EXECUTION COPY
AMENDMENT NO. 11
Dated as of November 26, 1999
to
CREDIT AGREEMENT
Dated as of March 12, 1997
PENNCORP FINANCIAL GROUP, INC., a Delaware corporation (the "Company"),
the lenders signatory to the Credit Agreement referred to below (the "Banks"),
the Managing Agents and the Co-Agents named therein (the "Agents") and THE BANK
OF NEW YORK, as administrative agent for the Banks (the "Administrative Agent"),
hereby agree as follows:
I.
CREDIT AGREEMENT
1. Credit Agreement. (a) Reference is hereby made to the Credit Agreement,
dated as of March 12, 1997, among the Company, the Banks, the Agents and the
Administrative Agent (as amended, modified or waived prior to the date hereof,
the "Credit Agreement"). Terms used in this Amendment No. 11 (this "Amendment")
that are defined in the Credit Agreement and are not otherwise defined herein
are used herein with the meanings therein ascribed to them.
(b) The Credit Agreement as amended by this Amendment is and shall continue
to be in full force and effect and is hereby in all respects confirmed, approved
and ratified.
2. Amendments to the Credit Agreement. Upon and after the Amendment No. 11
Effective Date (as defined below), the Credit Agreement shall be amended as
follows:
(a) Section 1.01 is hereby amended (i) to add, in alphabetical order, the
following new definitions:
"Amendment No. 11" shall mean Amendment No. 11, dated as of November __,
1999, to the Agreement.
"Amendment No. 11 Effective Date" shall have the meaning ascribed to that
term in Amendment No. 11.
"American Amicable Holdings Corporation Management Contracts" shall mean
each of the following: (i) Service Agreement dated April 1, 1999 between
American Amicable Holdings Corporation and Pennsylvania Life Insurance Company,
(ii) Service Agreement dated
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April 1, 1999 between the American Amicable Holdings Corporation and
American-Amicable Life Insurance Company of Texas, (iii) Service Agreement dated
April 1, 1999 between the American Amicable Holdings Corporation and Pioneer
American Life Insurance Company, and (iv) Service Agreement dated April 1, 1999
between the American Amicable Holdings Corporation and Pioneer Security Life
Insurance Company.
"American Amicable Holdings Corporation Operating Expenses" shall mean
expenses incurred by American Amicable Holdings Corporation in the performance
of its obligations under the American Amicable Holdings Corporation Management
Contracts.
"Executive Director Escrow Amount" shall mean the $994,879 to be paid by
the Company to fund the escrow account established pursuant to ss.3.3 of the
Release and Indemnity Agreement dated December 24, 1998 among the Company,
Pennsylvania Life Insurance Company, PennCorp Life Insurance Company and the
individual set forth on the signature pages thereto (the "Executive Director")
and attached hereto as Exhibit A, as such agreement may be amended or modified
from time to time after the Amendment No. 11 Effective Date, provided that that
any such amendment or modification was, in the sound business judgment of the
Company and its Board of Directors, in the best interests of the Company, and
was consented to in writing by the Majority Banks.
"KB Investment" shall mean KB Investment L.L.C., a New York limited
liability company.
