CONFORMED COPY
ARM FINANCIAL GROUP, INC.
$75,000,000
Credit Agreement
June 24, 1997
The Lenders Party Hereto
Chase Securities Inc.
as Arranger
The Chase Manhattan Bank
as Administrative Agent
CHASE
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
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SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Terms Generally . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
The Credits
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SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.03. Notice of Borrowings. . . . . . . . . . . . . . . . . . . . 13
SECTION 2.04. Evidence of Debt; Repayment of Loans. . . . . . . . . . . . 13
SECTION 2.05. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.06. Interest on Loans . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.07. Default Interest. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.08. Alternate Rate of Interest. . . . . . . . . . . . . . . . . 14
SECTION 2.09. Termination and Reduction of Commitments. . . . . . . . . . 14
SECTION 2.10. Conversion and Continuation of Borrowings . . . . . . . . . 14
SECTION 2.11. Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.12. Reserve Requirements; Change in Circumstances . . . . . . . 15
SECTION 2.13. Change in Legality. . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.14. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.15. Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.16. Sharing of Setoffs. . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.17. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.18. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.19. Termination or Assignment of Commitments
Under Certain Circumstances . . . . . . . . . . . . . . . 19
SECTION 2.20. Notice of Costs . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
Representations and Warranties
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SECTION 3.01. Organization; Powers. . . . . . . . . . . . . . . . . . . . 20
SECTION 3.02. Authorization . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.03. Enforceability. . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.04. Governmental Approvals. . . . . . . . . . . . . . . . . . . 20
SECTION 3.05. Financial Statements. . . . . . . . . . . . . . . . . . . . 20
SECTION 3.06. No Material Adverse Change. . . . . . . . . . . . . . . . . 20
SECTION 3.07. Title to Properties; Possession Under Leases. . . . . . . . 21
SECTION 3.08. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.09. Litigation; Compliance with Laws. . . . . . . . . . . . . . 21
SECTION 3.10. Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11. Federal Reserve Regulations . . . . . . . . . . . . . . . . 21
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act. 21
SECTION 3.13. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.14. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.15. True and Complete Disclosure. . . . . . . . . . . . . . . . 22
SECTION 3.16. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . 22
SECTION 3.17. Environmental and Safety Matters. . . . . . . . . . . . . . 22
SECTION 3.18. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.19. Absence of Certain Restrictions . . . . . . . . . . . . . . 22
SECTION 3.20. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.21. Reinsurance Agreements. . . . . . . . . . . . . . . . . . . 23
2
SECTION 3.22. Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.23. Capitalization. . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.24. Collateral Documents. . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
Conditions of Lending
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SECTION 4.01. All Borrowings. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.02. First Borrowing . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
Affirmative Covenants
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SECTION 5.01. Existence; Businesses and Properties. . . . . . . . . . . . 26
SECTION 5.02. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.03. Obligations and Taxes . . . . . . . . . . . . . . . . . . . 26
SECTION 5.04. Financial Statements, Reports, etc. . . . . . . . . . . . . 26
SECTION 5.05. Litigation and Other Notices. . . . . . . . . . . . . . . . 27
SECTION 5.06. Employee Benefits . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.07. Maintaining Records; Access to Properties and Inspections . 28
SECTION 5.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.09. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.10. Additional Security . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.11. Further Assurances. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
Negative Covenants
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SECTION 6.01. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.03. Sale and Lease-Back Transactions. . . . . . . . . . . . . . 30
SECTION 6.04. Investments, Loans and Advances . . . . . . . . . . . . . . 30
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions . 30
SECTION 6.06. Dividends and Distributions . . . . . . . . . . . . . . . . 31
SECTION 6.07. Transactions with Affiliates. . . . . . . . . . . . . . . . 31
SECTION 6.08. Business of the Borrower and the Subsidiaries . . . . . . . 32
SECTION 6.09. Debt Payments . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.10. Amendments and Assignments. . . . . . . . . . . . . . . . . 32
SECTION 6.11. Total Funded Indebtedness to Total Capital Ratio. . . . . . 32
SECTION 6.12. Interest Coverage Ratio . . . . . . . . . . . . . . . . . . 32
SECTION 6.13. Adjusted Statutory Surplus. . . . . . . . . . . . . . . . . 32
SECTION 6.14. Risk-Based Capital Ratio. . . . . . . . . . . . . . . . . . 32
SECTION 6.15. Investment Ratios . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.16. Surplus Relief Ratio. . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII
THE ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . 34
3
ARTICLE IX
Miscellaneous
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SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.02. Survival of Agreement . . . . . . . . . . . . . . . . . . . 36
SECTION 9.03. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.04. Successor and Assigns . . . . . . . . . . . . . . . . . . . 36
SECTION 9.05. Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.06. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.07. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.08. Waivers; Amendment. . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.09. Interest Rate Limitation. . . . . . . . . . . . . . . . . . 39
SECTION 9.10. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.11. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . 39
SECTION 9.12. Severability. . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.13. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.14. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.15. Jurisdiction; Consent to Service of Process . . . . . . . . 39
SCHEDULES:
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Schedule 1.01 -- Individual Investors
Schedule 2.01 -- Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 3.07 -- Title to Properties; Possession under Leases
Schedule 3.08 -- Subsidiaries
Schedule 3.09(a) -- Litigation
Schedule 3.09(b) -- Compliance with Laws
Schedule 3.10 -- Agreements
Schedule 3.20 -- Labor Matters
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
EXHIBITS:
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Exhibit A -- Form of Guarantee Agreement
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Assignment Agreement
Exhibit D -- Form of Pledge Agreement
Exhibit E -- Form of Administrative Questionnaire
Exhibit F-1 -- Form of Opinion of Borrower's Counsel
Exhibit F-2 -- Form of Opinion of Borrower's General Counsel
Exhibit G -- Summary of Reinsurance Agreements
Exhibit H -- Form of Subordination Provisions
Exhibit I -- Amended and Restated Stock Option Plan
CREDIT AGREEMENT dated as of June 24, 1997, among ARM FINANCIAL
GROUP, INC., a Delaware corporation (the "BORROWER"), the financial
institutions listed on Schedule 2.01 (the "LENDERS") and THE CHASE
MANHATTAN BANK, a New York banking corporation (individually and as
holder of the collateral subject to the Security Documents (as
hereinafter defined), "CHASE") as administrative agent for the Lenders
(Chase, in such capacity, the "ADMINISTRATIVE AGENT").
The Borrower has requested the Lenders to extend credit in order to enable
the Borrower, on the terms and subject to the conditions of this Agreement, to
borrow on a revolving basis, at any time and from time to time prior to the
Maturity Date (such term and each other capitalized term used but not defined in
this introductory statement having the meaning assigned thereto in Article I),
an aggregate principal amount at any time outstanding not in excess of
$75,000,000. The proceeds of the Loans are to be used (a) to repay all amounts
outstanding under the Credit Agreement dated as of November 15, 1993, as amended
(the "EXISTING CREDIT AGREEMENT"), among the Borrower, Integrity Holdings, Inc.,
a Delaware corporation ("HOLDINGS"), the financial institutions from time to
time party thereto and Chase, as Managing Agent, and (b) to provide working
capital for the Borrower and for other general corporate purposes.
The Lenders are willing to extend such credit to the Borrower, on the terms
and subject to the conditions set forth herein.
Accordingly, the Borrower, the Lenders and the Administrative Agent agree
as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the product of (a) the LIBO Rate in
effect for such Interest Period (or such 12-month period) and (b) Bank Statutory
Reserves. For purposes hereof, the term "LIBO RATE" for any Interest Period
shall mean the arithmetic average of the respective rates per annum at which
dollar deposits approximately equal in principal amount to the Administrative
Agent's portion of such Eurodollar Borrowing for a maturity comparable to such
Interest Period, are offered to the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period (or such 12-month period).
"ADJUSTED STATUTORY SURPLUS" shall mean, at any time, determined at such
time for the Insurance Subsidiaries, taken as a whole, the sum of (a) Statutory
Surplus of the Insurance Subsidiaries (consolidated in accordance with SAP) at
such time and (b) the Asset Valuation Reserve of the Insurance Subsidiaries
(consolidated in accordance with SAP) at such time.
"ADMINISTRATIVE SERVICES AGREEMENTS" shall mean the Administrative Services
Agreements referred to in Section 5.13 between the Borrower and each of
Integrity, National Integrity, SBM Certificate Company and ARM Financial
Services, Inc., and any other agreement, including any investment management
agreement, whether in effect on the Closing Date or entered into at any time
thereafter, between the Borrower and any Subsidiary or any third party pursuant
to which the Borrower provides services to such Subsidiary or third party and
receives fees.
"AFFILIATE" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"AGGREGATE NET PROCEEDS" shall mean the aggregate amount of Net Proceeds
received by the Borrower and its Subsidiaries since the Closing Date.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate shall be effective on the effective date of such change in the Prime
Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively. If for any reason Chase shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for
any reason, including the inability or failure of Chase to obtain sufficient
quotations in accordance with the terms thereof, the
2
Alternate Base Rate shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist.
"ANNUAL STATEMENT" shall mean, with respect to any Insurance Subsidiary,
the Annual Statement of such Insurance Subsidiary required to be filed with the
Applicable Insurance Regulatory Authority in accordance with state law,
including any exhibits, schedules, certificates or actuarial opinions filed or
delivered therewith.
"APPLICABLE INSURANCE REGULATORY AUTHORITY" shall mean, with respect to any
Insurance Subsidiary, (a) the insurance commission or similar Governmental
Authority located in (i) the state in which such Insurance Subsidiary is
domiciled, (ii) any state in which, by virtue of the amount (in each case,
whether in the aggregate or by types) of premiums written or business done by
such Insurance Subsidiary in such state or otherwise, such Insurance Subsidiary
becomes subject under the laws of such state (including laws governing
commercial domiciliation) to requirements that are in addition to, or more
restrictive on such Insurance Subsidiary than, the general requirements
applicable under the laws of such state to insurance companies licensed to do
business in such state or (iii) either the State of New York or the State of
Ohio (to the extent that such state imposes any requirements on such Insurance
Subsidiary) and (b) any Federal insurance Governmental Authority.
"APPLICABLE LENDING OFFICE" shall mean the office of a Lender or
participating bank in which a Loan or commitment or participation is recorded or
such other office as may, for United States Federal income tax purposes, be
deemed the office to which such Loan or commitment or participation is
effectively connected.
"APPLICABLE MARGIN" shall mean, for any day, with respect to the Loans
comprising any Eurodollar Borrowing or with respect to the commitment fees
payable hereunder, as the case may be, the applicable rate per annum set forth
in the chart below under the caption "LIBOR Margin" or "Commitment Fee", as the
case may be, based upon the Preferred Stock Rating. The Preferred Stock Rating
shall mean the actual or implied rating by Xxxxx'x Investors Service, Inc. and
Standard & Poor's Rating Group, respectively, of the Preferred Stock. In the
event that Xxxxx'x and S&P do not rate the Preferred Stock on the same level,
the rating used to determine the applicable margin shall be (a) in the event one
service rates the Preferred Stock two or more levels higher than the equivalent
level used by the other service, the lower rating plus one level and (b) in all
other cases, the higher level.
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Preferred Stock Rating LIBOR Margin Commitment Fee
------------------------------------------------------
> A- or A3 0.325% 0.1000%
-
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BBB+ or Baa1 0.375% 0.1250%
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BBB or Baa 2 0.400% 0.1375%
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BBB- or Baa3 0.450% 0.1500%
------------------------------------------------------
BB+ or Ba1 0.625% 0.1875%
------------------------------------------------------
< BB or Ba2 0.875% 0.2500%
-
------------------------------------------------------
Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the
ratings system of Moody's or S&P shall change, or if any such rating agency
shall cease to be in the business of rating corporate equity obligations, the
Borrower and the Lenders shall negotiate in good faith to agree upon a
substitute rating agency and to amend the references to specific ratings in this
definition to reflect the ratings used by such substitute rating agency and,
pending such agreement, the Applicable Margin shall be determined on the basis
of the ratings provided by the other rating agency, or in the event both such
rating agencies cease to rate the Preferred Stock, the Applicable Margin shall
be the highest of the applicable rates per annum set forth in the chart above
until such time as a substitute rating agency is agreed upon by the Borrower and
the Required Lenders.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by Chase as the
then-current net annual assessment rate that will be employed in determining
amounts payable by Chase to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor) of time
deposits made in dollars at the domestic offices of Chase.
"ASSET VALUATION RESERVE" shall mean, with respect to any Insurance
Subsidiary at any time, the aggregate amount of the asset valuation reserve of
such Insurance Subsidiary, computed in accordance with SAP and as set forth in
the Annual Statement or the Quarterly Statement of such Insurance Subsidiary
most recently delivered prior to such time to the Administrative Agent and the
Lenders pursuant to Section 5.04(c) or Section 5.04(d), as the case may be.
3
"ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement dated the
Closing Date, among the Borrower, Holdings and the Administrative Agent, and
consented to by Integrity and National Integrity, substantially in the form of
Exhibit C, as such agreement may be amended, supplemented or otherwise modified
and in effect from time to time.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"AUTHORIZED CONTROL LEVEL RISK-BASED CAPITAL" shall mean, with respect to
the Insurance Subsidiaries at any time, the Authorized Control Level Risk-Based
Capital as defined by the NAIC at such time and as computed in accordance with
SAP.
"BANK STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the
Administrative Agent is subject with respect to (a) the Base CD Rate (as such
term is used in the definition of the term "Alternate Base Rate"), for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months, and (b) the Adjusted LIBO Rate, for
Eurocurrency Liabilities (as defined in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D. Bank Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"BASE CD RATE" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Bank Statutory Reserves and (b) the Assessment Rate.
"BOARD" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"BOOK VALUE" shall mean with respect to any asset sold, transferred, leased
or otherwise disposed of (a) by the Borrower or any Subsidiary other than an
Insurance Subsidiary, the "value" (as defined in Section 2(41)(B) of the
Investment Company Act) of such asset of the Borrower or such Subsidiary and (b)
by an Insurance Subsidiary, the book value of such asset (determined in
accordance with SAP; PROVIDED, HOWEVER, that with respect to any block of
business sold by an Insurance Subsidiary, the term "Book Value" shall mean the
Insurance Liabilities associated with such block of business).
"BORROWING" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"BUSINESS DAY" shall mean any day (other than a day that is a Saturday,
Sunday or legal holiday in the State of New York) on which banks are open for
business in New York City; PROVIDED, HOWEVER, that, when used in connection with
a Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"CAPITAL EXPENDITURES" shall mean, for any period, the sum of all amounts
that would, in accordance with GAAP, be included as additions to property, plant
and equipment and other capital expenditures on a consolidated statement of cash
flows for the Borrower and the Subsidiaries during such period; PROVIDED,
HOWEVER, that Capital Expenditures shall exclude (a) deferred acquisition costs,
(b) value of insurance in force acquired and (c) goodwill.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CASH CONTRIBUTIONS" shall mean cash payments to be made by the Borrower to
Holdings and by Holdings to one or both of the Insurance Subsidiaries to provide
additional Statutory Surplus to such Insurance Subsidiaries.
"CASH EQUIVALENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
that either (i) mature within 365 days from the date of acquisition thereof
or (ii) as to obligations with a total purchase price not in excess of
$15,000,000 in the aggregate at any time outstanding, the coupons of which
reset within 365 days and the purchase prices of which do not exceed 102%
of their respective par values;
4
(b) direct obligations of any State of the United States maturing
within 365 days from the date of acquisition thereof by the Borrower or its
Subsidiaries and having, at such date of acquisition, the highest credit
rating obtainable from S&P and from Moody's;
(c) investments in commercial paper or corporate debt maturing within
365 days from the date of acquisition thereof and having, at such date of
acquisition, a credit rating of at least "A-1" or "AAA" (or the then
equivalent rating) from S&P or a credit rating of at least "Prime-1" or
"Aaa" (or the then equivalent rating) from Moody's;
(d) investments in certificates of deposit, bankers' acceptances and
time deposits (including Eurodollar time deposits) maturing within 365 days
from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United States
of America or any State thereof that has Tier 1 Capital of not less than
$250,000,000;
(e) investments pursuant to repurchase agreements with any Lender; and
(f) other short-term investment instruments approved in writing by the
Required Lenders and (i) offered by financial institutions that have a
combined capital and surplus and undivided profits of not less than
$250,000,000 and (ii) having, at the time of acquisition, the highest
credit rating obtainable from a nationally recognized rating agency.
"CERTIFICATE OF DESIGNATION" shall mean the Certificate of Designations
relating to the Preferred Stock, as filed with the Secretary of State of the
State of Delaware on November 23, 1993.
A "CHANGE IN CONTROL" shall be deemed to have occurred if at any time
(a) any person or group (within the meaning of Rule 13d-5 of the Securities
Exchange Act of 1934), other than the MS Investors, Xxxxxx Xxxxxxx Group Inc.,
Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co. or any of their affiliates, shall,
in the aggregate (i) own, directly or indirectly, common stock representing 25%
or more of the common equity capitalization of the Borrower at such time or
(ii) have the right to exercise voting control of at least a majority of the
aggregate ordinary voting power of the capital stock of the Borrower outstanding
at such time or (b) a majority of the seats (other than vacant seats) on the
board of directors of the Borrower shall at such time be occupied by persons who
were neither nominated by the management of the Borrower nor appointed by
directors so nominated.
"CHASE" shall have the meaning assigned to such term in the introduction or
shall mean any successor to The Chase Manhattan Bank pursuant to Article VIII.
"CLASS A COMMON STOCK" shall mean the Class A Common Stock, par value $.01
per share, of the Borrower.
"CLASS B COMMON STOCK" shall mean the Class B Common Stock, par value $.01
per share, of the Borrower.
