1
EXHIBIT 10.27(a)
================================================================================
$43,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
UNDERWRITERS RE GROUP, INC.,
as Borrower,
THE LENDERS NAMED HEREIN
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
DATED AS OF
December 31, 1998
================================================================================
2
TABLE OF CONTENTS
Article I
DEFINITIONS..............................................................................................1
Article II
THE FACILITY............................................................................................20
2.1 The Facility...................................................................................20
2.1.1 Description of Facility...............................................................20
2.1.2 Facility Amount.......................................................................20
2.1.3 Availability of Facility..............................................................20
2.2 Ratable Advances...............................................................................20
2.2.1 Ratable Advances......................................................................20
2.2.2 Ratable Advance Rate Options..........................................................21
2.2.3 Method of Selecting Types and Interest Periods for
Ratable Advances......................................................................21
2.2.4 Conversion and Continuation of Outstanding Ratable Advances...........................21
2.3 Competitive Bid Advances.......................................................................22
2.3.1 Competitive Bid Option................................................................22
2.3.2 Competitive Bid Quote Request.........................................................22
2.3.3 Invitation for Competitive Bid Quotes.................................................23
2.3.4 Submission and Contents of Competitive Bid Quotes.....................................23
2.3.5 Notice to Borrower....................................................................24
2.3.6 Acceptance and Notice by Borrower.....................................................25
2.3.7 Allocation by Agent...................................................................25
2.4 Availability of Funds..........................................................................25
2.5 Facility Fee; Reductions in Aggregate Commitment...............................................26
2.6 Minimum Amount of Each Advance.................................................................26
2.7 Optional Principal Payments....................................................................26
2.8 Changes in Interest Rate, etc..................................................................26
2.9 Rates Applicable After Default.................................................................27
2.10 Method of Payment..............................................................................27
2.11 Notes; Telephonic Notices......................................................................27
2.12 Interest Payment Dates; Interest and Fee Basis.................................................28
2.13 Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions..........................................................................28
2.14 Lending Installations..........................................................................28
2.15 Non-Receipt of Funds by the Agent..............................................................28
2.16 Taxes..........................................................................................29
2.17 Agent's Fees...................................................................................30
-i-
3
Article III
CHANGE IN CIRCUMSTANCES.................................................................................30
3.1 Yield Protection...............................................................................30
3.2 Changes in Capital Adequacy Regulations........................................................31
3.3 Availability of Types of Advances..............................................................31
3.4 Funding Indemnification........................................................................31
3.5 Lender Statements; Survival of Indemnity.......................................................32
3.6 Substitution of Lenders........................................................................32
3.7 Survival.......................................................................................32
Article IV
CONDITIONS PRECEDENT....................................................................................33
4.1 Initial Loans..................................................................................33
4.2 Each Future Advance............................................................................34
Article V
REPRESENTATIONS AND WARRANTIES..........................................................................35
5.1 Corporate Existence and Standing...............................................................35
5.2 Authorization and Validity.....................................................................35
5.3 Compliance with Laws and Contracts.............................................................35
5.4 Governmental Consents..........................................................................36
5.5 Financial Statements...........................................................................36
5.6 Material Adverse Change........................................................................36
5.7 Taxes..........................................................................................36
5.8 Litigation.....................................................................................37
5.9 Capitalization.................................................................................37
5.10 ERISA..........................................................................................37
5.11 Defaults.......................................................................................38
5.12 Federal Reserve Regulations....................................................................38
5.13 Investment Company; Public Utility Holding Company Act.........................................38
5.14 Certain Fees...................................................................................38
5.15 Solvency.......................................................................................39
5.16 Ownership of Properties........................................................................39
5.17 Indebtedness...................................................................................39
5.18 Material Agreements............................................................................39
5.19 Environmental Laws.............................................................................39
5.20 Insurance......................................................................................40
5.21 Insurance Licenses.............................................................................40
5.22 Reserves.......................................................................................40
5.23 Disclosure.....................................................................................41
-ii-
4
5.24 Year 2000 Compliance...........................................................................41
5.25 Use of Proceeds................................................................................41
5.26 Permits, Licenses and Rights...................................................................41
Article VI
COVENANTS...............................................................................................41
6.1 Financial Reporting............................................................................42
6.2 Use of Proceeds................................................................................44
6.3 Notice of Default..............................................................................44
6.4 Conduct of Business............................................................................45
6.5 Taxes..........................................................................................45
6.6 Insurance......................................................................................46
6.7 Compliance with Laws...........................................................................46
6.8 Maintenance of Properties; Year 2000 Compliance................................................46
6.9 Inspection.....................................................................................46
6.10 Capital Stock and Dividends....................................................................47
6.11 Indebtedness...................................................................................47
6.12 Merger.........................................................................................47
6.13 Sale of Assets.................................................................................47
6.14 Investments and Purchases......................................................................48
6.15 Contingent Obligations.........................................................................50
6.16 Liens..........................................................................................50
6.17 Affiliates.....................................................................................51
6.18 Other Indebtedness.............................................................................51
6.19 Environmental Matters..........................................................................51
6.20 Change in Corporate Structure; Fiscal Year.....................................................51
6.21 Inconsistent Agreements........................................................................52
6.22 Financial Covenants............................................................................52
6.22.1 Minimum Statutory Surplus.............................................................52
6.22.2 Leverage Ratio........................................................................52
6.22.3 Adjusted Leverage Ratio...............................................................52
6.22.4 URC Risk Based Capital Ratio..........................................................52
6.23 Tax Consolidation..............................................................................52
6.24 ERISA Compliance...............................................................................53
Article VII
DEFAULTS................................................................................................53
-iii-
5
Article VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES..........................................................56
8.1 Acceleration...................................................................................56
8.2 Amendments.....................................................................................57
8.3 Preservation of Rights.........................................................................57
Article IX
GENERAL PROVISIONS......................................................................................58
9.1 Survival of Representations....................................................................58
9.2 Governmental Regulation........................................................................58
9.3 Taxes..........................................................................................58
9.4 Headings.......................................................................................58
9.5 Entire Agreement...............................................................................58
9.6 Several Obligations; Benefits of this Agreement................................................58
9.7 Expenses; Indemnification......................................................................58
9.8 Numbers of Documents...........................................................................59
9.9 Accounting.....................................................................................59
9.10 Severability of Provisions.....................................................................59
9.11 Nonliability of Lenders........................................................................59
9.12 Choice of Law..................................................................................60
9.13 Consent to Jurisdiction........................................................................60
9.14 Waiver of Jury Trial...........................................................................60
9.15 Disclosure.....................................................................................60
9.16 Counterparts...................................................................................61
9.17 Confidentiality................................................................................61
9.18 Restatement Date...............................................................................61
9.19 Departing Lender...............................................................................62
Article X
THE AGENT...............................................................................................62
10.1 Appointment....................................................................................62
10.2 Powers.........................................................................................62
10.3 General Immunity...............................................................................62
10.4 No Responsibility for Loans, Recitals, etc.....................................................63
10.5 Action on Instructions of Lenders..............................................................63
10.6 Employment of Agents and Counsel...............................................................63
10.7 Reliance on Documents; Counsel.................................................................63
10.8 Agent's Reimbursement and Indemnification......................................................63
10.9 Notice of Default..............................................................................64
10.10 Rights as a Lender.............................................................................64
-iv-
6
10.11 Lender Credit Decision.........................................................................64
10.12 Successor Agent................................................................................64
Article XI
SETOFF; RATABLE PAYMENTS................................................................................65
11.1 Setoff.........................................................................................65
11.2 Ratable Payments...............................................................................65
Article XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.......................................................66
12.1 Successors and Assigns.........................................................................66
12.2 Participations.................................................................................66
12.2.1 Permitted Participants; Effect........................................................66
12.2.2 Voting Rights.........................................................................66
12.2.3 Benefit of Setoff.....................................................................66
12.3 Assignments....................................................................................67
12.3.1 Permitted Assignments.................................................................67
12.3.2 Effect; Effective Date................................................................67
12.4 Dissemination of Information...................................................................67
12.5 Tax Treatment..................................................................................67
Article XIII
NOTICES.................................................................................................68
13.1 Giving Notice..................................................................................68
13.2 Change of Address..............................................................................68
-v-
7
EXHIBITS
Exhibit A - Ratable Notes
Exhibit B - Competitive Bid Note
Exhibit C - Competitive Bid Quote Request
Exhibit D - Invitation for Competitive Bid Quotes
Exhibit E - Competitive Bid Quote
Exhibit F - Compliance Certificate
Exhibit G - Assignment Agreement
SCHEDULES
Schedule 5.3 - Approvals and Consents
Schedule 5.4 - Governmental Consents
Schedule 5.7 - Taxes
Schedule 5.9 Capitalization
Schedule 5.10 - ERISA
Schedule 5.16 - Owned Properties
Schedule 5.17 - Indebtedness
Schedule 5.19 - Environmental
Schedule 5.21 - Insurance Licenses
Schedule 6.11 - Closing Date Indebtedness
Schedule 6.14 - Investments
Schedule 6.16 - Liens
-vi-
8
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of December 31,
1998, is among UNDERWRITERS RE GROUP, INC., a Delaware corporation, the Lenders
and THE FIRST NATIONAL BANK OF CHICAGO, as Agent and in its individual capacity
as a Lender.
R E C I T A L S:
A. The Borrower (formerly URC Holdings Corp.) previously entered
into that certain Credit Agreement dated as of October 23, 1996 with the lenders
named therein and the Agent (the "Existing Credit Agreement"), pursuant to which
such lenders agreed to make financial accommodations to it in the aggregate
principal amount of $50,000,000, the proceeds of which were to be used for the
general corporate needs of the Borrower and its Subsidiaries.
B. The Borrower, the Lenders and the Agent wish to make certain
amendments to the Existing Credit Agreement, including the termination of a
$7,000,000 commitment of one of the lenders under the Existing Credit Agreement.
C. Lenders are willing to continue to extend such financial
accommodations on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders and the Agent hereby agree that the Existing Credit Agreement is hereby
amended and restated, effective as of the Restatement Date, as follows:
Article I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower.
9
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.3.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than 7 and not more than 180 days commencing on a
Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding Business
Day.
"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.
"Adjusted Leverage Ratio" means "Leverage Ratio"; provided, that each
reference to "Indebtedness" therein shall be deemed to exclude Indebtedness on
account of undrawn amounts of Letters of Credit provided to beneficiaries in the
ordinary course of business.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the Borrower
on the same Borrowing Date, of the same Type (or on the same interest basis in
the case of Competitive Bid Advances) and, when applicable, for the same
Interest Period and includes a Competitive Bid Advance.
"Affected Lender" is defined in Section 3.6.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For the
purposes of this Agreement, a Person shall be deemed to control another Person
if the controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.
"Agent" means First Chicago in its capacity as agent for the Lenders
pursuant to Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders hereunder. The initial Aggregate Commitment is $43,000,000.
"Agreement" means this Credit Agreement, as it may be amended, modified
or restated and in effect from time to time.
-2-
10
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect in the United States from time to time, applied in a
manner consistent with those used in preparing the financial statements referred
to in Section 5.5(a) and (b); provided, that with respect to the financial
covenants contained in Section 6.22 hereof, the related definitions, and the
computations required thereby, such term means generally accepted accounting
principles (except where SAP is applicable) in effect in the United States on
the date hereof, applied in a manner consistent with those used in preparing the
financial statements referred to in Section 5.5(a) and (b).
"Alleghany" means Alleghany Corporation, a Delaware corporation.
"Annual Statement" means the annual statutory financial statement of
any Insurance Subsidiary required to be filed with the insurance commissioner
(or similar authority) of its jurisdiction of incorporation, which statement
shall be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority)
to be used for filing annual statutory financial statements and shall contain
the type of information permitted by such insurance commissioner (or such
similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.
"Applicable Eurodollar Margin" means, on any date, subject to the
following sentence of this definition, the applicable of the following
percentages:
Applicable
Debt Rating on Such Date Eurodollar Margin
------------------------ -----------------
Level I Status .36%
Level II Status .425%
Level III Status .475%
Level IV Status .50%
Level V Status .575%
Any change in the Applicable Eurodollar Margin shall be effective as of the date
on which the Borrower has received official notification of the change in the
Debt Rating giving rise thereto and 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.
"Applicable Facility Fee Percentage" means, on any date, subject to the
following sentence of this definition, the applicable of the following
percentages:
-3-
11
Applicable
Debt Rating on Such Date Eurodollar Margin
------------------------ -----------------
Level I Status .09%
Level II Status .10%
Level III Status .125%
Level IV Status .15%
Level V Status .175%
Any change in the Applicable Facility Fee Percentage shall be effective as of
the date on which the Borrower has received official notification of the change
in the Debt Rating giving rise thereto and 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.
"Arranger" means First Chicago Capital Markets, Inc., and its
successors and assigns.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the chief executive officer or chief
financial officer of the Borrower, acting singly.
"Bankruptcy Code" means Xxxxx 00, Xxxxxx Xxxxxx Code, sections 1 et
seq., as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.
"Borrower" means Underwriters Re Group, Inc., a Delaware corporation,
and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago for the conduct of substantially all
of their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities.
-4-
12
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalents" means Investments maturing within one year from the
date of investment (excluding (x) Investments as to which the principal amount
to be repaid may be subject to fluctuation and (y) mortgage backed securities
consisting of principal only or interest only strips) in (a) certificates of
deposit, Eurodollar time deposits and other interest bearing deposits or
accounts with United States commercial banks having a combined capital and
surplus of at least $500,000,000 and rated C or better by Thomson BankWatch or
with any Lender, (b) certificates of deposit, other interest bearing accounts or
deposits and demand deposits with other United States commercial banks, which
deposits and accounts are in amounts fully insured by the Federal Deposit
Insurance Corporation, (c) obligations issued or unconditionally guaranteed by
the United States government or issued by an agency thereof and backed by the
full faith and credit of the United States, (d) direct obligations issued by any
state of the United States or any political subdivision thereof which have the
highest rating obtainable from S&P on the date of investment, (e) commercial
paper rated A-1 or better by S&P and P-1 or better by Xxxxx'x or (f) money
market mutual funds identified by the valuation office of the NAIC as requiring
no investment reserve.
"Change" is defined in Section 3.2.
"Change in Control" means (a) Alleghany shall fail to maintain
beneficial ownership, directly or indirectly, free and clear of any Lien, of at
least 51% of the outstanding voting stock of the Borrower (unless such failure
arises from a Public Offering and no Person (other than Alleghany) or Persons
acting in concert acquire (either in such Public Offering or thereafter)
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 10% or more of
the outstanding voting stock of the Borrower), (b) during any period of 25
consecutive calendar months, commencing on the date of this Agreement, the
ceasing of those individuals (the "Continuing Directors") who (i) were directors
of the Borrower on the first day of each such period or (ii) subsequently became
directors of the Borrower and whose initial election or initial nomination for
election subsequent to that date was approved by a majority of the Continuing
Directors then on the board of directors of the Borrower, to constitute a
majority of the board of directors of the Borrower, or (c) any "Credit Party"
(as defined in the Venton Credit Agreement) other than the Borrower shall cease
to be a Wholly-Owned Subsidiary of the Borrower (it being understood that a
merger of a Credit Party into an entity which is a Wholly-Owned Subsidiary of
the Borrower, to the extent otherwise permitted under this Agreement, will not
be deemed to cause such Credit Party to cease to be a Wholly-Owned Subsidiary of
the Borrower for purposes of this definition).
-5-
13
"Closing Date" means October 23, 1996.
"Closing Transactions" is defined in Section 4.1(d).
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Ratable Loans not exceeding the amount set forth opposite its signature
below and as set forth in any Notice of Assignment relating to any assignment
which has become effective pursuant to Section 12.3.2, as such amount may be
modified from time to time pursuant to the terms hereof.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.
"Competitive Bid Borrowing Notice" is defined in Section 2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute
Rate Loan, or both, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the
form of Exhibit B hereto, with appropriate insertions, duly executed and
delivered to the Agent by the Borrower for the account of a Lender and payable
to the order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in
the form of Exhibit E hereto completed and delivered by a Lender to the Agent in
accordance with Section 2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit C hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.3.2.
