EXHIBIT 10.C
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$15,000,000
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
VALLEY GROUP, INC.,
as Borrower,
WHITE MOUNTAINS HOLDINGS, INC.,
as Guarantor,
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............................................. 17
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.......................................... 19
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................................................................................. 31
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.............................................................................. 35
6.3. NOTICE OF DEFAULT............................................................................ 35
6.4. CONDUCT OF BUSINESS.......................................................................... 35
6.5. TAXES........................................................................................ 36
6.6. INSURANCE.................................................................................... 36
6.7. COMPLIANCE WITH LAWS......................................................................... 36
6.8. MAINTENANCE OF PROPERTIES.................................................................... 36
6.9. INSPECTION................................................................................... 36
6.10. DIVIDENDS.................................................................................... 36
6.11. INDEBTEDNESS................................................................................. 37
6.12. MERGER....................................................................................... 38
6.13. INVESTMENTS AND PURCHASES.................................................................... 38
6.14. CONTINGENT OBLIGATIONS....................................................................... 39
6.15. LIENS........................................................................................ 40
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.......................................................................... 42
6.20.2. LEVERAGE RATIO...................................................................... 42
6.20.3. FIXED CHARGES COVERAGE RATIO........................................................ 42
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6.20.4. STATUTORY SURPLUS................................................................... 42
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................................................................................... 46
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................................................................................ 49
9.13. CONSENT TO JURISDICTION...................................................................... 49
9.14. WAIVER OF JURY TRIAL......................................................................... 49
9.15. DISCLOSURE................................................................................... 49
9.16. COUNTERPARTS................................................................................. 49
9.17. TREATMENT OF CERTAIN INFORMATION: CONFIDENTIALITY............................................ 50
ARTICLE X THE AGENT.............................................................................................. 50
10.1. APPOINTMENT.................................................................................. 50
10.2. POWERS....................................................................................... 50
10.3. GENERAL IMMUNITY............................................................................. 51
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.................................................... 52
10.9. NOTICE OF DEFAULT............................................................................ 52
10.10. RIGHTS AS A LENDER........................................................................... 52
10.11. LENDER CREDIT DECISION....................................................................... 52
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10.12. SUCCESSOR AGENT.............................................................................. 52
ARTICLE XI SETOFF; RATABLE PAYMENTS.............................................................................. 53
11.1. SETOFF....................................................................................... 53
11.2. RATABLE PAYMENTS............................................................................. 53
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
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................................................................... 55
12.3. ASSIGNMENTS.................................................................................. 55
12.3.1. PERMITTED ASSIGNMENTS............................................................... 55
12.3.2. EFFECT; EFFECTIVE DATE.............................................................. 55
12.4. DISSEMINATION OF INFORMATION................................................................. 56
12.5. TAX TREATMENT................................................................................ 56
ARTICLE XIII NOTICES............................................................................................. 56
13.1. GIVING NOTICE................................................................................ 56
13.2. CHANGE OF ADDRESS............................................................................ 56
ARTICLE XIV GUARANTY............................................................................................ 56
ARTICLE XV AMENDMENT AND RESTATEMENT............................................................................ 60
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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 VALLEY GROUP, INC., an Oregon corporation, 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
$15,000,000 amended and restated credit agreement, dated as of July 30, 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, each Loan Party,
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 Parent, Net Worth of Parent
(on a consolidated basis) on the date of determination (without duplication for
amounts already excluded), MINUS the aggregate book value of Parent's equity
interest in SOMSC at such time, MINUS any intercompany loans or receivables
owing from Holdings that are assets of Parent 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 $15,000,000.
"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.
"Applicable Facility Fee Margin" has the meaning ascribed to it by, and
shall be determined in accordance with, SCHEDULE 1.
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"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 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, with respect to either Loan Party, any of
the chief executive officer, president, chief financial officer, treasurer or
controller of such Loan Party, 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 Valley Group, Inc., an Oregon 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.
"Change" is defined in SECTION 3.2.
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"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 Holdings, any Wholly-Owned
Subsidiary of Holdings, John J. Byrne or any Plan or any Benefit Plan of
Holdings, 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 Parent 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 Parent 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 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.
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"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 either Loan Party or any of their
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.
"FAE" means Fund American Enterprises, Inc. (f/k/a Fund American
Enterprises II, Inc.), a Delaware corporation and direct Wholly-Owned Subsidiary
of Parent.
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"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 Parent or (b) a Wholly-Owned
Subsidiary of a Subsidiary of Parent and there exists no Insurance Subsidiary in
the chain of ownership between Parent 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 Parent, the Borrower, FAE, Charter
Group, Inc., Charter General Agency, Inc., NCM
Management Corporation and Folksamerica (but only
after it becomes a Wholly-Owned Subsidiary of Parent)
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 Parent,
the Borrower, FAE and Folksamerica (but only after it
becomes a Wholly-Owned Subsidiary of Parent) without
approval of any Governmental Authority by each
present and future Wholly- Owned Subsidiary of Parent
that is a First-Tier Insurance Subsidiary of either
Parent or any of its Subsidiaries that is not an
Insurance Subsidiary pursuant to applicable insurance
statutes, rules and regulations of the applicable
Governmental Authority during the succeeding four
Fiscal Quarters, to
(b) Fixed Charges.
