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CREDIT AGREEMENT
Dated as of July 24, 1997
between
ZENITH NATIONAL INSURANCE CORP.,
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
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TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . 12
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Amounts and Terms of Commitments. . . . . . . . . . . . . . . . . . 13
(a) The Tranche A Credit . . . . . . . . . . . . . . . . . . . . . 13
(b) The Tranche B Credit . . . . . . . . . . . . . . . . . . . . . 13
2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . 13
2.4 Conversion and Continuation Elections . . . . . . . . . . . . . . . 14
2.5 Voluntary Termination or Reduction of Commitments . . . . . . . . . 15
2.6 Optional Prepayments. . . . . . . . . . . . . . . . . . . . . . . . 15
2.7 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) The Tranche A Credit . . . . . . . . . . . . . . . . . . . . . 15
(b) The Tranche B Credit . . . . . . . . . . . . . . . . . . . . . 15
2.8 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.9 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Arrangement Fee. . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . 16
2.10 Computation of Fees and Interest. . . . . . . . . . . . . . . . . . 16
2.11 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY. . . . . . . . . . . . . 17
3.1 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 Increased Costs and Reduction of Return . . . . . . . . . . . . . . 18
3.4 Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.5 Inability to Determine Rates. . . . . . . . . . . . . . . . . . . . 19
3.6 Certificates of Bank. . . . . . . . . . . . . . . . . . . . . . . . 20
3.7 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Conditions of Effectiveness . . . . . . . . . . . . . . . . . . . . 20
(a) Credit Agreement and Notes . . . . . . . . . . . . . . . . . . 20
(b) Resolutions; Incumbency. . . . . . . . . . . . . . . . . . . . 20
(c) Organization Documents; Good Standing. . . . . . . . . . . . . 20
(d) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Payment of Fees. . . . . . . . . . . . . . . . . . . . . . . . 20
(f) Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Other Documents. . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Conditions to All Borrowings. . . . . . . . . . . . . . . . . . . . 21
(a) Notice of Borrowing or Conversion/ Continuation. . . . . . . . 21
(b) Continuation of Representations and Warranties . . . . . . . . 21
(c) No Existing Default. . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 21
5.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . 21
5.2 Corporate Authorization; No Contravention . . . . . . . . . . . . . 22
5.3 Governmental Authorization. . . . . . . . . . . . . . . . . . . . . 22
5.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.6 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section Page
5.8 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . 23
5.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . 23
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . 23
5.12 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 24
5.13 Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . . . 24
5.14 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . . 24
5.15 Copyrights, Patents, Trademarks and Licenses, etc.. . . . . . . . . 24
5.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.18 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 25
6.1 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . 26
6.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . 28
6.5 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.7 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . . 28
6.8 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 29
6.9 Inspection of Property and Books and Records. . . . . . . . . . . . 29
6.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.11 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 29
7.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . 30
7.3 Consolidations and Mergers. . . . . . . . . . . . . . . . . . . . . 30
7.4 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . . . 30
7.6 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . 30
7.7 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.8 Change in Business. . . . . . . . . . . . . . . . . . . . . . . . . 31
7.9 Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . . . 31
7.10 Minimum Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.11 Debt to Total Capitalization. . . . . . . . . . . . . . . . . . . . 31
7.12 Risk-Based Capital. . . . . . . . . . . . . . . . . . . . . . . . . 31
7.13 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Non-Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Representation or Warranty . . . . . . . . . . . . . . . . . . 31
(c) Specific Defaults. . . . . . . . . . . . . . . . . . . . . . . 31
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . 32
(e) Cross-Payment and Acceleration . . . . . . . . . . . . . . . . 32
(f) Insolvency; Voluntary Proceedings. . . . . . . . . . . . . . . 32
(g) Involuntary Proceedings. . . . . . . . . . . . . . . . . . . . 32
(h) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(i) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . 33
(j) Non-Monetary Judgments . . . . . . . . . . . . . . . . . . . . 33
(k) Change of Control. . . . . . . . . . . . . . . . . . . . . . . 33
(l) Loss of Licenses . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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Section Page
8.3 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . 34
9.4 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 34
9.5 Company Indemnification . . . . . . . . . . . . . . . . . . . . . . 35
9.6 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . 35
9.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . 35
9.9 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.11 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.12 No Third Parties Benefited. . . . . . . . . . . . . . . . . . . . . 37
9.13 Governing Law and Jurisdiction. . . . . . . . . . . . . . . . . . . 37
9.14 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . 37
9.15 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 38
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SCHEDULES
Schedule 5.5 Litigation
Schedule 5.7 ERISA
Schedule 5.12 Environmental Matters
Schedule 5.16 Subsidiaries
Schedule 5.17 Insurance Matters
Schedule 9.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Tranche A Note
Exhibit F-2 Form of Tranche B Note
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of July 24, 1997, between ZENITH
NATIONAL INSURANCE CORP., a Delaware corporation (the "COMPANY") and Bank of
America National Trust and Savings Association (together with its successors
and assigns, the "BANK").
WHEREAS, the Bank has agreed to make available to the Company a revolving
credit facility upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. The following terms have the following
meanings:
"ADJUSTED CAPITAL" shall mean, as to any Insurance Subsidiary, as of
any date, the total adjusted surplus to policyholders shown on line 25, page
22, column 1 of the Annual Statement of such Insurance Subsidiary, or an
amount determined in a consistent manner for any date other than one as of
which an Annual Statement is prepared.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, membership
interests, by contract, or otherwise.
"AGREEMENT" means this Credit Agreement.
"AMOUNTS AVAILABLE FOR DIVIDENDS" shall mean, without duplication,
the amount that is paid or may be paid by ZIC as a dividend at any time
during the then current calendar year without being an "extraordinary
dividend" under Section 1215.5(c) of the California Insurance Code.
"ANNUAL STATEMENT" shall mean, as to any Insurance Subsidiary, the
annual financial statement of such Insurance Subsidiary as required to be
filed with the applicable Department, together with all exhibits or schedules
filed therewith, prepared in conformity with SAP. 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 1996 Property
and Casualty Company 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 1996 Annual
Statement of such Insurance Subsidiary.
"APPLICABLE INSURANCE CODE" shall mean, as to any Insurance
Subsidiary, the insurance code of any state where such Insurance Subsidiary
is domiciled or doing insurance business 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
Applicable Insurance Code shall be construed to also refer to successor
sections.
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"APPLICABLE MARGIN" means (a) as to Base Rate Loans, 0% per annum,
(b) as to Tranche A Loans that are Offshore Rate Loans, .375% per annum and
(c) as to Tranche B Loans that are Offshore Rate Loans, the margin set forth
in the table below based on the debt rating of the Company by Xxxxx'x and/or
S&P:
LONG-TERM DEBT RATING
OF COMPANY APPLICABLE MARGIN
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A/A2 or higher .275%
A-/A3 .350%
BBB+/Baa1 .475%
BBB/Baa2 or lower .75%
Any adjustment in the applicable margin as a result of a change in
the rating of the company's long-term public debt by xxxxx'x and/or s& p's
shall be effective as of the effective date of the change in such rating. In
the event the rating by xxxxx'x and s&p's corporation do not fall in the same
category provided above, the applicable margin shall be determined by adding
one level to the lower of the two rating levels.
"ASSIGNEE" has the meaning specified in SECTION 9.8(a).
"ATTORNEY COSTS" means and includes all fees and disbursements of
any law firm or other external counsel and without duplication, the allocated
cost of internal legal services and all disbursements of internal counsel.
"BANK" has the meaning specified in the introductory clause hereto.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, ET SEQ.).
"BASE RATE" means, for any day, the higher of:
(a) 0.50% per annum above the latest Federal Funds Rate; and
(b) the rate of interest in effect for such day as publicly
announced from time to time by the Bank in San Francisco, California, as
its "reference rate."
(The "reference rate" is a rate set by the Bank based upon various
factors including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing
some loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by the Bank shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"BASE RATE LOAN" means a Loan that bears interest based on the Base
Rate.
"BORROWING" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by the Bank under ARTICLE II,
and, other than in the case of Base Rate Loans, having the same Interest
Period.
"BORROWING DATE" means any date on which a Borrowing occurs under
SECTION 2.3.
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"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in Chicago or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"CALFARM" means CalFarm Insurance Company, a California corporation.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CAPITAL AND SURPLUS" shall mean, as to any Insurance Subsidiary, as
of the date of the Annual Statement, the total amount shown on line 25, page
3, column 1 of the Annual Statement of such Insurance Subsidiary, or an
amount determined in a manner consistent with the Annual Statement for any
fiscal quarter which does not end on the date of the Annual Statement.
"CHANGE OF CONTROL" means (a) any Person, or two or more Persons,
acting in concert, directly or indirectly acquire after the Closing Date
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended) of
51% or more of the outstanding shares of voting stock of the Company or (b)
individuals who as of the Closing Date constituted the Company's Board of
Directors (together with any new director whose election by the Company's
Board of Directors or whose nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously so
approved), for any reason, cease to constitute a majority of the directors at
any time then in office or (c) the Company ceases to own 100% of the capital
stock of any of the following on a fully-diluted basis: ZIC or CalFarm.
"CLOSING DATE" means the date on which this Agreement is effective
which shall be the date on which all the conditions in SECTION 4.1 are
satisfied.
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"COMMITMENT" means the Tranche A Commitment and the Tranche B
Commitment.
"COMPANY" has the meaning specified in the introductory clause
hereto.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of EXHIBIT C.
"CONTINGENT OBLIGATION" shall mean any agreement, undertaking or
arrangement (other than insurance and reinsurance obligations and surety
bonds, in each case entered into in the ordinary course of business) by which
any Person guarantees, endorses 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 but excluding the
Company's agreement to subordinate debt owed to it by Perma-Bilt, a Nevada
corporation, to amounts owed to the Bank) the debt, obligation or other
liability of any other Person (other than by endorsements of instruments in
the course of collection), or guarantees the payment of dividends or other
distributions
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upon the shares of any other Person. The amount of any Person's obligation
under any Contingent Obligation shall (subject to any limitation set forth
therein) be deemed to be the outstanding principal amount of the debt,
obligation or other liability guaranteed thereby.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound other than insurance and reinsurance obligations and surety
bonds, in each case entered into in the ordinary course of business.
"CONVERSION/CONTINUATION DATE" means any date on which, under
SECTION 2.4, the Company (a) converts Loans of one Type to another Type, or
(b) continues as Loans of the same Type, but with a new Interest Period,
Loans having Interest Periods expiring on such date.
"DEBT TO TOTAL CAPITALIZATION RATIO" shall mean the ratio of (a) the
principal of all Indebtedness of the Company described in clauses (a), (d) or
(f) of the definition thereof for which the Company is directly liable or
which is a Contingent Obligation of the Company to (b) Total Capitalization.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"DEPARTMENT" means, as to any insurance company, the state
department of insurance of the state of domicile of such insurance company.
"DISPOSITION" means (a) the sale, lease, assignment, conveyance or
other disposition or transfer of property, and (b) the sale or transfer by
the Company or any Subsidiary of the Company of any equity securities issued
by any Subsidiary of the Company and held by such transferor Person.
"DOLLARS", "DOLLARS" and "$" each mean lawful money of the United
States.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, and having a combined capital and surplus of at least
$100,000,000; PROVIDED, THAT such bank is acting through a branch or agency
located in the United States; and (c) a Person that is primarily engaged in
the business of commercial banking and that is (i) a Subsidiary of the Bank,
(ii) a Subsidiary of a Person of which the Bank is a Subsidiary, or (iii) a
Person of which the Bank is a Subsidiary.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land
use matters.
"ENVIRONMENTAL PERMITS" has the meaning specified in SECTION 5.12(b).
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"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a Plan;
(b) a withdrawal by the Company or any ERISA Affiliate from a Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Plan or
Multiemployer Plan; (e) an event or condition which would reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the
definition of "Offshore Rate".
"EVENT OF DEFAULT" means any of the events or circumstances
specified in SECTION 8.1.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor to release H.15(519)) on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City which are selected by the Bank.