"Condemnation" is defined in Section 7.8.
-6-
14
"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with Agreement Accounting
Principles.
"Consolidated Person" means, for the taxable year of reference of
Alleghany, each Person which has joined or which is required to join in the
filing of a consolidated federal income tax return with Alleghany.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.2.4.
"Corporate Base Rate" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as said corporate base rate changes. The Corporate Base Rate is a
reference rate and does not necessarily represent the lowest or best rate of
interest actually charged to any customer. First Chicago may make commercial
loans or other loans at rates of interest at, above or below the Corporate Base
Rate.
"Debt Rating" means the credit rating assigned to the Borrower's
senior, unsecured long term Indebtedness (without credit enhancement) as
publicly announced by Xxxxx'x or S&P, as the case may be. If the rating system
of Xxxxx'x or S&P shall materially change from that in effect on the date of
this Agreement, then the parties hereto shall negotiate in good faith to amend
the references to such ratings in this Agreement to fairly reflect such changes.
"Default" means an event described in Article VII.
"Departing Lender" means Union Bank of California, N.A.
"Environmental Laws" is defined in Section 5.19.
"Environmental Permits" is defined in Section 5.19.
-7-
15
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means a Eurodollar Bid Rate Advance or a
Eurodollar Ratable Advance, or both, as the case may be.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Eurodollar Bid Rates pursuant to Section 2.3.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, in the approximate amount of First Chicago's relevant
Eurodollar Ratable Loan (or in the case of a Eurodollar Bid Rate Advance, in an
amount comparable to the amount of such Advance) and having a maturity
approximately equal to such Eurodollar Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(a) the Eurodollar Base Rate and (b) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.
"Eurodollar Interest Period" means, with respect to a Eurodollar
Ratable Advance or a Eurodollar Bid Rate Advance, a period of one, two, three or
six months commencing on a Business Day selected by the Borrower pursuant to
this Agreement. Such Eurodollar Interest Period shall end on (but exclude) the
day which corresponds numerically to such date one, two, three or six months
thereafter; provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar Interest
Period shall end on the next succeeding Business Day; provided, however, that if
said next succeeding Business Day falls in a new month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid
Rate Loan, or both, as the case may be.
-8-
16
"Eurodollar Ratable Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.2.3.
"Eurodollar Ratable Loan" means a Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.2.3.
"Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance
for the relevant Eurodollar Interest Period, the sum of (a) the quotient of (i)
the Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided
by (ii) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (b) the Applicable Eurodollar Margin or
Margins, as applicable, for such Eurodollar Interest Period. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not
such a multiple.
"Existing Credit Agreement" is defined in the Recitals to this
Agreement.
"Facility Termination Date" means December 30, 1999.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Financial Statements" is defined in Section 5.5.
"First Chicago" means The First National Bank of Chicago in its
individual capacity as a Lender and not in its capacity as Agent, and its
successors.
"Fiscal Quarter" means one of the four three-month accounting periods
comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period ending December
31 of each year.
"Floating Rate" means, for any day, a rate per annum equal to the
higher of (a) the Corporate Base Rate for such day, or (b) the sum of the
Federal Funds Effective Rate for such day plus one-half percent (.50%) per
annum.
-9-
17
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Ratable Loan which bears interest at the
Floating Rate.
"Governmental Authority" means any government (foreign or domestic) or
any state or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including without limitation any
board of insurance, insurance department or insurance commissioner or any taxing
authority or political subdivision) or any instrumentality or officer thereof
(including without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned or controlled by or subject to the control of any of the
foregoing.
"Guaranty" means that certain Guaranty dated as of the Restatement Date
by URC in favor of the Agent and the Lenders.
"Hazardous Materials" is defined in Section 5.19.
"Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (d) obligations which are evidenced by notes, acceptances, or similar
instruments, (e) Capitalized Lease Obligations, (f) Rate Hedging Obligations,
(g) Contingent Obligations, (h) obligations for which such Person is obligated
(contingently, including with respect to undrawn amounts of issued Letters of
Credit, or otherwise) pursuant to or in respect of a Letter of Credit and (i)
repurchase obligations or liabilities of such Person with respect to accounts or
notes receivable sold by such Person.
"Insurance Subsidiary" means any direct or indirect present or future
Subsidiary which is engaged in the insurance business (and shall in any event
include URC), but excluding each of the Venton Entities.
"Interest Period" means a Eurodollar Interest Period or an Absolute
Rate Interest Period.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any other
Person or any investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of any other Person
made by such Person.
-10-
18
"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit D hereto, completed
and delivered by the Agent to the Lenders in accordance with Section 2.3.3.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Level I Status" exists at any date if at such date the Debt Rating is
(a) A2 (or the equivalent) or higher by Xxxxx'x or A (or the equivalent) or
higher by S&P and (b) not lower than Baa3 (or the equivalent) by Xxxxx'x or BBB-
(or the equivalent) by S&P.
"Level II Status" exists at any date if at such date (a) the Debt
Rating is A3 (or the equivalent) or higher by Xxxxx'x or A- (or the equivalent)
or higher by S&P, (b) the Debt Rating is not lower than Baa3 (or the equivalent)
by Xxxxx'x or BBB- (or the equivalent) by S&P and (c) Level I Status does not
exist.
"Level III Status" exists at any date if at such date (a) the Debt
Rating is Baa1 (or the equivalent) or higher by Xxxxx'x or BBB+ (or the
equivalent) or higher by S&P, (b) the Debt Rating is not lower than Baa3 (or the
equivalent) by Xxxxx'x or BBB- (or the equivalent) by S&P and (c) neither Level
I Status nor Level II Status exists.
"Level IV Status" exists at any date if at such date (a) the Debt
Rating is Baa3 (or the equivalent) or higher by Xxxxx'x and BBB- (or the
equivalent) or higher by S&P and (b) none of Level I Status, Level II Status or
Level III Status exists.
"Level V Status" exists at any date if at such date (a) the Debt Rating
is lower than Baa3 (or the equivalent) by Xxxxx'x or lower than BBB- (or the
equivalent) by S&P or (b) the Borrower's senior, unsecured long term
Indebtedness (without credit enhancement) is unrated by both Xxxxx'x and S&P.
"Leverage Ratio" means, with respect to the Borrower on a consolidated
basis with its Subsidiaries, at any time, the ratio of (a) Indebtedness to (b)
the sum of (i) Indebtedness and (ii) Net Worth, excluding the impact of
Statement of Financial Accounting Standards No. 115. For the purpose of
determining this ratio, Contingent Obligations shall be excluded from
-11-
19
Indebtedness to the extent that they relate to underlying obligations which are
included in Indebtedness with respect to the Borrower on a consolidated basis
with its Subsidiaries.
"License" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental Authority
in connection with the operation, ownership or transaction of insurance
business.
"Lien" means any security interest, lien (statutory or other),
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.
"Loan Documents" means this Agreement, the Notes, the Guaranty and the
other documents and agreements contemplated hereby and executed by the Borrower
or any Subsidiary in favor of the Agent or any Lender.
"Margin Stock" has the meaning assigned to that term under Regulation
U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or other), performance, operations, or
prospects of the Borrower and its Subsidiaries, taken as a whole, (b) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(c) the validity or enforceability of any of the Loan Documents or the rights or
remedies of the Agent or the Lenders thereunder.
"Xxxxx'x" means Xxxxx'x Investors Service, Inc., a Delaware
corporation, together with any Person succeeding thereto by merger,
consolidation or acquisition of all or substantially all of its assets,
including substantially all of its business of rating securities.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement which is subject to Title IV of ERISA to which the Borrower
or any member of the Controlled Group is a party to which more than one employer
is obligated to make contributions.
"NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.
-12-
20
"Net Worth" means at any date the stockholders' equity of the Borrower
and its Subsidiaries determined on a consolidated basis in accordance with
Agreement Accounting Principles.
"Notes" means, collectively, the Competitive Bid Notes and the Ratable
Notes; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent or any indemnified party hereunder arising under any
of the Loan Documents and any Rate Hedging Obligations or foreign exchange
contracts of the Borrower owing to the Agent or any Lender.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means any natural person, corporation, firm, limited liability
company, joint venture, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan, as defined in Section
3(2) of ERISA, as to which the Borrower or any member of the Controlled Group
may have any liability.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Loans.
"Public Offering" means any public offering after the date hereof of
shares of the Borrower's common stock, or options, warrants or securities
convertible into or exchangeable for, or rights to acquire, shares of such
common stock, which is registered pursuant to an effective registration
statement filed by the Borrower under the Securities Act (other than (a) a
registration statement filed on Form S-4 (or any successor form thereto) or (b)
a registration
-13-
21
statement filed on Form S-8 (or any successor form thereto), or any other
applicable form with respect to the issuance of shares of such common stock, or
options, warrants or securities convertible into or exchangeable for, or rights
to acquire, such shares of common stock, issued or to be issued or granted to
directors, officers or employees of the Borrower and its Subsidiaries).
"Purchase" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any firm, corporation or division or line of
business thereof, whether through purchase of assets, merger or otherwise, or
(b) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding partnership interests of a partnership or membership
interests of a limited liability company.
"Purchasers" is defined in Section 12.3.1.
"Quarterly Statement" means the quarterly statutory financial statement
of any Insurance Subsidiary required to be filed with the insurance commissioner
(or similar authority) of its jurisdiction of incorporation or, if no specific
form is so required, in the form of financial statements permitted by such
insurance commissioner (or such similar authority) to be used for filing
quarterly statutory financial statements and shall contain the type of financial
information permitted by such insurance commissioner (or such similar authority)
to be disclosed therein, together with all exhibits or schedules filed
therewith.
"Ratable Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Ratable Loans made by the Lenders to the
Borrower at the same time, of the same Type and for the same Interest Period.
"Ratable Borrowing Notice" is defined in Section 2.2.3.
"Ratable Loan" means a Loan made by a Lender pursuant to Section 2.2
hereof.
"Ratable Note" means a promissory note in substantially the form of
Exhibit A hereto, duly executed and delivered to the Agent by the Borrower for
the account of each Lender and payable to the order of a Lender in the amount of
its Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions
-14-
22
therefor), under (a) any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of interest
rates, exchange rates or forward rates applicable to such party's assets,
liabilities or exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants, and (b) any
and all cancellations, buybacks, reversals, terminations or assignments of any
of the foregoing.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to depositary institutions.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of such Board of
Governors relating to the extension of credit by securities brokers and dealers
for the purpose of purchasing or carrying margin stocks applicable to such
Persons.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to such Persons.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.
"Release" is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 39601 et seq.
"Replacement Lender" is defined in Section 3.6.
"Reportable Event" means a reportable event as defined in Section
4043(a) of ERISA and the regulations issued under such section, with respect to
a Plan, excluding, however, such events as to which the PBGC has by regulation
unconditionally or conditionally waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event;
provided, that a failure to meet the minimum funding standard of Section 412 of
the Code and of Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waiver
-15-
23
of the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least
66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66-2/3% of the aggregate
unpaid principal amount of the outstanding Loans.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Restatement Date" means December 31, 1998.
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"S&P" means Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx,
Inc., together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority, including the Council of Lloyd's) in the jurisdiction
of such Insurance Subsidiary for the preparation of annual statements and other
financial reports by insurance companies of the same type as such Insurance
Subsidiary in effect from time to time, applied in a manner consistent with
those used in preparing the financial statements referred to in Section 5.5(c)
and (d); provided, that with respect to the financial covenants contained in
Section 6.22 hereof, the related definitions, and the computations required
thereby, "SAP" means such statutory accounting practices (except where Agreement
Accounting Principles are applicable) in effect on the date hereof, applied in a
manner consistent with those used in preparing the financial statements referred
to in Section 5.5(c) and (d).
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group, other than a
Multiemployer Plan.
"Solvent" means, when used with respect to a Person, that (a) the fair
saleable value of the assets of such Person is in excess of the total amount of
the present value of its liabilities (including for purposes of this definition
all liabilities (including loss reserves as determined by
-16-
24
such Person), whether or not reflected on a balance sheet prepared in accordance
with Agreement Accounting Principles and whether direct or indirect, fixed or
contingent, secured or unsecured, disputed or undisputed), (b) such Person is
able to pay its debts or obligations in the ordinary course as they mature and
(c) such Person does not have unreasonably small capital to carry on its
business as conducted and as proposed to be conducted. "Solvency" shall have a
correlative meaning.
"Statutory Authorized Control Level Risk-Based Capital" means, with
respect to any Insurance Subsidiary at any time, the statutory authorized
control level risk-based capital of such Insurance Subsidiary at such time, as
determined in accordance with SAP (currently "Five Year Historical Data", Line
26 of the Annual Statement), based on methodology of the NAIC in effect on the
date hereof.
"Statutory Net Income" means, with respect to any Insurance Subsidiary
for any computation period, the net income earned by such Person during such
period, as determined in accordance with SAP ("Underwriting and Investment"
exhibit, "Statement of Income", Line 16 of the Annual Statement).
"Statutory Risk-Based Capital Ratio" means, with respect to URC and its
Insurance Subsidiaries, determined on a combined basis for URC and all of its
Insurance Subsidiaries (without double counting), the ratio of (a) Statutory
Total Adjusted Capital to (b) Statutory Authorized Control Level Risk-Based
Capital.
"Statutory Surplus" means, with respect to any Insurance Subsidiary at
any time, the surplus as regards policyholders of such Insurance Subsidiary at
such time, as determined in accordance with SAP ("Liabilities, Surplus and Other
Funds" statement, Page 3, Line 25, Column 1 of the Annual Statement).
"Statutory Total Adjusted Capital" means, with respect to any Insurance
Subsidiary at any time, the statutory total adjusted capital of such Insurance
Subsidiary at such time, as determined in accordance with SAP (currently "Five
Year Historical Data," Line 25 of the Annual Statement).
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, association, joint venture or similar business organization
more than 50% of the ownership interests having ordinary voting power of which
shall at the time be so owned or controlled. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the
Borrower.
-17-
25
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (a) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries, as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the end of the Fiscal Quarter next preceding the date on which such
determination is made, or (b) is responsible for more than 10% of the
consolidated net revenues or of the consolidated Net Income of the Borrower and
its Subsidiaries for the 12-month period ending as of the end of the Fiscal
Quarter next preceding the date of determination.
"Tax Sharing Agreements" means, collectively, that certain Amendment to
Agreement dated as of August 18, 1995 between Alleghany and the Borrower, that
certain Amendment to Agreement dated as of December 1, 1995 between the Borrower
and URC, that certain Amendment to Agreement dated as of December 1, 1995
between the Borrower and URC Risk Managers, Inc., that certain Agreement dated
as of December 1, 1995 between the Borrower and The Underwriting Center, Inc.,
that certain Agreement dated as of December 1, 1995 between The Underwriting
Center, Inc. and The Underwriting Center of Georgia, Inc. (now known as The
Center E&S Insurance Services, Inc.), that certain Amendment to Agreement dated
as of December 1, 1995 between URC and Commercial Underwriters Insurance
Company, and that certain Agreement dated as of December 1, 1995 between URC and
Underwriters Insurance Company, as each is in effect on the date of this
Agreement, together with any other agreements entered into pursuant to Section
6.23, and as any such agreement may be hereafter amended, subject to compliance
with the terms hereof.
"Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or
any other member of the Controlled Group from such Plan during a plan year in
which the Borrower or such member of the Controlled Group was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such under
Section 4068(f) of ERISA, (c) the termination of such Plan, the filing of a
notice of intent to terminate such Plan or the treatment of an amendment of such
Plan as a termination under Section 4041 of ERISA, (d) the institution by the
PBGC of proceedings to terminate such Plan or (e) any event or condition which
could reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or appointment of a trustee to administer, such Plan.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance, Eurodollar Advance or Absolute Rate Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
-18-
26
"Unmatured Default" means an event or condition which but for the lapse
of time or the giving of notice, or both, would constitute a Default.