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"Fixed Charges" means, with respect to Holdings, 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 Holdings,
Parent, the Borrower and any of Parent's Wholly- Owned Subsidiaries (other than
any Unrestricted Subsidiary), (b) dividends payable on preferred stock by
Holdings, Parent, the Borrower and any of Parent's Wholly-Owned Subsidiaries
(other than any Unrestricted Subsidiary), (c) Indebtedness payable pursuant to
the scheduled amortization of such Indebtedness by Holdings, Parent, the
Borrower and any of Parent'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 White
Mountains Credit Agreement) payable pursuant to Section 2.1(b) of the White
Mountains Credit Agreement as a result of reductions in the Aggregate Commitment
(as determined in the White Mountains Credit Agreement) occurring in any such
period pursuant to Section 2.7(a) of the White Mountains 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 $2,000,000 and the "Reduction Amount" on July 30, 2002 stated in Section
2.7(a) of the White Mountains Credit Agreement shall be deemed to be $4,000,000.
"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)
Parent and/or FAE acquires all of the outstanding capital stock of Folksamerica
not already owned by Parent and (b) Holdings 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) Holdings indemnifies the Folksamerica Guarantors and
their respective affiliates, successors and assigns with respect to various
matters relating to the Folksamerica Guaranty.
"FSA" means Financial Security Assurance Holdings Ltd., a New York
corporation.
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"FSA Amount" means an amount equal to that immediately utilized by
SOMSC to exercise 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.
"Guaranty" means the Guaranty of Parent pursuant to ARTICLE XIV.
"Hazardous Materials" is defined in SECTION 5.19.
"Holdings" means Fund American Enterprises Holdings, Inc., a Delaware
corporation.
"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
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falls in a new calendar month, such Interest Period shall end on the immediately
preceding Business Day.
"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 Holdings (excluding SOMSC) at such time to (b) the sum of
the consolidated Funded Indebtedness of Parent 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 either Loan Party
in favor of the Agent or any Lender.
"Loan Party" means each and either of the Borrower or Parent.
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"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 Parent and its Subsidiaries taken as a whole, (b)
the ability of Parent, the Borrower or any Subsidiary of Parent or the Borrower
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 either Loan Party 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
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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 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 each Loan Party to the
Lenders or to any Lender, the Agent or any indemnified party hereunder arising
under any of the Loan Documents.
"Parent" means White Mountains Holdings, Inc., a Delaware corporation,
formerly known as Fund American Enterprises, Inc. and the survivor of a merger
with White Mountains Holdings, Inc., a Hew Hampshire corporation.
"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 either Loan Party or any member of the Controlled
Group may have any liability.
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"Proceeding" is defined in SECTION 5.19.
"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
either Loan Party or any of their Subsidiaries (a) acquiresany 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
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interpretation of said Board of Governors relating to reserve requirements
applicable to depositary institutions.
"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.
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"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
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 either Loan Party or any member of the Controlled Group for
employees of either Loan Party 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
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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 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 either Loan
Party or any other member of the Controlled Group from such Plan during a plan
year in which either Loan Party 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.
"White Mountains Credit Agreement" means the Second 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 (and, subsequent to the termination thereof, as in effect on the date of
such termination).
"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
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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 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 either Loan Party and their
Subsidiaries and of either Loan Party's and their 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,
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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 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 $1,000,000 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 $1,000,000 (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 $1,000,000 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
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to the last day of the applicable Interest Period in a minimum amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof.
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 $ 1,000,000
June 30, 2000 $ 2,000,000
June 30, 2001 $ 2,000,000
July 30, 2002 $10,000,000
(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 or equity contributed to 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:
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(a) the Borrowing Date of such Advance, which shall be a
Business Day;
(b) the aggregate amount of such Advance;
(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
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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 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
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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 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.
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2.18. TAXES. (a) Any payments made by either Loan Party under this
Agreement or any other Loan Document shall be made free and clear of, and
without deduction or withholding for or on account of, any present or 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 no Loan Party shall 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 either Loan Party, as promptly as practicable
thereafter such Loan Party 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 such Loan Party showing payment thereof. If either
Loan Party 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, each Loan Party 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
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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.
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
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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 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
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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 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 each Loan Party 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 each Loan Party, 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 relevant Loan Party, of its
by-laws and of its Board of Directors' resolutions authorizing the
execution, delivery and performance of the Loan Documents to which it
is a party.