"FIXED INTEREST CHARGES" shall mean interest paid or, without
duplication, accrued but unpaid on the Loans or any other Indebtedness
described in clauses (a) or (d) of the definition thereof, which shall be
determined at the end of each fiscal quarter for the four consecutive fiscal
quarters then ended.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles in the United
States, which are applicable to the circumstances as of the date of
determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary
-5-
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GUARANTY OBLIGATION" means to assure or hold harmless the holder of
any such primary obligation against loss in respect thereof.
"HAZARDOUS MATERIALS" means all those substances that are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all net obligations with
respect to Swap Contracts; (h) all indebtedness referred to in clauses (a)
through (g) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (g) above.
"INDEMNIFIED LIABILITIES" has the meaning specified in SECTION 9.5.
"INDEMNIFIED PERSON" has the meaning specified in SECTION 9.5.
"INDEPENDENT AUDITOR" has the meaning specified in SECTION 6.1(a).
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.
"INSURANCE SUBSIDIARY" shall mean any Subsidiary of the Company
(other than ZIC Lloyd's Underwriting Limited, Zenith Risk Management, Inc.
and CalFarm Insurance Agency or any other Subsidiary which does not issue or
underwrite insurance or reinsurance) that is authorized or admitted to carry
on or transact one or more aspects of the business of selling, issuing or
underwriting insurance or reinsurance.
"INTEREST COVERAGE RATIO" shall mean the ratio of (a) (i) Amounts
Available for Dividends, plus (ii) pre-tax income from the Non-Insurance
Subsidiaries as of the end of each fiscal quarter for the four quarters then
-6-
ended, plus (iii) without duplication, pre-tax, pre-interest income of the
Company as of the end of each fiscal quarter for the four quarters then ended
to (b) Fixed Interest Charges.
"INTEREST PAYMENT DATE" means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the last Business Day of each calendar quarter and each
date such Loan is converted into another Type of Loan; PROVIDED, HOWEVER,
that if any Interest Period for an Offshore Rate Loan exceeds three months
the date that falls three months after the beginning of such Interest Period
and after each Interest Payment Date thereafter is also an Interest Payment
Date.
"INTEREST PERIOD" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/
Continuation Date on which the Loan is converted into or continued as an
Offshore Rate Loan, and ending on the date one, two, three or six months
thereafter as selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; PROVIDED, THAT:
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period; and
(c) no Interest Period for any Loan shall extend beyond (i) in the
case of Tranche A Loans, the Tranche A Termination Date and (ii) in the
case of Tranche B Loans, the Tranche B Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LENDING OFFICE" means the office or offices of the Bank specified
as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending
Office", as the case may be, on SCHEDULE 9.2, or such other office or offices
as the Bank may from time to time notify the Company.
"LIEN" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the foregoing,
or the filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the Uniform Commercial Code or any
comparable law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an operating
lease.
"LOAN" means an extension of credit by the Bank to the Company under
ARTICLE II, and may be a Base Rate Loan or an Offshore Rate Loan (each, a
"TYPE" of Loan), and includes any Tranche A Loan or Tranche B Loan.
-7-
"LOAN DOCUMENTS" means this Agreement, any Notes and all other
documents delivered to the Bank in connection herewith.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties or
condition (financial or otherwise) of the Company or the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of
the Company to perform under any Loan Document and to avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against the Company of any Loan Document.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc. and any
successor thereto.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or, during
the preceding three calendar years, has made, or been obligated to make,
contributions.
"NAIC" shall mean the National Association of Insurance
Commissioners, or any successor organization.
"NON-INSURANCE SUBSIDIARY" means any Subsidiary which is not an
Insurance Subsidiary.
"NOTES" means, collectively, the Tranche A Note and the Tranche B
Note.
"NOTICE OF BORROWING" means a notice in substantially the form of
EXHIBIT A.
"NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
the form of EXHIBIT B.
"OBLIGATIONS" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company to
the Bank or any Indemnified Person, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due,
now existing or hereafter arising.
"OECD" has the meaning specified in the definition of "Eligible
Assignee".
"OFFSHORE RATE" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Bank as follows:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any
Interest Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day which is
applicable to the Bank under regulations issued from time to time by the FRB
for determining the maximum reserve requirement (including any emergency,
-8-
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency liabilities").
"IBOR" means the rate of interest per annum determined by the
Bank as the rate at which dollar deposits in the approximate amount of the
Bank's Offshore Rate Loan for such Interest Period would be offered by the
Bank's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may
be designated for such purpose by the Bank), to major banks in the offshore
dollar interbank market at their request at approximately 11:00 a.m. (New
York City time) two Business Days prior to the commencement of such Interest
Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any change
in the Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means a Loan that bears interest based on the
Offshore Rate.
"ORGANIZATION DOCUMENTS" means, for any corporation, partnership or
limited liability company, the certificate or articles of incorporation,
partnership agreement, operating agreement, bylaws or similar document,
certificate of determination or instrument relating to the rights of
preferred shareholders of such corporation, shareholder rights agreement, and
all applicable resolutions of the board of directors (or any committee
thereof) or similar body of such entity.
"OTHER TAXES" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to this Agreement or any other
Loan Documents.
"PARTICIPANT" has the meaning specified in SECTION 9.8(c).
"PAYMENT OFFICE" means 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000 or such other office as may be designated by the Bank to the Company in
writing.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"PERMITTED LIENS" has the meaning specified in SECTION 7.1.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association or Governmental Authority.
"PLAN" means a pension plan (as defined in Section 3(2) of ERISA
which is subject to Title IV of ERISA) which the Company sponsors or
maintains or to which the Company makes, is making, or is obligated to make
contributions or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"REPORTABLE EVENT" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"REQUIREMENT OF LAW" means, as to any Person, any law, treaty, rule
or regulation or determination of an arbitrator or of a Governmental
-9-
Authority, in each case applicable to or binding upon the Person or any of
its property or to which the Person or any of its property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer or the
president of the Company, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the chief executive officer, chief financial officer or the
treasurer of the Company, or any other officer having substantially the same
authority and responsibility.
"RISK-BASED CAPITAL" shall mean, with respect to any Insurance
Subsidiary, the ratio of Adjusted Capital of such Insurance Subsidiary to the
Company Action Level of such Insurance Company (as determined by the NAIC or
the applicable Department). In the event that there is a conflict between
the Risk-Based Capital formulas adopted by the NAIC and any applicable
Department, the calculation of the Department shall govern.
"S&P'S" shall mean Standard & Poor's Ratings Group and any successor
thereto.
"SAP" shall mean, as to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the Department.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"SIGNIFICANT SUBSIDIARY" means a "significant subsidiary" as such
term is defined in Regulation S-X of the Securities Act of 1933, as amended.
"SOLVENT" means, as to any Person at any time, that (a) the fair
value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(31) of the Bankruptcy Code and, in the alternative,
for purposes of the Uniform Fraudulent Transfer Act; (b) the present fair
saleable value of the property of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person is able to realize
upon its property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the
normal course of business; (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability
to pay as such debts and liabilities mature; and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would constitute
unreasonably small capital.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"SURETY INSTRUMENTS" means all letters of credit (including standby
and commercial), banker's acceptances, surety bonds and similar instruments
but excluding insurance and reinsurance obligations and surety obligations,
in each case entered into in the ordinary course of business.
"SWAP CONTRACT" means any agreement (including any master agreement
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate
-10-
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, forward foreign exchange
agreement, rate cap, collar or floor agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option or any other,
similar agreement (including any option to enter into any of the foregoing).
"TAXES" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of the Bank, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by each Bank's net
income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Bank, as the case may be, is organized or maintains a
Lending Office.
"TOTAL CAPITALIZATION" shall mean (a) principal of all Indebtedness
of the Company described in clauses (a), (d) or (f) of the definition thereof
for which the Company is directly liable or a Contingent Obligation of the
Company related to Indebtedness described in one of such clauses plus (b) the
Total Shareholders' Equity of the Company.
"TOTAL SHAREHOLDERS' EQUITY" shall mean the total shareholders'
equity of a Person as determined in accordance with GAAP (calculated
excluding unrealized gains (losses) of securities as determined in accordance
with FASB 115).
"TRANCHE A COMMITMENT" has the meaning specified in SECTION 2.1(a).
"TRANCHE A LOAN" has the meaning specified in SECTION 2.1.
"TRANCHE A NOTE" means a promissory note executed by the Company in
favor of the Bank pursuant to SECTION 2.2, in substantially the form of
EXHIBIT F-1.
"TRANCHE A TERMINATION DATE" means the earlier to occur of:
(a) July 23, 1998; and
(b) the date on which the Tranche A Commitment terminates in
accordance with the provisions of this Agreement.
"TRANCHE B COMMITMENT" has the meaning specified in SECTION 2.1(b).
"TRANCHE B LOAN" has the meaning specified in SECTION 2.1.
"TRANCHE B NOTE" means a promissory note executed by the Company in
favor of the Bank pursuant to SECTION 2.2, in substantially the form of
EXHIBIT F-2.
"TRANCHE B TERMINATION DATE" means the earlier to occur of:
(a) July 24, 2002; and
(b) the date on which the Tranche B Commitment terminates in
accordance with the provisions of this Agreement.
"Type" has the meaning specified in the definition of "Loan."
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Plan pursuant to Section 412 of the Code for the applicable plan
year.
-11-
"UNITED STATES" and "U.S." each means the United States of America.
"WHOLLY-OWNED SUBSIDIARY" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination is
being made, is owned, beneficially and of record, by the Company, or by one
or more of the other Wholly-Owned Subsidiaries, or both.
"ZIC" means Zenith Insurance Company, a California corporation.
1.2 OTHER INTERPRETIVE PROVISIONS. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through" means "to
and including."
(iv) The term "property" includes any kind of property or asset,
real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are separate and
distinct limitations, tests and measurements and shall each be performed in
accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Bank and the
Company and are the products of all parties. Accordingly, they shall not be
construed against the Bank merely because of its involvement in their
preparation.
1.3 ACCOUNTING PRINCIPLES. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be
-12-
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 AMOUNTS AND TERMS OF COMMITMENTS.
(a) THE TRANCHE A CREDIT. The Bank agrees, on the terms and
conditions set forth herein, to make loans to the Company (each such Loan, a
"TRANCHE A LOAN") from time to time on any Business Day during the period
from the Closing Date to the Tranche A Termination Date in an aggregate
amount not to exceed at any time outstanding $20,000,000 (such amount as the
same may be reduced under SECTION 2.5, the "TRANCHE A COMMITMENT"). Within
the limits of the Tranche A Commitment, and subject to the other terms and
conditions hereof, the Company may borrow under this SECTION 2.1(a), prepay
under SECTION 2.6 and reborrow under this SECTION 2.1(a).
(b) THE TRANCHE B CREDIT. The Bank agrees, on the terms and
conditions set forth herein, to make loans to the Company (each such loan, a
"TRANCHE B LOAN") from time to time on any Business Day during the period
from the Closing Date to the Tranche B Termination Date, in an aggregate
amount not to exceed at any time outstanding $30,000,000 (such amount as the
same may be reduced under SECTION 2.5, the "TRANCHE B COMMITMENT"). Within
the limits of the Tranche B Commitment, and subject to the other terms and
conditions hereof, the Company may borrow under this SECTION 2.1(b), prepay
under SECTION 2.6 and reborrow under this SECTION 2.1(b).
2.2 NOTES. The Loans made by the Bank shall be evidenced by the Notes.
The Bank shall record on the schedules annexed to its Notes the date, amount
and maturity of each Loan made by it and the amount of each payment of
principal made by the Company with respect thereto. The Bank is irrevocably
authorized by the Company to record on its Notes and the Bank's record shall
be conclusive and binding unless the Company objects to such record within 30
days of having notice of any notation thereon; PROVIDED, HOWEVER, that the
failure of the Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of
the Company hereunder or under any such Note to the Bank.
