[Conformed Counterpart]
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ENHANCE FINANCIAL SERVICES GROUP INC.
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AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of November 24, 1992
Amended and Restated as of October 1, 1996
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$60,000,000
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THE CHASE MANHATTAN BANK,
as Administrative Agent
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Exhibits C and D are copies of the opinions as delivered.
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............................ 16
1.03 Classes; Series; Type.......................................... 17
Section 2. Commitments, Loans, Notes and Prepayments...................... 17
2.01 Loans.......................................................... 17
2.02 Borrowings..................................................... 19
2.03 Changes in Aggregate Amount of Commitments..................... 21
2.04 Commitment Fee................................................. 21
2.05 Several Obligations; Remedies Independent...................... 22
2.06 Notes.......................................................... 22
2.07 Optional Prepayments and Conversions or
Continuations of Loans..................................... 23
2.08 Mandatory Prepayments of Loans or Pledge of
Additional Shares.......................................... 24
2.09 Extension of Commitment Termination Date....................... 25
Section 3. Payments of Principal and Interest............................. 25
3.01 Repayment of Loans............................................. 25
3.02 Interest....................................................... 26
Section 4. Payments; Pro Rata Treatment; Computations;
Etc....................................................... 27
4.01 Payments....................................................... 27
4.02 Pro Rata Treatment............................................. 28
4.03 Computations................................................... 29
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4.04 Minimum Amounts................................................ 29
4.05 Certain Notices................................................ 30
4.06 Non-Receipt of Funds by the Administrative Agent............... 31
4.07 Sharing of Payments, Etc....................................... 32
Section 5. Yield Protection, Etc.......................................... 33
5.01 Additional Costs............................................... 33
5.02 Limitation on Types of Loans................................... 36
5.03 Illegality..................................................... 36
5.03A Treatment of Affected Loans................................... 37
5.04 Compensation................................................... 37
5.05 U.S. Taxes..................................................... 38
5.06 Fair Allocation; Substitution of Banks......................... 39
Section 6. Conditions Precedent........................................... 41
6.01 Amendment Effective Date....................................... 41
6.02 Term Loans..................................................... 43
6.03 Initial and Subsequent Loans................................... 43
Section 7. Representations and Warranties................................. 44
7.01 Corporate Existence............................................ 44
7.02 Financial Condition............................................ 44
7.03 Litigation..................................................... 45
7.04 No Breach...................................................... 45
7.05 Action......................................................... 46
7.06 Approvals...................................................... 46
7.07 Margin Stock................................................... 46
7.08 ERISA.......................................................... 47
7.09 Taxes.......................................................... 47
7.10 Investment Company Act......................................... 47
7.11 Public Utility Holding Company Act............................. 47
7.12 Material Agreements and Liens.................................. 47
7.13 Environmental Matters.......................................... 48
7.14 Capitalization................................................. 48
7.15 Subsidiaries, Etc.............................................. 48
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7.16 True and Complete Disclosure................................... 49
Section 8. Covenants of the Company....................................... 49
8.01 Financial Statements; Information; Etc......................... 50
8.02 Litigation..................................................... 54
8.03 Existence, Etc................................................. 54
8.04 Insurance...................................................... 55
8.05 Prohibition of Fundamental Changes............................. 55
8.06 Limitation on Liens............................................ 56
8.07 Indebtedness................................................... 58
8.08 Investments.................................................... 58
8.09 Restricted Payments............................................ 59
8.10 Financial Covenants............................................ 60
8.11 Capital Expenditures........................................... 61
8.12 Lines of Business.............................................. 61
8.13 Transactions with Affiliates................................... 61
8.14 Use of Proceeds................................................ 62
8.15 Certain Obligations Respecting Subsidiaries.................... 62
8.16 Modifications of Certain Documents............................. 62
8.17 Claims-Paying Rating........................................... 63
8.18 Dividends to or Investments in the Company by
Subsidiaries............................................... 63
Section 9. Events of Default.............................................. 63
Section 10. The Administrative Agent...................................... 66
10.01 Appointment, Powers and Immunities............................ 66
10.02 Reliance by Administrative Agent.............................. 67
10.03 Defaults...................................................... 67
10.04 Rights as a Bank.............................................. 68
10.05 Indemnification............................................... 68
10.06 Non-Reliance on Administrative Agent and Other
Banks...................................................... 69
10.07 Failure to Act................................................ 69
10.08 Resignation or Removal of Administrative Agent................ 70
10.09 Consents under Basic Documents................................ 70
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Section 11. Miscellaneous................................................. 71
11.01 Waiver........................................................ 71
11.02 Notices....................................................... 71
11.03 Expenses, Etc................................................. 71
11.04 Amendments, Etc............................................... 72
11.05 Successors and Assigns........................................ 73
11.06 Assignments and Participations................................ 73
11.07 Survival...................................................... 75
11.08 Captions...................................................... 76
11.09 Counterparts.................................................. 76
11.10 Governing Law; Submission to Jurisdiction..................... 76
11.11 Waiver of Jury Trial.......................................... 76
11.12 Treatment of Certain Information;
Confidentiality............................................ 76
11.13 Acknowledgement and Consent................................... 77
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Subsidiaries
SCHEDULE III - Litigation
EXHIBIT A-1 - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Term Loan Note
EXHIBIT B - Form of Pledge Agreement
EXHIBIT C - Form of Opinion of General Counsel to the Company
EXHIBIT D - Form of Opinion of Special New York Counsel to Chase
EXHIBIT E - Form of Confidentiality Agreement
EXHIBIT F - Form of Assignment and Acceptance
Credit Agreement
AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 24, 1992,
amended and restated as of October 1, 1996 among: ENHANCE FINANCIAL SERVICES
GROUP INC., a corporation duly organized and validly existing under the laws of
the State of New York (together with its successors and assigns, the "Company");
each of the lenders named under the caption "BANKS" on the signature pages
hereof (together with its successors and assigns, individually, a "Bank",
together, the "Banks"); and THE CHASE MANHATTAN BANK, as Swingline Bank
hereunder (in such capacity, together with its successors and permitted assigns
in such capacity, the "Swingline Bank") and as agent for the Banks (in such
capacity, together with its successors in such capacity, the "Administrative
Agent").
The Company, certain of the Banks (the "Existing Banks") and the
Administrative Agent are party to the Credit Agreement dated as of November 24,
1992 (as in effect immediately prior to the Amendment Effective Date defined
below, the "Existing Credit Agreement").
The Company has requested that the Existing Banks and the
Administrative Agent, and the Banks and the Administrative Agent are willing to,
amend and restate the Existing Credit Agreement to provide, among other things,
for an increase in the Commitments and an addition of a Bank and for Base Rate
Loans and Swingline Loans (each as defined below), on the terms and conditions
hereof.
Accordingly, the parties hereto agree to amend and restate the
Existing Credit Agreement so that, as amended and restated, it reads in its
entirety as herein provided.
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):
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"Affiliate" shall mean, as to any specified Person, any other Person
that directly or indirectly controls, or is under common control with, or is
controlled by, such specified Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person that owns directly or
indirectly securities having 10% or more of the voting power for the election of
directors or other governing body of a corporation or 10% or more of the
partnership or other ownership interests of any other Person will be deemed to
control such corporation or other Person. Notwithstanding the foregoing, (a) no
individual shall be an Affiliate of any Person or any of its Subsidiaries solely
by reason of such individual being a director, officer or employee of such
Person or any of its Subsidiaries, (b) a Person and its Subsidiaries shall not
be Affiliates of each other and (c) neither the Administrative Agent nor any
Bank shall be an Affiliate of the Company or any of its Subsidiaries.
"Amendment Effective Date" shall mean the date on which all of the
conditions set forth in Section 6.01 hereof shall have been satisfied or waived
by the Banks and the Administrative Agent.
"Applicable Insurance Regulatory Authority" shall mean, with respect
to any Insurance Subsidiary, the insurance department or similar insurance
regulatory or administrative authority or agency of the state in which such
Insurance Subsidiary is domiciled.
"Applicable Lending Office" shall mean, for each Bank and each Type
of Loan, the "Lending Office" of such Bank (or of an affiliate of such Bank)
designated for such Type of Loan on the signature pages hereof or such other
office of such Bank (or of an affiliate of such Bank) as such Bank may from time
to time specify to the Administrative Agent and the Company as the office by
which its Loans of a Type are to be made and maintained. The
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Swingline Loans shall be made and maintained at the "Lending Office" of the
Swingline Bank.
"Applicable Margin" shall mean: (a) with respect to Revolving Credit
Loans (i) that are Base Rate Loans, 0% per annum and (ii) that are Eurodollar
Loans, 0.40%; and (b) with respect to Term Loans (i) that are Base Rate Loans,
0% per annum and (ii) that are Eurodollar Loans, 0.50% per annum.
"Asset Guaranty" shall mean Asset Guaranty Reinsurance Company, a
New York financial guaranty insurance company and a Wholly Owned Subsidiary of
the Company.
"Available Cash Flow" shall mean, for any period, the sum, for the
Company (determined on an unconsolidated, stand-alone basis in accordance with
GAAP), of the following: (a) income from operations (calculated before taxes,
Debt Service, extraordinary and unusual items, and income or loss attributable
to equity in Affiliates of the Company) for such period plus (b) dividends
received from Subsidiaries of the Company during such period plus (c) dividends
declared by Subsidiaries of the Company during such period but not yet paid plus
(d) without duplication of any amount included above, the aggregate amount of
dividends legally available for payment by each Subsidiary of the Company as of
the last day of such period to the extent such payment would not result in a
Default hereunder.
"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.
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"Basic Documents" shall mean, collectively, this Agreement, the
Notes and the Pledge Agreement.
"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, also on which dealings in Dollar deposits are
carried out in the London interbank market.
"Capital Expenditures" shall mean, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Company or any of its
Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs)
during such period computed in accordance with GAAP.
"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 (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board), and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"Change in Control" shall mean, with respect to the Company, the
occurrence of a state of facts where (a) any one Person, together with its
Subsidiaries and Affiliates, or any group of Persons acting together as a group
(whether pursuant to a shareholders agreement, partnership or joint venture
agreement or otherwise), shall own (beneficially or otherwise) 50% or more of
the Voting Stock of the Company (except where such circumstance shall obtain as
a result of the arrangement existing
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on the date hereof as set forth in the Shareholders' Agreement, or (b) the
Company is or would be required to register itself as a "controlled insurer"
under Section 1503 of the New York Insurance Law, or (c) the Company is or would
be required under Section 1506(e) of the New York Insurance Law to notify the
New York State Superintendent of Insurance of a Person which controls or has
acquired control of the Company, or (d) a Person has filed under Section 1506(a)
of the New York Insurance Law to obtain the prior approval of the New York State
Superintendent of Insurance to acquire control of the Company and such approval
has been obtained.
"Chase" shall mean The Chase Manhattan Bank.
"Class" shall have the meaning assigned to such term in Section 1.03
hereof.
"Closing Date" shall mean the date upon which the initial Loans
hereunder are made.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral Account" shall have the meaning assigned to such term in
Section 4.01 of the Pledge Agreement.
"Commitment" shall mean, as to each Bank, the obligation of such
Bank to make Loans in an aggregate amount not exceeding the amount set opposite
such Bank's name on the signature pages hereof under the caption "Commitment"
(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 September 30, 1997
(provided that, if such date is not a Business Day, the next preceding Business
Day), as the same may be extended pursuant to Section 2.09 hereof.
"Computation Date" shall have the meaning in Section 8.09 hereof.
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"Computation Period" shall have the meaning assigned to such term in
Section 8.09 hereof.
"Consent Date" shall have the meaning assigned to such term in
Section 2.09 hereof.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.07 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.07 hereof of one Type of Loans into another Type of Loans,
which may be accompanied by the transfer by a Bank (at its sole discretion) of a
Loan from one Applicable Lending Office to another.
"date hereof" and "date of this Agreement" shall mean November 24,
1992.
"Debt Service" shall mean, for any period, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) Interest Expense plus (b) 1/3 of
all lease payments (net of any amounts received from subtenants with respect to
such leases) plus (c) the amount of dividends due and redemptions paid in
respect of Preferred Stock during such period plus (d) the amount of mandatory
repayment of the principal of Indebtedness due during such period.
"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.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without
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limitation, any stockholders' or voting trust agreements) for the issuance,
sale, registration or voting of, or outstanding securities convertible into, any
additional shares of capital stock of any class, or partnership or other
ownership interests of any type in, such Person.
"ERC" shall mean Enhance Reinsurance Company, a New York financial
guaranty insurance corporation and a Wholly Owned Subsidiary of the Company.
"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 (a) described in Section 414(b)
or (c) of the Code of which the Company is a member and (b) 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 arithmetic mean (rounded upwards, if
necessary, to the nearest 1/16 of 1%), as determined by the Administrative
Agent, of the respective rates per annum quoted by the Reference Banks 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 such Reference Bank 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 such Reference Bank for such Interest Period. If any Reference Bank or
Reference Banks do not timely furnish information for determination of any
Eurodollar Base Rate, the Administrative Agent shall determine such Eurodollar
Base Rate on the basis of information timely furnished by the remaining
Reference Banks or Reference Bank.
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"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 quotient of (a) the Eurodollar Base Rate for such Loan for such Interest
Period divided by (b) the sum of (i) 1 minus (ii) the Reserve Requirement for
such Loan for such Interest Period.
"Event of Default" shall have the meaning assigned to such term in
Section 9 hereof.
"Existing Banks" shall have the meaning assigned to such term in the
recitals hereto.
"Existing Commitment Termination Date" shall have the meaning
assigned to such term in Section 2.09 hereof.
"Existing Loans" shall mean the loans outstanding under the Existing
Credit Agreement on the Amendment Effective Date.
"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 reasonably determined by the Administrative Agent.
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"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio
of (a) Available Cash Flow for such period to (b) Debt Service for such period.
"Funded Debt" shall mean Indebtedness of the Company and its
Subsidiaries which by its terms becomes payable more than one year from the date
of origination thereof or which is renewable at the option of the Company or any
of its Subsidiaries beyond one year from the date of such origination.
"GAAP" shall mean the generally accepted accounting principles
which, in accordance with Section 1.02(a) hereof, are to be used in preparing
financial statements on the basis of which are to be made the calculations for
purposes of determining compliance with the financial covenants in this
Agreement.
"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; provided that the term Guarantee shall not include any
financial guaranty insurance, credit insurance or residual value insurance (or
any reinsurance of the same), or similar or related products, issued by any
Insurance Subsidiary in the ordinary course of its 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
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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) all
Redeemable Preferred Stock issued by such Person; (c) obligations of such Person
to pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (d) 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; (e) obligations
(contingent or otherwise) of such Person in respect of letters of credit,
bankers' acceptances or similar instruments issued or accepted by banks and
other financial institutions for account of such Person; (f) Capital Lease
Obligations of such Person; and (g) Indebtedness of others Guaranteed by such
Person; provided that accrued profit commissions shall not be treated as
Indebtedness.
"Insurance Subsidiaries" shall mean ERC, Asset Guaranty and any
other Subsidiary of the Company that is licensed to do an insurance business by
an Applicable Insurance Regulatory Authority.
"Interest Expense" shall mean, for any period, the sum, for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest in
respect of Indebtedness accrued or capitalized during such period (whether or
not actually paid during such period) plus (b) the net amounts payable (or minus
the net amounts receivable) under Interest Rate Protection Agreements accrued
during such period (whether or not actually paid or received during such
period).
"Interest Period" shall mean (a) with respect to any Revolving
Credit Loan that is a Eurodollar Loan, each period commencing on the date such
Eurodollar Loan is made or Converted
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from a Base Rate Loan or (in the event of a Continuation) the last day of the
next preceding Interest Period and ending on the numerically corresponding day
in the first, second or third calendar month thereafter, as the Company may
select as provided in Section 4.05 hereof, and (b) with respect to any Term Loan
that is a Eurodollar Loan, each period commencing on the date such Term 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 and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Company may select as provided in Section 4.05 hereof, 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 and (c) with respect to any Swingline
Loan, the period commencing on the date such Swingline Loan is made and ending
on the date three Business Days thereafter. Notwithstanding the foregoing: (i)
the Company may not select any Interest Period for any Revolving Credit Loan
that ends after the Commitment Termination Date; (ii) no Interest Period for any
Series of Term Loans may commence before and end after any Principal Payment
Date for such Series of Term Loans unless, after giving effect thereto, the
aggregate principal amount of Term Loans of such Series having Interest Periods
that end after such Principal Payment Date shall be equal to or less than the
aggregate principal amount of such Term Loans scheduled to be outstanding after
giving effect to the payments of principal required to be made on such Principal
Payment Date; and (iii) each Interest Period that would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
with respect to Eurodollar Loans, if such next succeeding Business Day falls in
the next succeeding calendar month, on the next preceding Business Day).
"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.
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"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 short 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, but excluding
any such advance, loan or extension of credit having a term not exceeding 90
days representing the purchase price of inventory or supplies sold by such
Person in the ordinary course of business) and (without duplication) the
entering into of any commitment to deposit funds with, advance or lend funds to
or otherwise extend credit to such Person; (c) the entering into of any
Guarantee of Indebtedness of any other Person; or (d) the entering into of any
Interest Rate Protection Agreement; provided that the term "Investment" shall
not include (i) the ownership interest of the Company and its Subsidiaries on
the date hereof in the capital stock of any Subsidiary of the Company other than
Vantage America, Inc. or (ii) any capital contribution or loan by the Company or
by any Wholly Owned Subsidiary of the Company to the Company or to any Wholly
Owned Subsidiary of the Company.
"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 Basic 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 Revolving Credit Loans, Term Loans, and the
Swingline Loans.
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"Majority Banks" shall mean Banks having at least 66-2/3% of the
aggregate amount of the Commitments or, if the Commitments shall have
terminated, Banks holding at least 66-2/3% of the aggregate unpaid principal
amount of the Loans.
"Margin Stock" shall mean "margin stock" within the meaning of
Regulations U and X.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations under any of
the Basic Documents, (c) the validity or enforceability of any of the Basic
Documents, (d) the rights and remedies of the Banks and the Administrative Agent
under any of the Basic Documents or (e) the timely payment of the principal of
or interest on the Loans or other amounts payable in connection therewith.
"Material Subsidiary" shall mean any Subsidiary of the Company other
than Vantage American, Inc., Guaranty Risk Services, Inc., AG Intermediaries,
Inc., Orleans Acquisition Corporation, Enhance Reinsurance Bermuda Ltd. and
Litton Loan Servicing Inc. and their respective Subsidiaries.
"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
or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Worth" shall mean, as at any date, the sum, for the Company and
its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following:
(a) the amount of capital stock (other than any Redeemable Preferred
Stock), plus
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(b) the amount of additional paid-in capital and retained earnings
(or, in the case of a retained earnings deficit, minus the amount of such
deficit).
