1
10(AA)
CREDIT AGREEMENT
BETWEEN
SAF FUNDING CORPORATION
AND
THE CHASE MANHATTAN BANK
DATED AUGUST 16, 1996
2
[Execution Counterpart]
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SAF FUNDING CORPORATION
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CREDIT AGREEMENT
Dated as of August 16, 1996
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THE CHASE MANHATTAN BANK,
as Administrative Agent
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
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Section 1. Definitions and Accounting Matters.................................................................. 1
1.01 Certain Defined Terms............................................................................ 1
1.02 Accounting Terms and Determinations.............................................................. 8
1.03 Types of Loans................................................................................... 9
1.04 Subsidiaries..................................................................................... 9
Section 2. Commitments, Loans, Notes and Prepayments........................................................... 9
2.01 Loans............................................................................................ 9
2.02 Borrowings....................................................................................... 9
2.03 Changes of Commitments........................................................................... 9
2.04 Commitment Fee................................................................................... 9
2.05 Lending Offices.................................................................................. 10
2.06 Several Obligations; Remedies Independent........................................................ 10
2.07 Notes............................................................................................ 10
2.08 Optional Prepayments of Loans.................................................................... 10
2.09 Mandatory Prepayments and Reductions of Commitments.............................................. 11
2.10 Extension of Commitment Termination Date......................................................... 11
Section 3. Payments of Principal and Interest.................................................................. 13
3.01 Repayment of Loans............................................................................... 13
3.02 Interest......................................................................................... 13
Section 4. Payments; Pro Rata Treatment; Computations; Etc..................................................... 13
4.01 Payments......................................................................................... 13
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4.02 Pro Rata Treatment............................................................................... 14
4.03 Computations..................................................................................... 14
4.04 Minimum Amounts.................................................................................. 15
4.05 Certain Notices.................................................................................. 15
4.06 Non-Receipt of Funds by the Administrative Agent................................................. 15
4.07 Sharing of Payments, Etc......................................................................... 16
Section 5. Yield Protection, Etc............................................................................... 17
5.01 Additional Costs................................................................................. 17
5.02 Limitation on Types of Loans..................................................................... 18
5.03 Illegality....................................................................................... 19
5.04 Treatment of Affected Loans...................................................................... 19
5.05 Compensation..................................................................................... 20
5.06 U.S. Taxes....................................................................................... 20
5.07 Replacement of Lenders........................................................................... 21
Section 6. Conditions Precedent................................................................................ 22
6.01 Effectiveness.................................................................................... 22
6.02 Initial and Subsequent Loans..................................................................... 23
Section 7. Representations and Warranties...................................................................... 24
7.01 Corporate Existence.............................................................................. 24
7.02 Financial Condition.............................................................................. 24
7.03 Litigation....................................................................................... 25
7.04 No Breach........................................................................................ 25
7.05 Action........................................................................................... 25
7.06 Approvals........................................................................................ 25
7.07 Taxes............................................................................................ 25
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7.08 Use of Credit.................................................................................... 26
7.09 Special Purpose Company.......................................................................... 26
7.10 Capitalization................................................................................... 26
7.11 ERISA............................................................................................ 26
Section 8. Covenants of the Company............................................................................ 26
8.01 Financial Statements, Etc........................................................................ 26
8.02 Litigation....................................................................................... 27
8.03 Existence, Etc................................................................................... 27
8.04 Limited Purpose Company.......................................................................... 27
8.05 Use of Proceeds.................................................................................. 28
8.06 Modifications of Certain Documents............................................................... 28
Section 9. Events of Default................................................................................... 28
Section 10. The Administrative Agent........................................................................... 30
10.01 Appointment, Powers and Immunities.............................................................. 30
10.02 Reliance by Administrative Agent................................................................ 31
10.03 Defaults........................................................................................ 31
10.04 Rights as a Lender.............................................................................. 32
10.05 Indemnification................................................................................. 32
10.06 Non-Reliance on Administrative Agent and Other Lenders.......................................... 32
10.07 Failure to Act.................................................................................. 33
10.08 Resignation or Removal of Administrative Agent.................................................. 33
10.09 Consents under Other Credit Documents........................................................... 33
Section 11. Miscellaneous...................................................................................... 33
11.01 Waiver.......................................................................................... 33
11.02 Notices......................................................................................... 34
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11.03 Amendments, Etc................................................................................. 34
11.04 Successors and Assigns.......................................................................... 34
11.05 Assignments and Participations.................................................................. 34
11.06 Survival........................................................................................ 36
11.07 Captions........................................................................................ 36
11.08 Counterparts.................................................................................... 36
11.09 Governing Law; Submission to Jurisdiction....................................................... 36
11.10 Waiver of Jury Trial............................................................................ 37
11.11 Treatment of Certain Information; Confidentiality............................................... 37
11.12 No Recourse..................................................................................... 38
EXHIBIT A
- Form of Note
EXHIBIT B
- Form of Borrowing Notice
EXHIBIT C-1
- Form of Company Pledge Agreement
EXHIBIT C-2
- Form of Parent Pledge Agreement
EXHIBIT D
- Form of Put Agreement
EXHIBIT E
- Form of Standby Purchase Agreement
EXHIBIT F
- Form of Opinion of Counsel to
the Company
EXHIBIT G
- Form of Opinion of Special New York
Counsel to Chase
EXHIBIT H
- Form of Confidentiality Agreement
EXHIBIT I
- Form of Assignment and Acceptance
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CREDIT AGREEMENT dated as of August 16, 1996, between: SAF
FUNDING CORPORATION, a corporation duly organized and validly existing under the
laws of the State of Delaware (the "COMPANY"); each of the lenders that is a
signatory hereto identified under the caption "LENDERS" on the signature pages
hereto and each lender that becomes a "Lender" after the date hereof pursuant to
Section 11.05(b) hereof (individually, a "LENDER" and, collectively, the
"LENDERS"); and THE CHASE MANHATTAN BANK, a New York banking corporation, as
agent for the Lenders (in such capacity, together with its successors in such
capacity, the "ADMINISTRATIVE AGENT").
The Company has requested that the Lenders make loans to it in
an aggregate principal amount not exceeding $100,000,000 and the Lenders are
prepared to make such loans upon the terms and conditions hereof. Accordingly,
the parties hereto agree as follows:
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01 CERTAIN DEFINED TERMS. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and VICE VERSA):
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and
for each Type of Loan, the "Lending Office" of such Lender (or of an affiliate
of such Lender) designated for such Type of Loan on the signature pages hereof
or such other office of such Lender (or of an affiliate of such Lender) as such
Lender may from time to time specify to the Administrative Agent and the Company
as the office by which its Loans of such Type are to be made and maintained.
"APPLICABLE MARGIN" shall mean: (a) with respect to Base Rate
Loans, 0% per annum; and (b) with respect to Eurodollar Loans, 3/4 of 1% per
annum.
"BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of
1978, as amended from time to time.
"BASE RATE" shall mean, for any day, a rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates
based upon the Base Rate.
"BASIC DOCUMENTS" shall mean, collectively, the Credit
Documents, the Preferred Stock Certificates and the Standby Purchase Agreement.
"BASLE ACCORD" shall mean the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
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"BORROWING NOTICE" shall mean a Borrowing Notice substantially
in the form of Exhibit B hereto.
"BUSINESS DAY" shall mean any day (a) on which commercial
banks are not authorized or required to close in New York City and (b) if such
day relates to a borrowing of, a payment or prepayment of principal of or
interest on, a Conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Company with respect to any such borrowing, payment,
prepayment, Conversion or Interest Period, that is also a day on which dealings
in Dollar deposits are carried out in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CHASE" shall mean The Chase Manhattan Bank and any successor
entity.
"CLOSING DATE" shall mean the first date upon which each of
the conditions precedent specified in Section 6.01 hereof shall have been
satisfied.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"COMMITMENT" shall mean, as to each Lender, the obligation of
such Lender to make Loans in an aggregate principal amount up to but not
exceeding the amount set opposite the name of such Lender on the signature pages
hereof under the caption "Commitment" or, in the case of a Person that becomes a
Lender pursuant to an assignment permitted under Section 11.05(b) hereof, as
specified in the respective instrument of assignment pursuant to which such
assignment is effected (as the same may be reduced at any time or from time to
time pursuant to Section 2.03 hereof).
"COMMITMENT TERMINATION DATE" shall mean June 30, 1997,
subject to extension as provided in Section 2.10 hereof.
"COMPANY PLEDGE AGREEMENT" shall mean a Pledge and Security
Agreement substantially in the form of Exhibit C-1 hereto between the Company
and the Administrative Agent, as the same shall be modified and supplemented and
in effect from time to time.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation of a Eurodollar Loan from one Interest Period to the next Interest
Period.
"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a
conversion of one Type of Loan into another Type of Loan, which may be
accompanied by the transfer by a Lender (at its sole discretion) of a Loan from
one Applicable Lending Office to another.
"CREDIT DOCUMENTS" shall mean, collectively, this Agreement,
the Notes, the Pledge Agreements and the Put Agreement.
"DEFAULT" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
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"DIVIDEND PAYMENT" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Company or of any warrants, options or other rights to
acquire the same (or to make any payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market or equity value of the Company), but excluding dividends payable solely
in shares of common stock of the Company.
"DOLLARS" and "$" shall mean lawful money of the United States
of America.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which the Company is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which the Company is a member.
"EURODOLLAR BASE RATE" shall mean, with respect to any
Eurodollar Loan for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) quoted by Chase at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) on
the date two Business Days prior to the first day of such Interest Period for
the offering by Chase to leading banks in the London interbank market of Dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the Eurodollar Loan to be made by Chase
for such Interest Period. If Chase is not participating in any Eurodollar Loans
during any Interest Period therefor, the Eurodollar Base Rate for such Loans for
such Interest Period shall be determined by reference to the amount of such
Loans that Chase would have made or had outstanding had it been participating in
such Loan during such Interest Period.
"EURODOLLAR LOANS" shall mean Loans that bear interest at
rates based on rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.01.
"EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the Eurodollar Base Rate for such Loan for such Interest Period divided by 1
minus the Reserve Requirement (if any) for such Loan for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning assigned to such
term in Section 9 hereof.
"EXISTING COMMITMENT TERMINATION DATE" shall have the meaning
assigned to such term in Section 2.10 hereof.
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"FEDERAL FUNDS RATE" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, PROVIDED that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
"GUARANTEE" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or with
respect to, the Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any Person, or an agreement
to purchase, sell or lease (as lessee or lessor) Property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of such debtor's obligations or an agreement to assure a creditor
against loss, and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or other similar instrument
for the benefit of another Person, but excluding endorsements for collection or
deposit in the ordinary course of business. The terms "GUARANTEE" and
"GUARANTEED" used as a verb shall have a correlative meaning.
"INDEBTEDNESS" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services; (c)
Indebtedness of others secured by a Lien on the Property of such Person, whether
or not the respective indebtedness so secured has been assumed by such Person;
(d) obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for
account of such Person; (e) Capital Lease Obligations of such Person; and (f)
Indebtedness of others Guaranteed by such Person.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made or
Converted from a Base Rate Loan or (in the event of a Continuation) the last day
of the next preceding Interest Period for such Loan and ending on the
numerically corresponding day in the third calendar month thereafter, except
that each Interest Period that commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (a) no
Interest Period may commence before and end after any Principal Payment Date
unless, after giving effect thereto, the aggregate principal amount of the Loans
having Interest Periods that end after such Principal Payment Date shall be
equal to or less than the aggregate principal amount of the Loans scheduled to
be outstanding after giving effect to the payments of principal required to be
made on such Principal Payment Date; (b) each Interest Period that would
otherwise end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and (c)
notwithstanding clause (a) above, no Interest Period shall have a duration of
less than three months and, if the Interest Period for
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any Eurodollar Loan would otherwise be a shorter period, such Loan shall not be
available hereunder for such period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, for any
Person, an interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies.
"INVESTMENT" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of Property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person); (c) the entering into of any
Guarantee of, or other contingent obligation with respect to, Indebtedness or
other liability of any other Person and (without duplication) any amount
committed to be advanced, lent or extended to such Person; or (d) the entering
into of any Interest Rate Protection Agreement.
"LIEN" shall mean, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Agreement and the other Credit Documents, a
Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.
"LOANS" shall mean the loans provided for in Section 2.01
hereof, which shall be Eurodollar Loans except as provided therein.
"MAJORITY LENDERS" shall mean Lenders having at least 66-2/3%
of the aggregate amount of the Commitments or, if the Commitments shall have
terminated, Lenders holding at least 66-2/3% of the aggregate unpaid principal
amount of the Loans; PROVIDED that, if at any time State Auto Mutual shall
acquire a portion (but less than all) of the Loans pursuant to the Put
Agreement, State Auto Mutual shall not be counted as a "Lender" for purposes of
determining the Majority Lenders under this Agreement.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by the
Company and that is covered by Title IV of ERISA.
"NOTES" shall mean the promissory notes provided for by
Section 2.07 hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"PARENT" shall mean Broad Street Contract Services, Inc., a
Delaware corporation.
"PARENT PLEDGE AGREEMENT" shall mean a Pledge Agreement
substantially in the form of Exhibit C-2 hereto between the Parent and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
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"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of
the United States of America, or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States of America, or of
any agency thereof, in either case maturing not more than 90 days from the date
of acquisition thereof; (b) certificates of deposit issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; and (c) commercial paper rated A-1 or better or P-1 by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., or
Moody's Investors Services, Inc., respectively, maturing not more than 90 days
from the date of acquisition thereof; in each case so long as the same (i)
provide for the payment of principal and interest (and not principal alone or
interest alone) and (ii) are not subject to any contingency regarding the
payment of principal or interest.
"PERSON" shall mean any individual, corporation, company,
voluntary association, partnership, limited liability company, joint venture,
trust, unincorporated organization or government (or any agency, instrumentality
or political subdivision thereof).
"PLAN" shall mean an employee benefit or other plan
established or maintained by the Company and that is covered by Title IV of
ERISA, other than a Multiemployer Plan.
"PLEDGE AGREEMENTS" shall mean the Company Pledge Agreement
and the Parent Pledge Agreement.
"POST-DEFAULT RATE" shall mean a rate per annum equal to 2%
PLUS the Base Rate as in effect from time to time PLUS the Applicable Margin for
Base Rate Loans, PROVIDED that, with respect to principal of a Eurodollar Loan
that shall become due (whether at stated maturity, by acceleration,
by optional or mandatory prepayment or otherwise) on a day other than the last
day of the Interest Period therefor, the "Post-Default Rate" shall be, for the
period from and including such due date to but excluding the last day of such
Interest Period, 2% PLUS the interest rate for such Loan as provided in Section
3.02(b) hereof and, thereafter, the rate provided for above in this definition.
"PREFERRED STOCK" shall mean the Class A Preferred Stock
issued from time to time by State Auto Financial to the Company under the
Standby Purchase Agreement.
"PREFERRED STOCK CERTIFICATES" shall mean the certificates
evidencing the Preferred Stock.
"PRIME RATE" shall mean the rate of interest from time to time
announced by Chase at its principal office in New York, New York as its prime
commercial lending rate.
"PRINCIPAL PAYMENT DATES" shall mean, with respect to any
Loan, each of the 3rd, 5th, 7th, 9th, 11th, 13th, 15th, 17th, 19th, 21st, 23rd
and 25th Quarterly Dates immediately following the making of such Loan.
"PROPERTY" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PUT AGREEMENT" shall mean a Put Agreement substantially in
the form of Exhibit D hereto between the State Auto Obligors and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
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"QUARTERLY DATES" shall mean the last Business Day of March,
June, September and December in each year, the first of which shall be the first
such day after the date hereof.
"REDEMPTION VALUE" shall mean, with respect to any Preferred
Stock, the "Redemption Value" for such Preferred Stock set forth in the
Preferred Stock Certificates evidencing such Preferred Stock.
"REGULATIONS A, D, G, U AND X" shall mean, respectively,
Regulations A, D, G, U and X of the Board of Governors of the Federal Reserve
System (or any successor), as the same may be modified and supplemented and in
effect from time to time.
"REGULATORY CHANGE" shall mean, with respect to any Lender,
any change after the date hereof in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"RESERVE REQUIREMENT" shall mean, for any Interest Period for
any Eurodollar Loan, the average maximum rate at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D
by member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall include any other reserves required to be maintained
by such member banks by reason of any Regulatory Change with respect to (a) any
category of liabilities that includes deposits by reference to which the
Eurodollar Base Rate is to be determined as provided in the definition of
"Eurodollar Base Rate" in this Section 1.01 or (b) any category of extensions of
credit or other assets that includes Eurodollar Loans.
"STANDBY PURCHASE AGREEMENT" shall mean the Standby Purchase
Agreement substantially in the form of Exhibit E hereto between State Auto
Financial and the Company, as the same shall be modified and supplemented and in
effect from time to time.
"STATE AUTO FINANCIAL" shall mean State Auto Financial
Corporation, an Ohio corporation.
"STATE AUTO MUTUAL" shall mean State Automobile Mutual
Insurance Company, an Ohio mutual insurance company.
"STATE AUTO OBLIGORS" shall mean State Auto Mutual and State
Auto Financial.
"STATE AUTO P&C" shall mean State Auto Property and Casualty
Insurance Company, a South Carolina corporation.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is
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at the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
"TYPE" shall have the meaning assigned to such term in Section
1.03 hereof.
"U.S. PERSON" shall mean a citizen, national or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under any laws of the United States of America or any State
thereof, or any estate or trust that is subject to Federal income taxation
regardless of the source of its income.
1.02 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lenders hereunder shall be
prepared, in accordance with GAAP. All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP.
1.03 TYPES OF LOANS. Loans hereunder are distinguished by
"Type". The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or
a Eurodollar Loan, each of which constitutes a Type.
1.04 SUBSIDIARIES. The Company does not and will not have any
Subsidiaries.
Section 2. COMMITMENTS, LOANS, NOTES AND PREPAYMENTS.
2.01 LOANS. Each Lender severally agrees, on the terms and
conditions of this Agreement, to make one or more term loans to the Company in
Dollars on or before the Commitment Termination Date in an aggregate principal
amount up to but not exceeding the amount of the Commitment of such Lender.
Except as provided in Sections 5.02, 5.03 and 5.04 hereof and the last paragraph
of Section 9 hereof, all Loans hereunder shall be Eurodollar Loans. Loans paid
or prepaid may not be reborrowed.
2.02 BORROWINGS. The Company shall give the Administrative
Agent notice of each borrowing hereunder by delivering to the Administrative
Agent a Borrowing Notice containing the information provided in Section 4.05
hereof and otherwise duly completed. Not later than 1:00 p.m. New York time on
the date specified for each borrowing hereunder, each Lender shall make
available the amount of the Loan or Loans to be made by it on such date to the
Administrative Agent, at any account designated by the Administrative Agent, in
immediately available funds, for account of the Company. The amount so received
by the Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account of the Company maintained with Chase
designated for such purpose.
2.03 CHANGES OF COMMITMENTS.
(a) The Company shall have the right at any time or from time
to time to terminate or reduce the aggregate unused amount of the Commitments;
PROVIDED that (i) the Company shall give notice of each such termination or
reduction as provided in Section 4.05 hereof and (ii) each partial reduction
shall be in an aggregate amount at least equal to $10,000,000 (or a larger
integral multiple of $5,000,000).