(c) SECRETARY'S CERTIFICATE. An incumbency certificate,
executed by the Secretary or Assistant Secretary of the relevant Loan
Party, which shall identify by name and title and bear the signature of
the officers of such Loan Party authorized to sign the Loan Documents
and, in the case of the Borrower, 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
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required, will have been, obtained, given, filed or taken and are or
will be in full force and effect (or the relevant Loan Party has
obtained effective judicial relief with respect to the application
thereof) and all applicable waiting periods have expired; (iv) each of
the representations and 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 each Loan Party, 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 relevant Loan Party 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
such Loan Party 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 Parent and 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.
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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;
(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 each Loan Party 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
Each Loan Party represents and warrants to the Lenders that:
5.1. CORPORATE EXISTENCE AND STANDING. Each Loan Party and each of its
Subsidiaries 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. Each Loan Party has all requisite
power and authority (corporate and otherwise) and legal right to execute and
deliver each of the Loan Documents to which it is a party and to perform its
obligations thereunder. The execution and delivery by each Loan Party of the
Loan Documents to which it is a party 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 such Loan
Party enforceable against it 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. Each Loan Party and each of
its Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and
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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 Material Adverse
Effect. Neither the execution and delivery by either Loan Party of the Loan
Documents to which it is party, 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 such Loan
Party or any of its Subsidiaries or the charter, articles or certificate of
incorporation or by-laws of such Loan Party or any of its Subsidiaries, (b)
violate the provisions of or require the approval or consent of any party to any
indenture, instrument or agreement to which such Loan Party or any of its
Subsidiaries 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 such Loan Party or any of its
Subsidiaries 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. No
Loan Party nor any of its Subsidiaries 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 such Loan
Party 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 Loan Parties have heretofore furnished
to each of the Lenders (a) the December 31, 1997 audited consolidated financial
statements of Parent and its Subsidiaries, (b) the unaudited consolidated
financial statements of Parent 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
consolidated financial statements of the Borrower 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 Holdings 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
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statements of Holdings, Parent, the Borrower , SOMSC, Folksamerica and Main
Street America Holdings, Inc., (k) the December 31, 1997 Annual Statement of
each Insurance Subsidiary of Parent and the Borrower and Folksamerica
Reinsurance Company and (l) the March 31, 1998 Quarterly Statement of each
Insurance Subsidiary of Parent and the Borrower and 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 either Loan Party and its Subsidiaries has occurred
since December 31, 1997, except as specifically disclosed in the Financial
Statements.
5.7. TAXES. Neither Loan Party nor any of its Subsidiaries is required
to file United States federal, foreign, state or local tax returns. As of the
date hereof, the United States income tax returns of Holdings 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
Holdings which could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of Holdings in respect of any
taxes or other governmental charges of Holdings 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 either
Loan Party or any of its Subsidiaries 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. No
Loan Party nor any of its Subsidiaries 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 the 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 each Loan Party's capitalization as of March 31, 1998 and (b) an
accurate list of all of the existing Subsidiaries of each Loan Party as of the
date of this Agreement, setting forth their respective jurisdictions of
incorporation and the percentage of their capital stock owned by such Loan Party
or its other Subsidiaries. All of the issued and outstanding shares of capital
stock of each Loan Party and of each Subsidiary of such Loan Party 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 each Loan Party or any of its Subsidiaries are subject to any
option,
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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, no Loan Party nor any of its Subsidiaries 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 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 such Loan Party or such
Subsidiary. No Loan Party nor any of its Subsidiaries 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, no Loan Party nor
any other member of the Controlled Group maintains any Single Employer Plans,
and no Single Employer Plan has any Unfunded Liability. No Loan Party 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. No Loan Party 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 either Loan Party,
threatened claims, actions, investigations or lawsuits against any Plan, any
fiduciary thereof, or either Loan Party or any member of the Controlled Group
with respect to a Plan. No Loan Party 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 no Loan Party
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. No Loan Party nor any of its
Subsidiaries 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.
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5.13. INVESTMENT COMPANY. No Loan Party nor any of its Subsidiaries 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.
5.14. CERTAIN FEES. No broker's or finder's fee or commission was, is
or will be payable by either Loan Party or any of its Subsidiaries with respect
to any of the transactions contemplated by this Agreement, except as described
in SECTION 9.5. Each Loan Party 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 either Loan Party 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 either Loan Party or any of its Subsidiaries for
any other services rendered to such Loan Party or such 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 each Loan Party or any of 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 Loan Party and each of its Subsidiaries is Solvent.
