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EXHIBIT 10.3
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CREDIT AGREEMENT
among
SUMMIT HOLDING SOUTHEAST, INC.
THE LENDERS NAMED HEREIN,
AND
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
as Agent
$38,000,000 Credit Facilities
Dated as of , 19
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TABLE OF CONTENTS
Page
RECITALS
ARTICLE I
DEFINITIONS
1.1 Defined Terms .................................................... 2
1.2 Use of Defined Terms .............................................. 25
1.3 Cross References; Headings ........................................ 25
1.4 Accounting Terms .................................................. 25
1.5 Time References .................................................. 25
1.6 Other Definitional Provisions .................................... 25
ARTICLE II
TERM LOANS
2.1 Term Loans. ...................................................... 26
2.2 Term Notes. ...................................................... 26
2.3 Scheduled Repayment of Term Loans.................................. 26
2.4 Mandatory Prepayment of Term Loans. .............................. 27
2.5 Voluntary Prepayment of Term Loans. .............................. 27
2.6 LIBOR Breakage; Interest; Etc...................................... 27
ARTICLE III
REVOLVING CREDIT FACILITY
3.1 Loans ............................................................ 27
3.2 Voluntary Termination; Reduction of Commitments.................... 29
3.3 Voluntary Prepayments.............................................. 30
3.4 Mandatory Repayment of Loans. .................................... 31
3.5 Unused Commitment Fee.............................................. 31
3.6 Revolving Credit Notes ............................................ 31
ARTICLE IV
INTEREST; ADDITIONAL PROVISIONS
4.1 Interest Rates .................................................... 31
4.2 Interest Payment Dates ............................................ 32
4.3 Computation of Rates .............................................. 32
4.4 Default Rate; PostPetition Interest................................ 32
4.5 Maximum Interest Rate ............................................ 32
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4.6 Conversion to and Renewal of LIBOR Loans ................. 32
4.7 Restrictions on Interest Rate Options ................... 33
4.8 Illegality ............................................... 34
4.9 Limitation on LIBOR Loans ............................... 34
4.10 Procedures Regarding Payments ........................... 34
4.11 Payment Not at End of Interest Period ................... 35
4.12 Increased Costs ......................................... 36
4.13 Taxes ................................................... 36
4.14 Application of Payments; Pro Rata Funding ............... 37
4.15 Recordkeeping ........................................... 38
ARTICLE V
CONDITIONS OF CLOSING AND BORROWIN
5.1 Closing ................................................. 38
5.2 Conditions to the Closing ............................... 38
5.2.1 Loan and Security Documents ............................. 38
5.2.2 Certificates; Opinions ................................... 39
5.2.3 Other Documents ......................................... 40
5.2.4 Investment Portfolio ..................................... 41
5.2.5 Litigation ............................................... 41
5.2.6 No Material Adverse Event ............................... 41
5.2.7 Discontinued Operations ................................. 41
5.3 Continuing Conditions..................................... 42
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Corporate Organization and Power ......................... 42
6.2 Certain Agreements ....................................... 43
6.3 Litigation; Government Regulation ....................... 43
6.4 Taxes ................................................... 43
6.5 Conflicts With Other Instruments, Laws ................... 43
6.6 Governmental Compliance ................................. 44
6.7 Default ................................................. 44
6.8 Margin Securities ....................................... 44
6.9 Insurance ............................................... 44
6.10 Ownership of Properties; Subsidiaries ................... 44
6.11 Business Locations ....................................... 45
6.12 Accuracy of Information ................................. 45
6.13 Subsidiaries; Affiliates ................................. 45
6.14 Investment Company Act ................................... 45
6.15 Employee Plans; ERISA ................................... 45
6.16 Pro Forma Balance Sheet ................................. 46
6.17 GAAP Financial Statements................................. 46
6.18 Statutory Financial Statements. ......................... 47
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6.19 Projections ............................................. 48
6.20 Solvency ................................................. 48
6.21 Environmental Matters ................................... 48
6.22 Assets for Conduct of Business ........................... 48
6.23 Trade Relations ......................................... 49
6.24 Securities Laws ......................................... 49
6.25 Compliance with Laws ..................................... 49
6.26 Employees and Labor ..................................... 49
6.27 First Priority ........................................... 50
6.28 Material Contracts ....................................... 50
6.29 Reinsurance ............................................. 50
6.30 Policies of Insurance ................................... 50
6.31 No Burdensome Restrictions. ............................. 50
6.32 Plan of Conversion ....................................... 51
ARTICLE VII
AFFIRMATIVE COVENANTS
7.1 Repayment of Obligations; Certain Prepayments ........... 51
7.2 Performance Under Credit Documents; Use of Proceeds ..... 52
7.3 Reports, Certificates and Other Information ............. 52
7.4 Corporate Existence; Foreign Qualification ............... 57
7.5 Books, Records and Inspections ........................... 58
7.6 Insurance; Assets......................................... 58
7.7 Taxes and Liabilities ................................... 58
7.8 Employee Benefit Plans ................................... 58
7.9 COBRA ................................................... 58
7.10 Pledge and Security Agreements ........................... 58
7.11 Compliance with Laws ..................................... 58
7.12 Maintenance of Permits ................................... 59
7.13 Interest Rate Protection ................................. 59
7.14 Dividends ............................................... 59
7.15 Key Man Life Insurance ................................... 59
7.16 Business Activities ..................................... 59
7.17 Disbursement Instructions ............................... 59
7.18 Further Assurances ....................................... 60
7.19 Certain Fees ............................................. 60
ARTICLE VIII
FINANCIAL COVENANTS
8.1 Borrower Financial Covenants ............................. 60
8.2 Summit Holding Financial Covenants ....................... 61
8.3 Insurance Subsidiary Financial Covenants ................. 61
8.4 Capital Expenditures ..................................... 62
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ARTICLE VIIIA
NEGATIVE COVENANTS
8A.1. Reinsurance Agreements ................................... 62
8A.2. Guarantees, Loans, Advances and Investments ............. 62
8A.3 Mergers, Consolidations and Sales ....................... 62
8A.4 Change in Control; Issuance of Stock ..................... 63
8A.5 Leases ................................................... 63
8A.7 Subsidiaries; Investment of Proceeds ..................... 63
8A.8 Business Activities ..................................... 63
8A.9 Transactions with Affiliates ............................. 64
8A.10 Indebtedness ............................................. 64
8A.11 Liens ................................................... 64
8A.12 Restricted Payments ..................................... 64
8A.13 Negative Pledge Agreements ............................... 65
8A.14 No Amendment of Documents ............................... 65
8A.15 Fiscal Year ............................................. 65
8A.16 Certain Investments ..................................... 65
8A.17 Hazardous Materials ..................................... 65
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default ....................................... 66
ARTICLE X
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT;
INTERCREDITOR PROVISIONS
10.1 Rights and Remedies ..................................... 69
10.2 Rights and Remedies Cumulative; Nonwaiver; Etc ........... 69
10.3 Rights in Property Held by the Lenders ................... 69
10.4 Crosscollateralization; No Marshalling ................... 69
10.5 Setoff ................................................... 70
10.6 Intercreditor Provisions ................................. 70
ARTICLE XI
PAYMENT OF FEES AND EXPENSES
11.1 Fees and Expenses ....................................... 71
11.2 Administrative Fee ....................................... 72
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ARTICLE XII
THE AGENT
12.1 Appointment ............................................. 72
12.2 Nature of Duties ......................................... 72
12.3 Absence of Reliance on the Agent ......................... 72
12.4 Certain Rights of the Agent ............................. 73
12.5 Notice of Default ....................................... 74
12.6 Reliance by Agent ....................................... 74
12.7 Indemnification ......................................... 74
12.8 The Agent in its Individual Capacity ..................... 74
12.9 Holders ................................................. 75
12.10 Successor Agent ......................................... 75
12.11 Collateral Matters ....................................... 75
12.12 Nonreceipt of Funds by the Agent ......................... 75
ARTICLE XIII
ASSIGNMENT AND PARTICIPATION
13.1 Assignments ............................................. 76
13.2 Participations ........................................... 77
13.3 Miscellaneous ............................................ 78
ARTICLE XIV
MISCELLANEOUS
14.1 Survival of Agreements ................................... 78
14.2 Governing Law; Consent to Jurisdiction ................... 79
14.3 Arbitration; Remedies ................................... 79
14.4 Notice ................................................... 80
14.5 Indemnification of the Agent and the Lenders ............. 81
14.6 Waivers by the Borrower ................................. 81
14.7 Assignment and Sale ..................................... 82
14.8 Amendment or Waiver ..................................... 82
14.9 Severability ............................................. 82
14.10 Entire Agreement ......................................... 82
14.11 Binding Effect ........................................... 83
14.12 Execution in Counterparts ............................... 83
14.13 Conflict of Terms ....................................... 83
14.14 Injunctive Relief ....................................... 83
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TABLE OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Compliance Certificate
Exhibit C Excess Cash Flow Calculation
Exhibit D Form of Interest Rate Election Notice
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Revolving Credit Note
Exhibit G Form of Term Note
SCHEDULES
Schedule 6.3 Claims Against Borrower
Schedule 6.6 Compliance; Jurisdictions of Borrower Affiliates
Schedule 6.9 Insurance Policies
Schedule 6.10 Ownership of Properties
Schedule 6.11 Borrower Affiliate Offices
Schedule 6.13 Borrower Affiliates
Schedule 6.15 Employee Plans
Schedule 6.21 Environmental Matters
Schedule 6.22 Certain Assets
Schedule 6.28 Material Contracts
Schedule 6.29 Reinsurance Agreements
Schedule 7.16 Business Activities
Schedule 8A.1 Certain Reinsurers
Schedule 8A.2 Contingent Liabilities
Schedule 8A.9 Certain Affiliate Transactions
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the _____ day of _________, 199_
(the "Credit Agreement" or the "Agreement"), is by and between SUMMIT HOLDING
SOUTHEAST, INC., a Florida corporation with its principal offices in Lakeland,
Florida (the "Borrower"); the banking and financial institutions listed on the
signature pages hereof or that become parties hereto after the date hereof in
their respective capacities as lenders hereunder (collectively, the "Lenders");
and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association
with its principal offices in Charlotte, North Carolina, acting in the manner
and to the extent described in ARTICLE XII hereof (in such capacity, the
"Agent").
RECITALS
A.
The Borrower is the corporate parent of Summit Holding Corporation ("Summit
Holding").
B.
Summit Holding has been party to that certain Credit Agreement, dated as of
January 16, 1996, with the Agent and the Lenders (as amended, the "Summit
Holding Credit Agreement"), originally providing for the extension of a
$36,000,000 term loan facility and a $8,000,000 revolving credit facility to
Summit Holding by the Lenders.
C.
As of November 21, 1996, the Lenders' commitments under the Summit Holding
Credit Agreement were reduced to an aggregate amount equal to $38,000,000
(consisting of $33,000,000 in respect of term loans and $5,000,000 in respect
of revolving loans).
D.
Summit Holding, the Borrower and their affiliates desire to effect a corporate
restructuring pursuant to which (i) Employers Self Insurers Fund, a Florida
self-insurance fund that is the owner of all of the capital stock of Summit
Holding ("ESIF"), would be converted to a stock insurance company to be named
"Bridgefield Employers Insurance Company" ("Bridgefield Employers"), (ii) the
Borrower would acquire ownership of Summit Holding and Bridgefield Employers
and complete an initial public offering of its capital stock and (iii) the
capital stock of Bridgefield Casualty Insurance Company ("Bridgefield
Casualty") would be contributed to Bridgefield Employers.
E.
Summit Holding and the Borrower desire that the Borrower assume Summit
Holding's repayment obligations under the Summit Holding Credit Agreement (but
only upon consummation of such transactions), and the Agent and the Lenders are
willing to permit such assumption on the terms set forth herein and in the
other Loan Documents.
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F.
Certain Subsidiaries of the Borrower will jointly and severally guarantee the
Obligations of the Borrower hereunder.
G.
The Obligations of the Borrower will be secured by a perfected first priority
lien on and security interest in the Collateral pledged to the Agent (for the
benefit of the Lenders) by the Borrower and its Subsidiaries, all as more
particularly set forth herein and in the other Loan Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1
"Defined Terms". For purposes of this Credit Agreement, in addition to the
terms defined elsewhere herein, the following terms shall have the meanings set
forth below:
"Account Designation Letter" shall mean a letter from the Borrower to the
Agent, duly completed and signed by an Authorized Officer and in form and
substance satisfactory to the Agent, listing any one or more accounts to which
the Borrower may from time to time request the Agent to forward the proceeds of
any Loans made hereunder.
"Actuarial Report" shall mean an actuarial review and valuation statement of an
Insurance Subsidiary's or a Fund's loss and loss adjustment expense reserve
positions as of the end of such Person's fiscal year (or such other date
requested by the Agent) with respect to the insurance business in force, as
prepared in connection with such Person's Annual Statement and covering such
other subjects as are customary in actuarial reviews and reasonably requested
by the Agent, prepared by an independent actuarial firm acceptable to the Agent
in accordance with reasonable actuarial assumptions and procedures, not
inconsistent with the assumptions and procedures previously employed, and
accompanied by a report prepared by such actuarial firm reviewing the adequacy
of loss reserves of an Insurance Subsidiary or Fund, as appropriate (which firm
shall be provided access to or copies of all reserves analyses and valuations
relating to the insurance business of each such Insurance Subsidiary or Fund)
together with its opinion affirming the adequacy of such loss reserves.
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"Adjusted Base Rate" shall mean, at any time with respect to any Loan, a rate
per annum equal to the Base Rate plus the Applicable Margin for Base Rate
Loans, each as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any Loan, a rate
per annum equal to the LIBOR Rate plus the Applicable Margin for LIBOR Loans,
each as in effect at such time.
"Admitted Assets" shall mean, as to an Insurance Subsidiary, the amount, as of
any date, shown on line 21, page 2 column 1 of the 1995 Annual Statement of
such Insurance Subsidiary (or any similar line, page and column reference in
any subsequent Annual Statement), or the amount determined in a consistent
manner for any date other than one as of which an Annual Statement is prepared.
"Advance" shall mean an advance of funds by a Lender to the Agent pursuant to
the Revolving Credit Commitment of such Lender, to be disbursed by the Agent to
the Borrower as a Revolving Loan from such Lender.
"Affiliate" shall mean, as to any Person, each of the Persons that directly or
indirectly, through one or more intermediaries, owns or controls, or is
controlled by or under common control with, such Person. For the purpose of
this definition, "control" means the possession, direct or indirect, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise, provided
that in any event: (a) any Person which owns directly or indirectly 20% or more
of the Securities having ordinary voting power for the election of directors or
other governing body of a corporation or 20% or more of the partnership or
other ownership interests of any other Person (other than as a limited partner
of such other Person) will be deemed to control such corporation or other
Person, and (b) each director and executive officer of the Borrower or any
Subsidiary of the Borrower shall be deemed to be an Affiliate of the Borrower.
"Agent" shall mean First Union and any successor agents appointed pursuant to
ARTICLE XII.
"Agreement" shall mean this Credit Agreement, together with any amendments,
modifications, supplements, exhibits and schedules hereto and restatements
hereof, in whole or in part.
"Annual Statement" shall mean an annual financial statement of an Insurance
Subsidiary or of a Fund, as appropriate, as required to be filed with the
insurance commissioner (or similar authority) of its state of domicile,
together with all exhibits and schedules filed therewith, prepared in
conformity with SAP.
"Applicable Margin" shall mean, at any time with respect to any Loan, the
applicable percentage as determined under the following matrix with reference
to the ratio of the Borrower's Fee/Commitment Ratio as provided below:
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Fee/Commitment Ratio Base Rate Loans LIBOR Loans
-------------------------------------- --------------- -----------
But Less than
-------------
Greater than or Equal to
------------ -----------
1.35 to 1.00 2.00 to 1.00 1.00% 3.00%
2.00 to 1.00 2.50 to 1.00 0.50% 2.50%
2.50 to 1.00 _______ 0.00% 2.00%
Notwithstanding any provision herein to the contrary, from the Closing Date
until the date on which the Borrower shall have delivered to the Lenders a
Compliance Certificate demonstrating that the Borrower shall have attained a
Fixed Charge Coverage Ratio of not less than 1.50 to 1.00 as of the end of the
most recently completed fiscal quarter (for the period of four consecutive
fiscal quarters then ending, it being understood that, with respect to the
period prior to Closing, the Fixed Charge Coverage Ratio will be determined by
reference to such ratio of Summit Holding as computed under Section 8.3 of the
Summit Holding Credit Agreement) after the satisfaction of the requirements set
forth in SECTION 5.2.3(f) with respect to the IPO or another equity offering,
the Loans shall bear interest at the Base Rate plus one percent (1.00%). Once
the Borrower attains the Fixed Charge Coverage Ratio specified above, the Loans
will bear interest in accordance with the matrix set forth above, and
accordingly will be reset from time to time within 10 Business Days after
delivery by the Borrower in accordance with SECTION 7.3(a)(i) of financial
statements together with a Compliance Certificate (reflecting the computation
of the Borrower's Fee/Commitment Ratio as of the last day of the preceding
fiscal quarter, beginning with the fiscal quarter ending March 31, 1997) that
provides for different Applicable Margins than those then in effect.
"Approved Stock Plan" shall mean the Summit Holding Southeast, Inc.
1996 Long-Term Incentive Plan adopted by the Borrower's management effective as
of __________________, pursuant to which certain employees of the Borrower may
acquire up to 500,000 shares of the Borrower's common stock.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
Agreement between any Lender and an Eligible Assignee, pursuant to which such
Lender assigns to such assignee, and such assignee accepts, all or a portion of
such Lender's rights and obligations under this Credit Agreement, substantially
in the form of EXHIBIT A hereto.
"Authorized Officer" shall mean the president or chief financial
officer of the Borrower or any other officer of the Borrower authorized by
resolution of the board of directors of the Borrower to engage in the activity
specified herein with respect to such officer and whose signatures and
incumbency shall have been certified to the Agent pursuant to SECTION 5.2.2(b).
"Bankruptcy Code" shall mean 11 U.S.C. Section Section 101 et seq.,
as amended from time to time, and any successor statute.
"Base Rate" shall mean the per annum interest rate publicly announced
from time to time by First Union from its principal office in Charlotte, North
Carolina to be its prime rate, which may not necessarily be its best lending
rate, and adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate. In the event First Union shall
abolish or abandon the practice of announcing its prime rate or should the same
be unascertainable, the Agent, with the consent
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of the Required Lenders, shall designate a reasonably comparable reference rate
that shall be deemed to be the Base Rate under this Credit Agreement and the
other Credit Documents.
"Base Rate Loan" shall mean, at any time, any outstanding Loan that
bears interest at the Adjusted Base Rate.
"Borrower" shall mean Summit Holding Southeast, Inc., a Florida
corporation and its successors and assigns.
"Borrower Affiliate" shall mean the Borrower or any of its
Subsidiaries.
"Borrower Cash Flow" shall mean, for any period, (a) the sum of (i)
EBITDA (Borrower-Stand Alone), (ii) EBITDA (Summit Holding), (iii) the amount
of all dividends actually paid to the Borrower by Bridgefield Employers in
compliance with all applicable Requirements of Law and (iv) the amount of all
payments made by Bridgefield Employers and Summit Holding pursuant to the Tax
Sharing Agreements, all for such period, minus (b) Capital Expenditures for
such period, minus (c) the total amount of cash taxes actually paid by the
Borrower during such period.
"Borrower Pledge Agreement" shall mean the pledge agreement, dated as
of the Closing Date, between the Borrower and the Agent (for the benefit of the
Lenders), together with any amendments, modifications and supplements thereto,
any replacements, restatements, renewals and extensions thereof, and any
substitutes therefor, in whole or in part.
"Borrower Security Agreement" shall mean the security agreement, dated
as of the Closing Date, between the Borrower and the Agent (for the benefit of
the Lenders), together with any amendments, modifications and supplements
thereto, any replacements, restatements, renewals and extensions thereof, and
any substitutes therefor, in whole or in part.
"Borrowing" shall mean the incurrence by the Borrower on a given date
of Loans pursuant to ARTICLE II OR III.
"Borrowing Date" shall mean any Business Day on which a Borrowing is
made, as provided in ARTICLE II or III hereof.
"Bridgefield Casualty" shall mean Bridgefield Casualty Insurance
Company, a Florida property and casualty insurance corporation.
"Bridgefield Casualty Management Agreement" shall mean the Managing
General Agent Agreement, dated December 29, 1995, between the Bridgefield
Casualty and Summit Consulting, together with any amendments, modifications and
supplements thereto, any replacements, restatements, renewals or extensions
thereof and any substitutes therefor, in whole or in part.
"Bridgefield Employers" shall mean Bridgefield Employers Insurance
Company, a Florida property and casualty insurance company and a successor in
interest to ESIF.
"Bridgefield Employers Management Agreements" shall mean the Summit
Claims Management Agreement and the Summit Loss Management Agreement (which
agreements were identified as the "ESIF Management Agreements" under the Summit
Holding Credit Agreement), or any Managing General Agent Agreement, in form and
substance satisfactory to the Required Lenders, as entered into
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after the date hereof.
"Bridgefield Employers Tax Sharing Agreement" shall mean the Tax
Sharing Agreement, dated ___________________, between Bridgefield Employers and
the Borrower (which agreement shall be in form and substance satisfactory to
the required Lenders), together with any amendments, modifications and
supplements thereto, any replacements, restatements, renewals or extensions
thereof and any substitutes therefor, in whole or in part.
"Business Day" shall mean (a) for all purposes other than as covered
by clause (b) below, any day excluding Saturday, Sunday and any day that shall
be in the City of Charlotte, North Carolina, a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close, and (b) with respect to all determinations and notices in connection
with, and payments of principal and interest on, LIBOR Loans, any day that is a
Business Day described in clause (a) and that is also a day for trading by and
between banks in Dollar deposits in the London interbank market.
"CICF" shall mean Commercial Insurance of Central Florida, Inc., a Florida
corporation.
"Capital Expenditures" shall mean, for any fiscal year of the
Borrower, the aggregate cost (less the amount of trade-in allowance included in
such cost) of all capital assets acquired by any of the Borrower Affiliates
during such fiscal year, exclusive of Capital Lease Obligations, each
calculated in accordance with GAAP.
"Capital Lease" shall mean any lease of any property that would, in
accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of the lessee.
"Capital Lease Obligations" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that would, in
accordance with GAAP, appear on a balance sheet of such lessee in respect of
such Capital Lease.
"Carolina Med" shall mean Carolina Med Summit, Inc., a North Carolina
corporation.
"Carolina Summit" shall mean Carolina Summit Healthcare, Inc., a North
Carolina corporation.
"Cash Equivalents" shall mean (a) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America
and maturing within one year from the date of acquisition; (b) securities
issued by any state of the United States of America or any political
subdivision or public instrumentality thereof, maturing within one year from
the date of acquisition and, at the time of acquisition, having the highest
rating obtainable from Standard & Poor's Corporation and Xxxxx'x Investors
Service, Inc. (the "Rating Agencies"); (c) commercial paper issued by any
Person organized under the laws of the United States of America, maturing no
more than one year from the date of acquisition and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor's Corporation and at least P-1 or the equivalent thereof by
Xxxxx'x Investors Service, Inc.; (d) time deposits and certificates of deposit
that are insured by the Federal Deposit Insurance Corporation (the "FDIC") or
any successor instrumentality of the government of the United States of America
up to the applicable limit on insurance granted by the FDIC or such other
instrumentality with respect to such instruments (it being understood that the
amount invested in such instrument may not exceed the limit on such insurance),
maturing within one year from the date of issuance and issued by a bank or
trust company organized under the laws of the United States of America or any
state thereof and having combined capital and
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surplus of at least $250,000,000; (e) repurchase obligations with a term not
exceeding seven (7) days with respect to underlying securities of the types
described in clause (a) above entered into with any bank or trust company
meeting the qualifications specified in clause (d) above; and (f) money market
funds substantially all of whose assets are comprised of securities of the
types described in clauses (a) through (e) above.
"Change in Control" shall mean the occurrence of one or more of the
following events: (i) a majority of the members of the board of directors
shall not constitute Continuing Directors; (ii) the board of directors of the
Borrower shall approve any plan or proposal for the liquidation or dissolution
of the Borrower or all or substantially all of its assets; or (iii) any
"Person" (as defined in Section 13(d) of the Exchange Act and the regulations
promulgated thereunder) or group of such Persons, together with any Affiliates
thereof, shall as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Borrower representing 20% of the
voting stock of such corporation.
"Closing" shall mean the consummation of the transactions contemplated
by this Credit Agreement and the other Credit Documents upon the satisfaction
of the conditions set forth in Article V hereof.
"Closing Date" shall mean ____________________, or such other date as
is agreed upon by the parties hereto (but in no event later than
__________________).
"Collateral" shall mean and include all the assets, property or
interests in property of the Borrower and its Subsidiaries (excluding assets
owned by any Insurance Subsidiary), whether now owned or hereafter acquired or
created, securing the Obligations pursuant to the Credit Documents, and all
other property and interests in personal property that shall from time to time
secure the Obligations.
"Commission" shall mean the Securities and Exchange Commission.
"Commitment" shall mean, at any time for any Lender, such Lender's
Term Loan Commitment plus its Revolving Credit Commitment.
"Compliance Certificate" shall mean a certificate duly executed by an
Authorized Officer substantially in the form of EXHIBIT B, with such changes as
the Agent may from time to time reasonably request, for the purpose of
monitoring the Borrower's compliance herewith.
"Consent Order" shall mean that certain Consent Order, dated November
15, 1996, issued by the Florida Department of Insurance, a true and complete
copy of which has been delivered to the Agent (as amended, modified or
supplemented from time to time).
"Consolidated Indebtedness" shall mean the Indebtedness of Borrower
and its Subsidiaries determined on a consolidated basis in accordance with GAAP
(provided, however, that such amount will be limited to Indebtedness that is
funded as of the date of determination and, accordingly, will exclude any
portion of the Revolving Line of Credit that is unused as of such date).
"Consolidating" shall mean, with respect to Financial Statements of
the Borrower and its Subsidiaries, financial statements containing the relevant
information for the Borrower, Bridgefield Employers and Summit Holding
(including appropriate entries (through footnotes or otherwise) for
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Summit Heritage and Summit Consulting).
"Contingent Liability" shall mean any agreement, undertaking or
arrangement by which any Person guarantees, endorses, acts as surety for or
otherwise becomes or is contingently liable for (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a
creditor against loss) the debt, obligation or other liability of any other
Person (other than by endorsements of instruments in the course of collection),
or for the payment of dividends or other distributions upon the shares of any
other Person or undertakes or agrees (contingently or otherwise) to purchase,
repurchase or otherwise acquire or become responsible for any Indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency,
assets, level of income, or other financial condition of any other Person, or
to make payment or transfer property to any other Person other than for value
received; provided, however, that obligations entered into in the ordinary
course of an Insurance Subsidiary's business under insurance policies or
contracts issued by it or to which it is a party, including reinsurance
treaties (and security posted by any such Insurance Subsidiary in the ordinary
course of its business to secure obligations thereunder) shall not be deemed to
be Contingent Liabilities of such Subsidiary or the Borrower for the purposes
of this Credit Agreement.
"Continuing Director" shall mean, at any time as to any Person, (i)
any member of the board of directors who is a director of such Person at the
Closing Date, or (ii) any Person who becomes a member of the board of directors
if such person was appointed or nominated for election to the board of
directors by a majority of the Continuing Directors.
"Contractual Obligation" shall mean, relative to any Person, any
obligation, commitment or undertaking under any agreement or other instrument
to which such Person is a party or by which it or any of its property is bound
or subject.
"Conversion" shall mean the conversion of ESIF to a Florida stock
insurance company pursuant to the Plan of Conversion.
"Credit Documents" shall mean and collectively refer to this
Agreement, each of the Notes, the Borrower Security Agreement, the Borrower
Pledge Agreement, the Guaranty, the Subsidiary Pledge Agreement, the Subsidiary
Security Agreement, all Supplemental Documentation and any and all amendments,
modifications, replacements, substitutes and supplements to such documents,
together with any other documents executed by or on behalf of the Borrower, its
Subsidiaries or other Affiliates in connection with any of the foregoing or
that designate themselves Credit Documents under this Credit Agreement.
"Current Assets" shall mean, as of any date, the aggregate (without
duplication) of the current assets of Summit Holding and its Subsidiaries as of
such date, as determined in compliance with GAAP.
"Current Liabilities" shall mean, as of any date, the aggregate
(without duplication) of the current liabilities of Summit Holding and its
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP.
"Default" shall mean any of the events or conditions specified in
ARTICLE IX, regardless of whether there shall have occurred any passage of time
or giving of notice or both that would be necessary to constitute such event or
condition an Event of Default.
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"Default Rate" shall mean, with respect to any Loan, an interest rate
equal to the sum of (a) the higher of the Elected Rate for such Loan or the
Adjusted Base Rate, plus (b) two (2) percentage points.