"CLOSING DATE" shall mean the first date on which the conditions set forth
in Section 4.02 shall have been satisfied or waived.
"CODE" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"COMMITMENT" shall mean, with respect to each Lender, the commitment of
such Lender to make Loans hereunder as set forth on Schedule 2.01, as the same
may be reduced from time to time pursuant to Section 2.09.
"COMMITMENT FEE" shall have the meaning assigned to such term in
Section 2.05(a).
"COMMITMENT FEE PERCENTAGE" shall mean at any time the Commitment Fee
percentage in effect at such time pursuant to the definition of the term
"Applicable Margin".
"COMMON STOCK OFFERING" shall mean the underwritten public offering of at
least 5,750,000 shares of Class A Common Stock (assuming no exercise of the
Overallotment Option) contemplated by the Prospectus.
"CONTROL" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative
thereto.
"DEFAULT" shall mean any event or condition that upon notice, lapse of time
or both would constitute an Event of Default.
"DESIGNATED INTERCOMPANY LOAN" shall mean any loan, advance or extension of
credit of any of the Subsidiaries to the Borrower.
5
"DOLLARS" or "$" shall mean lawful money of the United States of America.
"DUFF & XXXXXX" shall mean Duff & Xxxxxx Credit Rating Co.
"EBIT" on any Interest Coverage Measurement Date shall consist of the
aggregate of Net Income for the Prior Applicable Period for such Interest
Coverage Measurement Date, but shall exclude the effects of (a) realized
investment gains and losses, (b) Interest Expense and (c) federal income taxes,
all with respect to the Borrower and its subsidiaries on a consolidated basis.
"ELIGIBLE ASSIGNEE" shall mean (a) a commercial bank having total assets in
excess of $2,000,000,000, (b) a savings and loan association or savings bank
organized under the laws of the United States or any state thereof and having a
net worth of at least $300,000,000 computed in accordance with GAAP or (c) a
finance company, insurance company or other financial institution or fund that
is regularly engaged in making, purchasing or investing in loans and has total
assets in excess of $300,000,000.
"EMPLOYMENT AGREEMENTS" shall mean (a) the Employment Agreement dated
July 1, 1996, between the Borrower and Xxxxxx X. Xxxx and (b) the Employment
Agreement dated July 1, 1996, between the Borrower and Xxxx Xxxxxx.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at a rate determined
by reference to the Adjusted LIBO Rate in accordance with the provisions of
Article II.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by Chase from three
Federal funds brokers of recognized standing selected by it.
"FEES" shall mean the Administrative Agent's Fees and the Commitment Fees.
"FINANCIAL SERVICES BUSINESS" shall mean money management, asset-liability
management advisory services, insurance product development, the issuance of
face amount certificates and other types of annuity products and "investment
company" (as defined in Section 3.12) distribution services and related
financial services businesses and activities reasonably incidental thereto.
"GAAP" shall mean United States generally accepted accounting principles,
applied on a basis consistent with those that, in accordance with the last
sentence of Section 1.02, are to be used (except as expressly indicated) in
making the calculations for purposes of determining compliance with this
Agreement.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"GUARANTEE" of or by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the term "Guarantee"
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"GUARANTEE AGREEMENT" shall mean the Guarantee Agreement, substantially in
the form of Exhibit A, between Holdings and the Administrative Agent.
"INCOME TAXES" of the Borrower shall mean, in respect of any Interest
Coverage Measurement Date, (a) the aggregate amount of all Federal, state and
local income taxes (i) paid by the Borrower during the Prior Applicable Period
6
for such Interest Coverage Measurement Date, including such taxes of
Subsidiaries to the extent paid by the Borrower if the Borrower was liable
therefor, or (ii) due on such Interest Coverage Measurement Date and payable by
the Borrower within 12 months after such Interest Coverage Measurement Date
MINUS (b) any Federal, state and local income taxes due on the fourth preceding
Interest Coverage Measurement Date and payable by the Borrower within 12 months
after the fourth preceding Interest Coverage Measurement Date.
"INDEBTEDNESS" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (e) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services, (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of
such Person, (i) all obligations of such Person in respect of Rate Protection
Agreements (it being understood that the amount of Indebtedness of such
Person under any Rate Protection Agreement as of any date shall be deemed to
equal the termination value payable by such Person if such Rate Protection
Agreement was terminated on such date) and (j) all obligations of such Person
as an account party in respect of letters of credit and bankers' acceptances;
PROVIDED, HOWEVER, that the term "Indebtedness" shall exclude (x) any
insurance product, insurance policy claim payable or any other
insurance-related obligation or trade payable incurred by the Borrower or any
of the Subsidiaries in the ordinary course of the Insurance Business, (y) any
Rate Protection Agreement entered into by any Insurance Subsidiary in the
ordinary course of its Insurance Business and (z) any face amount
certificates issued by, or Rate Protection Agreements entered into by, SBM
Certificate Company in the ordinary course of the Financial Services
Business. The Indebtedness of any Person shall include the Indebtedness of
any partnership in which such Person is a general partner.
"INDIVIDUAL INVESTORS" shall mean the members of the Borrower's management
listed on Schedule 1.01 and certain other employees of the Borrower.
"INSURANCE BUSINESS" shall mean one or more aspects of the business of
selling, issuing or underwriting insurance or reinsurance, asset-liability
management and activities reasonably incidental thereto.
"INSURANCE LIABILITIES" shall mean, at any time, the aggregate amount of
all liabilities of the Borrower that would be classified as "Insurance
Liabilities" on a consolidated balance sheet of the Borrower, computed and
consolidated in accordance with the method used in the Pro Forma Consolidated
Balance Sheet.
"INSURANCE REGULATORY INFORMATION SYSTEM" shall mean the Insurance
Regulatory Information System promulgated by the NAIC, or any successor system
promulgated by the NAIC.
"INSURANCE SUBSIDIARIES" shall mean Integrity, National Integrity and any
other Subsidiary, whether now owned or hereafter acquired, that is regulated, in
accordance with applicable state law or any Federal law, as an insurer by any
Applicable Insurance Regulatory Authority.
"INTEGRITY" shall mean Integrity Life Insurance Company, an Ohio stock life
insurance company.
"INTERCOMPANY LOAN" shall mean (a) any Designated Intercompany Loan,
(b) any loan, advance or extension of credit of the Borrower to any of the
Subsidiaries, (c) any loan, advance or extension of credit of any of the
Subsidiaries to any other of the Subsidiaries and (d) any combination of the
foregoing; PROVIDED, HOWEVER, that the term "Intercompany Loan" shall not
include any direct or indirect loan or advance to or from Holdings.
"INTEREST COVERAGE MEASUREMENT DATE" shall mean the last day of any fiscal
quarter of the Borrower.
"INTEREST COVERAGE RATIO" shall mean, with respect to the Borrower on any
Interest Coverage Measurement Date, the ratio of (a) EBIT on such date to
(b) Interest Expense for the Prior Applicable Period ending on such date.
"INTEREST EXPENSE" of the Borrower for any period shall mean the cash
interest expense of the Borrower for such period, as shown on the
unconsolidated statement of earnings and cash flow of the Borrower, and shall
exclude (a) non-cash interest-related expense, (b) Commitment Fees and (c)
other debt-related expenses, in each case for such period.
"INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months' duration, each day that would have been an Interest Payment Date
had successive Interest Periods of three months' duration, been applicable to
such Borrowing, and, in addition, the date of any refinancing or conversion of
such Borrowing with or to a Borrowing of a different Type.
7
"INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case may be, and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Borrower may elect, and (b) as to any ABR Borrowing,
the period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the earliest of (i) the next succeeding March 31, June 30,
September 30 or December 31, (ii) the Maturity Date and (iii) the date such
Borrowing is converted to a Borrowing of a different Type in accordance with
Section 2.10 or repaid or prepaid in accordance with Section 2.11; PROVIDED,
HOWEVER, that if any Interest Period would end on a day other than a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless, in the case of a Eurodollar Borrowing only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"INVESTED ASSETS" of any Person shall mean (a) in the case of any Insurance
Subsidiary, the assets reflected on lines 10A and 16 of the Assets Statement in
the Annual Statement or Quarterly Statement of the Insurance Subsidiary most
recently delivered to the Administrative Agent and the Lenders pursuant to
Section 5.04 or, if such statement shall be modified, the equivalent statement
on any applicable successor form or (b) in the case of any other Person, assets
of such Person of the type described in clause (a) above.
"INVESTMENT-GRADE SECURITY" shall mean any of the following: (a) any Cash
Equivalent, (b) any Invested Asset that is rated NAIC 1 or NAIC 2 by the NAIC,
(c) any commercial or agricultural mortgage investment asset that is guaranteed
by any Person the long-term debt of which is rated not lower than NAIC 2 and
(d) any Substituted Mortgage.
"INVESTOR GROUP" shall mean the MS Investors, ARM, the Individual Investors
and the holders of the Preferred Stock.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"LOAN" shall have the meaning given such term in Section 2.01.
"LOAN DOCUMENTS" shall mean this Agreement, the Guarantee Agreement and the
Security Documents.
"MANAGEMENT FEES" shall mean, for any period, the fees earned by the
Borrower in such period pursuant to the Administrative Services Agreements;
PROVIDED, HOWEVER, that fees earned by ARM Capital Advisors, Inc. shall not be
included in determining such management fees earned by the Borrower.
"MARGIN STOCK" shall have the meaning given such term under Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect on the
business, assets, operations or condition, financial or otherwise, of the
Borrower and the Subsidiaries, taken as a whole, (b) material impairment of the
ability of the Borrower or any Subsidiary to perform any of its obligations
under any Loan Document to which it is or will be a party or (c) material
impairment of the rights or remedies available to the Lenders under any Loan
Document.
"MATERIAL SUBSIDIARY" shall mean on any date, (a) any Subsidiary with
consolidated revenues during the fiscal year of the Borrower most recently ended
greater than 2-1/2% of the total revenues of the Borrower and the Subsidiaries
during such year, computed and consolidated in accordance with GAAP, (b) any
Subsidiary with consolidated assets as of the last day of the fiscal quarter
immediately prior to such date greater than 2-1/2% of the total assets of the
Borrower and the Subsidiaries on such date, computed and consolidated in
accordance with GAAP, and (c) any Subsidiary with consolidated net income during
the fiscal year of the Borrower most recently ended greater than 2-1/2% of the
net income of the Borrower and the Subsidiaries, computed and consolidated in
accordance with GAAP.
"MATURITY DATE" shall mean the fifth anniversary of the date of this
agreement.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc.
"MS Investors" shall mean The Xxxxxx Xxxxxxx Leveraged Equity Fund II,
L.P., Xxxxxx Xxxxxxx Capital Partners III, L.P., Xxxxxx Xxxxxxx Capital
Investors, L.P., and MSCP III 892 Investors, L.P., each a Delaware limited
partnership.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
8
"NAIC" shall mean the National Association of Insurance Commissioners or
any association or Governmental Authority succeeding to any or all of the
functions of the National Association of Insurance Commissioners.
"NAIC 1" shall mean (a) the rating NAIC 1 of the NAIC and (b) the rating
assigned to any asset that requires a Risk-Based Capital Factor of not more than
the Risk-Based Capital Factor required for Invested Assets rated NAIC 1. If the
ratings system of the NAIC shall change or if the NAIC shall cease to assign
quality ratings to Invested Assets, then, in furtherance of the last sentence of
Section 1.02, the Borrower and the Lenders will negotiate in good faith to
substitute for the references to NAIC 1 in this Agreement references to
equivalent ratings reflecting such changed rating system or the non-availability
of ratings from the NAIC.
"NAIC 2" shall mean the rating NAIC 2 of the NAIC. If the ratings system of
the NAIC shall change or if the NAIC shall cease to assign quality ratings to
Invested Assets, then, in furtherance of the last sentence of Section 1.02, the
Borrower and the Lenders will negotiate in good faith to substitute for the
references to NAIC 2 in this Agreement references to equivalent ratings
reflecting such changed rating system or the non-availability of ratings from
the NAIC.
"NATIONAL INTEGRITY" shall mean National Integrity Life Insurance Company,
a New York stock life insurance company.
"NATIONAL MUTUAL CORPORATION" shall mean National Mutual Corporation (No.
2) Pty. Ltd., a proprietary limited company incorporated under the laws of
Victoria, Commonwealth of Australia.
"NET INCOME" shall mean, for any period, the aggregate net income (or net
deficit) of the Borrower and its subsidiaries determined on a consolidated basis
for such period, which consists of (a) income earned on investments less
interest credited on customer deposits (net investment spread), (b) fee income
from managing deposits, (c) income from surrender charges, (d) commissions (net
of deferrals), (e) realized investment gains and (f) any other item treated as
income under GAAP, less (i) operating expenses, (ii) amortization expenses,
(iii) interest expense on debt, (iv) non-recurring charges, (v) realized
investment losses, (vi) federal income taxes and (vii) any other items that are
treated as expense under GAAP, all calculated in accordance with GAAP, PROVIDED,
HOWEVER, that the term "Net Income" shall exclude, for all purposes,
(A) extraordinary gains or losses (as defined by GAAP) from the sale of assets
other than in the ordinary course of business, (B) one-time charges taken in
connection with the Transactions, (C) any write-up in the value of any asset and
(D) stock-based compensation expense.
"NET PROCEEDS" shall mean with respect to any event (a) the cash proceeds
received in respect of such event, including (i) in the case of a casualty,
insurance proceeds and (ii) in the case of a condemnation or similar event,
condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by the Borrower, Holdings and
the Subsidiaries to third parties (other than Affiliates) in connection with
such event, (ii) in the case of a sale or other disposition of an asset
(including pursuant to a casualty or condemnation), the amount of all payments
required to be made by the Borrower, Holdings and the Subsidiaries as a result
of such event to repay Indebtedness (other than Loans) secured by such asset and
(iii) the amount of all taxes that (A) are paid (or reasonably estimated to be
payable) by the Borrower, Holdings and the Subsidiaries during the year in which
such event occurred or the next succeeding year and (B) are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Borrower).
"1997 EQUITY CONTRIBUTION" shall mean the receipt by the Borrower on
June 24, 1997, of not less than $50,000,000 in cash as consideration for the
Borrower's issuance and sale of shares of its Class A Common Stock.
"NON-INVESTMENT GRADE INVESTMENTS" shall mean (a) investments in real
estate and commercial mortgages (other than mortgages that are indemnified by a
corporation the long-term debt of which is rated the equivalent of NAIC 1 or
NAIC 2), (b) equity investments (other than any such investments in subsidiaries
of the Borrower or any Insurance Subsidiary) and (c) investments in bonds that
are not rated NAIC 1 or NAIC 2 by the NAIC.
"NON-SUBSIDIARY INVESTMENTS" shall mean, with respect to the Borrower, SBM
Certificate Company, ARM Capital Advisors, Inc. and ARM Securities Corp., the
Invested Assets of the Borrower, SBM Certificate Company, ARM Capital Advisors,
Inc. and ARM Securities Corp. (determined, in each case, on an unconsolidated
basis in accordance with GAAP) other than their respective Subsidiary
Investments.
"OBLIGATIONS" shall mean (a) the due and punctual payment of (i) the
principal of and interest on each Loan, when and as due, whether at maturity, by
acceleration, by notice of prepayment or otherwise, and (ii) all other monetary
obligations of the Borrower under the Loan Documents and (b) the performance of
all other obligations of the Borrower to the Lenders and the Administrative
Agent under this Agreement and the other Loan Documents.
"OTHER TAXES" shall have the meaning given such term in Section 2.18.
"OVERALLOTMENT OPTION" shall mean the option granted by the Borrower to the
underwriters in the Underwriting Agreement pursuant to which the underwriters
may elect to purchase at least 862,500 additional shares of Class A Common Stock
to cover overallotments.
9
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"PERMITTED SWAP" shall mean any Rate Protection Agreement of the type
described in clause (a) of the definition of the term "Rate Protection
Agreement" that xxxxxx Interest Expense on the Loans between the Borrower and a
Lender or an Affiliate of a Lender.
"PERSON" shall mean any natural Person, corporation, business trust, joint
venture, trust, association, company, partnership or government, or any agency
or political subdivision thereof.
"PLAN" shall mean any pension plan (other than a Multiemployer Plan) that
is subject to the provisions of Title IV of ERISA or Section 412 of the Code and
is maintained for employees of the Borrower or any ERISA Affiliate.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement dated the Closing Date,
among the Borrower, Holdings and the Administrative Agent, substantially in the
form of Exhibit D, as such agreement may be amended, supplemented or otherwise
modified and in effect from time to time.
"PLEDGED SECURITIES" shall have the meaning given such term in the Pledge
Agreement.
"PREFERRED STOCK" shall mean the 9 1/2% Cumulative Perpetual Preferred
Stock, $25.00 stated value per share, of the Borrower.
"PRIME RATE" shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal offices in New York City. Each change in the Prime Rate shall be
effective on the date on which the Administrative Agent publicly announces such
change as being effective.
"PRINCIPAL" amount of any obligation at any time shall mean (a) the
then-outstanding principal amount of such obligation, (b) the
then-outstanding principal component of such obligation (if such obligation
is a Capital Lease Obligation) or (c) the sum of the issue price plus the
original issue discount accrued but unpaid attributable to such obligation
(in the case of a discount obligation).
"PRIOR APPLICABLE PERIOD" for any Interest Coverage Measurement Date shall
mean the period of four consecutive fiscal quarters of the Borrower ending on
such Interest Coverage Measurement Date.
"PRO FORMA CONSOLIDATED BALANCE SHEET" shall mean the pro forma
consolidated balance sheet of the Borrower and the consolidated Subsidiaries as
of March 31, 1997.