"URC" means Underwriters Reinsurance Company, a New Hampshire insurance
company and a Wholly-Owned Subsidiary of the Borrower.
"Venton" means Venton Holdings Ltd., a Bermuda corporation.
"Venton Credit Agreement" means that certain Letter of Credit Facility
and Reimbursement Agreement dated as of October 23, 1998 and amended as of
November 25, 1998 and December 31, 1998, among Venton Underwriting Group
Limited, Venton Underwriting Limited and Talbot Underwriting Limited, as Account
Parties, the Borrower and URC, as guarantors, Mellon Bank, N.A., as
Administrative Agent and Issuing Bank and as a Co-Arranger, Dresdner Bank AG,
New York and Grand Cayman Branches, as Documentation Agent, and Dresdner
Kleinwort Xxxxxx North America LLC, as Co-Arranger, as further amended,
supplemented or modified from time to time.
"Venton Entities" means, collectively, Xxxxxx, Xxxxxx Underwriting
Group Limited, an English company, Venton Underwriting Limited, Talbot
Underwriting Limited and each company which is a Subsidiary of Venton on the
date of this Agreement, together with each permitted successor thereto which
does not engage in any business other than the businesses engaged in by the
Venton Entities on the date of this Agreement.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, association, joint venture
or similar business organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
"Year 2000 Problem" means any significant risk that computer hardware,
software or equipment containing embedded microchips of the Borrower or any of
its Subsidiaries which is essential to its business or operations will not, in
the case of dates or time periods occurring after December 31, 1999, function at
least as effectively and reliably as in the case of times or time periods
occurring before January 1, 2000, including the making of accurate leap year
calculations.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. References herein to particular
columns, lines or sections of any Person's Annual Statement shall be deemed,
where appropriate, to be references to the corresponding column, line or section
of such Person's Quarterly Statement, or if no such corresponding
-19-
27
column, line or section exists or if any report form changes, then to the
corresponding item referenced thereby.
ARTICLE II
THE FACILITY
2.1 The Facility.
2.1.1 Description of Facility. The Lenders hereby establish
in favor of the Borrower a revolving credit facility pursuant to which, and upon
the terms and subject to the conditions herein set out:
(a) each Lender severally agrees to make Ratable
Loans to the Borrower in accordance with Section 2.2 in amounts not to exceed in
the aggregate at any one time outstanding the amount of such Lender's Commitment
less the amount of such Lender's pro-rata share of the outstanding principal
amount of all Competitive Bid Advances (regardless of which Lender or Lenders
made such Competitive Bid Advances) exclusive of Competitive Bid Advances being
repaid substantially contemporaneously with the making of any such Ratable Loans
(but not later than the close of business on the same day); and
(b) each Lender may, in its sole discretion,
make bids to make Competitive Bid Loans to the Borrower, and make such Loans, in
accordance with Section 2.3.
2.1.2 Facility Amount. In no event may the aggregate
principal amount of all outstanding Advances (including both the Ratable
Advances and the Competitive Bid Advances) at any time exceed the Aggregate
Commitment.
2.1.3 Availability of Facility. Subject to the terms of
this Agreement, from and including the date hereof to, but not including, the
Facility Termination Date, the Borrower may borrow, repay and reborrow Advances
hereunder. All outstanding Advances and all other unpaid Obligations shall be
due and payable in full by the Borrower on the Facility Termination Date.
2.2 Ratable Advances.
2.2.1 Ratable Advances. Each Ratable Advance hereunder
shall consist of borrowings made from the several Lenders ratably in proportion
to the amounts of their respective Commitments. The Borrower's obligation to pay
the principal of, and interest on, the Ratable Advances shall be evidenced by
the Ratable Notes. Although the Ratable Notes shall be dated the date of the
initial Advance, interest in respect thereof shall be payable only for the
periods during which the Loans evidenced thereby are outstanding and, although
the stated amount of each Ratable Note shall be equal to the applicable Lender's
Commitment, each Ratable Note shall be enforceable, with respect to the
Borrower's obligation to pay the principal
-20-
28
amount thereof, only to the extent of the unpaid principal amount of the Ratable
Loans at the time evidenced thereby.
2.2.2 Ratable Advance Rate Options. The Ratable Advances
may be Floating Rate Advances or Eurodollar Ratable Advances, or a combination
thereof, selected by the Borrower in accordance with Section 2.2.3 or 2.2.4. No
Ratable Advance may mature after, or have an Interest Period which extends
beyond, the Facility Termination Date.
2.2.3 Method of Selecting Types and Interest Periods for
Ratable Advances. The Borrower shall select the Type of each Ratable Advance
and, in the case of each Eurodollar Ratable Advance, the Eurodollar Interest
Period applicable to such Ratable Advance. The Borrower shall give the Agent
irrevocable notice (a "Ratable Borrowing Notice") not later than 11:00 a.m.
(Chicago time) on the Borrowing Date of each Floating Rate Advance and three
Business Days before the Borrowing Date for each Eurodollar Ratable Advance.
Notwithstanding the foregoing, a Ratable Borrowing Notice for a Floating Rate
Advance may be given not later than 30 minutes after the time which the Borrower
is required to reject one or more bids offered in connection with an Absolute
Rate Auction pursuant to Section 2.3.6 and a Ratable Borrowing Notice for a
Eurodollar Ratable Advance may be given not later than 30 minutes after the time
the Borrower is required to reject one or more bids offered in connection with a
Eurodollar Auction pursuant to Section 2.3.6. A Ratable Borrowing Notice shall
specify:
(a) the Borrowing Date, which shall be a
Business Day, of such Ratable Advance;
(b) the aggregate amount of such Ratable
Advance, which, when added to the aggregate amount of all outstanding Ratable
Advances and Competitive Bid Advances and after giving effect to the repayment
of any such outstanding Advances out of the proceeds of the requested Ratable
Advance, shall not exceed the Aggregate Commitment;
(c) the Type of Advance selected; and
(d) in the case of each Eurodollar Ratable
Advance, the Eurodollar Interest Period applicable thereto (which may not end
after the Facility Termination Date).
2.2.4 Conversion and Continuation of Outstanding Ratable
Advances. Floating Rate Advances shall continue as Floating Rate Advances unless
and until such Floating Rate Advances are converted into Eurodollar Ratable
Advances pursuant to this Section 2.2.4. Each Eurodollar Ratable Advance shall
continue as a Eurodollar Ratable Advance until the end of the then applicable
Eurodollar Interest Period therefor, at which time such Eurodollar Ratable
Advance shall be automatically converted into a Floating Rate Advance unless the
Borrower shall have given the Agent a Conversion/Continuation Notice requesting
that, at the end of such Eurodollar Interest Period, such Eurodollar Ratable
Advance continue as a Eurodollar Ratable Advance for the same or another
Eurodollar Interest Period. Subject to the terms of Section 2.6, the Borrower
may elect from time to time to convert all or any part of a Ratable Advance of
any Type into any other Type or Types of Ratable Advances; provided that any
conversion of any
-21-
29
Eurodollar Ratable Advance shall be made on, and only on, the last day of the
Eurodollar Interest Period applicable thereto. The Borrower shall give the Agent
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of a
Ratable Advance or continuation of a Eurodollar Ratable Advance not later than
11:00 a.m. (Chicago time) (x) on the date of the requested conversion, in the
case of a conversion to a Floating Rate Advance, or (y) at least three Business
Days, in the case of a conversion into or continuation of a Eurodollar Ratable
Advance, prior to the date of the requested conversion or continuation,
specifying:
(a) the requested date, which shall be a
Business Day, of such conversion or continuation;
(b) the aggregate amount and Type of Ratable
Advance which is to be converted or continued; and
(c) the amount and Type(s) of Ratable Advance(s)
into which such Ratable Advance is to be converted or continued and, in the case
of a conversion into or continuation of a Eurodollar Ratable Advance, the
duration of the Eurodollar Interest Period applicable thereto.
2.3 Competitive Bid Advances.
2.3.1 Competitive Bid Option. In addition to Ratable
Advances pursuant to Section 2.2, but subject to the terms and conditions of
this Agreement (including, without limitation, the limitation set forth in
Section 2.1.2 as to the maximum aggregate principal amount of all outstanding
Advances hereunder, provided that a Lender may make Competitive Bid Advances in
an amount in excess of its Commitment), prior to the Facility Termination Date
the Borrower may, as set forth in this Section 2.3, request the Lenders to make
offers to make Competitive Bid Advances to the Borrower. Each Lender may, but
shall have no obligation to, make such offers and the Borrower may, but shall
have no obligation to, accept any such offers in the manner set forth in this
Section 2.3. The Borrower's obligation to pay the principal of, and interest on,
the Competitive Bid Advances shall be evidenced by the Competitive Bid Notes.
Although the Competitive Bid Notes shall be dated the date of the initial
Advance, interest in respect thereof shall be payable only for the periods
during which the Loans evidenced thereby are outstanding.
2.3.2 Competitive Bid Quote Request. When the Borrower
wishes to request offers to make Competitive Bid Loans under this Section 2.3,
it shall transmit to the Agent by telecopy a Competitive Bid Quote Request
substantially in the form of Exhibit C hereto so as to be received no later than
(a) 11:00 a.m. (Chicago time) at least four Business Days prior to the Borrowing
Date proposed therein, in the case of a Eurodollar Auction or (b) 11:00 a.m.
(Chicago time) at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction specifying:
(a) the proposed Borrowing Date, which shall be
a Business Day, for the proposed Competitive Bid Advance;
-22-
30
(b) the aggregate principal amount of such
Competitive Bid Advance;
(c) whether the Competitive Bid Quotes requested
are to set forth a Eurodollar Bid Rate, an Absolute Rate, or both; and
(d) the Interest Period applicable thereto
(which may not end after the Facility Termination Date).
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be given within 5 Business Days (or such other number of
days as the Borrower and the Agent may agree) of any other Competitive Bid Quote
Request. A Competitive Bid Quote Request that does not conform substantially to
the format of Exhibit C hereto shall be rejected, and the Agent shall promptly
notify the Borrower of such rejection by telecopy.
2.3.3 Invitation for Competitive Bid Quotes. Promptly and
in any event before 3:00 p.m. (Chicago time) on the same Business Day of receipt
of a Competitive Bid Quote Request that is not rejected pursuant to Section
2.3.2, the Agent shall send to each of the Lenders by telecopy an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit D hereto, which
shall constitute an invitation by the Borrower to each Lender to submit
Competitive Bid Quotes offering to make the Competitive Bid Loans to which such
Competitive Bid Quote Request relates in accordance with this Section 2.3.
2.3.4 Submission and Contents of Competitive Bid Quotes.
(a) Each Lender may, in its sole discretion,
submit a Competitive Bid Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this Section 2.3.4
and must be submitted to the Agent by telecopy at its offices specified in or
pursuant to Article XIII not later than (i) 9:00 a.m. (Chicago time) at least
three Business Days prior to the proposed Borrowing Date, in the case of a
Eurodollar Auction or (ii) 9:00 a.m. (Chicago time) on the proposed Borrowing
Date, in the case of an Absolute Rate Auction (or, in either case upon
reasonable prior notice to the Lenders, such other time and date as the Borrower
and the Agent may agree); provided that Competitive Bid Quotes submitted by
First Chicago may only be submitted if the Agent or First Chicago notifies the
Borrower of the terms of the offer or offers contained therein not later than 30
minutes prior to the latest time at which the relevant Competitive Bid Quotes
must be submitted by the other Lenders. Subject to Articles IV and VIII, any
Competitive Bid Quote so made shall be irrevocable except with the written
consent of the Agent given on the written instructions of the Borrower.
(b) Each Competitive Bid Quote shall be in
substantially the form of Exhibit E hereto and shall in any case specify:
(i) the proposed Borrowing Date, which
shall be the same as that set forth in the applicable Invitation for Competitive
Bid Quotes;
-23-
31
(ii) the principal amount of the
Competitive Bid Loan for which each such offer is being made, which principal
amount (a) may be greater than, less than or equal to the Commitment of the
quoting Lender, (b) must be at least $2,000,000 and an integral multiple of
$250,000, and (c) may not exceed the principal amount of Competitive Bid Loans
for which offers were requested;
(iii) in the case of a Eurodollar
Auction, the Competitive Bid Margin offered for each such Competitive Bid Loan
for each Interest Period requested;
(iv) the minimum amount, if any, of the
Competitive Bid Loan which may be accepted by the Borrower;
(v) in the case of an Absolute Rate
Auction, the Absolute Rate offered for each such Competitive Bid Loan for each
Interest Period requested; and
(vi) the identity of the quoting Lender.
(c) The Agent shall reject any Competitive Bid
Quote that:
(i) is not substantially in the form of
Exhibit E hereto or does not specify all of the information required by Section
2.3.4(b);
(ii) contains qualifying, conditional or
similar language, other than any such language contained in Exhibit E hereto;
(iii) proposes terms other than or in
addition to those set forth in the applicable Invitation for Competitive Bid
Quotes; or
(iv) arrives after the time set forth in
Section 2.3.4(a).
If any Competitive Bid Quote shall be rejected pursuant to this Section
2.3.4(c), then the Agent shall promptly notify the relevant Lender of such
rejection.
(d) No Lender shall disclose any Competitive Bid
Quote (or any part thereof) to any other Lender (other than the Agent), and the
Agent shall not disclose the Competitive Bid Quote (or any part thereof) of any
Lender to any other Lender.
2.3.5 Notice to Borrower. The Agent shall promptly notify
the Borrower of the terms (a) of any Competitive Bid Quote submitted by a Lender
that is in accordance with Section 2.3.4 and (b) of any Competitive Bid Quote
that amends, modifies or is otherwise inconsistent with a previous Competitive
Bid Quote submitted by such Lender with respect to the same Competitive Bid
Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by
the Agent unless such subsequent Competitive Bid Quote specifically states that
it is submitted solely to correct a manifest error in such former Competitive
Bid Quote. The Agent's notice to the Borrower shall specify the aggregate
principal amount of Competitive Bid
-24-
32
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Quote Request and the respective principal amounts
and Eurodollar Bid Rates or Absolute Rates, as the case may be, so offered.
2.3.6 Acceptance and Notice by Borrower. Not later than (a)
11:00 a.m. (Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (b) 11:00 a.m. (Chicago
time) on the proposed Borrowing Date, in the case of an Absolute Rate Auction
(or, in either case upon reasonable prior notice to the Lenders, such other time
and date as the Borrower and the Agent may agree), the Borrower shall notify the
Agent of its acceptance or rejection of the offers so notified to it pursuant to
Section 2.3.5; provided, however, that the failure by the Borrower to give such
notice to the Agent shall be deemed to be a rejection of all such offers. In the
case of acceptance, such notice (a "Competitive Bid Borrowing Notice") shall
specify the aggregate principal amount of offers for each Interest Period that
are accepted. The Borrower may accept any Competitive Bid Quote in whole or in
part (subject to the terms of Section 2.3.4(b)(iv)); provided that:
(a) the aggregate principal amount of each
Competitive Bid Advance may not exceed the applicable amount set forth in the
related Competitive Bid Quote Request,
(b) acceptance of offers may only be made on the
basis of ascending Eurodollar Bid Rates or Absolute Rates, as the case may be,
in respect of each Interest Period for which Competitive Bid Quotes were
requested, and
(c) the Borrower may not accept any offer that
is described in Section 2.3.4(c) or that otherwise fails to comply with the
requirements of this Agreement.
2.3.7 Allocation by Agent. If offers are made by two or
more Lenders with the same Eurodollar Bid Rates or Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which offers are accepted for the related Interest Period, the principal amount
of Competitive Bid Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Lenders as nearly as possible (in such
multiples, not greater than $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amount of such offers; provided, however,
that no Lender shall be allocated a portion of any Competitive Bid Advance which
is less than the minimum amount which such Lender has indicated that it is
willing to accept. Allocations by the Agent of the amounts of Competitive Bid
Loans shall be conclusive in the absence of manifest error. The Agent shall
promptly, but in any event on the same Business Day, notify each Lender of its
receipt of a Competitive Bid Borrowing Notice and the aggregate principal amount
of such Competitive Bid Advance allocated to each participating Lender.