"Department" shall mean (a) with respect to an Insurance Subsidiary
and FRF, the Florida Department of Insurance or such other Governmental
Authority of its state of domicile charged with regulating insurance companies
or insurance holding companies, (b) with respect to KRF, the Kentucky
Department of Workers' Claims, and (c) with respect to LRA and XXXX, the
Louisiana Department of Insurance.
"Discontinued Operations" shall mean the businesses conducted by
Meritec, Healthcare Holdings, Carolina Summit and Carolina Med.
"Dollars" or "$" shall mean dollars of the United States of America.
"EBITDA (Borrower-Stand Alone)" shall mean, with respect to the
Borrower for any period, the sum of (a) Net Income for such period, (b)
Interest Expense for such period, (c) federal, state and local income and
franchise taxes deducted from revenue in determining Net Income for such period
and (d) depreciation and amortization deducted from revenue in determining Net
Income for such period; less (e) to the extent included in Net Income, the sum
of (i) all income distributed by Bridgefield Employers as dividends in
compliance with all applicable Requirements of Law for such period, (ii) all
undistributed income of the Borrower's Insurance Subsidiaries for such period
and (iii) EBITDA (Summit Holding) for such period (provided, however, that the
calculation of EBITDA will exclude items attributable to the Discontinued
Operations).
"EBITDA (Summit Holding)" shall mean, for any period, the sum of (a)
net income of Summit Holding and its Subsidiaries determined in accordance with
GAAP on a consolidated basis for such period, (b) interest expense of Summit
Holding for such period, (c) payments made (i) in respect of federal, state and
local income and franchise taxes deducted from revenue in determining such net
income for the period prior to the Closing Date and (ii) to the Borrower under
the Summit Holding Tax Sharing Agreement for the period from and after the
Closing Date and (d) depreciation and amortization deducted from revenue in
determining such net income; less (e) to the extent included in such net
income, the sum of (i) all income distributed by any Insurance Subsidiary as
dividends in compliance with all applicable Requirements of Law and (ii) all
undistributed income of any Insurance Subsidiaries (provided, however, that the
calculation of EBITDA will exclude items attributable to the Discontinued
Operations).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, and any successor statute of similar import, together with the
regulations thereunder, as amended, reformed or otherwise modified and in
effect from time to time. References to sections of ERISA shall be construed
to also refer to successor sections.
"ERISA Event" shall mean, with respect to any Person, (a) a Reportable
Event (other than a Reportable Event not subject to the provision for 30-day
notice to the Pension Benefit Guaranty Corporation under regulations issued
under Section 4043 of ERISA), (b) the withdrawal of such Person or any
Affiliate of such Person from an Employee Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(92) of ERISA if such
withdrawal would have a Material Adverse Effect on such Person, (c) the filing
of a notice of intent to terminate an Employee Plan under a distress
termination or the treatment of a Plan amendment as a distress termination
under Section 4041(c)
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of ERISA, (d) the institution of proceedings to terminate an Employee Plan by
the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, (e) the
failure to make required contributions that would result in the imposition of a
lien under Section 412 of the Internal Revenue Code or Section 302 of ERISA, or
(f) any other event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Employee Plan.
"ESIF" shall mean Employers Self Insurers Fund, a group self insurance
fund organized under the laws of the State of Florida.
"Effective Federal Funds Rate" shall mean, for any day, the interest
rate per annum equal to the weighted average of the rates of overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of Richmond, or if such rate is not so published on the relevant Business Day,
the average of the quotations for such day on such transactions received by the
Agent from three federal funds brokers of recognized standing selected by the
Agent.
"Elected Rate" shall mean the rate of interest with respect to a Loan
as selected by the Borrower, or as may apply as a result of a conversion, in
either case pursuant to ARTICLE IV hereof.
"Eligible Assignee" shall mean shall mean (a) a commercial bank
organized under the laws of the United States or any state thereof and having
total assets in excess of $5,000,000,000, (b) a commercial bank organized under
the laws of any other country that is a member of the OECD or a political
subdivision of any such country and having total assets in excess of
$5,000,000,000, provided that such bank is acting through a branch or agency
located in the United States, in the country under the laws of which it is
organized or in another country that is also a member of the OECD, (c) the
central bank of any country that is a member of the OECD, (d) a finance
company, mutual fund, insurance company or other financial institution that is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and having total assets in excess of
$3,000,000,000, (d) any Affiliate of an existing Lender or (f) any other Person
(other than an Affiliate of the Borrower) approved by the Agent and the
Borrower, which approval shall not be unreasonably withheld.
"Employee Plan" shall mean any "employee benefit plan" within the
meaning of Section 3(3) of ERISA maintained by the Borrower or its
Subsidiaries.
"Employment Agreements" shall mean, collectively, the Employment and
Confidentiality Agreement dated ____________ between the Borrower and Xxxxxxx
X. Xxxx, the Employment and Confidentiality Agreement dated ____________
between ____________ and Xxxxxxx X. Xxxx, the Employment and Confidentiality
Agreement dated January 16, 1996 between Summit Loss and Xxxxx X. Xxxxxxx and
the Employment and Confidentiality Agreement dated of January 16, 1996 between
Summit Claims and Xxxx X. Xxxxxx, as such agreements may be amended, modified,
supplemented, restated or restated from time to time.
"Environmental Law" shall mean any federal, state or local law,
statute, ordinance, rule, regulation, permit, license, approval,
interpretation, order, guidance or other legal requirement (including without
limitation any subsequent enactment, amendment or modification) relating to the
protection of human health or the environment, including, but not limited to,
any requirement pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling,
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reporting, licensing, permitting, investigation or remediation of materials
that are or may constitute a threat to human health or the environment.
Without limiting the foregoing, each of the following is an Environmental Law:
the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. Section 9601 et. seq.) ("CERCLA"), the Hazardous Material
Transportation Act (49 U.S.C. Section 1801 et. seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.) ("RCRA"), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et. seq.), the
Clean Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et. seq.), the Safe Drinking Water Act (42 U.S.C.
Section 300, et. seq.), and the Occupational Safety and Health Act (29 U.S.C.
Section 651 et. seq.) ("OSHA"), as such laws have been amended or
supplemented, and each similar federal, state and local statute, and each rule
and regulation promulgated under such federal, state and local laws.
"Event of Default" shall have the meaning specified in ARTICLE IX
hereof.
"Excess Cash Flow" shall mean, for any fiscal year, an amount
determined as follows: (a) Operating Cash Flow (Summit Holding) for such fiscal
year, plus (b) the amount of any dividends paid by Bridgefield Employers to the
Borrower during such year, plus (c) the positive difference, if any, of the
aggregate amount of all payments made to the Borrower under the Tax Sharing
Agreements, minus the total amount paid to Governmental Authorities in respect
of taxes during such year, minus (d) Capital Expenditures made during such
year, minus (e) any principal payments and prepayments actually made by the
Borrower in respect of (i) the Term Loans or (ii) the Revolving Loans to the
extent such payments permanently reduce the Revolving Credit Commitment, and
minus (f) the aggregate amount of any operating expenses paid by the Borrower
during such fiscal year, all as calculated pursuant to SECTION 7.1(c) on an
Excess Cash Flow Calculation executed and delivered to the Agent by the
Borrower.
"Excess Cash Flow Calculation" shall mean the Borrower's calculation
of Excess Cash Flow for any fiscal year substantially in the form of EXHIBIT C,
delivered to the Agent pursuant to SECTION 7.1(c).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FRF" shall mean Florida Retail Federation Self Insurers Fund, a group
self insurance fund organized under the laws of the State of Florida.
"FRF Management Agreement" shall mean the Administrator's Contract,
dated December 1, 1978, and as amended by Addenda dated December 9, 1982 and
August 22, 1985, between Summit Consulting and FRF, together with any
amendments, modifications and supplements thereto, any replacements,
restatements, renewals or extensions thereof and any substitutes therefor, in
whole or in part.
"Fee/Commitment Ratio" shall mean, as of the date of determination,
the ratio of (i) Fee Income during the period of four consecutive fiscal
quarters ending on such date, to (ii) the Total Commitment as of such date.
"Fee Income" shall mean for any period, the amount reflected as "Gross
Fee Revenue" on Summit Holding's consolidated income statement for such period
(as calculated in a manner consistent with that applicable to the Borrower's
audited income statements), which amount is attributable to income arising out
of the Management Agreements and any other agreements generating fee income in
the ordinary course of business.
"Financials" or "Financial Statements" shall mean the consolidated and
Consolidating balance
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sheet and statements of income and cash flow, to be delivered to the Lenders by
the Borrower pursuant to SECTIONS 6.17, 6.18, 7.3(a) and 7.3(b) hereof,
including without limitation any interim Financial Statements.
"Financing Statements" shall mean the UCC-1 financing statements
executed and delivered by the Borrower Affiliates or other Affiliates of the
Borrower to the Agent in respect of the Collateral, together with any
replacements thereof or any amendments thereto.
"First Union" shall mean First Union National Bank of North Carolina,
a national banking association with its principal offices in Charlotte, North
Carolina.
"Fixed Charge Coverage Ratio" shall mean, for the applicable
Measurement Period, the ratio determined by dividing (a) the amount of
Borrower Cash Flow for such period by (b) the sum of (i) the Borrower's
Historical Debt Service for such period and (ii) any amounts actually paid by
the Borrower in respect of its Series A preferred capital stock during such
period.
"Funds" shall mean LRA, KRF, XXXX and FRF.
"Generally Accepted Accounting Principles" or "GAAP" shall mean
generally accepted accounting principles, as recognized by the American
Institute of Certified Public Accountants, consistently applied and maintained
on a consistent basis for a Person throughout the period indicated and
consistent with the prior financial practice of such Person.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, the Department or any
similar body or agency.
"Guaranty" shall mean the guaranty agreement, dated the Closing Date,
of Summit Holding, Summit Consulting, CICF, Summit Claims, Summit Loss, and
Healthcare Holdings in favor of the Agent (for the benefit of the Lenders),
together with any amendments, new guarantor accessions, modifications and
supplements thereto, any replacements, restatements, renewals or extensions
thereof, and any substitutes therefor, in whole or in part.
"Hazardous Substance" shall mean any substance or material meeting any
one or more of the following criteria: (a) it is or contains a substance
designated as a hazardous waste, hazardous substance, hazardous material,
pollutant, contaminant or toxic substance under any Environmental Law; (b) it
is toxic, explosive, corrosive, reactive, ignitable, infectious, radioactive,
mutagenic, dangerous or otherwise hazardous; (c) its presence at some quantity
requires investigation, notification or remediation under any Environmental Law
or common law; (d) it constitutes a danger, a nuisance, a trespass or a health
or safety hazard to persons or property; or (e) it is or contains, without
limiting the foregoing, asbestos, polychlorinated biphenyls, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil or any fraction
thereof, nuclear fuel, natural gas or synthetic gas.
"Healthcare Holdings" shall mean Summit Healthcare Holdings, Inc., a
Florida corporation.
"Heritage Summit" shall mean Heritage/Summit Healthcare of Florida,
Inc., a Florida corporation.
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"Historical Debt Service" shall mean, with respect to the Borrower,
and for any Measurement Period, an amount equal to the total of all scheduled
principal (exclusive of any amounts of the Loans reborrowed pursuant to this
Agreement and exclusive of any amounts prepaid pursuant to Section 7.1(c)) and
Interest Expense paid by the Borrower in respect of all Indebtedness of the
Borrower during such period.
"IPO" shall mean the initial public offering of the Borrower's Series
A preferred stock and its common stock in connection with its registration
statement on Form S-1 as filed with the Commission on November 20, 1996
(Commission File No. 333-16499), as amended by an amendment dated December 9,
1996 and as otherwise amended from time to time.
"Increased Costs" is defined in SECTION 4.12(a).
"Indebtedness" of a Person shall mean (a) indebtedness of such Person
for borrowed money including without limitation all obligations evidenced by
bonds, debentures, notes or other similar instruments (including, with respect
to the Borrower, all indebtedness in respect of the Loans and with respect to
Revolving Loans, including the Total Revolving Credit Commitment whether or not
the Borrower has borrowed the entire amount thereof), (b) indebtedness of such
Person for the deferred purchase price of services or property (except for such
deferred obligations owed in respect of such purchases made in the ordinary
course of business, to the extent such amounts are ultimately paid in
accordance with the terms of such purchases), (c) obligations of such Person
under Capital Leases, (d) indebtedness of such Person arising under acceptance
facilities, (e) all obligations of such Person in respect of the Rate
Protection Agreement (it being understood that the amount of Indebtedness of
such Person under such Rate Protection Agreement as of any date shall be deemed
to equal the termination value payable by such Person if such Rate Protection
Agreement were terminated on such date), (f) indebtedness of such Person
consisting of unpaid and overdue reimbursement obligations in respect of all
obligations under letters of credit issued for the account of such Person, (g)
all unfunded pension fund obligations and liabilities, and (h) all Contingent
Liabilities of such Person in respect of any of the foregoing (including,
without limitation, with respect to each of the foregoing clauses (a) through
(g), any such indebtedness or obligation that is non-recourse to the credit of
such Person but is secured by assets of such Person, but only to the extent of
the value of such assets).
"Insurance Code" shall mean, as to any Insurance Subsidiary, the
Insurance Code of the state of domicile of such Insurance Subsidiary and any
successor statute of similar import, together with the regulations thereunder,
as amended or otherwise modified and in effect from time to time. References
to sections of the Insurance Code shall be construed to also refer to successor
sections.
"Insurance Holding Company Systems Act" shall mean the Florida
Insurance Holding Company Systems Act, Florida Insurance Code Section 628.801
et seq.
"Insurance Policies" shall mean policies purchased from insurance
companies by either the Borrower or any Subsidiary for its own account to
insure against its own liability and property loss (including, without
limitation, casualty, liability and workers' compensation insurance), other
than Reinsurance Agreements.
"Insurance Subsidiary" shall mean any of Bridgefield Casualty,
Bridgefield Employers or U.S. Employers, as applicable, and its successors and
assigns.
"Interest Coverage Ratio" shall mean, as of the date of determination,
the ratio of (i) EBITDA
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(Summit Holding) for the fiscal quarter ending on such date, less the total of
all Capital Expenditures made by Summit Holding during such quarter to (ii)
Interest Expense for such quarter.
"Interest Expense" shall mean, with respect to the Borrower for any
period, the sum of (a) gross interest expense of the Borrower and its
Subsidiaries for such period, including (i) the amortization of debt discounts,
(ii) the amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense and (iii) the portion
of any payments or accruals with respect to Capital Lease Obligations allocable
to interest expense, (b) any amounts paid during such period in respect of the
Rate Protection Agreement (except for any payments required to be made upon the
early termination thereof) and (c) any other capitalized interest of the
Borrower and its Subsidiaries for such period, in all cases determined on a
consolidated basis in accordance with GAAP consistently applied.
"Interest Period" shall mean, relative to any LIBOR Loan, the period
that begins on (and includes) the date on which such LIBOR Loan is made or
continued as, or converted into, a LIBOR Loan pursuant to SECTION 4.6 and,
unless the maturity of such LIBOR Loan is accelerated, ends on (but excludes)
the day which numerically corresponds to such date one, two or three months
thereafter, as the Borrower may select in its relevant notice pursuant to
SECTION 4.6; provided, however, that:
(a) all LIBOR Loans comprising a single Borrowing shall at all
times have the same Interest Period;
(b) if there exists no numerically corresponding day in such
month, such Interest Period shall end on the last Business Day of such month;
(c) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day);
(d) no LIBOR Loans may be incurred prior to the third Business Day
after the Closing Date;
(e) if the Borrower shall fail to provide in an Interest Rate
Election Notice an appropriate duration of an Interest Period, then the
Borrower shall be deemed to have selected the Adjusted Base Rate; and
(f) the Borrower shall not be permitted to select, and there shall
not be applicable, any Interest Period that would end later than the Loan
Termination Date.
"Interest Rate Election Notice" shall mean a notice in the form
attached hereto as EXHIBIT D to be delivered by the Borrower to the Agent
pursuant to SECTION 3.1(b) and SECTION 4.6.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
and any successor statute of similar import, together with the regulations
thereunder, as amended, reformed or otherwise modified and in effect from time
to time. References to sections of the Internal Revenue Code shall be
construed to also refer to successor sections.
"Invested Assets" shall mean, as to any Insurance Subsidiary, the
amount shown on line 8A, page 2, column 1 of the 1995 Annual Statement of such
Insurance Subsidiary (or any similar line, page and column reference in any
subsequent Annual Statement), or an amount determined in a consistent
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manner for any date other than one as of which an Annual Statement is prepared.
"Investment Grade Securities" shall mean (a) U.S. Government
Obligations; (b) any certificate of deposit, maturing not more than 365 days
after the date of acquisition, issued by, or time deposit of, a commercial
banking institution that has combined capital and surplus of not less than
$250,000,000 or its equivalent in foreign currency, whose debt is rated at the
time as of which any investment there is made, of "A" (or higher) according to
Standard & Poor's Corporation ("S&P") and "A2" by Xxxxx'x Investors Services,
Inc. ("Moody's"); (c) commercial paper, maturing not more than 270 days after
the date of acquisition, issued by a corporation (other than an Affiliate or
Subsidiary of the Borrower) with a rating, at the time as of which any
investment therein is made, of "A1" (or higher) according to S&P and "P-1" (or
higher) according to Moody's; (d) any bankers' acceptances or any market
deposit accounts, in each case, issued or offered by any commercial bank having
capital and surplus in excess of $250,000,000 or its equivalent in foreign
currency, whose debt is rated at the time as of which any investment there is
made, of "A" (or higher) according to S&P and "A2" by Moody's; (e) non-equity
securities that are rated "BBB-" or better by S&P and "Baa3" or better by
Moody's, or "2" or better by the SVO; and (f) any fund investing exclusively in
investments of the types described in clauses (a) through (e) above. For this
purpose, "U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect
to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the
specific payment of principal of or interest on the U.S. Government Obligation
evidenced by such depository receipt.
"Issuer Group" shall mean any Person and each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls,
is controlled by or under common control with, such Person. For the purpose of
this definition, with respect to any Person that is controlled through the
voting of Securities, "control" means the possession, direct or indirect, of
the power to vote 50% or more of the Securities having ordinary voting power
for the election of directors or other managers of such person. Such term
shall not include a Person that is a governmental unit, political subdivision
thereof or any government agency.
"KRF" shall mean Kentucky Retail Federation Self Insurers Fund, a
group self insurance fund organized under the laws of the State of Kentucky.
"KRF Management Agreement" shall mean the Administrator's Contract,
dated August 9, 1995, between Summit Consulting and KRF, together with any
amendments, modifications and supplements thereto, any replacements,
restatements, renewals or extensions thereof and any substitutes therefor, in
whole or in part.
"Key Man Life Insurance Policy" shall mean the $2,000,000 life
insurance policy covering the life of Xxxxxxx X. Xxxx, together with any
amendments or replacements thereof, endorsements thereto or substitutes
therefor, in whole or in part.
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"XXXX" shall mean Louisiana Employers Safety Association Self Insurers
Fund, a group self insurance fund organized under the laws of the State of
Louisiana.
"XXXX Management Agreement" shall mean the Administrator's Contract
dated March 23, 1982 and as amended by an Addendum dated August 1, 1982,
between Summit Consulting and XXXX, together with any amendments, modifications
and supplements thereto, any replacements, restatements, renewals or extensions
thereof and any substitutes therefor, in whole or in part.
"LRA" shall mean Louisiana Retailers Association Self Insurers Fund, a
group self insurance fund organized under the laws of the State of Louisiana.
"LRA Management Agreement" shall mean the Administrator's Contract,
dated June 24, 1980 and as amended by an Addendum dated February 10, 1983,
between Summit Consulting and LRA, together with any amendments, modifications
and supplements thereto, any replacements, restatements, renewals or extensions
thereof and any substitutes therefor, in whole or in part.
"LIBOR" means the rate for deposits in Dollars for a period equal to
the Interest Period selected by the Borrower, which rate appears on the
Telerate Page 3750 at approximately 11:00 a.m. London time, two (2) Business
Days prior to the commencement of the applicable Interest Period. If, for any
reason, such rate is not available, then "LIBOR" shall mean the rate per annum
at which, as determined by the Agent, Dollars in the amount of $5,000,000 are
being offered to leading banks at approximately 11:00 a.m. London time, two (2)
Business Days prior to the commencement of the applicable Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market for a period equal to the Interest Period selected.
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted LIBOR Rate.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Agent pursuant to the
following formula:
LIBOR Rate = LIBOR
-------------------------------
1 minus the Reserve Requirement
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that may become a party to this Agreement
pursuant to SECTION 13.1 hereof, and its successors or assigns.
"Leverage Ratio" shall mean a ratio, determined as of the last day of
each fiscal quarter of the Borrower, equal to (a) Consolidated Indebtedness at
such time, to (b) Total Capitalization of the Borrower at such time.
"Licenses" is defined in SECTION 6.6.
"Loan Termination Date" shall mean the earliest of (a) June 30, 2002
or such earlier date on which the Loans are required to be repaid in full
pursuant hereto, adjusted as the result of any mandatory or voluntary
prepayments hereunder, (b) the date of termination by the Required Lenders
after the occurrence and during the continuance of an Event of Default; (c)
such date of termination as is mutually agreed upon by the Lenders and the
Borrower; and (d) the date after all Obligations have been paid in full
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and the Lenders are no longer obligated to make Advances on Revolving Loans
hereunder.
"Loans" shall mean the Term Loans and the Revolving Loans made by the
Lenders pursuant to ARTICLES II and III hereof.
"Management Agreement" shall mean any of the Bridgefield Employers
Management Agreements, the XXXX Management Agreement, the LRA Management
Agreement, the KRF Management Agreement, the FRF Management Agreement and the
Bridgefield Casualty Management Agreement, in each case together with any
amendments, modifications and supplements thereto, any replacements,
restatements, renewals or extensions thereof and any substitutes therefor, in
whole or in part.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean, relative to any occurrence, of
whatever nature (including any determination in litigation, arbitration or
governmental proceeding or investigation), of a materially adverse effect on:
(a) the assets, business, financial condition, operations
or prospects of a Borrower Affiliate;
(b) any Management Agreement;
(c) the ability of any Person to perform any of its
payment or other obligations under this Credit Agreement, any of the
Notes, or any of the other Credit Documents.
Except where otherwise expressly indicated, the term "Material Adverse
Effect" shall refer to such an effect on the Borrower and its Subsidiaries,
taken as a whole.
"Material Asset" shall mean (a) any asset or line of business of any
Borrower Affiliate material to the operations or financial condition of such
Borrower Affiliate, including, but not limited to the following types of
assets: (i) as to any Borrower Affiliate, any asset or group of assets to which
10% or more of the Borrower Affiliate's gross revenues (on a stand alone basis)
are attributable, and (ii) as to an Insurance Subsidiary, (A) any insurance
product line to which greater than five percent (5%) of such Subsidiary's Net
Written Premiums in the prior fiscal year are attributable, or (B) any asset or
group of assets to which ten percent (10%) of such Subsidiary's Admitted Assets
are attributable, and (b) the Stock or other Securities of any Subsidiary of
the Borrower.
"Measurement Period" shall have the meaning assigned to such term in
Section 8.1 hereof.
"Meritec" shall mean Meritec Solutions, Inc., a Georgia corporation.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which any Borrower Affiliate is
required to make contributions.
"NAIC" shall mean the National Association of Insurance Commissioners,
or any successor thereto.
"Net Cash Proceeds" shall mean, with respect to the issuance and sale
by the Borrower of any
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capital stock or other equity securities of the Borrower (or any rights,
warrants or options relating thereto), cash payments received net of reasonable
accounting, legal and recording expenses, selling and brokerage commissions and
discounts and underwriting fees and discounts and other reasonable fees and
expenses incurred in connection with such issuance and sale.
"Net Income" shall mean, for any period, net income (or loss) for the
Borrower and its Subsidiaries on a consolidated basis for such period,
determined in accordance with GAAP.
"Net Worth" shall mean, as to any Person and as of any date, the
consolidated stockholders' equity of such Person and its Subsidiaries
determined on a consolidated basis in accordance with GAAP, excluding the
effect of FASB 115.
"Net Written Premiums" shall mean as to any Insurance Subsidiary, as
of any date, the total amount of premiums written after deducting or adding
premiums on business ceded to or assumed from others as shown on line 32,
column 4, Part 2B of page 8 of the 1995 Annual Statements (or any similar line,
page and column reference in any subsequent Annual Statement), or an amount
determined in a consistent manner for any date other than one as of which an
Annual Statement is prepared.
"Note" shall mean any Term Note or any Revolving Credit Note.
"Notice of Borrowing" shall mean a notice from the Borrower to the
Agent indicating the Borrower's desire to effect a Borrowing under the
Revolving Line of Credit, substantially in the form of EXHIBIT E.
"OECD" shall mean the Organization for Economic Cooperation and
Development and any successor thereto.
"Obligations" shall mean and include the Loans and all other loans,
advances, indebtedness, liabilities, obligations, covenants and duties
(including post-petition interest on the foregoing, to the extent lawful)
owing, arising, due or payable jointly or severally, from the Borrower to any
Lender, of any kind or nature, present or future, howsoever evidenced, created,
incurred, acquired or owing, whether arising under this Credit Agreement, the
Notes, the Borrower Pledge Agreement, the Borrower Security Agreement, the
Subsidiary Pledge Agreement, the Subsidiary Security Agreement or the other
Credit Documents, whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or to become
due, now existing or hereafter arising and however acquired. The term
includes, without limitation, all interest, charges, expenses, fees, attorneys'
fees and any other sums chargeable to the Borrower by any Lender under this
Credit Agreement or any of the other Credit Documents.
"Operating Cash Flow (Summit Holding)" shall mean, for any period, an
amount determined as follows: (a) EBITDA (Summit Holding) for such period, plus
(b) any Working Capital Decreases for such period, plus (c) any amounts paid by
Summit Holding to the Borrower pursuant to the Summit Holding Tax Sharing
Agreement during such period, plus (d) any non-cash expenses and charges
reducing income for such period, minus (e) any Working Capital Increases for
such period, and minus (f) any non-cash items increasing income for such
period.
"Other Taxes" is defined in SECTION 4.13(b).
"Payment Date" shall mean (a) with respect to any LIBOR Loan, the last
day of each Interest
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Period with respect thereto, and (b) with respect to any Base Rate Loan, each
March 31, June 30, September 30 and December 31, commencing March 31, 1997,
until the Loans are fully repaid.
"Pension Benefit Guaranty Corporation" shall mean the Pension Benefit
Guaranty Corporation or any entity succeeding to any or all of its functions.
"Permitted Indebtedness" shall mean (a) the Loans, (b) current
accounts payable arising in the ordinary course of business and not overdue,
(c) non-current accounts payable being contested in good faith and by
appropriate proceedings, and with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP, (d) current
amounts due within seven Business Days to or from brokers for securities
transactions in the ordinary course of business, (e) Capital Lease Obligations
the total amount of which shall not at any time exceed $500,000, (f) deferred
taxes accrued in the ordinary course of business that are reflected as a
liability in accordance with GAAP, (g) the Rate Protection Agreement, the total
amount of which Indebtedness (as specifically defined in clause (e) of the
definition of "Indebtedness") may not at any time exceed $3,000,000, and (h)
any Indebtedness underlying Permitted Liens.
"Permitted Liens" shall mean any of the following liens securing any
Indebtedness of the Borrower on its property, real or personal, whether now
owned or hereafter acquired:
(a) liens securing the Obligations of the Borrower;
(b) liens of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for sums not
yet due and payable;
(c) liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure the
performance of letters of credit, bids, tenders, statutory
obligations, leases and contracts (other than for borrowed funds)
entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds;
(d) (i) liens for current taxes, assessments or other
governmental charges that are not delinquent or remain payable without
any penalty or that are being contested in good faith and with due
diligence by appropriate proceedings but do not in any Lender's
judgment adversely affect such Lender's rights or the priority of such
Lender's lien in the Collateral, and if the Borrower has established
adequate reserves with respect thereto in accordance with GAAP, or
(ii) with respect to liens arising in connection with income tax
withholding, the Borrower has established reserves satisfactory to
such Lender with respect thereto;
(e) statutory liens of banks and other financial
institutions arising during the collection of instruments in the
ordinary course of business; and
(f) purchase money security interests or retention of
title to any property by the vendor (or equipment financing company)
thereof solely to secure payment for such property, which liens shall
not secure indebtedness in excess of an aggregate amount of $1,000,000
at any time.
"Person" shall mean a corporation, an association, a joint venture, a
partnership, an organization, a business, an individual, a trust or a
government or political subdivision thereof or any government agency.
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"Plan of Conversion" shall mean the Amended Plan of Conversion and
Recapitalization of ESIF as adopted by ESIF's members on _______ and as
approved by the Department on __________, as amended from time to time.
