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EXHIBIT 10.1
CREDIT AGREEMENT
among
PROASSURANCE CORPORATION
Borrower
SOUTHTRUST BANK,
Lead Arranger, Syndication Agent, and Administrative Agent
BANK OF AMERICA, N.A.,
Co-Arranger
and
THE LENDERS NAMED HEREIN,
Lenders
$150,000,000
SENIOR SECURED CREDIT FACILITIES
DATED AS OF MAY 10, 2001
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND TERMS.
1.1 Definitions...................................................................................1
1.2 Number and Gender of Words; Other References.................................................15
1.3 Accounting Principles........................................................................15
SECTION 2 BORROWING PROVISIONS.
2.1 Revolver Facility............................................................................15
2.2 Term Loan Facility...........................................................................15
2.3 Terminations or Reductions of Commitments....................................................16
2.4 Borrowing Procedure..........................................................................16
SECTION 3 TERMS OF PAYMENT.
3.1 Loan Accounts, Notes, and Payments...........................................................17
3.2 Interest and Principal Payments..............................................................17
3.3 Optional and Mandatory Prepayments...........................................................17
3.4 Interest Options.............................................................................18
3.5 Quotation of Rates...........................................................................18
3.6 Default Rate.................................................................................18
3.7 Interest Recapture...........................................................................19
3.8 Interest Calculations........................................................................19
3.9 Maximum Rate.................................................................................19
3.10 Interest Periods.............................................................................19
3.11 Conversions..................................................................................19
3.12 Order of Application.........................................................................20
3.13 Sharing of Payments, Etc.....................................................................20
3.14 Offset.......................................................................................20
3.15 Booking Borrowings...........................................................................21
SECTION 4 CHANGE IN CIRCUMSTANCES.
4.1 Increased Cost and Reduced Return............................................................21
4.2 Limitation on Types of Loans.................................................................22
4.3 Illegality...................................................................................22
4.4 Treatment of Affected Loans..................................................................22
4.5 Compensation.................................................................................23
4.6 Taxes........................................................................................23
SECTION 5 FEES.
5.1 Treatment of Fees............................................................................24
5.2 Fees of Administrative Agent and Lead Arranger...............................................25
5.3 Revolver Facility Commitment Fees............................................................25
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5.4 Up-Front Facilities Fee......................................................................25
SECTION 6 SECURITY.
6.1 Collateral...................................................................................25
6.2 Future Liens.................................................................................25
6.3 Release of Collateral........................................................................25
6.4 Negative Pledge..............................................................................26
6.5 Control; Limitation of Rights................................................................26
SECTION 7 CONDITIONS PRECEDENT.
7.1 Conditions Precedent to the Initial Borrowing................................................26
7.2 Conditions Precedent to a Permitted Acquisition..............................................26
7.3 Conditions Precedent to Each Borrowing.......................................................26
SECTION 8 REPRESENTATIONS AND WARRANTIES.
8.1 Purpose of Credit Facility...................................................................27
8.2 Existence, Good Standing, Authority, and Authorizations......................................27
8.3 Subsidiaries; Capital Stock..................................................................27
8.4 Authorization and Contravention..............................................................28
8.5 Binding Effect...............................................................................28
8.6 Financial Statements.........................................................................28
8.7 Litigation, Claims, Investigations...........................................................28
8.8 Taxes........................................................................................29
8.9 Environmental Matters........................................................................29
8.10 Employee Benefit Plans.......................................................................29
8.11 Properties; Liens............................................................................29
8.12 Government Regulations.......................................................................30
8.13 Transactions with Affiliates.................................................................30
8.14 Debt.........................................................................................30
8.15 Material Agreements..........................................................................30
8.16 Insurance....................................................................................30
8.17 Labor Matters................................................................................30
8.18 Solvency.....................................................................................30
8.19 Intellectual Property........................................................................30
8.20 Compliance with Laws.........................................................................30
8.21 Permitted Acquisitions; Intercompany Acquisitions............................................31
8.22 Regulation U.................................................................................31
8.23 Tradenames...................................................................................31
8.24 Year 2000....................................................................................31
8.25 Full Disclosure..............................................................................31
8.26 No Default...................................................................................31
8.27 Perfection of Security Interests.............................................................32
8.28 The Consolidation............................................................................32
SECTION 9 COVENANTS.
9.1 Use of Proceeds..............................................................................32
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9.2 Books and Records............................................................................32
9.3 Items to be Furnished........................................................................32
9.4 Inspections..................................................................................34
9.5 Taxes........................................................................................34
9.6 Payment of Obligations.......................................................................34
9.7 Maintenance of Existence, Assets, and Business...............................................34
9.8 Insurance....................................................................................35
9.9 Preservation and Protection of Rights........................................................35
9.10 Employee Benefit Plans.......................................................................35
9.11 Environmental Laws...........................................................................35
9.12 Debt and Guaranties..........................................................................35
9.13 Liens; Non-encumbrance Agreements............................................................36
9.14 Transactions with Affiliates.................................................................37
9.15 Compliance with Laws and Documents...........................................................37
9.16 Permitted Acquisitions and Collateral Documents.............................................37
9.17 Assignment...................................................................................37
9.18 Fiscal Year and Accounting Methods...........................................................37
9.19 Government Regulations.......................................................................37
9.20 Loans, Advances, and Investments.............................................................37
9.21 Distributions and Restricted Payments........................................................38
9.22 Restrictions on Subsidiaries.................................................................39
9.23 Sale of Assets...............................................................................39
9.24 Sale-Leaseback Financings....................................................................39
9.25 Mergers and Dissolutions; Sale of Capital Stock..............................................39
9.26 New Business.................................................................................39
9.27 Financial Hedges.............................................................................40
9.28 Affiliate Subordination Agreements...........................................................40
9.29 Amendments to Documents......................................................................40
9.30 Financial Covenants..........................................................................40
SECTION 10 DEFAULT.
10.1 Payment of Obligation........................................................................44
10.2 Covenants....................................................................................44
10.3 Debtor Relief................................................................................44
10.4 Judgments and Attachments....................................................................44
10.5 Government Action............................................................................44
10.6 Misrepresentation............................................................................45
10.7 Change of Control............................................................................45
10.8 Authorizations...............................................................................45
10.9 Default Under Other Debt and Agreements......................................................45
10.10 Validity and Enforceability of Loan Documents................................................45
10.11 Material Adverse Effect......................................................................45
10.12 Pledged Stock................................................................................45
10.13 Dissolution..................................................................................45
SECTION 11 RIGHTS AND REMEDIES.
11.1 Remedies Upon Default........................................................................45
11.2 Company Waivers..............................................................................46
11.3 Performance by Administrative Agent..........................................................46
11.4 Delegation of Duties and Rights..............................................................46
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11.5 Not in Control...............................................................................46
11.6 Course of Dealing............................................................................46
11.7 Cumulative Rights............................................................................46
11.8 Application of Proceeds......................................................................47
11.9 Certain Proceedings..........................................................................47
11.10 Limitation of Rights.........................................................................47
11.11 Expenditures by Lenders......................................................................47
11.12 INDEMNIFICATION..............................................................................47
SECTION 12 AGREEMENT AMONG LENDERS.
12.1 Administrative Agent.........................................................................48
12.2 Expenses.....................................................................................49
12.3 Proportionate Absorption of Losses...........................................................49
12.4 Delegation of Duties; Reliance...............................................................49
12.5 Limitation of Liability......................................................................49
12.6 Default; Collateral..........................................................................50
12.7 Limitation of Liability......................................................................51
12.8 Relationship of Lenders......................................................................51
12.9 Benefits of Agreement........................................................................51
12.10 Agents.......................................................................................52
12.11 Obligations Several..........................................................................52
12.12 Financial Hedges.............................................................................52
SECTION 13 MISCELLANEOUS.
13.1 Headings.....................................................................................52
13.2 Nonbusiness Days.............................................................................52
13.3 Communications...............................................................................52
13.4 Form and Number of Documents.................................................................53
13.5 Exceptions to Covenants......................................................................53
13.6 Survival.....................................................................................53
13.7 Governing Law................................................................................53
13.8 Invalid Provisions...........................................................................53
13.9 Entirety.....................................................................................53
13.10 Jurisdiction; Venue; Service of Process; Jury Trial..........................................53
13.11 Amendments, Consents, Conflicts, and Waivers.................................................54
13.12 Multiple Counterparts........................................................................55
13.13 Successors and Assigns; Assignments and Participations.......................................55
13.14 Confidentiality..............................................................................57
13.15 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances..................57
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SCHEDULES AND EXHIBITS
Schedule 1 - Consolidation Documents
Schedule 1A - Significant Subsidiaries
Schedule 2.1 - Lenders and Commitments
Schedule 7.1 - Conditions Precedent (Signing Date)
Schedule 7.1A - Conditions Precedent (Funding Date)
Schedule 7.2 - Conditions Precedent to Permitted Acquisition
Schedule 8.2 - Authorizations - Insurance Regulators
Schedule 8.3 - Capital Stock and Partnership Interests
Schedule 8.10 - Employee Benefit Plans
Schedule 8.23 - Tradenames
Schedule 9.12 - Existing Debt
Schedule 9.13 - Existing Liens
Schedule 9.20 - Existing Loans and Investments
Exhibit A-1 - Form of Revolver Note
Exhibit A-2 - Form of Term Loan Note
Exhibit B-1 - Form of Borrowing Notice
Exhibit B-2 - Form of Conversion Notice
Exhibit C - [Reserved]
Exhibit D - Form of Pledge and Security Agreement
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Assignment and Acceptance Agreement
Exhibit G-1 - Form of Opinion of Borrower's Counsel (Signing Date)
Exhibit G-2 - Form of Opinion of Borrower's Counsel (Funding Date)
Exhibit H - Form of Affiliate Subordination Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of May 10, 2001, among
PROASSURANCE CORPORATION (as more fully defined in SECTION 1, "BORROWER"),
Lenders (defined below), SOUTHTRUST BANK, as Lead Arranger (defined below),
Syndication Agent (defined below) and Administrative Agent (defined below), for
itself and the other Lenders, and BANK OF AMERICA, N.A., as Co-Arranger (defined
below).
RECITALS
A. Affiliates of Medical Assurance, Inc., a Delaware corporation
("MAI"), and Professionals Group, Inc., a Michigan corporation ("PICM"), have
formed Borrower to serve as the parent holding company for MAI and PICM
effective upon the consummation of the Consolidation (as defined below).
B. Pursuant to that certain Agreement to Consolidate dated as of
June 22, 2000, between MAI and PICM (the "Consolidation Agreement"), MAI
Acquisition Corporation I, a Delaware corporation and wholly-owned subsidiary of
Borrower, will merge with and into MAI (the "MAI Merger") and PICM Acquisition
Corporation, a Michigan corporation and wholly-owned subsidiary of Borrower,
will merge with and into PICM (the "PICM Merger", and collectively with the MAI
Merger and the related transactions effected pursuant to the Consolidation
Agreement, the "Consolidation").
C. Borrower has requested that, in addition to other sources of
financing, Lenders extend credit to Borrower to enable, among other things, the
consummation of the Consolidation.
D. Upon and subject to the terms and conditions of this
Agreement, Lenders are willing to extend to Borrower two credit facilities
totaling $150,000,000, in the form of a revolving loan facility in the aggregate
principal amount of $40,000,000 and a term loan facility in the aggregate
principal amount of $110,000,000.
Accordingly, in consideration of the mutual covenants contained herein,
Borrower, Administrative Agent, the other Agents, and Lenders agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 DEFINITIONS. As used herein (including each Schedule attached
hereto):
ACQUISITION means any transaction or series of related transactions for
the purpose of, or resulting in, directly or indirectly, (a) the acquisition by
any Company of all or substantially all of the assets of a Person or of any
business or division of a Person; (b) the acquisition by any Company of more
than 50% of any class of Voting Stock (or similar ownership interests) of any
Person (provided that, formation or organization of any entity shall not
constitute an "Acquisition" to the extent that the amount of the loan, advance,
investment, or capital contribution in such entity constitutes a permitted
investment under SECTION 9.20); or (c) a merger, consolidation, amalgamation, or
other combination by any Company with another Person if a Company is the
surviving entity, provided that, (i) in any merger involving Borrower, Borrower
must be the surviving entity; and (ii) for purpose of this Agreement, an
Intercompany Acquisition is not an "Acquisition."
ADDITIONAL AMOUNTS is defined in SECTION 4.5(B) .
ADDITIONAL ASSETS is defined in SECTION 6.2.
ADJUSTED EURODOLLAR RATE means, for any Eurodollar Rate Borrowing for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100th of 1%) determined by Administrative Agent to be equal to
the quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar
Rate Borrowing for such interest Period by (b) 1 minus the Reserve Requirement
for such Eurodollar Rate Borrowing for such Interest Period.
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ADMINISTRATIVE AGENT means SouthTrust Bank, and its permitted
successors or assigns, as "Administrative Agent" for Lenders under the Loan
Documents.
AFFILIATE of any Person means any other individual or entity who
directly or indirectly controls, or is controlled by, or is under common control
with, such Person, and, for purposes of this definition only, "control,"
"controlled by," and "under common control with" mean possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract, or
otherwise).
AFFILIATE SUBORDINATION AGREEMENT means, individually, and Affiliate
Subordination Agreements means, collectively, an Affiliate Subordination
Agreement (substantially in the form of EXHIBIT H) executed and delivered by any
Person pursuant to the requirements of the Loan Documents, and any amendments,
modifications, supplements, ratifications, or restatements of any Affiliate
Subordination Agreement made in accordance with the Loan Documents.
AGENTS means, collectively, Administrative Agent, Syndication Agent,
Lead Arranger and Co-Arranger.
AGREEMENT means this Credit Agreement (as the same may hereafter be
amended, modified, supplemented, or restated from time to time).
ANNUAL STATEMENT means the most recent annual statutory financial
statement of any Insurance Subsidiary required to be filed with the insurance
commissioner (or similar authority) of its jurisdiction of domicile, which
statement shall be in the form required or permitted by such Insurance
Subsidiary's jurisdiction of domicile or, if no specific form is so required or
permitted, in the form of financial statements recommended by the NAIC to be
used for filing annual statutory financial statements and shall contain the type
of information recommended by the NAIC to be disclosed therein, together with
all exhibits or schedules filed therewith.
ANNUALIZED EBITDA is defined in Section 9.30.
ANNUALIZED FIXED CHARGE NUMERATOR is defined in Section 9.30.
ANNUALIZED FIXED CHARGES is defined in Section 9.30.
APPLICABLE LENDING OFFICE means, for each Lender and for each Type of
Borrowing, the "Lending Office" of such Lender (or an affiliate of such Lender)
designated on SCHEDULE 2.1 or such other office that such Lender (or an
affiliate of such Lender) may from time to time specify to Administrative Agent
and Borrower by written notice in accordance with the terms hereof.
APPLICABLE MARGIN means:
(a) With respect to each Borrowing under the Revolver Facility and
under the Term Loan Facility, on any date of determination, the percentage per
annum set forth in the table below for the Type of Borrowing that corresponds to
the Leverage Ratio at such date of determination, as calculated based on the
quarterly Compliance Certificate most recently delivered pursuant to SECTION
9.3:
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LEVERAGE RATIO APPLICABLE MARGIN
-------------- -----------------
BASE RATE BORROWINGS EURODOLLAR RATE BORROWINGS
-------------------- --------------------------
Less than 1.0:1.0 0% 1.00%
Greater than or equal to 1.0:1.0, 0% 1.25%
but less than 2.0:1.0
Greater than or equal to 2.0:1.0, 0% 1.50%
but less than 3.0:1.0
Greater than or equal to 3.0:1.0, 0% 1.75%
but less than 3.25:1.0
Greater than or equal to 3.25:1.0, 0% 2.00%
but less than 3.5:1.0
Greater than or equal to 3.5:1.0 0% 2.25%
(b) The provisions in ITEM (A) are further subject to the
following:
(i) Until the second Business Day after the Financial
Statements and Compliance Certificate for the fiscal quarter ending
September 30, 2001, shall have been delivered hereunder, the Applicable
Margin for Eurodollar Rate Borrowings under the Revolver Facility and
the Term Loan Facility shall be 1.75%. With respect to any adjustments
in the Applicable Margin as a result of changes in the Leverage Ratio
on and after September 30, 2001, such adjustment shall be effective
commencing on the second Business Day after the delivery of Financial
Statements (and the related Compliance Certificate) pursuant to
SECTIONS 9.3(A) and 9.3(B); and
(ii) If Borrower shall fail to timely furnish to Lenders
the Financial Statements and related Compliance Certificates as
required to be delivered pursuant to SECTIONS 9.3(A) and 9.3(B), and
such failure shall not be remedied within five days, then (unless the
Default Rate has been effected by Required Lenders pursuant to SECTION
3.6) the Applicable Margin for the Revolver Facility and the Term Loan
Facility shall be the maximum Applicable Margin for the respective
Facility specified in the tables above.
APPLICABLE MARGIN FOR COMMITMENT FEES means, on any date of
determination, the percentage set forth in the table below that corresponds with
the Leverage Ratio at such date of determination, as calculated based on the
quarterly Compliance Certificates most recently delivered pursuant to SECTION
9.3:
LEVERAGE RATIO APPLICABLE MARGIN FOR COMMITMENT
FEES
-------------- --------------------------------
Less than 1.0:1.0 0.080%
Greater than or equal to 1.0:1.0, 0.105%
but less than 2.0:1.0
Greater than or equal to 2.0:1.0, 0.125%
but less than 3.0:1.0
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Greater than or equal to 3.0:1.0, 0.190%
but less than 3.25:1.0
Greater than or equal to 3.25:1.0, 0.250%
but less than 3.5:1.0
Greater than or equal to 3.5:1.0 0.375%
(a) Until the second Business Day after the Financial
Statements and Compliance Certificate for the fiscal quarter ending September
30, 2001, shall have been delivered hereunder, the Applicable Margin for
Commitment Fees shall be 0.190%. With respect to any adjustments in the
Applicable Margin for Commitment Fees as a result of changes in the Leverage
Ratio on and after September 30, 2001, such adjustment shall be effective
commencing on the second Business Day after the delivery of Financial Statements
(and related Compliance Certificate) pursuant to SECTIONS 9.3(A) and 9.3(B).
(b) If Borrower fails to timely furnish to Lenders the
Financial Statements and related Compliance Certificates as required to be
delivered pursuant to SECTIONS 9.3(A) and 9.3(B), and such failure shall not be
remedied within five days, then the Applicable Margin for Commitment Fees shall
be the maximum Applicable Margin for Commitment Fees specified in the table
above.
APPROVED FUND means, with respect to any Lender that is a fund or
commingled investment vehicle that invests in loans, any other fund that invests
in loans and is managed or advised by the same investment advisor as such Lender
or by an Affiliate of such investment advisor.
ASSIGNMENT AND ACCEPTANCE AGREEMENT means (a) an assignment and
acceptance agreement substantially in the form and upon the terms of EXHIBIT F,
executed and delivered by any Person pursuant to the requirements of the Loan
Documents, and (b) any amendments, modifications, supplements, restatements,
ratifications, or reaffirmations of any Assignment and Acceptance Agreement made
in accordance with the Loan Documents.
AUTHORIZATIONS means all material filings, recordings, and
registrations with, and all validations or exemptions, approvals, orders,
authorizations, consents, franchises, licenses, certificates, grants of
authority, and permits from, any Governmental Authority (including, without
limitation, the Insurance Regulators).
BASE RATE means, for any day, the rate per annum equal to the rate of
interest designated by SouthTrust Bank as its Base Rate. The Base Rate is not
necessarily the lowest rate charged by SouthTrust Bank to its customers.
BASE RATE BORROWING means a Borrowing bearing interest at the sum of
the Base Rate plus the Applicable Margin, if any, for Base Rate Borrowings.
BORROWER means ProAssurance Corporation, a Delaware corporation,
together with any successor or assign of Borrower permitted by the Loan
Documents.
BORROWING means any amount disbursed (a) by one or more Lenders under
the Loan Documents (under the Revolver Facility or the Term Loan Facility),
whether such amount constitutes an original disbursement of funds, or the
continuation of an amount outstanding, or (b) by any Lender in accordance with,
and to satisfy the obligations of any Company under, any Loan Document.
BORROWING DATE is defined in SECTION 2.4(A).
BORROWING NOTICE means a request for Borrowing made pursuant to SECTION
2.4(A), substantially in the form of EXHIBIT B-1.
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BUSINESS DAY means (a) for all purposes, any day other than Saturday,
Sunday, and any other day on which commercial banking institutions are required
or authorized by Law to be closed in Birmingham, Alabama, and (b) in addition to
the foregoing, in respect of any Eurodollar Rate Borrowing, a day on which
dealings in United States dollars are conducted in the London interbank market
and commercial banks are open for international business in London.
CAPITAL LEASE means any capital lease or sublease which should be
capitalized on a balance sheet in accordance with GAAP.
CHANGE OF CONTROL means the occurrence of any of the following:
(a) On and after the Funding Date (A) any person or group
of persons (within the meaning of Section 13(d) of the Securities Exchange Act
of 1934, as amended) other than the current shareholders of the Borrower after
giving effect to the Consolidation shall obtain ownership or control in one or
more series of transactions of more than twenty percent (20%) of the common
stock or twenty percent (20%) of the voting power of Borrower entitled to vote
in the election of members of the board of directors of Borrower, or (B) there
shall have occurred under any indenture or other instrument evidencing any Debt
in excess of $20,000,000 any "change in control" (as defined in such indenture
or other evidence of Debt) obligating Borrower to repurchase, redeem or repay
all or any part of the Debt or capital stock provided for therein; or
(b) After the Funding Date, Borrower ceases to own 100%
of the issued and outstanding capital stock of, or other ownership interests in,
MAI or PICM.
CO-ARRANGER means Bank of America, N.A., and its successors and
assigns, in its capacity as co-arranger under the Loan Documents.
CODE means the Internal Revenue Code of 1986, as amended, together with
the rules and regulations promulgated thereunder.
COLLATERAL means all of the items and types of property described as
"COLLATERAL" in now existing or hereafter created Collateral Documents and all
cash and non-cash proceeds thereof.
COLLATERAL DOCUMENTS means all security agreements, pledge agreements,
financing statements, assignments of partnership interests, guaranties,
mortgages, and deeds of trust at any time delivered to Administrative Agent to
create or evidence Liens securing the Obligation, together with all
reaffirmations, amendments, and modifications thereof or supplements thereto.
COMMITMENT PERCENTAGE means, at any date of determination, for any
Lender with respect to a particular Facility, the proportion (stated as a
percentage) that its Committed Sum for such Facility bears to the aggregate
Committed Sums of all Lenders for such Facility.
COMMITTED SUM means (a) for any Revolver Lender, with respect to the
Revolver Facility, at any date of determination occurring prior to the
Termination Date for the Revolver Facility, the amount stated beside such
Lender's name under the heading for the Revolver Facility on the most-recently
amended SCHEDULE 2.1 to this Agreement (which amount is subject to increase,
reduction, or cancellation in accordance with the Loan Documents), and (b) for
any other Lender, with respect to the Term Loan Facility, at any date of
determination occurring prior to the initial Borrowing Date for the Term Loan
Facility, the amount stated beside such Lender's name under the heading for the
Term Loan Facility on the most-recently amended SCHEDULE 2.1 to this Agreement
(which amount is subject to increase, reduction, or cancellation in accordance
with the Loan Documents).
COMPANIES means, (A) on any date of determination prior to the Funding
Date, Borrower, MAI and each of their respective Subsidiaries, and COMPANY
means, on any date of determination prior to the Funding Date, Borrower, MAI or
any of their respective Subsidiaries, and (B) on any date of determination on or
after the Funding Date, Borrower and each of its Subsidiaries, and Company
means, on any date of determination on or after the Funding Date, Borrower or
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any of its Subsidiaries. A list of the Companies as of the Signing Date and a
list of the entities contemplated to be Companies on the Funding Date (after
giving effect to the Consolidation) are set forth in SCHEDULE 8.3.
COMPLIANCE CERTIFICATE means a certificate signed by a Responsible
Officer of Borrower substantially in the form of EXHIBIT E.
CONSEQUENTIAL LOSS means any loss, cost, or expense (including loss of
anticipated profit) which any Lender may reasonably incur in respect of a
Eurodollar Rate Borrowing as a consequence of any event described in SECTION
4.5.
CONSOLIDATION means the merger of MAI Acquisition Corporation I, a
Delaware corporation and wholly-owned subsidiary of Borrower, with and into MAI
and the merger of PICM Acquisition Corporation, a Michigan corporation and
wholly-owned subsidiary of Borrower, with and into PICM, in each case on the
Funding Date pursuant to the Consolidation Agreement.
CONSOLIDATION AGREEMENT means the Agreement to Consolidate dated as of
June 22, 2000, between MAI and PICM, together with all amendments or
modifications thereto in form and upon terms acceptable to Administrative Agent.
CONSOLIDATION DOCUMENTS means the Consolidation Agreement and all
documents or instruments executed pursuant thereto or in connection therewith as
described on SCHEDULE 1, together with all amendments, modifications,
supplements, or restatements thereof in form and upon terms reasonably
satisfactory to Administrative Agent.
CONVERSION NOTICE means a request made pursuant to SECTION 3.11,
substantially in the form of EXHIBIT B-2.
CURRENT FINANCIALS means, at the time of any determination thereof, the
more recently delivered to Lenders of either (a) the audited Financial
Statements for the fiscal year ended December 31, 2000, calculated on a
consolidated basis for each of MAI and its Subsidiaries and PICM and its
Subsidiaries; or (b) the Financial Statements required to be delivered under
SECTIONS 9.3(A) or 9.3(B), as the case may be, calculated on a consolidated
basis for the Companies.
DEBT means (without duplication), for any Person, the sum of the
following: (a) all liabilities, obligations, and indebtedness of such Person
which in accordance with GAAP should be classified upon such Person's balance
sheet as liabilities in respect of (i) money borrowed, including, without
limitation, the Principal Debt, (ii) obligations of such Person under Capital
Leases, and (iii) obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations, and obligations
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (b) all obligations of the type
referred to in CLAUSES (A)(I) through (A)(II) above of other Persons for the
payment of which such Person is responsible or liable as obligor, guarantor, or
otherwise; (c) all obligations of the type referred to in CLAUSES (A)(I) through
CLAUSE (A)(II) and CLAUSE (B) above of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured; (d)
obligations of such Person under reimbursement agreements for advances made by
an issuer of a letter of credit but only if such obligation is payable over more
than, or outstanding longer than, thirty (30) days from the date such obligation
arises; and (e) net payments under Financial Hedges.
DEBTOR RELIEF LAWS means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent
transfer or conveyance, suspension of payments, or similar Laws from time to
time in effect affecting the Rights of creditors generally.
DEFAULT is defined in SECTION 10.
DEFAULT RATE means a per annum rate of interest equal from day to day
to the lesser of (a) the sum of the Base Rate plus the Applicable Margin for
Base Rate Borrowings for the relevant Facility plus 2% and (b) the Maximum Rate.
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DISTRIBUTION for any Person means, with respect to any shares of any
capital stock, membership interest, or any other equity securities issued by
such Person, (a) the retirement, redemption, purchase, or other acquisition for
value of any such securities, (b) the declaration or payment of any dividend or
distribution on or with respect to any such securities, and (c) any other
payment by such Person with respect to such securities.
DOLLARS and the symbol $ means lawful money of the United States of
America.
EBITDA is defined in Section 9.30.
ELIGIBLE ASSIGNEE means (a) a Lender; (b) an Affiliate of a Lender (so
long as (i) such assignment is not made in conjunction with the sale of such
Affiliate and (ii) such Affiliate remains an Affiliate of such Lender); (c) an
Approved Fund of the assigning Lender; and (d) any other Person approved by
Administrative Agent (which approval will not be unreasonably withheld or
delayed by Administrative Agent) and (unless a Default or Potential Default has
occurred and is continuing at the time any assignment is effected in accordance
with SECTION 13.13) Borrower (which approval will not be unreasonably withheld
or delayed by Borrower and which approval will be deemed given by Borrower if no
objection is received by the assigning Lender and Administrative Agent from
Borrower within five Business Days after notice of such proposed assignment has
been provided by the assigning Lender to Borrower); provided, however, that
neither Borrower nor any Affiliate of Borrower shall qualify as an Eligible
Assignee.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code and established or maintained by any Company or ERISA Affiliate, but not
including any Multiemployer Plan.
ENVIRONMENTAL LAW means any applicable Law that relates to (a) the
condition or protection of air; groundwater, surface water, soil, or other
environmental media, (b) the environment, including natural resources or any
activity which affects the environment, (c) the regulation of any pollutants,
contaminants, wastes, substances, and Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C.ss.9601 et seq.) ("CERCLA"), the Clean Air Act (42
U.S.C.ss.7401 et seq.), the Federal Water Pollution Control Act, as amended by
the Clean Water Act (33 U.S.C.ss.1251 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C.ss.136 et seq.), the Emergency Planning
and Community Right to Know Act of 1986 (42 U.S.C.ss.11001 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C.ss.1801 et seq.), the National
Environmental Policy Act of 1969 (42 U.S.C.ss.4321 et seq.), the Oil Pollution
Act (33 U.S.C.ss.2701 et seq.), the Resource Conservation and Recovery Act (42
U.S.C.ss.6901 et seq.), the Rivers and Harbors Act (33 U.S.C.ss.401 et seq.),
the Safe Drinking Water Act (42 U.S.C.ss.201 and ss.300f et seq.), the Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of
1976 and the Hazardous and Solid Waste Amendments of 1984 (42 U.S.C.ss.6901 et
seq.), the Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), and
analogous state and local Laws, as any of the foregoing may have been and may be
amended or supplemented from time to time, and any analogous future enacted or
adopted Law, or (d) the Release or threatened Release of Hazardous Substances.
ENVIRONMENTAL LIABILITY means any obligation, liability (including,
without limitation, any strict liability), loss, fine, penalty, charge, Lien,
damage, cost, or expense of any kind to the extent that it results (a) from any
violation of or any obligation or liability under any Environmental Law, (b)
from the presence, Release, or threatened Release of any Hazardous Substance, or
(c) from actual or threatened damages to natural resources.
ENVIRONMENTAL PERMIT means any permit, license, or other Authorization
from any Governmental Authority that is required under any Environmental Law for
the lawful conduct of any business, process, or other activity.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rulings thereunder.
ERISA AFFILIATE means any company or trade or business (whether or not
incorporated) which, for purposes of Title IV of ERISA, is (or has been within
the past six years) a member of any Company's controlled group or which is (or
has been within the past six years) under common control with any Company within
the meaning of Section 414(b), (c), (m), or (o) of the Code.
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EURODOLLAR RATE means, for any Eurodollar Rate Borrowing for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100th of 1%) appearing on Dow Jones Markets 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, the term "Eurodollar Rate" shall mean,
the arithmetic average (rounded upward, if necessary, to the next higher 1/100th
of 1%) of rates quoted by not less than 2 major banks in New York City, selected
by the Administrative Agent, at approximately 10:00 A.M., New York City time,
two Business Days prior to the first day of such Interest Period, for deposits
in Dollars offered by leading European banks for a period comparable to such
Interest Period in an amount comparable to the principal amount of such
Eurodollar Rate Borrowing.
EURODOLLAR RATE BORROWING means a Borrowing bearing interest at the sum
of the Adjusted Eurodollar Rate plus the Applicable Margin for Eurodollar Rate
Borrowings.
EVENT OF DEFAULT is defined in SECTION 10.
EXCESS CASH FLOW means, on any date of determination with respect to
the fiscal year then most recently ended, solely with respect to Borrower on a
non-consolidated basis: (i) cash provided (used) by operating activities, as
shown in the statement of cash flows included in the condensed financial
statements of Borrower as required by Rule 12-04 of regulation S-X and included
in Borrower's annual report to the Securities and Exchange Commission on Form
10-K, plus (ii) cash dividends received from Subsidiaries, less (iii) capital
contributions made by Borrower to any Insurance Subsidiary, less (iv) all
amounts remitted in prepayment of the Term Loan Principal Debt and/or the
Revolver Principal Debt pursuant to SECTION 9.23(G) of this Agreement (relating
to the sale of shares of MEEMIC stock), less (v) $10,000,000.00; provided,
however, in no event, shall Excess Cash Flow be less than $0.00.
EXHIBIT means an exhibit to this Agreement unless otherwise specified.
EXISTING DEBT is defined in SECTION 9.12(D).
FACILITIES means, collectively, the Revolver Facility and the Term Loan
Facility; FACILITY means, either of the Revolver Facility or the Term Loan
Facility.
FASB 115 means Statement No. 115 (Accounting for Certain Investments in
Debt and Equity Securities) issued by the Financial Accounting Standards Board.
FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) determined (which
determination shall be conclusive and binding, absent manifest error) by
Administrative Agent to be equal to the weighted average of the rates on
overnight Federal funds transactions with member banks of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate charged to Administrative Agent (in its
individual capacity) on such day on such transactions as determined by
Administrative Agent (which determination shall be conclusive and binding,
absent manifest error).
FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract
which is intended to reduce or eliminate the risk of fluctuations in interest
rates and which complies with the applicable requirements of SECTION 9.27(C) and
is otherwise in compliance with the requirements of the Loan Documents.
FINANCIAL PROJECTIONS means, the following financial statements
prepared by or on behalf of Borrower: (i) the Projected Parent Only Condensed
Statements of Cash Flows for the periods ending December 31, 2001, 2002 and
2003; (ii) the Projected Parent Only Condensed Balance Sheets for the periods
ending December 31, 2001, 2002 and 2003; (iii) the Projected Parent Only
Condensed Statements of Income for the periods ending December 31, 2001, 2002
and 2003;
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(iv) the Projected Condensed Consolidated Balance Sheets for the periods ending
December 31, 2001, 2002 and 2003; and (v) the Projected Consolidated Condensed
Statements of Income for the periods ending December 31, 2001, 2002 and 2003.
FINANCIAL STATEMENTS means balance sheets, statements of changes in
capital, statements of income, and statements of cash flows prepared in
accordance with GAAP, which statements shall be in comparative form to the
corresponding period of the preceding fiscal year, and which balance sheets
shall be in comparative form to the prior fiscal year-end figures.
FIXED CHARGE COVERAGE RATIO is defined in Section 9.30.
FIXED CHARGE NUMERATOR is defined in Section 9.30.
FIXED CHARGES is defined in Section 9.30.
FOREIGN SUBSIDIARY of any Person means a Subsidiary of such Person that
is organized or incorporated under the Laws of a jurisdiction other than a
jurisdiction of the United States.
FUNDED DEBT is defined in Section 9.30.
FUNDING DATE means the date upon which all conditions precedent
specified in SECTION 7.1 have been satisfied or waived and the initial Borrowing
under this Agreement is disbursed to or for the benefit of Borrower.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board which are applicable from time to time.
GOVERNMENTAL AUTHORITY means any (a) local, state, municipal, or
federal judicial, executive, or legislative instrumentality, (b) private
arbitration board or panel, or (c) central bank.
HAZARDOUS SUBSTANCE means (a) any substance that is designated,
defined, or classified as a hazardous waste, hazardous material, pollutant,
contaminant, or toxic or hazardous substance, or that is otherwise regulated,
under any Environmental Law, including without limitation, any hazardous
substance within the meaning of Section 101(14) of CERCLA, (b) petroleum, oil,
gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel,
and other petroleum hydrocarbons, (c) asbestos and asbestos-containing materials
in any form, (d) polychlorinated biphenyls, or (e) urea formaldehyde foam.
INSURANCE REGULATORS means all insurance departments, insurance
commissioners and similar Governmental Authorities of the various states of the
United States of America or any foreign jurisdiction with jurisdiction or
regulatory authority over Borrower or any of the Companies.
INSURANCE SUBSIDIARY means any Company which is licensed to engage in
the business of providing insurance in any jurisdiction.
INTERCOMPANY ACQUISITION means (i) a merger, consolidation,
amalgamation, or combination by any Company with another Company permitted by
SECTION 9.25, or (ii) sales, assignments, transfers, or dispositions of the
capital stock (or other ownership interests) of a Company to the extent
transferred by one Company to another Company as permitted under SECTION 9.25;
and (iii) sales or dispositions of all or substantially all the assets of a
Company to the extent transferred by one Company to another Company as permitted
under SECTION 9.23(E).
INTEREST EXPENSE is defined in Section 9.30.
INTEREST PERIOD is determined in accordance with SECTION 3.10.
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LAWS means all applicable statutes, laws, treaties, ordinances, tariff
requirements, rules, regulations, orders, writs, injunctions, decrees,
judgments, opinions, or interpretations of any Governmental Authority.
LEAD ARRANGER means SouthTrust Bank, and its successors and assigns, in
its capacity as sole lead arranger under the Loan Documents.
LENDERS means, on any date of determination, the financial institutions
named on SCHEDULE 2.1 (as the same may be amended from time to time by
Administrative Agent to reflect the assignments made in accordance with SECTION
13.13(B)), and, subject to the terms and conditions of this Agreement, their
respective successors and assigns (but not any Participant who is not otherwise
a party to this Agreement); provided that, solely for purposes of any Collateral
Document and SECTIONS 12, 3.13, and 3.14, "LENDERS" shall also include any
Lender or Affiliate of a Lender who is party to a Financial Hedge with any
Company, and their respective successors and assigns (for purposes hereof, each
Lender shall be deemed to have entered into this Agreement for and on behalf of
any Affiliate now or hereafter party to a Financial Hedge with any Company).
LEVERAGE RATIO is defined in Section 9.30.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor (other than under or relating to
subordination or other intercreditor arrangements) to have its claim satisfied
out of any property or assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
LITIGATION means any action by or before any Governmental Authority.
LOAN ACCOUNT means any record (including, without limitation, the
Register) maintained by any Lender in the ordinary course of business or by
Administrative Agent evidencing the Principal Debt owed to each Lender.
LOAN DOCUMENTS means (a) this Agreement, the Notes, and the Collateral
Documents, (b) all agreements, documents, or instruments in favor of Agents or
Lenders ever delivered pursuant to this Agreement or otherwise delivered in
connection with either or both of the Facilities, and (c) any and all future
renewals, extensions, restatements, reaffirmations, or amendments of, or
supplements to, all or any part of the foregoing.
MAI means Medical Assurance, Inc., a Delaware corporation.
MATERIAL ADVERSE EVENT means any set of one or more circumstances or
events which, individually or collectively, could reasonably be expected to
result in any (a) material impairment of the ability of the Companies to perform
any of their payment or other material obligations under the Loan Documents or
the ability of Administrative Agent or any Lender to enforce any such
obligations or any of their respective Rights under the Loan Documents, (b)
material and adverse effect on the business, properties or condition (financial
or otherwise), of the Companies, taken as a whole, or (c) Default or Potential
Default.
MATERIAL AGREEMENT means any contract material to the respective
business of any Company or any other written or oral agreement, contract,
commitment, or understanding to which any Company is a party, by which such
Company is directly or indirectly bound, or to which any assets of such Company
may be subject and which involves revenue payable to any Company in excess of
$20,000,000 in the aggregate during any 12-month period, or financial
obligations of any Company in excess of $20,000,000 in the aggregate during any
12-month period.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for each Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest which,
under applicable Law, such Lender is permitted to contract for, charge, take,
reserve, or receive on the Obligation.
MEEMIC means MEEMIC Holdings, Inc., a Michigan corporation.
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MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 4140 of the Code to which any Company
or ERISA Affiliate is making, or has made, or is accruing, or has accrued, an
obligation to make contributions or has, within any of the preceding five plan
years, made or accrued an obligation to make contributions.
NAIC means the National Association of Insurance Commissioners or any
successor thereto.
NET INCOME is defined in Section 9.30.
NET WORTH is defined in Section 9.30.
NOTES means, at the time of any determination thereof, all outstanding
and unpaid Revolver Notes and the Term Loan Notes.
OBLIGATION means all present and future indebtedness, liabilities, and
obligations, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to Administrative Agent, any other Agent, any Lender, or any
Affiliate of any Lender by any Company arising from, by virtue of, or pursuant
to any Loan Document, together with all interest accruing thereon, fees, costs,
and expenses (including, without limitation, all reasonable attorneys' fees and
expenses incurred in the enforcement or collection thereof) payable under the
Loan Documents; provided that, all references to the "Obligation" in the
Collateral Documents and in SECTIONS 3.12, 3.13, and 3.14, shall, in addition
to the foregoing, also include all present and future indebtedness,
liabilities, and obligations (and all renewals and extensions thereof or any
part thereof) now or hereafter owed to any Lender or any Affiliate of a Lender
arising from, by virtue of, or pursuant to any Financial Hedge entered into by
any Company.
OSHA means the Occupational Safety and Health Act of 1970, 29
U.S.C. ss.671 et seq.
OTHER TAXES is defined in SECTION 4.6(B).
PARTICIPANT is defined in SECTION 13.13(E).
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof established pursuant to ERISA.
PENSION PLAN means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code which (a) is maintained for employees of Borrower or any
ERISA Affiliates or (b) has at any time within the preceding six years been
maintained for the employees of Borrower or any of their current or former ERISA
Affiliates.
PERMITTED ACQUISITION means, individually and collectively:
(a) the Consolidation;
(b) any Acquisition by any Company of assets used in or
businesses which are engaged in the domestic insurance industry, with respect
to which each of the following requirements have been satisfied:
(i) the Purchase Price (as defined below) for
such Acquisition (A) must be less than or equal to
$10,000,000, and (B) when aggregated with the Purchase Price
of all other Permitted Acquisitions covered by this clause
(b) consummated on and after the Signing Date to any date of
determination, does not exceed in the aggregate ten percent
(10%) of Net Worth as shown in the most recent audited,
year-end Financial Statements delivered to Administrative
Agent, and
(ii) no Default or Potential Default exists at
the time of such Acquisition or arises after giving effect to
the consummation thereof; and/or
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provided that, without the consent of the Required Lenders, no such Acquisition
shall be permitted if (x) Funded Debt is incurred or assumed in connection with
the financing of such Acquisition and (y) the Borrower's Leverage Ratio is 3.0
to 1.0 or greater immediately after giving effect to such Acquisition; and/or
(c) any other Acquisition for which the prior written
consent of Required Lenders has been obtained in accordance with SECTION 7.2.
The Administrative Agent will not request any consents from the Lenders until
Borrower shall have complied with the requirements set forth in SECTION 7.2.
As a condition to obtaining the consent of the Required Lenders under
subparagraph (b) hereof, the Borrower will furnish the following information to
the Administrative Agent prior to completion of the subject Acquisition; (i)
the Purchase Price (herein defined) and (ii) the source of funds for payment of
the Purchase Price.
As used herein, the term "Purchase Price" means all direct, indirect and
deferred cash and non-cash payments made to or for the benefit of the Person
being acquired (or whose assets are being acquired), its shareholders,
officers, directors, employees or Affiliates in connection with such
Acquisition, including, without limitation, the amount of any Debt being
assumed in connection with such Acquisition (and subject to the limitations on
Permitted Debt hereunder), seller financing, payments (valued at their present
value discounted at the Base Rate) under non-competition or consulting
agreements (excluding any individual consulting or non-compete agreements)
entered into in connection with such Acquisition and similar agreements, all
non-cash consideration and the value of any stock, options or warrants or other
Rights to acquire stock issued as part of the consideration in such
transaction.
PERMITTED DEBT means Debt permitted under SECTION 9.12 as described in
such Section.
PERMITTED LIENS means Liens permitted under SECTION 9.13 as described
in such Section.
PERSON means any individual, entity, or Governmental Authority.
PICM means Professionals Group, Inc., a Michigan corporation.