2.3 PROCEDURE FOR BORROWING. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Bank in the form of a
Notice of Borrowing (which notice must be received by the Bank prior to 11:00
a.m. (Chicago time) (i) three Business Days prior to the requested Borrowing
Date, in the case of Offshore Rate Loans and (ii) on the requested Borrowing
Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $250,000 or any multiple of $10,000 in
excess thereof;
(B) the requested Borrowing Date, which shall be a Business Day;
(C) the Type of Loans comprising the Borrowing;
(D) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing fails to
specify the duration of the Interest Period for any
-13-
Borrowing comprised of Offshore Rate Loans, such Interest Period shall
be three months; and
(E) whether such Loan is a Tranche A Loan or a Tranche B Loan.
(b) The proceeds of all Loans will be made available to the Company
by the Bank by crediting the account of the Company on the books of the Bank
with the aggregate of such Loan or by wire transfer in accordance with
written instructions provided to the Bank by the Company.
(c) After giving effect to any Borrowing, there may not be more than
fifteen different Interest Periods in effect.
2.4 CONVERSION AND CONTINUATION ELECTIONS. (a) The Company may, upon
irrevocable written notice to the Bank in accordance with SECTION 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of any other Type of Loans, to convert any such Loans (or any part
thereof in an amount not less than $250,000, or that is in an integral
multiple of $1,000 in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods expiring on such
day (or any part thereof in an amount not less than $250,000, or that is
in an integral multiple of $1,000 in excess thereof);
PROVIDED, THAT if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $250,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert such Loans into
Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Bank not later than 11:00 a.m. (Chicago time) at least (i)
three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as Offshore Rate Loans and (ii)
on the Conversion/Continuation Date, if the Loans are to be converted into
Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
renewed;
(C) the Type of Loans resulting from the proposed conversion
or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans or if any Default or
Event of Default then exists, the Company shall be deemed to have elected to
convert such Offshore Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
-14-
(d) During the existence of a Default or Event of Default, the
Company may not elect to have a Loan converted into or continued as an
Offshore Rate Loan.
(e) After giving effect to any conversion or continuation of Loans,
there may not be more than fifteen different Interest Periods in effect.
2.5 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. The Company may,
upon not less than one Business Days' prior notice to the Bank, terminate the
Tranche A Commitment or the Tranche B Commitment, or permanently reduce the
Tranche A Commitment or the Tranche B Commitment by an aggregate minimum
amount of $1,000,000 or any multiple of $100,000 in excess thereof; unless,
after giving effect thereto and to any prepayments of Tranche A Loans or
Tranche B Loans made on the effective date thereof, the then-outstanding
principal amount of such Loans would exceed the amount of the Tranche A
Commitment or the Tranche B Commitment (as applicable) then in effect. Once
reduced in accordance with this Section, the Commitments may not be
increased. All accrued commitment fees to, but not including the effective
date of any reduction or termination of the Commitment, shall be paid on the
effective date of such reduction or termination.
2.6 OPTIONAL PREPAYMENTS. Subject to SECTION 3.4, the Company may, at
any time or from time to time, upon not less than two (2) Business Days'
irrevocable notice to the Bank in the case of Offshore Rate Loans and upon
same day irrevocable notice to the Bank in the case of Base Rate Loans,
prepay Loans in whole or in part, in minimum amounts of $250,000 or any
multiple of $10,000 in excess thereof (or, if less, the outstanding amount of
such Loans). Such notice of prepayment shall specify the date and amount of
such prepayment and the Type(s) of Loans to be prepaid. If such notice is
given by the Company, the Company shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such date on the
amount prepaid and any amounts required pursuant to SECTION 3.4.
2.7 REPAYMENT.
(a) THE TRANCHE A CREDIT. The Company shall repay to the Bank in
full on the Tranche A Termination Date the aggregate principal amount of
Tranche A Loans outstanding on such date and all related Obligations.
(b) THE TRANCHE B CREDIT. The Company shall repay to the Bank in
full on the Tranche B Termination Date the aggregate principal amount of
Tranche B Loans outstanding on such date and all related Obligations.
2.8 INTEREST. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per
annum equal to the Offshore Rate or the Base Rate, as the case may be (and
subject to the Company's right to convert to other Types of Loans under
SECTION 2.4), PLUS the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Loans under SECTION 2.6 for the portion of the Loans so prepaid and upon
payment (including prepayment) in full thereof and, during the existence of
any Event of Default, interest shall be paid on demand of the Bank.
(c) Notwithstanding subsection (a) of this Section, while any Event
of Default exists or after acceleration, the Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Obligations, at a rate per
annum which is determined by adding 2% per annum to the Applicable Margin
then
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in effect for such Loans and, in the case of Obligations not subject to
an Applicable Margin, at a rate per annum equal to the Base Rate plus 2%;
PROVIDED, HOWEVER, that, on and after the expiration of any Interest Period
applicable to any Offshore Rate Loan outstanding on the date of occurrence of
such Event of Default or acceleration, the principal amount of such Loan
shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base Rate plus
2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to the Bank hereunder shall be subject to the
limitation that payments of interest shall not be required, for any period
for which interest is computed hereunder, to the extent (but only to the
extent) that contracting for or receiving such payment by the Bank would be
contrary to the provisions of any law applicable to the Bank limiting the
highest rate of interest that may be lawfully contracted for, charged or
received by the Bank, and in such event the Company shall pay the Bank
interest at the highest rate permitted by applicable law.
2.9 FEES.
(a) ARRANGEMENT FEE. The Company shall pay an arrangement fee to
the Bank on the Closing Date in the amount of $25,000.
(b) COMMITMENT FEE. The Company shall pay to the Bank a commitment
fee on the average daily unused portion of the Commitment, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
based upon the daily utilization for that quarter as calculated by the Bank,
equal to .10% per annum on the Tranche A Commitment and equal to the
applicable per annum rate based on the grid set forth below for the Tranche B
Commitment:
LONG-TERM DEBT RATING
OF COMPANY COMMITMENT FEE
--------------------- --------------
A/A2 or higher .100%
A-/A3 .125%
BBB+/Baa1 .150%
BBB/Baa2 or lower .200%
Any adjustment to the commitment fee as a result of a change in the
rating of the Company's long-term public debt by Xxxxx'x and/or S&P's shall be
effective as of the effective date of the change in such rating. In the event
the rating by Xxxxx'x & S&P's do not fall in the same category provided above,
the commitment fee shall be determined by adding one level to the lower of the
two rating levels.
Such commitment fee shall accrue from the Closing Date to the Tranche
A Termination Date or the Tranche B Termination Date, as applicable, and shall
be due and payable quarterly in arrears on the last Business Day of each fiscal
quarter of the Company commencing on September 30, 1997 through such Termination
Date, with the final payment to be made on such Termination Date; PROVIDED, THAT
in connection with any reduction or termination of Commitments under SECTION
2.5, the accrued commitment fee calculated for the period ending on such date
shall also be paid on the date of such reduction or termination, with the
following quarterly payment being calculated on the basis of the period from
such reduction or termination date to such quarterly payment date. The
commitment fees provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article IV are not met.
2.10 COMPUTATION OF FEES AND INTEREST. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by the Bank's "reference
rate" shall be made on the basis of a year of 365 or 366 days, as
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the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Bank shall be
conclusive and binding on the Company unless the Company objects in writing
to such determination within thirty days of having notice thereof. The bank
will, at the request of the Company, deliver to the Company a statement
showing the quotations used by the Bank in determining any interest rate and
the resulting interest rate.
2.11 PAYMENTS BY THE COMPANY. (a) all payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the company shall be
made to the Bank at the Payment Office, and shall be made in dollars and in
immediately available funds, no later than 1:00 p.m. (Chicago time) on the
date specified herein. any payment received by the Bank later than 3:00 p.m.
(Chicago time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 TAXES. (a) Subject to clause (c) below, any and all payments by the
Company to the Bank or under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for any Taxes. In
addition, the Company shall pay all other Taxes.
(b) Without duplication of any amounts paid by the Company under
SECTIONS 3.1(c)(i) and (iv), the Company agrees to indemnify and hold
harmless the Bank for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Bank and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days
after the date the Bank makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to
the Bank, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) the Bank receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
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(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) without duplication, the Company shall also pay to the
Bank at the time interest is paid, all additional amounts which the Bank
specifies as necessary to preserve the after-tax yield the Bank would
have received if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish the Bank the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Bank.
(e) If the Company is required to pay additional amounts to the
Bank pursuant to subsection (c) of this Section, then the Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change
in the judgment of the Bank is not otherwise disadvantageous to the Bank.
3.2 ILLEGALITY. (a) If the Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for the Bank or its applicable Lending Office
to make Offshore Rate Loans, then, on notice thereof by the Bank to the
Company, any obligation of the Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Company that the circumstances giving
rise to such determination no longer exist.
(b) If the Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such
fact and demand from the Bank, prepay in full such Offshore Rate Loans of the
Bank then outstanding, together with interest accrued thereon and amounts
required under SECTION 3.4, either on the last day of the Interest Period
thereof, if the Bank may lawfully continue to maintain such Offshore Rate
Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Offshore Rate Loan. If the Company is required to so prepay
any Offshore Rate Loan, then concurrently with such prepayment, the Company
shall borrow from the Bank, in the amount of such repayment, a Base Rate Loan
or otherwise pay such Loan and all accrued interest thereon in full in cash.
(c) Before giving any notice under this Section, the Bank shall
designate a different Lending Office with respect to its Offshore Rate Loans
if such designation will avoid the need for giving such notice or making such
demand and will not, in the judgment of the Bank, be illegal or otherwise
disadvantageous to the Bank.
3.3 INCREASED COSTS AND REDUCTION OF RETURN. (a) If the Bank determines
that, due to either (i) the introduction of or any change (other than any
change by way of imposition of or increase in reserve requirements included
in the calculation of the Offshore Rate or in respect of the assessment rate
payable by the Bank to the FDIC for insuring U.S. deposits) in or in the
interpretation of any law or regulation or (ii) the compliance by the Bank
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any
increase in the cost to the Bank of agreeing to make or making, funding or
maintaining any Offshore Rate Loans, then the Company shall be liable for,
and shall from time to time, upon demand, pay to the Bank, additional amounts
as are sufficient to reimburse the Bank for the costs associated with such
increased costs.
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(b) If the Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration the Bank's or
such corporation's policies with respect to capital adequacy and the Bank's
desired return on capital) determines that the amount of such capital is to
be increased as a consequence of the Commitments, loans, credits or
obligations under this Agreement, then, upon demand of the Bank to the
Company, the Company shall pay to the Bank, from time to time as specified by
the Bank, amounts sufficient to reimburse the Bank for the additional costs
resulting from such increase.
3.4 FUNDING LOSSES. The Company shall reimburse the Bank and hold the
Bank harmless from any loss or expense which the Bank may sustain or incur as
a consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a
Loan after the Company has given a Notice of Borrowing or a Notice of
Conversion/Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under SECTION 2.6;
(d) the prepayment or other payment (including after acceleration
thereof) of an Offshore Rate Loan on a day that is not the last day of
the relevant Interest Period; or
(e) the automatic conversion under SECTION 2.4 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Company to the
Bank under this Section and under SECTION 3.3(a), each Offshore Rate Loan
made by the Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the IBOR
used in determining the Offshore Rate for such Offshore Rate Loan by a
matching deposit or other borrowing in the interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such Offshore
Rate Loan is in fact so funded.
3.5 INABILITY TO DETERMINE RATES. If the Bank determines that for any
reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan does not adequately and
fairly reflect the cost to the Bank of funding such Loan, the Bank will
promptly so notify the Company. Thereafter, the obligation of the Bank to
make or maintain Offshore Rate Loans, as the case may be, hereunder shall be
suspended until the Bank revokes such notice in writing. Upon receipt of
such notice, the Company may revoke any Notice of Borrowing or Notice of
Conversion/ Continuation then submitted by it. If the Company does not revoke
such Notice, the Bank shall make, convert or continue the Loans, as proposed
by the
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Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans, as the case may be.
3.6 CERTIFICATES OF BANK. In the event of the Bank claiming
reimbursement or compensation under this ARTICLE III, the Bank shall deliver
to the Company a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder and such certificate shall be conclusive and
binding on the Company unless objected to by the Company in writing within 30
days of the Company receiving such certificate.
