Exhibit 10.B
EXECUTION COPY
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$50,000,000
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
WHITE MOUNTAINS HOLDINGS, INC.,
as Borrower,
THE LENDERS NAMED HEREIN
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
DATED AS OF
August 14, 1998
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................. 1
ARTICLE II THE CREDITS.................................................. 16
2.1. ADVANCES.................................................. 16
2.2. RATABLE LOANS............................................. 16
2.3. TYPES OF ADVANCES......................................... 16
2.4. FACILITY FEE; REDUCTIONS IN AGGREGATE COMMITMENT.......... 16
2.5. MINIMUM AMOUNT OF EACH ADVANCE............................ 17
2.6. OPTIONAL PRINCIPAL PAYMENTS............................... 17
2.7. MANDATORY COMMITMENT REDUCTIONS........................... 17
2.8. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR
NEW ADVANCES ............................................. 18
2.9. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES....... 18
2.10. CHANGES IN INTEREST RATE, ETC............................. 19
2.11. RATES APPLICABLE AFTER DEFAULT............................ 19
2.12. METHOD OF PAYMENT......................................... 20
2.13. NOTES..................................................... 20
2.14. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. ......... 20
2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS
AND COMMITMENT REDUCTIONS................................ 20
2.16. LENDING INSTALLATIONS..................................... 21
2.17. NON-RECEIPT OF FUNDS BY THE AGENT......................... 21
2.18. TAXES..................................................... 21
2.19. AGENT'S FEES.............................................. 22
ARTICLE III CHANGE IN CIRCUMSTANCES...................................... 22
3.1. YIELD PROTECTION.......................................... 22
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS................... 23
3.3. AVAILABILITY OF TYPES OF ADVANCES......................... 24
3.4. FUNDING INDEMNIFICATION................................... 24
3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY.................. 24
ARTICLE IV CONDITIONS PRECEDENT......................................... 24
4.1. EFFECTIVENESS............................................. 24
4.2. EACH FUTURE ADVANCE....................................... 26
ARTICLE V REPRESENTATIONS AND WARRANTIES............................... 27
5.1. CORPORATE EXISTENCE AND STANDING.......................... 27
5.2. AUTHORIZATION AND VALIDITY................................ 27
5.3. COMPLIANCE WITH LAWS AND CONTRACTS........................ 27
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5.4. GOVERNMENTAL CONSENTS..................................... 28
5.5. FINANCIAL STATEMENTS...................................... 28
5.6. MATERIAL ADVERSE CHANGE................................... 28
5.7. TAXES..................................................... 28
5.8. LITIGATION AND CONTINGENT OBLIGATIONS..................... 29
5.9. CAPITALIZATION............................................ 29
5.10. ERISA..................................................... 29
5.11. DEFAULTS.................................................. 30
5.12. FEDERAL RESERVE REGULATIONS............................... 30
5.13. INVESTMENT COMPANY........................................ 30
5.14. CERTAIN FEES.............................................. 30
5.15. SOLVENCY.................................................. 30
5.16. INDEBTEDNESS.............................................. 30
5.17. INSURANCE LICENSES........................................ 31
5.18. MATERIAL AGREEMENTS....................................... 31
5.19. ENVIRONMENTAL LAWS........................................ 31
5.20. INSURANCE................................................. 32
5.21. DISCLOSURE................................................ 32
5.22. YEAR 2000................................................. 32
ARTICLE VI COVENANTS.................................................... 32
6.1. FINANCIAL REPORTING....................................... 32
6.2. USE OF PROCEEDS........................................... 34
6.3. NOTICE OF DEFAULT......................................... 35
6.4. CONDUCT OF BUSINESS....................................... 35
6.5. TAXES..................................................... 35
6.6. INSURANCE................................................. 36
6.7. COMPLIANCE WITH LAWS...................................... 36
6.8. MAINTENANCE OF PROPERTIES................................. 36
6.9. INSPECTION................................................ 36
6.11. INDEBTEDNESS.............................................. 37
6.12. MERGER.................................................... 38
6.13. INVESTMENTS AND PURCHASES................................. 38
6.14. CONTINGENT OBLIGATIONS.................................... 39
6.15. LIENS..................................................... 39
6.16. AFFILIATES................................................ 41
6.17. ENVIRONMENTAL MATTERS..................................... 41
6.18. CHANGE IN CORPORATE STRUCTURE; FISCAL YEAR................ 41
6.19. INCONSISTENT AGREEMENTS................................... 41
6.20. FINANCIAL COVENANTS....................................... 41
6.20.2. LEVERAGE RATIO................................... 42
6.20.3. FIXED CHARGES COVERAGE RATIO..................... 42
6.20.4. STATUTORY SURPLUS................................ 42
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6.21. TAX CONSOLIDATION......................................... 42
6.22. ERISA COMPLIANCE.......................................... 42
6.23. YEAR 2000................................................. 43
ARTICLE VII DEFAULTS..................................................... 43
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES............... 45
8.1. ACCELERATION.............................................. 45
8.2. AMENDMENTS................................................ 45
8.3. PRESERVATION OF RIGHTS.................................... 46
ARTICLE IX GENERAL PROVISIONS........................................... 47
9.1. SURVIVAL OF REPRESENTATIONS............................... 47
9.2. GOVERNMENTAL REGULATION................................... 47
9.3. TAXES..................................................... 47
9.4. HEADINGS.................................................. 47
9.5. ENTIRE AGREEMENT.......................................... 47
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT........... 47
9.7. EXPENSES; INDEMNIFICATION................................. 47
9.8. NUMBERS OF DOCUMENTS...................................... 48
9.9. ACCOUNTING................................................ 48
9.10. SEVERABILITY OF PROVISIONS................................ 48
9.11. NONLIABILITY OF LENDERS................................... 48
9.12. CHOICE OF LAW............................................. 48
9.13. CONSENT TO JURISDICTION................................... 48
9.14. WAIVER OF JURY TRIAL...................................... 49
9.15. DISCLOSURE................................................ 49
9.16. COUNTERPARTS.............................................. 49
9.17. TREATMENT OF CERTAIN INFORMATION: CONFIDENTIALITY......... 49
ARTICLE X THE AGENT.................................................... 50
10.1. APPOINTMENT............................................... 50
10.2. POWERS.................................................... 50
10.3. GENERAL IMMUNITY.......................................... 50
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC................ 51
10.5. ACTION ON INSTRUCTIONS OF LENDERS......................... 51
10.6. EMPLOYMENT OF AGENTS AND COUNSEL.......................... 51
10.7. RELIANCE ON DOCUMENTS; COUNSEL............................ 51
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION................. 51
10.9. NOTICE OF DEFAULT......................................... 52
10.10. RIGHTS AS A LENDER........................................ 52
10.11. LENDER CREDIT DECISION.................................... 52
10.12. SUCCESSOR AGENT........................................... 52
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ARTICLE XI SETOFF; RATABLE PAYMENTS..................................... 53
11.1. SETOFF.................................................... 53
11.2. RATABLE PAYMENTS.......................................... 53
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS............ 54
12.1. SUCCESSORS AND ASSIGNS.................................... 54
12.2. PARTICIPATIONS............................................ 54
12.2.1. PERMITTED PARTICIPANTS; EFFECT. ................ 54
12.2.2. VOTING RIGHTS.................................... 54
12.2.3. BENEFIT OF SETOFF................................ 54
12.3. ASSIGNMENTS............................................... 55
12.3.1. PERMITTED ASSIGNMENTS............................ 55
12.3.2. EFFECT; EFFECTIVE DATE........................... 55
12.4. DISSEMINATION OF INFORMATION.............................. 55
12.5. TAX TREATMENT............................................. 56
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ARTICLE XIII NOTICES...................................................... 56
13.1. GIVING NOTICE............................................. 56
13.2. CHANGE OF ADDRESS......................................... 56
ARTICLE XIV AMENDMENT AND RESTATEMENT................................... 56
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EXHIBITS
Exhibit A (Article 1) Note
Exhibit B (Section 6.1(g)) Compliance Certificate
Exhibit C (Section 12.3.1) Assignment Agreement
SCHEDULES
Schedule 1 - Margins
Schedule 5.3 - Approvals and Consents
Schedule 5.9 - Capitalization and Subsidiaries
Schedule 5.10 - ERISA
Schedule 5.16 - Indebtedness
Schedule 5.17 - Insurance Licenses
Schedule 5.18 - Material Restrictions
Schedule 6.13 - Investment Commitments
Schedule 6.15 - Liens
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amended and Restated Credit Agreement, dated as of August 14,
1998, is among WHITE MOUNTAINS HOLDINGS, INC., a Delaware corporation, the
Lenders and THE FIRST NATIONAL BANK OF CHICAGO, individually and as Agent.
R E C I T A L S:
A. The Borrower, the Lenders and the Agent are party to that certain
$50,000,000 amended and restated credit agreement, dated as of July 30, 1997, as
amended by a certain First Amendment to Credit Agreement, dated as of November
20, 1997 (the "Existing Credit Agreement").
B. The Borrower has requested that the Existing Credit Agreement be
amended and restated in order to make certain amendments to the Existing Credit
Agreement.
C. The Borrower, the Lenders and the Agent desire to amend and restate
the Existing Credit Agreement on the terms and conditions set forth below to
accomplish such amendments.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"ABR Advance" means an Advance which bears interest at the Alternate Base
Rate.
"Adjusted Net Worth" means, with respect to the Borrower, Net Worth of the
Borrower (on a consolidated basis) on the date of determination (without
duplication for amounts already excluded), MINUS the aggregate book value of the
Borrower's equity interest in SOMSC at such time, MINUS any intercompany loans
or receivables owing from the Parent that are assets of the Borrower or its
Subsidiaries at such time.
"Advance" means a borrowing pursuant to SECTION 2.1 consisting of the
aggregate amount of the several Loans made on the same Borrowing Date by the
Lenders to the Borrower of the same Type and, in the case of Eurodollar
Advances, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 20% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means First Chicago in its capacity as agent for the Lenders
pursuant to ARTICLE X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to ARTICLE X.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders hereunder. The initial Aggregate Commitment is $50,000,000.
"Agreement" means this Second Amended and Restated Credit Agreement, as it
may be amended, modified or restated and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time; PROVIDED, HOWEVER, that if any
changes in accounting principles from those in effect on the date of this
Agreement are adopted which result in a material change in the method of
calculation of any of the financial covenants, standards or terms in this
Agreement, the parties agree to enter into negotiations to determine whether
such provisions require amendment and, if so, the terms of such amendment so as
to equitably reflect such changes. Until a resolution thereof is reached, all
calculations made for the purposes of determining compliance with the terms of
this Agreement shall be made by application of generally accepted accounting
principles in effect on the date of this Agreement applied, to the extent
applicable, on a basis consistent with that used in the preparation of the
Financial Statements furnished to the Lenders pursuant to SECTION 5.5 hereof.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Corporate Base Rate for such day, and (b) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum, in each
case changing when and as the Corporate Base Rate and the Federal Funds
Effective Rate, as the case may be, changes.
"Annual Statement" means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority)
to be used for filing annual statutory financial statements and shall contain
the type of information permitted by such insurance commissioner (or such
similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.
"Applicable Eurodollar Margin" has the meaning ascribed to it by, and
shall be determined in accordance with, SCHEDULE 1.
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"Applicable Facility Fee Margin" has the meaning ascribed to it by, and
shall be determined in accordance with, SCHEDULE 1.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Asset Disposition" means any sale, transfer or other disposition (outside
the ordinary course of business) of any material asset of the Borrower in a
single transaction or in a series of related transactions (other than the sale
of a Money Market Investment, the Borrower's equity interests in SOMSC or FAE's
equity interest in San Juan Basin Trust, the net proceeds of which are utilized
within one hundred eighty (180) days to pay dividends permitted by SECTION
6.10), including any such sale, transfer or disposition by means of a
transaction permitted by SECTION 6.12.
"Authorized Officer" means any of the chief executive officer, president,
chief financial officer, treasurer or controller of the Borrower, acting singly.
"Bankruptcy Code" means Title 11, United States Code, sections 1 ET SEQ.,
as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.
"Benefit Plan" means any deferred benefit plan for the benefit of present,
future or former employees, whether or not such benefit plan is a Plan.
"Borrower" means White Mountains Holdings, Inc., a Delaware corporation,
and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in SECTION 2.8.
"Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago for the conduct of substantially all
of their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
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"Change" is defined in SECTION 3.2.
"Change in Control" means (a) the acquisition by any "person" or "group"
(as such terms are used in Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended) (other than Parent, any Wholly-Owned Subsidiary of
Parent, John J. Byrne or any Plan or any Benefit Plan of Parent, the Borrower or
any of their Subsidiaries), including without limitation any acquisition
effected by means of any transaction contemplated by SECTION 6.12, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 25% or more
of the outstanding shares of voting stock of the Borrower; or (b) during any
period of twelve (12) consecutive calendar months, commencing on the date of the
Agreement, the ceasing of those individuals (the "CONTINUING DIRECTORS") who (i)
were directors of the Borrower on the first day of each such period or (ii)
subsequently became directors of the Borrower and whose initial election or
initial nomination for election subsequent to that date was approved by a
majority of the Continuing Directors then on the board of directors of the
Borrower to constitute a majority of the board of directors of the Borrower; or
(c) during any period of twelve (12) consecutive calendar months, commencing on
the date of this Agreement, the ceasing of individuals who hold an office
possessing the title Senior Vice President or such title that ranks senior to a
Senior Vice President (collectively, "Senior Management") of the Borrower on the
first day of each such period to constitute a majority of the Senior Management
of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below and as set
forth in any Notice of Assignment relating to any assignment which has become
effective pursuant to SECTION 12.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.
"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for a
Person and its Subsidiaries in accordance with Agreement Accounting Principles.