"PROSPECTUS" shall mean the form of prospectus included in the Registration
Statement at the time it was declared effective by the Securities and Exchange
Commission.
"QUARTERLY STATEMENT" shall mean, with respect to any Insurance Subsidiary,
the Quarterly Statement of such Insurance Subsidiary required to be filed with
the Applicable Insurance Regulatory Authority in accordance with state law,
including any exhibits, schedules, certificates or actuarial opinions filed or
delivered therewith.
"RATE PROTECTION AGREEMENT" shall mean (a) any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate collar agreement, interest rate
hedge agreement, basis swap agreement, forward rate agreement or other similar
agreement or arrangement designed to protect any Person against fluctuations in
interest rates (including any option to enter into any of the foregoing and any
master agreement for any of the foregoing); (b) any foreign exchange contract,
forward foreign exchange agreement, currency swap agreement, cross-currency rate
swap agreement, currency option or other similar agreement or arrangement
designed to protect any Person against fluctuations in currency values
(including any option to enter into any of the foregoing and any master
agreement for any of the foregoing); or (c) to the extent not covered by clauses
(a) and (b) above, any derivative instrument, agreement or product used or
entered into by any Person in the ordinary course of the Insurance Business.
"REGISTER" shall have the meaning given such term in Section 9.04(d).
"REGISTRATION STATEMENT" shall mean the Borrower's Registration Statement
on Form S-1 (Registration No. 333-14693) filed on March 27, 1997, with the
Securities and Exchange Commission, relating to the Common Stock Offering, as
amended to the date hereof.
"REGULATION G" shall mean Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
10
"REGULATION X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REINSURANCE AGREEMENTS" shall mean all agreements, contracts, treaties,
certificates and other arrangements whereby an insurance company agrees to
transfer or cede to another insurer all or part of the liability assumed by such
insurance company under a policy or policies of insurance reinsured by such
insurance company.
"REPORTABLE EVENT" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"REQUIRED LENDERS" shall mean, at any time, Lenders holding Loans
representing a majority of the aggregate principal amount of the Loans
outstanding or, if no Loans are outstanding, Lenders having Commitments
representing a majority of the aggregate Commitments.
"RESERVE LIABILITIES" shall have the meaning given such term in
Section 3.22.
"RESPONSIBLE OFFICER" of any Person shall mean any executive officer, chief
financial officer, principal accounting officer, Treasurer or Controller of such
Person.
"RISK-BASED CAPITAL" shall mean, with respect to the Insurance Subsidiaries
at any time, the Risk-Based Capital (as defined by the NAIC at such time and as
computed in accordance with SAP) of the Insurance Subsidiaries (consolidated in
accordance with SAP) at such time.
"RISK-BASED CAPITAL FACTOR" shall mean, with respect to any component of
the statutory statement of an Insurance Subsidiary, the risk factor attributed
(in accordance with the NAIC and SAP) to such component for purposes of
calculating the Risk-Based Capital of such Insurance Subsidiary.
"S&P" shall mean Standard & Poor's Ratings Group, a division of the McGraw
Hill Companies, Inc.
"SAP" shall mean, with respect to any Insurance Subsidiary, the accounting
procedures prescribed or permitted by the Applicable Insurance Regulatory
Authority applied on a basis consistent with those that are indicated in
Section 1.02.
"SBM CERTIFICATE COMPANY" shall mean SBM Certificate Company, a Minnesota
corporation.
"SECURITY DOCUMENTS" shall mean the Pledge Agreement and the Assignment
Agreement.
"SEPARATE ACCOUNT ASSETS" shall mean, with respect to any Insurance
Subsidiary at any time, the assets reflected on line 23 of the Assets Statement
in the Annual Statement or Quarterly Statement most recently delivered to the
Administrative Agent and the Lenders pursuant to Section 5.04 or, if such
statement shall be modified, the equivalent item on any applicable successor
form.
"SHAREHOLDERS' EQUITY" shall mean, with respect to the Borrower at any
time, the total shareholders' equity of the Borrower at such time, computed in
accordance with GAAP.
"SPA GUARANTY AGREEMENT" shall mean the Guaranty Agreement dated not later
than the Closing Date among the Borrower, Integrity and National Integrity.
"STATEMENT OF ACTUARIAL OPINION" shall mean, with respect to any Insurance
Subsidiary, the Statement of Actuarial Opinion required to be filed with the
Applicable Insurance Regulatory Authority in accordance with state law or, if
such Applicable Insurance Regulatory Authority shall no longer require such a
statement, information equivalent to that required to be included in the
Statement of Actuarial Opinion that was filed immediately prior to the time such
statement was no longer required.
"STATUTORY INCOME" shall mean, for any period with respect to any Insurance
Subsidiary, the statutory net gain from operations of such Insurance Subsidiary,
computed in accordance with SAP and as set forth on line 31 of the Summary of
Operations in the Annual Statement or the Quarterly Statement of such Insurance
Subsidiary most recently delivered to the Administrative Agent and the Lenders
pursuant to Section 5.04 or, if such statement shall be modified, the equivalent
item on any applicable successor form.
"STATUTORY NET INCOME" shall mean, for any period with respect to any
Insurance Subsidiary, the statutory net income of such Insurance Subsidiary,
computed in accordance with SAP and as set forth on line 33 of the Summary of
Operations in the Annual Statement or the Quarterly Statement of such Insurance
Subsidiary most recently delivered to the Administrative Agent and the Lenders
pursuant to Section 5.04, or, if such statement shall be modified, the
equivalent item on any applicable successor form.
11
"STATUTORY SURPLUS" or "SURPLUS" shall mean, with respect to any Insurance
Subsidiary at any time, the amount set forth on line 37 of the Liabilities,
Surplus and Other Funds Statement in the Annual Statement or the Quarterly
Statement of such Insurance Subsidiary most recently delivered to the
Administrative Agent and the Lenders pursuant to Section 5.04 or, if such
statement shall be modified, the equivalent item on any applicable successor
form.
"STOCK OPTION PLAN" shall mean the Amended and Restated Stock Option Plan
and the 1997 Equity Incentive Plan as set forth in Exhibit I, as such plan may
be amended, supplemented or otherwise modified from time to time.
"STOCKHOLDERS AGREEMENT" shall mean the Amended and Restated Stockholders
Agreement dated as of June 24, 1997 as such agreement may be amended,
supplemented or otherwise modified and in effect from time to time as permitted
by Section 6.11.
"SUBSIDIARY" shall mean, with respect to any Person (herein referred to as
the "PARENT"), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the parent or by one or more subsidiaries of
the parent.
"SUBSIDIARY" shall mean any subsidiary of the Borrower, including Holdings.
"SUBSIDIARY INVESTMENTS" shall mean, at any time, (a) with respect to the
Borrower, its aggregate investment in the Subsidiaries, computed on an
unconsolidated basis in accordance with GAAP, and the aggregate amount of all
Intercompany Loans made by the Borrower at such time, (b) with respect to any
Insurance Subsidiary, its aggregate investment in any other Subsidiary, computed
on an unconsolidated basis in accordance with SAP, and the aggregate amount of
all Designated Intercompany Loans made by such Insurance Subsidiary and all
Intercompany Loans made by such Insurance Subsidiary to any other Subsidiary and
(c) with respect to any Subsidiary (other than an Insurance Subsidiary), its
aggregate investments in any other Subsidiary (whether or not an Insurance
Subsidiary), computed on an unconsolidated basis in accordance with GAAP, and
the aggregate amount of all Designated Intercompany Loans made by such
Subsidiary and all Intercompany Loans made by such Subsidiary, in each case to
any other Subsidiary (whether or not an Insurance Subsidiary).
"SUBSTITUTED MORTGAGE" shall mean any commercial or agricultural mortgage
investment asset that is substituted prior to the Closing Date into the general
accounts of Integrity or National Integrity for any other such asset of
Integrity or National Integrity.
"SURPLUS RELIEF RATIO" shall mean, with respect to the Insurance
Subsidiaries at any time, the Surplus Relief Ratio of the Insurance Subsidiaries
at such time, as defined by the NAIC and as computed and consolidated in
accordance with the Insurance Regulatory Information System.
"TAXES" shall have the meaning given such term in Section 2.18(a).
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by Chase from three New York City negotiable certificate of
deposit dealers of recognized standing selected by them.
"TIER 1 CAPITAL" shall mean, (a) with respect to any commercial bank
organized under the laws of the United States of America, "Tier 1 Capital" as
defined in the applicable regulations of the Treasury Department's Office of the
Comptroller of the Currency and (b) with respect to any commercial bank
organized under the laws of any State of the United States of America, "Tier 1
Capital" as defined in the applicable regulations of the Board, in each case as
in effect from time to time.
"TOTAL ASSETS" shall mean the total assets of the Borrower and its
subsidiaries, determined on a consolidated basis in accordance with GAAP, but
excluding all Separate Account Assets.
"TOTAL ADJUSTED CAPITAL" shall mean, with respect to the Insurance
Subsidiaries at any time, the Total Adjusted Capital (as defined by the NAIC at
such time and as computed in accordance with SAP) of the Insurance Subsidiaries
(taken together) at such time.
"TOTAL ADMITTED ASSETS" shall mean, with respect to the Insurance
Subsidiaries at any time, the sum of all assets of the Insurance Subsidiaries
that would be permitted at such time by their respective Applicable Insurance
Regulatory
12
Authorities to be classified as admitted assets in accordance with SAP, and in
any event shall exclude Subsidiary Investments of the Insurance Subsidiaries.
"TOTAL CAPITAL" shall mean at any time the sum of Total Funded Indebtedness
of the Borrower at such time and Shareholders' Equity at such time, determined
in accordance with GAAP excluding the effect of Financial Accounting Standards
Board, Statement of Financial Accounting Standards No. 115: Accounting for
Certain Investments in Debt and Equity Securities (May, 1993).
"TOTAL FUNDED INDEBTEDNESS" shall mean, at any time, the principal amount
of all Indebtedness of the type referred to in clauses (a), (b), (c) and (h) of
the definition of the term "Indebtedness" of the Borrower and the Subsidiaries
at such time, but in any event shall exclude (a) the amount of the unused
Commitments at such time and (b) the aggregate amount of undrawn letters of
credit of the Borrower and the Subsidiaries at such time, computed and
consolidated in accordance with GAAP. The term "Total Funded Indebtedness" shall
include all such Indebtedness of any partnership in which the Borrower or a
Subsidiary is a general partner.
"TRANSACTIONS" shall mean (a) the execution, delivery and performance by
the Borrower of each of the Loan Documents to which it is a party and the
borrowings by the Borrower under this Agreement and (b) the Common Stock
Offering.
"TRANSFEREE" shall have the meaning given such term in Section 2.18(a).
"TYPE", when used in respect of any Loan or Borrowing, shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term "RATE" shall mean the
Adjusted LIBO Rate and the Alternate Base Rate.
"UNDERWRITING AGREEMENT" shall mean the Underwriting Agreement dated as of
June 18, 1997, among the Borrower, Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxxxxx
Lufkin & Xxxxxxxx Securities Corporation and Xxxxxxxxxxx & Co., Inc., as such
agreement may be amended or otherwise modified from time to time.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP or, to the extent such terms apply to an
Insurance Subsidiary, SAP, in each case as in effect from time to time;
PROVIDED, HOWEVER, that, for purposes of determining compliance with any
covenant set forth in Article VI, such terms shall be construed in accordance
with GAAP or SAP (and the NAIC and the Insurance Regulatory Information System),
as applicable, as in effect on the Closing Date, in each case applied on a basis
consistent with the application used in preparing the Borrower's and the
Insurance Subsidiaries' audited financial statements referred to in
Section 3.05, or the Insurance Subsidiaries' financial statements filed with
their respective Applicable Insurance Regulatory Authorities, as the case may
be, unless the Borrower shall have objected to determining compliance on such
basis and the Borrower and the Required Lenders shall have agreed to determine
compliance in accordance with GAAP or SAP (and the NAIC and the Insurance
Regulatory Information System), as applicable, in effect on such date of
objection (or on another basis).
ARTICLE II. THE CREDITS
SECTION 2.01. COMMITMENTS. Upon the terms and subject to the conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make loans (each a "LOAN") to the
Borrower, at any time and from time to time on or after the Closing Date and
until the earlier of the Maturity Date and the termination of the Commitment of
such Lender in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding not to exceed its Commitment at such time.
Within the limits set forth in clause (b) of the preceding sentence, the
Borrower may borrow, pay or prepay and reborrow Loans on or after the Closing
Date and prior to the Maturity Date, upon the terms and subject to the
conditions and limitations set forth herein.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
respective Commitments; PROVIDED, HOWEVER, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). The Loans comprising each Borrowing shall be in an
aggregate principal amount that is an integral
13
multiple of $1,000,000 and not less than $1,000,000 (or an aggregate principal
amount equal to the remaining balance of the Commitments).
b) Each Borrowing shall be comprised entirely of ABR Loans or entirely of
Eurodollar Loans, as the Borrower may request pursuant to Section 2.03;
PROVIDED, HOWEVER, that each Borrowing prior to the date that is 30 days after
the Closing Date shall be comprised of ABR Loans unless the Administrative Agent
shall otherwise agree in writing. Each Lender may at its option fulfill its
Commitment with respect to any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; PROVIDED, HOWEVER,
that any exercise of such option shall not affect the obligation of the Borrower
to repay such Loan in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time; PROVIDED, HOWEVER, that
the Borrower shall not be entitled to request any Borrowing that, if made, would
result in an aggregate of more than five separate Eurodollar Loans of any Lender
being outstanding hereunder at any one time. For purposes of the foregoing,
Eurodollar Loans by the same Lender having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Eurodollar Loans.
(c) Subject to paragraph (e) below, each Lender shall make a Loan in the
amount of its pro rata portion, as determined under Section 2.15, of each
Borrowing hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Administrative Agent in New York, New York, not later
than 12:00 noon, New York City time, and the Administrative Agent shall by 3:00
p.m., New York City time, credit the amounts so received to the general deposit
account of the Borrower with the Administrative Agent or, if a Borrowing shall
not occur on such date because any condition precedent herein specified shall
not have been met, return the amounts so received to the respective Lenders.
Unless the Administrative Agent shall have received notice from a Lender prior
to the date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's portion of such Borrowing, the Administrative
Agent may assume that such Lender has made such portion available to the
Administrative Agent on the date of such Borrowing in accordance with this
paragraph (c) and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have made such portion available
to the Administrative Agent, such Lender and the Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Borrowing comprised of Eurodollar Loans if
the Interest Period requested with respect thereto would end after the Maturity
Date.
SECTION 2.03. NOTICE OF BORROWINGS. The Borrower shall give the
Administrative Agent written notice (or telephone notice promptly confirmed in
writing or by telecopy) (a) in the case of a Eurodollar Borrowing, not later
than 10:00 a.m., New York City time, three Business Days before a proposed
borrowing and (b) in the case of an ABR Borrowing, not later than 12:00 (noon),
New York City time, one Business Day before a proposed borrowing. Such notice
shall be irrevocable and shall in each case refer to this Agreement and specify
(i) whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing;
(ii) the date of such Borrowing (which shall be a Business Day) and the amount
thereof; and (iii) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto. If no election as to the Type of Borrowing
is specified in any such notice, then the requested Borrowing shall be an
ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is
specified in any such notice, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration, in the case of a Eurodollar
Borrowing. The Administrative Agent shall promptly advise the Lenders of any
notice given pursuant to this Section 2.03 and of each Lender's portion of the
requested Borrowing.
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS. (a) Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower or any Guarantor and each
Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to paragraphs (a)
and (b) above shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; PROVIDED, HOWEVER, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrower to repay the Loans in
accordance with their terms.
14
(d) Notwithstanding any other provision of this Agreement, in the event any
Lender shall request and receive a promissory note payable to such Lender and
its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. FEES. (a) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on the last day of March, June, September and December
in each year, and on the date on which the Commitment of such Lender shall be
terminated as provided herein, a commitment fee (a "COMMITMENT FEE") at a rate
per annum equal to the Commitment Fee Percentage from time to time in effect on
the average daily unused amount of the Commitment of such Lender during the
preceding quarter (or shorter period commencing with the Closing Date or ending
with the Maturity Date or the date on which the Commitment of such Lender shall
be terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Commitment Fee due to each
Lender shall commence to accrue on the date of this Agreement and shall cease to
accrue on the date on which the Commitment of such Lender shall be terminated as
provided herein.
(b) The Commitment Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution as appropriate
among the Lenders. The Administrative Agent's Fees shall be paid on the dates
due, in immediately available funds, as set forth in the Fee Letter. Once paid,
none of the Fees shall be refundable under any circumstances.
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) at a rate per annum equal to the
Alternate Base Rate.
(b) Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Margin.
(c) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.07. DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, the Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment (after as well as
before judgment) at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin plus 2%.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written notice of such determination to
the Borrower and the Lenders. In the event of any such determination, any
request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or
2.10 shall, until the Administrative Agent shall have advised the Borrower and
the Lenders that the Administrative Agent has determined that the circumstances
giving rise to such notice no longer exist, be deemed to be a request for an
ABR Borrowing. Each determination by the Administrative Agent under this
Section 2.08 shall be conclusive absent manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Commitments
shall be automatically terminated at 12:00 (noon), New York City time, on the
Maturity Date. Notwithstanding the foregoing, the Commitments shall be
automatically terminated at 5:00 p.m., New York City time, on June 30, 1997, if
the Closing Date has not occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written notice to
the Administrative Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Commitments;
PROVIDED, HOWEVER, that each partial reduction of the Commitments shall be in an
integral multiple of $500,000 and in a minimum principal amount of $1,000,000.