"Notes" shall mean the Revolving Credit Notes and the Term Loan
Notes and the Swingline Note.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, 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 or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"Pledge Agreement" shall mean a Pledge Agreement, substantially in
the form of Exhibit B hereto, between the Company and the Administrative Agent,
as the same shall be modified and supplemented and in effect from time to time.
"Pledged Stock" shall have the meaning assigned to such term in the
Pledge Agreement.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan or any other amount under this Agreement, any Note or any other Basic
Document that is not paid when due (whether at stated maturity, by acceleration,
by optional or mandatory prepayment or otherwise), a rate per annum during the
period from and including the due date to but excluding the date on which such
amount is paid in full equal to 2% plus the Base Rate as in effect from time to
time (provided that, if the amount so in default is principal of a Eurodollar
Loan and the due date thereof is a day other than the last day of the Interest
Period therefor, the "Post-Default Rate" for such principal shall be,
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for the period from and including such due date to but excluding the last day of
such Interest Period, the greater of (i) 2% plus the interest rate for such
Eurodollar Loan as provided in Section 3.02(b) hereof or (ii) 2% plus the Base
Rate as in effect from time to time and, thereafter, the rate provided for above
in this definition).
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at its principal office as its prime commercial lending rate.
"Principal Payment Date" shall have the meaning assigned to such
term in Section 3.01(b) hereof.
"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.
"Quarterly Dates" shall mean the last Business Day of each March,
June, September and December in each year, the first of which shall be the first
such day after the Amendment Effective Date.
"Redeemable Preferred Stock" shall mean, for any Person, all
preferred or preference stock issued by such Person, other than perpetual,
non-cumulative preferred stock.
"Reference Banks" shall mean Chase and such other Bank(s) as shall
be mutually acceptable to Chase and the Borrower (or their respective Applicable
Lending Offices, as the case may be).
"Regulation A", "Regulation D", "Regulation U" and "Regulation X"
shall mean, respectively, Regulation A, Regulation D, Regulation U and
Regulation 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.
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"Regulatory Change" shall mean, with respect to any Bank, any change
after the date of this Agreement 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 Bank 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 (i) 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 (ii) any category of extensions of credit or other assets that
includes the Eurodollar Loans.
"Restatement Date" shall mean October 1, 1996.
"Restricted 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 or
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any of its Subsidiaries), but excluding dividends payable solely in shares of
common stock of the Company.
"Revolving Credit Loans" shall mean the loans provided for by
Section 2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Revolving Credit Notes" shall mean the promissory notes provided
for by Section 2.06(a) 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.
"Senior Note Purchase Agreements" shall mean the Note Purchase
Agreements dated as of December 1, 1991 among the Company and the purchasers
named therein, as in effect on the date hereof.
"Series" shall have the meaning assigned to such term in Section
1.03 hereof.
"Shareholders' Agreement" shall mean the Shareholders' Agreement
dated May 10, 1988 among US West Financial Services, Inc., Manufacturers Life
Insurance Company, the Shareholders party thereto and the Company, as in effect
on the date hereof.
"Statutory Statement" shall mean, as to any Insurance Subsidiary, a
statement of the condition and affairs of such Insurance Subsidiary, prepared in
accordance with statutory accounting practices required or permitted by the
Applicable Insurance Regulatory Authority, and filed with the Applicable
Insurance Regulatory Authority.
"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
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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 at the particular time in question 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.
"Swingline Commitment" shall mean the obligation of the Swingline
Bank to make Swingline Loans in an aggregate amount not to exceed the lesser of
(i) $10,000,000 and (ii) the aggregate amount of the Commitments.
"Swingline Loans" shall mean the loans provided for by Section
2.01(d) hereof.
"Swingline Maturity Date" shall mean, for any Swingline Loan, the
last day of the Interest Period for such Swingline Loan.
"Swingline Note" shall mean the promissory note provided for by
Section 2.06(d) hereof and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Swingline Rate" shall mean, for any day, a rate per annum equal to
the Federal Funds Rate for such day plus 1/2 of 1%. Each change in any interest
rate provided for herein based upon the Swingline Rate resulting from a change
to the Swingline Rate shall take effect at the time of such change in the
Swingline Rate.
"Tangible Net Worth" shall mean, as at any date, the sum for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following:
(a) Net Worth, minus
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(b) the sum of the following (without duplication of deductions in
respect of items already deducted in arriving at Net Worth): cost of
treasury shares and the book value of all assets which should be
classified as intangibles but in any event including goodwill, minority
interests, trademarks, trade names, copyrights, patents and franchises,
unamortized debt discount and expense, all reserves and any write-up in
the book value of assets resulting from a revaluation thereof subsequent
to December 31, 1991.
"Term Loan Notes" shall mean the promissory notes provided for by
Section 2.06(b) 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.
"Term Loans" shall mean the loans provided for by Section 2.01(b)
hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Total Capitalization" shall mean the sum of (a) Funded Debt and (b)
Net Worth.
"Type" shall have the meaning assigned to such term in Section 1.03
hereof.
"Value" shall mean, as to any share of common stock of ERC, (X) the
sum of (a) policyholders' surplus in ERC, plus (b) the aggregate amount of the
contingent reserve of ERC, plus (c) 60% of the aggregate amount of unearned
premium reserve of ERC, (Y) divided by the total number of outstanding shares of
common stock of ERC. Such computations are to be made in accordance with
statutory accounting practices required or permitted by the Applicable Insurance
Regulatory Authority of ERC.
"Voting Stock" shall mean, at any date, the capital stock of any
class or classes of a corporation having general voting power under ordinary
circumstances to elect the board of directors of such corporation, or persons
performing similar
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functions (irrespective of whether or not at the time stock or other securities
of any other class or classes shall have or might have special voting power or
rights by reason of the happening of any contingency).
"Wholly Owned Subsidiary" shall mean, with respect to any Person,
any Subsidiary of such Person all of the equity securities or other ownership
interests (other than, in the case of a corporation, directors' qualifying
shares) of which are owned or controlled by such Person or one or more Wholly
Owned Subsidiaries of such Person.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, (i) all
accounting terms used herein shall be interpreted, (ii) all financial statements
and all certificates and reports as to financial matters required to be
delivered to the Banks hereunder shall (unless otherwise disclosed to the Banks
in writing at the time of delivery thereof in the manner described in subsection
(b) below) be prepared and (iii) all calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made in accordance with or by application of generally
accepted accounting principles or statutory accounting practices, as the case
may be, applied on a basis consistent with those used in the preparation of the
most recent financial statements furnished to the Banks hereunder (or, prior to
the delivery of the first financial statements under Section 8.01 hereof, the
financial statements as at December 31, 1991 referred to in Section 7.02 hereof)
unless (x) the Company shall notify the Banks of its objection thereto at the
time of delivery of any financial statements pursuant to Section 8.01 hereof or
(y) the Majority Banks shall notify the Company (through the Administrative
Agent) of their objection within 30 days after the delivery of any such
financial statements, in either of which events such interpretations,
statements, certificates, reports and calculations shall be made in accordance
with, or by application of, generally accepted accounting principles or
statutory accounting practices, as the case may be, on a basis
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consistent with those used in the preparation of the most recent financial
statements as to which no such objection shall have been made (or, prior to the
delivery of the first financial statements under Section 8.01 hereof, the
financial statements as at December 31, 1991 referred to in Section 7.02
hereof).
(b) The Company shall deliver to the Banks at the same time as the
delivery of any annual or quarterly financial statement under Section 8.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
paragraph (a) above and (ii) reasonable estimates of the difference between such
statements arising as a consequence thereof.
(c) The Company will not, and will not permit any of its
Subsidiaries to, change the last day of its fiscal year from December 31 of each
year, or the last days of the first three fiscal quarters in each of its fiscal
years from March 31, June 30 and September 30 of each year, respectively.
1.03 Classes; Series; Type. Loans hereunder are distinguished by
"Class". The "Class" of a Loan refers to whether such Loan is a Revolving Credit
Loan, a Swingline Loan or a Term Loan, each of which constitutes, respectively,
a "Class" of Loan. Loans are also distinguished by "Series". The Loans of any
one Class made on the occasion of any borrowing constitute a "Series" of Loans.
Loans hereunder are also 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. The Loans may be identified by both Class and Type.
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Section 2. Commitments, Loans, Notes and Prepayments.
2.01 Loans.
(a) Revolving Credit Loans. Each Bank severally agrees, on the terms
and conditions of this Agreement, at the request of the Company, to make
revolving credit loans to the Company in Dollars during the period from and
including the Amendment Effective Date to but not including the Commitment
Termination Date in an aggregate principal amount at any one time outstanding up
to but not exceeding the amount of the Commitment of such Bank as in effect from
time to time (each such revolving credit loan being herein called a "Revolving
Credit Loan" and collectively the "Revolving Credit Loans"); provided that, on
or before the Commitment Termination Date, in no event shall the aggregate
unpaid principal amount of all Loans (including all Swingline Loans) exceed the
aggregate amount of the Commitments as in effect from time to time. Subject to
the terms and conditions of this Agreement, during such period the Company may
borrow, repay and reborrow the amount of the Commitments by means of Base Rate
Loans and Eurodollar Loans, and the Company may Convert Loans of one Type into
Loans of another Type (as provided in Section 2.07 hereof) or Continue Loans of
one Type as Loans of the same Type (as provided in Section 2.07 hereof).
(b) Term Loans. Each Bank severally agrees, on the terms and
conditions of this Agreement, at the request of the Company, to make, on the
last day of any Interest Period of any Revolving Credit Loan made by such Bank,
a term loan (each such term loan being herein called a "Term Loan" and
collectively the "Term Loans") to the Company in Dollars in a principal amount
up to but not exceeding the unpaid principal balance of such Revolving Credit
Loan, the proceeds of which Term Loan shall be applied (and the Company hereby
authorizes and instructs such Bank to apply such proceeds) to refinance, in
whole or in part, the unpaid principal balance of such Revolving Credit Loan;
provided that the Banks shall not be obligated to make any Series of Term Loans
unless the aggregate amount of such Term Loans is equal to $3,000,000 or an
integral multiple of $200,000 in excess thereof. Subject to the terms and
conditions of this Agreement,
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the Company may borrow such Term Loans by means of Base Rate Loans and
Eurodollar Loans and, prior to payment in full of the principal of such Term
Loans, the Company may Convert Loans of one Type into Loans of another Type (as
provided in Section 2.07 hereof) or Continue Loans of one Type as Loans of the
same Type (as provided in Section 2.07 hereof).
(c) Limit on Revolving Credit Loans. No more than five separate
Revolving Credit Loans from each Bank may be outstanding at any one time.
(d) Swingline Loans. In addition to the Loans provided for in
Subsections (a) and (b) above of this Section 2.01, the Swingline Bank hereby
agrees, on the terms an conditions of this Agreement, to make loans ("Swingline
Loans") to the Company during the period from the date hereof to but excluding
the date five Business Days prior to the Commitment Termination Date in an
aggregate amount at any one time outstanding up to but not exceeding its
Swingline Commitment; provided that the aggregate principal amount of all Loans
(including Swingline Loans) shall not at any time outstanding exceed the
aggregate amount of the Commitments. Subject to the terms of this Agreement, the
Company may borrow, repay and reborrow the amount of the Swingline Commitment by
means of Loans that bear interest at the Swingline Rate; provided that only one
Swingline Loan may be outstanding at any one time and no Swingline Loan may be
borrowed to repay an outstanding Swingline Loan.
2.02 Borrowings.
(a) Revolving Credit Loans. The Company shall give the
Administrative Agent (which shall promptly notify the Banks) notice of each
borrowing hereunder as provided in Section 4.05 hereof. Not later than 1:00 p.m.
New York time on the date specified for each borrowing of Revolving Credit Loans
hereunder, each Bank shall make available the amount of the Revolving Credit
Loan to be made by it on such date to the Administrative Agent, at an account in
New York designated by the Administrative Agent, in Dollars and immediately
available funds, for account of the
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Company. The amount so received by the Administrative Agent shall, subject to
the terms and conditions of this Agreement, be made available by the
Administrative Agent to the Company by depositing the same, in immediately
available funds, in an account of the Company designated by the Company or by
repaying any then outstanding Swingline Loan.
(b) Swingline Loans. The Company shall give the Administrative Agent
(which shall promptly notify the Swingline Bank) notice of each borrowing of
Swingline Loans hereunder as provided in Section 4.05 hereof. Not later than
1:00 p.m. New York time on the date specified for each borrowing of Swingline
Loans hereunder, the Swingline Bank shall make available the amount of the
Swingline Loan to be made by it on such date to the Administrative Agent, at an
account in New York designated by the Administrative Agent, in Dollars and
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 by the Administrative Agent to the Company by
depositing the same, in immediately available funds, in an account of the
Company designated by the Company.
(c) Borrowings to Repay Swingline Loans. Unless the Company has
already given a notice of borrowing of Revolving Credit Loans to repay a
Swingline Loan, at any time from and including the Swingline Maturity Date for
any Swingline Loan until the unpaid principal amount of such Swingline Loan
shall have been paid in full, the Swingline Bank may, and the Company hereby
irrevocably authorizes and empowers (which power is coupled with an interest)
the Swingline Bank to, deliver, on behalf of the Company, to the Administrative
Agent under Section 2.02(a) hereof a notice of borrowing of Revolving Credit
Loans that are Base Rate Loans in an amount equal to the then unpaid principal
amount of such Swingline Loan. In the event that the power of the Swingline Bank
to give such notice of borrowing on behalf of the Company is terminated for any
reason whatsoever (including, without limitation, a termination resulting from
the occurrence of an event specified in clause (f) or (g) of Section 9 hereof
with respect to the Company), or the Swingline Bank is otherwise precluded for
any reason whatsoever
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from giving a notice of borrowing on behalf of the Company as provided in the
preceding sentence, each Bank shall, upon notice from the Swingline Bank on or
after the Swingline Maturity Date for such Swingline Loan, promptly purchase
from the Swingline Bank a participation in (or, if and to the extent specified
by the Swingline Bank, an assignment of) such Swingline Loan in the amount of
the Base Rate Loan it would have been obligated to make pursuant to such notice
of borrowing. Each Bank shall, not later than 4:00 p.m. New York time on the
Business Day on which such notice is given (if such notice is given by 3:00 p.m.
New York time) or 9:00 a.m. New York time on the next succeeding Business Day
(if such notice is given after 3:00 p.m., but before 5:00 p.m., New York time),
make available the amount of the Base Rate Loan to be made by it (or the amount
of the participation or assignment to be purchased by it, as the case may be) to
the Administrative Agent at the account specified in Section 2.02(a) hereof and
the amount so received by the Administrative Agent shall promptly be made
available to the Swingline Bank by remitting the same, in immediately available
funds, to the Swingline Bank. Promptly following its receipt of any payment in
respect of such Swingline Loan, the Swingline Bank shall pay to each Bank that
has acquired a participation in such Swingline Loan such Bank's proportionate
share of such payment. Anything in this Agreement to the contrary
notwithstanding (including, without limitation, in Section 6.03 hereof), the
obligation of each Bank to make its Base Rate Loan (or purchase its
participation in or assignment of such Swingline Loan, as the case may be)
pursuant to this Section 2.02(c) is unconditional under any and all
circumstances whatsoever and shall not be subject to set-off, counterclaim or
defense to payment that such Bank may have or have had against the Company, the
Administrative Agent, the Swingline Bank or any other Bank and, without limiting
any of the foregoing, shall be unconditional irrespective of (i) the occurrence
of any Default, (ii) the financial condition of the Company, any Subsidiary, the
Administrative Agent, the Swingline Bank or any other Bank or (iii) the
termination or cancellation of the Commitments; provided that no Bank shall be
obligated to make any such Base Rate Loan (or to purchase any such participation
or direct interest in the Swingline Loan) if (i) before the making of such
Swingline Loan, such Bank had
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notified the Swingline Bank that a Default had occurred and was continuing and
that such Bank would not refinance such Swingline Loan or (ii) to the extent
(and only to the extent) that such Swingline Loan, together with all Revolving
Credit Loans and Term Loans then outstanding at the time of the making of such
Swingline Loan, exceeded the then aggregate amount of the Commitments at the
time of the making of such Swingline Loan. The Company agrees that any Bank so
purchasing a participation (or assignment) in such Swingline Loan may exercise
all rights of set-off, bankers' lien, counterclaim or similar rights with
respect to such participation as fully as if such Bank were a direct holder of a
Swingline Loan in the amount of such participation.
2.03 Changes in Aggregate Amount of Commitments.
(a) The aggregate amount of the Commitments shall be automatically
reduced to zero on the Commitment Termination Date.
(b) The Company shall have the right at any time or from time to
time to terminate in whole, or to reduce in part, the aggregate unused amount of
the Commitments; provided that (x) the Company shall give notice of each such
termination or reduction as provided in Section 4.05 hereof, (y) each partial
reduction shall be in an integral multiple of $1,000,000 and (z) on or before
the Commitment Termination Date, the aggregate amount of the Commitments shall
at no time be less than the aggregate outstanding principal amount of all Loans
(including the Swingline Loans).
(c) The Company shall have the right to terminate or reduce the
unused amount of the Swingline Commitment at any time or from time to time on
not less than three Business Days' prior notice to the Administrative Agent
(which shall promptly notify the Swingline Bank and each Bank) or each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction (which shall be in integral multiples of
$1,000,000) and shall be irrevocable and effective only upon receipt by the
Administrative Agent.
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(d) The Commitments and Swingline Commitment, once terminated or
reduced, may not be reinstated.
2.04 Commitment Fee. The Company shall pay to the Administrative
Agent for account of each Bank a commitment fee on the daily average unused
amount of such Bank's Commitment (for which purpose the aggregate unpaid
principal amount of the Revolving Credit Loans, Swingline Loans and Term Loans
outstanding shall be deemed to constitute a use of the Commitments), for the
period from and including the Amendment Effective Date to but not including the
earlier of the Commitment Termination Date and the date such Commitment is
otherwise terminated, at a rate per annum equal to 1/8 of 1%. Accrued commitment
fee shall be payable on each Quarterly Date and on the earlier of the Commitment
Termination Date and the date the Commitment is otherwise terminated, as the
case may be.
2.05 Several Obligations; Remedies Independent. The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but
neither any Bank nor the Administrative Agent shall be responsible for the
failure of any other Bank to make a Loan to be made by such other Bank, and no
Bank shall have any obligation to the Administrative Agent or any other Bank for
the failure by such Bank to make any Loan required to be made by such Bank. The
amounts payable by the Company at any time hereunder and under the Notes to each
Bank shall be a separate and independent debt and each Bank shall, subject to
the express provisions of Section 9 with respect to the termination of the
Commitments and the declaration of the Loans to be due and payable, 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 Bank or the Administrative Agent to
consent to, or be joined as an additional party in, any proceedings for such
purposes.