"Consolidated Person" means, for the taxable year of reference, each
Person which is a member of the affiliated group of the Borrower if Consolidated
returns are or shall be filed for such affiliated group for federal income tax
purposes or any combined or unitary group of which the Borrower is a member for
state income tax purposes.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract or
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application for a Letter of Credit, excluding however (a) insurance policies and
insurance contracts issued in the ordinary course of business and (b) any
financial guarantees issued by FSA.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in SECTION 2.9.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest publicly announced by First Chicago from time to time, changing
when and as said corporate base rate changes. The Corporate Base Rate is a
reference rate and does not necessarily represent the lowest or best rate of
interest actually charged to any customer. First Chicago may make commercial
loans or other loans at rates of interest at, above or below the Corporate Base
Rate.
"Default" means an event described in ARTICLE VII.
"Environmental Laws" is defined in SECTION 5.19.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means an Advance which bears interest at the
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the rate determined by the Agent to be the rate at
which deposits in U.S. dollars are offered by First Chicago to first-class banks
in the London interbank market at approximately 11 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period, in the approximate
amount of First Chicago's relevant Eurodollar Advance and having a maturity
approximately equal to such Interest Period.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base
Rate applicable to such Interest Period, divided by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
the Applicable Eurodollar Margin. The Eurodollar Rate shall be rounded to the
next higher multiple of 1/100 of 1% if the rate is not such a multiple.
"Existing Credit Agreement" is defined in the recitals to this Agreement.
"Facility Fee" is defined in Section 2.4(a).
"Facility Termination Date" means July 30, 2002.
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"FAE" means Fund American Enterprises, Inc. (f/k/a Fund American
Enterprises II, Inc.), a Delaware corporation and direct Wholly-Owned Subsidiary
of the Borrower.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum 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 for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Financial Statements" is defined in SECTION 5.5.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"First-Tier Insurance Subsidiary" means any Insurance Subsidiary that is
either (a) a direct Wholly-Owned Subsidiary of the Borrower or (b) a
Wholly-Owned Subsidiary of a Subsidiary of the Borrower and there exists no
Insurance Subsidiary in the chain of ownership between the Borrower and such
Insurance Subsidiary.
"Fiscal Quarter" means one of the four three-month accounting periods
comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period ending December 31
of each year.
"Fixed Charges Coverage Ratio" means, as of the end of any Fiscal Quarter,
the ratio of:
(a) the sum, without duplication, of,
(i) investments of the Borrower, Valley, FAE, Charter Group, Inc.,
Charter General Agency, Inc., NCM Management Corporation and
Folksamerica (but only after it becomes a Wholly-Owned
Subsidiary of the Borrower) in cash and Money Market
Investments as of the end of such Fiscal Quarter, PLUS
(ii) an amount equal to the maximum amount of dividends and
intercompany fees available to be paid to the Borrower,
Valley, FAE and Folksamerica (but only after it becomes a
Wholly-Owned Subsidiary of the Borrower) without approval of
any Governmental Authority by each present and future Wholly-
Owned Subsidiary of the Borrower that is a First-Tier
Insurance Subsidiary of either the Borrower or any of its
Subsidiaries that is not an Insurance Subsidiary pursuant to
applicable insurance statutes, rules and regulations of
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the applicable Governmental Authority during the succeeding
four Fiscal Quarters, to
(b) Fixed Charges.
"Fixed Charges" means, with respect to Parent and the Borrower, as of the
end of any Fiscal Quarter, the sum, without duplication and after giving effect
to consolidation, of (a) the sum of all interest expense on outstanding
Indebtedness (determined by adjusting the principal amount of such Indebtedness
for scheduled amortization payments and assuming that the applicable interest
rate in effect as of the date of determination would remain constant during the
succeeding four Fiscal Quarter period) payable by Parent, the Borrower and any
of Borrower's Wholly-Owned Subsidiaries (other than any Unrestricted
Subsidiary), (b) dividends payable on preferred stock by Parent, the Borrower
and any of Borrower's Wholly-Owned Subsidiaries (other than any Unrestricted
Subsidiary), (c) Indebtedness payable pursuant to the scheduled amortization of
such Indebtedness by Parent, the Borrower and any of Borrower's Wholly-Owned
Subsidiaries (other than any Unrestricted Subsidiary), (d) Loans payable
pursuant to SECTION 2.1(b) as a result of reductions in the Aggregate Commitment
occurring in any such period pursuant to SECTION 2.7(a) (subject to the last
sentence of this definition with respect to the July 30, 2002 reduction), and
Loans (as defined in the Valley Credit Agreement) payable pursuant to Section
2.1(b) of the Valley Credit Agreement as a result of reductions in the Aggregate
Commitment (as determined in the Valley Credit Agreement) occurring in any such
period pursuant to Section 2.7(a) of the Valley Credit Agreement (subject to the
last sentence of this definition with respect to the July 30, 2002 reduction),
in each case for the period of four Fiscal Quarters immediately following the
date of determination. Solely for purposes of computing Fixed Charges under the
preceding CLAUSE (c), the scheduled principal payment of approximately
$56,000,000 due on or before March 31, 1999 under the Folksamerica Loan
Agreement shall not be included. Solely for purposes of computing Fixed Charges
under the preceding CLAUSE (d) for any period on or after June 30, 2001, the
"Reduction Amount" on July 30, 2002 stated in SECTION 2.7(a) shall be deemed to
be $4,000,000 and the "Reduction Amount" on July 30, 2002 stated in Section
2.7(a) of the Valley Credit Agreement shall be deemed to be $2,000,000.
"Folksamerica" means Folksamerica Holding Company, Inc., a New York
corporation.
"Folksamerica Loan Agreement " means that certain $70,000,000 loan
agreement between Folksamerica and Swedbank (Sparbanken Sverige AB (publ)), New
York Branch, dated as of November 12, 1991, as amended.
"Folksamerica Transaction" means that certain transaction by which (a) the
Borrower and/or FAE acquires all of the outstanding capital stock of
Folksamerica not already owned by the Borrower, (b) Parent assumes the
obligations of each of Folksam Omsesidig Sakforsakring (Sweden) and Samvirke
Skadeforsikring AS (Norway) (collectively, the "Folksamerica Guarantors") to
guarantee the obligations of Folksamerica (the "Folksamerica Guaranty") under
the Folksamerica Loan Agreement and (c) the Parent indemnifies the Folksamerica
Guarantors and their respective affiliates, successors and assigns with respect
to various matters relating to the Folksamerica Guaranty.
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"FSA" means Financial Security Assurance Holdings Ltd., a New York
corporation.
"FSA Amount" means an amount equal to that immediately utilized by SOMSC
to excercise certain options, in existence on the date hereof, on the capital
stock of FSA, such amount not to exceed $18,000,000.
"Funded Indebtedness" means Indebtedness of the type described in clauses
(a), (d), (e) and (h) of the definition "Indebtedness".
"Governmental Authority" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body, agency,
authority, department or commission (including without limitation any board of
insurance, insurance department or insurance commissioner and any taxing
authority or political subdivision) or any instrumentality or officer thereof
(including without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned or controlled by or subject to the control of any of the
foregoing.
"Hazardous Materials" is defined in SECTION 5.19.
"Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (d) obligations which are evidenced by notes, acceptances, or similar
instruments, (e) Capitalized Lease Obligations, (f) Rate Hedging Obligations,
(g) Contingent Obligations, (h) obligations for which such Person is obligated
pursuant to or in respect of a Letter of Credit and (i) repurchase obligations
or liabilities of such Person with respect to accounts or notes receivable sold
by such Person.
"Insurance Subsidiary" means any Subsidiary which is engaged in the
insurance business as an issuer or underwriter of insurance policies and/or
insurance contracts.
"Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one, two, three or
six months thereafter; PROVIDED, HOWEVER, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day; PROVIDED, HOWEVER, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
-8-
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade), deposit
account or contribution of capital by such Person to any other Person or any
investment in, or purchase or other acquisition of, the stock, partnership
interests, notes, debentures or other securities of any other Person made by
such Person.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, at any time, the ratio of (a) the consolidated
Funded Indebtedness of Parent (excluding SOMSC) at such time to (b) the sum of
the consolidated Funded Indebtedness of the Borrower and its Subsidiaries, other
than SOMSC, at such time PLUS Adjusted Net Worth at such time, in all cases
determined in accordance with Agreement Accounting Principles.
"License" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental Authority
in connection with the operation, ownership or transaction of insurance
business.
"Lien" means any security interest, lien (statutory or other), mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement), save in respect of liabilities and obligations arising out
of the underwriting of insurance policies and contracts of insurance.
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.
"Loan Documents" means this Agreement, the Notes and the other documents
and agreements contemplated hereby and executed by the Borrower in favor of the
Agent or any Lender.
"Margin Stock" has the meaning assigned to that term under Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or other), performance, results of
operations, or prospects of the Borrower and
-9-
its Subsidiaries taken as a whole, (b) the ability of the Borrower or any
Subsidiary to perform its obligations under the Loan Documents, or (c) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of the Agent or the Lenders thereunder.
"Money Market Investments" means (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 one year 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 ninety (90) days from the date of
acquisition thereof; (c) commercial paper rated A-1 or better P-1 or better by
Standard & Poor's Ratings Group or Moody's Investors Services, Inc.,
respectively, maturing not more than ninety (90) days from the date of
acquisition thereof; and (d) shares in an open-end management investment company
with U.S. dollar denominated investments in fixed income obligations, including
repurchase agreements, fixed time deposits and other obligations, with a dollar
weighted average maturity of not more than one year, and for the calculation of
this dollar weighted average maturity, certain instruments which have a variable
rate of interest readjusted no less frequently than annually are deemed to have
a maturity equal to the period remaining until the next readjustment of the
interest rate.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.
"Net Available Proceeds" means (a) with respect to any Asset Disposition,
the sum of cash or readily marketable cash equivalents received (including by
way of a cash generating sale or discounting of a note or account receivable)
therefrom, whether at the time of such disposition or subsequent thereto, in
excess in the case of any Asset Disposition of any amounts derived from such
sale used (and permitted by this Agreement to be used) within one hundred eighty
(180) days after such sale to make a Permitted Reinvestment, or (b) with respect
to any sale or issuance of equity securities of the Borrower, cash or readily
marketable cash equivalents received therefrom, whether at the time of such sale
or issuance or subsequent thereto, net, in the case of either CLAUSE (a) or
CLAUSE (b), of all legal, title and recording tax expenses, commissions and
other fees and all costs and expenses incurred, including, without limitation,
incremental income taxes resulting from such transaction.
"Net Worth" means, with respect to any Person, at any date the
consolidated shareholders' equity of such Person and its Consolidated
Subsidiaries determined in accordance with Agreement
-10-
Accounting Principles (but excluding the effect of Statement of Financial
Accounting Standards No. 115).
"Non-Excluded Taxes" is defined in SECTION 2.18(a).
"Note" means a promissory note in substantially the form of EXHIBIT A
hereto, with appropriate insertions, duly executed and delivered to the Agent by
the Borrower and payable to the order of a Lender in the amount of its
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Notice of Assignment" is defined in SECTION 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent or any indemnified party hereunder arising under any
of the Loan Documents.
"Parent" means Fund American Enterprises Holdings, Inc., a Delaware
corporation.
"Parent Credit Agreement" means the Amended and Restated Credit Agreement
dated as of August 14, 1998, among Parent, the financial institutions from time
to time party thereto and First Chicago, as agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Participants" is defined in SECTION 12.2.1.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Reinvestment" means an Investment in Subsidiaries (other than
any Unrestricted Subsidiary) in existence on the date hereof, an Investment in
Main Street America Holdings, Inc., or any other Investment approved by the
Required Lenders.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan, as defined in Section 3(2)
of ERISA, as to which the Borrower or any member of the Controlled Group may
have any liability.
"Proceeding" is defined in SECTION 5.19.
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"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances.
"Purchase" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (a) acquires any going business or all or substantially all
of the assets of any firm, corporation or division or line of business thereof,
whether through purchase of assets, merger or otherwise, or (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of the
outstanding partnership interests of a partnership.
"Purchasers" is defined in SECTION 12.3.1.
"Quarterly Statement" means the quarterly statutory financial statement of
any Insurance Subsidiary required to be filed with the insurance commissioner
(or similar authority) of its jurisdiction of incorporation or, if no specific
form is so required, in the form of financial statements permitted by such
insurance commissioner (or such similar authority) to be used for filing
quarterly statutory financial statements and shall contain the type of financial
information permitted by such insurance commissioner (or such similar authority)
to be disclosed therein, together with all exhibits or schedules filed
therewith.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to depositary institutions.
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"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of such Board of Governors relating
to the extension of credit by securities brokers and dealers for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to such Persons.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Release" is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 39601 ET SEQ.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within thirty
(30) days of the occurrence of such event; PROVIDED, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 66-2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66-2/3% of the aggregate unpaid
principal amount of the outstanding Loans.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Restatement Effective Date" means the date on which all conditions
precedent set forth in SECTION 4.1 are satisfied or waived by all of the
Lenders.
"Risk-Based Capital Guidelines" is defined in SECTION 3.2.
"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) in the jurisdiction of such Person for the preparation
of annual statements and other financial reports by insurance companies of the
same type as such Person in effect from time to time; PROVIDED, HOWEVER, that if
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any changes in statutory accounting practices from those in effect on the date
of this Agreement are adopted which result in a material change in the method of
calculation of any of the financial covenants, standards or terms in this
Agreement, the parties agree to enter into negotiations to determine whether
such provisions require amendment and, if so, the terms of such amendment so as
to equitably reflect such changes. Until a resolution thereof is reached, all
calculations made for the purposes of determining compliance with the terms of
this Agreement shall be made by application of statutory accounting practices in
effect on the date of this Agreement applied, to the extent applicable, on a
basis consistent with that used in the preparation of the Financial Statements
furnished to the Lenders pursuant to SECTION 5.5 (j) AND (k) hereof.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Significant Subsidiary" shall mean and include, at any time, each
Subsidiary of the Borrower to the extent that the Net Worth of such Subsidiary
is equal to or greater than $5,000,000.
"Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group, other than a
Multiemployer Plan.