"KB Management Service Contracts" shall mean each of the following: (i)
Amended and Restated Investment Agreement dated January 1, 1997, between KB
Management L.L.C. and Southwestern Life Insurance Company, (ii) the Investment
Management Agreements dated January 1, 1998 between KB Management L.L.C. and
American-Amicable Life Insurance Company of Texas, (iii) the Investment
Management Agreements dated January 1, 1998 between KB Management L.L.C. and
Integon Life Insurance Corporation (now known as Security Life and Trust
Insurance Company), (iv) the Investment Management Agreements dated January 1,
1998 between KB Management L.L.C. and Pacific Life and Accident Insurance
Company, (v) the Investment Management Agreements dated January 1, 1998 between
KB Management L.L.C. and Occidental Life Insurance Company of North Carolina,
(vi) the Investment Management Agreements dated January 1, 1998 between KB
Management L.L.C. and Pioneer American Insurance Company, (vii) Investment
Management Agreement dated January 1, 1998 between KB Management L.L.C. and
Pioneer Security Life Insurance Company, (viii) Advisory and Management Services
Agreement effective as of January 1, 1998 by and among KB Management L.L.C. and
American-Amicable Life Insurance Company of Texas, Integon Life Insurance
Corporation (now known as Security Life and Trust Insurance Company), Pacific
Life and Accident Insurance Company, Pioneer American Insurance Company, Pioneer
Security Life Insurance Company, Southwestern Life Insurance Company and
Occidental Life Insurance Company, and (ix) Employee Benefit Cost Sharing and
Service Agreement effective as of September 1, 1998 by and among KB Management
L.L.C., Southwestern Financial Services Corporation, American-Amicable Life
Insurance Company of Texas, Marketing One, Inc., Occidental Life Insurance
Company of North Carolina, PennCorp Financial Group, Inc. and PennCorp Financial
Services, Inc.
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"KB Management Operating Expenses" shall mean operating expenses incurred
by KB Management L.L.C. in the performance of its obligations under the KB
Management Service Contracts.
"Shareholder Litigation Settlement Amount" shall mean the $1,500,000 to be
paid by the Company to settle In re PennCorp Financial Group, Inc. Securities
Litigation, Master File Xx. 00 Xxx. 0000 (XXX) (the "Shareholder Litigation"
pursuant to the Memorandum of Understanding dated November 11, 1999, a copy of
which is attached as Exhibit B to Amendment No. 11, as such form may be amended
or modified from time to time or as such may be more fully documented in a
settlement agreement after the Amendment No. 11 Effective Date, provided that
that any such amendment, modification. or documentation was, in the sound
business judgment of the Company and its Board of Directors, in the best
interests of the Company, and was consented to in writing by the Majority Banks.
(ii) to amend the following existing definitions to read as follows:
"Commitment" shall mean (i) the amount set opposite each Bank's name on the
signature pages of Amendment No. 11 under the caption "Reduced Commitment", or,
in the case of a Bank that becomes a Bank pursuant to an assignment, the amount
of the assignor's Commitment assigned to such Bank (in either case as the same
may be terminated or reduced at any time or from time to time pursuant to
Section 2.04, canceled pursuant to Section 9 or increased or reduced at any time
or from time to time pursuant to assignments made in accordance with Section
11.06) or (ii) as the context may require, the obligation of each Bank to make
RC Loans in an aggregate unpaid principal amount not exceeding such amount.
"Commitment Stepdown Date" shall mean the Amendment No. 11 Effective Date.
"Operating Bank Account" shall mean a Bank Account of an Operating Bank
Account Subsidiary that is listed on Amended Schedule 8.29(a) to Amendment No.
11.
"Permitted Operating Account Withdrawal" shall mean a withdrawal from an
Operating Bank Account to make a payment listed or described on Amended Schedule
8.29(b) to Amendment No. 11, subject to any limitations there set forth.
"Reduced Commitment" shall mean, as applied to any Bank, the amount set
forth opposite such Bank's name under the caption "Reduced Commitment" on the
signature pages of Amendment No. 11.
(b) Section 2.04(b)(iv) of the Credit Agreement shall be amended and
restated as follows:
"on the Commitment Stepdown Date, the Commitments
shall be reduced to the amounts set forth under the
caption "Reduced Commitment," on the signature pages
attached to Amendment No. 11 (the aggregate of the
reduction totaling $2,000,000);"
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(c) Section 8.19(b) shall be amended by
(i) changing "(vi)" to "(viii)" and by adding the following after
subclause (v):
", (vi) withdrawing the Shareholder Litigation Settlement Amount
provided that such payment shall not exceed $1,500,000 and provided further
that, pursuant to this Section 8.19(b), should the Company become entitled
to and receive any portion of the Shareholder Litigation Settlement Amount
such amount shall be immediately deposited in the Collateral Account, (vii)
withdrawing the Executive Director Escrow Amount provided that such payment
shall not exceed $994,875, and, provided further that, pursuant to this
Section 8.19(b), should the Company become entitled to and receive any
portion of the Executive Director Escrow Amount such amount shall be
immediately deposited in the Collateral Account,"
(ii) by adding the following sentence at the end thereof:
"The fact that a particular current or future expenditure has been
identified to the Administrative Agent, the Banks or their advisors
pursuant to information furnished by the Company under this Agreement does
not mean that the Banks have approved of such expenditure or that funds may
be withdrawn from the Collateral Account for such expenditure."