"Pledge Agreements" shall mean the Borrower Pledge Agreement and the
Subsidiary Pledge Agreement and all the pledge agreements executed and
delivered to the Agent at any time by any Borrower Affiliate, together with any
amendments, modifications and supplements thereto, any replacements,
restatements, renewals and extensions thereof, and any substitutes therefor, in
whole or in part.
"Pro Rata Share" of any amount shall mean, with respect to any Lender
at any time, the product of (a) a fraction the numerator of which is the amount
of such Lender's Commitment at such time and the denominator of which is the
Total Commitment at such time, times (b) such amount; provided that if the Pro
Rata Share of any Lender is to be determined after the Commitments have been
terminated, then such Pro Rata Share shall be determined immediately prior (and
without giving effect) to such termination.
"Prohibited Transaction" shall have the meaning given such term under
ERISA or Section 4975 of the Internal Revenue Code.
"Projections" shall mean the financial projections described in
SECTION 6.19 hereof.
"Rate Protection Agreement" shall mean that certain [NAME OF EXISTING
SWAP AGREEMENT], dated ____________, between Summit Holding and First Union,
which agreement was entered into in accordance with the terms of the Summit
Holding Credit Agreement.
"Realty" any real property owned or leased by any Borrower Affiliate.
"Register" is defined in SECTION 13.1(b) hereof.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 204, or any successor or other
regulation relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 207, or any successor or other
regulation relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation T" shall mean Regulation T promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 220.3 and 220.4, or
any successor or other regulation hereafter promulgated by said Board to
replace the prior Regulation T and having substantially the same function.
"Regulation U" shall mean Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any successor
or other regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any successor
or other regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
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"Regulatory Change" shall mean, relative to any Lender any change in
(or the adoption, implementation, phase-in or commencement of effectiveness of)
any federal, state or foreign law applicable to such Lender, or regulation,
interpretation, directive, requirement or request applicable to such Lender of
any court or Governmental Authority charged with the interpretation or
administration of any such law or of any fiscal, monetary or other authority
having jurisdiction over such Lender, or any change in the application to such
Lender of any such existing law, regulation, interpretation, directive,
requirement or request, occurring after the Closing Date.
"Reinsurance Agreements" shall mean any agreement, contract, treaty,
certificate or other arrangement whereby an Insurance Subsidiary or a Fund
agrees to transfer, cede or retrocede to another insurer or reinsurer all or
part of the liability assumed by such an Insurance Subsidiary or Fund under a
policy or policies of insurance issued by such Insurance Subsidiary or under an
insurance obligation of a Fund.
"Reportable Event" shall have the meaning given such term in ERISA.
"Required Lenders" shall mean the Lenders having in the aggregate a
Voting Percentage of 100%; provided, however, that if as of the end of the
fiscal quarter following the one year anniversary of the IPO, there shall not
have occurred (from the Closing Date through such quarter end) an Event of
Default described in Section 9.1(a) or 9.1(b), then, effective as of such
quarter end, such term shall mean the Lenders having in the aggregate a Voting
Percentage of 66-2/3%
"Requirement of Law" for any Person shall mean the articles of
incorporation and bylaws or other organizational or governing documents of such
Person, and any federal, state or local law (whether statutory, judicial or
administrative), treaty, rule, ordinance or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Reserve Requirement" shall mean, with respect to any Interest Period,
that reserve percentage (expressed as a decimal), as provided by the Board of
Governors of the Federal Reserve System (or any successor governmental body)
applied for determining the maximum reserve requirements (including without
limitation, basic, supplemental, marginal and emergency reserves) under
Regulation D with respect to "Eurocurrency liabilities" as currently defined in
Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding. Each determination by a
Lender of the Reserve Requirement shall, in the absence of manifest error, be
conclusive and binding.
"Revolving Credit Commitment" shall mean, with respect to any Lender
at any time, the amount set forth opposite such Lender's name on its signature
page under the caption "Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, the amount set forth for
such Lender at such time in the Register maintained by the Agent pursuant to
this Agreement, in either case as such amount may be reduced from time to time
pursuant hereto.
"Revolving Credit Note" shall mean a promissory note of the Borrower
substantially in the form of EXHIBIT F, executed and delivered to the Agent for
the benefit of a Lender pursuant to SECTION 3.6 hereof or, in connection with
an Assignment and Acceptance, pursuant to SECTION 13.1(d), together with any
amendments, modifications and supplements thereto and restatements thereof, in
whole or in part.
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"Revolving Line of Credit" shall mean the revolving line of credit
established by the Lenders under SECTION 3.1(a) hereof.
"Revolving Loans" shall have the meaning assigned to such term in
SECTION 3.1 hereof.
"SVO" shall mean the Securities Valuation Office of the NAIC, or any
successor thereto.
"Securities" shall mean common and preferred stock, partnership units
and participations, certificates of equity contribution, limited liability
company membership interests, notes, bonds, debentures, surplus debentures or
notes, trust receipts and other obligations, instruments or evidences of
indebtedness, including debt instruments of public and private issuers and
tax-exempt securities (including, without limitation, warrants, rights, put and
call options and other options relating thereto or any combination thereof),
guarantees of indebtedness, choses in action, other property or interests
commonly regarded as securities or any form of interest or participation
therein (whether certificated or uncertificated) or any instruments convertible
into any of the foregoing.
"Security Agreements" shall mean the Borrower Security Agreement and
the Subsidiary Security Agreement.
"Solvent" shall mean, with respect to any Person at any time, that
such Person (a) has capital sufficient to carry on its business as presently
conducted, (b) has assets with a fair saleable value at such time (i) not less
than the amount required to pay the probable liability on its then existing
debts as they become absolute and matured and (ii) greater than the total
amount of its liabilities (including identified contingent liabilities) at such
time, and (c) does not then intend to, and does not then believe that it will,
incur debts or liabilities beyond its ability to pay such debts and liabilities
as they mature, and, in the case of a Subsidiary, such term shall mean that
such Subsidiary, at such time, satisfies the minimum capital requirements of
any relevant Department.
"Statutory Accounting Principles" or "SAP" shall mean the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) in the State of Florida for the preparation of Annual
Statements and other financial reports by insurance corporations of the same
type as the Insurance Subsidiaries, as applied by each Insurance Subsidiary on
a basis consistent with prior periods.
"Statutory Financial Statements" is defined in SECTION 6.18(a).
"Statutory Liabilities" shall mean, as to any Insurance Subsidiary, as
of any date, the total amount shown on line 21, page 3, column 1 of the 1995
Annual Statements (or any similar line, page and column reference in any
subsequent Annual Statement), or an amount determined in a consistent manner
for any date other than one as of which an Annual Statement is prepared.
"Statutory Surplus" shall mean, as to any Insurance Subsidiary, as of
any date, the total amount of capital and surplus shown on line 32, page 4,
column 1 of the 1995 Annual Statement (or any similar line, page and column
reference in any subsequent Annual Statement), or an amount determined in a
consistent manner for any date other than one as of which an Annual Statement
is prepared.
"Stock" shall mean all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or non-voting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in
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whole or in part, into any one or more or all of the foregoing.
"Subsidiary" shall mean a corporation of which the indicated Person
and/or its other Subsidiaries, individually or in the aggregate, own, directly
or indirectly, such number of outstanding shares as have at the time of any
determination hereunder more than 50% of the ordinary voting power for the
election of directors (or their equivalent under the laws of the jurisdiction
of organization of such corporation). Except where otherwise expressly
indicated, references herein to "Subsidiary" shall mean a Subsidiary of the
Borrower.
"Subsidiary Pledge Agreement" shall mean the pledge agreement, dated
as of the Closing Date, between Summit Consulting, Summit Healthcare and the
Agent (for the benefit of the Lenders), together with any amendments,
modifications and supplements thereto, any replacements, restatements, renewals
and extensions thereof, and any substitutes therefor, in whole or in part.
"Subsidiary Security Agreement" shall mean the security agreement,
dated as of the closing date, between certain Subsidiaries of the Borrower and
the Agent, (for the benefit of the Lenders), together with any together with
any amendments, modifications and supplements thereto, any replacements,
restatements, renewals and extensions thereof, and any substitutes therefor, in
whole or in part.
"Summit Claims" shall mean Summit Claims Management, Inc., a Florida
corporation.
"Summit Claims Management Agreement" shall mean the Agreement, dated
January 1, 1994, between Summit Claims and ESIF, together with any amendments,
modifications and supplements thereto, any replacements, restatements, renewals
or extensions thereof and any substitutes therefor, in whole or in part, as
assigned by ESIF to Bridgefield Employers.
"Summit Consulting" shall mean Summit Consulting, Inc., a Florida
corporation.
"Summit Holding" is defined in the Recitals.
"Summit Holding Credit Agreement" is defined in the Recitals.
"Summit Holding Tax Sharing Agreement" shall mean the Tax Sharing
Agreement, dated ___________________, between Summit Holding and the Borrower
(which agreement shall be in form and substance satisfactory to the required
Lenders), together with any amendments, modifications and supplements thereto,
any replacements, restatements, renewals or extensions thereof and any
substitutes therefor, in whole or in part.
"Summit Loss" shall mean Summit Loss Control Services, Inc., a Florida
corporation.
"Summit Loss Management Agreement" shall mean the Contract, as amended
by an Addendum dated October 15, 1987, between Summit Loss and ESIF, together
with any amendments, modifications and supplements thereto, any replacements,
restatements, renewals or extensions thereof and any substitutes therefor, in
whole or in part, as assigned by ESIF to Bridgefield Employers.
"Supplemental Documentation" shall mean all agreements, instruments,
documents, financing statements, notices of assignment of accounts, schedules
of accounts assigned, mortgages, deeds of trust, certificates of title and
other written matter necessary or requested by the Agent or the Lenders to
perfect and maintain perfected each Lender's security interest in the
Collateral and to consummate the
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transactions contemplated by this Credit Agreement and the other Credit
Documents.
"Taxes" is defined in SECTION 4.13(a).
"Tax Sharing Agreement" shall mean either of the Summit Holding Tax
Sharing Agreement or the Bridgefield Employers Tax Sharing Agreement.
"Term Loan Commitment" shall mean, with respect to any Lender at any
time, the amount set forth opposite such Lender's name on its signature page
under the caption "Term Loan Commitment" or, if such Lender has entered into
one or more Assignment and Acceptances, the amount set forth for such Lender at
such time in the Register maintained by the Lender pursuant to this Agreement,
in either case, as such amount may be reduced from time to time pursuant hereto.
"Term Loans" shall have the meaning given to such term in SECTION 2.1
hereof.
"Term Note" shall mean a promissory note of the Borrower substantially
in the form of EXHIBIT G, executed and delivered to a Lender pursuant to
SECTION 2.2 hereof or, in connection with an Assignment and Acceptance,
pursuant to SECTION 13.1(d), together with any amendments, modifications and
supplements thereto and restatements thereof, in whole or in part.
"Total Capitalization" shall mean, with respect to any Person, and as
of any date, the sum of (a) the amount of such Person's Consolidated
Indebtedness as of such date and (b) the amount of such Person's Net Worth as
of such date.
"Total Commitment" shall mean, at any time, the sum of the Term Loan
Commitments and the Revolving Credit Commitments, which shall not exceed
$38,000,000 in the aggregate for all Lenders, as reduced from time to time
pursuant to ARTICLES II and III hereof.
"Total Revolving Credit Commitment" shall mean, at any time, the sum
of the Revolving Credit Commitments of the Lenders at such time, which shall
not exceed $5,000,000 in the aggregate (as reduced from time to time as
required hereunder).
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Term Loan Commitments of the Lenders at such time, which shall not exceed
$33,000,000 in the aggregate.
"U.S. Employers" shall mean U.S. Employers Insurance Company, a Cayman
property and casualty insurance company.
"U.S. Government Securities" shall mean obligations of, or guaranteed
as to principal and interest by, the United States Government.
"Voting Percentage" shall mean, with respect to each Lender, a
percentage equal, at the time of computation, to the quotient (expressed as a
percentage) of the Loans advanced by such Lender divided by the total amount of
the Loans then outstanding.
"Welfare Plan" shall mean any "employee welfare benefit plan" as such
term is defined in ERISA, as to which the Borrower or its Subsidiaries has any
liability.
"Working Capital" shall mean, for any period, the excess of Current
Assets (less cash and any
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Cash Equivalents) over Current Liabilities as of the last day of such period.
"Working Capital Decrease" shall mean, for any period, the amount, if
any, by which Working Capital as of the end of such period is less than Working
Capital as of the end of the immediately preceding period.
"Working Capital Increase" shall mean, for any period, the amount, if
any, by which Working Capital as of the end of such period is more than Working
Capital as of the end of the immediately preceding period.
1.2 Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Credit
Agreement shall have such meanings when used in the schedules hereto, the
Credit Documents, the exhibits and any other communications delivered from time
to time in connection with this Credit Agreement.
1.3 Cross References; Headings. The words "hereof," "herein" and
"hereunder" and words of similar import, when used in this Credit Agreement or
in any of the Credit Documents shall refer to this Credit Agreement or such
Credit Document as a whole and not to any particular provision of this Credit
Agreement or such Credit Document. Section, schedule and exhibit references
contained in this Credit Agreement are references to sections, schedules and
exhibits in or to this Credit Agreement unless otherwise specified. Any
reference in any section or definition to any clause is, unless otherwise
specified, to such clause of such section or definition. The various headings
in this Credit Agreement and the Credit Documents are inserted for convenience
only and shall not affect the meaning or interpretation of this Credit
Agreement or such Credit Document or any provision hereof or thereof.
1.4 Accounting Terms. Any accounting terms used in this Credit
Agreement that are not specifically defined shall have the meanings customarily
given them in accordance with GAAP or, if used in the context of an Insurance
Subsidiary, Statutory Accounting Principles (or if any such term has no
customary meaning under Statutory Accounting Principles, then such term shall
have the meaning customarily given it in accordance with GAAP); provided,
however, that, in the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board, changes in Statutory Accounting
Principles shall be mandated by applicable Governmental Authorities or the NAIC
or any similar accounting body of comparable standing, or any change in
accounting practices shall be recommended, by the Borrower's independent
certified public accountants, and to the extent that such changes would modify
or could modify such accounting terms or the interpretation or computation
thereof, such changes shall be followed in defining such accounting terms only
from and after the date the Borrower, the Agent and the Lenders shall have
amended this Credit Agreement to the extent necessary to reflect any such
changes in the financial covenants and other terms and conditions of this
Credit Agreement. References to amounts on particular exhibits, schedules,
lines, pages and columns of the Annual Statement are based on the format
promulgated by the NAIC for the 1994 Annual Statements. If such format is
changed in future years so that different information is contained in such
items or they no longer exist, it is understood that the reference is to
information consistent with that reported in the referenced item in the
Insurance Subsidiaries' 1994 Annual Statements.
1.5 Time References. Any reference in this Agreement or in any
other Credit Document to the time of day shall mean such time in Charlotte,
North Carolina.
1.6 Other Definitional Provisions. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular. In addition, when used herein,
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the terms "best knowledge of" or "to the best knowledge of" any Person shall
mean matters within the actual knowledge of such Person (or an executive
officer or general partner of such Person) or which should have been known by
such Person after reasonable inquiry.
ARTICLE II
TERM LOANS
2.1 Term Loans. The parties acknowledge that as of the date
hereof, there is outstanding under the Summit Holding Credit Agreement an
aggregate principal balance of $33,000,000 in respect of the term loan facility
thereunder (together with interest thereon in an amount equal to
$________________). Effective as of the Closing Date, the Borrower
unconditionally assumes Summit Holding's obligation to repay such amounts
(together with any other amounts accruing with respect thereto after the date
hereof to and including the Closing Date), and such term loans assumed by the
Borrower shall be deemed to be converted to Term Loans hereunder. Once repaid
or prepaid, Term Loans (or any portion thereof) may not be reborrowed.
2.2 Term Notes. A Term Loan made by a Lender shall be evidenced
by a Term Note appropriately completed in substantially the form of EXHIBIT F.
Each Term Note shall (a) be executed by the Borrower, (b) be payable to the
order of such Lender, (c) be dated as of the Closing Date (or, in the case of
Term Notes issued pursuant to an Assignment and Acceptance, as of the date
thereof), (d) be in a stated principal amount equal to such Lender's Term Loan
Commitment, (e) bear interest in accordance with the provisions of ARTICLE IV,
as the same may be applicable to the Loans made by such Lender from time to
time, and (f) be entitled to all of the benefits of this Agreement and the
other Credit Documents and subject to the provisions hereof and thereof.
2.3 Scheduled Repayment of Term Loans. (a) Except to the extent
due or made sooner pursuant to the terms and conditions of this Agreement,
including pursuant to SECTIONS 2.4 and 2.5, the Borrower will repay the
aggregate outstanding principal amount of the Term Loans in the amounts and on
the dates set forth below:
Date Principal Payment
March 31, 1997 325,000
June 30, 1997 700,000
September 30, 1997 700,000
December 31, 1997 450,000
March 31, 1998 900,000
June 30, 1998 1,600,000
September 30, 1998 1,400,000
December 31, 1998 1,100,000
March 31, 1999 1,100,000
June 30, 1999 1,600,000
September 30, 1999 1,600,000
December 31, 1999 1,300,000
March 31, 2000 1,450,000
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June 30, 2000 1,900,000
September 30, 2000 1,975,000
December 31, 2000 2,200,000
March 31, 2001 2,250,000
June 30, 2001 2,250,000
September 30, 2001 2,250,000
December 31, 2001 2,500,000
March 31, 2002 2,000,000
June 30, 2002 1,450,000
(b) Notwithstanding any other provision in this Agreement, the
then aggregate outstanding principal amount of the Term Loans shall be due and
payable in full on June 30, 2002.
2.4 Mandatory Prepayment of Term Loans.
(a) The Borrower shall make prepayments of the Term Loans as
required by SECTIONS 7.1(b) and (c).
(b) The Borrower shall repay the Term Loans, in full, upon the
occurrence of an Event of Default and acceleration of the Obligations by the
Required Lenders pursuant to ARTICLE X hereof, or upon the occurrence of an
Event of Default under SECTIONS 9.1(g), (h) or (i) and the automatic
acceleration thereunder.
2.5 Voluntary Prepayment of Term Loans. The Borrower may, from
time to time on any Business Day, make a voluntary prepayment, in whole or in
part, of the outstanding principal amount of the Term Loans; provided, however,
that (a) no such prepayment of any LIBOR Loan may be made on any day other than
the last day of the Interest Period for such Loan unless the Borrower
compensates the Lenders as provided in SECTION 4.11, (b) all such voluntary
prepayments shall require at least three (3) Business Days' prior written
notice to the Agent, (c) all such voluntary prepayments shall be in a minimum
amount of $500,000 and an integral multiple of $100,000 (or, if less, the
outstanding principal amount of the Term Loans then outstanding) and (d) each
such prepayment shall be applied to reduce the scheduled repayments on the Term
Loans in inverse order of maturity. Each such notice of prepayment shall
specify the proposed date of such prepayment, the aggregate principal amount
thereof and whether the Term Loans to be prepaid are Base Rate Loans or LIBOR
Loans, and shall be irrevocable and shall bind the Borrower to make such
prepayment on the terms specified therein.
2.6 LIBOR Breakage; Interest; Etc. Each payment or prepayment of
the Term Loans made pursuant to SECTION 2.3, 2.4 or 2.5 shall be subject to the
provisions of SECTION 4.11. Interest accruing to the date of prepayment in
respect of any amount of principal prepaid pursuant to SECTION 2.4 or 2.5 shall
be paid on the earlier of (i) the next succeeding Payment Date or (ii) the Loan
Termination Date.
ARTICLE III
REVOLVING CREDIT FACILITY
3.1 Loans. (a) The Lenders hereby establish, on the terms and
conditions of this Agreement
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and in reliance upon the representations and warranties made hereunder, a
revolving line of credit in favor of the Borrower in the aggregate principal
amount up to the Total Revolving Credit Commitment and agree to make and remake
one or more Loans ("Revolving Loans") to the Borrower, upon the terms and
conditions set forth in this ARTICLE III, from time to time on any Business Day
during the period from the date hereof through the Loan Termination Date.
Subject to the provisions of this Agreement (including, without limitation, the
schedule of reduction of Revolving Credit Commitments contained in SECTION
3.2(b) hereof), the Borrower may borrow, repay (without penalty except for
LIBOR breakage costs under SECTION 4.11) and reborrow any amount of the
Revolving Loans, provided that the aggregate principal amount of Revolving
Loans outstanding at any one time may not exceed the Total Revolving Credit
Commitment at such time; and provided further that the amount advanced by any
Lender hereunder at any time shall not exceed such Lender's Revolving Credit
Commitment at such time. Notwithstanding the foregoing, no Lender shall have
any obligation to lend funds at any time when an Event of Default exists or
when there exists any event or condition that, with the lapse of time, giving
of notice or making of such advance, would constitute an Event of Default. The
parties acknowledge that as of the date hereof, there is outstanding under the
Summit Holding Credit Agreement an aggregate principal balance of $__________
in respect of the revolving credit facility thereunder (together with interest
thereon in an amount equal to $________________). Effective as of the Closing
Date, the Borrower unconditionally assumes Summit Holding's obligation to repay
such amounts (together with any other amounts accruing with respect thereto
after the date hereof to and including the Closing Date), and such revolving
loans assumed by the Borrower shall be deemed to be converted to Revolving
Loans hereunder.
(b) Whenever the Borrower desires to borrow under the Revolving
Line of Credit, the Borrower shall give the Agent prior to 12:00 noon at least
three (3) Business Days' prior notice of each LIBOR Loan and at least one (1)
Business Day's prior notice of each Base Rate Loan to be made hereunder,
pursuant to a Notice of Borrowing. Each such Notice of Borrowing shall be
irrevocable and shall specify (i) the aggregate principal amount of the
Revolving Loans to be made pursuant to such Borrowing, and (ii) the requested
date of the Borrowing (the "Borrowing Date") (which shall be a Business Day)
and shall include an Interest Rate Election Notice. Upon the receipt of such
Notice of Borrowing from the Borrower, the Agent shall promptly notify each
Lender thereof.
Each Lender will make the amount of its Pro Rata Share of each
Revolving Loan available to the Agent for the account of the Borrower in the
form of an Advance at the office of the Agent in immediately available funds
prior to 1:00 p.m. on the Borrowing Date. All wire transfers to the Agent
shall be sent to the account described on the Agent's signature page hereto,
unless otherwise instructed by the Agent. The proceeds of all such Advances
will then be made available by 2:00 p.m. on the Borrowing Date to the Borrower
by the Agent at the office of the Agent specified in SECTION 14.4 by crediting
the aggregate amount of such Advances to the account of the Borrower on the
books of such office or pursuant to other instructions of the Borrower as
provided under subsection (c) below.
Unless the Agent has been notified to the contrary prior to 1:00 p.m.
on any Borrowing Date, the Agent may assume that each Lender has made an
Advance in the amount of its Pro Rata Share of each Revolving Loan to the Agent
on such Borrowing Date, and the Agent may, in reliance upon such assumption,
make available to the Borrower a corresponding amount as part of a Revolving
Loan. If any Lender shall not have made its required Advance available to the
Agent in the manner set forth herein, such Lender agrees to pay to the Agent,
on demand, such Advance, together with interest thereon for each day from the
date such corresponding Revolving Loan amount is made available to the
Borrower, until the date such Loan amount is repaid to the Agent, at the
Effective Federal Funds Rate. If such Lender shall reimburse to the Agent its
pro rata share of such Revolving Loan amount within three (3)
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Business Days after the Borrowing Date, such amount so reimbursed shall
constitute such Lender's Advance as part of such Revolving Loan for purposes of
this Agreement. If such Lender does not make its Advance available to the
Agent within three (3) Business Days after the Borrowing Date, the Borrower (to
the extent the proceeds of the corresponding Revolving Loan amount have been
made available by the Agent, on behalf of such Lender, to the Borrower) agrees
to repay to the Agent on demand an amount equal to such defaulted Advance
together with interest thereon at the rate applicable to the Revolving Loans
disbursed on the Borrowing Date, for each date such amount is made available to
the Borrower until such amount is repaid to the Agent. The failure of any
Lender to make its required Advance available to the Agent shall not relieve
any other Lender of its obligation hereunder to make its Advance on the
respective Borrowing Date, or relieve the Lender who failed to make such
Advance to subsequently make such Advance, or relieve any Lender (including the
Lender who failed to make such Advance) of its obligation, if any, hereunder to
make its Advance as part of any subsequent Revolving Loans, but no Lender shall
be responsible for the failure of any other Lender to make the Advance of any
other Lender as part of any Revolving Loan.
(c) The Borrower hereby irrevocably authorizes the Agent to
disburse the proceeds of each Revolving Loan under this Agreement (i) in
accordance with the terms of any written instructions from the Borrower
(provided that the Agent shall not be obligated under any circumstances to
forward amounts to any account not listed in an Account Designation Letter),
(ii) pursuant to SECTION 4.10 hereof, to advance to the Lenders principal and
interest payable hereunder, fees payable under SECTION 3.5 and any Lender's
fees for cash management services provided by such Lender from time to time to
the Borrower, or (iii) to the Borrower's controlled disbursement or depository
accounts with its bank in an amount equal to the sum necessary to cover checks
or other items of payment drawn by the Borrower upon such account and presented
for payment, but in no event shall the Agent, on behalf of the Lenders, be
obligated to make advances hereunder in amounts necessary to cover any such
checks or other items of payment presented to the extent that the Borrower is
not otherwise entitled to receive the proceeds of Revolving Loans in such
amounts from the Agent, on behalf of the Lenders. The Borrower may at any time
deliver to the Agent an Account Designation Letter listing any additional
accounts or deleting any accounts listed in a previous Account Designation
Letter.
(d) Each request for a Revolving Loan and each Advance made by a
Lender for the benefit of the Borrower shall constitute a new certification by
the Borrower as of the date of such request or Advance (i) that the
representations and warranties of the Borrower contained in ARTICLE VI remain
true and correct as of such date (except where such representation or warranty
speaks as of a specified date) and (ii) that, with respect to and after giving
effect to such Advance, no Event of Default, nor any event or condition that
with notice, lapse of time or the making of any such Advance would constitute
an Event of Default, has occurred and is continuing as of such date.
(e) Notwithstanding any provision herein to the contrary, as an
additional covenant of the Borrower hereunder, the Borrower shall maintain a
zero ($0.00) balance under the Revolving Line of Credit for a period of at
least five consecutive Business Days during each fiscal quarter, beginning with
the fiscal quarter ending March 31, 1997.
3.2 Voluntary Termination; Reduction of Commitments.
(a) At any time and from time to time during the term of this
Agreement, upon at least three (3) Business Days' prior written notice to the
Agent, the Borrower may terminate in whole or reduce in part the Total
Revolving Credit Commitment, provided that any such partial reduction shall be
in an
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aggregate amount of not less than $300,000 or, if greater, shall be in an
integral multiple of $100,000 in excess thereof. The amount of any termination
or reduction made under this subsection (a) may not thereafter be reinstated
(and any reduction shall be applied in inverse order of scheduled reduction).
(b) On each date set forth below, the Total Revolving Credit
Commitment shall automatically be permanently reduced to the lower of (i) the
amount set forth below opposite such date or (ii) the amount to which the Total
Revolving Credit Commitment has been previously reduced pursuant to subsection
(a) above or subsection (c) below:
Date
Credit Commitment
June 30, 2000
3,500,000
June 30, 2001
2,000,000
June 30, 2002
0
(c)
The Total Revolving Credit Commitment (and each Lender's Revolving Credit
Commitment) shall also be reduced as provided in SECTIONS 7.1(b) below.
(d)
The Total Revolving Credit Commitment, and the Revolving Credit Commitment of
each Lender, shall terminate in its entirety on the Loan Termination Date
unless sooner terminated pursuant to subsection (a) above or SECTION 10.1
hereof.
(e)
Each reduction of the Total Revolving Credit Commitment under this Section
shall be applied ratably to the Revolving Credit Commitments of the Lenders
according to their respective Revolving Credit Commitments. After any such
reduction, the fee required under SECTION 3.5 shall be calculated with respect
to the reduced Total Revolving Credit Commitment.
(f)
Upon each reduction of the Total Revolving Credit Commitment under this SECTION
3.2, the Borrower will pay to the Agent on the date of such reduction, for the
ratable benefit of the Lenders, an amount equal to the positive difference, if
any, of (i) the aggregate principal amount outstanding under the Revolving
Loans as of such date, minus (ii) the amount to which the Total Revolving
Credit Commitment is being reduced as of such date, together with any loss or
expenses required under SECTION 4.11. Interest accruing to the date of
prepayment in respect of any amount of principal prepaid pursuant to this
Section
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3.2 shall be paid on the earlier of (i) the next succeeding Payment Date or
(ii) the Loan Termination Date.