POTENTIAL DEFAULT means the occurrence of any event or existence of
any circumstance which, with the giving of notice or lapse of time or both,
would become a Default or an Event of Default.
PRINCIPAL DEBT means, at the time of any determination thereof, the
sum of the Revolver Principal Debt and the Term Loan Principal Debt.
PRO RATA or PRO RATA PART, for each Lender, means on any date of
determination (a) for purposes of sharing, any amount or fee payable to any
Lender in respect of a Facility, the proportion which the portion of the
Principal Debt for the applicable Facility owed to such Lender bears to the
Principal Debt under the applicable Facility owed to all Lenders at the time in
question, and (b) for all other purposes, the proportion which the portion of
the Principal Debt owed to such Lender bears to the Principal Debt owed to all
Lenders at the time in question, or if no Principal Debt is outstanding, then
the proportion that the aggregate of such Lender's Committed Sums then in
effect under the Facilities bears to the Total Commitment then in effect.
REGISTER is defined in SECTION 13.13(C).
REGULATION D means Regulation D of the Board of Governors of the
Federal Reserve System, as amended.
REGULATION U means Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
RELEASE means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposal,
deposit, dispersal, migrating, or other movement into the air, ground, or
surface water, or soil in violation of any Environmental Law.
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REPORTING ENTITIES is defined in SECTION 8.6.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.
REQUIRED LENDERS means (a) on any date of determination on and after
the Signing Date and prior to the Funding Date, those Lenders holding 66.667%
or more (or in the case of any amendment, consent, or waiver with respect to
any covenant or requirement in Section 9.30, those Lenders holding 81% or more)
of the Total Commitment, (b) on any date of determination on and after the
Funding Date and prior to the Termination Date for the Revolver Facility, those
Lenders holding 66.667% or more (or in the case of any amendment, consent, or
waiver with respect to any covenant or requirement in Section 9.30, those
Lenders holding 81% or more) of the sum of (i) the Revolver Commitment plus
(ii) the Term Loan Principal Debt; and (c) on any date of determination on or
after the Termination Date for the Revolver Facility, those Lenders holding
66.667% or more (or in the case of any amendment, consent, or waiver with
respect to any covenant or requirement in Section 9.30, those Lenders holding
81% or more) of the sum of the Principal Debt.
RESERVE ACCOUNT means any deposit account or other similar asset of a
Company maintained with, or held under the control of, a Lender if such account
or asset is held (i) in a custodial or trust account with any Lender, or (ii)
in any other special account, designated as such, established to meet loss
reserve and/or unearned premium reserve requirements in accordance with
guidelines or requirements of Insurance Regulators and applicable Laws.
RESERVE REQUIREMENT means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental,
or emergency reserves) are required to be maintained under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) by member banks of the Federal Reserve System against, in the
case of Eurodollar Rate Borrowings, "Eurocurrency liabilities" (as such term is
used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required by Law to be
maintained by such member banks with respect to (a) any category of liabilities
which includes deposits by reference to which the Adjusted Eurodollar Rate is
to be determined, or (b) any category of extensions of credit or other assets
which include Eurodollar Rate Borrowings. The Adjusted Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Requirement.
RESPONSIBLE OFFICER means with respect to Borrower, its chairman,
president, chief executive officer, chief financial officer, senior vice
president, or treasurer, or, for all purposes under the Loan Documents, any
other officer designated from time to time by the Board of Directors of
Borrower.
RESTRICTED PAYMENTS means (a) redemptions, repurchases, dividends, and
Distributions of any kind in respect of the capital stock (including, without
limitation, any class of common or preferred shares), membership interests, or
other equity interests issued by any Company; (b) partnership Distributions of
any kind in respect of partnership interests of any Company that is a
partnership; and (c) payments of principal and interest on, and any redemptions
or repurchases of, Subordinated Debt.
REVOLVER COMMITMENT means an amount (subject to reduction or
cancellation as herein provided) equal to $40,000,000.
REVOLVER COMMITMENT USAGE means, at the time of any determination
thereof, the sum of the aggregate Revolver Principal Debt.
REVOLVER FACILITY means the credit facility as described in and
subject to the limitations set forth in SECTION 2.1.
REVOLVER LENDER means, on any date of determination, any Lender that
has a Committed Sum under the Revolver Facility or that is owed any Revolver
Principal Debt.
REVOLVER NOTE means a promissory note in substantially the form of
EXHIBIT A-1, and all amendments, renewals and extensions of all or any part
thereof, and any promissory note or notes given in substitution therefore.
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REVOLVER PRINCIPAL DEBT means, on any date of determination, the
aggregate unpaid principal balance of all Borrowings under the Revolver
Facility.
RIGHTS means rights, remedies, powers, privileges, and benefits.
ROLLING PERIOD is defined in Section 9.30.
SAP means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) from time to time in the jurisdiction of domicile of
such Insurance Subsidiary for the preparation of Annual Statements and other
financial reports by insurance companies of the same type as such Insurance
Subsidiary.
SCHEDULE means, unless specified otherwise, a schedule attached to this
Agreement, as the same may be supplemented and modified from time to time in
accordance with the terms of the Loan Documents.
SECURITY AGREEMENT means (a) a Pledge and Security Agreement in
substantially the form and upon the terms of EXHIBIT D, executed by any Person
pursuant to the requirements of the Loan Documents; and (b) any amendments,
modifications, supplements, restatements, ratifications, or reaffirmations of
any Security Agreement made in accordance with the Loan Documents.
SIGNIFICANT SUBSIDIARY means (a) each of the companies specified as
such on SCHEDULE 1A to this Agreement plus (b) each Subsidiary, if any, whether
now or hereafter existing, (i) whose income for the most recently-completed
fiscal year of Borrower shall constitute at least 10.00% of the Net Income of
the Companies on a consolidated basis, or (ii) whose net worth as of the end of
the most recently-completed fiscal year of Borrower shall constitute at least
10.00% of the Net Worth of the Companies on a consolidated basis.
SIGNING DATE means the date upon which this Agreement has been executed
by Borrower, Lenders and Administrative Agent and the Notes and the other Loan
Documents listed on SCHEDULE 7.1 have been executed and delivered to the
Administrative Agent.
SOLVENT means, as to a Person, that (a) the aggregate fair market value
of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise to the extent reasonably
ascertainable), (b) such Person has sufficient cash flow to enable it to pay its
Debts as they mature, and (c) such Person does not have unreasonably small
capital to conduct such Person's businesses.
SOUTHTRUST BANK means SouthTrust Bank, an Alabama banking corporation,
and its successors and assigns.
SUBORDINATED DEBT means any Debt of any Company subordinated to the
Obligation on terms (including, without limitation, subordination terms)
reasonably acceptable to Administrative Agent and its counsel.
SUBSIDIARY of any Person means (a) any entity of which an aggregate of
more than 50% (in number of votes) of the stock, membership interests, or other
equity interests (other than partnership interests) is owned of record or
beneficially, directly or indirectly, by such Person, or (b) any partnership
(limited or general) of which such Person shall at any time be the controlling
general partner determined in accordance with GAAP or own, directly or
indirectly, more than 50% of the issued and outstanding partnership interests.
SYNDICATION AGENT means SouthTrust Bank and its permitted successors or
assigns as "Syndication Agent" under the Loan Documents.
TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon such Person, its income, or any of its
properties, franchises, or assets.
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TERM LOAN COMMITMENT means an amount (subject to reduction or
cancellation as herein provided) equal to $110,000,000.
TERM LOAN FACILITY means the credit facility as described in and
subject to the limitations set forth in SECTION 2.2.
TERM LOAN LENDER means, on any date of determination, any Lender that
has a Committed Sum under the Term Loan Facility or that is owed any Term Loan
Principal Debt.
TERM LOAN NOTE means a promissory note substantially in the form of
EXHIBIT A-2, and all amendments, renewals and extensions of all or any part
thereof, and any promissory note or notes given in substitution therefore.
TERM LOAN PRINCIPAL DEBT means, on any date of determination, the
aggregate unpaid principal balance of all Borrowings under the Term Loan
Facility.
TERMINATION DATE means (a) for purposes of the Revolver Facility, the
earlier of (i) May 31, 2003, and (ii) the effective date of any other
termination, cancellation, or acceleration of all commitments to lend under the
Revolver Facility; and (b) for purposes of the Term Loan Facility, the earlier
of (i) May 31, 2006, and (ii) the effective date of any other termination,
cancellation, or acceleration of the Term Loan Facility.
TERMINATION EVENT means (a) a "Reportable Event" described in Section
4043 of ERISA (other than a Reportable Event as to which the provision of 30
days notice has been waived by the PBGC under applicable regulations), (b) the
withdrawal of Borrower or any ERISA Affiliate from a Pension Plan during a plan
year in which it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA, (c) the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a distress termination under Section 4041(c) of ERISA, (d) the institution of
proceedings to terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC, (e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan, (f) the partial or
complete withdrawal of Borrower or any ERISA Affiliate from a Multiemployer
Plan, (g) the imposition of a lien pursuant to Section 412 of the Code or
Section 302 of ERISA, (h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA, or (i) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
TOTAL COMMITMENT means, on any date of determination, the sum of all
Committed Sums then in effect for all Lenders in respect of the Revolver
Facility and the Term Loan Facility (as the same may have been reduced or
canceled as provided in the Loan Documents).
TYPE means any type of Borrowing determined with respect to the
interest option applicable thereto.
VOTING STOCK means the capital stock (or equivalent thereof) of any
class or kind, issued by Borrower, the holders of which are entitled to vote for
the election of directors, managers, or other voting members of the governing
body of Borrower.
WHOLLY-OWNED when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) shall be owned by Borrower or
one or more of its Wholly-owned Subsidiaries.
1.2 NUMBER AND GENDER OF WORDS; OTHER REFERENCES. Unless otherwise
specified in the Loan Documents, (a) where appropriate, the singular includes
the plural and vice versa, and words of any gender include each other gender,
(b) heading and caption references may not be construed in interpreting
provisions, (c) monetary references are to currency of the United States of
America, (d) section, paragraph, annex, schedule, exhibit, and similar
references are to the particular Loan Document in which they are used, (e)
references to "telecopy," "facsimile," "fax," or similar terms are to facsimile
or telecopy transmissions, (f) references to "including" mean including without
limiting the generality
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of any description preceding that word, (g) the rule of construction that
references to general items that follow references to specific items are limited
to the same type or character of those specific items is not applicable in the
Loan Documents, (h) references to any Person include that Person's heirs,
personal representatives, successors, trustees, receivers, and permitted
assigns, (i) references to any Law include every amendment or supplement to it,
rule and regulation adopted under it, and successor or replacement for it, and
(j) references to any Loan Document or other document include every renewal and
extension of it, amendment and supplement to it, and replacement or substitution
for it.
1.3 ACCOUNTING PRINCIPLES. Unless otherwise provided or specified,
all accounting and financial terms used in the Loan Documents and the compliance
with each financial covenant therein shall be determined in accordance with GAAP
or SAP, as appropriate, and, all accounting principles shall be applied on a
consistent basis so that the accounting principles in a current period are
comparable in all material respects to those applied during the preceding
comparable period. If Borrower or any Lender determines that a change in GAAP,
SAP or the NAIC risk-based capital rules from that in effect on December 31,
2000 has altered the treatment of certain financial data to its detriment under
this Agreement, such party may, by written notice to the others and
Administrative Agent not later than ten days after the date of such
determination, request a modification of the financial covenants affected by
such change to reflect the effect of such change. If Borrower and Required
Lenders have not agreed on revised covenants to reflect the effect of such
change within 30 days after delivery of such notice, then, for purposes of this
Agreement, GAAP, SAP or the NAIC risk-based capital rules, as the case may be,
will have the meaning given to such term on the date just prior to the date on
which the applicable change that gave rise to the renegotiation with respect to
such change occurred.
SECTION 2 BORROWING PROVISIONS.
2.1 REVOLVER FACILITY. Each Revolver Lender severally, but not
jointly, agrees to lend to Borrower such Revolver Lender's Commitment Percentage
of one or more Borrowings under the Revolver Facility not to exceed such
Revolver Lender's Committed Sum under the Revolver Facility, which Borrowings
may be repaid and reborrowed from time to time in accordance with the terms and
provisions of the Loan Documents; provided that, (a) each such Borrowing must
occur on a Business Day and no later than the Business Day immediately preceding
the Termination Date for the Revolver Facility; (b) each such Borrowing shall be
in an amount not less than (i) $1,000,000 or a greater integral multiple of
$100,000 if a Eurodollar Rate Borrowing, or (ii) $500,000 or a greater integral
multiple of $100,000 if a Base Rate Borrowing; (c) on any date of determination,
after giving effect to the requested Borrowing, the Revolver Commitment Usage
shall never exceed the Revolver Commitment; and (d) on any date of
determination, after giving effect to the requested Borrowing, each Lender's
Commitment Percentage (under the Revolver Facility) of the Revolver Commitment
Usage shall not exceed such Lender's Committed Sum with respect to the Revolver
Facility.
2.2 TERM LOAN FACILITY. Subject to and in reliance upon the terms,
conditions, representations, and warranties in the Loan Documents, each Term
Loan Lender severally, but not jointly, agrees to lend to Borrower in a single
Borrowing on the Funding Date such Lender's Commitment Percentage of the Term
Loan Commitment or such lesser amount as Borrower shall request thereunder. No
Borrowing under the Term Loan Facility shall be permitted at any time after the
Funding Date. If all or a portion of the Term Loan Principal Debt is paid or
prepaid, then the amount so paid or prepaid may not be reborrowed.
2.3 TERMINATIONS OR REDUCTIONS OF COMMITMENTS.
(a) Voluntary Commitment Reduction. Without premium or
penalty, and upon giving not less than ten Business Days prior written and
irrevocable notice to Administrative Agent, Borrower may terminate in whole or
in part the unused portion of the Revolver Commitment; provided that: (i) each
partial termination of the Revolver Commitment shall be in an amount of not less
than $5,000,000 or a greater integral multiple of $1,000,000; and (ii) on any
date of determination, the amount of the Revolver Commitment may not be reduced
below the Revolver Commitment Usage. At the time of any commitment termination
under this SECTION 2.3, Borrower shall pay to Administrative Agent, for the
account of each Revolver Lender, as applicable, all accrued and unpaid fees then
due and payable under this Agreement, all accrued and unpaid interest
attributable to the amount of that reduction, and any related Consequential
Loss. Any part of the Revolver Commitment that is terminated may not be
reinstated.
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(b) Mandatory Commitment Reductions. To the extent any
payment or reduction of the Revolver Principal Debt pursuant to SECTION 3.12(B)
results in a mandatory reduction of the Revolver Commitment, then the Revolver
Commitment shall be reduced by the amount of such payment, and each Revolver
Lender's Committed Sum under the Revolver Facility shall be ratably reduced by
such amount.
(c) Ratable Allocation of Revolver Commitment Reductions.
Each reduction of the Revolver Commitment under this SECTION 2.3 shall be
allocated among the Revolver Lenders in accordance with their respective
Commitment Percentages under the Revolver Facility.
2.4 BORROWING PROCEDURE. The following procedures apply to all
Borrowings:
(a) Borrowing Request. Borrower may request a Borrowing
by making or delivering a Borrowing Notice to Administrative Agent requesting
that Lenders fund a Borrowing on a certain date (the "BORROWING DATE"), which
Borrowing Notice (i) shall be irrevocable and binding on Borrower, (ii) shall
specify the Facility or Facilities under which such Borrowing is being made,
(iii) shall specify the Borrowing Date, amount, Type, and (for a Borrowing
comprised of Eurodollar Rate Borrowings) Interest Period, (iv) must be received
by Administrative Agent no later than 11:00 a.m. Birmingham, Alabama time on the
second Business Day preceding the Borrowing Date for any Eurodollar Rate
Borrowing or on the Business Day immediately preceding the Borrowing Date for
any Base Rate Borrowing, and (v) shall state the purpose or purposes for which
such Borrowing is being requested. Administrative Agent shall timely notify each
Lender with respect to each Borrowing Notice.
(b) Funding. Each Lender shall remit its Commitment
Percentage for the relevant Facility of each requested Borrowing to
Administrative Agent's principal office in Birmingham, Alabama, in funds which
are or will be available for immediate use by Administrative Agent by 11:00
a.m., Birmingham, Alabama time on the applicable Borrowing Date. Subject to
receipt of such funds, Administrative Agent shall (unless to its actual
knowledge any of the conditions precedent therefor have not been satisfied by
Borrower or waived by the requisite Lenders under SECTION 13.11) make such funds
available to Borrower by causing such funds to be deposited to Borrower's
account as designated to Administrative Agent by Borrower.
(c) Funding Assumed. Absent contrary written notice from
a Lender, Administrative Agent may assume that each Lender has made its
Commitment Percentage of the-requested Borrowing available to Administrative
Agent on the applicable Borrowing Date, and Administrative Agent may, in
reliance upon such assumption (but shall not be required to), make available to
Borrower a corresponding amount. If a Lender fails to make its Commitment
Percentage of any requested Borrowing available to Administrative Agent on the
applicable Borrowing Date, Administrative Agent may recover the applicable
amount on demand (i) from that Lender, together with interest commencing on the
Borrowing Date and ending on (but excluding) the date Administrative Agent
recovers the amount from that Lender, at an annual interest rate equal to the
Federal Funds Rate, or (ii) from Borrower if such Lender fails to pay its amount
upon demand. No Lender is responsible for the failure of any other Lender to
make its Commitment Percentage of any Borrowing available as required by SECTION
2.4(B); however, failure of any Lender to make its Commitment Percentage of any
Borrowing so available does not excuse any other Lender from making its
Commitment Percentage of any Borrowing so available.
SECTION 3 TERMS OF PAYMENT.
3.1 LOAN ACCOUNTS, NOTES, AND PAYMENTS.
(a) Loan Accounts. The Principal Debt owed to each Lender
shall be evidenced by one or more Loan Accounts or records maintained by
Administrative Agent in the ordinary course of business. The Loan Accounts or
records maintained by Administrative Agent (including, without limitation, the
Register) shall be prima facie evidence absent manifest error of the amount of
the Borrowings made by Borrower from each Lender under this Agreement (and the
Facilities thereunder) and the interest and principal payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of Borrower under the Loan Documents to pay any
amount owing with respect to the Obligation.
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(b) Notes. In addition to the Loan Accounts, the
Principal Debt owed to each Lender shall be evidenced by one or more of the
following Notes (as the case maybe): (i) a Revolver Note (with respect to
Revolver Principal Debt); and (ii) a Term Loan Note (with respect to Term Loan
Principal Debt).
(c) Payment. All payments of principal, interest, and
other amounts to be made by Borrower under the Loan Documents shall be made to
Administrative Agent at its principal office in Birmingham, Alabama in Dollars
and in funds which are or will be available for immediate use by Administrative
Agent by 11:00 a.m., Birmingham, Alabama time on the day due, without setoff,
deduction, or counterclaim. Payments made after 11:00 a.m., Birmingham, Alabama,
time shall be deemed made on the Business Day next following. Administrative
Agent shall pay to each Lender any payment of principal, interest, or other
amount to which such Lender is entitled hereunder on the same day Administrative
Agent shall have received the same from Borrower; provided such payment is
received by Administrative Agent prior to 11:00 a.m., Birmingham, Alabama time,
and otherwise before 11:00 a.m., Birmingham, Alabama time on the Business Day
next following.
(d) Payment Assumed. Unless Administrative Agent has
received notice from Borrower prior to the date on which any payment is due
under this Agreement that Borrower will not make that payment in full,
Administrative Agent may assume that Borrower has made the full payment due and
Administrative Agent may, in reliance upon that assumption, cause to be
distributed to the appropriate Lender on that date the amount then due to such
Lenders. If and to the extent Borrower does not make the full payment due to
Administrative Agent, each Lender shall repay to Administrative Agent on demand
the amount distributed to that Lender by Administrative Agent, together with
interest for each day from the date that Lender received payment from
Administrative Agent until the date that Lender repays Administrative Agent
(unless such repayment is made on the same day as such distribution), at an
annual interest rate equal to the Federal Funds Rate.
3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a) Interest. Accrued interest on each Eurodollar Rate
Borrowing is due and payable on the last day of its respective Interest Period
and on the Termination Date for the applicable Facility. Accrued interest on
each Base Rate Borrowing shall be due and payable on the first day of each
month, commencing July 1, 2001 (or if such day is not a Business Day, on the
next succeeding Business Day), and on the Termination Date for the applicable
Facility.
(b) Revolver Principal Debt. The Revolver Principal Debt
is due and payable on the Termination Date for the Revolver Facility.
(c) Term Loan Principal Debt. The Term Loan Principal
Debt is due and payable in quarterly installments in the principal amount of
$2,500,000 each, commencing on September 30, 2001, and continuing thereafter on
the last Business Day of each March, June, September, and December, and a final
payment equal to all remaining outstanding Term Loan Principal Debt shall be due
on the Termination Date for the Term Loan Facility.
3.3 OPTIONAL AND MANDATORY PREPAYMENTS.
(a) Optional Prepayments. After giving Administrative
Agent advance written notice of the intent to prepay, Borrower may voluntarily
prepay all or any part of the Revolver Principal Debt and the Term Loan
Principal Debt from time to time and at any time, in whole or in part, without
premium or penalty; provided that: (i) such notice must be received by
Administrative Agent by 11:00 a.m. Birmingham, Alabama time on the third
Business Day preceding the date of prepayment of any Borrowing; (ii) each such
partial prepayment must be in a minimum amount of at least $1,000,000 or a
greater integral multiple of $100,000 or such lesser amount as may be
outstanding under the applicable Facility; (iii) any Eurodollar Rate Borrowing
may only be prepaid at the end of an applicable Interest Period (unless Borrower
pays the amount of any Consequential Loss); and (iv) Borrower shall pay any
related Consequential Loss within ten days after demand therefor. Conversions
under SECTION 3.11 are not prepayments. Each notice of prepayment shall specify
the prepayment date, the Facility hereunder being prepaid, and the Type of
Borrowing(s) and amount(s) of such Borrowing(s) to be prepaid and shall
constitute a binding obligation of Borrower to make a prepayment on the date
stated therein, together with (unless such prepayment is made with respect to a
Base Rate
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Borrowing under the Revolver Facility) accrued and unpaid interest to the date
of such payment on the aggregate principal amount prepaid.
Unless a Default or Potential Default has occurred and is
continuing or would arise as a result thereof (whereupon the provision of
SECTION 3.12(B) shall apply), (i) any payment or prepayment of the Revolver
Principal Debt may be reborrowed by Borrower, subject to the terms and
conditions hereof, and (ii) any voluntary prepayments of the Term Loan Facility
may not be reborrowed, shall be applied to the Term Loan Principal Debt in
inverse order of maturity of the regularly-scheduled principal installments
under the Term Loan Facility as set forth in SECTION 3.2(C), and shall be
allocated Pro Rata to each Term Loan Lender.
(b) Term Loan Facility Mandatory Prepayments from Excess
Cash Flow. No mandatory prepayment under this SECTION 3.3(B) shall be required
during calendar year 2001. No later than the 30th day following the date of
delivery of the Financial Statements required under SECTION 9.3(A) for fiscal
year 2001 and each fiscal year thereafter, (but in any event no later than 150
days after the end of each fiscal year of the Companies), the Term Loan
Principal Debt shall be permanently prepaid by an amount equal to the lesser of
(A) 50% of Excess Cash Flow for the fiscal year covered by such Financial
Statements or (B) $15,000,000. Unless a Default or Potential Default then exists
or arises as a result thereof (whereupon the provisions of SECTION 3.12(B) shall
apply), each prepayment under this SECTION 3.3(B) from payments from Excess Cash
Flow made in fiscal year 2002 and thereafter shall be applied as a prepayment of
the Obligation arising under the Term Loan Facility. All mandatory prepayments
of the Term Loan Principal Debt shall be applied to unpaid installments of Term
Loan Principal Debt in the inverse order of the maturity thereof and shall be
allocated Pro Rata to each Term Loan Lender.
(c) Revolver Facility Mandatory Payments/Reductions. On
any date of determination if the Revolver Commitment Usage exceeds the Revolver
Commitment then in effect, then Borrower shall make a mandatory prepayment of
the Revolver Principal Debt in at least the amount of such excess, together with
(x) all accrued and unpaid interest on the principal amount so prepaid and (y)
any Consequential Loss arising as a result thereof. All mandatory prepayments
under the Revolver Facility or Revolver Commitment reductions hereunder shall be
allocated among the Revolver Lenders in accordance with their respective
Commitment Percentages under the Revolver Facility.
(d) Mandatory Prepayments of Interest/Consequential Loss.
All prepayments under this SECTION 3.3 shall be made,
together with accrued interest to the date of such prepayment on the principal
amount prepaid and any Consequential Loss arising as a result thereof.
3.4 INTEREST OPTIONS. Except that the Eurodollar Rate may not be
selected when a Default exists, and except as otherwise provided in this
Agreement, Borrowings shall bear interest at a rate per annum equal to the
lesser of (a) as to the respective Type of Borrowing (as designated by Borrower
in accordance with this Agreement), the Base Rate plus the Applicable Margin for
Base Rate Borrowings for the applicable Facility or the Adjusted Eurodollar Rate
plus the Applicable Margin for Eurodollar Rate Borrowings for the applicable
Facility, and (b) the Maximum Rate. Each change in the Base Rate or the Maximum
Rate, subject to the terms of this Agreement, will become effective, without
notice to Borrower or any other Person, upon the effective date of such change.
3.5 QUOTATION OF RATES. It is hereby acknowledged that a
Responsible Officer or other appropriately designated officer of Borrower may
call Administrative Agent on or before the date on which a Borrowing Notice is
to be delivered by Borrower in order to receive an indication of the rates then
in effect, but such indicated rates shall neither be binding upon Administrative
Agent or Lenders nor affect the rate of interest which thereafter is actually in
effect when the Borrowing Notice is given or on the Borrowing Date.
3.6 DEFAULT RATE. At the option of Required Lenders and to the
extent permitted by Law, all past-due Principal Debt and all past-due interest
accruing thereon shall bear interest from maturity (stated or by acceleration)
at the Default Rate until paid, regardless whether such payment is made before
or after entry of a judgment; provided that, the Default Rate shall
automatically apply in the case of SECTION 11.3 where the Default Rate is
specified.
3.7 INTEREST RECAPTURE. If the designated rate applicable to any
Borrowing exceeds the Maximum Rate, the rate of interest on such Borrowing shall
be limited to the Maximum Rate, but any subsequent reductions in such
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designated rates had at all times been in effect, then, at such time and to the
extent permitted by Law, Borrower shall pay an amount equal to the difference
between (a) the lesser of the amount of interest which would have accrued if
such designated rates had at all times been in effect and the amount of
interest which would have accrued if the Maximum Rate had at all times been in
effect, and (b) the amount of interest actually paid or accrued on the
Principal Debt.
3.8 INTEREST CALCULATIONS. Interest will be calculated on the
basis of actual number of days (including the first day but excluding the last
day) elapsed but computed as if each calendar year consisted of 360 days in the
case of each Borrowing (unless the calculation would result in an interest rate
greater than the Maximum Rate, in which event interest will be calculated on
the basis of a year of 365 or 366 days, as the case may be). All interest rate
determinations and calculations by Administrative Agent are conclusive and
binding absent manifest error.
3.9 MAXIMUM RATE. Regardless of any provision contained in any
Loan Document, neither Administrative Agent nor any Lender shall ever be
entitled to contract for, charge, take, reserve, receive, or apply, as interest
on all or any part of the Obligation, any amount in excess of the Maximum Rate,
and, if Lenders ever do so, then such excess shall be deemed a partial
prepayment of principal and treated hereunder as such and any remaining excess
shall be refunded to Borrower. In determining if the interest paid or payable
exceeds the Maximum Rate, Borrower and Lenders shall, to the maximum extent
permitted under applicable Law, (a) treat all Borrowings as but a single
extension of credit (and Lenders and Borrower agree that such is the case and
that provision herein for multiple Borrowings is for convenience only), (b)
characterize any nonprincipal payment as an expense, fee, or premium rather
than as interest, (c) exclude voluntary prepayments and the effects thereof,
and (d) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the Obligation. However, if the
Obligation is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the Maximum Amount, Lenders shall refund such
excess, and, in such event, Lenders shall not, to the extent permitted by Law,
be subject to any penalties provided by any Laws for contracting for, charging,
taking, reserving, or receiving interest in excess of the Maximum Amount.
3.10 INTEREST PERIODS. When Borrower requests any Eurodollar Rate
Borrowing, Borrower may elect the interest period (each an "INTEREST PERIOD")
applicable thereto, which shall be, at Borrower's option and subject to
availability, one, two, or three months; provided, however, that: (a) the
initial Interest Period for a Eurodollar Rate Borrowing shall commence on the
date of such Borrowing (including the date of any conversion thereto), and each
Interest Period occurring thereafter in respect of such Borrowing shall
commence on the day on which the next preceding Interest Period applicable
thereto expires; (b) if any Interest Period for a Eurodollar Rate Borrowing
begins on a day for which there is no numerically corresponding Business Day in
the calendar month at the end of such Interest Period, then such Interest
Period shall end on the last Business Day in the calendar month at the end of
such Interest Period); (c) no Interest Period may be chosen with respect to any
portion of the Principal Debt which would extend beyond the scheduled repayment
date (including any dates on which mandatory prepayments are required to be
made) for such portion of the Principal Debt; and (d) no more than an aggregate
of eight (8) Interest Periods shall be in effect at one time.
3.11 CONVERSIONS. Borrower may (a) convert a Eurodollar Rate
Borrowing on the last day of the applicable Interest Period to a Base Rate
Borrowing, (b) convert a Base Rate Borrowing at any time to a Eurodollar Rate
Borrowing, and (c) elect a new Interest Period (in the case of a Eurodollar
Rate Borrowing), by giving a Conversion Notice of such intent to Administrative
Agent no later than 12:00 noon Birmingham, Alabama time on the second Business
Day prior to the date of conversion or the last day of the Interest Period, as
the case may be (in the case of a conversion to a Eurodollar Rate Borrowing or
an election of a new Interest Period), and no later than 12:00 noon Birmingham,
Alabama time one Business Day prior to the last day of the Interest Period (in
the case of a conversion to a Base Rate Borrowing); provided that, the
principal amount converted to, or continued as, a Eurodollar Rate Borrowing
shall be in an amount not less than $1,000,000 or a greater integral multiple
of $100,000 (or such lesser amount as is outstanding under any Facility).
Administrative Agent shall timely notify each Lender with respect to each
Conversion Notice. Absent Borrower's Conversion Notice or election of a new
Interest Period, a Eurodollar Rate Borrowing shall be deemed converted to a
Base Rate Borrowing effective as of the expiration of the Interest Period
applicable thereto. No Eurodollar
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Rate Borrowing may be either made or continued as a Eurodollar Rate Borrowing,
and no Base Rate Borrowing may be converted to a Eurodollar Rate Borrowing, if
the interest rate for such Eurodollar Rate Borrowing would exceed the Maximum
Rate. The Right to convert from a Base Rate Borrowing to a Eurodollar Rate
Borrowing, or to continue as a Eurodollar Rate Borrowing, shall not be
available during the occurrence of a Default or a Potential Default.
3.12 ORDER OF APPLICATION.
(a) No Default. If no Default or Potential Default
exists and if no order of application is otherwise specified in SECTION 3.3 or
otherwise in the Loan Documents, payments and prepayments of the Obligation
shall be applied first to fees, second to accrued interest then due and payable
on the Principal Debt, and then to the remaining Obligation in the order and
manner as Borrower may direct.
(b) Default. If a Default or Potential Default exists
(or if Borrower fails to give directions as permitted under SECTION 3.12(A)),
any payment or prepayment (including proceeds from the exercise of any Rights)
shall be applied to the Obligation in the following order: (i) to the ratable
payment of all fees, expenses, and indemnities for which Agents or Lenders have
not been paid or reimbursed in accordance with the Loan Documents (as used in
this SECTION 3.12(B)(I), a "ratable payment" for any Lender or any Agent shall
be, on any date of determination, that proportion which the portion of the
total fees, expenses, and indemnities owed to such Lender or such Agent bears
to the total aggregate fees and indemnities owed to all Lenders and Agents on
such date of determination); (ii) to the ratable payment of accrued and unpaid
interest on the Principal Debt (as used in this SECTION 3.12(B)(II), "ratable
payment" means, for any Lender, on any date of determination, that proportion
which the accrued and unpaid interest on the Principal Debt owed to such Lender
bears to the total accrued and unpaid interest on the Principal Debt owed to
all Lenders); (iii) to the ratable payment of the Principal Debt (as used in
this SECTION 3.12(B)(III), "ratable payment" means for any Lender, on any date
of determination, that proportion which the Principal Debt owed to such Lender
bears to the Principal Debt owed to all Lenders); and (iv) to the payment of
the remaining Obligation in the order and manner Required Lenders deem
appropriate.
Subject to the provisions of SECTION 12 and provided that Administrative Agent
shall not in any event be bound to inquire into or to determine the validity,
scope, or priority of any interest or entitlement of any Lender and may suspend
all payments or seek appropriate relief (including, without limitation,
instructions from Required Lenders or an action in the nature of interpleader)
in the event of any doubt or dispute as to any apportionment or distribution
contemplated hereby, Administrative Agent shall promptly distribute such amounts
to each Lender in accordance with the Agreement and the related Loan Documents.
3.13 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment or prepayment with respect to the Obligation (whether voluntary,
involuntary, or otherwise, including, without limitation, as a result of
exercising its Rights under SECTION 3.14) which is in excess of its share of
any such payment in accordance with the relevant Rights of Lenders under the
Loan Documents, such Lender shall purchase from the other Lenders such
participations as shall be necessary to cause such purchasing Lender to share
the excess payment with each other Lender in accordance with the relevant
Rights of Lenders under the Loan Documents. If all or any portion of such
excess payment is subsequently recovered from such purchasing Lender, then the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery. Borrower agrees that any Lender purchasing a participation from
another Lender pursuant to this Section may, to the fullest extent permitted by
Law, exercise all of its Rights (including the Right of offset) with respect to
such participation as fully as if such Lender were the direct creditor of
Borrower in the amount of such participation.
3.14 OFFSET. If a Default exists, each Lender shall be entitled to
exercise (for the benefit of all Lenders in accordance with SECTION 3.13) the
Rights of offset and/or banker's Lien against each and every account and other
property, or any interest therein, which Borrower may now or hereafter have
with, or which is now or hereafter in the possession of, such Lender to the
extent of the full amount of the Obligation; provided, that, each Lender agrees
that it shall not, and shall not have the right to, exercise any Right of
offset and/or banker's Lien against any Reserve Account.
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3.15 BOOKING BORROWINGS. To the extent permitted by Law, any
Lender may make, carry, or transfer its Borrowings at, to, or for the account
of any of its branch offices or the office of any of its Affiliates; provided
that, no Affiliate shall be entitled to receive any greater payment under
SECTION 4 than the transferor Lender would have been entitled to receive with
respect to such Borrowings.
SECTION 4 CHANGE IN CIRCUMSTANCES.
4.1 INCREASED COST AND REDUCED RETURN.
(a) Changes in Law. If, after the date hereof, the
adoption of any applicable Law or any change in any applicable Law or any
change in the interpretation or administration thereof by any Governmental
Authority, or compliance by any Lender (or its Applicable Lending Office) with
any request or directive (whether or not having the force of law) of any such
Governmental Authority:
(i) Shall subject such Lender (or its
Applicable Lending Office) to any Tax or other charge with
respect to any Eurodollar Rate Borrowing, its Notes, or its
obligation to loan Eurodollar Rate Borrowings, or change the
basis of taxation of any amounts payable to such Lender (or
its Applicable Lending Office) under the Loan Documents in
respect of any Eurodollar Rate Borrowings (other than Taxes
imposed on the overall net income of such Lender by the
jurisdiction in which such Lender has its principal office or
such Applicable Lending Office);
(ii) Shall impose, modify, or deem applicable
any reserve, special deposit, assessment, or similar
requirement (other than the Reserve Requirement utilized in
the determination of the Adjusted Eurodollar Rate) relating
to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the
commitment of such Lender hereunder; or
(iii) Shall impose on such Lender (or its
Applicable Lending Office) or the London interbank market any
other condition affecting the Loan Documents or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, converting into, continuing, or
maintaining any Eurodollar Rate Borrowings or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under the Loan
Documents with respect to any Eurodollar Rate Borrowing, then Borrower shall pay
to such Lender on demand such amount or amounts as will compensate such Lender
for the portion of such increased cost or reduction that relate to such
Eurodollar Rate Borrowing. If any Lender requests compensation by Borrower under
this SECTION 4.1(A), Borrower may, by notice to such Lender (with a copy to
Administrative Agent), suspend the obligation of such Lender to loan or continue
Borrowings of the Type with respect to which such compensation is requested, or
to convert Borrowings of any other Type into Borrowings of such Type, until the
event or condition giving rise to such request ceases to be in effect (in which
case the provisions of SECTION 4.4 shall be applicable); provided that such
suspension shall not affect the Right of such Lender to receive the compensation
so requested.
(b) Capital Adequacy. If, after the date hereof, any
Lender shall have determined that the adoption of any applicable Law regarding
capital adequacy or any change therein or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority has or would have the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender
as a consequence of such Lender's obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such
adoption, change, request, or directive (taking into consideration its policies
with respect to capital adequacy), then from time to time upon demand Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction.
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(c) Changes in Applicable Lending Office; Compensation
Statement. Each Lender shall promptly notify Borrower and Administrative Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender
claiming compensation under this Section shall furnish to Borrower and
Administrative Agent a statement setting forth the additional amount or amounts
to be paid to it hereunder which statement shall be conclusive in the absence
of manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
4.2 LIMITATION ON TYPES OF LOANS. If on or prior to the first day
of any Interest Period for any Eurodollar Rate Borrowing:
(a) Inability to Determine Eurodollar Rate.
Administrative Agent determines (which determination shall be conclusive) that
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period; or
(b) Cost of Funds. Required Lenders determine (which
determination shall be conclusive) and notify Administrative Agent that the
Adjusted Eurodollar Rate will not adequately and fairly reflect the cost to
Lenders of funding Eurodollar Rate Borrowings for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant amounts or periods, and so long as such condition remains in
effect, Lenders shall be under no obligation to fund additional Eurodollar Rate
Borrowings, continue Eurodollar Rate Borrowings, or to convert Base Rate
Borrowings into Eurodollar Rate Borrowings, and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Eurodollar
Rate Borrowings, either prepay such Borrowings or convert such Borrowings into
Base Rate Borrowings in accordance with the terms of this Agreement.
4.3 ILLEGALITY. Notwithstanding any other provision of the Loan
Documents, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Borrowings
hereunder, then such Lender shall promptly notify Borrower thereof and such
Lender's obligation to make or continue Eurodollar Rate Borrowings and to
convert other Base Rate Borrowings into Eurodollar Rate Borrowings shall be
suspended until such time as such Lender may again make, maintain, and fund
Eurodollar Rate Borrowings (in which case the provisions of SECTION 4.4 shall
be applicable).
4.4 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender
to fund Eurodollar Rate Borrowings or to continue, or to convert Base Rate
Borrowings into Eurodollar Rate Borrowings, shall be suspended pursuant to
SECTIONS 4.1, 4.2, or 4.3, such Lender's Eurodollar Rate Borrowings shall be
automatically converted into Base Rate Borrowings on the last day(s) of the
then current Interest Period(s) for Eurodollar Rate Borrowings (or, in the case
of a conversion required by SECTION 4.3, on such earlier date as such Lender
may specify to Borrower with a copy to Administrative Agent) and, unless and
until such Lender gives notice as provided below that the circumstances
specified in SECTIONS 4.1, 4.2, or 4.3 that gave rise to such conversion no
longer exist:
(a) To the extent that such Lender's Eurodollar Rate
Borrowings have been so converted, all payments and prepayments of principal
that would otherwise be applied to such Lender's Eurodollar Rate Borrowings
shall be applied instead to its Base Rate Borrowings: and
(b) All Borrowings that would otherwise be made or
continued by such Lender as Eurodollar Rate Borrowings shall be made or
continued instead as Base Rate Borrowings, and all Borrowings of such Lender
that would otherwise be converted into Eurodollar Rate Borrowings shall be
converted instead into (or shall remain as) Base Rate Borrowings.
If such Lender gives notice to Borrower (with a copy to Administrative Agent)
that the circumstances specified in SECTIONS 4.1, 4.2, or 4.3 that gave rise to
the conversion of such Lender's Eurodollar Rate Borrowings pursuant to this
SECTION 4.4 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a
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time when Eurodollar Rate Borrowings made by other Lenders are outstanding,
such Lender's Base Rate Borrowings shall be automatically converted, on the
first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Rate Borrowings, to the extent necessary so that, after giving
effect thereto, all Eurodollar Rate Borrowings held by Lenders and by such
Lender are held pro rata (as to principal amounts, Types, and Interest Periods)
in accordance with their respective Committed Sums for the applicable Facility.
4.5 COMPENSATION.
(a) Upon the request of any Lender, Borrower shall pay
to such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(i) Any payment, prepayment, or conversion of a
Eurodollar Rate Borrowing for any reason (including, without
limitation, the acceleration of the loan pursuant to SECTION
11.1) on a date other than the last day of the Interest
Period for such Borrowing; or
(ii) Any failure by Borrower for any reason
(including, without limitation, the failure of any condition
precedent specified in SECTION 7.3 to be satisfied) to
borrow, convert, continue, or prepay a Eurodollar Rate
Borrowing on the date for such borrowing, conversion,
continuation, or prepayment specified in the relevant
Borrowing Notice, or notice of prepayment, continuation, or
conversion under this Agreement.
(b) If any Lender requests compensation under SECTION
4.1, or if any Lender is unable to fund or continue a Eurodollar Rate Borrowing
as contemplated in SECTION 4.3 (collectively, "ADDITIONAL AMOUNTS"), then
Borrower may, at its sole expense and effort, upon written notice to such
Lender and Administrative Agent, require such Lender to assign and delegate,
without recourse, all its interests, Rights, and obligations under the Loan
Documents to an Eligible Assignee that shall assume such obligations; provided
that, (i) Borrower shall have received the prior written consent of
Administrative Agent to any such assignment; (ii) such Lender shall have
received payment from Borrower of any Additional Amounts owed to such Lender by
Borrower for periods prior to the replacement of such Lender and any costs
incurred as a result of such replacement of a Lender; (iii) such assignment
will result in reduction or elimination of the Additional Amounts; and (iv)
such assignment and acceptance shall be made in accordance with, and subject to
the requirements and restrictions contained in, SECTION 13.13(B). A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling Borrower to require such assignment and delegation cease to apply.
4.6 TAXES.
(a) General. Any and all payments by Borrower to or for
the account of any Lender or Administrative Agent under any Loan Document shall
be made free and clear of and without deduction for any and all present or
future United States federal, state or local Taxes, excluding, in the case of
each Lender and Administrative Agent, Taxes imposed (by withholding or
otherwise) on its income and franchise Taxes imposed on it by the jurisdiction
under the Laws of which such Lender (or its Applicable Lending Office) or
Administrative Agent (as the case may be) is organized, or any political
subdivision thereof (all such non-excluded Taxes, the "Transaction Taxes"). If
Borrower shall be required by Law to deduct any Transaction Taxes from or in
respect of any sum payable under any Loan Document to any Lender or
Administrative Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 4.6) such Lender or Administrative
Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law, and (iv) Borrower shall furnish to
Administrative Agent, at its address listed in SCHEDULE 2.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) Stamp and Documentary Taxes. In addition, Borrower
agrees to pay any and all present or future stamp or documentary Taxes and any
other excise or property Taxes or charges or similar levies which arise from
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any payment made under any Loan Document or from the execution or delivery of,
or otherwise with respect to, any Loan Document (hereinafter referred to as
"OTHER TAXES").