(c) Each reduction in the Commitments hereunder shall be made ratably among
the Lenders in accordance with their respective applicable Commitments. The
Borrower shall pay to the Administrative Agent for the account of the Lenders,
on the date of each termination or reduction, the accrued Commitment Fees on the
amount of such Commitments so terminated or reduced through the date of such
termination or reduction.
15
SECTION 2.10. CONVERSION AND CONTINUATION OF BORROWINGS. The Borrower shall
have the right at any time upon prior irrevocable notice to the Administrative
Agent (i) not later than 12:00 (noon), New York City time, one Business Day
prior to conversion, to convert any Eurodollar Borrowing to an ABR Borrowing,
(ii) not later than 10:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing into a Eurodollar
Borrowing, or to continue any Eurodollar Borrowing for an additional Interest
Period and (iii) not later than 10:00 a.m., New York City time, three Business
Days prior to conversion, to convert the Interest Period with respect to any
Eurodollar Borrowing to another permissible Interest Period, subject in each
case to the following:
(a) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
(b) accrued interest on the Loan (or portion thereof) being converted
shall be paid by the Borrower at the time of conversion;
(c) if any Eurodollar Borrowing is converted at a time other than the
end of the Interest Period applicable thereto, the Borrower shall pay, upon
demand, any amounts due to the Lenders pursuant to Section 2.14;
(d) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Borrowing;
(e) any portion of a Eurodollar Borrowing that cannot be converted
into or continued as a Eurodollar Borrowing by reason of clause (d) above
shall be automatically converted at the end of the Interest Period in
effect for such Borrowing into an ABR Borrowing;
(f) no Interest Period may be selected for any Eurodollar Borrowing
that would end later than the Maturity Date; and
(g) no ABR Borrowing may be converted to a Eurodollar Borrowing on any
date prior to the 30th day following the Closing Date without the prior
written consent of the Administrative Agent.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an
ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the other Lenders of any notice
given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Borrowing. If the Borrower shall not have given notice in
accordance with this Section 2.10 to continue any Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end
of the Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), automatically be continued into a new Interest Period as an ABR
Borrowing.
SECTION 2.11. PREPAYMENT. (a) The Borrower shall have the right at any time
and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days' prior written notice (or telephone notice promptly
confirmed by written notice) to the Administrative Agent; PROVIDED, HOWEVER,
that each partial prepayment pursuant to this paragraph (a) shall be in an
amount that is an integral multiple of $500,000 and not less than $1,000,000.
(b) On the date of any termination or reduction of the Commitments pursuant
to Section 2.09, the Borrower shall pay or prepay so much of the Borrowings as
shall be necessary in order that the aggregate principal amount of the Loans
outstanding will not exceed the aggregate Commitments after giving effect to
such termination or reduction.
(c) To the extent that the Borrower shall have redeemed, purchased, retired
or otherwise acquired for value shares of its Class A Common Stock in accordance
with the terms of the Stock Option Plan and pursuant to Section 6.06(c) for an
aggregate purchase price in excess of $5,000,000, then the Borrower shall reduce
the Commitments in an aggregate principal amount equal to such excess. To the
extent that, following any such reduction of the Commitments, the aggregate
Borrowings then outstanding shall exceed the aggregate amount of Commitments
then remaining, the Borrower shall prepay the Borrowings in a principal amount
equal to such excess.
(d) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.11 shall be subject to Section 2.14 but otherwise without premium or penalty.
All prepayments under this Section 2.11 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of payment.
16
SECTION 2.12. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any Fees
or other amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of such Lender by the jurisdiction in which
such Lender is organized, has its principal office or Applicable Lending Office
or by any political subdivision or taxing authority therein), or shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of or credit extended by
such Lender (except any such reserve requirement that is reflected in the
Adjusted LIBO Rate) or shall impose on such Lender or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender, and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Lender hereunder (whether
of principal, interest or otherwise) by an amount reasonably deemed by such
Lender to be material, then the Borrower will pay to such Lender upon demand in
accordance with Section 2.12(c) hereof such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender shall have determined that the adoption after the date
hereof of any law, rule, regulation, agreement or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
any Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such Lender or such Lender's
holding company could have achieved but for such applicability, adoption, change
or compliance (taking into consideration such Lender's policies and the policies
of such Lender's holding company with respect to capital adequacy) by an amount
reasonably deemed by such Lender to be material, then from time to time the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company in accordance with
Section 2.12(c) hereof for any such reduction suffered.
(c) A certificate of each Lender setting forth in reasonable detail such
amount or amounts and the calculations thereof as shall be necessary to
compensate such Lender or its holding company as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay each Lender the amount
shown as due on any such certificate delivered by the Lender within 10 days
after the Borrower's receipt of the same.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period. The protection of this Section 2.12 shall be available to each
Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition that shall have occurred or been imposed.
(e) Each Lender agrees to use reasonable efforts to avoid or minimize the
amount of any demand for payment from the Borrower under this Section 2.12 and
under Section 2.13, including reasonable efforts to change its lending office or
to transfer its affected Loans to an Affiliate of such Lender; PROVIDED,
HOWEVER, that no Lender shall be required by this paragraph (e) to effect any
change or transfer that is, in the reasonable judgment of such Lender,
disadvantageous to such Lender.
SECTION 2.13. CHANGE IN LEGALITY. (a) Notwithstanding any other provision
herein, if any change in any law or regulation or in the interpretation thereof
by any Governmental Authority charged with the administration or interpretation
thereof shall make it unlawful, in the determination of the Lender, which
determination shall be conclusive absent manifest error, for any Lender to make
or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrower for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR
Loan unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under clause (i) or
(ii) above, all payments and prepayments of principal that would otherwise have
been applied to repay the Eurodollar Loans that would have been made by such
Lender or the
17
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.13, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.14. INDEMNITY. The Borrower shall indemnify each Lender against
any reasonable loss or expense that such Lender may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by the Borrower to borrow, refinance, convert or continue any Loan
hereunder after irrevocable notice of such borrowing, refinancing, conversion or
continuation has been given pursuant to Section 2.03 or 2.10, (c) any payment,
prepayment or conversion of a Eurodollar Loan required by any other provision of
this Agreement or otherwise made or deemed made on a date other than the last
day of the Interest Period applicable thereto or (d) any default in payment or
prepayment of the principal amount of any Loan or any part thereof or interest
accrued thereon, as and when due and payable (at the due date thereof, whether
by scheduled maturity, acceleration, irrevocable notice of prepayment or
otherwise), including, in each such case, any loss or reasonable expense
sustained or incurred or to be sustained or incurred in liquidating or employing
deposits from third parties acquired to effect or maintain such Loan or any part
thereof as a Eurodollar Loan. Such loss or reasonable expense shall include an
amount equal to the excess, if any, as reasonably determined by such Lender, of
(a) its cost of obtaining the funds for the Loan being paid, prepaid, converted
or not borrowed, converted or continued (assumed to be the Adjusted LIBO Rate
applicable thereto) for the period from the date of such payment, prepayment,
conversion or failure to borrow, convert or continue to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, convert
or continue, the Interest Period for such Loan that would have commenced on the
date of such failure) over (b) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
so paid, prepaid, converted or not borrowed, converted or continued for such
period or Interest Period, as the case may be. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section 2.14 and explaining in reasonable detail the basis for
calculating such amount or amounts (provided that no Lender shall be required to
match or trace deposits funding any Loan) shall be delivered to the Borrower and
shall be conclusive absent manifest error.
SECTION 2.15. PRO RATA TREATMENT. Except as required under Section 2.13 and
Section 2.19, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the Commitment
Fees, each reduction of the Commitments and each refinancing of any Borrowing
with, conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their outstanding Loans). Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, Chase may, in its discretion,
round each Lender's percentage of such Borrowing, computed in accordance with
Section 2.01, to the next higher or lower whole dollar amount.
SECTION 2.16. SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a result
of which the unpaid principal portion of its Loans shall be proportionately less
than the unpaid principal portion of the Loans of any other Lender, it shall be
deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans of such other Lender, so that the aggregate unpaid
principal amount of the Loans and participations in Loans held by each Lender
shall be in the same proportion to the aggregate unpaid principal amount of all
Loans then outstanding as the principal amount of its Loans prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Loans outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event; PROVIDED, HOWEVER, that, if any
such purchase or purchases or adjustments shall be made pursuant to this
Section 2.16 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. To the extent permitted by applicable law, the Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in a Loan deemed to have been so purchased may exercise any and
all rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by the Borrower to such Lender by reason thereof as fully as if
such Lender had made a Loan directly to the Borrower in the amount of such
participation.
SECTION 2.17. PAYMENTS. (a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or any Fees or other amounts)
hereunder and under any other Loan Document not later than 12:00 (noon), New
York City time, on the date when due in dollars to Chase at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day
(unless, in the case of a Eurodollar Borrowing
18
only, such next succeeding Business Day would fall in the next calendar month,
in which case such payment shall be made on the next preceding Business Day),
and such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.18. TAXES. (a) Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.17, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
(i) income taxes and franchise taxes imposed on the net or gross income or gross
receipts (but not including any such tax in the nature of a withholding tax) of
the Administrative Agent or any Lender (or any transferee or assignee thereof,
including a participation holder (any such entity being called a "TRANSFEREE")),
by the jurisdiction under the laws of which the Administrative Agent or any such
Lender (or Transferee) is organized or has its Applicable Lending Office or any
political subdivision of or within any of the foregoing and (ii) taxes that
would not have been imposed if the only connection between the Administrative
Agent or any Lender (or Transferee) and the jurisdiction imposing such taxes
were activities of the Administrative Agent or such Lender (or Transferee)
pursuant to or in respect of this Agreement (including entering into, lending
money or extending credit pursuant to, receiving payments under or enforcing
this Agreement) and the activities of such party pursuant to or in respect of
similar agreements (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities, collectively or individually, "TAXES").
If the Borrower shall be required to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender (or any Transferee) or the Administrative
Agent, (i) the sum payable shall be increased by the amount (an "ADDITIONAL
AMOUNT") necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.18) such
Lender (or Transferee) or Administrative Agent (as the case may be) shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document ("OTHER TAXES").
(c) The Borrower will indemnify each Lender (or Transferee) and
Administrative Agent for the full amount of Taxes and Other Taxes paid by such
Lender (or Transferee) or Administrative Agent, as the case may be, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant taxing authority or other Governmental
Authority. Such indemnification shall be made within 30 days after the date any
Lender (or Transferee) or the Administrative Agent, as the case may be, makes
written demand therefor; but in no event shall such indemnification be required
to be made prior to five days before the date such Lender (or Transferee) or the
Administrative Agent, as the case may be, pays such Taxes or Other Taxes to the
relevant taxing authority or other Governmental Authority. Each Lender (or
Transferee) or Administrative Agent shall make written demand for such
indemnification no later than 180 days after the earlier of (i) the date on
which such Lender (or Transferee) or Administrative Agent makes such payment of
Taxes or Other Taxes and (ii) the date on which such relevant taxing authority
or other Governmental Authority makes written demand upon such Lender (or
Transferee) or Administrative Agent for payment of such Taxes or Other Taxes.
(d) If a Lender (or Transferee) or Administrative Agent shall become aware
that it is entitled to receive a refund or credit from a Governmental Authority
in respect of Taxes or Other Taxes as to which it has been indemnified by the
Borrower pursuant to this Section 2.18, it shall promptly notify the Borrower of
the availability of such refund and shall, within 30 days after receipt of a
request by the Borrower, make a claim to such Governmental Authority for such
refund or credit at the Borrower's expense. If any Lender (or Transferee) or
Administrative Agent receives a refund or credit in respect of any Taxes or
Other Taxes as to which it has been indemnified by the Borrower pursuant to this
Section 2.18 or with respect to which the Borrower has paid additional amounts
pursuant to this Section 2.18, it shall promptly notify the Borrower of such
refund or credit and shall within 30 days from the date of receipt of such
refund or benefit of such credit pay over the amount of such refund or benefit
of such credit (including any interest paid or credited by the relevant
Governmental Authority with respect to such refund or credit) to the Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section 2.18 with respect to Taxes or Other Taxes
giving rise to such refund or credit), net of all out-of-pocket expenses of such
Lender (or Transferee) or Administrative Agent and without interest; PROVIDED,
HOWEVER, that the Borrower, upon the request of such Lender (or Transferee) or
Administrative Agent, agrees to repay the amount paid over to the Borrower (plus
penalties, interest or other charges) to such Lender (or Transferee) or
Administrative Agent in the event such Lender (or Transferee) or Administrative
Agent is required to repay such refund or credit to such Governmental Authority.
(e) As soon as practicable after the date of any payment of Taxes or Other
Taxes by the Borrower to the relevant Governmental Authority, the Borrower will
furnish to Chase, at its address referred to in Section 9.01, the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
payment thereof to the extent such receipt is legally available.
19
(f) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.18 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(g) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction outside the United States, any State thereof or the District of
Columbia (a "NON-U.S. BANK") shall deliver to the Borrower (i) two copies of
either United States Internal Revenue Service Form 1001 or Form 4224 or (ii) in
the case of a Non-U.S. Bank claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code, with respect to payments of
"portfolio interest", a Form W-8 or any subsequent versions thereof or
successors thereto and a certificate representing that such Non-U.S. Bank is not
a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), in either case properly
completed and duly executed by such Non-U.S. Bank claiming complete exemption
from, or (in the case of a Transferee, an assignment to a New Lending Office (as
defined below) or any form delivered pursuant to the second succeeding sentence)
reduced rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Bank on or before the date it becomes a party to this Agreement
(or, in the case of a Transferee that is a participation holder, on or before
the date such participation holder becomes a Transferee hereunder) and on or
before the date, if any, such Non-U.S. Bank changes its Applicable Lending
Office by designating a different lending office (a "NEW LENDING OFFICE"). In
addition, each Non-U.S. Bank shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Bank. Notwithstanding any other provision of this Section 2.18(g), other than on
the date of this Agreement, a Non-U.S. Bank shall not be required to deliver any
form pursuant to this Section 2.18(g) that such Non-U.S. Bank is not legally
able to deliver. Each Lender (or Transferee) that is organized under the laws of
the United States or any state thereof or the District of Columbia shall deliver
to the Borrower an original copy of Internal Revenue Service Form W-9 (or
applicable successor form) properly completed and duly executed by such Lender
(or Transferee).
(h) The Borrower shall not be required to indemnify any Non-U.S. Bank, or
to pay any additional amounts to any Non-U.S. Bank, in respect of United States
Federal withholding tax pursuant to paragraph (a) or (c) of this Section 2.18 to
the extent that: (i) the obligation to withhold amounts with respect to United
States Federal withholding tax or make indemnification existed on the date such
Non-U.S. Bank became a party to this Agreement (or, in the case of a Transferee
that is a participation holder, on the date such participation holder became a
Transferee hereunder) or, with respect to payments to a New Lending Office, the
date such Non-U.S. Bank designated such New Lending Office with respect to a
Loan (or, in each case, arose thereafter as a result of a change in the place of
incorporation or organization of such Non-U.S. Bank, its principal place of
business or the nature of its business operations); PROVIDED, HOWEVER, that this
clause (i) shall not apply to any Transferee or New Lending Office that becomes
a Transferee or New Lending Office as a result of an assignment, participation,
transfer or designation made at the request of the Borrower; and PROVIDED
FURTHER, HOWEVER, that this clause (i) shall not apply to the extent the
indemnity payment or the additional amounts any Transferee, or Lender (or
Transferee) through a New Lending Office, would be entitled to receive (without
regard to this clause (i)) do not exceed the indemnity payment or additional
amounts that the Lender making the assignment, participation or transfer to such
Transferee, or the Lender (or Transferee) making the designation of such New
Lending Office, would have been entitled to receive in the absence of such
assignment, participation, transfer or designation; or (ii) the obligation to
make such indemnification or to pay such additional amounts would not have
arisen but for a failure by such Non-U.S. Bank to comply with the provisions of
paragraph (g) above.
(i) Any Lender (or Transferee) or Administrative Agent claiming any
indemnity payments or additional amounts payable pursuant to this Section 2.18
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to take any action to avoid or minimize any amounts that otherwise may be
payable by the Borrower pursuant to this Section 2.18, including filing any
certificate or document reasonably requested in writing by the Borrower or
changing the jurisdiction of its Applicable Lending Office, if the taking of
such action would avoid the need for or reduce the amount of any such indemnity
payment or additional amounts that may thereafter accrue and would not, in the
good faith judgment of such Lender (or Transferee) or Administrative Agent, be
otherwise disadvantageous to such Lender (or Transferee) or Administrative
Agent.
(j) Nothing contained in this Section 2.18 shall require any Lender (or
Transferee) or the Administrative Agent to make available any of its tax returns
(or any other information relating to its taxes which it deems to be
confidential).
SECTION 2.19. TERMINATION OR ASSIGNMENT OF COMMITMENTS UNDER CERTAIN
CIRCUMSTANCES. In the event that (a) any Lender shall have delivered a notice or
certificate pursuant to Section 2.12 or 2.13; (b) the Borrower shall be required
to make additional payments to any Lender under Section 2.18; (c) any Lender
shall have refused (and shall not have retracted such refusal) to make available
any Loan on its part to be made available hereunder, other than solely as a
result of the failure of any condition set forth in Article IV to be satisfied
(such condition not having been effectively waived in accordance with the terms
hereof); (d) any Lender shall have notified the Administrative Agent or the
Borrower (and shall not have retracted such notification) that it does not
intend to comply with any of its obligations hereunder, other than solely as a
result of the failure of any condition set forth in Article IV to be satisfied
(such condition not having been effectively waived in accordance with the terms
hereof); or (e) either (A) a receiver, trustee, conservator or other custodian
shall have been appointed with respect to any Lender or its property at the
direction or request of any regulatory agency
20
or authority or (B) an order, action, process or proceeding of the type
contemplated by paragraph (g) or (h) of Article VII shall be commenced by or
against such Lender (or such Lender shall have consented to any such order,
action, process or proceeding), the Borrower shall have the right, at its own
expense, upon notice to such Lender and the Administrative Agent, to require
such Lender to transfer and assign without recourse (in accordance with and
subject to the restrictions contained in Section 9.04) all its interests, rights
and obligations under this Agreement to another financial institution that shall
assume such obligations; PROVIDED, HOWEVER, that (a) no such termination or
assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority and (b) the Borrower or the assignee, as the case may be,
shall pay to the affected Lender in immediately available funds on the date of
such termination or assignment the principal of and interest accrued to the date
of payment on the Loans made by it hereunder and all other amounts accrued for
its account or owed to it hereunder.