2.4 Availability of Funds. Not later than noon (Chicago time) on
each Borrowing Date, each Lender (or in the case of a Competitive Bid Advance,
each Lender making a portion of such Advance) shall make available its Loan or
Loans in funds immediately available in Chicago to the Agent at its address
specified pursuant to Article XIII. The Agent will promptly
-25-
33
make such funds, in the form received from the Lenders, available to the
Borrower at the Agent's aforesaid address.
2.5 Facility Fee; Reductions in Aggregate Commitment.
(a) The Borrower agrees to pay to the Agent for
the ratable account of each Lender a facility fee at a rate per annum equal to
the Applicable Facility Fee Percentage times such Lender's Commitment (whether
used or unused) from the date hereof to and including the Facility Termination
Date, payable in arrears on each Payment Date hereafter and on the Facility
Termination Date; provided, that such facility fee shall not accrue with respect
to the Commitment of any Lender during any period in which such Lender has
failed to make any Advance required hereunder.
(b) The Borrower may permanently reduce the
Aggregate Commitment in whole, or in part ratably among the Lenders, in a
minimum amount of $2,000,000 (and in multiples of $250,000 if in excess
thereof), upon at least three Business Days' written notice to the Agent, which
notice shall specify the amount of any such reduction; provided, however, that
the amount of the Aggregate Commitment may not be reduced below the aggregate
principal amount of the outstanding Advances. All accrued facility fees shall be
payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder and no facility fees shall accrue thereafter.
2.6 Minimum Amount of Each Advance. Each Advance shall be in the
minimum amount of $2,000,000 (and in multiples of $250,000 if in excess
thereof); provided, however, that (a) any Floating Rate Advance may be in the
amount of the unused Aggregate Commitment and (b) in no event shall more than
five (5) Eurodollar Advances be permitted to be outstanding at any time.
2.7 Optional Principal Payments. The Borrower may from time to
time pay, without penalty or premium, all outstanding Advances (other than
Competitive Bid Advances, which may not be voluntarily prepaid unless a Lender
has given notice in respect of such Competitive Bid Loan that additional
material amounts are payable to such Lender pursuant to Section 2.16(a), 3.1 or
3.2), or, in a minimum aggregate amount of $2,000,000 or any integral multiple
of $250,000 in excess thereof, any portion of the outstanding Advances (other
than Competitive Bid Advances) upon notice to the Agent not later than 11:00
a.m. (Chicago time) on the date of such payment; provided, that any prepayment
of a Eurodollar Advance prior to the last day of the applicable Eurodollar
Interest Period shall require three Business Days' prior notice to the Agent and
shall be subject to the indemnity provisions of Section 3.4.
2.8 Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest at the Floating Rate from and including the date of such
Advance or the date on which such Advance was converted into a Floating Rate
Advance to (but not including) the date on which such Floating Rate Advance is
paid or converted to a Eurodollar Ratable Advance. Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate Advance
will take effect simultaneously with each change in the Floating Rate. Each
Eurodollar Ratable
-26-
34
Advance and Absolute Rate Advance shall bear interest from and including the
first day of the Interest Period applicable thereto to, but not including, the
last day of such Interest Period at the interest rate determined as applicable
to such Eurodollar Ratable Advance or Absolute Rate Advance. No Interest Period
may end after the Facility Termination Date.
2.9 Rates Applicable After Default. Notwithstanding anything to
the contrary contained in Section 2.2.3 and 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Agent and the Required Lenders) when any Default or Unmatured
Default has occurred and is continuing. During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower, declare (which
declaration may be revoked at the option of the Required Lenders notwithstanding
any provision of Section 8.2 requiring unanimous consent of the Lenders to
changes in interest rates) that each Eurodollar Advance, Absolute Rate Advance
and Floating Rate Advance shall bear interest (for the remainder of the
applicable Interest Period in the case of Eurodollar Advances and Absolute Rate
Advances) at the rate otherwise applicable plus two percent (2.0%) per annum;
provided, however, that such increased rate shall automatically and without
action of any kind by the Lenders become and remain applicable in the event of a
Default described in Section 7.6 or 7.7 until revoked by the Required Lenders.
2.10 Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by noon (Chicago time) on the date when
due and shall be applied ratably by the Agent among the Lenders. Each payment
delivered to the Agent for the account of any Lender shall be delivered promptly
by the Agent to such Lender in the same type of funds that the Agent received at
its address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender. The Agent is
hereby authorized to charge the account of the Borrower maintained with First
Chicago for each payment of principal, interest and fees as it becomes due
hereunder.
2.11 Notes; Telephonic Notices. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note; provided, however, that neither the failure to so
record nor any error in such recordation shall affect the Borrower's obligations
under such Note. The Borrower hereby authorizes the Lenders and the Agent to
extend, convert or continue Advances, effect selections of Types of Advances,
submit Competitive Bid Quotes and to transfer funds based on telephonic notices
made by any person or persons the Agent or any Lender in good faith believes to
be acting on behalf of the Borrower. The Borrower agrees to deliver promptly to
the Agent a written confirmation, if such confirmation is requested by the Agent
or any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error.
-27-
35
2.12 Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which a Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a Eurodollar
Ratable Advance on a day other than a Payment Date shall be payable on the date
of conversion. Interest accrued on each Eurodollar Advance or Absolute Rate
Advance shall be payable on the last day of its applicable Interest Period, on
any date on which the Eurodollar Advance or Absolute Rate Advance is prepaid,
whether by acceleration or otherwise, and at maturity. Interest accrued on each
Eurodollar Advance or Absolute Rate Advance having an Interest Period longer
than three months shall also be payable on the last day of each three-month
interval during such Interest Period. Facility fees and interest on Floating
Rate Advances and Absolute Rate Advances shall be calculated for actual days
elapsed on the basis of a 365/366-day year. Interest on Eurodollar Advances
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day an Advance is made but not for the day of
any payment on the amount paid if payment is received prior to noon (Chicago
time) at the place of payment. If any payment of principal of or interest on an
Advance shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.13 Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Ratable Borrowing Notice, Conversion/Continuation Notice, Invitation for
Competitive Quotes and repayment notice received by it hereunder. The Agent will
notify the Borrower and each Lender of the interest rate applicable to each
Eurodollar Advance promptly upon determination of such interest rate and will
give the Borrower and each Lender prompt notice of each change in the Floating
Rate.
2.14 Lending Installations. Subject to Section 3.5, each Lender may
book its Loans at any Lending Installation selected by such Lender and may
change its Lending Installation from time to time. All terms of this Agreement
shall apply to any such Lending Installation and the Notes shall be deemed held
by each Lender for the benefit of such Lending Installation. Each Lender may, by
written or telecopy notice to the Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
2.15 Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan, or (b) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
the Borrower has not in fact made such
-28-
36
payment to the Agent, the Lenders shall, on demand by the Agent, repay to the
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to the Federal Funds Effective Rate for such day. If any Lender
has not in fact made such payment to the Agent, such Lender or the Borrower
shall, on demand by the Agent, repay to the Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the Agent until the
date the Agent recovers such amount at a rate per annum equal to (a) in the case
of payment by a Lender, the Federal Funds Effective Rate for such day, or (b) in
the case of payment by the Borrower, the interest rate applicable to the
relevant Loan.
2.16 Taxes.
(a) Any payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes or any other tax based
upon any income imposed on the Agent or any Lender by the jurisdiction in which
the Agent or such Lender is incorporated or has its principal place of business.
If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be withheld
from any amounts payable to the Agent or any Lender hereunder, the amounts so
payable to the Agent or such Lender shall be increased to the extent necessary
to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in or pursuant to this Agreement; provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the U.S. or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
Section 2.16. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as practicable thereafter the Borrower shall send to the Agent for its
own account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Agent and the Lenders for any incremental taxes, interest or penalties that
may become payable by any Agent or any Lender as a result of any such failure.
The agreements in this Section 2.16 shall survive the termination of this
Agreement and the payment of all other amounts payable hereunder.
(b) At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to
-29-
37
receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Lender which so
delivers a Form 1001 or 4224 further undertakes to deliver to each of the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including, without limitation, any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
2.17 Agent's Fees. The Borrower shall pay to the Agent those fees
owing to it in its capacity as Agent, in addition to the facility fees
referenced in Section 2.5(a), in the amounts and at the times separately agreed
to between the Agent and the Borrower.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If, after the Closing Date, the adoption of
or any change in any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any interpretation thereof or the compliance of any Lender therewith,
(a) subjects any Lender or any applicable
Lending Installation to any tax, duty, charge or withholding on or from payments
due from the Borrower (excluding net income taxes and franchise taxes or any
other tax based upon any income of any Lender or applicable Lending Installation
imposed by the jurisdiction in which such Lender or Lending Installation is
incorporated or has its principal place of business), or changes the basis of
taxation of principal, interest or any other payments to any Lender or Lending
Installation in respect of its Loans or other amounts due it hereunder, or
(b) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Lender or any applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest rate applicable to
Eurodollar Advances), or
-30-
38
(c) imposes any other condition the result of
which is to increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining Loans or reduces any amount
receivable by any Lender or any applicable Lending Installation in connection
with any Loans, or requires any Lender or any applicable Lending Installation to
make any payment calculated by reference to the amount of Loans held, or
interest received by it, in each case, by an amount reasonably deemed material
by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an amount
received which such Lender reasonably determines is attributable to making,
funding and maintaining its Loans and its Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender
reasonably determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender or any
corporation controlling such Lender is increased as a result of a Change, then,
within 15 days of demand by such Lender, the Borrower shall pay such Lender the
amount necessary to compensate for any material shortfall in the rate of return
on the portion of such increased capital which such Lender reasonably determines
is attributable to this Agreement, its Loans or its obligation to make Loans
hereunder (after taking into account such Lender's policies as to capital
adequacy). "Change" means (a) any change after the Closing Date in the
Risk-Based Capital Guidelines, or (b) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
Closing Date which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (a) the risk-based
capital guidelines in effect in the United States on the Closing Date and (b)
the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices entitled
"International Convergence of Capital Measurements and Capital Standards" and
any amendments to such regulations adopted prior to the Closing Date.
3.3 Availability of Types of Advances. If (a) any Lender
determines that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or (b) the Required Lenders determine
that (i) deposits of a type and maturity appropriate to match fund Eurodollar
Advances are not available, or (ii) the interest rate applicable to a Eurodollar
Advance does not accurately or fairly reflect the cost of making or maintaining
such Eurodollar Advance, then the Agent shall suspend the availability of the
affected Type of Advance until such circumstance no longer exists and require
any such Eurodollar Advances to be repaid or converted into a Floating Rate
Advance at the option of the Borrower, in each case subject to Section 3.4.
3.4 Funding Indemnification. If any payment of a Eurodollar
Advance or Absolute Rate Advance occurs on a date which is not the last day of
the applicable Interest Period, whether because of acceleration, prepayment or
otherwise, or a Eurodollar Advance or Absolute
-31-
39
Rate Advance is not made on the date specified by the Borrower for any reason
other than default by the Lenders, the Borrower will indemnify the Agent and
each Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Advance or Absolute Rate Advance.
3.5 Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Advances to minimize any liability
of the Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender to the Borrower (with a copy to the Agent) as
to the amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement
shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurodollar Advance shall be calculated
as though each Lender funded its Eurodollar Advances through the purchase of a
deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the written statement of any Lender shall be payable on demand
after receipt by the Borrower of the written statement. The obligations of the
Borrower under Sections 3.1, 3.2 and 3.4 shall survive payment of the
Obligations and termination of this Agreement.
3.6 Substitution of Lenders. Upon the receipt by the Borrower from
any Lender (an "Affected Lender") of a claim for compensation under Section
2.16(a), 3.1 or 3.2 or a notice in accordance with Section 3.3 regarding the
unavailability of a Type of Advance, the Borrower may: (a) request the Affected
Lender to use its best efforts to obtain a replacement bank or financial
institution satisfactory to the Borrower to acquire and assume all or a ratable
part of all of such Affected Lender's Loans and Commitment at the face amount
thereof (a "Replacement Lender"); (b) request one or more of the other Lenders
to acquire and assume all or part of such Affected Lender's Loans and Commitment
(which request each such other Lender may decline or agree to in its sole
discretion); or (c) designate a Replacement Lender. Any such designation of a
Replacement Lender under clause (a) or (c) shall be subject to the prior written
consent of the Agent (which consent shall not unreasonably be withheld). Any
transfer of Loans or Commitment pursuant to this Section shall be made in
accordance with Section 12.3 and Section 3.4, if applicable.
3.7 Survival. The agreements and obligations of the Borrower in
Section 2.16(a) and this Article III shall survive the payment of all other
Obligations, and the Borrower will have no obligation to pay any amount pursuant
to Section 2.16(a), 3.1, or 3.2 if a demand is not made within 180 days of the
date on which the Lender's right to reimbursement arises.
-32-
40
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Initial Loans. The Lenders shall not be required to make the
initial Advance hereunder unless the Borrower has furnished the following to the
Agent with one copy for each of the Lenders and the other conditions set forth
below have been satisfied.
(a) Charter Documents; Good Standing Certificates. Copies of the
certificate of incorporation of each of the Borrower and URC, together with all
amendments thereto, both certified by the appropriate governmental officer in
its jurisdiction of incorporation, together with a good standing certificate
issued by the Secretary of State of its state of incorporation or formation and
the Secretary of State of California.
(b) By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant Secretary of the Borrower and URC, of its by-laws and of its Board of
Directors' resolutions authorizing the execution, delivery and performance of
the Loan Documents to which such Person is a party.
(c) Secretary's Certificate. An incumbency certificate, executed by
the Secretary or Assistant Secretary of the Borrower and URC, which shall
identify by name and title and bear the signature of the officers of the
Borrower and URC authorized to sign the Loan Documents and, with respect to the
Borrower, to make borrowings hereunder, upon which certificate the Agent and the
Lenders shall be entitled to rely until informed of any change in writing by the
Borrower.
(d) Officer's Certificate. A certificate, dated the date of this
Agreement, signed by an Authorized Officer of the Borrower, in form and
substance satisfactory to the Agent, to the effect that: (i) on such date (both
before and after giving effect to the consummation of the transactions
contemplated hereby (collectively, the "Closing Transactions")) no Default or
Unmatured Default has occurred and is continuing (with such representation, with
respect to Section 6.22 for the period ending December 31, 1998 and as of such
date, to the best of such Person's knowledge); (ii) no injunction or temporary
restraining order which would prohibit the making of the Loans or the
consummation of any of the Closing Transactions, or other litigation which could
reasonably be expected to have a Material Adverse Effect is pending or, to the
best of such Person's knowledge, threatened; (iii) all orders, consents,
approvals, licenses, authorizations, or validations of, or filings, recordings
or registrations with, or exemptions by, any governmental or public body or
authority, or any subdivision thereof, required to make or consummate the
Closing Transactions have been or, prior to the time required, will have been,
obtained, given, filed or taken and are or will be in full force and effect (or
the Borrower has obtained effective judicial relief with respect to the
application thereof) and all applicable waiting periods have expired; (iv)
neither the Borrower nor any Subsidiary has failed to perform any material
obligation or covenant required in connection with any Closing Transaction to be
performed or complied with by it on or before such date; (v) each of the
representations and warranties set forth in Article V of this Agreement is true
and correct on and
33
41
as of such date; and (viii) since December 31, 1997 no event or change has
occurred that has caused or evidences a Material Adverse Effect.
(e) Legal Opinions. Written opinions of Xxxxx Xxxxxxxxxx LLP and of
Xxx & Reno, counsel for the Borrower and URC, addressed to the Agent and the
Lenders in form and substance acceptable to the Agent and its counsel.
(f) Notes. Notes payable to the order of each of the Lenders duly
executed by the Borrower.
(g) Loan Documents. Executed originals of the Agreement, together
with all schedules, exhibits, certificates, instruments, opinions, documents and
financial statements required to be delivered pursuant hereto and thereto.
