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EXHIBIT 10.1
UNITED LIFE
CONSENT AGREEMENT
Dated as of March 5, 1999
Reference is made to the Credit Agreement, dated as of March 12, 1997
(as amended, the "Credit Agreement"), among the Managing Agents named therein,
the Co-Agents named therein and The Bank of New York, as Administrative Agent,
and PennCorp Financial Group, Inc. (the "Company"). Capitalized terms that are
not otherwise defined in this Consent or in the United Life Purchase Contract
(as hereinafter defined) are used with the meanings assigned in the Credit
Agreement. "Kivex Note" means the promissory note, dated as of March 5, 1999, in
the principal amount of $1,300,000, payable by Kivex, Inc. to UC. In addition,
the terms "Buyer", "Closing", "CyberLink" "Escrow Agreement", "Escrow Amount",
"Litigation Reserves" "Marketing One", "Marketing One Assets", "Noncurrent
Loans", "Nonresidential Mortgages", "PLAC", "Pre-Closing Dividend",
"Reorganization", "Residential Mortgages", "Section 338(h)(10) Election",
"Sellers", "Servicer" and "UC" shall have the meanings assigned to those terms
in the United Life Purchase Contract.
WHEREAS, The Company has requested that, pursuant to Section
8.06(b) of the Credit Agreement, the Majority Banks consent to the Company's or
its Subsidiary's execution of the United Life Purchase Contract, as hereinafter
defined.
NOW THEREFORE, in accordance with the Company's request, the
Company, the undersigned Banks and the Agent hereby agree as follows:
1. (a) The "United Life Purchase Contract" shall mean that
certain Purchase Agreement dated as of February 21, 1999 among ING America
Insurance Holdings, Inc., the Company, Pacific Life and Accident Insurance
Company, Marketing One Financial Corporation and Marketing One, Inc., a copy of
which is attached hereto as Schedule A, as such Purchase Contract may be amended
or modified from time to time after the Effective Date (as defined in paragraph
8 below); provided that any such amendment or modification that reduces the
Gross Proceeds (as hereinafter defined), or amends or modifies any other
material term of the United Life Purchase Contract, is furnished to the Banks
prior to its execution and delivery and is consented to in writing by the
Majority Banks.
(b) "Gross Proceeds" shall mean $152,000,000 payable to the
Sellers under the United Life Purchase Contract plus any amount payable by the
Buyer pursuant to Section 2.2 of the United Life Purchase Agreement as a result
of the Pre-Closing Dividend not having been paid to the Sellers before the
Closing.
(c) "Net Cash Proceeds" shall mean the Gross Proceeds minus
the Specified Deductions.
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(d) "Specified Deductions" shall mean the Marketing One
Proceeds, the Mortgage Loan Purchase Price, $1,000,000 of the InterCompany
Settlement Amount and up to but not in excess of the dollar amount specified as
"Fees and Expenses" on Schedule B attached hereto, or such greater amount as the
Majority Banks shall specify from time to time in a writing designated "Increase
in Specified Deductions."
(e) "Specified Minimum Amount" shall mean the Net Cash
Proceeds, but in any event, an amount of not less than $140,000,000 or such
lesser amount as the Majority Banks shall specify from time to time in a writing
designated "Reduction in Specified Minimum Amount."
(f) "Escrow Payment" shall mean an amount distributable to the
Sellers pursuant to the Escrow Agreement representing Escrow Amounts together
with interest on the Escrow Amounts payable in accordance with the terms of the
Escrow Agreement.
(g) "InterCompany Settlement Amount shall mean the dollar
amount specified as "Intercompany Settlement" on Schedule B.
(h) "Knightsbridge Companies' InterCompany Settlement Amount"
shall mean the InterCompany Settlement Amount minus $1,000,000
(i) "Marketing One Proceeds" shall mean the portion of the
Gross Proceeds allocable to the Marketing One Assets, not to exceed $392,000.
(j) "Mortgage Loan Purchase Price" shall mean the aggregate
purchase prices of the Noncurrent Loans and Nonresidential Mortgages required to
be purchased by Sellers pursuant to Section 5.17(a) of the United Life Purchase
Contract), in any event such amount shall not exceed $10,000,000 or such greater
amount as the Majority Banks may specify in a writing entitled "Increase in
Mortgage Purchase Price."
(k) "Initial Mortgage Loan Purchase Price" shall mean that
portion of the Mortgage Loan Purchase Price that the Sellers must pay at the
Closing pursuant to Section 5.17(a) of the United Life Purchase Contract.
(l) "Post-Closing Mortgage Loan Purchase Price" shall mean an
amount equal to the Mortgage Loan Purchase Price minus the Initial Mortgage Loan
Purchase Price.