"Solvent" means, when used with respect to a Person, that (a) the fair
saleable value of the assets of such Person is in excess of the total amount of
the present value of its liabilities (including for purposes of this definition
all liabilities (including loss reserves as determined by such Person), whether
or not reflected on a balance sheet prepared in accordance with Agreement
Accounting Principles and whether direct or indirect, fixed or contingent,
secured or unsecured, disputed or undisputed), (b) such Person is able to pay
its debts or obligations in the ordinary course as they mature and (c) such
Person does not have unreasonably small capital to carry out its business as
conducted and as proposed to be conducted. "Solvency" shall have a correlative
meaning.
"SOMSC" means Source One Mortgage Services Corporation, a Delaware
corporation.
"SOMSC Credit Agreements" means the credit agreement or credit agreements
from time to time in effect among SOMSC, the financial institutions from time to
time party thereto and First Chicago, as agent, as the same may be amended,
supplemented, restated, replaced or otherwise modified from time to time (and,
subsequent to the termination thereof, as in effect on the date of such
termination).
"Statutory Surplus" means, with respect to any Insurance Subsidiary at any
time, the statutory capital and surplus of such Insurance Subsidiary at such
time, as determined in accordance with SAP ("Liabilities, Surplus and Other
Funds" statement, page 3, line 25 of the Annual Statement for the 1995 Fiscal
Year entitled "Surplus as Regards Policyholders").
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly
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or indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (b) any partnership, association,
joint venture, limited liability company or similar business organization more
than 50% of the ownership interests having ordinary voting power of which shall
at the time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or
any other member of the Controlled Group from such Plan during a plan year in
which the Borrower or any other member of the Controlled Group was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA, (c) the termination of such Plan, the
filing of a notice of intent to terminate such Plan or the treatment of an
amendment of such Plan as a termination under Section 4041 of ERISA, (d) the
institution by the PBGC of proceedings to terminate such Plan or (e) any event
or condition which might constitute grounds under Section 4042 of ERISA for
the termination of, or appointment of a trustee to administer, such Plan.
"Transferee" is defined in SECTION 12.4.
"Type" means, with respect to any Advance, its nature as an ABR Advance or
Eurodollar Advance.
"Unfunded Liability" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under a Single Employer Plan exceeds
the fair market value of assets allocable to such benefits, all determined as of
the then most recent valuation date for such Plans using PBGC actuarial
assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Unrestricted Subsidiary" means SOMSC and its Subsidiaries.
"Valley Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated as of August 14, 1998, among Valley, the financial institutions
from time to time party thereto and First Chicago, as agent, as the same may be
amended, supplemented or otherwise modified from time to time.
"Valley" means Valley Group, Inc., an Oregon corporation.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of the
outstanding voting securities of which (other than directors' qualifying or
similar shares) shall at the time be owned or controlled, directly or
indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned Subsidiaries of such
Person, or (b) any partnership, association, joint venture, limited liability
company or similar
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business organization 100% of the ownership interests having ordinary voting
power of which (other than directors' qualifying or similar shares) shall at the
time be so owned or controlled.
"Year 2000 Issues" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications and hardware to
effectively function on and after January 1, 2000, as such inability affects the
business, operations and financial condition of the Borrower and its
Subsidiaries and of the Borrower's and its Subsidiaries' material customers,
suppliers and vendors.
"Year 2000 Program" is defined in SECTION 5.22.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. References herein to particular columns,
lines or sections of any Person's Annual Statement shall be deemed, where
appropriate, to be references to the corresponding column, line or section of
such Person's Quarterly Statement, or if no such corresponding column, line or
section exists or if any report form changes, then to the corresponding item
referenced thereby. In the event that the columns, lines or sections of the
Annual Statement referenced herein are changed or renumbered, all such
references shall be deemed references to such column, line or section as so
renumbered or changed. Each accounting term used herein which is not otherwise
defined herein shall be defined in accordance with Agreement Accounting
Principles or SAP, as applicable, unless otherwise specified.
ARTICLE II
THE CREDITS
2.1.ADVANCES. (a) From and including the date hereof to but excluding the
Facility Termination Date, each Lender severally (and not jointly) agrees, on
the terms and conditions set forth in this Agreement, to make Advances to the
Borrower from time to time in amounts not to exceed in the aggregate at any one
time outstanding the amount of its pro-rata share of the Aggregate Commitment
existing at such time. Subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow Advances at any time prior to the Facility
Termination Date.
(b) The Borrower hereby agrees that if at any time, as a result of
reductions in the Aggregate Commitment pursuant to SECTION 2.7 or otherwise, the
aggregate balance of the Loans exceeds the Aggregate Commitment, the Borrower
shall repay immediately its then outstanding Loans in such amount as may be
necessary to eliminate such excess.
(c) The Borrower's obligation to pay the principal of, and interest
on, the Loans shall be evidenced by the Notes. Although the Notes shall be dated
the date of this Agreement, interest in respect thereof shall be payable only
for the periods during which the Loans evidenced thereby are outstanding and,
although the stated amount of each Note shall be equal to the applicable
Lender's Commitment, each Note shall be enforceable, with respect to the
Borrower's obligation to
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pay the principal amount thereof, only to the extent of the unpaid principal
amount of the Loans at the time evidenced thereby.
(d) All Advances and all Loans shall mature, and the principal
amount thereof and the unpaid accrued interest thereon shall be due and payable,
on the Facility Termination Date.
2.2. RATABLE LOANS. Each Advance hereunder shall consist of Loans made
from the several Lenders ratably in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment.
2.3. TYPES OF ADVANCES. The Advances may be ABR Advances or Eurodollar
Advances, or a combination thereof, selected by the Borrower in accordance with
SECTIONS 2.8 and 2.9.
2.4. FACILITY FEE; REDUCTIONS IN AGGREGATE COMMITMENT. (a) The Borrower
agrees to pay to the Agent for the account of each Lender a facility fee
("Facility Fee") in an amount equal to the Applicable Facility Fee Margin per
annum times the daily average Commitment of such Lender from the date hereof to
and including the Facility Termination Date, payable on each Payment Date
hereafter and on the Facility Termination Date. All accrued Facility Fees shall
be payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder.
(b) The Borrower may permanently reduce the Aggregate Commitment in
whole, or in part ratably among the Lenders in a minimum aggregate amount of
$2,000,000 upon at least three (3) Business Days' written notice to the Agent,
which notice shall specify the amount of any such reduction; PROVIDED, HOWEVER,
that the amount of the Aggregate Commitment may not be reduced below the
aggregate principal amount of the outstanding Advances. Such reductions shall be
in addition to reductions occurring pursuant to SECTION 2.7(b). Voluntary
commitment reductions pursuant to this SECTION 2.4(b) shall be applied to the
mandatory commitment reductions required to be made pursuant to SECTION 2.7(a)
in direct order of maturity.
2.5. MINIMUM AMOUNT OF EACH ADVANCE. Each Advance shall be in the minimum
amount of $2,000,000 (and in integral multiples of $500,000 if in excess
thereof); PROVIDED, HOWEVER, that (a) any ABR Advance may be in the amount of
the unused Aggregate Commitment and (b) in no event shall more than six (6)
Eurodollar Advances be permitted to be outstanding at any time.
2.6. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to time pay,
without penalty or premium, all outstanding ABR Advances, or, in a minimum
aggregate amount of $2,000,000 any portion of the outstanding ABR Advances upon
two (2) Business Days' prior notice to the Agent. Subject to SECTION 3.4 and
upon like notice, a Eurodollar Advance may be paid prior to the last day of the
applicable Interest Period in a minimum amount of $2,000,000 or an integral
multiple of $500,000 in excess thereof.
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2.7. MANDATORY COMMITMENT REDUCTIONS. (a) The Aggregate Commitment shall
be automatically and permanently reduced by the following amounts (or such
lesser amount as a result of reductions pursuant to SECTION 2.7(c)) on the
following dates:
Date Reduction Amount
---- ----------------
June 30, 1999 $3,000,000
June 30, 2000 $3,000,000
June 30, 2001 $4,000,000
July 30, 2002 $40,000,000
(b) The Aggregate Commitment shall also be automatically and
permanently reduced in the amounts and at the times set forth below:
(i) within one hundred eighty (180) days after the receipt in the
form of cash or cash equivalents thereof by the Borrower, 100% of the
aggregate Net Available Proceeds in excess of $1,000,000 realized upon all
Asset Dispositions in any Fiscal Year of the Borrower; and
(ii) within five (5) Business Days after the receipt in the form of
cash or cash equivalents thereof by the Borrower, 85% of the Net Available
Proceeds realized upon the sale by the Borrower of any equity securities
issued by it after the date of this Agreement in excess of an aggregate
amount of $1,000,000 (other than a sale of common stock of the Borrower to
Parent).
(c) Mandatory commitment reductions under SECTION 2.7(b) shall be
cumulative and in addition to reductions occurring pursuant to SECTION 2.4(b).
Any mandatory commitment reductions under SECTION 2.7(b) shall be applied to the
mandatory commitment reductions required to be made pursuant to SECTION 2.7(a)
in the inverse order of maturity.
(d) Any reduction in the Aggregate Commitment pursuant to this
SECTION 2.7 or otherwise shall ratably reduce the Commitment of each Lender.
2.8. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW ADVANCES. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable to each Advance from time to time;
PROVIDED, HOWEVER, that in the event Loans are incurred on the date of this
Agreement, all Loans incurred on such date shall be ABR Advances. The Borrower
shall give the Agent irrevocable notice (a "BORROWING NOTICE") not later than
10:00 a.m. (Chicago time) on the Borrowing Date of each ABR Advance and at least
three (3) Business Days before the Borrowing Date for each Eurodollar Advance,
specifying:
(a) the Borrowing Date of such Advance, which shall be a Business
Day;
(b) the aggregate amount of such Advance;
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(c) the Type of Advance selected;
(d) in the case of each Eurodollar Advance, the Interest Period
applicable thereto, which shall end on or prior to the
Facility Termination Date; and
(e) any changes to money transfer instructions previously
delivered to the Agent.
Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available its Loan or Loans, in funds immediately available in Chicago, to
the Agent at its address specified pursuant to ARTICLE XIII. The Agent will make
the funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address or at such account at such other institution in the United
States of America as the Borrower may indicate in the Borrowing Notice.
2.9. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. ABR Advances
shall continue as ABR Advances unless and until such ABR Advances are converted
into Eurodollar Advances. Each Eurodollar Advance shall continue as a Eurodollar
Advance until the end of the then applicable Interest Period therefor, at which
time such Eurodollar Advance shall be automatically converted into an ABR
Advance unless the Borrower shall have given the Agent a Conversion/Continuation
Notice requesting that, at the end of such Interest Period, such Eurodollar
Advance continue as a Eurodollar Advance for the same or another Interest
Period. Subject to the terms of SECTION 2.5, the Borrower may elect from time to
time to convert all or any part of an Advance of any Type into any other Type or
Types of Advances; PROVIDED, HOWEVER, that any conversion of any Eurodollar
Advance shall be made on, and only on, the last day of the Interest Period
applicable thereto. The Borrower shall give the Agent irrevocable notice (a
"CONVERSION/ CONTINUATION NOTICE") of each conversion of an ABR Advance or
continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) on
the conversion date, in the case of a conversion into an ABR Advance, or at
least three (3) Business Days, in the case of a conversion into or continuation
of a Eurodollar Advance, prior to the date of the requested conversion or
continuation, specifying:
(a) the requested date of such conversion or continuation, which
shall be a Business Day;
(b) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(c) the amount and Type(s) of Advance(s) into which such Advance
is to be converted or continued and, in the case of a
conversion into or continuation of a Eurodollar Advance, the
duration of the Interest Period applicable thereto, which
shall end on or prior to the Facility Termination Date.
2.10. CHANGES IN INTEREST RATE, ETC. Each ABR Advance shall bear interest
at the Alternate Base Rate from and including the date of such Advance or the
date on which such Advance was converted into an ABR Advance to (but not
including) the date on which such ABR Advance is paid or converted to a
Eurodollar Advance. Changes in the rate of interest on that portion of any
Advance maintained as an ABR Advance will take effect simultaneously with each
change in the
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Alternate Base Rate. Each Eurodollar Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to, but not
including, the last day of such Interest Period at the Eurodollar Rate
determined as applicable to such Eurodollar Advance plus the Applicable
Eurodollar Margin. No Interest Period may end after the Facility Termination
Date. The Borrower shall select Interest Periods so that it is not necessary to
repay any portion of a Eurodollar Advance prior to the last day of the
applicable Interest Period in order to make a mandatory repayment required
pursuant to SECTION 2.7(a).
2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in SECTIONS 2.8 or 2.9, no Advance may be made as, converted
into or continued as a Eurodollar Advance (except with the consent of the Agent
and the Required Lenders) when any Default or Unmatured Default has occurred and
is continuing. During the continuance of a Default the Required Lenders may, at
their option, by notice to the Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of SECTION 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that each Eurodollar Advance and ABR Advance shall bear interest (for
the remainder of the applicable Interest Period in the case of Eurodollar
Advances) at a rate per annum equal to the rate otherwise applicable plus two
percent (2%) per annum; PROVIDED, HOWEVER, that such increased rate shall
automatically and without action of any kind by the Lenders become and remain
applicable until revoked by the Required Lenders in the event of a Default
described in SECTIONS 7.6 or 7.7.
2.12. METHOD OF PAYMENT. All payments of the Obligations hereunder shall
be made, without setoff, deduction or counterclaim, in immediately available
funds to the Agent at the Agent's address specified pursuant to ARTICLE XIII, or
at any other Lending Installation of the Agent specified in writing by the Agent
to the Borrower (at least two (2) Business Days in advance) by noon (Chicago
time) on the date when due and shall be applied ratably by the Agent among the
Lenders. Each payment delivered to the Agent for the account of any Lender shall
be delivered promptly by the Agent to such Lender in the same type of funds that
the Agent received at its address specified pursuant to ARTICLE XIII or at any
Lending Installation specified in a notice received by the Agent from such
Lender. The Agent is hereby authorized to charge the account of the Borrower
maintained with the Agent for each payment of principal, interest and fees as it
becomes due hereunder.
2.13. NOTES. Each Lender is hereby authorized to record the principal
amount of each of its Loans and each repayment on the schedule attached to its
Note; PROVIDED, HOWEVER, that neither the failure to so record nor any error in
such recordation shall affect the Borrower's obligations under such Note.