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(b) The aggregate amount of the Commitments shall
automatically reduce to zero on the Commitment Termination Date.
(c) The Commitments once terminated or reduced may not be
reinstated.
2.04 COMMITMENT FEE. The Company shall pay to the
Administrative Agent for account of each Lender a commitment fee on the daily
average unused amount of such Lender's Commitment, for the period from and
including the date hereof to but not including the earlier of the date such
Commitment is terminated and the Commitment Termination Date, at a rate per
annum equal to 1/4 of 1%. Accrued commitment fee shall be payable on each
Quarterly Date and on the earlier of the date the Commitments are terminated and
the Commitment Termination Date.
2.05 LENDING OFFICES. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type.
2.06 SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT. The failure of
any Lender to make any Loan to be made by it on the date specified therefor
shall not relieve any other Lender of its obligation to make its Loan on such
date, but neither any Lender nor the Administrative Agent shall be responsible
for the failure of any other Lender to make a Loan to be made by such other
Lender, and (except as otherwise provided in Section 4.06 hereof) no Lender
shall have any obligation to the Administrative Agent or any other Lender for
the failure by such Lender to make any Loan required to be made by such Lender.
The amounts payable by the Company at any time hereunder and under the Notes to
each Lender shall be a separate and independent debt and each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and the
Notes, and it shall not be necessary for any other Lender or the Administrative
Agent to consent to, or be joined as an additional party in, any proceedings for
such purposes.
2.07 NOTES.
(a) Each Loan made by each Lender shall be evidenced by a
single promissory note of the Company substantially in the form of Exhibit A
hereto, dated the date such Loan is made, payable to such Lender in a principal
amount equal to the amount of such Loan and otherwise duly completed.
(b) The date, amount, Type, interest rate and duration of
Interest Period (if applicable) of each Loan made by each Lender to the Company,
and each payment made on account of the principal thereof, shall be recorded by
such Lender on its books and, prior to any transfer of the Note held by it,
endorsed by such Lender on the schedule attached to such Note or any
continuation thereof; PROVIDED that the failure of such Lender to make any such
recordation (or any error by such Lender in making any such recordation) or
endorsement shall not affect the obligations of the Company to make a payment
when due of any amount owing hereunder or under such Note in respect of the
Loans.
(c) No Lender shall be entitled to have its Notes substituted
or exchanged for any reason, or subdivided for promissory notes of lesser
denominations, except in connection with a permitted assignment of all or any
portion of such Lender's Commitment, Loans and Notes pursuant to Section 11.05
hereof (and, if requested by any Lender, the Company agrees to so exchange any
Notes).
2.08 OPTIONAL PREPAYMENTS OF LOANS. Subject to Section 4.04
hereof, the Company shall have the right to prepay Loans at any time or from
time to time, PROVIDED that: (a) the Company shall give the Administrative Agent
notice of each such prepayment as provided in Section 4.05 hereof (and, upon the
date specified in any such notice of prepayment, the amount to be prepaid shall
become due and payable hereunder); (b) Eurodollar Loans may be prepaid only on
the last day of an Interest Period for
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such Loans; and (c) prepayments of the Loans shall be applied to the
installments of the Loans pro rata in accordance with the respective principal
amounts thereof outstanding on the date of such prepayment.
2.09 MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENTS. If
(a) the Company shall sell, assign, transfer or otherwise dispose of all or any
portion of the Preferred Stock, (b) the Administrative Agent shall sell the
Preferred Stock to State Auto Mutual pursuant to the Put Agreement or (c) the
Preferred Stock shall at any time be repurchased, redeemed or otherwise retired
by State Auto Financial (whether pursuant to the terms of such Preferred Stock
or otherwise), the Company will prepay Loans in a principal amount equal to the
aggregate Redemption Value of the Preferred Stock so sold, assigned, transferred
or otherwise disposed of. In addition, if the aggregate outstanding principal
amount of the Loans shall at any time exceed either (i) the aggregate amount of
the Commitments or (ii) the aggregate Redemption Value of the Preferred Stock
issued and outstanding at such time, the Company will prepay the Loans in an
amount equal to such excess. Prepayments of the Loans shall be applied to the
installments of the Loans in the inverse order or the maturities of the
installments thereof.
2.10 EXTENSION OF COMMITMENT TERMINATION DATE.
(a) The Company may, by notice to the Administrative Agent
(which shall promptly notify the Lenders) given not less than 60 days and not
more the 90 days prior to the Commitment Termination Date then in effect (the
"EXISTING COMMITMENT TERMINATION DATE"), request that the Lenders extend the
Commitment Termination Date for an additional 364 days from the Existing
Commitment Termination Date; PROVIDED that in no event may the Company request
more than two such extensions. Each Lender, acting in its sole discretion,
shall, by notice (which shall be irrevocable) to the Company and the
Administrative Agent given no earlier than the date that is 30 days prior to the
Existing Commitment Termination Date (herein, the "CONSENT DATE") and no later
than the date that is three Business Days after the Consent Date, advise the
Company whether or not such Lender agrees to such extension; PROVIDED that each
Lender that determines not to extend the Commitment Termination Date (a
"NON-EXTENDING LENDER") shall notify the Administrative Agent (which shall
notify the Lenders) of such fact promptly after such determination (but in any
event no later than the date three Business Days after the Consent Date) and any
Lender that does not advise the Company on or prior to the date three Business
Days after the Consent Date that such Lender agrees to such extension shall be
deemed to be a Non-Extending Lender. The election of any Lender to agree to such
extension shall not obligate any other Lender to so agree.
(b) The Company may, at any time prior to the Existing
Commitment Termination Date, replace any Non-Extending Lender, by giving not
less than ten Business Days' prior notice to the Administrative Agent (which
shall promptly notify such Non-Extending Lender), that it intends to replace
such Non-Extending Lender with respect to its rights and obligations (including,
without limitation, its Commitments) as a "Lender" under this Agreement
(collectively, the "TRANSFERRED INTEREST") with one or more banks or other
financial institutions (including, but not limited to, any other Lender or an
affiliate of any Lender) selected by the Company and acceptable to the
Administrative Agent (each, a "REPLACEMENT LENDER"). Upon the Existing
Commitment Termination Date (and as a condition to the extension thereof), (i)
the Company shall pay or cause to be paid to such Non-Extending Lender being
replaced an amount equal to all fees and other amounts then owing to such
Non-Extending Lender hereunder and under any other Basic Document in respect of
the Transferred Interest (all or a portion of which amount may constitute
consideration for an assignment by such Non-Extending Lender of all or a portion
of the Transferred Interest) and (ii) such Non-Extending Lender shall assign to
each Replacement Lender, pursuant to an Assignment and Acceptance substantially
in the form of Exhibit I hereto, a portion of the Transferred Interest specified
by the Company, whereupon (x) each Replacement Lender shall become a "Lender"
for all purposes of this Agreement having the Commitments in the
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amount of such Non-Extending Lender's Commitments assumed by
it and all of the rights and obligations under this Agreement of "Lender(s)"
holding the Transferred Interest and (y) such Non-Extending Lender shall cease
to be responsible or liable for, and shall cease to be entitled to the rights
and benefits of, all or any portion of the Transferred Interest (except to the
extent provided in Section 11.06 hereof).
(c) If (and only if) the sum of the aggregate amount of the
Commitments of Lenders having agreed so to extend the Existing Commitment
Termination Date on or prior to the Existing Commitment Termination Date PLUS
the aggregate amount of the Commitments of the Replacement Lenders shall equal
or exceed 50% of the aggregate amount of the Commitments in effect immediately
prior to the Existing Commitment Termination Date, then, effective as of the
Existing Commitment Termination Date, the Existing Commitment Termination Date
shall be extended to the date falling 364 days after the Existing Commitment
Termination Date (except that, if such date is not a Business Day, such
Commitment Termination Date as so extended shall be the next preceding Business
Day); PROVIDED that the Commitment of each Non-Extending Lender shall terminate
on the Existing Commitment Termination Date.
(d) Notwithstanding the foregoing clauses (a) through (c), the
extension of the Existing Commitment Termination Date shall not be effective
with respect to any Lender unless:
(i) no Default shall have occurred and be continuing on
each of the date of the notice requesting such extension (the "REQUEST
DATE"), the Consent Date and the Existing Commitment Termination Date;
(ii) each of the representations and warranties made by
the Company in Section 7 hereof shall be true and complete on and as of
each of the Request Date, the Consent Date and the Existing Commitment
Termination Date with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific
date);
(iii) no Loans shall be outstanding on each of the
Request Date, the Consent Date and the Existing Commitment Termination
Date;
(iv) on each of the Request Date and the Existing
Commitment Termination Date, the Administrative Agent shall have
received the respective certificate required to be delivered by State
Auto Mutual on such date pursuant to Section 4.20 of the Put Agreement;
and
(v) without duplication of the obligation of the
Company to make the payments required by clause (b)(i) of this Section
2.10 with respect to any Non-Extending Lender being replaced hereunder,
the Company shall pay or cause to paid to each Non-Extending Lender an
amount equal to all fees and other amounts then owing to such
Non-Extending Lender hereunder.
Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.
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3.01 REPAYMENT OF LOANS. The Company hereby promises to pay to
the Administrative Agent for account of each Lender the principal of each Loan
made by such Lender in twelve installments payable on the Principal Payment
Dates for such Loan. The first eleven of such installments shall be equal to
one-twelfth of the principal amount of such Loan and the twelfth such
installment shall be equal to the balance thereof.
3.02 INTEREST. The Company hereby promises to pay to the
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan made by such Lender for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
(a) during such periods as such Loan is a Base Rate Loan, the
Base Rate (as in effect from time to time) PLUS the Applicable Margin
and
(b) during such periods as such Loan is a Eurodollar Loan, for
each Interest Period relating thereto, the Eurodollar Rate for such
Loan for such Interest Period PLUS the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable
Post-Default Rate on any principal of any Loan made by such Lender and on any
other amount payable by the Company hereunder or under the Notes held by such
Lender to or for account of such Lender that shall not be paid in full when due
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full. Accrued interest on each Loan shall
be payable (i) in the case of a Base Rate Loan, quarterly on the Quarterly
Dates, (ii) in the case of a Eurodollar Loan, on the last day of each Interest
Period therefor and (iii) in the case of any Loan, upon the payment or
prepayment thereof or the Conversion of such Loan to a Loan of another Type (but
only on the principal amount so paid, prepaid or Converted), except that
interest payable at the Post-Default Rate shall be payable from time to time on
demand. Promptly after the determination of any interest rate provided for
herein or any change therein, the Administrative Agent shall give notice thereof
to the Lenders to which such interest is payable and to the Company.
Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
4.01 PAYMENTS.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Company
under this Agreement and the Notes, shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the
Administrative Agent at an account designated by the Administrative Agent in
writing to the Company, not later than 1:00 p.m. New York time on the date on
which such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business
Day).
(b) Any Lender for whose account any such payment is to be
made may (but shall not be obligated to) debit the amount of any such payment
that is not made by such time to any ordinary deposit account of the Company
with such Lender (with notice to the Company and the Administrative Agent),
PROVIDED that such Lender's failure to give such notice shall not affect the
validity thereof.
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(c) The Company shall, at the time of making each payment
under this Agreement or any Note for account of any Lender, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans or other amounts payable by the Company hereunder to which such
payment is to be applied (and in the event that the Company fails to so specify,
or if an Event of Default has occurred and is continuing, the Administrative
Agent may distribute such payment to the Lenders for application in such manner
as it or the Majority Lenders, subject to Section 4.02 hereof, may determine to
be appropriate).
(d) Each payment received by the Administrative Agent under
this Agreement or any Note for account of any Lender shall be paid by the
Administrative Agent promptly to such Lender, in immediately available funds,
for account of such Lender's Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.
(e) If the due date of any payment under this Agreement or any
Note would otherwise fall on a day that is not a Business Day, such date shall
be extended to the next succeeding Business Day, and interest shall be payable
for any principal so extended for the period of such extension.
4.02 PRO RATA TREATMENT. Except to the extent otherwise
provided herein: (a) each borrowing from the Lenders under Section 2.01 hereof
shall be made from the Lenders, each payment of commitment fee under Section
2.04 hereof shall be made for account of the Lenders, and each termination or
reduction of the amount of the Commitments under Section 2.03 hereof shall be
applied to the respective Commitments of the Lenders, pro rata according to the
amounts of their respective Commitments; (b) except as otherwise provided in
Section 5.04 hereof, Eurodollar Loans having the same Interest Period shall be
allocated pro rata among the Lenders according to the amounts of their
respective Commitments (in the case of the making of Loans) or their respective
Loans (in the case of Conversions and Continuations of Loans); (c) each payment
or prepayment of principal of Loans by the Company or upon the receipt of
proceeds by the Administrative Agent in connection with a put of the Preferred
Stock under the Put Agreement shall be made for account of the Lenders pro rata
in accordance with the respective unpaid principal amounts of the Loans held by
them; and (d) each payment of interest on Loans by the Company shall be made for
account of the Lenders pro rata in accordance with the amounts of interest on
such Loans then due and payable to the respective Lenders.
4.03 COMPUTATIONS. Interest on Eurodollar Loans and commitment
fee shall be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable and interest on Base Rate Loans shall be computed on the basis of
a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which payable. Notwithstanding the foregoing, for each day that the Base Rate is
calculated by reference to the Federal Funds Rate, interest on Base Rate Loans
shall be computed on the basis of a year of 360 days and actual days elapsed.
4.04 MINIMUM AMOUNTS. Except for mandatory prepayments made
pursuant to Section 2.09 hereof, each borrowing and partial prepayment of
principal of Loans shall be in an aggregate amount at least equal to $10,000,000
or a larger integral multiple of $1,000,000 (borrowing or prepayments of Loans
of different Types or, in the case of Eurodollar Loans, having different
Interest Periods at the same time hereunder to be deemed separate borrowings and
prepayments for purposes of the foregoing, one for each Type or Interest
Period).
4.05 CERTAIN NOTICES. Notices by the Company to the
Administrative Agent of terminations or reductions of the Commitments and of
borrowings and optional prepayments of Loans
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shall be irrevocable and shall be effective only if received by the
Administrative Agent not later than 10:00 a.m. New York time on the third
Business Day prior to the date of the relevant termination, reduction, borrowing
or prepayment. Each such notice of termination or reduction shall specify the
amount of the Commitments to be terminated or reduced. Each such notice of
borrowing or optional prepayment shall specify the Loans to be borrowed or
prepaid and the amount (subject to Section 4.04 hereof) of each Loan to be
borrowed or prepaid and the date of borrowing or optional prepayment (which
shall be a Business Day). The Administrative Agent shall promptly notify the
Lenders of the contents of each such notice.
4.06 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless
the Administrative Agent shall have been notified by a Lender or the Company
(the "PAYOR") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender hereunder or (in the case of the Company) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "REQUIRED PAYMENT"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "ADVANCE DATE") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, PROVIDED that if neither the recipient(s)
nor the Payor shall return the Required Payment to the Administrative Agent
within three Business Days of the Advance Date, then, retroactively to the
Advance Date, the Payor and the recipient(s) shall each be obligated to pay
interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment
to be made by the Company to the Lenders, the Company and the
recipient(s) shall each be obligated retroactively to the Advance Date
to pay interest in respect of the Required Payment at the Post-Default
Rate (without duplication of the obligation of the Company under
Section 3.02 hereof to pay interest on the Required Payment at the
Post-Default Rate), it being understood that the return by the
recipient(s) of the Required Payment to the Administrative Agent shall
not limit such obligation of the Company under said Section 3.02 to
pay interest at the Post-Default Rate in respect of the Required
Payment and
(ii) if the Required Payment shall represent proceeds of
a Loan to be made by the Lenders to the Company, the Payor and the
Company shall each be obligated retroactively to the Advance Date to
pay interest in respect of the Required Payment pursuant to whichever
of the rates specified in Section 3.02 hereof is applicable to the Type
of such Loan, it being understood that the return by the Company of the
Required Payment to the Administrative Agent shall not limit any claim
the Company may have against the Payor in respect of such Required
Payment.
4.07 SHARING OF PAYMENTS, ETC.
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(a) The Company agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender may
otherwise have, each Lender shall be entitled, at its option (to the fullest
extent permitted by law), to set off and apply any deposit (general or special,
time or demand, provisional or final), or other indebtedness, held by it for the
credit or account of the Company at any of its offices, in Dollars or in any
other currency, against any principal of or interest on any of such Lender's
Loans or any other amount payable to such Lender hereunder, that is not paid
when due (regardless of whether such deposit or other indebtedness are then due
to the Company), in which case it shall promptly notify the Company and the
Administrative Agent thereof, PROVIDED that such Lender's failure to give such
notice shall not affect the validity thereof.
(b) If any Lender shall obtain from the Company payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement or any other Credit Document through the exercise of any
right of set-off, banker's lien or counterclaim or similar right or otherwise
(other than from the Administrative Agent as provided herein), and, as a result
of such payment, such Lender shall have received a greater percentage of the
principal of or interest on the Loans or such other amounts then due hereunder
or thereunder by the Company to such Lender than the percentage received by any
other Lender, it shall promptly purchase from such other Lenders participations
in (or, if and to the extent specified by such Lender, direct interests in) the
Loans or such other amounts, respectively, owing to such other Lenders (or in
interest due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
pro rata in accordance with the unpaid principal of and/or interest on the Loans
or such other amounts, respectively, owing to each of the Lenders. To such end
all the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation (or direct
interest).
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Company. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 4.07 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.07 to
share in the benefits of any recovery on such secured claim.
Section 5. YIELD PROTECTION, ETC.
5.01 ADDITIONAL COSTS.
(a) The Company shall pay directly to each Lender from time to
time such amounts as such Lender may determine to be necessary to compensate
such Lender for any costs that such Lender determines are attributable to its
making or maintaining of any Eurodollar Loans or its obligation to make any
Eurodollar Loans hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"ADDITIONAL COSTS"), resulting from any Regulatory Change that:
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(i) shall subject any Lender (or its Applicable Lending
Office for any of such Loans) to any tax, duty or other charge in
respect of such Loans or its Notes or changes the basis of taxation of
any amounts payable to such Lender under this Agreement or its Notes in
respect of any of such Loans (excluding changes in the rate of tax on
the overall net income of such Lender or of such Applicable Lending
Office by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement utilized in
the determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including, without limitation, any of such
Loans or any deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof), or any commitment of such Lender
(including, without limitation, the Commitment of such Lender
hereunder); or
(iii) imposes any other condition affecting this
Agreement or its Notes (or any of such extensions of credit or
liabilities) or its Commitment.
If any Lender requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender thereafter to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.04 hereof shall be applicable), PROVIDED that
such suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), the Company shall pay directly to
each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any increased
costs that it determines are attributable to the maintenance by such Lender (or
any Applicable Lending Office or such bank holding company), pursuant to any law
or regulation or any interpretation, directive or request (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or other
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) hereafter issued by any
government or governmental or supervisory authority implementing at the national
level the Basle Accord, of capital in respect of its Commitment or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company) to a level below that which such Lender (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive or request).