(c) Indemnification for Taxes. Borrower agrees to
indemnify each Lender and Administrative Agent for the full amount of
Transaction Taxes and Other Taxes (including, without limitation, any
Transaction Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this SECTION 4.6) paid by such Lender or Administrative
Agent (as the case may be) and any liability (together with penalties,
interest, and expenses accruing after notice to Borrower of the same) arising
therefrom or with respect thereto.
(d) Withholding Tax Forms. Each Lender organized under
the Laws of a jurisdiction outside the United States, on or prior to the
Signing Date in the case of each Lender listed on the signature pages hereof
and on or prior to the date on which it becomes a Lender in the case of each
other Lender, and from time to time thereafter if requested in writing by
Borrower or Administrative Agent (but only so long as such Lender remains
lawfully able to do so), shall provide Borrower and Administrative Agent with
(i) if such Lender is a "bank" within the meaning of Section 881(c)(3)(A) of
the Code, Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender is entitled to benefits under an income Tax treaty to which the United
States is a party which reduces the rate of withholding Tax on payments of
interest or certifying that the income receivable pursuant to the Loan
Documents is effectively connected with the conduct of a trade or business in
the United States, or (ii) if such Lender is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and intends to claim an exemption from United
States withholding Tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest," a Form W-8, or any successor form
prescribed by the Internal Revenue Service, and a certificate representing that
such Lender is not a bank for purposes of Section 881(c) of the Code, is not a
ten-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of Borrower, and is not a controlled foreign corporation related to
Borrower (within the meaning of Section 864(d)(4) of the Code). Each Lender
which so delivers a W-8, Form 1001, or 4224 further undertakes to deliver to
Borrower and Administrative Agent additional forms (or a successor form) on or
before the date such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so delivered by it, in
each case certifying that such Lender is entitled to receive payments from
Borrower under any Loan Document without deduction or withholding (or at a
reduced rate of deduction or withholding) of any United States federal income
Taxes, unless an event (including, without limitation, any change in Law) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it,
and such Lender advises Borrower and Administrative Agent that it is not
capable of receiving such payments without any deduction or withholding of
United States federal income Tax.
(e) Failure to Provide Withholding Forms; Chances in Tax
Laws. For any period with respect to which a Lender has failed to provide
Borrower and Administrative Agent with the appropriate form pursuant to SECTION
4.6(D) (unless such failure is due to a change in Law occurring subsequent to
the date on which a form originally was required to be provided), such Lender
shall not be entitled to indemnification under SECTION 4.6(A) or 4.6(C) with
respect to Taxes imposed by the United States; provided, however, that should a
Lender, which is otherwise exempt from or subject to a reduced rate of
withholding Tax, become subject to Taxes because of its failure to deliver a
form required hereunder, Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(f) Change in Applicable Lending Office. If Borrower is
required to pay additional amounts to or for the account of any Lender pursuant
to this SECTION 4.6, then such Lender will agree to use reasonable efforts to
change the jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such change,
in the judgment of such Lender, is not otherwise disadvantageous to such
Lender.
(g) Tax Payment Receipt. Within 30 days after the date
of any payment of Transaction Taxes, and if requested by Administrative Agent,
any other Taxes paid by a Company, Borrower shall furnish to Administrative
Agent the original or a certified copy of a receipt evidencing such payment.
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(h) Survival. Without prejudice to the survival of any
other agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this SECTION 4.6 shall survive the termination of the
Total Commitment and the payment in full of the Obligation.
SECTION 5 FEES.
5.1 TREATMENT OF FEES. Except as otherwise provided by Law, the
fees described in this SECTION 5: (a) do not constitute compensation for the
use, detention, or forbearance of money, (b) are in addition to, and not in
lieu of, interest and expenses otherwise described in the Loan Documents, (c)
shall be payable in accordance with SECTION 3.1(C), (d) shall be
non-refundable, (e) shall, to the fullest extent permitted by Law, bear
interest, if not paid when due, at the Default Rate, and (f) shall be
calculated on the basis of actual number of days (including the first day but
excluding the last day) elapsed, but computed as if each calendar year
consisted of 360 days, unless such computation would result in interest being
computed in excess of the Maximum Rate in which event such computation shall be
made on the basis of a year of 365 or 366 days, as the case may be.
5.2 FEES OF ADMINISTRATIVE AGENT AND LEAD ARRANGER. Borrower
shall pay to Administrative Agent and Lead Arranger, as the case may be, solely
for their respective accounts, the fees described in the commitment letter and
attached summary of terms and the separate fee letter, each dated as of March
12, 2001, among Borrower, Administrative Agent, and Lead Arranger, which
payments shall be made on the Funding Date (unless otherwise specified), and in
amounts calculated in accordance with, such letter agreements, and which
obligations of MAI to pay such fees are expressly assumed by Borrower.
5.3 REVOLVER FACILITY COMMITMENT FEES. Following the Funding
Date, Borrower shall pay to Administrative Agent, for the ratable account of
Revolver Lenders, a commitment fee, calculated daily from the Signing Date but
payable in installments in arrears each March 31, June 30, September 30, and
December 31 and on the Termination Date for the Revolver Facility, commencing
June 30, 2001. On any day of determination, the commitment fee shall be an
amount equal to the Applicable Margin for Commitment Fees multiplied by the
amount by which (a) the Revolver Commitment on such day exceeds (b) the
Revolver Commitment Usage on such day. Each such installment shall be
calculated in accordance with SECTION 5.1(F). Solely for the purposes of this
SECTION 5.3, "ratable" shall mean, for any period of determination, with
respect to any Revolver Lender, that proportion which (x) the average daily
unused Committed Sum under the Revolver Facility of Such Revolver Lender during
such period bears to (y) the amount of the average daily unused Revolver
Commitment during such period.
5.4 UP-FRONT FACILITIES FEE. Borrower agrees to pay to
Administrative Agent, for the account of the Lenders on a Pro Rata basis, a
one-time up-front facilities fee equal to $375,000. Such fee shall be fully
earned, non- refundable, due and payable on the Signing Date.
SECTION 6 SECURITY.
6.1 COLLATERAL. To secure the full and complete payment and
performance of the Obligation, Borrower shall (and shall cause each other
Company to) enter into Collateral Documents (in form and substance acceptable
to Administrative Agent) pursuant to which, among other things, each such
entity shall, to the extent permitted by applicable Law, grant, pledge, assign,
and create first priority Liens (except to the extent Permitted Liens affect
such priority) in favor of Administrative Agent (for the ratable benefit of
Lenders) in and to 100% of each such Company's Rights, titles, and interests in
the issued and outstanding stock, equity, or other investment securities issued
by each Significant Subsidiary specified as such on SCHEDULE 1A and each
additional Significant Subsidiary, other than MEEMIC and its Subsidiaries,
which becomes a Significant Subsidiary after the Signing Date.
6.2 FUTURE LIENS. Promptly upon the designation, formation, or
Acquisition of any new Subsidiary of any Company (herein as the "ADDITIONAL
ASSETS"), Borrower shall (or shall cause the appropriate Company to) execute
and deliver to Administrative Agent all further instruments and documents
(including, without limitation, Collateral Documents and all certificates and
instruments representing shares of stock), and shall take all further action
that may be necessary or desirable, or that Administrative Agent may reasonably
request, to grant, perfect, and protect Liens in favor of Administrative Agent
for the benefit of Lenders in such Additional Assets, as security for the
Obligation to the
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extent Liens are required in such assets pursuant to SECTION 6.1; it being
expressly understood that the granting of such additional security for the
Obligation is a material inducement to the execution and delivery of this
Agreement by each Lender. Upon satisfying the terms and conditions hereof, such
Additional Assets shall be included in the "COLLATERAL" for all purposes under
the Loan Documents, and all references to the "COLLATERAL" in the Loan
Documents shall include the Additional Assets.
6.3 RELEASE OF COLLATERAL.
(a) Sale or Disposition of Collateral. Upon any sale,
transfer, or disposition of Collateral which is expressly permitted pursuant to
the Loan Documents (or is otherwise authorized by Required Lenders or Lenders,
as the case may be), and upon ten Business Days prior written request by
Borrower (which request must be accompanied by true and correct copies of (i)
all documents of transfer or disposition, including any contract of sale, (ii)
a preliminary closing statement, if any, and (iii) all requested release
instruments), Administrative Agent shall (and is hereby irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence the
release of Liens granted to Administrative Agent for the benefit of Lenders
pursuant hereto in such Collateral.
(b) General Provisions. The actions of Administrative
Agent under this SECTION 6.3 are subject to the following: (i) no such release
of Liens shall be granted if any Default or Potential Default has occurred and
is continuing; (ii) Administrative Agent shall not be required to execute any
such document on terms which, in Administrative Agent's opinion, would expose
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty;
and (iii) such release shall not in any manner discharge, affect, or impair the
Obligation or Liens upon (or obligations of any Company in respect of) all
interests retained by the Companies, including, without limitation, the
proceeds of any sale, all of which shall continue to constitute Collateral.
6.4 NEGATIVE PLEDGE. Borrower hereby covenants and agrees not to
(and shall cause each other Company not to) create, incur, grant, suffer, or
permit to be created or incurred any Lien on any of their respective assets,
other than Permitted Liens; it being expressly understood that the provisions
of this negative pledge are a material inducement to the execution and delivery
of this Agreement by each Lender.
6.5 CONTROL; LIMITATION OF RIGHTS. Notwithstanding anything in
any Loan Document to the contrary, (a) the transactions contemplated hereby (i)
do not and will not constitute, create, or have the effect of constituting or
creating, directly or indirectly, actual or practical ownership of the
Companies by Agents or Lenders, or control, affirmative or negative, direct or
indirect, by Agents or Lenders over the management or any other aspect of the
operation of the Companies, which ownership or control remains exclusively and
at all times in the Companies, and (ii) do not and will not constitute the
transfer, assignment, or disposition in any manner, voluntary or involuntary,
directly or indirectly, of any Authorization at any time issued by any
Insurance Regulator to any Company; and (b) Administrative Agent shall not,
without first obtaining necessary approval of each applicable Insurance
Regulator, take any action pursuant to any Loan Document that would constitute
or result in any assignment of any Authorization or any change of control of
any Company, if such assignment or change of control would require, under then
existing Law (including the written rules and regulations promulgated by an
applicable Insurance Regulator), the prior approval of such Insurance
Regulator.
SECTION 7 CONDITIONS PRECEDENT.
7.1 CONDITIONS PRECEDENT TO THE INITIAL BORROWING. This Agreement
shall not become effective, and Lenders shall not be obligated to advance any
Borrowing, unless: (a) Administrative Agent has received all of the agreements,
documents, instruments, and other items described on SCHEDULE 7.1; (b) all
other conditions precedent described on SCHEDULE 7.1 shall have been satisfied;
(c) Administrative Agent has received all of the agreements, documents,
instruments and other items described on SCHEDULE 7.1A; and (d) all other
conditions precedent described on SCHEDULE 7.1A shall have been satisfied. All
conditions precedent set forth on SECTION 7.1 shall be satisfied prior to or
simultaneously with the execution of this Agreement by Lenders, and all
conditions precedent set forth on SCHEDULE 7.1A shall be satisfied before
Borrower will be eligible to request any Borrowing under SECTION 7.3.
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7.2 CONDITIONS PRECEDENT TO A PERMITTED ACQUISITION. Borrower may
request that any proposed Acquisition be considered for approval as a Permitted
Acquisition in accordance with this SECTION 7.2. A reasonable time prior to the
proposed consummation of any proposed Acquisition (whether or not the purchase
price for such Acquisition is funded by Borrowings), Borrower shall deliver, or
cause to be delivered, to Administrative Agent, all documents and information
set forth on SCHEDULE 7.2, in form and content satisfactory to Administrative
Agent, together with such other documents and information, in form and content
satisfactory to Administrative Agent, as Administrative Agent may request. Upon
Borrower's compliance with the foregoing, Administrative Agent shall (a)
provide copies of such documents and information to Lenders, and (b) request
that Lenders approve the proposed Acquisition as a Permitted Acquisition.
Within a reasonable time thereafter (but not to exceed 30 days), Administrative
Agent shall notify Borrower whether such proposed Acquisition is approved or
denied as a Permitted Acquisition, and/or advise Borrower of any additional
documentation requirements or conditions. To the extent any Borrowing is being
requested in connection with the consummation of a Permitted Acquisition, the
conditions set forth in SECTIONS 7.2 and 7.3 must be satisfied prior to the
making of any such Borrowing.
7.3 CONDITIONS PRECEDENT TO EACH BORROWING. In addition to the
conditions stated in SECTION 7.1 and SECTION 7.2 (as applicable), Lenders will
not be obligated to fund (as opposed to continue or convert) any Borrowing,
unless on the date of such Borrowing or issuance (and after giving effect
thereto): (a) Administrative Agent shall have timely received therefor a
Borrowing Notice; (b) all of the representations and warranties of any Company
set forth in the Loan Documents are true and correct in all respects (except to
the extent that (i) the representations and warranties speak to a specific date
or (ii) the facts on which such representations and warranties are based have
been changed by transactions contemplated or permitted by the Loan Documents);
(c) no change in the financial condition or business of the Companies which
could reasonably be expected to be a Material Adverse Event shall have
occurred; (d) no Default or Potential Default shall have occurred and be
continuing; (e) the funding of such Borrowings is permitted by Law; (f) in the
event all or any part of the proceeds of the Borrowing will be used to finance
a Distribution to the extent permitted by SECTION 9.21, Administrative Agent
shall have received all such certifications, financial information, and
projections as Administrative Agent may reasonably request; and (g) all matters
related to such Borrowing must be satisfactory to Required Lenders and their
respective counsel in their reasonable determination and upon the reasonable
request of Administrative Agent, Borrower shall deliver to Administrative Agent
evidence substantiating any of the matters in the Loan Documents which are
necessary to enable Borrower to qualify for such Borrowing. Each Borrowing
Notice delivered to Administrative Agent shall constitute the representation
and warranty by Borrower to Administrative Agent that, as of the Borrowing
Date, the statements above are true and correct in all respects. Each condition
precedent in this Agreement is material to the transactions contemplated in
this Agreement, and time is of the essence in respect of each thereof. Subject
to the prior approval of Required Lenders, Lenders may fund any Borrowing,
without all conditions being satisfied, but, to the extent permitted by Law,
the same shall not be deemed to be a waiver of the requirement that each such
condition precedent be satisfied as a prerequisite for any subsequent funding
or issuance, unless Required Lenders specifically waive each such item in
writing.
SECTION 8 REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Administrative Agent and Lenders as
follows:
8.1 PURPOSE OF CREDIT FACILITY. Borrower will use (or will invest
in, or loan such proceeds to, its Subsidiaries to so use) all proceeds of
Borrowings for one or more of the following: (a) to finance the cash portion of
the acquisition costs incurred by Borrower in connection with the Consolidation
and the related costs and expenses; (b) for working capital of the Companies;
and (c) for general corporate purposes. No Company is engaged principally in
the business of purchasing or carrying any "margin stock" within the meaning of
Regulation U or extending credit therefor. No part of the proceeds of any
Borrowing will be used, directly or indirectly, for a purpose which violates
any Law, including, without limitation, the provisions of Regulations T, U, or
X (as enacted by the Board of Governors of the Federal Reserve System, as
amended).
8.2 EXISTENCE, GOOD STANDING, AUTHORITY, AND AUTHORIZATIONS. Each
Company is duly organized, validly existing, and in good standing under the
Laws of its jurisdiction of organization (such jurisdictions being identified
on SCHEDULE 8.3, as supplemented and modified in writing from time to time to
reflect any changes to such Schedule as a result of transactions permitted by
the Loan Documents). Except where failure to do so could not reasonably be
expected
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to be a Material Adverse Event, each Company is duly qualified to transact
business and is in good standing in each jurisdiction where the nature and
extent of its business and properties require the same. Each Company possesses
all Authorizations, including, without limitation, all Authorizations required
from applicable Insurance Regulators, necessary or required in the conduct of
its respective business(es), all of which are described on SCHEDULE 8.2, and
the same are valid, binding, enforceable, and subsisting without any defaults
thereunder or enforceable adverse limitations thereon, except where the lack of
enforceability or such defaults could not reasonably be expected to be a
Material Adverse Event, and are not subject to any proceedings or claims
opposing the issuance, development, or use thereof or contesting the validity
thereof. No Authorization, consent, approval, waiver, license, or formal
exemptions from, nor any filing, declaration, or registration with, any
Governmental Authority (federal, state, or local), non-governmental entity, or
other Person under the terms of contracts or otherwise, is required by reason
of or in connection with the execution and performance of the Loan Documents by
the Companies or consummation of the Consolidation, except as shall have been
obtained on or prior to, or will become effective concurrently with, the
Funding Date.
8.3 SUBSIDIARIES; CAPITAL STOCK. The Borrower has no direct or
indirect Significant Subsidiaries except as disclosed on SCHEDULE 8.3 (as
supplemented and modified in writing from time to time to reflect any changes
to such Schedule as a result of transactions permitted by the Loan Documents).
All of the outstanding shares of capital stock (or similar voting interests) of
each Company are duly authorized, validly issued, fully paid, and nonassessable
and are owned of record and beneficially as set forth on SCHEDULE 8.3 (as
supplemented and modified in writing from time to time to reflect any changes
to such Schedule as a result of transactions permitted by the Loan Documents),
free and clear of any Liens, restrictions, claims, or Rights of another Person,
other than Permitted Liens, and none of such shares owned by any Company is
subject to any restriction on transfer thereof except for restrictions imposed
by any Insurance Regulators (with respect to stock of insurance companies),
securities Laws, and general corporate Laws. Except as disclosed in the
Consolidation Agreement, no Company has outstanding any warrant, option, or
other Right of any Person to acquire any of its capital stock or similar equity
interests. No Company has any Subsidiaries that are Foreign Subsidiaries.
8.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery
by each Company of each Loan Document to which it is a party and the
performance by such Company of its obligations thereunder (a) are within the
corporate, partnership, or limited liability company power of such Company, (b)
will have been duly authorized by all necessary corporate, partnership, or
limited liability company action on the part of such Company when such Loan
Document is executed and delivered, (c) require no action by or in respect of,
or filing with, any Governmental Authority, which action or filing has not been
taken or made on or prior to the Funding Date (or if later, the date of
execution and delivery of such Loan Document), (d) will not violate any
provision of the charter, bylaws, limited liability company agreement,
partnership agreement, or other organizational documents of such Company, (e)
will not violate any provision of Law applicable to such Company, (f) will not
violate any Material Agreements, other than such violations which could not
reasonably be expected to be a Material Adverse Event, or (g) will not result
in the creation or imposition of any Lien on any asset of any Company, other
than as expressly permitted by the Loan Documents. Each Company has (or will
have upon consummation thereof) all necessary consents and approvals of any
Person or Governmental Authority required to be obtained in order to effect the
Consolidation and any other asset transfer, change of control, merger, or
consolidation permitted by the Loan Documents, except where the failure to
obtain such consents or approvals could not, individually or collectively,
reasonably be expected to be a Material Adverse Event.
8.5 BINDING EFFECT. Upon execution and delivery by all parties
thereto, each Loan Document will constitute a legal, valid, and binding
obligation of each Company party thereto, enforceable against each such Company
in accordance with its terms, except as enforceability may be limited by
applicable Debtor Relief Laws and general principles of equity.
8.6 FINANCIAL STATEMENTS.
(a) Current Financials. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the consolidated financial condition, results of operations, and cash flows of
the entities covered thereby ("REPORTING ENTITIES") as of and for the portion
of the fiscal year ending on the date or dates thereof (subject only to normal
year-end audit adjustments for interim statements). There were no material
liabilities, direct or indirect, fixed or contingent, of the Reporting Entities
as of the date or dates of the Current Financials which
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are required under GAAP to be reflected therein or in the notes thereto and are
not so reflected. Except for transactions directly related to or expressly
permitted by the Loan Documents (including, without limitation, the
Consolidation), (a) there have been no changes in the consolidated financial
condition or operations of the Reporting Entities from that shown in the
Current Financials after such date which could reasonably be expected to be a
Material Adverse Event, and no Reporting Entity has incurred any liability
(including, without limitation, any liability under any Environmental Law),
direct or indirect, fixed or contingent, after such date which could reasonably
be expected to be a Material Adverse Event, and (b) no Reporting Entity has
incurred any liability (including, without limitation, any liability under any
Environmental Law), direct or indirect, fixed or contingent, after such date
which could reasonably be expected to be a Material Adverse Event.
(b) Financial Projections. The Financial Projections
were prepared in good faith based upon reasonable assumptions and nothing has
come to the attention of Borrower which gives it reason to believe that any
circumstance or event has occurred which could result in a material and adverse
change to the financial condition or results of operations of the Companies as
reflected in the Financial Projections.
8.7 LITIGATION, CLAIMS, INVESTIGATIONS. No Company is subject to,
or aware of the threat of, any Litigation which is reasonably likely to be
determined adversely to any Company, and, if so adversely determined, could
(individually or collectively with other Litigation) reasonably be expected to
be a Material Adverse Event. There are no outstanding orders or judgments
against a Company for the payment of money in excess of $7,500,000
(individually or collectively) or any warrant of attachment, sequestration, or
similar proceeding against the assets of any Company having a value
(individually or collectively) of $7,500,000 or more which is not either (a)
stayed on appeal or (b) being diligently contested by appropriate proceedings
and adequate reserves having been set aside on the books of the Companies in
accordance with GAAP. There are no formal complaints, suits, claims,
investigations, or proceedings initiated at or by any Governmental Authority
pending or threatened by or against any Company relating to the Consolidation,
the transactions evidenced by the Loan Documents, or which could reasonably be
expected to be a Material Adverse Event, or any judgments, decrees, or orders
of any Governmental Authority outstanding against any Company that could
reasonably be expected to be a Material Adverse Event.
8.8 TAXES. All Tax returns of each Company required to be filed
have been filed (or extensions have been granted) prior to delinquency, except
for any such returns for which the failure to so file could not reasonably be
expected to be a Material Adverse Event, and all Taxes imposed upon each
Company which are due and payable have been paid prior to delinquency, other
than Taxes for which the criteria for Permitted Liens (as specified in SECTION
9.13(B)(VI)) have been satisfied or for which nonpayment thereof could not
reasonably be expected to be a Material Adverse Event.
8.9 ENVIRONMENTAL MATTERS. No Company (a) knows of any
environmental condition or circumstance, such as the presence or Release of any
Hazardous Substance, on any property presently or previously owned by any
Company that could reasonably be expected to be a Material Adverse Event, (b)
knows of any violation by any Company of any Environmental Law, except for such
violations that could not reasonably be expected to be a Material Adverse
Event, or (c) knows that any Company is under any obligation to remedy any
violation of any Environmental Law, except for such obligations that could not
reasonably be expected to be a Material Adverse Event; provided, however, that
each Company (x) to the best of its knowledge, has in full force and effect all
Environmental Permits, licenses, and approvals required to conduct its
operations and is operating in substantial compliance thereunder, and (y) has
taken prudent steps to determine that its properties and operations are not in
violation of any Environmental Law.
8.10 EMPLOYEE BENEFIT PLANS.
(a) Neither Borrower nor any ERISA Affiliate maintains
or contributes to or has any obligation under, any Employee Plans other than
those identified on SCHEDULE 8.10;
(b) Borrower and each ERISA Affiliate is in material
compliance with all applicable provisions of ERISA and the regulations and
published interpretations thereunder with respect to all Employee Plans except
for any required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired. Each Employee Plan that is
intended to be qualified under Section 401(a) of the Code has been determined
by
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the Internal Revenue Service to be so qualified, and each trust related to such
plan has been determined to be exempt under Section 501(a) of the Code. No
liability has been incurred by any Borrower or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to any Employee
Plan or any Multiemployer Plan;
(c) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code) been
incurred (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has Borrower or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and owing
as required by Section 412 of the Code, Section 302 of ERISA or the terms of
any Pension Plan prior to the due dates of such contributions under Section 412
of the Code or Section 302 of ERISA, nor has there been any event requiring any
disclosure under Section 4041(c)(3)(c) or 4063(a) of ERISA with respect to any
Pension Plan;
(d) Neither Borrower nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section 406 of the
ERISA or Section 4975 of the Code; (ii) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there are no
premium payments which are due and unpaid; (iii) failed to make a required
contribution or payment to a Multiemployer Plan; or (iv) failed to make a
required installment or other required payment under Section 412 of the Code;
(e) No Termination Event has occurred or is reasonably
expected to occur; and
(f) No material proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of Borrower after due
inquiry, threatened concerning or involving any (i) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) currently maintained or contributed
to by Borrower or any ERISA Affiliate, (ii) Pension Plan or (iii) Multiemployer
Plan.
8.11 PROPERTIES; LIENS. Each Company has good and marketable title
to all its property reflected on the Current Financials, except (a) for (i)
property that is obsolete, (ii) property that has been disposed of in the
ordinary course of business, or (iii) property with title defects or failures
in title which, when considered in the aggregate, could not reasonably be
expected to be a Material Adverse Event, or (b) as otherwise permitted by the
Loan Documents. Except for Permitted Liens, there is no Lien on any property of
any Company, and the execution, delivery, performance, or observance of the
Loan Documents will not require or result in the creation of any Lien on such
property except as contemplated by the Loan Documents.
8.12 GOVERNMENT REGULATIONS. No Company is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, or any other Law (other than
Regulations T, U, and X of the Board of Governors of the Federal Reserve System
and the requirements of applicable Insurance Regulators) which regulates the
incurrence of Debt.
8.13 TRANSACTIONS WITH AFFILIATES. Except as permitted in SECTION
9.14, no Company is a party to a material transaction with any of its
Affiliates, other than transactions in the ordinary course of business and upon
fair and reasonable terms not materially less favorable than such Company could
obtain or could become entitled to in an arm's- length transaction with a
Person that was not its Affiliate.
8.14 DEBT. No Company is an obligor on any Debt other than
Permitted Debt.
8.15 MATERIAL AGREEMENTS. There are no failures of any Material
Agreements to be in full force and effect which could reasonably be expected to
be a Material Adverse Event, and no default or potential default exists on the
part of any Company party thereunder which could reasonably be expected to be a
Material Adverse Event.
8.16 INSURANCE. Each Company maintains, with financially sound,
responsible, and reputable insurance companies or associations, insurance
concerning its properties and businesses against such casualties and
contingencies and of such types and in such amounts (and with co-insurance and
deductibles) as is customary in the case of same or similar businesses.
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8.17 LABOR MATTERS. There are no actual or threatened strikes,
labor disputes, slow downs, walkouts, or other concerted interruptions of
operations by the employees of any Company that could reasonably be expected to
be a Material Adverse Event. Hours worked by and payment made to employees of
the Companies have not been in violation of the Fair Labor Standards Act or any
other applicable Law dealing with such matters, other than any such violations,
individually or collectively, which could not reasonably be expected to be a
Material Adverse Event. All payments due from any Company on account of
employee health and welfare insurance have been paid or accrued as a liability
on its books, other than any such nonpayments which could not, individually or
collectively, reasonably be expected to be a Material Adverse Event.
8.18 SOLVENCY. At the time of each Borrowing hereunder, and on the
dates of the Consolidation, each other Permitted Acquisition, and each
Intercompany Acquisition, each Company is (and after giving effect to the
transactions contemplated by the Loan Documents, the Consolidation, any other
Permitted Acquisition, any Intercompany Acquisition, and any incurrence of
additional Debt, will be) Solvent.
8.19 INTELLECTUAL PROPERTY. Each Company owns or has sufficient
and legally enforceable Rights to use all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
and trade names necessary to continue to conduct its businesses as heretofore
conducted by it, now conducted by it, and now proposed to be conducted by it.
Each Company is conducting its business without infringement or claim of
infringement of any license, patent, copyright, service mark, trademark, trade
name, trade secret, or other intellectual property Right of others, other than
any such infringements or claims which, if successfully asserted against or
determined adversely to any Company, could not, individually or collectively,
reasonably be expected to be a Material Adverse Event.
8.20 COMPLIANCE WITH LAWS. No Company is in violation of any Laws
(including, without limitation, Environmental Laws, and those Laws administered
by applicable Insurance Regulators), other than such violations which could
not, individually or collectively, reasonably be expected to be a Material
Adverse Event. No Company has received notice alleging any noncompliance with
any Laws, except for such noncompliance which no longer exists, or which could
not reasonably be expected to be a Material Adverse Event.
8.21 PERMITTED ACQUISITIONS; INTERCOMPANY ACQUISITIONS.
(a) Validity. With respect to any Permitted Acquisition
or Intercompany Acquisition, each Company has, or at all applicable times will
have, the power and authority under the Laws of its state of incorporation or
organization and under its charter, bylaws, limited liability company
agreement, partnership agreement, or other organizational documents, as
applicable, to enter into and perform the related acquisition or asset swap
agreement to which it is a party and all other agreements, documents, and
actions required thereunder; and all actions (corporate or otherwise) necessary
or appropriate by the Companies for the execution and performance of said
acquisition or asset swap agreements, and all other documents, agreements, and
actions required thereunder, will have been taken, and, upon their execution,
such acquisition or asset swap agreements will constitute the valid and binding
obligation of the Companies party thereto, enforceable in accordance with their
respective terms.
(b) No Violations. With respect to any Permitted
Acquisition or Intercompany Acquisition, the making and performance of the
related acquisition or asset swap agreements, and all other agreements,
documents, and actions required thereunder, will not violate any provision of
any Law, including, without limitation, all state corporate Laws and judicial
precedents of the states of incorporation or formation of the Companies, and
will not violate any provisions of the charter, bylaws, limited liability
company agreement, partnership agreement, or other organizational documents of
the Companies, or constitute a default under any agreement by which the
Companies or their respective property may be bound, except where such
violation could not reasonably be expected to be a Material Adverse Event.
(c) Authorizations. With respect to any Permitted
Acquisition or Intercompany Acquisition, no Authorization, waiver, or formal
exemptions from, or any filing, declaration, or registration with, any
Governmental Authority (federal, state, or local), non-governmental entity, or
other Person under the terms of contracts or otherwise, is or will be required
by reason of or in connection with the execution and performance of the
acquisition or asset swap agreement related to such Permitted Acquisition or
Intercompany Acquisition or the consummation of such Permitted Acquisition or
Intercompany Acquisition, other than as will be obtained on or prior to, or
will become effective
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concurrently with, the closing date of such Permitted Acquisition or
Intercompany Acquisition except where the failure to do so could not reasonably
be expected to be a Material Adverse Event.
8.22 REGULATION U. None of the Companies is engaged principally in
the business of purchasing or carrying any "margin stock" (as defined in
Regulation U), and no part of the proceeds of any Borrowing will be used for
any purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X.
8.23 TRADENAMES. Except as set forth on SCHEDULE 8.23, no Company
is currently transacting business under any name other than its corporate name.
8.24 YEAR 2000. Except where such malfunction could not reasonably
be expected to be a Material Adverse Event, all of the material computer
software, computer firmware, computer hardware (whether general or special
purpose), and other similar or related items of automated, computerized, and/or
software systems that are used or relied on by the Companies in the conduct of
their respective businesses have not malfunctioned, have not ceased to function
and have not produced incorrect results when processing, providing, and/or
receiving (a) date-related data into, between, and during year 1999 and year
2000, and (b) date-related data in connection with any valid date in year 1999
and year 2000. The Companies have developed and implemented to the extent
required a year 2000 contingency and business continuity plan.
8.25 FULL DISCLOSURE. There is no material fact or condition
relating to the Loan Documents or the financial condition, business, or
property of any Company (or, with respect to events prior to the Funding Date,
MAI, PICM, and their respective Subsidiaries) which could reasonably be
expected to be a Material Adverse Event and which has not been related, in
writing, to Administrative Agent. All information heretofore furnished by any
Company to any Lender or Administrative Agent in connection with the Loan
Documents was, and all such information hereafter furnished by any Company to
any Lender or Administrative Agent will be, true and accurate in all material
respects or based on reasonable estimates on the date as of which such
information is stated or certified.
8.26 NO DEFAULT. No Default or Potential Default exists or will
arise as a result of the execution delivery, and performance of the Loan
Documents, of any Borrowing hereunder, or the consummation of the
Consolidation.
8.27 PERFECTION OF SECURITY INTERESTS. Upon filing of the
financing statements (and payment of requisite filing fees) against each
Company in the jurisdictions indicated for such Company in the Security
Agreement and the delivery to Administrative Agent, for the benefit of Lenders,
of all stock certificates, membership certificates, or other evidence of equity
investments owned by any Company required to be pledged to secure the
Obligation pursuant to SECTIONS 6.1 and 6.2, the security interests in the
Collateral created by the Collateral Documents (which may be perfected under
applicable Law by the filing of financing statements or the possession of
collateral) will be perfected in favor of Administrative Agent, for the benefit
of Lenders. No further action, including any filing or recording of any
document, is necessary in order to establish, perfect, and maintain Lenders'
first priority security interests in the assets and the stock created by the
Collateral Documents (which may be perfected under applicable Law by the filing
of financing statements or the possession of collateral), except for the
periodic filing of continuation statements (and payment of requisite filing
fees) with respect to financing statements filed under the UCC.
8.28 THE CONSOLIDATION. The Consolidation Agreement has been
executed and delivered by all parties thereto and represents the valid and
binding agreement of the parties thereto, enforceable in all material respects
in accordance with its terms (except as enforceability may be limited by
applicable Debtor Relief Laws and general principles of equity). On and as of
the Funding Date, the execution and delivery by each Company party thereto (or
its predecessors in interest) of the Consolidation Documents and the
performance of their respective obligations thereunder (a) are within the
corporate or organizational power of such Company (or its predecessors in
interest), (b) have been duly authorized by all necessary corporate,
partnership, or limited liability company action on the part of such Company
(or its predecessors in interest), (c) require no action by or in respect of,
or filing with any Governmental Authority, which action or filing has not been
taken or made on or prior to the Funding Date, (d) do not violate any provision
of the charter, bylaws, limited liability company agreement, partnership
agreement, or other organizational documents of such Company (or its
predecessors in interest), (e) do not violate any provision of Law applicable
to it, other than such violations which, individually or collectively, could
not reasonably expected to be a Material Adverse Event, (f) do not
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violate any Material Agreements to which it is (or its predecessors in interest
are) a party, other than such violations which could not reasonably be expected
to be a Material Adverse Event, (g) do not result in the creation or imposition
of any Lien on any asset of any Company or their predecessors in interest
(other than Permitted Liens), and (h) immediately prior to, and after giving
pro forma effect thereto, no Default or Potential Default exists or arises
under the Loan Documents. On and as of the Funding Date, the Companies (or
their predecessors in interest) have obtained all necessary consents and
approvals of any Person or Governmental Authority required to be obtained in
order for such Companies to effectuate the Consolidation and the transactions
contemplated by the Consolidation Agreement, except to the extent any such
failure could not reasonably be expected to be a Material Adverse Event and
could not reasonably be expected to materially impair the value to the
Companies of, or the benefits to be derived by the Companies or their
predecessors in interest from, the Consolidation. On the Funding Date, all
conditions precedent under the Consolidation Agreement, to the parties'
obligations to consummate such Consolidation have been satisfied in all
material respects, and concurrently with the Funding Date, the Consolidation
shall have been consummated.
SECTION 9 COVENANTS.
Borrower covenants and agrees, and covenants and agrees to cause each
other Company (and all ERISA Affiliates with respect to SECTION 9.10), to
perform, observe, and comply with each of the following covenants applicable to
such Person, from the Signing Date for entities that are Companies as of such
date (and from the Funding Date for entities that are or become Companies on or
after such date) and, in any case, so long thereafter as Lenders are committed
to fund Borrowings under this Agreement and thereafter until the payment in full
of the Principal Debt (and termination of outstanding Financial Hedges, if any)
and payment in full of all other interest, fees, and other amounts of the
Obligation then due and owing, unless Borrower receives a prior written consent
to the contrary by Administrative Agent as authorized by Required Lenders:
9.1 USE OF PROCEEDS. Borrower shall use (or shall cause its
Subsidiaries to use) the proceeds of Borrowings only for the purposes
represented herein.
9.2 BOOKS AND RECORDS. The Borrower and its Subsidiaries shall
maintain books, records, and accounts necessary to prepare financial statements
on a consolidated basis in accordance with GAAP.
9.3 ITEMS TO BE FURNISHED. Borrower shall cause the following to
be furnished to Administrative Agent for delivery to Lenders:
(a) Promptly after preparation, and no later than 120
days after the last day of each fiscal year of Borrower, Financial Statements
showing the consolidated financial condition and results of operations
calculated for the Borrower and its Subsidiaries as of and for the year ended
on such day, accompanied by:
(i) The unqualified opinion of a firm of
nationally-recognized independent certified public
accountants, based on an audit using generally accepted
auditing standards, that such Financial Statements
(calculated with respect to Borrower and its Subsidiaries)
were prepared in accordance with GAAP and present fairly the
consolidated financial condition and results of operations of
Borrower and its Subsidiaries;
(ii) A certificate from such accounting firm
addressed to Administrative Agent indicating that during its
audit it obtained no knowledge of any Default or Potential
Default or, if it obtained such knowledge, the nature and
period of existence thereof; and
(iii) With respect to the Financial Statements of
Borrower and its Subsidiaries, a Compliance Certificate.
(b) Promptly after preparation, and no later than 45
days after the last day of each of the first three fiscal quarters in each
fiscal year of Borrower and no later than 60 days after the last day of the
fourth fiscal quarter in each fiscal year of Borrower, Financial Statements
showing the consolidated financial condition and results of operations
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calculated for the Companies for such fiscal quarter and for the period from
the beginning of the then-current fiscal year to, such last day, accompanied by
a Compliance Certificate with respect to the Financial Statements of the
Companies.
(c) Promptly after preparation, and not later than the
earlier of (i) 15 days after the regulatory filing date, or (ii) 90 days after
the close of each fiscal year of each Insurance Subsidiary that is a
Significant Subsidiary, copies of the Annual Statement of each such Company
prepared on the NAIC annual statement blanks (or such other form as shall be
required or permitted by the jurisdiction of incorporation of each such
Company), all such statements to be prepared in accordance with SAP; and within
15 days after the regulatory filing date, copies of the annual financial
statements prepared in accordance with SAP of each such Insurance Subsidiary
certified by independent certified public accountants reasonably acceptable to
Administrative Agent if such certification is so required by any Governmental
Authority.
(d) Promptly upon receipt thereof, copies of all
auditor's annual management letters and the report on evaluation of internal
controls by independent auditors delivered to any Company.
(e) Notice, promptly after any Company knows or has
reason to know of (i) the existence and status of any Litigation which could
reasonably be expected to be a Material Adverse Event, or of any order or
judgment against a Company for the payment of money which (individually or
collectively) is in excess of $7,500,000 which is not stayed on appeal or being
diligently contested by appropriate proceedings with adequate reserves having
been set aside on the books of the Companies in accordance with GAAP, or any
warrant of attachment, sequestration, or similar proceeding against the assets
of any Company having a value (individually or collectively) of $7,500,000,
(ii) any material change in any material fact or circumstance represented or
warranted in any Loan Document, (iii) a Default or Potential Default specifying
the nature thereof and what action any Company has taken, is taking, or
proposes to take with respect thereto, (iv) the receipt by any Company of any
notice from any Governmental Authority of the expiration without renewal,
termination, material modification or suspension of, or institution of any
proceedings to terminate, materially modify, or suspend, any Authorization
granted by any Insurance Regulator, or any other Authorization which any
Company is required to hold in order to operate its business in compliance with
all applicable Laws, other than such expirations, terminations, suspensions, or
modifications which, individually or in the aggregate, could not reasonably be
expected to be a Material Adverse Event, (v) any federal, state, or local Law
limiting or controlling the operations of any Company which has been issued or
adopted hereafter and which could reasonably be expected to be a Material
Adverse Event, (vi) the receipt by any Company of notice of any violation or
alleged violation of any Environmental Law or Environmental Permit or any
Environmental Liability or potential Environmental Liability, which violation
or liability or alleged violation or liability could, individually or
collectively with other such violations or allegations, reasonably be expected
to be a Material Adverse Event, or (vii) (A) any expressed statement in writing
on the part of the PBGC of any "prohibited transaction" or Termination Event or
(B) the creation or acquisition of any Employee Plan by any Company or any
ERISA Affiliate.
(f) Promptly after any of the information or disclosures
provided on any of the Schedules delivered pursuant to this Agreement or any
Annexes to any of the Collateral Documents becomes outdated or incorrect in any
material respect, such revised or updated Schedule(s) or Annexes as may be
necessary or appropriate to update or correct such information or disclosures;
provided that, no deletions may be made to any Annexes describing Collateral in
any of the Collateral Documents unless such asset disposition is expressly
permitted by the Loan Documents or is approved by Required Lenders.
(g) Promptly upon request therefor by Administrative
Agent or Lenders, true, correct, and complete copies of, or access to, all
material reports or filings filed by or on behalf of any Company with any
Governmental Authority (including any Insurance Regulator and the Securities
and Exchange Commission).
(h) Promptly after the filing thereof, a true, correct,
and complete copy of each Form 10-K, Form 10-Q, and Form 8-K filed by or on
behalf of Borrower with the Securities and Exchange Commission.
(i) Promptly upon request therefor by Administrative
Agent or Lenders, such information (not otherwise required to be furnished
under the Loan Documents) respecting the business affairs, assets, and
liabilities of
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the Companies, and such opinions, certifications, and documents, in addition to
those mentioned in this Agreement, as reasonably requested.
(j) With respect to the post-closing requirements set
forth on SCHEDULE 7.1A, if any, deliver, or cause to be delivered, to
Administrative Agent, all agreements, documents, instruments, or other items
listed on SCHEDULE 7.1A on or prior to the date specified for delivery thereof
on SCHEDULE 7.1A.
9.4 INSPECTIONS. Subject to the confidentiality provisions of
SECTION 13.14, upon reasonable notice, each Company shall allow Administrative
Agent or any Lender (or their respective Representatives) to inspect its
properties, to review reports, files, and other records and to make and take
away copies thereof, to conduct tests or investigations, and to discuss any of
its affairs, conditions, and finances with directors, officers, employees,
other representatives, and independent accountants of such Company, from time
to time, during reasonable business hours.
9.5 TAXES. Each Company shall (and shall cause each of its
Subsidiaries to) (a) promptly pay when due any and all Taxes other than Taxes
the applicability, amount, or validity of which is being contested in good
faith by lawful proceedings diligently conducted, and against which reserve or
other provision required by GAAP has been made, and in respect of which levy
and execution of any Lien securing same have been and continue to be stayed,
(b) not, directly or indirectly, use any portion of the proceeds of any
Borrowing to pay the wages of employees unless a timely payment to or deposit
with the appropriate Governmental Authorities of all amounts of Tax required to
be deducted and withheld with respect to such wages is also made, and (c)
notify Administrative Agent promptly if the Internal Revenue Service or any
other taxing authority notifies any Company of any assessment or deficiency in
excess of $500,000 alleged to be due from any Company.