SECTION 2.20. NOTICE OF COSTS. Neither the Administrative Agent nor any
Lender shall be entitled to compensation under Section 2.12 for any costs
incurred or reductions suffered with respect to any date unless it shall have
notified the Borrower that it will demand compensation for such costs or
reductions suffered not more than 180 days after the later of (a) such date and
(b) the date on which such Lender or Administrative Agent shall have become
aware of such costs or reductions.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. The Borrower and each of the
Subsidiaries (a) is a corporation or limited partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify would not
result in a Material Adverse Effect, and (d) has the corporate power and
authority to execute, deliver and perform its obligations under each of the Loan
Documents and each other agreement or instrument contemplated thereby to which
it is or will be a party and, in the case of the Borrower, to borrow hereunder.
SECTION 3.02. AUTHORIZATION. The Transactions (a) have been duly authorized
by all requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation applicable to
the Borrower or any Subsidiary, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Borrower or any
Subsidiary or (B) any provision of any indenture, agreement or other instrument
to which the Borrower or any Subsidiary is a party or by which any of them or
any of their property is or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or (iii) result
in the creation or imposition of any Lien upon or with respect to any property
or assets now owned or hereafter acquired by the Borrower or any Subsidiary,
other than the Liens created by the Security Documents.
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by the Borrower will constitute, a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equity principles
(whether enforcement is sought by proceedings in equity or at law).
SECTION 3.04. GOVERNMENTAL APPROVALS. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in order to consummate the Transactions, except (a) such as
have been made or obtained and are in full force and effect, (b) filings and
other actions required pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the respective rules and regulations thereunder, and
filings and other actions required pursuant to state securities or blue sky
laws, in each case to the extent that such filings and other actions are not
required to have been made or taken prior to the date hereof, (c) filings and
other actions required pursuant to any law, rule or regulation of any insurance
Governmental Authority, to the extent that either (i) such filings and other
actions are not required to have been made or taken prior to the Closing Date or
(ii) the failure to make such filings or take such other actions would not
result in a Material Adverse Effect and (d) any approvals that may be required
by the New York and Arizona insurance Governmental Authorities in connection
with the exercise of rights or remedies with respect to any of the Collateral
(as defined in the Pledge Agreement) pledged by the Borrower pursuant to the
Pledge Agreement.
SECTION 3.05. FINANCIAL STATEMENTS. The Borrower has heretofore furnished
to the Lenders (i) the consolidated balance sheet and statements of earnings and
cash flow of the Borrower and its Subsidiaries (A) as of and for the fiscal
years ended December 31, 1995, and December 31, 1996, prepared in accordance
with GAAP and audited by and accompanied by the opinion of Ernst & Young LLP,
independent public accountants and (B) as of and for the fiscal quarter and the
portion of the fiscal year ended March 31, 1997, prepared in accordance with
GAAP and certified by its chief financial officer and (ii) the Annual Statement
of each of the Insurance Subsidiaries for the year ended December 31, 1996, and
the Quarterly Statement of each of the Insurance Subsidiaries for the fiscal
quarter ended March 31, 1997 in
21
each case prepared in accordance with SAP and filed with such Insurance
Subsidiary's Applicable Insurance Regulatory Authority. All the foregoing
financial statements that were prepared in accordance with GAAP present
fairly the financial condition and results of operations of the Borrower and
its Subsidiaries and all of the foregoing statements that were prepared in
accordance with SAP present fairly the statutory assets, liabilities, capital
and surplus, results of operations and cash flows of the applicable Insurance
Subsidiary, as of such dates and for such periods, subject, in the case of
any unaudited interim financial statements, to changes resulting from normal
year-end adjustments. All the foregoing balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of the Borrower and
its Subsidiaries or such Insurance Subsidiary, as the case may be, as of the
dates thereof, as required in accordance with GAAP or SAP, as applicable.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. Except for changes disclosed in
this Agreement, the Schedules or the statements referred to in Section 3.05
(including the notes thereto), there has been no material adverse change in the
business, assets, operations or condition, financial or otherwise, of the
Borrower and the Subsidiaries, taken as a whole, since December 31, 1996.
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Except as
set forth on Schedule 3.07, each of the Borrower and the Subsidiaries has good
and marketable title to, or valid leasehold interests in, all its material
properties and assets, except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02.
(b) Each of the Borrower and the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect. Each of the Borrower and the Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases under which
it is a lessee.
SECTION 3.08. SUBSIDIARIES. Schedule 3.08 sets forth as of the Closing Date
a list of all Subsidiaries of the Borrower and the percentage ownership interest
of the Borrower therein. All outstanding shares of the capital stock of each
Subsidiary are fully paid and nonassessable and are owned beneficially and of
record as set forth in Schedule 3.08, free and clear of all Liens and
encumbrances whatsoever, except such as are created pursuant to the Security
Documents. There are no outstanding subscriptions, options, warrants, calls,
rights (including preemptive rights) or other agreements or commitments of any
nature relating to any capital stock of any Subsidiary.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as set forth on
Schedule 3.09(a), there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any business, property or rights of any such Person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect.
(b) Except as set forth on Schedule 3.09(b), neither the Borrower nor any
Subsidiary is in violation of any law, rule or regulation, nor is the Borrower
or any Subsidiary in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority, including any Applicable Insurance
Regulatory Authority of any Insurance Subsidiary, where such violation or
default could reasonably be expected to result in a Material Adverse Effect.
None of the Transactions will violate any judgment, writ, injunction or decree
of any Governmental Authority, including any Applicable Insurance Regulatory
Authority of any Insurance Subsidiary, where such violation or default could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. AGREEMENTS. Except as set forth on Schedule 3.10, neither the
Borrower nor any of its Subsidiaries is in default in any manner under (a) any
provision of any indenture or other agreement or instrument evidencing
Indebtedness or (b) any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where, in the case of clause (a) or (b), such default could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) Neither the Borrower nor any
of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to buy or
carry Margin Stock or to extend credit to others for the purpose of buying or
carrying Margin Stock or to refund indebtedness originally incurred for such
purpose, or (ii) for any purpose that entails a violation of, or is inconsistent
with, the provisions of the Regulations of the Board, including Regulation G, U
or X.
(c) After giving effect to each Borrowing, not more than 25% of the value
of the assets of the Borrower, on an unconsolidated basis and on a consolidated
basis will be Margin Stock.
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SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
Neither the Borrower nor any Subsidiary (other than SBM Certificate Company) is
(a) an "investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. USE OF PROCEEDS. The Borrower will use the proceeds of the
Loans only for the purposes specified in the preamble to this Agreement;
PROVIDED, HOWEVER, that no proceeds of the Loans shall be used in violation of
the Investment Company Act of 1940.
SECTION 3.14. TAX RETURNS. Each of the Borrower and the Subsidiaries has
filed or caused to be filed all Federal, state and local tax returns required to
have been filed by it and has paid or caused to be paid all taxes shown to be
due and payable on such returns or on any assessments received by it, except
taxes that are being contested in good faith by appropriate proceedings and for
which the Borrower or the applicable Subsidiary shall have set aside on its
books adequate reserves.
SECTION 3.15. TRUE AND COMPLETE DISCLOSURE. On the Closing Date, all
factual information (taken as a whole) heretofore or contemporaneously furnished
by or on behalf of the Borrower to the Administrative Agent or any
Lender(including all information contained in the Loan Documents and the
Prospectus, as amended by any supplements thereto) for purposes of or in
connection with this Agreement is true and accurate in all material respects on
the date as of which such information is dated or certified and not incomplete
by omitting to state any material fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances under
which such information was provided. On the Closing Date, the projections and
pro forma financial information contained in such information are based on good
faith estimates and assumptions believed by the Borrower to be reasonable as of
the Closing Date, it being recognized by the Administrative Agent and the
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may differ from the projected results.
SECTION 3.16. EMPLOYEE BENEFIT PLANS. Each of the Borrower and its ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the regulations and published interpretations
thereunder. No Reportable Event has occurred in respect of any Plan of the
Borrower or any ERISA Affiliate. The present value of all benefit liabilities
under each Plan (based on those assumptions used to fund such Plan) did not, as
of the last annual valuation date applicable thereto, exceed by more than
$20,000,000 the value of the assets of such Plan, and the present value of all
benefit liabilities of all underfunded Plans (based on those assumptions used to
fund each Plan) did not, as of the last valuation dates applicable thereto,
exceed by more than $25,000,000 the value of the assets of all such Plans.
Neither the Borrower nor any ERISA Affiliate has incurred any Withdrawal
Liability that could reasonably be expected to result in a Material Adverse
Effect. Neither the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated where such
reorganization or termination has resulted or could reasonably be expected to
result in an increase in the contributions required to be made to such Plan or
otherwise, in a Material Adverse Effect.
SECTION 3.17. ENVIRONMENTAL AND SAFETY MATTERS. The Borrower and each
Subsidiary has complied in all material respects with all Federal, state, local
and other statutes, ordinances, orders, judgments, rulings and regulations
relating to environmental pollution or to environmental regulation or control or
to employee health or safety. Neither the Borrower nor any Subsidiary has
received notice of any material failure so to comply. The Borrower's and the
Subsidiaries' plants do not manage any hazardous wastes, hazardous substances,
hazardous materials, toxic substances, toxic pollutants or substances similarly
denominated, as those terms or similar terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any other
applicable law relating to environmental pollution or employee health and
safety, in violation of any law or any regulations promulgated pursuant thereto,
which violation would result in a Material Adverse Effect. The Borrower is aware
of no events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that could reasonably be expected to
result in material liability on the part of the Borrower or any Subsidiary.
SECTION 3.18. SOLVENCY. (a) On and as of the Closing Date, the fair salable
value of the assets of the Borrower and the Subsidiaries, taken as a whole and
on a consolidated basis, exceeds the amount that will be required to be paid on
or in respect of the existing debts and other liabilities (including contingent
liabilities) of the Borrower and the Subsidiaries, taken as a whole and on a
consolidated basis, as they become absolute and mature.
(b) On and as of the Closing Date, the capital of the Borrower and the
Subsidiaries, taken as a whole and on a consolidated basis, do not constitute
unreasonably small capital for the Borrower and the Subsidiaries, taken as a
whole on a consolidated basis, to carry out their respective businesses as now
conducted and as proposed to be conducted, including the capital needs of the
Borrower and the Subsidiaries, taking into account the particular capital
requirements of such business and the projected capital requirements and capital
availability thereof.
(c) The Statutory Surplus of each Insurance Subsidiary is in excess of
zero.
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(d) The representations made in this Section 3.18 are made after taking
into consideration and giving effect to the Transactions. To the extent that the
representations made in paragraphs (a), (b) and (d) of this Section 3.18 relate
to any contingent liability, the amount of such contingent liability is computed
as the amount that, based on the Borrower's good faith estimates and assumptions
(made as of the Closing Date and determined in light of all facts and
circumstances known to the Borrower on the Closing Date and, in the case of any
contingent liability incurred in the ordinary course of the Insurance Business,
in accordance with actuarial assumptions used in the insurance industry),
represents the portion of such contingent liability in effect on the Closing
Date that can reasonably be expected, on the Closing Date, to become an actual
or matured liability. The Borrower is not aware as of the Closing Date of any
event, condition or circumstance that would make such estimates and assumptions
unreasonable.
SECTION 3.19. ABSENCE OF CERTAIN RESTRICTIONS. Except as required by law,
rule or regulation or by any Governmental Authority, including any Applicable
Insurance Regulatory Authority, no indenture, certificate of designation for
preferred stock, agreement or instrument to which any Material Subsidiary is a
party will, directly or indirectly, prohibit or restrain the payment of
dividends by such Subsidiary. As of the Closing Date, no such indenture,
certificate, agreement or instrument to which the Borrower or any Material
Subsidiary is a party will require the prepayment of any amounts owed by the
Borrower or such Subsidiary as a result of the consummation of the Transactions.
SECTION 3.20. LABOR MATTERS. Except as set forth on Schedule 3.20, there
are no strikes or other labor disputes against the Borrower or any of the
Subsidiaries pending or, to the Borrower's knowledge, threatened. The hours
worked and payments made to employees of the Borrower and each of the
Subsidiaries have not been in violation in any material respect of the Fair
Labor Standards Act or any other applicable law dealing with such matters. All
material payments due from the Borrower or any of the Subsidiaries, or for which
any claim may be made against the Borrower or any of the Subsidiaries, on
account of wages and employee health and welfare insurance and other benefits
have been paid or accrued as a liability on the books of the Borrower or such
Subsidiary.
SECTION 3.21. REINSURANCE AGREEMENTS. Exhibit G summarizes all the
Reinsurance Agreements to which any Insurance Subsidiary is a party on the
Closing Date and the Borrower has delivered copies of each such Reinsurance
Agreement with respect to which the Administrative Agent requested copies. On
the Closing Date, each such Reinsurance Agreement is in full force and effect
and none of the Borrower, any Subsidiary or, to the best of the knowledge of the
Borrower and the Subsidiaries, any other Person party thereto is in default in
respect of any material provision thereof.
SECTION 3.22. RESERVES. All reserves and other liabilities with respect to
insurance policies and annuity contracts reflected in each Annual Statement or
Quarterly Statement of each Insurance Subsidiary filed with an Applicable
Insurance Regulatory Authority since March 31, 1997, or delivered to any Lender
or the Administrative Agent ("RESERVE LIABILITIES") (a) were determined in
accordance with generally accepted actuarial standards consistently applied,
(b) were fairly stated in accordance with sound actuarial principles, (c) were
based on actuarial assumptions that were in accordance with or more conservative
than those appropriate (in the reasonable determination of the applicable
Insurance Subsidiary) for the related insurance policies and annuity contracts,
(d) met the requirements of the insurance laws, rules and regulations of their
respective states of domicile and met in all material respects the requirements
of the insurance laws, rules and regulations of each other jurisdiction in which
they are licensed to write life insurance or issue annuities and (e) reflected
(on a net basis) the related reinsurance, coinsurance and other similar
agreement of such Insurance Subsidiary. Adequate provision for all such Reserve
Liabilities has been made (under generally accepted actuarial principles
consistently applied) to cover the total amount of all reasonably anticipated
matured and unmatured benefits, claims and other liabilities of such Insurance
Subsidiary under all insurance policies and annuity contracts under which such
Insurance Subsidiary has any liability (including any liability arising under or
as a result of any reinsurance, coinsurance or other similar agreement) on the
respective dates of the Annual Statements or Quarterly Statements based on
commonly accepted actuarial assumptions as to future contingencies that are
reasonable and appropriate under the circumstances.
SECTION 3.23. CAPITALIZATION. (a) As of the Closing Date, the authorized
capital stock of the Borrower consists of 150,000,000 shares of Class A Common
Stock, 50,000,000 shares of Class B Common Stock and 10,000,000 shares of
Preferred Stock. Of such authorized capital stock, 14,543,619 shares of Class A
Common Stock, assuming no exercise of the Overallotment Option, 8,712,352 shares
of Class B Common Stock and 2,000,000 shares of Preferred Stock will be issued
and outstanding as of the Closing Date.
(b) The authorized capital stock of Holdings consists of 50,000 shares of
common stock, par value $1.00 per share. Of such authorized capital stock,
1,000 shares are issued and outstanding, fully paid and nonassessable and owned
beneficially and of record by the Borrower, free and clear of all Liens and
encumbrances whatsoever other than the Lien of the Pledge Agreement.
(c) The authorized capital stock of Integrity consists of 1,500,000 shares
of Common Stock, par value $1.33 per share, all of which shares are issued and
outstanding, fully paid and nonassessable and owned beneficially and of record
by Holdings, free and clear of all Liens and encumbrances whatsoever other than
the Lien of the Pledge Agreement.
(d) The authorized capital stock of National Integrity consists of
200,000 shares of Common Stock, par value $10.00 per share, all of which shares
are issued and outstanding, fully paid and nonassessable and owned beneficially
and of record by Integrity, free and clear of all Liens and encumbrances
whatsoever.
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SECTION 3.24. COLLATERAL DOCUMENTS. (a) The security interests created in
favor of Chase for the benefit of the Lenders under the Pledge Agreement
constitute valid, first-priority, perfected security interests in all the
pledgor's directly held capital stock of the Subsidiaries and such stock is not
subject to any Liens of any other Person. No filings or recordings are or will
be required in order to perfect the security interests created under the Pledge
Agreement in such stock.
(b) Upon execution and delivery of the Security Documents (other than the
Pledge Agreement) and the filing of financing statements in the appropriate
jurisdictions, the security interests created in favor of Chase for the benefit
of the Lenders under such Security Documents constitute, and at all times
thereafter will constitute, valid, perfected security interests in the
collateral subject thereto.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to the
satisfaction of the following conditions:
SECTION 4.01. ALL BORROWINGS. On the date of each Borrowing (other than, in
the case of paragraphs (b) and (c) below, a Borrowing in a principal amount such
that, immediately after the making of such Borrowing and all other simultaneous
Borrowings and giving effect to the application of the proceeds thereof, the
aggregate principal amount of all Borrowings hereunder shall not exceed the
aggregate amount of all Borrowings hereunder immediately prior thereto):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03.