3.3
Voluntary Prepayments. The Borrower may, from time to time on any Business
Day, make a voluntary prepayment, in whole or in part, of the outstanding
principal amount of the Loans and (subject to the other provisions of this
ARTICLE III such amounts may be reborrowed from time to time); provided,
however, that (a) no such prepayment of any LIBOR Loan may be made on any day
other than the last day of the Interest Period for such Loan unless the
Borrower compensates the Lenders as provided in SECTION 4.11, (b) all such
voluntary prepayments resulting in a permanent reduction of the Total Revolving
Credit Commitment shall require at least three (3) Business Days' prior written
notice to the Agent, (c) all such voluntary prepayments shall be in a minimum
amount of $300,000 and an integral multiple of $100,000 (or, if less, the
outstanding principal amount of the Revolving Loans then outstanding).
Interest accruing to the date of prepayment in respect of any amount of
principal prepaid pursuant to this SECTION 3.3 shall be paid on the earlier of
(i) the next succeeding Payment Date or (ii) the Loan Termination Date.
3.4
Mandatory Repayment of Loans. The Borrower shall repay the Revolving Loans:
(a)
In full, upon the occurrence of an Event of Default and acceleration
of the Obligations by the Required Lenders pursuant to ARTICLE X
hereof, or upon the occurrence of an Event of Default under SECTIONS
9.1(g), (h) and (i) and the automatic acceleration thereunder; and
(b)
In part, immediately in the event that the total principal amount
outstanding at any time under the Revolving Loans exceeds the amount
of the Total Revolving Credit Commitment at such time, in the amount
of such excess.
(c)
In part, as provided in SECTION 7.1(b).
3.5
Unused Commitment Fee. During the term of this Agreement, the Borrower shall
pay to the Agent, for the ratable benefit of the Lenders, an unused commitment
fee at the rate of .375% per annum on the average daily undisbursed portion of
the Total Revolving Credit Commitment (calculated based on a year consisting of
360 days). Such fee shall accrue from and include the Closing Date to and
including the Loan Termination Date, shall be payable (a) on the last Business
Day of each fiscal quarter beginning with the fiscal quarter ending March 31,
1997, and (b) on the Loan Termination Date.
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3.6
Revolving Credit Notes. On the Closing Date, the Borrower shall execute and
deliver to each of the Lenders then party hereto, and on the date that any
other Person becomes a Lender, the Borrower shall execute and deliver to such
Lender, a Revolving Credit Note to evidence such Lender's Revolving Loans.
Each Revolving Credit Note shall (a) be substantially in the form of EXHIBIT E
hereto, (b) be payable to the order of the appropriate Lender and be dated the
date such Person becomes a Lender (except that the Notes of the Persons who are
Lenders as of the Closing Date shall be dated the Closing Date), (c) be in the
stated principal amount of such Lender's Revolving Credit Commitment and (d)
bear interest in accordance with the applicable provisions of ARTICLE IV
hereof. The amount of principal owing on each Revolving Credit Note at any
given time shall be the aggregate amount of all Revolving Loans made under such
Revolving Credit Note, less all payments of principal theretofore made by the
Borrower and applied to such Revolving Credit Note in accordance with the terms
hereof.
ARTICLE IV
INTEREST; ADDITIONAL PROVISIONS
4.1
Interest Rates. The Borrower covenants and agrees to pay to the Agent, for the
ratable credit of the Lenders, interest on the unpaid principal amount of the
Loans for the period commencing on the date each such Loan is made until such
Loan is paid in full, at the rates per annum specified below:
(a)
On that portion of the outstanding principal amount of the Loans maintained
from time to time as Base Rate Loans, interest shall accrue at the Adjusted
Base Rate; and
(b)
On that portion of the outstanding principal amount of the Loans maintained
from time to time as LIBOR Loans, interest shall accrue at a rate per annum
equal to the Adjusted LIBOR Rate from time to time in effect for each Interest
Period.
Notwithstanding any provision herein to the contrary, from the Closing Date
until the date on which the Borrower shall have delivered to the Lenders a
Compliance Certificate demonstrating that the Borrower shall have attained a
Fixed Charge Coverage Ratio of not less than 1.50 to 1.00 as of the end of the
most recently completed fiscal quarter (for the period of four consecutive
fiscal quarters then ending, it being understood that, with respect to the
period prior to Closing, the Fixed Charge Coverage Ratio will be determined by
reference to such ratio of Summit Holding as computed under Section 8.3 of the
Summit Holding Credit Agreement) after the satisfaction of the requirements set
forth in SECTION 5.2.3(f) with respect to the IPO or another equity offering,
the Loans shall bear interest at the Base Rate plus one percent (1.00%).
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4.2
Interest Payment Dates. Accrued interest on the Loans shall be paid on the
Payment Dates, commencing with the first such date following the Closing Date.
4.3
Computation of Rates.
(a)
The Agent, upon determining the interest rate for any Borrowing for any
Interest Period, shall promptly notify the Borrower and the Lenders thereof.
The Agent shall promptly notify the Borrower and the Lenders of any change in
the Base Rate and the effective date thereof. Failure of the Agent to provide
the Borrower or the Lenders with any notice described in this SECTION 4.3(a)
shall not affect any obligations of the Borrower or the Lenders hereunder nor
will such failure result in any liability on the part of the Agent to the
Borrower or any Lender.
(b)
Interest on each Loan, whether maintained as a Base Rate Loan or a LIBOR Loan,
shall be computed on the basis of actual days elapsed and a year consisting of
360 days.
4.4
Default Rate; Post-Petition Interest. Notwithstanding any other provision of
this Agreement, upon and during the continuance of any Event of Default,
without any required notice to the Borrower, all outstanding principal amounts
of the Loans, and to the full extent permitted by law, all interest accrued on
the Loans, shall bear interest at the Default Rate, and such default interest
shall be payable on demand. Additionally, and notwithstanding any other
provision of this Agreement, at the option of the Required Lenders, all LIBOR
Loans then outstanding shall immediately and automatically be converted into
Base Rate Loans. To the full extent permitted by applicable law, interest
shall continue to accrue on the Notes after the filing by or against the
Borrower of any petition seeking any relief in bankruptcy or under any act or
law pertaining to insolvency or debtor relief, whether state, federal or
foreign.
4.5
Maximum Interest Rate. Nothing contained in this Credit Agreement or in any
Note shall be deemed to establish or require the payment of interest to any
Lender at a rate in excess of the maximum rate permitted in the jurisdiction of
enforcement of this Credit Agreement or such Note. In the event that the rate
of interest required to be paid under other provisions of this Credit Agreement
or a Note exceeds the maximum rate permitted in such jurisdiction, the rate of
interest required to be paid hereunder and under such Note shall be
automatically reduced to the maximum rate permitted in such jurisdiction, and
any amounts collected in excess of the permissible amount shall be deemed a
voluntary prepayment of principal of the Term Loans or Revolving Loans,
whichever is applicable.
4.6
Conversion to and Renewal of LIBOR Loans. On the terms and subject to the
conditions of this Agreement, the Borrower may elect (a) at any time to convert
a Loan that is a Base Rate Loan into a LIBOR Loan, or (b) at the end of any
Interest Period with respect to a LIBOR Loan, to convert such
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LIBOR Loan into a Base Rate Loan or to renew such LIBOR Loan for an additional
Interest Period. Except as set forth in SECTION 4.7, Loans may be renewed or
converted in whole or in part. Each such election shall be made by the
Borrower delivering to the Agent an Interest Rate Election Notice executed by
an Authorized Officer of Borrower prior to 12:00 noon at least three Business
Days prior to the effective date of any conversion to or renewal of a LIBOR
Loan and at least one Business Day prior to the effective date of any
conversion to a Base Rate Loan, specifying (x) in the case of a conversion to
or a renewal of a LIBOR Loan, the Interest Period; (y) the date of conversion
or renewal (which date shall be a Business Day, and in the case of a conversion
from a LIBOR Loan to a Base Rate Loan, the last day of the Interest Period
therefor); and (z) the amount and type of conversion or renewal. Upon timely
receipt of an Interest Rate Election Notice, the Agent shall promptly notify
the Borrower and the Lenders of the applicable Elected Rate for the Interest
Periods selected in such Interest Rate Election Notice; provided, however, that
the failure by the Agent to provide any such notice shall not, in any way,
affect or diminish the Borrower's obligations to any Lender, or any Lender's
rights under this Agreement, the Notes or any of the other Credit Documents.
If, within the time period required under this SECTION 4.6, the Agent shall not
have received an Interest Rate Election Notice from the Borrower of an election
to renew a LIBOR Loan for an additional Interest Period, then, upon the
expiration of the Interest Period therefor, such LIBOR Loan shall be converted
automatically to a Base Rate Loan.
4.7
Restrictions on Interest Rate Options. Notwithstanding any provision herein to
the contrary, the right of the Borrower to elect the interest rate option
applicable to any Loan or Loans shall be subject to the following restrictions:
(a)
the aggregate principal amount of each Borrowing hereunder (y) in the case of
Borrowings comprised of Base Rate Loans, shall not be less than $500,000 and,
if greater, shall be in an integral multiple of $100,000 in excess thereof, and
(z) in the case of Borrowings comprised of LIBOR Loans, shall not be less than
$1,000,000 and, if greater, shall be in an integral multiple of $[100,000] in
excess thereof.
(b)
if the Borrower shall have failed to designate the type of Loans comprising a
Borrowing, the Borrower shall be deemed to have requested a Borrowing comprised
of Base Rate Loans.
(c)
A continuation or conversion of a LIBOR Loan or any conversion of a Base Rate
Loan to a LIBOR Loan must be in an amount such that the aggregate amount of the
succeeding LIBOR Loan made by the Lenders complies with paragraph 4.7(a) above;
(d)
The Interest Period for each LIBOR Loan shall be either one, two or three
months in duration, if available, and if the Borrower shall have failed to
select the duration of the Interest Period to be applicable to any Borrowing of
LIBOR Loans, then the Borrower shall be deemed to have selected an Interest
Period with a duration of one month.
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(e)
No portion of the outstanding principal amount of any Loan may be renewed as,
or be converted into, a LIBOR Loan if any Default or Event of Default has
occurred and is continuing;
(f)
No portion of the outstanding principal amount of any Loan may be made or
renewed as, or be converted into, a LIBOR Loan if, after giving effect to such
action, the Interest Period applicable thereto shall extend beyond the date of
any mandatory prepayment of any Loans unless a sufficient principal amount of
such Loan is being maintained as a Base Rate Loan or as a LIBOR Loan having an
Interest Period ending on or prior to the date of any such scheduled mandatory
prepayment to permit such repayment to be applied in full to Base Rate Loans;
and
(g)
LIBOR Loans may not be outstanding under more than three (3) separate Interest
Periods at any one time (for which purpose Interest Periods will be deemed
separate even if they are coterminous).
4.8
Illegality. Notwithstanding any other provision of this Credit Agreement, if
as the result of any Regulatory Change, any Lender shall determine that it is
unlawful for such Lender to make, renew, or maintain any Loan as, or to convert
any Loan into, a LIBOR Loan, the obligations of all Lenders to make, renew or
maintain any portion of the principal amount of any Loan as, or to convert any
Loan into, a LIBOR Loan shall be, upon such determination (and telephonic
notice thereof, confirmed in writing, to the Agent and the Borrower), forthwith
suspended until such Lender shall notify the Agent that the circumstances
causing such suspension no longer exist, and all LIBOR Loans shall
automatically convert into Base Rate Loans in accordance with SECTION 4.6.
4.9
Limitation on LIBOR Loans. Anything herein to the contrary notwithstanding,
if, on or prior to the date on which all or any portion of a Loan is to be made
or renewed as, or converted into, a LIBOR Loan:
(i)
the Agent or any Lender shall have determined (which
determination shall be conclusive) that quotations of
interest rates for the relevant deposits are not
being provided by the relevant Persons in the
relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such
LIBOR Loans under this Credit Agreement, or
(ii)
the Agent or any Lender determines that the rate of
interest referred to in the definition of Adjusted
LIBOR Rate in SECTION 1.1 hereof upon the basis of
which the rate of interest on any LIBOR Loan for such
period is determined does not accurately reflect the
cost to such Lender of making or maintaining such
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LIBOR Loans for such period,
then the Agent or such Lender shall give the Borrower and the other Lenders
prompt notice thereof, and the obligations of all Lenders hereunder to make or
renew any portion of the principal amount of any Loan as, or convert any
portion of any Loan into, LIBOR Loans shall be suspended until the Agent shall
notify the Lenders that the circumstances causing such suspension no longer
exist.
4.10 Procedures Regarding Payments.
(a) All payments (including prepayments) by the Borrower on
account of principal, interest and fees due hereunder and under the Notes shall
be made, in immediately available funds, to the Agent, for the account of the
Lenders, at the address of the Agent set forth in SECTION 14.4, prior to 12:00
noon, on the date payment is due, or at such other place as is designated in
writing by the Agent. The Agent shall thereafter cause to be distributed on
the same day (if payment was actually received by 12:00 noon on such day) like
funds relating to payment of principal, interest or fees ratably to the Lenders
entitled to receive any such payment in accordance with the terms of this
Credit Agreement. Any payments under this Credit Agreement that are made later
than 12:00 noon shall be deemed to have been made on the next succeeding
Business Day. The Agent shall notify the Borrower and the Lenders of the
amounts distributed to each Lender.
(b) If any payment of principal, interest or fees is otherwise
required by this Credit Agreement to be made on any day that is not a Business
Day, payment shall be deemed required on the next succeeding Business Day;
provided, however, that this SECTION 4.10(b) shall not affect the determination
of the expiration of an Interest Period for a LIBOR Loan.
(c) Each of the Lenders agrees, for the benefit of all of the
Lenders, that if, at any time following the acceleration of any of the
Obligations, it should receive any amount payable under this Credit Agreement
or a Note (including without limitation any voluntary payment, realization upon
security, exercise of the right of set-off or banker's lien, counterclaim or
cross action, enforcement of any right under the Credit Documents) that is
applicable to the payment of any of the Obligations, of a sum that with respect
to the related sum or sums received by other Lenders is in a greater proportion
than the total of such Obligations then owed and due to such Lender bears to
the total of such Obligations then owed and due to all of the Lenders
immediately prior to such receipt, then such Lender receiving such excess
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Obligations of the Borrower to such Lenders in such
amount as shall result in a proportional participation by all of the Lenders in
such amount; provided, that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
(d) The Borrower hereby irrevocably authorizes the Agent to
advance to the Lenders principal and interest payable hereunder, fees payable
under SECTION 3.5 and any Lender's standard fees for cash management services
provided by such Lender from time to time to the Borrower, all payable by
drawing such amounts under the Revolving Line of Credit provided under this
Agreement as of the respective due dates of such principal, interest and fees;
provided that the failure of the Agent so to advance and pay any such amounts
by drawing under the Loans will not affect the Borrower's obligation to pay
such principal, interest and fees as and when due and payable.
4.11 Payment Not at End of Interest Period. The Borrower shall pay
the Agent, for the credit of the Lenders, such amount or amounts as shall
compensate each Lender for any loss, cost or expense
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incurred by such Lender as a result of:
(i) any payment or prepayment by the Borrower of a LIBOR
Loan on a date other than the last day of an Interest
Period for such LIBOR Loan; or
(ii) any failure by the Borrower to borrow a LIBOR Loan on
the effective date for such borrowing specified in
the relevant Interest Rate Election Notice electing
the Adjusted LIBOR Rate as the Elected Rate;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (a) the amount of interest that would have accrued on the
amount so paid or prepaid or not borrowed for the period from the date of such
payment, prepayment or failure to borrow to the last day of the then current
Interest Period for such LIBOR Loan (or, in the case of a failure to borrow,
the Interest Period for such LIBOR Loan that would have commenced on the date
of such failure to borrow) at the applicable rate over (b) the amount of
interest (as reasonably determined by such Lender, which determination shall,
absent manifest error, be conclusive) such Lender would have paid on such
deposits of comparable amounts having terms comparable to such period.
4.12 Increased Costs.
(a) If at any time after the date hereof, and from time to time,
any Lender determines that the adoption or modification of any applicable
federal, state, local or foreign law, rule or regulation regarding such
Lender's required levels of reserves, insurance or capital (including any
allocation of capital requirements or conditions, but excluding federal income
tax liability), or similar requirements, or any interpretation or
administration thereof by any court, governmental authority, central bank or
comparable agency charged with the interpretation, administration or compliance
of such Lender with any of such requirements, has or would have the effect of
(i) increasing such Lender's net costs relating to the Loans (including LIBOR
Loans) hereunder (which, with respect to any Base Rate Loan, such increase in
costs is not reflected in an increase in the Adjusted Base Rate as determined
by such Lender in its reasonable discretion), (ii) reducing the yield or rate
of return of such Lender on the Loans (including LIBOR Loans) hereunder, to a
level below that which such Lender could have achieved but for the adoption or
modification of any such requirements, (iii) changing the basis of taxation of
payments to such Lender of the principal or interest on any LIBOR Loan or other
amounts payable under this Credit Agreement in respect thereof or (iv) imposing
of any reserve, special deposit or similar requirements relating to any
extensions of credit on other assets of, or any deposits with or other
liabilities of, such Lender (such increases or reductions collectively referred
to as "Increased Costs"), the Borrower shall, within fifteen (15) days of any
request by Lender, pay to such Lender an amount equal to such Increased Costs.
No failure by any Lender to demand payment of any additional amounts payable
hereunder shall constitute a waiver of such Lender's right to demand payment of
any amounts arising at any subsequent time. Nothing herein contained shall be
construed or so operate as to require the Borrower to pay any interest, fees,
costs or charges greater than is permitted by applicable law.
(b) Without limiting the effect of SECTION 4.12(a), in the event
that, by reason of any Regulatory Change, any Lender either (i) incurs
increased costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such Lender that
includes deposits by reference to which the interest rate on LIBOR Loans is
determined as provided in this Credit Agreement or a category of extensions of
credit or other assets of such Lender that includes LIBOR Loans or (ii) becomes
subject to restrictions on the amount of such category of liabilities or assets
that it may hold, then, if such Lender so elects by notice to the Borrower and
the Agent, the
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obligation of such Lender to make, renew and convert Loans of any other type
into, LIBOR Loans hereunder, shall be suspended until the date such Regulatory
Change ceases to be in effect (and all LIBOR Loans then outstanding shall be
converted into Base Rate Loans in accordance with SECTION 4.6 hereof).
(c) Determinations by any Lender for purposes of SECTIONS 4.8 or
4.12 of the effect of any Regulatory Change on its costs or legality of making
or maintaining LIBOR Loans or on amounts receivable by it in respect of LIBOR
Loans, and of the additional amounts required to compensate such Lender in
respect of any Increased Costs, shall, absent manifest error, be conclusive.
4.13 Taxes.
(a) Any and all payments by the Borrower hereunder or under the
Notes shall be made, in accordance with the terms hereof and thereof, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes measured by net income and franchise taxes, imposed on
any Lender by the jurisdiction under the laws of which such Lender is organized
or transacting business or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to such Lender, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 4.13) such Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority for the account of such Lender in accordance with applicable
law, and (iv) the Borrower shall deliver to such Lender evidence of such
payment to the relevant taxation authority or other authority.
(b) In addition, the Borrower agrees to pay any and all present or
future intangibles, stamp or documentary taxes or any other excise or property
taxes, charges or similar levies of the United States or any state or political
subdivision thereof or any applicable foreign jurisdiction that arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Credit Agreement (hereinafter referred to as
"Other Taxes").
(c) The Borrower hereby agrees to indemnify the Agent and each
Lender for the full amount of Taxes or Other Taxes (including without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this SECTION 4.13) paid by the Agent and any Lender (as the case
may be) and any liability (including penalties, interest and expenses, but
excluding any amounts arising out of Agent's or any Lender's gross negligence,
willful misconduct or noncompliance with any applicable tax laws) arising
therefrom or with respect thereto. This indemnification shall be made within
30 days from the date any Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by the
Borrower pursuant to this SECTION 4.13, the Borrower will furnish to the
relevant Lender the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this SECTION 4.13 shall survive the payment in full of principal
and interest hereunder.
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4.14 Application of Payments; Pro Rata Funding. (a) Except as
otherwise specifically set forth in this Agreement and unless the Agent is
specifically instructed by the Borrower, all payments made by the Borrower
shall be applied (i) first, to the payment of amounts due under SECTION 4.11,
(ii) second, to the payment of accrued and unpaid fees and interest on the Term
Notes, (iii) third, to the payment of accrued and unpaid fees and interest on
the Revolving Credit Notes, (iv) fourth, to the payment of unpaid principal on
the Term Notes and (v) fifth, to the payment of unpaid principal on the
Revolving Credit Notes. Payments of principal on the Notes shall be applied to
such Loans outstanding as directed by the Borrower or, in the absence of any
such direction, shall be applied first to the payment of Base Rate Loans and
second to the payment of LIBOR Loans in the order of the soonest to mature. If
there is more than one LIBOR Loan maturing on any one day, then, in the absence
of contrary directions from the Borrower, payment shall be applied to the LIBOR
Loan bearing the higher rate of interest. Notwithstanding the foregoing,
during the continuance of an Event of Default, the Agent shall apply all such
payments to the Obligations in any amounts and in any priority as the Required
Lenders in their sole discretion determine.
(b) All Loans hereunder shall be funded by the Lenders pro rata on
the basis of their Revolving Credit Commitments and their Term Loan
Commitments, as the case may be, rounded to the nearest xxxxx.
4.15 Recordkeeping. The Agent shall record in its records the
respective Commitments of the Lenders, the principal amount of the Loans, the
amount of the Loans that are Base Rate Loans and LIBOR Loans and each repayment
thereof. The aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on the Notes.
The failure so to record any such information or any error in such recording of
any information shall not, however, limit or otherwise affect the actual
obligations of the Borrower hereunder or under the Notes to repay the principal
amount of the Loans together with all interest accruing thereon. Each Lender
will record on its internal records the amount of each Loan made by it and each
payment in respect thereof. Failure to make any such recordation, or any error
in such recordation, shall not affect the Borrower's Obligations in respect of
such Loans.
ARTICLE V
CONDITIONS OF CLOSING AND BORROWING
5.1 Closing. The Closing shall take place on the Closing Date, or
at such other time as the parties hereto shall mutually agree, at the offices
of Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A., 1900 Independence Center, 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000. Upon the Closing of the transaction
contemplated hereby, the Summit Holding Credit Agreement shall be deemed
superseded by the terms hereof.
5.2 Conditions to the Closing. The Closing by the Lenders and the
obligation of the Lenders to consummate the transactions contemplated hereby on
the Closing Date shall be subject to the prior or concurrent satisfaction
(except as expressly provided otherwise in form and substance satisfactory to
the Agent) of each of the conditions precedent set forth below (it being
understood that (i) until all such conditions are either fulfilled or waived in
writing by the Lenders, the Summit Holding Credit Agreement will remain in full
force and effect, and (ii) in the event all such conditions are not either
fulfilled or waived in writing by the Lenders by __________________, then this
Agreement will be
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terminated and of no further force or effect, and the terms of the Summit
Holding Credit Agreement will remain in full force and effect.)
5.2.1 Loan and Security Documents. The Agent shall have received
all of the following, each duly executed and dated the Closing Date (or such
earlier date as shall be satisfactory to the Lenders), in form and substance
satisfactory to the Lenders and in full force and effect with no default
existing thereunder as of the Closing Date:
(a) the Term Notes and the Revolving Credit Notes (each payable to
the Lender to whom such Note is issued pursuant to SECTIONS 2.2 and 3.6 hereof);
(b) the Borrower Pledge Agreement (together with stock
certificates representing the Securities pledged thereunder, accompanied by
stock powers duly executed in blank);
(c) the Borrower Security Agreement;
(d) the Guaranty;
(e) the Subsidiary Pledge Agreement (together with stock
certificates representing the Securities pledged thereunder, accompanied by
stock powers duly executed in blank);
(f) the Subsidiary Security Agreement;
(g) the Financing Statements and all other filings or recordings
necessary to perfect the security interests of the Agent in the Collateral; and
(h) the Key Man Life Insurance Policy, duly and validly assigned
to the Agent for the benefit of the Lenders pursuant to documentation in form
and substance satisfactory to the Agent.
5.2.2 Certificates; Opinions.
(a) Certificate of Borrower. The Agent shall have received a
certificate dated as of the Closing Date from the president or the chief
financial officer of the Borrower, in form and substance satisfactory to the
Agent, to the effect that all representations and warranties of the Borrower
contained in this Agreement and the other Credit Documents are true, correct
and complete; that the conditions set forth in Sections 5.2.5 have been
fulfilled; that no Borrower Affiliate is in violation of any of the covenants
contained in this Agreement and the other Credit Documents; that, after giving
effect to the transactions contemplated by this Agreement, no Default or Event
of Default has occurred and is continuing; and that the Borrower has satisfied
in all material respects each of the closing conditions set forth in this
ARTICLE V.
(b) Secretary's Certificate. The Agent shall have received a
certificate dated as of the Closing Date of the corporate secretary or an
assistant secretary of each Borrower Affiliate certifying: (i) that attached
thereto is a true and complete copy of the bylaws of such Borrower Affiliate as
in effect on the date of such certification; (ii) to the extent applicable,
that attached thereto is a true and complete copy of resolutions adopted by the
Board of Directors of such Borrower Affiliate, authorizing the borrowings
contemplated hereunder (in the case of the Borrower only) and the execution,
delivery and performance of the Credit Documents to which it is a party; and
(iii) to the extent applicable, as to the incumbency and genuineness of the
signature of each officer of such Borrower Affiliate executing any of
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the Credit Documents.
(c) Articles of Incorporation. The Agent shall have received
copies of the articles of incorporation and all amendments thereto of each
Borrower Affiliate, each certified as of a recent date by the Secretary of
State of its state of incorporation, together with a certification by the
corporate secretary or an assistant secretary of each such Borrower Affiliate
that such articles of incorporation have not been amended since such date.
(d) Certificates of Good Standing. The Agent shall have received
short-form certificates as of a recent date of the good standing of each
Borrower Affiliate under the laws of its state of incorporation and each state
in which it is qualified to conduct business as a foreign corporation.
(e) Certificate of Authority. The Agent shall have received a
certificate of authority for each Insurance Subsidiary issued by the relevant
Department no earlier than thirty (30) days prior to the Closing Date.
(f) Opinion of Counsel. The Agent shall have received an executed
legal opinion of Xxxxxx & Bird, special counsel to Borrower, and XxXxxxxxxxxx,
Xxxxxx, Maida & Cherr, regulatory counsel to the Borrower, each dated as of the
Closing Date and addressed to the Agent and the Lenders, in form and substance
reasonably satisfactory to the Lenders.
(g) Account Designation Letter. The Agent shall have received an
Account Designation Letter, together with written instructions from an
Authorized Officer, including wire transfer information, directing the payment
of the proceeds of the initial Loans to be made hereunder.
5.2.3 Other Documents. The Agent shall have received, in form and
substance reasonably satisfactory to the Agent:
(a) Financial Statements. Evidence that the Borrower shall have
delivered to the Lenders prior to the Closing Date the pro forma consolidated
and Consolidating balance sheets and income statements required by SECTION 6.16
(it being understood that the financial statements contained in the Borrower's
registration statement described in the definition of "IPO" satisfy such
condition), each of the Financial Statements required by SECTION 6.17, the
Statutory Financial Statements required by SECTION 6.18, the Projections
required by SECTION 6.19 and the most recently prepared financial statements
for U.S. Employers.
(b) Insurance. Evidence that the Borrower and its Subsidiaries
are maintaining the Insurance Policies, which are in compliance with SECTION
6.9 hereof.
(c) Consents. Certified copies of each material consent, license
and approval required in connection with (i) the execution, delivery,
performance, validity and enforceability of this Credit Agreement and the other
Credit Documents, (ii) the consummation of the Conversion and the IPO and (iii)
the conduct by the Borrower Affiliates of their respective businesses after the
Closing Date, including in each case without limitation, any required approvals
of the commissioners of insurance (or similar authorities) of the State of
Florida and any other Governmental Authority whose approval is required by law
(such consents, licenses and approvals, if any, to be in full force and effect,
and all of the consents required to be obtained or made on or before the
consummation of the transactions contemplated hereby).
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(d) Financial Condition Certificate. A certificate certified as
accurate by the Borrower's chief financial officer, as to the financial
condition of the Borrower.
(e) UCC Search. The Agent shall have received the results of a
search of all filings made against each Borrower Affiliate under the Uniform
Commercial Code as in effect in any state in which any assets of such Borrower
Affiliate are located indicating that such assets are free and clear of any
lien or encumbrances except for Permitted Liens.
(f) IPO; Conversion. Evidence satisfactory to the Agent that (i)
the Borrower's registration statement on Form S-1 as initially filed with the
Commission on November 20, 1996 (and as amended on December 9, 1996 and on
_________, which amendments are deemed approved by the Lenders) (A) shall not
have been further amended except as approved by the Lenders and (B) shall have
become effective, (ii) the IPO or another equity offering on terms acceptable
to the Lenders (yielding proceeds net of transaction expenses of not less than
$40,000,000), and (iii) the Plan of Conversion shall not have been amended
except as approved by the Lenders and the Conversion shall have been
consummated (such that the Borrower is the legal and beneficial owner of all of
the Stock and Securities of Bridgefield Employers, and Bridgefield Employers is
the legal and beneficial owner of all of the Stock and Securities of
Bridgefield Casualty).