5.16. INDEBTEDNESS. Attached hereto as SCHEDULE 5.16 is a complete and
correct list of all Indebtedness of each Loan Party and each of its Subsidiaries
outstanding on the date of this Agreement (other than Indebtedness in a
principal amount not exceeding $100,000 for a single item of Indebtedness and
$1,000,000 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 each Loan Party'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, no Loan Party nor any of its Subsidiaries 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 of a
Loan Party (other
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than an Unrestricted Subsidiary) to (a) pay dividends or make other
distributions on its capital stock (b) make loans or advances to either Loan
Party, (c) repay loans or advances from either Loan Party or (d) grant Liens to
the Agent to secure the Obligations. No Loan Party nor any of its Subsidiaries
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions 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 either Loan Party 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 Holdings or any Subsidiary
of Holdings), which, in any case, could reasonably be expected to have a
Material Adverse Effect. As of the date hereof, Parent 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. Each Loan Party and each of 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 either
Loan Party 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 either Loan Party (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. Each Loan Party 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 each Loan Party does not reasonably
anticipate that Year 2000 Issues will have a Material Adverse Effect.
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ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. FINANCIAL REPORTING. Parent will maintain, for itself and each of
its Subsidiaries, 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 of the Parent, 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 of the Parent, copies of the unaudited Quarterly
Statement of each of the Insurance Subsidiaries of the Parent,
certified by the chief financial officer or the treasurer of such
Insurance Subsidiary, all such statements to be prepared in accordance
with SAP.
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(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 of the Parent and (ii) receipt thereof, copies of
any ratings analysis by A.M. Best & Co. relating to any Insurance
Subsidiary of the Parent.
(f) Copies of any outside actuarial reports prepared with
respect to any valuation or appraisal of any Insurance Subsidiary of
the Parent, 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 such Loan Party knows that any Termination Event has
occurred with respect to any Plan, a statement, signed by the chief
financial officer of such Loan Party, describing said Termination Event
and the action which such Loan Party proposes to take with respect
thereto.
(j) As soon as possible and in any event within ten (10)
days after receipt by such Loan Party, a copy of (i) any notice, claim,
complaint or order to the effect that such Loan Party or any of its
Subsidiaries is or may be liable to any Person as a result of the
release by such Loan Party 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 such Loan
Party or any of its Subsidiaries. Within ten (10) days of such Loan
Party or any of its Subsidiaries having knowledge of the enactment or
promulgation of any Environmental Law which could reasonably be
expected to have a Material Adverse Effect, such Loan Party shall
provide the Agent with written notice thereof.
(k) Promptly upon the furnishing thereof to the shareholders
of such Loan Party, 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 such Loan Party 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
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or department or analogous Governmental Authority (including any filing
made by such Loan Party or any of its Subsidiaries 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 Holdings or any other Consolidated Person or (ii) the filing of 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 such Loan Party 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 relevant board of
directors, a copy of the Borrower's and Parent'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 of the Parent 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 of its
Subsidiaries 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 making of any Investments permitted by SECTION 6.13. The
Borrower will not, nor will it permit any of its Subsidiaries 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
either Loan Party or any of their Subsidiaries (and not of a general economic or
political nature) which could reasonably be expected to have a Material Adverse
Effect, (c) receipt by either Loan Party or any of their Subsidiaries 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 of the
Parent 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 either Loan Party or any of their Subsidiaries of any notice from any
Governmental Authority of the institution of any disciplinary proceedings
against or in respect of any Insurance Subsidiary of the Parent, or the issuance
of any order, the taking of any action or any request for an extraordinary audit
for cause by
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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 either Loan Party or any of their Subsidiaries are
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 either Loan Party or any of
their Subsidiaries are aware which could reasonably be expected to create a
Material Adverse Effect.
6.4. CONDUCT OF BUSINESS. Each Loan Party will, and will cause each of
its Subsidiaries to, (a) carry on and conduct its business in substantially the
same manner as it is presently conducted, (b) 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 of the
Parent 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 of the Parent may withdraw from one or more states (other than its
state of domicile) as an admitted insurer if such withdrawal is determined by
such Loan Party's Board of Directors to be in the best interest of such Loan
Party and could not reasonably be expected to have a Material Adverse Effect.
The Parent shall cause Folksamerica to remain a Wholly-Owned Subsidiary of the
Parent (but only after it becomes a Wholly-Owned Subsidiary of the Parent) 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 Parent or any of its
Subsidiaries are required to do so, each Loan Party will, and will cause each of
its Subsidiaries 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. Each Loan Party will, and will cause each of its
Subsidiaries 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. Each Loan Party will, and will cause each of
its Subsidiaries 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.
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6.8. MAINTENANCE OF PROPERTIES. Each Loan Party will, and will cause
each of its Subsidiaries 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. Each Loan Party will, and will cause each of its
Subsidiaries 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 such Loan Party and such Subsidiary, to examine and make
copies of the books of accounts and other financial records of such Loan Party
and such Subsidiary, and to discuss the affairs, finances and accounts of such
Loan Party and such 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. Each Loan Party will keep or cause to be kept, and cause each of its
Subsidiaries 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 may declare and pay dividends or make
distributions to Parent. Parent 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) Parent 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 Parent or its
Subsidiaries to Holdings, (i) during Parent'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), Parent
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 Parent 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 Holdings to repay all or a portion of a certain
$40,000,000 loan from FAE to Holdings.