2.14. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued on
each ABR Advance shall be payable on each Payment Date, commencing with the
first such date to occur after the date hereof, on any date on which an ABR
Advance is prepaid, whether due to acceleration or otherwise, and at maturity.
Interest accrued on that portion of the outstanding principal amount of any ABR
Advance converted into a Eurodollar Advance on a day other than a Payment Date
shall be payable on the date of conversion. Interest accrued on each Eurodollar
Advance shall be payable on the last day of its applicable Interest Period, on
any date on which the Eurodollar Advance is
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prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued
on each Eurodollar Advance having an Interest Period longer than three (3)
months shall also be payable on the last day of each three-month interval during
such Interest Period. Interest and commitment fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest shall be payable
for the day an Advance is made but not for the day of any payment on the amount
paid if payment is received prior to noon (Chicago time) at the place of
payment. If any payment of principal of or interest on an Advance shall become
due on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.
2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND COMMITMENT
REDUCTIONS. Promptly after receipt thereof, the Agent will notify each Lender of
the contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each
Eurodollar Advance promptly upon determination of such interest rate and will
give each Lender prompt notice of each change in the Alternate Base Rate.
2.16. LENDING INSTALLATIONS. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written or telex notice to the
Agent and the Borrower, designate a Lending Installation through which Loans
will be made by it and for whose account Loan payments are to be made.
2.17. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan, or (b) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
the Borrower has not in fact made such payment to the Agent, the Lenders shall,
on demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the Federal Funds Effective
Rate for such day. If any Lender has not in fact made such payment to the Agent,
such Lender or the Borrower shall, on demand by the Agent, repay to the Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to (a) in the case of payment by a Lender, the Federal Funds Effective
Rate for such day, or (b) in the case of payment by the Borrower, the interest
rate applicable to the relevant Loan.
2.18. TAXES. (a) Any payments made by the Borrower under this Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or
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future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income taxes
and franchise taxes or any other tax based upon any income imposed on the Agent
or any Lender by the jurisdiction in which the Agent or such Lender is
incorporated or has its principal place of business or maintains its Lending
Installation. If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Agent or any Lender hereunder, the
amounts so payable to the Agent or such Lender shall be increased to the extent
necessary to yield to the Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in or pursuant to this Agreement; PROVIDED,
HOWEVER, that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the U.S. or a
state thereof if such Lender fails to comply with the requirements of paragraph
(b) of this SECTION 2.18. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as practicable thereafter the Borrower shall send to the
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by any Agent or any Lender as a result of any
such failure. The agreements in this SECTION 2.18 shall survive the termination
of this Agreement and the payment of all other amounts payable hereunder.
(b) At least five (5) Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of America,
or a state thereof, agrees that it will deliver to each of the Borrower and the
Agent two (2) duly completed and properly executed copies of United States
Internal Revenue Service Form 1001 or 4224 (or a successor form), certifying in
either case that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes. Each Lender which so delivers a Form 1001 or 4224 (or a
successor form) further undertakes to deliver to each of the Borrower and the
Agent two (2) additional duly completed and properly executed copies of such
form (or a successor form) on or before the date that such form expires
(currently, three (3) successive calendar years for Form 1001 and each tax year
for Form 4224) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Lender
is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
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2.19. AGENT'S FEES. The Borrower shall pay to the Agent those fees, in
addition to the Facility Fees referenced in SECTION 2.4(A), in the amounts and
at the times separately agreed to between the Agent and the Borrower.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. YIELD PROTECTION. If, after the date hereof, the adoption of or any
change in any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
new interpretation thereof, or the compliance of any Lender with such adoption,
change or interpretation,
(a) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the
Borrower (excluding taxation of the overall net income of any Lender or
applicable Lending Installation imposed by the jurisdiction in which such
Lender or Lending Installation is incorporated or has its principal place
of business), or changes the basis of taxation of principal, interest or
any other payments to any Lender or Lending Installation in respect of its
Loans or other amounts due it hereunder, or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending Installation (other than reserves
and assessments taken into account in determining the interest rate
applicable to Eurodollar Advances), or
(c) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of making,
funding or maintaining Loans or reduces any amount receivable by any
Lender or any applicable Lending Installation in connection with any
Loans, or requires any Lender or any applicable Lending Installation to
make any payment calculated by reference to the amount of Loans held, or
interest received by it, by an amount deemed material by such Lender,
then, within fifteen (15) days of demand by such Lender, the Borrower shall pay
such Lender that portion of such increased expense incurred or resulting in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans and its Commitment.
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within fifteen (15) days of demand
by such Lender, the Borrower shall pay such Lender the amount
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necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy). "CHANGE" means (a)
any change after the date of this Agreement in the Risk-Based Capital
Guidelines, or (b) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means (a) the risk-based
capital guidelines in effect in the United States on the date of this Agreement
and (b) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices entitled
"International Convergence of Capital Measurements and Capital Standards" and
any amendments to such regulations adopted prior to the date of this Agreement.
3.3. AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available, or (b) the interest rate applicable to a Eurodollar Advance does not
accurately or fairly reflect the cost of making or maintaining such Advance,
then the Agent shall suspend the availability of the Eurodollar Advances until
such circumstance no longer exists and require any Eurodollar Advances to be
repaid.
3.4. FUNDING INDEMNIFICATION. If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurodollar
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower will indemnify the Agent and each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Advance.
3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Advances to reduce any liability of the Borrower to
such Lender under SECTIONS 2.18, 3.1 and 3.2 or to avoid the unavailability of a
Type of Advance under SECTION 3.3, so long as such designation is not
disadvantageous to such Lender. Each Lender shall deliver a written statement of
such Lender to the Borrower (with a copy to the Agent) as to the amount due, if
any, under SECTIONS 3.1, 3.2 or 3.4. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Advance shall be calculated as though each Lender
funded its Eurodollar Advances through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement of any
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Lender shall be payable on demand after receipt by the Borrower
of the written statement. The obligations of the Borrower under SECTIONS 3.1,
3.2 and 3.4 shall survive payment of the Obligations and termination of this
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. EFFECTIVENESS. The Lenders shall not be required to make the initial
Advance hereunder unless and until the Borrower has furnished the following to
the Agent with sufficient copies for the Lenders and the other conditions set
forth below have been satisfied:
(a) CHARTER DOCUMENTS; GOOD STANDING CERTIFICATES. Copies of the
certificate of incorporation of the Borrower, together with all amendments
thereto, both certified by the appropriate governmental officer in its
jurisdiction of incorporation, together with a good standing certificate
issued by the Secretary of State of the jurisdiction of its incorporation
and such other jurisdictions as shall be reasonably requested by the
Agent.
(b) BY-LAWS AND RESOLUTIONS. Copies, certified by the Secretary or
Assistant Secretary of the Borrower, of its by-laws and of its Board of
Directors' resolutions authorizing the execution, delivery and performance
of the Loan Documents to which the Borrower is a party.
(c) SECRETARY'S CERTIFICATE. An incumbency certificate, executed by
the Secretary or Assistant Secretary of the Borrower, which shall identify
by name and title and bear the signature of the officers of the Borrower
authorized to sign the Loan Documents and to make borrowings hereunder,
upon which certificate the Agent and the Lenders shall be entitled to rely
until informed of any change in writing by the Borrower.
(d) OFFICER'S CERTIFICATE. A certificate signed by an Authorized
Officer of the Borrower, in form and substance satisfactory to the Agent,
to the effect that on the Restatement Effective Date (both before and
after giving effect to the consummation of the transactions contemplated
hereby and the making of the Loans hereunder, if any, being made on such
date): (i) no Default or Unmatured Default has occurred and is continuing;
(ii) no injunction or temporary restraining order which would prohibit the
making of any Loans or other litigation which could reasonably be expected
to have a Material Adverse Effect is pending or, to the best of such
Person's knowledge, threatened; (iii) all orders, consents, approvals,
licenses, authorizations, or validations of, or filings, recordings or
registrations with, or exemptions by, any Governmental Authority required
in connection with the execution, delivery and performance of this
Agreement have been or, prior to the time required, will have been,
obtained, given, filed or taken and are or will be in full force and
effect (or the Borrower has obtained effective judicial relief with
respect to the application thereof) and all applicable waiting periods
have expired; (iv) each of the representations and
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warranties set forth in ARTICLE V of this Agreement is true and correct on
and as of the Restatement Effective Date; and (v) since December 31, 1997,
no event or change has occurred that has caused or evidences a Material
Adverse Effect.
(e) LEGAL OPINION. A written opinion of Brobeck, Phleger & Harrison
LLP, counsel to the Borrower, addressed to the Agent and the Lenders in
form and substance acceptable to the Agent and its counsel.
(f) NOTES. Notes payable to the order of each of the Lenders duly
executed by the Borrower.
(g) LOAN DOCUMENTS. Executed originals of this Agreement and each of
the Loan Documents, which shall be in full force and effect, together with
all schedules, exhibits, certificates, instruments, opinions, documents
and financial statements required to be delivered pursuant hereto and
thereto.
(h) LETTERS OF DIRECTION. Written money transfer instructions with
respect to the initial Advances and to future Advances in form and
substance acceptable to the Agent and its counsel addressed to the Agent
and signed by an Authorized Officer, together with such other related
money transfer authorizations as the Agent may have reasonably requested.
(i) SOLVENCY CERTIFICATE. A written solvency certificate from the
chief financial officer of the Borrower in form and content satisfactory
to the Agent with respect to the value, Solvency and other factual
information, or relating to, as the case may be of the Borrower on a
consolidated basis.
(j) REGULATORY MATTERS. Receipt of any required regulatory approvals
from any Governmental Authority.
(k) INVESTMENT POLICY GUIDELINES. Certified copy of the investment
policy guidelines adopted by the finance committee of the board of
directors of the Borrower.
(l) PAYMENT OF FEES. The Borrower shall have paid all fees due to
First Chicago.
(m) FOLKSAMERICA LOAN AGREEMENT. A copy of the Folksamerica Loan
Agreement, including all amendments thereto.
(n) OTHER. Such other documents as the Agent, any Lender or their
counsel may have reasonably requested.
4.2. EACH FUTURE ADVANCE. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default and none would
result from such Advance;
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(b) The representations and warranties contained in ARTICLE V are
true and correct as of such Borrowing Date (except to the extent such
representations and warranties are expressly made as of a specified date,
in which event such representations and warranties shall be true and
correct as of such specified date);
(c) A Borrowing Notice shall have been properly submitted; and
(d) All legal matters incident to the making of such Advance shall
be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Borrower that the conditions contained in
SECTIONS 4.2(A), (B) AND (C) have been satisfied. Any Lender may require a duly
completed compliance certificate in substantially the form of EXHIBIT B hereto
as a condition to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
duly qualified and in good standing as a foreign corporation and is duly
authorized to conduct its business in each jurisdiction in which its business is
conducted or proposed to be conducted, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.
5.2. AUTHORIZATION AND VALIDITY. The Borrower has all requisite power and
authority (corporate and otherwise) and legal right to execute and deliver each
of the Loan Documents and to perform its obligations thereunder. The execution
and delivery by the Borrower of the Loan Documents and the performance of its
obligations thereunder have been duly authorized by proper corporate proceedings
and the Loan Documents constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
5.3. COMPLIANCE WITH LAWS AND CONTRACTS. The Borrower and its Subsidiaries
have complied in all material respects with all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
their respective businesses or the ownership of their respective properties,
except where the failure to so comply could not reasonably be expected to have a
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Material Adverse Effect. Neither the execution and delivery by the Borrower of
the Loan Documents, the application of the proceeds of the Loans or the
consummation of the transactions contemplated in the Loan Documents, nor
compliance with the provisions of the Loan Documents will, or at the relevant
time did, (a) violate any law, rule, regulation (including Regulations T, U and
X), order, writ, judgment, injunction, decree or award binding on the Borrower
or any Subsidiary or the Borrower's or any Subsidiary's charter, articles or
certificate of incorporation or by-laws, (b) violate the provisions of or
require the approval or consent of any party to any indenture, instrument or
agreement to which the Borrower or any Subsidiary is a party or is subject, or
by which it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien (other than
Liens permitted by, the Loan Documents) in, of or on the property of the
Borrower or any Subsidiary pursuant to the terms of any such indenture,
instrument or agreement, or (c) require any consent of the stockholders of any
Person, except for approvals or consents which will be obtained on or before the
initial Advance and are disclosed on SCHEDULE 5.3, except for any violation of,
or failure to obtain an approval or consent required under, any such indenture,
instrument or agreement that could not reasonably be expected to have a Material
Adverse Effect.
5.4. GOVERNMENTAL CONSENTS. No order, consent, approval, qualification,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any court, governmental or
public body or authority, or any subdivision thereof, any securities exchange or
other Person is or at the relevant time was required to authorize, or is or at
the relevant time was required in connection with the execution, delivery,
consummation or performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents or the application of the proceeds
of the Loans or any other transaction contemplated in the Loan Documents.
Neither the Borrower nor any Subsidiary is in default under or in violation of
any foreign, federal, state or local law, rule, regulation, order, writ,
judgment, injunction, decree or award binding upon or applicable to the Borrower
or such Subsidiary, in each case the consequences of which default or violation
could reasonably be expected to have a Material Adverse Effect.
5.5. FINANCIAL STATEMENTS. The Borrower has heretofore furnished to each
of the Lenders (a) the December 31, 1997 audited consolidated financial
statements of the Borrower and its Subsidiaries, (b) the unaudited consolidated
financial statements of the Borrower and its Subsidiaries as of March 31, 1998,
(c) the December 31, 1997 audited financial statements of Charter Group, Inc.
and its Subsidiaries, (d) the December 31, 1997 audited financial statements of
Valley Insurance Co. and its Subsidiaries, (e) the December 31, 1997 audited
financial statements of Valley and its Subsidiaries, (f) the December 31, 1997
audited financial statements of SOMSC and its Subsidiaries, (g) the December 31,
1997 audited financial statements of Parent and its Subsidiaries, (h) the
December 31, 1997 audited financial statements of Folksamerica and its
Subsidiaries, (i) the December 31, 1997 audited financial statements of Main
Street America Holdings, Inc. and its Subsidiaries, (j) the March 31, 1998
unaudited balance sheets and income statements of Parent, the Borrower, Valley,
SOMSC, Folksamerica and Main Street America Holdings, Inc., (k) the December 31,
1997 Annual Statement of each Insurance Subsidiary and Folksamerica Reinsurance
Company and (l) the March 31, 1998 Quarterly Statement of each Insurance
Subsidiary and
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Folksamerica Reinsurance Company (collectively, the "FINANCIAL STATEMENTS").