(d) Section 8.29 shall be amended by
(i) amending Section 8.29(b)(i)(C) by inserting "(1)" after "(C)" and
by deleting the "." at the end of that Section and replacing it with the
following:
"; and (2) Operating Bank Account Subsidiary Indebtedness may be
repaid by the Company only to permit the Operating Bank Account Subsidiary
to which such Indebtedness is owed to fund Permitted Operating Bank Account
Withdrawals, and then only to the extent such payments have not otherwise
been funded, including a funding with funds that constitute Excluded Funds.
Any withdrawal by the Company from the Collateral Account for the payment
of Operating Bank Account Subsidiary Indebtedness shall be deemed a
representation and warranty by the Company made at the time of such
withdrawal that such withdrawal is in accordance with the immediately
preceding sentence."
(ii) amending Section 8.29(b)(ii)(A) to read as follows:
"(A) Funds determined to be Excluded Funds by the Majority Banks,
pursuant to Section 8.29(b)(i)(D) hereof, are set forth on Amended Schedule
8.29(b)(ii)(A). Funds referred to in the proviso to the definition of
"Excluded Funds" shall constitute "Excluded Funds", whether or not
specified in such Schedule.
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II.
GENERAL
1. Representations and Warranties.
In order to induce the Banks to execute and deliver this Amendment No. 11,
the Company hereby represents and warrants as follows:
(a) The Company has the power, and has taken all necessary action
(including any necessary stockholder action) to authorize, to execute, deliver
and perform in accordance with their respective terms, this Amendment and the
Credit Agreement. This Amendment has been duly executed and delivered by the
duly authorized officers of the Company and is, as amended by this Amendment,
the legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally. The execution, delivery and
performance in accordance with their respective terms by the Company of this
Amendment and the Credit Agreement, as amended by this Amendment do not and
(absent any change in any Applicable Law or applicable Contract) will not (A)
require any Governmental Approval (hereinafter defined) or any other consent or
approval, including any consent or approval of the stockholders of the Company
or of any Subsidiary, to have been obtained, or any Governmental Registration
(hereinafter defined) to have been made, other than Governmental Approvals and
other consents and approvals and Governmental Registrations that have been
obtained or made, are final and not subject to review on appeal or to collateral
attack, are in full force and effect, or (B) violate, conflict with, result in a
breach of, constitute a default under, or result in or require the creation of
any Lien (other than the Security Interests) upon any assets of the Company or
any Subsidiary under (1) any Contract to which the Company, or any Subsidiary is
a party or by which the Company, or any Subsidiary or any of their respective
properties may be bound, or (2) any Applicable Law. As used herein,
"Governmental Approval" shall mean any authority, consent, approval, license (or
the like) or exemption (or the like) of any governmental unit; "Governmental
Registration" shall mean any registration or filing (or the like) with, or
report or notice (or the like) to, any governmental unit.
(b) The payment of the Executive Director Escrow Amount is the only
remaining specific cash Liability of the Company in connection with the Release
and Indemnity Agreement that is attached hereto as Exhibit A.
2. Conditions to Effectiveness; Amendment No. 11 Effective Date.
This Amendment No. 11 shall be effective as of the date first written above,
but shall not become effective as of such date until the time (such time, the
"Amendment No. 11 Effective Date") as:
(a) this Amendment No. 11 has been executed and delivered by the
Company, each of the Banks and the Administrative Agent; and
(b) all amounts payable pursuant to Section 11.03 of the Credit Agreement
for which invoices have been delivered to the Company on or prior to such date,
have been paid in full.