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6.11. INDEBTEDNESS. No Loan Party will, nor will it permit any of its
Subsidiaries (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) either Loan Party to any
Wholly-Owned Subsidiary of a Loan Party and (y) any Wholly-Owned
Subsidiary of a Loan Party to a Wholly-Owned Subsidiary of a Loan Party
or either Loan Party;
(d) Indebtedness permitted under the White Mountains
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 Parent, 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 either Loan Party or any of their
Subsidiaries 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. No Loan Party will, 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) either Loan Party, (ii) any Wholly-Owned
Subsidiary of either Loan Party or
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(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 either Loan Party or
a Wholly-Owned Subsidiary of either Loan Party;
(b) a Significant Subsidiary (other than the Borrower) may
merge or consolidate with any Person so long as neither Parent, the
Borrower, nor any of their Subsidiaries shall hold any capital stock of
such Significant Subsidiary after giving effect to such merger or
consolidation; and
(c) either Loan Party may merge into any Person so long as
(i) such Loan Party 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.
6.13. INVESTMENTS AND PURCHASES. No Loan Party will, and will not
permit any of its Subsidiaries (other than an Unrestricted Subsidiary) to, make
or suffer to exist any Investments (including, without limitation, loans and
advances to, and other Investments in, Holdings or Subsidiaries of either Loan
Party), 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 Holdings);
(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 Parent 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;
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(f) loans made by Parent or its Subsidiaries to Holdings,
(i) so long as at all times, after giving effect to the aggregate
outstanding principal amount of such loans, Parent would be permitted
to pay at least $1.00 in incremental dividends pursuant to SECTION
6.10(a) or (ii) that are made out or 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 Holdings), so long as any such Investment is materially
consistent with such Loan Party's investment policy guidelines as
approved from time to time by the finance committee of the board of
directors of Parent and 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
(h) other Investments (other than any direct or indirect
Investments in Holdings) by Folksamerica (but only after it becomes a
Wholly-Owned Subsidiary of Parent) 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. No Loan Party will, nor will it permit
any of its Subsidiaries (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 of either
Loan Party), 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 issued 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. No Loan Party will, nor will it permit any of its
Subsidiaries (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
such Loan Party 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
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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 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 such Loan
Party or any of 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) by either Loan
Party or any of their Subsidiaries, 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 such Loan Party 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 such Loan Party and,
in the case of any 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 either Loan Party,
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. No Loan Party will, and will not permit any of its
Subsidiaries 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 of
either Loan Party), except in the ordinary course of business and pursuant to
the
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reasonable requirements of such Loan Party's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to such Loan Party or such
Subsidiary than such Loan Party or such Subsidiary would obtain in a comparable
arms-length transactions, except that any Unrestricted Subsidiary may make loans
to Holdings.
6.17. ENVIRONMENTAL MATTERS. Each Loan Party 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 such Loan Party or any of its
Subsidiaries.
6.18. CHANGE IN CORPORATE STRUCTURE; FISCAL YEAR. No Loan Party shall,
nor shall it permit any of its Subsidiaries to, (a) permit any amendment or
modification to be made to its certificate or 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. No Loan Party shall, nor shall it permit
any of its Subsidiaries (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 White Mountains 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 such Loan
Party or (iii) repay loans or advances from such Loan Party or (b) contains any
provision which would be violated or breached by the making of Advances or by
the performance by such Loan Party or any of its Subsidiaries of any of its
obligations under any Loan Document.
6.20. FINANCIAL COVENANTS. Parent 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 Parent after June 30, 1998,
PLUS (c) an amount equal to 50% of Parent's positive consolidated net
income (excluding from such calculation (i) SOMSC and its Subsidiaries,
(ii) any net realized gain from the sale of Parent'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 Parent's equity interest in SOMSC to
the extent such proceeds are not paid out by Parent as dividends within
one hundred eighty (180) days after receipt thereof.
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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 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. No Loan Party will 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 Holdings 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, no Loan Party nor any of its
Subsidiaries 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 either Loan Party or any other member of the
Controlled Group in excess of $100,000;
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(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 either Loan
Party 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. Each Loan Party will take and will cause each of its
Subsidiaries to take all such actions as are reasonably necessary to
successfully implement its 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, each Loan Party will provide a description of its Year 2000 Program,
together with any updates or progress reports with respect thereto.
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 either Loan Party 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 either Loan Party 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 either Loan Party (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 either Loan Party or any of its Subsidiaries (or,
at any time Parent is a Subsidiary of Holdings, by Holdings) 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 Holdings and $20,000,000, or such lower cross-
default threshold amount as is provided in the SOMSC Credit Agreements, in the
case of SOMSC)
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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
either Loan Party or any of its Subsidiaries or Holdings 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. Either Loan Party 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 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 relevant Loan
Party or any of its Significant Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for either Loan Party 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 either Loan
Party 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. Either Loan Party 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 of Parent (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
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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 of Parent 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 of Parent 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 Authority in either
case which could reasonably be expected to have a Material Adverse Effect and
which is not stayed within thirty (30) days.