2. (a) As of the Effective Date of this Consent, the Banks
hereby consent under Section 8.06(b) of the Credit Agreement to the Company's
execution, delivery and performance of the United Life Purchase Contract;
provided that, if the Closing does not take place on or before June 30, 1999,
this Consent will no longer be effective, except for paragraph 5 which shall
continue in full force and effect. The failure by the Company to comply with any
of its obligations hereunder shall not affect the effectiveness of this
paragraph 2(a).
(b) The Majority Banks hereby waive compliance with Sections
8.06 of the Credit Agreement, insofar as it prohibits the transfer of Property,
to the extent, and only to the extent, necessary to permit the Company to effect
the Reorganization.
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3. (a) The Company agrees that all of the Net Cash Proceeds
received by the Company will be applied directly, and not through the Collateral
Account, to the prepayment of the Loans as follows: (i) the Company will, on the
first Business Day following the Closing prepay directly, and not through the
Collateral Account, the Loans in an amount of such Net Cash Proceeds in an
amount not less than the Specified Minimum Amount minus the Escrow Amount; and
(ii) all Escrow Payments shall be paid on or before the date upon which the
Escrow Agreement is terminated, or such later date as the Majority Banks may
approve to the Administrative Agent as distributable under the Escrow Agreement
in amounts aggregating not less than $23,800,000 (as reduced by the principal
payments made after January 31, 1999 and prior to the termination of the Escrow
Agreement) minus the Mortgage Loan Purchase Price. All prepayments required by
this paragraph 3(a) shall effect concomitant permanent reductions in the
Commitments.
(b) The Company agrees that the amount of the Net Cash
Proceeds that the Company deems necessary to reserve for future payment of the
Post-Closing Mortgage Loan Purchase Price, that is not part of the Escrow
Amount, shall be delivered to the Administrative Agent for deposit into an
account established at The Bank of New York in the name and under the control of
the Administrative Agent (the "Mortgage Loan Purchase Price Account"). Except
during an Event of Default, amounts necessary to pay the Post-Closing Mortgage
Loan Purchase Price shall be released from the Mortgage Loan Purchase Price
Account as necessary to make such payment. The Company further agrees that the
amount remaining in such Account after payment by Sellers to Buyer of any
amounts due on account of the Post-Closing Mortgage Loan Purchase Prices shall
be withdrawn by the Administrative Agent and applied directly to the prepayment
of Loans in accordance with paragraph 3(a) of this Consent.
(c) The Company shall act as expeditiously as possible (i) to
cause, subject to Applicable Law and written disapproval by an Applicable
Insurance Regulatory Authority, each of its Subsidiaries, other than Marketing
One, receiving any of the Net Cash Proceeds (including Escrow Payments) from the
sales of assets pursuant to the United Life Purchase Contract to transfer such
proceeds to the Company for purposes of making the prepayments contemplated by
paragraph 3(a), and (ii) to comply with any such Applicable Law and to obtain
any required approval; and for this purpose "transfer" includes by way of
dividend, loan, purchase of shares or capital contribution, and the second
sentence of Section 8.06, insofar as it applies to the acquisition of Property,
and Section 8.15 shall not apply to such transfers.
(d) The Company shall (i) cause the Escrow Agreement to
provide that, except for the final distribution, Escrow Payments, otherwise
available to be distributed, shall not be distributed to the Sellers until such
amounts aggregate, from time to time, not less than $500,000, and (ii) cause to
be executed, by each of the Persons designated therein as a "Seller," and
delivered, after the same shall have been executed by the Administrative Agent,
and cause to be countersigned by the Person acting as escrow agent under the
Escrow Agreement (the "Escrow Agent"), a payment direction in the form of
Exhibit A attached hereto (the "Payment Direction").
(e) The Company agrees that it shall (i) be the Seller that
purchases Noncurrent Loans and Nonresidential Loans pursuant to Section 5.17(a)
of the United Life
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Purchase Contract and (ii) cause the Pre-Closing Dividend not to be paid unless
immediately paid to the Administrative Agent to be applied as specified in
paragraph 3(a).
(f) The Company shall, unless the Majority Banks shall have
otherwise agreed, cause PLAC, not later than the Closing, to transfer to the
Company by dividend, or Surplus Note payment all of PLAC's rights in, to and
under the Escrow Agreement.
4. The Company represents and warrants as follows:
(a)(i) The Company has the power, and has taken all
necessary action (including, if a corporation, any necessary
stockholder action) to authorize it, to execute, deliver and perform in
accordance with its terms this Consent. This Consent has been duly
executed and delivered by the Company and is a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally.