9.6 PAYMENT OF OBLIGATIONS. Borrower shall pay the Obligation in
accordance with the terms and provisions of the Loan Documents. Each Company
shall promptly pay (or renew and extend) all of its material obligations as the
same become due (unless such obligations [other than the Obligation] are being
contested in good faith by appropriate proceedings). No Company shall (a) make
any voluntary payment or prepayment of principal of, or interest on, other Debt
(other than the Obligation, or provided that no Default or Potential Default is
then existing hereunder or would occur as a result of such payment or
prepayment, other Permitted Debt ), whether or not subordinate to the
Obligation or (b) use proceeds from the Facilities to make any payment or
voluntary prepayment of principal of, or interest on, or sinking fund payment
in respect of any Debt of any Company, provided, that, the Borrower shall use
up to $14,500,000 to repay in full all indebtedness outstanding under that
certain Credit Agreement dated April 4, 1997, as amended, between Professionals
Group, Inc. and LaSalle Bank, N.A., and such Credit Agreement shall be
terminated simultaneously with such payment. No Company shall make any payment
on any Subordinated Debt if such payment would violate the subordination
provisions thereof or result in a Default or Potential Default hereunder.
9.7 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as
otherwise permitted by SECTION 9.25, each Company shall (and shall cause each
of its Subsidiaries to) at all times: (a) maintain its existence and good
standing in the jurisdiction of its organization and its authority to transact
business in all other jurisdictions where the failure to so maintain its
authority to transact business could reasonably be expected to be a Material
Adverse Event; (b) maintain all licenses, permits, and franchises necessary for
its business where the failure to so maintain could reasonably be expected to
be a Material Adverse Event; (c) keep all of its assets which are useful in and
necessary to its business in good working order and condition (ordinary wear
and tear excepted) and make all necessary repairs thereto and replacements
thereof; and (d) do all things necessary to obtain, renew, extend, and continue
in effect all Authorizations issued by Insurance Regulators which may at any
time and from time to time be necessary for the Companies to operate their
businesses in compliance with applicable Law, where the failure to so renew,
extend, or continue in effect could reasonably be expected to be a Material
Adverse Event.
9.8 INSURANCE. Each Company (or Borrower on behalf of and for the
benefit of, such Companies) shall, at its sole cost and expense, keep and
maintain all tangible property and assets owned by such Company and valued in
excess of $50,000 insured for its actual cash value against loss or damage by
fire, theft, explosion, flood, and all other hazards and risks ordinarily
insured against by other owners or users of such properties in similar
businesses of comparable size and notify Administrative Agent promptly of any
occurrence causing a material loss or decline in value of such property or
assets, and the estimated (or actual, if available) amount of such loss or
decline. All such policies
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of insurance shall be in a form, with such deductibles, and with insurers
recognized as adequate by prudent business Persons in the same businesses as
the Companies and acceptable to Administrative Agent, and all such policies
shall be in such amount as may be satisfactory to Administrative Agent. On or
before the Funding Date and thereafter as each such policy is renewed and
extended, the Companies shall deliver to Administrative Agent a certificate of
insurance for each such policy of insurance and evidence of payment of all
premiums therefor.
9.9 PRESERVATION AND PROTECTION OF RIGHTS. Each Company shall
(and shall cause each Subsidiary thereof to) perform such acts and duly
authorize, execute, acknowledge, deliver, file, and record any additional
agreements, documents, instruments, and certificates as Administrative Agent or
Required Lenders may reasonably deem necessary or appropriate in order to
preserve and protect the Rights of Administrative Agent and Lenders under any
Loan Document.
9.10 EMPLOYEE BENEFIT PLANS. In addition to and without limiting
the generality of SECTION 9.15, Borrower and each ERISA affiliate shall make
timely payment of contributions required to meet the minimum funding standards
set forth in ERISA with respect to any Employee Plan; not take any action or
fail to take action the result of which could be a liability to the PBGC or to
a Multiemployer Plan; not participate in any prohibited transaction that could
result in any civil penalty under ERISA or tax under the Code; furnish to the
Administrative Agent upon the Administrative Agent's request such additional
information about any Employee Plan as may be reasonably requested by the
Administrative Agent; and operate each Employee Plan in such a manner that will
not incur any tax liability under Section 4980B of the Code or any liability
(other than for benefits in accordance with the terms of such Employee Plan) to
any qualified beneficiary as defined in Section 4980B of the Code, except where
the result of any of the foregoing could not reasonably be expected to be a
Material Adverse Event.
9.11 ENVIRONMENTAL LAWS. Each Company shall (a) conduct its
business so as to comply in all material respects with all applicable
Environmental Laws and shall promptly take corrective action to remedy any non-
compliance with any Environmental Law, (b) promptly investigate and remediate
any known Release or threatened Release of any Hazardous Substance on any
property owned by any Company or at any facility operated by any Company to the
extent and degree necessary to comply with Law and to assure that any Release
or threatened Release does not result in a substantial endangerment to human
health or the environment, and (c) appropriately monitor compliance with
applicable Environmental Laws and minimize financial and other risks to each
Company arising under applicable Environmental Laws or as a result of
environmentally-related injuries to Persons or property.
9.12 DEBT AND GUARANTIES. No Company shall directly or indirectly,
create, incur, or suffer to exist any direct, indirect, fixed, or contingent
liability for any Debt, other than:
(a) The Obligation;
(b) Debt incurred by any Company under any Financial
Hedge permitted by, and purchased and maintained in compliance with, the
requirements of the Loan Documents;
(c) Debt between Companies;
(d) Funded Debt of the Companies existing on the Funding
Date and listed on SCHEDULE 9.12 (counting revolving lines of credit as if they
were fully drawn), together with all renewals, extensions, amendments,
modifications, and refinancings thereof, so long as (x) the principal amount of
any refinanced Debt shall not exceed the principal amount of the Debt being
refinanced immediately prior to giving effect to any such refinancing ; and (y)
no Default or Potential Default exists or arises as a result of any such
renewal, extension, amendment, modification, or refinancing (collectively, the
"EXISTING DEBT");
(e) Debt incurred or assumed by any Company for the
purpose of financing all or any part of the cost of any asset (including
Capital Leases and renewals, extensions, amendments, and modifications of such
Debt), so long as (i) the aggregate amount of such Debt (together with any and
all amendments, modifications, or refinancings thereof) does not exceed
$20,000,000, and (ii) no Default or Potential Default then exists or arises as
a result of such Debt incurrence;
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(f) Unsecured Debt of any Company not otherwise permitted
by this SECTION 9.12 and unsecured guaranties thereof, so long as on any date of
determination such Debt does not exceed, in the aggregate, $10,000,000;
9.13 LIENS; NON-ENCUMBRANCE AGREEMENTS. No Company will, directly
or indirectly, (a) enter into or permit to exist any arrangement or agreement
which directly or indirectly prohibits any Company from creating or incurring
any Lien on any of its assets, other than the Loan Documents, or (b) create,
incur, or suffer or permit to be created or incurred or to exist any Lien upon
any of its assets, except:
(i) Liens securing the Obligation, and so long as the
Obligation is ratably secured therewith, Liens securing Debt incurred
by any Company under any Financial Hedge with any Lender or an
Affiliate of any Lender to the extent permitted under SECTION 9.12(B);
(ii) Pledges or deposits made to secure payment of
worker's compensation, or to participate in any fund in connection with
worker's compensation, unemployment insurance, pensions, or other
social security programs, but expressly excluding any Liens in favor of
the PBGC or otherwise under ERISA;
(iii) Good-faith pledges or deposits made to secure
performance of bids, tenders, insurance or other contracts (other than
for the repayment of borrowed money), or leases, or to secure statutory
obligations, surety or appeal bonds or indemnity, performance, or other
similar bonds as all such Liens arise in the ordinary course of
business;
(iv) Encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, none of
which impair in any material respect the use of such property by the
Person in question in the operation of its business, and none of which
is violated by existing or proposed structures or land use;
(v) Liens of landlords or of mortgagees of landlords,
arising solely by operation of law, on fixtures and movable property
located on premises leased in the ordinary course of business;
(vi) The following, so long as the validity or amount
thereof is being contested in good faith and by appropriate and lawful
proceedings diligently conducted, reserve or other appropriate
provisions (if any) required by GAAP shall have been made, levy and
execution thereon have been stayed and continue to be stayed, and they
do not in the aggregate materially detract from the value of the
property of the Person in question, or materially impair the use
thereof in the operation of its business: (i) claims and Liens for
Taxes (other than Liens relating to Environmental Laws or ERISA); (ii)
claims and Liens upon, and defects of title to, real or personal
property, including any attachment of personal or real property or
other legal process prior to adjudication of a dispute of the merits;
and (iii) claims and Liens of mechanics, materialmen, warehousemen,
carriers, landlords, or other like Liens;
(vii) Liens securing Permitted Debt incurred pursuant to
SECTION 9.12(E), so long as (A) any such Lien does not extend to any
asset other than the asset purchased or financed by such Debt, and (B)
any such Lien attached to such asset concurrently with or within 180
days of the related asset acquisition;
(viii) Liens existing on the Signing Date and listed on
SCHEDULE 9.13; and
(ix) Liens to secure outstanding judgments for the payment
of money, so long as enforcement of such judgment is stayed on appeal
pursuant to the posting of an appropriate bond and adequate reserves
have been set aside on the books of the Companies in accordance with
GAAP.
Borrower will not (and shall cause each other Company not to) enter into any
non-encumbrance agreement or negative pledge agreement or covenant with respect
to any of its assets in favor of any Person (other than Lenders).
9.14 TRANSACTIONS WITH AFFILIATES. Except for transactions
permitted by SECTION 9.20, 9.21, 9.23 9.25 OR 9.26, reinsurance and other
similar agreements between Companies in the ordinary course of business, tax
allocation agreements on terms reasonable to the Companies party thereto,
management, consulting and similar arrangements on
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reasonable terms (including at cost) to the Companies party thereto, no Company
shall enter into any material transaction with any of its Affiliates unless such
transaction is in the ordinary course of business and upon fair and reasonable
terms not materially less favorable than such Company could obtain or could
become entitled to in an arm's- length transaction with a Person that was not
its Affiliate.
9.15 COMPLIANCE WITH LAWS AND DOCUMENTS. No Company shall violate
the provisions of any Laws applicable to it, including, without limitation,
Environmental Laws, Environmental Permits, ERISA, OSHA and all rules and
regulations promulgated by any Insurance Regulator, or any Material Agreement if
such violation alone, or when aggregated with all other such violations, could
reasonably be expected to be a Material Adverse Event; no Company shall violate
the provisions of its charter, bylaws, limited liability company agreement,
partnership agreement, or other organizational documents.
9.16 PERMITTED ACQUISITIONS AND COLLATERAL DOCUMENTS. In connection
with each Acquisition submitted for approval as a Permitted Acquisition and each
Permitted Acquisition, Borrower shall deliver, or cause to be delivered to,
Administrative Agent each of the items required under SECTION 7.2, on or before
the date specified for each such item. Borrower shall cause each entity that
becomes a direct or indirect Subsidiary of Borrower after the Signing Date
(whether as a result of a Permitted Acquisition, Intercompany Acquisition,
merger, creation, or otherwise) to execute and deliver to Administrative Agent
all required Collateral Documents (in form and substance acceptable to
Administrative Agent) creating Liens in favor of Administrative Agent on behalf
of the Lenders to the extent Liens are required in such assets pursuant to
SECTION 6.1.
9.17 ASSIGNMENT. Except as expressly permitted in this Agreement,
no Company shall assign or transfer any of its Rights, duties, or obligations
under any of the Loan Documents.
9.18 FISCAL YEAR AND ACCOUNTING METHODS. No Company will change its
fiscal year for book accounting purposes or its method of accounting, other than
(a) immaterial changes in methods or as allowed by GAAP or SAP, as appropriate,
or (b) in connection with a Permitted Acquisition, such changes to the
newly-acquired entity so as to conform its fiscal year and its method of
accounting to those of the Companies.
9.19 GOVERNMENT REGULATIONS. No Company will conduct its business
in such away that it will become subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, or any other Law (other than Regulations T, U, and X of the Board of
Governors of the Federal Reserve System and the requirements of applicable
Insurance Regulators) which regulates the incurrence of Debt.
9.20 LOANS, ADVANCES, AND INVESTMENTS. No Company shall, directly
or indirectly, make any loan, advance, extension of credit, or capital
contribution to, make any investment in, or purchase or commit to purchase any
stock or other securities or evidences of Debt of, or interests in, or any
assets constituting an ongoing business of, any other Person, other than:
(a) Investments by Borrower or its Subsidiaries in U.S.
Treasury Securities, state and municipal bonds, corporate bonds, mortgage-backed
securities, certificates of deposit, equity securities and other investments,
securities, properties and loans acquired or held as permitted under applicable
insurance laws or by Insurance Regulators; provided, however, that, excluding
investments in bonds and notes of the U.S. Government, U.S. Government agency,
or prerefunded state and municipal bonds which are 100% backed U.S. Treasury
obligations, no such investment in any Person or its Affiliates shall exceed 10%
of total stockholder's equity of the Borrower;
(b) Investments by Borrower or its Subsidiaries in demand
deposit accounts which are maintained in the ordinary course of business;
(c) Loans, advances, extensions of credit, capital
contributions, Intercompany Acquisitions, and other investments between
Companies;
(d) Permitted Acquisitions;
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(e) Trade accounts receivable (including, without
limitation, premiums) which are for goods furnished or services rendered in the
ordinary course of business and are payable in accordance with customary trade
terms;
(f) Financial Hedges purchased by any Company to the
extent permitted by, and purchased and maintained in compliance with, the Loan
Documents;
(g) Loans made by any Company in the ordinary course of
business to employees of such Company in an amount which, when aggregated with
any other outstanding loans made pursuant to this SECTION 9.20(G) from and after
the Signing Date to any date of determination, does not exceed $5,000,000;
provided, however, that payments under the Thrift Plan of MAI shall not be
deemed "loans" for purposes of this SECTION 9.20(G);
(h) Investments received by any Company in connection
with (i) the bankruptcy or reorganization of suppliers or customers of such
Company or (ii) in settlement of delinquent obligations of, or other disputes
with, customers and suppliers of such Company arising in the ordinary course of
business;
(i) Other loans, advances, and investments of the
Companies existing on the Funding Date and identified in SCHEDULE 9.20; or
(j) Purchases or redemptions of Borrower's or MEEMIC's
outstanding stock so long as no Default or Potential Default exists or arises
after giving effect thereto. However, Borrower shall not make purchases or
redemptions of Borrower's outstanding stock unless the Borrower's Leverage Ratio
is below 3.0 to 1.0 both before and immediately after giving effect to such
purchase or redemption, without the prior written consent of the Required
Lenders.
9.21 DISTRIBUTIONS AND RESTRICTED PAYMENTS. No Company shall,
directly or indirectly, declare, make, or pay any Distribution or Restricted
Payment, other than:
(a) Distributions declared, made, or paid by Borrower or
its Subsidiaries wholly in the form of their capital stock or in cash to the
extent required to compensate for fractional shares;
(b) So long as no Default or Potential Default exists or
arises after giving effect thereto, ordinary cash dividends declared, made or
paid by Borrower with respect to its outstanding capital stock;
(c) Distributions or Restricted Payments by any
Subsidiary of Borrower to Borrower or any Subsidiary of Borrower;
(d) So long as no Default or Potential Default exists or
arises after giving effect thereto, to the extent any Company is a partnership,
Distributions by such Company made in accordance with its partnership agreement
in an amount sufficient to pay the cash Tax liabilities of its respective
partners for federal and state income Taxes, which Taxes are directly
attributable to each such partner's profit of such partnership; and
(e) Purchases or redemptions of Borrower's outstanding
stock so long as no Default or Potential Default exists or arises after giving
effect thereto.
Notwithstanding the foregoing, Restricted Payments and Distributions are
permitted hereunder only to the extent such Restricted Payment or Distribution
is made in accordance with applicable Law and constitutes a valid, non-voidable
transaction.
9.22 RESTRICTIONS ON SUBSIDIARIES. No Subsidiary of Borrower shall
enter into or permit to exist any material arrangement or agreement (other than
the Loan Documents) which directly or indirectly prohibits any such Person from
(a) declaring, making, or paying, directly or indirectly, any Distribution or
Restricted Payment to any Company, (b) paying any Debt owed to any Company, (c)
making loans, advances, or investments to any Company, or (d) transferring any
of its property or assets to any Company.
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9.23 SALE OF ASSETS.
No Company shall sell, assign, transfer, or otherwise dispose
of any of its assets, other than (a) sales of assets, including securities and
other investments, in the ordinary course of business, (b) the sale, discount,
or transfer of delinquent accounts receivable in the ordinary course of business
for purposes of collection, (c) occasional sales of immaterial assets for
consideration not less than the fair market value thereof, (d) dispositions of
obsolete assets and those assets no longer useful in the conduct of business,
(e) sales, leases, or other dispositions by a Company to Borrower or among
Companies other than Borrower, (f) if no Default or Potential Default then
exists or arises as a result thereof, sales of other assets outside the ordinary
course of business; provided that, the fair market value of all assets sold
pursuant to CLAUSE (F), (A) in any calendar year does not exceed $10,000,000 in
the aggregate, and (B) on a cumulative basis on and after the Signing Date to
any date of determination does not exceed, in the aggregate, $25,000,000; and
(g) the sale of shares of MEEMIC stock; provided that, such shares are sold in
an arms length transaction for reasonably equivalent value for such shares, and
all proceeds (net of reasonable expenses of sale and Taxes attributable thereto)
of such sale or other disposition are remitted to Administrative Agent in
prepayment of the Term Loan Principal Debt and then to the Revolver Principal
Debt after the Term Loan Principal Debt has been paid in full. So long as no
Default has occurred and is continuing, all sums remitted to Administrative
Agent pursuant to this clause (g) in prepayment of the Term Loan Principal Debt
or the Revolver Principal Debt, as applicable, will be held by Administrative
Agent (to the extent such prepayment exceeds the then-outstanding amount of any
outstanding Base Rate Borrowings under the applicable Facility) until the
next-occurring end of an Interest Period for a Eurodollar Rate Borrowing under
the applicable Facility, and such sum will be applied in reduction of the Term
Loan Principal Debt and/or Revolver Principal Debt, as applicable, at the end of
such Interest Period as reasonably necessary to avoid Borrower's incurrence of
liability under SECTION 4.5 of this Agreement to pay additional amounts for
making a prepayment on a date other than the last day of an Interest Period.
9.24 SALE-LEASEBACK FINANCINGS. Except for a sale-lease back
arrangement in connection with the building at 8630 Delmar Boulevard, St. Louis,
Missouri, no Company will enter into any sale-leaseback arrangement with any
Person pursuant to which such Company shall lease any asset (whether now owned
or hereafter acquired) if such asset has been or is to be sold or transferred by
any Company to any other Person.
9.25 MERGERS AND DISSOLUTIONS; SALE OF CAPITAL STOCK. No Company
will, directly or indirectly, merge or consolidate with any other Person, other
than (a) as a result of the Consolidation, (b) as a result of a Permitted
Acquisition, or (c) mergers among Wholly-owned Subsidiaries; provided that, in
any merger involving Borrower (including a Permitted Acquisition effected as a
merger), Borrower must be the surviving entity, and, in any merger involving any
other Company (including a Permitted Acquisition or Intercompany Acquisition
effected as a merger), a Company must be the surviving entity. No Company shall
liquidate, wind up, or dissolve (or suffer any liquidation or dissolution),
other than liquidations, wind ups, or dissolutions incident to mergers permitted
under this SECTION 9.25. No Company may sell, assign, lease, transfer, or
otherwise dispose of the capital stock (or other ownership interests) of any
Subsidiary of such Company, except for sales, leases, transfers, or other such
distributions (i) by a Company other than Borrower to another Company or (ii)
pursuant to an Intercompany Acquisition. Borrower shall not convert its
organizational form from a Delaware corporation without (x) the prior written
consent of Administrative Agent and (y) the execution and delivery of such other
certificates, opinions, assumption agreements, and other instruments as
Administrative Agent may reasonably require.
9.26 NEW BUSINESS. Borrower and each Subsidiary of Borrower will
not, directly or indirectly, permit or suffer to exist any material change in
the type of businesses in which it is engaged from the businesses of such
Company as conducted on the Signing Date other than as contemplated in
connection with the Consolidation. Borrower will not engage in any material
business or activity other than (i) holding 100% of the capital stock of MAI and
PICM, (ii) purchasing, holding or selling investments as permitted by SECTIONS
9.20 and 9.23(A), and (iii) providing services to and/or managing certain
matters for its Subsidiaries pursuant to service and/or management agreements
under which the Borrower receives not less than its costs for performing such
services.
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9.27 FINANCIAL HEDGES.
(a) The Companies may from time to time enter into,
purchase, or acquire Financial Hedges in a form and upon terms acceptable to
Administrative Agent, issued by one or more Lenders or an institution acceptable
to Administrative Agent, which ensure that the net interest cost to the
Companies is fixed, capped, or hedged with respect to all or a portion of the
Debt of the Companies.
(b) To the extent any Lender or its Affiliate issues a
Financial Hedge to any Company which is permitted by SECTION 9.27(A), such
Lender or its Affiliate are afforded the benefits of (and Borrower, and each
other Company by execution of the Collateral Documents, confirms a grant of)
Liens in and to the Collateral as evidenced by the Collateral Documents to the
extent of such Lender's (or Affiliate thereof's) credit exposure under such
Financial Hedge; such Lien is pari passu with that of Administrative Agent on
behalf of Lenders).
(c) Financial Hedges held by any Company shall be subject
to the following: (i) each such Lender or other institution issuing a Financial
Hedge shall calculate its credit exposure in a reasonable and customary manner;
(ii) all documentation for such Financial Hedge shall conform to ISDA standards
and must be acceptable to Administrative Agent with respect to intercreditor
issues; (iii) if issued by any Lender or any Affiliate of a Lender to any
Company, the credit exposure under such Financial Hedge shall be secured by
Liens in and to the Collateral as evidenced by the Collateral Documents on a
pari passu basis with the Liens of Administrative Agent (held for the benefit of
Lenders), and such Lender or Affiliate issuing a Financial Hedge shall, by
acceptance of the benefits of such Liens in the Collateral, agree to the
provisions of SECTION 12.12; and (iv) such Financial Hedge shall be incurred in
the ordinary course of business and consistent with prior business practices of
the Companies and not for speculative purposes.
9.28 AFFILIATE SUBORDINATION AGREEMENTS. Each Company shall,
simultaneously with the incurrence of any and all future obligations of such
Company owed to any one or more Affiliates that is not already a party to an
Affiliate Subordination Agreement, cause the appropriate Affiliate or Affiliates
to execute and deliver to Administrative Agent an Affiliate Subordination
Agreement, subordinating the payment of such obligation to the payment of the
Obligation as provided in the Affiliate Subordination Agreement.
9.29 AMENDMENTS TO DOCUMENTS. On and after the Signing Date, no
Company shall (a) amend, permit any amendments to, modify, repeal, or replace
any Company's charter, bylaws, limited liability company agreement, partnership
agreement, or other organizational documents, if such action could adversely
affect the Rights of Lenders; (b) amend any, existing credit arrangement or
enter into any new credit arrangement (to the extent permitted by the Loan
Documents), if such amended or new credit arrangements contain any provisions
which are materially more restrictive (as reasonably determined by
Administrative Agent) than the provisions of the Loan Documents; (c) without the
prior written consent of Required Lenders, amend, modify, or waive any provision
of the Consolidation Documents other than to extend the deadline for the
consummation of the Consolidation to a date not later than June 30, 2001; or (d)
amend or permit any amendments to any Material Agreements (other than those
listed in clause (c)) which could reasonably be expected to adversely affect the
Rights of Lenders.
9.30 FINANCIAL COVENANTS. As calculated on a consolidated basis for
the Companies (unless otherwise indicated):
(a) Leverage Ratio. Borrower shall never permit the
Leverage Ratio to be greater than the ratio shown in the table below which
corresponds to the applicable period of determination:
Period Leverage Ratio
From Funding Date to June 30, 2002 3.75 to 1.00
- ----------------------------------------------- -----------------------------
From July 1, 2002 and thereafter 3.00 to 1.00
=============================================== =============================
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As used herein:
LEVERAGE RATIO means, with respect to the Companies on a consolidated
basis, either (a) on any date of determination prior to June 30, 2002, the ratio
of (i) Funded Debt to (ii) Annualized EBITDA, or (b) on any date of
determination occurring on and after June 30, 2002, the ratio of (i) Funded Debt
to (ii) EBITDA.
FUNDED DEBT means (without duplication), with respect to the Companies
on a consolidated basis, the sum of the following: (a) all liabilities,
obligations, and indebtedness which in accordance with GAAP should be classified
upon their balance sheet as liabilities in respect of (i) money borrowed,
including, without limitation, the Principal Debt and (ii) obligations under
Capital Leases; (b) obligations under reimbursement agreements for advances made
by an issuer of a letter of credit but only if such obligation is payable over
more than, or outstanding longer than, thirty (30) days from the date such
obligation arises; (c) obligations with respect to Financial Hedges, but only
following the occurrence of a default under the applicable Financial Hedge or an
Event of Default hereunder; and (d) obligations with respect to Debt for which a
Company is responsible or liable solely as a guarantor, but only from and after
the date demand for payment is made under the applicable guaranty.
ANNUALIZED EBITDA means, with respect to the Companies on a
consolidated basis, (a) on any date of determination occurring on September 30,
2001, to (but not including) December 31, 2001, EBITDA for the one-fiscal
quarter period ending September 30, 2001, multiplied by four, (b) on any date of
determination occurring on December 31, 2001, to (but not including) March 31,
2002, EBITDA for the two-fiscal quarter period ending December 31, 2001,
multiplied by two, and (c) on any date of determination occurring on March 31,
2002, to (but not including) June 30, 2002, EBITDA for the three-fiscal quarter
period ending March 31, 2002, multiplied by 4/3.
EBITDA means, with respect to the Companies on a consolidated basis, as
calculated at any date of determination with respect to the most recently ended
Rolling Period (unless otherwise indicated), the sum (without duplication) of
(a) Net Income during such period, plus (b) Interest Expense during such period,
plus (c) income Tax expense, during such period, plus (d) depreciation of
tangible property, amortization of goodwill and capitalized software costs, and
amortization of bond premium and/or discounts resulting from the valuation of
the PICM investment portfolio at fair value instead of PICM historical cost, as
required by GAAP, during such period.
NET INCOME means, with respect to the Companies on a consolidated
basis, as calculated at any date of determination, with respect to the most
recently ended Rolling Period (unless otherwise indicated), the net income (or
loss) of such Person from operations for such period before minority interest
but after deduction of all expenses, Taxes, and other proper charges for such
period, determined in accordance with GAAP, after eliminating therefrom all
extraordinary gains or losses and all other nonrecurring gains or losses from
any disposition of assets; provided, that, all gains and losses realized by the
Companies in connection with investments made or disposed of in the ordinary
course of business as permitted by SECTION 9.20 or 9.23(A) shall be included in
Net Income.
INTEREST EXPENSE means, for any period of calculation thereof, with
respect to the Companies on a consolidated basis, and without duplication, the
aggregate amount of all interest (including commitment fees) on all Debt of such
Person, whether paid in cash or accrued as a liability and payable in cash
during such period (including, without limitation, imputed interest on Capital
Lease obligations; the amortization of any original issue discount on any Debt;
the interest portion of any deferred payment obligation; all commissions,
discounts, and other fees and charges owed with respect to letters of credit or
bankers' acceptance financing; net costs associated with Financial Hedges; the
interest component of any Debt that is guaranteed or secured by such Person);
and all cash premiums or penalties for the repayment, redemption, or repurchase
of Debt.
ROLLING PERIOD means, on any date of determination, the most recent
four fiscal quarters ended on March 31, June 30, September 30, or December 31
(as the case may be).
(b) Fixed Charge Coverage Ratio. On and after September
30, 2001, Borrower shall never permit the Fixed Charge Coverage Ratio to be less
than or equal to the ratio shown in the table below which corresponds to the
applicable period of determination:
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Period Fixed Charge Coverage Ratio
From September 30, 2001 and thereafter 1.50 to 1.00
============================================ =================================
As used herein:
FIXED CHARGE COVERAGE RATIO means, with respect to the Companies on a
consolidated basis, either (a) on any date of determination prior to June 30,
2002, the ratio of (i) Annualized Fixed Charge Numerator to (ii) Annualized
Fixed Charges, or (b) on any date of determination occurring on and after June
30, 2002, with respect to the most recently ended Rolling Period, the ratio of
(i) Fixed Charge Numerator to (ii) Fixed Charges.
ANNUALIZED FIXED CHARGE NUMERATOR means, with respect to the Companies
on a consolidated basis, (a) on any date of determination occurring on September
30, 2001, to (but not including) December 31, 2001, Fixed Charge Numerator for
the one-fiscal quarter period ending September 30, 2001, multiplied by four, (b)
on any date of determination occurring on December 31, 2001, to (but not
including) March 31, 2002, Fixed Charge Numerator for the two-fiscal quarter
period ending December 31, 2001, multiplied by two, and (c) on any date of
determination occurring on March 31, 2002, to (but not including) June 30, 2002,
Fixed Charge Numerator for the three-fiscal quarter period ending March 31,
2002, multiplied by 4/3.
ANNUALIZED FIXED CHARGES means, with respect to the Companies on a
consolidated basis, the sum of (i) $10,000,000.00, plus (ii) the portion of all
Funded Debt, other than Principal Debt, that is due within one (1) year of the
date of determination, plus (iii) (a) on any date of determination occurring on
September 30, 2001, to (but not including) December 31, 2001, Interest Expense
for the one-fiscal quarter period ending September 30, 2001, multiplied by four,
(b) on any date of determination occurring on December 31, 2001, to (but not
including) March 31, 2002, Interest Expense for the two-fiscal quarter period
ending December 31, 2001, multiplied by two, and (c) on any date of
determination occurring on March 31, 2002, to (but not including) June 30, 2002,
Interest Expense for the three-fiscal quarter period ending March 31, 2002,
multiplied by 4/3.
FIXED CHARGE NUMERATOR means, with respect to the Companies on a
consolidated basis, Net Income, plus depreciation of tangible property,
amortization of goodwill and capitalized software costs, plus Interest Expense,
minus cash dividends paid by the Borrower.
FIXED CHARGES means, with respect to the Companies, on any date of
determination, the sum of (i) $10,000,000, plus (ii) the portion of all Funded
Debt, other than the Principal Debt, that is due within one (1) year of such
date of determination, plus (iii) Interest Expense with respect to the most
recently ended Rolling Period.
FUNDED DEBT means (without duplication), with respect to the Companies
on a consolidated basis, the sum of the following: (a) all liabilities,
obligations, and indebtedness which in accordance with GAAP should be classified
upon their balance sheet as liabilities in respect of (i) money borrowed,
including, without limitation, the Principal Debt and (ii) obligations under
Capital Leases; (b) obligations under reimbursement agreements for advances made
by an issuer of a letter of credit but only if such obligation is payable over
more than, or outstanding longer than, thirty (30) days from the date such
obligation arises; (c) obligations with respect to Financial Hedges, but only
following the occurrence of a default under the applicable Financial Hedge or an
Event of Default hereunder; and (d) obligations with respect to Debt for which a
Company is responsible or liable solely as a guarantor, but only from and after
the date demand for payment is made under the applicable guaranty.
INTEREST EXPENSE means, for any period of calculation thereof, with
respect to the Companies on a consolidated basis, and without duplication, the
aggregate amount of all interest (including commitment fees) on all Debt of such
Person, whether paid in cash or accrued as a liability and payable in cash
during such period (including, without limitation, imputed interest on Capital
Lease obligations; the amortization of any original issue discount on any Debt;
the interest portion of any deferred payment obligation; all commissions,
discounts, and other fees and charges owed with respect to letters of credit or
bankers' acceptance financing; net costs associated with Financial Hedges; the
interest
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component of any Debt that is guaranteed or secured by such Person); and all
cash premiums or penalties for the repayment, redemption, or repurchase of Debt.
NET INCOME means, with respect to the Companies on a consolidated
basis, as calculated at any date of determination, with respect to the most
recently ended Rolling Period (unless otherwise indicated), the net income (or
loss) of such Person from operations for such period before minority interest
but after deduction of all expenses, Taxes, and other proper charges for such
period, determined in accordance with GAAP, after eliminating therefrom all
extraordinary gains or losses and all other nonrecurring gains or losses from
any disposition of assets; provided, that, all gains and losses realized by the
Companies in connection with investments made or disposed of in the ordinary
course of business as permitted by SECTION 9.20 or 9.23(A) shall be included in
Net Income.
ROLLING PERIOD means, on any date of determination, the most recent
four fiscal quarters ended on March 31, June 30, September 30, or December 31
(as the case may be).
(c) Minimum Net Worth. Borrower shall never permit the
Net Worth of Borrower and its Subsidiaries on a consolidated basis measured at
the end of each fiscal year of Borrower to be less than the sum of (i) the
greater of (A) $290,000,000 or (B) 90% of the Net Worth of Borrower and its
Subsidiaries on a consolidated basis at June 30, 2001, plus (ii) 75% of Net
Income of the Companies on a consolidated basis (excluding losses) after June
30, 2001.
As used herein:
NET WORTH means, with respect to the Companies on a consolidated basis,
as calculated at any date of determination, the amount of common shareholders'
equity of Borrower and its Subsidiaries, determined on a consolidated basis as
at such date in accordance with GAAP, but exclusive of any adjustments required
under FASB 115.
NET INCOME solely for the purposes of this SECTION 9.30(C) means, with
respect to the Companies on a consolidated basis, as calculated at any date of
determination, with respect to the fiscal year then ended, the net income (or
loss) of such Person from operations for such period after deduction of all
expenses, Taxes, and other proper charges for such period, determined in
accordance with GAAP, after eliminating therefrom all extraordinary gains or
losses and all other nonrecurring gains or losses from any disposition of
assets; provided, that, all gains and losses realized by the Companies in
connection with investments made or disposed of in the ordinary course of
business as permitted by SECTION 9.20 or 9.23(A) shall be included in Net
Income.
(d) NAIC Risk-Based Capital Ratio. Borrower shall never
permit the NAIC Risk-Based Capital Ratio measured at the end of any fiscal year
for either The Medical Assurance Company, Inc. or ProNational Insurance Company
to be less than 3.5 to 1; provided, that, in the event that the NAIC Risk-Based
Capital Ratio for either such company is less than 3.5 to 1, but is not less
than 3.0 to 1, Borrower shall not be in Default under this Agreement (in the
absence of any other Default or Event of Default) if within 30 days after the
NAIC Risk-Based Capital Ratio falls below 3.5 to 1, Borrower pledges to Lenders
(in a manner acceptable to Administrative Agent), as additional security for the
Obligation, Excess Cash in an amount equal to the Total Adjusted Capital
Shortfall for the applicable company. As used herein:
NAIC RISK-BASED CAPITAL RATIO means, with respect to any Person on an
individual basis, the ratio of Total Adjusted Capital to Authorized Control
Level Risk-Based Capital. As used herein, the terms "Total Adjusted Capital" and
"Authorized Control Level Risk-Based Capital" have the meanings attributed
thereto in the Risk-Based Capital (RBC) for Property and Casualty Insurers Model
Act adopted by the NAIC in December 1992, as modified, supplemented or amended
from time to time.
EXCESS CASH means unencumbered cash and readily marketable securities
held by Borrower which in the aggregate exceeds the Revolver Principal Debt.
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TOTAL ADJUSTED CAPITAL SHORTFALL means, with respect to either
ProNational Insurance Company or The Medical Assurance Company, Inc., the amount
of additional Total Adjusted Capital that would be necessary for such Person to
achieve a NAIC Risk-Based Capital Ratio of 3.5 to 1.
(e) Funded Debt to Adjusted Statutory Capital Ratio.
Borrower shall never permit its ratio of Funded Debt to Adjusted Statutory
Capital to be greater than 0.35 to 1.
As used herein:
FUNDED DEBT means (without duplication), with respect to the Companies
on a consolidated basis, the sum of the following: (a) all liabilities,
obligations, and indebtedness which in accordance with GAAP should be classified
upon their balance sheet as liabilities in respect of (i) money borrowed,
including, without limitation, the Principal Debt and (ii) obligations under
Capital Leases; (b) obligations under reimbursement agreements for advances made
by an issuer of a letter of credit but only if such obligation is payable over
more than, or outstanding longer than, thirty (30) days from the date such
obligation arises; (c) obligations with respect to Financial Hedges, but only
following the occurrence of a default under the applicable Financial Hedge or an
Event of Default hereunder; and (d) obligations with respect to Debt for which a
Company is responsible or liable solely as a guarantor, but only from and after
the date demand for payment is made under the applicable guaranty.
ADJUSTED STATUTORY CAPITAL means the combined statutory surplus of The
Medical Assurance Company, Inc. and ProNational Insurance Company as reflected
in their most recent respective Annual Statements, plus unencumbered cash and
readily marketable securities held directly by Borrower, plus Funded Debt.
SECTION 10 DEFAULT.
The term "DEFAULT" or "EVENT OR DEFAULT" means the occurrence of any
one or more of the following events:
10.1 PAYMENT OF OBLIGATION. The failure or refusal of any Company
to pay (a) all or any part of the Principal Debt when the same becomes due
(whether by its terms, by acceleration, or as otherwise provided in the Loan
Documents); (b) interest or fees within five (5) days after the same become due
and payable in accordance with the Loan Documents; or (c) any other part of the
Obligation within five (5) days after demand by Administrative Agent or any
Lender.
10.2 COVENANTS. The failure or refusal of Borrower (and, if
applicable, any other Company) to punctually and properly perform, observe, and
comply with:
(a) Any covenant, agreement, or condition contained in
SECTIONS 9.1, 9.4, 9.6, 9.10, 9.12, 9.13, 9.16, 9.17, 9.20 through 9.25, 9.29,
AND 9.30; and
(b) Any covenant, agreement, or condition contained in
SECTIONS 9.3 AND 9.14 and such failure or refusal continues for five (5) days;
and
(c) Any other covenant, agreement, or condition contained
in any Loan Document (other than the covenants to pay the Obligation set forth
in SECTION 10.1 and the covenants in SECTION 10.2(A) and the covenants in
SECTION 10.2(B)), and such failure or refusal continues for twenty (20) days.
10.3 DEBTOR RELIEF. The Borrower or any Significant Subsidiary (a)
shall not be Solvent, (b) fails to pay its Debts generally as they become due,
(c) voluntarily seeks, consents to, or acquiesces in the benefit of any Debtor
Relief Law, other than as a creditor or claimant, or (d) becomes a party to or
is made the subject of any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise adversely
affect the Rights of Administrative Agent or any Lender granted in the Loan
Documents (unless, in the event such proceeding is involuntary, the petition
instituting same is dismissed within 60 days after its filing).
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10.4 JUDGMENTS AND ATTACHMENTS. Any Company fails, within 30 days
after entry, to pay, bond, or otherwise discharge any judgment or order against
such Company for the payment of money in excess of $7,500,000 (individually or
collectively), or any warrant of attachment, sequestration, or similar
proceeding against any of its assets having a value (individually or
collectively) of $7,500,000, which is not either (a) stayed on appeal or (b)
being diligently contested by appropriate proceedings and adequate reserves
therefor having been set aside on the books of the Companies in accordance with
GAAP.
10.5 GOVERNMENT ACTION. (a) A final non-appealable order is issued
by any Governmental Authority, including, without limitation, any Insurance
Regulator or the United States Justice Department, seeking to cause any Company
to divest a significant portion of its assets pursuant to any antitrust,
restraint of trade, unfair competition, industry regulation, or similar Laws, or
(b) any Governmental Authority shall condemn, seize, or otherwise appropriate,
or take custody or control of all or any substantial portion of the assets of
any Company.
10.6 MISREPRESENTATION. Any representation or warranty made by any
Company contained in any Loan Document shall at any time prove to have been
incorrect in any material respect when made.
10.7 CHANGE OF CONTROL. The occurrence of a Change of Control.
10.8 AUTHORIZATIONS. (a)Any Company its required by any
Governmental Authority to halt operations under any Authorization and such
action continues uncorrected for 30 days after the applicable Company has
received notice thereof; or (b) any Governmental Authority makes any other final
non-appealable determination the effect of which would be to affect materially
and adversely the operations of any Company as now conducted.
10.9 DEFAULT UNDER OTHER DEBT AND AGREEMENTS. (a) Any Company fails
to pay when due (after lapse of any applicable grace periods) any Debt of such
Company (other than the Obligation) in excess (individually or collectively) of
$1,000,000; (b) the acceleration of any Debt of any Company or the occurrence of
any event or condition that (with notice or lapse of time) would enable the
holder of such Debt or any Person acting on behalf of such holder to accelerate
the maturing thereof, which Debt exceeds (individually or collectively)
$1,000,000; or (c) any default by a Company exists under any other Material
Agreement if such default could reasonably be expected to be a Material Adverse
Event.
10.10 VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. Any Loan
Document shall, at any time after its execution and delivery and for any reason,
cease to be in full force and effect in any material respect or be declared to
be null and void (other than in accordance with the terms hereof or thereof) or
the validity or enforceability thereof be contested by any Company party thereto
or any Company shall deny in writing that it has any liability or any further
liability or obligations under any Loan Document to which it is a party.
10.11 MATERIAL ADVERSE EFFECT. The occurrence of a Material Adverse
Event.
10.12 PLEDGED STOCK. (a) Administrative Agent ceases to hold as
Collateral (for the benefit of Lenders) a perfected first priority Lien on all
of the issued and outstanding shares of common stock issued by all Significant
Subsidiaries (other than MEEMIC and its Subsidiaries), and such failure is not
cured within five Business Days; or (b) any Collateral Document after delivery
thereof pursuant to SECTION 6 shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected first priority Lien on and
security interest in the Collateral purported to be covered thereby, except as
permitted under the Loan Documents.
10.13 DISSOLUTION. Except for dissolutions in connection with
Intercompany Acquisitions or otherwise permitted by this Agreement, any Company
shall dissolve or otherwise terminate its existence.
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SECTION 11 RIGHTS AND REMEDIES.
11.1 REMEDIES UPON DEFAULT.
(a) Debtor Relief. If a Default exists under SECTION
10.3(C) or 10.3(D), the commitment to extend credit hereunder shall
automatically terminate and the entire unpaid balance of the Obligation shall
automatically become due and payable without any action or notice of any kind
whatsoever.
(b) Other Defaults. If any Default exists, Administrative
Agent may (and, subject to the terms of SECTION 12, shall upon the request of
Required Lenders) or Required Lenders may, do any one or more of the following:
(i) if the maturity of the Obligation has not already been accelerated under
SECTION 11.1(A), declare the entire unpaid balance of the Obligation, or any
part thereof, immediately due and payable, whereupon it shall be due and
payable, (ii) terminate the commitments of Lenders to extend credit hereunder;
(iii) reduce any claim to judgment; (iv) to the extent permitted by Law,
exercise (or request each Lender to, and each Lender shall be entitled to,
exercise whether or not the Administrative Agent or Required Lender shall have
made such a request) the Rights of offset or banker's Lien against the interest
of Borrower in and to every account and other property of Borrower which are in
the possession of Administrative Agent or any Lender to the extent of the full
amount of the Obligation (to the extent permitted by Law, Borrower being deemed
directly obligated to each Lender in the full amount of the Obligation for
such purposes) provided, that, Administrative Agent and each Lender agrees that
it shall not, and shall not have the right to, exercise any Right of offset
and/or banker's Lien against any Reserve Account; (v) exercise any and all other
legal or equitable Rights afforded by the Loan Documents, the Laws of the State
of Alabama, or any other applicable jurisdiction as Administrative Agent or
Required Lenders (as the case may be) shall deem appropriate, or otherwise,
including, without limitation, the Right to bring suit or other proceedings
before any Governmental Authority either for specific performance of any
covenant or condition contained in any of the Loan Documents or in aid of the
exercise of any Right granted to Administrative Agent or any Lender in any of
the Loan Documents.