3.7 SURVIVAL. The agreements and obligations of the Company in this
ARTICLE III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS OF EFFECTIVENESS. The effectiveness of this Agreement is
subject to the condition that the Bank shall have received all of the
following, in form and substance and dated a date satisfactory to the Bank:
(a) CREDIT AGREEMENT AND NOTES. This Agreement and the Notes
executed by each party thereto;
(b) RESOLUTIONS; INCUMBENCY. (i) Copies of the resolutions of the
board of directors of the Company authorizing the transactions contemplated
hereby, certified as of the Closing Date by the Secretary or an Assistant
Secretary of the Company; and (ii) a certificate of the Secretary or
Assistant Secretary of the Company certifying the names and true signatures
of the officers of the Company authorized to execute, deliver and perform, as
applicable, this Agreement, and all other Loan Documents to be delivered by
it hereunder;
(c) ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the following
documents:
(i) the articles or certificate of incorporation and the
bylaws of the Company as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Company as of the Closing Date;
and
(ii) a good standing and tax good standing certificate for the
Company from the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation and each state where the
Company is qualified to do business as a foreign corporation as of a
recent date, together with a bring-down certificate by facsimile, dated
the date of the effectiveness of this Agreement;
(d) LEGAL OPINION. An opinion of each of Skadden, Arps, Slate,
Meager & Xxxx LLP and Xxxxx X. Xxx, Xx., vice-president-legal of the Company,
in each case addressed to the Bank and together covering those matters
addressed in EXHIBIT D;
(e) PAYMENT OF FEES. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and
payable on or before the date of the effectiveness of this Agreement,
together with Attorney Costs of the Bank to the extent invoiced prior to or
on such date, plus such additional amounts of Attorney Costs as shall
constitute the Bank's reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings (provided that such estimate
shall not thereafter
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preclude final settling of accounts between the Company and the Bank);
including any such costs, fees and expenses arising under or referenced in
SECTIONS 2.9 and 9.4;
(f) CERTIFICATE. A certificate signed by a Responsible Officer,
dated as of such date, stating that:
(i) the representations and warranties contained in ARTICLE
V are true and correct on and as of such date, as though made on and as
of such date;
(ii) no Default or Event of Default exists on the date of the
effectiveness;
(iii) there has occurred since December 31, 1996, no event or
circumstance that has resulted or would reasonably be expected to result
in a Material Adverse Effect; and
(iv) all necessary material governmental, creditor,
shareholder, and third party approvals in connection with the
transactions contemplated herein have been obtained and remain in
effect, and all applicable waiting periods shall have expired without,
in all such cases, any action being taken by any competent authority
that restrains, prevents, or imposes materially adverse conditions upon
the consummation of the transaction contemplated hereby.
(g) OTHER DOCUMENTS. Such other approvals, opinions, documents or
materials as the Bank may reasonably request.
4.2 CONDITIONS TO ALL BORROWINGS. The obligation of the Bank to make
any Loan to be made by it (including its initial Loan) or to continue or
convert any Loan under SECTION 2.4 is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date or Conversion/
Continuation Date:
(a) NOTICE OF BORROWING OR CONVERSION/ CONTINUATION. The Bank
shall have received a Notice of Borrowing or a Notice of Conversion/
Continuation, as applicable;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in ARTICLE V (other than those contained in
SECTION 5.5) shall be true and correct on and as of such Borrowing Date or
Conversion/Continuation Date with the same effect as if made on and as of
such Borrowing Date or Conversion/Continuation Date (except to the extent
such representations and warranties expressly refer to an earlier date, in
which case they shall be true and correct as of such earlier date); and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Borrowing or continuation or conversion.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
5.1 CORPORATE EXISTENCE AND POWER. The Company and each of its
Subsidiaries:
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(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all material governmental
licenses, authorizations, consents and approvals to own its assets,
carry on its business and to execute, deliver, and perform its
obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license, except to the extent that
failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect; and
(d) is in compliance with all Requirements of Law, except to the
extent that the failure to do so would not reasonably be expected to
have a Material Adverse Effect.
5.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by the Company of this Agreement and each other Loan
Document, have been duly authorized by all necessary corporate action, and do
not and will not:
(a) contravene the terms of any of the Company's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Company is a party or any order, injunction,
writ or decree of any Governmental Authority to which the Company or its
property is subject; or
(c) violate any Requirement of Law.
5.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company of
the Agreement or any other Loan Document.
5.4 BINDING EFFECT. This Agreement and each other Loan Document to
which the Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
5.5 LITIGATION. Except as specifically disclosed in SCHEDULE 5.5, there
are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, against the Company, or
its Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or
thereby; or
(b) if determined adversely to the Company or its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect.
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5.6 NO DEFAULT. As of the Closing Date, no Default or Event of Default
exists or would result from the incurring of any Obligations by the Company.
As of the Closing Date, neither the Company nor any Subsidiary is in default
under or with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, would reasonably be expected
to have a Material Adverse Effect, or that would, if such default had
occurred after the Closing Date, create an Event of Default under SECTION
8.1(e).
5.7 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE 5.7:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law,
except to the extent any such non-compliance would not reasonably be
expected to have a Material Adverse Effect. The Company and each ERISA
Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has
resulted or would reasonably be expected to result in a Material Adverse
Effect.
(c) No ERISA Event has occurred or is reasonably expected to occur
except to the extent such ERISA Event would not reasonably be expected
to have a Material Adverse Effect.
5.8 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by SECTION 6.10
and SECTION 7.7. Neither the Company nor any Subsidiary will take any action
which will cause the Bank to violate or not be in compliance with Regulations
G, T, U or X of the FRB.
5.9 TITLE TO PROPERTIES. The Company and each Subsidiary have title to,
or valid leasehold interests in, all real property necessary or used in the
ordinary conduct of their respective businesses, except for such defects in
title as would not, individually or in the aggregate, have a Material Adverse
Effect. As of the Closing Date, the property of the Company and its
Subsidiaries is subject to no Liens, other than Permitted Liens.
5.10 TAXES. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income
or assets otherwise due and payable, except those (a) which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP or (b) for which
appropriate extensions have been obtained. There is no proposed tax
assessment against the Company or any Subsidiary that would, if made, have a
Material Adverse Effect.
5.11 FINANCIAL CONDITION. (a) The audited consolidated financial
statements of the Company and its Subsidiaries dated December 31, 1996 and
the unaudited consolidated financial statements of the Company and its
Subsidiaries dated March 31, 1997 and, in each case, the related consolidated
statements of income or operations, shareholders' equity and cash flows for
the fiscal year or fiscal quarter ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except
-23-
as otherwise expressly noted therein, subject to ordinary, good faith
year end audit adjustments; and
(ii) fairly present the financial condition of the Company and
its Subsidiaries as of the date thereof and results of operations for
the period covered thereby.
(b) Since December 31, 1996, there has been no Material Adverse
Effect.
5.12 ENVIRONMENTAL MATTERS. (a) Except as specifically disclosed in
SCHEDULE 5.12, the on-going operations of the Company and each of its
Subsidiaries comply in all material respects with all Environmental Laws.
(b) Except as specifically disclosed in SCHEDULE 5.12, the Company
and each of its Subsidiaries have obtained all licenses, permits,
authorizations and registrations required under any Environmental Law
("ENVIRONMENTAL PERMITS") and the Company and each of its Subsidiaries are in
compliance with all material terms and conditions of such Environmental
Permits.
(c) Except as specifically disclosed in SCHEDULE 5.12, there are no
Hazardous Materials existing with respect to any property of the Company or
any Subsidiary, or arising from operations prior to the Closing Date, of the
Company or any of its Subsidiaries that would reasonably be expected to have
a Material Adverse Effect.
5.13 REGULATED ENTITIES. None of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act, any state public utilities code, or any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness.
5.14 NO BURDENSOME RESTRICTIONS. Neither the Company nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which
would reasonably be expected to have a Material Adverse Effect.
5.15 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. The Company or
its Subsidiaries own or are licensed or otherwise have the right to use all
of the patents, trademarks, service marks, trade names, copyrights,
authorizations and other rights that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of
any other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Company or
any Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in SCHEDULE 5.5, no claim or litigation regarding any
of the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or
code is pending or, to the knowledge of the Company, proposed, which, in
either case, would reasonably be expected to have a Material Adverse Effect.
5.16 SUBSIDIARIES. As of the Closing Date, the Company has no
Subsidiaries other than those specifically disclosed in SCHEDULE 5.16 hereto.
5.17 INSURANCE. Except as specifically disclosed in SCHEDULE 5.17, the
properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in
such amounts, with such deductibles and covering such risks as are
customarily
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carried by companies engaged in similar businesses and owning similar
properties in localities where the Company or such Subsidiary operates.
5.18 FULL DISCLOSURE. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection with
the Loan Documents, contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Bank waives
compliance in writing:
6.1 FINANCIAL STATEMENTS. The Company shall deliver to the Bank:
(a) as soon as available, but not later than one hundred twenty
(120) days after the end of each fiscal year, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as at the
end of such year and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the previous
fiscal year, and accompanied by the opinion of Coopers & Xxxxxxx LLP or
another nationally-recognized independent public accounting firm
("INDEPENDENT AUDITOR") which report shall state that such consolidated
financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years. Such opinion shall not be qualified or limited
because of a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any Subsidiary's
records;
(b) as soon as available, but not later than seventy-five (75) days
after the end of each of the first three fiscal quarters of each fiscal
year, a copy of the unaudited consolidated balance sheet of the Company
and its Subsidiaries as of the end of such quarter and the related
consolidated statements of income, shareholders' equity and cash flows
for the period commencing on the first day and ending on the last day of
such quarter (or, at the option of the Company, its 10-Q filing for such
fiscal quarter);
(c) as soon as possible, but in any event within one hundred twenty
(120) days after the end of each fiscal year of ZIC, a copy of the
Annual Statement of ZIC and its Subsidiaries on a combined basis, in
each case, for such fiscal year prepared in accordance with SAP;
(d) as soon as possible, but in any event within seventy-five (75)
days after the end of each of the first three fiscal quarters of each
fiscal year of ZIC, a copy of the quarterly statement of ZIC and its
Subsidiaries on a combined basis, in each case, for such fiscal quarter,
all prepared in accordance with SAP and accompanied by the certification
of the chief financial
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officer or a vice-president with responsibility for or knowledge of
financial matters of ZIC and its Subsidiaries that (i) such quarterly
financial statement has been prepared principally for the internal use
of management and is not required by, or filed with, any regulatory
agencies, (ii) such quarterly statement contains combined data for and
the consolidated financial statements of Zenith Insurance Company with
its wholly owned affiliated Property and Casualty Insurers, CalFarm
Insurance Company, ZNAT Insurance Company, and Zenith Star Insurance
Company that, to the best of the certifying officer's information,
knowledge and belief, were compiled in accordance with the NAIC
instructions for the completion of quarterly statements and (iii) for
purposes of such quarterly financial statements, all significant
intercompany balances and transactions have been eliminated in
consolidation;
(e) within thirty (30) days after being delivered to ZIC, any final
Triennial Examination Report issued by the applicable Department;
(f) within one hundred twenty (120) days after the close of each
fiscal year of ZIC, a copy of the "Statement of Actuarial Opinion" and
"Combined Management Discussion and Analysis" for ZIC and its
Subsidiaries which is provided to the applicable Department (or
equivalent information should such Department no longer require such a
statement) as to the adequacy of loss reserves of ZIC and its
Subsidiaries. Such opinion shall be in the format prescribed by the
Applicable Insurance Code of the state of domicile of ZIC.