(g) Fairness Opinion. The agent shall have received a true and
complete copy of the fairness opinion of Chicago Corporation delivered in
connection with the Conversion.
(h) Employment Agreements. True, correct and complete copies of
each of the Employment Agreements, each duly and validly authorized by each
party thereto.
(i) Management Agreements. True, correct and complete copies of
each of the Management Agreements, each duly and validly authorized by each
party thereto.
(j) Consent Order. The Consent Order shall be in full force and
effect and shall not have been terminated or amended (except as approved by the
Required Lenders).
(k) Tax Sharing Agreements. A true, correct and complete copy of
each of the Tax Sharing Agreements, duly and validly authorized by each party
thereto.
(l) Other. Such other documents as the Agent may reasonably
request.
5.2.4 Investment Portfolio. The Borrower shall have caused each
Insurance Subsidiary to deliver to the Agent such information necessary to
disclose to the Agent such entity's investment portfolio as of the calendar
month-end immediately preceding the Closing Date, together with a listing of
all securities transactions in the investment portfolio from the date of such
information through the Closing Date, and no change which would have a Material
Adverse Effect shall have occurred with respect to such investment portfolio
since the date of such disclosure.
5.2.5 Litigation. No litigation (including, without limitation,
derivative actions), arbitration, governmental investigation or proceeding or
inquiry (a) shall be, on the Closing Date, pending, or to the knowledge of the
Borrower, threatened, that seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or to obtain relief as a result of,
the Loans, the consummation of the Conversion or the IPO, or (b) shall exist
that in the reasonable opinion of the Agent could be expected to have a
Material Adverse Effect on any Borrower Affiliate or any of the Funds.
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5.2.6 No Material Adverse Event. No event shall have occurred since
September 30, 1996 that individually or in the aggregate has had or could be
expected to have a Material Adverse Effect on any Borrower Affiliate.
5.2.7 Discontinued Operations. The Agent shall have received
evidence in form and substance satisfactory to it that (a) all Borrower
Affiliates' investments in the Discontinued Operations shall have been
terminated, (b) Meritec, Carolina Med and Carolina Summit shall have been
liquidated and dissolved (and their operations wound-up) in accordance with all
applicable Requirements of Law (provided, however, that Meritec and [Carolina
Med] will be permitted to maintain their respective corporate existences and to
remain parties to their real property leases so long as such properties are
subleased to third parties on terms satisfactory to the Agent) and (c) the
Borrower's corporate airplane shall have been sold.
5.3 Continuing Conditions. The following shall be conditions to
the Lenders' obligations to make Loans on the Closing Date and the dates of
each Borrowing thereafter, and each request for a Borrowing hereunder shall
constitute a certification by the Borrower that:
(a) No Default. No Default or Event of Default shall have
occurred and be continuing or will result from the making of the Loans
hereunder; and
(b) Warranties and Representations. (i) All warranties and
representations contained in this Credit Agreement and the Credit Documents
shall be true and correct as of such date with the same effect as though made
on the date of and concurrently with the making of such Loan (except where such
representations speak as of a specified date) and (ii) all covenants contained
herein in this Credit Agreement and the Credit Documents to be performed by
each of the parties thereto (other than the Agent or the Lenders) prior to such
date shall have been performed.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
the Loans, the Borrower makes the following warranties and representations to
the Agent and the Lenders, all of which shall be true and correct as of the
date hereof, the Closing Date and any other date on which any Loans are made
hereunder (except where any such representation speaks only as of a specified
date):
6.1 Corporate Organization and Power. Each Borrower Affiliate (a)
is a corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation, (b) is duly qualified to do business
and in good standing in each jurisdiction where, because of the nature of its
activities or properties, the failure to so qualify would have a Material
Adverse Effect on such Borrower Affiliate, (c) has the requisite corporate
power and authority and the right to own and operate its properties, to lease
the property it operates under lease, and to conduct its business as now and
proposed to be conducted and (d) has obtained all material licenses, permits,
consents or approvals from or by, and
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has made all material filings with, and given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct (including, without limitation, the consummation of the
Conversion and the IPO and the transactions contemplated by this Credit
Agreement and the other Credit Documents) as to each of the foregoing. The
execution, delivery and performance by each Borrower Affiliate of each Credit
Document to which it is a party and the consummation of the transactions
contemplated hereby and thereby are within its corporate powers and have been
duly authorized by all necessary corporate action (including, without
limitation, shareholder approval, if required). Each Borrower Affiliate has
received all material governmental and other consents and approvals (if any
shall be required) necessary for such execution, delivery and performance of
this Credit Agreement and the other Credit Documents, and such execution,
delivery and performance do not and will not contravene or conflict with, or
create a lien or right of termination or acceleration under, any Requirement of
Law or Contractual Obligation binding upon any Borrower Affiliate. This Credit
Agreement and each of the Credit Documents is (or when executed and delivered
will be) the legal, valid, and binding obligation of each Borrower Affiliate
party thereto, enforceable against such Borrower Affiliate in accordance with
its respective terms.
6.2 Certain Agreements. There have been delivered to the Agent,
on behalf of each Lender, true, correct and complete copies of each of the
Credit Agreement, such Lender's Notes, and each of the other Credit Documents
and any other material documents required to be delivered by the Borrower in
connection therewith, as amended to the date hereof, and all exhibits and
schedules delivered in connection therewith. Each of the Credit Documents
existing as of the Closing Date is in full force and effect, and each Borrower
Affiliate party thereto has performed all of its material obligations
thereunder required to be performed on or prior to the date hereof.
6.3 Litigation; Government Regulation. No claim, litigation
(including, without limitation, derivative actions), arbitration, or
governmental investigation, proceeding or inquiry is pending or, to the
knowledge of the Borrower, threatened against any Borrower Affiliate or any
Fund (a) that would, if adversely determined, have a Material Adverse Effect on
such Borrower Affiliate or (b) that relates to any of the transactions
contemplated hereby, and there is no basis known to the Borrower for any of the
foregoing. SCHEDULE 6.3 sets forth all claims, litigation, arbitration, and
governmental investigations, proceedings or inquiries pending or, to the
knowledge of the Borrower, threatened against any Borrower Affiliate and any
Fund as of the date hereof and the Closing Date, and none of such actions,
individually or in the aggregate, if adversely determined would have a Material
Adverse Effect on such Borrower Affiliate or any such Fund. No Borrower
Affiliate has any material contingent liabilities not provided for or referred
to in the Financial Statements and Statutory Financial Statements delivered
pursuant to SECTIONS 6.17, 6.18 and 7.3.
6.4 Taxes. No Borrower Affiliate is delinquent in the payment of
any taxes that have been levied or assessed by any Governmental Authority
against it or its assets. Each Borrower Affiliate has timely filed all tax
returns that are required by law to be filed, and has paid all taxes shown on
said returns and all other assessments or fees levied upon such Borrower
Affiliate, or upon its respective properties to the extent that such taxes,
assessments or fees have become due and if not due, such taxes have been
adequately provided for or are being contested in good faith by appropriate
proceedings. No controversy in respect of income taxes is pending or, to the
Borrowers's knowledge, threatened, against any Borrower Affiliate. As used in
this SECTION 6.4, the term "taxes" includes all taxes of any nature whatsoever
and however denominated, including, without limitation, income, sales, use, and
excise taxes, import and governmental fees, duties and all other charges, as
well as additions to tax, penalties and interest thereon, imposed by any
government or instrumentality.
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6.5 Conflicts With Other Instruments, Laws. Neither the
execution, delivery or performance of the Credit Documents executed by any
Borrower Affiliate nor its compliance therewith: (a) conflicts or will
conflict with or results or will result in any breach of, or constitutes or
will constitute, with the passage of time or the giving of notice or both, a
default under, or requires the consent or approval of any Person with respect
to, (i) the articles of incorporation or bylaws of any Borrower Affiliate, (ii)
any law, rule, statute or regulation or any order, writ, injunction or decree
of any court or governmental authority (including the Consent Order) or (iii)
any material agreement or instrument to which any Borrower Affiliate is a party
or by which such Borrower Affiliate, or its respective properties, is bound or
(b) results or will result in the creation or imposition of any lien, charge or
encumbrance upon its properties pursuant to any such agreement or instrument,
except the liens and security interests created by the Credit Documents.
6.6 Governmental Compliance. (a) Each Borrower Affiliate has been
and is in good standing with respect to all material governmental approvals,
licenses, permits, certificates, inspections, consents and franchises necessary
to continue to conduct its business as heretofore conducted and to own or lease
and operate its properties as now owned or leased by them. Except as set forth
in SCHEDULE 6.6, none of such approvals, licenses, permits, certificates,
consents or franchises contains any term, provision, condition or limitation
more burdensome than such as are generally applicable to Persons engaged in the
same or similar business as either such Borrower Affiliate.
(b) SCHEDULE 6.6 lists all of the jurisdictions in which either
any Insurance Subsidiary, as of the date hereof, holds licenses, permits or
authorizations to transact its business, or in which either such entity has
applied for any licenses, permits or authorizations (including, without
limitation, licenses or certificates of authority from any Departments)
(collectively, as in effect on the Closing Date and at any time thereafter, the
"Licenses"), except where failure to hold any such License would not have a
Material Adverse Effect. No License is the subject of a proceeding for
suspension, revocation or limitation or any similar proceedings, there is no
sustainable basis for such a suspension, revocation or limitation, and no such
suspension, revocation or limitation is threatened by any Governmental
Authority, except where failure to hold any such License would not have a
Material Adverse Effect. SCHEDULE 6.6 indicates the line or lines of insurance
in which each of the Insurance Subsidiaries (or its predecessors) is permitted
to be engaged with respect to each License therein listed, or each line of
business in which management of the Borrower intends (as of the Closing Date)
such Subsidiaries to be engaged with respect to Licenses to be applied for.
Neither of the Insurance Subsidiaries (nor any of its predecessors) transacts
any business, directly or indirectly, in any state other than those enumerated
on SCHEDULE 6.6 hereto, where such business requires any license, permit,
governmental approval, consent or other authorization, except where failure to
hold any such License would not have a Material Adverse Effect.
6.7 Default. No event has occurred and is continuing that
constitutes a Default or an Event of Default.
6.8 Margin Securities. Neither the making of any Loan hereunder,
nor the use of the proceeds thereof, will violate or be inconsistent with the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System, and no part of the proceeds of any Loans will be used to
purchase or carry any Margin Stock in violation of Regulation U or to extend
credit for the purpose of purchasing or carrying any Margin Stock in violation
of Regulation U.
6.9 Insurance. SCHEDULE 6.9 sets forth a true and correct summary
of all Insurance Policies in place as of the date hereof and the Closing Date.
Each Borrower Affiliate is adequately
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insured for its benefit under the Insurance Policies, with coverage of types
and in amounts as are customary in the Borrower Affiliates' respective
businesses, which policies are issued by insurers of recognized responsibility.
No notice of any pending or threatened cancellation or premium increase has
been received by a Borrower Affiliate with respect to any such Insurance
Policies. Each Borrower Affiliate is in substantial compliance with all
material conditions contained in such Insurance Policies.
6.10 Ownership of Properties; Subsidiaries. On the date of any
Loan, each Borrower Affiliate will have good title to all of its properties and
assets, real and personal, of any nature whatsoever reflected in the Financial
Statements and Statutory Financial Statements. Except as set forth in SCHEDULE
6.10, as of the Closing Date (and thereafter) Borrower will own 100% of the
outstanding Stock and Securities of Summit Holding and Bridgefield Employers;
Summit Holding will own 100% of the outstanding Stock and Securities of Summit
Consulting and Healthcare Holdings; Healthcare Holdings will own 100% of the
Stock of Heritage Summit; Summit Consulting will own 100% of the Stock and
Securities of each of CICF, Summit Claims and Summit Loss; and Bridgefield
Employers will own 100% of the outstanding Stock and Securities of Bridgefield
Casualty and U.S. Employers, in each case free and clear of all liens,
encumbrances and charges whatsoever.
6.11 Business Locations. SCHEDULE 6.11 lists each of the locations
where each of the Borrower Affiliates maintains an office, a place of business
or any records.
6.12 Accuracy of Information. All factual written information
furnished heretofore or contemporaneously herewith by any Borrower Affiliate or
known by any Borrower or Borrower Affiliate to have been furnished on its
behalf to the Agent or the Lenders for purposes of or in connection with this
Credit Agreement or any of the transactions contemplated hereby, as
supplemented to the date hereof, is, and all other such factual written
information hereafter furnished by or on behalf of any Borrower Affiliate to
the Agent or the Lenders will be, true and accurate in every material respect
on the date as of which such information is dated or certified and not
incomplete by omitting to state any material fact necessary to make such
information not misleading, and the Borrower has notified the Lenders of all
events that have occurred since such date that would render such information
incomplete or misleading in any material respect; provided, however, that
projections and other forward-looking information have been prepared as stated
in SECTION 6.19 hereof and are not otherwise warranted by Borrower hereunder.
6.13 Subsidiaries; Affiliates. As of the Closing Date, the
Borrower will have no Subsidiaries other than Summit Holding, Summit
Consulting, CICF, Summit Claims, Summit Loss, Healthcare Holdings, Heritage
Summit, Bridgefield Employers, Bridgefield Casualty and U.S. Employers, and no
Affiliates other than as set forth on SCHEDULE 6.13 hereto.
6.14 Investment Company Act. No Borrower Affiliate is an
"investment company" or a company "controlled by an investment company," within
the meaning of the Investment Company Act of 1940, as amended.
6.15 Employee Plans; ERISA.
(a) Set forth on SCHEDULE 6.15 is a list of all Employee Plans
that are maintained with respect to employees of each Borrower Affiliate, and a
list of all Multiemployer Plans, all Welfare Plans and all other Employee Plans
that each Borrower Affiliate adopted. All such plans that are subject to ERISA
are in compliance therewith.
(b) Except as set forth in SCHEDULE 6.15, no accumulated funding
deficiency (as defined in
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Section 302 of ERISA and Section 412 of the Internal Revenue Code), whether or
not waived, has occurred with respect to any Employee Plan, and no ERISA Event
has occurred or is reasonably expected to occur with respect to any Employee
Plan. Except as set forth in SCHEDULE 6.15, the present value of all accrued
benefits under each Employee Plan (based on those assumptions used to fund such
Employee Plan) did not, as of the most recent valuation date, exceed the then
current value of the assets of such Employee Plan allocable to such benefits.
Except as set forth in SCHEDULE 6.15, full payment has been made on or before
the due date thereof of all amounts that any Borrower Affiliate is required
under the terms of each such Employee Plan to have paid as contributions to
such plan.
(c) Except as set forth in SCHEDULE 6.15, no Borrower Affiliate
has incurred any withdrawal liability under Section 4201 of ERISA.
(d) No Borrower Affiliate has participated in any Prohibited
Transaction that has subjected, or may subject, it to any material civil
penalty or tax imposed by Section 502(i) of ERISA or Section 4975 of the
Internal Revenue Code, respectively. Except as set forth in SCHEDULE 6.15, no
Borrower Affiliate has incurred, or is reasonably expected to incur, any
liability to the Pension Benefit Guaranty Corporation (other than for insurance
premiums, which have been paid when due).
(e) The present value (determined using actuarial and other
assumptions that are reasonable in respect of the benefits provided and the
employees participating) of the liability of any Borrower Affiliate for
post-retirement benefits to be provided to their current and former employees
under all Welfare Plans does not, in the aggregate, exceed the assets under all
such plans allocable to such benefits by an amount that would materially and
adversely affect the financial condition of such Borrower Affiliate or the
Borrower's ability to perform its obligations hereunder.
(f) The execution and delivery of this Credit Agreement will not
involve any transaction that is subject to the prohibitions of Section 406 of
ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Internal Revenue Code.
(g) Except as set forth in SCHEDULE 6.15, no Borrower Affiliate is
making or has ever made or been required to make any contributions to a
Multiemployer Plan.
6.16 Pro Forma Balance Sheet. The pro forma consolidated and
Consolidating balance sheets and income statements of the Borrower and its
Subsidiaries as of September 30, 1996 (true and complete copies of which have
been delivered to the Agent and which give effect to the Conversion and the
IPO) (a) give effect to the Loans (as though the amount of the Total Commitment
had been borrowed), and the other transactions contemplated by this Agreement
and the other Credit Documents, (b) appropriately reflect the pro forma
financial condition of the Borrower and its Subsidiaries as of such date and
(c) are prepared in accordance with GAAP (subject to the absence of footnotes
required by GAAP and subject to year-end audit adjustments), in good faith and
based upon stated assumptions having a reasonable basis.
6.17 GAAP Financial Statements. Prior to the Closing Date the
Borrower has delivered to the Agent the Financial Statements consisting of the
audited consolidated balance sheets of the predecessor to Summit Holding and
its Subsidiaries as of December 31, 1995, December 31, 1994, December 31, 1993
and December 31, 1992 and the related statements of income and cash flows for
the fiscal years then ended, and the unaudited consolidated balance sheets of
Summit Holding and its Subsidiaries as of September 30, 1995 and the related
statements of income and cash flows for the nine-month period then ended. All
Financial Statements delivered to the Lenders have been prepared by
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the Borrower in accordance with GAAP, and they contain no material misstatement
or omission and fairly present in all material respects the financial position,
assets and liabilities of Summit Holding (or its predecessors as appropriate)
and its Subsidiaries, on a consolidated basis, as of the respective dates
thereof and the results of operations of Summit Holding (or its predecessors as
appropriate) and its Subsidiaries, on a consolidated basis, for the respective
periods then ended. Since December 31, 1995, there has been no material
adverse change in the assets, liabilities or financial position of any Borrower
Affiliate or in the results of any such Borrower Affiliate's operations, and no
Borrower Affiliate has incurred any obligation or liability that could
materially and adversely affect its financial condition, business operations or
the Collateral.
6.18 Statutory Financial Statements.
(a) The Annual Statements of each Insurance Subsidiary including,
without limitation, the provisions made therein for investments and the
valuation thereof, losses (reserves), and Statutory Liabilities, as filed with
the Department and delivered to Agent pursuant hereto (collectively, the
"Statutory Financial Statements"), have been prepared in accordance with SAP.
Each such Statutory Financial Statement was in compliance with applicable law
when filed. The Statutory Financial Statements fairly present the financial
position, the results of operations, changes in equity and changes in financial
position of each Insurance Subsidiary as of and for the respective dates and
periods indicated therein in accordance with SAP, except as set forth in the
notes thereto. Except for liabilities and obligations disclosed or provided
for in the Statutory Financial Statements, including, without limitation,
losses (reserves) and Statutory Liabilities (all of which have been computed in
accordance with SAP), no Insurance Subsidiary had as of the respective dates of
each of such Statutory Financial Statements, any liabilities or obligations
(whether absolute or contingent and whether due or to become due) that in
conformity with SAP would have been required to be or should be disclosed or
provided for in such Statutory Financial Statements. All books of account of
each of the Insurance Subsidiaries fully and fairly disclose all of the
transactions, properties, assets, investments, liabilities and obligations of
each Insurance Subsidiary, and all of such books of account are in the
possession of each Insurance Subsidiary, and are true, correct and complete in
all material respects.
(b) The investments of each Insurance Subsidiary and for each Fund
reflected in the most recently prepared Annual Statements comply in all
material respects with all applicable requirements of the Department as well as
those of any other Governmental Authority with jurisdiction over the investment
of such Person's funds.
(c) The amounts shown in the most recently prepared Annual
Statement for each Insurance Subsidiary and for each Fund for (i) aggregate
losses (reserves) and loss adjustment expenses for insurance policies and
contracts (set forth in lines 1 and 2, column 1, of page 3 thereof), (ii)
agents' balances and uncollected premiums (as set forth in lines 9.1, 9.2 and
9.3, column 1, of page 2 thereof) and (iii) Statutory Liabilities were computed
in accordance with commonly accepted actuarial standards consistently applied
and were fairly stated in accordance with sound actuarial principles, were
based on actuarial assumptions that were in accordance with or more stringent
than those called for in the insurance policies and contracts and in the
related reinsurance, co-insurance or similar contracts of such Insurance
Subsidiaries, were computed on the basis of assumptions consistent with those
of the preceding fiscal year or Quarter, as the case may be, and met the
requirements of the Department, as applicable, as well as those of any other
applicable Governmental Authority. Such losses (reserves) established by each
Insurance Subsidiary and each Fund were adequate as of such date for the
payment by such Insurance Subsidiary of all insurance benefits, losses, claims
and investigative expenses of such Insurance Subsidiary and each Fund, as
appropriate.
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(d) Marketable securities and short term investments reflected in
each Insurance Subsidiary's and each Fund's Annual Statement are valued at
cost, amortized cost or market value, as required by applicable law or
regulation.
6.19 Projections. Prior to the date hereof, the Borrower has
delivered to the Lenders projected statements of income and balance sheets of
the Borrower Affiliates, on a consolidated and Consolidating basis, and after
giving effect to the making of the Loans and the other transactions
contemplated hereby, covering the period through December 31, 2002 (the
"Projections"). Such Projections have been prepared by the executive and
financial personnel of the Borrower Affiliates, in the light of the past
business of the Borrower Affiliates and on the basis of the assumptions that
are set forth therein. Such Projections have been prepared in good faith, have
a reasonable basis and represent the good faith opinion of the Borrower and
senior management of the Borrower Affiliates and constitute a reasonable basis
for the assessment of future performance of the Borrower Affiliates. Except as
otherwise noted therein, the practices followed in preparing such Projections
do not differ materially from financial planning practices usually followed by
the Borrower Affiliates in good faith and in the regular course of business.
6.20 Solvency. The Borrower is Solvent, and will not, as a result
of the transactions contemplated hereby become not Solvent or be left with
unreasonably small capital.
6.21 Environmental Matters. (a) The Realty owned or operated by
each Borrower Affiliate currently or in the past (all of which Realty owned or
operated by any Borrower Affiliate as of the date hereof or on the Closing Date
being listed in SCHEDULE 6.21), including without limitation the improvements
thereon and the soil and groundwater thereunder: (i) does not contain and is
not contaminated by any Hazardous Substance; (ii) does not contain and has not
previously contained any asbestos or underground storage tanks; and (iii) (A)
has never been the subject of any activities representing a violation or
alleged violation of any Environmental Law or any report to or action by a
governmental authority pursuant to any Environmental Law; (B) has not had any
release of any Hazardous Substance from, on, in or upon it; and (C) has never
been the subject of an environmental audit or assessment, or remedial action
for an environmental problem; provided, however, that the foregoing
representations, to the extent they relate to the period prior to the time the
Realty in question was owned or operated by a Borrower Affiliate, shall be
limited to the knowledge of the Borrower Affiliates. With respect to any
Realty owned or operated by any Borrower Affiliate in the past, but not
currently owned or operated by such Borrower Affiliate, the representations set
forth above in this SECTION 6.21 shall be deemed to apply as of the last date
that such Borrower Affiliate owned or operated the property in question.
(b) The Borrower and each Insurance Subsidiary: (i) have never
sent a Hazardous Substance to a site that is contaminated by any Hazardous
Substance or that, pursuant to any Environmental Law, (1) has been placed on
the "National Priorities List", the "CERCLIS" list, or any similar state or
federal list, or (2) is subject to or the source of a claim, an administrative
order or other request to take "removal", "remedial", "corrective" or any other
"response" action, as defined in any Environmental Law, or to pay for the costs
of any such action at the site; (ii) are in compliance in all material respects
with all Environmental Laws in all of their activities and operations; and
(iii) are not involved in any suit or proceeding and have not received any
notice or request for information from any governmental authority or other
third party with respect to a release or threatened release of any Hazardous
Substance or a violation or alleged violation of any Environmental Law, and
have not received notice of any claims from any person or entity relating to
property damage or to personal
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injuries from exposure to any Hazardous Substance.
6.22 Assets for Conduct of Business. Each of the Borrower
Affiliates possesses adequate assets, contract rights, patents, patent
applications, copyrights, trademarks, servicemarks and trade names, or licenses
thereto, to continue to conduct its business as heretofore conducted, without
any material conflict with the rights of others, and all such patents, patent
applications, copyrights, trademarks, servicemarks, trade names and licenses in
existence on the date hereof are listed on SCHEDULE 6.22 attached hereto.
6.23 Trade Relations. There exists no actual or, to the best of
the Borrower's knowledge following due inquiry, threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship of any Borrower Affiliate with any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of such Borrower Affiliate (including, with respect to any of the
Management Agreements, business relationships with any of the Funds and
business relationships with any employees that are members of any of the
Funds), or with any insurance agent or insurance agency or group of insurance
agents or insurance agencies, whose business relationship is individually or in
the aggregate material to the business of such Borrower Affiliate, and there
exists no present condition or state of facts or circumstances that would have
a Material Adverse Effect on any Borrower Affiliate or prevent such Borrower
Affiliate from conducting its business after the consummation of the
transactions contemplated by this Credit Agreement in substantially the same
manner in which it has heretofore been conducted.
6.24 Securities Laws. No Borrower Affiliate, nor anyone acting on
behalf of any such Person, has directly or indirectly offered any interest in
any Note or any other Obligation for sale to, or solicited any offer to acquire
any such interest from, or has sold any such interest to, any Person that would
subject the issuance or sale of such Note or any other liability to
registration under the Securities Act of 1933, as amended.
6.25 Compliance with Laws. No Borrower Affiliate is in violation
of any law, ordinance, rule, regulation, order, policy, guideline or other
requirement of any Governmental Authority, if the effect of such violation, or
cumulative effect of such violations, could reasonably be expected to have a
Material Adverse Effect on such Borrower Affiliate and, to the best of the
Borrower's knowledge, no such violation has been alleged, and each Borrower
Affiliate (a) has filed in a timely manner all reports, documents and other
materials required to be filed by it with any Governmental Authority, if such
failure to so file could reasonably be expected to have a Material Adverse
Effect on such Borrower Affiliate, and the information contained in each of
such filings is true, correct and complete in all material respects, and (b)
has retained all records and documents required to be retained by it pursuant
to any law, ordinance, rule, regulation, order, policy, guideline or other
requirement of any Governmental Authority, if the failure to so retain such
records and documents could reasonably be expected to have a Material Adverse
Effect on such Borrower Affiliate.
6.26 Employees and Labor. There is no unfair labor practice
complaint against any Borrower Affiliate pending before the National Labor
Relations Board or any state or local agency and there is not a labor strike or
other labor dispute pending or, to the best of the Borrower's knowledge,
threatened, affecting any of the foregoing that if adversely resolved would
have a Material Adverse Effect on such Borrower Affiliate and, to the best of
the Borrower's knowledge, there are no organizational attempts affecting any of
the employees of any Borrower Affiliate that could have a Material Adverse
Effect on any Borrower Affiliate. There is no grievance, labor dispute or work
stoppage involving or affecting any Borrower Affiliate pending or, to the best
of the Borrower's
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knowledge, threatened that could have a Material Adverse Effect on any Borrower
Affiliate.
6.27 First Priority. Each of the Pledge Agreements and each of the
Security Agreements (assuming possession by the Agent of certificates
representing Collateral consisting of Securities and proper and timely filing
of the Financing Statements and continuation statements in the locations set
forth in the Schedules to the Security Agreements) creates a valid and
perfected first priority security interest and lien in and to the Collateral
described therein, in each case enforceable against the Borrower Affiliate
party thereto and all third parties in all relevant jurisdictions and securing
the payment of all Obligations purported to be secured thereby.
6.28 Material Contracts. SCHEDULE 6.28 lists all existing
contracts, agreements and commitments of each Borrower Affiliate as of the date
hereof and on the Closing Date (including without limitation any commitments in
respect of any Indebtedness), whether written or oral, that (a) extend for one
(1) year or more and involve the receipt or payment of more than $100,000 (b)
relate to employment or labor matters (except individual employment contracts),
or (c) are material to the business, property, assets, operations or condition,
financial or otherwise, of any Borrower Affiliate. No Borrower Affiliate is in
default with respect to any agreement listed on SCHEDULE 6.28 or any indenture,
loan agreement, mortgage, lease, deed or similar agreement relating to the
borrowing of monies to which such Borrower Affiliate is a party or by which it
is bound.
6.29 Reinsurance. SCHEDULE 6.29 lists all existing Reinsurance
Agreements (as of the date hereof and on the Closing Date) of each Insurance
Subsidiary and of each Fund entered into since January 1, 1993. As of the date
hereof all such Reinsurance Agreements are in full force and effect. No party
to any such agreements is in default in any material respect as to any
provision thereof, and no such agreement contains any provision providing that
the other party thereto may terminate such agreement by reason of the
transactions contemplated by the Credit Agreement. To the knowledge of the
Borrower, there is no reason to believe that the financial condition of any
other party to any such Reinsurance Agreement is impaired with the result that
a default thereunder may reasonably be anticipated.