7.14. The Guaranty shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Guaranty, or Parent shall fail to comply with any of the
terms or provisions of the Guaranty, or shall deny, or give notice to such
effect, that it has any further liability under the Guaranty.
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.
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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 Loan Parties 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 either Loan Party 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;
(e) Amend this SECTION 8.2;
(f) Release Parent from the Guaranty; or
(g) Permit any assignment by either Loan Party 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
either Loan Party 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.
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ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
each Loan Party contained in this Agreement or either Loan Party or any of their
Subsidiaries 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.
9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among each Loan Party, the Agent and the Lenders and supersede
all prior agreements and understandings among each Loan Party, 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. Each Loan Party agrees to reimburse the
Agent for any 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. Each Loan
Party 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.
Each Loan Party 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
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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 each
Loan Party 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.
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
either Loan Party. Neither the Agent nor any Lender undertakes any
responsibility to either Loan Party to review or inform either Loan Party of any
matter in connection with any phase of either Loan Party's business or
operations. Each Loan Party shall rely entirely upon its own judgment with
respect to its business, and any review, inspection or supervision of, or
information supplied to either Loan Party by the Agent or the Lenders is for the
protection of the Agent and the Lenders and no Loan Party 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 each Loan Party hereby waives, releases and agrees not to sue
for, any special, indirect or consequential damages suffered by either Loan
Party 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. EACH LOAN PARTY HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
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STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH LOAN PARTY
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 EITHER LOAN PARTY IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY EITHER LOAN PARTY 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. EACH LOAN PARTY, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, 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. Each Loan Party 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 either Loan Party, 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 either Loan Party 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 each
Loan Party, 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) Each Loan Party 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 such Loan Party and its
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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 either Loan Party 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
either Loan Party or any of their 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 either Loan
Party.
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 either Loan Party 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 either Loan Party 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.
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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 either Loan Party to the
Agent at such time, but is voluntarily furnished by either Loan Party 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 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 either Loan Party for which the Agent is entitled to reimbursement
by such Loan Party 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
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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 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 either Loan Party or any of
their Subsidiaries in which such Loan Party 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 each Loan Party 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
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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.
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 each Loan Party and
the Lenders and their respective successors and assigns, except that (a) no Loan
Party shall have the right to assign their 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 either Loan Party 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 each Loan Party 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
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in amounts 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 White Mountains 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 White Mountains 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), each
Loan Party authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in the Loan Documents by operation of law
(each a "TRANSFEREE") and any prospective Transferee any
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and all information in such Lender's possession concerning the creditworthiness
of such Loan Party 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. Either Loan Party, 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
GUARANTY
14.1. Parent hereby absolutely, irrevocably and unconditionally
guarantees prompt, full and complete payment when due, whether at stated
maturity, upon acceleration or otherwise, and at all times thereafter, of (a)
the principal of and interest on the Advances made by the Lenders to, and the
Notes held by the Lenders of, the Borrower and (b) all other amounts from time
to time owing to the Lenders by the Borrower under this Agreement, the Notes and
the other Loan Documents, including without limitation all Obligations of the
Borrower (solely for purposes of this ARTICLE XIV, collectively referred to as
the "Guaranteed Debt"). This is a guaranty of payment, not a guaranty of
collection.
14.2. Parent waives notice of the acceptance of this ARTICLE XIV
(solely for purposes of this ARTICLE XIV, referred to as the "Guaranty") and of
the extension or incurrence of the Guaranteed Debt or any part thereof. Parent
further waives all setoffs and counterclaims and presentment, protest, notice,
filing of claims with a court in the event of receivership, bankruptcy or
reorganization of the Borrower, demand or action on delinquency in respect of
the Guaranteed Debt or any part thereof, including any right to require the
Agent or any Lender to sue the Borrower, or any other person obligated with
respect to the Guaranteed Debt or any part
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thereof, or otherwise to enforce payment thereof against any collateral securing
the Guaranteed Debt or any part thereof.