Each of the Financial Statements (other than as described in CLAUSE (j)) was
prepared in accordance with Agreement Accounting Principles or SAP, as
applicable, and fairly presents the consolidated financial condition and
operations of the Person which is the subject of such Financial Statements at
such dates and the consolidated results of their operations for the respective
periods then ended (except, in the case of such unaudited statements, for normal
year-end audit adjustments).
5.6. MATERIAL ADVERSE CHANGE. No material adverse change in the business,
Property, condition (financial or otherwise), performance, prospects or results
of operations of the Borrower and its Subsidiaries has occurred since December
31, 1997, except as specifically disclosed in the Financial Statements.
5.7. TAXES. Neither the Borrower nor any of its Subsidiaries are required
to file United States federal, foreign, state or local tax returns. As of the
date hereof, the United States income tax returns of Parent on a consolidated
basis have been audited by the Internal Revenue Service through its fiscal
period ending December 31, 1988, and all tax years beginning on or after January
1, 1989 are currently being audited or are subject to audit. No tax liens have
been filed and no claims are being asserted with respect to any taxes of Parent
which could reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of Parent in respect of any taxes or
other governmental charges of Parent are in accordance with Agreement Accounting
Principles.
5.8. LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, proceeding, inquiry or governmental investigation pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any Subsidiary or any of their respective properties which could
reasonably be expected to have a Material Adverse Effect or to prevent, enjoin
or unduly delay the making of the Loans under this Agreement. Neither the
Borrower nor any Subsidiary has any material contingent obligations incurred
outside of the ordinary course of its business except as set forth on SCHEDULE
5.16 or disclosed in the Financial Statements or in financial statements
required to be delivered under SECTIONS 6.1(a) and (b) and as permitted under
this Agreement.
5.9. CAPITALIZATION. SCHEDULE 5.9 hereto contains (a) an accurate
description of the Borrower's capitalization as of March 31, 1998 and (b) an
accurate list of all of the existing Subsidiaries as of the date of this
Agreement, setting forth their respective jurisdictions of incorporation and the
percentage of their capital stock owned by the Borrower or other Subsidiaries.
All of the issued and outstanding shares of capital stock of the Borrower and of
each Subsidiary have been duly authorized and validly issued, are fully paid and
non-assessable, and are free and clear of all Liens. No authorized but unissued
or treasury shares of capital stock of the Borrower or any Subsidiary are
subject to any option, warrant, right to call or commitment of any kind or
character. Except as set forth on SCHEDULE 5.9 or pursuant to management
incentive plans implemented after the date of this Agreement, neither the
Borrower nor any Subsidiary has any outstanding stock or securities convertible
into or exchangeable for any shares of its capital stock, or any right issued to
any Person (either preemptive or other) to subscribe for or to purchase, or any
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options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to any of its capital stock or any stock or securities
convertible into or exchangeable for any of its capital stock other than as
expressly set forth in the certificate or articles of incorporation of the
Borrower or such Subsidiary. Neither the Borrower nor any Subsidiary is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock or any convertible securities, rights
or options of the type described in the preceding sentence except as otherwise
set forth on SCHEDULE 5.9 or pursuant to management incentive plans implemented
after the date of this Agreement.
5.10. ERISA. Except as disclosed on SCHEDULE 5.10, neither the Borrower
nor any other member of the Controlled Group maintains any Single Employer
Plans, and no Single Employer Plan has any Unfunded Liability. Neither the
Borrower nor any other member of the Controlled Group maintains, or is obligated
to contribute to, any Multiemployer Plan or has incurred, or is reasonably
expected to incur, any withdrawal liability to any Multiemployer Plan. Each Plan
complies in all material respects with all applicable requirements of law and
regulations other than any such failure to comply which could not reasonably be
expected to have a Material Adverse Effect. Neither the Borrower nor any member
of the Controlled Group has, with respect to any Plan, failed to make any
contribution or pay any amount required under Section 412 of the Code or Section
302 of ERISA or the terms of such Plan. There are no pending or, to the
knowledge of the Borrower, threatened claims, actions, investigations or
lawsuits against any Plan, any fiduciary thereof, or the Borrower or any member
of the Controlled Group with respect to a Plan. Neither the Borrower nor any
member of the Controlled Group has engaged in any prohibited transaction (as
defined in Section 4975 of the Code or Section 406 of ERISA) in connection with
any Plan which would subject such Person to any material liability. Within the
last five (5) years neither the Borrower nor any member of the Controlled Group
has engaged in a transaction which resulted in a Single Employer Plan with an
Unfunded Liability being transferred out of the Controlled Group which could
reasonably be expected to have a Material Adverse Effect. No Termination Event
has occurred or is reasonably expected to occur with respect to any Plan which
is subject to Title IV of ERISA which could reasonably be expected to have a
Material Adverse Effect.
5.11. DEFAULTS. No Default or Unmatured Default has occurred and is
continuing.
5.12. FEDERAL RESERVE REGULATIONS. Neither the Borrower nor any Subsidiary
is engaged, directly or indirectly, principally, or as one of its important
activities, in the business of extending, or arranging for the extension of,
credit for the purpose of purchasing or carrying Margin Stock. No part of the
proceeds of any Loan will be used in a manner which would violate, or result in
a violation of, Regulation T, Regulation U or Regulation X. Neither the making
of any Advance hereunder nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulation T, Regulation U or Regulation X.
5.13. INVESTMENT COMPANY. Neither the Borrower nor any Subsidiary is, or
after giving effect to any Advance will be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
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5.14. CERTAIN FEES. No broker's or finder's fee or commission was, is or
will be payable by the Borrower or any Subsidiary with respect to any of the
transactions contemplated by this Agreement, except as described in SECTION 9.5.
The Borrower hereby agrees to indemnify the Agent and the Lenders against and
agrees that it will hold each of them harmless from any claim, demand or
liability for broker's or finder's fees or commissions alleged to have been
incurred by the Borrower in connection with any of the transactions contemplated
by this Agreement and any expenses (including, without limitation, attorneys'
fees and time charges of attorneys for the Agent or any Lender, which attorneys
may be employees of the Agent or any Lender) arising in connection with any such
claim, demand or liability. No other similar fee or commissions will be payable
by the Borrower or any Subsidiary for any other services rendered to the
Borrower or any Subsidiary ancillary to any of the transactions contemplated by
this Agreement.
5.15. SOLVENCY. As of the date hereof, after giving effect to the
consummation of the transactions contemplated by the Loan Documents and the
payment of all fees, costs and expenses payable by the Borrower or its
Subsidiaries with respect to the transactions contemplated by the Loan Documents
and the application of the proceeds of Loans incurred by the Borrower on the
initial Borrowing Date, each of the Borrower and each Subsidiary is Solvent.
5.16. INDEBTEDNESS. Attached hereto as SCHEDULE 5.16 is a complete and
correct list of all Indebtedness of the Borrower and its Subsidiaries
outstanding on the date of this Agreement (other than Indebtedness in a
principal amount not exceeding $500,000 for a single item of Indebtedness and
$2,000,000 in the aggregate for all such Indebtedness listed, it being
understood and agreed that any such Indebtedness shall be permitted to exist
pursuant to SECTION 6.11(b) notwithstanding the absence thereof on SCHEDULE
5.16), showing the aggregate principal amount which was outstanding on such date
after giving effect to the application of the proceeds of Loans incurred by the
Borrower on the initial Borrowing Date.
5.17. INSURANCE LICENSES. SCHEDULE 5.17 hereto lists all of the
jurisdictions in which any Insurance Subsidiary holds a License and is
authorized to and does transact insurance business as of the date of this
Agreement. No such License, the loss of which could reasonably be expected to
have a Material Adverse Effect, is the subject of a proceeding for suspension or
revocation. To the Borrower's knowledge, there is no sustainable basis for such
suspension or revocation, and no such suspension or revocation has been
threatened by any Governmental Authority.
5.18. MATERIAL AGREEMENTS. Except as set forth in SCHEDULE 5.18 and except
for agreements or arrangements with regulatory agencies with regard to Insurance
Subsidiaries, neither the Borrower nor any Subsidiary is a party to any
agreement or instrument or subject to any charter or other corporate restriction
which could reasonably be expected to have a Material Adverse Effect or which
restricts or imposes conditions upon the ability of any Subsidiary (other than
an Unrestricted Subsidiary) to (a) pay dividends or make other distributions on
its capital stock (b) make loans or advances to the Borrower, (c) repay loans or
advances from Borrower or (d) grant Liens to the Agent to secure the
Obligations. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions
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contained in any agreement to which it is a party, which default could
reasonably be expected to have a Material Adverse Effect.
5.19. ENVIRONMENTAL LAWS. There are no claims, investigations, litigation,
administrative proceedings, notices, requests for information (each a
"PROCEEDING"), whether pending or threatened, or judgments or orders asserting
violations of applicable federal, state and local environmental, health and
safety statutes, regulations, ordinances, codes, rules, orders, decrees,
directives and standards ("ENVIRONMENTAL LAWS") or relating to any toxic or
hazardous waste, substance or chemical or any pollutant, contaminant, chemical
or other substance defined or regulated pursuant to any Environmental Law,
including, without limitation, asbestos, petroleum, crude oil or any fraction
thereof ("HAZARDOUS MATERIALS") asserted against the Borrower or any of its
Subsidiaries, other than in connection with an insurance policy issued in the
ordinary course of business to any Person (other than Parent or any Subsidiary
of Parent), which, in any case, could reasonably be expected to have a Material
Adverse Effect. As of the date hereof, the Borrower and its Subsidiaries do not
have liabilities exceeding $100,000 in the aggregate for all of them with
respect to compliance with applicable Environmental Laws or related to the
generation, treatment, storage, disposal, release, investigation or cleanup of
Hazardous Materials, and no facts or circumstances exist which could give rise
to such liabilities with respect to compliance with applicable Environmental
Laws and the generation, treatment, storage, disposal, release, investigation or
cleanup of Hazardous Materials.
5.20. INSURANCE. The Borrower and its Subsidiaries maintain with
financially sound and reputable insurance companies insurance on their Property
in such amounts and covering such risks as is consistent with sound business
practice.
5.21. DISCLOSURE. No information, exhibit or report furnished by the
Borrower or any of its Subsidiaries to the Agent or to any Lender in connection
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
There is no fact known to the Borrower (other than matters of a general economic
or political nature) that has had or could reasonably be expected to have a
Material Adverse Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated by this Agreement.
5.22. YEAR 2000. The Borrower has made a reasonable assessment of the Year
2000 Issues and has a realistic and achievable program for remediating the Year
2000 Issues on a timely basis (the "Year 2000 Program"). Based on such
assessment and on the Year 2000 Program the Borrower does not reasonably
anticipate that Year 2000 Issues will have a Material Adverse Effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
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6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, consistently applied, and furnish
to the Lenders:
(a) As soon as practicable and in any event within 100 days after
the close of each of its Fiscal Years, an unqualified audit report
certified by independent certified public accountants, acceptable to the
Lenders, prepared in accordance with Agreement Accounting Principles on a
consolidated and consolidating basis (consolidating statements need not be
certified by such accountants) for itself and its Subsidiaries, including
balance sheets as of the end of such period and related statements of
income, retained earnings and cash flows accompanied by a certificate of
said accountants that, in the course of the examination necessary for
their certification of the foregoing, they have obtained no knowledge of
any Default or Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(b) As soon as practicable and in any event within sixty (60) days
after the close of each of the first three Fiscal Quarters of each of its
Fiscal Years, for itself and its Subsidiaries, consolidated and
consolidating unaudited balance sheets as at the close of each such period
and consolidated and consolidating statements of income, retained earnings
and cash flows for the period from the beginning of such Fiscal Year to
the end of such quarter, all certified by its chief financial officer.
(c) (i) Upon the earlier of (A) fifteen (15) days after the
regulatory filing date or (B) seventy-five (75) days after the close of
each fiscal year of each Insurance Subsidiary, copies of the unaudited
Annual Statement of such Insurance Subsidiary, certified by the chief
financial officer or the treasurer of such Insurance Subsidiary, all such
statements to be prepared in accordance with SAP and (ii) no later than
each June 15, copies of financial statements prepared in accordance with
SAP, or generally accepted accounting principles with a reconciliation to
SAP, and certified by independent certified public accountants of
recognized national standing.
(d) Upon the earlier of (i) ten (10) days after the regulatory
filing date or (ii) sixty (60) days after the close of each of the first
three (3) fiscal quarters of each fiscal year of each Insurance
Subsidiary, copies of the unaudited Quarterly Statement of each of the
Insurance Subsidiaries, certified by the chief financial officer or the
treasurer of such Insurance Subsidiary, all such statements to be prepared
in accordance with SAP.
(e) Promptly and in any event within ten (10) days after (i)
learning thereof, notification of any changes after the date of this
Agreement in the rating given by A.M. Best & Co. in respect of any
Insurance Subsidiary and (ii) receipt thereof, copies of any ratings
analysis by A.M. Best & Co. relating to any Insurance Subsidiary.
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(f) Copies of any outside actuarial reports prepared with respect to
any valuation or appraisal of any Insurance Subsidiary, promptly after the
receipt thereof.
(g) Together with the financial statements required by CLAUSES (a)
and (b) above, a compliance certificate in substantially the form of
EXHIBIT B hereto signed by the Borrower's chief financial officer showing
the calculations necessary to determine compliance with this Agreement and
stating that no Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof.
(h) Promptly after the same becomes available after the close of
each Fiscal Year, a statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary enrolled under ERISA.