The execution, delivery and performance in accordance with its terms by
the Company of this Consent do not and (absent any change in any
Applicable Law or applicable Contract) will not (A) require any
Governmental Approval or any other consent or approval, including any
consent or approval of the stockholders of the Company, other than
Governmental Approvals and other consents and approvals that have been
obtained, are final and not subject to review on appeal or to
collateral attack, and are in full force and effect, or (B) violate,
conflict with, result in a breach of, constitute a default under, or
result in or require the creation of any Lien upon any assets of any
such Person under, (y) any Contract to which any such Person is a party
or by which any such Person or any of its properties may be bound or
(z) any Applicable Law. Upon receipt of the dividends or Surplus Note
payments contemplated by paragraph (f)(i), the Company will have good
title to, and be the sole owner of, the assets that are the subject of
such dividends or Surplus Note payments subject to no Liens other than
the Security Interest created under the Security Agreement, dated as of
September 4, 1998, between The Bank of new York, as Collateral Agent,
and the Company (the "Security Agreement"). Not later than the Closing,
the Company will have good title to, and be the sole owner of, the
Kivex Note.
(ii) Subject to the approval of the Applicable
Insurance Regulatory Authority, PLAC has the power, and prior to the
declaration and payment thereof, will have taken all necessary action
(including any stockholder action) to authorize it to declare and pay
the dividend contemplated by paragraph 3(f). The payment by PLAC of the
dividend, if a dividend is in fact paid, will not have an adverse
effect on PLAC's present and future ability to make payments under its
Surplus Notes in accordance with their terms.
(b) The copy of the United Life Purchase Contract attached as
Schedule A hereto (i) has been approved by the Company's Board of Directors at
the meeting of the Board of Directors of the Company held on February 15, 1999,
(ii) has been executed by the parties, and (iii) has not been amended or
modified in any way subsequent to its having been furnished to the
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Administrative Agent and prior to the Effective Date of this Consent, except by
amendments and modifications of which the Banks have been furnished copies.
(c) The Company shall deliver copies of any and all Form A
applications submitted to any Applicable Insurance Regulatory Authority to the
Banks as soon as such applications are submitted to such Applicable Insurance
Regulatory Authority.
(d) Amounts payable by the Company pursuant to paragraph 3
above shall constitute payments of principal under Section 9(a) of the Credit
Agreement that are due on the date specified in such paragraph. Each of the
foregoing representations and warranties shall constitute representations and
warranties subject to Section 9(d) of the Credit Agreement and shall be made at
and as of the Effective Date of this Consent. Each of the Company's agreements
contained in paragraphs 3(b), 3(c), 3(d), 3(e), 3(f) and 4(c) shall, for
purposes of Section 9(e) of the Credit Agreement, constitute obligations default
in the performance of which constitute an immediate Event of Default as fully as
though such paragraphs were Sections specifically identified in such Section
9(e). Each of the following shall constitute an Event of Default under the
Credit Agreement: (i) all or any part of the Knightsbridge Companies'
InterCompany Settlement Amount shall be paid to any of the Knightsbridge
Companies unless such amount is immediately thereafter dividended to the Company
and paid by the Company to the Administrative Agent to be applied as specified
in paragraph 3(a); and (ii) the Escrow Agent shall fail to perform its
obligations under the Escrow Agreement.
5. The Company, on behalf of itself and each of its
Subsidiaries, hereby releases each Released Party from, and agrees not to xxx
each Released Party for, any loss or damage sustained by the Company or any of
its Subsidiaries as a result of, in connection with, or that is in any way
related to, the distribution or other dissemination by The Bank of New York or
Ernst & Young L.L.P. to the Banks of any information related to the transactions
contemplated by the United Life Purchase Contract, including any claim that such
distribution was contrary to any confidentiality agreement or other limitation
on the distribution of such information. For this purpose, "Released Party"
means The Bank of New York, as Administrative Agent, and as a Bank, the other
Xxxxx, Xxxxx & Xxxxx, L.L.P., Winthrop, Stimson, Xxxxxx & Xxxxxxx, and each of
their respective directors, officers, partners, employees and agents.
6. This Consent is limited to Section 8.06 of the Credit
Agreement as specified in paragraphs 2 above, and by its execution and delivery
the Banks do not intend to, and do not, waive any other rights that they, or any
of them, now or hereafter have under any other provision of the Credit Agreement
or under any of the other Loan Documents.
7. (a) Section 1.01(a) of the Credit Agreement is hereby
amended to add, in alphabetical order, (i) the definitions from the United Life
Purchase Contract specified in the introductory paragraph of this Consent, (ii)
the definition of "United Life Purchase Contract" specified in paragraph 1(a) of
this Consent and (iii) the definition of "Mortgage Loan Purchase Price Account"
contained in paragraph 3(b) of this Consent.