(b) The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of
such Borrowing with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate
to an earlier date.
(c) At the time of and immediately after such Borrowing, no Event of
Default or Default shall have occurred and be continuing.
Each Borrowing to which the conditions specified in paragraphs (b) and (c) of
this Section 4.01 apply shall be deemed to constitute a representation and
warranty by the Borrower on the date of such Borrowing as to the matters
specified in such paragraphs.
SECTION 4.02. FIRST BORROWING. On the date of the first Borrowing
hereunder:
(a) The Administrative Agent shall have received (i) a favorable
written opinion of Shearman & Sterling, counsel for the Borrower, to the
effect set forth in Exhibit F-1 hereto and (ii) a favorable written opinion
of Xxxxxx X. Xxxxx, Esq., General Counsel of the Borrower, to the effect
set forth in Exhibit F-2 hereto, in each case dated the Closing Date and
addressed to the Lenders and the Administrative Agent, and the Borrower
hereby instruct such counsel to deliver such opinions to the Administrative
Agent.
(b) All legal matters incident to this Agreement and the Borrowings
hereunder shall be satisfactory to the Administrative Agent, the Lenders
and to Cravath, Swaine & Xxxxx, counsel for the Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto,
of the Borrower, certified as of a recent date by the Secretary of State of
the state of its organization, and a certificate as to the good standing of
the Borrower as of a recent date, from such Secretary of State; (ii) a
certificate of the Secretary or Assistant Secretary of the Borrower dated
the Closing Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws of the Borrower as in effect on the Closing
Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of the
Borrower authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, the Borrowings hereunder and the other
Transactions, and that such resolutions have not been modified, rescinded
or amended and are in full force and effect, (C) that the certificate or
articles of incorporation of the Borrower have not been amended since the
date of the last amendment thereto shown on the certificate of good
standing furnished pursuant to clause (i) above, and (D) as to the
incumbency and specimen signature of each officer executing any Loan
Document or any other document delivered in connection herewith on behalf
of the Borrower; (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Administrative Agent or Cravath, Swaine & Xxxxx, counsel
for the Administrative Agent, may reasonably request.
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(d) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed by a Responsible Officer of the Borrower,
confirming compliance with the conditions precedent set forth in paragraphs
(b) and (c) of Section 4.01.
(e) The Pledged Securities shall have been delivered to Chase, as
representative for the Lenders under the Security Documents, all requisite
Uniform Commercial Code Financing Statements shall have been filed and each
of the Security Documents shall have been duly executed and delivered by
each pledgor or grantor thereunder and shall be in full force and effect.
Upon consummation of the actions set forth in the immediately preceding
sentence, each Security Document shall create in favor of Chase as holder
of the collateral for the Lenders under the Security Documents a perfected
first priority security interest in the collateral subject thereto, subject
to no Liens other than Liens permitted by Section 6.02.
(f) The Lenders shall be reasonably satisfied as to (i) the amount and
nature of the environmental and employee health and safety exposures to
which the Borrower and the Subsidiaries could reasonably be expected to be
subject and (ii) the plans of the Borrower with respect to the reduction of
such exposure.
(g) The aggregate amount of the Statutory Reserves of the Insurance
Subsidiaries (defined and determined, in the case of each Insurance
Subsidiary, in accordance with SAP), after giving effect to the Cash
Contributions, shall not be less than $1,700,000,000 in the aggregate.
(h) The Lenders shall be reasonably satisfied in all material respects
with the management of the Borrower and the arrangements for the retention
of such management, including the form and scope of the Employment
Agreements.
(i) All fees previously agreed upon to be paid to the Lenders shall
have been paid.
(j) The Lenders shall have been satisfied in all material respects
with the provisions of the Preferred Stock as set forth in the Certificate
of Designation, including such provisions relating to dividends and
mandatory and optional redemption, and the Preferred Stock shall have
received a rating of BBB- or higher by each of S&P and Ba1 by Moodys.
(k) All consents, approvals and agreements necessary or, in the
judgment of the Lenders, the Administrative Agent or Cravath, Swaine &
Xxxxx, counsel for the Administrative Agent, advisable for consummation of
the Transactions shall have been obtained and shall be in full force and
effect. In the reasonable judgment of the Lenders and the Administrative
Agent, there shall not be any action, suit, litigation or similar
proceeding at law or in equity or by or before any court or Governmental
Authority pending (i) that would be materially inconsistent with the
assumptions underlying the projections regarding the Borrower and the
Subsidiaries heretofore furnished to the Lenders or (ii) that would
reasonably be expected to have a materially adverse effect on (A) the
business, assets, operations or condition, financial or otherwise,
prospects, or material contracts of the Borrower or any Subsidiary, (B) the
ability of the Borrower to consummate the Transactions or (C) the validity
or enforceability of any of the Loan Documents or the rights, remedies and
benefits available to the Administrative Agent or any Lender under the Loan
Documents.
(l) No judgment, order or decree shall be outstanding, and no action
shall have been taken by any Governmental Authority, that, in the
reasonable judgment of the Lenders, the Administrative Agent or Cravath,
Swaine & Xxxxx, counsel for the Administrative Agent, has or is likely to
have the effect of restraining, preventing or imposing burdensome
conditions upon any of the Transactions.
(m) The Borrower shall have delivered to the Administrative Agent a
letter dated the Closing Date setting forth in reasonable detail the
estimated fees and expenses to be paid by the Borrower in connection with
the Transactions and the Lenders shall have been reasonably satisfied with
the aggregate amount of such fees and expenses.
(n) The Common Stock Offering shall have been completed on terms
reasonably satisfactory to Chase, and the Borrower shall have received net
cash proceeds from the Common Stock Offering of at least $50,000,000.
(o) Up to $38,000,000 drawn under the Loans shall be used to repay in
full all amounts outstanding under the Existing Credit Agreement, and all
commitments to lend under the Existing Credit Agreement shall be
permanently terminated.
(p) The Lenders shall have received a reasonably satisfactory Pro
Forma Consolidated Balance Sheet of the Borrower after giving effect to the
Common Stock Offering and the other transactions contemplated hereby, and
the Lenders shall be reasonably satisfied that such balance sheet is not
inconsistent with the projections heretofore or hereafter furnished to the
Lenders.
26
(q) Each Insurance Subsidiary shall be rated A- or better by A.M. Best
Company, Inc.
(r) The Administrative Agent shall have received (i) the consolidated
balance sheet and statements of earnings and cash flow of the Borrower and
its Subsidiaries (A) as of and for the fiscal years ended December 31,
1995, and December 31, 1996, prepared in accordance with GAAP and audited
by and accompanied by the opinion of Ernst & Young LLP, independent public
accountants and (B) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 1997, prepared in accordance with GAAP and
certified by its chief financial officer and (ii) the Annual Statement of
each of the Insurance Subsidiaries for the year ended December 31, 1996,
and the Quarterly Statement of each of the Insurance Subsidiaries for the
fiscal quarter ended March 31, 1997 in each case prepared in accordance
with SAP and filed with such Insurance Subsidiary's Applicable Insurance
Regulatory Authority.
(s) The Guarantee Agreement shall have been duly executed by Holdings
and Chase, as representative for the Lenders.
(t) The Assignment Agreement shall have been duly executed by the
Borrower, Holdings and Chase, as representative for the Lenders, and
consented to by Integrity and National Integrity.
Notwithstanding the satisfaction of the Lenders with respect to any
matters set forth in this Section 4.02, the Lenders shall at all times be deemed
to have relied on the representations and warranties set forth in this Agreement
and the other Loan Documents.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that so long as (a) the
principal of or interest on any Loan shall remain unpaid, (b) any Lender shall
have any Commitment hereunder or (c) any Fees, expenses or other amounts payable
under any Loan Document (if due and payable on the first date that the principal
of and interest on all Loans have been paid in full and the Commitments have
been terminated) shall remain unpaid, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and will cause each of its
respective Subsidiaries to:
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under Section 6.05
and with respect to any Material Subsidiary.
(b) (i) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; PROVIDED, HOWEVER, that neither the
Borrower, nor any of its Subsidiaries shall be required to preserve any rights,
licenses, permits, franchises, authorizations, patents, copyrights, trademarks
and tradenames if the applicable Board of Directors of the Borrower or any of
its Subsidiaries shall determine the preservation thereof is no longer desirable
in the conduct of the Insurance Business or the Financial Services Business, as
the case may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower or such Subsidiary or the Lenders; maintain and
operate such business in a manner consistent with the manner permitted under
Section 6.08; (ii) comply in all material respects with all applicable laws,
rules, regulations and orders of any Governmental Authority, whether now in
effect or hereafter enacted; and (iii) at all times maintain and preserve all
property material to the conduct of such business and keep such property in
normal working order and condition (ordinary wear and tear excepted) and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 5.02. INSURANCE. Keep its insurable properties adequately insured
at all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies engaged in
the same or similar businesses and owning properties of similar type, including
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
SECTION 5.03. OBLIGATIONS AND TAXES. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; PROVIDED, HOWEVER,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto.
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SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower, furnish to the Administrative Agent:
(a) within 90 days after the end of each fiscal year, (i) its
unconsolidated and consolidated balance sheets and related statements of
earnings and cash flow, showing the financial condition of the Borrower or
the Borrower and the consolidated Subsidiaries, as the case may be, as of
the close of such fiscal year and the results of its operations or of its
operations and the operations of such Subsidiaries during such year, as the
case may be, all audited by and accompanied by an opinion of Ernst & Young
or other independent public accountants of recognized national standing to
the effect that such financial statements fairly present the financial
condition and results of operations of the Borrower or of the Borrower and
the consolidated Subsidiaries on a consolidated basis, as the case may be,
in accordance with GAAP consistently applied, (ii) a certificate of Ernst &
Young or such other accounting firm opining on or certifying such
statements (which certificate may be limited to accounting matters and
disclaim responsibility for legal interpretations), (A) certifying that in
the course of the regular audit of the business of the Borrower or the
Borrower and its consolidated Subsidiaries, as the case may be, such
accounting firm has obtained no knowledge that an Event of Default or
Default has occurred and is continuing or, if in the opinion of such
accounting firm an Event of Default or Default has occurred and is
continuing, specifying the nature and extent thereof and (B) setting forth
computations in reasonable detail satisfactory to the Administrative Agent
demonstrating compliance with the covenants contained in Sections 6.12
through 6.17 and (iii) its consolidating schedules relating to the balance
sheets and related statements of earnings delivered pursuant to clause (i)
above, certified by a Responsible Officer of the Borrower;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, (i) its unconsolidated and consolidated
balance sheets, related statements of earnings and cash flow, and related
consolidating schedules (other than with respect to cash flow) showing the
financial condition of the Borrower or of the Borrower and the consolidated
Subsidiaries, as the case may be, as of the close of such fiscal quarter
and the results of its operations or its operations and the operations of
such Subsidiaries, as the case may be, during such fiscal quarter and the
then-elapsed portion of the fiscal year, all certified by one of its
Responsible Officers as fairly presenting the financial condition and
results of operations of the Borrower or the Borrower and the consolidated
Subsidiaries on a consolidated basis, as the case may be, in accordance
with GAAP consistently applied, subject to normal year-end audit
adjustments, and (ii) a certificate of a Responsible Officer opining on or
certifying such statements, (A) certifying that no Event of Default or
Default has occurred and is continuing or, if such an Event of Default or
Default has occurred and is continuing, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto and (B) setting forth computations in reasonable detail
satisfactory to the Administrative Agent demonstrating compliance with the
covenants contained in Sections 6.12 through 6.16 (and stating that such
computations have been reviewed by such accounting firm referred to in
clause (a)(i) above);
(c) as soon as available and in any event within 90 days after the end
of each fiscal year, (i) the Statement of Actuarial Opinion of each
Insurance Subsidiary for such fiscal year and as filed with the Applicable
Insurance Regulatory Authority and (ii) the Annual Statement of each
Insurance Subsidiary for such fiscal year and as filed with the Applicable
Insurance Regulatory Authority, together with, in the case of the
statements delivered pursuant to clause (ii) above, a certificate of a
Responsible Officer of such Insurance Subsidiary or a Responsible Officer
of the Borrower, as the case may be, to the effect that such statements
present fairly the statutory assets, liabilities, capital and surplus,
results of operations and cash flows of such Insurance Subsidiary in
accordance with SAP;
(d) as soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year, the
Quarterly Statement of each Insurance Subsidiary for such fiscal quarter
and as filed with the Applicable Insurance Regulatory Authority, certified
by a Responsible Officer of the Borrower as fairly presenting the statutory
assets, liabilities, capital and surplus, results of operations and cash
flows of such Insurance Subsidiary;
(e) upon the request of the Required Lenders at any time that a
Default has occurred and is continuing, but not more often than once in any
fiscal year, an actuarial value report regarding actuarial valuations of
Surplus and in force business of each Insurance Subsidiary, prepared by any
independent actuarial or accounting firm of nationally recognized standing
acceptable to the Required Lenders;
(f) promptly after delivery to an Insurance Subsidiary, final copies
of all regular and periodic reports of reviews or examinations of such
Insurance Subsidiary, delivered to such Insurance Subsidiary by the
Applicable Insurance Regulatory Authority;
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
it with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of or all the functions of said Commission, or
with any national securities exchange, or distributed to its shareholders,
as the case may be;
28
(h) upon the request of the Administrative Agent, a summary of the
Reinsurance Agreements of the Insurance Subsidiaries as in effect on the
date of such request, such summary to be substantially in the form of
Exhibit G, and copies of any Reinsurance Agreement of any Insurance
Subsidiary; and
(i) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request (it being
understood that any non-public information provided hereunder shall be kept
confidential in accordance with sound banking practices and in any event
subject to Section 9.04(g)).
SECTION 5.05. LITIGATION AND OTHER NOTICES. Furnish to the Administrative
Agent prompt written notice of the following:
(a) any Event of Default or Default continuing on the date of such
notice, specifying the nature and extent thereof and the corrective action
(if any) proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Subsidiary that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect; and
(c) any development that has resulted, in the Borrower's reasonable
judgment, in a Material Adverse Effect.
SECTION 5.06. EMPLOYEE BENEFITS. (a) Comply in all material respects with
the applicable provisions of ERISA and (b) furnish to the Administrative Agent
and each Lender (i) as soon as possible, and in any event within 30 days after
any Responsible Officer of the Borrower or any ERISA Affiliate either knows or
has reason to know that any Reportable Event has occurred that alone or together
with any other Reportable Event could reasonably be expected to result in
liability of the Borrower to the PBGC in an aggregate amount exceeding
$2,000,000 a statement of a Responsible Officer of the Borrower setting forth
details as to such Reportable Event and the action that the Borrower proposes to
take with respect thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (ii) promptly after receipt thereof, a copy
of any notice that the Borrower or any ERISA Affiliate may receive from the PBGC
relating to the intention of the PBGC to terminate any such Plan (other than a
Plan maintained by an ERISA Affiliate which is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any such Plan, (iii) within 15 days after the due date
for filing with the PBGC pursuant to Section 412(n) of the Code of a notice of
failure to make a required installment or other payment with respect to a Plan,
a statement of a Responsible Officer of the Borrower setting forth details as to
such failure and the action the Borrower or its ERISA Affiliates propose to take
with respect thereto, together with a copy of such notice given to the PBGC and
(iv) promptly and in any event within 30 days after receipt thereof by the
Borrower or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy
of each notice received by the Borrower or any ERISA Affiliate concerning (A)
the imposition of Withdrawal Liability or (B) a determination that a
Multiemployer Plan is, or is expected to be, terminated or in reorganization,
both within the meaning of Title IV of ERISA.
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Maintain all financial records in accordance with GAAP and, with respect to any
Insurance Subsidiary, SAP, and permit any representatives designated by any
Lender to visit and inspect the financial records and the properties of the
Borrower or any Subsidiary from time to time upon reasonable notice, at
reasonable times, during normal business hours and as often as requested and to
make extracts from and copies of such financial records, and permit any
representatives designated by any Lender to discuss the affairs, finances and
condition of the Borrower or any Subsidiary with the officers thereof and
independent accountants therefor.
SECTION 5.08. USE OF PROCEEDS. Use the proceeds of the Loans only for the
purposes set forth in the preamble to this Agreement; PROVIDED, HOWEVER, that no
proceeds of the Loans shall be used in violation of the Investment Company Act
of 1940.
SECTION 5.09. FISCAL YEAR. Cause its fiscal year to end on December 31 of
each year.
SECTION 5.10. ADDITIONAL SECURITY. Promptly upon the direct acquisition of
the capital stock of any United States Subsidiary by the Borrower or Holdings
(including any capital stock acquired in connection with the creation of any
subsidiary of the Borrower or Holdings), amend the applicable Pledge Agreement
to include such stock as Pledged Securities thereunder and take all actions
necessary in order to perfect the validity and first priority of the security
interest of the Lenders in such stock, except to the extent that such amendment
or any such action is prohibited by any law, rule or regulation of any
Governmental Authority, including any Applicable Insurance Regulatory Authority;
and promptly upon the direct acquisition of the capital stock of any other
Material Subsidiary by the Borrower or Holdings (including any capital stock
acquired in connection with the creation of any subsidiary of the Borrower or
Holdings), negotiate in good faith with the Lenders to provide such additional
security in respect of the stock of such subsidiary; PROVIDED,
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HOWEVER, that neither the Borrower nor Holdings shall be required hereunder or
under any of the Security Documents to pledge shares possessing more than 65% of
the voting power of all classes of capital stock entitled to vote of any
subsidiary that is a controlled foreign corporation (as defined in
Section 957(a) and (b) (or any successor provisions) of the Code) or of any
subsidiary that acts solely or principally as a holding company (directly or
indirectly) for the stock of one or more controlled foreign corporations and
that shares of only one such corporation in a corporate chain shall be required
to be pledged and, in any event, no pledge of the shares of capital stock of any
subsidiary shall be required or effective to the extent that such pledge would
trigger an increase in income of a United States shareholder of the pledgor of
such stock pursuant to Section 951 (or a successor provision) of the Code.