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3. Governing Law. The rights and duties of the Company, the Agent and the
Banks under this Amendment shall, pursuant to New York General Obligations Law
Section 5-1401, be governed by the law of the State of New York.
4. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.
5. Headings. Section headings in this Amendment are included herein for
convenience and reference only and shall not constitute a part of this Amendment
for any other purpose.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 11
to be duly executed as of the day and year first above written.
PENNCORP FINANCIAL GROUP, INC.
By: /s/Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
THE BANK OF NEW YORK, as Administrative
Agent, Collateral Agent and as a Bank
$17,233,333.38 Reduced Commitment
By: /s/Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
THE CHASE MANHATTAN BANK, as a Managing
Agent and as a Bank
$15,399,999.99 Reduced Commitment
By: /s/Xxxxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Managing Director
FIRST NATIONAL BANK OF CHICAGO, as a
Managing Agent and as a Bank
$15,399,999.99 Reduced Commitment
By:
-------------------------------------
Name:
Title:
BANK OF AMERICA, N.A., formerly known as
Nations Bank, N.A., as a Managing
Agent and as a Bank
$15,399,999.99 Reduced Commitment
By: /s/Xxxxxxx X. Xxxxxxxxxxx XX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx XX
Title: Managing Director
FLEET NATIONAL BANK, as a
Co-Agent and as a Bank
$16,866,666.67 Reduced Commitment
By: /s/Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President
MELLON BANK, N.A., as a Co-Agent
and as a Bank
$13,200,000.00 Reduced Commitment
By: /s/Xxxx X. Xxxx
-------------------------------------
Name: Xxxx X. Xxxx
Title: First Vice President
BANK OF MONTREAL, as a Co-Agent
and as a Bank
$11,000,000.01 Reduced Commitment
By: /s/Xxxxxx X. XxXxxx
-------------------------------------
Name: Xxxxxx X. XxXxxx
Title: Director
CIBC INC., as a Co-Agent and as a Bank
$11,000,000.01 Reduced Commitment
By: /s/Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Execuitve Director
CIBC World Markets Corp,
As Agent
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DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, as a Co-Agent
and as a Bank
$11,000,000.01 Reduced Commitment
By: /s/Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
By: /s/Xxxxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
SUNTRUST BANK, CENTRAL FLORIDA NATIONAL
ASSOCIATION
$7,333,333.32 Reduced Commitment
By: /s/T. Xxxxxxx Xxxxx
-------------------------------------
Name: T. Xxxxxxx Xxxxx
Title: Managing Director
FIRST UNION NATIONAL BANK
$7,333,333.33 Reduced Commitment
By: /s/Xxxxxx X. Xxxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President
BANK ONE TEXAS, NA
$7,333,333.32 Reduced Commitment
By:
-------------------------------------
Name:
Title:
BEAR XXXXXXX & CO., INC.
$12,833,333.31 Reduced Commitment
By: /s/Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Managing Director
XX XXXXX SECURITIES CORPORATION
$1,833,333.34 Reduced Commitment
By:
-------------------------------------
Name:
Title:
8
ING (U.S.) CAPITAL CORPORATION
$1,833,333.33 Reduced Commitment
By:
-------------------------------------
Name:
Title:
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Amended Schedule 8.29(a)
OPERATING BANK ACCOUNTS
Operating Bank Operating Bank
Account Subsidiary Accounts Depositary Bank
------------------ --------------- ---------------
KB Management LLC 000-0000-000 Bank of New York,
(ZBA Disb) NY, NY
000-0000-000 Bank of New York,
(DDA) NY, NY
1574898050 (DDA) Bank Xxx Xxxxx,
(XXX) Xxxxxx, Xxxxx
KB Investment LLC 000-0000-000 Bank of New York,
(DDA) NY, NY
American Amicable Holdings 15606 Provident Inst.,
Corp. (Money Market) Wilmington, DE
000-0000-000 Bank of New York,
(DDA) NY, NY
Southwestern Financial 000-0000-000 Bank of New York,
Corporation (DDA) NY, NY
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Amended Schedule 8.29(b)
PERMITTED OPERATING ACCOUNT WITHDRAWALS
(Capitalized terms used in this Amended Schedule 8.29(b)
that are not defined in the Credit Agreement are
defined on Annex A hereto.)