6.2 CERTIFICATES; OTHER INFORMATION. The Company shall furnish to the
Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and (b), a Compliance Certificate
executed by a Responsible Officer;
(b) promptly, copies of all financial statements and reports that
the Company sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms
10K, 10Q and 8K) that the Company or any Subsidiary may make to, or file
with, the SEC or that ZIC and its Subsidiaries on a combined basis may
make to, or file with, the Department;
(c) promptly, copies of all material Insurance Holding Company
System Act filings with Governmental Authorities by the Company or any
of its Subsidiaries, including, without limitation, filings which seek
approval of Governmental Authorities with respect to transactions
between the Company and its Affiliates;
(d) within five (5) Business Days of notice, notice of actual
suspension, termination or revocation of any License or restriction
thereon (material to the Insurance Subsidiaries taken as a whole) of any
of the Insurance Subsidiaries by any Governmental Authority or of
receipt of notice from any Governmental Authority notifying any of the
Insurance Subsidiaries of a hearing (which is not withdrawn within ten
(10) days) relating to such a suspension, termination, revocation or
restriction, including any request by a Governmental Authority which
commits any of the Insurance Subsidiaries to take, or refrain from
taking, any action which affects the authority of any of the Insurance
Subsidiaries to conduct its business in each case
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only if the underlying event would reasonably be expected to have a
Material Adverse Effect; and
(e) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary, the
Bank may from time to time reasonably request.
6.3 NOTICES. The Company shall promptly notify the Bank:
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeable will
become a Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default under,
any Contractual Obligation of the Company or any of its Subsidiaries
which would reasonably be expected to have a Material Adverse Effect;
and (ii) any dispute, litigation, investigation, proceeding or
suspension which may exist at any time between the Company or any of its
Subsidiaries and any Governmental Authority which would result in a
Material Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary (i) in
which the amount of damages claimed, if awarded, would result in a
Material Adverse Effect, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, would reasonably be expected
to have a Material Adverse Effect, or (iii) in which the relief sought
is an injunction or other stay of the performance of this Agreement or
any Loan Document;
(d) of (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened
against the Company or any Subsidiary or any of their respective
properties pursuant to any applicable Environmental Laws, and (ii) all
other Environmental Claims, which in each case would reasonably be
expected to have a Material Adverse Effect;
(e) of any of the following events affecting the Company unless
such event would not reasonably be expected to have a Material Adverse
Effect, together with a copy of any notice with respect to such event
that may be required to be filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Company with respect
to such event:
(i) an ERISA Event;
(ii) the adoption of any amendment to a Plan , if such
amendment results in a material increase in contributions or
Unfunded Pension Liability; or
(iii) the commencement of contributions to any Plan subject to
Section 412 of the Code;
(f) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated
Subsidiaries;
(g) within three (3) Business Days of such notice, of any pending
or threatened investigation or regulatory proceeding (other than routine
periodic investigations or reviews) by any Governmental Authority
concerning the business, practices or operations of any of the Insurance
Subsidiaries and within three
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(3) Business Day of the Company having knowledge thereof, of any agent
or managing general agent thereof, which would be reasonably expected to
have a Material Adverse Effect; and
(h) of notice of any change in the rating of the Company's
long-term debt rating by Xxxxx'x and/or S&P's.
Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein in form and substance reasonably satisfactory to the Bank.
6.4 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Company shall,
and shall cause each Significant Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction
of incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names, service marks and Licenses, the non-preservation of which
would reasonably be expected to have a Material Adverse Effect.
6.5 MAINTENANCE OF PROPERTY. The Company shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted and make all necessary repairs thereto and renewals
and replacements thereof except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect. The Company and
each Subsidiary shall use the standard of care typical in the industry in the
operation and maintenance of its facilities except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect.
6.6 INSURANCE. Except as disclosed on SCHEDULE 5.17, the Company shall
maintain, and shall cause each of its Subsidiaries to maintain, with
financially sound and reputable independent insurers, insurance with respect
to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons; including workers' compensation
insurance, public liability and property and casualty insurance. Upon
request of the Bank, the Company shall furnish the Bank, at reasonable
intervals (but not more than once per calendar year) a certificate of a
Responsible Officer of the Company setting forth the nature and extent of all
insurance maintained by the Company and its Subsidiaries in accordance with
this Section.
6.7 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable,
all their respective material obligations and liabilities except where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings
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and adequate reserves in accordance with GAAP are being maintained by
the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all indebtedness, as and when due and payable (after giving
effect to applicable grace periods), but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.
6.8 COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each Subsidiary (or, in the case of ERISA, each ERISA Affiliate in
which the Company owns a controlling interest) to comply, in all
material respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the
Federal Fair Labor Standards Act, ERISA and the Environmental Laws),
except such as may be contested in good faith or as to which a bona fide
dispute may exist.
6.9 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company
shall maintain and shall cause each Subsidiary to maintain proper books
of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the
Company and such Subsidiary. The Company shall permit, and shall cause
each Subsidiary to permit, representatives and independent contractors
of the Bank to visit and inspect any of their respective properties, to
examine their respective corporate, financial and operating records, and
make copies thereof or abstracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective
directors, Responsible Officers, and independent public accountants (at
which discussions the Company's representatives may be present unless a
Default has occurred and is continuing), all at the expense of the Bank
and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to the
Company; PROVIDED, HOWEVER, when a Default exists the Bank may do any of
the foregoing at the expense of the Company at any time during normal
business hours and without advance notice.
6.10 USE OF PROCEEDS. The Company shall use the proceeds of the
Loans for working capital, other general corporate purposes and
acquisitions which are negotiated and consummated with the consent of
the company to be acquired and, in each case which are not in
contravention of any Requirement of Law or of any Loan Document.
6.11 FURTHER ASSURANCES. The Company shall ensure that all written
information, exhibits and reports furnished to the Bank do not and will
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will
promptly disclose to the Bank and correct any material misstatement or
omission that may be discovered therein or in any Loan Document or in
the execution or acknowledgement thereof.
ARTICLE VII
NEGATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Bank waives
compliance in writing:
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7.1 LIMITATION ON LIENS. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than Liens which would not,
individually or in the aggregate, have or cause a Material Adverse Effect
("PERMITTED LIENS").
7.2 DISPOSITION OF ASSETS. The Company shall not, and shall not suffer
or permit any Significant Subsidiary to, make a Disposition of (whether in
one or a series of transactions) any property (including accounts and notes
receivable, with or without recourse) or enter into any agreement to do so,
except:
(a) in the ordinary course of business and consistent with past
practices;
(b) Dispositions made for fair market value; PROVIDED, THAT at the
time of any Disposition under this CLAUSE (b), no Event of Default shall
exist or shall result from such Disposition; and
(c) Dispositions permitted under SECTION 7.3.
7.3 CONSOLIDATIONS AND MERGERS. The Company shall not, and shall not
suffer or permit any Significant Subsidiary to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any
Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any
one or more Subsidiaries; PROVIDED, THAT if any transaction shall be
between a Subsidiary and a Wholly- Owned Subsidiary, the Wholly-Owned
Subsidiary shall be the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary; and
(c) a merger where the Company or one of its Subsidiaries is the
surviving corporation in the merger and no Default exists immediately
prior to or immediately following such merger.
7.4 LOANS AND INVESTMENTS. The Company shall not and shall not permit
any Subsidiary to extend credit or make investments in Perma-Bilt in excess
of $45,000,000.
7.5 LIMITATION ON INDEBTEDNESS. The Company shall not permit its
Insurance Subsidiaries to create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness defined in clauses (a), (c), (d) or (f) of the definition
thereof exceeding $20,000,000 at any one time outstanding.
7.6 TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction (other than
(i) pooling arrangements entered into in the ordinary course of business
between Insurance Subsidiaries and (ii) the tax-sharing agreement between the
Company and its Subsidiaries) with any Affiliate of the Company, except upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person not
an Affiliate of the Company or such Subsidiary.
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7.7 USE OF PROCEEDS. The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (a) in a manner that would cause the Bank to violate or not to
comply with Regulations G, T, U or X of the FRB, (b) to repay or otherwise
refinance indebtedness of the Company or others incurred to purchase or carry
Margin Stock, (c) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (d) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.
7.8 CHANGE IN BUSINESS. The Company shall not, and shall not suffer or
permit any Significant Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the
Company and its Significant Subsidiaries on the date hereof.
7.9 ACCOUNTING CHANGES. The Company shall not, and shall not suffer or
permit any Subsidiary (other than ZIC Lloyd's Underwriting Limited) to, make
any significant change in accounting treatment or reporting practices, except
as required by GAAP or SAP, or change the fiscal year of the Company or of
any Subsidiary.
7.10 MINIMUM SURPLUS. The Company shall not permit Capital and Surplus
of ZIC as reported on a combined basis to be less than $140,000,000 as of the
end of any fiscal quarter.
7.11 DEBT TO TOTAL CAPITALIZATION. The Company shall not permit the Debt
to Total Capitalization Ratio to exceed .40:1 as of the end of any fiscal
quarter.
7.12 RISK-BASED CAPITAL. The Company shall not permit the Risk-Based
Capital of ZIC, as reported on a combined basis as of the end of any fiscal
quarter, to fall below 150%.
7.13 INTEREST COVERAGE RATIO. The Company shall not permit the Interest
Coverage Ratio to be less than 2.00:1 as of the end of any fiscal quarter.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 EVENT OF DEFAULT. Any of the following shall constitute an "EVENT
OF DEFAULT":
(a) NON-PAYMENT. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii)
within five (5) days after the same becomes due, any interest, fee or
any other amount payable hereunder or under any other Loan Document; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty by
the Company or any Subsidiary made herein, in any other Loan Document,
or which is contained in any certificate, document or financial or other
statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other
Loan Document, is incorrect in any material respect on or as of the date
made; or
(c) SPECIFIC DEFAULTS. The Company fails to perform or observe
any term, covenant or agreement contained in any of SECTION 6.3(a) or in
ARTICLE VII; or
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(d) OTHER DEFAULTS. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of 30
days after the date upon which written notice thereof is given to the
Company by the Bank; PROVIDED, THAT if the default cannot be cured
within 30 days after such notice but the Company commences a cure within
30 days and the default is ultimately cured within 90 days of such
notice, then no Event of Default shall be deemed to have occurred
hereunder; or
(e) CROSS-PAYMENT AND ACCELERATION. The Company or any Subsidiary
(i) fails to make any payment in respect of any Indebtedness defined in
clauses (a), (c), (d) or (f) or any Contingent Obligations related
thereto having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more
than $10,000,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure; or (ii) fails to
perform or observe any other condition or covenant, or any other event
shall occur or condition exist, under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, and such
failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if the
effect of such failure, event or condition is to cause such Indebtedness
to be declared to be due and payable prior to its stated maturity, or
such Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded; or
(f) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Company or any
Significant Subsidiary (i) ceases or fails to be Solvent, or generally
fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at
stated maturity or otherwise; (ii) voluntarily ceases to conduct its
business in the ordinary course; (iii) commences any Insolvency
Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Significant
Subsidiary, or any writ, judgment, warrant of attachment, execution or
similar process, is issued or levied against a substantial part of the
Company's or any Significant Subsidiary's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement,
filing or levy;(ii) the Company or any Significant Subsidiary admits the
material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law)
is ordered in any Insolvency Proceeding; or (iii) the Company or any
Significant Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or
agent therefor), or other similar Person for itself or a substantial
portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Plan
or Multiemployer Plan which has resulted or would
-32-
reasonably be expected to result in liability of the Company under Title
IV of ERISA to the Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of $10,000,000; or (ii) the aggregate amount of
Unfunded Pension Liability among all Plans at any time exceeds
$10,000,000; or (iii) the Company or any ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount
in excess of $10,000,000; or
(i) MONETARY JUDGMENTS. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any
single or related series of transactions, incidents or conditions, of
$10,000,000 or more, and the same shall remain unsatisfied, unvacated or
unstayed pending appeal for a period of the longer of (i) 30 days after
the entry thereof or (ii) the expiration of the applicable period for
filing notice of an appeal; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree is entered against the Company or any Significant Subsidiary
which does or would reasonably be expected to have a Material Adverse
Effect, and there shall be any period of 10 consecutive days during
which such judgment is not vacated or a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect; or
(k) CHANGE OF CONTROL. There occurs any Change of Control; or
(l) LOSS OF LICENSES. Any Governmental Authority revokes or fails
to renew any material insurance license, permit or franchise of the
Company or any Significant Subsidiary, or the Company or any Significant
Subsidiary for any reason loses any material insurance license, permit
or franchise, or the Company or any Significant Subsidiary suffers the
imposition of any restraining order, escrow, suspension or impound of
funds in connection with any proceeding (judicial or administrative)
with respect to any material insurance license, permit or franchise.