14.3. Parent hereby agrees that, to the fullest extent permitted by
law, its obligations hereunder shall be continuing, absolute and unconditional
under any and all circumstances and not subject to any reduction, limitation,
impairment, termination, defense (other than indefeasible payment in full),
setoff, counterclaim or recoupment whatsoever (all of which are hereby expressly
waived by it to the fullest extent permitted by law), whether by reason of any
claim of any character whatsoever, including, without limitation, any claim of
waiver, release, surrender, alteration or compromise. The validity and
enforceability of this Guaranty shall not be impaired or affected by any of the
following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitution for, the Guaranteed Debt or any part thereof or any
agreement relating thereto at any time; (b) any failure or omission to perfect
or maintain any lien on, or preserve rights to, any security or collateral or to
enforce any right, power or remedy with respect to the Guaranteed Debt or any
part thereof or any agreement relating thereto, or any collateral securing the
Guaranteed Debt or any part thereof; (c) any waiver of any right, power or
remedy or of any default with respect to the Guaranteed Debt or any part thereof
or any agreement relating thereto or with respect to any collateral securing the
Guaranteed Debt or any part thereof; (d) any release, surrender, compromise,
settlement, waiver, subordination or modification, with or without
consideration, of any collateral securing the Guaranteed Debt or any part
thereof, any other guaranties with respect to the Guaranteed Debt or any part
thereof, or any other obligations of any person or entity with respect to the
Guaranteed Debt or any part thereof; (e) the enforceability or validity of the
Guaranteed Debt or any part thereof or the genuineness, enforceability or
validity of any agreement relating thereto or with respect to any collateral
securing the Guaranteed Debt or any part thereof; (f) the application of
payments received from any source to the payment of indebtedness other than the
Guaranteed Debt, any part thereof or amounts which are not covered by this
Guaranty even though the Agent or any Lender might lawfully have elected to
apply such payments to any part or all of the Guaranteed Debt or to amounts
which are not covered by this Guaranty; (g) any change of ownership of the
Borrower or the insolvency, bankruptcy or any other change in the legal status
of the Borrower; (h) any change in, or the imposition of, any law, decree,
regulation or other governmental act which does or might impair, delay or in any
way affect the validity, enforceability or the payment when due of the
Guaranteed Debt; (i) the failure of the Borrower to maintain in full force,
validity or effect or to obtain or renew when required all governmental and
other approvals, licenses or consents required in connection with the Guaranteed
Debt or this Guaranty, or to take any other action required in connection with
the performance of all obligations pursuant to the Guaranteed Debt or this
Guaranty; (j) the existence of any claim, setoff or other rights which Parent
may have at any time against the Borrower in connection herewith or with any
unrelated transaction; (k) the Agent's or any Lender's election, in any case or
proceeding instituted under chapter 11 of the Bankruptcy Code, of the
application of section 1111(b)(2) of the Bankruptcy Code; (l) any borrowing, use
of cash collateral, or grant of a security interest by the Borrower, as debtor
in possession, under section 363 or 364 of the United States Bankruptcy Code;
(m) the disallowance of all or any portion of the Lender's claims for repayment
of the Guaranteed Debt under section 502 or 506 of the United States Bankruptcy
Code; or (n) any other fact or circumstance which might
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otherwise constitute grounds at law or equity for the discharge or release of
Parent from its obligations hereunder, all whether or not Parent shall have had
notice or knowledge of any act or omission referred to in the foregoing CLAUSES
(a) THROUGH (n) of this paragraph. It is agreed that Parent's liability
hereunder is independent of any other guaranties or other obligations at any
time in effect with respect to the Guaranteed Debt or any part thereof and that
Parent's liability hereunder may be enforced regardless of the existence,
validity, enforcement or non-enforcement of any such other guaranties or other
obligations or any provision of any applicable law or regulation purporting to
prohibit payment by the Borrower of the Guaranteed Debt in the manner agreed
upon between the Agent, the Lenders and the Borrower.
14.4. Credit may be granted or continued from time to time by the Agent
and/or any Lender to the Borrower without notice to or authorization from Parent
regardless of the Borrower's financial or other condition at the time of any
such grant or continuation. Neither the Agent nor any Lender shall have any
obligation to disclose or discuss with Parent its assessment of the financial
condition of the Borrower.
14.5. Until the irrevocable payment in full of the Obligations and
termination of all commitments which could give rise to any Obligation, Parent
shall have no right of subrogation with respect to the Guaranteed Debt and
hereby waives any right to enforce any remedy which the Agent and/or the Lenders
now has or may hereafter have against the Borrower, any endorser or any other
guarantor of all or any part of the Guaranteed Debt, and Parent hereby waives
any benefit of, and any right to participate in, any security or collateral
given to the Agent and/or the Lenders to secure payment of the Guaranteed Debt
or any part thereof or any other liability of the Borrower to the Agent and/or
the Lenders.
14.6. Parent authorizes the Agent and the Lenders to take any action or
exercise any remedy with respect to any collateral from time to time securing
the Guaranteed Debt, which the Agent and the Lenders in their sole discretion
(but subject, as applicable, to the terms of this Agreement and of any
documentation pursuant to which a Lien in such collateral is granted) shall
determine, without notice to Parent. Notwithstanding any reference herein to any
collateral securing any of the Guaranteed Debt, it is acknowledged that, on the
date hereof, neither Parent nor any of its Subsidiaries has granted, or has any
obligation to grant, any security interest in or other lien on any of its
property as security for the Guaranteed Debt.