6.30 Policies of Insurance. Except with respect to terms
specifically negotiated with policyholders, if any, all policies of insurance
issued by any Insurance Subsidiary as now in force are, to the extent required
under applicable law, on forms approved by the appropriate Governmental
Authorities in the jurisdictions where issued or have been filed with and not
objected to by such Governmental Authorities within the period provided for
objection. None of the terms embraced by the exception contained in the
preceding sentence could reasonably be expected to have a Material Adverse
Effect on the enforceability of any such policies or jeopardizes, or could
reasonably be expected to jeopardize, the License of any Insurance Subsidiary
in any jurisdiction. Any rates for premiums required to be filed with or
approved by any Governmental Authority have been so filed or approved, and such
premiums charged by each Insurance Subsidiary conform thereto.
6.31 No Burdensome Restrictions. There exists no restriction or
encumbrance on (i) the creation or assumption of any Lien upon the assets or
properties of any Borrower Affiliate as security, directly or indirectly, for
the Obligations, or (ii) the ability of any Subsidiary (other than either of
the Insurance Subsidiaries which are subject to certain regulatory
restrictions, including those contained in the Consent Order) to make any
dividend payments or other distributions in respect of its capital stock or any
other interest or participation in its profits owned by the Borrower, or to
make loans or advances thereto, except for the terms of this Agreement and the
other Credit Documents, or customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of any Borrower
Affiliate; and no Borrower Affiliate is a party to or bound by any other
restriction, encumbrance or obligation,
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whether pursuant to its articles or certificate of incorporation, bylaws,
contract or any applicable Requirement of Law, that could reasonably be
expected to have a Material Adverse Effect.
6.32 Plan of Conversion. With respect to the Plan of Conversion,
the Borrower hereby represents and warrants as follows:
(a) The Borrower has delivered to the Agent a true, complete and
correct copy of such document, together with all amendments and modifications
thereto. Such plan (as amended) comprises a full and complete statement of the
transactions contemplated thereby, and there are no agreements or
understandings, written or oral, or side agreements not contained therein that
modify the substance thereof.
(b) Such plan has been duly authorized by all necessary corporate
or other action on the part of the Borrower Affiliates party thereto, has been
validly executed and delivered by the Borrower Affiliates party thereto and is
the legal, valid and binding obligation of the Borrower Affiliates party
thereto, enforceable in accordance with its terms.
(c) As of the Closing Date such plan will be in full force and
effect and, except with the Lenders' prior approval, has not been amended or
modified, and no provision thereof has been waived by any party thereto.
(d) As of the Closing Date, each of the transactions contemplated
by such agreement shall have been consummated and all of the conditions to the
consummation thereof (as provided therein and as provided in the Department's
consent with respect thereto) have been fully satisfied or waived, such that,
as of the Closing Date hereof, ESIF shall have been converted to Bridgefield
Employers, which shall have become a wholly owned Subsidiary of the Borrower.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until payment in full of all Obligations of the Borrower to each of
the Lenders, the Borrower covenants and agrees that, unless the Required
Lenders consent otherwise in writing, the Borrower shall:
7.1 Repayment of Obligations; Certain Prepayments. (a) Promptly
repay the Obligations when due, including without limitation the amounts due
under the Notes, according to the terms of this Credit Agreement and the other
Credit Documents.
(b) Promptly upon its receipt thereof, but in any event not later
than two (2) Business Days after the date thereof, the Borrower will make a
mandatory prepayment of the aggregate outstanding principal amount of the Term
Loans in an amount equal to 100% of the Net Cash Proceeds from the issuance,
sale or other disposition of its capital stock or other equity securities or of
any rights, warrants or options to purchase or acquire any shares of its
capital stock or other equity securities (in any such case, a "Sale"), provided
that such Sale yields Net Cash Proceeds of $2,000,000 or more; provided,
however, that the Borrower will have no such obligations in respect of the IPO
or any other equity offering satisfying the requirements set forth in SECTION
5.2.3(f). Any such payments shall be applied to
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the Term Loans in inverse order of maturity and, once such Term Loans have been
repaid in full, such payments shall be applied to the Revolving Loans in
inverse order of scheduled reduction, and any such prepayment, to the extent
applied to the Revolving Loans, will result in permanent reductions to the
Total Revolving Credit Commitment (and corresponding reductions in each Lender's
Revolving Credit Commitment).
(c) Concurrently with the delivery of its annual Financial
Statements after the end of each fiscal year of the Borrower pursuant to
SECTION 7.3(a)(ii), beginning with the fiscal year ending December 31, 1996,
but in any event not later than ninety days (90) after the last day of each
such fiscal year, the Borrower will make a mandatory principal prepayment of
the aggregate outstanding principal amount of the Term Loans (with a
corresponding reduction in the Total Term Loan Commitment) in an amount equal
to 75% of Excess Cash Flow, if any, for such fiscal year. Each such prepayment
shall be accompanied by the Borrower's Excess Cash Flow Calculation for such
period, certified by the Borrower's chief financial officer, which calculation
shall be subject to the reasonable approval of the Required Lenders. Any such
prepayments shall be applied to the Term Loans in inverse order of maturity.
(d) In the event the Borrower raises proceeds (net of transaction
expenses) in excess of $55,000,000 in connection with the IPO or another equity
offering satisfying the requirements set forth in Section 5.2.3(f), the
Borrower will make a mandatory prepayment of the aggregate outstanding
principal amount of the Term Loans in an amount equal to fifty percent (50%) of
the aggregate amount of such total net proceeds in excess of $55,000,000. Any
such payments shall be applied to the Term Loans in inverse order of maturity.
7.2 Performance Under Credit Documents; Use of Proceeds. (a)
Perform, and cause its Subsidiaries to perform, all obligations required to be
performed by each such Borrower Affiliate, as applicable, under the terms of
this Credit Agreement and the other Credit Documents and any other agreements
now or hereafter existing or entered into between any such Borrower Affiliate
and the Lenders, subject to notice and cure provisions contained therein.
(b) Use the proceeds of the Revolving Loans solely for general
corporate purposes in the ordinary course of the Borrower's business as
historically conducted.
7.3 Reports, Certificates and Other Information. Furnish or cause
to be furnished to the Agent and the Lenders:
(a) GAAP Financial Statements.
(i) Within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower, (A) a copy
of the unaudited consolidated and Consolidating balance sheet of the
Borrower and its Subsidiaries, as of the close of such fiscal quarter,
and (B) a copy of the unaudited consolidated and Consolidating
statements of income, retained earnings and cash flows of the Borrower
and its Subsidiaries for such fiscal quarter and for the elapsed
portion of the fiscal year, all prepared in accordance with GAAP
(subject to normal year-end adjustments and except that footnote and
schedule disclosure may be abbreviated) and accompanied by the
certification of the chief executive officer or chief financial
officer of the Borrower that all such Financial Statements are
complete and correct and present fairly, in all material respects, in
accordance with GAAP (subject to normal year-end adjustments) the
financial position
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and results of operations of the Borrower and its Subsidiaries as at
the end of such fiscal quarter, and for such fiscal quarter and for
the elapsed portion of the fiscal year.
(ii) Within 90 days after the close of each fiscal year, a
copy of the annual audited consolidated and unaudited Consolidating
Financial Statements of the Borrower, consisting of the audited
consolidated and unaudited Consolidating balance sheets and statements
of income, changes in stockholders equity and cash flows, setting
forth in comparative form in each case the consolidated and
Consolidating figures for the previous fiscal year, which Financial
Statements shall be prepared in accordance with GAAP, and in the case
of audited Financial Statements accompanied by a report of the
independent certified public accountants regularly retained by the
Borrower, or any other firm of independent certified public
accountants of recognized national standing selected by the Borrower,
that contains an opinion that is not qualified and that is reasonably
acceptable to the Required Lenders, to the effect that all such
Financial Statements present fairly in all material respects in
accordance with GAAP the consolidated financial position and the
consolidated results of operations and cash flows of the Borrower and
its Subsidiaries as at the end of such fiscal year and for such fiscal
year, and in the case of unaudited Financial Statements, such
Financial Statements shall be prepared in accordance with GAAP
accompanied by the certification of the chief executive officer or
chief financial officer of the Borrower that all such Financial
Statements are complete and correct and present fairly in all material
respects in accordance with GAAP the Consolidating financial position
and the Consolidating results of operations and cash flows of the
Borrower its Subsidiaries as at the end of such fiscal year and for
such fiscal year.
(iii) Within 30 days after the end of each month,
(A) a copy of the unaudited consolidated and Consolidating balance
sheet of the Borrower and its Subsidiaries, as of the close of such
month, and (B) a copy of the unaudited consolidated and Consolidating
statements of income, retained earnings and cash flows of the Borrower
and its Subsidiaries for such month, all prepared in accordance with
GAAP (subject to normal year-end adjustments)
(b) SAP Financial Statements.
(i) As soon as possible, but in any event within 75 days
after the end of each fiscal year of each Insurance Subsidiary (and,
with respect to the Funds, within 180 days after the end of each
fiscal year of the Funds), a copy of the Annual Statement of such
Insurance Subsidiary and each Fund for such fiscal year prepared in
accordance with SAP and, in the case of each Insurance Subsidiary,
accompanied by the certification of the chief financial officer or
chief executive officer of such Subsidiary that such financial
statement is complete and correct and presents fairly in all material
respects in accordance with SAP the financial position of such
Subsidiary for such fiscal year.
(ii) If reasonably requested by the Required Lenders by
written notice delivered to the Borrower within 45 days after delivery
of each Insurance Subsidiary's or a Fund's Annual Statement pursuant
to SECTION 7.3(b)(i), within 90 days after the date of such request, a
copy of such Insurance Subsidiary's or Fund's Annual Statement
prepared in accordance with SAP, certified, in the case of an
Insurance Subsidiary, without
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qualification by the independent certified public accountants
regularly retained by such Insurance Subsidiary, or any other firm of
independent certified public accountants of recognized national
standing selected by the Borrower and reasonably acceptable to the
Required Lenders that such Annual Statement is complete and correct
and presents fairly in all material respects in accordance with SAP
such Insurance Subsidiary's financial position for such fiscal year
and continuing consolidated and consolidating financial statements.
(iii) As soon as possible, but in any event within 45 days
after the end of each of the first three fiscal quarters of each
fiscal year of such Insurance Subsidiary and each Fund (and, in the
case of each Fund, within 45 days after the fourth fiscal quarter of
each fiscal year of each Fund), a copy of such Insurance Subsidiary's
and each Fund's quarterly statement for such fiscal quarter, all
prepared in accordance with SAP and, in the case of an Insurance
Subsidiary, accompanied by the certification of such Insurance
Subsidiary's chief financial officer or chief executive officer that
all such financial statements are complete and correct and present
fairly in all material respects in accordance with SAP such Insurance
Subsidiary's financial position for the periods then ended.
(iv) Within 90 days after the end of each fiscal year of
each Insurance Subsidiary and the Funds, a copy of such Insurance
Subsidiary's and each Fund's "Statement of Actuarial Opinion" which is
provided to the relevant Department (or equivalent information should
the Department not require such a statement) as to the adequacy of
such Insurance Subsidiary's and the Fund's loss reserves. Such
opinion shall be in the format prescribed by the applicable Insurance
Code.
(v) Within 90 days after the end of each fiscal year, an
Actuarial Report prepared by an independent actuary acceptable to the
Required Lenders and certified as to the reserve position as of such
fiscal year end by such independent actuary for (A) each Insurance
Subsidiary and (B) each of the Funds.
(vi) Within 30 days of filing with the Department, each
Insurance Subsidiary's management discussion and analysis.
(c) Compliance Certificates. Within 45 days of the end of each
fiscal quarter of Borrower or within 90 days of the end of a fiscal quarter
that is also the end of a fiscal year of Borrower, and at any other time no
later than 30 days following a written request of the Agent, a duly completed
Compliance Certificate, signed by the chief financial officer of the Borrower,
containing, among other things, a computation of, and showing compliance with,
each of the applicable financial ratios and financial restrictions contained in
ARTICLE VIII and to the effect that, to the best of such officer's knowledge,
as of such date no Default or Event of Default has occurred and is continuing.
(d) Notice of Default. As soon as practicable, but in any event
within five (5) Business Days after the Borrower becomes aware of the existence
of any Default or Event of Default, or any development that would have a
Material Adverse Effect on any Borrower Affiliate, telephonic, facsimile, or
telegraphic notice specifying the nature of such Default, Event of Default or
development, including the anticipated effect thereof, which notice shall be
promptly confirmed in writing within two (2) Business Days, other than
developments that affect the economy of the United States generally or the
insurance industry generally.
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(e) Additional Information. The following documentation and other
information:
(i) Documentation. Except as otherwise expressly
indicated, promptly upon receipt by a Borrower Affiliate:
(A) Not later than sixty (60) days after the
updating thereof, and in any event not less
frequently than annually and not later than
sixty (60) days prior to the end of each
fiscal year of the Borrower, a copy of the
consolidated and Consolidating projections of
cash flow, balance sheets and income
statements covering the period through the
Loan Termination Date, substantially in the
form of the materials delivered to the
Lenders pursuant to SECTION 6.19 hereof.
(B) Not later than sixty (60) days prior to the
end of each fiscal year of the Borrower, new
business plans (or budgets) for the Borrower
Affiliates for the following fiscal year.
(C) A copy of any reports on examination or
similar reports, financial examination
reports or market conduct examination reports
by a Governmental Authority with respect to
any Borrower Affiliate's business.
(D) Copies of all Insurance Holding Company
Systems Act filings with Governmental
Authorities by any Borrower Affiliate not
later than five (5) Business Days after such
filings are made, including, without
limitation, filings that seek approval of
Governmental Authorities with respect to
transactions between any Borrower Affiliate
and any Affiliates thereof.
(E) Copies of all material detailed financial and
management reports regarding any Borrower
Affiliate submitted to any such entity by
independent public accountants in connection
with each annual or interim audit report made
by such accountants of the books of such
entity.
(F) Promptly upon the sending, filing or receipt
thereof, copies of (i) all financial
statements, reports, notices and proxy
statements that the Borrower or any of its
Subsidiaries shall send or make available
generally to its shareholders, and (ii) all
reports on Form 10-Q, Form 10-K or Form 8-K
(or their successor forms) or registration
statements and prospectuses (other than on
Form S-8 or its successor form) that the
Borrower or any of its Subsidiaries shall
render to or file with the Securities and
Exchange Commission, the National Association
of Securities Dealers, Inc. or any national
securities exchange.
(G) Not later than 45 days after the end of each
fiscal quarter, statements of the sales and
renewals for each of the Funds, Bridgefield
Casualty and Bridgefield Employers.
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(ii) Notices. Within five (5) Business Days after a
Borrower Affiliate obtains knowledge thereof, notice of:
(A) Actual suspension, termination, limitation or
revocation of any material license of any
Borrower Affiliate by any Governmental
Authority or of receipt of notice from any
Governmental Authority notifying a Borrower
Affiliate of a hearing relating to such a
suspension, termination, limitation or
revocation, including any request by a
Governmental Authority that commits any
Borrower Affiliate to take, or refrain from
taking, any action or that otherwise
materially and adversely affects the
authority of such Borrower Affiliate to
conduct its business.
(B) Any pending or threatened inquiry,
investigation or regulatory proceeding (other
than routine periodic inquiries,
investigations or reviews) by any
Governmental Authority concerning the
business, practices or operations of any
Borrower Affiliate or any Fund.
(C) Any actual or, to the best of the Borrower's
knowledge, formally proposed material changes
in the Insurance Code governing the
investment or dividend practices of Florida
domiciled insurance companies or any change
in any Requirement of Law that would
reasonably be expected to have a Material
Adverse Effect on the business, financial
condition or prospects of any Borrower
Affiliate.
(D) Any change or modification to any Reinsurance
Agreement whether entered into before or
after the Closing Date including Reinsurance
Agreements, if any, that are in a runoff mode
on the Closing Date, which change or
modification could reasonably be expected to
have a Material Adverse Effect on any
Borrower Affiliate, or any written notice
received by any Borrower Affiliate of denial
of coverage, litigation, claim or arbitration
arising out of any Reinsurance Agreement to
which such entity is a party.
(E) (i) The institution of, or any adverse
determination in, any litigation, arbitration
proceeding or governmental proceeding
(including any Internal Revenue Service or
Department of Labor proceeding with respect
to any Employee Plan or Welfare Plan) that
could, if adversely determined, be reasonably
expected to have a Material Adverse Effect on
any Borrower Affiliate, (ii) the failure of
any Borrower Affiliate timely to make a
required contribution to any Employee Plan if
such failure is sufficient to give rise to a
lien under section 302(f)(1) of ERISA, or
(iii) the institution of any steps by any
Borrower Affiliate to withdraw from, or the
institution of any steps by any Borrower
Affiliate to terminate under a distress
termination, any Employee Plan or the taking
of any action with respect to an Employee
Plan that could result in the requirement
that the Borrower Affiliate furnish a bond or
other security to such Employee Plan, or the
occurrence of any event with respect to any
Employee Plan that could result in the
incurrence by any
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Borrower Affiliate of any material liability
(other than a liability for contributions or
premiums), fine or penalty.
(F) Any change in the name or principal place of
business of any Borrower Affiliate.
(G) Any other matter or event that has, or could
be reasonably likely to have, a Material
Adverse Effect on any Borrower Affiliate or
any Fund.
(f) Other Information. From time to time such other information
concerning any Borrower Affiliate as the Agent may reasonably request.
7.4 Corporate Existence; Foreign Qualification. Do and cause to
be done at all times all things necessary to (a) maintain and preserve the
corporate existence of each Borrower Affiliate, (b) be, and ensure that each
Borrower Affiliate is, duly qualified to do business and be in good standing as
a foreign corporation in each jurisdiction where because of the nature of such
Borrower Affiliate's business, the failure to so qualify would have a Material
Adverse Effect on such Borrower Affiliate, (c) comply, and cause each other
Borrower Affiliate to comply, with all material Contractual Obligations and
Requirements of Law binding upon such entity, and (d) do or cause to be done
all things reasonably necessary to preserve and keep in full force and effect
required for each Borrower Affiliate to be engaged in each business in which
such Borrower Affiliate is so engaged.
7.5 Books, Records and Inspections. (a) Maintain, and cause its
Subsidiaries to maintain books and records which are complete and accurate in
all material respects, (b) permit, and cause each other Borrower Affiliate to
permit access at reasonable times and upon reasonable prior notice by the Agent
to its books and records (except for any instance of noncompliance that could
reasonably be expected to have a Material Adverse Effect), (c) permit, and
cause each other Borrower Affiliate to permit, the Agent to inspect at
reasonable times its properties and operations, and (d) permit, and cause each
other Borrower Affiliate to permit, the Agent to discuss its business,
operations and financial condition with such Borrower Affiliate's officers.
7.6 Insurance; Assets.
(a) Maintain, and cause each other Borrower Affiliate to maintain,
such Insurance Policies as may be required by law or as are customarily
maintained by prudent companies similarly situated.
(b) Maintain fire and casualty insurance on its personal property
and leasehold improvements at least equal to the current level of coverage in
place as of the Closing Date as set forth in SCHEDULE 6.9.
(c) Keep all properties of the Borrower Affiliates in reasonably
good working order and condition in the manner customary for companies of like
size in similar businesses and as may be required for the continued conduct of
their respective businesses, except to the extent that the failure to so keep
any such property, together with the failure to so keep all other such
properties, would not have a Material Adverse Effect on the prospects,
business, operations, properties or financial condition of the Borrower and its
Subsidiaries, taken as a whole.
7.7 Taxes and Liabilities. Pay, and cause each other Borrower
Affiliate to pay, when due, all material taxes, assessments and other material
liabilities except as contested in good faith and by appropriate proceedings,
with respect to which reserves have been established, and are being maintained,
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in accordance with GAAP, if and so long as such contest could not reasonably be
expected to have a Material Adverse Effect on any Borrower Affiliate.
7.8 Employee Benefit Plans. Maintain, and cause each other
Borrower Affiliate to maintain, each Employee Plan and Welfare Plan in
compliance in all material respects with all applicable Requirements of Law.
7.9 COBRA. Operate, and cause each other Borrower Affiliate to
operate, each Employee Plan of such Borrower Affiliate in such a manner that
such Borrower Affiliate will not incur any material tax liability under Section
4980B of the Internal Revenue Code or any material liability to any qualified
beneficiary as defined in such Section 4980B.
7.10 Pledge and Security Agreements. From and after the Closing
Date cause each of the Security Agreements, each of the Pledge Agreements and
the Guaranty to be and remain valid, and to maintain first priority perfected
security interests in all of the Collateral described therein in favor of the
Agent for the benefit of the Lenders.
7.11 Compliance with Laws. Comply, and cause each other Borrower
Affiliate to comply, with all federal, state and local laws, rules and
regulations related to its businesses (including, without limitation, the
establishment of all insurance reserves required to be established under SAP
and applicable laws restricting the Insurance Subsidiaries' investments, and
compliance by the Borrower Affiliates with the terms of the Consent Order).
7.12 Maintenance of Permits. Maintain, and cause each other
Borrower Affiliate to maintain, all material Licenses as may be required for
the conduct of its business by any state, federal or local government agency or
instrumentality.
7.13 Interest Rate Protection. As of the Closing Date, the
Borrower shall take all steps necessary to cause the Rate Protection Agreement
to be assigned to the Borrower, with all amendments incident thereto as are in
form and substance satisfactory to the Agent. Except for such Rate Protection
Agreement, the Borrower shall not enter into (a) any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate collar agreement, interest rate
hedge agreement, basis swap agreement, forward rate agreement or other similar
agreement or arrangement designed to protect any Person against fluctuations in
interest rates (including any option to enter into any of the foregoing and any
master agreement for any of the foregoing); (b) any foreign exchange contract,
forward foreign exchange agreement, currency swap agreement, cross-currency
rate swap agreement, currency option or other similar agreement or arrangement
designed to protect any Person against fluctuations in currency values
(including any option to enter into any of the foregoing and any master
agreement for any of the foregoing); or (c) to the extent not covered by
clauses (a) and (b) above, any derivative instrument, agreement or product used
or entered into by any Person in the ordinary course of selling, issuing or
underwriting insurance or reinsurance.
7.14 Dividends. The Borrower shall from time to time cause each of
its Subsidiaries to declare and pay dividends to the Borrower to the extent
necessary to satisfy the Obligations hereunder (such amounts to include,
without limitation, Net Income received by any Borrower Affiliates in respect
of the Management Agreements) to the extent allowed by law. The Lenders
acknowledge and agree that the ability of each Insurance Subsidiary to declare
or pay dividends is subject to limitations as set forth in the Consent Order,
but the Borrower (no less frequently than annually) shall request any approvals
of the Department necessary to permit the payment of such dividends.
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7.15 Key Man Life Insurance. The Borrower will exercise its
reasonable best efforts to maintain the Key Man Life Insurance Policy at all
times during the term hereof and, in the event of any termination of such
policy, to obtain another policy in form or substance acceptable to the
Required Lenders.
7.16 Business Activities. The Borrower will, and will cause each
of its Subsidiaries to, remain in substantially the same lines of business in
which they are engaged as of the Closing Date (which lines of business are
described on SCHEDULE 7.16 hereto); provided, that no Borrower Affiliate may
re-enter any business previously conducted in connection with the Discontinued
Operations (provided, however, that Meritec and Carolina Med may maintain their
respective corporate existences and remain parties to their real property
leases so long as such properties are subleased to third parties on terms
satisfactory to the Agent).
7.17 Disbursement Instructions. The Borrower will notify the Agent
in writing (in an instrument substantially in the form of the Account
Designation Letter) of any changes in the information contained in the Account
Designation Letter.
7.18 Further Assurances. The Borrower will, and will cause each of
its Subsidiaries to, make, execute, endorse, acknowledge and deliver to the
Agent and the Lenders any amendments, modifications or supplements hereto or
restatements hereof and any other agreements, instruments, financing
statements, certificates, stock powers or other documents or instruments, and
take any and all such other actions, as may from time to time be reasonably
requested by the Agent or any Lender to perfect and maintain the validity and
priority of the liens granted pursuant to the Credit Documents and to effect,
confirm or further assure or protect and preserve the interests, rights and
remedies of the Lenders and the Agent under this Agreement and the other Credit
Documents and to secure payment and performance of the Obligations.
Furthermore, the Borrower will, and will cause each of its Subsidiaries to,
exercise their respective best efforts to ensure that all Obligations are
performed as required hereunder.
7.19 Certain Fees. As consideration for the Lenders' agreement to
enter into this Agreement, (i) in the event the Borrower and its Affiliates
have not raised net proceeds of $40,000,000 or more in connection with the IPO
or any other any equity offering on or before September 30, 1997, the Borrower
will pay to the Agent, for the ratable benefit of the Lenders, a fee equal to
$665,000 (which amount shall be due and payable on or before December 31,
1997), or (ii) in the event the Borrower and its Affiliates have raised net
proceeds of $40,000,000 or more in connection with the IPO or any such equity
offering on or before September 30, 1997, the Borrower will pay to the Agent,
for the ratable benefit of the Lenders, a fee of $285,000 (payable at the
Closing hereof). In the event the Loans are repaid in full on or before
December 31, 1997, then payment of any such theretofore unpaid fees will be
waived by the Lenders.
ARTICLE VIII
FINANCIAL COVENANTS
Until payment in full of all Obligations of the Borrower to each of
the Lenders, the Borrower
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covenants and agrees that, unless the Required Lenders consent in writing, the
Borrower shall not, and shall not permit any Borrower Affiliate, to:
8.1 Borrower Financial Covenants.
(a) Net Worth. Permit the Borrower's Net Worth to be less than
(i) $70,000,000 at any time from and after the Closing Date through and
including December 31, 1997; (ii) $75,000,000 at any time from and after
January 1, 1998 through and including December 31, 1998; (iii) $85,000,000 at
any time from and after January 1, 1999 through and including December 31,
1999; and (iv) $95,000,000 at any time thereafter.
(b) Fixed Charge Coverage Ratio. (a) As of the end of any fiscal
quarter of the Borrower (i) with respect to the period from January 1, 1997
through September 30, 1997, for the number of consecutive fiscal quarters
having elapsed as of the end of such fiscal quarter, and (ii) from and after
October 1, 1997, for the period of four consecutive fiscal quarters ending with
such fiscal quarter (each, a "Measurement Period"), permit the Fixed Charge
Coverage Ratio to be less than (x) 1.45 to 1.0 for any Measurement Period
ending on or before September 30, 1997, or (y) 1.35 to 1.0 for any subsequent
Measurement Period (it being understood that the fees contemplated by Section
7.19 hereof will not be included in any such calculations); provided, further,
that the Borrower shall not permit the Fixed Charge Coverage Ratio for any
single fiscal quarter (beginning with the quarter ending March 31, 1997) to be
less than 1.0 to 1.0.
(c) Leverage Ratio. Permit the Leverage Ratio as of the end of
any fiscal quarter to be more than (A) .30 to 1.0 as of the end of any fiscal
quarter from and after the Closing Date through December 31, 1998; (B) .25 to
1.0 as of the end of any subsequent fiscal quarter through December 31, 1999;
(C) .20 to 1.0 as of the end of any subsequent fiscal quarter through December
31, 2000; and (D) .15 to 1.0 as of the end of any fiscal quarter thereafter.
8.2 Summit Holding Financial Covenants.
(a) Fee/Commitment Ratio. As of the end of any fiscal quarter
during the following periods, permit the Fee/Commitment Ratio to be less than
the following;
Period Minimum
December 31, 1996 1.35 to 1.0
through March 31, 1997
June 30, 1997 through 1.45 to 1.0
December 31, 1997
March 31, 1998
through December 31, 1998 1.50 to 1.0
Thereafter 2.00 to 1.0
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(b) Minimum Fee Income. Permit Fee Income for any fiscal quarter
(i) from the quarter ending March 31, 1997 through the fiscal quarter ending
December 31, 1997, to be less than $10,000,000, (ii) from January 1, 1998
through the fiscal quarter ending December 31, 1998, to be less than
$12,000,000 or (iii) thereafter, to be less than $14,000,000.
(c) Interest Coverage Ratio. Permit the Interest Coverage Ratio
as of the end of the quarter ending December 31, 1996 to be less than 1.75 to
1.0.
8.3 Insurance Subsidiary Financial Covenants.
(a) Operating Leverage. Permit the ratio of (a) any Insurance
Subsidiary's Net Written Premiums in any fiscal year to (b) the Statutory
Surplus of such Insurance Subsidiary as of the end of such fiscal year, to
exceed (i) 3.0 to 1.0 for each fiscal year through the fiscal year ending
December 31, 1998, and (ii) 2.5 to 1.0 for each fiscal year thereafter.
(b) Risk-Based Capital. Permit Total Adjusted Capital of the
Insurance Subsidiary at any time from and after the Closing Date to be less
than 150% of the Company Action Level RBC. For purposes of this Section,
"Total Adjusted Capital" and "Company Action Level RBC" shall have the meanings
assigned to such terms under the NAIC Risk-Based Capital Model Act as
promulgated by the NAIC as of the date hereof (it being understood that in the
event the Florida Department adopts risk-based capital standards during the
term hereof, the Borrower, the Agent and the Required Lenders will amend this
Agreement to provide for a replacement covenant substantially consistent
herewith).