(i) As soon as possible and in any event within ten (10) days after
the Borrower knows that any Termination Event has occurred with respect to
any Plan, a statement, signed by the chief financial officer of the
Borrower, describing said Termination Event and the action which the
Borrower proposes to take with respect thereto.
(j) As soon as possible and in any event within ten (10) days after
receipt by the Borrower, a copy of (i) any notice, claim, complaint or
order to the effect that the Borrower or any of its Subsidiaries is or may
be liable to any Person as a result of the release by the Borrower or any
of its Subsidiaries of any Hazardous Materials into the environment or
requiring that action be taken to respond to or clean up a Release of
Hazardous Materials into the environment, and (ii) any notice, complaint
or citation alleging any violation of any Environmental Law or
Environmental Permit by the Borrower or any of its Subsidiaries. Within
ten (10) days of the Borrower or any Subsidiary having knowledge of the
enactment or promulgation of any Environmental Law which could reasonably
be expected to have a Material Adverse Effect, the Borrower shall provide
the Agent with written notice thereof.
(k) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements
so furnished.
(l) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which
the Borrower or any of its Subsidiaries files with the Securities and
Exchange Commission, the National Association of Securities Dealers, any
securities exchange, the NAIC or any insurance commission or department or
analogous Governmental Authority (including any filing made by the
Borrower or any Subsidiary pursuant to any insurance holding company act
or related rules or regulations), but excluding routine or non-material
filings with the NAIC, any insurance commissioner or department or
analogous Governmental Authority.
(m) Promptly and in any event within ten (10) days after learning
thereof, notification of (i) any material tax assessment, demand, notice
of proposed deficiency or notice of deficiency received by Parent or any
other Consolidated Person or (ii) the filing of
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any tax Lien or commencement of any judicial proceeding by or against any
such Consolidated Person, if any such assessment, demand, notice, Lien or
judicial proceeding relates to tax liabilities in excess of ten percent
(10%) of the net worth (determined according to generally accepted
accounting standards and without reduction for any reserve for such
liabilities) of the Borrower and its Subsidiaries taken as a whole.
(n) Promptly after available, any management letter prepared by the
accountants conducting the audit of the financial statements delivered
pursuant to Section 6.1(a).
(o) Promptly after reviewed by the board of directors of the
Borrower, a copy of the Borrower's investment policy compliance report.
(p) Such other information (including, without limitation, the
annual Best's Advance Report Service report prepared with respect to each
Insurance Subsidiary rated by A.M. Best & Co. and non-financial
information) as the Agent or any Lender may from time to time reasonably
request.
6.2. USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to meet the working capital and general
corporate needs of the Borrower and its Subsidiaries, including, but not limited
to, the consummation of the Folksamerica Transaction and the making of any other
Investments permitted by SECTION 6.13. The Borrower will not, nor will it permit
any Subsidiary to, use any of the proceeds of the Advances in any manner which
would violate, or result in the violation of, Regulation T, Regulation U or
Regulation X or to finance the Purchase of any Person which has not been
approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.
6.3. NOTICE OF DEFAULT. The Borrower will give prompt notice in writing to
the Lenders of the occurrence of (a) any Default or Unmatured Default, (b) of
any other event or development, financial or other, relating specifically to the
Borrower or any of its Subsidiaries (and not of a general economic or political
nature) which could reasonably be expected to have a Material Adverse Effect,
(c) receipt by the Borrower or any Subsidiary of any notice from any
Governmental Authority of the expiration without renewal, revocation or
suspension of, or the institution of any proceedings to revoke or suspend, any
License now or hereafter held by any Insurance Subsidiary which is required to
conduct insurance business in compliance with all applicable laws and
regulations and the expiration, revocation or suspension of which could
reasonably be expected to have a Material Adverse Effect, (d) receipt by the
Borrower or any Subsidiary of any notice from any Governmental Authority of the
institution of any disciplinary proceedings against or in respect of any
Insurance Subsidiary, or the issuance of any order, the taking of any action or
any request for an extraordinary audit for cause by any Governmental Authority
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect, (e) any material judicial or administrative order of which the
Borrower or any Subsidiary is aware limiting or controlling the insurance
business of any Insurance Subsidiary (and not the insurance industry generally)
which has been issued or adopted or (f) the commencement of any litigation of
which the Borrower or any Subsidiary is aware which could reasonably be expected
to create a Material Adverse Effect.
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, (a) carry on and conduct its business in substantially the same
manner as it is presently conducted, (b)
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not conduct any significant business except for financial services, (c) do all
things necessary to remain duly incorporated, validly existing and in good
standing as a domestic corporation in its jurisdiction of incorporation and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted except where the failure to maintain such
authority could not reasonably be expected to have a Material Adverse Effect and
(d) do all things necessary to renew, extend and continue in effect all Licenses
which may at any time and from time to time be necessary for any Insurance
Subsidiary to operate its insurance business in compliance with all applicable
laws and regulations except for any License the loss of which could not
reasonably be expected to have a Material Adverse Effect; PROVIDED, that any
Insurance Subsidiary may withdraw from one or more states (other than its state
of domicile) as an admitted insurer if such withdrawal is determined by the
Borrower's Board of Directors to be in the best interest of the Borrower and
could not reasonably be expected to have a Material Adverse Effect. The Borrower
shall cause Folksamerica to remain a Wholly-Owned Subsidiary (but only after it
becomes a Wholly-Owned Subsidiary) until the Borrower shall have repaid all
outstanding Advances and other Obligations and the Lenders' Commitments
hereunder have terminated.
6.5. TAXES. At any time on and after the date the Borrower or any of its
Subsidiaries is required to do so, the Borrower will, and will cause each
Subsidiary to, timely file complete and correct United States federal and
applicable foreign, state and local tax returns required by applicable law and
pay when due all taxes, assessments and governmental charges and levies upon it
or its income, profits or Property, except those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside in accordance with generally accepted accounting
principles or SAP, as applicable.
6.6. INSURANCE. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to the Agent and any
Lender upon request full information as to the insurance carried.
6.7. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect.
6.8. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9. INSPECTION. The Borrower will, and will cause each Subsidiary to, at
reasonable times during normal business hours and upon reasonable notice, permit
the Agent and the Lenders, by their respective representatives and agents, to
inspect any of the Property, corporate books and financial records of the
Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs,
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finances and accounts of the Borrower and each Subsidiary with, and to be
advised as to the same by, their respective officers at such reasonable times
and intervals as the Lenders may designate. The Borrower will keep or cause to
be kept, and cause each Subsidiary to keep or cause to be kept, appropriate
records and books of account in which complete entries are to be made reflecting
its and their business and financial transactions, such entries to be made in
accordance with Agreement Accounting Principles or SAP, as applicable.
6.10. DIVIDENDS. The Borrower will not declare or pay any dividends or
make any distributions on its capital stock (other than dividends payable in its
own capital stock) or redeem, repurchase or otherwise acquire or retire any of
its capital stock or any options or other rights in respect thereof at any time
outstanding, except that so long as no Default or Unmatured Default exists
before or after giving effect to the declaration or payment of such dividends or
distributions or repurchase or redemption of such stock or other transaction,
(a) the Borrower may declare and pay dividends, and make distributions, on its
common stock and repurchase and redeem and otherwise acquire or retire its
common stock and any options or other rights thereof in an aggregate amount not
to exceed, when aggregated with the principal amount of loans (exclusive of
loans described in SECTION 6.13(e)(II)) made during such Fiscal Year from the
Borrower or its Subsidiaries to Parent, (i) during the Borrower's 1998 Fiscal
Year, 2% of Adjusted Net Worth as of December 31, 1997, and (ii) during any
Fiscal Year thereafter, 3% of Adjusted Net Worth as of the end of the Fiscal
Year preceding the Fiscal Year during which such transaction is consummated and
(b) in addition to any dividends, distributions, repurchases, redemptions,
acquisitions or retirements which may be declared, paid or made pursuant to the
preceding CLAUSE (a), the Borrower may declare and pay dividends, and make
distributions, on its common stock and repurchase and redeem and otherwise
acquire or retire its common stock, and any options or rights thereof, (x) in an
amount equal to (1) the net proceeds received by the Borrower from dividends,
sales, transfers or other dispositions of its equity interests in SOMSC or FAE's
equity interest in San Juan Basin Trust, MINUS (2) the amount of loans made
pursuant to SECTION 6.13(e)(II), PROVIDED, that such dividend is paid within one
hundred eighty (180) days of receipt of such net proceeds, (y) its equity
interests in SOMSC and (z) in an amount equal to that immediately utilized by
Parent to repay all or a portion of a certain $40,000,000 loan from FAE to
Parent.
6.11. INDEBTEDNESS. The Borrower will not, nor will it permit any
Subsidiary (other than an Unrestricted Subsidiary) to, create, incur or suffer
to exist any Indebtedness, except:
(a) the Loans;
(b) Indebtedness existing on the date hereof and described in
SCHEDULE 5.16 hereto and any renewals, extensions, refundings or
refinancings of such Indebtedness; PROVIDED that the amount thereof is not
increased and the maturity or scheduled amortization of principal thereof
is not shortened (unless to a maturity or scheduled amortization occurring
after the Facility Termination Date);
(c) Indebtedness owing by (x) the Borrower to any Wholly-Owned
Subsidiary and (y) any Wholly-Owned Subsidiary to a Wholly-Owned
Subsidiary or the Borrower;
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(d) Indebtedness permitted under the Valley Credit Agreement;
(e) Indebtedness of Folksamerica or its Subsidiaries in existence at
the time of the Folksamerica Transaction; PROVIDED, however, such
Indebtedness of Folksamerica or its Subsidiaries may not be renewed,
extended, refunded or refinanced by Folksamerica without the prior written
consent of the Required Lenders;
(f) Indebtedness of the Borrower, the proceeds of which are used
directly or indirectly to refund or refinance the Indebtedness described
in SECTION 6.11(e); PROVIDED, however that the amount thereof is not
increased, the maturity or scheduled amortization of principal thereof is
not set to a maturity or weighted average maturity occurring before the
Facility Termination Date hereunder and the terms of the proposed
Indebtedness are not otherwise, in the reasonable judgment of the Required
Lenders, disadvantageous (relative to the terms of the Indebtedness
refunded or refinanced) to the interests of the Lenders hereunder;
(g) Indebtedness secured by Liens permitted pursuant to SECTION
6.15(f);
(h) Contingent Obligations permitted under SECTION 6.14; and
(i) other Indebtedness of the Borrower or any Subsidiary to the
extent not otherwise included in subparagraphs (a) through (h) of this
SECTION 6.11 or in SECTION 6.14, in an aggregate amount outstanding at any
one time not to exceed $5,000,000.
6.12. MERGER. The Borrower will not, nor will it permit any Significant
Subsidiary to, merge or consolidate with or into any other Person, except that:
(a) a Wholly-Owned Subsidiary (other than any Unrestricted
Subsidiary) may merge with (i) the Borrower, (ii) any Wholly-Owned
Subsidiary of the Borrower or (iii) any other Person so long as no Default
or Unmatured Default shall have occurred or be continuing before and after
giving effect to such merger and the surviving entity of such merger is
the Borrower or a Wholly-Owned Subsidiary of the Borrower;
(b) a Significant Subsidiary (other than Valley) may merge or
consolidate with any Person so long as neither the Borrower nor any of its
Subsidiaries shall hold any capital stock of such Significant Subsidiary
after giving effect to such merger or consolidation; and
(c) the Borrower or Valley may merge into any Person so long as (i)
the Borrower or Valley, as the case may be, is the surviving entity of
such merger, (ii) no Default or Unmatured Default shall have occurred or
be continuing before and after giving effect to such merger and (iii) the
covenants contained in SECTION 6.20 shall be complied with on a PRO FORMA
basis on the date of, and after giving effect to, such merger.
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6.13. INVESTMENTS AND PURCHASES. The Borrower will not, and will not
permit any Subsidiary (other than an Unrestricted Subsidiary) to, make or suffer
to exist any Investments (including, without limitation, loans and advances to,
and other Investments in, Parent or Subsidiaries), or commitments therefor, or
create any Subsidiary or become or remain a partner in any partnership or joint
venture, or make any Purchases, except:
(a) Investments or commitments therefor (such commitments being set
forth on SCHEDULE 6.13) in existence on the date hereof (including a
certain $40,000,000 loan from FAE to Parent);
(b) loans and advances to employees in the ordinary course of
business and consistent with past practices;
(c) Investments made in Subsidiaries (other than any Unrestricted
Subsidiary) and Main Street America Holdings, Inc.;
(d) Purchases of or Investments in businesses or entities engaged in
the insurance and/or insurance services business or businesses reasonably
incident thereto (including holding companies, the Subsidiaries of which
on a consolidated basis are primarily engaged in such businesses) which do
not constitute hostile takeovers (including the creation of Subsidiaries
in connection therewith) so long as no Default or Unmatured Default has
occurred and is continuing or would occur after giving effect to such
Purchase or Investment;
(e) Investments by the Borrower made on or before May 13, 1999
directly in SOMSC in an amount equal to the FSA Amount so long as at the
time of such Investment no Default or Unmatured Default has occurred and
is continuing or would occur after giving effect to such Investment;
PROVIDED, however, that any Investments pursuant to this CLAUSE (E) are
made from net proceeds traceable to dividends, sales, transfers or other
distributions of equity interests in SOMSC after the date hereof;
(f) loans made by the Borrower or its Subsidiaries to Parent (i) so
long as at all times, after giving effect to the aggregate outstanding
principal amount of such loans, the Borrower would be permitted to pay at
least $1.00 in incremental dividends pursuant to SECTION 6.10(a) or (ii)
that are made out of the net proceeds described in SECTION 6.10(b)(x) in
lieu of utilizing such net proceeds to pay a dividend;
(g) other Investments (other than any direct or indirect Investments
in Parent), so long as any such Investment is materially consistent with
the Borrower's investment policy guidelines as approved from time to time
by the finance committee of the board of directors of the Borrower (a copy
of the current version of such guidelines having been delivered to each
Lender); provided that any change from the guidelines previously submitted
to the Lenders shall not materially adversely affect the Lenders; and
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(h) other Investments (other than any direct or indirect Investments
in Parent) by Folksamerica (but only after it becomes a Wholly-Owned
Subsidiary of the Borrower) at any time prior to March 31, 1999, so long
as any such Investment is permitted under the insurance laws of the State
of New York and is materially consistent with Folksamerica's investment
policy guidelines as approved from time to time by the board of directors
of Folksamerica (a copy of the current version of such guidelines having
been delivered to each Lender); provided that any change from the
guidelines previously submitted to the Lenders shall not materially
adversely affect the Lenders.