11.2 COMPANY WAIVERS. To the extent permitted by Law, the Companies
hereby waive presentment and demand for payment, protest, notice of intention to
accelerate, notice of acceleration, and notice of protest and nonpayment, and
agree that their respective liability with respect to the Obligation (or any
part thereof) shall not be affected by any renewal or extension in the time of
payment of the Obligation (or any part thereof), by any indulgence, or by any
release or change in any security for the payment of the Obligation (or any part
thereof).
11.3 PERFORMANCE BY ADMINISTRATIVE AGENT. If any covenant, duty, or
agreement of any Company is not performed in accordance with the terms of the
Loan Documents, after the occurrence and during the continuance of a Default,
Administrative Agent may, at its option (but subject to the approval of Required
Lenders), perform or attempt to perform such covenant, duty, or agreement on
behalf of such Company. In such event, any amount expended by Administrative
Agent in such performance or attempted performance shall be payable by Borrower
to Administrative Agent on demand, shall become part of the Obligation, and
shall bear interest at the Default Rate from the date of such expenditure by
Administrative Agent until paid. Notwithstanding the foregoing, it is expressly
understood that Administrative Agent does not assume, and shall never have,
except by its express written consent, any liability or responsibility for the
performance of any covenant, duty, or agreement of any Company.
11.4 DELEGATION OF DUTIES AND RIGHTS. Lenders may perform any of
their duties or exercise any of their Rights under the Loan Documents by or
through their respective Representatives.
11.5 NOT IN CONTROL. Nothing in any Loan Document shall, or shall
be deemed to (a) give any Agent or any Lender the Right to exercise control over
the assets (including real property), affairs, or management of any Company, (b)
preclude or interfere with compliance by any Company with any Law, or (c)
require any act or omission by any Company that may be harmful to Persons or
property. Any "Material Adverse Event" or other materiality qualifier in any
representation, warranty, covenant, or other provision of any Loan Document is
included for credit documentation purposes only and shall not, and shall not be
deemed to, mean that any Agent or any Lender acquiesces in any non-compliance by
any Company with any Law or document, or that any Agent or any Lender does not
expect any Company to promptly, diligently, and continuously carry out all
appropriate removal, remediation, and termination activities required or
appropriate in accordance with all Environmental Laws. Agents and Lenders have
no fiduciary relationship
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with or fiduciary duty to any Company arising out of or in connection with the
Loan Documents, and the relationship between Agents and Lenders, on the one
hand, and the Companies, on the other hand, in connection with the Loan
Documents is solely that of debtor and creditor. The power of Agents and Lenders
under the Loan Documents is limited to the Rights provided in the Loan
Documents, which Rights exist solely to assure payment and performance of the
Obligation.
11.6 COURSE OF DEALING. The acceptance by Administrative Agent or
Lenders at any time and from time to time of partial payment on the Obligation
shall not be deemed to be a waiver of any Default then existing. No waiver by
Administrative Agent, Required Lenders, or Lenders of any Default shall be
deemed to be a waiver of any other then- existing or subsequent Default. No
delay or omission by Administrative Agent, Required Lenders, or Lenders in
exercising any Right under the Loan Documents shall impair such Right or be
construed as a waiver thereof or any acquiescence therein, nor shall any single
or partial exercise of any such Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Documents or
otherwise.
11.7 CUMULATIVE RIGHTS. All Rights available to Administrative
Agent and Lenders under the Loan Documents are cumulative of and in addition to
all other Rights granted to Administrative Agent and Lenders at law or in
equity, whether or not the Obligation is due and payable and whether or not
Administrative Agent or Lenders have instituted any suit for collection,
foreclosure, or other action in connection with the Loan Documents.
11.8 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Administrative Agent or Lenders from the exercise of any Rights pertaining to
the Obligation shall be applied to the Obligation in the order and manner set
forth in SECTION 3.12.
11.9 CERTAIN PROCEEDINGS. Each Company will promptly execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers
Administrative Agent or Lenders may reasonably request in connection with the
obtaining of any consent, approval, registration, qualification, permit,
license, or Authorization of any Governmental Authority or other Person
necessary or appropriate for the effective exercise of any Rights under the Loan
Documents. Because the Companies agree that Administrative Agent's and Lenders'
remedies at Law for failure of the Companies to comply with the provisions of
this Section would be inadequate and that such failure would not be adequately
compensable in damages, the Companies agree that the covenants of this Section
may be specifically enforced.
11.10 LIMITATION OF RIGHTS. Notwithstanding any other provision of
any Loan Document, any action taken or proposed to be taken by Administrative
Agent, any Agent, or any Lender under any Loan Document which would affect the
operational, voting, or other control of any Company, shall be pursuant any
applicable state Law, and the applicable rules and regulations thereunder and,
if and to the extent required thereby, subject to the prior consent of
applicable Insurance Regulators.
11.11 EXPENDITURES BY LENDERS. Borrower shall promptly pay within 15
Business Days after request therefor (a) all reasonable costs, fees, and
expenses paid or incurred by Administrative Agent and Lead Arranger, incident to
any Loan Document (including, without limitation, the reasonable fees and
expenses of counsel to Administrative Agent and Lead Arranger and the allocated
cost of internal counsel in connection with the negotiation, preparation,
delivery, execution, coordination and administration of the Loan Documents and
any related amendment, waiver, or consent) and (b) all reasonable costs and
expenses of Lenders and Administrative Agent incurred by Administrative Agent or
any Lender in connection with the enforcement of the obligations of any Company
arising under the Loan Documents (including, without limitation, costs and
expenses incurred in connection with any workout or bankruptcy) or the exercise
of any Rights arising under the Loan Documents (including, without limitation,
reasonable attorneys' fees including the allocated cost of internal counsel,
court costs and other costs of collection), all of which shall be a part of the
Obligation and shall bear interest at the Default Rate from the date due until
the date repaid.
11.12 INDEMNIFICATION. BORROWER AND EACH OTHER COMPANY (BY EXECUTION
OF AN AFFILIATE SUBORDINATION AGREEMENT OR ANY OTHER LOAN DOCUMENT) AGREES TO
INDEMNIFY AND HOLD HARMLESS EACH AGENT AND EACH LENDER AND EACH OF THEIR
RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ATTORNEYS, AND ADVISORS (EACH,
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AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES,
LIABILITIES, (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL, LIABILITIES)
COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES)
THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN
EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING,
WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR
PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE LOAN
DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED
USE OF THE PROCEEDS OF THE BORROWINGS (INCLUDING ANY OF THE FOREGOING ARISING
FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH
INDEMNIFIED PARTY'S BAD FAITH, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT. IN THE
CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY
IN THIS SECTION 11.12 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT
SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY BORROWER, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER PERSON
OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER AND EACH OTHER
COMPANY (BY EXECUTION OF AN AFFILIATE SUBORDINATION AGREEMENT OR ANY OTHER LOAN
DOCUMENT) AGREES NOT TO ASSERT ANY CLAIM AGAINST ANY INDEMNIFIED PARTY ON ANY
THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSE QUENTIAL, OR PUNITIVE DAMAGES
ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PRO POSED USE OF THE PROCEEDS
OF THE BORROWINGS. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF
BORROWER OR THE OTHER COMPANIES HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE
COMPANIES CONTAINED IN THIS SECTION 11.12 SHALL SURVIVE THE PAYMENT IN FULL OF
THE BORROWINGS AND ALL OTHER AMOUNTS PAYABLE UNDER THE LOAN DOCUMENTS.
SECTION 12 AGREEMENT AMONG LENDERS.
12.1 ADMINISTRATIVE AGENT.
(a) Appointment of Administrative Agent. Each Lender
hereby appoints SouthTrust Bank (and SouthTrust Bank hereby accepts such
appointment) as its nominee and agent, in its name and on its behalf: (i) to act
as nominee for and on behalf of such Lender in and under all Loan Documents;
(ii) to arrange the means whereby the funds of Lenders are to be made available
to Borrower under the Loan Documents; (iii) to take such action as may be
requested by any Lender under the Loan Documents (when such Lender is entitled
to make such request under the Loan Documents and after such requesting Lender
has obtained the concurrence of such other Lenders as may be required under the
Loan Documents); (iv) to receive all documents and items to be furnished to
Lenders under the Loan Documents; (v) to timely distribute, and Administrative
Agent agrees to so distribute, to each Lender all material information,
requests, documents, and items received from Borrower under the Loan Documents;
(vi) to promptly distribute to each Lender its ratable part of each payment or
prepayment (whether voluntary, as proceeds of Collateral upon or after
foreclosure, as proceeds of insurance thereon, or otherwise) in accordance with
the terms of the Loan Documents; (vii) to deliver to the appropriate Persons
requests, demands, approvals, and consents received from Lenders; and (viii) to
execute, on behalf of Lenders, such releases or other documents or instruments
as are permitted by the Loan Documents or as directed by Lenders from time to
time; provided, however, Administrative Agent shall not be required to take any
action which exposes Administrative Agent to personal liability or which is
contrary to the Loan Documents or applicable Law.
(b) Resignation of Administrative Agent; Successor
Administrative Agents. Administrative Agent may resign at any time as
Administrative Agent under the Loan Documents by giving written notice thereof
to Lenders and may be removed as Administrative Agent under the Loan Documents
at any time with cause by Required Lenders. Should the initial or any successor
Administrative Agent ever cease to be a party hereto or should the initial or
any successor Administrative Agent ever resign or be removed as Administrative
Agent, then Required Lenders shall elect the successor Administrative Agent from
among the Lenders (other than the resigning Administrative Agent). If
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no successor Administrative Agent shall have been so appointed by Required
Lenders, within 30 days after the retiring Administrative Agent's giving of
notice of resignation or Required Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
Lenders, appoint a successor Administrative Agent, which shall be a commercial
bank having a combined capital and surplus of at least $1,000,000,000. Upon the
acceptance of any appointment as Administrative Agent under the Loan Documents
by a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the Rights of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations of Administrative Agent under the Loan Documents
and each Lender shall execute such documents as any Lender may reasonably
request to reflect such change in and under the Loan Documents. After any
retiring Administrative Agent's resignation or removal as Administrative Agent
under the Loan Documents, the provisions of this SECTION 12 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under the Loan Documents.
(c) Administrative Agent as a Lender; Non-Fiduciary.
Administrative Agent, in its capacity as a Lender, shall have the same Rights
under the Loan Documents as any other Lender and may exercise the same as though
it were not acting as Administrative Agent; the term "Lender" shall, unless the
context otherwise indicates, include Administrative Agent; and any resignation
or removal of Administrative Agent hereunder shall not impair or otherwise
affect any Rights which it has or may have in its capacity as an individual
Lender. Each Lender and Borrower agree that Administrative Agent is not a
fiduciary for Lenders or for Borrower but simply is acting in the capacity
described herein to alleviate administrative burdens for both Borrower and
Lenders, that Administrative Agent has no duties or responsibilities to Lenders
or Borrower except those expressly set forth herein, and that Administrative
Agent in its capacity as a Lender has all Rights of any other Lender.
(d) Other Activities of Administrative Agent.
Administrative Agent and its Affiliates may now or hereafter be engaged in one
or more loan, letter of credit, leasing, or other financing transactions with
Borrower and/or one or more of the other Companies, act as trustee or depositary
for Borrower and/or one or more of the other Companies, or otherwise be engaged
in other transactions with Borrower and/or one or more of the other Companies
(collectively, the "OTHER ACTIVITIES") not the subject of the Loan Documents.
Without limiting the Rights of Lenders specifically set forth in the Loan
Documents, Administrative Agent and its Affiliates shall not be responsible to
account to Lenders for such other activities, and no Lender shall have any
interest in any other activities, any present or future guaranties by or for the
account of Borrower and/or one or more of the other Companies which are not
contemplated or included in the Loan Documents, any present or future offset
exercised by Administrative Agent and its Affiliates in respect of such other
activities, any present or future property taken as security for any such other
activities, or any property now or hereafter in the possession or control of
Administrative Agent or its Affiliates which may be or become security for the
obligations of Borrower or any Company arising under the Loan Documents by
reason of the general description of indebtedness secured or of property
contained in any other agreements, documents or instruments related to any such
other activities; provided that, if any payments in respect of such guaranties
or such property or the proceeds thereof shall be applied to reduction of the
Obligation arising under the Loan Documents, then each Lender shall be entitled
to share in such application ratably.
12.2 EXPENSES. Upon demand by Administrative Agent, each Lender
shall pay its ratable portion of any reasonable expenses (including, without
limitation, court costs, attorneys' fees, and other costs of collection)
incurred by Administrative Agent in connection with any of the Loan Documents if
and to the extent Administrative Agent does not receive reimbursement therefor
from other sources within 60 days after incurred; provided that, each Lender
shall be entitled to receive its ratable portion of any reimbursement for such
expenses, or part thereof, which Administrative Agent subsequently receives from
such other sources.
12.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise
provided in the Loan Documents, nothing in the Loan Documents shall be deemed to
give any Lender any advantage over any other Lender insofar as the Obligation
arising under the Loan Documents is concerned, or to relieve any Lender from
absorbing its ratable portion of any losses sustained with respect to the
Obligation (except to the extent such losses result from unilateral actions or
inactions of any Lender that are not made in accordance with the terms and
provisions of the Loan Documents).
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12.4 DELEGATION OF DUTIES; RELIANCE. Administrative Agent may
perform any of its duties or exercise any of its Rights under the Loan Documents
by or through its Representatives. Administrative Agent and its Representatives
shall (a) be entitled to rely upon (and shall be protected in relying upon) any
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telecopy, telegram, telex or teletype message, statement, order, or other
documents or conversation believed by it or them to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinion of counsel selected by Administrative Agent, (b) be
entitled to deem and treat each Lender as the owner and holder of the Obligation
owed to such Lender for all purposes until, subject to SECTION 13.13, written
notice of the assignment or transfer thereof shall have been given to and
received by Administrative Agent (and any request, authorization, consent, or
approval of any Lender shall be conclusive and binding on each subsequent
holder, assignee, or transferee of the Obligation owed to such Lender or portion
thereof until such notice is given and received), (e) not be deemed to have
notice of the occurrence of a Default or Potential Default unless a responsible
officer of Administrative Agent, who handles matters associated with the Loan
Documents and transactions thereunder, has received written notice from a Lender
or Borrower and stating that such notice is a "Notice of Default," and (d) be
entitled to consult with legal counsel (including counsel for Borrower),
independent accountants, and other experts selected by Administrative Agent and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts.
12.5 LIMITATION OF LIABILITY.
(a) General. None of the Agents or any of their
respective Representatives shall be liable for any action taken or omitted to be
taken by it or them under the Loan Documents in good faith and reasonably
believed by it or them to be within the discretion or power conferred upon it or
them by the Loan Documents or be responsible for the consequences of any error
of judgment, except for fraud, gross negligence, or willful misconduct; and none
of the Agents or any of their respective Representatives has a fiduciary
relationship with any Lender by virtue of the Loan Documents (provided that,
nothing herein shall negate the obligation of Administrative Agent to account
for funds received by it for the account of any Lender).
(b) Non-Discretionary Actions; Indemnification. Unless
indemnified to its satisfaction against loss, cost, liability, and expense,
neither Administrative Agent nor any other Agent shall be compelled to do any
act under the Loan Documents or to take any action toward the execution or
enforcement of the powers thereby created or to prosecute or defend any suit in
respect of the Loan Documents. If Administrative Agent requests instructions
from Lenders or Required Lenders, as the case may be, with respect to any act or
action (including, without limitation, any failure to act) in connection with
any Loan Document, Administrative Agent shall be entitled (but shall not be
required) to refrain (without incurring any liability to any Person by so
refraining) from such act or action unless and until it has received such
instructions. Except where action of Required Lenders or all Lenders is required
in the Loan Documents, Administrative Agent may act hereunder in its own
discretion without requesting instructions. In no event, however, shall
Administrative Agent or any of its respective Representatives be required to
take any action which it or they determine could incur for it or them criminal
or onerous civil liability. Without limiting the generality of the foregoing, no
Lender shall have any Right of action against Administrative Agent as a result
of Administrative Agent's acting or refraining from acting hereunder in
accordance with the instructions of Required Lenders (or all Lenders if required
in the Loan Documents).
(c) Independent Credit Decision. Neither Administrative
Agent nor any other Agent shall be responsible in any manner to any Lender or
any Participant for, and each Lender represents and warrants that it has not
relied upon Administrative Agent or any other Agent in respect of, (i) the
creditworthiness of any Company and the risks involved to such Lender, (ii) the
effectiveness, enforceability, genuineness, validity, or the due execution of
any Loan Document, (iii) any representation, warranty, document, certificate,
report, or statement made therein or furnished thereunder or in connection
therewith, (iv) the existence, priority, or perfection of any Lien hereafter
granted or purported to be granted under any Loan Document, or (v) observation
of or compliance with any of the terms, covenants, or conditions of any Loan
Document on the part of any Company. Each Lender agrees to indemnify
Administrative Agent and its respective Representatives and hold them harmless
from and against (but limited to such Lender's Pro Rata Part of) any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses, and reasonable disbursements of any kind or nature
whatsoever which may be imposed on, asserted against, or incurred by them in any
way relating to or arising out of the Loan Documents or any action taken or
omitted by them under the
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Loan Documents (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF
ADMINISTRATIVE AGENT OR ITS REPRESENTATIVES), to the extent Administrative Agent
and its respective Representatives are not reimbursed for such amounts by any
Company (provided that, Administrative Agent, and its respective Representatives
shall not have the Right to be indemnified hereunder for its or their own fraud,
gross negligence, or willful misconduct).
12.6 DEFAULT; COLLATERAL.
(a) Upon the occurrence and continuance of a Default,
Lenders agree to promptly confer in order that Required Lenders or necessary
Lenders, as the case may be, may agree upon a course of action for the
enforcement of the Rights of Lenders; and Administrative Agent shall be entitled
to refrain from taking any action (without incurring any liability to any Person
for so refraining) unless and until Administrative Agent shall have received
instructions from Required Lenders. All Rights of action under the Loan
Documents and all Rights to the Collateral, if any, hereunder may be enforced by
Administrative Agent and any suit or proceeding instituted by Administrative
Agent in furtherance of such enforcement shall be brought in its name as
Administrative Agent without the necessity of joining as plaintiffs or
defendants any other Lender, and the recovery of any judgment shall be for the
benefit of Lenders subject to the expenses of Administrative Agent. In actions
with respect to any property of Borrower, Administrative Agent is acting for the
ratable benefit of each Lender. Any and all agreements to subordinate (whether
made heretofore or hereafter) other indebtedness or obligations of Borrower to
the Obligation shall be construed as being for the ratable benefit of each
Lender.
(b) Each Lender authorizes and directs Administrative
Agent to enter into the Collateral Documents for the benefit of the Lenders.
Except to the extent unanimity (or other percentage set forth in SECTION 13.11)
is required hereunder, each Lender agrees that any action taken by the Required
Lenders in accordance with the provisions of the Loan Documents, and the
exercise by the Required Lenders of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders.
(c) Administrative Agent is hereby authorized on behalf
of all of the Lenders, without the necessity of any notice to or further consent
from any Lender, from time to time to take any action with respect to any
Collateral or Collateral Documents which may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Collateral Documents.
(d) Administrative Agent shall have no obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by any Company or is cared for, protected, or insured or has
been encumbered or that the Liens granted to Administrative Agent herein or
pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected, or enforced, or are entitled to any particular priority,
or to exercise at all or in any particular manner or under any duty of care,
disclosure, or fidelity, or to continue exercising, any of the Rights granted or
available to Administrative Agent in this SECTION 12.6 or in any of the
Collateral Documents; it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, Administrative Agent
may act in any manner it may deem appropriate, in its sole discretion, given
Administrative Agent's own interest in the Collateral as one of the Lenders and
that Administrative Agent shall have no duty or liability whatsoever to any
Lender, other than to act without gross negligence or willful misconduct.
(e) Lenders hereby irrevocably authorize Administrative
Agent, at its option and in its discretion, to release any Lien granted to or
held by Administrative Agent upon any Collateral: (i) upon termination of the
Total Commitment and payment and satisfaction of the Obligation; (ii)
constituting property in which no Company owned an interest at the time the Lien
was granted or at any time thereafter; (iii) constituting property leased to a
Company under a lease which has expired or been terminated in a transaction
permitted under the Loan Document or is about to expire and which has not been,
and is not intended by such Company to be, renewed; (iv) consisting of an
instrument evidencing Debt pledged to Administrative Agent (for the benefit of
Lenders), if the Debt evidenced thereby has been paid in full; (v) upon the
sale, transfer, or disposition of Collateral which is expressly permitted
pursuant to the Loan Documents, including, without limitation, under SECTION
9.23; (vi) as contemplated in SECTION 6.3; or (vii) if approved, authorized, or
ratified in writing by all necessary Lenders. Upon request by Administrative
Agent at any time, Lenders
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will confirm in writing Administrative Agent's authority to release particular
types or items of Collateral pursuant to this SECTION 12.6.
(f) In furtherance of the authorizations set forth in
this SECTION 12.6, each Lender hereby irrevocably appoints Administrative Agent
its attorney-in-fact, with full power of substitution, for and on behalf of and
in the name of each such Lender, (i) to enter into Collateral Documents
(including, without limitation, any appointments of substitute trustees under
any Collateral Document), (ii) to take action with respect to the Collateral and
Collateral Documents to perfect, maintain, and preserve Lender's Liens, and
(iii) to execute instruments of release or to take other action necessary to
release Liens upon any Collateral to the extent authorized in PARAGRAPH (E)
hereof. This power of attorney shall be liberally, not restrictively, construed
so as to give the greatest latitude to Administrative Agent's power, as
attorney, relative to the Collateral matters described in this SECTION 12.6. The
powers and authorities herein conferred on Administrative Agent may be exercised
by Administrative Agent through any Person who, at the time of the execution of
a particular instrument, is an officer of Administrative Agent. The power of
attorney conferred by this SECTION 12.6(F) is granted for valuable consideration
and is coupled with an interest and is irrevocable so long as the Obligation, or
any part thereof, shall remain unpaid or Lenders are obligated to make any
Borrowings under the Loan Documents.
12.7 LIMITATION OF LIABILITY. To the extent permitted by Law, (a)
neither Administrative Agent nor any other Agent (acting in their respective
agent capacities) shall incur any liability to any other Lender, Agent, or
Participant except for acts or omissions resulting from its own fraud, gross
negligence or willful misconduct, and (b) neither Administrative Agent nor any
other Agent, Lender, or Participant shall incur any liability to any other
Person for any act or omission of any other Lender, Agent, or Participant.
12.8 RELATIONSHIP OF LENDERS. Nothing herein shall be construed as
creating a partnership or joint venture among Agents and Lenders.
12.9 BENEFITS OF AGREEMENT. None of the provisions of this SECTION
12 shall inure to the benefit of any Company or any other Person other than
Lenders; consequently, no Company or other Person shall be entitled to rely
upon, or to raise as a defense, in any manner whatsoever, the failure of any
Agent or any Lender to comply with such provisions.
12.10 AGENTS. None of the Lenders identified in this Agreement as
"Syndication Agent", "Lead Arranger" or "Co-Arranger" shall have any Rights,
powers, obligations, liabilities, responsibilities, or duties under the Loan
Documents other than those applicable to all Lenders as such. Without limiting
the foregoing, none of the Lenders so identified as a "Syndication Agent", "Lead
Arranger" or "Co-Arranger" shall have or be deemed to have any fiduciary
relationship with any Lender. Any Lender that is a "Syndication Agent", "Lead
Arranger" or "Co-Arranger" may voluntarily relinquish its title by giving
written notice thereof to Administrative Agent and Borrower. Upon such
relinquishments, a successor "Syndication Agent", "Lead Arranger" or
"Co-Arranger" may be appointed upon the mutual agreement of Borrower and
Administrative Agent.
12.11 OBLIGATIONS SEVERAL. The obligations of Lenders hereunder are
several, and each Lender hereunder shall not be responsible for the obligations
of the other Lenders hereunder, nor will the failure of one Lender to perform
any of its obligations hereunder relieve the other Lenders from the performance
of their respective obligations hereunder.
12.12 FINANCIAL HEDGES. To the extent any Lender or any Affiliate of
a Lender issues a Financial Hedge in accordance with the requirements of the
Loan Documents and accepts the benefits of the Liens in the Collateral arising
pursuant to the Collateral Documents, such Lender (for itself and on behalf of
any such Affiliates) hereby (i) appoints SouthTrust Bank, as its nominee and
agent, to act for and on behalf of such Lender or Affiliate thereof in
connection with the Collateral Documents and (ii) agrees to be bound by the
terms of this SECTION 12; whereupon all references to "Lender" in this SECTION
12 and in the Collateral Documents shall include, on any date of determination,
any Lender or Affiliate of a Lender that is party to a then-effective Financial
Hedge which complies with the requirements of the Loan Documents. Additionally,
if the Obligation owed to any Lender or Affiliate of a Lender consists solely of
Debt arising under a Financial Hedge (such Lender or Affiliate being referred to
in this SECTION 12.12 as an "ISSUING LENDER"), then such Issuing Lender (by
accepting the benefits of any Collateral Documents) acknowledges and agrees that
pursuant
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to the Loan Documents and without notice to or consent of such Issuing Lender:
(i) Liens in the Collateral may be released in whole or in part; (ii) all
guaranties may be released; (iii) any Collateral Document may be amended,
modified, supplemented, or restated; and (iv) all or any part of the Collateral
may be permitted to secure other Debt.
SECTION 13 MISCELLANEOUS.
13.1 HEADINGS. The headings, captions, and arrangements used in any
of the Loan Documents are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan
Documents, or affect the meaning thereof.
13.2 NONBUSINESS DAYS. In any case where any payment or action is
due under any Loan Document on a day which is not a Business Day, such payment
or action may be delayed until the next succeeding Business Day, but interest
and fees shall continue to accrue in respect of any payment to which it is
applicable until such payment is in fact made; provided that, if, in the case of
any such payment in respect of a Eurodollar Rate Borrowing, the next-succeeding
Business Day is in the next calendar month, then such payment shall be made on
the next-preceding Business Day.
13.3 COMMUNICATIONS. Unless specifically otherwise provided,
whenever any Loan Document requires or permits any consent, approval, notice,
request, or demand from one party to another, such communication must be in
writing (which may be by telex or telecopy) to be effective and shall be deemed
to have been given (a) if by telex, when transmitted to the telex number, if
any, for such party, and the appropriate answer back is received, (b) if by
telecopy, when transmitted to the telecopy number for such party (and all such
communications sent by telecopy shall be confirmed promptly thereafter by
personal delivery or mailing in accordance with the provisions of this section;
provided that any requirement in this parenthetical shall not affect the date on
which such telecopy shall be deemed to have been delivered), (c) if by mail, on
the third Business Day after it is enclosed in an envelope, properly addressed
to such party, properly stamped, sealed, and deposited in the appropriate
official postal service, or (d) if by any other means, when actually delivered
to such party. Until changed by notice pursuant hereto, the address (and telex
and telecopy numbers, if any) for Administrative Agent and each Lender,
Administrative Agent, and other Agents is set forth on SCHEDULE 2.1, and for
Borrower is the address set forth by Borrower's signature on the signature page
of this Agreement.
13.4 FORM AND NUMBER OF DOCUMENTS. Each agreement, document,
instrument, or other writing to be furnished under any provision of the Loan
Documents must be in form and substance and in such number of counterparts as
may be reasonably satisfactory to Administrative Agent and its counsel.
13.5 EXCEPTIONS TO COVENANTS. No Company shall take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained in any Loan Document if such action or omission would result
in the breach of any other covenant contained in any of the Loan Documents.
13.6 SURVIVAL. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents shall survive
all closings under the Loan Documents and, except as otherwise indicated, shall
not be affected by any investigation made by any party. All Rights of, and
provisions relating to, reimbursement and indemnification of Administrative
Agent, any Agent, or any Lender (and any other provision of the Loan Documents
that expressly provides for such survival) shall survive termination of this
Agreement and payment in full of the Obligation.
13.7 GOVERNING LAW. THE SUBSTANTIVE LAWS OF THE STATE OF ALABAMA
(EXCEPT TO THE EXTENT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION,
PERFECTION, VALIDITY, OR ENFORCEMENT OF LIENS UNDER THE COLLATERAL DOCUMENTS),
AND THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA SHALL GOVERN THE
VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS.
13.8 INVALID PROVISIONS. If any provision in any Loan Document is
held to be illegal, invalid, or unenforceable, such provision shall be fully
severable, the appropriate Loan Document shall be construed and enforced as if
such provision had never comprised a part thereof, and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by such
provision or by its severance therefrom. Administrative Agent, Lenders,
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and each Company party to such Loan Document agree to negotiate, in good faith,
the terms of a replacement provision as similar to the severed provision as may
be possible and be legal, valid, and enforceable.
13.9 ENTIRETY. THE RIGHTS AND OBLIGATIONS OF THE COMPANIES,
LENDERS, AND AGENTS SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS,
DOCUMENTS, AND INSTRUMENTS. ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE
SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN
WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY ANY
COMPANY, ANY LENDER, AND/OR ANY AGENT (TOGETHER WITH ALL COMMITMENT LETTERS AND
FEE LETTERS ONLY AS THEY RELATE TO THE PAYMENT OF FEES AFTER THE SIGNING DATE)
REPRESENT THE FINAL AGREEMENT BETWEEN THE COMPANIES, LENDERS, AND AGENTS, AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREE MENTS BY SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
SUCH PARTIES.
13.10 JURISDICTION; VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH
COMPANY AND OTHER PARTY HERETO (INCLUDING EACH COMPANY BY EXECUTION OF AN
AFFILIATE SUBORDINATION AGREEMENT OR ANY OTHER LOAN DOCUMENT), IN EACH CASE FOR
ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE
OF ALABAMA, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT
IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS
AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY ALABAMA LAW, (B)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING
OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGA TION BROUGHT IN
ANY SUCH COURT, (C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D) AGREES TO
DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN ALABAMA IN CONNECTION
WITH ANY SUCH LITIGATION AND TO DELIVER TO ADMINISTRATIVE AGENT EVIDENCE
THEREOF, IF REQUESTED, (E) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES
THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS
ADDRESS SET FORTH HEREIN, (F) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING
AGAINST ANY PARTY HERETO ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS
OR THE OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED COURTS, AND (G)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. The scope of each
of the foregoing waivers is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including, without limitation, contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. The
Companies and each other party to the Loan Documents acknowledge that this
waiver is a material inducement to the agreement of each party hereto to enter
into a business relationship, that each has already relied on this waiver in
entering into the Loan Documents, and each will continue to rely on each of such
waivers in related future dealings. The Companies and each other party to the
Loan Documents warrant and represent that they have reviewed these waivers with
their legal counsel, and that they knowingly and voluntarily agree to each such
waiver following consultation with legal counsel. THE WAIVERS IN THIS SECTION
13.10 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN DOCUMENT. In the
event of Litigation, this Agreement may be filed as a written consent to a trial
by the court.
13.11 AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS.
(a) Except as otherwise specifically provided (including
the next two sentences of this SECTION 13.11(A)), (i) this Agreement may be
amended, modified, or waived only by an instrument in writing executed jointly
by Borrower and Required Lenders, and, in the case of any matter affecting
Administrative Agent (except removal of Administrative Agent as provided in
SECTION 12) by Administrative Agent, and may only be supplemented by
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documents delivered or to be delivered in accordance with the express terms
hereof, and (ii) the other Loan Documents may be the subject of an amendment,
modification, or waiver only if Borrower and Required Lenders, and, in the case
of any matter affecting Administrative Agent (except as set forth above),
Administrative Agent, have approved same. Except as provided in SECTION 13.11(B)
below, if Borrower shall request a waiver or consent of the Required Lenders
under this Agreement or any other Loan Document and deliver to Administrative
Agent all information and documentation requested by Administrative Agent in
connection therewith, Administrative Agent shall endeavor to promptly forward
such request and related documents and information to Lenders and request that
Lenders approve or deny Borrower's request within a reasonable time (but not to
exceed 30 days). If Administrative Agent has not received the vote of all
Lenders within 30 days after such request has been sent to Lenders,
Administrative Agent, in its sole and absolute discretion, may (and is hereby
authorized by Lenders to) grant such waiver or consent if 66.667% (or in the
case of any amendment, consent, or waiver with respect to any covenant or
requirement in Section 9.30, 81%) of Lenders voting have approved such waiver or
consent.
(b) Any amendment to or consent or waiver under any Loan
Document which purports to accomplish any of the following must be by an
instrument in writing executed by Borrower and executed (or approved, as the
case may be) by each Lender affected thereby, and, in the case of any matter
affecting Administrative Agent, by Administrative Agent: (i) postpones or delays
any date fixed by the Loan Documents for any payment of all or any part of the
Obligation payable to such Lender or Administrative Agent; (ii) reduces the
interest rate or decreases the amount of any payment of principal, interest,
fees, or other sums payable to Administrative Agent or any such Lender hereunder
(except such reductions as are contemplated by this Agreement); (iii) changes
the definition of "REQUIRED LENDERS," this SECTION 13.11(B), or any other
provision of the Loan Documents that requires the unanimous consent of Lenders;
(iv) changes the order of application of any payment or prepayment set forth in
SECTIONS 3.3 and 3.12 in any manner that materially affects such Lender or
Administrative Agent; (v) except as otherwise permitted by any Loan Document
(including, without limitation, SECTION 6.3), waives compliance with, amends, or
releases all or substantially all of the guaranties, if any; (vi) except as
contemplated in SECTION 6.3, releases all or substantially all of the Collateral
for the Obligation or permits the creation, incurrence, assumption, or existence
of any Lien on all or substantially all of the Collateral to secure any
obligations, other than Liens securing the Obligation and Permitted Liens; or
(vii) changes this CLAUSE (B) or any other matter specifically requiring the
consent of all Lenders hereunder. Without the consent of such Lender, no
Lender's Committed Sum or Commitment Percentage may be increased.
(c) Any conflict or ambiguity between the terms and
provisions of this Agreement and terms and provisions in any other Loan Document
shall be controlled by the terms and provisions of this Agreement.
(d) No course of dealing or any failure or delay by
Administrative Agent, any Lender, or any of their respective Representatives
with respect to exercising any Right of Administrative Agent or any Lender
hereunder shall operate as a waiver thereof. A waiver must be in writing and
signed by Administrative Agent and Required Lenders (or by all Lenders, if
required hereunder) to be effective, and such waiver will be effective only in
the specific instance and for the specific purpose for which it is given.
13.12 MULTIPLE COUNTERPARTS. The Loan Documents may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of any Loan Document, it shall not be necessary to produce or
account for more than one such counterpart. It is not necessary that each Lender
execute the same counterpart so long as identical counterparts are executed by
Borrower, each Lender, and Administrative Agent. This Agreement shall become
effective when counterparts hereof shall have been executed and delivered to
Administrative Agent by each Lender, Administrative Agent, and Borrower, or,
when Administrative Agent shall have received telecopied, telexed, or other
evidence satisfactory to it that such party has executed and is delivering to
Administrative Agent a counterpart hereof.
13.13 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that (i) Borrower may not, directly or indirectly, assign or transfer, or
attempt to assign or transfer, any of its Rights, duties or obligations under
any Loan Documents without the express written
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consent of all Lenders, and (ii) except as permitted under this Section, no
Lender may transfer, pledge, assign, sell any participation in, or otherwise
encumber its portion of the Obligation.
(b) Each Lender may assign to one or more Eligible
Assignees all or a portion of its Rights and obligations under the Loan
Documents (including, without limitation, all or a portion of its Borrowings and
its Notes); provided, however, that:
(i) Each such assignment shall be to an Eligible
Assignee;
(ii) Except in the case of an assignment to
another Lender, an Affiliate of any Lender, or an Approved
Fund of any Lender, or in the case of an assignment of all of
a Lender's Rights and obligations under the Loan Documents,
any such partial assignment under any Facility shall not be
less than the following amounts for the Facility indicated,
unless Administrative Agent and, unless a Default or Potential
Default has occurred and is continuing, Borrower consent
thereto in writing which may be evidenced by their acceptance
and execution of the related Assignment and Acceptance
Agreement):
Facility Minimum Assignment
-------- ------------------
Revolver Facility $5,000,000 (inclusive of any concurrent
assignments under the Term Loan Facility by the
assigning Lender to the same assignee)
Term Loan Facility $5,000,000 (inclusive of any concurrent
assignments under the Revolver Facility or the
Term Loan Facility by the assigning Lender to
the same assignee)
; provided that, no partial assignment for any Facility
(including any assignment among Lenders) may result in any
Lender holding less than $500,000 in any Facility;
(iii) Each such assignment by a Lender shall be of
a proportionate part of all of the assigning Lender's Rights
and obligations under this Agreement, the Notes and both
Facilities so that both the assignee and the assigning Lender
will at all times hold equivalent percentages of the Revolver
Facility and the Term Loan Facility;
(iv) The parties to such assignment shall execute
and deliver to Administrative Agent for its acceptance an
Assignment and Acceptance Agreement substantially in the form
of EXHIBIT F, together with any Notes subject to such
assignment and a processing fee of $3,500; and
(v) So long as any Lender is an Agent under this
Agreement, such Lender (or an Affiliate of such Lender) shall
retain an economic interest in the Loan Documents, will not
assign all of its Rights, duties, or obligations under the
Loan Documents except to an Affiliate of such Lender, and will
not enter into any Assignment and Acceptance Agreement that
would have the effect of such Lender assigning all of its
Rights, duties, or obligations under the Loan Documents to any
Person other than an Affiliate of such Lender unless such
Agent has relinquished such title in accordance with SECTION
12.1 (with respect to Administrative Agent) or SECTION 12.10
(with respect to the other Agents).
Upon execution, delivery, acceptance, and recordation of such Assignment and
Acceptance Agreement, the assignee thereunder shall be a party hereto and, to
the extent of such assignment, have the obligations, Rights, and benefits of a
Lender under the Loan Documents, and the assigning Lender shall, to the extent
of such assignment, relinquish its Rights and be released from its obligations
under the Loan Documents. Upon the consummation of any assignment pursuant to
this Section, but only upon the request of the assignor or assignee made through
Administrative Agent,
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Borrower shall issue appropriate Notes to the assignor and the assignee,
reflecting such Assignment and Acceptance. If the assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to Borrower and Administrative Agent certification as to exemption from
deduction or withholding of Taxes in accordance with SECTION 4.6.
(c) Administrative Agent (acting solely for this
administrative purpose as an agent of Borrower) shall maintain at its address
referred to in SECTION 13.3 a copy of each Assignment and Acceptance Agreement
delivered to and accepted by it and a register for the recordation of the names
and addresses of Lenders and the Commitment Percentage, and principal amount of
the Borrowings owing to, each Lender from time to time (the "REGISTER"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and Borrower, Administrative Agent, and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of the Loan Documents. The Register shall be available for inspection
by Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Upon the consummation of any assignment in accordance
with this SECTION 13.13, SCHEDULE 2.1 shall automatically be deemed amended (to
the extent required) by Administrative Agent to reflect the name, address, and,
where appropriate, the respective Committed Sums under the Facilities of the
assignor and assignee. No assignment shall be effective until recorded in the
Register as provided in this SECTION 13.13(C).
(d) Upon its receipt of an Assignment and Acceptance
Agreement executed by the parties thereto, together with any Notes subject to
such assignment and payment of the processing fee, Administrative Agent shall,
if such Assignment and Acceptance has been completed and is in substantially the
form of EXHIBIT F, (i) accept such Assignment and Acceptance Agreement, (ii)
record the, information contained therein in the Register, and (iii) give prompt
notice thereof to the parties thereto.
(e) Subject to the provisions of this Section and in
accordance with applicable Law, any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable Law, at any time
sell to one or more Persons (other than any Company or any Affiliate of any
Company) (each a "PARTICIPANT") participating interests in its portion of the
Obligation. In the event of any such sale to a Participant, (i) such Lender
shall remain a "Lender" under the Loan Documents and the Participant shall not
constitute a "Lender" hereunder, (ii) such Lender"s obligations under the Loan
Documents shall remain unchanged, (iii) such Lender shall remain solely
responsible for the performance thereof, (iv) such Lender shall remain the
holder of its share of the Principal Debt for all purposes under the Loan
Documents, (v) Borrower and Administrative Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's Rights and
obligations under the Loan Documents, and (vi) such Lender shall be solely
responsible for any withholding Taxes or any filing or reporting requirements
relating to such participation and shall hold Borrower and Administrative Agent
and their respective successors, permitted assigns, officers, directors,
employees, agents, and representatives harmless against the same. Participants
shall have no Rights under the Loan Documents, other than certain voting Rights
as provided below. Subject to the following, each Lender shall be entitled to
obtain (on behalf of its Participants) the benefits of SECTION 4 with respect to
all participations in its part of the Obligation outstanding from time to time,
so long as Borrower shall not be obligated to pay any amount in excess of the
amount that would be due to such Lender under SECTION 4 calculated as though no
participations have been made. No Lender shall sell any participating interest
under which the Participant shall have any Rights to approve any amendment,
modification, or waiver of any Loan Document, except to the extent such
amendment, modification, or waiver extends the due date for payment of any
amount in respect of principal, interest, or fees due under the Loan Documents,
reduces the interest rate or the amount of principal or fees applicable to the
Obligation (except such reductions as are contemplated by the Loan Documents),
or releases all or substantially all of the Collateral for the Obligation under
the Loan Documents (except such releases of Collateral as are contemplated in
SECTION 6.3); provided that, in those cases where a Participant is entitled to
the benefits of SECTION 4 or a Lender grants Rights to its Participants to
approve amendments to or waivers of the Loan Documents respecting the matters
previously described in this sentence, such Lender must include a voting
mechanism in the relevant participation agreement or agreements, as the case may
be, whereby a majority of such Lender's portion of the Obligation (whether held
by such Lender or Participant) shall control the vote for all of such Lender's
portion of the Obligation. Except in the case of the sale of a participating
interest to another Lender, the relevant participation agreement shall not
permit the Participant to transfer, pledge, assign, sell participations in, or
otherwise encumber its portion of the Obligation, unless the consent of the
transferring Lender (which consent will not be unreasonably withheld) has been
obtained.
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(f) Notwithstanding any other provision set forth in this
Agreement, any Lender may, without notice to, or consent of Borrower or
Administrative Agent, at any time assign and pledge all or any portion of its
Borrowings and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank or any Lender which is a fund may pledge all or any portion of its
Borrowings and its Notes to any trustee or to any other representative of
holders of obligations owed or securities issued by such fund as security for
such obligations or securities; provided that any transfer to any Person upon
the enforcement of such pledge or security interest may only be made subject to
this SECTION 13.13. No such assignment, shall release the assigning Lender from
its obligations hereunder.
(g) Any Lender may furnish any information concerning the
Companies in the possession of such Lender from time to time to Eligible
Assignees and Participants (including prospective Eligible Assignees and
Participants) and to counterparties under a Financial Hedge issued by a Lender
or an Affiliate of a Lender to the extent permitted by the Loan Documents.