8.2 REMEDIES. If any Event of Default occurs, the Bank may:
(a) declare the Commitment to be terminated, whereupon such
Commitment shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due
and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Company; and
(c) exercise all rights and remedies available to it under the
Loan Documents or applicable law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in
subsection (f) or (g) of SECTION 8.1 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the
obligation of the Bank to make Loans shall automatically terminate and the
-33-
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without
further act of the Bank.
8.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall
be in writing and signed by the Bank and the Company, and then any such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
9.2 NOTICES. (a) All notices and other communications shall be in
writing and mailed, faxed or delivered, to the address or facsimile number
specified for notices on SCHEDULE 9.2; or, as directed to the Company or the
Bank, to such other address as shall be designated by such party in a written
notice to the other party.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon receipt, or if delivered, upon
delivery; except that notices pursuant to ARTICLE II shall not be effective
until actually received by the Bank.
(c) Any agreement of the Bank herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the
Company. The Bank shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such notice and the
Bank shall not have any liability to the Company or other Person on account of
any action taken or not taken by the Bank in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans shall not be
affected in any way or to any extent by any failure by the Bank to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Bank of a confirmation which is at variance with the terms understood by the
Bank to be contained in the telephonic or facsimile notice.
9.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Bank, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
9.4 COSTS AND EXPENSES. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Bank within five Business Days after
demand (subject to SECTION 4.1(e)) for all costs and expenses incurred
by the Bank in connection with the preparation, delivery and execution
of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and
any other documents prepared in connection herewith or therewith, and
the consummation of the
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transactions contemplated hereby and thereby, including reasonable
Attorney Costs incurred by the Bank with respect thereto; and
(b) pay or reimburse the Bank within five Business Days after
demand (subject to SECTION 4.1(e)) for all costs and expenses (including
Attorney Costs) incurred by it in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under
this Agreement or any other Loan Document during the existence of an
Event of Default or after acceleration of the Loans (including in
connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
9.5 COMPANY INDEMNIFICATION. (a) Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Bank and each of its respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "INDEMNIFIED PERSON")
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time (including at any time following repayment of the
Loans) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of this Agreement or any document contemplated
by or referred to herein, or the transactions contemplated hereby, or any
action taken or omitted by any such Person under or in connection with any of
the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding)
related to or arising out of this Agreement or the Loans or the use of the
proceeds thereof, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED,
THAT the Company shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements
in this Section shall survive payment of all other Obligations.
(b) SURVIVAL; DEFENSE. The obligations in this Section shall
survive payment of all other Obligations. At the election of any Indemnified
Person, the Company shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole discretion, at
the sole cost and expense of the Company. All amounts owing under this
Section shall be paid within 30 days after demand.
9.6 MARSHALLING; PAYMENTS SET ASIDE. The Bank shall not be under any
obligation to xxxxxxxx any assets in favor of the Company or any other Person
or against or in payment of any or all of the Obligations. To the extent
that the Company makes a payment to the Bank, or the Bank exercises its right
of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Bank in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any Insolvency Proceeding or
otherwise, then to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such set-off had not
occurred.
9.7 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns, except that the Company may not
assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Bank.
9.8 ASSIGNMENTS, PARTICIPATIONS, ETC. (a) The Bank may, with the
written consent of the Company at all times other than during the existence
of
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an Event of Default which consent shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company shall be required in connection with any
assignment and delegation by a Bank to an Eligible Assignee that is an
Affiliate of the Bank) (each an "ASSIGNEE") all, or any ratable part of all,
of the Loans, the Commitment and the other rights and obligations of the Bank
hereunder, in a minimum amount of $10,000,000; PROVIDED, HOWEVER, that the
Company may continue to deal solely and directly with the Bank in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Company by the Bank and the Assignee; and (ii) the Bank and its Assignee
shall have delivered to the Company an Assignment and Acceptance in the form
of EXHIBIT E ("ASSIGNMENT AND ACCEPTANCE") together with any Note or Notes
subject to such assignment and any tax forms required to be provided by the
Assignee under Section 6 of the Assignment and Acceptance.
(b) The Bank may at any time sell to one or more Persons which
would qualify as an Eligible Assignee (a "PARTICIPANT") participating
interests in any Loans, the Commitment and the other interests of the Bank
(the "originating Bank") hereunder and under the other Loan Documents;
PROVIDED, HOWEVER, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain
solely responsible for the performance of such obligations, (iii) the Company
shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or
grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would do any of the following:
(A) increase or extend any Commitment;
(B) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or
other amounts due hereunder or under any other Loan Document; or
(C) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document.
In the case of any such participation, the Participant shall be entitled to
the benefit of SECTIONS 3.1, 3.3 and 9.5 as though it were also a Bank
hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as the Bank under this
Agreement.
(c) Notwithstanding any other provision in this Agreement, the Bank
may at any time create a security interest in, or pledge, all or any portion
of its rights under and interest in this Agreement and the Note held by it in
favor of any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted
under applicable law.
9.9 SET-OFF. In addition to any rights and remedies of the Bank
provided by law, if an Event of Default exists or the Loans have been
accelerated, the Bank is authorized at any time and from time to time,
without
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prior notice to the Company, any such notice being waived by the Company to
the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, the Bank to or for
the credit or the account of the Company (excluding any account which is
expressly designated as a custodial or trust account on the books and records
of the Bank) against any and all Obligations owing to the Bank, now or
hereafter existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. The Bank agrees promptly to
notify the Company after any such set-off and application made by the Bank;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect the
validity of such set-off and application.
9.10 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
9.11 SEVERABILITY. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not
in any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required
hereunder.
9.12 NO THIRD PARTIES BENEFITED. This Agreement is made and entered into
for the sole protection and legal benefit of the Company and the Bank and
their permitted successors and assigns, and no other Person shall be a direct
or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any of the other Loan
Documents.
9.13 GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES; PROVIDED, THAT
THE PARTIES SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY AND THE
BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY AND THE BANK
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE COMPANY AND THE BANK EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
9.14 WAIVER OF JURY TRIAL. THE COMPANY AND THE BANK WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY AND THE BANK EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL
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APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
9.15 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company
and the Bank, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in California by their proper and duly authorized
officers as of the day and year first above written.
ZENITH NATIONAL INSURANCE CORP.
By: /s/ XXXXXXX X. XXX
----------------------------
Title: CHAIRMAN
-------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ XXXXXXX X. XXXXX
----------------------------
Title: VICE PRESIDENT
-------------------------
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EXHIBIT A
FORM OF NOTICE OF BORROWING
Bank of America National Trust
and Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: ____________________
Ladies and Gentlemen:
This Notice of Borrowing is delivered to you pursuant to SECTIONS
2.3 and 4.2(a) of the Credit Agreement, dated as of _______________, 1997 (as
amended or modified, the "Credit Agreement"), between Zenith National
Insurance Corp., a Delaware corporation (the "Company") and Bank of America
National Trust and Savings Association (the "Lender"). Unless otherwise
defined herein, capitalized terms used herein have the meanings provided in
the Credit Agreement.
The Company hereby requests that a [Tranche A Loan] [Tranche B Loan]
be made in the aggregate principal amount of $________________ on
_____________, 19___ as a [Base Rate Loan] [Offshore Rate Loan having an
Interest Period of ___ months].
The Company hereby certifies and warrants that on the date the
Borrowing requested hereby is made, after giving effect to the making of such
Borrowing, the conditions set forth in SECTION 4.2 of the Credit Agreement are
satisfied.
The Company agrees that if prior to the time of the Borrowing
requested hereby any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Lender. Except to the extent, if any, that prior to the time of the Borrowing
requested hereby the Lender shall receive written notice to the contrary from
the Company, each matter certified to herein shall be deemed once again to be
certified as true and correct at the date of such Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of
the following persons as set forth on ANNEX I attached hereto.
The Company has caused this Notice of Borrowing to be executed and
delivered, and the certification and warranties contained herein to be made, by
a Responsible Officer this ____ day of ___________, 19__.
ZENITH NATIONAL INSURANCE CORP.
By:____________________________________
Name:__________________________________
Title:_________________________________
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ANNEX I
AMOUNT TO BE PERSON TO BE PAID NAME, ADDRESS, ETC.
TRANSFERRED ----------------- OF TRANSFEREE LENDER
------------ ---------------------
NAME ACCOUNT NO.
-------------- ----------
$___________ ______________ __________ _____________________
_____________________
Attention:___________
$___________ ______________ __________ _____________________
_____________________
Attention:___________
Balance of The Company ___________ _____________________
such proceeds
_____________________
Attention:___________
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
Bank of America National Trust
and Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: _________________
Ladies and Gentlemen:
This Conversion/Continuation Notice is delivered to you pursuant to
SECTIONS 2.4(b) and 4.2(a) of the Credit Agreement, dated as of ___________,
1997 (as amended or modified, the "Credit Agreement"), between Zenith
National Insurance Corp., a Delaware corporation (the "Company") and Bank of
America National Trust and Savings Association (the "Lender"). Unless
otherwise defined herein, capitalized terms used herein have the meanings
provided in the Credit Agreement.
The Company hereby requests that on ___________, 19__,
(1) $___________ of the presently outstanding principal amount of
the [Tranche A Loans] [Tranche B Loans] originally made on ___________,
19__ [and $___________ of the presently outstanding principal amount of the
[Tranche A Loans] [Tranche B Loans] originally made on ___________,
19__],
(2) and all presently being maintained as (1)[Base
Rate Loans] [Offshore Rate Loans],
(3) be [converted into] [continued as],
(4) (2)[Base Rate Loans] [Offshore Rate Loans having an
Interest Period of____ months].
The Company hereby represents and warrants that the
conditions set forth in SECTION 4.2 of the Credit Agreement are met.
______________________
(1) Select appropriate interest rate option.
(2) Insert appropriate interest rate option.
Except to the extent, if any, that prior to the time of the
continuation or conversion requested hereby the Lender shall receive written
notice to the contrary from the Company, each matter certified to herein
shall be deemed to be certified at the date of such continuation or
conversion as if then made.
The Company has caused this Continuation/Conversion Notice to be
executed and delivered, and the certification and warranties contained herein
to be made, by a Responsible Officer this ____ day of _________, 19__.
ZENITH NATIONAL INSURANCE CORP.
By: ________________________________
Name:_______________________________
Title:______________________________
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EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
Bank of America National Trust
and Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: __________________
Ladies and Gentlemen:
This certificate (the "Certificate") is delivered to you pursuant
to SECTION 6.2(a) of the Credit Agreement, dated as of _______________, 1997
(as amended or modified, the "Credit Agreement"), between Zenith National
Insurance Corp., a Delaware corporation (the "Company") and Bank of America
National Trust and Savings Association (the "Lender"). Unless otherwise
defined herein, capitalized terms used herein have the meanings provided in
the Credit Agreement.
The undersigned hereby certifies and warrants to the Lender that he
is a Responsible Officer of the Company and that, as such, he is authorized
to execute this Certificate on behalf of the Company and further certifies
and warrants to the Lender on behalf of the Company that as at ____________,
19__ (the "Computation Date") the following is a true and correct computation
of the ratios and financial restrictions contained in the Credit Agreement:
1. SECTION 7.10 - MINIMUM SURPLUS
The Capital and Surplus of ZIC on a combined basis is
$___________ (cannot be less than $140,000,000).
2. SECTION 7.11 - DEBT TO TOTAL CAPITALIZATION
(a) Debt $__________
(b) Total Capitalization $__________
(c) Ratio of (a) to (b) (cannot
exceed .40:1) ___:___
3. SECTION 7.12 - RISK BASED CAPITAL
The Risk-Based Capital of ZIC on a combined basis
is ___% (cannot be less than 150%).