2.06 Notes.
(a) The Revolving Credit Loans made by each Bank shall be evidenced
by a single promissory note of the Company
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substantially in the form of Exhibit A-1 hereto, dated the Restatement Date,
payable to such Bank in a principal amount equal to the amount of its Commitment
as originally in effect and otherwise duly completed.
(b) Each Term Loan made by each Bank shall be evidenced by a
separate promissory note of the Company substantially in the form of Exhibit A-2
hereto, dated the date of such Term Loan, payable to such Bank in a principal
amount equal to the amount of such Term Loan and otherwise duly completed.
(c) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Revolving Credit Loan made by each Bank to the
Company, and each payment made on account of the principal thereof, shall be
recorded by such Bank on its books and, prior to any transfer of the Revolving
Credit Note evidencing the Revolving Credit Loans held by it, endorsed by such
Bank on the schedule attached to such Revolving Credit Note or any continuation
thereof; provided that the failure of such Bank to make 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 Revolving Credit Note in
respect of the Revolving Credit Loans evidenced by such Revolving Credit Note.
(d) The Swingline Loans made by the Swingline Bank shall be
evidenced by a single promissory note of the Company substantially in the form
of Exhibit A-3 hereto, dated the Amendment Effective Date, payable to the
Swingline Bank in a principal amount equal to $10,000,000 and otherwise duly
completed. The date and amount of each Swingline Loan and each payment made on
account of the principal thereof, shall be recorded by the Swingline Bank on its
books and, prior to any transfer of its Swingline Note, endorsed by the
Swingline Bank on the schedule attached to the Swingline Note or any
continuation thereof; provided that the failure by the Swingline Bank to make
any such recordation or endorsement shall not affect the obligations of the
Company to make a payment when due of any
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amount owing hereunder or under such Swingline Note in respect of the Swingline
Loans evidenced by such Swingline Note.
(e) No Bank shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Bank's
relevant Commitment, Loans and Notes pursuant to Section 11.06(b) hereof. The
Swingline Bank shall not be entitled to have its Note subdivided, by exchange
for promissory notes of lesser denominations or otherwise, except in connection
with a permitted assignment of all or any portion of the Swingline Bank's
Swingline Commitment, the Swingline Loans and the Swingline Note pursuant to
Section 11.06(g) hereof.
2.07 Optional Prepayments and Conversions or Continuations of Loans.
Subject to Section 4.04 hereof, the Company shall have the right to prepay
Swingline Loans or any Series of Revolving Credit Loans or any Series of Term
Loans, in whole at any time or in part from time to time or to Convert Loans of
one Type into Loans of another type or Continue Loans of one Type as Loans of
the same Type, provided that:
(a) the Company shall give the Administrative Agent notice of each
such prepayment, Conversion or Continuation as provided in Section 4.05
hereof (and, upon the prepayment date specified in any such notice of
prepayment, the amount to be prepaid shall become due and payable
hereunder);
(b) the Company shall simultaneously pay interest on any principal
so prepaid accrued to the date of such prepayment;
(c) if any Revolving Credit Loan that is a Eurodollar Loan is
prepaid or Converted on any day other than the last day of the Interest
Period therefor, the Company shall simultaneously pay any amounts required
by Section 5.04 hereof in respect of such prepayment;
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(d) prepayments or Conversions of any Series of Term Loans that are
Eurodollar Loans may only be made on the last day of any Interest Period
therefor and shall be applied ratably to the outstanding installments of
such Series of Term Loans;
(e) if any Swingline Loan is outstanding, the Revolving Credit Loans
may not be prepaid or Converted;
(f) Swingline Loans may not be Continued.
Notwithstanding the foregoing, and without limiting the rights and remedies of
the Banks 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 Banks shall) suspend (for so long as such Event of
Default shall be continuing) the right of the Company to Convert any Loan into a
Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan, in which event
all Loans shall be Converted (on the last day(s) of the respective Interest
Periods therefor) or Continued, as the case may be, as Base Rate Loans.
2.08 Mandatory Prepayments of Loans or Pledge of Additional Shares.
The Company shall from time to time when and to the extent necessary pledge
additional shares of common stock of ERC in accordance with the Pledge Agreement
and/or prepay the Loans so that at all times the aggregate outstanding amount of
the Loans, less any collected funds standing to the credit of the Collateral
Account, shall not exceed 60% of the aggregate Value of the shares of Pledged
Stock (as defined in the Pledge Agreement); provided that the amount of any such
prepayment shall be applied first to any outstanding Swingline Loan, next to any
outstanding Revolving Credit Loans and finally to any outstanding Term Loans and
to the installments of the Term Loans in the inverse order of their maturity
(regardless of Series) and, in the case of a partial prepayment of installments
due on the same date, ratably based on the respective unpaid principal amounts
of such installments. Simultaneously with each such prepayment, the Company
shall pay interest on the principal so prepaid accrued to the date of such
prepayment and, if any Loan is prepaid on any
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day other than the last day of an Interest Period therefor, the Company shall
simultaneously pay any amounts required by Section 5.04 hereof in respect of
such prepayment. Any such pledge of additional shares of common stock of ERC
shall be subject to the condition that the Company shall have satisfied the
conditions set forth in Section 6.03(c) hereof with respect to such pledge.
2.09 Extension of Commitment Termination Date. The Company may, by
notice to the Administrative Agent (which shall promptly deliver a copy thereof
to each of the Banks) not more than 45 days prior to the Commitment Termination
Date then in effect hereunder (the "Existing Commitment Termination Date"),
request that the Banks extend the Commitment Termination Date for an additional
360 day period. If each Bank, acting in its sole discretion, by notice to the
Company and Administrative Agent given on the date (and only on the date) 30
days prior to the Existing Commitment Termination Date (provided, if such date
is not a Business Day, then such notice date shall by the next succeeding
Business Day) (the "Consent Date"), agrees to such request, then effective as of
the Existing Commitment Termination Date, the Commitment Termination Date shall
be extended to the date falling 360 days after the Existing Commitment
Termination Date (provided, if such date is not a Business Day, then such
Commitment Termination Date as so extended shall be the next preceding Business
Day); provided that such extension shall not be effective unless (i) no Default
shall have occurred and be continuing on the date of the notice requesting such
extension or on the Existing Commitment Termination Date and (ii) each of the
representations and warranties of the Company in Section 7 hereof shall be true
and correct on and as of each of the date of such notice and the Existing
Commitment Termination Date with the same force and effect as if made on and as
of each 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).
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans.
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(a) The Company hereby promises to pay to the Administrative Agent
for account of each Bank the outstanding principal amount of each of such Bank's
Revolving Credit Loans, and each Revolving Credit Loan shall mature, on the
Commitment Termination Date.
(b) The Company hereby promises to pay to the Administrative Agent
for account of the Banks the aggregate principal amount of each Series of Term
Loans in sixteen equal consecutive quarterly installments commencing on the date
three months after the date of the making of such Series of Term Loans and
thereafter on the quarterly anniversary dates of the date of the making of such
Series of Term Loans (each a "Principal Payment Date"); provided that, if the
date of the making of such Series of Term Loans is the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
date in the appropriate subsequent calendar month) the payment date shall be the
last Business Day of the appropriate subsequent calendar month; and provided
that, if any Principal Payment Date would fall on a day other than a Business
Day, such Principal Payment Date shall be 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).
(c) The Company hereby promises to pay to the Administrative Agent
for account of the Swingline Bank the principal of each Swingline Loan at or
prior to, and such Swingline Loan shall mature at, 1:00 p.m. New York time on
the Swingline Maturity Date for such Swingline Loan.
3.02 Interest. The Company hereby promises to pay to the
Administrative Agent for account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank 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) if such Loan is a Revolving Credit Loan, (i) during such periods
as such Loan is a Base Rate Loan, the Base Rate (as in effect from time to
time) plus the
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Applicable Margin and (ii) 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;
(b) if such Loan is a Term Loan, (i) 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 (ii) 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;
and
(c) if such Loan is a Swingline Loan, the Swingline Rate for each
day during the period from and including the first day of the Interest
Period related thereto to but excluding the Swingline Maturity Date for
such Swingline Loan.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Bank interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank and on any
other amount payable by the Company hereunder or under the Notes held by such
Bank to or for account of such Bank, which 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 Eurodollar Loans or Swingline Loans, on the last day
of each Interest Period therefor and, if such Interest Period is longer than
three months, at three-month intervals following the first day of such Interest
Period, and (iii) 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,
or prepaid or Converted), except that interest payable at the Post-Default Rate
shall be payable from time to time on demand of the Banks for whose account such
interest is payable. Promptly after the determination of any interest rate
provided for herein
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or any change therein, the Administrative Agent shall give notice thereof to the
Banks 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, and, except to the extent otherwise provided therein,
all payments to be made by the Company under any other Basic Document, shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at an account in New York designated
by the Administrative Agent, 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 Bank or Swingline Bank 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 Bank (with notice to the Company and the Administrative
Agent).
(c) The Company shall, at the time of making each payment under this
Agreement or any Note for account of any Bank, specify to the Administrative
Agent (which shall notify the intended recipient(s) thereof) the Loans or other
amounts payable by the Company hereunder to which such payment is to be applied,
in which case such payment shall be, subject to Section 4.02 hereof, so applied
(and in the event that the Company fails to so specify, or if an Event of
Default has occurred and is continuing, such payment shall be, subject to said
Section 4.02, applied first to the Swingline Bank (to the extent any amounts are
then due and payable to the Swingline Bank on account of any Swingline Loan) and
then in payment of amounts due under this
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Agreement or any Note in such manner as is determined to be appropriate by the
Majority Banks or, if the Majority Banks fail to advise the Administrative Agent
of their determination promptly following a request from the Administrative
Agent for such a determination, by the Administrative Agent).
(d) Each payment received by the Administrative Agent under this
Agreement or any Note for account of any Bank shall be paid by the
Administrative Agent promptly to such Bank, in immediately available funds, for
account of such Bank'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 on
any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein:
(a) the making of Loans of a particular Class shall be made pro rata
among the Banks according to the amounts of their respective Commitments
and the then current Interest Period of Loans of a particular Class and
Series shall be coterminous;
(b) except as otherwise provided in Section 5.03A hereof,
Eurodollar Loans having the same Interest Period shall be allocated pro
rata among the Banks 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 of a particular
Class and Series shall be made for account of the Banks pro rata in
accordance with the respective unpaid principal amounts of the Loans of
such Class and Series held by the Banks;
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(d) each payment of interest on Loans of a particular Class and
Series shall be made for account of the Banks pro rata in accordance with
the amounts of interest on Loans of such Class and Series then due and
payable to the respective Banks;
(e) each payment of commitment fee under Section 2.04 hereof shall
be made, and each termination or reduction of the amount of the
Commitments shall be applied to the Commitments of the Banks, pro rata
according to the respective amounts of the Commitments of the Banks; and
Notwithstanding the foregoing, borrowings, payments and prepayments of Swingline
Loans shall be made without regard to the foregoing provisions of this Section
4.02.
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 referred by
Section 2.08 hereof and Conversions, or prepayments made pursuant to Section
5.04 hereof, each borrowing, Conversion and partial prepayment of principal of
Revolving Credit Loans shall be in an aggregate amount equal to $1,000,000 or
any integral multiple of $200,000 in excess thereof (borrowings, Conversions or
prepayments of or into 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, Conversions and prepayments for purposes of the foregoing,
one for each Type or Interest Period).
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Each borrowing and Conversion of Term Loans shall be in an aggregate amount
equal to $3,000,000 or any integral multiple of $200,000 in excess thereof, and
each partial prepayment or Conversion of the principal of any Series of Term
Loans shall be in an aggregate amount at least equal to $500,000 (Conversions or
prepayments of or into Loans of different Types or, in the case of Eurodollar
Loans, having different Interest Periods at the same time hereunder to be deemed
separate Conversions and prepayments for purposes of the foregoing, one for each
Type or
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Interest Period). Each borrowing or partial prepayment of Swingline Loans shall
be in an aggregate amount at least equal to $1,000,000 or in multiples of
$200,000 in excess thereof.
4.05 Certain Notices. Notices by the Company to the Administrative
Agent of terminations or reductions of Commitments, of borrowings, Conversions,
Continuations and optional prepayments of Loans, of Types of Loans and of the
duration of Interest Periods shall be irrevocable and shall be effective only if
received by the Administrative Agent not later than 10:00 a.m. New York time.
The number of Business Days prior to the date of the relevant termination,
reduction, borrowing, Conversion, Continuation or prepayment or the first day of
such Interest Period specified below:
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of Commitments 3
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans 0
Borrowing or prepayment of
Swingline Loans 0
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Each such notice of termination or reduction shall specify the
amount of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Class and Series of Loans to be borrowed, Converted, Continued or prepaid, the
amount
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(subject to Section 4.04 hereof) of each Loan to be borrowed, Converted,
Continued or prepaid, the date of borrowing, Conversion, Continuation or
optional prepayment (which shall be a Business Day), and the duration of the
Interest Period for such Loan. The Administrative Agent shall promptly notify
the Banks of the contents of each such notice. In the event that the Company
fails to select the Type of Loan, or the duration of any Interest Period for any
Loan, within the time period and otherwise as provided in this Section 4.05,
such Loan (if outstanding as a Eurodollar Loan) will be automatically Converted
into a Base Rate Loan on the last day of the then current Interest Period for
such Loan or (if outstanding as a Base Rate Loan) will remain as, or (if not
then outstanding) will be made as, a Base Rate Loan.
4.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank 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 Bank) the proceeds of a Loan to be
made by such Bank hereunder or (in the case of the Company) a payment to the
Administrative Agent for account of one or more of the Banks 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
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aforesaid, provided that if the recipient(s) shall fail to return, and the Payor
shall fail to make, the Required Payment to the Administrative Agent within
three Business Days of the Advance Date, then the Payor and the recipient(s)
shall each be obligated to pay interest on the Required Payment (but without
duplication) as follows:
(a) if the Required Payment shall represent a payment to be made by
the Company to the Banks, 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 (and, in case the
recipient(s) shall return the Required Payment to the Administrative
Agent, without limiting the obligation of the Company under Section 3.02
hereof to pay interest to such recipient(s) at the Post-Default Rate in
respect of the Required Payment); and
(b) if the Required Payment shall represent proceeds of a Loan to be
made by the Banks 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 at the rate of interest provided for such Required
Payment pursuant to whichever of the rates specified in Section 3.02
hereof is applicable to the Type of such Loan (and, in case the Company
shall return the Required Payment to the Administrative Agent, without
limiting any claim the Company may have against the Payor in respect of
the Required Payment).
4.07 Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Bank or the Swingline
Bank (as the case may be) may otherwise have, each Bank and the Swingline Bank
shall be entitled, at its option, to offset balances held by it for 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 Bank's or the Swingline Bank's Loans
or any other amount
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payable to such Bank or Swingline Bank (as the case may be) hereunder, that is
not paid when due (regardless of whether such balances are then due to the
Company), in which case it shall promptly thereafter notify the Company and the
Administrative Agent thereof, provided that such Bank's or the Swingline Bank's
failure to give such notice shall not affect the validity thereof.
(b) If any Bank shall obtain payment of any principal of or interest
on any Loan of a particular Class and Series owing to it or payment of any other
amount under this Agreement or any other Basic Document through the exercise of
any right of set-off, banker's lien or counterclaim or similar right or
otherwise (other than through the Administrative Agent as provided herein), and,
as a result of such payment, such Bank shall have received a greater percentage
of the principal of or interest on the Loans of such Class and Series or such
other amounts then due hereunder or thereunder by the Company to such Bank than
the percentage received by any other Bank, it shall promptly purchase from such
other Banks participations in (or, if and to the extent specified by such Bank,
direct interests in) the Loans of such Class and Series or such other amounts,
respectively, owing to such other Banks (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 Banks shall share the benefit of
such excess payment (net of any expenses that may be incurred by such Bank in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and/or interest on the Loans of such Class and Series or
such other amounts, respectively, owing to each of the Banks. To such end all
the Banks 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 Bank 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 Bank were a
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direct holder of Loans or other amounts (as the case may be) owing to such Bank
in the amount of such participation.
(d) Nothing contained herein shall require any Bank or the Swingline
Bank to exercise any such right or shall affect the right of any Bank or the
Swingline Bank 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 Bank
receives a secured claim in lieu of a set-off to which this Section 4.07
applies, such Bank shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Banks 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 Bank from time to time
such amounts as such Bank may determine to be necessary to compensate such Bank
for any costs that such Bank 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 Bank
hereunder in respect of any Loans or such obligation (such increases in costs
and reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to such
Bank under this Agreement or its Notes (other than taxes imposed on or
measured by the overall net income of such Bank or of its Applicable
Lending Office by the jurisdiction in which such Bank 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
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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 Bank (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
Bank hereunder (including, without limitation, the Commitment of such
Bank); or
(iii) imposes any other condition affecting this Agreement or its
Notes or its Commitment.
If any Bank requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Bank (with a copy to the Agent), suspend the
obligation of such Bank 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 5.03A hereof shall be applicable), provided that such suspension
shall not affect the right of such Bank to receive the compensation so
requested.
(b) Without limiting the effect of the provisions of paragraph (a)
of this Section 5.01, in the event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of such Bank that includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank that includes Eurodollar Loans
or (ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets that it may hold, then, if such Bank so elects by notice
to the Company (with a copy to the Administrative Agent), the obligation of such
Bank to make Eurodollar Loans hereunder shall be suspended until such Regulatory
Change ceases to be in effect (in which case the Loans theretofore made by such
Bank shall bear interest at the Base Rate from the last day of the then current
Interest Period for such Loans in accordance with the provisions of Section
5.03A).
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(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank (or, without duplication, the bank holding
company of which such Bank is a subsidiary) for any costs that it determines are
attributable to the maintenance by such Bank (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 Basel Accord
(including, without limitation, the Final Risk-Based Capital Guidelines of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 208, Appendix
A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based Capital Guidelines
of the Office of the Comptroller of the Currency (12 C.F.R. Part 3, Appendix
A)), of capital in respect of its Commitment(s) 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 Bank (or any Applicable Lending Office or
such bank holding company) to a level below that which such Bank (or any
Applicable Lending Office or such bank holding company) could have achieved but
for such law, regulation, interpretation, directive or request). For purposes of
this Section 5.01(c), "Basel Accord" shall mean the proposals for risk-based
capital framework described by the Basel 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.