SECTION 5.11. FURTHER ASSURANCES. Execute any and all further documents,
financing statements, agreements and instruments, and take all further actions
(including (i) filing Uniform Commercial Code financing statements that may be
required under applicable law or which the Required Lenders or the
Administrative Agent may reasonably request and (ii) delivering any securities
to be subject to the Pledge Agreement), in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents.
ARTICLE VI. NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that, so long as (a) the
principal of or interest on any Loan shall remain unpaid, (b) any Lender shall
have any Commitment hereunder or (c) any Fees, expenses or other amounts payable
under any Loan Document (if due and payable on the first date that the principal
of and interest on all Loans have been paid in full and the Commitments have
been terminated) shall remain unpaid, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not and will not permit the
Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness for borrowed money that is secured by Liens on or is
otherwise with recourse to the property or assets of the Borrower or any
Subsidiary to the extent that such Indebtedness is existing on the date
hereof and is set forth on Schedule 6.01, but not any extensions, renewals
or replacements of such Indebtedness;
(b) Indebtedness of the Borrower that is not secured by Liens on and
is otherwise without recourse to the property or assets (whether now owned
or hereafter acquired) of the Borrower or any Subsidiary;
(c) Intercompany Loans, provided that (i) the repayment obligations in
respect of such Intercompany Loans to the Borrower are subordinated, on
terms no less favorable to the Lenders than those set forth on Exhibit H,
to the prior payment in full in cash of the Obligations, (ii) no case,
proceeding or other action of the type referred to in paragraph (g) of
Article VII at any time has been commenced against any of the borrowers of
such Intercompany Loans and (iii) no Applicable Insurance Regulatory
Authority at any time has issued any order of the type referred to in
paragraph (o) of Article VII against any such borrowers;
(d) Indebtedness consisting of the Borrowings hereunder and the
Guarantee Agreement;
(e) in the case of the Borrower, Permitted Swaps;
(f) in the case of the Insurance Subsidiaries, Rate Protection
Agreements;
(g) Indebtedness of the Borrower pursuant to repurchase agreements
with any Lender;
(h) Indebtedness of the Borrower incurred or assumed in connection
with permitted Capital Expenditures;
(i) Indebtedness of the Borrower incurred in connection with the
acquisition of any capital stock or assets permitted by Section 6.05(c),
provided that the repayment obligations in respect of such Indebtedness are
subordinated, on terms no less favorable to the Lenders than those set
forth on Exhibit H, to the prior payment in full in cash of the
Obligations;
(j) obligations of the Borrower and/or the Subsidiaries as account
parties in respect of letters of credit and bankers' acceptances and
Guarantees of the Indebtedness of or by the Borrower and the Subsidiaries
in an aggregate principal amount in respect of this clause (j) not in
excess of $2,000,000 at any time outstanding, $1,600,000 of which may be
secured as permitted in Section 6.02(1);
(k) additional Indebtedness in an aggregate principal amount not
exceeding at any time $10,000,000; and
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(l) Indebtedness of the Borrower and its Subsidiaries in an aggregate
principal amount not exceeding at any time $12,000,000 owed to reinsurers,
the proceeds of which are used to finance the payment of commissions to
agents that sell insurance products on behalf of the Subsidiaries.
The Borrower and the Lenders agree to negotiate in good faith to amend paragraph
(f) of this Section 6.01 in the event that any change in law, rule or regulation
of any Governmental Authority, including any Applicable Insurance Regulatory
Authority, shall prohibit the Insurance Subsidiaries from entering into Rate
Protection Agreements.
SECTION 6.02. LIENS. Create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any Person,
including any Subsidiary) now owned or hereafter acquired by it or any
Subsidiary or on any income or revenues or rights in respect of any thereof,
except:
(a) Liens on property or assets of the Subsidiaries existing on the
date hereof and set forth in Schedule 6.02; PROVIDED, HOWEVER, that such
Liens shall secure only those obligations that they secure on the date
hereof and refinancings of such obligations;
(b) any Lien existing on any property or asset (including any such
property or asset acquired in connection with Capital Expenditures) prior
to the acquisition thereof by the Borrower or any Subsidiary; PROVIDED,
HOWEVER, that (i) such Lien shall not be created in contemplation of or in
connection with such acquisition and (ii) such Lien shall not apply to any
other property or assets of the Borrower or any Subsidiary;
(c) Liens for taxes not yet due or which are being contested in
compliance with Section 5.03;
(d) carriers', warehousemen's, mechanic's, materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due or which are being contested in compliance
with Section 5.03;
(e) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(f) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary
course of business that, in the aggregate, are not substantial in amount
and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(h) purchase options, calls and similar rights of third-parties with
respect to securities that constitute Invested Assets;
(i) Liens on the assets of any Insurance Subsidiary or of SBM
Certificate Company securing obligations of such Insurance Subsidiary or
SBM Certificate Company, respectively, in respect of Rate Protection
Agreements;
(j) Liens created under the Security Documents and Liens securing
Indebtedness referred to in paragraphs (a), (g) and (h) of Section 6.01;
PROVIDED HOWEVER, that in the case of Liens securing Indebtedness referred
to in paragraph (g) or (h) of Section 6.01, such Liens shall only exist on
the asset acquired to which such Indebtedness relates;
(k) additional Liens securing Indebtedness permitted to be incurred by
Section 6.01(k), PROVIDED that such Liens shall apply only to properties
and assets, if any, of which the purchase, construction, maintenance or
development shall be (or shall have been) financed (or refinanced, replaced
or refunded) with, or which shall be (or shall have been) the subject of
any lease-financing (including any sale-and-leaseback) transaction
constituting or involving (or refinanced, replaced or refunded with),
Indebtedness incurred pursuant to subparagraph (k) of Section 6.01; and
(l) Liens on assets the aggregate fair market value of which does not
exceed $1,600,000, in connection with a letter of credit issued by The
First National Bank of Chicago.
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property being sold or transferred; PROVIDED, HOWEVER, that the Borrower or any
of the Subsidiaries may enter into any transaction otherwise prohibited under
this Section 6.03 if (a) the applicable lease
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pertains to property acquired after the Closing Date and (b) such transaction is
not prohibited by the provisions of Section 6.01.
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other Person, except:
(a) investments by the Borrower and the Subsidiaries existing on the
date hereof in the capital stock of the Subsidiaries and, subject to
Section 6.05(c), investments by the Borrower and the Subsidiaries in any
other Subsidiaries;
(b) cash and Cash Equivalents;
(c) permitted Capital Expenditures; and
(d) investments by the Borrower or any Subsidiary in Invested Assets;
and
(e) investments consisting of loans to ARM Capital Advisors Holdings,
LLC in connection with the purchase of ARM Capital Advisors, LLC and the
provision of working capital loans to ARM Capital Advisors, LLC, in an
aggregate amount for all such loans not in excess of $4,000,000 at any time
outstanding.
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND ACQUISITIONS.
(a) Merge into or consolidate with any other Person, or permit any other Person
to merge into or consolidate with it, except that if, at the time thereof and
immediately after giving effect thereto, no Event of Default or Default shall
have occurred and be continuing, (i) any wholly owned Subsidiary other than an
Insurance Subsidiary may merge into the Borrower so long as the Borrower is the
surviving corporation, (ii) any wholly owned Subsidiary may merge into or
consolidate with any other wholly owned Subsidiary other than Holdings so long
as the surviving entity is a wholly owned Subsidiary and no Person other than
the Borrower or a wholly owned Subsidiary receives any consideration and
(iii) subject to Section 6.08, any Subsidiary other than Holdings may merge with
any other Person that is principally engaged in the Insurance Business or the
Financial Services Business, provided that such Subsidiary is the surviving
entity.
(b) Sell, transfer, lease or otherwise dispose of (in one transaction or in
a series of transactions) any of its assets (whether now owned or hereafter
acquired), unless immediately after giving effect to such sale, transfer or
lease (i) no Event of Default or Default shall have occurred and be continuing
and (ii) the aggregate Net Proceeds of all such sales, transfers, leases and
dispositions since the Closing Date (other than such sales, transfers, leases
and dispositions permitted pursuant to the immediately following sentence) does
not exceed 15% of the Total Assets as of the date of such asset sale.
Notwithstanding the foregoing, the Borrower and any Subsidiary may (i) sell,
transfer, lease or otherwise dispose of assets (including Invested Assets) in
the ordinary course of business, (ii) sell, transfer, lease or otherwise dispose
of assets to the Borrower or a Subsidiary, PROVIDED that if such seller,
transferor or lessor is an Insurance Subsidiary, such assets shall be sold or
leased at fair market value, (iii) sell, transfer, lease or otherwise dispose of
assets that are replaced within six months of the date of sale with assets that
are either (A) comparable to and used in the same business as the assets sold or
(B) comparable to the assets sold and used in another business in which the
Borrower and the Subsidiaries are permitted to engage pursuant to Section 6.08,
(iv) sell or dispose of in the ordinary course of business property that is
obsolete or no longer useful in any of its business and that is (A) of DE
MINIMIS value or (B) in the case of any property the value of which exceeds
$500,000, determined in good faith by the Board of Directors of the Borrower or
such Subsidiary, as the case may be, to be obsolete or no longer useful and
(v) sell, transfer, lease or otherwise dispose of substantially all of the
assets of ARM Capital Advisors, Inc. in connection with the sale by Borrower of
an 80% membership interest in ARM Capital Advisors, LLC ("New ARMCA") to ARM
Capital Advisors Holdings, LLC ("ARMCA Holdings") and shall transfer, convey or
otherwise dispose of an 80% membership interest in New ARMCA to ARMCA Holdings.
To the extent the Required Lenders waive the provisions of this Section 6.05
with respect to the sale of any asset, or any asset or membership interest is
sold as permitted by this Section 6.05, such asset or membership interest shall
be sold free and clear of the Liens created by the Security Documents, and the
Administrative Agent shall take such actions as the Administrative Agent
reasonably deems appropriate at the expense of the Borrower in connection
therewith.
(c) Purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or any substantial part of the capital stock or assets of any
other Person, except that if, at the time thereof and immediately after giving
effect thereto, no Event of Default shall have occurred and be continuing, the
Borrower or any Subsidiary may, subject to the provisions of Sections 6.08,
acquire all or a substantial part of the capital stock or assets of any Person
that is principally engaged in the Insurance Business or the Financial Services
Business, provided that, (i) in the case of an acquisition of assets, such
assets are of the type used in the Insurance Business or the Financial Services
Business of such Person and (ii) in the case of an acquisition of capital stock
by the Borrower, such capital stock is, if required by Section 5.10, pledged to
the Administrative Agent, for the benefit of the Lenders, pursuant to the Pledge
Agreement.
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS. Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
with respect to any shares of its capital stock or directly or indirectly
redeem, purchase, retire or otherwise acquire for
32
value (or permit any Subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose; PROVIDED,
HOWEVER, that (a) any Subsidiary may declare and pay dividends or make other
distributions to the Borrower or any other Subsidiary; (b) so long as no Default
or Event of Default has occurred and is continuing or would occur after giving
effect thereto, (i) the Borrower may declare and pay dividends with respect to
the Preferred Stock as provided in the Certificate of Designation and (ii) the
Borrower may declare and pay cash dividends on, and may make redemptions and
repurchases of, any of its capital stock other than the Preferred Stock so long
as the amounts paid in any fiscal year in connection with such dividends,
redemptions and repurchases do not exceed the greater of (A) one-third of the
Borrower's Net Income in respect of the immediately preceding fiscal year and
(B) $3,000,000; and (c) the Borrower may directly or indirectly redeem,
purchase, retire or otherwise acquire for value any shares of its Class A Common
Stock in accordance with the terms of the Stock Option Plan.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. Sell or transfer any property
or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates,
except that (a) the Borrower or any Subsidiary may engage in any of the
foregoing transactions in the ordinary course of business at prices and on
terms and conditions no less favorable to the Borrower or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) the Borrower and the Subsidiaries may perform their respective
obligations under the Administrative Services Agreements, the Employment
Agreements, any employment agreement with an executive of the Borrower and
the Stock Option Plan, (c) the Borrower may perform its obligations under the
Underwriting Agreement, (d) the Borrower and the Subsidiaries may engage in
the Transactions and in any other transaction with each other that is not
otherwise prohibited under this Agreement and in any transaction with an
Affiliate otherwise permitted pursuant to this Agreement, (e) the Borrower
may engage in the Transactions contemplated by clause (v) of Section 6.05(b)
and (f) the Borrower and the Subsidiaries may pay fees to Xxxxxx Xxxxxxx
Group Inc., Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co. and their Affiliates
for financial and consulting services (including any underwriting discounts
and commissions, placement agent fees and fees for asset management and
financial advisory services performed in the ordinary course of business of
Xxxxxx Xxxxxxx Group Inc., Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co. or any
of their Affiliates), provided that the amount of any such fees shall not
exceed the usual and customary fees of Xxxxxx Xxxxxxx Group, Inc. or such
Affiliate, as the case may be, for similar services rendered to third parties.
SECTION 6.08. BUSINESS OF THE BORROWER AND THE SUBSIDIARIES. (a) In the
case of the Borrower and the Subsidiaries, other than Holdings, engage at any
time in any business or business activity other than (i) the Insurance Business
and the Financial Services Business (including the acquisition of such
businesses to the extent not otherwise prohibited by this Agreement),
(ii) activities in connection with the consummation of the Transactions and
(iii) the ownership or acquisition of the capital stock of, or the creation of
(in the form of new Subsidiaries), entities engaged in the Insurance Business or
the Financial Services Business.
(b) In the case of Holdings, engage at any time in any business or business
activity other than (i) the ownership or acquisition of the capital stock of, or
the creation of (in the form of new Subsidiaries), entities engaged in the
Insurance Business or the Financial Services Business and (ii) activities in
connection with the consummation of the Transactions.
SECTION 6.09. DEBT PAYMENTS. Directly or indirectly make any optional
payment, prepayment, redemption, retirement or defeasance, whether in cash,
property, securities or a combination thereof, on account of the principal
amount of any Indebtedness (other than the Obligations) of the Borrower or any
Subsidiary, except for (a) payments of insurance claims in the ordinary course
of the Insurance Business and (b) prepayments of any Intercompany Loan other
than a Designated Intercompany Loan.
SECTION 6.10. AMENDMENTS AND ASSIGNMENTS. (a) Permit any amendment or
modification to be made to, or any waiver of its rights (but not its
obligations) under the Stockholders Agreement, the SPA Guaranty Agreement, the
Certificate of Designation, either Employment Agreement or any Administrative
Services Agreement, other than any amendment, modification or waiver (i) that
could not reasonably be expected to materially adversely affect the business,
assets, operations or condition (financial or otherwise) of the Borrower and the
Subsidiaries taken as a whole and (ii) that could not reasonably be expected to
adversely affect the interests of the Lenders, including in the case of the
Certificate of Designation, by any increase in any dividend to accrue in any
period with respect to the Preferred Stock and the making of any other change
that would not materially increase the Borrower's obligations thereunder and/or
by replacing the terms of the Stock Option Plan contained in Exhibit B thereto
with any Stock Option Plan as in effect from time to time in accordance with the
definition of the term "Stock Option Plan". Notwithstanding the foregoing and
so long as no Default or Event of Default has occurred and is continuing or
shall occur as a result thereof, the Borrower shall be permitted to amend or
modify, or waive any provisions under, the Stockholders Agreement or either
Employment Agreement.
(b) Permit any assignment of the SPA Guaranty Agreement to any Person
without the consent of the Required Lenders.
SECTION 6.11. TOTAL FUNDED INDEBTEDNESS TO TOTAL CAPITAL RATIO. Permit the
ratio of Total Funded Indebtedness to Total Capital at the end of any fiscal
quarter of the Borrower to exceed 0.30 to 1.00.
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SECTION 6.12. INTEREST COVERAGE RATIO. Permit the ratio of EBIT of the
Borrower and its Subsidiaries on a consolidated basis to Interest Expense of the
Borrower and its Subsidiaries on a consolidated basis to be less than 2.00 to
1.00.
SECTION 6.13. ADJUSTED STATUTORY SURPLUS. Permit the excess of (a) Adjusted
Statutory Surplus at the end of any fiscal quarter of the Borrower over (b) the
aggregate principal amount of all Intercompany Loans outstanding at such time to
be less than $135,000,000.
SECTION 6.14. RISK-BASED CAPITAL RATIO. Permit (a) the ratio of Total
Adjusted Capital to Risk-Based Capital at the end of any fiscal quarter of the
Borrower to be less than 1.50 to 1.00 or (b) the ratio of Total Adjusted Capital
to the Authorized Control Level Risk-Based Capital at the end of any fiscal
quarter of the Borrower to be less than 3.00 to 1.00.