4. SECTION 7.13 - INTEREST COVERAGE
(a) Amounts Available for Dividends. $__________
(b) Pre-tax income from Non-
Insurance Subsidiaries
for the four quarters ending
on the Computation Date $__________
(c) Pre-tax, pre-interest income of
the Borrower for the four
quarters ending on the
Computation Date $__________
(d) Sum of (a) + (b) + (c) $__________
(e) Fixed Interest Charges $__________
(f) Ratio of (d:e) (cannot be less
than 2:1) _____:1
The Company further certifies that no Default or Event of Default has
occurred and is continuing under the Credit Agreement as of the date hereof.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered and the certifications and warranties contained herein to
be made, by a Responsible Officer this ____ day of ______________, 19__.
ZENITH NATIONAL INSURANCE CORP.
By:___________________________________
Name:_________________________________
Title:________________________________
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EXHIBIT D
FORM OF OPINION OF COMPANY'S COUNSEL
________ __, 1997
Bank of America National Trust
and Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: ___________________
Ladies and Gentlemen:
We have acted as counsel for Zenith National Insurance Corp., a
Delaware corporation (the "Company") in connection with the preparation,
authorization, execution and delivery of, and the consummation of the
transactions contemplated by, the Credit Agreement (hereinafter defined).
Unless otherwise defined herein, capitalized terms used herein have the
meanings provided in the Credit Agreement. This opinion is delivered to you
pursuant to SECTION 4.1(d) of the Credit Agreement.
In connection with this opinion, we have examined the following:
(a) the Credit Agreement (the "Credit Agreement"), dated as of the
date hereof, between the Company and Bank of America National Trust and
Savings Association (the "Lender");
(b) the Tranche A Note of the Company, dated the date hereof and
delivered pursuant to the Credit Agreement; and
(c) the Tranche B Note of the Company, dated the date hereof and
delivered pursuant to the Credit Agreement.
The foregoing documents (a) through (c) are hereinafter collectively referred
to as the "Loan Documents".
In connection with this opinion, we also have been furnished with
and have examined the originals, or certified, conformed or reproduction
copies, of certificates of public officials and officers of the Company and
such other records,
agreements, instruments and documents as we have deemed relevant and
necessary as the basis for the opinions hereinafter expressed. In stating
our opinion, we have assumed the genuineness of all signatures, the
authenticity of documents submitted to us as originals, the conformity to
original or certified copies of all copies submitted to us as certified or
reproduction copies, and the legal capacity of natural persons.
As to various questions of fact material to our opinions, we have
relied upon the representations and warranties in the Loan Documents and upon
certificates of the Company's public officials.
Based upon the foregoing, and upon such further matters as we have
deemed necessary or appropriate, and subject to the qualifications,
limitations and assumptions set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of its incorporation
and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted. The Company is duly qualified to transact business and is in
good standing as a foreign corporation in each jurisdiction where the
nature of its business makes such qualification necessary or the failure
of the Company to be so qualified could have a Material Adverse Effect.
2. The Company has the corporate power to execute, deliver and
perform the terms and provisions of each of the Loan Documents and has
taken all necessary corporate action to authorize the execution,
delivery and performance by it of each of such Loan Documents.
3. The execution, delivery and performance by the Company of the
Loan Documents to which it is a party, and compliance by the Company
with the terms and provisions thereof, will not (i) contravene or
conflict with any provision of any existing law, statute, rule or
regulation applicable to the Company, (ii) to the best of our knowledge,
contravene or conflict with, result in any breach of, or constitute a
default under, any indenture, mortgage, deed of trust, credit agreement,
loan agreement or other agreement, contract or instrument binding on it,
or (iii) result in the creation or imposition of (or the obligation to
create or impose) any Lien (except for Permitted Liens) upon any of the
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property or assets of the Company pursuant to the terms of any of the
indentures, mortgages, deeds of trust, credit agreements, loan
agreements or other agreements, contracts or instruments to which the
Company is a party, or (iv) contravene or conflict with any of the
articles of incorporation or by-laws of the Company.
4. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as may
be required to be made or obtained by you as a result of your
involvement in the transactions contemplated by the Loan Documents), or
exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in
connection with, the execution and delivery of any Loan Document by the
Company and the performance by the Company of its obligations thereunder.
5. The Company has duly executed and delivered each of the Loan
Documents and each of such Loan Documents constitutes the legal, valid
and binding obligation of the Company, enforceable in accordance with
its terms.
6. The Company is not engaged principally, or in one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying "margin stock" within the meaning of
Regulations G and U of the Board of Governors of the Federal Reserve
Board.
7. None of the Company or its Subsidiaries are an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
8. None of the Company or its Subsidiaries are a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
[Add exceptions and qualifications.]
Very truly yours,
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EXHIBIT E(1)
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated as of
____________, 19__ is made between BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Assignor") and _______________________________________ (the
"Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit Agreement dated as
of _____________, 1997 between Zenith National Insurance Corp., a Delaware
corporation (the "Company") and the Assignor (the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meaning;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to make tranche A loans (the "Tranche A Loans") to the Company in
an aggregate amount not to exceed Twenty Million United States dollars
(U.S.$20,000,000) (the "Tranche A Commitment");
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to make tranche B loans (the "Tranche B Loans") to the Company in
an aggregate amount not to exceed Thirty Million United States dollars
(U.S.$30,000,000) (the "Tranche B Commitment" and together with the Tranche A
Commitment, the "Commitments"); and
WHEREAS, the Assignor wishes to assign to the Assignee part of the
rights and obligations of the Assignor under the Credit Agreement in respect
of its Commitment [(pro rata in accordance with the Assignor's Tranche A
Commitment and Tranche B Commitment)], [together with a corresponding portion
of each of its outstanding Loans,] in an amount equal to ______________
United States dollars (U.S.$_____) (the "Assigned Amount") on the terms
listed on Schedule I hereto and subject to the conditions set forth herein,
and the Assignee wishes to accept assignment of such rights and to assume
such obligations from the Assignor on such terms and subject to such
conditions;
___________________
(1) In connection with an assignment, the Credit Agreement will need to be
amended to reflect the addition of an agent etc.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ASSUMPTION.
(a) With effect on and after the Effective Date (as defined in Section
5 hereof), the Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, the
Assigned Amount, which shall be equal to ________ percent (___%) (the
"Assignee's Percentage Share") of all of the Assignor's rights and
obligations under the Credit Agreement, including, without limitation,
the Assignee's Percentage Share of the Assignor's Commitment and any
outstanding Loans. The assignment set forth in this Section 1(a) shall
be without recourse to, or representation or warranty (except as
expressly provided in this Agreement) by, the Assignor.
(b) With effect on and after the Effective Date, the Assignee shall be
a party to the Credit Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Lender under the Credit
Agreement with a Commitment in an amount equal to the Assigned Amount.
The Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender. It is the intent of the
parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and
the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations
have been assumed by the Assignee.
(c) After giving effect to the assignment and assumption, on the
Effective Date, the Assignee's Tranche A Commitment will be
_______________________________ United States dollars (U.S.$__________).
After giving effect to such assignment and assumption, on the Effective
Date, the Assignee's Tranche B Commitment will be _______________ United
States dollars (U.S.$________).
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer contemplated
in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to
_____________________________ United
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States dollars (U.S.$_________), representing the Assignee's Percentage
Share of the principal amount of all Loans previously made, and
currently owned, by the Assignor to the Company under the Credit
Agreement and outstanding on the Effective Date.
[(b) The Assignee further agrees to pay to the Agent a processing or
transfer fee in the amount of $ _________.]
[(c) The Assignee agrees to pay the Assignor a fee in an amount equal to
percent ( %) of all interest, commissions and fees paid by the Company
to the Assignee under the Credit Agreement. Such fee shall be payable
quarterly in arrears on the last business day of each ________________,
_____________________, ________________ and _______________, commencing on
________________, PROVIDED, HOWEVER, that such fee shall not be due and
payable hereunder if the Company has not made a payment of interest,
commissions or fees during such immediately preceding quarterly period.
All payments to the Assignor pursuant to this Section 2(c) shall be made
by wire transfer in immediately available funds to Bank of America National
Trust and Savings Association, Attention: Asset Sales Processing, Dept.
#6563, Bancontrol Account #12334-10284, Reference: Auxiliary Fee/Zenith
National Insurance Corp., or to such other person or place as the Assignor
may designate in writing to the Assignee from time to time.]
(e) To the extent payment to be made by the Assignee pursuant to
Section(s) 2(b) or (c) hereof are not made when due, the Assignor shall
be entitled to recover such amount together with interest thereon at the
Federal Funds Rate per annum accruing from the date such amounts were
due. For purposes hereof, "Federal Funds Rate" shall mean, for any day,
the weighted average of the rate on overnight Federal funds
transactions, with members of the Federal Reserve System, only, arranged
by Federal funds brokers, as published as of such day by the Federal
Reserve Bank of New York.
3. REALLOCATION OF PAYMENTS.
Any interest, commissions, fees and other payments accrued to but
excluding the Effective Date with respect to the Loans and the Commitment,
shall be for the account of the Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the
Assignor and the Assignee agree that it will hold in trust for the other
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party any interest, commissions, fees and other amounts which it may receive
to which the other party is entitled pursuant to the preceding sentence and
pay to the other party any such amounts which it may receive promptly upon
receipt. The Assignor and the Assignee's obligations to make the payments
referred to in this Section 3 are non-assignable.
4. INDEPENDENT CREDIT DECISION.
The Assignee (i) acknowledges that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred
to in Section __ thereof, and such other documents and information as it has
deemed appropriate to make its own credit and legal analysis and decision to
enter into this Agreement; and (ii) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. EFFECTIVE DATE.
The effective date for this Agreement shall be ____________________
(the "Effective Date"); PROVIDED that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Agreement shall be executed and delivered by the Assignor
and the Assignee;
(ii) the requirements for an effective assignment by a Lender set
forth in Section 9.8 of the Credit Agreement shall be satisfied with
respect to the Assigned Amount; and any consents required for an
effective assignment of the Assigned Amount by the Assignor to the
Assignee shall have been duly obtained and shall be in full force and
effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to the
Assignor under this Agreement; and
[(iv) the processing or transfer fee referred to in Section 2(b)
shall have been paid to the Agent.]
6. WITHHOLDING TAX.
If the Assignee is organized under the laws of any jurisdiction
other than the United States or any state or other
-4-
political subdivision thereof it agrees that it will furnish the Company,
concurrently with the execution of this Agreement, either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
the Assignee claims entitlement to complete exemption from or reduced rate of
U.S. federal withholding tax on all interest payments under the Credit
Agreement) and, upon the expiration or obsolescence of any previously
delivered form, with a new U.S. Internal Revenue Service Form 4224 or Form
1001 and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by the Assignee,
PROVIDED, HOWEVER, that the Assignee shall not be required to deliver a Form
4224 or 1001 under this Section 6 to the extent that the delivery of such
form is not authorized by law.
7. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any lien, security interest or other
adverse claim; (ii) it is duly organized and existing and it has the
full power and authority to take, and has taken, all action necessary to
execute and deliver this Agreement and any other documents required or
permitted to be executed or delivered by it in connection with this
Agreement and to fulfill its obligations hereunder, (iii) no notices to,
or consents, authorizations or approvals of, any person are required
(other than any already given or obtained) for its due execution,
delivery and performance of this Agreement, and apart from any
agreements or undertakings or filings required by the Credit Agreement,
no further action by, or notice to, or filing with, any person is
required of it for such execution, delivery or performance; and (iv)
this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of the Assignor,
enforceable against the Assignor in accordance with the terms hereof,
except subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable
principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto. The Assignor makes no
-5-
representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or
statements of the Company or any guarantor or the performance or
observance by the Company or any guarantor of any of its respective
obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Agreement and any other
documents required or permitted to be executed or delivered by it in
connection with this Agreement, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any person
are required (other than any already given or obtained) for its due
execution, delivery and performance of this Agreement; and apart from any
agreements or undertaking or filings required by the Credit Agreement, no
further action by, or notice to, or filing with, any person is required of
it for such execution, delivery or performance; (iii) this Agreement has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligations of the Assignee, enforceable against the Assignee in
accordance with the terms hereof, except subject, as to enforcement, to
bankruptcy, insolvency, moratorium, reorganization and other laws of
general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is eligible under the Credit
Agreement to be an assignee of the Loans and the Commitment.