(d) Each Bank shall notify the Company of any event occurring after
the date of this Agreement entitling such Bank to
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compensation under paragraph (a) or (c) of this Section 5.01 as promptly as
practicable; provided that the Company shall not be required to pay any amounts
under this Section 5.01 to the extent the amount requested to be paid is
allocable to a period or date prior to the date which is 90 days before the date
of such notice by such Bank to the Company. Each Bank will designate a different
Applicable Lending Office for the Loans of such Bank 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 good faith opinion of such Bank, be
disadvantageous to such Bank, except that such Bank shall have no obligation to
designate an Applicable Lending Office located in the United States of America.
Each Bank will furnish to the Company a certificate setting forth in reasonable
detail the basis and amount of each request by such Bank for compensation under
paragraph (a) or (c) of this Section 5.01. Determinations and allocations by any
Bank for purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to paragraph (a) or (b) of this Section 5.01, or of the effect of
capital maintained pursuant to paragraph (c) 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 Bank under this Section 5.01, shall be conclusive, provided that
such determinations and allocations are made on a reasonable basis and are not
manifestly in error.
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
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(b) if the Majority Banks in good faith determine, which
determination shall otherwise 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 Banks of
making or maintaining Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Company and each Bank prompt notice
thereof and, so long as such condition remains in effect, the Banks 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 2.07 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans
hereunder, then such Bank shall promptly notify the Company thereof (with a copy
to the Administrative Agent) and, in the case that it has become unlawful for
such Bank to make Loans, such Bank's obligation to make or Continue, or to
Convert Loans of any other Type into, Eurodollar Loans shall be suspended until
such time as such Bank may again make and maintain Eurodollar Loans and, in the
case that it has become unlawful for such Bank to maintain Loans, its
outstanding Loans shall bear interest at the Base Rate from the date such Bank
may specify to the Company with a copy to the Administrative Agent until it
shall no longer be unlawful for such Bank to maintain Eurodollar Loans (in which
case the provisions of Section 5.03A hereof shall be applicable).
5.03A Treatment of Affected Loans. If the obligation of any Bank to
make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended
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pursuant to Section 5.01 or 5.03 hereof, such Bank's Eurodollar Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for such 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 Bank may specify to the Company with a copy to the
Agent) and, unless and until such Bank 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 Bank's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Bank'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 Bank
as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
and all Base Rate Loans of such Bank that would otherwise be Converted
into Eurodollar Loans shall remain as Base Rate Loans.
If such Bank gives notice to the Company with a copy to the Agent that the
circumstances specified in Section 5.01 or 5.03 hereof that gave rise to the
Conversion of such Bank's Eurodollar Loans pursuant to this Section 5.03A no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Banks are
outstanding, such Bank'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 Banks ratably (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
5.04 Compensation. The Company shall pay to the Administrative Agent
for account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such
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Bank) to compensate it for any loss, cost or expense that such Bank determines
is attributable to:
(a) any payment, mandatory or optional prepayment, or Conversion of
a Eurodollar Loan made by such Bank 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 an Interest Period for such Loan;
(b) any failure by the Company (whether by reason of the Company's
election not to proceed or the failure of any of the conditions precedent
specified in Section 6 hereof to be satisfied) to borrow a Eurodollar Loan
from such Bank on the date for such borrowing specified in the relevant
notice of borrowing given under 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 of
such Eurodollar Loan 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 Eurodollar Loan (or,
in the case of a failure to borrow, the Interest Period for such Eurodollar Loan
that would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Eurodollar Loan provided for herein, less
the Applicable Margin for such Eurodollar Loan, 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 Bank would have bid on the
date of such payment, prepayment or failure to borrow 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 Bank).
5.05 U.S. Taxes.
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(a) The Company agrees to pay to each of the Banks and the Swingline
Bank 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 a Bank hereunder unless such Bank is, on the
Restatement Date (or on the date it becomes a Bank or the Swingline Bank
as provided in Section 11.06(b) hereof) and on the date of any change in
the Applicable Lending Office of such Bank or the Swingline Bank, either
entitled to submit a Form 1001 (relating to such Bank 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 Bank 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 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 5.05(a), (w) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (x) "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), (y) "U.S. Person" shall mean a citizen, national or
resident of the United States of America, a
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corporation, partnership or other entity created or organized in or under any
laws of the United States of America, or any estate or trust that is subject to
Federal income taxation regardless of the source of its income and (z) "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.
(b) Within 30 days after paying any amount to the Administrative
Agent or any Bank or the Swingline Bank from which it is required by law to make
any deduction or withholding, and within 30 days after it is 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).
5.06 Fair Allocation; Substitution of Banks.
(a) Anything herein to the contrary notwithstanding, any
determination by any Bank of any amounts payable by the Company under Section
5.01 shall be based upon a fair and equitable allocation by such Bank of the
particular overall cost or loss among all its similarly situated borrowers
relative to such Bank, and the Company shall not be obligated to compensate any
Bank for any costs that would not have been incurred by such Bank but for its
gross negligence or willful misconduct.
(b) Provided that no Default shall have occurred and be continuing,
the Company may, at any time, replace any Bank or the Swingline Bank that has
requested compensation from the Company pursuant to Section 5.01 hereof or whose
obligation to make additional Loans has been suspended pursuant to Section 5.03
hereof or that is entitled to payment of additional amounts under Section 5.05
hereof (any such Bank or the Swingline Bank being herein called an "Affected
Bank"), by giving not less than ten Business Days' prior notice to the
Administrative Agent (which shall promptly notify such Affected Bank and each
other Bank), that it intends to replace such Affected Bank with one or more
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banks (including, but not limited to, any other Bank under this Agreement)
selected by the Company and acceptable to the Administrative Agent (which shall
not unreasonably withhold its consent). The method (whether by assignment or
otherwise) of and documentation for such replacement shall be acceptable to the
Affected Bank, the other Banks and the Administrative Agent (which shall not
unreasonably withhold their consent and shall cooperate with the Company in
effecting such replacement). Upon the effective date of any replacement under
this Section 5.06 (and as a condition thereto), the Company shall, or shall
cause the replacement bank(s) to, pay to the Affected Bank being replaced any
amounts owing to such Affected Bank hereunder (including, without limitation,
interest, commitment fees, compensation and additional amounts under this
Section 5, in each case accrued to the effective date of such replacement),
whereupon each replacement bank shall become a "Bank" or the "Swingline Bank",
as the case may be, for all purposes of this Agreement having a Commitment in
the amount of such Affected Bank's Commitment assumed by it, and such Commitment
of the Affected Bank being replaced (including, if such Affected Bank is the
Swingline Bank, its Swingline Commitment) shall be terminated upon such
effective date and all of such Affected Bank's rights and obligations under this
Agreement shall terminate (provided that the obligations of the Company under
Sections 5.01, 5.04, 5.05 and 11.03 hereof to such Affected Bank shall survive
such replacement as provided in Section 11.07 hereof).
Section 6. Conditions Precedent.
6.01 Amendment Effective Date. The effectiveness of this amendment
and restatement of the Existing Credit Agreement provided for hereby is subject
to the receipt by the Administrative Agent of the following documents, each of
which shall be satisfactory to the Administrative Agent (and to the extent
specified below, to each Bank) in form and substance:
(a) Corporate Documents. The following documents, each certified as
indicated below:
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(i) a copy of the charters, as amended and in effect, of the
Company and of each Material Subsidiary certified as of a recent
date by the Secretary of State of the State of New York and by the
New York Insurance Department, as the case may be, and a certificate
from such respective New York State authorities dated as of a recent
date as to the good standing of and charter documents filed by the
Company and by such Material Subsidiary;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company, dated the Amendment Effective Date and certifying (A)
that attached thereto is a true and complete copy of the by-laws of
the Company and of each Material Subsidiary as amended and in effect
at all times from the date on which the resolutions referred to in
clause7 (B) were adopted to and including the date of such
certificate, (B) that attached thereto is a true and complete copy
of resolutions duly adopted by the board of directors of the Company
authorizing the execution, delivery and performance of the Basic
Documents and the extensions of credit hereunder, and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that the charters of the Company and the
Material Subsidiaries have not been amended since the date of the
certification thereto furnished pursuant to subparagraph (i) above,
and (D) as to the incumbency and specimen signature of each officer
of the Company executing the Basic Documents and each other document
to be delivered by the Company from time to time in connection
therewith (and the Administrative Agent and each Bank may
conclusively rely on such certificate until it receives notice in
writing from the Company); and
(iii) a certificate of another officer of the Company as to the
incumbency and specimen signature of the Secretary or Assistant
Secretary, as the case may be, of the Company.
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(b) Officer's Certificate. A certificate of a senior officer of the
Company, dated the Amendment Effective Date, to the effect set forth in
the first sentence of Section 6.03 hereof.
(c) Opinion of Counsel to the Company. An opinion, dated the
Amendment Effective Date, of Samuel Bergman, Executive Vice President and
General Counsel of the Company, substantially in the form of Exhibit C
hereto and covering such other matters as the Administrative Agent or any
Bank may reasonably request (and the Company hereby instructs such counsel
to deliver such opinion to the Banks and the Administrative Agent).
(d) Opinion of Special New York Counsel to Chase. An opinion, dated
the Amendment Effective Date, of Milbank, Tweed, Hadley & McCloy, special
New York counsel to Chase, substantially in the form of Exhibit D hereto.
(e) Notes. The Revolving Credit Notes, duly completed and executed
in exchange (in the case of the Existing Banks) for the promissory notes
issued under the Existing Credit Agreement.
(f) Tax Sharing Agreements. True, correct and complete copies of all
tax sharing agreements (if any) to which the Company or any of its
Subsidiaries is a party, which agreements must be in form and substance
satisfactory to the Banks.
(g) Capital Contribution Agreements. A true, correct and complete
copy of all agreements (if any) of the Company under which the Company is
obligated to make capital contributions to any of its Insurance
Subsidiaries, which agreements must be in form and substance satisfactory
to the Banks.
(h) Evidence that Existing Banks have been paid all principal of and
interest on the Existing Loans and all commitment fee, and all other
amounts owing, under the
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Existing Credit Agreement accrued to the Amendment Effective Date.
(i) Other Documents. Such other documents as the Administrative
Agent or any Bank or special New York counsel to Chase may reasonably
request.
The effectiveness of this amendment and restatement of the Existing Credit
Agreement is also subject to the payment by the Company of such fees as the
Company shall have agreed to pay or deliver to any Bank 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 Notes 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 the Company not less than five days prior to the Amendment
Effective Date).
6.02 Term Loans.
The obligation of the Banks to make any Term Loans to the Company
hereunder on the occasion of the borrowing of any Series of Term Loans is
subject to the further condition precedent that the Company shall have delivered
to the Administrative Agent the Term Notes evidencing such Series of Term Loans.
6.03 Initial and Subsequent Loans.
The obligation of any Bank or the Swingline Bank to make any Loan to
the Company upon the occasion of any borrowing hereunder (including the initial
borrowing) is subject to the further conditions precedent that, both immediately
prior to the making of such Loan and also after giving effect thereto and to the
intended use thereof:
(a) no Default shall have occurred and be continuing;
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(b) the representations and warranties made by the Company in
Section 7 hereof, and in each of the other Basic Documents, 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); and
(c) the Company shall have delivered to the Administrative Agent (i)
certificates (accompanied by stock powers duly endorsed in blank)
representing shares of common stock of ERC having an aggregate Value at
least equal to 166-2/3% of the aggregate unpaid principal amount of all
Loans outstanding (after giving effect to such borrowing), and (ii) a
certificate of the senior financial officer of the Company setting forth
in reasonable detail the computations necessary to determine the aggregate
Value of the shares of Pledged Stock after giving effect to the delivery
of the certificates referred to in clause (i) above.
Each notice of borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in the preceding sentence
(both as of the date of such notice and, unless the Company otherwise notifies
the Administrative Agent prior to the date of such borrowing, as of the date of
such borrowing).
Section 7. Representations and Warranties. The Company represents
and warrants to the Administrative Agent and the Banks and the Swingline Bank
that:
7.01 Corporate Existence. Each of the Company and its Material
Subsidiaries: (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; and (c) is qualified
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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 where
failure so to qualify could, either individually or in the aggregate, have a
Material Adverse Effect.
7.02 Financial Condition.
(a) The Company has heretofore furnished to each of the Banks
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at December 31, 1995 and the related consolidated and
consolidating statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries for the fiscal year ended on said date, with the
opinion thereon (in the case of said consolidated balance sheet and statements)
of Deloitte & Touche LLP, and the unaudited consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at June 30, 1996 and the
related consolidated and consolidating statements of income, shareholders'
equity and cash flows of the Company and its Subsidiaries for the six-month
period ended on such date. All such financial statements present fairly, in all
material respects, the consolidated financial condition of the Company and its
Subsidiaries, and (in the case of said consolidating financial statements) the
respective unconsolidated financial condition of the Company and of each of its
Subsidiaries, as at said dates and the consolidated results of their operations,
and (in the case of said consolidating statements) the respective unconsolidated
results of operations of the Company and of each of its Subsidiaries, for the
fiscal year and six-month period ended on said dates (subject, in the case of
such financial statements as at June 30, 1996, to normal year-end audit
adjustments), all in accordance with generally accepted accounting principles
and practices applied on a consistent basis. None of the Company nor any of its
Subsidiaries has on the Restatement 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 financial statements (or in the notes thereto)
as at said dates. Since December 31, 1995, there has
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been no material adverse change in the consolidated financial condition,
operations, business or prospects of the Company and its Subsidiaries taken as a
whole from that set forth in said financial statements as at said date.
(b) The Company has heretofore furnished to each of the Banks the
annual and quarterly Statutory Statements of the Company (consolidated) and of
each of its Insurance Subsidiaries for the fiscal year ended December 31, 1995
and for the quarterly fiscal period ended June 30, 1996 as filed with the
Applicable Insurance Regulatory Authority. All such Statutory Statements present
fairly, in all material respects, the financial condition of the Company
(consolidated) and of each Insurance Subsidiary, respectively, as at the
respective dates thereof and its results of operations through fiscal year ended
on December 31, 1995 and the quarterly fiscal period ended June 30, 1996, in
accordance with statutory accounting practices prescribed or permitted by the
Applicable Insurance Regulatory Authority.
7.03 Litigation. Except as disclosed in Schedule III hereto, there
are no legal or arbitration 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 Subsidiaries that,
if adversely determined, could, either individually or in the aggregate, have a
Material Adverse Effect.
7.04 No Breach. None of the execution and delivery of this Agreement
and the Notes and the other Basic Documents, 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, (or, in the case of the Pledge Agreement, have
conflicted with or resulted in a breach of, or required 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 or any of its
Subsidiaries is a party or by which any of them or any of their Property is
bound or to which any of them is subject, or
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constitute (or, in the case of the Pledge Agreement, constituted) a default
under any such agreement or instrument, or (except for the Liens created
pursuant to the Pledge Agreement) result (or, in the case of the Pledge
Agreement, resulted) in the creation or imposition of any Lien upon any Property
of the Company or any of its Subsidiaries pursuant to the terms of any such
agreement or instrument; provided that the pledge of shares of common stock of
ERC under the Pledge Agreement required the consent of the Required Majority
under (and as such term is defined in) the Senior Note Purchase Agreements.
7.05 Action. The Company has all necessary corporate power,
authority and legal right to execute and deliver this Agreement and the Notes
and perform its obligations under each of the Basic Documents; the execution and
delivery of this Agreement and the Notes and performance by the Company of each
of the Basic Documents have been duly authorized by all necessary corporate
action on its part (including, without limitation, any required shareholder
approvals); and this Agreement and the Pledge Agreement have been duly and
validly executed and delivered by the Company and constitute, and each of the
Notes when executed and delivered for value will constitute, the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
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 or delivery
by the Company of this Agreement and the Notes or performance by the Company of
the Basic Documents or for the legality, validity or enforceability hereof or
thereof except that the approval of the New York Insurance Department may be
required in connection with a foreclosure on the Pledged Stock in the event such
foreclosure results a Change in Control of ERC.
7.07 Margin Stock. Not more than 25% of the value (as determined by
any reasonable method) of the Properties of the Company and its Subsidiaries
(including, without limitation, common stock of the Company held in treasury)
subject to the
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provisions of Section 8.05 or 8.06 hereof is represented by Margin Stock.
7.08 ERISA. Each Plan, and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which the Company would be
under an obligation to furnish a report to the Banks under Section 8.01(g)
hereof.
7.09 Taxes. The Company and its Subsidiaries are members of an
affiliated group of corporations filing consolidated returns for Federal income
tax purposes, of which the Company is the "common parent" (within the meaning of
Section 1504 of the Code) of such group. The Company and its Subsidiaries have
filed all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company or any of its
Subsidiaries. The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Company, adequate. The Company has not given or been requested to
give a waiver of the statute of limitations relating to the payment of Federal,
state, local and foreign taxes or other impositions.
7.10 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
7.11 Public Utility Holding Company Act. Neither the Company nor any
of its Subsidiaries is 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.
7.12 Material Agreements and Liens.
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(a) Part A of Schedule I hereto is a complete and correct list, as
of the Restatement Date, of each credit agreement, loan agreement, indenture,
securities purchase agreement, guarantee, letter of credit or other arrangement
providing for or otherwise relating to any Indebtedness of the Company or any of
its Subsidiaries the aggregate principal or face amount of which equals or
exceeds (or may equal or exceed) $1,000,000, and the aggregate principal or face
amount outstanding or that may become outstanding under each such arrangement is
correctly described in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list, as
of the Restatement Date, of each Lien securing Indebtedness of any Person the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $1,000,000 and covering any Property of the Company or any of its
Subsidiaries, and the aggregate Indebtedness secured (or which may be secured)
by each such Lien and the Property covered by each such Lien is correctly
described in Part B of said Schedule I.
7.13 Environmental Matters. There have been no environmental
investigations, studies, audits, tests, reviews or other analyses conducted by
or that are in the possession of the Company or any of its Subsidiaries in
relation to any site or facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries which have not been made available to the
Banks.
7.14 Capitalization. The authorized capital stock of the Company
consists, on the Restatement Date, of an aggregate of 30,000,000 shares of
common stock, par value $0.10 per share, of which [18,163,100] shares are duly
and validly issued and outstanding (and [111,400] shares of which are held in
treasury), each of which shares is fully paid and nonassessable. As of the
Restatement Date, except for the Company's Long-Term Incentive Plan for Key
Employees and its Non-Employee-Director Stock Option Plan as in effect on the
Restatement Date and any stock bonus awards, restricted stock awards,
performance units, stock options or stock appreciation rights heretofore issued
thereunder and
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other than pursuant to the Shareholders' Agreement, (x) there are no outstanding
Equity Rights with respect to the Company and (y) there are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem, or
otherwise acquire any shares of capital stock of the Company nor are there any
outstanding obligations of the Company or any of its Subsidiaries 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 or any of its Subsidiaries.