(c) Each Lender shall notify the Company of any event
occurring after the date hereof entitling such Lender to compensation under
paragraph (a) or (b) of this Section 5.01 as promptly as practicable, but in any
event within 45 days, after such Lender obtains actual knowledge thereof;
PROVIDED that (i) if any Lender fails to give such notice within 45 days after
it obtains actual knowledge of such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 5.01
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in respect of any costs resulting from such event, only be entitled to payment
under this Section 5.01 for costs incurred from and after the date 45 days prior
to the date that such Lender does give such notice and (ii) each Lender will
designate a different Applicable Lending Office for the Loans of such Lender
affected by such event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole opinion of such
Lender, be disadvantageous to such Lender, except that such Lender shall have no
obligation to designate an Applicable Lending Office located in the United
States of America. Each Lender will furnish to the Company a certificate setting
forth the basis and amount of each request by such Lender for compensation under
paragraph (a) or (b) of this Section 5.01. Determinations and allocations by any
Lender for purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to paragraph (a) of this Section 5.01, or of the effect of capital
maintained pursuant to paragraph (b) of this Section 5.01, on its costs or rate
of return of maintaining Loans or its obligation to make Loans, or on amounts
receivable by it in respect of Loans, and of the amounts required to compensate
such Lender under this Section 5.01, shall be conclusive, PROVIDED that such
determinations and allocations are made on a reasonable basis.
5.02 LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Eurodollar
Base Rate for any Interest Period:
(a) the Administrative Agent determines, which determination
shall be conclusive, that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of
interest for Eurodollar Loans as provided herein; or
(b) the Majority Lenders determine, which determination shall
be conclusive, and notify the Administrative Agent that the relevant
rates of interest referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof upon the basis of which the rate of
interest for Eurodollar Loans for such Interest Period is to be
determined are not likely adequately to cover the cost to such Lenders
of making or maintaining Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Company and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Company shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.08 hereof. Upon such condition
ceasing to be in effect, the Administrative Agent or the Majority Lenders
(through the Agent), as the case may, shall notify the Company thereof,
whereupon each Lender's Base Rate Loans shall automatically be Converted, on the
date three Business Days after the date of such notice, into Eurodollar Loans.
5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder (and, in the sole opinion of such Lender, the designation of a
different Applicable Lending Office would either not avoid such unlawfulness or
would be disadvantageous to such Lender), then such Lender shall promptly notify
the Company thereof (with a copy to the Administrative Agent) and such Lender's
obligation to make or Continue, or to Convert Base Rate Loans into, Eurodollar
Loans shall be suspended until such time as such Lender may again make and
maintain Eurodollar Loans (in which case the provisions of Section 5.04 hereof
shall be applicable).
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5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any
Lender to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans
into, Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03
hereof, such Lender's Eurodollar Loans shall be automatically Converted into
Base Rate Loans on the last day(s) of the then current Interest Period(s) for
Eurodollar Loans (or, in the case of a Conversion resulting from a circumstance
described in Section 5.03 hereof, on such earlier date as such Lender may
specify to the Company with a copy to the Administrative Agent) and, unless and
until such Lender gives notice as provided below that the circumstances
specified in Section 5.01 or 5.03 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Eurodollar Loans have
been so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Eurodollar Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Eurodollar Loans shall be made or Continued instead as
Base Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be Converted into Eurodollar Loans shall remain as Base Rate
Loans.
If such Lender gives notice to the Company with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave
rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 5.04 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Base Rate and Eurodollar Loans are allocated among the
Lenders ratably (as to principal amounts, Types and Interest Periods) in
accordance with their respective Commitments.
5.05 COMPENSATION. The Company shall pay to the Administrative
Agent for account of any Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender determines is attributable to:
(a) any payment, mandatory or optional prepayment or
Conversion of a Eurodollar Loan made by such Lender for any reason
(including, without limitation, the acceleration of the Loans pursuant
to Section 9 hereof) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Section 6 hereof to be satisfied) to borrow a Eurodollar
Loan from such Lender on the date for such borrowing specified in the
relevant notice of borrowing given pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid,
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such
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Loan (or, in the case of a failure to borrow, the Interest Period for such Loan
that would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Loan provided for herein over (ii) the
amount of interest that otherwise would have accrued on such principal amount at
a rate per annum equal to the interest component of the amount such Lender would
have bid in the London interbank market for Dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities comparable to
such period (as reasonably determined by such Lender).
5.06 U.S. TAXES.
(a) The Company agrees to pay to each Lender that is not a
U.S. Person such additional amounts as are necessary in order that the net
payment of any amount due to such non-U.S. Person hereunder after deduction for
or withholding in respect of any U.S. Taxes imposed with respect to such payment
(or in lieu thereof, payment of such U.S. Taxes by such non-U.S. Person), will
not be less than the amount stated herein to be then due and payable, PROVIDED
that the foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to any Lender hereunder unless such
Lender is, on the date hereof (or on the date it becomes a Lender
hereunder as provided in Section 11.05(b) hereof) and on the date of
any change in the Applicable Lending Office of such Lender, either
entitled to submit a Form 1001 (relating to such Lender and entitling
it to a complete exemption from withholding on all interest to be
received by it hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by such Lender hereunder in
respect of the Loans), or
(ii) to any U.S. Taxes imposed solely by reason of the
failure by such non-U.S. Person to comply with applicable
certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or
connections with the United States of America of such non-U.S. Person
if such compliance is required by statute or regulation of the United
States of America as a precondition to relief or exemption from such
U.S. Taxes.
For the purposes of this Section 5.06(a), (A) "U.S. TAXES" shall mean any
present or future tax, assessment or other charge or levy imposed by or on
behalf of the United States of America or any taxing authority thereof or
therein (but excluding any taxes on the overall net income of a Lender imposed
as a result of a present or former connection between such Lender and the United
States of America or any taxing authority thereof or therein (except a
connection arising solely from such Lender having executed, delivered or
performed its obligations or received a payment under or enforced this Agreement
or the Notes), (B) "FORM 1001" shall mean Form 1001 (Ownership, Exemption, or
Reduced Rate Certificate) of the Department of the Treasury of the United States
of America and (C) "FORM 4224" shall mean Form 4224 (Exemption from Withholding
of Tax on Income Effectively Connected with the Conduct of a Trade or Business
in the United States) of the Department of the Treasury of the United States of
America (or in relation to either such Form such successor and related forms as
may from time to time be adopted by the relevant taxing authorities of the
United States of America to document a claim to which such Form relates). Each
of the Forms referred to in the foregoing clauses (B) and (C) shall include such
successor and related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a claim to which
such Form relates.
(b) Within 30 days after paying any amount to the
Administrative Agent or any Lender from which it is required by law to make any
deduction or withholding, and within 30 days after it is
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required by law to remit such deduction or withholding to any relevant taxing or
other authority, the Company shall deliver to the Administrative Agent for
delivery to such non-U.S. Person evidence satisfactory to such Person of such
deduction, withholding or payment (as the case may be).
5.07 REPLACEMENT OF LENDERS. If any Lender requests
compensation pursuant to Section 5.01, 5.05 or 5.06 hereof, or any Lender's
obligation to make or Continue, or to Convert Loans of any Type into, any other
Type of Loan shall be suspended pursuant to Section 5.01 or 5.03 hereof (any
such Lender so requesting such compensation or whose obligations are so
suspended, being herein called a "RELEVANT LENDER"), the Company, upon three
Business Days notice given when no Default shall have occurred and be
continuing, may require that such Relevant Lender transfer all of its right,
title and interest under this Agreement and such Relevant Lender's Notes to any
bank or other financial institution identified by the Company that is
satisfactory to the Administrative Agent, in its discretion reasonably exercised
(a "PROPOSED LENDER") if (i) such Proposed Lender agrees to assume all of the
obligations of such Relevant Lender hereunder, and to purchase all of such
Relevant Lender's Loans hereunder and under the other Basic Documents for
consideration equal to the aggregate outstanding principal amount of such
Relevant Lender's Loans, together with interest thereon to the date of such
purchase, and satisfactory arrangements are made for payment to such Relevant
Lender of all other amounts payable hereunder to such Relevant Lender on or
prior to the date of such transfer (including any fees accrued hereunder and any
amounts that would be payable under Section 5.05 hereof as if all of such
Relevant Lender's Loans were being prepaid in full on such date) and (ii) to the
extent such Proposed Lender has requested compensation pursuant to Section 5.01,
5.05 or 5.06 hereof, such Proposed Lender's aggregate requested compensation, if
any, paid pursuant to Section 5.01, 5.05 or 5.06 hereof with respect to such
Relevant Lender's Loans is lower than that of the Relevant Lender. Subject to
the provisions of Section 11.06(b) hereof, such Proposed Lender shall be a
"Lender" for all purposes hereunder. Without prejudice to the survival of any
other agreement of the Company hereunder, the agreements of the Company
contained in Sections 5.01, 5.05, 5.06 and 11 hereof (without duplication of any
payments made to such Relevant Lender by the Company or the Proposed Lender)
shall survive for the benefit of such Relevant Lender under this Section 5.07
with respect to the time prior to such replacement.
Section 6. CONDITIONS PRECEDENT.
6.01 EFFECTIVENESS. The effectiveness of this Agreement is
subject to the conditions precedent that the Administrative Agent shall have
received the following documents (with sufficient copies for each Lender), each
of which shall be satisfactory to the Administrative Agent (and to the extent
specified below, to each Lender) in form and substance:
(a) THIS AGREEMENT. This Agreement, duly executed and
delivered by the Company, each Lender and the Administrative Agent.
(b) PLEDGE AGREEMENTS. The Company Pledge Agreement, duly
executed and delivered by the Company and the Administrative Agent,
and the Parent Pledge Agreement, duly executed and delivered by the
Parent and the Administrative Agent and the certificates identified in
Annex 1 thereto, accompanied by undated stock powers executed in
blank. In addition, the Company and the Parent shall have taken such
other action (including, without limitation, delivering to the
Administrative Agent, for filing, Uniform Commercial Code financing
statements) as the Administrative Agent shall have requested in order
to perfect the security interests created pursuant to the Pledge
Agreements.
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(c) PUT AGREEMENT. The Put Agreement, duly executed and
delivered by the State Auto Obligors and the Administrative Agent.
(d) STANDBY PURCHASE AGREEMENT. The Standby Purchase Agreement,
duly executed and delivered by the State Auto Obligors and the
Company.
(e) CORPORATE DOCUMENTS. Certified copies of the charter and
by-laws (or equivalent documents) of each of the Company and the
Parent (each, an "OBLIGOR") and of all corporate
authority for such Obligor (including, without limitation, board of
director resolutions and evidence of the incumbency, including specimen
signatures, of officers) with respect to the execution, delivery and
performance of such of the Basic Documents to which such Obligor is
intended to be a party and each other document to be delivered by the
Company from time to time in connection herewith and the Loans
hereunder (and the Administrative Agent and each Lender may
conclusively rely on such certificate until it receives notice in
writing from such Obligor to the contrary).
(f) OPINION OF COUNSEL TO THE COMPANY. An opinion, dated the
Closing Date, of Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel
to the Company and the Parent, substantially in form of Exhibit F
hereto and covering such other matters as the Administrative Agent or
any Lender may reasonably request (and the Company hereby instructs
such counsel to deliver such opinion to the Lenders and the
Administrative Agent).
(g) OPINION OF SPECIAL NEW YORK COUNSEL TO CHASE. An opinion,
dated the Closing Date, of Milbank, Tweed, Hadley & McCloy, special New
York counsel to Chase, substantially in the form of Exhibit G hereto
(and Chase hereby instructs such counsel to deliver such opinion to the
Lenders).
(h) DOCUMENTS REQUIRED BY PUT AGREEMENT. Each of the
documents required to be delivered by State Auto Mutual pursuant to
Section 4.18 of the Put Agreement.
(i) OTHER DOCUMENTS. Such other documents as the
Administrative Agent or any Lender or special New York counsel to
Chase may reasonably request.
The effectiveness of this Agreement is also subject to the payment by the
Company of such fees as the State Auto Obligors shall have agreed to pay or
deliver to any Lender or the Administrative Agent in connection herewith,
including, without limitation, the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to Chase, in connection with
the negotiation, preparation, execution and delivery of this Agreement and the
other Basic Documents and the making of the Loans hereunder (to the extent that
statements for such fees and expenses have been delivered to State Auto Mutual).
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6.02 INITIAL AND SUBSEQUENT LOANS. The obligation of the
Lenders to make any Loan to the Company upon the occasion of each borrowing
hereunder (including the initial borrowing) is subject to the further conditions
precedent that:
(a) the Administrative Agent shall have received a Borrowing
Notice, duly completed and executed;
(b) each Lender shall have received a Note, duly completed
and executed for such Lender;
(c) concurrently therewith, (i) the Company shall receive
Preferred Stock having an aggregate liquidation preference equal to the
aggregate principal amount of such Loan and shall deliver the same,
together with an undated stock power executed in blank, to the
Administrative Agent in pledge subject to the Company Pledge Agreement
and (ii) all of the conditions precedent to the purchase of the
Preferred Stock under the Standby Purchase Agreement shall be satisfied
(and the Administrative Agent shall receive evidence satisfactory to it
that such conditions precedent shall be so satisfied) or (with the
consent of the Administrative Agent and each Lender) waived;
(d) the Administrative Agent shall have received each of the
documents required to be delivered by State Auto Mutual pursuant to
Section 4.19 of the Put Agreement;
(e) the Administrative Agent shall have received such other
documents as the Administrative Agent or any Lender or special New York
counsel to Chase may reasonably request (including, without limitation,
opinions of counsel to the State Auto Obligors relating to the issuance
of the Preferred Stock); and
(f) both immediately prior to the making of such Loan and also
after giving effect thereto and to the intended use thereof:
(i) no Default shall have occurred and be continuing;
and
(ii) the representations and warranties made by the
Company in Section 7 hereof shall be true and complete on and
as of the date of the making of such Loan with the same force
and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date).
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Section 7. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Administrative Agent and the Lenders that:
7.01 CORPORATE EXISTENCE. The Company: (a) is a corporation,
partnership or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (b) has all
requisite corporate or other power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; (c) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary; and (d) has no
Subsidiaries.
7.02 FINANCIAL CONDITION. The Company has heretofore furnished
to each of the Lenders the pro forma balance sheet of the Company as at the date
hereof. Such pro forma balance sheet presents fairly in all material respects
the financial condition of the Company as at said date in accordance with GAAP.
The Company does not have on the date hereof and will not have on the Closing
Date any material contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
said pro forma balance sheet as at said date. Since the date of said pro forma
balance sheet, there has been no material adverse change in the condition
(financial or otherwise), operations, business or prospects of the Company from
that set forth in said pro forma balance sheet as at said date.
7.03 LITIGATION. There are no legal or arbitral proceedings,
or any proceedings by or before any governmental or regulatory authority or
agency, now pending or (to the knowledge of the Company) threatened against the
Company or any of its Property.
7.04 NO BREACH. None of the execution and delivery of this
Agreement and the Notes and the other Credit Documents to which is a party, the
consummation of the transactions herein and therein contemplated or compliance
with the terms and provisions hereof and thereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws of the
Company, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or
instrument to which the Company is a party or by which it or any of its Property
is bound or to which it is subject, or constitute a default under any such
agreement or instrument, or (except for the Liens created pursuant to the
Company Pledge Agreement) result in the creation or imposition of any Lien upon
any Property of the Company pursuant to the terms of any such agreement or
instrument.
7.05 ACTION. The Company has all necessary corporate power,
authority and legal right to execute, deliver and perform its obligations under
each of the Credit Documents to which it is a party; the execution, delivery and
performance by the Company of each of the Credit Documents to which it is a
party have been duly authorized by all necessary corporate action on its part
(including, without limitation, any required shareholder approvals); and this
Agreement has been duly and validly executed and delivered by the Company and
constitutes, and each of the Notes and the other Credit Documents to which it is
a party when executed and delivered (in the case of the Notes, for value) will
constitute, its legal, valid and binding obligation, enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(b) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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7.06 APPROVALS. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency, or any securities exchange, are necessary for the execution, delivery
or performance by the Company of this Agreement or any of the other Credit
Documents to which it is a party or for the legality, validity or enforceability
hereof or thereof.
7.07 TAXES. As of the date hereof, the Company has not been
required to file any Federal or other tax returns. As of the date of each
borrowing, the Company will have filed all Federal income tax returns and all
other material tax returns (if any) that are required to be filed by it and has
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company. The charges, accruals and reserves on the books of the
Company in respect of taxes and other governmental charges are, in the opinion
of the Company, adequate.
7.08 USE OF CREDIT. No part of the proceeds of any Loan will
be used to buy or carry Margin Stock (as such term is defined in Regulations G,
U and X) in violation of Regulation G, U or X. The Preferred Stock does not
constitute Margin Stock (as so defined).
7.09 SPECIAL PURPOSE COMPANY. On the date hereof, the
Company is not engaged in any business or transaction other than as permitted by
Section 8.04 hereof.
7.10 CAPITALIZATION. The authorized capital stock of the
Company consists, on the date hereof, of an aggregate of 1000 shares of common
stock, no par value, of which 1000 shares are duly and validly issued and
outstanding, each of which shares is fully paid and nonassessable. As of the
date hereof, there are no outstanding Equity Rights with respect to the Company
and there are no outstanding obligations of the Company to repurchase, redeem,
or otherwise acquire any shares of capital stock of the Company nor are there
any outstanding obligations of the Company to make payments to any Person, such
as "phantom stock" payments, where the amount thereof is calculated with
reference to the fair market value or equity value of the Company.
7.11 ERISA. The Company does not have any ERISA Affiliates.
The Company does not maintain or contribute to any Plan or Multiemployer Plan.
Section 8. COVENANTS OF THE COMPANY. The Company covenants and
agrees with the Lenders and the Administrative Agent that, so long as any
Commitment or Loan is outstanding and until payment in full of all amounts
payable by the Company hereunder:
8.01 FINANCIAL STATEMENTS, ETC. The Company shall deliver to
each of the Lenders:
(a) as soon as available and in any event within 45 days after
the end of each quarterly fiscal period of each fiscal year of the
Company, statements of income retained earnings and cash flows of the
Company for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related
balance sheet of the Company as at the end of such period, setting
forth in each case in comparative form the corresponding figures for
the corresponding periods in the preceding fiscal year (except that,
(i) in the case of balance sheets, such comparison shall be to the last
day of the prior fiscal year and (ii) comparative information shall not
be required in the absence of a preceding fiscal year or a
corresponding period in a preceding fiscal year), accompanied by a
certificate of a senior officer of the Company, which certificate shall
state that said financial statements present fairly in all
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material respects the financial condition and results of operations of
the Company in accordance with GAAP, as at the end of, and for, such
period (subject to normal year-end audit adjustments);
(b) promptly after the Company knows or has reason to believe
that any Default has occurred, a notice of such Default stating that
such notice is a "Notice of Default" and describing the same in
reasonable detail and, together with such notice or as soon thereafter
as possible, a description of the action that the Company has taken or
proposes to take with respect thereto;
(c) promptly after its receipt thereof, copies of all written
notices, requests, directions, instructions or other communications
received by the Company from any State Auto Obligor under the Standby
Purchase Agreement or otherwise; and
(d) from time to time such other information regarding the
financial condition, operations, business or prospects of the Company
as any Lender or the Administrative Agent may reasonably request.