(h) Regulatory Matters. Receipt of any required regulatory
approvals from any Governmental Authority with respect to the transactions
contemplated by the Loan Documents.
(i) Departing Lender. The Departing Lender shall have consented to
this Agreement and the reduction to $0 of its Commitment hereunder, such consent
to be in form and substance satisfactory to the Agent.
4.2 Each Future Advance. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default and none would
result from such Advance;
(b) The representations and warranties contained in Article V are
true and correct in all material respects as of such Borrowing Date;
(c) A Borrowing Notice shall have been properly submitted; and
(d) All legal matters incident to the making of such Advance shall
be reasonably satisfactory to the Lenders and their counsel.
Each Ratable Borrowing Notice and Competitive Bid Quote Request with respect to
each such Advance shall constitute a representation and warranty by the Borrower
that the conditions contained in Section 4.2 have been satisfied. Any Lender may
require a duly completed compliance certificate in substantially the form of
Exhibit F hereto as a condition to making an Advance.
34
42
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that, both before
and after giving effect to the Closing Transactions:
5.1 Corporate Existence and Standing. Each of the Borrower and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has the
power and authority to own its properties and assets, and to carry on its
business as presently conducted, and is duly qualified to conduct business as a
foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect.
5.2 Authorization and Validity. Each of the Borrower and URC has all
requisite corporate power and authority and legal right to execute and deliver
(or file, as the case may be) each of the Loan Documents to which it is a party
and to perform its obligations thereunder. The execution and delivery (or
filing, as the case may be) by the Borrower and URC of such Loan Documents and
the performance of their obligations thereunder have been duly authorized by
proper corporate proceedings and such Loan Documents constitute the legal, valid
and binding obligations of the Borrower and URC, as applicable, enforceable
against the Borrower and URC in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity.
5.3 Compliance with Laws and Contracts. The Borrower and its
Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof, having jurisdiction over
the conduct of their respective businesses or the ownership of their respective
properties, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Neither the execution and delivery
by the Borrower and URC of the Loan Documents, the application of the proceeds
of the Loans, the consummation of the Closing Transactions nor compliance with
the provisions of the Loan Documents will, or at the relevant time did, (a)
violate any law, rule, regulation (including Regulations T, U and X), order,
writ, judgment, injunction, decree or award binding on the Borrower or any
Subsidiary or the Borrower's or any Subsidiary's charter, articles or
certificate of incorporation or by-laws, (b) violate the provisions of or
require the approval or consent of any party to any indenture, instrument or
agreement to which the Borrower or any Subsidiary is a party or is subject, or
by which it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien (other than
Liens permitted by the Loan Documents) in, of or on the property of the Borrower
or any Subsidiary pursuant to the terms of any such indenture, instrument or
agreement, or (c) require any consent of the stockholders of any Person, except
for approvals or consents which will be obtained on or before the initial
Advance and are disclosed
35
43
on Schedule 5.3, except for any violation of, or failure to obtain an approval
or consent required under, any such law, rule, regulation, order, writ,
judgment, injunction, decree, award, indenture, instrument or agreement that
could not reasonably be expected to have a Material Adverse Effect.
5.4 Governmental Consents. Except as set forth in Schedule 5.4 hereto,
no order, consent, approval, qualification, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
other action in respect of, a Governmental Authority, or any subdivision
thereof, any securities exchange or any other Person is or at the relevant time
was required to authorize, or is or at the relevant time was required in
connection with the execution, delivery, consummation or performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents the application of the proceeds of the Loans or the consummation of
any transaction contemplated in the Loan Documents.
5.5 Financial Statements. The Borrower has heretofore furnished to each
of the Lenders (a) the December 31, 1997 audited consolidated financial
statements of the Borrower and its Subsidiaries, (b) the unaudited consolidated
financial statements of the Borrower and its Subsidiaries through June 30, 1998,
(c) the December 31, 1997 audited Annual Statement of each Insurance Subsidiary
and (d) the June 30, 1998 Quarterly Statement of each Insurance Subsidiary
(collectively, the "Financial Statements"). Each of the Financial Statements was
prepared in accordance with generally accepted accounting principles or SAP, as
applicable, and, together with the related notes, fairly presents the
consolidated financial condition and operations of the Borrower and its
Subsidiaries, or such Insurance Subsidiary, as applicable, at such dates and the
consolidated results of their operations for the respective periods then ended
(except, in the case of such unaudited statements, for normal year-end audit
adjustments).
5.6 Material Adverse Change. No material adverse change in the
business, Property, condition (financial or otherwise), performance, prospects
or operations of the Borrower and its Subsidiaries, taken as a whole, or of URC
and its Subsidiaries, taken as a whole, has occurred since December 31, 1997.
5.7 Taxes. Except as set forth in Schedule 5.7 hereto, the Borrower and
its Subsidiaries have filed or caused to be filed on a timely basis and in
correct form all United States federal and applicable state tax returns and all
other material tax returns which are required to be filed by it, each of
Alleghany and each other Consolidated Person has filed or caused to be filed all
United States federal and material applicable state tax returns which are
required to be filed by it on a consolidated or combined basis and which include
the Borrower or any Subsidiary, and each of the Borrower, the Subsidiaries,
Alleghany and each other Consolidated Person has paid all taxes due pursuant to
said returns or pursuant to any assessment received by such person, except, in
each case, such taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided in accordance with Agreement
Accounting Principles or SAP, as applicable, and as to which no Lien exists.
From and after October 7, 1993, each of the Borrower and each Subsidiary has
joined in the filing of a consolidated federal income tax return with Alleghany.
No tax liens have been filed and no
36
44
claims are being asserted with respect to any taxes for which any Consolidated
Person may be liable which could reasonably be expected to have a Material
Adverse Effect. The charges, accruals and reserves (a) on the books of the
Borrower and its Subsidiaries in respect of any taxes or other governmental
charges and (b) on the books of Alleghany and such other Consolidated Person in
respect of any taxes or other governmental charges owing with respect to any tax
year beginning after December 31, 1992 are in accordance with Agreement
Accounting Principles or SAP, as applicable.
5.8 Litigation. There is no litigation, arbitration, proceeding,
inquiry or governmental investigation pending or, to the knowledge of any of
their officers, threatened against or affecting the Borrower or any Subsidiary
or any of their respective properties which could reasonably be expected to have
a Material Adverse Effect or to prevent, enjoin or unduly delay the making of
the Loans under this Agreement or the consummation of any other Closing
Transaction.
5.9 Capitalization. Schedule 5.9 hereto contains (a) an accurate
description of the Borrower's capitalization as of September 30, 1998 after
giving effect to the Closing Transactions and (b) an accurate list of all of the
existing Subsidiaries as of the date of this Agreement, setting forth their
respective jurisdictions of incorporation and the percentage of their capital
stock owned by the Borrower or other Subsidiaries. All of the issued and
outstanding shares of capital stock of the Borrower and of each Subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable, and
are free and clear of all Liens. Except as set forth on Schedule 5.9, no
authorized but unissued or treasury shares of capital stock of the Borrower or
any Subsidiary are subject to any option, warrant, right to call or commitment
of any kind or character. Except as set forth on Schedule 5.9, neither the
Borrower nor any Subsidiary has any outstanding stock or securities convertible
into or exchangeable for any shares of its capital stock, or any right issued to
any Person (either preemptive or other) to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to any of its capital stock or any stock or securities
convertible into or exchangeable for any of its capital stock other than as
expressly set forth in the certificate or articles of incorporation of the
Borrower or such Subsidiary. Neither the Borrower nor any Subsidiary is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock or any convertible securities, rights
or options of the type described in the preceding sentence except as otherwise
set forth on Schedule 5.9. Except as set forth on Schedule 5.9, as of the date
hereof the Borrower does not own or hold, directly or indirectly, any capital
stock or equity security of, or any equity or partnership interest in any Person
other than such Subsidiaries.
5.10 ERISA. The Unfunded Liabilities of all Single Employer Plans
maintained by the Borrower or any of its Subsidiaries do not in the aggregate
exceed $1,000,000 and the Unfunded Liabilities of all Single Employer Plans
maintained by the other members of the Controlled Group do not in the aggregate
exceed an amount which could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 5.10, neither the Borrower nor any other
member of the Controlled Group maintains, or is obligated to contribute to, any
37
45
Multiemployer Plan. Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event has occurred
with respect to any Plan maintained by the Borrower or any of its Subsidiaries,
no Reportable Event has occurred with respect to any Plan maintained by any
other member of the Controlled Group that could reasonably be expected to have a
Material Adverse Effect, neither the Borrower nor any Subsidiary has withdrawn
from any Multiemployer Plan or initiated steps to do so, no other member of the
Controlled Group has withdrawn from any Multiemployer Plan resulting in any
withdrawal liability that could reasonably be expected to have a Material
Adverse Effect or initiated steps to do so, and no steps have been taken to
reorganize or terminate any Plan by any member of the Controlled Group or, to
the Borrower's knowledge, by any other Person.
5.11 Defaults. No Default or Unmatured Default has occurred and is
continuing.
5.12 Federal Reserve Regulations. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of any Loan will be used in a manner which would violate,
or result in a violation of, Regulation T, Regulation U or Regulation X. Neither
the making of any Advance hereunder nor the use of the proceeds thereof will
violate or conflict with the provisions of Regulation T, Regulation U or
Regulation X. Following the application of the proceeds of the Loans, less than
25% of the value (as determined by any reasonable method) of the assets of the
Borrower and its Subsidiaries which are subject to any limitation on sale,
pledge, or other restriction hereunder taken as a whole have been, and will
continue to be, represented by Margin Stock.
5.13 Investment Company; Public Utility Holding Company Act. Neither
the Borrower nor any Subsidiary is, or after giving effect to any Advance will
be, an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Borrower nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.14 Certain Fees. No broker's or finder's fee or commission was, is or
will be payable by the Borrower or any Subsidiary with respect to any of the
transactions contemplated by this Agreement. The Borrower hereby agrees to
indemnify the Agent and the Lenders against and agrees that it will hold each of
them harmless from any claim, demand or liability for broker's or finder's fees
or commissions alleged to have been incurred by the Borrower in connection with
any of the transactions contemplated by this Agreement and any expenses
(including, without limitation, attorneys' fees and time charges of attorneys
for the Agent or any Lender, which attorneys may be employees of the Agent or
any Lender) arising in connection with any such claim, demand or liability. No
other similar fee or commissions will be payable by the Borrower or any
Subsidiary for any other services rendered to the Borrower or any Subsidiary
ancillary to any of the transactions contemplated by this Agreement.
38
46
5.15 Solvency. As of the date hereof, before and after giving effect to
the consummation of the transactions contemplated by the Loan Documents and the
payment of all fees, costs and expenses payable by the Borrower or its
Subsidiaries with respect to the transactions contemplated by the Loan
Documents, the Borrower (individually and on a consolidated basis) is Solvent.
5.16 Ownership of Properties. Except as set forth on Schedule 5.16
hereto, the Borrower and its Subsidiaries own, free of all Liens, other than
those permitted by Section 6.16 or by any of the other Loan Documents, all of
the properties and assets reflected in the Financial Statements as being owned
by it, except for assets sold, transferred or otherwise disposed of in the
ordinary course of business since the date thereof. To the knowledge of the
Borrower, there are no actual, threatened or alleged defaults with respect to
any leases of real property under which the Borrower or any Subsidiary is lessee
or lessor which could reasonably be expected to have a Material Adverse Effect.
The Borrower and its Subsidiaries own or possess rights to use all licenses,
patents, patent applications, copyrights, service marks, trademarks and trade
names necessary to continue to conduct their business as heretofore conducted,
and no such license, patent or trademark has been declared invalid or been
limited by order of any court or by agreement or is the subject of any
infringement, interference or similar proceeding or challenge, except for
proceedings and challenges which could not reasonably be expected to have a
Material Adverse Effect.
5.17 Indebtedness. Attached hereto as Schedule 5.17 is a complete and
correct list of all Indebtedness of the Borrower and its Subsidiaries
outstanding on the date of this Agreement (other than Indebtedness in a
principal amount not exceeding $1,000,000 for a single item of Indebtedness and
$5,000,000 in the aggregate for all such Indebtedness), showing the aggregate
principal amount which was outstanding on such date after giving effect to the
Closing Transactions. The Borrower has delivered or caused to be delivered to
the Lenders a true and complete copy of each instrument evidencing Indebtedness
in a principal amount of $5,000,000 or more and of each document pursuant to
which any of such Indebtedness was issued.
5.18 Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter, bylaw or other
restriction set forth in a similar governing document which could reasonably be
expected to have a Material Adverse Effect or which restricts or imposes
conditions upon the ability of any Subsidiary to (a) pay dividends or make other
distributions on its capital stock, (b) make loans or advances to the Borrower
or (c) repay loans or advances from the Borrower. Neither the Borrower nor any
Subsidiary is in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement to which it
is a party, which default could reasonably be expected to have a Material
Adverse Effect.
5.19 Environmental Laws. There are no claims, investigations,
litigation, administrative proceedings, notices, requests for information (each
a "Proceeding"), whether pending or, to the Borrower's knowledge, threatened, or
judgments or orders asserting violations of applicable federal, state and local
environmental, health and safety statutes, regulations,
39
47
ordinances, codes, rules, orders, decrees, directives and standards
("Environmental Laws") or relating to any toxic or hazardous waste, substance or
chemical or any pollutant, contaminant, chemical or other substance defined or
regulated pursuant to any Environmental Law, including, without limitation,
asbestos, petroleum, crude oil or any fraction thereof ("Hazardous Materials")
asserted against the Borrower or any of its Subsidiaries which, in any case,
could reasonably be expected to have a Material Adverse Effect. As of the date
hereof, there are no such Proceedings pending, or to the Borrower's knowledge
threatened, except as disclosed on Schedule 5.19. The Borrower and each of its
Subsidiaries have obtained and are in compliance in all material respects with
all permits, certificates, licenses, approvals and other authorizations
("Environmental Permits") required for the operation of their business and have
filed all required notifications or reports relating, in each case, to chemical
substances, air emissions, effluent discharges and the storage, treatment,
transport and disposal of Hazardous Materials. As of the date hereof, the
Borrower and its Subsidiaries do not have liabilities exceeding $100,000 in the
aggregate for all of them with respect to compliance with applicable
Environmental Laws and Environmental Permits or related to the generation,
treatment, storage, disposal, release, investigation or cleanup of Hazardous
Materials, and, to the knowledge of the Borrower, no facts or circumstances
exist which could give rise to such liabilities with respect to compliance with
applicable Environmental Laws and Environmental Permits and the generation,
treatment, storage, disposal, release, investigation or cleanup of Hazardous
Materials.
5.20 Insurance. The Borrower and its Subsidiaries maintain insurance on
their Property with such companies, in such amounts and covering such risks as
is, in each case, consistent with sound business practice.
5.21 Insurance Licenses. No License, the loss of which could reasonably
be expected to have a Material Adverse Effect, is the subject of a proceeding
for suspension or revocation. To the Borrower's knowledge, there is no
sustainable basis for such suspension or revocation, and no such suspension or
revocation has been threatened by any Governmental Authority. No Insurance
Subsidiary has received written notice from any Governmental Authority that it
is deemed to be "commercially domiciled" for insurance regulatory purposes in
any jurisdiction other than that indicated on Schedule 5.21. Schedule 5.21 also
indicates the state or states in which such Insurance Subsidiary is licensed to
engage in any line of insurance, in each case as of the date of this Agreement.
5.22 Reserves. Each reserve and other liability amount in respect of
the insurance business, including, without limitation, reserve and other
liability amounts in respect of insurance policies, established or reflected in
the SAP Financial Statements for the year ended December 31, 1997 of each
Insurance Subsidiary, was determined in accordance with generally accepted
actuarial standards consistently applied, was fairly stated in accordance with
sound actuarial principles and was in compliance with the requirements of the
insurance laws, rules and regulations of its state of domicile as of the date
thereof. Each Insurance Subsidiary owns assets that qualify as admitted assets
under applicable law in an amount at least equal to the sum of all such reserves
and liability amounts and its minimum statutory capital and surplus as required
by the insurance laws, rules and regulations of its state of domicile.