6.14. CONTINGENT OBLIGATIONS. The Borrower will not, nor will it permit
any Subsidiary (other than an Unrestricted Subsidiary) to, make or suffer to
exist any Contingent Obligation (including, without limitation, any Contingent
Obligation with respect to the obligations of a Subsidiary), except (a) the
issuance of financial guarantees in the ordinary course of business, (b) by
endorsement of instruments for deposit or collection in the ordinary course of
business, (c) for insurance policies issued in the ordinary course of business,
(d) the issuance of intercompany guarantees so long as the primary obligation is
permitted under this Agreement and (e) issuance of financial guarantees to the
holders of seller notes issues by ML (Bermuda) Holdings Ltd. or any of its
Subsidiaries, provided that the aggregate principal amount of all such financial
guarantees shall not at any time exceed 6,500,000 British Pounds.
6.15. LIENS. The Borrower will not, nor will it permit any Subsidiary
(other than an Unrestricted Subsidiary) to, create, incur, or suffer to exist
any Lien in, of or on the Property (other than Margin Stock) of the Borrower or
any of its Subsidiaries (other than an Unrestricted Subsidiary), except:
(a) Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good
faith and by appropriate proceedings and for which adequate reserves in
accordance with generally accepted principles of accounting shall have
been set aside on its books;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure the payment of obligations not more than sixty (60)
days past due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on
its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties
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of a similar character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the
business of the Borrower or its Subsidiaries;
(e) Liens existing on the date hereof and described in SCHEDULE 6.15
hereto;
(f) Liens in, of or on Property acquired after the date of this
Agreement (by purchase, construction or otherwise), each of which Liens
either (1) existed on such Property before the time of its acquisition and
was not created in anticipation thereof, or (2) was created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of such
Property; PROVIDED that no such Lien shall extend to or cover any Property
of the Borrower or such Subsidiary other than the Property so acquired and
improvements thereon; and PROVIDED, FURTHER, that the principal amount of
Indebtedness secured by any such Lien shall at the time the Lien is
incurred not exceed 75% of the fair market value (as determined in good
faith by a financial officer of the Borrower and, in the case of such
Property having a fair market value in excess of $500,000, certified by
such officer to the Agent, with a copy for each Lender) of the Property at
the time it was so acquired;
(g) Liens on assets securing letters of credit issued on behalf of
Insurance Subsidiaries in the ordinary course of business; and
(h) Liens not otherwise permitted by the foregoing clauses (a)
through (g) securing any Indebtedness of the Borrower, provided that the
aggregate principal amount of Indebtedness secured by Liens permitted by
this clause (h) shall not exceed $3,000,000 at any time.
6.16. AFFILIATES. The Borrower will not, and will not permit any
Subsidiary to, enter into any material transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliates (other than a Wholly-Owned Subsidiary),
except in the ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary would obtain in a comparable arms-length
transactions, except that any Unrestricted Subsidiary may make loans to Parent.
6.17. ENVIRONMENTAL MATTERS. The Borrower shall and shall cause each of
its Subsidiaries to (a) at all times comply in all material respects with all
applicable Environmental Laws and (b) promptly take any and all necessary
remedial actions in response to the presence, storage, use, disposal,
transportation or Release of any Hazardous Materials on, under or about any real
property owned, leased or operated by the Borrower or any of its Subsidiaries.
6.18. CHANGE IN CORPORATE STRUCTURE; FISCAL YEAR. The Borrower shall not,
nor shall it permit any Subsidiary to, (a) permit any amendment or modification
to be made to its certificate or
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articles of incorporation or by-laws which is materially adverse to the
interests of the Lenders or (b) change its Fiscal Year to end on any date other
than December 31 of each year.
6.19. INCONSISTENT AGREEMENTS. The Borrower shall not, nor shall it permit
any Subsidiary (other than an Unrestricted Subsidiary) to, enter into any
indenture, agreement, instrument or other arrangement which by its terms, (a)
other than pursuant to the Valley Credit Agreement or pursuant to agreements or
arrangements with regulatory agencies with regard to Insurance Subsidiaries,
directly or indirectly contractually prohibits or restrains, or has the effect
of contractually prohibiting or restraining, or contractually imposes materially
adverse conditions upon, the incurrence of the Obligations, the granting of
Liens to secure the Obligations, the amending of the Loan Documents or the
ability of any Subsidiary to (i) pay dividends or make other distributions on
its capital stock, (ii) make loans or advances to the Borrower or (iii) repay
loans or advances from the Borrower or (b) contains any provision which would be
violated or breached by the making of Advances or by the performance by the
Borrower or any Subsidiary of any of its obligations under any Loan Document.
6.20. FINANCIAL COVENANTS. The Borrower shall (or, in the case of Section
6.20.4, shall cause its Insurance Subsidiaries to):
6.20.1 MINIMUM ADJUSTED NET WORTH. At all times after the date
hereof, maintain a minimum Adjusted Net Worth at least equal to the sum
of, without duplication, (a) $465,000,000, PLUS (b) an amount equal to 85%
of the cash and non-cash proceeds of any equity securities issued or
capital contributions received by the Borrower after June 30, 1998, PLUS
(c) an amount equal to 50% of the Borrower's positive consolidated net
income (excluding from such calculation (i) SOMSC and its Subsidiaries,
(ii) any net realized gain from the sale of Borrower's equity interests in
White River Corp. or Travelers Property Casualty Corp. and (iii) any net
income directly arising out of the consummation of the Folksamerica
Transaction) after June 30, 1998, PLUS (d) an amount equal to 85% of the
proceeds of any sale of the Borrower's equity interest in SOMSC to the
extent such proceeds are not paid out by the Borrower as dividends within
one hundred eighty (180) days after receipt thereof.
6.20.2. LEVERAGE RATIO. At all times after the date hereof,
maintain a Leverage Ratio of (a) not greater than 45% through and
including December 31, 2000 and (b) not greater than 30% at all times
thereafter.
6.20.3. FIXED CHARGES COVERAGE RATIO. As of the end of each
Fiscal Quarter maintain a Fixed Charges Coverage Ratio of not less than
1.5:1.0.
6.20.4. STATUTORY SURPLUS. At all times, maintain Statutory
Surplus for each First-Tier Insurance Subsidiary in an amount not less
than an amount equal to (a) 85% of the Statutory Surplus of each such
First-Tier Insurance Subsidiary, in existence on the date hereof, as of
March 31, 1998 (or, in the case of any First-Tier Insurance Subsidiary
acquired after the date hereof, 85% of the Statutory Surplus of each such
acquired First-Tier Insurance
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Subsidiary as of the most recently ended Fiscal Quarter preceding such
acquisition), PLUS (b) 85% of all subsequent capital contributions to each
such First-tier Insurance Subsidiary, MINUS (c) in the event such
First-Tier Insurance Subsidiary dividends or otherwise distributes to its
parent all the capital stock of a Wholly-Owned Insurance Subsidiary, 100%
of the book value (calculated in accordance with SAP) of such Wholly-Owned
Insurance Subsidiary at the time of such dividend or distribution.
6.21. TAX CONSOLIDATION. The Borrower will not and will not permit any of
its Subsidiaries to (a) file or consent to the filing of any consolidated,
combined or unitary income tax return with any Person other than Parent and its
Subsidiaries or (b) amend, terminate or fail to enforce any existing tax sharing
agreement or similar arrangement if such action would cause a Material Adverse
Effect.
6.22. ERISA COMPLIANCE.
With respect to any Plan, neither the Borrower nor any Subsidiary shall:
(a) engage in any "prohibited transaction" (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) for which a civil
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section
4975 of the Code in excess of $100,000 could be imposed;
(b) incur any "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA) in excess of $100,000, whether or not
waived, or permit any Unfunded Liability to exceed $100,000;
(c) permit the occurrence of any Termination Event which could
result in a liability to the Borrower or any other member of the
Controlled Group in excess of $100,000;
(d) be an "employer" (as such term is defined in Section 3(5) of
ERISA) required to contribute to any Multiemployer Plan or a "substantial
employer" (as such term in defined in Section 4001(a)(2) of ERISA)
required to contribute to any Multiple Employer Plan; or
(e) permit the establishment or amendment of any Plan or fail to
comply with the applicable provisions of ERISA and the Code with respect
to any Plan which could result in liability to the Borrower or any other
member of the Controlled Group which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
6.23. YEAR 2000. The Borrower will take and will cause each of its
Subsidiaries to take all such actions as are reasonably necessary to
successfully implement the Year 2000 Program and to assure that Year 2000 Issues
will not have a Material Adverse Effect. At the request of the Agent or any
Lender, the Borrower will provide a description of the Year 2000 Program,
together with any updates or progress reports with respect thereto.
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ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in
connection with this Agreement, any other Loan Document, any Loan, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be false in any material respect on the date as of
which made.
7.2. Nonpayment of (a) any principal of any Note when due, or (b) any
interest upon any Note or any commitment fee or other fee or obligations under
any of the Loan Documents within five (5) days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
SECTION 6.2, SECTION 6.3(a) or SECTIONS 6.10 THROUGH 6.16 or SECTIONS 6.18
through 6.22.
7.4. The breach by the Borrower (other than a breach which constitutes a
Default under SECTIONS 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within twenty (20) days after written
notice from the Agent or any Lender.
7.5. The default by the Borrower or any of its Subsidiaries (or, at any
time the Borrower is a Subsidiary of Parent, by Parent) in the performance of
any term, provision or condition contained in any agreement or agreements under
which any Funded Indebtedness aggregating in excess of $2,000,000 ($10,000,000
in the case of Parent and $20,000,000, or such lower cross-default threshold
amount as is provided in the SOMSC Credit Agreements, in the case of SOMSC) was
created or is governed, or the occurrence of any other event or existence of any
other condition, the effect of any of which is to cause, or to permit the holder
or holders of such Funded Indebtedness to cause, such Funded Indebtedness to
become due prior to its stated maturity; or any such Funded Indebtedness of the
Borrower, any of its Subsidiaries or Parent shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled payment)
prior to the stated maturity thereof.
7.6. The Borrower or any of its Significant Subsidiaries shall (a) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (b) make an assignment for the benefit of creditors,
(c) apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial portion of its Property, (d) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization
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or relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (e) take any
corporate action to authorize or effect any of the foregoing actions set forth
in this SECTION 7.6, (f) fail to contest in good faith any appointment or
proceeding described in SECTION 7.7 or (g) become unable to pay, not pay, or
admit in writing its inability to pay, its debts generally as they become due.
7.7. Without the application, approval or consent of the Borrower or any
of its Significant Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its Significant
Subsidiaries or any substantial portion of its Property, or a proceeding
described in SECTION 7.6(d) shall be instituted against the Borrower or any of
its Significant Subsidiaries and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of sixty (60)
consecutive days.
7.8. The Borrower or any of its Subsidiaries shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $1,000,000 (or multiple judgments or orders for the
payment of an aggregate amount in excess of $5,000,000), which is not stayed on
appeal or otherwise being appropriately contested in good faith and as to which
no enforcement actions have been commenced.
7.9. Any Change in Control shall occur.
7.10. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement or the Notes) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement or the Notes), which
default or breach continues beyond any period of grace therein provided.
7.11. Any License of any Insurance Subsidiary (a) shall be revoked by the
Governmental Authority which issued such License, or any action (administrative
or judicial) to revoke such License shall have been commenced against such
Insurance Subsidiary and shall not have been dismissed within thirty (30) days
after the commencement thereof, (b) shall be suspended by such Governmental
Authority for a period in excess of thirty (30) days or (c) shall not be
reissued or renewed by such Governmental Authority upon the expiration thereof
following application for such reissuance or renewal of such Insurance
Subsidiary, which, in any case, could reasonably be expected to have a Material
Adverse Effect.
7.12. Any Insurance Subsidiary shall be the subject of a final
non-appealable order imposing a fine by or at the request of any state insurance
regulatory agency as a result of the violation by such Insurance Subsidiary of
such state's applicable insurance laws or the regulations promulgated in
connection therewith which could reasonably be expected to have a Material
Adverse Effect.
7.13. Any Insurance Subsidiary shall become subject to any conservation,
rehabilitation or liquidation order, directive or mandate issued by any
Governmental Authority or any Insurance Subsidiary shall become subject to any
other directive or mandate issued by any Governmental
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Authority in either case which could reasonably be expected to have a Material
Adverse Effect and which is not stayed within thirty (30) days.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION. If any Default described in SECTIONS 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent
or any Lender. If any other Default occurs, the Required Lenders (or the Agent
with the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.
If, within ten (10) Business Days after acceleration of the maturity of
the Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
SECTIONS 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.
8.2. AMENDMENTS. Subject to the provisions of this ARTICLE VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; PROVIDED, HOWEVER, that no such supplemental agreement shall,
without the consent of each Lender:
(a) Extend the final maturity of any Loan or Note or reduce the
principal amount thereof, or, subject to SECTION 2.11, reduce the rate or
extend the time of payment of interest or fees thereon;
(b) Reduce the percentage specified in the definition of Required
Lenders;
(c) Reduce the amount of or extend the date for the mandatory
payments and commitment reductions required under SECTIONS 2.1(b) or 2.7,
or increase the amount of the Commitment of any Lender hereunder;
(d) Extend the Facility Termination Date or reduce the amount or
extend the time of any mandatory commitment reduction required by SECTION
2.7;
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(e) Amend this SECTION 8.2; or
(f) Permit any assignment by the Borrower of its Obligations or its
rights hereunder.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under SECTION 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to SECTION 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower contained in this Agreement or of the Borrower or any Subsidiary
contained in any Loan Document shall survive delivery of the Notes and the
making of the Loans herein contemplated.