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) above, a certificate of a senior
officer of the Company to the effect that no Default has occurred and is
continuing (or, if any Default has occurred and is continuing, describing the
same in reasonable detail and describing the action that the Company has taken
or proposes to take with respect thereto).
8.02 LITIGATION. The Company will promptly give to each Lender
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting the Company.
8.03 EXISTENCE, ETC. The Company will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises;
(b) comply in all material respects with the requirements of
all applicable laws, rules, regulations and orders of governmental or
regulatory authorities;
(c) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any
of its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained;
(d) maintain all of its Properties used or useful in its
business in good working order and condition, ordinary wear and tear
excepted;
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(e) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP; and
(f) permit representatives of any Lender or the Administrative
Agent, during normal business hours, to examine, copy and make extracts
from its books and records, to inspect any of its Properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by such Lender or the Administrative Agent (as the
case may be).
8.04 LIMITED PURPOSE COMPANY. Notwithstanding anything herein
to the contrary, the Company shall not:
(a) create, incur, assume or have outstanding any Indebtedness
or other liabilities or obligations except for obligations under or in
respect of the Credit Documents;
(b) own any Property except for the Preferred Stock and
dividends thereon;
(c) enter into any transaction of merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution);
(d) create, incur or permit to exist any Lien (other than the
Lien created by the Company Pledge Agreement) on or in respect of, or
convey, sell, lease, assign, transfer or otherwise dispose of, any of
its Property;
(e) make or hold any Investment, except operating deposit
accounts with banks and Permitted Investments;
(f) declare or make any Dividend Payment at any time; or
(g) otherwise engage in any business or transaction other than
the transactions contemplated by (and consistent with) the Basic
Documents and incidental thereto.
8.05 USE OF PROCEEDS. The Company will use the proceeds of the
Loans hereunder solely to finance the purchase from State Auto Financial of the
Preferred Stock under the Standby Purchase Agreement (in compliance with all
applicable legal and regulatory requirements); PROVIDED that neither the
Administrative Agent nor any Lender shall have any responsibility as to the use
of any of such proceeds.
8.06 MODIFICATIONS OF CERTAIN DOCUMENTS. The Company will not
consent to any modification, supplement or waiver of any of the provisions of,
or assignment of any rights or obligations of any other Person under, any Basic
Document without the prior consent of the Administrative Agent (with the
approval of the Majority Lenders).
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Section 9. EVENTS OF DEFAULT. If one or more of the following
events (herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) The Company shall default in the payment when due (whether
at stated maturity or upon mandatory or optional prepayment) of any
principal of or interest on any Loan, any fee or any other amount
payable by it hereunder or under any other Credit Document to which it
is a party; or
(b) Any representation, warranty or certification made or
deemed made herein or in any other Credit Document to which the Company
or the Parent is a party (or in any modification or supplement hereto
or thereto) by the Company or the Parent, or any certificate furnished
to any Lender or the Administrative Agent pursuant to the provisions
hereof or thereof, shall prove to have been false or misleading as of
the time made or furnished in any material respect; or
(c) The Company shall default in the performance of any of its
obligations under any of Sections 8.04, 8.05 or 8.06 hereof; the
Company or the Parent shall default in the performance of any of its
obligations under the Company Pledge Agreement or the Parent Pledge
Agreement, as the case may be; or the Company or the Parent shall
default in the performance of any of its other obligations in this
Agreement or any other Credit Document to which it is a party and such
default shall continue unremedied for a period of 30 or more days after
the occurrence of such default; or
(d) The Company or the Parent shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts
become due; or
(e) The Company or the Parent shall (i) apply for or consent
to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its Property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement or winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi)
take any corporate action for the purpose of effecting any of the
foregoing; or
(f) A proceeding or case shall be commenced, without the
application or consent of the Company or the Parent, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Company or
the Parent or of all or any substantial part of its respective Property
or (iii) similar relief in respect of the Company or the Parent under
any law relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving
or ordering any of the
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foregoing shall be entered and continue unstayed and in effect, for a
period of 60 or more days; or an order for relief against the Company
shall be entered in an involuntary case under the Bankruptcy Code; or
(g) The Parent shall fail to own and control, beneficially
(free and clear of all Liens other than Liens created pursuant to the
Basic Documents), 100% of the capital stock issued by the Company
(irrespective of whether or not at the time securities or other
ownership interests issued by the Company or any other class or classes
might have voting power by reason of the happening of any contingency);
or
(h) The Liens created by the Pledge Agreements shall at any
time not constitute valid and perfected Liens on the collateral
intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein)
in favor of the Administrative Agent, free and clear of all other
Liens, or, except for expiration in accordance with its terms, either
Pledge Agreement shall for whatever reason be terminated or cease to be
in full force and effect, or the enforceability thereof shall be
contested by the Company or the Parent; or
(i) A Put Event under, and as defined in, the Put Agreement;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (e) or (f) of this Section 9 with respect to the Company, the
Administrative Agent may and, upon request of the Majority Lenders, will, by
notice to the Company, terminate the Commitments and/or declare the principal
amount then outstanding of, and the accrued interest on, the Loans and all other
amounts payable by the Company hereunder and under the Notes (including, without
limitation, any amounts payable under Section 5.05 hereof) to be forthwith due
and payable, whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company; and (2) in the case of the occurrence of
an Event of Default referred to in clause (e) or (f) of this Section 9 with
respect to the Company, the Commitments shall automatically be terminated and
the principal amount then outstanding of, and the accrued interest on, the Loans
and all other amounts payable by the Company hereunder and under the Notes
(including, without limitation, any amounts payable under Section 5.05 hereof)
shall automatically become immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Company.
Without limiting the rights and remedies of the Lenders under
Section 9 hereof, in the event that any Event of Default shall have occurred and
be continuing, the Administrative Agent may (and at the request of the Majority
Lenders shall) give a notice to the Company specifying that Eurodollar Loans
shall no longer be available hereunder, in which event all Loans shall be
Converted (on the last day(s) of the respective Interest Periods therefor) into
or Continued as, as the case may be, Base Rate Loans.
Section 10. THE ADMINISTRATIVE AGENT.
10.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Credit Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this
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Agreement and of the other Credit Documents, together with such other powers as
are reasonably incidental thereto. The Administrative Agent (which term as used
in this sentence and in Section 10.05 and the first sentence of Section 10.06
hereof shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Credit
Documents, and shall not by reason of this Agreement or any other
Credit Document be a trustee for any Lender;
(b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement
or in any other Credit Document, or in any certificate or other
document referred to or provided for in, or received by any of them
under, this Agreement or any other Credit Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any Note or any other Credit Document or any other
document referred to or provided for herein or therein or for any
failure by the Company or any other Person to perform any of its
obligations hereunder or thereunder;
(c) shall not, except to the extent expressly instructed by
the Majority Lenders with respect to collateral security under the
Pledge Agreements, be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Credit Document;
and
(d) shall not be responsible for any action taken or omitted
to be taken by it hereunder or under any other Credit Document or under
any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct.
The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Administrative Agent may
deem and treat the payee of a Note as the holder thereof for all purposes hereof
unless and until a notice of the assignment or transfer thereof shall have been
filed with the Administrative Agent, together with the consent of the Company to
such assignment or transfer (to the extent required by Section 11.05(b) hereof).
Each Lender hereby approves the terms of the Put Agreement and agrees to be
bound thereby including, without limitation, Section 5.10(b) of the Put
Agreement and authorizes and directs the Administrative Agent to enter into the
Put Agreement on behalf of such Lender.
10.02 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including, without limitation, any thereof by telephone,
telecopy, telegram or cable) reasonably believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Administrative Agent. As to any matters not
expressly provided for by this Agreement or any other Credit Document, the
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions
given by the Majority Lenders, and such instructions of the Majority Lenders and
any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders.
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10.03 DEFAULTS. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received notice from a Lender or the Company specifying
such Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the
Lenders. The Administrative Agent shall (subject to Section 10.07 hereof) take
such action with respect to such Default as shall be directed by the Majority
Lenders, PROVIDED that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interest of the Lenders
except to the extent that this Agreement expressly requires that such action be
taken, or not be taken, only with the consent or upon the authorization of the
Majority Lenders or all of the Lenders.
10.04 RIGHTS AS A LENDER. With respect to its Commitment and
the Loans made by it, Chase (and any successor acting as Administrative Agent)
in its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. Chase (and any successor acting as Administrative Agent)
and its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Company (and any of its
Affiliates) as if it were not acting as the Administrative Agent, and Chase (and
any such successor) and its affiliates may accept fees and other consideration
from the Company for services in connection with this Agreement or otherwise
without having to account for the same to the Lenders.
10.05 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 5.03 of the Put
Agreement, but without limiting the obligations of the State Auto Obligors under
said Section 5.03) ratably in accordance with the aggregate principal amount of
the Loans held by the Lenders (or, if no Loans are at the time outstanding,
ratably in accordance with their respective Commitments), for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent (including
by any Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Credit Document or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses that the State Auto Obligors are obligated to pay under
Section 5.03 of the Put Agreement, but excluding, unless a Default has occurred
and is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, PROVIDED that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
10.06 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or under any other Credit Document. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance
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by the Company, the Parent or any State Auto Obligor of this Agreement or any of
the other Basic Documents or any other document referred to or provided for
herein or therein or to inspect the Properties or books of the Company. Except
for notices, reports and other documents and information expressly required to
be furnished to the Lenders by the Administrative Agent hereunder or under the
Pledge Agreements, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Company (or any
of its affiliates) that may come into the possession of the Administrative Agent
or any of its affiliates.
10.07 FAILURE TO ACT. Except for action expressly required of
the Administrative Agent hereunder and under the other Credit Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
10.08 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Company, and the Administrative Agent may be
removed at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, that shall be a bank that
has an office in New York, New York with a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Section 10
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent.
10.09 CONSENTS UNDER OTHER CREDIT DOCUMENTS. Except as
otherwise provided in Section 11.03 hereof with respect to this Agreement, the
Administrative Agent may, with the prior consent of the Majority Lenders (but
not otherwise), consent to any modification, supplement or waiver under any of
the other Credit Documents or the Standby Purchase Agreement, PROVIDED that
without the prior consent of each Lender, the Administrative Agent shall not
(except as provided herein or in the other Credit Documents) terminate any
Credit Document, release either State Auto Obligor from its liability under the
Put Agreement, release any collateral or otherwise terminate any Lien under any
Credit Document providing for collateral security, agree to additional
obligations being secured by such collateral security (unless the Lien in for
such additional obligation shall be junior to the Lien in favor of the other
obligations secured by such Credit Document) or modify, supplement or waive any
provision in Section 3 of the Standby Purchase Agreement.
Section 11. MISCELLANEOUS.
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11.01 WAIVER. No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement or
any Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement or any Note
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
11.02 NOTICES. All notices, requests and other communications
provided for herein (including, without limitation, any modifications of, or
waivers, requests or consents under, this Agreement) shall be given or made in
writing (including, without limitation, by telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof); or, as to any party, at such other address as shall be designated
by such party in a notice to each other party. Except as otherwise provided in
this Agreement, all such communications shall be deemed to have been duly given
when transmitted by telecopier or personally delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed as aforesaid.
11.03 AMENDMENTS, ETC. Except as otherwise expressly provided
in this Agreement, any provision of this Agreement may be modified or
supplemented only by an instrument in writing signed by the Company and the
Majority Lenders, or by the Company and the Administrative Agent acting with the
consent of the Majority Lenders, and any provision of this Agreement may be
waived by the Majority Lenders or by the Administrative Agent acting with the
consent of the Majority Lenders; PROVIDED that: (a) no modification, supplement
or waiver shall, unless by an instrument signed by all of the Lenders or by the
Administrative Agent acting with the consent of all of the Lenders: (i) (except
as provided in Section 2.10 hereof) increase, or extend the term of, the
Commitments, or extend the time or waive any requirement for the reduction or
termination of the Commitments, (ii) extend the date fixed for the payment of
principal of or interest on any Loan or any fee hereunder, (iii) reduce the
amount of any such payment of principal, (iv) reduce the rate at which interest
is payable thereon or any fee is payable hereunder, (v) alter the rights or
obligations of the Company to prepay Loans, (vi) alter the manner in which
payments or prepayments of principal, interest or other amounts hereunder shall
be applied as between the Lenders or Types of Loans, (vii) alter the terms of
this Section 11.03, (viii) modify the definition of the term "Majority Lenders"
or modify in any other manner the number or percentage of the Lenders required
to make any determinations or waive any rights hereunder or to modify any
provision hereof, or (ix) waive any of the conditions precedent set forth in
Section 6.01 hereof; and (b) any modification or supplement of Section 10
hereof, or of any of the rights or duties of the Administrative Agent hereunder,
shall require the consent of the Administrative Agent.
11.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.05 ASSIGNMENTS AND PARTICIPATIONS.
(a) The Company may not assign any of its rights or
obligations hereunder or under the Notes without the prior consent of all of the
Lenders and the Administrative Agent.
(b) Each Lender may assign any of its Loans, its Notes, and
its Commitment (but only with the consent of, in the case of its outstanding
Commitment, the Company, State Auto Mutual and the Administrative Agent,
provided that no such consent shall be unreasonably withheld); PROVIDED that
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(i) no such consent by the Company, the Administrative
Agent or the State Auto Obligors shall be required in the case of any
assignment to another Lender;
(ii) except to the extent the Company and the
Administrative Agent shall otherwise consent, any such partial
assignment (other than to another Lender) shall be in an amount at
least equal to $5,000,000;
(iii) each such assignment by a Lender of its Loans,
Notes or Commitment shall be made in such manner so that the same
portion of its Loans, Notes and Commitment is assigned to the
respective assignee; and
(iv) upon each such assignment, the assignor and
assignee shall deliver to the Company and the Administrative Agent an
Assignment and Acceptance substantially in the form of Exhibit I
hereto, duly completed and executed.
Upon execution and delivery by the assignor and the assignee to the Company and
the Administrative Agent of such Assignment and Acceptance, consent thereto by
the Company, the Administrative Agent and State Auto Mutual to the extent
required above and acceptance thereof by the Administrative Agent, the assignee
shall have, to the extent of such assignment (unless otherwise consented to by
the Company and the Administrative Agent), the obligations, rights and benefits
of a Lender hereunder holding the Commitment and Loans (or portions thereof)
assigned to it and specified in such Assignment and Acceptance (in addition to
the Commitment and Loans, if any, theretofore held by such assignee) and the
assigning Lender shall, to the extent of such assignment, be released from the
Commitment (or portion thereof) so assigned. Upon each such assignment the
assigning Lender shall pay the Administrative Agent an assignment fee of $3,000.
(c) A Lender may sell or agree to sell to one or more other
Persons (each a "PARTICIPANT") a participation in all or any part of any Loans
held by it, or in its Commitment, PROVIDED that such Participant shall not have
any rights or obligations under this Agreement or any Note or any other Credit
Document (the Participant's rights against such Lender in respect of such
participation to be those set forth in the agreements executed by such Lender in
favor of the Participant). All amounts payable by the Company to any Lender
under Section 5 hereof in respect of Loans held by it, and its Commitment, shall
be determined as if such Lender had not sold or agreed to sell any
participations in such Loans and Commitment, and as if such Lender were funding
each of such Loan and Commitment in the same way that it is funding the portion
of such Loan and Commitment in which no participations have been sold. In no
event shall a Lender that sells a participation agree with the Participant to
take or refrain from taking any action hereunder or under any other Credit
Document except that such Lender may agree with the Participant that it will
not, without the consent of the Participant, agree to (i) increase or extend the
term of such Lender's Commitment, (ii) extend the date fixed for the payment of
principal of or interest on the related Loan or Loans or any portion of any fee
hereunder payable to the Participant, (iii) reduce the amount of any such
payment of principal, (iv) reduce the rate at which interest is payable thereon,
or any fee hereunder payable to the Participant, to a level below the rate at
which the Participant is entitled to receive such interest or fee or (v) consent
to any modification, supplement or waiver hereof or of any of the other Credit
Documents to the extent that the same, under Section 10.09 or 11.03 hereof,
requires the consent of each Lender.
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(d) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 11.05, any Lender may
(without notice to the Company, the State Auto Obligors, the Administrative
Agent or any other Lender and without payment of any fee) (i) assign and pledge
all or any portion of its Loans 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 and (ii) assign all or any portion of its rights
under this Agreement and its Loans and its Notes to an affiliate. No such
assignment shall release the assigning Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning the
Company in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants), subject,
however, to the provisions of Section 11.11(b) hereof.
(f) Anything in this Section 11.05 to the contrary
notwithstanding, no Lender may assign or participate any interest in any Loan
held by it hereunder to the Company or any of its Affiliates or to any State
Auto Obligor (except pursuant to the Put Agreement) without the prior consent of
each Lender.
11.06 SURVIVAL. The obligations of the Company under Sections
5.01, 5.05 and 5.06 hereof, and the obligations of the Lenders under Section
10.05 hereof, shall survive the repayment of the Loans and the termination of
the Commitments (including, with respect to any Lender that does not agree to
the extension of the Commitment Termination Date in accordance with Section 2.10
hereof, the repayment of the Loans made by such Lender and the termination of
the Commitment of such Lender on the applicable Existing Commitment Termination
Date before giving effect to such extension) and, in the case of any Lender that
may assign any interest in its Commitment or Loans hereunder, shall survive the
making of such assignment, notwithstanding that such assigning Lender may cease
to be a "Lender" hereunder. In addition, each representation and warranty made,
or deemed to be made by a notice of any Loan, herein or pursuant hereto shall
survive the making of such representation and warranty, and no Lender shall be
deemed to have waived, by reason of making any Loan, any Default that may arise
by reason of such representation or warranty proving to have been false or
misleading, notwithstanding that such Lender or the Administrative Agent may
have had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Loan was made.
11.07 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
11.08 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
11.09 GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement and the Notes shall be governed by, and construed in accordance with,
the law of the State of New York. The Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of the Supreme Court of the State of New York sitting in New York
County (including its Appellate Division), and of any other appellate court in
the State of New York, for the purposes of all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby. The
Company hereby irrevocably waives, to the fullest extent permitted by applicable
law, any objection that it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
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11.10 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company (in connection with this Agreement or otherwise) by any Lender or by
one or more subsidiaries or affiliates of such Lender and the Company hereby
authorizes each Lender to share any information delivered to such Lender by the
Company pursuant to this Agreement, or in connection with the decision of such
Lender to enter into this Agreement, to any such subsidiary or affiliate, it
being understood that any such subsidiary or affiliate receiving such
information shall be bound by the provisions of paragraph (b) below as if it
were a Lender hereunder. Such authorization shall survive the repayment of the
Loans and the termination of the Commitments.