8. FURTHER ASSURANCES.
The Assignor and the Assignee each hereby agrees to execute and
deliver such other instruments, and take such other action, as either party
may reasonably request in connection with the transactions contemplated by
this Agreement, including, without limitation, the delivery of any notices or
other documents or instruments to the Company or any guarantor which may be
required in connection with the assignment and assumption contemplated hereby.
9. INDEMNITY.
The Assignee agrees to indemnify and hold harmless the Assignor
against any and all losses, costs, expenses (including, without limitation,
reasonable attorneys' fees and the allocated cost of internal legal services
and all disbursements of internal
-6-
counsel) and liabilities incurred by the Assignor in connection with or
arising in any manner from the non-performance by the Assignee of any
obligation assumed by the Assignee under this Agreement.
10. MISCELLANEOUS.
(a) Any amendment or waiver of any provision of this Agreement shall be in
writing signed by the parties hereto. No failure or delay by either party
hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof and any waiver of any breach of the provisions of this
Agreement shall be without prejudice to any rights with respect to any
other or further breach hereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) All communications among the parties or notices in connection herewith
shall be in writing, hand-delivered, telex or facsimile transmitter,
addressed as follows: (i) if to the Assignor or the Assignee, at their
respective addresses set forth on the signature pages hereof and (ii) if to
the Company or any guarantor, at their respective addresses set forth in
the Credit Agreement or other documents or instruments. All such
communications and notices shall be effective upon receipt. [The Assignee
specifies as its Domestic and Offshore Lending Office(s) the offices set
forth beneath its name on the signature pages hereof.
(d) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation,
execution and performance of this Agreement.
(e) The representations and warranties made herein shall survive the
consummation of the transactions contemplated hereby.
(f) This Agreement shall be binding upon and inure to the benefit of the
Assignor and the Assignee and their respective successors and assigns;
provided, however, that no party shall assign its rights hereunder without
the prior written consent of the other party and any purported assignment,
absent such consent, shall be void. The preceding sentence shall not limit
the right of the Assignee to assign or participate all or part of the
Assignee's
-7-
Percentage Share and the Assigned Amount and any outstanding
Loans attributable thereto in the manner contemplated by the Credit
Agreement.
(g) The Assignor may at any time or from time to time grant to the others
assignments or participations in Assignor's Commitment or the Loans but not
in the portions thereof assigned to the Assignee pursuant to this
Agreement.
(h) This Agreement may be executed in any number of counterparts and all
of such counterparts taken together shall be deemed to constitute one and
the same instrument.
(i) This Agreement shall be governed by and construed in accordance with
the law of the State of California. The Assignor and the Assignee each
irrevocably submits to the non-exclusive jurisdiction of any California
State or Federal court sitting in The City of San Francisco over any suit,
action or proceeding arising out of or relating to this Agreement and
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such California State or Federal court.
Each party to this Agreement hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding.
(j) This Agreement and any agreement, document or instrument attached
hereto or referred to herein integrate all the terms and conditions
mentioned herein or incidental hereto, constitutes the entire agreement and
understanding between the parties hereto and supersedes any and all prior
agreements and understandings related to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms,
conditions and provisions of this Agreement shall prevail.
(k) In the event of any inconsistency between the provisions of this
Agreement and Schedule I hereto, this Agreement shall control. Headings
are for reference only and are to be ignored in interpreting this
Agreement.
(l) The illegality or unenforceability of any provision of this Agreement
or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions
of this Agreement or any instrument or agreement required hereunder.
-8-
(m) Any controversy or claim between the Assignor and the Assignee,
including but not limited to those arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered in
connection herewith and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The
arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrators shall give effect to
statutes of limitation in determining any claim. Any controversy
concerning whether an issue is arbitrable shall be determined by the
arbitrator. Judgment upon the arbitration award may be entered in any
court having jurisdiction. The institution and maintenance of an action
for judicial relief or pursuit of a provisional or ancillary remedy shall
not constitute a waiver of the right of any party, including the plaintiff,
to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief. This section shall not limit the
right of either party to this Agreement to exercise self-help remedies such
as setoff, to foreclose against or sell any real or personal property or
collateral or security or to obtain provisional or ancillary remedies from
a court of competent jurisdiction before, after, or during the pendency of
any arbitration or other proceeding. The exercise of a remedy does not
waive the right of either party to resort to arbitration.
-9-
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
Assignor
By:____________________________________
Title: ________________________________
_______________________________________
Assignee
By:____________________________________
Title:_________________________________
Domestic Lending Office
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Offshore Lending Office
_______________________________________
_______________________________________
_______________________________________
_______________________________________
-10-
SCHEDULE I
to
Assignment and Assumption Agreement
1. COMPANY: Zenith National Insurance Corp.
2. DATE OF CREDIT AGREEMENT: ____________________, 1997
3. ASSIGNOR: Bank of America National Trust and Savings Association
4. ASSIGNEE:
5. DATE OF ASSIGNMENT AGREEMENT:
6. EFFECTIVE DATE:
7. ASSIGNEE'S TRANCHE A TRANCHE B
SHARE COMMITMENT COMMITMENT
---------- ---------- ----------
(a) Assignee's
Percentage
Share
(b) Assigned Amount
8. FEES:
9. INTEREST: PAYMENT BY PAYMENT BY
COMPANY TO ASSIGNEE TO
ASSIGNEE ASSIGNOR
--------- ---------- ------------
(i) Base Rate Loan
(ii) Offshore Rate Loan
10. PAYMENT INSTRUCTIONS:
Assignor:
Assignee:
11. ASSIGNEE'S NOTICE:
INSTRUCTIONS
------------------
12. OTHER INFORMATION:
-11-
EXHIBIT F-1
FORM OF
TRANCHE A NOTE
$20,000,000 July 24, 1997
On or before July 23, 1998 the undersigned, FOR VALUE RECEIVED,
promises to pay to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Lender") at its principal office at 000 Xxxxx XxXxxxx
Xxxxxx in Chicago, Illinois, TWENTY MILLION DOLLARS ($20,000,000) or, if
less, the aggregate unpaid principal amount of all Tranche A Loans (as
defined in the Credit Agreement hereinafter referred to) made by the Lender
to the undersigned pursuant to the Credit Agreement, as shown in the schedule
attached hereto (and any continuation thereof).
The undersigned also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States of America in same day or immediately available
funds.
This Note is the Tranche A Note described in, and is subject to the
terms and provisions of, a Credit Agreement, dated as of July 24, 1997 (as
the same may at any time be amended or modified and in effect, the "Credit
Agreement"), between the undersigned and the Lender. Reference is hereby
made to the Credit Agreement for a statement of the prepayment rights and
obligations of the undersigned and for a statement of the terms and
conditions under which the due date of this Note may be accelerated. Upon
the occurrence of any Event of Default as specified in the Credit Agreement,
the principal balance hereof and the interest accrued hereon may be declared
to be forthwith due and payable, and any indebtedness of the holder hereof to
the undersigned may be appropriated and applied hereon.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the
holder of
this Note in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
ZENITH NATIONAL INSURANCE CORP.
By:______________________________________
Name:____________________________________
Title:___________________________________
-2-
EXHIBIT X-0
XXXX XX
XXXXXXX X NOTE
$30,000,000 July 24, 1997
On or before July 24, 2002 the undersigned, FOR VALUE RECEIVED,
promises to pay to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Lender") at its principal office at 000 Xxxxx XxXxxxx
Xxxxxx in Chicago, Illinois, THIRTY MILLION DOLLARS ($30,000,000) or, if
less, the aggregate unpaid principal amount of all Tranche B Loans (as
defined in the Credit Agreement hereinafter referred to) made by the Lender
to the undersigned pursuant to the Credit Agreement, as shown in the schedule
attached hereto (and any continuation thereof).
The undersigned also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity,
until paid, at the rates PER ANNUM and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States of America in same day or immediately available
funds.
This Note is the Tranche B Note described in, and is subject to the
terms and provisions of, a Credit Agreement, dated as of July 24, 1997 (as
the same may at any time be amended or modified and in effect, the "Credit
Agreement"), between the undersigned and the Lender. Reference is hereby
made to the Credit Agreement for a statement of the prepayment rights and
obligations of the undersigned and for a statement of the terms and
conditions under which the due date of this Note may be accelerated. Upon
the occurrence of any Event of Default as specified in the Credit Agreement,
the principal balance hereof and the interest accrued hereon may be declared
to be forthwith due and payable, and any indebtedness of the holder hereof to
the undersigned may be appropriated and applied hereon.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the
holder of
this Note in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
ZENITH NATIONAL INSURANCE CORP.
By:____________________________
Name:__________________________
Title:_________________________
-2-
TRANCHE A NOTE
$20,000,000 July 24, 1997
On or before July 23, 1998 the undersigned, FOR VALUE RECEIVED,
promises to pay to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Lender") at its principal office at 000 Xxxxx XxXxxxx
Xxxxxx in Chicago, Illinois, TWENTY MILLION DOLLARS ($20,000,000) or, if
less, the aggregate unpaid principal amount of all Tranche A Loans (as
defined in the Credit Agreement hereinafter referred to) made by the Lender
to the undersigned pursuant to the Credit Agreement, as shown in the schedule
attached hereto (and any continuation thereof).
The undersigned also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity,
until paid, at the rates PER ANNUM and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States of America in same day or immediately available
funds.
This Note is the Tranche A Note described in, and is subject to the
terms and provisions of, a Credit Agreement, dated as of July 24, 1997 (as
the same may at any time be amended or modified and in effect, the "Credit
Agreement"), between the undersigned and the Lender. Reference is hereby
made to the Credit Agreement for a statement of the prepayment rights and
obligations of the undersigned and for a statement of the terms and
conditions under which the due date of this Note may be accelerated. Upon
the occurrence of any Event of Default as specified in the Credit Agreement,
the principal balance hereof and the interest accrued hereon may be declared
to be forthwith due and payable, and any indebtedness of the holder hereof to
the undersigned may be appropriated and applied hereon.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the
holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
ZENITH NATIONAL INSURANCE CORP.
By: /s/ XXXXXXX X. XXX
----------------------------
Name:
--------------------------
Title: Chairman
-------------------------
-2-
TRANCHE B NOTE
$30,000,000 July 24, 1997
On or before July 24, 2002 the undersigned, FOR VALUE RECEIVED,
promises to pay to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Lender") at its principal office at 000 Xxxxx XxXxxxx
Xxxxxx in Chicago, Illinois, THIRTY MILLION DOLLARS ($30,000,000) or, if
less, the aggregate unpaid principal amount of all Tranche B Loans (as
defined in the Credit Agreement hereinafter referred to) made by the Lender
to the undersigned pursuant to the Credit Agreement, as shown in the schedule
attached hereto (and any continuation thereof).
The undersigned also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity,
until paid, at the rates PER ANNUM and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States of America in same day or immediately available
funds.
This Note is the Tranche B Note described in, and is subject to the
terms and provisions of, a Credit Agreement, dated as of July 24, 1997 (as
the same may at any time be amended or modified and in effect, the "Credit
Agreement"), between the undersigned and the Lender. Reference is hereby
made to the Credit Agreement for a statement of the prepayment rights and
obligations of the undersigned and for a statement of the terms and
conditions under which the due date of this Note may be accelerated. Upon
the occurrence of any Event of Default as specified in the Credit Agreement,
the principal balance hereof and the interest accrued hereon may be declared
to be forthwith due and payable, and any indebtedness of the holder hereof to
the undersigned may be appropriated and applied hereon.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the
holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
ZENITH NATIONAL INSURANCE CORP.
By: /s/ XXXXXXX X. XXX
----------------------------
Name:
--------------------------
Title: Chairman
-------------------------
-2-