(c) Statutory Net Worth. Permit the aggregate Statutory Surplus
of all Insurance Subsidiaries, collectively, to be less than (i) $45,000,000 at
any time from and after the Closing Date through and including December 31,
1997; (ii) $50,000,000 at any time from and after January 1, 1998 through and
including December 31, 1998; (iii) $55,000,000 at any time from and after
January 1, 1999 through and including December 31, 1999; and (iv) $60,000,000
at any time thereafter.
8.4 Capital Expenditures. Make any Capital Expenditure if, after
giving effect to such Capital Expenditure, the aggregate amount of all such
Capital Expenditures made by the Borrower Affiliates for the period of four
consecutive fiscal quarters ending as of the end of the then-current fiscal
quarter shall exceed $500,000.
ARTICLE VIIIA
NEGATIVE COVENANTS
Until payment in full of all Obligations of the Borrower to each of
the Lenders, the Borrower covenants and agrees that, unless the Required
Lenders consent in writing, the Borrower shall not, and shall not permit any
Borrower Affiliate, to:
8A.1. Reinsurance Agreements. Permit Summit Consulting to place any
new Reinsurance Agreements involving FRF, XXXX, LRA, or KRF, or permit any
Insurance Subsidiary to be party to any new Reinsurance Agreement, with any
reinsurer (other than those reinsurers set forth on SCHEDULE 8A.1, as to which
no rating requirement shall apply) that is not rated "A-" or better by A.M.
Best & Company, Inc.
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8A.2. Guarantees, Loans, Advances and Investments. Incur any
Contingent Liability or become or be responsible in any manner (whether by
agreement to purchase any obligations, stock, assets, goods or services, or to
supply or advance any funds, assets, goods or services, or otherwise) with
respect to any undertaking of any other Person, or make or permit to exist any
loans or advances to, or investments in, any other Person, except for (a) the
endorsement, in the ordinary course of collection, of instruments payable to it
or to its order, (b) investments in Subsidiaries as described in SECTION 6.10
hereof, (c) with respect to each Insurance Subsidiary, such investments as are
not in violation of SECTION 8A.16, (d) relocation loans, travel and xxxxx cash
advances and other similar advances to the employees of a Borrower Affiliate in
the ordinary course of business, (e) current amounts due within seven Business
Days to or from brokers for securities transactions in the ordinary course of
business and (f) Contingent Liabilities set forth on SCHEDULE 8A.2;
notwithstanding any provision herein to the contrary, no loan, advance or
investment may result in any reduction in cash, Cash Equivalents, or Net Worth
of the Borrower and its Subsidiaries on a consolidated basis; provided,
however, that any Subsidiary may make any loans, or advances to or investments
in the Borrower.
8A.3 Mergers, Consolidations and Sales.
(a) Merge or consolidate with, or purchase or otherwise acquire,
or permit any Borrower Affiliate to merge or consolidate with, or purchase or
otherwise acquire, all or substantially all of the assets or stock of any class
of, or any partnership or joint venture interest in, any Person.
(b) Sell, transfer, convey or lease, or permit any other Borrower
Affiliate to sell, convey or lease, any Material Asset to any Person.
(c) Transfer, dispose of, pledge or otherwise encumber, or permit
any Borrower Affiliate to transfer, dispose of, pledge or otherwise encumber,
any Stock of any of its Subsidiaries to any Person other than pursuant to any
of the Pledge Agreements.
8A.4 Change in Control; Issuance of Stock. (a) Permit a Change in
Control to occur without the prior written consent of the Required Lenders,
which may withhold their consent in their absolute discretion; or
(b) Except in connection with the IPO (or another equity offering
meeting the requirements set forth in SECTION 5.2.3(f), issue any Stock, or
permit any other Borrower Affiliate to issue any Stock, options or warrant or
other rights to purchase such Stock, to any Person without the prior written
consent of the Required Lenders, which may withhold consent in their absolute
discretion; provided, however, that Borrower shall be permitted to issue its
Stock, or options or warrants to purchase its Stock, to any Person if and only
if 100% of the Net Cash Proceeds from such offering are paid to the Lenders as
a prepayment of the Loans in accordance with SECTION 7.1(b) hereof; provided,
further, that from time to time the Borrower may issue shares of its Stock to
such entity's employees under the Approved Stock Plan.
8A.5 Leases. Incur or permit to exist any obligation or liability
under any lease other than in the ordinary course of business and, subject to
the definition of "Permitted Indebtedness," other than Capital Lease
Obligations.
8A.6 Unconditional Purchase Obligations. Enter into any contract
for the purchase of materials, supplies or other property or services, if such
contract requires that payment be made by it regardless of whether delivery is
ever made of such materials, supplies or other property or services.
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8A.7 Subsidiaries; Investment of Proceeds. (a) Create or permit
to exist any Subsidiary, other than Summit Holding, Summit Consulting, CICF,
Summit Claims, Summit Loss, Healthcare Holdings, Heritage Summit, Bridgefield
Employers or Bridgefield Casualty, unless (i) the consent of the Required
Lenders is obtained, (ii) the Stock of such Subsidiary is pledged to the Agent
pursuant to a pledge agreement satisfactory in form and substance to the Agent
(together with the delivery to the Agent of legal opinions, in form and
substance satisfactory to the Agent, as to the effectiveness of such pledge and
the perfection of the liens granted thereby), and (iii) this Agreement is
amended, at Borrower's expense, to the satisfaction of the Required Lenders, to
take into account any such additional Subsidiary; or
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(b) Contribute any proceeds of the Revolving Loans to the capital
(on a permanent basis) of any Subsidiary.
8A.8 Business Activities. Engage in any business other than the
businesses conducted by the Borrower and its Subsidiaries as of the date hereof
(subject to the proviso contained in SECTION 7.16), or engage in the business
of writing insurance policies other than through the Insurance Subsidiaries, or
conduct any business through or on behalf of any Discontinued Operation.
8A.9 Transactions with Affiliates. Except as set forth on SCHEDULE
8A.9, enter into, or permit any Borrower Affiliate to enter into, or cause,
suffer or permit to exist, directly or indirectly, any arrangement, transaction
(or series of related transactions) or contract with or for the benefit of any
of its Affiliates or any Affiliate of any other Borrower Affiliate (or any
officer, director or shareholder thereof) unless (a) such arrangement,
transaction or contract is in the ordinary course of business, reasonably
intended to satisfy the reasonable business requirements of such Borrower
Affiliate, and only on terms and conditions at least as favorable to such
Borrower Affiliate as the terms and conditions that would apply in a similar
arrangement, transaction or contract with a Person not an Affiliate, (b) such
transaction has been approved by a majority of the disinterested directors of
the Borrower and (c) with respect to any transaction or series of related
transactions involving aggregate payments in excess of [$1,000,000,] the
Borrower receives an opinion from a nationally recognized investment banking
firm, or other nationally or regionally recognized appraisal firm, that such
transaction is fair to the Borrower Affiliate from a financial point of view.
8A.10 Indebtedness. Incur or permit to exist any Indebtedness
except Permitted Indebtedness.
8A.11 Liens. Pledge, grant any lien or security interests in or
otherwise encumber, or permit any Subsidiary to pledge, grant any lien or
security interest in or otherwise encumber, any assets or other properties now
owned or thereafter acquired by such Borrower Affiliate (including, without
limitation, any Stock or Securities owned by such Borrower Affiliate), other
than Permitted Liens.
8A.12
Restricted Payments. The Borrower will not, and will not permit or cause any
of its Subsidiaries to, directly or indirectly, declare or make any dividend
payment, or make any other distribution of cash, property or assets, in respect
of any of its Stock or Securities or other ownership interests or any warrants,
rights or options to acquire its Stock or Securities or other ownership
interests, or purchase, redeem, retire or otherwise acquire for value any
shares of its Stock or Securities or other ownership interests or any warrants,
rights or options to acquire its Stock or Securities or other ownership
interests (any such payments or distributions being referred to herein as
"Restricted Payments"), or set aside funds for any of the foregoing, or enter
into any agreement (other than this Agreement) that restricts its ability to
declare or make any Restricted Payments, except that:
(a)
the Borrower may declare and make dividend payments
or other distributions payable solely in its common
stock;
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(b)
any direct or indirect wholly owned Subsidiary of the
Borrower may declare and make dividend payments or
other distributions to the Borrower or another wholly
owned Subsidiary of the Borrower; and
(c)
the Borrower may declare and pay dividends in respect
of its Series A preferred capital stock to the extent
of any Excess Cash Flow not required to be prepaid
pursuant to SECTION 7.1(c) (so long as no Default or
Event of Default has occurred and is continuing or
would result therefrom).
Notwithstanding any provision herein to the contrary, no Borrower Affiliate may
make any payment of cash or distribution of any other property to any Insurance
Subsidiary.
8A.13
Negative Pledge Agreements. Except as set forth in SCHEDULE 6.10, create,
incur, assume or suffer to exist any agreement, other than this Credit
Agreement and the Credit Documents, that places any restrictions (a) upon the
right of a Borrower Affiliate to sell, pledge or otherwise dispose of any
material portion of its properties now owned or thereafter acquired other than
as permitted herein, except for such restrictions imposed by federal or state
securities laws, (b) upon the right of a Borrower Affiliate to sell, pledge or
otherwise dispose of any Stock or Securities owned by it, or (c) upon the right
or ability of any Subsidiary to pay dividends or make any other distributions
on its Stock held by the Borrower, respectively, or to pay any obligation owed
to the Borrower.
8A.14
No Amendment of Documents. Enter into or permit to exist any amendment,
modification or waiver to or termination of any of the Credit Documents, the
Plan of Conversion, any Tax Sharing Agreement or any of the Management
Agreements, or the termination (other than any termination pursuant to the
terms of any Employment Agreement) of any noncompetition, confidentiality or
similar restrictive provisions of the Employment Agreements, except with the
consent of the Required Lenders.
8A.15
Fiscal Year. Change its fiscal year from a fiscal year ending on December 31
(it being understood that Bridgefield Employers shall change its fiscal year
from one ending on March 31 to one ending on December 31, as contemplated by
the Department.
8A.16
Certain Investments. Permit the assets of any Insurance Subsidiary to be
invested at any time in violation of the following limitations:
(a)
All investments shall be in compliance with the Insurance Code as applicable to
each of the Insurance Subsidiaries as well as the applicable insurance laws and
regulations of any other applicable jurisdiction relating to investments by
each Insurance Subsidiary.
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(b)
No less than one hundred (100%) of any Insurance Subsidiary's investments in
bonds or similar instruments (the "Bond Portfolio") shall be Investment Grade
Securities; provided, however, that in the event any Investment Grade
Securities become non-Investment Grade Securities while held by such Insurance
Subsidiary ("Downgraded Investments"), such Subsidiary shall be permitted to
hold such Downgraded Investments without regard to the foregoing limitation,
but only to the extent that no more than one percent of the aggregate value of
the Bond Portfolio is invested at any time in Downgraded Investments.
(c)
No more than ten percent (10%) of the Invested Assets shall be invested, in the
aggregate, in real estate, mortgages, or any Securities (including investments
in Affiliates but excluding Investment Grade Securities); provided, however,
that there shall be no limit on the amount that any Insurance Subsidiary may
loan to or invest in the Borrower.
(d)
No more than two percent (2%) of Invested Assets shall be invested, taking all
forms of investment into account, in any single Issuer Group.
8A.17
Hazardous Materials. The Borrower will not, and will not permit or cause any
Borrower Affiliate to, (a) permit any Hazardous Substances to be brought on to
or located on any real property owned or operated by the Borrower or any
Insurance Subsidiary, except in full compliance with all applicable
Environmental Laws and then only as needed in connection with typical insurance
business activities, or (b) violate any Environmental Law.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Credit
Agreement, the Notes and the other Credit Documents:
(a)
The Borrower shall fail to pay any principal or interest on the Loans,
any fees or any other Obligations when due;
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(b)
The Borrower or any Borrower Affiliate shall fail or neglect to
observe, perform or comply with any term, provision, condition or
covenant contained in SECTIONS 3.1(e), 7.1, 7.2(b) 7.3(c), 7.4(a),
7.10, 7.15, 7.16 or in ARTICLE VIII OR VIIIA of this Credit Agreement;
provided, however, that any Defaults arising under SECTIONS 8.1(a),
8.1(c), 8.3(a), 8.3(b), 8.3(c) and SECTION 8A.16 shall be subject to
the cure period set forth in SECTION 9.1(c) below, and Defaults
arising under SECTIONS 7.10, 8A.11 and 8A.13 shall also be subject to
such cure period but only to the extent so provided in the last clause
of SECTION 9.1(c);
(c)
The Borrower shall fail or neglect to observe, perform or comply with
any other term, provision, condition or covenant contained in this
Credit Agreement, except those enumerated in SECTIONS 9.1(a) or 9.1(b)
above, and the same is not cured to the Required Lenders' satisfaction
within thirty (30) days after the Borrower acquires knowledge thereof
(it being understood that any Defaults arising under any of SECTIONS
7.10, 8A.11 or 8A.13 shall be subject to the cure period contemplated
by this paragraph (c) if and to the extent such Liens or restrictions
are involuntary and not the result of affirmative conduct of a
Borrower Affiliate);
(d)
Any representation or warranty made in writing by or on behalf of any
Borrower Affiliate in this Credit Agreement or the other Credit
Documents or in any certificate, instrument or document delivered in
connection herewith or therewith, or in connection with the
transactions contemplated hereby or thereby, shall prove to have been
false or incorrect in any material respect at the time as of which
such representation or warranty was made;
(e)
Any Borrower Affiliate shall fail to observe, perform or comply with
any term, condition or covenant contained in any of the Credit
Documents other than this Agreement, and such failure shall continue
unremedied for any grace period specifically applicable thereto;
(f)
Any Borrower Affiliate shall fail to pay when due, whether by
scheduled maturity, acceleration or otherwise (taking into account any
applicable grace period), any principal of, interest on or other
amount payable in respect of any Indebtedness (other than the
Indebtedness incurred pursuant to this Agreement) having an aggregate
principal amount of at least $500,000; any other default or event of
default shall occur under the terms of any agreement or instrument
pursuant to which a Borrower Affiliate has incurred any such
Indebtedness, the effect of which default or event of default is to
accelerate, or permit acceleration of (after any applicable grace
period, notice or lapse of time), the maturity of at least $500,000 in
principal amount of such Indebtedness; or any such Indebtedness of a
Borrower Affiliate shall be declared to be due and payable or required
to be prepaid or redeemed (other than pursuant to a regular schedule
therefor), purchased or defeased, or an offer to prepay, redeem,
purchase or defease shall be required to be made, in each case prior
to the stated maturity thereof;
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(g)
The institution of an action or proceeding by any Governmental
Authority seeking to place any Borrower Affiliate under supervision,
conservation or rehabilitation, or the appointment of a receiver of
any such entity;
(h)
Any Borrower Affiliate shall (i) file a voluntary petition or commence
a voluntary case seeking liquidation, reorganization, dissolution,
arrangement, readjustment of debts or any other relief under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, (ii) consent to the
appointment of or taking possession by a custodian, trustee, receiver
or similar official for or of all or a substantial part of its
properties (or any of the Collateral), (iii) fail generally to pay its
debts as they become due or admit in writing its inability to pay its
debts generally as they become due, (iv) make a general assignment for
the benefit of creditors or (v) take any corporate action to authorize
or approve any of the actions described above;
(i)
Any involuntary petition or case shall be filed or commenced against a
Borrower Affiliate seeking liquidation, reorganization, dissolution,
arrangement, readjustment of debts, the appointment of a custodian,
trustee, receiver or similar official for it or all or a substantial
part of its properties (or any of the Collateral) or any other relief
under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, which petition
or case is not dismissed, bonded or discharged within sixty (60) days
of the date of filing; or an order for relief (including, without
limitation, the appointment of a custodian, trustee, receiver or
similar official) shall be entered in any such proceeding, which order
is not immediately stayed or made subject to other similar relief;
(j)
Any Borrower Affiliate shall (i) cease to be Solvent, or (ii) be
enjoined, restrained or in any way prevented by order of court or any
other Governmental Authority from conducting all or any material part
of its business affairs (except for the Discontinued Operations);
(k)
Any one or more judgments, writs or warrants of attachment, executions
or similar processes involving an aggregate amount in excess of
$500,000 shall be entered or filed against any Borrower Affiliate or
any of its respective properties, and all such judgments and processes
shall not be paid, dismissed, vacated, stayed, discharged or bonded
within thirty (30) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder, and, if bonded, such bond
(or a replacement bond) shall not continue in effect at all times
until such judgment is dismissed or discharged;
(l)
Any lien, levy or assessment, or notice thereof, shall be filed of
record with respect to all or any portion of the assets of any
Borrower Affiliate by the United States, or any department, agency or
instrumentality thereof, or by any other Governmental Authority,
including, without limitation,
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the Pension Benefit Guaranty Corporation; such lien, levy or
assessment, taken together with all other Liens, levies or assessments
then of record with respect to the assets of the Borrower Affiliates,
taken as a whole, exceeds $500,000; and such lien, levy or assessment
shall be executed upon or shall not be paid, dismissed, vacated,
stayed, released, bonded or discharged within thirty (30) days after
the same becomes a lien or, in the case of a lien involving ad valorem
taxes, prior to the last day when payment may be made without penalty;
(m)
Any one or more licenses, permits or authorizations now or hereafter
held by any Borrower Affiliate shall be terminated, suspended or
revoked or shall not be renewed, which terminations, suspensions,
revocations or failures to renew would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect;
(n)
Any Credit Document, at any time after execution and delivery thereof,
shall for any reason cease to be a legal, valid and binding obligation
of any Borrower Affiliate or other Affiliate that is a party thereto
(including any party that becomes a party thereto after the Closing
Date), enforceable against such party, or to give the Agent the
rights, powers and remedies purported to be created thereby,
including, without limitation, a valid, first priority perfected
security interest in and lien upon all of the Collateral purported to
be covered thereby, subject only to Permitted Liens, in each case
unless any such cessation is due to any act or failure to act on the
part of the Agent or any Lender;
(o)
Any Subsidiary of the Borrower or any Person acting on behalf of any
such Subsidiary shall deny or disaffirm such Subsidiary's obligations
under the Guaranty;
(p)
The occurrence of any of the following events: (i) the happening of a
Reportable Event (which is not waived by the Pension Benefit Guaranty
Corporation) with respect to any Employee Plan; (ii) the termination
of any Employee Plan in a "distress termination" under the provisions
of section 4041 of ERISA; (iii) the appointment of a trustee by an
appropriate United States District Court to administer any Employee
Plan; (iv) the institution of any proceedings by the Pension Benefit
Guaranty Corporation to terminate any Employee Plan or to appoint a
trustee to administer any such plan; and (v) the failure of the
Borrower to notify the Agent promptly upon receipt by a Borrower
Affiliate of any notice of the institution of any proceeding or any
other actions that may result in the termination of any such plan;
(q)
Either of the Pledge Agreements or either of the Security Agreements
ceases, for any reason other than as a result of action taken or
omitted to be taken by the Agent, to be in full force and effect;
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(r)
The cancellation, termination or expiration, prior to repayment in
full of the Loans, of any one or more of the Management Agreements
representing ten percent (10%) or more of the gross fee revenues paid
in the aggregate to Summit Consulting, CICF, Summit Claims or Summit
Loss, as appropriate, by the Funds under the Management Agreements, by
Bridgefield Employers to the service providers under the Bridgefield
Employers Management Agreements and by Bridgefield Casualty to Summit
Consulting under the Bridgefield Casualty Management Agreement (as
calculated on an annual basis);
(s)
The ceasing of any person party to any Employment Agreement to be
employed by the Borrower, if such person is not replaced within 90
days following such termination with a person reasonably acceptable to
the Required Lenders; and
(t)
The failure of any new reinsurer of any Insurance Subsidiary to carry
a rating of "A-" or better by A.M. Best & Company, Inc.
ARTICLE X
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT;
INTERCREDITOR PROVISIONS
10.1
Rights and Remedies. Upon and after the occurrence of any Event of Default,
the Agent shall, upon request of the Required Lenders, by notice to the
Borrower, take any or all of the following actions, without prejudice to the
rights of any Lender to enforce its claims against the Borrower, except as
otherwise specifically provided for in this Credit Agreement: (a) declare the
Total Commitment terminated, whereupon the Revolving Credit Commitment of each
Lender shall forthwith terminate immediately and any fees payable in respect
thereof shall forthwith become due and payable without any other notice of any
kind; (b) declare all or any part of the Obligations owing hereunder
immediately due and payable, whereupon such Obligations shall become
immediately due and payable without presentment, demand, protest, notice or
legal process of any kind, all of which are hereby expressly waived by the
Borrower and/or (c) exercise all of the rights and remedies of the Lenders
under this Credit Agreement, the Guaranty, any of the Pledge Agreements, any of
the Security Agreements, the other Credit Documents and applicable law), in
order to satisfy all of the Borrower's Obligations, including, but not limited
to, the enforcement of any or all liens and security interests created pursuant
to the Credit Documents; provided, however, that all obligations shall
automatically become due and payable upon the occurrence of an Event of Default
pursuant to SECTIONS 9.1(g), (h) or (i) hereof.
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10.2
Rights and Remedies Cumulative; Non-waiver; Etc. The enumeration of the
Lenders' rights and remedies set forth in this Credit Agreement is not
intended to be exhaustive and the exercise by any Lender of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy
given hereunder, under the Credit Documents or under any other agreement
between any of the Borrower Affiliates and any of the Lenders or which may now
or hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of the Agent or any Lender in exercising any
right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude other
or further exercise thereof or the exercise of any other right, power or
privilege or shall be construed to be a waiver of any Event of Default. No
course of dealing between the Borrower and the Agent or any Lender or the
agents or employees of either of them shall be effective to change, modify or
discharge any provision of this Agreement or to constitute a waiver of any
Default or Event of Default.
10.3
Rights in Property Held by the Lenders. As additional security for the
Obligations, the Borrower hereby assigns, transfers and sets over to the Agent,
for the benefit of the Lenders, all of its right, title, and interest in and
to, and grants the Agent, for the benefit of the Lenders, a lien on and a
security interest in, all amounts that may be owing from time to time by any
Lender or any of its Affiliates to the Borrower in any capacity, including
without limitation any balance or share belonging to the Borrower, or any
deposit or other account with such Lender or any of its Affiliates, which lien
and security interest shall be independent of, and in addition to, any right of
set-off that any Lender has under this Agreement or otherwise.
10.4
Cross-collateralization; No Marshalling. The Collateral and all other
collateral that the Lenders or any of them may at any time acquire from the
Borrower or its Subsidiaries in connection with any of its Obligations under
the Credit Documents shall constitute cross-collateral for all of its
Obligations, without apportionment or designation as to any particular
Obligation, and the Agent shall have the right, in its sole discretion, to
determine the order in which the Lenders' rights in or remedies against such
Collateral are to be exercised and which types of such Collateral or which
portions of such Collateral are to be proceeded against and the order of
application of proceeds of such Collateral as against particular Obligations of
the Borrower. The Agent and the Lenders shall have no obligation to xxxxxxxx
any such Collateral or apply the same in any fashion.
10.5
Set-off. The Borrower agrees that, in addition to any rights now or hereafter
granted under applicable law or otherwise, the Agent and each of the Lenders
shall have, and are hereby granted by the Borrower and authorized to exercise,
all rights of set-off provided by applicable law (to the fullest extent
thereof) and, in addition thereto, the Borrower agrees that at any time (a) any
payment or amount owing by the Borrower or any of its Subsidiaries under or in
connection with this Credit Agreement or the Credit Documents is then due or
(b) any Event of Default exists, each Lender or the Agent, without advance
notice to the Borrower of any kind (any such notice being expressly waived by
the Borrower), may set-off and apply to the payment of such payment or other
amount any and all balances, credits, deposits, accounts or moneys (general or
special, time or demand, provisional or final) at any time held and any other
Indebtedness at any time owing by the Agent or any Lender to or for the credit
or the account of the
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Borrower against any or all of the Obligations of the Borrower to the Agent or
any Lender under this Credit Agreement or any other Credit Document, now or
hereafter existing, whether or not such Obligations have matured. The Agent
and each Lender agree promptly to notify the Borrower after any such set-off or
application by it, provided that the failure to give such notice shall not
affect the validity of such set-off or application.
10.6
Intercreditor Provisions. (a) Upon the occurrence and during the continuance
of an Event of Default, the proceeds of any sale, disposition or other
realization upon all or any part of the Collateral (including any proceeds of
Collateral) payable to the Agent, for the benefit of the Lenders, and all
payments made to the Agent, for the benefit of the Lenders, under this
Agreement, the Notes and any of the other Credit Documents, shall be applied by
the Agent in the following order:
(i) First, to the payment in full of all
reasonable costs and expenses incurred by the
Agent in connection with the sale,
disposition or other realization upon the
Collateral, including, without limitation,
out-of-pocket costs, court costs, attorneys'
fees and all liabilities and advances
incurred by the Agent in connection
therewith, and all other fees, expenses and
amounts due to the Agent hereunder and under
the other Credit Documents;
(ii) Second, to the payment in full of all
reasonable costs and expenses incurred by the
Lenders in connection with the sale,
disposition or other realization upon the
Collateral, including, without limitation,
out-of-pocket costs, court costs, attorneys'
fees (to the extent actually incurred) and
all liabilities and advances incurred by the
Lenders in connection therewith, but only to
the extent that such costs and expenses are
required to be paid hereunder and under the
other Credit Documents;
(iii) Third, to the payment in full of all interest
with respect to the Obligations accrued and
unpaid as of the date of the Agent's receipt
of such proceeds, pro rata to each Lender
based on the percentage that the amount of
such interest owed to such Lender bears to
the aggregate amount of such interest owed to
all Lenders;
(iv) Fourth, to the payment in full of all
remaining Obligations (including, without
limitation, principal on the Loans)
outstanding and unpaid as of the date of the
Agent's receipt of such proceeds, pro rata to
each Lender based on the percentage that the
amount of such Obligations owed to such
Lender bears to the aggregate amount of such
Obligations owed to all Lenders; and
(v) The balance, to the Borrower or to such other
Persons as may be required by law.
(b) Each Lender agrees that it shall not, unless
specifically requested to do so by the Agent, commence or cause to be
commenced against the Borrower any enforcement proceeding with respect
to a Note or this Credit Agreement.
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ARTICLE XI
PAYMENT OF FEES AND EXPENSES
11.1 Fees and Expenses. Whether or not the transactions
contemplated by this Agreement shall be consummated, the Borrower shall be
obligated:
(a) to pay or reimburse the Agent upon demand and after notice in
accordance with SECTION 14.4 for all reasonable expenses (including, without
limitation, reasonable attorneys' fees) incurred or paid by the Agent in
connection with: (i) the preparation, execution, delivery, interpretation,
modification, syndication, amendment or termination of this Agreement or the
other Credit Documents or any consent or waiver requested by the Borrower
hereunder or thereunder; (ii) charges for appraisers, examiners, environmental
consultants, auditors or similar Persons whom the Agent may engage with respect
to rendering opinions concerning the financial condition of the Borrower and
its Subsidiaries; and (iii) any commercially reasonable attempt to inspect,
verify, protect, preserve, collect, sell, liquidate or otherwise dispose of the
Collateral or any other assets of any Borrower Affiliate;
(b) to pay or reimburse the Agent and each Lender upon demand and
after notice in accordance with SECTION 14.4 for all reasonable expenses
(including, without limitation, reasonable attorneys' fees, but excluding
salaries of the Agent's or such Lender's regularly employed personnel and
overhead) incurred or paid by the Agent or such Lender in good faith in
connection with: (i) any litigation, contest, dispute, suit or proceeding or
action (whether instituted by the Agent, the Lenders, or any of them, the
Borrower or any other Person) in any way relating to this Agreement or the
other Credit Documents or to the Borrower's or any Subsidiary's affairs (other
than a dispute solely between or among the Lenders); (ii) any attempt by the
Agent or such Lender to enforce any of its rights against the Borrower or any
other Person that may be obligated to the Agent or such Lender by virtue of
this Agreement or the other Credit Documents; and (iii) any refinancing or
restructuring of the credit arrangement provided under this Agreement in the
nature of a "work-out" or in any insolvency or bankruptcy proceeding;
(c) to pay and hold the Agent and each Lender harmless from and
against any and all liability and loss with respect to or resulting from the
nonpayment or delayed payment of any and all intangibles, documentary stamp and
other similar taxes, fees and excises, if any, including any interest and
penalties, that may be, or be determined to be, payable in connection with the
transactions contemplated by this Agreement and the other Credit Documents or
in any modification hereof or thereof; and
(d) to pay and hold the Agent and each Lender harmless from and
against any and all finder's or brokerage fees and commissions that may be
payable in connection with the transactions contemplated by this Agreement and
the other Credit Documents, other than any fees or commissions of finders or
brokers engaged by the Agent or any Lender.