40
48
5.23 Disclosure. None of the (a) information, exhibits or reports
furnished by or on behalf of the Borrower to the Agent or to any Lender in
connection with the negotiation of the Loan Documents and the transactions
contemplated hereby or thereby, or (b) representations or warranties of the
Borrower contained in this Agreement, the other Loan Documents or any other
document, certificate or written statement furnished to the Agent or the Lenders
by or on behalf of the Borrower for use in connection with the transactions
contemplated by this Agreement contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made and on the
date as of which the same were made; provided, that this Section 5.23 shall not
apply to any plan, forecast, projection or pro forma financial information
contained in such materials that is based upon good faith estimates and
assumptions believed to be reasonable at the time made. The pro forma financial
information contained in such materials is based upon good faith estimates and
assumptions believed by the Borrower to be reasonable at the time made. There is
no fact known to the Borrower (other than matters of a general economic or
political nature) that has had since December 31, 1997 or could reasonably be
expected to have a Material Adverse Effect and that has not been disclosed
herein or in such other documents, certificates and statements furnished to the
Lenders for use in connection with the transactions contemplated by this
Agreement.
5.24 Year 2000 Compliance. The Borrower has reviewed its operations and
those of its Subsidiaries with a view to assessing whether its businesses, or
the businesses of any of its Subsidiaries, will be vulnerable to a Year 2000
Problem or will be vulnerable to the effects of a Year 2000 Problem suffered by
any of the Borrower's or any of its Subsidiaries' major commercial
counter-parties. The Borrower represents and warrants that it has a reasonable
basis to believe that no Year 2000 Problem will cause a Material Adverse Effect.
5.25 Use of Proceeds. Neither the Borrower nor any of its Subsidiaries
is engaged in the business of extending credit to others for the purposes of
buying or carrying any "margin stock."
5.26 Permits, Licenses and Rights. The Borrower and its Subsidiaries
own or possess all the patents, trademarks, service marks, trade names,
copyrights, licenses, franchises, permits and rights with respect to the
foregoing necessary to own and operate their respective properties and to carry
on their respective businesses as presently conducted and presently planned to
be conducted without, to the best knowledge of the Borrower, conflict with the
rights of others, except where failure to do so could not reasonably be expected
to have a Material Adverse Effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
41
49
6.1 Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, consistently applied,
and furnish to the Lenders:
(a) As soon as practicable and in any event within 90 days after
the close of each of its Fiscal Years, an unqualified (except for qualifications
relating to changes in accounting principles or practices reflecting changes in
generally accepted accounting principles and required or approved by the
independent certified public accountants of the Borrower or of Venton, as the
case may be) audit report certified by independent certified public accountants,
acceptable to the Lenders, prepared in accordance with Agreement Accounting
Principles on a consolidated and consolidating basis (consolidating statements
need not be certified by such accountants) for itself and its Subsidiaries and
for Venton and its Subsidiaries, including balance sheets as of the end of such
period and related statements of income, retained earnings and cash flows
accompanied by (i) any control letter prepared by said accountants addressed to
the audit committee of the board of directors of the Borrower or Venton, as the
case may be, (ii) a certificate of said accountants that, in the course of the
examination necessary for their certification of the foregoing, they have
obtained no knowledge of any Default or Unmatured Default, or if, in the opinion
of such accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof, and (iii) a letter from said accountants addressed to
the Lenders acknowledging that the Lenders are relying on such certificate as
part of their credit consideration of the transactions contemplated hereby and
authorizing such reliance.
(b) As soon as practicable and in any event within 45 days after
the close of the first three Fiscal Quarters of each of its Fiscal Years, for
itself and its Subsidiaries, consolidated and consolidating unaudited balance
sheets as at the close of each such period and consolidated and consolidating
statements of income, retained earnings and cash flows for the period from the
beginning of such Fiscal Year to the end of such quarter, all certified by its
chief financial officer.
(c) (i) Upon the earlier of (A) fifteen days after the regulatory
filing date or (B) 75 days after the close of each Fiscal Year of each Insurance
Subsidiary, copies of the unaudited Annual Statement of such Insurance
Subsidiary, certified by the chief financial officer of such Insurance
Subsidiary, all such statements to be prepared in accordance with SAP and (ii)
no later than each June 15, copies of such Annual Statements audited and
certified by independent certified public accountants of recognized annual
standing.
(d) Upon the earlier of (i) ten (10) days after the regulatory
filing date or (ii) 60 days after the close of each of the first three Fiscal
Quarters of each Fiscal Year of each Insurance Subsidiary, copies of the
Quarterly Statement of each of the Insurance Subsidiaries, certified by the
chief financial officer of such Insurance Subsidiary, all such statements to be
prepared in accordance with SAP.
(e) Promptly and in any event within ten days after (i) learning
thereof, notification of any changes after the date hereof in the rating given
by (A) A.M. Best & Co. or S&P in respect of any Insurance Subsidiary or (B) S&P
or Xxxxx'x in respect of the
42
50
senior Indebtedness of the Borrower or any Subsidiary and (ii) receipt thereof,
copies of any ratings analysis by (A) A.M. Best & Co. or S&P relating to any
Insurance Subsidiary or (B) S&P or Xxxxx'x in respect of the senior Indebtedness
of the Borrower or any Subsidiary.
(f) Copies of any actuarial certificates prepared with respect to
any Insurance Subsidiary by an employee of or an actuary engaged by such
Insurance Subsidiary, promptly after the receipt thereof.
(g) As soon as available, but in any event not later than the last
Business Day in February of each year, a copy of the plan and forecast
(including a projected consolidated and consolidating balance sheet, income
statement and funds flow statement) of the Borrower and its Subsidiaries for
such Fiscal Year.
(h) Together with the financial statements required by clauses (a)
and (b) above, a compliance certificate in substantially the form of Exhibit F
hereto signed by its chief financial officer showing the calculations necessary
to determine compliance with this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default exists, stating
the nature and status thereof.
(i) Within 270 days after the close of each Fiscal Year, a
statement of the Unfunded Liabilities of each Single Employer Plan, if any,
certified as correct by an actuary enrolled under ERISA.
(j) As soon as possible and in any event within 10 days after the
Borrower knows that any Termination Event has occurred with respect to any Plan,
a statement, signed by the chief financial officer of the Borrower, describing
said Termination Event and the action which the Borrower proposes to take with
respect thereto and as soon as possible and in any event within ten (10) days
after learning thereof, notification of any lien imposed by the PBGC or the IRS
on the assets of any member of the Controlled Group in respect of any Plan
maintained by any such member (or any other employee pension benefit plan as to
which any such member may be liable) which relates to liabilities in excess of
ten percent of the net worth (determined according to generally accepted
accounting principles and without reduction for any reserve for such
liabilities) of Alleghany and its Subsidiaries.
(k) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (i) any notice, claim, complaint or order to
the effect that the Borrower or any of its Subsidiaries is or may be liable to
any Person as a result of the release by the Borrower, any of its Subsidiaries,
or any other Person of any Hazardous Materials into the environment or requiring
that action be taken to respond to or clean up a Release of Hazardous Materials
into the environment, and (ii) any notice, complaint or citation alleging any
violation of any Environmental Law or Environmental Permit by the Borrower or
any of its Subsidiaries. Within ten days of the Borrower or any Subsidiary
having knowledge of the proposal, enactment or promulgation of any Environmental
Law which could reasonably be expected to have a Material Adverse Effect, the
Borrower shall provide the Agent with written notice thereof.
43
51
(l) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which the
Borrower or any of its Subsidiaries files with the NAIC or any insurance
commission or department or analogous Governmental Authority (including without
limitation, any filing made by the Borrower or any Subsidiary pursuant to any
insurance holding company act or related rules or regulations), but excluding
routine or non-material filings with the NAIC, any insurance commissioner or
department or analogous Governmental Authority.
(m) Promptly and in any event within ten (10) days after learning
thereof, notification of (i) any tax assessment, demand, notice of proposed
deficiency or notice of deficiency received by Alleghany or any other
Consolidated Person or (ii) the filing of any tax Lien or commencement of any
judicial proceeding by or against any such Consolidated Person, if any such
assessment, demand, notice, Lien or judicial proceeding relates to tax
liabilities in excess of ten percent (10%) of the net worth (determined
according to generally accepted accounting standards and without reduction for
any reserve for such liabilities) of Alleghany and its Subsidiaries taken as a
whole.
(n) Such other information (including, without limitation, the
annual Best's Advance Report Service report prepared with respect to each
Insurance Subsidiary rated by A.M. Best & Co.) as the Agent or any Lender may
from time to time reasonably request.
6.2 Use of Proceeds. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to meet the general corporate needs of the
Borrower and its Subsidiaries. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
Margin Stock or to finance the Purchase of any Person which has not been
approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.
6.3 Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of (a) the
occurrence of any Default or Unmatured Default, (b) the occurrence of any other
development, financial or other, relating specifically to the Borrower or any of
its Subsidiaries (and not of a general economic or political nature) which could
reasonably be expected to have a Material Adverse Effect, (c) the receipt of any
notice from any Governmental Authority of the expiration without renewal,
revocation or suspension of, or the institution of any proceedings to revoke or
suspend, any License now or hereafter held by any Insurance Subsidiary which is
required to conduct insurance business in compliance with all applicable laws
and regulations and the expiration, revocation or suspension of which could
reasonably be expected to have a Material Adverse Effect, (d) the receipt of any
notice from any Governmental Authority of the institution of any disciplinary
proceedings against or in respect of any Insurance Subsidiary, or the issuance
of any order, the taking of any action or any request for an extraordinary audit
for cause by any Governmental Authority which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect, (e) any judicial or
administrative order limiting or controlling the insurance business of any
Insurance Subsidiary (and not the insurance industry generally) which has been
issued or adopted and which has had,
44
52
or could reasonably be expected to have, a Material Adverse Effect, or (f) the
commencement of any litigation which could reasonably be expected to create a
Material Adverse Effect.
6.4 Conduct of Business. The Borrower will, and will cause each
Subsidiary to, (a) carry on and conduct its business only in substantially the
same manner as it is presently conducted, (b) (i) with respect to the Borrower,
only engage in the business of a holding company owning entities engaged in the
business of insurance or reasonably incidental activities, (ii) with respect to
each Insurance Subsidiary, only engage in the insurance business in which it is
engaged or licensed as of the date hereof, if it is an Insurance Subsidiary as
of such date, or as of the date of its Purchase, if hereafter acquired, or only
engage in the insurance business for which it is formed, if hereafter formed,
and (iii) with respect to each other Subsidiary, only engage in the business in
which it is engaged as of the date hereof, if it is a Subsidiary as of such
date, or as of the date of its Purchase if hereafter acquired, or only engage in
the business for which it is formed, if hereafter formed, (c) do all things
necessary to remain duly incorporated, validly existing and in good standing in
its jurisdiction of incorporation and its jurisdiction of domicile and maintain
all requisite qualification to conduct business in each other jurisdiction in
which such qualification is required, except where the failure to maintain such
qualification could not reasonably be expected to have a Material Adverse
Effect, and (d) do all things necessary to renew, extend and continue in effect
all Licenses which may at any time and from time to time be necessary for any
Insurance Subsidiary to operate its insurance business in compliance with all
applicable laws and regulations; provided, that (i) any Insurance Subsidiary may
withdraw from one or more states (other than its state of domicile) as an
admitted insurer if such withdrawal is determined by the board of directors or
management of such Insurance Subsidiary to be in the best interest of such
Insurance Subsidiary and could not reasonably be expected to have a Material
Adverse Effect and (ii) any Subsidiary that is not actively engaged in business
may be dissolved, if such dissolution is determined by the Borrower's board of
directors to be in the best interest of the Borrower and could not reasonably be
expected to have a Material Adverse Effect. No Insurance Subsidiary shall change
its state of domicile or incorporation without the prior written consent of the
Required Lenders. Each Wholly-Owned Subsidiary in existence as of the date of
this Agreement shall continue to be a Wholly-Owned Subsidiary except as
permitted by Section 6.12. It is understood that a merger of a Subsidiary of URC
into an entity which is a Wholly-Owned Subsidiary of URC, to the extent
otherwise permitted by this Agreement, will not be deemed to violate this
Section 6.4. It is also understood that a merger of a Subsidiary of the Borrower
(which is not a Subsidiary of URC) into an entity which is a Wholly-Owned
Subsidiary of the Borrower, to the extent otherwise permitted by this Agreement,
will not be deemed to violate this Section 6.4.
6.5 Taxes. The Borrower will, and will cause each Subsidiary to, timely
file United States federal and applicable foreign, state and local tax returns
required to be filed by it that are true and correct in all material respects,
and each of the Borrower, the Subsidiaries, Alleghany and each other
Consolidated Person will pay when due all taxes, assessments and governmental
charges and levies upon it or its income, profits or Property, except, in each
case, those which are being contested in good faith by appropriate proceedings
and with respect to which adequate
45
53
reserves have been set aside in accordance with generally accepted accounting
principles or SAP, as applicable.
6.6 Insurance. The Borrower will, and will cause each Subsidiary to,
maintain, insurance on all their Property with such companies, in such amounts
and covering such risks as is, in each case, consistent with sound business
practice, and the Borrower will furnish to the Agent and any Lender upon request
full information as to the insurance carried.
6.7 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect.
6.8 Maintenance of Properties; Year 2000 Compliance. (a) The Borrower
will, and will cause each Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working order and
condition, except for ordinary wear and tear, and make all necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times; provided, that the Borrower or
any Subsidiary may, subject to Section 6.13, dispose of any Property that such
Person deems unnecessary for the conduct of its business.
(b) The Borrower will take all actions necessary and commit
adequate resources to assure that its computer-based and other systems (and
those of all Subsidiaries) are able to effectively process data, including dates
before, on and after January 1, 2000, without experiencing any Year 2000 Problem
that could reasonably be expected to cause a Material Adverse Effect. At the
request of the Agent, the Borrower will provide the Agent with assurances and
substantiations (including, but not limited to, the results of internal or
external audit reports prepared in the ordinary course of business) reasonably
acceptable to the Required Lenders as to the capability of the Borrower and its
Subsidiaries to conduct its and their businesses and operations before, on and
after January 1, 2000 without experiencing a Year 2000 Problem causing a
Material Adverse Effect.
6.9 Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records of
the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lenders may designate. The Borrower will
keep or cause to be kept, and cause each Subsidiary to keep or cause to be kept,
appropriate records and books of account in which complete entries are to be
made reflecting its and their business and financial transactions, such entries
to be made in accordance with Agreement Accounting Principles or SAP, as
applicable, consistently applied.
46
54
6.10 Capital Stock and Dividends. The Borrower will not, nor will it
permit any Subsidiary to, (a) issue any capital stock or equity securities of
any kind if, as a result thereof, a Change in Control would occur, or (b)
declare or pay any dividends or make any distributions on its capital stock
(other than dividends payable in its own capital stock) or redeem, repurchase or
otherwise acquire or retire any of its capital stock or any options or other
rights in respect thereof at any time outstanding if a Default or Unmatured
Default has occurred and is continuing or would occur after giving effect
thereto (determined with respect to the covenants set forth in Section 6.22 on a
pro forma basis as of the last day of the immediately preceding Fiscal Quarter),
except that any Subsidiary may declare and pay dividends or make distributions
to the Borrower or any Wholly-Owned Subsidiary.
6.11 Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(a) the Loans;
(b) Outstanding Indebtedness existing on the Closing Date and
described in Schedule 6.11 hereto;
(c) Rate Hedging Obligations related to the Loans;
(d) Contingent Obligations permitted pursuant to Section 6.15;
(e) Indebtedness under the Venton Credit Agreement consisting of
Letters of Credit with an aggregate face amount not to exceed $225,000,000 at
any one time outstanding; and
(f) additional Indebtedness of the Borrower in an aggregate
principal amount not to exceed $25,000,000, so long as no Default or Unmatured
Default has occurred and is continuing or would occur after giving effect to the
incurrence of such Indebtedness (determined with respect to the covenants set
forth in Section 6.22 on a pro forma basis as of the last day of the immediately
preceding Fiscal Quarter).