(b) Each Lender and the Administrative Agent agrees (on behalf
of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Company pursuant to this Agreement
that is identified by the Company as being confidential at the time the same is
delivered to the Lenders or the Administrative Agent, PROVIDED that nothing
herein shall limit the disclosure of any such information (i) after such
information shall have become public (other than through a violation of this
Section 11.11), (ii) to the extent required by statute, rule, regulation or
judicial process, (iii) to counsel for any of the Lenders or the Administrative
Agent, (iv) to bank examiners (or any other regulatory authority having
jurisdiction over any Lender or the Administrative Agent), or to auditors or
accountants, (v) to the Administrative Agent or any other Lender (or to Chase
Securities Inc.), (vi) in connection with any litigation to which any one or
more of the Lenders or the Administrative Agent is a party, or in connection
with the enforcement of rights or remedies hereunder or under any other Credit
Document, (vii) to a subsidiary or affiliate of such Lender as provided in
paragraph (a) above or (viii) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first executes and delivers to the respective Lender a
Confidentiality Agreement substantially in the form of Exhibit H hereto (or
executes and delivers to such Lender an acknowledgement to the effect that it is
bound by the provisions of this Section 11.11(b), which acknowledgement may be
included as part of the respective assignment or participation agreement
pursuant to which such assignee or participant acquires an interest in the Loans
hereunder); PROVIDED, FURTHER, that in no event shall any Lender or the
Administrative Agent be obligated or required to return any materials furnished
by the Company. The obligations of any assignee that has executed a
Confidentiality Agreement in the form of Exhibit H hereto shall be superseded by
this Section 11.11 upon the date upon which such assignee becomes a Lender
hereunder pursuant to Section 11.05(b) hereof.
11.12 NO RECOURSE. The obligations of the Company and Parent
under the Basic Documents shall be satisfied solely from the Preferred Stock and
the stock required to be pledged to the Administrative Agent and Lenders under
the Parent Pledge Agreement and the proceeds thereof. Moreover, no recourse
shall be had for any obligation owing to any Lender or the Administrative Agent
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under any Basic Document or for the payment of any fee due to any Lender or the
Administrative Agent under any Basic Document or any other obligation or claim
arising out of or based upon any Basic Document against any stockholder,
employee, officer, director, affiliate or incorporator of the Company, the
Parent or Lord Securities Corporation based on their status as such or their
actions in connection therewith, except to the extent resulting from the fraud
or willful misconduct of such stockholder, employee, officer, director,
affiliate or incorporator, as the case may be. The provisions of this section
shall survive the termination of any or all Basic Documents and, with respect to
any Lender or the Administrative Agent, the resignation or replacement thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
SAF FUNDING CORPORATION
By_________________________
Title:
Address for Notices:
SAF Funding Corporation
2 Wall Street
New York, New York 10005
Attention: Kevin Burns
Telecopier No.: 212-346-9012
Telephone No.: 212-346-9007
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LENDERS
-------
COMMITMENT THE CHASE MANHATTAN BANK
----------
$13,000,000
By_________________________
Title:
Lending Office for all Loans:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Address for Notices:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Monique Parker
Telecopier No.: 212-552-5231
Telephone No.: 212-552-7697
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COMMITMENT BANK ONE, COLUMBUS, NA
----------
$11,000,000
By_________________________
Title:
Lending Office for all Loans:
Bank One, Columbus, NA
100 East Broad Street-7th Floor
Columbus, OH 43271
Address for Notices:
Bank One, Columbus, NA
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100 East Broad Street-7th Floor
Columbus, OH 43271
Attention: Dave Hammond
Telecopier No.: 614-248-5518
Telephone No.: 614-248-5764
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- 46 -
Commitment CREDIT LYONNAIS
----------
$11,000,000
By_________________________
Title:
Lending Office for all Loans:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Address for Notices:
Credit Lyonnais New York Branch
48
- 47 -
1301 Avenue of the Americas
New York, NY 10019
Attention: Peter Rassmusen, VP
Telecopier No.: 212-261-3401
Telephone No.: 212-261-7718
49
- 48 -
Commitment DRESDNER BANK AG NEW YORK BRANCH
----------
$11,000,000
AND GRAND CAYMAN BRANCH
By_________________________
Title:
By_________________________
Title:
Lending Office for all Loans:
Dresdner Bank AG
New York Branch
75 Wall Street
50
-49-
New York, NY 10005-2889
Address for Notices:
Dresdner Bank AG
New York Branch
75 Wall Street
New York, NY 10005-2889
Attention: Lora Lam
Telecopier No.: 212-429-2130
Telephone No.: 212-429-2188
51
- 50 -
Commitment FLEET BANK
----------
$11,000,000
By_________________________
Title:
Lending Office for all Loans:
Fleet Bank
777 Main Street
Hartford, CT 06115
Address for Notices:
Fleet Bank
52
- 51 -
777 Main Street
Hartford, CT 06115
Attention: Bruce Gregory
Telecopier No.: 860-986-1264
Telephone No.: 860-986-2809
53
- 52 -
Commitment KEYBANK NATIONAL ASSOCIATION
----------
$11,000,000
By_________________________
Title:
Lending Office for all Loans:
KeyBank National Association
127 Public Square
Cleveland, OH 44114-1306
Address for Notices:
KeyBank National Association
54
- 53 -
127 Public Square
Cleveland, OH 44114-1306
Attention:
Kathy Koenig,
Large Corporate Dept., OH-01-27-0606
Telecopier No.: 216-689-4981
Telephone No.: 216-689-4228
55
- 54 -
Commitment MELLON BANK, N.A.
----------
$11,000,000
By_________________________
Title:
Lending Office for all Loans:
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Address for Notices:
Mellon Bank, N.A.
56
- 55 -
One Mellon Center - Room 370
Pittsburgh, PA 15258
Attention: Susan M. Whitewood
Telecopier No.: 412-234-8087
Telephone No.: 412-234-7112
57
- 56 -
Commitment UNION BANK OF CALIFORNIA, N.A.
----------
$11,000,000
By_________________________
Title:
Lending Office for all Loans:
Union Bank of California, N.A.
550 S. Hope Street
Los Angeles, CA 90071
Address for Notices:
Union Bank of California, N.A.
58
- 57 -
550 S. Hope Street
Los Angeles, CA 90071
Attention: James R. Fothergill
Telecopier No.: 213-243-3552
Telephone No.: 213-243-3542
59
- 58 -
Commitment NATIONAL CITY BANK OF COLUMBUS
----------
$10,000,000
By_________________________
Title:
Lending Office for all Loans:
National City Bank of Columbus
155 East Broad Street
Columbus, OH 43251-0061
Address for Notices:
National City Bank of Columbus
60
- 59 -
155 East Broad Street
Columbus, OH 43251-0061
Attention: Joseph M. Jester
Telecopier No.: 614-463-8025
Telephone No.: 614-463-8658
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- 60 -
THE CHASE MANHATTAN BANK
as Administrative Agent
By_________________________
Title:
Address for Notices to
Chase as Administrative Agent:
The Chase Manhattan Bank
c/o Agent Bank Services Group
140 East 45th Street, 29th Floor
New York, New York 10017
Telecopier No.: (212) 622-0122
Telephone No.: (212) 622-0004
62
-61-
EXHIBIT A to the
Credit Agreement
[Form of Note]
PROMISSORY NOTE
$_______________ __________ __, 199_
New York, New York
FOR VALUE RECEIVED, SAF FUNDING CORPORATION, a Delaware
corporation (the "COMPANY"), hereby promises to pay to __________________ (the
"LENDER"), for account of its respective Applicable Lending Offices provided for
by the Credit Agreement referred to below, at the principal office of The Chase
Manhattan Bank in New York, New York, the principal sum of _______________
Dollars (or such lesser amount as shall equal the aggregate unpaid principal
amount of the Loans made by the Lender to the Company under the Credit
Agreement), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Loan, at such office, in like money and funds, for the period commencing on
the date of such Loan until such Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Loan made by the Lender to the Company, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, endorsed by the
Lender on the schedule attached hereto or any continuation thereof, PROVIDED
that the failure of the Lender to make any such recordation (or any error by
such Lender in making any such recordation) or endorsement shall not affect the
obligations of the Company to make a payment when due of any amount owing under
the Credit Agreement or hereunder in respect of the Loans made by the Lender.
This Note is one of the Notes referred to in the Credit
Agreement dated as of August 16, 1996 (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT") between the Company, the
lenders party thereto (including the Lender) and The Chase Manhattan Bank, as
Administrative Agent, and evidences Loans made by the Lender thereunder. Terms
used but not defined in this Note have the respective meanings assigned to them
in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for prepayments
of Loans upon the terms and conditions specified therein.
Except as permitted by Section 11.05 of the Credit Agreement,
this Note may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
SAF FUNDING CORPORATION
63
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By_________________________
Title:
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SCHEDULE OF LOANS
This Note evidences Loans made, Continued or Converted under
the within-described Credit Agreement to the Company, on the dates, in the
principal amounts, of the Types, bearing interest at the rates and having
Interest Periods (if applicable) of the durations set forth below, subject to
the payments, Continuations, Conversions and prepayments of principal set forth
below:
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Amount Type of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made By
- --------- ------ ---- -------- -------- --------- ------ --------
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EXHIBIT B to the
Credit Agreement
[Form of Borrowing Notice]
[Date]
The Chase Manhattan Bank
Agent Bank Services
140 East 45th Street, 29th Floor
New York, New York 10017
Re: Credit Agreement dated as of August 16, 1996,
between SAF Funding Corporation, the lenders party thereto and
The Chase Manhattan Bank, as Administrative Agent.
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of August
16, 1996 (as modified and supplemented and in effect from time to time, the
"CREDIT AGREEMENT"), between SAF Funding Corporation (the "COMPANY"), the
lenders party thereto and The Chase Manhattan Bank, as Administrative Agent.
Capitalized terms used but not defined herein shall have the respective meanings
assigned to such terms in the Credit Agreement.
Pursuant to Section 2.02 of the Credit Agreement, the Company
hereby notifies you that it will make a borrowing of Loans on ______________,
199_(1) in the principal amount of $_____________.(2)
SAF FUNDING CORPORATION
By_________________________
Title:
- --------
1 Insert a date falling on or after the third Business Day following the date
of this Notice of Borrowing.
2 Insert an amount at least equal to $10,000,000 or a larger integral
multiple of $1,000,000.
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EXHIBIT C-1
to the Credit Agreement
[Form of Company Pledge Agreement]
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of August 16, 1996
between SAF FUNDING CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "COMPANY"); and THE CHASE
MANHATTAN BANK, as administrative agent for the lenders or other financial
institutions or entities party, as lenders, to the Credit Agreement referred to
below (in such capacity, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT").
The Company, certain lenders and the Administrative Agent are
parties to a Credit Agreement dated as of August 16, 1996 (as modified and
supplemented and in effect from time to time, the "CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for loans to be made by
said lenders to the Company.
To induce said lenders to enter into the Credit Agreement and
to extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company has agreed
to pledge and grant a security interest in the Collateral (as hereinafter
defined) as security for the Secured Obligations (as so defined). Accordingly,
the parties hereto agree as follows:
Section 1. DEFINITIONS. Terms defined in the Credit Agreement
are used herein as defined therein. In addition, as used herein:
"COLLATERAL" shall have the meaning ascribed thereto in
Section 3 hereof.
"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto
in Section 4.01 hereof.
"PLEDGED STOCK" shall have the meaning ascribed thereto in
Section 3(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the
principal of and interest on the Loans made by the Lenders to, and the
Note(s) held by each Lender of, the Company and all other amounts from
time to time owing to the Lenders or the Administrative Agent by the
Company under the Basic Documents and (b) all obligations of the
Company to the Lenders and the Administrative Agent hereunder.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Lenders and the Administrative Agent that the
Company is the sole beneficial owner of the Collateral and no Lien exists or
will exist upon the Collateral at any time (and, except as set forth in the Put
Agreement with respect to the Pledged Stock, no right or option to acquire the
same exists in favor of any other Person), except for the pledge and security
interest in favor of the Administrative Agent for the
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benefit of the Lenders created or provided for herein, which pledge and security
interest will constitute a first priority perfected pledge and security interest
in and to all of the Collateral.
Section 3. THE PLEDGE. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, the Company hereby pledges and grants to
the Administrative Agent, for the benefit of the Lenders as hereinafter
provided, a security interest in all of the Company's right, title and interest
in, to and under the following Property, whether now owned by the Company or
hereafter acquired and whether now existing or hereafter coming into existence
(all being collectively referred to herein as "COLLATERAL"):
(a) all shares of Preferred Stock now or hereafter owned by
the Company, in each case together with the certificates evidencing the
same (collectively, the "PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of State Auto Financial
under any provision prohibiting such action hereunder or under any of
the other Basic Documents to which it is a party, in the event of any
consolidation or merger in which State Auto Financial is not the
surviving corporation, all shares of each class of the capital stock of
the successor corporation (unless such successor corporation is the
Company itself) formed by or resulting from such consolidation or
merger issued in exchange for the Pledged Stock;
(d) the Standby Purchase Agreement;
(e) the balance from time to time in the Collateral Account;
and
(f) all other tangible and intangible Property of the Company,
including, without limitation, all proceeds, products, accessions,
rents, profits, income, benefits, substitutions and replacements of and
to any of the Property of the Company described in the preceding
clauses of this Section 3 (including, without limitation, all causes of
action, claims and warranties now or hereafter held by the Company in
respect of any of the items listed above and any proceeds of insurance
thereon) and, to the extent related to any Property described in said
clauses or such proceeds, products and accessions, all books,
correspondence, credit files, records, invoices and other papers.
Section 4. CASH PROCEEDS OF COLLATERAL.
4.01 COLLATERAL ACCOUNT. The Administrative Agent may
establish with Chase a cash collateral account (the "COLLATERAL ACCOUNT") in the
name and under the control of the Administrative Agent into which there shall be
deposited from time to time the cash proceeds of any of the Collateral required
to be delivered to the Administrative Agent pursuant hereto and into which the
Company may from time to time deposit any additional amounts that it wishes to
pledge to the Administrative Agent for the benefit of the Lenders as additional
collateral security hereunder (it being understood and agreed that ordinary
dividends payable on the Pledged Stock shall not constitute cash proceeds). The
balance from time to time in the Collateral Account shall constitute part of the
Collateral hereunder and shall not constitute payment of the Secured Obligations
until applied as hereinafter provided. Except as expressly
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provided in the next sentence, the Administrative Agent shall remit the
collected balance standing to the credit of the Collateral Account to or upon
the order of the Company as the Company shall from time to time instruct.
However, at any time following the occurrence and during the continuance of an
Event of Default, the Administrative Agent may (and, if instructed by the
Lenders as specified in Section 10.03 of the Credit Agreement, shall) in its (or
their) discretion apply or cause to be applied (subject to collection) the
balance from time to time outstanding to the credit of the Collateral Account to
the payment of the Secured Obligations in the manner specified in Section 5.09
hereof. The balance from time to time in the Collateral Account shall be under
the sole dominion and control of the Administrative Agent and subject to
withdrawal only as provided herein. In addition to the foregoing, the Company
agrees that if the proceeds of any Collateral hereunder shall be received by it,
the Company shall as promptly as possible deposit such proceeds into the
Collateral Account to the extent such proceeds are required to be delivered to
the Administrative Agent pursuant hereto. Until so deposited, all such proceeds
shall be held in trust by the Company for and as the property of the
Administrative Agent and shall not be commingled with any other funds or
property of the Company.
4.02 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Company (or, after the occurrence and during the
continuance of a Default, the Administrative Agent) shall determine, which
Permitted Investments shall be held in the name and be under the control of the
Administrative Agent, PROVIDED that at any time after the occurrence and during
the continuance of an Event of Default, the Administrative Agent may (and, if
instructed by the Lenders as specified in Section 10.03 of the Credit Agreement,
shall) in its (or their) discretion at any time and from time to time elect to
liquidate any such Permitted Investments and to apply or cause to be applied the
proceeds thereof to the payment of the Secured Obligations in the manner
specified in Section 5.09 hereof.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, the
Company hereby agrees with each Lender and the Administrative Agent as follows:
5.01 DELIVERY AND OTHER PERFECTION. The Company shall:
(a) if any of the shares, securities, moneys or property
required to be pledged by the Company under clauses (a), (b) and (c) of
Section 3 hereof are received by the Company, forthwith either (x)
transfer and deliver to the Administrative Agent such shares or
securities so received by the Company (together with the certificates
for any such shares and securities duly endorsed in blank or
accompanied by undated stock powers duly executed in blank), all of
which thereafter shall be held by the Administrative Agent, pursuant to
the terms of this Agreement, as part of the Collateral or (y) take such
other action as the Administrative Agent shall deem necessary or
appropriate to duly record the Lien created hereunder in such shares,
securities, moneys or property in said clauses (a), (b) and (c);
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the judgment of the Administrative
Agent) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Administrative Agent to
exercise and enforce its rights hereunder with respect to such pledge
and security interest, including, without limitation, causing any or
all of the Collateral to be transferred of record into the name of the
Administrative Agent or its nominee (and the Administrative Agent
agrees that if any Collateral is transferred into its name or the name
of its nominee, the Administrative Agent will thereafter promptly give
to the Company copies of any notices and communications received by it
with respect to the Collateral);
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(c) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement; and
(d) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect
and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the Administrative Agent to
be present at the Company's place of business to receive copies of all
communications and remittances relating to the Collateral, and forward
copies of any notices or communications received by the Company with
respect to the Collateral, all in such manner as the Administrative
Agent may require.
5.02 OTHER FINANCING STATEMENTS AND LIENS. Without the prior
written consent of the Administrative Agent (granted with the authorization of
the Lenders as specified in Section 10.09 of the Credit Agreement), the Company
shall not file or suffer to be on file, or authorize or permit to be filed or to
be on file, in any jurisdiction, any financing statement or like instrument with
respect to the Collateral in which the Administrative Agent is not named as the
sole secured party for the benefit of the Lenders.
5.03 PRESERVATION OF RIGHTS. The Administrative Agent shall
not be required to take steps necessary to preserve any rights against prior
parties to any of the Collateral.
5.04 COLLATERAL.
(1) So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right to exercise all consensual and
other powers of ownership pertaining to the Pledged Stock for all purposes not
inconsistent with the terms of this Agreement, the Credit Agreement, the Notes,
the Put Agreement, the Standby Purchase Agreement or any other instrument or
agreement referred to herein or therein, PROVIDED that the Administrative Agent
shall execute and deliver to the Company or cause to be executed and delivered
to the Company all such proxies, powers of attorney, dividend and other orders,
and all such instruments, without recourse, as the Company may reasonably
request for the purpose of enabling the Company to exercise the rights and
powers that it is entitled to exercise pursuant to this Section 5.04(1).
(2) If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the Administrative
Agent or any Lender exercises any available right to declare any Secured
Obligation due and payable or seeks or pursues any other relief or remedy
available to it under applicable law or under this Agreement, the Credit
Agreement, the Notes, the Put Agreement, the Standby Purchase Agreement or any
other agreement relating to such Secured Obligation, all dividends and other
distributions on the Collateral shall be paid directly to the Administrative
Agent and retained by it in the Collateral Account as part of the Collateral,
subject to the terms of this Agreement, and, if the Administrative Agent shall
so request in writing, the Company agrees to execute and deliver to the
Administrative Agent appropriate additional dividend, distribution and other
orders and documents to that end, PROVIDED that if such Event of Default is
cured, any such dividend or distribution theretofore paid to the Administrative
Agent shall, upon request of the Company (except to the extent theretofore
applied to the Secured Obligations), be returned by the Administrative Agent to
the Company.