SECTION 6.15. INVESTMENT RATIOS. Permit, at any time, the sum of (a) the
aggregate amount of the Non-Subsidiary Investments of the Borrower, SBM
Certificate Company and ARM Securities Corp., Inc. at such time, determined on
an unconsolidated basis in accordance with GAAP, and (b) the Total Admitted
Assets (other than Separate Account Assets) of the Insurance Subsidiaries (taken
as a whole) at such time, determined on a consolidated basis, in accordance with
SAP, in each case that are Non-Investment Grade Investments, to exceed the sum
of (i) 10% of the aggregate amount of Non-Subsidiary Investments of the
Borrower, SBM Certificate Company and ARM Securities Corp. at such time,
determined on an unconsolidated basis, in accordance with GAAP, and (ii) 10% of
the aggregate amount of the Total Admitted Assets (other than Separate Account
Assets) of the Insurance Subsidiaries (taken as a whole) at such time determined
on a consolidated basis, in accordance with SAP.
SECTION 6.16. SURPLUS RELIEF RATIO. Permit, at the last day of any fiscal
quarter of the Borrower, the Surplus Relief Ratio of the Insurance Subsidiaries
(taken together) for any period of four consecutive fiscal quarters of the
Borrower to exceed 10% of the Surplus of the Insurance Subsidiaries during such
period.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the Borrowings hereunder, or any
representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in
connection with or pursuant to any Loan Document, shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or any other amount (other than an amount referred to in
paragraph (b) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue unremedied
for a period of four Business Days;
(d) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05, or 5.09 or in Article VI (it being
understood that if any covenant in Section 6.12, 6.13, 6.14, 6.15 or 6.16
is breached at the end of any applicable period but not as to any
subsequent period, such Event of Default is no longer continuing);
(e) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan Document (other than those specified in
paragraph (b), (c) or (d) above) and such default shall continue unremedied
for a period of 15 days after notice thereof from the Administrative Agent
or any Lender to the Borrower;
(f) the Borrower or any Subsidiary shall (i) fail to pay any principal
or interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess of $5,000,000, when and as the same shall become
due and payable (and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument related to such
Indebtedness), or (ii) fail to observe or perform any other term, covenant,
condition or agreement contained in any agreement or instrument evidencing
or governing any such Indebtedness (and such failure shall continue after
the applicable grace period, if any, specified in the agreement or
instrument related to such Indebtedness) if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a trustee on its or their behalf (with or
without the giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity;
34
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Borrower or any Material Subsidiary, or of a
substantial part of the property or assets of the Borrower or a Material
Subsidiary, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Material Subsidiary or for a substantial part of
the property or assets of the Borrower or a Material Subsidiary or
(iii) the winding-up or liquidation of the Borrower or any Material
Subsidiary; and either (x) an order or decree approving or ordering any of
the foregoing shall be entered or, in the case of an Insurance Subsidiary,
such proceeding or petition shall result in adjudication or an appointment
of the type referred to in clause (i) or (y) such proceeding or petition
shall continue undismissed for 60 days;
(h) the Borrower or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Material Subsidiary or for a substantial part of
the property or assets of the Borrower or any Material Subsidiary,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount (not covered by insurance as to which the applicable company has
acknowledged coverage) in excess of $1,000,000 shall be rendered against
the Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to levy upon assets or properties of the
Borrower or any Subsidiary to enforce any such judgment;
(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrower to the PBGC or to a Plan in an aggregate amount exceeding
$2,000,000 and, within 30 days after the reporting of any such Reportable
Event to the Administrative Agent or after the receipt by the
Administrative Agent of the statement required pursuant to Section 5.06,
the Administrative Agent shall have notified the Borrower in writing that
(i) the Required Lenders have made a determination that, on the basis of
such Reportable Event or Reportable Events or the failure to make a
required payment, there are reasonable grounds (A) for the termination of
such Plan or Plans by the PBGC, (B) for the appointment by the appropriate
United States District Court of a trustee to administer such Plan or Plans
or (C) for the imposition of a lien in favor of a Plan and (ii) as a result
thereof an Event of Default exists hereunder; or a trustee shall be
appointed by a United States District Court to administer any such Plan or
Plans; or the PBGC shall institute proceedings (including giving notice of
intent thereof) to terminate any Plan or Plans;
(k) (i) the Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA
Affiliate does not have reasonable grounds for contesting such Withdrawal
Liability or is not contesting such Withdrawal Liability in a timely and
appropriate manner and (iii) the amount of such Withdrawal Liability
specified in such notice, when aggregated with all other amounts required
to be paid to Multiemployer Plans in connection with Withdrawal Liabilities
(determined as of the date or dates of such notification), (A) exceeds
$500,000 or requires payments exceeding $100,000 in any year or (B) is less
than $500,000 but any Withdrawal Liability payment remains unpaid 30 days
after such payment is due;
(l) the Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, if solely as a result of such reorganization or termination the
aggregate annual contributions of the Borrower and its ERISA Affiliates to
all Multiemployer Plans that are then in reorganization or have been or are
being terminated have been or will be increased over the amounts required
to be contributed to such Multiemployer Plans for their most recently
completed plan years by an amount exceeding $100,000;
(m) there shall have occurred a Change in Control;
(n) any Loan Document shall cease to be or be asserted by the Borrower
or any Subsidiary not to be, in full force and effect, in accordance with
its terms, or the security interest purported to be created by any Security
Document shall cease to be a valid and perfected first priority security
interest in the relevant collateral
35
for any reason other than the failure of Chase, on behalf of the Lenders,
to take any action that is within its control and not otherwise prohibited
by applicable law, applicable regulation or the order of any court; or
(o) any Applicable Insurance Regulatory Authority shall issue any
order of conservation, supervision or any other order of like effect
relating to any of the Insurance Subsidiaries;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Borrower, take any or all of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments, and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrower accrued hereunder and
under any other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding; and in any event with
respect to the Borrower described in paragraph (g) or (h) above, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII. THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this Agreement, (a)
Chase is hereby appointed to act as the Administrative Agent on behalf of the
Lenders and (b) Chase is hereby appointed to hold the collateral on behalf of
the Lenders under, and otherwise act in the capacity set forth in, the Security
Documents and to act in the capacity set forth in Article II. Each of the
Lenders hereby irrevocably authorizes the Administrative Agent to take such
actions on behalf of such Lender or holder and to exercise the powers as are
specifically delegated to the Administrative Agent by the terms and provisions
hereof and of the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto. Chase is hereby expressly authorized by the
Lenders, without hereby limiting any implied authority, to, and shall,
(a) receive on behalf of the Lenders all payments of principal of and interest
on the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received, (b) give
notice on behalf of each of the Lenders to the Borrower of any Event of Default
specified in this Agreement of which it has actual knowledge acquired in
connection with its agency hereunder and (c) distribute to each Lender copies of
all notices, financial statements and other materials required to be delivered
by the Borrower pursuant to this Agreement as received by Chase.
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower of any of the terms, conditions, covenants or agreements contained in
any Loan Document. The Administrative Agent shall not be responsible to the
Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents or other instruments
or agreements. The Administrative Agent shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders. The Administrative Agent shall, in the absence of
knowledge to the contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to have been signed
or sent by the proper Person or persons. Neither the Administrative Agent nor
any of its directors, officers, employees or agents shall have any
responsibility to the Borrower on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other Lender or the Borrower of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. The
Administrative Agent may execute any and all duties hereunder by or through
agents or employees and shall be entitled to rely upon the advice of legal
counsel selected by it with respect to all matters arising hereunder and shall
not be liable for any action taken or suffered in good faith by it in accordance
with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent shall not be
under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any Security Document unless it
shall be requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Administrative
Agent if the Administrative Agent shall have resigned as provided below, the
Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor acceptable to the Borrower. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor bank, such
36
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of such resigning Administrative Agent. Upon the
resignation of an Administrative Agent, such resigning Administrative Agent
shall be discharged from its duties and obligations hereunder. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.05 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 Administrative Agent.
With respect to the Loans made by it hereunder, the Administrative Agent in
its individual capacity and not as the Administrative Agent shall have the same
rights and powers as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the Administrative Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not the Administrative Agent.
Each Lender agrees (a) to reimburse the Administrative Agent, on demand, in
the amount of its pro rata share (based on its Commitment hereunder) of any
expenses incurred for the benefit of the Lenders by the Administrative Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, that shall not have been reimbursed
by the Borrower and (b) to indemnify and hold harmless the Administrative Agent
and any of its directors, officers, employees or agents, on demand, in the
amount of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against it in its capacity as a Administrative Agent
or any of them in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by it or any of them under
this Agreement or any other Loan Document, to the extent the same shall not have
been reimbursed by the Borrower; PROVIDED, HOWEVER, that no Lender shall be
liable to the Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement or any other Loan Document, any
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed or sent by telecopy, as follows:
(a) if to the Borrower, to it at 000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention of Xxxxx Xxxxxxx (Telecopy
No. 502-582-0903), with copies to Xxxxxx Xxxxxxx & Co. Incorporated,
1251 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention of Xxxxx X. Xxxx (Telecopy No. 212-703-7951);
(b) if to the Administrative Agent, to The Chase Manhattan Bank at Xxx
Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxxx Xxxxxxx
(Telecopy No. 212-552-5231);
(c) if to a Lender, to it at its address (or telecopy number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or other telegraphic communications equipment of the sender, or on the
date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or any Fee or any other amount payable under
this Agreement or any other Loan Document is outstanding and unpaid and so long
as the Commitments have not been terminated (it being understood that no
representation and warranty shall be deemed to have been made on or as of any
date other than the dates referred to in Section 4.01 and 4.02).
37
SECTION 9.03. BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have received copies hereof that, when taken
together, bear the signatures of each Lender, and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Administrative Agent and each
Lender and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior consent of all the Lenders.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Borrower, the Administrative Agent or the Lenders that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); PROVIDED,
HOWEVER, that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender or to an Eligible Assignee, the Administrative Agent must
give its prior written consent to such assignment (which consent shall not be
unreasonably withheld) and prior to giving such consent the Administrative Agent
shall consult with the Borrower, (ii) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Lender's rights and
obligations in connection with its Commitment, (iii) the amount of the
Commitment of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $2,500,000 (or, if
less, the then-remaining Commitment of the assigning Lender) and the amount of
the Commitment of such Lender remaining after such assignment shall not be less
than $2,500,000 or shall be zero, (iv) the parties to each such assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
and a processing and recordation fee of $3,500, and (v) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Upon acceptance and recording pursuant to
paragraph (e) of this Section 9.04, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, (i) the assignee thereunder shall be
a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this Agreement
and shall be deemed to be a Lender under this Agreement and (ii) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 2.12, 2.14, 2.18 and 9.05, as well as to any Fees
accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof that have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in clause (i)
above, such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.04 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (v) such assignee will independently and
without reliance upon the Administrative Agent, such assigning Lender 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; (vi) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations that by the terms of
this Agreement are required to be performed by it as a Lender.
(d) Chase shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "REGISTER"). The entries in the Register shall be
conclusive in the absence of manifest error and the Borrower, the Administrative
Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement. Any change in the Register from time to time shall be deemed an
amendment to Schedule 2.01. The Register shall be available for inspection by
the Borrower, the Administrative Agent and any Lender at any reasonable time and
from time to time upon reasonable prior notice.
38
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in
paragraph (b) above and, if required, the written consent of the Administrative
Agent to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower, the
Administrative Agent and the Lenders.
(f) Each Lender may without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.12, 2.14 and 2.18 to the same extent as if
they were Lenders; PROVIDED, HOWEVER, that the Borrower shall not be required to
reimburse any participating bank pursuant to Section 2.12, Section 2.14 or
Section 2.18 for any amount in excess of the amount payable to the Lender
assigning such participation had such participation not been sold, (iv) the
voting rights of participating banks or other entities shall be limited to
matters in respect of (A) increases in commitments, (B) changes of principal,
interest or fees, (C) extensions of final maturity and (D) certain releases of
collateral and (v) the Borrower, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Borrower relating to the
Loans and to approve any amendment, modification or waiver of any provision of
this Agreement (other than amendments, modifications or waivers decreasing any
fees payable hereunder or the amount of principal of or the rate at which
interest is payable on the Loans, extending any scheduled principal payment date
or date fixed for the payment of interest on the Loans, changing or extending
the Commitments, releasing any collateral from the Lien created by any Security
Document or releasing any guarantor of the Obligations).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; PROVIDED, HOWEVER, that, prior to any such
disclosure of information designated by the Borrower as confidential, each such
assignee or participant or proposed assignee or participant shall execute an
agreement (in form and substance reasonably satisfactory to the Borrower)
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank in accordance with Regulation A
of the Board; PROVIDED, HOWEVER, that no such assignment shall release a Lender
from any of its obligations hereunder.
(i) The Borrower shall not assign or delegate any of its rights or duties
hereunder.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation of this Agreement and the other Loan Documents
(including with respect to any due diligence performed in connection therewith)
or in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Administrative Agent or any Lender in connection
with the enforcement or protection of their rights in connection with this
Agreement and the other Loan Documents or in connection with the Loans made
hereunder, including, but not limited to, the reasonable fees, charges and
disbursements of Cravath, Swaine & Xxxxx, counsel for the Administrative Agent,
and, in connection with any such amendment, modification or waiver or any such
enforcement or protection, the fees, charges and disbursements of any other
counsel for the Administrative Agent.
(b) The Borrower agrees to indemnify the Administrative Agent, each Lender
and each of their respective directors, officers, employees and agents (each
such Person being called an "INDEMNITEE") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and disbursements, incurred
by or asserted against any Indemnitee arising out of, in any way connected with,
or as a result of (i) the execution or delivery of this Agreement or any other
Loan Document or any agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective obligations thereunder or
the consummation of the Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto; PROVIDED, HOWEVER, that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the Transactions, the repayment of any of the Loans, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any
39
investigation made by or on behalf of the Administrative Agent or any Lender.
All amounts due under this Section 9.05 shall be payable on written demand
therefor.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any of and all the obligations of
the Borrower now or hereafter existing under this Agreement and other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent or any Lender in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances.
(b) Neither this Agreement nor the other Loan Documents nor any provision
hereof or thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Required
Lenders; PROVIDED, HOWEVER, that no such agreement shall (i)(A) decrease (or
waive or excuse the payment of) the principal amount of any Loan due to any
Lender on the Maturity Date, (B) extend the Maturity Date or (C) extend the
date for the payment of any interest on any Loan, or waive or excuse any such
payment or any part thereof, made by any Lender or (D) decrease the rate of
interest on any Loan made by any Lender, in each case, without the prior written
consent of each Lender (excluding from the coverage of this clause (i) interest
payable pursuant to Section 2.07 as a result of a default in the prepayment of
the principal amount of any Loan for which the Borrower has delivered a notice
pursuant to Section 2.11(a), the waiver of which shall be effective upon the
consent of the Required Lenders), (ii) increase or extend the Commitment of any
Lender past the Maturity Date or decrease the Commitment Fees of any Lender, in
each case without the prior written consent of each Lender, (iii) amend or
modify the provisions of Section 2.15, the provisions of this Section 9.08(b) or
the definition of the term "Required Lenders" (or any other provision hereof
specifying the number of Lenders required to take any action hereunder) without
the prior written consent of each Lender, (iv) release any of the collateral
from the Lien created by any Security Document without the prior written consent
of each Lender, except as provided in Section 6.05 hereof, Sections 2.04 and
5.15 of the Pledge Agreement and Sections 4 and 8 of the Assignment Agreement,
(v) waive any of the provisions of Section 4.02 without the prior written
consent of each Lender or (vi) release any guarantor without the prior consent
of each Lender; PROVIDED FURTHER, HOWEVER, that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent
hereunder without the prior written consent of the Administrative Agent.
SECTION 9.09. INTEREST RATE LIMITATION. Notwithstanding anything herein to
the contrary, if at any time the applicable interest rate, together with all
fees and charges which are treated as interest under applicable law
(collectively the "CHARGES"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"MAXIMUM RATE") that may be contracted for, charged, taken, received or reserved
by such Lender in accordance with applicable law, the rate of interest payable
on the Loans of such Lender, together with all Charges payable to such Lender,
shall be limited to the Maximum Rate.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement, the other Loan Documents
and the Fee Letter referred to in Section 2.05(c) constitute the entire contract
between the parties relative to the subject matter hereof. Any previous
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement and the other Loan Documents. Nothing in this
Agreement or in the other Loan Documents, expressed or implied, is intended to
confer upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED,
40
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.03. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.14. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each party
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against the Borrower or its properties in the courts of any
jurisdiction.
(b) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
IN WITNESS WHEREOF, the Borrower, the Administrative Agent and the Lenders
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
ARM FINANCIAL GROUP, INC.,
by
/s/: Xxxxxx X. Xxxx
-------------------
Name: Xxxxxx X. Xxxx
Title: Co-Chairman of the Board and
Co-Chief Executive Officer
by
/s/: Xxxx Xxxxxx
----------------
Name: Xxxx Xxxxxx
Title: Co-Chairman of the Board and
Co-Chief Executive Officer
THE CHASE MANHATTAN BANK, individually,
and as Administrative Agent,
by
/s/: Xxxxx Xxxxxxx
------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
by
/s/: Xxxxxxx X. Xxxx
--------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES,
by
/s/: Xxxxx Xxxxxxxxxxx
----------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES,
by
/s/: Xxxx X. XxXxxx
-------------------
Name: Xxxx X. XxXxxx
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by
/s/: Xxxx X. Xxxxxxx
--------------------
Name: Xxxx X. Xxxxxxx
Title: Assistant Vice President
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by
/s/: Brigitte Sacin
-------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/: Xxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Assistant Vice President
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
/s/: Xxxx X. Xxxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President
PNC BANK, KENTUCKY, INC.
by
/s/: Xxxx X. Xxxxxxx
--------------------
Name: Xxxx X. Xxxxxxx
Title: Sr. Vice President
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
by
/s/: Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: First Vice President