6.12 Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that (a) a
Wholly-Owned Subsidiary of URC may merge into URC or any Wholly-Owned Subsidiary
of URC and (b) any Subsidiary formed for the purpose of effecting a transaction
permitted under Section 6.14(a)(iv) or (b)(v) may merge with another entity if
required to consummate such transaction.
6.13 Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell, transfer or otherwise dispose of its Property to any
other Person except for (a) sales of Investments in the ordinary course of
business by the Borrower or any Insurance Subsidiary, including without
limitation, transactions undertaken for the purpose of restructuring all or a
part of the portfolio of Investments owned by the Borrower or such Insurance
Subsidiary, and (b) leases, sales, transfers or other dispositions of its
Property that, together with all other Property
47
55
of its Subsidiaries previously leased, sold or disposed of (other than
Investments sold in the ordinary course of business by Insurance Subsidiaries)
as permitted by this Section 6.13 since the date hereof do not constitute a
Substantial Portion of the Property of the Borrower and its Subsidiaries.
6.14 Investments and Purchases. (a) The Borrower will not, and will not
permit any Subsidiary which is not an Insurance Subsidiary to, make or suffer to
exist any Investments (including, without limitation, loans and advances to, and
other Investments in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint venture,
or to make any Purchases, except:
(i) Cash and Cash Equivalents;
(ii) Investments in existence as of September 30,
1996 (including Investments in Subsidiaries as of September 30, 1996) and
described in Schedule 6.14 hereto;
(iii) Investments in debt securities rated BBB- or
better by S&P, Baa-3 or better by Xxxxx'x or NAIC-2 or better by the NAIC;
provided, that any such Investment which, at any time after which it is made,
ceases to meet such rating requirements shall (A) cease to be permitted hereby
if then permitted by Section 6.14(a)(vi) and (B) if not then permitted by
Section 6.14(a)(vi) remain permitted hereby until the earlier of the time it is
permitted under Section 6.14(a)(vi) and the date which is 30 days after the date
on which such rating requirement is no longer met;
(iv) Purchases of businesses or entities engaged in
the insurance business or businesses reasonably incident thereto which do not
constitute hostile takeovers (including the creation of Subsidiaries in
connection therewith) so long as no Default or Unmatured Default has occurred
and is continuing or would occur after giving effect to such Purchase or
creation (determined with respect to the covenants set forth in Section 6.22 on
a pro forma basis as of the last day of the immediately preceding Fiscal
Quarter);
(v) Other Investments by the Borrower in any
Subsidiary which was a Subsidiary as of the Closing Date, so long as no Default
or Unmatured Default has occurred and is continuing or would occur after giving
effect to such Investment (determined with respect to the covenants set forth in
Section 6.22 on a pro forma basis as of the last day of the immediately
preceding Fiscal Quarter); and
(vi) Other Investments by the Borrower made after the
Closing Date in an aggregate amount not exceeding $40,000,000 (including the
creation of Subsidiaries and Investments therein and Investments in any
partnership or joint venture) so long as at the time of such Investment no
Default or Unmatured Default has occurred and is continuing or would occur after
giving effect to such Investment (determined with respect to the covenants set
forth in Section 6.22 on a pro forma basis as of the last day of the immediately
preceding Fiscal Quarter).
48
56
(b) The Borrower will not permit any Insurance Subsidiary to make
or suffer to exist any Investments (including, without limitation, loans and
advances to and other Investments in, Subsidiaries), or commitments therefor, or
to create any Subsidiary or to become or remain a partner in any partnership or
joint venture, or to make any Purchases, except:
(i) Cash and Cash Equivalents;
(ii) Investments in debt securities rated BBB- or
better by S&P, Baa-3 or better by Xxxxx'x or NAIC-2 or better by the NAIC;
provided, that any such Investment which, at any time after which it is made,
ceases to meet such rating requirements shall (A) cease to be permitted hereby
if then permitted by Section 6.14(b)(vi) and (B) if not then permitted by
Section 6.14(b)(vi) remain permitted hereby until the earlier of the time it is
permitted under Section 6.14(b)(vi) and the date which is 30 days after the date
on which such rating requirement is no longer met;
(iii) Investments in Subsidiaries as of the Closing
Date and other Investments in existence on the Closing Date;
(iv) Other Investments in any Subsidiary which was a
Subsidiary as of the Closing Date so long as no Default or Unmatured Default has
occurred and is continuing or would occur after giving effect to such Investment
(determined with respect to the covenants set forth in Section 6.22 on a pro
forma basis as of the last day of the immediately preceding Fiscal Quarter);
(v) Purchases of businesses or entities engaged in
the insurance business which do not constitute hostile takeovers (including the
creation of Subsidiaries in connection therewith) made after the Closing Date
for an aggregate consideration not to exceed $50,000,000, so long as no Default
or Unmatured Default has occurred and is continuing or would occur after giving
effect thereto (determined with respect to the covenants set forth in Section
6.22 on a pro forma basis as of the last day of the immediately preceding Fiscal
Quarter); provided, that the consideration paid in connection with the Purchase
of Venton Holdings Ltd. and its Subsidiaries shall not count toward such
$50,000,000 limitation; and
(vi) Other Investments (including the creation of
Subsidiaries and Investments therein and Investments in any partnership or joint
venture but excluding any Investment of the type described in clause (b)(v)
above) of a type acceptable to the insurance commissioner in the respective
domiciliary state of such Insurance Subsidiary; provided, that such Investments
do not exceed, in the aggregate at any one time outstanding, an amount equal to
the Total Admitted Assets (as presented on the "Assets" statement, currently
Page 2, Line 21 of the Annual Statement) of all Insurance Subsidiaries
(determined, where applicable, on a combined basis by reference to the
comparable line in the combined Annual Statement) less 125% of the aggregate
Total Required Liabilities (as presented on the "Liabilities, Surplus and Other
Funds" statement, currently Page 3, Line 22 of the Annual Statement) of all
Insurance Subsidiaries (determined, where applicable, on a combined basis by
reference to the comparable line in the combined Annual Statement); provided,
further, that the fair market value of the
49
57
Investment in Burlington Northern Santa Fe Corporation held by the Borrower and
its Insurance Subsidiaries shall be subtracted from such amount for so long as
such Investment exists.
6.15 Contingent Obligations. The Borrower will not, nor will it permit
any Subsidiary to, make or suffer to exist any Contingent Obligation (including,
without limitation, any Contingent Obligation with respect to the obligations of
a Subsidiary), except (a) the Contingent Obligations described on Schedule 5.17,
(b) Contingent Obligations incurred under insurance contracts or policies or
reinsurance contracts or policies issued in the ordinary course of business, (c)
Contingent Obligations in respect of the extension of guaranties in the ordinary
course of business to insureds of the obligations of insurers under insurance
policies or contracts or reinsurance contracts or policies, (d) Contingent
Obligations in respect of the endorsement of instruments for deposit or
collection in the ordinary course of business and (e) Contingent Obligations
consisting of (i) a guaranty by the Borrower and URC of obligations under the
Venton Credit Agreement and (ii) the Guaranty.
6.16 Liens. The Borrower will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(a) Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting or SAP, as applicable, shall have
been set aside on its books;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure the payment of obligations not more than 60 days past due
or which are being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation;
(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries;
(e) Deposits made by any Insurance Subsidiary with the insurance
regulatory authority in its jurisdiction of domicile or other statutory liens or
liens or claims imposed or required by applicable insurance law or regulation
against the assets of any Insurance Subsidiary, in each case in favor of all
policyholders of such Insurance Subsidiary and in the ordinary course of such
Insurance Subsidiary's business;
50
58
(f) Rights of third parties with respect to amounts deposited with
or for the benefit of any Insurance Subsidiary in trust to secure obligations
owed to any Insurance Subsidiary under contracts of reinsurance entered into in
the ordinary course of such Insurance Subsidiary's business;
(g) Outstanding Liens existing on the Closing Date and described in
Schedule 6.16 hereto;
(h) Liens on cash deposited in cash collateral accounts securing
the obligations under the Venton Credit Agreement to the extent required under
the Venton Credit Agreement as the provisions of Section 7.02 of the Venton
Credit Agreement requiring the posting of cash collateral are in effect on the
date hereof; and
(i) Other Liens securing Indebtedness or obligations with an
aggregate principal amount not in excess of $1,000,000 at any time outstanding.
6.17 Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate (other than Accra Holdings Corp. and entities owned
by it) except in the ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary would obtain in a comparable arm's-length
transaction.
6.18 Other Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire, any
Indebtedness prior to the date when due (other than the Loans) while a Default
or Unmatured Default has occurred and is continuing.
6.19 Environmental Matters. The Borrower shall and shall cause each of
its Subsidiaries to (a) at all times comply in all material respects with all
applicable Environmental Laws and (b) promptly take any and all commercially
reasonable remedial actions in response to the presence, storage, use, disposal,
transportation or Release of any Hazardous Materials on, under or about any real
property owned, leased or operated by the Borrower or any of its Subsidiaries.
6.20 Change in Corporate Structure; Fiscal Year. The Borrower shall
not, nor shall it permit any Subsidiary to, (a) permit any amendment or
modification to be made to its certificate or articles of incorporation or
by-laws which is materially adverse to the interests of the Lenders (provided
that the Borrower shall notify the Agent of any other amendment or modification
thereto as soon as practicable thereafter) or (b) change its Fiscal Year to end
on any date other than December 31 of each year, except that the Venton Entities
may change their fiscal year to the twelve month period ending September 30.
51
59
6.21 Inconsistent Agreements. The Borrower shall not, nor shall it
permit any Subsidiary to, enter into any indenture, agreement, instrument or
other arrangement which, (a) directly or indirectly prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the amending of the Loan
Documents or the ability of any Subsidiary to (i) pay dividends or make other
distributions on its capital stock, (ii) make loans or advances to the Borrower
or (iii) repay loans or advances from the Borrower or (b) contains any provision
which would be violated or breached by the making of Advances or by the
performance by the Borrower of any of its obligations under any Loan Document,
other than the restriction on dividends payable by URC to the Borrower set forth
in Section 6.10 of the Venton Credit Agreement, as in effect on the date hereof.
6.22 Financial Covenants. The Borrower shall:
6.22.1 Minimum Statutory Surplus. At all times after the date
hereof, cause URC and its Insurance Subsidiaries, as determined on a combined
basis for URC and all of the Insurance Subsidiaries (without double counting) as
of the last day of each Fiscal Quarter, to maintain a minimum Statutory Surplus
at least equal to the sum of (a) $555,000,000, plus (b) 100% of any capital
contributions made to URC or any of its Insurance Subsidiaries after June 30,
1998 (without double counting), plus (c) 35% of positive Statutory Net Income,
if any, for each Fiscal Quarter ending after January 1, 1999 and on or prior to
the time of determination.
6.22.2 Leverage Ratio. At all times after the date hereof,
determined as of the end of each Fiscal Quarter, maintain a Leverage Ratio of
not more than .50 to 1.0.
6.22.3 Adjusted Leverage Ratio. At all times after the date
hereof, determined as of the end of each Fiscal Quarter, maintain an Adjusted
Leverage Ratio of not more than .35 to 1.0.
6.22.4 URC Risk Based Capital Ratio. At all times after the date
hereof, determined as of the end of each Fiscal Quarter, cause URC and its
Insurance Subsidiaries to maintain a Statutory Risk-Based Capital Ratio of not
less than 3.15 to 1.0.
6.23 Tax Consolidation. The Borrower will not and will not permit any
of its Subsidiaries to file or consent to the filing of any consolidated,
combined or unitary income tax return with any Person (other than any of the
Borrower's Subsidiaries, Alleghany or any other Consolidated Person), except as
required by law. The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any tax sharing agreement with any Person (other
than Alleghany, the Borrower or any of its Subsidiaries) without the written
consent of the Required Lenders. The Borrower shall cause each Subsidiary
(including any newly acquired or newly created Subsidiary) to enter into a tax
sharing agreement with such Subsidiary's immediate parent corporation, which tax
sharing agreement shall obligate such Subsidiary to pay to such Subsidiary's
immediate parent corporation an amount of tax substantially equal to the amount
of tax such parent corporation is required to pay to Alleghany (or to a
Subsidiary of Alleghany) by reason of the taxable income of such Subsidiary. No
Tax Sharing Agreement or other agreement
52
60
described above may be amended to provide for any payments to be made to
Alleghany in an amount substantially in excess of the amount of tax which
Alleghany is required to pay by reason of the taxable income of the Borrower and
its Subsidiaries.
6.24 ERISA Compliance.
With respect to any Plan, neither the Borrower nor any Subsidiary
shall:
(a) engage in any "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) for which a civil
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975 of
the Code in excess of $1,000,000 could be imposed;
(b) permit to be incurred any "accumulated funding deficiency" (as
such term is defined in Section 302 of ERISA) in excess of $1,000,000, whether
or not waived;
(c) permit the occurrence of any Termination Event which could
result in a liability to the Borrower or any other member of the Controlled
Group in excess of $1,000,000;
(d) be an "employer" (as such term is defined in Section 3(5) of
ERISA) required to contribute to any Multiemployer Plan or a "substantial
employer" (as such term in defined in Section 4001(a)(2) of ERISA) required to
contribute to any Multiemployer Plan; or
(e) permit the establishment or amendment of any Plan or fail to
comply with the applicable provisions of ERISA and the Code with respect to any
Plan which could reasonably be expected to result in liability to the Borrower
or any other member of the Controlled Group which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower to the Lenders or the Agent under or in connection with this
Agreement, any other Loan Document, any Loan, or any certificate or material
information delivered in connection with this Agreement or any other Loan
Document shall prove to have been false in any material respect on the date as
of which made or deemed made.
53
61
7.2. Nonpayment of (a) any principal of any Note when due, or (b) any
interest upon any Note or any commitment fee or other fee or obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.2, Section 6.3(a) or Sections 6.10 through 6.24.
7.4. The breach by the Borrower (other than a breach which constitutes
a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within thirty (30) days after written
notice from the Agent or any Lender.
7.5. The default by the Borrower or any of its Subsidiaries in the
performance of any term, provision or condition contained in any agreement or
agreements under which any Indebtedness aggregating in excess of $5,000,000 was
created or is governed, or the occurrence of any other event or existence of any
other condition, the effect of any of which is to cause, or to permit the holder
or holders of such Indebtedness to cause, such Indebtedness to become due prior
to its stated maturity; or any such Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof.
7.6. The Borrower or any of its Subsidiaries shall (a) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (b) make an assignment for the benefit of creditors, (c)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (d) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (e)
take any corporate action to authorize or effect any of the foregoing actions
set forth in this Section 7.6, (f) fail to contest in good faith any appointment
or proceeding described in Section 7.7 or (g) become unable to pay, not pay, or
admit in writing its inability to pay, its debts generally as they become due.
7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section 7.6(d)
shall be instituted against the Borrower or any of its Subsidiaries and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of forty-five (45) consecutive days.
54
62
7.8. Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of (each a "Condemnation"),
all or any portion of the Property of the Borrower and its Subsidiaries which,
when taken together with all other Property of the Borrower and its Subsidiaries
so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation occurs,
constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within thirty
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $500,000 (or multiple judgments or orders for the payment
of an aggregate amount in excess of $1,000,000), which is not stayed on appeal
or otherwise being appropriately contested in good faith and as to which no
enforcement actions have been commenced.
7.10. Any Change in Control shall occur.
7.11. Nonpayment by the Borrower of any Rate Hedging Obligation owed to
any Lender or the breach by the Borrower of any term, provision or condition
contained in any agreement, device or arrangement giving rise to any such Rate
Hedging Obligation.