5.05 EVENTS OF DEFAULT, ETC. During the period during which an
Event of Default shall have occurred and be continuing, but subject to the
provisions of Section 6.11 hereof:
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(a) the Administrative Agent may make any reasonable
compromise or settlement deemed desirable with respect to any of the
Collateral and may modify the terms of any of the Collateral;
(b) the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all
consensual and other powers of ownership pertaining to the Collateral
as if the Administrative Agent were the sole and absolute owner thereof
(and the Company agrees to take all such action as may be appropriate
to give effect to such right);
(c) the Administrative Agent in its discretion may, in its
name or in the name of the Company or otherwise, demand, sue for,
collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but
shall be under no obligation to do so; and
(d) the Administrative Agent may, upon ten business days'
prior written notice to the Company of the time and place, with respect
to the Collateral or any part thereof that shall then be or shall
thereafter come into the possession, custody or control of the
Administrative Agent, the Lenders or any of their respective agents,
sell, lease, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Administrative Agent deems
best, and for cash or for credit or for future delivery (without
thereby assuming any credit risk), at public or private sale, without
demand of performance or notice of intention to effect any such
disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Administrative Agent or any Lender or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral
so disposed of at any public sale (or, to the extent permitted by law,
at any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Company, any such demand,
notice and right or equity being hereby expressly waived and released.
The Administrative Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the sale may be so
adjourned; and
(e) Without limiting the rights and remedies of the
Administrative Agent under the foregoing clauses (a), (b), (c) and (d)
of this Section 5.05, the Administrative Agent may exercise all of its
rights and remedies under the Put Agreement.
The proceeds of each collection, sale or other disposition under this Section
5.05 shall be applied in accordance with Section 5.09 hereof.
The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Administrative Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Company acknowledges that any such private sales
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may be at prices and on terms less favorable to the Administrative Agent than
those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed, for that reason alone, not to have been made in a commercially
reasonable manner and that the Administrative Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral for
the period of time necessary to permit State Auto Financial or issuer thereof to
register it for public sale.
5.06 NO LIABILITY FOR DEFICIENCY. If the proceeds of sale,
collection or other realization of or upon the Collateral pursuant to Section
5.05 hereof are insufficient to cover the costs and expenses of such realization
and the payment in full of the Secured Obligations, the Company shall not be
liable for any deficiency.
5.07 REMOVALS, ETC. Without at least 30 days' prior written
notice to the Administrative Agent, the Company shall not (i) maintain any of
its books and records with respect to the Collateral at any office or maintain
its principal place of business at any place other than at the address indicated
beneath the signature of the Company to the Credit Agreement or (ii) change its
name, or the name under which it does business, from the name shown on the
signature pages hereto.
5.08 PRIVATE SALE. The Administrative Agent and the Lenders
shall incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 hereof conducted in a
commercially reasonable manner. The Company hereby waives any claims against the
Administrative Agent or any Lender arising by reason of the fact that the price
at which the Collateral may have been sold at such a private sale was less than
the price that might have been obtained at a public sale or was less than the
aggregate amount of the Secured Obligations, even if the Administrative Agent
accepts the first offer received and does not offer the Collateral to more than
one offeree.
5.09 APPLICATION OF PROCEEDS. Except as otherwise herein
expressly provided, the proceeds of any collection, sale or other realization of
all or any part of the Collateral pursuant hereto, and any other cash at the
time held by the Administrative Agent under Section 4 hereof or this Section 5,
shall be applied by the Administrative Agent:
FIRST, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Administrative Agent and the
fees and expenses of its agents and counsel, and all expenses incurred
and advances made by the Administrative Agent in connection therewith;
NEXT, to the payment in full of the Secured Obligations, in
each case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Lenders holding the same may
otherwise agree; and
FINALLY, to the payment to the Company, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
As used in this Section 5, "PROCEEDS" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Company or any issuer of or obligor on
any of the Collateral.
5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers
granted by this Agreement to the Administrative Agent while no Event of Default
has occurred and is continuing, upon the occurrence and during the continuance
of any Event of Default the Administrative Agent is hereby
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appointed the attorney-in-fact of the Company for the purpose of carrying out
the provisions of this Section 5 and taking any action and executing any
instruments that the Administrative Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, so long as the Administrative Agent shall be entitled under this
Section 5 to make collections in respect of the Collateral, the Administrative
Agent shall have the right and power to receive, endorse and collect all checks
made payable to the order of the Company representing any dividend, payment or
other distribution in respect of the Collateral or any part thereof and to give
full discharge for the same.
5.11 PERFECTION. Prior to or concurrently with the execution
and delivery of this Agreement, the Company shall file such financing statements
and other documents in such offices as the Administrative Agent may request to
perfect the security interests granted by Section 3 of this Agreement.
5.12 TERMINATION. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement shall
have expired or been terminated, this Agreement shall terminate, and the
Administrative Agent shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or on the order of the Company. The Administrative Agent shall also execute and
deliver to the Company upon such termination such Uniform Commercial Code
termination statements and such other documentation as shall be reasonably
requested by the Company to effect the termination and release of the Liens on
the Collateral.
5.13 FURTHER ASSURANCES. The Company agrees that, from time to
time upon the written request of the Administrative Agent, the Company will
execute and deliver such further documents and do such other acts and things as
the Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
5.14 RELEASES. The parties hereto agree that upon the
redemption by State Auto Financial of any Pledged Stock in accordance with its
terms and the prepayment of Loans in respect thereof in accordance with Section
2.09 of the Credit Agreement, the Lien created hereunder on the Pledged Stock so
redeemed shall be automatically released.
Section 6. MISCELLANEOUS.
6.01 NO WAIVER. No failure on the part of the Administrative
Agent or any Lender to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Administrative
Agent or any Lender of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
6.02 NOTICES. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at its "Address for Notices" specified pursuant to Section 11.02 of
the Credit Agreement and shall be deemed to have been given at the times
specified in said Section 11.02.
6.03 AMENDMENTS, ETC. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by the
Company and the Administrative Agent
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(with the consent of the Lenders as specified in Section 10.09 of the Credit
Agreement). Any such amendment or waiver shall be binding upon the
Administrative Agent and each Lender, each holder of any of the Secured
Obligations and the Company.
6.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Administrative Agent, the Lenders and each holder of any of the
Secured Obligations (PROVIDED, however, that the Company shall not assign or
transfer its rights hereunder without the prior written consent of the
Administrative Agent).
6.05 CAPTIONS. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
6.06 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
6.07 GOVERNING LAW, ETC. This Agreement shall be governed by,
and construed in accordance with, the law of the State of New York. The Company
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of the Supreme Court of the
State of New York sitting in New York County (including its Appellate Division),
and of any other appellate court in the State of New York, for the purposes of
all legal proceedings arising out of or relating to this Pledge Agreement or the
transactions contemplated hereby. The Company hereby irrevocably waives, to the
fullest extent permitted by applicable law, any objection that it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
6.08 AGENTS AND ATTORNEYS-IN-FACT. The Administrative Agent
may employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
6.09 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
6.10 THE ADMINISTRATIVE AGENT. As provided in Section 10 of
the Credit Agreement, each Lender has appointed The Chase Manhattan Bank as its
agent for purposes of this Agreement. Following the payment in full of all
Secured Obligations outstanding under the Credit Agreement and the termination
or expiration of the Commitments thereunder, the provisions of said Section 10
shall be deemed to continue in full force and effect for the benefit of the
Administrative Agent under this Agreement. In that connection, following such
payment in full and expiration and termination of the Commitments, the term
"Majority Lenders" (as defined in said Section 1.01) shall be deemed to refer to
Lenders holding Secured Obligations representing at least 66-2/3% of the
aggregate Secured Obligations.
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6.11 CERTAIN REGULATORY REQUIREMENTS. The Administrative Agent
hereby acknowledges that, in connection with any exercise by it of the rights
and remedies afforded to it hereunder, it may be necessary to provide notice to
and/or obtain the prior consent or approval of certain governmental authorities.
Notwithstanding anything to the contrary contained herein, the Administrative
Agent will not take any action pursuant to this Agreement which would constitute
or result in any transfer of control over State Auto Financial, or any other
action, if such action, in either case, requires notice to and/or the prior
consent or approval of governmental authorities without first providing such
notice and/or obtaining such consent or approval. Upon the exercise by the
Administrative Agent of any power, right or privilege or remedy pursuant to this
Agreement which requires any consent, approval, recording, qualification or
authorization of any governmental authority, the Company will, and will cause
State Auto Financial to, (a) execute and deliver, or cause the execution and
delivery of, all applications, instruments or other documents and papers that
the Administrative Agent may reasonably require to be obtained for such
governmental consent, approval, recording, qualification or authorization, (b)
use its best efforts otherwise to secure such governmental consent, approval,
recording, qualification or authorization and (c) take no action inconsistent
therewith. The Company acknowledges that the Administrative Agent has no
adequate remedy at law for the breach of any obligation of this Section 6.11,
and that such obligations shall be enforceable by specific performance.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered as of the day and year first above
written.
SAF FUNDING CORPORATION
By _________________________
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By _________________________
Title:
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EXHIBIT C-2 to the
Credit Agreement
[Form of Parent Pledge Agreement]
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of August 16, 1996 between BROAD
STREET CONTRACT SERVICES, INC., a corporation duly organized and validly
existing under the laws of the State of Delaware (the "PARENT"); and THE CHASE
MANHATTAN BANK, as administrative agent for the Lenders party to the Credit
Agreement referred to below (in such capacity, together with its successors in
such capacity, the "ADMINISTRATIVE AGENT").
SAF Funding Corporation, a Delaware corporation (the
"COMPANY"), certain lenders (the "LENDERS") and the Administrative Agent are
parties to a Credit Agreement dated as of August 16, 1996 (as modified and
supplemented and in effect from time to time, the "CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for loans to be made by
said Lenders to the Company. The Parent owns all of the issued and outstanding
capital stock of the Company.
To induce said Lenders to enter into the Credit Agreement and
to extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parent has agreed
to pledge and grant a security interest in the Collateral (as hereinafter
defined) as security for the Secured Obligations (as hereinafter defined).
Accordingly, the parties hereto agree as follows:
Section 1. DEFINITIONS. Terms defined in the Credit Agreement
are used herein as defined therein. In addition, as used herein:
"COLLATERAL" shall have the meaning ascribed thereto in
Section 3.01 hereof.
"PLEDGED STOCK" shall have the meaning ascribed thereto in
Section 3.01(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the
principal of and interest on the Loans made by the Lenders to, and the
Notes held by the Lenders of, the Company and all other amounts from
time to time owing to the Lenders or the Administrative Agent by the
Company under the Credit Documents and (b) all obligations of the
Parent to the Lenders and the Administrative Agent hereunder.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. The Parent
represents and warrants to the Lenders and the Administrative Agent that:
2.01 CORPORATE EXISTENCE. The Parent is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation.
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2.02 LITIGATION. There are no legal or arbitral proceedings or
any proceedings by or before any governmental or regulatory authority or agency,
now pending or (to the knowledge of the Parent) threatened against the Parent
that, if adversely determined, could (either individually or in the aggregate)
have a material adverse effect on the making or performance by the Parent of
this Agreement or the validity or enforceability thereof.
2.03 NO BREACH. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws of the Parent,
or any applicable law or regulation, or any order, writ, injunction or decree of
any court or governmental authority or agency, or any agreement or instrument to
which the Parent is a party or by which is bound or to which it is subject, or
constitute a default under any such agreement or instrument, or (except for the
Liens created pursuant to this Agreement) result in the creation or imposition
of any Lien upon any Property of the Parent pursuant to the terms of any such
agreement or instrument.
2.04 CORPORATE ACTION. The Parent has all necessary corporate
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement; the execution, delivery and performance by the Parent of
this Agreement have been duly authorized by all necessary corporate action on
its part (including, without limitation, any required shareholder approvals);
and this Agreement has been duly and validly executed and delivered by the
Parent and constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.05 APPROVALS. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency, or any securities exchange are necessary for the execution, delivery
or performance by the Parent of this Agreement or for the validity or
enforceability hereof except for filings and recordings in respect of the Liens
created pursuant to this Agreement.
2.06 TAXES. As of the Closing Date, the charges, accruals and
reserves on the books of the Parent and its Subsidiaries in respect of taxes and
other governmental charges are, in the opinion of the Parent, adequate.
2.07 PLEDGED STOCK.
(a) The Parent is the sole beneficial owner of the Collateral
and no Lien exists or will exist upon the Collateral at any time (and no right
or option to acquire the same exists in favor of any other Person), except for
the pledge and security interest in favor of the Administrative Agent for the
benefit of the Lenders created or provided for herein, which pledge and security
interest will constitute a first priority perfected pledge and security interest
in and to all of the Collateral.
(b) The Pledged Stock represented by the certificates
identified in Annex 1 hereto is, and all other Pledged Stock in which the Parent
shall hereafter grant a security interest pursuant to Section 3.01 hereof will
be, duly authorized, validly existing, fully paid and non-assessable and none of
such Pledged Stock is or will be subject to any contractual restriction, or any
restriction under the charter or by-laws of the Company, upon the transfer of
such Pledged Stock (except for any such restriction contained herein).
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(c) The Pledged Stock represented by the certificates
identified in Annex 1 hereto constitutes all of the issued and outstanding
shares of capital stock of any class of the Company beneficially owned by the
Parent on the date hereof (whether or not registered in the name of the Parent)
and said Annex 1 correctly identifies, as at the date hereof, the respective
class and par value of the shares comprising such Pledged Stock and the
respective number of shares (and registered owners thereof) represented by each
such certificate.
2.08 INVESTMENT COMPANY ACT. The Parent is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
2.09 PUBLIC UTILITY HOLDING COMPANY ACT. The Parent is not a
"holding company", or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Section 3. THE PLEDGE.
3.01 PLEDGE. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations, the Parent hereby pledges and grants to the Administrative
Agent, for the benefit of the Lenders as hereinafter provided, a security
interest in all of the Parent's right, title and interest in, to and under the
following Property, whether now owned by the Parent or hereafter acquired and
whether now existing or hereafter coming into existence (all being collectively
referred to herein as "COLLATERAL"):
(a) the shares of common stock of the Company represented by
the certificates identified in Annex 1 hereto and all other shares of
capital stock of whatever class of the Company, now or hereafter owned
by the Parent, in each case together with the certificates evidencing
the same (collectively, the "PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of the Parent under any
provision prohibiting such action hereunder or under the Credit
Agreement, in the event of any consolidation or merger in which the
Company is not the surviving corporation, all shares of each class of
the capital stock of the successor corporation (unless such successor
corporation is the Parent itself) formed by or resulting from such
consolidation or merger; and
(d) all proceeds of and to any of the Property of the Parent
described in the preceding clauses of this Section 3.01 (including,
without limitation, all causes of action, claims and warranties now or
hereafter held by the Parent in respect of any of the items listed
above) and, to
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the extent related to any property described in said clauses or such
proceeds, products and accessions, all books, correspondence, credit
files, records, invoices and other papers.
3.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Parent
under Section 3.01 hereof are absolute, unconditional and irrevocable,
irrespective of the value, genuineness, validity, regularity or enforceability
of the Secured Obligations, or any substitution, release or exchange of any
other guarantee of or security for any of the Secured Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense available to the Parent, it being the intent of this
Section 3.02 that the obligations of the Parent hereunder shall be absolute,
unconditional and irrevocable under any and all circumstances. Without limiting
the generality of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not alter or impair the liability of the Parent
hereunder which shall remain absolute, unconditional and irrevocable as
described above:
(a) at any time or from time to time, without notice to the
Parent, the time for any performance of or compliance with any of the
Secured Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of this
Agreement, the Credit Agreement, the Notes, the Put Agreement, the
Standby Purchase Agreement or any other agreement or instrument
referred to therein shall be done or omitted;
(c) the maturity of any of the Secured Obligations shall be
accelerated, or any of the Secured Obligations shall be modified,
supplemented or amended in any respect, or any right under this
Agreement, the Credit Agreement, the Notes, the Put Agreement, the
Standby Purchase Agreement or any other agreement or instrument
referred to therein shall be waived or any guarantee of any of the
Secured Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(d) any change in the financial condition (including,
without limitation, insolvency or bankruptcy) of the Company.
The Parent hereby expressly waives all of the defenses referred to above and
diligence, presentment, demand of payment, protest and all notices whatsoever,
and any requirement that the Administrative Agent or any Lender exhaust any
right, power or remedy or proceed against the Company or any other Person under
the Credit Agreement, the Notes, the Put Agreement, the Standby Purchase
Agreement or any other agreement or instrument referred therein, or against any
other Person under any other guarantee of, or security for, any of the
Obligations.
Section 4. COVENANTS. The Parent agrees that, until the
payment and satisfaction in full of the Secured Obligations and the expiration
or termination of the Commitments of the Lenders under the Credit Agreement:
4.01 LITIGATION. The Parent will promptly give to each Lender
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, affecting the Parent, except
proceedings that, if adversely determined, would not (either
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individually or in the aggregate) have a material adverse effect on the making
or performance by the Parent of this Agreement or the validity or enforceability
thereof.
4.02 CORPORATE EXISTENCE, ETC. The Parent will: preserve and
maintain its corporate existence and all of its material rights, privileges and
franchises; comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure to
comply with such requirements could (either individually or in the aggregate)
materially and adversely affect the making or performance by the Parent of this
Agreement or the validity or enforceability thereof; pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the payment
of which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained; and permit representatives of any
Lender or the Administrative Agent, during normal business hours, to examine,
copy and make extracts from its books and records relating to the Collateral.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the
grant of the pledge and security interest pursuant to Section 3.01 hereof, the
Parent hereby agrees with each Lender and the Administrative Agent as follows:
5.01 DELIVERY AND OTHER PERFECTION. The Parent shall:
(a) if any of the shares, securities, moneys or property
required to be pledged by the Parent under clauses (a), (b) and (c) of
Section 3.01 hereof are received by the Parent, forthwith either (x)
transfer and deliver to the Administrative Agent such shares or
securities so received by the Parent (together with the certificates
for any such shares and securities duly endorsed in blank or
accompanied by undated stock powers duly executed in blank), all of
which thereafter shall be held by the Administrative Agent, pursuant to
the terms of this Agreement, as part of the Collateral or (y) take such
other action as the Administrative Agent shall deem necessary or
appropriate to duly record the Lien created hereunder in such shares,
securities, moneys or property in said clauses (a), (b) and (c);
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the judgment of the Administrative
Agent) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Administrative Agent to
exercise and enforce its rights hereunder with respect to such pledge
and security interest, including, without limitation, causing any or
all of the Collateral to be transferred of record into the name of the
Administrative Agent or its nominee (and the Administrative Agent
agrees that if any Collateral is transferred into its name or the name
of its nominee, the Administrative Agent will thereafter promptly give
to the Parent copies of any notices and communications received by it
with respect to the Collateral);
(c) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement; and
(d) permit representatives of the Administrative Agent, upon
reasonable notice, at any
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time during normal business hours to inspect and make abstracts from
its books and records pertaining to the Collateral, and permit
representatives of the Administrative Agent to be present at the
Parent's place of business to receive copies of all communications and
remittances relating to the Collateral, and forward copies of any
notices or communications received by the Parent with respect to the
Collateral, all in such manner as the Administrative Agent may
require.