14.7. In the event the Agent and the Lenders in their sole discretion
elect to give notice of any action with respect to any collateral securing the
Guaranteed Debt or any part thereof, ten (10) days' written notice mailed to
Parent by ordinary mail at the address shown hereon shall be deemed reasonable
notice of any matters contained in such notice. Parent consents and agrees that
neither the Agent nor any Lender shall be under any obligation to marshall any
assets in favor of Parent or against or in payment of any or all of the
Guaranteed Debt.
14.8. In the event that acceleration of the time for payment of any of
the Guaranteed Debt is stayed upon the insolvency, bankruptcy or reorganization
of the Borrower, or otherwise, all such amounts shall nonetheless be payable by
Parent forthwith upon demand by the Agent. Parent further
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agrees that, to the extent that the Borrower makes a payment or payments to the
Agent or any Lender on the Guaranteed Debt, or the Agent or any Lender receives
any proceeds of collateral securing the Guaranteed Debt, which payment or
receipt of proceeds or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required to be returned or repaid to
the Borrower, its estate, trustee, receiver, debtor in possession or any other
party, including, without limitation, Parent, under any insolvency or bankruptcy
law, state or federal law, common law or equitable cause, then to the extent of
such payment, return or repayment, the obligation or part thereof which has been
paid, reduced or satisfied by such amount shall be reinstated and continued in
full force and effect as of the date when such initial payment, reduction or
satisfaction occurred.
14.9. No delay on the part of the Agent or any Lender in the exercise
of any right, power or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Agent or any Lender of any right, power or remedy
shall preclude any further exercise thereof; nor shall any amendment,
supplement, modification or waiver of any of the terms or provisions of this
Guaranty be binding upon the Agent or any Lender, except as expressly set forth
in a writing duly signed and delivered by the Agent and the Lenders. The failure
by the Agent or any Lender at any time or times hereafter to require strict
performance by the Borrower or Parent of any of the provisions, warranties,
terms and conditions contained in any promissory note, security agreement,
agreement, guaranty, instrument or document now or at any time or times
hereafter executed pursuant to the terms of, or in connection with, this
Agreement by the Borrower or Parent and delivered to the Agent or any Lender
shall not waive, affect or diminish any right of the Agent or any Lender at any
time or times hereafter to demand strict performance thereof, and such right
shall not be deemed to have been waived by any act or knowledge of the Agent or
any Lender, its agents, officers or employees, unless such waiver is contained
in an instrument in writing duly signed and delivered by the Agent or such
Lender. No waiver by the Agent or any Lender of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by the Agent or any Lender permitted hereunder shall in any way affect or
impair the Agent's or such Lender's rights or powers, or the obligations of
Parent under this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any Guaranteed Debt owing by the Borrower to the
Agent and the Lender shall be conclusive and binding on Parent irrespective of
whether Parent was a party to the suit or action in which such determination was
made.
14.10. Subject to the provisions of SECTION 14.8, this guaranty shall
continue in effect until this Agreement has terminated, the Guaranteed Debt has
been paid in full and the other conditions of this guaranty have been satisfied.
ARTICLE XV
AMENDMENT AND RESTATEMENT
15.1. (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
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shall, subject to this ARTICLE XV, 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 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 XV.
[signature pages to follow]
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IN WITNESS WHEREOF, each Loan Party, the Lenders and the Agent have
executed this Agreement as of the date first above written.
VALLEY GROUP, INC.
By:
--------------------------------------------
Print Name:
------------------------------------
Title:
-----------------------------------------
Address: 80 South Main Street
Hanover, New Hampshire 03755
Attn:
-----------------------------
Fax No.:
------------------------------------
Tel. No.:
-----------------------------------
WHITE MOUNTAINS HOLDINGS, INC.
By:
--------------------------------------------
Print Name:
------------------------------------
Title:
-----------------------------------------
Address: 80 South Main Street
Hanover, New Hampshire 03755
Attn: Reid T. Campbell
Fax No.: (603) 640-2203
Tel. No.: (603) 643-4562
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COMMITMENTS
THE FIRST NATIONAL BANK OF CHICAGO,
Commitment $8,192,307.69 Individually and as Agent
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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
$6,807,692.31 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 $15,000,000
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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
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Leverage Ratio is: Less than 25% Greater than or Equal to 25% Less than 25% Greater than or Equal to 25%
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If Fixed Charges Greater than 2:1 Greater than 2:1 Less than or Equal to 2:1 Less than or Equal to 2:1
Coverage Ratio is:
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The applicable
margin will be:
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Applicable Facility .150% .175% .175% .200%
Fee Margin
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Applicable .350% .450% .450% .550%
Eurodollar Margin
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The Leverage Ratio and Fixed Charges Coverage Ratio shall be calculated
by Parent 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 Parent 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
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.
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