7.12. Any material License of any Insurance Subsidiary (a) shall be
revoked by the Governmental Authority which issued such License, or any action
(administrative or judicial) to revoke such License shall have been commenced
against such Insurance Subsidiary and shall not have been dismissed within 60
days after the commencement thereof, (b) shall be suspended by such Governmental
Authority for a period in excess of 60 days or (c) shall not be reissued or
renewed by such Governmental Authority upon the expiration thereof following
application for such reissuance or renewal of such Insurance Subsidiary.
7.13. Any Insurance Subsidiary shall be the subject of a final
non-appealable order imposing a fine in an amount in excess of $250,000 in any
single instance or other such orders imposing fines in excess of $1,000,000 in
the aggregate after the date of this Agreement by or at the request of any state
insurance regulatory agency as a result of the violation by such Insurance
Subsidiary of such state's applicable insurance laws or the regulations
promulgated in connection therewith.
7.14. Any Insurance Subsidiary shall become subject to (a) any
conservation or liquidation order, directive or mandate issued by any
Governmental Authority or (b) any other directive or mandate issued by any
Governmental Authority which could reasonably be expected to have a Material
Adverse Effect, which in either case is not stayed within thirty (30) days.
7.15. The Borrower, any of its Subsidiaries, Alleghany or any other
Consolidated Person shall receive any tax assessment, demand or notice of
deficiency or have any tax liens filed or any judicial proceeding relating to
any tax matter commenced against it which, in any
55
63
such case, could reasonably be expected to have a Material Adverse Effect or any
tax lien shall be filed against any property of the Borrower or any Subsidiary
relating to the tax liabilities of any Person if the same shall not at the time
be delinquent or thereafter can be paid without penalty, or are being contested
in good faith and by appropriate proceedings and for which adequate reserves in
accordance with generally accepted principles of accounting or SAP, as
applicable, shall have been set aside on its books.
7.16. (a) The Unfunded Liabilities of all Single Employer Plans
maintained by the Borrower and its Subsidiaries shall exceed in the aggregate
$1,000,000 or a Reportable Event shall occur in connection with any Plan
maintained by the Borrower or any of its Subsidiaries, (b) the Unfunded
Liabilities of all Single Employer Plans maintained by other members of the
Controlled Group shall exceed an amount which could reasonably be expected to
have a Material Adverse Effect or any Reportable Event shall occur in connection
with any Plan maintained by other members of the Controlled Group which could
reasonably be expected to have a Material Adverse Effect or (c) any Lien shall
be imposed by the PBGC or the IRS against any assets of the Borrower or any of
its Subsidiaries with respect to a Plan maintained by any other member of the
Controlled Group (or any other employee pension benefit plan as to which any
such member may be liable).
7.17. The Guaranty shall terminate or cease, in whole or material part,
to be a legally valid and binding obligation of URC, or URC or any Person acting
for or on behalf of URC contests such validity or binding nature of such
guarantee, or any other Person shall assert any of the foregoing.
7.18. URC shall fail to maintain a claims paying rating by A.M. Best &
Co. of at least A-.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Acceleration. If any Default described in Section 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent
or any Lender. If any other Default occurs, the Required Lenders (or the Agent
with the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.
If, within ten Business Days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default
56
64
(other than any Default as described in Section 7.6 or 7.7 with respect to the
Borrower) and before any judgment or decree for the payment of the Obligations
due shall have been obtained or entered, the Required Lenders (in their sole
discretion) shall so direct, the Agent shall, by notice to the Borrower, rescind
and annul such acceleration and/or termination.
8.2 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender:
(a) Extend the final maturity of any Loan or Note or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest or fees thereon;
(b) Reduce the percentage specified in the definition of Required
Lenders;
(c) Increase the amount of the Commitment of any Lender hereunder;
(d) Extend the Facility Termination Date;
(e) Amend this Section 8.2;
(f) Permit any assignment by the Borrower of its Obligations or
its rights hereunder; or
(g) Terminate the Guaranty.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3 Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
57
65
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement or of the Borrower or any Subsidiary
contained in any Loan Document shall survive the delivery of the Notes and the
making of the Loans herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3 Taxes. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
9.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Agent and the Lenders and supersede
all prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof other than the fee letter dated
August 5, 1996 in favor of First Chicago.
9.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
the Arranger and their respective successors and assigns.
9.7 Expenses; Indemnification. The Borrower shall reimburse the Agent
and the Arranger for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent and the
Arranger, which attorneys may be employees of the Agent or the Arranger) paid or
incurred by the Agent or the Arranger in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse the
Agent, the Arranger and the Lenders for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Agent, the Arranger and the Lenders, which attorneys may be employees of
the Agent, the Arranger or the Lenders) paid or incurred by the Agent, the
Arranger or any Lender in connection with the collection and enforcement of the
Loan Documents. The Borrower further agrees to indemnify the Agent, the Arranger
and each
58
66
Lender, its directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent, the Arranger or any Lender is a party thereto) which any of them may
pay or incur arising out of or relating to this Agreement or the other Loan
Documents the transactions contemplated hereby or thereby or the direct or
indirect application or proposed application of the proceeds of any Loan
hereunder except to the extent that they arise (a) out of the gross negligence
or willful misconduct of the party seeking indemnification, (b) from any dispute
of or any litigation or other proceeding instituted by any Lender against the
Agent or any other Lender or (c) from any breach by the party seeking
indemnification of its obligations under this Agreement. The obligations of the
Borrower under this Section shall survive the termination of this Agreement.
9.8 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.9 Accounting. Except as provided to the contrary or otherwise defined
herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.11 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations. The Borrower shall rely entirely
upon its own judgment with respect to its business, and any review, inspection
or supervision of, or information supplied to the Borrower by the Agent or the
Lenders is for the protection of the Agent and the Lenders and neither the
Borrower nor any other Person is entitled to rely thereon. The Borrower agrees
that neither the Agent nor any Lender shall have liability to the Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by the
Borrower in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined by a judgment of a court that is binding on the Agent,
or such Lender, final and not subject to review on appeal, that such losses were
the result of acts or omissions on the part of the Agent or such Lender, as the
case may be, constituting gross negligence or willful misconduct of the party
from which recovery is sought. Whether or not such damages are related to a
claim that is subject to the waiver effected above and whether or not such
waiver is effective, neither the Agent nor any Lender shall have any
59
67
liability with respect to, and the Borrower hereby waives, releases and agrees
not to xxx for, any special, indirect or consequential damages suffered by the
Borrower in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby or the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith.
9.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS; PROVIDED, THAT SUCH PROCEEDINGS MAY BE BROUGHT IN OTHER COURTS IF
JURISDICTION MAY NOT BE OBTAINED IN A COURT IN CHICAGO, ILLINOIS.
9.14 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.15 Disclosure. The Borrower and each Lender hereby (a) acknowledge
and agree that First Chicago and/or its Affiliates from time to time may hold
other investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability arising out of or resulting from any conflict of interest arising from
such investments, loans or relationships.
60
68
9.16 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Agent and the Lenders and each party has notified the Agent that
it has taken such action.
9.17 Confidentiality. Each of the Agent and each Lender agrees to take
and to cause its Affiliates to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by the Borrower and provided to it by the Borrower
or any Subsidiary, or by the Agent on the Borrower's or such Subsidiary's
behalf, under this Agreement or any other Loan Document, and neither it nor any
of its Affiliates shall use any such information other than in connection with
or in enforcement of this Agreement and the other Loan Documents or in
connection with other business now or hereafter existing or contemplated with
the Borrower or any Subsidiary, except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by the Lender, or (ii) was or becomes available on a non-confidential basis from
a source other than the Borrower, provided that such source is not bound by a
confidentiality agreement with the Borrower known to the Agent or such Lender;
provided, however, that the Agent or any Lender may disclose such information
(a) at the request or pursuant to any requirement of any Governmental Authority
to which the Agent or such Lender is subject or in connection with an
examination of the Agent or such Lender by any such authority; (b) pursuant to
subpoena or other court process, provided that if not prohibited by law, the
Agent or such Lender will use its best efforts to provide notice to the Borrower
of the receipt of such subpoena and give the Borrower reasonable opportunity to
seek a protective order with respect to such information prior to delivering
confidential material in response thereto; (c) when required to do so in
accordance with the provisions of any applicable requirement of law; (d) to the
extent reasonably required in connection with any litigation or proceeding with
respect to the transactions contemplated hereby to which the Agent or any Lender
or their respective Affiliates may be party; (e) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (f) to the Agent's or such Lender's independent auditors
and other professional advisors with a need to know and who agree to keep such
information confidential to the extent required of the Agent or such Lender
hereunder; (g) to any Participant or Purchaser, actual or potential, provided
that such Person agrees to keep such information confidential to the same extent
required of the Agent or the Lenders hereunder; (h) as to the Agent or any
Lender or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower or any
Subsidiary is party or is deemed party with the Agent or such Lender or such
Affiliate; and (i) to its Affiliates, provided that any such Affiliate agrees in
writing to keep such information confidential to the same extent required of the
Agent or such Lender hereunder.
9.18 Restatement Date. The Borrower, each Lender and the Agent agree
that on the Restatement Date the following transactions shall be deemed to occur
automatically, without further action by any party hereto (except as set forth
below):
61
69
(a) The Existing Credit Agreement shall be deemed to be amended
and restated in its entirety in the form of this Agreement.
(b) The Agent shall, promptly after receipt of the Notes
reflecting the amendments to the Existing Credit Agreement effected hereunder,
cancel and return to the Borrower (upon receipt from the Lenders) the promissory
notes being replaced by such Notes.
The Borrower, each Lender and the Agent agree that (i) the restatement
transactions provided in the foregoing sentence shall not be effective until the
execution of this Agreement by all of the parties hereto and the satisfaction of
the conditions precedent set forth in Section 4.1 hereof; (ii) all terms and
conditions of the Existing Credit Agreement which are amended and restated by
this Agreement shall remain effective until such amendment and restatement
becomes effective hereunder and thereafter shall continue to be effective only
as amended and restated by this Agreement and (iii) the representations,
warranties and covenants set forth herein shall become effective on the
Restatement Date.
9.19 Departing Lender. Upon the effectiveness of this Agreement and the
payment to the Departing Lender of the Obligations due it, (a) the Departing
Lender shall have no further Commitment hereunder and (b) the Departing Lender
shall cease to have any rights or duties as Lender hereunder; provided, that the
Departing Lender shall remain entitled to indemnities under the Existing Credit
Agreement which by their terms survive the termination of the Existing Credit
Agreement.
ARTICLE X
THE AGENT
10.1 Appointment. First Chicago is hereby appointed Agent hereunder and
under each other Loan Document, and each of the Lenders authorizes the Agent to
act as the agent of such Lender. The Agent agrees to act as such upon the
express conditions contained in this Article X. The Agent shall not have a
fiduciary relationship in respect of the Borrower or any Lender by reason of
this Agreement.
10.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower or any Lender for
any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except for its or
their own gross negligence or willful misconduct.
62
70
10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder, (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent and not waived at
closing, or (d) the validity, effectiveness, sufficiency, enforceability or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the Agent at
such time, but is voluntarily furnished by the Borrower to the Agent (either in
its capacity as Agent or in its individual capacity).
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders (or, to the extent required by Section 8.2, all Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all holders of Notes. The Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (a) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (b) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents, and
(c) for any
63
71
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents; provided, that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations and termination
of this Agreement.
10.9 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.
10.10 Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a Lender.
10.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
10.12 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent and, if no Default or
Unmatured Default has occurred and is continuing, the Borrower's prior written
consent, or, if no successor Agent has been appointed, forty-five days after the
retiring Agent gives notice of its intention to resign. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf of
the Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty days after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Agent. If the Agent has resigned and no successor Agent has
been
64
72
appointed, the Lenders may perform all the duties of the Agent hereunder and the
Borrower shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such successor
Agent has accepted the appointment and the Borrower has given its consent if
required hereunder. Any such successor Agent shall be a commercial bank having
capital and retained earnings of at least $50,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent and such consent by the
Borrower, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article X shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Agent hereunder and under the other Loan Documents.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1 Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower or any Subsidiary may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be due.
11.2 Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Section 2.16(a), 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata
share of such Loans, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made. If an amount to be offset is to be applied to Indebtedness of the
Borrower to a Lender, other than Indebtedness evidenced by any of the Notes held
by such Lender, such amount shall be applied ratably to such other Indebtedness
and to the Indebtedness evidenced by such Notes.
65
73
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (a) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents, and (b) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (b) of this Section, any Lender may at
any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment to a Federal Reserve Bank shall
release the transferor Lender from its obligations hereunder. The Agent may
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until such payee complies with Section 12.3 in the case of an assignment
thereof or, in the case of any other transfer, a written notice of the transfer
is filed with the Agent. Any assignee or transferee of a Note agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
12.2 Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver which effects any of the modifications referenced in
clauses (a) through (f) of Section 8.2.
12.2.3 Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section 11.1
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents; provided,
66
74
that each Lender shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each Participant. The
Lenders agree to share with each Participant, and each Participant, by
exercising the right of setoff provided in Section 11.1, agrees to share with
each Lender, any amount received pursuant to the exercise of its right of
setoff, such amounts to be shared in accordance with Section 11.2 as if each
Participant were a Lender.
12.3 Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of its
rights and obligations under the Loan Documents; provided, however, that in the
case of an assignment to an entity which is not a Lender or an Affiliate of a
Lender, such assignment shall be in a minimum amount of $5,000,000. Such
assignment shall be substantially in the form of Exhibit G hereto or in such
other form as may be agreed to by the parties thereto. The consent of the Agent
and, so long as no Default is continuing, the Borrower shall be required prior
to an assignment becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof. Such consent shall not be unreasonably withheld.
12.3.2 Effect; Effective Date. Upon (a) delivery to the Agent by
the transferor Lender of a notice of assignment, substantially in the form
attached as Exhibit I to Exhibit G hereto (a "Notice of Assignment"), together
with any consents required by Section 12.3.1, and (b) payment by the transferor
Lender of a $3,000 fee to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in such Notice
of Assignment. On and after the effective date of such assignment, (a) such
Purchaser shall for all purposes be a Lender party to this Agreement and any
other Loan Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if it
were an original party hereto, and (b) the transferor Lender shall be released
with respect to the percentage of the Aggregate Commitment and Loans assigned to
such Purchaser without any further consent or action by the Borrower, the
Lenders or the Agent. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3.2, the transferor Lender, the Agent and the
Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment.
12.4 Dissemination of Information. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries.
12.5 Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or
67
75
any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the
provisions of Section 2.16(b).
ARTICLE XIII
NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section 2.11 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to the
other parties given pursuant to this Section 13.1. Any notice, if mailed and
properly addressed with first class postage prepaid, return receipt requested,
shall be deemed given three (3) Business Days after deposit in the U.S. mail;
any notice, if transmitted by facsimile, shall be deemed given when transmitted;
and any notice given by overnight courier shall be deemed given when received by
the addressee.
13.2 Change of Address. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
[signature pages to follow]
68
76
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
UNDERWRITERS RE GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------------
Senior Vice President and
Title: Chief Financial Officer
---------------------------------------
Address: 00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Commitment $10,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
Title: First Vice President
--------------------------------------
Address: One First Xxxxxxxx Xxxxx
Xxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
69
77
Commitment $10,000,000 FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------------------
Title: Senior Vice President
--------------------------------------
Address: 000 Xxxxx Xxxxxxx Xxxxxx, XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Commitment $ 9,000,000 MELLON BANK, N.A.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------
Title: Vice President
--------------------------------------
Address: One Mellon Bank Center
Room 370
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
70
78
Commitment $7,000,000 THE NORTHERN TRUST COMPANY
By: /s/ Xxxx X. Xxxxx
------------------------------------------
Title: Second Vice President
--------------------------------------
Address: 00 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Commitment $7,000,000 SANWA BANK CALIFORNIA
By: /s/ Xxxx Xxxxx
------------------------------------------
Title: Vice President
--------------------------------------
Address: 000 Xxxxx Xxxxxxxx Xxxxxx
(X0-0)
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Initial Aggregate $43,000,000
Commitment
71