Operating Bank Operating Bank
Account Subsidiary Accounts Payments Permitted to be Funded
------------------ --------------- -------------------------------
KB Management LLC 000-0000-000 (DDA) KB Management
Operating Expenses, to (BNY)
the extent not otherwise Funded.
American-Amicable 000-0000-000 American-Amicable Holdings
Holdings Corporation (DDA) Corporation Operating Expenses,
(BNY) to the extent not otherwise
Funded.
15606 Payments, to the extent not otherwise
(Money Market) funded, required to pay dividends to
(Provident Inst.) the Company, as described in the Weil
Letter, provided, that such dividend
is, in fact, paid on the date of such
withdrawal.
Southwestern Financial 000-0000-000 Southwestern Financial Corporation
Corporation (DDA) Operating Expenses, to the extent not
(BNY) otherwise Funded.
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Amended Schedule 8.29(b)(ii)(A)
SCHEDULE OF EXCLUDED FUNDS
(Numbered Footnote references are to the attached Footnote
Appendix. Such Footnote Appendix and the Footnotes there set
forth are an integral part of this Schedule.)
Operating Bank Operating Bank
Account Subsidiary Accounts Depositary Bank Excluded Funds
------------------ -------- --------------- --------------
KB Management LLC 000-0000-000 Bank of New York, NY, NY 100%(1)
(ZBA Disb)
000-0000-000 Bank of New York, NY, NY 0%(3)
(DDA)
1574898050 (DDA) Bank One Texas, Dallas, 100%(2)
Texas
KB Investment LLC 000-0000-000 Bank of New York, NY, NY 0%(3)
(DDA)
American Amicable 15606 Provident Inst., 100%(4)
Holdings Corp. (Money Market) Wilmington, DE
000-0000-000 Bank of New York, NY, NY 0%(3)
(DDA)
Southwestern Financial 000-0000-000 Bank of New York, NY, NY 0%(1)
Corporation (DDA)
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FOOTNOTE APPENDIX
TO SCHEDULE OF EXCLUDED FUNDS
1. Balances in this account shall constitute Excluded Funds only if, to the
extent, and so long as, deposits in this account are used for the purposes
specified in the letter dated, November 24, from Xxxxxx X. Xxxxxxx to
Xxxxxxx Xxxxxxx (the "Weil Letter") attached hereto as Exhibit C.
2. Balances in this account shall constitute Excluded Funds until this
account is closed, provided that this account is closed promptly upon
finalization of the necessary paperwork referenced in the Weil Letter, but
in any event no later than January 31, 2000, or such later date as the
Administrative Agent may agree to.
3. Balances shall constitute Excluded Funds only to the extent they represent
amounts required for gross payroll and employee benefits, provided that
such amounts are deposited in the applicable payroll and benefit accounts
on the day received. For this purpose, "gross" payroll shall include
withholding taxes, and "employee benefits" shall include medical, dental
and the like employee benefits.
4. Balances in this account shall constitute Excluded Funds only if, and to
the extent, and so long as balances in this account are required to
demonstrate liquidity in an amount necessary to maintain the intercompany
notes referred to in the Weil Letter as admitted assets ("Liquidity
Balances").
Balances in excess of such amounts shall not constitute Excluded Funds,
but the Operating Bank Account Indebtedness resulting from the transfer of
such balances to the Company, pursuant to Section 8.29(b) of the Credit
Agreement, may be repaid on each date that a dividend in the amount of the
repayment is paid to the Company, provided that such dividend is, in fact,
paid on such date.
If, for regulatory purposes, it is necessary to maintain the Liquidity
Balances in a separate account, this account should be divided into two
accounts, one containing Liquidity Balances, and the other containing all
other balances.
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