7.15 Subsidiaries, Etc.
(a) Set forth in Schedule II hereto is a complete and correct list,
as of the Restatement Date, of all of the Subsidiaries of the Company, together
with, for each such Subsidiary, (i) the jurisdiction of organization of such
Subsidiary, (ii) each Person holding ownership interests in such Subsidiary and
(iii) the nature of the ownership interests held by each such Person and the
percentage of ownership of such Subsidiary represented by such ownership
interests. Except as disclosed in Schedule II hereto, as of the Restatement Date
(x) each of the Company and its Subsidiaries owns, free and clear of Liens
(other than Liens created pursuant to the Pledge Agreement), and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Schedule II hereto, (y) all of the issued and
outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
Equity Rights with respect to such Person.
(b) None of the Subsidiaries of the Company is, on the Restatement
Date, subject to any indenture, agreement, instrument or other arrangement of
the type described in Section 8.15(c) hereof.
7.16 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Company or any of its
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Subsidiaries to the Administrative Agent or any Bank in connection with the
negotiation, preparation or delivery of this Agreement and the other Basic
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole, do not, as of the Restatement Date, contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished after the
Restatement Date by the Company and its Subsidiaries to the Administrative Agent
and the Banks in connection with this Agreement and the other Basic Documents
and the transactions contemplated hereby and thereby will be true, complete and
accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or
certified. To the Company's knowledge, there is no fact peculiar to the Company
or any of its Subsidiaries (in contrast to information of a general economic or
industry nature) that could have a Material Adverse Effect that has not been
disclosed herein, in the other Basic Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Banks for use in connection with the transactions contemplated hereby or
thereby.
Section 8. Covenants of the Company. The Company covenants and
agrees with the Banks, the Swingline Bank 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; Information; Etc. The Company shall
deliver to each of the Banks and the Swingline Bank:
(a) as soon as available and in any event within 55 days after the
end of each quarterly fiscal period of each fiscal year of the Company,
consolidated and consolidating statements of income, shareholders' equity
and cash flows of the Company and its Subsidiaries for such period and for
the period from the beginning of the
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respective fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such period, setting forth in each case in
comparative form the corresponding consolidated and consolidating figures
for the corresponding period in the preceding fiscal year, accompanied by
a certificate of a senior financial officer of the Company, which
certificate shall state that said consolidated financial statements
present fairly, in all material respects, the consolidated financial
condition and results of operations of the Company and its Subsidiaries,
and said consolidating financial statements present fairly in all material
respects, the respective individual unconsolidated financial condition and
results of operations of the Company and of each of its Subsidiaries, in
each case in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such period (subject to
normal year-end audit adjustments);
(b) as soon as available and in any event within 100 days after the
end of each fiscal year of the Company, consolidated and consolidating
statements of income, stockholders' equity and cash flows of the Company
and its Subsidiaries for such fiscal year and the related consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at the
end of such fiscal year, setting forth in each case in comparative form
the corresponding consolidated and consolidating figures for the preceding
fiscal year, and accompanied (i) in the case of said consolidated
statements and balance sheet of the Company, by an opinion thereon of
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
present fairly, in all material respects, the consolidated financial
condition and results of operations of the Company and its Subsidiaries as
at the end of, and for, such fiscal year in accordance with generally
accepted accounting principles, and a certificate of such accountants
addressed to the Banks stating that, in making the examination necessary
for their opinion, nothing came to
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their attention that caused them to believe that the Company had failed to
comply with any of its obligations under Sections 8.05 to 8.11 (inclusive)
or that any Default specified in paragraph (b) or (e) to (j), inclusive,
of Section 9 hereof had occurred, except as specifically stated, and (ii)
in the case of said consolidating statements and balance sheets, by a
certificate of a senior financial officer of the Company, which
certificate shall state that said consolidating financial statements
present fairly, in all material respects, the respective individual
unconsolidated financial condition and results of operations of the
Company and of each of its Subsidiaries, in each case in accordance with
generally accepted accounting principles, consistently applied, as at the
end of, and for, such fiscal year;
(c) within 5 days after filing with the Applicable Insurance
Regulatory Authority and in any event within 55 days after the end of each
of the first three quarterly fiscal periods of each fiscal year of the
Company the quarterly Statutory Statement of the Company (consolidated)
and of each Insurance Subsidiary for such fiscal period, together with
(except in the case of Van-American Insurance Company) a certificate of a
senior financial officer of the Company (x) stating that such Statutory
Statement fairly presents, in all material respects, the financial
condition of the Company (consolidated) and of each Insurance Subsidiary,
respectively, for such quarterly fiscal period in accordance with
statutory accounting practices required or permitted by the Applicable
Insurance Regulatory Authority and (y) in the case of ERC, setting forth
in reasonable detail the computations necessary to determine the aggregate
Value of the shares of Pledged Stock (if any).
(d) within 5 days after filing with the Applicable Insurance
Regulatory Authority and in any event within 55 days after the end of each
fiscal year of the Company the annual Statutory Statement of the Company
(consolidated) and of each Insurance Subsidiary for such year, together
with a certificate of a senior financial officer of the Company
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(except in the case of Van-American Insurance Company) (x) stating that
such annual Statutory Statement fairly presents, in all material respects,
the financial condition of the Company (consolidated) and of each
Insurance Subsidiary, respectively, for such fiscal year in accordance
with statutory accounting practices required or permitted by the
Applicable Insurance Regulatory Authority and (y) in the case of ERC,
setting forth in reasonable detail the computations necessary to determine
the aggregate Value of the shares of Pledged Stock (if any).
(e) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which the
Company shall have filed with the Securities and Exchange Commission (or
any governmental agency substituted therefor) or any national securities
exchange;
(f) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) as soon as possible, and in any event within ten days after the
Company knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan
has occurred or exists, a statement signed by a senior financial officer
of the Company setting forth details respecting such event or condition
and the action, if any, that the Company or its ERISA Affiliate proposes
to take with respect thereto (and a copy of any report or notice required
to be filed with or given to PBGC by the Company or an ERISA Affiliate
with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (provided that
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a failure to meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA, including, without limitation, the
failure to make on or before its due date a required installment
under Section 412(m) of the Code or Section 302(e) of ERISA, shall
be a reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request for a
waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by the Company or
an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Company or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or
the receipt by the Company or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and
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(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result
in the loss of tax-exempt status of the trust of which such Plan is
a part if the Company or an ERISA Affiliate fails to timely provide
security to the Plan in accordance with the provisions of said
Sections;
(h) promptly after the Company knows or has reason to believe that
any Default has occurred, a notice of such Default specifying 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; and
(i) from time to time such other information regarding the financial
condition, operations, business or prospects of the Company or any of its
Subsidiaries (including, without limitation, any Plan or Multiemployer
Plan and any reports or other information required to be filed under
ERISA) as any Bank or the Administrative Agent may reasonably request.
The Company will furnish to each Bank, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
senior financial officer of the Company (i) 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) and (ii) setting
forth in reasonable detail the computations necessary to determine whether the
Company is in compliance with Sections 8.05(d)(v)(z), 8.06(i), 8.07(d), 8.09 and
8.10 hereof as of the end of the respective quarterly fiscal period or fiscal
year.
8.02 Litigation. The Company will promptly give to each Bank and the
Swingline Bank notice of all legal or arbitration proceedings, and of all
proceedings by or before any
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governmental or regulatory authority or agency, and any material development in
respect of such legal or other proceedings, affecting the Company or any of its
Subsidiaries, except proceedings which, if adversely determined, could not,
either individually or in the aggregate, have a Material Adverse Effect.
8.03 Existence, Etc. The Company will, and will cause each of its
Material Subsidiaries to:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that
nothing in this Section 8.03 shall prohibit any transaction expressly
permitted by Section 8.05 hereof);
(b) 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, have a Material Adverse Effect;
(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 in accordance with GAAP;
(d) maintain all of its Properties material to its business in
reasonably adequate working order and condition, ordinary wear and tear
excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Bank or the Administrative Agent,
during normal business hours, to
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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 Bank or the
Administrative Agent (as the case may be).
8.04 Insurance. The Company will, and will cause each of its
Material Subsidiaries to, keep insured by financially sound and reputable
insurers all Property of a character usually insured by corporations engaged in
the same or similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such corporations and
carry such other insurance as is usually carried by such corporations.
8.05 Prohibition of Fundamental Changes.
(a) The Company will not, and will not permit any of its Material
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution).
(b) The Company will not, and will not permit any of its
Subsidiaries to, acquire any business or Property from, or capital stock of, or
be a party to any acquisition of, any Person.
(c) The Company will not, and will not permit any of its Material
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of any part
of its business or Property, whether now owned or hereafter acquired (including,
without limitation, receivables and leasehold interests).
(d) Notwithstanding the foregoing paragraphs of this Section 8.05:
(i) any Subsidiary of the Company may be merged or consolidated with
or into (x) the Company if the Company shall be the continuing or
surviving corporation or (y) any other Subsidiary of the Company; provided
that if any such
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transaction shall be between a Subsidiary of the Company and a Wholly
Owned Subsidiary of the Company, such Wholly Owned Subsidiary shall be the
continuing or surviving corporation;
(ii) the Company or any of its Subsidiaries may (x) purchase
equipment, furniture and supplies to be used in the ordinary course of
business and (y) acquire all of the capital stock of Vesta American
Reinsurance Corporation Inc. ("Vesta American") from
Skadeforsikringsselskapet Vesta A/S for a consideration not to exceed the
net worth of Vesta American (determined as provided in the stock purchase
agreement) plus $1,000,000;
(iii) the Company or any of its Subsidiaries may make Investments
permitted by Section 8.08 hereof;
(iv) any Subsidiary of the Company may convey, sell, lease, transfer
or otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise) to the Company or a Wholly Owned Subsidiary of
the Company; and
(v) the Company or any of its Subsidiaries may convey, sell, lease,
transfer or otherwise dispose of (x) equipment no longer used or useful in
its business, (y) any portfolio Investment sold or disposed of in the
ordinary course of business and (z) any other Investment (including any
Investment in the capital stock of Subsidiaries of the Company other than
ERC or Asset Guaranty) having a value, together with the value (when sold,
leased transferred or otherwise disposed of), of all Investments sold
leased, transferred or otherwise disposed of in reliance on this
sub-clause (z), not in excess of $1,000,000.
(e) Except as expressly permitted by paragraphs of this Section
8.05, the Company shall not, nor shall it permit any of its Material
Subsidiaries to, sell, transfer, convey or otherwise dispose of either directly
or indirectly (x) all or any portion of the capital stock of any of its Material
Subsidiaries (except that the Company may pledge shares of common stock of ERC
under the Pledge Agreement) or (y) all or substantially all of
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the Properties of any of its Material Subsidiaries in one transaction or a
series of related transactions.
8.06 Limitation on Liens. The Company will not, and will not permit
any of its Material Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any of its Property, whether now owned or hereafter acquired,
except:
(a) Liens created pursuant to the Pledge Agreement and Liens on the
common stock of ERC securing the principal of, and interest and Make-Whole
Amount on, the senior notes issued under the Senior Note Purchase
Agreements;
(b) Liens in existence on the Restatement Date and listed in Part B
of Schedule I hereto;
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in good
faith and by appropriate proceedings, unless the amount thereof is
material with respect to it or its financial condition, if adequate
reserves with respect thereto are maintained on the books of the Company
or the affected Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or which are being
contested in good faith and by appropriate proceedings and Liens securing
judgments but only to the extent for an amount and for a period not
resulting in an Event of Default under Section 9(h) hereof;
(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory
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obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on
the use of Property or minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in any case
materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(h) Liens on Property of any corporation which becomes a Subsidiary
of the Company after the Restatement Date; provided that such Liens are in
existence at the time such corporation becomes a Subsidiary of the Company
and were not created in anticipation thereof;
(i) Liens upon real and/or tangible personal Property acquired after
the Restatement Date (by purchase, construction or otherwise) by the
Company or any of its Subsidiaries, each of which Liens either existed on
such Property before the time of its acquisition and was not created in
anticipation thereof or was created solely for the purpose of securing
Indebtedness incurred to finance, refinance or refund the cost (including
the cost of construction) of such Property; provided that (i) no such Lien
shall extend to or cover any Property of the Company or such Subsidiary
other than the Property so acquired and improvements thereon and (ii) the
principal amount of Indebtedness secured by any such Lien shall not exceed
75% of the fair market value (as determined in good faith by a senior
financial officer of the Company) of such Property at the time it was
acquired (by purchase, construction or otherwise); and
(j) any extension, renewal or replacement of the foregoing; provided
that the Liens permitted by this
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paragraph shall not extend to or cover any additional Indebtedness or
Property (other than a substitution of like Property).
8.07 Indebtedness. The Company will not, and will not permit any of
its Material Subsidiaries to, create or incur any Indebtedness except:
(a) Indebtedness to the Banks and the Swingline Bank hereunder;
(b) Indebtedness of the Company to any Subsidiary of the Company or
Indebtedness of any Wholly Owned Subsidiary to the Company or to any other
Wholly Owned Subsidiary of the Company;
(c) Indebtedness of the Company and its Material Subsidiaries
secured by Liens permitted by Section 8.06(i) hereof;
(d) additional Indebtedness of the Company provided that on the date
such Indebtedness is incurred and after giving effect thereto and to the
concurrent retirement of any other Indebtedness of the Company, total
consolidated Indebtedness of the Company and its Subsidiaries does not
exceed 25% of Total Capitalization; and
(e) Indebtedness of ERC not exceeding $100,000,000 in aggregate
principal amount incurred under a credit facility established by ERC
solely for the purpose of acquiring or supporting one or more of its
claims-paying ability ratings.
8.08 Investments. The Company will not, and will not permit any of
its Material Subsidiaries to, make or permit to remain outstanding any
Investments except:
(a) Investments constituting (i) operating deposit accounts with
banks and (ii) accounts receivable arising in the ordinary course of
business on ordinary business terms that are not overdue;
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(b) portfolio Investments constituting short-term debt instruments
that are rated at least A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service Inc.;
(c) portfolio Investments constituting fixed income debt securities
if, after giving effect to such Investment:
(i) the weighted average credit quality of the fixed income
debt securities portfolio of the Company or any Material Subsidiary,
as determined by the rating system of Standard & Poor's Corporation,
is AA or higher; or
(ii) the aggregate amount invested by the Company and each of
its Material Subsidiaries in fixed income debt securities which are
rated lower than BBB by Standard & Poor's Corporation or Baa2 by
Moody's Investors Service Inc. does not exceed 1% of the aggregate
amount of all portfolio Investments of the Company and its Material
Subsidiaries;
(d) equity Investments if, after giving effect to such Investments,
the aggregate amount of equity Investments of the Company and of its
Material Subsidiaries (including, without limitation, Investments in
Vantage American, Inc. and in other Subsidiaries of the Company that are
not Wholly Owned Subsidiaries of the Company) does not exceed 6% of the
aggregate amount of the consolidated Investments (both debt and equity) of
the Company and its Material Subsidiaries; and
(e) travel and similar advances by the Company and its Material
Subsidiaries in the ordinary course of business and loans to officers and
directors of the Company and its Material Subsidiaries, provided that such
travel and similar advances and loans to officers and directors at any one
time do not, in the aggregate, exceed $500,000 for the Company and its
Material Subsidiaries.
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8.09 Restricted Payments. The Company will not declare or make any
Restricted Payment unless, on the date of declaration in the case of any
proposed dividend and on the date of payment or distribution in the case of the
making of any other Restricted Payment (the "Computation Date"), and after
giving effect thereto:
(i) the aggregate amount of all Restricted Payments made
during the period commencing on January 1, 1992 and ending on and
including the Computation Date (the "Computation Period") shall not
exceed an amount equal to the sum of:
(a) 25% (or, in the case of a deficit, minus 100%) of
consolidated net income of the Company and its Subsidiaries
for the Computation Period, plus
(b) the net cash proceeds received by the Company from
the issue or sale (other than to a Subsidiary) of shares of
common stock of the Company (including shares of common stock
issued upon conversion of Indebtedness to common stock, it
being understood and agreed that in any such conversion, the
Company shall be deemed to have received cash proceeds in an
amount equal to the principal amount of Indebtedness converted
to common stock; and
(ii) no Default shall have occurred and be continuing;
provided, that the Company shall not in any fiscal quarter of the Company
declare any dividend to the extent that the amount of such dividend, together
with the sum of (i) the aggregate amount of all dividends theretofore declared
in such fiscal quarter plus (ii) the aggregate amount of dividends actually paid
during the period (the "Measuring Period") of four consecutive fiscal quarters
of the Company ended on (or most recently ended prior to) such declaration,
would exceed 25% of the consolidated net
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income of the Company and its Subsidiaries for the Measuring Period (and the
Company shall not pay any dividends it has not previously declared as permitted
hereby); and provided further, that no Restricted Payments shall be permitted if
and for so long as the claims-paying ability rating of any Insurance Subsidiary
of the Company, as determined by Standard & Poor's Ratings Group (if rated by
said agency), falls below AA- (or is withdrawn).
8.10 Financial Covenants.
(a) Tangible Net Worth. The Company will not, on any date falling in
any period set forth below, permit Tangible Net Worth to be less than the amount
set forth opposite such period:
Period Amount
------ ------
From and including the date hereof
through December 31, 1992 $290,000,000
From and including January 1, 1993
through December 31, 1993 $310,000,000
From and including January 1, 1994
through December 31, 1994 $335,000,000
Thereafter $365,000,000
(b) Fixed Charge Coverage Ratio. The Company will not, as at any
date falling in any period set forth below, permit the Fixed Charge Coverage
Ratio for the period of the four consecutive fiscal quarters of the Company
ending on, or most recently ended prior to, such date to be less than the ratio
set forth opposite such period:
Period Ratio
------ -----
From and including the date hereof
through December 31, 1993 2.2 to 1
From and including January 1, 1994
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through December 31, 1994 2.5 to 1
Thereafter 2.7 to 1
8.11 Capital Expenditures. The Company will not permit the aggregate
amount of Capital Expenditures by the Company and its Subsidiaries to exceed
$2,000,000 in any fiscal year of the Company.
8.12 Lines of Business. The Company will not permit any of its
Insurance Subsidiaries to engage to any substantial extent in any line or lines
of business activity other than the business of issuing financial guaranty
insurance, credit insurance and residual value insurance (and reinsurance of the
same) and similar or related products.