11.2 Administrative Fee. Pay to the Agent the administrative fee
in the amount and manner set forth in the supplemental fee letter, dated
December __, 1995, executed in connection with the Summit Holding Credit
Agreement.
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ARTICLE XII
THE AGENT
12.1 Appointment. The Lenders hereby designate and appoint First
Union as Agent to act as specified herein and in the other Credit Documents.
Each Lender hereby authorizes, and each holder of any Note by the acceptance of
such Note shall be deemed to authorize, the Agent to take such action as agent
on its behalf under the provisions of this Agreement and the other Credit
Documents and any other instruments and agreements referred to herein or
therein, and to exercise such powers and to perform such duties hereunder and
thereunder, as are specifically delegated to or required of the Agent by the
terms hereof or thereof and such other powers as are reasonably incidental
thereto. The Agent may execute any of its duties under this Agreement or any
other Credit Document by or through agents or attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact that it selects with reasonable care.
12.2 Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Credit Documents. Neither the Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it or
them as such hereunder or under any other Credit Document or in connection
herewith or therewith, unless caused by its or their gross negligence or
willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Lender
or the holder of any Note; and nothing in this Agreement or any other Credit
Document, express or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations or liabilities in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
12.3 Absence of Reliance on the Agent.
(a) Each Lender acknowledges that neither the Agent nor any of its
officers, directors, employees or agents has made any representation or
warranty to it and that no act by the Agent hereinafter taken, including any
review of the affairs of the Borrower and its Subsidiaries, shall be deemed to
constitute any representation or warranty by the Agent to any Lender.
(b) Each Lender acknowledges that, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed and may deem appropriate, (i) it has made its own
appraisal of and investigation into the business, prospects, operations,
properties, financial and other condition and creditworthiness of the Borrower
and its Subsidiaries in connection with its decision to enter into this
Agreement and extend credit to the Borrower hereunder, and (ii) it will
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action hereunder.
(c) Except as expressly provided in this Agreement, the Agent
shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender or the holder of any Note with any credit or other
information concerning the business, prospects, operations, properties,
financial
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or other condition or creditworthiness of the Borrower, its Subsidiaries or any
other Person that may come into its possession, whether before the making of
the initial Loans or at any time or times thereafter.
(d) The Agent shall not be responsible to any Lender or the holder
of any Note for any recitals, statements, information, representations or
warranties herein or in any other Credit Document or in any document,
instrument, certificate or other writing delivered in connection herewith or
therewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of the Borrower, its
Subsidiaries or any other Person, or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Credit Document, or the financial
condition of the Borrower, its Subsidiaries or any other Person or the
existence or possible existence of any Default or Event of Default.
(e) The Agent shall be under no obligation or duty to take any
action under this Agreement or any other Credit Document if taking such action
(i) would subject the Agent to a tax in any jurisdiction where it is not then
subject to a tax, (ii) would require the Agent to qualify to do business in any
jurisdiction where it is not then so qualified, unless the Agent receives
security or indemnity satisfactory to it against any tax or other liability in
connection with such qualification or resulting from the taking of such action
in connection therewith or (iii) would subject the Agent to in personam
jurisdiction in any location where it is not then so subject.
12.4 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Credit Document, the Agent shall be entitled to refrain from such act or taking
such action unless and until it shall have received such instructions, and the
Agent shall incur no liability by reason of so refraining. The Agent shall not
be obligated to take any action hereunder or under any other Credit Document
(a) if such action would, in the reasonable opinion of the Agent, be contrary
to applicable law or this Agreement or the other Credit Documents, (b) if it
shall not receive such advice or concurrence of the Required Lenders as it
reasonably deems appropriate or (c) if it shall not first be indemnified to its
satisfaction by the Lenders requesting such action against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
or holder of any Note shall have any right of action whatsoever against the
Agent as a result of the Agent's acting or refraining from acting hereunder or
under any other Credit Document in accordance with the instructions of the
Required Lenders.
12.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, other
than any Default or Event of Default arising out of the failure to pay any
principal, interest, fees or other amounts payable to the Agent for the account
of the Lenders, unless the Agent has received written notice from the Borrower
or a Lender describing such Default or Event of 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 notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also
been furnished to the Lenders, the Agent shall have no obligation to notify the
Lenders with respect thereto. Each Lender shall promptly give the Agent such a
notice upon its actual knowledge of a Default or an Event of Default; provided,
however, that the failure of any Lender to deliver such notice in the absence
of gross negligence or willful misconduct shall not affect its rights hereunder
or under the other Credit Documents.
12.6 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in
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relying, upon any note, writing, resolution, notice, statement, consent,
certificate, telex, teletype or facsimile message, order or other documentary,
teletransmission or telephone message believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person.
The Agent may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Credit Documents and its
duties hereunder and thereunder and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
12.7 Indemnification. To the extent the Agent is not reimbursed by
or on behalf of the Borrower, and without limiting the obligation of the
Borrower to do so, the Lenders will reimburse and indemnify the Agent, in
proportion to their respective percentages as used in determining the Required
Lenders, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys' fees and expenses) or disbursements of any kind or nature whatsoever
that may at any time (including at any time following the indefeasible
repayment in full of the Loans) be imposed on, incurred by or asserted against
the Agent in any way relating to or arising out of this Agreement or any other
Credit Document or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the
foregoing, and in particular will reimburse the Agent for out-of-pocket
expenses promptly upon demand by the Agent therefor; provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements finally determined by a court of competent jurisdiction and not
subject to any appeal (or pursuant to arbitration as set forth in SECTION 14.3)
to have resulted from the Agent's gross negligence or willful misconduct.
12.8 The Agent in its Individual Capacity. With respect to its
Commitments, the Loans made by it and the Notes issued to it, the Agent shall
have the same rights and powers under the Credit Documents as any other Lender
or holder of a Note and may exercise the same as though it were not performing
the agency duties specified herein; and the terms "Lenders," "Required
Lenders," "holders of Notes" and any similar terms shall, unless the context
clearly 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 banking, trust, financial advisory or other business with the Borrower or
any of its Subsidiaries or any of their respective Affiliates as if it were not
performing the agency duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
12.9 Holders. The Agent may deem and treat the payee of any Note
as the holder thereof for all purposes hereof unless and until a written notice
of the assignment, transfer or endorsement thereof, as the case may be, shall
have been filed with the Agent. Any request, authority or consent of any
Person that, 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, assignee or endorsee, as the case may be, of
such Note or of any Note or Notes issued in exchange therefor.
12.10 Successor Agent. The Agent may resign at any time upon sixty
(60) days' prior written notice to the Borrower and the Lenders. Such
resignation shall take effect upon the appointment of a successor Agent as
provided hereinbelow. Upon any such notice of resignation, the Required
Lenders (so long as no Default or Event of Default has occurred and is
continuing, with the consent of the Borrower, which consent shall not be
unreasonably withheld) will appoint from among the Lenders a successor Agent.
If no successor Agent shall have been appointed within such sixty-day period,
the Agent may appoint, after consulting with the Lenders and the Borrower, a
successor agent from among
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the Lenders, who shall serve as Agent until such time, if any, as the Required
Lenders shall have appointed a successor Agent as provided hereinabove. Upon
the written acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Credit Documents. After any retiring Agent's resignation
as Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent. Until Borrower
is duly notified of a successor Agent, all payments and notices provided to
Agent shall be deemed duly made and given under this Agreement.
12.11 Collateral Matters.
(a) The Agent is hereby authorized on behalf of all the Lenders,
without the necessity of any notice to or further consent from the Lenders,
from time to time (but without any obligation) to take any action with respect
to the Collateral and the Credit Documents that may be necessary to perfect and
maintain perfected the liens upon the Collateral granted pursuant to the Credit
Documents.
(b) The Lenders hereby irrevocably authorize the Agent, at its
option and in its discretion, to release any lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and
indefeasible payment in full of all Obligations, (ii) constituting property
sold or to be sold or disposed of as part of or in connection with a
disposition permitted hereunder, (iii) constituting property in which neither
the Borrower nor any Subsidiary owned any interest at the time such lien was
granted or at any time thereafter or (iv) if approved, authorized or ratified
in writing by the Lenders or the Required Lenders, as may be required with
respect to any such release in accordance with SECTION 14.8. Upon request by
the Agent at any time, the Lenders will confirm in writing the Agent's
authority to release Collateral pursuant to this subsection (b).
12.12 Non-receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Lender or the Borrower (any such party being herein
called the "Payor") prior to the date on which such Payor is to make payment to
the Agent of the proceeds of the Loan to be made by it hereunder (in the case
of a Lender) or such Payor is to make a payment hereunder or under the Note to
the Agent for the account of the Lenders (in the case of the Borrower), as the
case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient of such payment (and, if such recipient is the Borrower
and the Lender which is the Payor fails to pay the amount thereof to the Agent
forthwith upon such demand, the Borrower) shall, on demand, repay to the Agent
the amount made available to it, 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 the Borrower, the Default Rate, provided,
that if the Borrower has to repay such amount through no fault of its own, the
Borrower shall pay the Base Rate and (b) in the case of a Lender, for the first
three (3) Business Days the rate set by interbank custom and practice for the
correction of errors among banks and for every day thereafter the Default Rate.
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ARTICLE XIII
ASSIGNMENT AND PARTICIPATION
13.1 Assignments. (a) With the prior consent of the Agent and the
Borrower, which consent shall not be unreasonably withheld, each Lender may
assign to one or more other Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the outstanding Loans made by it and the Note or
Notes held by it); provided, however, that (i) except in the case of an
assignment to an Affiliate of such Lender or a Person that, immediately prior
to such assignment, was a Lender, the amount of the Commitments of such
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to each such
assignment) shall in no event be less than the lesser of (y) the aggregate
Commitments of such Lender immediately prior to such assignment or (z)
$5,000,000, (ii) each such assignment shall be to an Eligible Assignee, (iii)
each such assignment shall be of an equal, pro rata percentage of such Lender's
rights and obligations (including its Commitment) under each of the Term Loans
and the Revolving Loans, and (iv) the parties to each such assignment will
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment, and will pay a processing fee of $3,000 to the Agent for
its own account. Upon such execution, delivery, acceptance and recording of
the Assignment and Acceptance, from and after the effective date specified
therein (a) the assignee thereunder shall be deemed a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of
such Lender hereunder with respect thereto and (b) the assigning Lender shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of such
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree, with each
other and with the other parties hereto, as follows: (i) other than as may be
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Credit Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Credit Document or any other instrument or document furnished hereto or
pursuant thereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any of its Subsidiaries or the performance or observance by
the Borrower or any of its Subsidiaries of any of their respective obligations
under this Agreement or any other Credit Document or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
Financial Statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Agreement; (iv) such assignee will, independently and without reliance upon the
Agent, the assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (v)
such assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement
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and the other Credit Documents and any other instruments and agreements
referred to herein or therein, and to exercise such powers and to perform such
duties hereunder and thereunder, as are specifically delegated to or required
of the Agent by the terms hereof or thereof and such other powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender.
(c) The Agent will maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of the Lenders and the Commitments of, and principal
amount of the Loans owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent will, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT A, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give notice thereof to the Borrower. Within five (5)
Business Days after its receipt of such notice, the Borrower, at its own
expense, will execute and deliver to the Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to the Commitment or Commitments assumed by it pursuant to such
Assignment and Acceptance and, to the extent the assigning Lender has retained
its Commitments hereunder, a new Note or Notes to the order of the assigning
Lender in an amount equal to the Commitment or Commitments retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the forms of EXHIBIT F or G, as appropriate.
13.2 Participations. Each Lender may sell to one or more other
Persons participations in any portion comprising less than all of its rights
and obligations under this Agreement (including, without limitation, a portion
of its Commitments, the outstanding Loans made by it and the Note or Notes held
by it); provided, however, that (a) such Lender's obligations under this
Agreement shall remain unchanged, (b) such Lender shall remain solely
responsible for the performance of such obligations, (c) the Borrower, the
Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, (d) any such participation shall be in an amount of not less than
$5,000,000, (e) no Lender shall sell any participation that, when taken
together with all other participations, if any, sold by such Lender, covers all
of such Lender's rights and obligations under this Agreement (including,
without limitation, all of its Commitments, the outstanding Loans made by it
and the Note or Notes held by it), (f) each such participation shall be of an
equal, pro rata percentage of such Lender's rights and obligations (including
its Commitments) under the Term Loans and the Revolving Loans, and (g) no
Lender shall permit any participant to have any voting rights or any right to
control the vote of such Lender with respect to any amendment, modification,
waiver, consent or other action hereunder or under any other Credit Document
except as to actions of the type described in SECTION 14.8(a). In the case of
a participation, the participant shall not have any rights under this Agreement
or any of the other Credit Documents, the participant's rights against the
granting Lender in respect of such participation to be those set forth in the
participation agreement, and all amounts payable by the Borrower hereunder
shall be determined as if such Lender had not sold such
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participation; provided, however, that each such participant shall have the
rights of a Lender for purposes of SECTIONS 4.11, 4.12, 4.13, 10.2 and 10.5,
and shall be entitled to the benefits thereto, to the extent that the Lender
selling such participation would be entitled to such benefits if the
participation had not been sold.
13.3 Miscellaneous. (a) The Agent and each Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section, disclose to the assignee or
participant, or proposed assignee or participant, any information relating to
the Borrower and its Subsidiaries furnished to it by or on behalf of any other
party hereto.
(b) Nothing herein shall prohibit the pledging by any Lender of
any Note to any Federal Reserve Bank in connection with borrowings from the
Federal Reserve Bank (provided that any such pledge shall not affect the
obligations of such Lender hereunder).
ARTICLE XIV
MISCELLANEOUS
14.1 Survival of Agreements. All agreements, representations and
warranties contained herein or made in writing by or on behalf of the Borrower
in connection with the transactions contemplated hereby shall survive the
execution and delivery of this Credit Agreement and the other Credit Documents.
No termination or cancellation (regardless of cause or procedure) of this
Credit Agreement shall in any way affect or impair the powers, obligations,
duties, rights and liabilities of the parties hereto in any way with respect to
(a) any transaction or event occurring prior to such termination or
cancellation, (b) the Collateral or (c) any of the Borrower's undertakings,
agreements, covenants, warranties and representations contained in this Credit
Agreement and the other Credit Documents and all such undertakings, agreements,
covenants, warranties and representations shall survive such termination or
cancellation until payment in full of the Obligations. The Borrower further
agrees that to the extent the Borrower makes a payment or payments to the
Lenders, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or similar state or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, the Obligation or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been received by the Lenders.
14.2 Governing Law; Consent to Jurisdiction. THIS AGREEMENT HAS
BEEN EXECUTED, DELIVERED AND ACCEPTED AT, AND SHALL BE DEEMED TO HAVE BEEN MADE
IN, NORTH CAROLINA AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED
TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NORTH CAROLINA. AS PART OF THE
CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, THE BORROWER HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA
OR ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF
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NORTH CAROLINA FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE
OTHER CREDIT DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH THE LENDER OR
THE BORROWER IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR
IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWER. THE BORROWER
IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY
ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY
OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER
CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL
DIRECTED TO IT AT ITS ADDRESS SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR FIVE
(5) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND
PROPERLY ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER IN THE COURTS OF
ANY OTHER JURISDICTION.
14.3 Arbitration; Remedies. (a) Upon demand of any party hereto,
whether made before or after institution of any judicial proceeding, any
dispute, claim or controversy arising out of, connected with or relating to
this Agreement or any of the Credit Documents ("Disputes") between or among
parties hereto or thereto shall be resolved by binding arbitration as provided
herein. Institution of a judicial proceeding by a party does not waive the
right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class
actions, claims arising from documents executed in the future, or claims
arising out of or connected with the transaction contemplated by this Agreement
or any of the Credit Documents. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and
Title 9 of the U.S. Code. All arbitration hearings shall be conducted in
Charlotte, North Carolina. The expedited procedures set forth in Rule 51 et
seq. of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any Dispute.
A judgment upon the award may be entered in any court having jurisdiction. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted. Notwithstanding the
foregoing, this arbitration provision does not apply to disputes under or
related to any Hedge Agreements.
(b) Notwithstanding the foregoing, Borrower, Agent and Lenders
agree to preserve, without diminution, certain remedies that any party hereto
may employ or exercise freely, either alone, in conjunction with or during a
Dispute. Borrower, Agent and Lenders shall have the right to proceed in any
court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any
real or personal property or other security by exercising a power of sale
granted under any Credit Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
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(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the
power of an arbitrator to grant similar remedies that may be requested by a
party in a Dispute.
Borrower, Agent and Lenders agree that they shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
14.4 Notice. All notices and other communications hereunder shall
be in writing and shall be deemed to have been validly served, given or
delivered five (5) days after deposit in the United States mails with postage
prepaid, and addressed to the party to be notified as follows (it being
understood that the below-described copies of notices being sent to Persons
other than the parties to be notified shall not themselves constitute notice
hereunder):
If to the Borrower: Summit Holding Corporation
0000 X-X Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
with copies to: Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx Xxxxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
If to the Agent at: First Union National Bank of
North Carolina
Xxx Xxxxx Xxxxx Xxxxxx, XX-00
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Agency Services
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
with copies to: First Union National Bank of
North Carolina
One First Xxxxx Xxxxxx, XX-0
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000--0000
Attn: Xxxx X. Xxxxxxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
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Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
and if to any Lender, at its address specified for such Lender on its signature
page hereto or to such other address as each party may designate for itself by
like notice, or shall be deemed to have been validly served, given or delivered
on the date of delivery to such party at such address, if notice is given or
delivered by hand, telex, telegram or facsimile transmitter.
14.5 Indemnification of the Agent and the Lenders. From and at all
times after the date of this Agreement, and in addition to the fees, costs and
expenses payable under SECTION 11.1 and all of the Agent's and the Lenders'
other rights and remedies, the Borrower agrees to indemnify, defend and hold
harmless the Agent and each Lender and each of their respective directors,
officers, employees, agents and Affiliates (each, an "Indemnified Person")
against any and all claims, losses, damages, liabilities, requirements,
judgments, liens, costs and expenses of any kind or nature whatsoever,
including, without limitation, reasonable attorneys' fees and expenses
(collectively, "Indemnified Costs"), actually incurred by or asserted against
any such Indemnified Person from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way
relating to any action, suit or proceeding (including any inquiry or
investigation) by any Person, whether threatened or initiated, arising from or
in connection with the negotiation, preparation, execution, breach, performance
or enforcement of this Agreement, any of the other Credit Documents, the
exercise of any right or remedy hereunder or thereunder, including, without
limitation, the actual or alleged (a) generation, presence, transport, disposal
or release of any Hazardous Substance by any Borrower Affiliate on, to, in,
about or from any real property owned or operated by any Borrower Affiliate
(currently or in the past), or (b) violation of any Environmental Law by any
Borrower Affiliate, in any case whether or not any such Indemnified Person is a
party to any such action, suit or proceeding or a subject of any such inquiry
or investigation; provided, however, that no Indemnified Person shall have the
right to be indemnified hereunder for any Indemnified Costs to the extent
resulting from the gross negligence or willful misconduct of such Indemnified
Person as finally determined pursuant to SECTION 14.3. All of the foregoing
Indemnified Costs of any Indemnified Person shall be paid or reimbursed by the
Borrower, as and when incurred and upon demand, and shall be additional
Obligations hereunder.
14.6 Waivers by the Borrower. Except as otherwise provided for in
this Credit Agreement, the Borrower waives (a) presentment, demand and protest
and notice of presentment, protest, default, non-payment, maturity and all
other notices; (b) notice prior to taking possession or control of the
Collateral or any bond or security that might be required by any court prior to
allowing the Agent or any Lender to exercise any of the Lenders' remedies under
this Credit Agreement or the other Credit Documents; and (c) the benefit of all
valuation, appraisement and exemption laws.
14.7 Assignment and Sale. The Borrower may not sell, assign or
transfer this Credit Agreement, or the other Credit Documents or any portion
thereof, including without limitation, the Borrower's rights, title, interests,
remedies, powers, and duties hereunder or thereunder. The Borrower hereby
consents to any of the Lenders' participation, sale, assignment, transfer or
other disposition at any time or times hereafter of this Credit Agreement or
the other Credit Documents or of the Borrower's Obligations, or of any portion
hereof or thereof, including without limitation, such Lender's rights, title,
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interests, remedies, powers and duties hereunder or thereunder.
14.8 Amendment or Waiver. Except as may be otherwise specifically
set forth in this Agreement or the other Credit Documents, neither this
Agreement nor any other Credit Document nor any provision hereof or thereof may
be amended, modified, waived, discharged or terminated, and no consent to any
departure by the Borrower from any provision hereof or thereof may be given,
except in a writing signed by the Required Lenders; provided, however, that:
(a) no such amendment, modification, waiver, discharge,
termination or consent shall, without the consent of each Lender holding
Obligations directly affected thereby, (i) reduce the principal amount of, or
rate of interest on, any Loan, or reduce any fees or other Obligations (other
than fees payable to the Agent for its own account) or any obligations of any
Person now or hereafter primarily or contingently liable with respect to the
Obligations or (ii) postpone any date fixed for any payment of principal,
interest (other than additional interest payable hereunder during the
continuance of an Event of Default), fees (other than fees payable to the Agent
for its own account) or any other Obligations;
(b) no such amendment, modification, waiver, discharge,
termination or consent shall, without the consent of all Lenders, (i) increase
the Commitments of any Lender (it being understood that a waiver of any Default
or Event of Default or of any mandatory reduction in the Total Commitment shall
not constitute such an increase), (ii) change the definition of "Required
Lenders" or otherwise change the number or percentage of Lenders that shall be
required for the Lenders or any of them to take or approve, or direct the Agent
to take, any action hereunder, (iii) amend, modify or waive any of the
provisions for extending, or take action to extend, the term of the (iv) amend
any provision of this Section or of SECTIONS 4.11, 4.12, 4.13, 10.2 or 10.5,
(vi) release any of the Collateral or (vii) consent to the assignment or
transfer by the Borrower, or by any other Person now or hereafter primarily or
contingently liable with respect to the Obligations, of any of its rights and
obligations under this Agreement or any of the other Credit Documents;
(c) no provision relating to the rights or obligations of the
Agent under this Agreement or any of the other Credit Documents may be amended,
modified or waived without the consent of the Agent.
14.9 Severability. To the extent any provision of this Agreement
is prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Credit Agreement.
14.10 Entire Agreement. This Credit Agreement and the other
documents, certificates and instruments referred to herein constitute the
entire agreement between the parties and supersede and rescind any prior
agreements relating to the subject matter hereof, including, without
limitation, the Commitment Letter.
14.11 Binding Effect. All of the terms of this Credit Agreement and
the other Credit Documents, as the same may from time to time be amended, shall
be binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of the Borrower, the Agent and the Lenders. This
provision, however, shall not be deemed to modify SECTION 14.7.
14.12 Execution in Counterparts. This Credit Agreement may be
executed in two or more counterparts, which when assembled shall constitute one
and the same agreement.
93
Page 87
14.13 Conflict of Terms. The provisions of the exhibits hereto and
the other Credit Documents and any schedule or annex hereto are incorporated in
this Credit Agreement by this reference thereto. Except as otherwise provided
in this Credit Agreement and except as otherwise provided in the other Credit
Documents, if any provision contained in this Credit Agreement is in conflict
with, or inconsistent with, any provision of the other Credit Documents, the
provision contained in this Credit Agreement shall control.
14.14 Injunctive Relief. The Borrower recognizes that in the event
the Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Credit Agreement, any remedy of law may prove to be
inadequate relief to the Lenders. The Borrower therefore agrees that the
Lenders, if the Lenders so request, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
94
Page 88
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed in their corporate names by their duly authorized
corporate officers as of the date first above written.
SUMMIT HOLDING SOUTHEAST, INC.
By:
---------------------------------------
Title:
---------------------------------------
(signatures continued)
95
Page 00
XXXXX XXXXX XXXXXXXX XXXX
XX XXXXX XXXXXXXX, as Agent and as Lender
Term Loan Commitment: By:
---------------------------------------
$ Title:
--------------------- ---------------------------------------
Revolving Credit Commitment:
$ [Insert address and payment information]
---------------------
(signatures continued)
96
Page 90
BANK ONE, TEXAS, N.A.
Term Loan Commitment: By:
---------------------------------------
Title:
---------------------------------------
$
---------------------
Revolving Credit Commitment: [Insert address and payment information]
$
---------------------
(signatures continued)
97
Page 00
XXXXX XXXX XX XXXXXXXXXX, N.A.
Term Loan Commitment: By:
---------------------------------------
Title:
---------------------------------------
$
---------------------
Revolving Credit Commitment: [Insert address and payment information]
$
---------------------
(signatures continued)
98
Page 92
SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION
Term Loan Commitment: By:
---------------------------------------
Title:
---------------------------------------
$
---------------------
Revolving Credit Commitment: [Insert address and payment information]
$
---------------------
99
Exhibit 10.3
November 19, 1996
Summit Holding Corporation
0000 X-X Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Re: Proposed Initial Public Offering
Ladies and Gentlemen:
This letter refers to the credit agreement (the "Credit Agreement") and
amended as of the date hereof, dated as of January 16, 1996, between Summit
Holding Corporation (the "Borrower"), First Union National Bank of North
Carolina ("First Union"), SouthTrust Bank of Alabama, National Association
("South Trust"), Union Bank of California, N.A. ("Union Bank") and Bank One
Texas, N.A. ("Bank One") (First Union, SouthTrust, Union Bank and Bank One being
collectively referred to as the "Lenders") and First Union in its capacity as
agent (the "Agent"). Capitalized terms will have the meanings given them in the
Credit Agreement.
The Leaders and the Agent have considered certain proposals of the Borrower
concerning its ownership structure and understand that the Borrower and
Employers Self Insurers Fund ("ESIF") desire to effect a corporate
reorganization pursuant to which (i) ESIF would be converted (the "Conversion")
to a stock insurance company to be named "Bridgefield Employers Insurance
Company" ("Bridgefield Employers"), (ii) ESIF would organize a new corporation
named Summit Holding Southeast, Inc. ("Summit Southeast") that would acquire
ownership of Borrower and Bridgefield Employers and complete an initial public
offering and/or private placement of its capital stock (the "IPO") and (iii) the
capital stock of Bridgefield Casualty Insurance Company ("Bridgefield Casualty")
would be contributed to Bridgefield Employers ("the Capital Contribution"). The
Conversion, the IPO, and the Capital Contribution are referred to collectively
as the "Transactions". The Borrower has requested that the Lenders consent to
the restructuring of the Loans to accommodate the Transactions.
The Lenders confirm to the Borrower that they are willing to consider and
discuss the restructuring of the Loans such that Summit Southeast would succeed
the Borrower as borrower under the Credit Agreement (and the waiver of the
prepayment requirement of Section 7.1(b) of the Credit Agreement). The Lenders
emphasize, however, that the foregoing is intended only as a non-binding
expression of their present willingness to consider such restructuring, and that
any binding agreement to agree on a restructuring would be subject to the
conditions customarily relied upon by lenders in similar transactions.
In connection with the Transactions, these conditions would include (but
would not be limited to) the following: (a) the Leaders would need to have
approved of the final pro forma corporate organization, capital structure and
capitalization of each of the Borrower and its Affiliates; (b) the Lenders shall
have been permitted to conduct a due diligence review with respect to the
Transactions so that each is comfortable with the pro forma corporate and
capital structure and the Transactions generally; (c) the Lenders shall be
satisfied that the Management Agreements will remain unchanged after giving
effect to the Transactions in a manner satisfactory to the Lenders; and (d) the
parties shall have entered into satisfactory loan documentation containing such
changes to the existing credit agreement and such collateral as are deemed
necessary by the Lenders. In addition, any agreement of the Lenders to
restructure the Loans would be contingent on the receipt of any required
regulatory approvals relating to the Transactions, the loan documentation and
the Management Agreements.
In addition, the Lenders require, as an additional condition, that the
Borrower file its initial registration statement on Form S-1 with the Securities
and Exchange Commission in connection with the IPO within seven days from the
date hereof.
The Lenders agree that the restructuring of the Loans will include, among
other changes, restoring the applicable interest rates on the Loans to those
set forth in the Credit Agreement before the amendment effective on the date
hereof.
100
This letter does not constitute a modification, amendment or waiver of any
provision of Credit Agreement, which shall remain in force and effect on the
terms thereof.
This letter agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute but one instrument.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA (AS AGENT AND LENDER)
BY:
--------------------------------------
TITLE:
--------------------------------------
SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION
BY:
--------------------------------------
TITLE:
--------------------------------------
UNION BANK OF CALIFORNIA, N.A.
BY:
--------------------------------------
TITLE:
--------------------------------------
BANK ONE, TEXAS, N.A.
BY:
--------------------------------------
TITLE:
--------------------------------------
101
AGREED TO AND ACCEPTED:
SUMMIT HOLDING CORPORATION
BY:
----------------------------------------------------
TITLE:
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