13.14 CONFIDENTIALITY. Administrative Agent and each Lender (each, a
"LENDING PARTY") agrees to keep confidential any information furnished or made
available to it by the Companies in the course of inspections conducted pursuant
to SECTION 9.4 if such information has been marked "confidential"; provided that
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any Affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending Party or Affiliate
of any Lending Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
Law, (d) upon the order of any Governmental Authority, (e) upon the request or
demand of any Insurance Regulator or other Governmental Authority, (f) that is
or becomes available to the public or that is or becomes available to any
Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) in connection with any litigation to which
such Lending Party or any of its Affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under the Loan
Documents, (i) subject to provisions substantially similar to those contained in
this Section, to any actual or proposed Participant or Eligible Assignee, (j) to
any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterpart), agrees to
be bound by the provisions of this SECTION 13.14, and (k) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender. Administrative Agent and each Lender hereby acknowledge that their
representatives who are directly involved in this matter may, from time to time,
be in possession of material non-public information, and that all such
representatives have been, or will be, advised about applicable state and
federal securities Laws which may be applicable to persons having possession of
material, non-public information concerning a public company.
13.15 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. The obligations of each Company under the Loan Documents shall
remain in full force and effect until termination of the Total Commitment,
payment in full of the Principal Debt and of all interest, fees, and other
amounts of the Obligation then due and owing, except that SECTIONS 4, 11, and
13, and any other provisions under the Loan Documents expressly intended to
survive by the terms hereof or by the terms of the applicable Loan Documents,
shall survive such termination. If at any time any payment of the principal of
or interest on any Note or any other amount payable by any Company under any
Loan Document is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy, or reorganization of such Company or otherwise, the
obligations of each Company under the Loan Documents with respect to such
payment shall be reinstated as though such payment had been due but not made at
such time.
[REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers, as of the
day and year first above written.
BORROWER:
Borrower's Address, Telex, etc. PROASSURANCE CORPORATION
- ------------------------------
ProAssurance Corporation By /s/ A. Derrill Crowe
100 Brookwood Place ----------------------------------------------------
Birmingham, AL 35209 Name A. Derrill Crowe
Attention: Chief Executive Officer --------------------------------------------------
Telecopier Number: (205) 877-4405 Its President and Chairman
Confirmation Number: (205) 877-4400 --------------------------------------------------
LENDERS:
SOUTHTRUST BANK
as Lead Arranger, as Administrative Agent,
as Syndication Agent,
and as Lender
By /s/ T. Knudsen
----------------------------------------------------
Name T. Knudsen
--------------------------------------------------
Its Senior Vice President
--------------------------------------------------
BANK OF AMERICA, N.A.
as Co-Arranger and as Lender
By /s/ David B. Jackson
----------------------------------------------------
Name David B. Jackson
--------------------------------------------------
Its Senior Vice President
--------------------------------------------------
AMSOUTH BANK
By /s/ David A. Simmons
----------------------------------------------------
Name David A. Simmons
--------------------------------------------------
Its Senior Vice President
--------------------------------------------------
REGIONS BANK
By /s/ William D. Ritter
----------------------------------------------------
Name William D. Ritter
--------------------------------------------------
Its Vice President
--------------------------------------------------
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LASALLE BANK, N.A.
By /s/ Linda A. Whittaker
----------------------------------
Name Linda A. Whittaker
--------------------------------
Its Assistant Vice President
--------------------------------
62
69
SCHEDULE 1
CONSOLIDATION DOCUMENTS
- - Agreement to Consolidate dated June 22, 2000 by and between Medical
Assurance, Inc. and Professionals Group, Inc., as amended on November
1, 2000
- - Medical Assurance, Inc. Stock Option Agreement dated June 22, 2000 by
and between Medical Assurance, Inc. and Professionals Group, Inc.
- - Professionals Group, Inc. Stock Option Agreement dated June 22, 2000 by
and between Medical Assurance, Inc. and Professionals Group, Inc.
- - Agreement and Plan of Merger to be executed between MAI Acquisition
Corporation I and Medical Assurance, Inc.
- - Agreement and Plan of Merger to be executed between PICM Acquisition
Corporation and Professionals Group, Inc.
70
SCHEDULE 1A
SIGNIFICANT SUBSIDIARIES
Significant Subsidiaries as of the Signing Date:
MAI Acquisition Corporation I
The Medical Assurance Company, Inc.
PICM Acquisition Corporation
Significant Subsidiaries as of Funding Date:
Medical Assurance, Inc.
The Medical Assurance Company, Inc.
Professionals Group, Inc.
ProNational Insurance Company
MEEMIC Holdings, Inc.
71
SCHEDULE 2.1
LENDERS AND COMMITMENTS
Revolver Term Loan
Revolver Lender's Term Loan Lender's Total
Lender's Commitment Lender's Commitment Initial
Lender Committed Sum Percentage Committed Sum Percentage Commitment
------ --------------- ---------- --------------- ---------- ---------------
SouthTrust Bank $ 13,333,333.00 33.333333% $ 36,666,667.00 33.333333% $ 50,000,000.00
420 North 20th Street
Birmingham, AL 35203
Attention: Ted Knudsen
Telecopier number: (205) 254-6600
Confirmation number: (205) 254-5068
Bank of America, N.A $ 8,000,000.00 20.000000% $ 22,000,000.00 20.000000% $ 30,000,000.00
600 Peachtree Street, N.E
Atlanta, GA 30308-2214
Attention: David Jackson
Telecopier number: (404) 607-6343
Confirmation number: (404) 607-5854
AmSouth Bank $ 6,666,667.00 16.666667% $ 18,333,333.00 16.666667% $ 25,000,000.00
1900 5th Avenue North
Birmingham, AL 35203
Attention: David Simmons
Telecopier number: (205) 581-7479
Confirmation number: (205) 326-5924
Regions Bank $ 6,666,667.00 16.666667% $ 18,333,333.00 16.666667% $ 25,000,000.00
417 20th Street North
Birmingham, AL 35203
Attention: William D. Ritter
Telecopier number: (205) 326-7739
Confirmation number: (205) 326-7904
LaSalle Bank, N.A $ 5,333,333.00 13.333333% $ 14,666,667.00 13.333333% $ 20,000,000.00
135 South LaSalle Street
Chicago, IL 60603
Attention: Linda Whittaker
Telecopier number: (312) 904-6189
Confirmation number: (312) 904-2639
TOTALS: $ 40,000,000.00 100.00% $110,000,000.00 100.00% $150,000,000.00
72
SCHEDULE 7.1
CONDITIONS PRECEDENT (SIGNING DATE)
SECTION 1. SIGNING. The signing of the Loan Documents shall take
place at the offices of Bradley Arant Rose & White LLP, 2001 Park Place, Suite
1400, Birmingham, Alabama 35203, on May 10, 2001, or at such other place or on
such other date as the parties hereto shall mutually agree.
SECTION 2. CONDITIONS TO EFFECTIVENESS. This Agreement shall not
become effective until the satisfaction of each of the following conditions:
(a) Executed Loan Documents. (i) This Agreement,
(ii) a Revolver Note payable to each Lender, (iii) a
Term Loan Note payable to each Lender, (iv) a
Security Agreement given by the holder of the stock
of each Significant Subsidiary which is a Significant
Subsidiary as of the Signing Date, (v) the Affiliate
Subordination Agreement that is to be entered into by
any Company which is a Company as of the Signing
Date, and (vi) each of the other Collateral Documents
that is to be entered into by any Company which is a
Company as of the Signing Date, shall have been duly
authorized and executed by the parties thereto in
form and substance satisfactory to the Administrative
Agent, shall be in full force and effect and no
Default or Potential Default shall exist thereunder,
and the Borrower shall have delivered the original
Notes and original counterparts of each of the other
Loan Documents that is to be entered into by any
Company which is a Company as of the Signing Date,
(in sufficient number for delivery of a counterpart
to each Lender) to the Administrative Agent.
(b) Closing Certificates; Opinions; etc.
(i) Officer's Certificate. The
Administrative Agent shall have received a
certificate from the chief executive officer
and chief financial officer of Borrower, in
form and substance reasonably satisfactory
to the Administrative Agent, to the effect
that all representations and warranties of
the Borrower contained in this Agreement and
in the other Loan Documents delivered on the
Signing Date are true, correct and complete;
that the Borrower is not in violation of any
of the covenants contained in this Agreement
or the other Loan Documents; that no Default
or Potential Default has occurred and is
continuing; that, after giving effect to the
transactions contemplated by this Agreement,
Borrower on a consolidated basis with its
Subsidiaries is Solvent and will continue to
be Solvent upon and after the Consolidation;
and that the Borrower has filed all required
tax returns and owes no delinquent taxes.
(ii) Certificate of Secretary. The
Administrative Agent shall have received a
certificate of the secretary or assistant
secretary of the Borrower, of each
Significant Subsidiary which is a
Significant Subsidiary as of the Signing
Date, and of the holder of the stock of each
Significant Subsidiary which is a
Significant Subsidiary as of the Signing
Date certifying, as applicable, that
attached thereto is a true and complete copy
of the articles of incorporation or other
Schedule 7.1-1
73
charter documents of such Company and all
amendments thereto, certified as of recent
date by the appropriate Governmental
Authority in its jurisdiction of
incorporation; that attached thereto is a
true and complete copy of the bylaws of such
Company as in effect on the date of such
certification; that attached thereto is a
true and complete copy of resolutions duly
adopted by the board of directors of such
Company, authorizing the transactions
contemplated hereunder and the execution,
delivery and performance of this Agreement
and the other Loan Documents to which it is
a party; and as to the incumbency and
genuineness of the signature of each officer
of such Company executing Loan Documents to
which Borrower or such Company is a party.
(iii) Certificates of Good Standing. The
Administrative Agent shall have received
certificates as of a recent date of the
existence and good standing of the Borrower,
each Significant Subsidiary which is a
Significant Subsidiary as of the Signing
Date, and the holder of the stock of each
such Significant Subsidiary under the laws
of their respective jurisdictions of
organization and such other jurisdictions
requested by the Administrative Agent.
(iv) Opinions of Counsel. The
Administrative Agent shall have received the
favorable opinion of counsel to the Borrower
and the Companies addressed to the
Administrative Agent and Lenders with
respect to such Persons, the Loan Documents
delivered on the Signing Date and regulatory
matters (including without limitation all
applicable Authorizations) substantially in
the form attached to this Agreement as
EXHIBIT G-1, and covering such additional
matters relating to the transactions
contemplated by this Agreement and the
Consolidation Agreement as the
Administrative Agent or any Lender may
reasonably request.
(v) Tax Forms. If applicable, the
Administrative Agent shall have received
copies of the United States Internal Revenue
Service forms required by SECTION 4.6(D) of
this Agreement.
(c) Collateral.
(i) Filings and Recordings. All filings
that are necessary or desirable to perfect
and protect the Liens of the Administrative
Agent and the Lenders in the Collateral
described in the Loan Documents shall have
been filed in all appropriate locations and
the Administrative Agent shall have received
evidence satisfactory to the Administrative
Agent that such security interests
constitute valid and perfected first
priority Liens therein subject only to Liens
permitted pursuant to SECTION 9.13.
(ii) Pledged Stock. The Administrative
Agent shall have received original stock
certificates from the shareholders of each
Significant Subsidiary which is a
Significant Subsidiary as of the Signing
Date evidencing the capital stock pledged
pursuant to each Security Agreement
delivered on the Signing Date, together with
Schedule 7.1-2
74
an appropriate undated stock power for each
certificate duly executed in blank by the
registered owner thereof.
(iii) Insurance. To the extent reasonably
available on the Signing Date, the
Administrative Agent shall have received
certificates of insurance and certified
copies of insurance policies as required
under SECTION 9.8 and the Collateral
Documents and otherwise in form and
substance reasonably satisfactory to the
Administrative Agent.
(d) Consents; No Adverse Change.
(i) Governmental and Third Party
Approvals. All necessary approvals,
authorizations and consents, if any be
required, of any Person and of all
Governmental Authorities (including all
Insurance Regulators) and courts having
jurisdiction with respect to the execution
and delivery of this Agreement and the other
Loan Documents delivered on the Signing Date
shall have been obtained.
(ii) Permits and Licenses. All permits
and licenses, including all permits and
licenses from Insurance Regulators and under
applicable Laws, necessary to the conduct of
business by the Borrower and the other
Companies which are Companies as of the
Signing Date shall have been obtained.
(iii) No Injunction, etc. No action,
proceeding, investigation, regulation or
legislation shall have been instituted,
threatened or proposed before any
Governmental Authority to enjoin, restrain,
or prohibit, or to obtain substantial
damages in respect of, or which is related
to or arises out of this Agreement or the
other Loan Documents or the consummation of
the transactions contemplated hereby or
thereby or by the Consolidation Agreement.
(iv) No Material Adverse Change. Since
December 31, 2000, there shall not have
occurred any change in the condition
(financial or otherwise), operations,
properties, business or prospects of
Borrower and its Subsidiaries or MAI and its
Subsidiaries, in each case taken as a whole,
or any other event or condition that, in any
case, is, or could be reasonably expected to
be, a Material Adverse Event.
(v) No Event of Default. No event that
would constitute a Default or Potential
Default under the Credit Agreement shall
have occurred and be continuing.
(e) Financial Matters.
(i) Financial Statements. The
Administrative Agent and each Lender shall
have received recent annual and interim
financial statements and other financial
information with respect to MAI and its
Subsidiaries and PICM and its Subsidiaries
prepared in accordance with GAAP. Without
limitation of the foregoing, the
Administrative Agent and each Lender shall
have
Schedule 7.1-3
75
received audited financial statements for
the fiscal year ended December 31, 2000,
unaudited financial statements for each
fiscal quarter thereafter through March 31,
2001, and such other financial information
with respect to Borrower and its
Subsidiaries, MAI and its Subsidiaries and
PICM and its Subsidiaries as the
Administrative Agent may reasonably require.
(ii) Payment of Fees and Expenses. There
shall have been paid by the Borrower to the
Administrative Agent, the Lead Arranger and
the Lenders the fees set forth or referenced
in SECTION 5 of this Agreement that are due
and payable upon execution of this
Agreement, and any other accrued and unpaid
fees or commissions due hereunder
(including, without limitation,
Administrative Agent's legal fees and
expenses incurred to date), and to any other
Person such amount as may be due thereto in
connection with the transactions
contemplated hereby, including all Taxes,
fees and other charges in connection with
the execution, delivery, recording, filing
and registration of any of the Loan
Documents. The Administrative Agent shall
have received duly authorized and executed
copies of the commitment letter, summary of
terms, and fee letter referred to in SECTION
5.2 of this Agreement.
(f) Consolidation. The Administrative Agent
shall have reviewed (i) the documents in connection
with the Consolidation, (ii) the business plans of
Borrower and its Subsidiaries, and (iii) such other
documents in connection with the Consolidation as the
Administrative Agent shall reasonably request and
such documents shall be reasonably satisfactory in
form and substance to the Administrative Agent.
(g) Miscellaneous.
(i) Proceedings and Documents. All
opinions, certificates and other instruments
and all proceedings in connection with the
transactions contemplated by this Agreement
shall be reasonably satisfactory in form and
substance to the Lenders. The Lenders shall
have received copies of all other
instruments and other evidence as the
Lenders may reasonably request, in form and
substance reasonably satisfactory to the
Lenders, with respect to the transactions
contemplated by this Agreement and the
taking of all actions in connection
therewith.
(ii) Due Diligence and Other Documents.
The Borrower shall have delivered to the
Administrative Agent such other documents,
certificates and opinions as the
Administrative Agent shall reasonably
request.
Schedule 7.1-4
76
SCHEDULE 7.1A
CONDITIONS PRECEDENT (FUNDING)
SECTION 1. CLOSING. The closing and funding of the Facilities
shall take place at the offices of Bradley Arant Rose & White LLP, 2001 Park
Place, Suite 1400, Birmingham, Alabama 35203, not later than June 30, 2001, or
at such other place and on or before such other date as the parties hereto shall
mutually agree.
SECTION 2. CONDITIONS TO CLOSING. The obligation of the Lenders
to fund the initial Borrowing under this Agreement is subject to the
satisfaction of each of the following conditions, in addition to the conditions
stated in SECTION 7.3 of this Agreement:
(a) Conditions Reflected on Schedule 7.1. (i)
Each of the Loan Documents required to be delivered
in accordance with SCHEDULE 7.1 shall have been
delivered and be in full force and effect and no
Default of Potential Default shall exist thereunder,
and (ii) each of the other conditions precedent set
forth on SCHEDULE 7.1 shall have been, and shall
remain, satisfied in all respects.
(b) Additional Loan Documents. To the extent not
delivered on the Signing Date: (i) a Security
Agreement given by the holder of the stock of each
Significant Subsidiary which is or becomes a
Significant Subsidiary on the Funding Date (other
than MEEMIC and its Subsidiaries), (ii) the Affiliate
Subordination Agreement that is to be entered into by
any Company which is or becomes a Company as of the
Funding Date, and (iii) each of the other Collateral
Documents that is to be entered into by any Company
which is or becomes a Company as of the Funding Date,
shall have been duly authorized and executed by the
parties thereto in form and substance satisfactory to
the Administrative Agent, shall be in full force and
effect and no Default or Potential Default shall
exist thereunder, and the Borrower shall have
delivered the original counterparts of such Loan
Documents (in sufficient number for delivery of a
counterpart to each Lender) to the Administrative
Agent.
(c) Closing Certificates; Opinions.
(i) Officer's Certificate. The
Administrative Agent shall have received a
certificate from the chief executive officer
and chief financial officer of Borrower, on
behalf of the Companies, in form and
substance reasonably satisfactory to the
Administrative Agent, to the effect that all
representations and warranties of the
Borrower contained in this Agreement and the
other Loan Documents are true, correct and
complete; that the Borrower is not in
violation of any of the covenants contained
in this Agreement or the other Loan
Documents; that no Default or Potential
Default has occurred and is continuing and,
after giving effect to the transactions
contemplated by this Agreement and the
consummation of the Consolidation, no
Default or Potential Default will have
occurred; that the Borrower has satisfied
each of the closing conditions to be
satisfied thereby; that, after giving effect
to the transactions contemplated by this
Agreement, Borrower on a consolidated basis
with its Subsidiaries is Solvent
Schedule 7.1A-1
77
and will continue to be Solvent upon and
after the Consolidation; and that the
Borrower has filed all required tax returns
and owes no delinquent taxes.
(ii) Opinions of Counsel. The
Administrative Agent shall have received the
favorable opinion of counsel to the Borrower
and the Companies addressed to the
Administrative Agent and Lenders with
respect to such Persons, the Loan Documents,
the Consolidation, and regulatory matters
(including without limitation all applicable
Authorizations) substantially in the form
attached to this Agreement as EXHIBIT G-2,
and covering such additional matters
relating to the transactions contemplated by
this Agreement and the Consolidation
Agreement as the Administrative Agent or any
Lender may reasonably request.
(iii) Certificate of Secretary. To the
extent not delivered on the Signing Date,
the Administrative Agent shall have received
a certificate of the secretary or assistant
secretary of the Borrower, of each
Significant Subsidiary which is or becomes a
Significant Subsidiary on the Funding Date
(other than MEEMIC and its Subsidiaries),
and of the holder of the stock of each
Significant Subsidiary which is or becomes a
Significant Subsidiary on the Funding Date
(other than MEEMIC and its Subsidiaries)
certifying, as applicable, that attached
thereto is a true and complete copy of the
articles of incorporation or other charter
documents of such Company and all amendments
thereto, certified as of recent date by the
appropriate Governmental Authority in its
jurisdiction of incorporation; that attached
thereto is a true and complete copy of the
bylaws of such Company as in effect on the
date of such certification; that attached
thereto is a true and complete copy of
resolutions duly adopted by the board of
directors of such Company, authorizing the
transactions contemplated hereunder and the
execution, delivery and performance of this
Agreement and the other Loan Documents to
which it is a party; and as to the
incumbency and genuineness of the signature
of each officer of such Company executing
Loan Documents to which Borrower or such
Company is a party.
(iv) Certificates of Good Standing. To
the extent not delivered on the Signing
Date, the Administrative Agent shall have
received certificates as of a recent date of
the existence and good standing of the
Borrower, each Significant Subsidiary which
is or becomes a Significant Subsidiary on
the Funding Date (other than MEEMIC and its
Subsidiaries), and the holder of the stock
of each such Significant Subsidiary under
the laws of their respective jurisdictions
of organization and such other jurisdictions
requested by the Administrative Agent.
(d) Collateral.
(i) Pledged Stock. The Administrative
Agent shall have received original stock
certificates from the shareholder(s) of each
Significant Subsidiary which is or becomes a
Significant
Schedule 7.1A-2
78
Subsidiary as of the Funding Date (other
than MEEMIC and its Subsidiaries) evidencing
the capital stock pledged pursuant to each
Security Agreement, together with an
appropriate undated stock power for each
certificate duly executed in blank by the
registered owner thereof.
(ii) Regulation U. The aggregate value
of the margin and nonmargin stock pledged to
secure the Facilities shall be sufficient to
satisfy the loan value requirements of
Regulation U.
(iii) Filings and Recordings. To the
extent not delivered on the Signing Date,
all filings that are necessary or desirable
to perfect and protect the Liens of the
Administrative Agent and the Lenders in the
Collateral described in the Loan Documents
shall have been filed in all appropriate
locations and the Administrative Agent shall
have received evidence satisfactory to the
Administrative Agent that such security
interests constitute valid and perfected
first priority Liens therein subject only to
Liens permitted pursuant to SECTION 9.13.
(iv) Insurance. To the extent not
delivered on the Signing Date, the
Administrative Agent shall have received
certificates of insurance and certified
copies of insurance policies as required
under SECTION 9.8 and the Collateral
Documents and otherwise in form and
substance reasonably satisfactory to the
Administrative Agent.
(e) Consents; No Adverse Change.
(i) Governmental and Third Party
Approvals. All necessary approvals,
authorizations and consents, if any be
required, of any Person and of all
Governmental Authorities (including all
applicable Insurance Regulators) and courts
having jurisdiction with respect to the
execution and delivery of this Agreement and
the other Loan Documents, and with respect
to the consummation of the Consolidation,
shall have been obtained.
(ii) Permits and Licenses. All permits
and licenses, including permits and licenses
required from Insurance Regulators and under
applicable Laws, necessary to the conduct of
business by the Borrower and the other
Companies shall have been obtained.
(iii) No Injunction, etc. No action,
proceeding, investigation, regulation or
legislation shall have been instituted,
threatened or proposed before any
Governmental Authority to enjoin, restrain,
or prohibit, or to obtain substantial
damages in respect of, or which is related
to or arises out of this Agreement or the
other Loan Documents or the consummation of
the transactions contemplated hereby or
thereby or by the Consolidation Agreement.
(iv) No Material Adverse Change. Since
December 31, 2000, there shall not have
occurred any change in the condition
(financial or otherwise), operations,
properties, business or prospects of
Schedule 7.1A-3
79
Borrower and its Subsidiaries (including all
of the Companies which are or become
Companies as of the Funding Date), taken as
a whole, or any other event or condition
that, in any case, has had or could be
reasonably expected to be a Material Adverse
Event.
(v) No Event of Default. No Default or
Potential Default shall have occurred and be
continuing.
(f) Financial Matters.
(i) Payment of Fees and Expenses. There
shall have been paid by the Borrower to the
Administrative Agent, the Lead Arranger and
the Lenders the fees set forth or referenced
in SECTION 5 of this Agreement that are due
and payable on the Funding Date, and any
other accrued and unpaid fees or commissions
due hereunder (including, without
limitation, Administrative Agent's legal
fees and expenses), and to any other Person
such amount as may be due thereto in
connection with the transactions
contemplated hereby, including (to the
extent not paid on the Signing Date) all
Taxes, fees and other charges in connection
with the execution, delivery, recording,
filing and registration of any of the Loan
Documents.
(g) Consolidation. The Consolidation shall have
been consummated prior to or contemporaneously with
the funding of the initial Borrowing under this
Agreement, and all conditions to the Consolidation
shall have been satisfied, including, without
limitation, the following:
(i) Shareholder Approval. Approval of
the consolidation shall have been given by
the required shareholders of MAI and PICM.
(ii) Approval of Government Authorities.
All necessary approvals of Governmental
Authorities (including all applicable
Insurance Regulators) shall have been
received.
(iii) Approval for Listing on NYSE. The
shares of stock of Borrower to be issued in
connection with the Consolidation shall have
been approved for listing on the New York
Stock Exchange, subject to official notice
of issuance.
(iv) Opinion of Accountants. Borrower
shall have received a favorable opinion of
Ernst & Young LLP, or another nationally
recognized accounting firm, with respect to
the federal income tax treatment of the
Consolidation regarding the Companies.
(v) Ratings. MAI and PICM shall have
received ratings from the A.M. Best Rating
Agency no less favorable than A-, and
neither MAI nor PICM shall have received
notice that such ratings will be less
favorable than A- after the Consolidation.
(vi) Dividends from MAI and PICM.
Borrower shall have received dividends from
MAI and PICM in an aggregate amount
Schedule 7.1A-4
80
which, together with the amount available
under the Term Loan Facility, is sufficient
to pay all sums required to consummate the
Consolidation.
(vii) Mergers of MAI and PICM. MAI shall
have been merged with MAI Acquisition
Corporation, Inc., a wholly owned Subsidiary
of Borrower, with MAI being the surviving
corporation with 100% of its outstanding
stock being owned by Borrower, and PICM
shall have been merged with PICM Acquisition
Corporation, Inc., a wholly owned Subsidiary
of Borrower, with PICM being the surviving
corporation with 100% of its outstanding
stock being owned by Borrower.
(viii) Other Matters. Borrower shall have
delivered to the Administrative Agent such
other documents and information relating to
the Consolidation as the Administrative
Agent or any Lender shall reasonably
request, and all matters pertaining to the
Consolidation shall be satisfactory to the
Administrative Agent and the Lenders.
(ix) Exchange Agent. To the extent
required by Administrative Agent if the
funding of the initial Borrowing will occur
prior to the consummation of the
Consolidation, Administrative Agent shall
have received such agreements and assurances
from Mellon Investor Services LLC (the
Exchange Agent for the Consolidation) that
the proceeds of the initial Borrowing will
be returned to Lenders on Administrative
Agent's demand if the Consolidation is not
consummated promptly after such Exchange
Agent's receipt of such funds.
(h) Miscellaneous.
(i) Pay off of Loans. The
Administrative Agent shall have received
evidence, in form and substance reasonably
satisfactory to the Administrative Agent,
that (A) the obligations of Professionals
Group, Inc. arising under that certain
Credit Agreement dated April 4, 1997, as
amended, between such company and LaSalle
Bank, N.A. will be fully paid, satisfied and
discharged, and (B) such Credit Agreement
and any liens, encumbrances, mortgages or
restrictions in respect of any such
obligations will be terminated on the
Funding Date.
(ii) Proceedings and Documents. All
opinions, certificates and other instruments
and all proceedings in connection with the
transactions contemplated by this Agreement
and by the Consolidation shall be reasonably
satisfactory in form and substance to the
Lenders. The Lenders shall have received
copies of all other instruments and other
evidence as the Lenders may reasonably
request, in form and substance reasonably
satisfactory to the Lenders, with respect to
the transactions contemplated by this
Agreement and by the Consolidation, and the
taking of all actions in connection
therewith.
Schedule 7.1A-5
81
(iii) Due Diligence and Other Documents.
The Borrower shall have delivered to the
Administrative Agent such other documents,
certificates and opinions as the
Administrative Agent reasonably requests.
(i) Funding Indemnification Letter. If the
Borrower desires to obtain a Eurodollar Rate
Borrowing on the Funding Date, the Administrative
Agent shall have received, at least 2 Business Days
prior to the Funding Date, a funding indemnification
letter satisfactory to the Administrative Agent and
the Lenders, pursuant to which (i) the Administrative
Agent and Borrower have agreed upon an interest rate,
amount of Eurodollar Rate Borrowing, and Interest
Period for such Eurodollar Rate Borrowing, and (ii)
Borrower has agreed to indemnify the Lenders from any
loss or expense arising from the failure to close on
the anticipated Funding Date identified in such
letter or the failure to borrow such Eurodollar Rate
Borrowing on such date.
SECTION 3. POST-CLOSING REQUIREMENTS.
(a) Confirmation of Consummation of
Consolidation. The Administrative Agent shall no
later than ______ days after the Funding Date receive
written confirmation from counsel to the Borrower and
the Companies of the consummation of the
Consolidation and the effective date thereof.
Schedule 7.1A-6
82
SCHEDULE 7.2
CONDITIONS PRECEDENT TO PERMITTED ACQUISITION
1. Borrower shall deliver to Administrative Agent a copy
of the proposed purchase agreement (including all schedules and exhibits
thereto) relating to the proposed Acquisition, and such other documents,
certificates, information and instruments as Administrative Agent may request;
2. Borrower shall deliver to Administrative Agent
documentation demonstrating pro forma compliance with the terms and conditions
of the Loan Documents, after giving effect to the proposed Acquisition,
including (A) pro forma income statement and balance sheet for the Companies
(after giving effect to the proposed Acquisition), and (B) cash flow projections
therefor for the period from the date thereof through the last-to-occur of the
then-effective Termination Dates, demonstrating compliance with the applicable
financial covenants and debt amortization schedules;
3. As of the closing of any proposed Acquisition, after
giving effect thereto, the acquiring party must be Solvent, and the Companies,
on a consolidated basis, must be Solvent; and
4. As of the closing of any proposed Acquisition, no
Default or Potential Default (including, but not limited to, a Default pursuant
to SECTION 10.7) shall exist or occur as a result thereof, and after giving
effect thereto.
83
SCHEDULE 8.2
AUTHORIZATIONS-INSURANCE REGULATORS
COMPANY STATES LICENSED TYPE OF INSURANCE
- ------- --------------- -----------------
Medical Assurance of Alabama Power 3, Miscellaneous Casualty; Surety
West Virginia, Inc. Excl. Official Surety Bonds; Marine
West Virginia Casualty, including Limited WC
Mississippi 3-Casualty; 5-Surety; 6-Workers'
Compensation; 16-Accident & Health
The Medical Assurance Alabama Property; Misc. Casualty, including
Company, Inc. Official Surety; Disability Only;
Marine
Alaska Disability; Property; Casualty (all
Clauses); Surety
Arizona Property; Casualty without WC
Arkansas Casualty
California Liability
Colorado Property & Casualty, including WC;
Life, including Accident & Health
Delaware Health & Casualty, including Liability;
Surety and Misc.
District of Columbia Medical Malpractice; Group A&H;
Other A&H; WC; Com. Gen. Liab.;
Supersedeas Bonds
Florida Med. Mal.; Other Liability
Georgia Prop.; Marine & Trans.; Casualty,
including Work Comp.; Surety
Hawaii Casualty; Disability
Idaho Casualty, excluding WC; Disability
Illinois Class 2(a) A&H; (c) Liability; (d) WC;
(g) Surety
Indiana Class 2(a), (b), (c), (d), (e), (f), (g), (h), (i)&
(k-excluding bail bonds); Class 3 (a), (b), (c) &
(d); Class 2(a) A&H: Disability; (b) WC;
84
COMPANY STATES LICENSED TYPE OF INSURANCE
- ------- --------------- -----------------
(H) Liability
Kentucky Multiple Line Ins. (Health, Property,
Surety, Casualty, Marine and Trans.)
Louisiana A&H; Liability; WC
Maryland Casualty; Health; Surety; WC
Massachusetts Liability other than Auto.
Michigan 624(b) including Liability, excluding
WC; 624(h) (Malpractice)
Minnesota Liability; WC
Missouri Fidelity and Surety (379.010.1(3)
RsMo); Liability (379.010.1(2) Rs.Mo)
Montana Casualty
Nebraska Sickness & Accident; Liability;
WC and Employers' Liability
Nevada Health; Accident; Property;
Casualty (including WC effective
7/1/99)
North Carolina A&H; Personal Liability (Other);
Property Damage Liability (Other);
WC and Emp. Liability; Fidelity
and Surety
North Dakota A&H; WC; Liability (not Auto);
Surety
Ohio Med. Mal.; A&H; Other Accident;
WC; Other Liability; Surety
Oklahoma A&H; Property; Casualty
Oregon Casualty, including WC
Pennsylvania Other Liability; WC
Rhode Island Med. Mal.; A&H; WC; Other
Liability; Surety
South Carolina Property; Casualty (includes WC);
A&H
85
COMPANY STATES LICENSED TYPE OF INSURANCE
- ------- --------------- -----------------
South Dakota (2) Health; (5) WC; (6) Bodily Injury;
(7) Property Damage (no Auto)
Tennessee Property; Casualty (includes WC)
Texas Liability other than Auto.; A&H;
Reinsurance (Direct Line)
Utah Liability; Professional Liability;
Disability; WC
Virginia Fire; Misc. Property; Com'cial
Multi. Peril; Liability: A&S; WC
Washington General Casualty
Wisconsin Disability; Liability & Incidental
Medical; Surety; WC
Wyoming Casualty
ProNational Insurance
Company Alabama Property, Miscellaneous Casualty
and Surety (including Official
Surety Bonds and Marine)
Delaware Property, Surety, Marine &
Transportation and Casualty
(including vehicle, liability, burglary
& theft, personal property floater,
glass, boiler & machinery, credit, w/c
& employer's liability, malpractice
and livestock.
Florida Medical Malpractice and other liability
Georgia Property, Marine & Transport, Casualty
(including workers' compensation) and Surety
Illinois Casualty, Fidelity & Surety: Accident &
Health, Vehicle, Liability, W/C, Burglary &
Forgery, Glass, Fidelity & Surety,
Miscellaneous, other Casualty Risks,
Contingent Losses, Legal Expense Insurance.
Fire and Marine: Fire, Elements, War, Riot &
Explosion, Marine and Transportation,
Vehicle, Property damage, sprinkler leakage
and crop, other Fire and Marine Risks,
Contingent Losses, Legal Expense Insurance
86
COMPANY STATES LICENSED TYPE OF INSURANCE
- ------- --------------- -----------------
Indiana Accident, W/C, Burglary, theft or
housebreaking, Glass, Boiler & Machinery,
Auto, Sprinklers, leakage, accident liability,
Credit, Title, Bonds, Mortgages, Surety &
Fidelity (except Bail Bonds), Casualty, Legal
Expenses, Buildings & Personal Property,
Crops & Farm, Water, Sprinklers, Inland
Marine.
Iowa Fire, Extended Coverage, Other Allied Lines,
Homeowners Multi-Peril (including BI),
Commercial multiple peril, Earthquake,
Growing Crops, Ocean Marine, Inland
Marine, Accident only (individual), Accident
& health (Individual), Hospital & medical
expense (individual), Group accident and
health, Workers' compensation, Liability other
than auto (BI&PD), Auto Liability (BI&PD),
Auto physical damage, Aircraft physical
damage, Fidelity, Surety, Glass, Burglary &
theft, Boiler & machinery, Livestock (only),
Credit (only), Reinsurance (only), life
[includes credit life, variable life, annuities,
variable annuities & group], County mutual
association, Fraternal benefit, Reciprocal,
Mortgage guaranty, Nonprofit hospital &
medical services, Assessment accident, Health
maintenance organization, Benevolent
association, Financial Guaranty.
Kansas Fire, Windstorm & Hail, Extended Coverage,
Additional Perils on Growing Crops, Hail on
Growing Crops, Sprinkler Leakage, Business
Interruption, Water Damage, Ocean Marine,
Inland Marine, Automobile Physical Damage,
Homeowners Policies, Automobile Liability,
General Liability, W/C, fidelity, Surety &
Forgery Bonds, lass, Burglary, Theft &
Robbery, Boiler & Machinery, Credit,
Malpractice Liability, Livestock Mortality.
Kentucky Health, Property & Casualty, Surety, Marine
& Transportation
Maryland Marine, Wet Marine & Transportation-
Section 70, Property & Marine-Section 67
(excluding Wet Marine & Transportation),
Surety-Section 69, Casualty (not including
Vehicle Liability, Mortgage Guaranty & W/C)
Section-68, W/C-Section 68, Vehicle
Liability-Section 68, Variable Annuities-
Sections 63 & 362, Dental-
87
COMPANY STATES LICENSED TYPE OF INSURANCE
- ------- --------------- -----------------
Section 585, Fraternal-Section 307, Mortgage
guaranty-Section 68, Health-Section 66, Life,
including Annuities & Health (except Variable
Life & Variable Annuities) - Sections 63, 65 &
66, Non-Profit health Service Plan-Section 354,
Variable Life-Section 63 & 362, Title-Section
71, Medical Mutual-Section 551, Legal Mutual-
Section 569.
Michigan Disability, Property, Ocean Marine, Inland
Marine, Automobile Liability-limited,
Casualty: Steam Boiler, Flywheel &
Machinery, Automobile, W/C, Liability, Plate
Glass, Sprinkler & Water Damage, Credit,
Burglary & Theft, Livestock, Malpractice,
Disability coverage supplemental to Auto
Insurance, Surety & Fidelity.
Minnesota Pending
Missouri Fidelity & Surety, Liability, Property
New Jersey Fire & Allied Lines, Ocean Marine, Inland
Marine, Automobile Liability BI/PD, Other
Liability, Burglary & Theft, Livestock
North Carolina Pending
Ohio Medical Malpractice, Workers'
Compensation, Other Liability, Other
Commercial Auto Liability
Pennsylvania Inland Marine & Physical Damage, Ocean
Marine, Fidelity & Surety, Glass, Other
Liability, Boiler & Machinery, Burglary &
Theft, Credit, Water Damage, Livestock, Auto
Liability, W/C.
South Carolina Accident & health, Property, Casualty, Surety,
Marine
Tennessee Property, Casualty, Vehicle, Surety
Virginia Liability other than Auto
West Virginia Accident & Sickness, Fire, marine, Casualty,
Surety
Wisconsin Fire, Inland Marine & Other Property, Ocean
Marine, Liability & Incidental Medical
Expense, Automobile & Aircraft, Fidelity,
88
COMPANY STATES LICENSED TYPE OF INSURANCE
- ------- --------------- -----------------
Surety.
ProNational Casualty
Company Illinois Casualty, Fidelity & Surety: Accident &
Health, Vehicle, Liability, W/C, Burglary &
Forgery, Glass, Fidelity & Surety,
Miscellaneous, other Casualty Risks,
Contingent Losses, Legal Expense Insurance.
Fire and Marine: Fire, Elements, War, Riot &
Explosion, Marine and Transportation,
Vehicle, Property damage, sprinkler leakage
and crop, other Fire and Marine Risks,
Contingent Losses, Legal Expense Insurance
American Medical
Insurance Exchange Indiana Accident, W/C, Burglary, theft or
housebreaking, glass, Boiler & Machinery,
Auto, Sprinklers, leakage, accident liability,
Credit, Surety & Fidelity (except Bail Bonds),
Casualty, Legal Expenses, Buildings &
Personal Property, Crops & Farm, Water,
Sprinklers, Inland Marine.
MEEMIC Insurance
Company Michigan Property, Ocean Marine, Automobile
Insurance-Limited, Casualty: Automobile,
Casualty: Plate Glass, Casualty: Sprinkler &
Water Damage, Casualty: Burglary & Theft,
Disability coverage supplemental to auto
insurance. Personal lines.
Ohio Allied Lines, Burglary & Theft, Commercial
Auto-Liability, Commercial Auto-No Fault,
Commercial Auto-Physical Damage, Fire,
glass, Inland Marine, Multiple Peril-
Commercial, Multiple Peril-Farm owners,
Multiple Peril-Homeowners, Ocean Marine,
Other Liability, Private Passenger Auto-
Liability, Private Passenger Auto-Other,
Private Passenger-Physical Damage, Workers
Compensation
89
SCHEDULE 8.3
CAPITAL STOCK AND PARTNERSHIP INTERESTS
LISTING OF BORROWER, MAI AND THEIR RESPECTIVE
SUBSIDIARIES AS OF THE SIGNING DATE:
Company Owner of Shares % Ownership
- ------- --------------- -----------
ProAssurance Corporation Unissued -
MAI Acquisition Corporation I ProAssurance Corporation 100%
PICM Acquisition Corporation ProAssurance Corporation 100%
Medical Assurance, Inc. Publicly traded -
Medical Assurance of West Virginia, Inc. Medical Assurance, Inc. 100%
Specialty Underwriters Reinsurance Facility Medical Assurance, Inc. 100%
The Medical Assurance Company, Inc. Medical Assurance, Inc. 100%
Medical Assurance of Indiana Agency, Inc. Medical Assurance, Inc. 100%
Mutual Assurance Agency, Inc. The Medical Assurance
Company, Inc. 100%
Mutual Assurance Agency of Ohio, Inc. The Medical Assurance
Company, Inc. 100%
LISTING OF BORROWER AND ITS SUBSIDIARIES
CONTEMPLATED ON AND AFTER THE FUNDING DATE:
Company Owner of Shares % Ownership
- ------- --------------- -----------
ProAssurance Corporation Publicly traded
Medical Assurance, Inc. ProAssurance Corporation 100%
Medical Assurance of West Virginia, Inc. Medical Assurance, Inc. 100%
Specialty Underwriters Reinsurance Facility Medical Assurance, Inc. 100%
The Medical Assurance Company, Inc. Medical Assurance, Inc. 100%
Mutual Assurance Agency, Inc. The Medical Assurance 100%
Company, Inc.
Professionals Group, Inc. ProAssurance Corporation 100%
ProNational Insurance Agency, Inc. (formerly known Professionals Group, Inc. 100%
as PICOM Insurance Agency, Inc.)
Professionals Group Services Corp. Professionals Group, Inc. 100%
Professionals National Insurance Co., Ltd. Professionals Group, Inc. 100%
MedAdvantage, Inc. Professionals Group, Inc. 100%
American Insurance Management Corporation Professionals Group, Inc. 100%
ProNational Insurance Company Professionals Group, Inc. 100%
MEEMIC Holdings, Inc. ProNational Insurance Company approx. 84%
ProNational Casualty Company ProNational Insurance Company 100%
PICOM Claims Services Corporation ProNational Insurance Company 100%
Physicians Protective Plan, Inc. ProNational Insurance Company 100%
MEEMIC Insurance Company MEEMIC Holdings, Inc. 100%
MEEMIC Insurance Services Corporation MEEMIC Holdings, Inc. 100%
90
SCHEDULE 8.10
EMPLOYEE BENEFIT PLANS
Benefit Plans of Medical Assurance, Inc. and Subsidiaries
1. Medical Assurance, Inc. Thrift Plan (stock purchase plan/non-ERISA
plan)
2. Medical Assurance, Inc. 401(k) Plan (through Principal Financial Group)
3. Medical Assurance, Inc. Pension Plan
4. Medical Assurance, Inc. Incentive Compensation Stock Plan
5. Long-Term Disability Plan (through MGIS Companies)
6. Short-Term Disability Plan (self-funded)
7. Group Universal Life Insurance Plan (through Principal - funded by
employees)
8. Group Term Life Insurance - Indiana only (through UNUM - company
funded)
9. Group Health/Dental Insurance (Blue Cross-Blue Shield of Alabama).
Employees of all locations will be covered under this plan as of July
1, 2000. (Indiana currently has separate coverage through Anthem Blue
Cross Blue Shield; converting to corporate coverage on 7/1/00.)
10. MA-Flex (Flexible Spending Plan for dependent care expenses and
unreimbursed medical expenses.)