8.13 Transactions with Affiliates. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly:
(a) make any Investment in any Affiliate of the Company;
(b) transfer, sell, lease, assign or otherwise dispose of any
Property to any such Affiliate;
(c) purchase or acquire Property from any such Affiliate; or
(d) enter into any other transaction directly or indirectly with or
for the benefit of any such Affiliate (including, without limitation,
Guarantees and assumptions of obligations of any such Affiliate);
provided that the Company and its Subsidiaries may enter into transactions
(other than Investments by the Company or any of its Subsidiaries in any
Affiliate of the Company) providing for the leasing of Property, the rendering
or receipt of services or the purchase or sale of Property in the ordinary
course of business if the monetary or business consideration arising therefrom
would
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be substantially as advantageous to the Company and its Subsidiaries as the
monetary or business consideration which would obtain in a comparable
transaction with a Person not an Affiliate of the Company.
8.14 Use of Proceeds. The Company will use the proceeds of the Loans
hereunder solely for general corporate purposes (in compliance with all
applicable legal and regulatory requirements) or, subject to Section 8.09
hereof, to purchase shares of the common stock of the Company; provided that (a)
the proceeds of any Swingline Loan may not be used to repay or prepay any other
Swingline Loan and (b) none of the Administrative Agent, any Bank or the
Swingline Bank shall have any responsibility as to the use of any of such
proceeds.
8.15 Certain Obligations Respecting Subsidiaries.
(a) Subject to Section 8.05 hereof, the Company will, and will cause
each of ERC and Asset Guaranty to, take such action from time to time as shall
be necessary to ensure that each of ERC and Asset Guaranty is a Wholly Owned
Subsidiary (subject only, in the case of the shares of common stock of ERC, to
the Lien of the Pledge Agreement).
(b) The Company will not permit any of ERC or Asset Guaranty to
issue any shares of stock of any class whatsoever to any Person (other than to
the Company).
8.16 Modifications of Certain Documents. The Company will not
consent to any modification, supplement or waiver of any of the provisions of
the Senior Note Purchase Agreements that would materially increase the
obligations, or materially reduce the rights, of the Company or any of its
Subsidiaries thereunder.
8.17 Claims-Paying Rating. The Company will not allow the
claims-paying rating of any Insurance Subsidiary as rated by Standard & Poor's
Corporation to be less than AA- (or to be withdrawn) at any time.
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8.18 Dividends to or Investments in the Company by Subsidiaries. The
Company will not, nor will it permit any of its Subsidiaries, to issue any
securities or enter into any agreements (other than with or as required by
applicable regulatory authorities) that will either (i) limit the ability of any
of the Subsidiaries of the Company to declare or pay or set apart any funds for
the payment of any dividend or make any distribution to or Investment in the
Company or (ii) prevent such Subsidiary from paying to the Company the entire
amount available to be paid as dividends or distributions by such Subsidiary;
provided, that nothing herein shall be deemed to require any Subsidiary of the
Company to pay any dividend to, or make any Investment in, the Company in excess
of the amount necessary to enable the Company to make all payments required
hereunder and under the Notes.
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: (i) default in the payment of any principal
of any Loan when due (whether at stated maturity or upon mandatory or
optional prepayment); or (ii) default in the payment of any interest on
any Loan or any commitment fee hereunder when due and such default shall
have continued unremedied for five or more days; or
(b) The Company or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any of its
Indebtedness aggregating $1,000,000 or more (other than the Indebtedness
referred to in paragraph (a) above); or any event specified in any note,
agreement, indenture or other document evidencing or relating to any such
Indebtedness shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, such Indebtedness to become due, or to
be prepaid in full (whether by redemption, purchase, offer to purchase or
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otherwise), prior to its stated maturity or to have the interest rate
thereon reset to a level so that securities evidencing such Indebtedness
trade at a level specified in relation to the par value thereof; or
(c) Any representation, warranty or certification made or deemed
made herein or in any other Basic Document (or in any modification or
supplement hereto or thereto) by the Company, or any certificate furnished
to any Bank, the Swingline Bank or the Administrative Agent pursuant to
the provisions hereof or thereof, shall prove to have been false or
misleading as of the time made, deemed made or furnished in any material
respect; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 8.01(h), 8.05, 8.06, 8.07, 8.09, 8.10,
8.11 and 8.13 to 8.18 (inclusive) hereof or the Company shall default in
the performance of any of its obligations under Section 5.02 of the Pledge
Agreement; or the Company shall default in the performance of any of its
other obligations in this Agreement or any other Basic Document and such
default shall continue unremedied for a period of 15 days after notice
thereof to the Company by the Administrative Agent, any Bank or the
Swingline Bank (in either case, through the Administrative Agent); or
(e) The Company or any of its Material Subsidiaries shall admit in
writing its inability to, or be generally unable to, pay its debts as such
debts become due; or
(f) The Company or any of its Material Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner, rehabilitator, conservator 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,
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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
(g) A proceeding or case shall be commenced, without the application
or consent of the Company or any of its Material Subsidiaries, in any
court of competent jurisdiction, seeking (i) its reorganization,
rehabilitation, conservation, liquidation, dissolution, arrangement or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a receiver, custodian, trustee, examiner, rehabilitator,
conservator, liquidator or the like of the Company or such Material
Subsidiary or of all or any substantial part of its Property, or (iii)
similar relief in respect of the Company or such Subsidiary under any law
relating to bankruptcy, insolvency, reorganization, rehabilitation,
conservation, liquidation, 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 foregoing
(other than an order for relief in an involuntary case under the
Bankruptcy Code) 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 or
such Material Subsidiary shall be entered in an involuntary case under the
Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect
of such judgment) or in excess of $5,000,000 in the aggregate (regardless
of insurance coverage) shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction against the
Company or any of its Subsidiaries and the same shall not be discharged
(or provision shall not be made for such discharge), or a stay of
execution thereof shall not be
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procured, within 30 days from the date of entry thereof and the Company or
the relevant Subsidiary shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or
(i) An event or condition specified in Section 8.01(g) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the
opinion of the Majority Banks shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination of
the foregoing) which, in the determination of the Majority Banks, could
have a Material Adverse Effect; or
(j) A Change in Control shall occur; or
(k) Except for expiration in accordance with its terms, the security
interest granted pursuant to the Pledge Agreement shall cease to be a
first priority perfected security interest for whatever reason;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
paragraph (f) or (g) of this Section 9 with respect to the Company, the
Administrative Agent may and, upon request of the Majority Banks (or with
respect to Swingline Loans, upon the request of the Swingline Bank), shall, by
notice to the Company, terminate the Commitments (and/or the Swingline
Commitment) 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 5.04 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 paragraph (f)
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or (g) 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 5.04 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.
Section 10. The Administrative Agent.
10.01 Appointment, Powers and Immunities. Each Bank and the
Swingline Bank hereby irrevocably (subject to Section 10.08 hereof) appoints and
authorizes the Administrative Agent to act as its agent hereunder and under the
other Basic Documents with such powers as are specifically delegated to the
Administrative Agent by the terms of this Agreement and of the other Basic
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 Basic Documents, and shall not by
reason of this Agreement or any other Basic Document be a trustee for any Bank
or the Swingline Bank; (b) shall not be responsible to the Banks or the
Swingline Bank for any recitals, statements, representations or warranties
contained in this Agreement or in any other Basic 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 Basic Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Note or any other Basic 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 be required to initiate or conduct any litigation or collection
proceedings hereunder or under any other Basic
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Document; (d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other Basic 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; and (e) shall not be responsible to the Company, the Banks or the
Swingline Bank for (i) determining whether or not any of the transactions
contemplated hereby qualifies as a highly leveraged transaction ("HLT") as
defined by any bank regulatory authority, (ii) notifying the Banks or the
Swingline Bank regarding the HLT status of any transaction contemplated hereby
or of any change in that status or (iii) the correctness of any determination as
to HLT status. 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 any 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 provided in Section
11.06(b) hereof).
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, telex,
telegram or cable) 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 Basic 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
Banks or, if provided herein, in accordance with the instructions given by the
Majority Banks or all of the Banks as is required in such circumstance, and such
instructions of such Banks and any action
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taken or failure to act pursuant thereto shall be binding on all of the Banks.
10.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on Loans or of commitment fees) unless the
Administrative Agent has received notice from a Bank 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 Banks
and the Swingline Bank (and shall give each Bank and with respect to Swingline
Loans, the Swingline Bank prompt notice of each such non-payment). The
Administrative Agent shall (subject to Sections 10.01, 10.07 and 11.04 hereof)
take such action with respect to such Default as shall be directed by the
Majority Banks or in the case of Swingline Loans, the Swingline Bank, 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 Banks 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 Banks or
all of the Banks.
10.04 Rights as a Bank. With respect to its Commitments, its
Swingline Commitment and the Loans made by it, Chase (and any successor acting
as Administrative Agent) in its capacity as a Bank or the Swingline Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Administrative Agent,
and the term "Bank" or "Banks" or "Swingline Bank" 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 Bank) accept deposits
from, lend money to, make investments in and generally engage in any kind of
banking, trust or other business
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with the Company (and any of its Subsidiaries or Affiliates) as if it were not
acting as the Administrative Agent, and Chase 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 Banks or
the Swingline Bank.
10.05 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 11.03 hereof,
but without limiting the obligations of the Company under said Section 11.03)
ratably in accordance with the aggregate principal amount of the Loans held by
the Banks (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 Bank) 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 Basic 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 Company is obligated to pay under Section 11.03 hereof, 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 Bank 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 Banks. Each
Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and its Subsidiaries and decision to enter into this Agreement and that
it will, independently and without reliance upon the Administrative Agent or any
other Bank, and based on such documents and information as
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it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Company 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 or any of its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Company or any of its Subsidiaries (or
any of their 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 Basic 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 Banks 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 Banks and the Company, and the Administrative Agent may be removed at any
time with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Banks and shall have accepted such appointment within
30 days after the retiring Administrative Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Administrative Agent,
then the retiring Administrative Agent may,
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on behalf of the Banks, after consultation with the Company, appoint a successor
Administrative Agent, that shall be a bank which has an office in New York, New
York and which has 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 Basic Documents. Except as otherwise provided
in Section 11.04 hereof with respect to this Agreement, the Administrative Agent
may, with the prior consent of the Majority Banks (but not otherwise), consent
to any modification, supplement or waiver under any of the Basic Documents,
provided that, without the prior consent of each Bank, the Administrative Agent
shall not (except as provided herein or in the Pledge Agreement) release any
collateral or otherwise terminate any Lien under any Basic Document providing
for collateral security, or agree to additional obligations being secured by
such collateral security (unless the Lien for such additional obligations shall
be junior to the Lien in favor of the other obligations secured by such Basic
Document), except that no such consent shall be required, and the Administrative
Agent is hereby authorized, to release any Lien covering Property which is the
subject of a disposition of Property permitted hereunder or to which the
Majority Banks have consented.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Administrative Agent or
any Bank or the Swingline Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
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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 and under the Pledge Agreement (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 Expenses, Etc. The Company agrees to pay or reimburse each of
the Banks and the Swingline Bank and the Administrative Agent for paying: (a)
all reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to Chase), in connection with
(i) the negotiation, preparation, execution and delivery of this Agreement and
the other Basic Documents and the making of the Loans hereunder and (ii) any
modification, supplement or waiver of any of the terms of this Agreement or any
of the other Basic Documents; (b) all costs and expenses of the Banks, the
Swingline Bank and the Administrative Agent (including, without limitation,
reasonable counsels' fees) in connection with (i) any Default and any
enforcement or collection proceedings resulting therefrom or in connection with
the negotiation of any restructuring or "work-out" (whether or not consummated)
of the obligations of the Company hereunder or under any of the other Basic
Documents and (ii) the enforcement of this Section 11.03; and (c) all transfer,
stamp, documentary
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or other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any of the other Basic
Documents or any other document referred to herein or therein and all costs,
expenses, taxes, assessments and other charges incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated by any Basic Document or any other document referred to therein.
The Company hereby agrees to indemnify the Administrative Agent each
Bank and the Swingline Bank and their respective directors, officers, employees,
attorneys and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any of them (other
than liability of the Administrative Agent to any Bank) arising out of or by
reason of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings and whether or not
the Administrative Agent or such Bank or the Swingline Bank or other Person is a
party thereto) relating to the extensions of credit hereunder or any actual or
proposed use by the Company or any of its Subsidiaries of the proceeds of any of
the extensions of credit hereunder, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
11.04 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, the Administrative Agent
and the Majority Banks, or by the Company and the Administrative Agent acting
with the consent of the Majority Banks, and, if the rights or obligations
hereunder of the Swingline Bank are affected thereby, the Swingline Bank, and
any provision of this Agreement may be waived by the Majority Banks or by the
Administrative Agent acting with the consent of the Majority Banks and, if the
rights or obligations hereunder of the Swingline Bank are affected
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thereby, the Swingline Bank; provided that: (a) no modification, supplement or
waiver shall, unless by an instrument signed by all of the Banks or by the
Administrative Agent acting with the consent of all of the Banks (i) increase or
extend the term of any of the Commitments, or extend the time or waive any
requirement for the reduction or termination of any of the Commitments, (ii)
extend any date fixed for the payment of principal of or interest on any Loan or
any fee hereunder (other than any fee payable solely for account of the
Administrative Agent), (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 (other than any fee payable solely for account of the Administrative
Agent), (v) reduce the obligations of the Company to prepay Loans, (vi) alter
the terms of any of Sections 2.08, 2.09, 4.02 or 4.07 hereof or this Section
11.04, (vii) modify the definition of the term "Majority Banks" or modify in any
other manner the number or percentage of the Banks required to make any
determinations or waive any rights hereunder or to modify any provision hereof,
or (viii) waive any of the conditions precedent set forth in Section 6 hereof;
and (b) if at the time any Swingline Loans shall be outstanding, no
modification, supplement or waiver with respect to any provision of Sections 8
or 9 hereof shall be effective without the concurrence of the Swingline Bank;
and (c) any modification of any of the rights or obligations of the
Administrative Agent hereunder shall require the consent of the Administrative
Agent.
11.05 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.
11.06 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 Banks and
the Administrative Agent and the Swingline Bank.
(b) Each Bank may, at any time or from time to time, assign to one
or more other Persons all or any portion of its
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Loans, its Notes, and its Commitment (but only with the consent of the Company,
the Administrative Agent and the Swingline Bank, which consents shall not be
unreasonably withheld); provided that (i) no such consent by the Company, the
Administrative Agent or the Swingline Bank shall be required in the case of any
assignment to another Bank; (ii) any such partial assignment shall be in an
amount at least equal to $5,000,000 or any integral multiple of $1,000,000 in
excess thereof; (iii) each such assignment by a Bank of its Revolving Credit
Loans, Revolving Credit Note, Term Loans, Term Loan Notes or Commitment shall be
made in such manner so that the same portion of its Revolving Credit Loans,
Revolving Credit Note, Term Loans, Term Loan Notes and Commitment is assigned to
the respective assignee; (iv) each such assignment shall be effected by an
Assignment and Acceptance in substantially the form of Exhibit F hereto. Upon
execution and delivery by the assignee to the Company and the Administrative
Agent of an Assignment and Acceptance pursuant to which such assignee agrees to
become a "Bank" hereunder (if not already a Bank) having the Commitment and
Loans specified in such Assignment and Acceptance, and upon consent thereto by
the Company and the Administrative Agent, to the extent required above, the
assignee shall have, to the extent of such assignment (unless otherwise provided
in such assignment with the consent of the Company and the Administrative
Agent), the obligations, rights and benefits of a Bank hereunder holding the
Commitment and Loans (or portions thereof) assigned to it (in addition to the
Commitment and Loans, if any, theretofore held by such assignee) and the
assigning Bank shall, to the extent of such assignment, be released from the
Commitment (or portion thereof) so assigned. Notwithstanding the foregoing, no
assignee or other transferee of any of the rights, obligations or benefits of a
Bank in respect of the Loans shall be entitled to receive any greater payment
under Sections 5.01, 5.04 and 5.05 than such Bank would have been entitled to
receive with respect to the Loans unless such transfer is made with the
Company's prior written consent specifically detailing the nature of the greater
payments to be due, or at a time when the circumstances giving rise to such
greater payment did not exist or had not been announced. Upon each such
assignment the assigning Bank shall pay the Administrative Agent an assignment
fee of $3,000.
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(c) A Bank may, at any time or from time to time, sell or agree to
sell to one or more other Persons a participation in all or any part of any
Loans held by it, or in its Commitment, but no purchaser of a participation (a
"Participant") shall, except as otherwise provided in Section 4.07(c) hereof,
have any rights or benefits under this Agreement or any Note or any other Basic
Document (the Participant's rights against such Bank in respect of such
participation to be those set forth in the agreements executed by such Bank in
favor of the Participant). All amounts payable by the Company to any Bank under
Section 5 hereof in respect of the Loans held by it, and its Commitment, shall
be determined as if such Bank had not sold or agreed to sell any participations
in such Loans and Commitment, and as if such Bank 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 Bank
that sells a participation agree with the Participant to take or refrain from
taking any action hereunder or under any other Basic Document except that such
Bank may agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of such Bank's related
Commitment, (ii) extend any 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, (v) increase the rights
or reduce the obligations of the Company to prepay the related Loans or (vi)
consent to any modification, supplement or waiver hereof or of any of the other
Basic Documents to the extent that the same, under Section 10.09 or 11.04
hereof, requires the consent of each Bank.
(d) In addition to the assignments and participations permitted by
the foregoing provisions of this Section 11.06, any Bank may assign and pledge
all or any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security
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pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Bank from its
obligations hereunder.
(e) A Bank or the Swingline Bank may furnish any information
concerning the Company or any of its Subsidiaries in the possession of such Bank
from time to time to assignees and participants (including prospective assignees
and participants), subject, however, to the provisions of Section 11.12(b)
hereof.
(f) Anything in this Section 11.06 to the contrary notwithstanding,
neither the Company nor any of its Subsidiaries or Affiliates may acquire
(whether by assignment, participation or otherwise), and neither any Bank nor
the Swingline Bank shall assign or participate to the Company or any of its
Subsidiaries or Affiliates, any interest in any Commitment or Loan without the
prior consent of each Bank.
(g) The Swingline Bank may not (except as provided in Section
2.02(c) hereof) assign or sell participations in all or any part of its
Swingline Loans, its Swingline Note or its Swingline Commitment; provided that
the Swingline Bank may assign to another Bank all of its obligations, rights and
benefits in respect of its Swingline Loans, its Swingline Note and its Swingline
Commitment (but only with the consent of the Company which consent will not be
unreasonably withheld). Upon the effectiveness of any such assignment, the
assignee shall have the obligations, rights and benefits of the Swingline Bank
hereunder holding the Swingline Commitment and Swingline Loans assigned to it,
and the assigning Swingline Bank shall be released from its Swingline Commitment
so assigned.