9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. TAXES. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
9.4. HEADINGS. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
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9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent and the Lenders and supersede all
prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof other than the fee letter, dated
August 14, 1998, in favor of First Chicago.
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the Agent for
any reasonable costs, internal charges and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, actual or proposed
amendment, modification, and administration of the Loan Documents. The Borrower
also agrees to reimburse the Agent and the Lenders for any reasonable costs,
internal charges and out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Agent and the Lenders, which attorneys may be
employees of the Agent or the Lenders) paid or incurred by the Agent or any
Lender in connection with the collection and enforcement of the Loan Documents.
The Borrower further agrees to indemnify the Agent and each Lender, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Agent or
any Lender is a party thereto) which any of them may pay or incur arising out of
or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or thereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder arising from claims or
assertions by third parties except to the extent that they arise out of the
gross negligence or willful misconduct of the party seeking indemnification. The
obligations of the Borrower under this Section shall survive the termination of
this Agreement.
9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.
9.9. ACCOUNTING. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles.
9.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
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9.11. NONLIABILITY OF LENDERS. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations. The Borrower shall rely entirely
upon its own judgment with respect to its business, and any review, inspection
or supervision of, or information supplied to the Borrower by the Agent or the
Lenders is for the protection of the Agent and the Lenders and neither the
Borrower nor any other Person is entitled to rely thereon. Whether or not such
damages are related to a claim that is subject to the waiver effected above and
whether or not such waiver is effective, neither the Agent nor any Lender shall
have any liability with respect to, and the Borrower hereby waives, releases and
agrees not to sue for, any special, indirect or consequential damages suffered
by the Borrower in connection with, arising out of, or in any way related to the
Loan Documents or the transactions contemplated thereby or the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS; PROVIDED, THAT SUCH PROCEEDINGS MAY BE BROUGHT IN OTHER COURTS IF
JURISDICTION MAY NOT BE OBTAINED IN A COURT IN CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
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DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. DISCLOSURE. The Borrower and each Lender hereby (a) acknowledge and
agree that First Chicago and/or its Affiliates from time to time may hold other
investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates to the extent that such
liability would not have arisen but for First Chicago's status as Agent
hereunder.
9.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Agent and the Lenders and each party has notified the Agent that
it has taken such action.
9.17. TREATMENT OF CERTAIN INFORMATION: CONFIDENTIALITY.
(a) The Borrower acknowledges that (i) services may be offered or
provided to it (in connection with this Agreement or otherwise) by each Lender
or by one or more subsidiaries or affiliates of such Lender and (ii) information
delivered to each Lender by the Borrower and its Subsidiaries may be provided to
each such Subsidiary and Affiliate, it being understood that any such Subsidiary
or Affiliate receiving such information shall be bound by the provisions of
clause (b) below as if it were a Lender hereunder.
(b) Each Lender and the 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 Borrower pursuant to this Agreement, provided that nothing
herein shall limit the disclosure of any such information (i) to the extent
required by statue, rule, regulation or judicial process, (ii) to counsel for
any of the Lenders or the Agent, (iii) to bank examiners, auditors or
accountants, (iv) to the Agent or any other Lender (or to First Chicago Capital
Markets, Inc.), (v) in connection with any litigation to which any one or more
of the Lenders or the Agent is a party, (vi) to a subsidiary or affiliate of
such Lender as provided in clause (a) above, (vii) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) agrees with the respective
Lender to keep such information confidential on substantially the terms set
forth in this SECTION 9.17(b), (viii) to any other Person as may be reasonably
required in the course of the enforcement of any Lender's rights or remedies
hereunder or under any of such Lender's Note, or (ix) to any other creditor of
the Borrower or any
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of its Subsidiaries at any time during the continuance of a Default; PROVIDED
that in no event shall any Lender or the Agent be obligated or required to
return any materials furnished by the Borrower.
ARTICLE X
THE AGENT
10.1. APPOINTMENT. First Chicago is hereby appointed Agent hereunder and
under each other Loan Document, and each of the Lenders authorizes the Agent to
act as the agent of such Lender. The Agent agrees to act as such upon the
express conditions contained in this ARTICLE X. The Agent shall not have a
fiduciary relationship in respect of the Borrower or any Lender by reason of
this Agreement.
10.2. POWERS. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3. GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower or any Lender for
any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except for its or
their own gross negligence or willful misconduct.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder, (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in ARTICLE IV, except
receipt of items required to be delivered to the Agent and not waived at
closing, or (d) the validity, effectiveness, sufficiency, enforceability or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the Agent at
such time, but is voluntarily furnished by the Borrower to the Agent (either in
its capacity as Agent or in its individual capacity).
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders (or, to the extent required by SECTION 8.2, all Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all holders of Notes. The Agent shall be
fully justified in failing
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or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (a) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (b) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents, and
(c) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents;
PROVIDED, that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Agent. The
obligations of the Lenders under this SECTION 10.8 shall survive payment of the
Obligations and termination of this Agreement.
10.9. NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.
10.10. RIGHTS AS A LENDER. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender, including, without limitation, pursuant to Article XII
hereof, and may exercise the same as though it were not the Agent, and the term
"Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless
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the context otherwise indicates, include the Agent in its individual capacity.
The Agent may accept deposits from, lend money to, and generally engage in any
kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
10.11. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
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 this Agreement and the other Loan Documents.
10.12. SUCCESSOR AGENT. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five (45) days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Lenders, a successor Agent, which
successor Agent, so long as no Default is continuing, shall be reasonably
acceptable to the Borrower. If no successor Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty
(30) days after the resigning Agent's giving notice of its intention to resign,
then the resigning Agent may appoint, on behalf of the Borrower and the Lenders,
a successor Agent, which successor Agent, so long as no Default is continuing,
shall be reasonably acceptable to the Borrower. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $50,000,000 and with a Lending Installation in the United States of
America. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent. Upon the effectiveness of the resignation of the Agent, the resigning
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation of an Agent, the
provisions of this ARTICLE X 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
Agent hereunder and under the other Loan Documents.
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ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
SECTIONS 2.18, 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share
of such Loans, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of the Borrower to a
Lender, other than Indebtedness evidenced by any of the Notes held by such
Lender, such amount shall be applied ratably to such other Indebtedness and to
the Indebtedness evidenced by such Notes.
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ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (a) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents, and (b) any assignment by any Lender must be made in compliance
with SECTION 12.3. Notwithstanding CLAUSE (b) of the preceding sentence, any
Lender may at any time, without the consent of the Borrower or the Agent, assign
all or any portion of its rights under this Agreement and its Notes to a Federal
Reserve Bank; PROVIDED, HOWEVER, that no such assignment to a Federal Reserve
Bank shall release the transferor Lender from its obligations hereunder. The
Agent may treat the payee of any Note as the owner thereof for all purposes
hereof unless and until such payee complies with SECTION 12.3 in the case of an
assignment thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and provisions of the
Loan Documents. Any request, authority or consent of any Person, who at the time
of making such request or giving such authority or consent is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("PARTICIPANTS") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents.
12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver which effects any of the modifications referenced in
clauses (a) through (f) of SECTION 8.2.
12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in SECTION 11.1 in respect
of its participating interest in amounts
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owing under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents; PROVIDED, that each Lender shall retain the right of setoff provided
in SECTION 11.1 with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in SECTION 11.1, agrees
to share with each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with SECTION 11.2 as if
each Participant were a Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("PURCHASERS") all or any part of its
rights and obligations under the Loan Documents; provided, however, that in the
case of an assignment to an entity which is not a Lender or an Affiliate of a
Lender, such assignment shall be in a minimum amount (when added to the amount
of the assignment of such Lender's obligations under the Valley Credit
Agreement) of $5,000,000 (or, if less, the entire amount of such Lender's
Commitment). Such assignment shall be substantially in the form of EXHIBIT C
hereto or in such other form as may be agreed to by the parties thereto. The
consent of the Agent and, so long as no Default under SECTIONS 7.2, 7.6 or 7.7
is continuing, the Borrower, shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof. Such consent shall not be unreasonably withheld. Notwithstanding
anything to the contrary contained herein, any assignment by a Lender of its
rights and obligations under the Loan Documents shall be accompanied by an
assignment to the same assignee of the same ratable share of the rights and
obligations of such Lender under the Valley Credit Agreement in respect of its
obligations thereunder.
12.3.2. EFFECT; EFFECTIVE DATE. Upon (a) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit I to EXHIBIT
C hereto (a "NOTICE OF ASSIGNMENT"), together with any consents required by
SECTION 12.3.1, and (b) payment of a $3,000 fee to the Agent for processing such
assignment, such assignment shall become effective on the effective date
specified in such Notice of Assignment. On and after the effective date of such
assignment, (a) such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and (b) the transferor Lender
shall be released with respect to the percentage of the Aggregate Commitment and
Loans assigned to such Purchaser without any further consent or action by the
Borrower, the Lenders or the Agent. Upon the consummation of any assignment to a
Purchaser pursuant to this SECTION 12.3.2, the transferor Lender, the Agent and
the Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their Commitment, as adjusted pursuant to such assignment.
12.4. DISSEMINATION OF INFORMATION. Subject to SECTION 9.17(b), the
Borrower authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in
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the Loan Documents by operation of law (each a "TRANSFEREE") and any prospective
Transferee any and all information in such Lender's possession concerning the
creditworthiness of the Borrower and its Subsidiaries.
12.5. TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of SECTION 2.18.
ARTICLE XIII
NOTICES
13.1. GIVING NOTICE. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with first class
postage prepaid, return receipt requested, shall be deemed given three (3)
Business Days after deposit in the U.S. mail; any notice, if transmitted by
facsimile, shall be deemed given when transmitted; and any notice given by
overnight courier shall be deemed given when received by the addressee.
13.2. CHANGE OF ADDRESS. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE XIV
AMENDMENT AND RESTATEMENT
14.1. (a) This Agreement amends and restates in its entirety the Existing
Credit Agreement and, upon the Restatement Effective Date, the terms and
provisions of the Existing Credit Agreement shall, subject to this ARTICLE XIV,
be superseded hereby and thereby. Prior to the Restatement Effective Date, the
Existing Credit Agreement shall continue to govern the making of any Loans and
any outstanding Loans and Obligations.
(b) Notwithstanding the amendment and restatement of the Existing
Credit Agreement by this Agreement, the Loans under, and as defined in, the
Existing Credit Agreement ("Continuing Loans") and all accrued interest, fees
and expenses owing to First Chicago and Fleet National Bank by the Borrower
shall remain outstanding as of the Restatement Effective Date and constitute
continuing Obligations under this Agreement. The Continuing Loans shall in all
respects be continuing, and this Agreement shall not be deemed to evidence or
result in a novation or
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repayment and re-borrowing of the Continuing Loans. In furtherance of and
without limiting the foregoing (i) all interest, fees and expenses which have
arisen under the Existing Credit Agreement shall be paid on the applicable due
date therefor specified in this Agreement and (ii) from and after the
Restatement Effective Date, the terms, conditions and covenants governing the
Continuing Loans shall be solely as set forth in this Agreement, which shall
supersede the Prior Credit Agreement to the extent provided in this ARTICLE XIV.
[signature pages to follow]
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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
WHITE MOUNTAINS HOLDINGS, INC.
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 80 South Main Street
Hanover, New Hampshire 03755
Attn: Reid T. Campbell
Vice President and
Director of Finance
Fax No.: (603) 640-2203
Tel. No.: (603) 643-4562
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COMMITMENTS
THE FIRST NATIONAL BANK OF CHICAGO,
Commitment $27,307,692.31 Individually and as Agent
--------------
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: 153 West 51st Street
New York, NY 10019
Attn: Samuel W. Bridges
First Vice President
Fax No.: (212) 373-1393
Tel. No.: (212) 373-1142
$22,692,307.69 FLEET NATIONAL BANK
--------------
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address: One Federal Street-MAOFD06H
Boston, MA 02110-2010
Attn: David A. Bosselait
---------------
Fax No.: (617) 346-5825
Tel. No.: (617) 346-5823
Aggregate
Initial
Commitment $50,000,000
-----------
-----------
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SCHEDULE 1
TO CREDIT AGREEMENT
MARGINS
"Applicable Eurodollar Margin" and "Applicable Facility Fee Margin" means,
for any period, the applicable of the following percentages in effect with such
period based on the Leverage Ratio and the Fixed Charges Coverage Ratio as
follows:
I II III IV
Greater than Greater than
Leverage Ratio is: Less than 25% or equal to 25% Less than 25% or equal to 25%
- ------------------ ------------- ---------------- ------------- ---------------
If Fixed Charges Less than or Less than or
Coverage Ratio is: Greater than 2:1 Greater than 2:1 equal to 2:1 equal to 2:1
- ------------------ ------------- ---------------- ------------- ---------------
The applicable
margin will be:
- ------------------ ------------- ---------------- ------------- ---------------
Applicable Facility .150% .175% .175% .200%
Fee Margin
- ------------------ ------------- ---------------- ------------- ---------------
Applicable .350% .450% .450% .550%
Eurodollar Margin
- ------------------ ------------- ---------------- ------------- ---------------
The Leverage Ratio and Fixed Charges Coverage Ratio shall be calculated by
the Borrower as of the end of each of its Fiscal Quarters commencing September
30, 1998 and shall be reported to the Agent pursuant to a certificate executed
by an authorized officer of the Borrower and delivered in accordance with
SECTION 6.1(g) of the Agreement. The foregoing margins shall be adjusted, if
necessary, quarterly as of the fifth (5th) day after the delivery of the
certificate provided for above; PROVIDED that if such certificate, together with
the financial statements to which such certificate relates, are not delivered by
the fifth (5th) day after the due date therefor specified in SECTION 6.1(g),
then until the fifth (5th) day after such delivery, each of the margins
specified above shall be as set forth in Column IV above. Until adjusted as
described above after September 30, 1998, the Applicable Eurodollar Margin and
Applicable Facility Fee Margin, as the case may be, shall be as specified in
Column II above.