5.02 OTHER FINANCING STATEMENTS AND LIENS. Without the prior
written consent of the Administrative Agent (granted with the authorization of
the Lenders as specified in Section 10.09 of the Credit Agreement), the Parent
shall not file or suffer to be on file, or authorize or permit to be filed or to
be on file, in any jurisdiction, any financing statement or like instrument with
respect to the Collateral in which the Administrative Agent is not named as the
sole secured party for the benefit of the Lenders.
5.03 PRESERVATION OF RIGHTS. The Administrative Agent shall
not be required to take steps necessary to preserve any rights against prior
parties to any of the Collateral.
5.04 COLLATERAL.
(1) The Parent will cause the Pledged Stock to constitute at
all times 100% of the total number of shares of each class of capital stock of
the Company then outstanding.
(2) So long as no Event of Default shall have occurred and be
continuing, the Parent shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Pledged Stock for all purposes
not inconsistent with the terms of this Agreement, the Credit Agreement, the
Notes, the Put Agreement or any other instrument or agreement referred to herein
or therein, PROVIDED that the Parent agrees that it will not vote the Collateral
in any manner that is inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes, the Put Agreement or any such other instrument or
agreement; and the Administrative Agent shall execute and deliver to the Parent
or cause to be executed and delivered to the Parent all such proxies, powers of
attorney, dividend and other orders, and all such instruments, without recourse,
as the Parent may reasonably request for the purpose of enabling the Parent to
exercise the rights and powers that it is entitled to exercise pursuant to this
Section 5.04(2).
(3) Unless and until an Event of Default has occurred and is
continuing, the Parent shall be entitled to receive, retain and use any
dividends on the Pledged Stock paid in cash out of earned surplus and all
proceeds of all other Collateral.
(4) If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the Administrative
Agent or any Lender exercises any available right to declare any Secured
Obligation due and payable or seeks or pursues any other relief or remedy
available to it under applicable law or under this Agreement, the Credit
Agreement, the Notes or any other agreement relating to such Secured Obligation,
all dividends and other distributions on the Collateral shall be paid directly
to the Administrative Agent and retained by it as part of the Collateral,
subject to the terms of this Agreement, and, if the Administrative Agent shall
so request in writing, the Parent agrees to execute and deliver to the
Administrative Agent appropriate additional dividend, distribution and other
orders and documents to that end, PROVIDED that if such Event of Default is
cured, any such dividend or distribution theretofore paid to the Administrative
Agent shall, upon request of the Parent (except to the extent theretofore
applied to the Secured Obligations), be returned by the Administrative Agent to
the Parent.
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5.05 EVENTS OF DEFAULT, ETC. During the period during which an
Event of Default shall have occurred and be continuing, but subject to the
provisions of Section 6.11 hereof:
(a) the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral
as if the Administrative Agent were the sole and absolute owner thereof
(and the Parent agrees to take all such action as may be appropriate to
give effect to such right);
(b) the Administrative Agent in its discretion may, in its
name or in the name of the Parent or otherwise, demand, sue for,
collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but
shall be under no obligation to do so; and
(c) the Administrative Agent may, upon ten business days'
prior written notice to the Parent of the time and place, with respect
to the Collateral or any part thereof that shall then be or shall
thereafter come into the possession, custody or control of the
Administrative Agent, the Lenders or any of their respective agents,
sell, lease, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Administrative Agent deems
best, and for cash or for credit or for future delivery (without
thereby assuming any credit risk), at public or private sale, without
demand of performance or notice of intention to effect any such
disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Administrative Agent or any Lender or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral
so disposed of at any public sale (or, to the extent permitted by law,
at any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Parent, any such demand,
notice and right or equity being hereby expressly waived and released.
The Administrative Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the sale may be so
adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05 shall be applied in accordance with Section 5.09 hereof.
The Parent recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Administrative Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The Parent
acknowledges that any such private sales may be at prices and on terms less
favorable to the Administrative Agent than those obtainable through a public
sale without such restrictions, and, notwithstanding such circumstances, agrees
that any such private sale shall not be deemed, for that reason alone, not to
have been made in a commercially
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reasonable manner and that the Administrative Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral for
the period of time necessary to permit the Company or issuer thereof to register
it for public sale.
5.06 NO LIABILITY FOR DEFICIENCY. If the proceeds of sale,
collection or other realization of or upon the Collateral pursuant to Section
5.05 hereof are insufficient to cover the costs and expenses of such realization
and the payment in full of the Secured Obligations, the Parent shall not be
liable for any deficiency.
5.07 REMOVALS, ETC. Without at least 30 days' prior written
notice to the Administrative Agent, the Parent shall not (i) maintain any of its
books and records with respect to the Collateral at any office or maintain its
principal place of business at any place other than at the address indicated
beneath its signature hereto or (ii) change its name, or the name under which it
does business, from the name shown on the signature pages hereto.
5.08 PRIVATE SALE. The Administrative Agent and the Lenders
shall incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 hereof conducted in a
commercially reasonable manner. The Parent hereby waives any claims against the
Administrative Agent or any Lender arising by reason of the fact that the price
at which the Collateral may have been sold at such a private sale was less than
the price that might have been obtained at a public sale or was less than the
aggregate amount of the Secured Obligations, even if the Administrative Agent
accepts the first offer received and does not offer the Collateral to more than
one offeree.
5.09 APPLICATION OF PROCEEDS. Except as otherwise herein
expressly provided, the proceeds of any collection, sale or other realization of
all or any part of the Collateral pursuant hereto shall be applied by the
Administrative Agent:
FIRST, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Administrative Agent and the
fees and expenses of its agents and counsel, and all expenses incurred
and advances made by the Administrative Agent in connection therewith;
NEXT, to the payment in full of the Secured Obligations, in
each case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Lenders holding the same may
otherwise agree; and
FINALLY, to the payment to the Parent, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
As used in this Section 5, "PROCEEDS" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Parent or any issuer of or obligor on
any of the Collateral.
5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers
granted by this Agreement to the Administrative Agent while no Event of Default
has occurred and is continuing, upon the occurrence and during the continuance
of any Event of Default the Administrative Agent is hereby
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appointed the attorney-in-fact of the Parent for the purpose of carrying out the
provisions of this Section 5 and taking any action and executing any instruments
that the Administrative Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the foregoing, so
long as the Administrative Agent shall be entitled under this Section 5 to make
collections in respect of the Collateral, the Administrative Agent shall have
the right and power to receive, endorse and collect all checks made payable to
the order of the Parent representing any dividend, payment or other distribution
in respect of the Collateral or any part thereof and to give full discharge for
the same.
5.11 PERFECTION. Prior to or concurrently with the execution
and delivery of this Agreement, the Parent shall deliver to the Administrative
Agent all certificates identified in Annex 1 hereto, accompanied by undated
stock powers duly executed in blank.
5.12 TERMINATION. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement shall
have expired or been terminated, this Agreement shall terminate, and the
Administrative Agent shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or on the order of the Parent.
5.13 FURTHER ASSURANCES. The Parent agrees that, from time to
time upon the written request of the Administrative Agent, the Parent will
execute and deliver such further documents and do such other acts and things as
the Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
Section 6. MISCELLANEOUS.
6.01 NO WAIVER. No failure on the part of the Administrative
Agent or any Lender to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Administrative
Agent or any Lender of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
6.02 NOTICES. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at the "Address for Notices" specified beneath its name on the
signature pages hereof (or, as to the Administrative Agent, on the signature
pages of the Credit Agreement) or, as to either party, at such other address as
shall be designated by such party in a notice to the other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopier or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
6.03 AMENDMENTS, ETC. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by the
Parent and the Administrative Agent (with the consent of the Lenders as
specified in Section 10.09 of the Credit Agreement). Any such amendment or
waiver shall be binding upon the Administrative Agent and each Lender, each
holder of any of the Secured Obligations and the Parent.
6.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Parent, the Administrative Agent, the Lenders and
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each holder of any of the Secured Obligations (PROVIDED, however, that the
Parent shall not assign or transfer its rights hereunder without the prior
written consent of the Administrative Agent).
6.05 CAPTIONS. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
6.06 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
6.07 GOVERNING LAW, ETC. This Agreement shall be governed by,
and construed in accordance with, the law of the State of New York. The Parent
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of the Supreme Court of the
State of New York sitting in New York County (including its Appellate
Division), and of any other appellate court in the State of New York, for the
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby. The Parent hereby irrevocably waives,
to the fullest extent permitted by applicable law, any objection that it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. EACH OF THE PARENT, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
6.08 AGENTS AND ATTORNEYS-IN-FACT. The Administrative Agent
may employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
6.09 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
6.10 THE ADMINISTRATIVE AGENT. As provided in Section 10 of
the Credit Agreement, each Lender has appointed The Chase Manhattan Bank as its
agent for purposes of this Agreement. Following the payment in full of all
Secured Obligations outstanding under the Credit Agreement and the termination
or expiration of the Commitments thereunder, the provisions of said Section 10
shall be deemed to continue in full force and effect for the benefit of the
Administrative Agent under this Agreement. In that connection, following such
payment in full and expiration and termination of the Commitments, the term
"Majority Lenders" (as defined in said Section 1.01) shall be deemed to refer to
Lenders holding Secured Obligations representing at least 66-2/3% of the
aggregate Secured Obligations.
6.11 CERTAIN REGULATORY REQUIREMENTS. The Administrative Agent
hereby acknowledges that, in connection with any exercise by it of the rights
and remedies afforded to it hereunder, it may be necessary to provide notice to
and/or obtain the prior consent or approval of certain governmental authorities.
Notwithstanding anything to the contrary contained herein, the Administrative
Agent will not take any action pursuant to this Agreement which would constitute
or result in any
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transfer of control over the Company, or any other action, if such action, in
either case, requires notice to and/or the prior consent or approval of
governmental authorities without first providing such notice and/or obtaining
such consent or approval. Upon the exercise by the Administrative Agent of any
power, right or privilege or remedy pursuant to this Agreement which requires
any consent, approval, recording, qualification or authorization of any
governmental authority, the Parent will, and will cause the Company to, (a)
execute and deliver, or cause the execution and delivery of, all applications,
instruments or other documents and papers that the Administrative Agent may
reasonably require to be obtained for such governmental consent, approval,
recording, qualification or authorization, (b) use its best efforts otherwise to
secure such governmental consent, approval, recording, qualification or
authorization and (c) take no action inconsistent therewith. The Parent
acknowledges that the Administrative Agent has no adequate remedy at law for the
breach of any obligation of this Section 6.11, and that such obligations shall
be enforceable by specific performance.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
BROAD STREET CONTRACT
SERVICES, INC.
By _________________________
Title:
Address for Notices:
Broad Street Contract Services, Inc.
2 Wall Street
New York, New York 10005
Attention: Kevin Burns
Telecopier No.: 212-346-9012
Telephone No.: 212-346-9007
THE CHASE MANHATTAN BANK,
as Administrative Agent
By _________________________
Title:
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ANNEX 1
PLEDGED STOCK
-------------
[See Section 2.07(b) and (c)]
Certificate Registered
Issuer Nos. Owner Number of Shares
- ------ ---- ----- ----------------
SAF Funding 1 Broad Street 1000
Corporation Contract
Services, Inc.
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EXHIBIT D
[Form of Put Agreement]
[To be supplied]
90
Put Agreement
Schedule I
Part A
Indebtedness in Excess OF $5,000,000
------------------------------------
Disclosure of Schedule Omitted
91
Put Agreement
Schedule I
Part B
Liens
-----
Disclosure of Schedule Omitted
92
Put Agreement
Schedule II
Part A
Subsidiaries of State Auto Mutual
---------------------------------
Disclosure of Schedule Omitted
93
ORGANIZATIONAL STRUCTURE
OF
STATE AUTO HOLDING COMPANY SYSTEM
[GRAPHIC OMITTED]
94
Put Agreement
Schedule II
Part B
Investments
-----------
Disclosure of Schedule Omitted
95
Put Agreement
Schedule IV
Part A
Equity Rights
-------------
Disclosure of Schedule Omitted
96
Put Agreement
Schedule IV
Part B
Disclosure of Schedule Omitted
97
Standby Purchase Agreement
Schedule I
Part A
Equity Rights
Disclosure of Schedule Omitted
98
Standby Purchase Agreement
Schedule I
Part B
Disclosure of Schedule Omitted
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EXHIBIT F to the
Credit Agreement
[Form of Opinion of Counsel to the Company]
August 16, 1996
To each of the Lenders party to the
Credit Agreement referred to
below and The Chase Manhattan Bank,
as Administrative Agent
Ladies and Gentlemen:
We have acted as counsel to SAF Funding Corporation (the
"COMPANY") and Broad Street Contract Services, Inc. (the "PARENT" and, together
with the Company, the "OBLIGORS") in connection with (i) the Credit Agreement
dated as of August 16, 1996 (the "CREDIT AGREEMENT") between the Company, the
lenders party thereto (the "LENDERS") and The Chase Manhattan Bank, in its
capacity as administrative agent for said Lenders (the "ADMINISTRATIVE AGENT"),
providing for, among other things, extensions of credit to be made by the
Lenders to the Company in an aggregate principal or stated amount not exceeding
$100,000,000 and (ii) the agreements, instruments and other documents referred
to in the next paragraph. All capitalized terms used but not defined herein have
the respective meanings given to such terms in the Credit Agreement or, if not
defined in the Credit Agreement, in Annex 1 hereto. This opinion letter is
delivered to you pursuant to Section 6.01(g) of the Credit Agreement.
In rendering the opinions expressed below, we have examined
the following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Company Pledge Agreement;
(c) the Parent Pledge Agreement;
(d) the Standby Purchase Agreement (collectively with the
agreements referred to in clauses (a) through (c), the
"CREDIT DOCUMENTS");
(e) certain financing statements being executed and delivered
pursuant to Section 6( ) of the Credit Agreement
concurrently with the delivery of this opinion
(collectively, the "FINANCING STATEMENTS"); and
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(f) such records of the Obligors and such other documents as we
have deemed necessary as a basis for the opinions expressed
below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon certificates of governmental officials and appropriate
representatives of the Obligors and upon representations made in or pursuant to
the Credit Documents.
In rendering the opinions expressed below, we have assumed,
with respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Obligors):
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid,
binding and enforceable obligations of, all of the parties to
such documents;
(ii) all signatories to such documents have been duly authorized;
and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate,
partnership or other) to execute, deliver and perform such
documents.
Based upon and subject to the foregoing and subject also to
the comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. Each Obligor is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware.
2. Each Obligor has all requisite corporate power to execute
and deliver, and to perform its obligations and to incur
liabilities under, the Credit Documents to which it is intended to
be a party.
3. The execution, delivery and performance by each Obligor of,
and the incurrence by such Obligor of liabilities under, each
Credit Document to which it is intended to be a party have been
duly authorized by all necessary corporate action on the part of
the Company.
4. Each Credit Document has been duly executed and delivered
by the Company.
5. Each Credit Document constitutes the legal, valid and
binding obligation of each
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Obligor party thereto, enforceable against such Obligor in
accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or other similar laws relating to or
affecting the rights of creditors generally and except as the
enforceability of the Credit Documents is subject to the
application of general principles of equity (regardless of
whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of
specific performance, injunctive relief or any other equitable
remedy and (b) concepts of materiality, reasonableness, good
faith and fair dealing.
6. No authorization, approval or consent of, and no filing or
registration with, any governmental or regulatory authority or
agency of the United States of America or the State of New York is
required on the part of either Obligor for the execution, delivery
or performance by such Obligor of, or for the incurrence by such
Obligor of any liabilities under, any of the Credit Documents.
7. The execution, delivery and performance by each Obligor of,
and the consummation by such Obligor of the transactions
contemplated by, the Credit Documents do not and will not (a)
violate any provision of the charter or by-laws of such Obligor,
(b) violate any provision of the Delaware General Corporation Law,
(c) violate any applicable law, rule or regulation of the United
States of America or the State of New York, (d) violate any order,
writ, injunction or decree of any court or governmental authority
or agency or any arbitral award applicable to such Obligor of which
we have knowledge (after due inquiry) or (e) result in a breach of,
constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness
pursuant to the terms of, any agreement or instrument of which we
have knowledge (after due inquiry) to which such Obligor is a party
or by which it is bound or to which it is subject, or (except for
the Liens created pursuant to the Pledge Agreements) result in the
creation or imposition of any Lien upon any Property of such
Obligor pursuant to the terms of any such agreement or instrument.
8. We have no knowledge (after due inquiry) of any legal or
arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or
threatened against or affecting either Obligor or any of its
Properties that, if adversely determined, could have a Material
Adverse Effect.
9. The issued and outstanding shares of capital stock of the
Company consist of the type and number of shares described in Annex
1 to the Parent Pledge Agreement. All of said shares have been duly
and validly issued and are fully paid and nonassessable.
10. Each Pledge Agreement is effective to create, in favor of
the Administrative Agent for the benefit of the Administrative
Agent and the Lenders, a valid security interest under the Uniform
Commercial Code as in effect in the State of New York (the "UCC")
in all of the right, title and interest of the Obligor party
thereto in, to and under the Collateral (as defined in such Pledge
Agreement) as collateral security for the payment when due of the
Secured Obligations (as defined in such Pledge Agreement), except
that (a) such security interest will
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continue in Collateral (as so defined) after its sale, exchange
or other disposition and in any Proceeds thereof only to the
extent provided in Section 9-306 of the UCC, (b) such security
interest in any portion of the Collateral (as so defined) in
which such Obligor acquires rights after the commencement of a
case under the Bankruptcy Code in respect of the Company may be
limited by Section 552 of the Bankruptcy Code and (c) the
creation of a security interest in any Pledged Stock (as defined
in such Pledge Agreement) constituting a Security requires the
transfer thereof to the Administrative Agent pursuant to Section
8-313(1) of the UCC, which transfer in the case of a Certificated
Security, may be effected in the manner contemplated by paragraph
11 below.
11. The security interest referred to in paragraph 10 above in
that portion of such Collateral consisting of a Certificated
Security (including the Pledged Stock (as defined in the Pledge
Agreements)), will, upon the creation of such security interest, be
perfected by the Administrative Agent taking and thereafter
retaining possession in the State of New York of such Certificated
Security (or any certificates representing any such Certificated
Security).
12. The security interest referred to in paragraph 10 above in
the Standby Purchase Agreement will, upon the creation of such
security interest, be perfected by filing the Financing Statements
in the offices of the Secretary of State of the State of New York
and the County Clerk of New York County, New York.
13. With respect to any portion of such Collateral consisting
of a Certificated Security (including the Pledged Stock (as defined
in the Pledge Agreements)), if such security interest in perfected
by the Administrative Agent in the manner specified in paragraph 11
above in good faith and without notice of any Adverse Claim and in
bearer form or in registered form issued to the Administrative
Agent or indorsed to the Administrative Agent or in blank, such
perfected security interest will have priority over all other
security interests theretofore or thereafter created under the UCC.
The foregoing opinions are subject to the following comments
and qualifications:
(A) The enforceability of provisions in the Credit Documents
to the effect that terms may not be waived or modified except in
writing may be limited under certain circumstances.