11.07 Survival. The obligations of the Company under Sections 5.01,
5.04, 5.05 and 11.03 hereof and the obligations of the Banks under Section 10.05
hereof shall survive the repayment of the Loans and the termination of the
Commitments. 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 Bank shall be deemed to have waived,
by reason of making any
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Loan, any Default which may arise by reason of such representation or warranty
proving to have been false or misleading, notwithstanding that such Bank or the
Swingline Bank 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.
11.08 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.
11.09 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.
11.10 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
any New York State court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company irrevocably waives, to the fullest extent
permitted by applicable law, any objection which 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.
11.11 Waiver of Jury Trial. EACH OF THE COMPANY, THE ADMINISTRATIVE
AGENT AND THE BANKS AND THE SWINGLINE BANK 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.
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11.12 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 or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Bank or by one or more subsidiaries or affiliates
of such Bank and the Company hereby authorizes each Bank and the Swingline Bank
to share any information delivered to such Bank by the Company and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Bank or the Swingline Bank 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 Bank hereunder.
(b) Each Bank and the Swingline Bank 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 this nature and in accordance with safe and sound
banking practices, any non-public information supplied to it by the Company
pursuant to this Agreement which is identified by the Company as being
confidential at the time the same is delivered to the Banks or the Swingline
Bank or the Administrative Agent, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process (with concurrent notice thereof to be given to
the Company), (ii) to counsel, auditors or accountants for any of the Banks or
the Swingline Bank or the Administrative Agent (so long as they are advised of
the non-public nature of the information), (iii) to bank examiners, (iv) to the
Administrative Agent or any other Bank or the Swingline Bank (or to Chase
Securities, Inc.), (v) in connection with any litigation to which any one or
more of the Banks or the Swingline Bank or the Administrative Agent is a party,
(vi) to a subsidiary or affiliate of such Bank as provided in paragraph (a)
above or (vii) to any assignee or participant (or prospective
Credit Agreement
-97-
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first executes and delivers to the respective Bank and
the Company a Confidentiality Agreement substantially in the form of Exhibit E
hereto; provided, further, that in no event shall any Bank or the Administrative
Agent be obligated or required to return any materials furnished by the Company.
The obligations of each Bank under this Section 11.12 shall supersede and
replace the obligations of such Bank under the confidentiality letter in respect
of this financing signed and delivered by such Bank to the Company prior to the
Restatement Date.
11.13 Acknowledgement and Consent. The Company hereby acknowledges
that (a) each reference in the Pledge Agreement to the Credit Agreement shall
mean the Existing Credit Agreement as amended and restated hereby, and as the
same shall be modified and supplemented and in effect from time to time, (b)
each reference to the amount $30,000,000 in the Pledge Agreement shall be deemed
a reference to "$60,000,000", (c) each reference therein to "Bank" shall include
the Swingline Bank, (d) each reference therein to Loan shall include the
Swingline Loans and (e) each reference therein to the "Agent" shall be deemed to
be a reference to the Administrative Agent.
Credit Agreement
-98-
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.
ENHANCE FINANCIAL SERVICES GROUP
INC.
By /s/ Jeffery A. Figurelli
---------------------------------------
Title: Senior Vice President & Treasurer
Address for Notices:
Enhance Financial Services Group
Inc.
335 Madison Avenue
25th Floor
New York, NY 10017-4605
Attention: Arthur Dubroff
Executive Vice President
and Chief Financial
Officer
Telecopier No.: (212) 983-3129
Telephone No.: (212) 983-3100
Credit Agreement
-99-
BANKS
Commitment THE CHASE MANHATTAN BANK
$25,000,000
By /s/ J. David Parker, Jr.
--------------------------------------
Title: Vice President
Lending Office for all Loans:
The Chase Manhattan Bank
270 Park Avenue
New York, NY 10017
Address for Notices:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
5th Floor
New York, NY 10081
Attention: J. David Parker, Jr.
Vice President
Telecopier No.: (212) 552-3651
Telephone No.: (212) 552-7631
Credit Agreement
-100-
Commitment FLEET NATIONAL BANK
$15,000,000
By /s/ Howard Carpenter
-----------------------------------
Title: Vice President
Lending Office for all Loans:
Fleet National Bank
777 Main Street, CT MO 0250
Hartford, Connecticut 06115
Address for Notice:
Fleet National Bank
777 Main Street, CT MO 0250
Hartford, Connecticut 06115
Attention: Financial Institutions Group
Telecopier No.: (860) 986-1264
Telephone No.: (860) 986-1963
Credit Agreement
-101-
Commitment BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
$20,000,000
By /s/ Margaret Sunier
-----------------------------------
Title: Vice President & Manager
Lending Office for all Loans:
Bank of Tokyo-Mitsubishi Trust
Company
1251 Avenue of the Americas
12th Floor
New York, New York 10022-1104
Address for Notice:
Bank of Tokyo-Mitsubishi Trust
Company
1251 Avenue of the Americas
12th Floor
New York, New York 10022-1104
Attention: Mr. Dane Holmes
Telecopier No.: (212) 782-4935
Telephone No.: (212) 782-4354
Credit Agreement
-102-
SWINGLINE BANK
THE CHASE MANHATTAN BANK,
as Swingline Bank
By /s/ J. David Parker, Jr.
-----------------------------------
Title: Vice President
Credit Agreement
-103-
THE CHASE MANHATTAN BANK,
as Administrative Agent
By /s/ J. David Parker, Jr.
----------------------------------
Title: Vice President
Address for Notices to
the Administrative Agent:
The Chase Manhattan Bank
140 East 45th Street
29th Floor
New York, NY 10017
Attention: Agent Bank Services
Telecopier No.: (212) 622-0122
Telephone No.: (212) 622-0004
With a copy to:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
5th Floor
New York, NY 10081
Attention: J. David Parker, Jr.
Vice President
Credit Agreement
SCHEDULE I
Material Agreements and Liens
[See Sections 7.12 and 8.07(b)]
Part A - Material Agreements
6 3/4% Debentures due 2003 - $75 million
Part B - Liens
None
Schedule I to Credit Agreement
SCHEDULE II
Subsidiaries
[See Section 7.15]
(A) ENHANCE REINSURANCE COMPANY
(i) New York
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock
(B) ASSET GUARANTY REINSURANCE COMPANY
(i) New York
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the oustanding common stock
(C) GUARANTY RISK SERVICES, INC.
(i) New York
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the oustanding common stock
(D) VANTAGE AMERICAN, INC.
(i) Delaware
(ii); (iii) Enhance Financial Services Group Inc.;
100% of the Convertible Preferred Stock and
100% of the Senior Preferred Stock.
James A. Godfrey, Jr., Alan N. Alpern and
Alfred Zucker, 100% of the common stock.
(E) VAN-AMERICAN INSURANCE COMPANY
(i) Kentucky
(ii) Vantage American, Inc.
(iii) 100% of the common stock
(F) A.G. INTERMEDIARIES, INC.
Schedule II to Credit Agreement
-2-
(i) New York
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock
(G) ORLEANS ACQUISITION CORPORATION
(i) Illinois
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock
(H) ENHANCE REINSURANCE BERMUDA, LTD.
(i) Bermuda
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock
(I) LITTON LOAN SERVICING INC.
(i) Texas
(ii) Enhance Financial Services Group Inc.
(iii) 100% of the outstanding common stock
Schedule II to Credit Agreement
SCHEDULE III
Litigation
None
Schedule III to Credit Agreement
EXHIBIT A-1
[Form of Revolving Credit Note]
PROMISSORY NOTE
$_______________ October 1, 1996
New York, New York
FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New
York corporation (the "Company"), hereby promises to pay to __________________
(the "Payee"), 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 at 270 Park Avenue, New York, New York 10017, the principal
sum of _______________ Dollars (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Revolving Credit Loans made by the
Payee 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 Revolving Credit Loan, at such office, in
like money and funds, for the period commencing on the date of such Revolving
Credit Loan until such Revolving Credit Loan shall be paid in full, at the rates
per annum and on the dates provided in the Credit Agreement.
The date, amount, interest rate and duration of Interest Period of
each Revolving Credit Loan made by the Payee to the Company, and each payment
made on account of the principal thereof, shall be recorded by the Payee on its
books and, prior to any transfer of this Note, endorsed by the Payee on the
schedule attached hereto or any continuation thereof, provided that the failure
of the Payee to make 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 Revolving Credit Loans made
by the Payee.
Revolving Credit Note
-2-
This Note is one of the Revolving Credit Notes referred to in the
Amended and Restated Credit Agreement dated as of November 24, 1992 amended and
restated as of October 1, 1996 (as modified and supplemented and in effect from
time to time, the "Credit Agreement") among the Company, the Banks and The Chase
Manhattan Bank, as Administrative Agent, and evidences Revolving Credit Loans
made by the Payee 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 Sections 11.06(b) and 11.06(d) of the Credit
Agreement, this Note may not be assigned by the Payee to any other Person.
This Note shall be governed by, and construed in accordance with,
the law of the State of New York.
ENHANCE FINANCIAL SERVICES GROUP
INC.
By____________________________
Title:
Revolving Credit Note
SCHEDULE OF REVOLVING CREDIT LOANS
This Note evidences Revolving Credit 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 and prepayments, Continuations, Conversions of principal
set forth below:
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Type Amount of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made by
- --------- ---- ---- ---- ------ --------- ------ -------
Revolving Credit Note
EXHIBIT A-2
[Form of Term Loan Note]
PROMISSORY NOTE
$_______________ ____________, 199_
New York, New York
FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New
York corporation (the "Company"), hereby promises to pay to __________________
(the "Payee"), for account of its Applicable Lending Office provided for by the
Credit Agreement referred to below, at the principal office of The Chase
Manhattan Bank at 270 Park Avenue, New York, New York 10017, the principal sum
of _______________ Dollars, 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 hereof, at such office, in like money and funds, for the period
commencing on the date hereof until this Note shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Term Loan Notes referred to in the Amended
and Restated Credit Agreement dated as of November 24, 1992 amended and restated
as of October 1, 1996 (as modified and supplemented and in effect from time to
time, the "Credit Agreement") among the Company, the Banks and The Chase
Manhattan Bank, as Administrative Agent, and evidences a Term Loan made by the
Payee 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 Term
Loans upon the terms and conditions specified therein.
Except as permitted by Sections 11.06(b) and 11.06(d) and of the
Credit Agreement, this Note may not be assigned by the Payee to any other
Person.
Term Loan Note
This Note shall be governed by, and construed in accordance with,
the law of the State of New York.
ENHANCE FINANCIAL SERVICES GROUP
INC.
By____________________________
Title:
EXHIBIT A-3
[Form of Swingline Note]
PROMISSORY NOTE
$10,000,000.00 October 1, 1996
New York, New York
FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New
York corporation (the "Company"), hereby promises to pay to THE CHASE MANHATTAN
BANK (the "Bank") at its principal office at 270 Park Avenue, New York, New York
10017, the principal sum of TEN MILLION Dollars (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Swingline Loans made by the
Bank 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 Swingline Loan, at such office, in like
money and funds, for the period commencing on the date of such Swingline Loan
until such Swingline Loan shall be paid in full, at the rates per annum and on
the dates provided in the Credit Agreement.
The date and amount of each Swingline Loan made by the Bank to the
Company, and each payment made on account of the principal thereof, shall be
recorded by the Bank on its books and, prior to any transfer of this Note,
endorsed by the Bank on the schedule attached hereto or any continuation
thereof, provided that the failure of the Bank to make any such
Swingline Note
- 2 -
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 Swingline Loans made by the Bank.
This Note is the Swingline Note referred to in the Amended and
Restated Credit Agreement dated as of November 24, 1992 amended and restated as
of October 1, 1996 (as modified and supplemented and in effect from time to
time, the "Credit Agreement") between the Company, the lenders party thereto
(including the Bank) and The Chase Manhattan Bank, as Administrative Agent, and
evidences Swingline Loans made by the Bank 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 11.06(g) of the Credit Agreement,
this Note may not be assigned by the Bank to any other Person.
This Note shall be governed by, and construed in accordance with,
the law of the State of New York.
________________
By_________________________
Title:
Swingline Note
- 3 -
SCHEDULE OF SWINGLINE LOANS
This Note evidences Swingline Loans made under the within-described
Credit Agreement to the Company, on the dates and in the principal amounts set
forth below, subject to the payments and prepayments of principal set forth
below:
Principal
Date Amount Amount Unpaid
of of Paid or Principal Notation
Loan Loan Prepaid Amount Made by
---- ---- ------- ------ -------
Swingline Note
EXHIBIT B
[Form of Pledge Agreement]
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of November 24, 1992 between ENHANCE
FINANCIAL SERVICES GROUP INC., a corporation duly organized and validly existing
under the laws of the State of New York (the "Company"); and THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), as 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
"Agent").
The Company, certain lenders and the Agent are parties to a Credit
Agreement dated as of November 24, 1992 (as modified and supplemented and in
effect from time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit to be made by said
lenders to the Company in an aggregate principal amount not exceeding
$30,000,000.
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.
Pledge Agreement
-2-
"Collateral Account" shall have the meaning ascribed thereto in
Section 4.01 hereof.
"Issuer" shall mean the issuer of any Pledged Stock.
"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 or better by Standard & Poor's Corporation or Moody's Investors
Services, Inc., respectively, maturing not more than 90 days from the date
of acquisition thereof.
"Pledged Stock" shall have the meaning ascribed thereto in Section
3(a) hereof.
"Secured Obligations" shall mean, together, (a) the principal of and
interest on the Loans made by the Banks to, and the Note(s) held by each
Bank of, the Company and (b) all obligations hereunder of the Company to
the Banks and the Agent.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect from time to time in the State of New York.
Enhance Pledge Agreement
-3-
Section 2. Representations and Warranties. The Company represents
and warrants to the Banks and the Agent that at the time of the delivery to the
Agent of certificates representing any Pledged Stock:
(a) the Company will be the sole beneficial owner of such Pledged
Stock and no Lien will exist upon such Pledged Stock 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 Agent for the
benefit of the Banks created or provided for herein, which pledge and
security interest constitute a first priority perfected pledge and
security interest in and to all of such Pledged Stock
(b) such Pledged Stock will be duly authorized, validly existing,
fully paid and non-assessable and none of such Pledged Stock will be
subject to any contractual restriction, or any restriction under the
charter or by-laws of the Issuer thereof (except for any such restriction
contained herein or in the Credit Agreement).
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 Agent, for
the benefit of the Banks as hereinafter provided, a security interest in all of
the Company's right, title and interest in the following property, whether now
owned by the Company or hereafter acquired and whether now existing or hereafter
coming into existence (all being together referred to herein as "Collateral"):
(a) the shares of common stock of ERC represented by certificates
delivered to the Agent by the Company at any time or from time to time
(the "Pledged Stock");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or
Enhance Pledge Agreement
-4-
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 Company under any
provision prohibiting such action hereunder or under the Credit Agreement,
in the event of any consolidation or merger in which an Issuer is not the
surviving corporation, the shares of each class of the capital stock of
the successor corporation formed by or resulting from such consolidation
or merger corresponding to the shares of Pledged Stock redeemed or
exchanged pursuant to such consolidation or merger;
(d) the balance from time to time in the Collateral Account; and
(e) all proceeds of and to any of the property of the Company
described in the preceding clauses of this Section 3.
Section 4. Cash Proceeds of Collateral.
4.01 Collateral Account. The Agent may at any time establish at
Chase a cash collateral account (the "Collateral Account") in the name and under
the control of the 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 Agent
pursuant hereto and into which the Company may from time to time deposit any
additional amounts which it wishes to pledge to the Agent for the benefit of the
Banks as additional collateral security hereunder. 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
Enhance Pledge Agreement
-5-
Obligations until applied as hereinafter provided. Except as expressly provided
in the next sentence, the Agent shall remit the collected balance outstanding 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 Agent may
(and, if instructed by the Banks 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 5.08 hereof. The balance from time to time in the
Collateral Account shall be 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. Until so deposited,
all such proceeds shall be held in trust by the Company for and as the property
of the 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 Agent) shall determine, which Permitted Investments shall be
held in the name and be under the control of the Agent, provided that at any
time after the occurrence and during the continuance of an Event of Default, the
Agent may (and, if instructed by the Banks 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 5.08 hereof.
Enhance Pledge Agreement
-6-
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 Bank and the Agent as follows:
5.01 Delivery and Other Perfection. The Company shall:
(a) if any of the above-described shares, securities, moneys or
property required to be pledged by the Company under clauses (b) or (c) of
Section 3 hereof are received by the Company, forthwith either (x)
transfer and deliver to the 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
Agent, pursuant to the terms of this Agreement, as part of the Collateral
or (y) take such other action as the Agent shall deem necessary or
appropriate to duly record the Lien created hereunder in such shares,
securities, moneys or property in said clauses (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 Agent) to create,
preserve, perfect or validate the security interest granted pursuant
hereto or to enable the Agent to exercise and enforce its rights hereunder
with respect to such pledge and security interest;
(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 Agent may reasonably require in order to reflect the
security interests granted by this Agreement; and
(d) permit representatives of the Agent, upon reasonable notice, at
any time during normal business hours
Enhance Pledge Agreement
-7-
to inspect and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the 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 Agent may require.
5.02 Other Financing Statements and Liens. Without the prior written
consent of the Agent (granted with the authorization of the Banks 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 Agent is not named as the sole secured party for the
benefit of the Banks.
5.03 Preservation of Rights. The Agent shall not be required to take
steps necessary to preserve any rights against prior parties to any of the
Collateral.
5.04 Collateral.
(a) So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Collateral for all purposes not
inconsistent with the terms of this Agreement, the Credit Agreement, the Notes
or any other instrument or agreement referred to herein or therein, provided
that the Company 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 or any such other instrument or agreement; and the 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 which it is
entitled to exercise pursuant to this Section 5.04(a).
Enhance Pledge Agreement
-8-
(b) Unless and until an Event of Default has occurred and is
continuing, the Company shall be entitled to receive and retain any dividends on
the Collateral paid in cash out of earned surplus. Upon receipt of any such
dividends that the Company is entitled to receive and retain as aforesaid, the
security interest on such dividends provided for hereunder shall terminate.
(c) If any Event of Default shall have occurred, then so long as
such Event of Default shall continue, and whether or not the Agent or any Bank
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 Agent and retained
by it in the Collateral Account as part of the Collateral, subject to the terms
of this Agreement, and, if the Agent shall so request in writing, the Company
agrees to execute and deliver to the 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 Agent shall, upon request of the Company (except to the extent theretofore
applied to the Secured Obligations), be returned by the Agent to the Company.