11. Educational Reimbursement Program (self-funded)
12. Vacation (with vacation buy back for excess carry over hours)
13. Sick Leave (with sick leave buy back for excess carry over hours)
14. Holidays (9 paid holidays per year; 5 regular, 4 floating)
15. MAI Director Deferred Compensation Plan
Professionals Group, Inc. Benefit Plans
1. Delta Dental Plan of Michigan Contract
Group Number: 1651-0012
2. Delta Dental Plan - Florida
Group Number: 1651-0012
MetLife - Preferred Dentist Program
3. Physicians Health Plan, Inc. Health Maintenance Organization
Group Policy Number: 20543
Benefit Description: 20049-311-11010
91
4. Physicians Health Plan, Inc. - United Healthcare Insurance Company
Out-of-Network Medical Benefits
Group Number: 23305
5. Blue Cross Blue Shield of Florida
Summary of Benefits
6. Reliance Standard Life Insurance Company
Group Life and Accidental Death and Dismemberment Insurance Program
GL033309-00 04/1999 edition
7. Reliance Standard Life Insurance Company
Group Life Insurance Program
GL033310-00 04/1999 edition
8. Short Term Disability Summary
Plan Number 600
Effective September 1, 1990, revised and restated effective September
1, 1994
9. Professionals Group Employee Stock Ownership Pension Plan, as amended,
and Summary Plan Description dated July 1, 1998
10. Professionals Group Stock Purchase Plan, as amended, and Summary of Key
Provisions of the Plan
11. Professionals Group Employees' Savings and Retirement Plan, as amended
June 3, 1998
12. Professionals Group Employees' Savings and Retirement Plan Summary Plan
Description dated July 1, 1998
13. Professionals Insurance Company Management Group 1996 Non-Employee
Directors Stock Option Plan
14. Professionals Insurance Company Management Group 1996 Long Term
Incentive Plan
15. Professionals Insurance Company Management Group Stock Purchase Plan
16. ProNational Insurance Company Employee Handbook dated January, 1999,
which contains other benefit plans.
17. MEEMIC Holdings, Inc. Stock Compensation Plan
18. Reliance Standard Life Insurance Company
Accidental Death & Dismemberment
Effective Date: March 8, 1999
Policy No. SR 45047
19. Delta Dental Contract & Summary of Dental Plan Benefits
Group No.: 7336-0001, 0002
Dated: October 1, 1998
20. American United Life Insurance Company
Group Term Life Insurance
Group No. G00600547-0000-000
92
21. MEEMIC Flexible Benefit Plan
Federal Plan ID Number: 502
Dated: January 1, 1999
22. American United Life Insurance Company
Group Long Term Disability Insurance
Group No. 00600547-0001-000
23. MEEMIC Employee Benefit Plan w/ Amendments 1-9
Medical, Vision, Prescription Drug
Dated: September 1, 1988
Federal Plan ID Number: 501
24. MEEMIC Insurance Company Retirement and Savings Plan
Dated: January, 2000
25. MEEMIC Insurance Company
Principal Financial Group Prototype for Money Purchase Plans
Dated: January 1, 1993
26. MEEMIC Insurance Company
Principal Financial Group Prototype for Savings Plans
Dated: July 1, 1991
27. Automated Travel Expense Report Instructions
Automated Daily Expense Report Instructions
28. MEEMIC Insurance Company
Employee Handbook
Dated: July, 1999
29. MEEMIC - 2000 Short-Term Incentive Plan
Dated: December 8, 1999
93
SCHEDULE 8.23
TRADENAMES
Professionals Group Services Corp. d/b/a "ProNational Services Corporation"
Physicians Protective Plan, Inc. d/b/a ProNational Solutions
MEEMIC Insurance Services Corporation d/b/a "Michigan Educators Insurance
Agency"
ProAssurance [applied for]
94
SCHEDULE 9.12
EXISTING DEBT
1. Debt outstanding under Credit Agreement dated April 4, 1997 between
Professionals Group, Inc. and LaSalle Bank, N.A. At March 31, 2001, the
amount outstanding was $14,500,000.
2. Debt owed by MEEMIC Holdings, Inc. to the former shareholders of the
MEIA Insurance Agency incurred in connection with MEEMIC Holdings'
acquisition of MEIA. As of December 31, 2000, the amount owing was
$1,040,000.
95
SCHEDULE 9.13
EXISTING LIENS
1. The Credit Agreement between Professionals Group, Inc. and LaSalle Bank
as referenced in Schedule 9.12 contains a negative pledge covenant.
2. Other Liens permitted by Section 9.13.
96
SCHEDULE 9.20
EXISTING LOANS AND INVESTMENTS
1. None, other than as permitted by Section 9.20.
97
EXHIBIT C
[RESERVED]
98
EXHIBIT A-1
REVOLVER NOTE
$_____________ Birmingham, Alabama
, 2001
--------------------------
FOR VALUE RECEIVED, PROASSURANCE CORPORATION, a Delaware corporation
(the "Borrower"), promises to pay to the order of
_____________________________________, a _______________________ (the "Lender"),
the principal sum of ________________________AND NO/100 DOLLARS
($__________________), or such lesser amount as shall equal the aggregate unpaid
principal amount of all Borrowings disbursed by the Lender to the Borrower
pursuant to Section 2.1 of the Credit Agreement referred to below, on the dates
and in the amounts provided for Borrowings under the Revolver Facility pursuant
to the Credit Agreement. The Borrower promises to pay interest on the unpaid
principal amount of this note on the dates and at the rate or rates provided for
in the Credit Agreement. Interest on any overdue principal of and, to the extent
permitted by law, overdue interest on the principal amount hereof shall bear
interest at the Default Rate, as provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of
SouthTrust Bank, as Administrative Agent, 420 North 20th Street, Birmingham,
Alabama 35203, or such other address as may be specified from time to time
pursuant to the Credit Agreement.
All Borrowings under the Revolver Facility funded by the Lender, the
respective maturities thereof, the interest rates from time to time applicable
thereto, and all repayments of the principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, endorsed by the Lender on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Revolver Notes referred to in the Credit
Agreement dated as of May 10, 2001 among the Borrower, the Lenders listed on the
signature pages thereof, and SouthTrust Bank, as Lead Arranger, Syndication
Agent and Administrative Agent, and Bank of America, National Association, as
Co-Arranger (as the same may be amended and modified from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are used herein with
the same meanings. Reference is made to the Credit Agreement for provisions for
the optional and mandatory prepayment and the repayment hereof and the
acceleration of the maturity hereof, as well as the obligation of the Borrower
to pay all costs of collection, including reasonable attorneys fees, in the
event this note is collected by law or through an attorney at law. This note is
entitled to the security provided by the Credit Agreement and the Collateral
Documents referred to therein.
The Borrower hereby waives presentment, demand, notice of dishonor,
protest, notice of demand, protest and nonpayment and any other notice required
by law relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.
THIS NOTE IS MADE AND DELIVERED IN THE STATE OF ALABAMA AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ALABAMA
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
[Remainder of Page Intentionally Blank. Signature Page Follows.]
A-1-1
99
IN WITNESS WHEREOF, the Borrower has caused this note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.
PROASSURANCE CORPORATION
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
[CORPORATE SEAL]
A-1-2
100
SCHEDULE A
TO REVOLVER NOTE
LOANS AND PAYMENTS OF PRINCIPAL
Date Base Rate Borrowing Amount Amount of Maturity Notation
or Eurodollar Rate of Borrowing Principal Date Made By
Borrowing Repaid
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
A-1-3
101
EXHIBIT A-2
TERM LOAN NOTE
$_____________ Birmingham, Alabama
, 2001
--------------------------------
FOR VALUE RECEIVED, PROASSURANCE CORPORATION, a Delaware corporation
(the "Borrower"), promises to pay to the order of
_____________________________________, a _______________________ (the "Lender"),
the principal sum of ________________________AND NO/100 DOLLARS
($__________________), or such lesser amount as shall equal the aggregate unpaid
principal amount of all Borrowings disbursed by the Lender to the Borrower
pursuant to Section 2.2 of the Credit Agreement referred to below, on the dates
and in the amounts provided for Borrowings under the Term Loan Facility pursuant
to the Credit Agreement. The Borrower promises to pay interest on the unpaid
principal amount of this note on the dates and at the rate or rates provided for
in the Credit Agreement. Interest on any overdue principal of and, to the extent
permitted by law, overdue interest on the principal amount hereof shall bear
interest at the Default Rate, as provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of
SouthTrust Bank, as Administrative Agent, 420 North 20th Street, Birmingham,
Alabama 35203, or such other address as may be specified from time to time
pursuant to the Credit Agreement.
All Borrowings under the Term Loan Facility funded by the Lender, the
respective maturities thereof, the interest rates from time to time applicable
thereto, and all repayments of the principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, endorsed by the Lender on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Term Loan Notes referred to in the Credit
Agreement dated as of May 10, 2001 among the Borrower, the Lenders listed on the
signature pages thereof, and SouthTrust Bank, as Lead Arranger, Syndication
Agent, and Administrative Agent, and Bank of America, National Association, as
Co-Arranger (as the same may be amended and modified from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are used herein with
the same meanings. Reference is made to the Credit Agreement for provisions for
the optional and mandatory prepayment and the repayment hereof and the
acceleration of the maturity hereof, as well as the obligation of the Borrower
to pay all costs of collection, including reasonable attorneys fees, in the
event this note is collected by law or through an attorney at law. This note is
entitled to the security provided by the Credit Agreement and the Collateral
Documents referred to therein.
The Borrower hereby waives presentment, demand, notice of dishonor,
protest, notice of demand, protest and nonpayment and any other notice required
by law relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.
THIS NOTE IS MADE AND DELIVERED IN THE STATE OF ALABAMA AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ALABAMA
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
[Remainder of Page Intentionally Blank. Signature Page Follows.]
A-2-1
102
IN WITNESS WHEREOF, the Borrower has caused this note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.
PROASSURANCE CORPORATION
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
[CORPORATE SEAL]
A-2-2
103
SCHEDULE A
TO TERM LOAN NOTE
LOANS AND PAYMENTS OF PRINCIPAL
Date Base Rate Borrowing Amount Amount of Maturity Notation
or Eurodollar Rate of Borrowing Principal Date Made By
Borrowing Repaid
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
A-2-3
104
EXHIBIT B-1
BORROWING NOTICE
___________________, 20_____
SouthTrust Bank, as Administrative Agent
420 North 20th Street
Birmingham, AL 35203
Attention: Ted Knudsen
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of May 10, 2001 by and among
ProAssurance Corporation, as Borrower, the Lenders from time
to time parties thereto, SouthTrust Bank, as Lead Arranger,
Syndication Agent and Administrative Agent, and Bank of
America, N.A. as Co-Arranger.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement. This Borrowing
Notice is delivered to you pursuant to Section 2.4(a) of the Credit Agreement.
The Borrower hereby requests a (check applicable boxes and complete
applicable information):
1. [ ] BASE RATE BORROWING in the aggregate principal amount of
$____________________________ under the:
[ ] Revolver Facility
[ ] Term Loan Facility
to be made on _____________, 20____ ("Borrowing Date"), and for interest to
accrue thereon at the rate established by the Credit Agreement for Base Rate
Borrowings.
2. [ ] EURODOLLAR RATE BORROWING in the aggregate principal amount of
$________________________ under the:
[ ] Revolver Facility
[ ] Term Loan Facility
to be made on _____________, 20____ ("Borrowing Date"), and for interest to
accrue thereon at the rate established by the Credit Agreement for Eurodollar
Rate Borrowings. The duration of the Interest Period with respect thereto shall
be ________________________________.
(1 month, 2 months or 3 months)
The Borrower represents and confirms that no Default or Potential
Default has occurred under the Credit Agreement. The Borrower hereby represents
and confirms that the purpose for which such Borrowing is being requested is
for one or more of the permitted purposes as set forth in Section 8.1 of the
Credit Agreement.
The Borrower has caused this Borrowing Notice to be executed and
delivered by its duly authorized officer this _______ day of ______________,
20___.
PROASSURANCE CORPORATION
By:
-----------------------------------------
Name:
----------------------------------------
Title:
-------------------------------------
105
EXHIBIT B-2
CONVERSION NOTICE
(or election of new Interest Period)
_____________________, 20___
SouthTrust Bank, as Administrative Agent
420 North 20th Street
Birmingham, AL 35203
Attention: Ted Knudsen
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of May 10, 2001, by and
among ProAssurance Corporation, the Lenders from time to time
parties thereto, SouthTrust Bank, as Lead Arranger,
Syndication Agent, and Administrative Agent, and Bank of
America, N.A., as Co-Arranger
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement. This Conversion
Notice is delivered to you pursuant to Section 3.11 of the Credit Agreement
with respect to Borrowings under the (check applicable box and complete 1 or 2
below):
[ ] Revolver Facility
[ ] Term Loan Facility
1. [ ] With respect to the Eurodollar Rate Borrowing under the
above-referenced Facility in the aggregate amount of
$_______________________ which has an Interest Period ending on
_________________, 20_____, the Borrower hereby requests that such
Borrowing:
[ ] be converted to a Base Rate Borrowing on such date, and
for interest to accrue thereon at the rate established by
the Credit Agreement for Base Rate Borrowings.
[ ] be continued as a Eurodollar Rate Borrowing in the
aggregate principal amount of $__________________________
to be made on such date, and for interest to accrue
thereon at the rate established by the Credit Agreement
for Eurodollar Rate Borrowings. The duration of the new
Interest Period with respect thereto shall be
__________________________________.
(1 month, 2 months, or 3 months)
2. [ ] With respect to $__________________________ of the outstanding
Base Rate Borrowing under the above- referenced Facility, the Borrower
hereby requests that such sum be converted to a Eurodollar Rate
Borrowing on ________________________, 20______, and for interest to
accrue thereon at the rate established by the Credit Agreement for
Eurodollar Rate Borrowings. The duration of the new Interest Period
with respect thereto shall be _______________________________.
(1 month, 2 months, or 3 months)
The Borrower represents and confirms that no Default or Potential Default has
occurred under the Credit Agreement.
The Borrower has caused this Conversion Notice to be executed and
delivered by its duly authorized officer this ______ day of ______________,
20___.
PROASSURANCE CORPORATION
By:
-----------------------------------------
Name:
----------------------------------------
Title:
-------------------------------------
106
EXHIBIT D
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement"),
dated as of ________________, 20_____ is made by
______________________________________, a corporation organized under the laws
of _________________ (the "Pledgor"), in favor of SOUTHTRUST BANK, an Alabama
banking corporation, as Administrative Agent (in such capacity, the
"Administrative Agent"), for the ratable benefit of itself and the financial
institutions (the "Lenders") as are, or may from time to time become, parties
to the Credit Agreement (as defined below).
RECITALS
Pursuant to a Credit Agreement, dated as of May 10, 2001
(together with all amendments and other modifications, if any, from time to
time hereafter made thereto, the "Credit Agreement"), by and among ProAssurance
Corporation (the "Borrower"), the Lenders, and the Administrative Agent, the
Lenders have agreed to extend Borrowings to the Borrower as more specifically
described in the Credit Agreement.
The Pledgor [IS A SUBSIDIARY OR OTHER AFFILIATE OF BORROWER
AND] is the legal and beneficial owner of (a) the shares of Pledged Stock (as
hereinafter defined) issued by certain Subsidiaries as specified on SCHEDULE 1
attached hereto and incorporated herein by reference (collectively, the
"Issuers") and (b) the Partnership Interests (as hereinafter defined) in the
partnerships and limited liability companies listed on SCHEDULE 2 hereto
(collectively, the "Partnerships").
In connection with the transactions contemplated by the
Credit Agreement and as a condition precedent thereto, the Lenders have
requested, and the Pledgor has agreed to execute and deliver, this Pledge
Agreement together with all certificates representing the Pledged Stock and the
Partnership Interests to the Administrative Agent for the ratable benefit of
itself and the Lenders.
NOW, THEREFORE, in consideration of the premises and to
induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and make available Borrowings thereunder, the Pledgor hereby agrees
with the Administrative Agent for the ratable benefit of itself and Lenders as
follows:
1. DEFINED TERMS. Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein are so used as
so defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of Alabama.
"Collateral" means the Stock Collateral and the Partnership
Collateral.
"Partnership Collateral" means all of the Partnership
Interests of the Pledgor in the Partnerships and all Proceeds
therefrom.
"Partnership Interests" means the entire partnership or
membership interest of the Pledgor in each Partnership listed on
SCHEDULE 2 hereto, including without limitation, Pledgor's capital
account, its interest as a partner or member in the net cash flow, net
profit and net loss, and items of income, gain, loss, deduction and
credit of the Partnerships, its interest in all distributions made or
to be made by the Partnerships to the Pledgor and all of the other
economic rights, titles and interests of the Pledgor as a partner or
member of the Partnerships, whether set forth in the partnership
agreement or membership agreement of the Partnerships, by separate
agreement or otherwise.
D-1
107
"Pledge Agreement" means this Pledge and Security Agreement,
as amended or modified.
"Pledged Stock" means the shares of capital stock of each
Issuer listed on SCHEDULE 1 hereto, together with all stock
certificates, options or rights of any nature whatsoever that may be
issued or granted by such Issuer to the Pledgor while this Pledge
Agreement is in effect.
"Proceeds" means all "proceeds" as such term is now or
hereafter defined in the Code and, in any event, shall include,
without limitation, all dividends or other income from the Pledged
Stock, collections thereon, proceeds of sale thereof or distributions
with respect thereto.
"Stock Collateral" means the Pledged Stock and all Proceeds
therefrom.
2. PLEDGE AND GRANT OF SECURITY INTEREST. For the
purpose of creating and perfecting a security interest in the Pledged Stock,
the Pledgor hereby delivers to the Administrative Agent, for the ratable
benefit of itself and the Lenders all the Pledged Stock and hereby grants to
the Administrative Agent, for the ratable benefit of itself and the Lenders, a
first priority security interest in the Pledged Stock and all other Collateral,
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligation. The Administrative Agent hereby acknowledges receipt of the
certificates representing the Pledged Stock and agrees to hold the Pledged
Stock subject to the terms of this Pledge Agreement.
3. STOCK POWERS. Concurrently with the delivery to the
Administrative Agent of each certificate representing one or more shares of
Pledged Stock, the Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by the Pledgor with, if the Administrative
Agent so requests, signature guaranteed.
4. PLEDGOR REMAINS LIABLE. Anything herein to the
contrary notwithstanding, (a) the Pledgor shall remain liable to perform all of
its duties and obligations as a partner or member of the Partnerships to the
same extent as if this Pledge Agreement had not been executed, (b) the exercise
by the Administrative Agent or any Lender of any of its rights hereunder shall
not release the Pledgor from any of its duties or obligations as a partner or
member of the Partnerships, and (c) neither the Administrative Agent nor any
Lender shall have any obligation or liability as a partner or member of the
Partnerships by reason of this Pledge Agreement.
5. REPRESENTATIONS AND WARRANTIES. To induce the
Administrative Agent and the Lenders to execute the Credit Agreement and fund
any Borrowings and to accept the security contemplated hereby, the Pledgor
hereby represents and warrants that:
(a) the Pledgor has the corporate or partnership, as
applicable, right, power and authority and has taken all
necessary corporate or partnership, as applicable, action to
authorize its execution, delivery and performance of, and
grant of the Lien on the Collateral pursuant to, this Pledge
Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor enforceable against the
Pledgor in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar state or federal debtor
relief laws from time to time in effect which affect the
enforcement of creditors' rights generally and the
availability of equitable remedies;
(c) the execution, delivery and performance of this
Pledge Agreement will not (i) violate any applicable laws
relating to the Pledgor or any of its Subsidiaries; (ii)
conflict with, result in a breach of or constitute a default
under any Material Agreement to which Pledgor is a party or
by which any of its properties may be bound or (iii) result
in the creation or imposition of any Lien upon or with
respect to
D-2
108
any material property now owned or hereafter acquired by the
Pledgor other than Liens arising under the Loan Documents;
(d) except as contemplated in PARAGRAPH 12 hereof, no
consent or authorization of, filing with, or other act by or
in respect of, any arbitrator, Insurance Regulator, or other
Governmental Authority and no consent of any other Person
(including, without limitation, any stockholder, other owner
or creditor of the Pledgor or any Issuer or any general or
limited partner, member or manager of any Partnership), is
required in connection with the execution, delivery,
performance, validity or enforceability against the Pledgor
of this Pledge Agreement, except (i) as may be required in
connection with the disposition of the Pledged Stock and the
Partnership Interests by Laws affecting the offering and sale
of securities generally, and (ii) filings under the Uniform
Commercial Code;
(e) no litigation, investigation or proceeding of or
before any arbitrator, Insurance Regulator, or other
Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any
of its properties or revenues with respect to this Pledge
Agreement or any of the transactions contemplated hereby;
(f) the shares of Pledged Stock listed on SCHEDULE 1
constitute all the issued and outstanding shares of all
classes of the capital stock of each of the Issuers;
(g) all the shares of the Pledged Stock have been duly
and validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of,
and has good and marketable title to, the Pledged Stock and
Partnership Interests, free of any and all Liens or options
in favor of, or claims of, any other Person, except the Lien
created by this Pledge Agreement;
(i) none of the Partnership Interests are represented by
certificates;
(j) upon (A) delivery to the Administrative Agent of the
stock certificates evidencing the Pledged Stock, the Lien
granted pursuant to this Pledge Agreement will constitute a
valid, perfected first priority Lien on the Pledged Stock and
(B) filing of UCC-1 financing statements in the appropriate
filing offices, the Lien granted pursuant to this Pledge
Agreement will constitute a valid, perfected first priority
Lien on the other Collateral, in each case enforceable as
such against all creditors of the Pledgor and any Persons
purporting to purchase any of the Collateral from the
Pledgor; and
(k) Pledgor has delivered to the Administrative Agent
true and complete copies of the partnership or membership
agreements for each of the Partnerships which partnership or
membership agreements are currently in full force and effect
and have not been amended or modified except as disclosed to
the Administrative Agent in writing.
6. CERTAIN COVENANTS AND AGREEMENTS. The Pledgor
covenants and agrees with the Administrative Agent
for the ratable benefit of itself and the Lenders
that, from and after the date of this Pledge
Agreement until the Obligation is paid in full and
the Commitments are terminated:
(a) On or before the date of execution of this Pledge
Agreement, the Pledgor shall cause each of the partners or
members of each of the Partnerships to execute a consent in
the form attached hereto evidencing the consent of the
partners or members to the pledge of the Partnership
Interests pursuant to this Pledge Agreement.
(b) The Pledgor agrees that as a partner or member in
the Partnerships it will abide by, perform and discharge each
and every material obligation, covenant and agreement to be
abided by, performed or
D-3
109
discharged by Pledgor under the terms of the partnership or
membership agreements of the Partnerships, at no cost or
expense to the Administrative Agent or the Lenders.
(c) If the Pledgor shall, as a result of its ownership
of the Pledged Stock or any other Collateral, become entitled
to receive or shall receive any stock or other certificate
(including, without limitation, any certificate representing
a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization),
option or rights, whether in addition to, in substitution of,
as a conversion of, or in exchange for any shares of the
Pledged Stock or other Collateral, or otherwise in respect
thereof, the Pledgor shall accept the same as the agent of
the Administrative Agent, hold the same in trust for the
Administrative Agent and deliver the same forthwith to the
Administrative Agent in the exact form received, duly
indorsed by the Pledgor to the Administrative Agent, if
required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor and with,
if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for
the Obligation.
(d) Except as expressly permitted by the Credit
Agreement, without the prior written consent of the
Administrative Agent, the Pledgor will not (i) vote to
enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or
to issue any other securities convertible into or granting
the right to purchase or exchange for any stock or other
equity securities of any nature of such Issuer, (ii) except
as expressly provided to the contrary herein, consent to any
modification, extension or alteration of the terms of any
partnership or membership agreement of the Partnerships,
(iii) accept a surrender of any partnership or membership
agreement of any of the Partnerships or waive any breach of
or default under any partnership or membership agreement of
any of the Partnerships by any other party thereto, (iv)
sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Pledged Stock, or (v)
create, incur or permit to exist any Lien or option in favor
of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien
provided for by this Pledge Agreement. The Pledgor will
defend the right, title and interest of the Administrative
Agent in and to the Collateral against the claims and demands
of all Persons whomsoever.
(e) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense
of the Pledgor, the Pledgor will promptly and duly execute
and deliver such further instruments and documents and take
such further actions as the Administrative Agent may
reasonably request for the purposes of obtaining or
preserving the full benefits of this Pledge Agreement and of
the rights and powers herein granted. If any amount payable
under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument or
chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Administrative Agent, duly
endorsed in a manner satisfactory to the Administrative
Agent, to be held as Collateral pursuant to this Pledge
Agreement.
(f) The Pledgor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and
all liabilities with respect to, or resulting from any delay
in paying, any and all stamp, excise, sales or other similar
taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of
the transactions contemplated by this Pledge Agreement.
(g) On or prior to the formation or acquisition of any
Subsidiary of the Pledgor that is or is expected to be a
Significant Subsidiary, other than MEEMIC and its
Subsidiaries, the Pledgor agrees at the request of the
Administrative Agent, to execute such amendments and
supplements to this Pledge Agreement, including without
limitation the Pledge Agreement Supplement attached hereto,
and such other documents and instruments and to take any and
all actions, all as shall be necessary, in the reasonable
judgment of the Administrative Agent, to pledge the Pledgor's
interest therein to the Administrative Agent for the ratable
benefit of itself and the Lenders.
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7. CASH DIVIDENDS AND DISTRIBUTIONS; VOTING
RIGHTS. Unless an Event of Default shall have
occurred and be continuing and the Administrative
Agent shall have given notice to the Pledgor of the
Administrative Agent's intent to exercise its rights
pursuant to Paragraph 8 below, the Pledgor shall be
permitted to receive all cash dividends and
shareholder, partnership and membership distributions
paid in accordance with the terms of the Credit
Agreement in respect of the Collateral and to
exercise all voting and corporate, partnership or
membership rights, as applicable, with respect to the
Collateral; provided, that no vote shall be cast or
corporate, partnership or membership right exercised
or other action taken which, in the Administrative
Agent's reasonable judgment, would impair the
Collateral or which would result in any violation of
any provision of the Credit Agreement, the Notes, any
other Loan Documents or this Pledge Agreement.
8. RIGHTS OF THE ADMINISTRATIVE AGENT.
(a) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent
to exercise such rights to the Pledgor, and subject to the
receipt of any applicable approvals from Insurance
Regulators, and compliance by Administrative Agent and
Lenders with any applicable filing or other requirements of
the applicable Insurance Regulators, (i) the Administrative
Agent shall have the right to receive any and all cash
dividends paid in respect of the Pledged Stock and
partnership and membership distributions in respect of the
Partnership Interests and make application thereof to the
Obligation in the order set forth in SECTION 11.8 of the
Credit Agreement and (ii) all shares of the Pledged Stock
shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (A) all voting, corporate and other
rights pertaining to such shares of the Pledged Stock at any
meeting of shareholders of the applicable Issuer or otherwise
and (B) any and all rights of conversion, exchange,
subscription, and any other rights, privileges or options
pertaining to such shares of the Pledged Stock as if it were
the absolute owner thereof (including, without limitation,
the right to exchange at its discretion any and all of the
Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate
structure of the applicable Issuer, or upon the exercise by
the Pledgor or the Administrative Agent of any right,
privilege or option pertaining to such shares of the Pledged
Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine),
all without liability except to account for property actually
received by it, but the Administrative Agent shall have no
duty to the Pledgor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so
or delay in so doing.
(b) The rights of the Administrative Agent and the
Lenders hereunder shall not be conditioned or contingent upon
the pursuit by the Administrative Agent or any Lender of any
right or remedy against the Pledgor or against any other
Person which may be or become liable in respect of all or any
part of the Obligation or against any collateral security
therefor, guarantee therefor or right of offset with respect
thereto. Neither the Administrative Agent nor any Lender
shall be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in
doing so, nor shall the Administrative Agent be under any
obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or any other Person or to
take any other action whatsoever with regard to the
Collateral or any part thereof.
(c) Pledgor agrees to cooperate with and assist
Administrative Agent and Lenders in connection with any
filings to be with, or approvals required from, any Insurance
Regulators or other Governmental Authorities.
9. REMEDIES. If an Event of Default shall
occur and be continuing, with the consent of the
Required Lenders, and subject to the receipt of any
applicable approvals from Insurance
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Regulators, and compliance by Administrative Agent
and Lenders with any applicable filing or other
requirements of the applicable Insurance Regulators,
the Administrative Agent may, and upon the request
of the Required Lenders, the Administrative Agent
shall, exercise on behalf of itself and the Lenders,
all rights and remedies granted in this Pledge
Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligation,
and in addition thereto, all rights and remedies of
a secured party under the Code. Without limiting the
generality of the foregoing with regard to the scope
of the Administrative Agent's remedies, the
Administrative Agent, without demand of performance
or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by
law referred to below) to or upon the Pledgor, any
Issuer, any Partnership or any other Person (all and
each of which demands, defenses, advertisements and
notices are hereby waived), may in such
circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise
dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or
sales, in the over-the-counter market, at any
exchange, broker's board or office of the
Administrative Agent or any Lender or elsewhere upon
such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption
of any credit risk. The Administrative Agent or any
Lender shall have the right upon any such public
sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of
any right or equity of redemption in the Pledgor,
which right or equity is hereby waived or released.
The Administrative Agent shall apply any Proceeds
from time to time held by it and the net proceeds of
any such collection, recovery, receipt,
appropriation, realization or sale, after deducting
all reasonable costs and expenses of every kind
incurred in respect thereof or incidental to the
care or safekeeping of any of the Collateral or in
any way relating to the Collateral or the rights of
the Administrative Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys'
fees and disbursements of counsel thereto, to the
payment in whole or in part of the Obligation, in
the order set forth in SECTION 11.8 of the Credit
Agreement, and only after such application and after
the payment by the Administrative Agent of any other
amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the Code
(or any successor provision), need the
Administrative Agent account for the surplus, if
any, to the Pledgor. To the extent permitted by
applicable law, the Pledgor waives all claims,
damages and demands it may acquire against the
Administrative Agent or any Lender arising out of
the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
10. REGISTRATION RIGHTS; PRIVATE SALES.
(a) If the Administrative Agent shall determine to
exercise its right to sell any or all of the Collateral
pursuant to PARAGRAPH 9 hereof, and if in the opinion of the
Administrative Agent it is necessary or advisable to have
such Collateral, or that portion thereof to be sold,
registered under the provisions of the Security Act of 1933,
as amended (the "Securities Act"), the Pledgor will use its
best efforts to cause the applicable Issuer or Partnership to
(i) execute and deliver, and use its best efforts to cause
the directors, officers and representatives of the applicable
Issuer or Partnership to execute and deliver, all such
instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the
Administrative Agent, necessary or advisable to register such
Collateral, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) to use its best
efforts to cause the registration statement relating thereto
to become effective and to remain effective for a period of
one year from the date of the first public offering of such
Collateral or that portion thereof to be sold, and (iii) to
make all amendments thereto and/or to the related prospectus
which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission
applicable thereto. The Pledgor agrees to use
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its best efforts to cause the applicable Issuer or
Partnership to comply with the provisions of the securities
or "Blue Sky" laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to
its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act. For the
purposes of this SECTION 10.(A), "applicable Issuer or
Partnership" shall mean each Issuer or Partnership which is a
direct or indirect wholly-owned Subsidiary of the Pledgor.
(b) The Pledgor recognizes that the Administrative Agent
may be unable to effect a public sale of any or all the
Collateral, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to
acquire such securities for their own account for investment
and not with a view to the distribution or resale thereof.
The Pledgor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than
if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.
The Administrative Agent shall be under no obligation to
delay a sale of any of the Collateral for the period of time
necessary to permit the applicable Issuer or Partnership to
register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if the
applicable Issuer or Partnership would agree to do so.
(c) The Pledgor further agrees to use its best efforts
to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of
the Collateral pursuant to this PARAGRAPH 10 valid and
binding and in compliance with any and all other applicable
Laws and applicable requirements of the Insurance Regulators.
The Pledgor further agrees that a breach of any of the
covenants contained in this PARAGRAPH 10 will cause
irreparable injury to the Administrative Agent and the
Lenders not compensable in damages, that the Administrative
Agent and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, that each and
every covenant contained in this PARAGRAPH 10 shall be
specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against
an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the
Credit Agreement.
11. AMENDMENTS, ETC. WITH RESPECT TO THE
OBLIGATION. The Pledgor shall remain obligated
hereunder, and the Collateral shall remain subject to
the Lien granted hereby, notwithstanding that,
without any reservation of rights against the
Pledgor, and without notice to or further assent by
the Pledgor, any demand for payment of the Obligation
made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender,
and any of the Obligations continued, and the
Obligation, or the liability of the Pledgor or any
other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time,
in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived,
surrendered, or released by the Administrative Agent
or any Lender, and the Credit Agreement, the Notes,
any other Loan Documents and any other documents
executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in
whole or in part, as the Lenders (or the Required
Lenders, as the case may be) may deem advisable from
time to time, and any guarantee, right of offset or
other collateral security at any time held by the
Administrative Agent or any Lender for the payment of
the Obligation may be sold, exchanged, waived,
surrendered or released. Neither the Administrative
Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any other Lien at
any time held by it as security for the Obligation or
any property subject thereto. The Pledgor waives any
and all notice of the creation, renewal, extension or
accrual of the Obligation or any part thereof and
notice of or proof of reliance by the Administrative
Agent or any Lender upon this Pledge Agreement; the
Obligation, and any part thereof, shall conclusively
be deemed to have been created, contracted or
incurred in reliance upon this Pledge Agreement; and
all dealings between the Pledgor, on
D-7
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the one hand, and the Administrative Agent and the
Lenders, on the other, shall likewise be conclusively
presumed to have been had or consummated in reliance
upon this Pledge Agreement. The Pledgor waives
diligence, presentment, protest, demand for payment
and notice of default or nonpayment to or upon the
Pledgor with respect to the Obligation.
12. REGULATORY APPROVAL. The Pledgor will, at its
expense, promptly execute and deliver, or cause the
execution and delivery of, all applications,
certificates, instruments, registration statements,
filings and all other documents and papers the
Administrative Agent may reasonably request or as may
be required by law in connection with the obtaining
of any consent, approval, registration, qualification
or authorization of any Insurance Regulator or other
Governmental Authority or of any other Person
necessary or appropriate for the effective exercise
of any rights under this Pledge Agreement. Without
limiting the generality of the foregoing, if an Event
of Default shall have occurred and be continuing, the
Pledgor shall take any action which the
Administrative Agent may reasonably request in order
to transfer and assign to the Administrative Agent,
or to such one or more third parties as the
Administrative Agent may designate, or to a
combination of the foregoing, each license and
Authorization of any Insurance Regulator or other
Governmental Authority. To enforce the provisions of
this PARAGRAPH 12, upon the occurrence and during the
continuance of an Event of Default, the
Administrative Agent is empowered to request the
appointment of a receiver from any court of competent
jurisdiction. Such receiver shall be instructed to
seek from the Insurance Regulators and all other
necessary Governmental Authorities an involuntary
transfer of control of the Pledged Stock or
Partnership Interests and Authorization from the
applicable Insurance Regulators for the purpose of
seeking a bona fide purchaser to whom control of such
property will ultimately be transferred. The Pledgor
hereby agrees to authorize such an involuntary
transfer of control upon the request of the receiver
so appointed and, if the Pledgor shall refuse to
authorize the transfer, its approval may be required
by the court. Upon the occurrence and during the
continuance of an Event of Default, the Pledgor shall
further use its best efforts to assist in obtaining
approval of any applicable Insurance Regulator, if
required, for any action or transactions contemplated
by this Pledge Agreement including, without
limitation, the preparation, execution and filing
with the applicable Insurance Regulator of the
assignor's or transferor's portion of any filings or
applications for consent to the assignment or
transfer of control necessary or appropriate under
the rules and regulations of the applicable Insurance
Regulators for the approval of the transfer or
assignment of any portion of the Collateral, together
with any other applicable Authorizations. The Pledgor
acknowledges that the assignment or transfer of such
rights is integral to the Administrative Agent's and
the Lenders' realization of the value of the
Collateral, that there is no adequate remedy at law
for failure by the Pledgor to comply with the
provisions of this PARAGRAPH 12 and that such failure
would cause irreparable injury not adequately
compensable in damages, and therefore agrees that
each and every covenant contained in this PARAGRAPH
12 may be specifically enforced, and the Pledgor
hereby waives and agrees not to assert any defenses
against an action for specific performance of such
covenants.
13. LIMITATION ON DUTIES REGARDING COLLATERAL. The
Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of
the Code or otherwise, shall be to deal with it in
the same manner as the Administrative Agent deals
with similar securities and property for its own
account. Neither the Administrative Agent, any Lender
nor any of their respective directors, officers,
employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or
otherwise.
14. POWERS COUPLED WITH AN INTEREST. All
authorizations and agencies herein contained with
respect to the Collateral constitute irrevocable
powers coupled with an interest.
D-8
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15. SEVERABILITY. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in
any other jurisdiction.
16. PARAGRAPH HEADINGS. The paragraph headings used
in this Pledge Agreement are for convenience of
reference only and are not to affect the construction
hereof or be take into consideration in the
interpretation hereof.
17. NO WAIVER; CUMULATIVE REMEDIES. Neither the
Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to PARAGRAPH
18 hereof) be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default
or Potential Default or in any breach of any of the
terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power
or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
18. WAIVER AND AMENDMENTS; SUCCESSORS AND ASSIGNS;
GOVERNING LAW. None of the terms or provisions of
this Pledge Agreement may be amended, supplemented or
otherwise modified except by a written instrument
executed by the Pledgor and the Administrative Agent;
provided that any consent by the Administrative Agent
to any waiver, amendment, supplement or modification
hereto shall be subject to approval thereof by the
Lenders or Required Lenders, as applicable, in
accordance with SECTION 13.11 of the Credit
Agreement. This Pledge Agreement shall be binding
upon the successors and assigns of the Pledgor and
shall inure to the benefit of the Administrative
Agent and the Lenders and their respective successors
and assigns. This Pledge Agreement shall be governed
by, and construed and interpreted in accordance with,
the laws of the State of Alabama.
19. NOTICES. All notices and communications
hereunder shall be given to the addresses and
otherwise in accordance with SECTION 13.3 of the
Credit Agreement, with notices to Pledgor being sent
in care of Borrower.
20. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO
ISSUERS AND PARTNERSHIPS. The Pledgor hereby
authorizes and instructs each Issuer and Partnership
to comply with any instruction received by it from
the Administrative Agent in writing that (a) states
that an Event of Default has occurred and is
continuing and (b) is otherwise in accordance with
the terms of this Pledge Agreement, without any other
or further instructions from the Pledgor, and the
Pledgor agrees that such Issuer and Partnership shall
be fully protected in so complying.
21. AUTHORITY OF ADMINISTRATIVE AGENT. The Pledgor
acknowledges that the rights and responsibilities of
the Administrative Agent under this Pledge Agreement
with respect to any action taken by the
Administrative Agent or the exercise or non-exercise
by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy
provided for herein or resulting or arising out of
this Pledge Agreement shall, as between the
Administrative Agent and the Lenders, be governed by
the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent
and the Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for
itself and the Lenders with full and valid authority
so to act or refrain
D-9
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from acting, and neither the Pledgor nor any Issuer
shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.
22. CONSENT TO JURISDICTION; INDEMNIFICATION. The
Pledgor hereby irrevocably consents to the personal
jurisdiction of the state and federal courts located
in Jefferson County, Alabama, in any action, claim or
other proceeding arising out of or any dispute in
connection with this Pledge Agreement, any rights or
obligations hereunder, or the performance of such
rights and obligations. The Pledgor hereby
irrevocably consents to the service of a summons and
complaint and other process in any action, claim or
proceeding brought by the Administrative Agent or any
Lender in connection with this Pledge Agreement, any
rights or obligations hereunder, or the performance
of such rights and obligations, on behalf of itself
or its property, in the manner provided in SECTION
13.10 of the Credit Agreement, and agrees to
indemnify each Agent, Lead Arranger, Co-Arranger and
each Lender as, and to the extent, provided in
SECTION 11.12 of the Credit Agreement. Nothing in
this PARAGRAPH 22 shall affect the right of the
Administrative Agent or any Lender to serve legal
process in any other manner permitted by Applicable
Law or affect the right of the Administrative Agent
or any Lender to bring any action or proceeding
against the Pledgor or its properties in the courts
of any other jurisdictions.
23. CONTROL. Notwithstanding anything in this Pledge
Agreement to the contrary, unless and until an Event
of Default shall occur and the Administrative Agent
exercises the rights and remedies granted in this
Pledge Agreement in accordance with Paragraph 9
hereof, (a) the execution and delivery of this Pledge
Agreement and the performance of Pledgor's
obligations hereunder (i) do not and will not
constitute, create, or have the effect of
constituting or creating, directly or indirectly,
actual or practical ownership of the Issuers or
Partnerships by Agents or Lenders, or control,
affirmative or negative, direct or indirect, by
Agents or Lenders over the management or any other
aspect of the operation of the Issuers or
Partnerships, which ownership or control remains
exclusively and at all times in the Issuers or
Partnerships, as applicable, and (ii) do not and will
not constitute the transfer, assignment, or
disposition in any manner, voluntary or involuntary,
directly or indirectly, of any Authorization at any
time issued by any Insurance Regulator to any Issuer
or Partnership; and (b) Administrative Agent shall
not, without first obtaining necessary approval of
each applicable Insurance Regulator, take any action
pursuant to this Pledge Agreement that would
constitute or result in any assignment of any
Authorization or any change of control of any Issuer
or Partnership, if such assignment or change of
control would require, under then existing Law
(including the written rules and regulations
promulgated by an applicable Insurance Regulator),
the prior approval of such Insurance Regulator.
24. WAIVER OF JURY TRIAL. NOTWITHSTANDING ANY OTHER
PROVISION CONTAINED HEREIN, IN THE EVENT ANY JUDICIAL
PROCEEDING IS INSTITUTED IN CONNECTION WITH THIS
PLEDGE AGREEMENT, TO THE EXTENT PERMITTED BY LAW, THE
ADMINISTRATIVE AGENT AND EACH LENDER BY THEIR
ACCEPTANCE OF THIS PLEDGE AGREEMENT OR THE BENEFITS
HEREOF AND THE PLEDGOR EACH HEREBY IRREVOCABLY WAIVES
ITS RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO
ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
OR RELATING TO, OR ANY DISPUTE IN CONNECTION WITH,
THIS PLEDGE AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
[Remainder of Page Intentionally Blank. Signature Pages Follow.]
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IN WITNESS WHEREOF, the undersigned by and through their duly
authorized officers have executed and delivered this Pledge Agreement as of the
date first above written
PLEDGOR:
[CORPORATE SEAL]
-------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ADMINISTRATIVE AGENT:
SOUTHTRUST BANK,
as Administrative Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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ACKNOWLEDGMENT AND CONSENT
OF ISSUERS
Each Issuer of Pledged Stock referred to in the foregoing
Pledge Agreement hereby acknowledges receipt of a copy thereof. Each Issuer
agrees to notify the Administrative Agent promptly in writing of the occurrence
of any of the events described in PARAGRAPH 6.(c) of the Pledge Agreement:
ISSUERS:
{ }
-----------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
{ }
-----------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
{ }
-----------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
D-12
118
ACKNOWLEDGMENT AND CONSENT
OF PARTNERS OR MEMBERS
The undersigned partners or members of
__________________________________ (the "Partnership") (a) hereby acknowledge
receipt of a copy of the foregoing Pledge Agreement, (b) hereby acknowledge and
consent to the pledge of the Pledgor's interest in the Partnership pursuant
thereto, and (c) agree that the Administrative Agent may freely assign its
interest thereunder without further consent of the partners or members.