(B) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Lender is located (other than the
State of New York) that limit the interest, fees or other charges
such Lender may impose for the loan or use of money or other
credit, (ii) Section 4.07(c) of the Credit Agreement, (iii) the
second paragraph of Section 11.01 of the Credit Agreement and (iv)
the second sentence of Section 11.09 of the Credit Agreement (and
any similar provisions in any of the other Credit Documents),
insofar as such sentence relates to the subject matter jurisdiction
of the United States District Court for the Southern District of
New York to adjudicate any controversy related to the Credit
Documents.
(C) We wish to point out that the obligations of either
Obligor, and the rights and
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remedies of the Administrative Agent, under the Pledge Agreement
to which such Obligor is a party may be subject to possible
limitations upon the exercise of remedial or procedural
provisions contained in such Pledge Agreement, provided that such
limitations do not, in our opinion (but subject to the other
comments and qualifications set forth in this opinion letter),
make the remedies and procedures that will be afforded to the
Administrative Agent and the Lenders inadequate for the practical
realization of the substantive benefits purported to be provided
to the Administrative Agent and the Lenders by such Pledge
Agreement.
(D) With respect to our opinions in paragraphs 10 through 13
above, we express no opinion as to the creation, perfection or
priority of any security interest in (or other lien on) any portion
of the Collateral (as defined in either Pledge Agreement) (i) to
the extent that, pursuant to Section 9-104 of the UCC, Article 9
of the UCC does not apply thereto or (ii) consisting of
Uncertificated Securities.
(E) We express no opinion as to the existence of, or the
right, title or interest of the Company in, to or under, any of the
Collateral (as defined in either Pledge Agreement).
(F) Except as expressly provided in paragraphs 10 through 13
above, we express no opinion as to the creation, perfection or
priority of any security interest in, or other lien on, the
Collateral (as defined in the Company Pledge Agreement).
(G) We invite your attention to the fact that an act to amend
Articles 8 and 9 of the New York Uniform Commercial Code was
introduced in the New York State Assembly on March 18, 1996
(Assembly Bill No. 9454) and in the New York State Senate on March
20, 1996 (Senate Bill No. 6571). This act (which was referred to
the Committee on Judiciary) would replace the current Article 8
(and certain related provisions of Article 9) with the version of
revised Article 8 adopted by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws in 1994.
If enacted in the form proposed, this act would materially change
the opinions expressed in paragraphs 2, 3 and 4 above (insofar as
such opinions relate to Securities) were such opinions to be
rendered after such enactment.
The foregoing opinions are limited to matters involving the
Federal laws of the United States of America, the Delaware General Corporation
Law and the law of the State of New York, and we do not express any opinion as
to the laws of any other jurisdiction.
At the request of our clients, this opinion letter is provided
to you by us in our capacity as counsel to the Obligors, and this opinion letter
may not be relied upon by any Person for any purpose other than in connection
with the transactions contemplated by the Credit Agreement without, in each
instance, our prior written consent.
Very truly yours,
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Annex 1
DEFINED TERMS
"ADVERSE CLAIM" means an "adverse claim" within the meaning of
Section 8-302(2) of the UCC.
"CERTIFICATED SECURITY" means a "certificated security" within
the meaning of Section 8- 102(1)(a) of the UCC, other than a Clearing
Corporation Security.
"CLEARING CORPORATION" means a "clearing corporation" within
the meaning of Section 8-102(3) of the UCC.
"CLEARING CORPORATION SECURITY" means a Security that is
either (a) an Uncertificated Security that is (i) issued by an issuer organized
under the laws of the State of New York and (ii) registered in the name of a
Clearing Corporation or of a Custodian or the nominee of a Clearing Corporation
or such Custodian or (b) a "certificated security" (within the meaning of
Section 8- 102(1)(a) of the UCC) that is (i) held in the State of New York in
the custody of a Clearing Corporation or of a Custodian or the nominee of such
Clearing Corporation or such Custodian subject to the exclusive control of such
Clearing Corporation and (ii) in bearer form or indorsed in blank by an
appropriate Person or registered in the name of a Clearing Corporation or of a
Custodian or the nominee of such Clearing Corporation or such Custodian subject
to the exclusive control of such Clearing Corporation.
"CUSTODIAN" means a "custodian" within the meaning of Section
8-102(4) of the UCC.
"PROCEEDS" means "proceeds" within the meaning of Section
9-306(1) of the UCC.
"SECURITY" means a "security" as such term is defined in
Section 8-102(1)(c) of the UCC.
"UNCERTIFICATED SECURITY" means an "uncertificated security"
within the meaning of Section 8-102(1)(b) of the UCC.
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EXHIBIT G to the
Credit Agreement
[Form of Opinion of Special New York Counsel to Chase]
August 16, 1996
To the Lenders party to the
Credit Agreement referred to
below and The Chase Manhattan Bank,
as Administrative Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase
Manhattan Bank, ("CHASE") in connection with (i) the Credit Agreement dated as
of August 16, 1996 (the "CREDIT AGREEMENT") between SAF Funding Corporation (the
"COMPANY"), the lenders party thereto (the "LENDERS") and Chase, as
Administrative Agent, providing for loans to be made by the Lenders to the
Company in an aggregate principal amount not exceeding $100,000,000 and (ii) the
various other agreements, instruments and other documents referred to in the
next following paragraph. All capitalized terms used but not defined herein have
the respective meanings given to such terms in the Credit Agreement or, if not
defined in the Credit Agreement, in Annex 1 hereto. This opinion letter is being
delivered pursuant to Section 6.01(h) of the Credit Agreement.
In rendering the opinions expressed below, we have examined
the following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Company Pledge Agreement;
(c) the Parent Pledge Agreement;
(d) the Put Agreement; and
(e) the Standby Purchase Agreement.
The agreements, instruments and other documents referred to in the foregoing
lettered clauses are collectively referred to as the "BASIC DOCUMENTS"; the
Company Pledge Agreement and the Parent Pledge Agreement are collectively
referred to as the "PLEDGE AGREEMENTS"; the Company, the Parent and the State
Auto Obligors are herein collectively referred to as the "OBLIGORS".
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In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon representations made in or pursuant to the Credit Documents.
In rendering the opinions expressed below, we have assumed,
with respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have
been duly executed and delivered by, and (except to
the extent set forth in the opinions below as to the
Obligors) constitute legal, valid, binding and
enforceable obligations of, all of the parties to
such documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all of the parties to such documents are duly
organized and validly existing and have the power and
authority (corporate or other) to execute, deliver
and perform such documents.
Based upon and subject to the foregoing and subject also to
the comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. Each of the Basic Documents constitutes the legal, valid
and binding obligation of each Obligor party thereto, enforceable
against such Obligor in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors
generally and except as the enforceability of the Basic Documents
is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at
law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any
other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
2. Each Pledge Agreement is effective to create, in favor of
the Administrative Agent for the benefit of the Administrative
Agent and the Lenders, a valid security interest under the Uniform
Commercial Code as in effect in the State of New York (the "UCC")
in all of the right, title and interest of the Obligor party
thereto in, to and under the Collateral (as defined in such Pledge
Agreement) as collateral security for the payment when due of the
Secured Obligations (as defined in such Pledge Agreement), except
that (a) such security interest will continue in Collateral (as so
defined) after its sale, exchange or other disposition and in any
Proceeds thereof only to the extent provided in Section 9-306 of
the UCC, (b) such security interest in any portion of the
Collateral (as so defined) in which such Obligor acquires rights
after the commencement of a case under the Bankruptcy Code in
respect of such Obligor may be limited by Section 552 of the
Bankruptcy Code and (c) the creation of a security interest in any
Pledged Stock (as defined in such Pledge Agreement) constituting a
Security requires the
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transfer thereof to the Administrative Agent pursuant to Section
8-313(1) of the UCC, which transfer in the case of a Certificated
Security, may be effected in the manner contemplated by paragraph
3 below.
3. The security interest referred to in paragraph 2 above in
that portion of such Collateral consisting of a Certificated
Security (including the Pledged Stock (as defined in the Pledge
Agreements)), will, upon the creation of such security interest, be
perfected by the Administrative Agent taking and thereafter
retaining possession in the State of New York of such Certificated
Security (or any certificates representing any such Certificated
Security).
4. With respect to any portion of such Collateral consisting
of a Certificated Security (including the Pledged Stock (as defined
in the Pledge Agreements)), if such security interest in perfected
by the Administrative Agent in the manner specified in paragraph 3
above in good faith and without notice of any Adverse Claim and in
bearer form or in registered form issued to the Administrative
Agent or indorsed to the Administrative Agent or in blank, such
perfected security interest will have priority over all other
security interests theretofore or thereafter created under the UCC.
The foregoing opinions are subject to the following comments
and qualifications:
(A) The enforceability of Section 5.03 of the Put Agreement
and Section 6.04 of the Standby Purchase Agreement (and any similar
provision in any of the other Basic Documents) may be limited by
(i) laws rendering unenforceable indemnification contrary to
Federal or state securities laws and the public policy underlying
such laws and (ii) laws limiting the enforceability of provisions
exculpating or exempting a party, or requiring indemnification of a
party for, liability for its own action or inaction, to the extent
the action or inaction involves gross negligence, recklessness,
willful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Basic Documents to
the effect that terms may not be waived or modified except in
writing may be limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Bank is located (other than the State
of New York) that limit the interest, fees or other charges such
Bank may impose, (ii) Section 4.07(c) of the Credit Agreement,
(iii) the second paragraph of Section 11.01 of the Credit Agreement
and (iv) the second sentence of Section 11.10 of the Credit
Agreement, Section 7.07 of the Standby Purchase Agreement and
Section 5.08 of the Put Agreement (and any similar provisions in
any of the other Basic Documents), insofar as such sentence relates
to the subject matter jurisdiction of the United States District
Court for the Southern District of New York to adjudicate any
controversy related to any of the Basic Documents.
(D) We wish to point out that the obligations of the Obligors,
and the rights and remedies of the Administrative Agent, under the
Pledge Agreements may be subject to possible limitations upon the
exercise of remedial or procedural provisions contained in the
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Pledge Agreements, provided that such limitations do not, in our
opinion (but subject to the other comments and qualifications set
forth in this opinion letter), make the remedies and procedures
that will be afforded to the Administrative Agent and the Lenders
inadequate for the practical realization of the substantive
benefits purported to be provided to the Administrative Agent and
the Lenders by the Pledge Agreements.
(E) With respect to our opinions in paragraphs 2, 3 and 4
above, we express no opinion as to the creation, perfection or
priority of any security interest in (or other lien on) any portion
of the Collateral (as defined in the Pledge Agreements) (i) to the
extent that, pursuant to Section 9-104 of the UCC, Article 9 of the
UCC does not apply thereto or (ii) consisting of Uncertificated
Securities.
(F) We express no opinion as to the existence of, or the
right, title or interest of the Obligors in, to or under, any of
the Collateral (as defined in the Pledge Agreements).
(G) Except as expressly provided in paragraphs 2 through 4
above, we express no opinion as to the creation, perfection or
priority of any security interest in, or other lien on, the
Collateral (as defined in the Pledge Agreements).
(H) We invite your attention to the fact that an act to amend
Articles 8 and 9 of the New York Uniform Commercial Code was
introduced in the New York State Assembly on March 18, 1996
(Assembly Bill No. 9454) and in the New York State Senate on March
20, 1996 (Senate Bill No. 6571). This act (which was referred to
the Committee on Judiciary) would replace the current Article 8
(and certain related provisions of Article 9) with the version of
revised Article 8 adopted by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws in 1994.
If enacted in the form proposed, this act would materially change
the opinions expressed in paragraphs 2, 3 and 4 above (insofar as
such opinions relate to Securities) were such opinions to be
rendered after such enactment.
The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction.
At the request of our client, this opinion letter is, pursuant
to Section 6.01(h) of the Credit Agreement, provided to you by us in our
capacity as special New York counsel to Chase and may not be relied upon by any
Person for any purpose other than in connection with the transactions
contemplated by the Credit Agreement without, in each instance, our prior
written consent.
Very truly yours,
WJM/TDB
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Annex 1
DEFINED TERMS
"ADVERSE CLAIM" means an "adverse claim" within the meaning of
Section 8-302(2) of the UCC.
"CERTIFICATED SECURITY" means a "certificated security" within
the meaning of Section 8- 102(1)(a) of the UCC, other than a Clearing
Corporation Security.
"CLEARING CORPORATION" means a "clearing corporation" within
the meaning of Section 8-102(3) of the UCC.
"CLEARING CORPORATION SECURITY" means a Security that is
either (a) an Uncertificated Security that is (i) issued by an issuer organized
under the laws of the State of New York and (ii) registered in the name of a
Clearing Corporation or of a Custodian or the nominee of a Clearing Corporation
or such Custodian or (b) a "certificated security" (within the meaning of
Section 8- 102(1)(a) of the UCC) that is (i) held in the State of New York in
the custody of a Clearing Corporation or of a Custodian or the nominee of such
Clearing Corporation or such Custodian subject to the exclusive control of such
Clearing Corporation and (ii) in bearer form or indorsed in blank by an
appropriate Person or registered in the name of a Clearing Corporation or of a
Custodian or the nominee of such Clearing Corporation or such Custodian subject
to the exclusive control of such Clearing Corporation.
"CUSTODIAN" means a "custodian" within the meaning of Section
8-102(4) of the UCC.
"PROCEEDS" means "proceeds" within the meaning of Section
9-306(1) of the UCC.
"SECURITY" means a "security" as such term is defined in
Section 8-102(1)(c) of the UCC.
"UNCERTIFICATED SECURITY" means an "uncertificated security"
within the meaning of Section 8-102(1)(b) of the UCC.
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EXHIBIT H to the
Credit Agreement
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Credit Agreement dated as of August 16, 1996 (as
modified and supplemented and in effect from time to
time, the "CREDIT AGREEMENT"), between SAF Funding
Corporation (the "COMPANY"), the lenders party
thereto and The Chase Manhattan Bank, as
Administrative Agent.
Dear Ladies and Gentlemen:
As a Lender party to the Credit Agreement, we have agreed with
the Company pursuant to Section 11.11 of the Credit Agreement to use reasonable
precautions to keep confidential, except as otherwise provided therein, all
non-public information identified by the Company as being confidential at the
time the same is delivered to us pursuant to the Credit Agreement.
As provided in said Section 11.11, we are permitted to provide
you, as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Lender], with certain of such non-public
information subject to the execution and delivery by you, prior to receiving
such non-public information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution and return to
us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on
behalf of yourself and each of your affiliates, directors, officers, employees
and representatives and for the benefit of us and the Company) that (A) such
information will not be used by you except in connection with the proposed
[participation][assignment] mentioned above and (B) you shall use reasonable
precautions, in accordance with your customary procedures for handling
confidential information and in accordance with safe and sound banking
practices, to keep such information confidential, PROVIDED that nothing herein
shall limit the disclosure of any such information (i) after such information
shall have become public (other than through a violation of Section 11.11 of the
Credit Agreement), (ii) to the extent required by statute, rule, regulation or
judicial process, (iii) to your counsel or to counsel for any of the Lenders or
the Administrative Agent, (iv) to bank examiners (or any other regulatory
authority having jurisdiction over any Lender or the
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Administrative Agent), or to auditors or accountants, (v) to the Administrative
Agent or any other Lender (or to Chase Securities Inc.), (vi) in connection with
any litigation to which you or any one or more of the Lenders or the
Administrative Agent are a party, or in connection with the enforcement of
rights or remedies under the Credit Agreement or under any other Credit
Document, (vii) to a subsidiary or affiliate of yours as provided in Section
11.11(a) of the Credit Agreement or (viii) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to you a
Confidentiality Agreement substantially in the form hereof; PROVIDED, FURTHER,
that in no event shall you be obligated to return any materials furnished to you
pursuant to this Confidentiality Agreement.
If you are a prospective assignee, your obligations under this
Confidentiality Agreement shall be superseded by Section 11.11 of the Credit
Agreement on the date upon which you become a Lender under the Credit Agreement
pursuant to Section 11.05(b) thereof.
Please indicate your agreement to the foregoing by signing as
provided below the enclosed copy of this Confidentiality Agreement and returning
the same to us.
Very truly yours,
[INSERT NAME OF LENDER]
By_________________________
The foregoing is agreed to
as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By_________________________
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EXHIBIT I to the
Credit Agreement
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of August
16, 1996 (as modified and supplemented and in effect from time to time, the
"CREDIT AGREEMENT"), between SAF Funding Corporation, a Delaware, the lenders
named therein, and The Chase Manhattan Bank, as administrative agent for such
lenders. Terms defined in the Credit Agreement are used herein as defined
therein.
____________________ (the "ASSIGNOR") and ____________________
(the "ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date as set forth in Schedule 1 hereto (the "EFFECTIVE DATE"), an
interest (the "ASSIGNED INTEREST") in and to the Assignor's rights and
obligations under the Credit Agreement with respect to the Commitment and the
Loans, in a principal amount and percentage as set forth on Schedule 1.
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, any other
Credit Document or any other instrument or document furnished pursuant thereto,
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, any other Credit Document or any other
instrument or document furnished pursuant thereto, other than that it has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any other obligation or the performance or
observance by the Company or any other obligor of any of their respective
obligations under the Credit Agreement or any other Credit Document or any other
instrument or document furnished pursuant hereto or thereto; and (iii) attaches
the Note(s) held by it and requests that the Administrative Agent exchange such
Note(s) for a new Note or Notes payable to the Assignor (if the Assignor has
retained any interest in the Assigned Facility) and a new Note or Notes payable
to the Assignee in the respective amounts which reflect the assignment being
made hereby (and after giving effect to any other assignments which have become
effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 7.02 thereof, the financial
statements delivered pursuant to Section 8.01 thereof, if any, 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; (iii) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit
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Agreement, the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto; (iv) appoints and authorizes the
Administrative Agent to take such action as administrative agent on its behalf
and to exercise such powers and discretion under the Credit Agreement, the other
Credit Documents or any other instrument or document furnished pursuant hereto
or thereto as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and (v) agrees that it will
be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender.
4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Administrative Agent for acceptance by the
Administrative Agent pursuant to Section 11.05(b) of the Credit Agreement,
effective as of the Effective Date (which date shall not, unless otherwise
agreed to by the Administrative Agent, be earlier than five Business Days after
the date of such acceptance by the Administrative Agent).
5. Upon such acceptance, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignee which accrue subsequent to the Effective Date.
6. From and after the Effective Date, (i) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Credit Documents and shall be bound by the
provisions thereof and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement except as provided in Section 11.06 of
the Credit Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the law of the State of New York.
8. This Assignment and Acceptance may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Assignment and
Acceptance by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
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Schedule 1 to
Assignment and Acceptance
relating to the Credit Agreement,
dated as of August 16, 1996,
between SAF Funding Corporation,
the lenders named therein and
The Chase Manhattan Bank, as administrative agent for the Lenders
(in such capacity, the "ADMINISTRATIVE AGENT")
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Principal Percentage
AMOUNT ASSIGNED ASSIGNED
- -------------------------------------------------------------
[ASSIGNEE] [ASSIGNOR]
By:___________________________ By:__________________________
Title: Title:
[Consented to and] Accepted:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:__________________________
Title:
[Consented to:
SAF FUNDING CORPORATION
By:__________________________
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Title:
STATE AUTOMOBILE MUTUAL
INSURANCE COMPANY
By:__________________________
Title:]