(d) If at any time there are no Loans outstanding, at the request of
the Company, the Agent shall forthwith cause to be delivered, against receipt
but without any recourse, warranty or representation whatsoever, any remaining
Collateral to the Company.
(e) At the time of the delivery to the Agent of the quarterly or
annual Statutory Statement of ERC, together with the certificate of a senior
financial officer of the Company, as required by paragraphs (c) and (d) of
Section 8.01 of the Credit Agreement, if such certificate indicates that the
Value of the Pledged Stock as at the date of such Statutory Statement exceeds
Enhance Pledge Agreement
-9-
175% of the aggregate unpaid principal amount of all Loans less any collected
funds standing to the credit of the Collateral Account then outstanding, then at
the request of the Company, so long as no Default has then occurred and is
continuing, the Agent shall promptly release to the Company the maximum number
of shares of Pledged Stock so that, after giving effect to such release, the
Value of the Pledged Stock is not less than 166-2/3% of the aggregate unpaid
principal amount of the Loans then outstanding less any collected funds standing
to the credit of the Collateral Account.
5.05 Events of Default, Etc. During the period during which an Event
of Default shall have occurred and be continuing:
(a) the 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 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, including, without limitation,
causing certificates representing the Pledged Stock to be registered in
the name of the Agent);
(b) the 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
(c) the Agent may, upon ten business days' prior written notice to
the Company of the time and place, with
Enhance Pledge Agreement
-10-
respect to the Collateral or any part thereof which shall then be or shall
thereafter come into the possession, custody or control of the Agent, the
Banks 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 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
Agent or any Bank 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 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 5.08 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 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 may be at prices and on terms less
favorable to the Agent than those obtainable
Enhance Pledge Agreement
-11-
through a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the 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 or issuer thereof to
register it for public sale.
5.06 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 remain liable for any
deficiency.
5.07 Private Sale. The Agent and the Banks 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 Agent or any Bank
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 which might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
5.08 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 Agent under Section 4 hereof or this Section 5, shall be applied by the
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 Agent and the reasonable fees and expenses of its agents
and counsel, and
Enhance Pledge Agreement
-12-
all expenses incurred and advances made by the 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 Banks 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.
5.09 Attorney-in-Fact. Without limiting any rights or powers granted
by this Agreement to the Agent while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default the Agent is hereby 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 which the 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 Agent shall be entitled under
this Section 5 to make collections in respect of the Collateral, the 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.
5.10 Termination. When all Secured Obligations shall have been paid
in full and the Commitments of the Banks under the
Enhance Pledge Agreement
-13-
Credit Agreement shall have expired or been terminated, this Agreement shall
terminate, and the 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.
5.11 Expenses. The Company agrees to pay to the Agent all
out-of-pocket expenses (including reasonable expenses for legal services) of, or
incident to, the enforcement of any of the provisions of this Section 5, or
performance by the Agent of any obligations of the Company in respect of the
Collateral which the Company has failed or refused to perform, or any actual or
attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for defending or asserting
rights and claims of the Agent in respect thereof, by litigation or otherwise,
and all such expenses shall be Secured Obligations to the Agent secured under
Section 3 hereof.
5.12 Further Assurances. The Company agrees that, from time to time
upon the written request of the Agent, the Company will execute and deliver such
further documents and do such other acts and things as the 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 Agent or any of its
agents 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 Agent or any of its
agents 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.
Enhance Pledge Agreement
-14-
6.02 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
6.03 Notices. All notices, requests, consents and demands hereunder
shall be in writing and telexed, 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.
6.04 Waivers, 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 Agent (with the consent of the Banks as specified in Section 10.09 of
the Credit Agreement). Any such amendment or waiver shall be binding upon the
Agent and each Bank, each holder of any of the Secured Obligations and the
Company.
6.05 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
Company, the Agent, the Banks 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 Agent).
6.06 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 Agent and the
Banks 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.
Enhance Pledge Agreement
-15-
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.
ENHANCE FINANCIAL SERVICES GROUP
INC.
By __________________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By __________________________________
Title:
Enhance Pledge Agreement
EXHIBIT C
[Form of Opinion of General Counsel to the Company]
October __, 1996
Each of the Banks party
to the Credit Agreement
referred to below
The Chase Manhattan Bank,
as Administrative Agent for said Banks
1 Chase Manhattan Plaza
New York, New York 10081
Ladies and Gentlemen:
I am Executive Vice President and General Counsel to Enhance
Financial Services Group Inc., a corporation organized under the law of the
State of New York (the "Company"), and am rendering this opinion in connection
with the Amended and Restated Credit Agreement dated as of November 24, 1992
amended and restated as of October 1, 1996 (the "Credit Agreement") among the
Company, the banks party thereto (the "Banks") and The Chase Manhattan Bank, in
its capacity as agent for said Banks (the "Administrative Agent"). All
capitalized terms used but not defined herein have the respective meanings given
to such terms in the Credit Agreement.
In rendering the opinions expressed below, I have examined:
(i) the Credit Agreement;
(ii) the Revolving Credit Notes and the form of the Term Notes;
Opinion of General Counsel to the Company
-2-
(iii) the Pledge Agreement (together with the documents referred to in the
foregoing lettered clauses (i) to (iii), the "Credit Documents");
and
(iv) such corporate records of the Company and such other documents as I
have deemed necessary as a basis for the opinions expressed below.
In my examination, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals and the conformity
with authentic original documents of all documents submitted to me as copies.
In rendering the opinions expressed below, I have assumed, with
respect to all of the documents referred to in this opinion, that (except, to
the extent set forth in the opinions expressed below, as to the Company):
(i) such documents have been duly authorized by, have been (or, in the
case of the Term Notes, will be) duly executed and delivered by, and
constitute (or, in the case of the Term Notes, will 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 I have deemed necessary as a basis for the opinions
expressed below, I am of the opinion that:
Opinion of General Counsel to the Company
-3-
1. The Company is a corporation duly organized, validly existing and
in good standing under the law of the State of New York. The Company has
all material government licenses, authorizations, consents and approvals,
necessary to own assets and carry on its business as now being conducted.
2. The Company has all requisite corporate power to execute and
deliver, and to perform its obligations under, each Credit Document. The
Company has all requisite corporate power to borrow under the Credit
Agreement and to pledge shares of the common stock of ERC under the Pledge
Agreement.
3. The execution, delivery and performance by the Company of each
Credit Document has been duly authorized by all necessary corporate action
on the part of the Company.
4. Each Credit Document (other than the Term Notes) has been duly
executed and delivered by the Company.
5. Each Credit Document (other than the Notes) constitutes, and each
Note upon its execution and delivery by the Company for value will
constitute, the legal, valid and binding obligation of the Company,
enforceable against the Company 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 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.
Opinion of General Counsel to the Company
-4-
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 the Company for the execution, delivery or performance by the
Company of the Credit Documents, for any borrowings by the Company under
the Credit Agreement or for the pledge by the Company of shares of common
stock of ERC under the Pledge Agreement except that the approval of the
New York Insurance Department may be required in connection with a
foreclosure on the Pledged Stock in the event such foreclosure results in
a change in control of ERC and no opinion is expressed as to the ability
or likelihood of any Bank to obtain such approval.
7. The execution, delivery and performance by the Company of, and
the consummation by the Company of the transactions contemplated by, the
Credit Documents do not and will not (a) violate any provision of the
charter or by-laws of the Company, (b) violate any applicable law, rule or
regulation of the United States of America or the State of New York, (c)
violate any order, writ, injunction or decree of any court or governmental
authority or agency or any arbitral award applicable to the Company or any
of its Subsidiaries or (d) 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 to which the Company or any of its Subsidiaries is
a party or by which any of them is bound or to which any of them is
subject, or (except for the Lien of the Pledge Agreement) result in the
creation or imposition of any Lien upon any Property of the Company or any
of its Subsidiaries pursuant to the terms of any such agreement or
instrument.
8. Except as disclosed in Schedule III to the Credit Agreement,
there are no legal or arbitral proceedings, or any proceedings by or
before any governmental or regulatory
Opinion of General Counsel to the Company
-5-
authority or agency, now pending or to my knowledge threatened against the
Company or any of its Subsidiaries or any of their respective Properties
that, if adversely determined, could have a Material Adverse Effect.
9. The Pledge Agreement is effective (together, in the case of that
portion of the Collateral consisting of Pledged Stock, with the delivery
to the Agent of the certificates representing the Pledged Stock) to create
in favor of the Agent for the benefit of the Agent and the Banks a valid
security interest under the Uniform Commercial Code as in effect in the
State of New York in all of the right, title and interest of the Company
in, to and under the Collateral (as defined in the Pledge Agreement) as
collateral security for the payment of the Secured Obligations (as defined
in the Pledge Agreement).
10. The Pledge Agreement creates in favor of the Agent for the
benefit of the Agent and the Banks a perfected security interest in the
Pledged Stock represented by the certificates in the possession of the
Agent on the date hereof so long as the Agent retains possession of such
certificates as collateral security for the Secured Obligations.
11. All of the outstanding shares of common stock of ERC have been
duly and validly issued and are fully paid and nonassessable. Assuming
that the Agent (or a Person designated by the Agent) obtains (or, in the
case of the Pledged Stock referred to in paragraph 10 above, obtained)
possession in the State of New York of the certificates representing the
Pledged Stock in good faith and without notice of any adverse claim (as
defined in Section 8-302(2) of the Uniform Commercial Code as in effect in
the State of New York ("UCC")) and in bearer form or in registered form
issued to the Agent or endorsed to the Agent or in blank, and thereafter
maintains possession thereof, the perfected security interest therein will
have priority over all other
Opinion of General Counsel to the Company
-6-
security interests theretofore or thereafter created under the UCC.
12. Neither the Company nor any of its Subsidiaries is an
"investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended.
13. Neither the Company nor any of its Subsidiaries is 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.
The foregoing opinions are subject to the following comments and
qualifications:
A. The enforceability of Section 11.03 of the Credit Agreement (and
Section 5.11 of the Pledge Agreement) may be limited by laws rendering
unenforceable indemnification contrary to Federal or state securities laws
and the public policy underlying such laws.
B. 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.
C. I 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) the last sentence of Section 2.02(c) and Section 4.07(c) of the
Credit Agreement and (iii) the second sentence of Section 11.10 of the
Credit Agreement, 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.
Opinion of General Counsel to the Company
-7-
D. I wish to point out that the obligations of the Company under the
Pledge Agreement may be subject to possible limitations upon the exercise
of remedial or procedural provisions contained in the Pledge Agreement,
but such limitations do not, in my opinion, make the remedies and
procedures that will be afforded to the Agent and the Banks inadequate for
the practical realization of the substantive benefits purported to be
provided to the Agent and the Banks by the Pledge Agreement and provided
further that this paragraph shall in no way derogate from the exception to
paragraph 6 of this opinion set forth at the conclusion of said paragraph.
The foregoing opinions are limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and I
do not express any opinion as to the laws of any other jurisdiction.
At the request of the Company, this opinion is, pursuant to Section
6.01(c) of the Credit Agreement, provided to you by me in my capacity as General
Counsel to the Company and may not be relied upon by any Person other than the
addressees hereof without, in each instance, my prior written consent.
Very truly yours,
Samuel Bergman
Executive Vice President and
General Counsel
Opinion of General Counsel to the Company
EXHIBIT D
[Form of Opinion of Special New York Counsel to Chase]
October __, 1996
Each of the Banks party
to the Credit Agreement
referred to below
The Chase Manhattan Bank,
as Administrative Agent for said Banks
1 Chase Manhattan Plaza
New York, New York 10081
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan
Bank in connection with the Amended and Restated Credit Agreement dated as of
November 24, 1992 amended and restated as of October 1, 1996 (the "Credit
Agreement") among Enhance Financial Services Group Inc. (the "Company"), the
banks party thereto (the "Banks") and The Chase Manhattan Bank, in its capacity
as agent for said Banks (the "Administrative Agent"). All capitalized terms used
but not defined herein have the respective meanings given to such terms in the
Credit Agreement.
In rendering the opinions expressed below, we have examined:
(i) the Credit Agreement;
(ii) the Revolving Credit Notes and the form of the Term Notes;
(iii) the Pledge Agreement (together with the documents referred to in the
foregoing clauses (i) through (iii), the "Credit Documents"); and
Opinion of Special New York Counsel to Chase
-2-
(iv) such corporate records of the Company 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
statements of governmental officials and upon representations made in or
pursuant to the Credit Documents and certificates of appropriate representatives
of the Company.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion, that:
(i) such documents have been duly authorized by, have been (or, in the
case of the Term Notes, will be) duly executed and delivered by, and
(except as to the Company) constitute (or, in the case of the Term
Notes, will 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:
Opinion of Special New York Counsel to Chase
-3-
1. Each Credit Document (other than the Notes) constitutes, and each
Note upon its execution and delivery by the Company for value will constitute,
the legal, valid and binding obligation of the Company enforceable against the
Company 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 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.
2. The Pledge Agreement is effective (together, in the case of that
portion of the Collateral consisting of Pledged Stock, with the delivery to the
Agent of the certificates representing the Pledged Stock) to create in favor of
the Agent and the Banks a valid security interest under the Uniform Commercial
Code as in effect in the State of New York (the "Uniform Commercial Code") in
all of the right, title and interest of the Company in, to and under the
Collateral (as defined in the Pledge Agreement) as collateral security for the
payment of the Secured Obligations (as defined in the Pledge Agreement).
3. The Pledge Agreement creates in favor of the Agent for the
benefit of the Agent and the Banks a perfected security interest in the Pledged
Stock represented by the certificates in the possession of the Agent on the date
hereof so long as the Agent retains possession of such certificates as
collateral security for the Secured Obligations.
The foregoing opinions are subject to the following comments and
qualifications:
Opinion of Special New York Counsel to Chase
-4-
A. The enforceability of Section 11.03 of the Credit Agreement (and
Section 5.11 of the Pledge Agreement) may be limited by laws rendering
unenforceable indemnification contrary to Federal or state securities laws
and the public policy underlying such laws.
B. 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.
C. We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Bank is located (other than New York) that limit
the interest, fees or other charges such Bank may impose, (ii) the last
sentence of Section 2.02(c) and Section 4.07(c) of the Credit Agreement,
(iii) the second sentence of Section 11.10 of the Credit Agreement,
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 and (iv) the
waiver of inconvenient forum set forth in Section 11.10 of the Credit
Agreement with respect to proceedings in the United States District Court
for the Southern District of New York.
D. We wish to point out that the (i) obligations of the Company
under the Pledge Agreement may be subject to possible limitations upon the
exercise of remedial or procedural provisions contained in the Pledge
Agreement, provided that such limitations do not, in our opinion, make the
remedies and procedures that will be afforded to the Agent and the Banks
inadequate for the practical realization of the substantive benefits
purported to be provided to the Agent and the Banks by the Pledge
Agreement and (ii) the approval of the New York Insurance Department may
be required in connection with a foreclosure on the Pledged Stock in the
event such foreclosure results in a change in
Opinion of Special New York Counsel to Chase
-5-
control of ERC and no opinion is expressed as to the ability or likelihood
of any Bank to obtain such approval.
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 the Pledge Agreement) or as to the perfection or priority of
any security interest in, or other Lien on, the Collateral.
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.
This opinion is being delivered pursuant to Section 6.01(d) of the
Credit Agreement, and is being 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,
CDP/RJW
Opinion of Special New York Counsel to Chase
EXHIBIT E
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Amended and Restated Credit Agreement dated as of November 24, 1992
amended and restated as of October 1, 1996 (the "Credit Agreement"),
among Enhance Financial Services Group Inc. (the "Company"), the
lenders named therein and The Chase Manhattan Bank, as
Administrative Agent.
Ladies and Gentlemen:
As a Bank party to the Credit Agreement, we have agreed with the
Company pursuant to Section 11.12 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 11.12, we are permitted to provide you,
as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)][assignee Bank], 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) that (A) such
Confidentiality Agreement
-2-
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) to the extent required by
statute, rule, regulation or judicial process, (ii) to your counsel or to
counsel for any of the Banks or the Administrative Agent, (iii) to bank
examiners, auditors or accountants, (iv) to the Administrative Agent or any
other Bank (or to Chase Securities, Inc.), (v) in connection with any litigation
to which you or any one or more of the Banks or the Administrative Agent are a
party, (vi) to a subsidiary or affiliate of yours as provided in Section
11.12(a) of the Credit Agreement or (vii) 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.
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 BANK]
By______________________________
Title:
AGREED AS AFORESAID:
Confidentiality Agreement
-3-
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By___________________________
Title:
Confidentiality Agreement
EXHIBIT F
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Credit Agreement
Credit Agreement, dated as of November 24, 1992, amended and restated as of
October 1, 1996 (as modified and supplemented and in effect from time to time,
the "Credit Agreement"), among Enhance Financial Services Group Inc., (the
"Company") the lenders named therein, and The Chase Manhattan Bank, as agent for
such lenders (the "Administrative Agent"). 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 those credit facilities
contained in the Credit Agreement as are set forth on Schedule 1 (individually,
an "Assigned Facility"; collectively, the "Assigned Facilities"), in a principal
amount and percentage for each Assigned Facility 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 Basic 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 Basic 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
Assignment and Acceptance
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no representation or warranty and assumes no responsibility with respect to the
financial condition of the Company, any of its Subsidiaries or any other
obligation or the performance or observance by the Company, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Basic Document or any other instrument or
document furnished pursuant hereto or thereto; and (iii) attaches the Note(s)
held by it evidencing the Assigned Facilities 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 Agreement, the
other Basic 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 Basic 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
Assignment and Acceptance
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obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States of America, its obligation pursuant to
Section 5.05 of the Credit Agreement to deliver the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement, or such other documents as
are necessary to indicate that all such payments are subject to such tax at a
rate reduced by an applicable tax treaty.
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 11.06(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.
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 Basic 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 11.07 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.
Assignment and Acceptance
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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.
Assignment and Acceptance
Schedule 1 to
Assignment and Acceptance
relating to the Amended and Restated Credit Agreement,
dated as of November 24, 1996,
amended and restated as of October 1, 1996
among Enhance Financial Services Group Inc.
the lenders named therein and
The Chase Manhattan Bank, as agent for the Lenders
(in such capacity, the "Administrative Agent")
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Credit Principal Percentage
Facility Assigned Amount Assigned Assigned
----------------- --------------- --------
[ASSIGNEE] [ASSIGNOR]
By:___________________________ By:__________________________
Title: Title:
[Consented to and] Accepted:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:__________________________
Title:
Assignment and Acceptance
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[Consented to:
ENHANCE FINANCIAL SERVICES
GROUP INC.
By:__________________________
Title:
THE CHASE MANHATTAN BANK,
as Swingline Bank
By:__________________________
Title:]
Assignment and Acceptance