- -------------------------------------, -------------------------------------,
[PARTNER] [MEMBER] of [PARTNER] [MEMBER] of
- ---------------- -----------------
- ------------------------------------- -------------------------------------
D-13
119
SCHEDULE 1
TO PLEDGE
AGREEMENT
PLEDGOR:
----------------
DESCRIPTION OF PLEDGED STOCK
ISSUER CLASS OF STOCK CERTIFICATE NUMBER(S) NUMBER OF SHARES
- ------ -------------- --------------------- ----------------
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120
SCHEDULE 2
TO PLEDGE
AGREEMENT
DESCRIPTION OF PARTNERSHIP INTERESTS
PARTNERSHIP PARTNERSHIP INTEREST
- ----------- --------------------
D-15
121
PLEDGE AGREEMENT SUPPLEMENT
PLEDGE AGREEMENT SUPPLEMENT, dated as of
________________________, 20___ (the "Supplement"), made by
__________________________________________, a ___________________ organized
under the laws of _____________________ (the "Pledgor"), in favor of SOUTHTRUST
BANK, an Alabama banking corporation, as Administrative Agent (in such
capacity, the "Administrative Agent"), under the Credit Agreement (as defined
in the Pledge Agreement referred to below) for the benefit of itself and the
Lenders (as so defined).
1. Reference is hereby made to that Pledge Agreement,
dated as of _______________, 20___, made by the Pledgor in favor of the
Administrative Agent (as amended, supplemented or otherwise modified as of the
date hereof, the "Pledge Agreement"). This Supplement supplements the Pledge
Agreement, forms a part thereof and is subject to the terms thereof. Terms
defined in the Pledged Agreement are used herein as therein defined.
[2. The Pledgor hereby confirms and reaffirms the
security interest in the Collateral granted to the Administrative Agent for the
ratable benefit of itself and the Lenders under the Pledge Agreement, and, as
additional collateral security for the prompt and complete payment when due
(whether at stated maturity, by acceleration or otherwise) of the Obligation
and in order to induce the Lenders to fund Borrowings under the Credit
Agreement, the Pledgor hereby delivers to the Administrative Agent, for the
benefit of the Lenders, all of the issued and outstanding share of capital
stock of [INSERT NAME OF NEW SUBSIDIARY] (the "New Issuer") listed below,
together with all stock certificates, options, or rights of any nature
whatsoever which may be issued or granted by the New Issuer in respect to such
stock which the Pledge Agreement, as supplemented hereby, is in force (the
"Additional Pledged Stock"; as used in the Pledge Agreement as supplemented by
this Supplement, "Pledged Stock" shall be deemed to include the Additional
Pledged Stock) and hereby grants to the Administrative Agent, for the ratable
benefit of itself and the Lenders, a first priority security interest in the
Additional Pledged Stock and all Proceeds thereof.]
or
[2. The Pledgor hereby confirms and reaffirms the
security interest in the Collateral granted to the Administrative Agent for the
ratable benefit of itself and the Lenders under the Pledge Agreement, and, as
additional collateral security for the prompt and complete payment when due
(whether at stated maturity, by acceleration or otherwise) of the Obligation
and in order to induce the Lenders to fund Borrowings under the Credit
Agreement, the Pledgor hereby grants to the Administrative Agent, for the
ratable benefit of itself and the Lenders, a first priority security interest
in the entire partnership or membership interest of Pledgor (the "Additional
Partnership Interest") in [INSERT NAME OF NEW SUBSIDIARY] (the "New
Partnership") listed below and all Proceeds thereof; as used in the Pledge
Agreement as supplemented by this Supplement, "Partnership Interests" shall be
deemed to include the Additional Partnership Interest).]
3. The Pledgor hereby represents and warrants that the
representations and warranties contained in PARAGRAPH 5 of the Pledge Agreement
are true and correct on the date of this Supplement with references therein to
the ["Pledged Stock" to include the Additional Pledged Stock] or ["Partnership
Interests" to include the Additional Partnership Interest], with references
therein to the ["Issuer" to include the New Issuer] or "Partnership" to include
the New Partnership], and with references to the "Pledge Agreement" to mean the
Pledge Agreement as supplemented by this Supplement.
4. The Pledgor shall deliver to the Administrative
Agent the Acknowledgment and Consent attached hereto duly executed by the [New
Issuer] or [New Partnership]. The Additional [Pledged Stock] [Partnership
Interest] or [Pledged Debt] pledged hereby is as follows which [Pledged Stock]
[Partnership Interest] or [Pledged Debt] shall be deemed part of SCHEDULE 1
thereto:
D-16
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DESCRIPTION OF PLEDGED STOCK
Issuer Class of Stock Certificate No. No. of Shares
- ------ -------------- --------------- -------------
New Issuer
DESCRIPTION OF PARTNERSHIP INTEREST
Partnership Partnership Interest
- ----------- --------------------
New Partnership
5. The Pledgor hereby agrees to deliver to the
Administrative Agent such certificates and other documents and take such other
action as shall be reasonably requested by the Administrative Agent in order to
effectuate the terms hereof and the Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has caused this
Supplement to be duly executed under seal and delivered as of the date first
above written.
PLEDGOR:
[CORPORATE SEAL]
-------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
D-17
123
ACKNOWLEDGMENT AND CONSENT OF NEW ISSUER
The undersigned hereby acknowledges receipt of a copy of the
foregoing Supplement and the Pledge Agreement referred to therein (the "Pledge
Agreement"). The undersigned agrees for the benefit of the Administrative Agent
and the Lenders as follows:
1. The undersigned will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in
PARAGRAPH 6.(C) of the Pledge Agreement.
[NAME OF NEW ISSUER]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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ACKNOWLEDGMENT AND CONSENT OF PARTNERS OR MEMBERS
OF NEW PARTNERSHIP
The undersigned partners or members of
__________________________________ (the "New Partnership") (a) hereby
acknowledge receipt of a copy of the foregoing Supplement and the Pledge
Agreement referred to therein (the "Pledge Agreement"), (b) hereby acknowledge
and consent to the pledge of the Pledgor's interest in the New Partnership
pursuant thereto, and (c) agree that the Administrative Agent may freely assign
its interest thereunder without further consent of the partners or members.
- -------------------------------------, -------------------------------------,
[PARTNER] [MEMBER] of [PARTNER] [MEMBER] of
- ---------------- -----------------
- ------------------------------------- -------------------------------------
D-19
125
EXHIBIT E
COMPLIANCE CERTIFICATE
SouthTrust Bank, as Administrative Agent
420 North 20th Street (Zip Code 35203)
P. O. Box 2554 (Zip Code 35290)
Birmingham, Alabama
Date of This Report:_____________, 20____
For the period from: _____________, 20____ to ____________, 20____
Gentlemen:
This Compliance Certificate (this "Certificate") is delivered pursuant
to the terms of the Credit Agreement dated as of May 10, 2001 (as amended and
modified from time to time, the "Credit Agreement"), by and among ProAssurance
Corporation, as Borrower, the Lenders from time to time parties thereto,
SouthTrust Bank, as Lead Arranger, Syndication Agent and Administrative Agent,
and Bank of America, N.A., as Co-Arranger. Unless otherwise defined herein,
capitalized terms used herein have the meanings attributable thereto in the
Credit Agreement.
I, the undersigned duly authorized officer of Borrower do hereby
certify to you and the other Lenders on behalf of Borrower as follows:
(1) I have individually reviewed the provisions of the Credit
Agreement, and I have caused to be made under my supervision a review of the
activities of Borrower during the above-referenced period with a view toward
determining whether the Borrower has kept, observed, performed and fulfilled
all of its obligations under the Credit Agreement. To the best of my knowledge,
the Borrower has kept, observed, performed and fulfilled each and every
undertaking contained in the Credit Agreement, and is not at this time in
default in the observance or performance of any of the terms or conditions of
the Credit Agreement, and no Default or Potential Default has occurred and is
continuing except as follows:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(2) I further certify to you that no Material Adverse Event has
occurred, and that all representations and warranties set forth in Section 8 of
the Credit Agreement are true and correct in all respects as if made on and as
of the date hereof.
(3) The requirements of the financial covenants for Borrower (and
its Subsidiaries, as applicable) for the above-referenced period, set forth in
Section 9.30 of the Credit Agreement, are set forth below, together with the
calculation thereof for the above-referenced period. Copies of all supporting
calculations are attached to this Certificate.
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126
AS OF
FINANCIAL COVENANT PERIOD REQUIRED REPORTING DATE
------------------ ------ -------- --------------
(a) Leverage Ratio From Funding Date to Not greater than 3.75 to 1
June 30, 2002
From July 1, 2002 and Not greater than 3.00 to 1
thereafter ________ to 1
(b) Fixed Charge Coverage From September 30, 2001 Not less than or equal to
Ratio and thereafter 1.50 to 1 ________ to 1
(c) Minimum Net Worth: Measured at the end of Not less than the sum of:
each fiscal year of
Borrower (i) the greater of:
(A) $290,000,000.00 or
(B) 90% of the Net
Worth of Borrower
and its Subsidiaries
on a consolidated
basis at June 30, 2001,
plus
(ii) 75% of Net Income of the
Companies on a consolidated
basis (excluding losses)
after June 30, 2001. $____________
(d)(i) NAIC Risk-Based
Capital Ratio for Measured at the end of Not less than 3.5 to 1 ________ to 1
The Medical Assurance each fiscal year
Company, Inc.
(d)(ii) NAIC Risk-Based
Capital Ratio for Measured at the end of Not less than 3.5 to 1 ________ to 1
ProNational Insurance each fiscal year
Company
(e) Funded Debt to
Adjusted Statutory At all times Not greater than 0.35 to 1 ________ to 1
Capital Ratio
E-2
127
(4) [Complete this section (4) if Compliance Certificate is being
delivered pursuant to Section 9.3(a) of the Credit Agreement (i.e. accompanying
year-end Financial Statements) for fiscal year 2001 and each fiscal year
thereafter.] During the fiscal year noted above, calculated solely with respect
to the Borrower on a non-consolidated basis, Borrower's Excess Cash Flow is as
follows:
(i) Cash provided (used) by operating activities $
---------------
plus:
(ii) cash dividends received from Subsidiaries +
---------------
less:
(iii) capital contributions made by Borrower
to any Insurance Subsidiary -
---------------
less:
(iv) amounts remitted pursuant toss. 9.23(g) -
---------------
less: (v) $10,000,000.00 - 10,000,000.00
---------------
equals:
Excess Cash Flow (not less than zero): $
===============
[Mandatory Prepayment under Section 3.3(b) equals the lesser of (A) 50% of
Excess Cash Flow or (B) $15,000,000.]
(5) During the period noted above, none of the Companies has
changed its name, its state of incorporation or organization, any of its places
of business, or chief executive office, except as follows:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(6) During the period noted above, there are no new Significant
Subsidiaries, and none of the Significant Subsidiaries has issued any shares of
capital stock, stock certificates, options, rights, or other proceeds of any
Collateral of any nature except as itemized below:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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128
(7) During the period noted above, none of the Companies has
acquired, purchased substantially all the assets of, or merged with any
company, or made any Acquisition except as follows:
DESCRIPTION OF ACQUISITION
INCLUDING TYPE AND NATURE OF ASSETS PURCHASED PURCHASE PRICE
--------------------------------------------- --------------
(attach additional pages if needed)
--------------------------------------------- --------------
--------------------------------------------- --------------
--------------------------------------------- --------------
--------------------------------------------- --------------
TOTAL DURING PERIOD NOTED ABOVE:
PROASSURANCE CORPORATION
By:
-------------------------------------
Its Chief Financial Officer
E-4
129
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Dated ____________________, 20__
Reference is made to the Credit Agreement dated as of May 10, 2001
(together with all amendments and modifications thereto, the "Credit
Agreement") among ProAssurance Corporation, a Delaware corporation (the
"Borrower"), the Lenders (as defined in the Credit Agreement), SouthTrust Bank,
as Administrative Agent (in such capacity, the "Administrative Agent"),
SouthTrust Bank, as Syndication Agent and Lead Arranger, and Bank of America,
N.A., as Co-Arranger. Terms defined in the Credit Agreement are used herein
with the same meaning.
__________________________________ (the "Assignor") and
_____________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
without recourse to the Assignor, and the Assignee hereby purchases and assumes
from the Assignor, a _______% interest in and to all of the Assignor's rights
and obligations under the Credit Agreement as of the Effective Date (as defined
below) which includes:
(a) (i) a _________% interest in the Assignor's
Committed Sum with respect to the Revolver Facility (which on
the Effective Date hereof is $__________), (ii) a ________ %
interest in the Borrowings under the Revolver Facility owing
to the Assignor (which on the Effective Date hereof is
$___________________), and (iii) a ______% interest in the
Revolver Note held by the Assignor (which on the Effective
Date hereof is $__________), and
(b) (i) a _________% interest in the Assignor's
Committed Sum with respect to the Term Loan Facility (which
on the Effective Date hereof is $__________), (ii) a ________
% interest in the Borrowings under the Term Loan Facility
owing to the Assignor (which on the Effective Date hereof is
$_____________), and (iii) a ______% interest in the Term
Loan Note held by the Assignor (which on the Effective Date
hereof is $__________).
2. The Assignor (i) 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, other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder, that such interest is free and clear
of any adverse claim and that as of the date hereof its Committed Sum with
respect to the Revolver Facility (without giving effect to assignments thereof
which have not yet become effective) is $__________ and the aggregate
outstanding principal amount of Borrowings under the Revolver Facility owing to
it (without giving effect to assignments thereof which have not yet become
effective) is $___________________, and its Committed Sum with respect to the
Term Loan Facility (without giving effect to assignments thereof which have not
yet become effective) is $__________ and the aggregate outstanding principal
amount of Borrowings under the Term Loan Facility owing to it (without giving
effect to assignments thereof which have not yet become effective) is
$______________; (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
of the other Companies or the performance or observance by the Borrower of any
of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iii) attaches the Notes referred to
in paragraph 1 above and requests that the Administrative Agent exchange such
Notes for new Note(s) as follows each dated the Effective Date: (A) a Revolver
Note in the principal amount of $________________ payable to the order of the
Assignor, (B) a Revolver Note in the principal amount of $___________ payable
to the order of the Assignee, (C) a Term Loan Note in the principal amount of
$_______ payable to the order of Assignor, and (D) a Term Loan Note in the
principal amount of $_______________ payable to the order of the Assignee.
F-1
130
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the Financial Statements referred to
in Section 8.6 thereof (or any more recent financial statements of the Borrower
delivered pursuant to Section 9.3 thereof) and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance Agreement; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
the Assignor or any other Lenders and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (iii)
confirms that it is a lender or financial institution; (iv) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the Credit Agreement as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) 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 Lender; (vi) specifies as its
Applicable Lending Office (and address for notices) the office set forth
beneath its name on the signature pages hereof, (vii) represents and warrants
that the execution, delivery and performance of this Assignment and Acceptance
Agreement are within its corporate powers and have been duly authorized by all
necessary corporate action, and (viii) attaches the forms required by Section
4.6(d) of the Credit Agreement or otherwise prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to the Assignee under the Credit Agreement
and the Notes or such other documents as are necessary to indicate that all
such payments are subject to such taxes at a rate reduced by an applicable tax
treaty.
4. The Effective Date for this Assignment and Acceptance shall
be _______________, 20____ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Administrative
Agent for execution and acceptance by the Administrative Agent [(IF REQUIRED BY
THE CREDIT AGREEMENT) and to the Borrower for execution by the Borrower].
5. Upon such execution and acceptance by the Administrative
Agent [(IF REQUIRED BY THE CREDIT AGREEMENT) and execution by the Borrower],
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent rights and obligations have been
transferred to it by this Assignment and Acceptance Agreement, have the rights
and obligations of a Lender thereunder and (ii) the Assignor shall, to the
extent its rights and obligations have been transferred to the Assignee by this
Assignment and Acceptance Agreement, relinquish its rights (other than under
Sections 4.1, 11.11 and 11.12 of the Credit Agreement) and be released from its
obligations under the Credit Agreement.
6. Upon such execution and acceptance by the Administrative
Agent [(IF REQUIRED BY THE CREDIT AGREEMENT) and execution by the Borrower],
from and after the Effective Date, the Administrative Agent shall make all
payments in respect of the interest assigned hereby to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments for
periods prior to such acceptance by the Administrative Agent directly between
themselves.
7. This Assignment and Acceptance Agreement shall be governed
by, and construed in accordance with, the laws of the State of Alabama.
[The remainder of this page intentionally left blank.]
F-2
131
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance Agreement to be executed by their respective duly authorized
officers as of the date first above written.
[NAME OF ASSIGNOR]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[NAME OF ASSIGNEE]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Lending Office:
[Address]
SOUTHTRUST BANK,
As Administrative Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
PROASSURANCE CORPORATION
[IF REQUIRED BY THE CREDIT AGREEMENT]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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132
EXHIBIT G-1
OPINION OF
COUNSEL OF THE BORROWER
(INITIAL SIGNING)
_______________, 2001
To the Lenders and the Administrative Agent
Referred to Below
c/o SouthTrust Bank
as Administrative Agent
420 North 20th Street
Birmingham, Alabama 35203
Attn: __________________________
Re: $150,000,000.00 Credit Facility to ProAssurance
Corporation
Ladies and Gentlemen:
We have acted as counsel to ProAssurance Corporation, a
Delaware corporation (the "Borrower"), in connection with the Credit Agreement
(the "Credit Agreement") dated as of _______________, 2001, among the Borrower,
the banks listed on the signature pages thereof (the "Lenders"), SouthTrust
Bank, as Administrative Agent (in such capacity, the "Administrative Agent"),
SouthTrust Bank as Syndication Agent and Lead Arranger and Bank of America,
N.A.as Co-Arranger, and in connection with the other Loan Documents executed
and delivered by the Borrower pursuant to the Credit Agreement. We have also
acted as counsel to Medical Assurance, Inc., a Delaware corporation ("MAI"), in
connection with its Pledge and Security Agreement dated as of ______________,
2001, and we have also acted as counsel to MAI Acquisition Corporation I, a
Delaware corporation, PICM Acquisition Corporation, a Michigan corporation, and
The Medical Assurance Company, Inc., an Alabama corporation (such entities are
sometimes collectively referred to herein as the "Represented Subsidiaries",
and individually as "Represented Subsidiary") in connection with the execution
and delivery of the Affiliate Subordination Agreement by each of them.
Capitalized terms used herein without definition have the respective meanings
attributed thereto in the Credit Agreement.
In so acting, we have participated in the preparation of the
Credit Agreement, the Notes, and the other Loan Documents being delivered to
you today. We have also examined and relied upon the accuracy of the
representations and warranties as to factual matters contained in and made
pursuant to the Credit Agreement and have examined and relied upon the
originals, or copies certified or otherwise identified to our satisfaction, of
such records, documents, certificates and other instruments as in our judgment
are necessary or appropriate to enable us to render the opinions expressed
below. As to certain matters with respect to our opinion, we have examined, and
relied upon the accuracy of, certificates from officers of the Borrower, MAI or
the Represented Subsidiaries. In all such examinations, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures on original documents and the conformity to such original
documents of all copies submitted to us as certified, conformed, photographic
or telecopied copies, and as to certificates, telegraphic and telephonic
confirmations given by public officials, we have assumed the same to have been
properly given and to be accurate. In addition and without limiting the
foregoing, we have, with your permission and without any independent
investigation, assumed the following in connection with the opinions rendered
below:
(a) the genuineness of all signatures on the Credit
Agreement and the other Loan Documents (other than the signatures of the
Borrower, MAI and the Represented Subsidiaries) and the authority of each of
the persons signing the Credit Agreement and the other Loan Documents on behalf
of such persons; and
(b) that the Credit Agreement and the other Loan
Documents have been duly authorized, executed and delivered by all parties
thereto (other than the Borrower, MAI and the Represented Subsidiaries).
G-1-1
133
(c) that each of the Agents and the Lenders is duly
qualified to transact business in Alabama or is not required by applicable law
to be so qualified as a result of its activities in the State of Alabama or
because of its status as a national bank;
(d) that the original principal balance (as such term is
defined in Ala. Codess. 8-8-5(c)) of the Revolver Facility and the Term Loan
Facility shall be in excess of $2,000; and
(e) that each of the Lenders and the Administrative
Agent will act in good faith and in a commercially reasonable manner in the
exercise of any rights or enforcement of any remedies under the Loan Documents,
not engage in any conduct in the exercise of such rights or enforcement of such
remedies that would constitute other than fair dealing, and comply with all
requirements or applicable procedural and substantive laws in the exercise of
any rights or the enforcing of any remedies under the Loan Documents.
Whenever opinions set forth herein are based on "our
knowledge" or are expressed "to our knowledge", the words "our knowledge" and
"to our knowledge" signify that, in the course of our representation of the
Borrower, MAI or any Represented Subsidiary, no information has come to the
attention of any attorney with this firm who has devoted substantial attention
to the transactions contemplated by the Loan Documents which would give such
attorney actual knowledge that any such opinions or other matters are not
accurate in any material respect. However, we have not undertaken any
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge thereof shall be drawn from the fact of our
representation of any party or otherwise. Further, as used in this opinion, the
words "our knowledge" and "to our knowledge" and similar language are intended
to be limited to the actual knowledge of the attorneys within our firm who have
been directly involved in representing the Borrower and the Companies in
connection with the Consolidation and the other transactions contemplated by
the Loan Documents.
Based upon the foregoing and subject to the qualifications,
limitations and exceptions set forth herein, we are of the following opinions:
1. The Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has all corporate powers and authority necessary to carry on its
business as now conducted and presently proposed to be conducted, and
is qualified and in good standing as a foreign corporation in the
State of Alabama.
2. The execution, delivery and performance by the Borrower of
the Credit Agreement, the Notes, and the other Loan Documents to which
it is a party (i) are within the Borrower's corporate powers, (ii)
have been duly authorized by all necessary corporate action, (iii)
require no approval or action by or in respect of, or filing with, any
governmental body, agency or official other than such approvals which
have been obtained, such actions which have been taken or such filings
which have been made and are in full force and effect as of the date
hereof, (iv) do not contravene, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the
Borrower, or constitute a default under any material agreement,
judgment, injunction, order, decree or other instrument which to our
knowledge is binding upon the Borrower, and (v) to our knowledge,
except as provided in the Credit Agreement, do not result in the
creation or imposition of any Lien on any asset of the Borrower or any
other Company.
3. The Credit Agreement, the Notes, the Security Agreement, and
the other Loan Documents to which Borrower is a party, have been
executed and delivered by duly authorized officers of the Borrower,
and constitute the valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective
terms, except as otherwise stated herein and except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws from time to time in effect affecting the enforcement of
creditors' rights and remedies generally; (ii) general principles of
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law), and the availability
of the remedies of specific performance, injunctive relief or other
equitable remedies limited by statute or subject to the discretion of
the court before which such proceedings therefor may be brought, (iii)
the effect of federal or state securities laws on the enforceability
of provisions relating to indemnification or contribution, (iv)
standards of good faith, fair dealing and reasonableness which may be
applied by a court to the exercise of certain rights and remedies, and
(v) certain laws and judicial decisions of the State of Alabama which
may limit the enforceability of certain rights and remedies provided
by the Credit Agreement, the Notes, the
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134
Security Agreement, and the other Loan Documents to which Borrower is
a party, none of which laws or judicial decisions will render
inadequate the rights and remedies to enforce the practical benefits
and security provided by such documents.
4. The Borrower directly owns of record all of the issued and
outstanding capital stock of each of the "Issuers" listed on SCHEDULE
1 to the Security Agreement to which the Borrower is a party. SCHEDULE
1 to such Security Agreement describes the record ownership, and the
applicable certificate number of each share certificate evidencing
such ownership, of the capital stock of each of the "Issuers" listed
on said SCHEDULE 1. All of such stock is validly issued, fully paid
and nonassessable.
5. MAI directly owns of record all of the issued and outstanding
capital stock of each of the "Issuers" listed on SCHEDULE 1 to the
Security Agreement to which MAI is a party. SCHEDULE 1 to such
Security Agreement accurately describes the record ownership, and the
applicable certificates evidencing such ownership, of the capital
stock of each of the "Issuers" listed on said SCHEDULE 1. All of such
stock is validly issued, fully paid and nonassessable.
6. MAI is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware, has all
corporate powers and authority necessary to carry on its business as
now conducted and is qualified and in good standing as a foreign
corporation in the State of Alabama.
7. Each of the Represented Subsidiaries is a corporation, duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation, has all corporate powers and
authority necessary to carry on its business as now conducted. Based
upon the Certificate of Authority dated January 3, 2001 issued by the
State of Alabama Department of Insurance, The Medical Assurance
Company, Inc. is duly licensed in the State of Alabama.
8. The execution, delivery and performance by MAI of its
Security Agreement and each of the other Loan Documents to which it is
a party (i) are within MAI's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) require no
approval or action by or in respect of, or filing with, any
governmental body, agency or official, other than such approvals which
have been obtained, such actions which have been taken or such filings
which have been made and are in full force and effect as of the date
hereof (iv) do not contravene any provision of applicable law or
regulation or of the organizational documents of MAI , or constitute a
default under any material agreement, judgment, injunction, order,
decree or other instrument which to our knowledge is binding upon such
MAI, and (v) to our knowledge, except as provided in the Credit
Agreement, do not result in the creation or imposition of any Lien on
any asset of MAI.
9. The Security Agreement and each of the other Loan Documents
to which MAI is a party have been executed and delivered by duly
authorized officers of MAI, and constitute the valid and binding
obligations of MAI, enforceable against MAI in accordance with their
respective terms, except as otherwise stated herein and except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws from time to time in effect affecting the enforcement of
creditors' rights and remedies generally; (ii) general principles of
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law), and the availability
of the remedies of specific performance, injunctive relief or other
equitable remedies limited by statute or subject to the discretion of
the court before which such proceedings therefor may be brought, (iii)
the effect of federal or state securities laws on the enforceability
of provisions relating to indemnification or contribution, (iv)
standards of good faith, fair dealing and reasonableness which may be
applied by a court to the exercise of certain rights and remedies, and
(v) certain laws and judicial decisions of the State of Alabama which
may limit the enforceability of certain rights and remedies provided
by the Security Agreements and the other Loan Documents to which MAI
is a party, none of which laws or judicial decisions will render
inadequate the rights and remedies to enforce the practical benefits
and security provided by such documents.
10. The execution, delivery and performance by each of the
Represented Subsidiaries of the Affiliate Subordination Agreement and
each of the other Loan Documents to which it is a party (i) are within
the corporate powers of each Represented Subsidiary, (ii) have been
duly authorized by all necessary corporate action, (iii) require no
approval or action by or in respect of, or filing with, any
governmental body, agency or official, other
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135
than such approvals which have been obtained, such actions which have
been taken or such filings which have been made and are in full force
and effect as of the date hereof, (iv) do not contravene any provision
of applicable law or regulation or of the organizational documents of
such Represented Subsidiary, or constitute a default under any
agreement, judgment, injunction, order, decree or other instrument
which to our knowledge is binding upon such Represented Subsidiary,
and (v) to our knowledge, except as provided in the Credit Agreement,
do not result in the creation or imposition of any Lien on any asset
of any Represented Subsidiary.
11. The Affiliate Subordination Agreement has been executed and
delivered by duly authorized officers of each Represented Subsidiary,
and constitutes the valid and binding obligation of such Represented
Subsidiary enforceable against such Represented Subsidiary in
accordance with its terms, except as otherwise stated herein and
except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws from time to time in effect affecting
the enforcement of creditors' rights and remedies generally; (ii)
general principles of equity (regardless of whether the application of
such principles is considered in a proceeding in equity or at law),
and the availability of the remedies of specific performance,
injunctive relief or other equitable remedies limited by statute or
subject to the discretion of the court before which such proceedings
therefor may be brought, (iii) the effect of federal or state
securities laws on the enforceability of provisions relating to
indemnification or contribution, (iv) standards of good faith, fair
dealing and reasonableness which may be applied by a court to the
exercise of certain rights and remedies, and (v) certain laws and
judicial decisions of the State of Alabama which may limit the
enforceability of certain rights and remedies provided by the
Affiliate Subordination Agreement, none of which laws or judicial
decisions will render inadequate the rights and remedies to enforce
the practical benefits and security provided by such documents.
12. To our knowledge, there is no action, suit or proceeding
pending, or threatened, against or affecting the Borrower or any other
Company before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an
adverse decision which could be a Material Adverse Event.
13. Neither the Borrower nor any other Company in an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
14. Neither the Borrower, nor any other Company is a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
15. None of the stock directly pledged to you pursuant to the
Security Agreements constitutes "margin stock", as such term is
defined in Regulation U of the Federal Reserve Board, and performance
by the Administrative Agent and the Lenders and by the Borrower and
the other Companies who are parties to the Loan Documents of the
transactions contemplated by the Loan Documents (including, but not
limited to, the Borrowings to be made thereunder, and the pledge of
such stock as Collateral therefor), does not and will not violate said
Regulation U.
The opinions expressed in this letter are subject to the
following qualifications and limitations:
A. No opinion is expressed with respect to federal and state
securities laws, the statutes, administrative decisions, and rules and
regulations of county, municipal and special political subdivisions, or the
enforceability of provisions (i) granting rights of set off to the Lenders and
Administrative Agent otherwise than in accordance with applicable law or (ii)
requiring indemnification for or providing waiver, release or exemption from
liability for an action or inaction to the extent such action or inaction
involves negligence or willful misconduct or to the extent otherwise contrary
to public policy.
B. The law covered by the opinions expressed herein is limited
to the federal law of the United States, the laws of the State of Alabama and
the General Corporation Law of the State of Delaware, the West Virginia
Business Corporation Act and the Michigan Business Corporation Act.
The opinions expressed herein are limited to the matters
stated herein and no opinion may be implied or inferred beyond the matters
expressly stated herein. The opinions expressed herein are as of the date
hereof, and we
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assume no obligation to update or supplement these opinions to reflect any
facts or circumstances which may hereafter come to our attention or any changes
in the law which may hereafter occur.
This opinion is furnished to you for your benefit and the
benefit of any Eligible Assignee or Participant under the Credit Agreement
only, and no other person or entity shall be entitled to rely on this opinion
without our express written consent in each instance. Subject to the foregoing,
this opinion letter is not to be quoted in whole or in part or otherwise
referred to, nor is it to be filed with or disclosed to any governmental agency
or other person, without our prior written consent except as required otherwise
by applicable law, rule, regulation or order of any court or regulatory
authority.
Yours very truly,
Burr & Forman LLP
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EXHIBIT H
AFFILIATE SUBORDINATION AGREEMENT
THIS AFFILIATE SUBORDINATION AGREEMENT, dated as of ______________,
20____ among PROASSURANCE CORPORATION, a corporation organized under the laws
of Delaware ("Borrower"), certain direct and indirect subsidiaries of Borrower
identified on the signature pages hereto (the "Subsidiaries" and together with
Borrower, the "Companies," and each a "Company"), SOUTHTRUST BANK, an Alabama
banking corporation, as Administrative Agent (in such capacity, the
"Administrative Agent"), for the benefit of itself and the financial
institutions (the "Lenders") as are, or may from time to time become, parties
to the Credit Agreement (as defined below).
RECITALS
Pursuant to the terms of the Credit Agreement dated May 10, 2001
(together with all amendments and other modifications, if any, from time to
time hereafter made thereto, the "Credit Agreement"), by and among Borrower,
the Lenders, and the Administrative Agent, the Lenders agreed to extend certain
credit facilities to Borrower as more specifically described in the Credit
Agreement. (Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.)
The Credit Agreement requires that the Companies agree to subordinate
all intercompany obligations owing by any Company to any other Company to all
obligations owed to the Administrative Agent or any Lender under the Credit
Agreement or any other Loan Document (the "Senior Indebtedness") by any of the
Companies.
To induce the Lenders to enter into the Credit Agreement, the
Companies have agreed to enter into this Affiliate Subordination Agreement with
respect to all such intercompany obligations.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. SUBORDINATION.
1.01 Subordination to Senior Indebtedness.
Each Company for itself and its successors agrees that, to the extent
it is from time to time entitled to receive payment in respect of any
intercompany loan, advance or other obligation (other than payment in respect
of (i) a bona fide reinsurance obligation, or (ii) a tax sharing agreement to
the extent of any Taxes owed by such Company) from any other Company that is
obligated to pay any Senior Indebtedness (a "Subordinated Obligation"), the
payment of the principal of, premium, if any, interest on (including all
interest accruing thereon subsequent to a Bankruptcy Event, as defined in
SECTION 1.07 ("post-petition interest")) or other fees, costs, expenses and any
other amounts accrued, incurred or otherwise due in connection with all such
Subordinated Obligations from time to time, is subordinated in right of
payment, to the extent and in the manner provided herein, to the payment in
full of all Senior Indebtedness owing by such Company.
1.02 No Payment on the Subordinated Obligations in Certain
Circumstances.
(a) No payment shall be made, either directly or indirectly, by
or on behalf of any Company that is obligated to pay any Senior Indebtedness,
in cash, property or securities on account of the principal of, premium, if
any, and interest (including post-petition interest) on any Subordinated
Obligation at the time outstanding, or other fees, costs, expenses and any
other amounts accrued, incurred or otherwise due in respect of any such
Subordinated Obligation, or to prepay, purchase, redeem, retire, exchange,
defease or otherwise acquire any Subordinated Obligation or any instrument
evidencing a Subordinated Obligation for cash or property (collectively,
"Subordinated Payments"), (i) upon the maturity of any Senior Indebtedness by
acceleration or otherwise, unless and until all principal of, interest
(including post-petition interest) and premium, if any, on and all other fees,
costs, expenses and other amounts accrued or incurred pursuant to the terms of
the Senior Indebtedness then due, shall have first been paid in full or waived,
or (ii) upon the occurrence of any Default or
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Potential Default with respect to any Senior Indebtedness (unless and until
such Default or Potential Default shall have been cured or waived in accordance
with the terms of the Credit Agreement).
(b) In furtherance of the provisions of SECTION 1.01, in the
event that, notwithstanding the foregoing provisions of this SECTION 1.02, any
Subordinated Payment, either directly or indirectly, shall be made by or on
behalf of any Company that is obligated to pay any Senior Indebtedness, and
received by another Company at a time when such payment was prohibited by the
provisions of this SECTION 1.02, then, unless and until such payment is no
longer prohibited by this SECTION 1.02, such payment shall be segregated and
held in trust for the benefit of, and shall be promptly paid over to, the
Administrative Agent for the benefit of the Lenders.
(c) Borrower shall give prompt written notice to each other
Company of any Default or Potential Default with respect to such Senior
Indebtedness. Failure to give such notice shall not affect the subordination of
the Subordinated Obligations to the Senior Indebtedness provided in this
Affiliate Subordination Agreement.
1.03 SUBORDINATION OF INTERCOMPANY OBLIGATIONS ON DISSOLUTION,
LIQUIDATION OR REORGANIZATION OF A COMPANY.
Upon any distribution by any Company that is obligated to pay any
Senior Indebtedness of assets of any kind or character, whether in cash,
property or securities, to creditors upon any dissolution, winding up,
liquidation or reorganization of such Company (the "Liquidating Loan Party")
(whether in a voluntary or involuntary bankruptcy, insolvency or receivership
proceedings or upon any assignment for the benefit of creditors or otherwise):
(a) the Lenders shall first receive payment in full in
cash, to the extent then presently available for payment, of the
principal, interest (including post-petition interest) and premium, if
any, due with respect to the Senior Indebtedness owing by such
Liquidating Loan Party and all other fees, costs, expenses, or other
amounts accrued or incurred pursuant to the terms thereof (or have
such payments duly provided for in a manner reasonably satisfactory to
holders of Senior Indebtedness or their representative) before any
other Company is entitled to receive any Subordinated Payment on
account of or accrued or incurred in connection with any Subordinated
Obligation;
(b) any payment or distribution of assets of the
Liquidating Loan Party of any kind or character, whether in cash,
property or securities to which such other Company would be entitled
except for the provisions of this Affiliate Subordination Agreement
shall be paid by the Liquidating Loan Party, the liquidating trustee
or agent or other person making such a payment or distribution,
directly to the Administrative Agent, for the benefit of the Lenders,
to the extent necessary to make payment in full of all Senior
Indebtedness owing by such Liquidating Loan Party remaining unpaid;
and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Liquidating Loan Party of
any kind or character, whether in cash, property or securities, shall
be received by any such other Company on account of, or accrued or
incurred in connection with, any Subordinated Obligation before all
Senior Indebtedness owing by such Liquidating Loan Party is paid in
full in cash, or effective provision (in a manner reasonably
satisfactory to the Lenders) made for its payment, then such payment
or distribution shall be segregated and received and held in trust for
the benefit of and shall be promptly paid over to the Administrative
Agent, for the benefit of the Lenders, for application to the payment
of all Senior Indebtedness owing by such Liquidating Loan Party until
such Senior Indebtedness shall have been paid in full (including
post-petition interest).
Borrower shall give prompt written notice to the Administrative Agent
and each Company of any dissolution, winding up, liquidation or reorganization
of any Company, but failure to give such notice shall not affect the
subordination of the Subordinated Obligations to the Senior Indebtedness
provided in this Affiliate Subordination Agreement.
1.04 SUBROGATION.
Subject to the payment in full of all Senior Indebtedness, the holder
of, or obligee with respect to, any Subordinated Obligation shall be subrogated
to the rights of the Lenders to receive payments or distributions of assets of
any Company applicable to the Senior Indebtedness to the extent that
distributions were paid to the Lenders that otherwise would have been paid to
such obligee, until all amounts owing on such Subordinated Obligation be paid
in full, and for the purpose of such
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subrogation no such payments or distributions to the Lenders by virtue of this
Affiliate Subordination Agreement, which otherwise would have been made to such
obligee, shall, as between the obligor on such Subordinated Obligation and such
obligee, be deemed to be payment on account of such Subordinated Obligation, it
being understood that the provisions of this Affiliate Subordination Agreement
are and are intended solely for the purpose of defining the relative rights of
the Companies, on the one hand, and the Lenders, on the other hand.
1.05 SUBORDINATION RIGHTS NOT IMPAIRED.
(a) No right of the Administrative Agent or any Lender to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any Company or by any act
or failure to act, in good faith, by the Administrative Agent or any such
Lender, or by any noncompliance by any Company with the terms of any
Subordinated Obligation, regardless of any knowledge thereof which any such
Lender may have or be otherwise charged with. The Administrative Agent and the
Lenders may extend, renew, modify or amend the terms of Senior Indebtedness or
any security therefor and release, sell or exchange such security and otherwise
deal freely with any Company, all without affecting the liabilities and
obligations of any other Company or the rights of the Administrative Agent and
the Lenders hereunder.
(b) All rights and interests hereunder or under any Subordinated
Obligation of the Administrative Agent and the Lenders, and all agreements and
obligations of the Companies under this Affiliate Subordination Agreement,
shall remain in full force and effect irrespective of (i) any lack of validity
or enforceability of the Credit Agreement or any other Loan Document, or of any
provision of any thereof or (ii) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Company in respect of
the Senior Indebtedness.
1.06 AUTHORIZATION TO EFFECT SUBORDINATION.
Each Company, by its acceptance hereof, solely in its capacity as
obligee with respect to Subordinated Obligations, upon the occurrence and
during the continuation of a Default or Potential Default under the Credit
Agreement, (a) irrevocably authorizes and empowers (but without imposing any
obligation on) the Administrative Agent (through its authorized
representatives), on behalf of itself and the Lenders, to demand, sue for,
collect and receive such obligee's ratable share of payments or distributions
with respect to Subordinated Obligations which are required to be paid or
delivered to the Lenders as provided herein, and take all such other action, in
the name of such obligee or otherwise, as such authorized representatives may
determine to be necessary or appropriate for the enforcement of the provisions
of this Affiliate Subordination Agreement, including without limitation, that
(i) such representatives shall have the right to vote such obligee's interest
in any proceeding under all Debtor Relief Laws, as defined in SECTION 1.07, as
such vote relates to any Subordinated Obligation or Subordinated Payment and
(ii) in any such proceeding such representatives may, as attorney-in-fact for
such obligee, file any claim, proof of claim or such other instrument of
similar character, in each case, solely to the extent such proof of claim or
such other instrument relates to any Subordinated Obligation or Subordinated
Payment; and (b) agrees to execute and deliver to such representatives, all
such further instruments confirming the authorization hereinabove set forth,
and all such powers of attorney, proofs of claim, assignments of claim and
other instruments as may reasonably be requested by the Administrative Agent.
1.07 DEFINITIONS.
"Bankruptcy Event" means (a) any Company, pursuant to or within the
meaning of any Debtor Relief Law (i) admits in writing its inability to pay its
debts generally as they become due, (ii) commences a voluntary case or
proceeding under any Debtor Relief Law with respect to itself, (iii) consents
to the entry of a judgment, decree or order for relief against it in an
involuntary case or proceeding in which it is the alleged debtor under any
Debtor Relief Law, (iv) consents to the appointment of a Custodian of it or for
any substantial part of its property, (v) consents to or acquiesces in the
institution of bankruptcy or insolvency proceedings against it, (vi) applies
for, consents to or acquiesces in the appointment of or taking possession by a
Custodian of any other Company for any substantial part of their properties,
(vii) makes a general assignment for the benefit of its creditors or (viii)
takes any corporate act to authorize any of the foregoing; or (b) a court of
competent jurisdiction enters a judgment, decree or order for relief in respect
of any Company in an involuntary case or proceeding under any Debtor Relief Law
which shall (i) approve as properly filed a petition seeking reorganization,
arrangement, adjustment or composition in respect of any Company, (ii) appoint
a Custodian of any Company for any substantial part of their respective
properties or (iii) order the winding- up or liquidation of the affairs of any
Company; and such judgment, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or any bankruptcy or insolvency petition
or application is filed, or any bankruptcy
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or insolvency proceeding is commenced against any Company and such petition,
application or proceeding is not dismissed within 60 days.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Debtor Relief Law.
"Debtor Relief Law" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent
transfer or conveyance, suspension of payments, or similar Laws from time to
time in effect affecting the Rights of creditors generally.
2. COUNTERPARTS.
This Affiliate Subordination Agreement may be executed in any number
of counterparts, which may be originals or copies sent by facsimile
transmission, each of which shall be an original and all of which shall
constitute one and the same agreement.
3. BINDING EFFECT.
This Affiliate Subordination Agreement shall be binding on the parties
hereto and their respective successors and assigns.
4. EVIDENCE OF SUBORDINATION.
To the extent that any of the Subordinated Obligations is evidenced by
a promissory note or other instrument, the Company obligated thereunder shall
cause to be placed thereon a legend stating that the payment thereof is
subordinate to payment of all Senior Indebtedness pursuant to this Agreement
and such Company shall mark all books of account in such manner to indicate
that payment thereof is subordinated pursuant to this Affiliate Subordination
Agreement.
5. GOVERNING LAW.
This Affiliate Subordination Agreement shall be governed by, and
construed in accordance with, the laws of the State of Alabama, without regard
to principles of conflicts of law.
6. FURTHER ASSURANCES.
The parties hereto agree to execute such other documents and take such
other actions as may be reasonably necessary to implement the terms hereof.
[Remainder of Page Intentionally Blank. Signature Pages Follow.]
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IN WITNESS WHEREOF, the undersigned by and through their duly
authorized officers have executed and delivered this Agreement as of the date
hereinabove first written.
ADMINISTRATIVE AGENT:
SOUTHTRUST BANK
By:
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Name:
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Title:
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COMPANIES:
PROASSURANCE CORPORATION
[CORPORATE SEAL]
By:
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Name:
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Title:
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[CORPORATE SEAL]
By:
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Name:
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Title:
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[CORPORATE SEAL]
By:
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Name:
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Title:
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[CORPORATE SEAL]
By:
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Name:
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Title:
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[CORPORATE SEAL]
By:
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Name:
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Title:
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[CORPORATE SEAL]
By:
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Name:
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Title:
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[CORPORATE SEAL]
By:
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Name:
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Title:
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