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(b) (i) Section 3 of the Security Agreement, dated as of
September 4, 1998, between The Bank of New York as Collateral Agent and
the Company is hereby amended by:
(A) Adding the following new clauses (f), (g) (h)
and (i):
"(f) The Mortgage Loan Purchase Price
Account;
(g) The Residential Mortgages and
Non-Residential Mortgages required to be
purchased by Seller pursuant to Section 5.17
of the United Life Purchase Contract;
(h) The Escrow Agreement and
(i) The Kivex Note;" and
(B) appropriately relettering existing clauses (f)
through (l) as (h) through (m).
(ii) Section 4.01(a) of the Security Agreement is
hereby amended by adding the following two new final sentences:
"The Residential Mortgages and Non-Residential Mortgages shall
be released to the Company to permit their delivery to the
purchasers thereof, upon certification by the Company of the
need therefore, such certification to constitute a
representation and warranty made under this Agreement. Except
during an Event of Default, there shall be released from the
Mortgage Purchase Price Account amounts necessary to pay the
Post-Closing Mortgage Purchase Price upon certification by the
Company of the amount thereof, such certification to
constitute a representation and warranty made under this
Agreement."
(C) Section 4.01(c) is hereby amended to add the
following new first sentence:
"The Company shall be permitted to make sales of the
Residential Mortgages and Non-Residential Mortgages released
to it pursuant to Section 4.01(a)."
8. This Consent shall be effective as of the date first
written above, but shall not become effective as of such date until the time
(such time, the " Effective Date") as:
(a) this Consent has been executed and delivered by the
Company, the Majority Banks and the Administrative Agent;
(b) all amounts payable pursuant to Section 11.03 of the
Credit Agreement for which invoices have been delivered to the Company on or
prior to such date, have been paid in full;
(c) the Company shall have executed and delivered to the
Administrative Agent duly executed UCC-1 financing statement forms relating to
the Collateral referred to in paragraph 7(b)(i)(A).
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9. This Consent shall be governed by, and construed in
accordance with, the law of the State of New York.
10. This Consent may be executed in any number of counterparts
(and by facsimile copy), all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Amendment by
signing any such counterpart.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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Exhibit A
Payment Direction
[Name and address of Escrow Agent]
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Re: [Escrow Acct. No. -] (the "Escrow Account")
Ladies & Gentlemen:
Until you shall have received written instructions to the contrary from
The Bank of New York, as Administrative Agent, you are hereby instructed by each
of the undersigned (each a "Seller") to pay all amounts otherwise payable to
such Seller from the Escrow Account to such account as The Bank of New York, as
Administrative Agent, shall specify from time to time.
The terms of this letter may not be amended or modified except in a
writing that has been countersigned by the Bank of New York as Collateral Agent.
Very truly yours,
PENNCORP FINANCIAL GROUP, INC.
By:
-------------------------------------
(Authorized Signature)
PACIFIC LIFE AND ACCIDENT INSURANCE
COMPANY
By:
-------------------------------------
(Authorized Signature)
MARKETING ONE FINANCIAL CORPORATION
By: MARKETING ONE, INC.
By:
-------------------------------------
(Authorized Signature)
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SCHEDULE B
XXX XXXX PROCEEDS
AATX M1/M1Fin
Cash Proceeds ($ millions) ULA Notes Cyberlink UC Mort. Other Total
------ ------ --------- ------- ------ ------
Actual Purchase Price $139.2 N/A $ 9.0 $ 3.8 -- $152.0
Q4 Statutory Earnings (Est.) 2.0 2.0
Litigation Reserve (Est.) 0.3 0.3
Mortgage Loan Purchase (Est.)(a) (10.0) (10.0)
Intercompany Settlement (3.5) (3.5)
Fees and Expenses (Est.) (3.0) (3.0)
------ ------ ------ ------ ------ ------
Total Cash Proceeds to PFG (h) $141.5 $ 0.0 $ 9.0 $ 3.8 ($16.5) $137.8
====== ====== ====== ====== ====== ======
(a) Assumed held at PFG for now.
(b) Litigation settlements are not considered as it is unlikely litigation will
be settled on or before closing.
(22)
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IN WITNESS WHEREOF, the parties hereto have caused this Consent to be
duly executed as of the day and year first above written.
PENNCORP FINANCIAL GROUP, INC.
By: /s/ XXXXX X. XXXXXXXXX
------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: EVP
THE BANK OF NEW YORK, as
Administrative Agent, Collateral Agent and
as a Bank
By: /s/ XXXXX X. XXXX
------------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
THE CHASE MANHATTAN BANK, as a
Managing Agent and as a Bank
By: /s/ XXXXXXXXX X. XXXXXX
------------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Managing Director
THE FIRST NATIONAL BANK OF CHICAGO,
as a Managing Agent and as a Bank
By:
------------------------------------------
Name:
Title:
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NATIONSBANK, N.A., as a Managing Agent
and as a Bank
By: /s/ XXXXXXX X. XXXXXXXXXXX, XX
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx, XX
Title: Senior Vice President
FLEET NATIONAL BANK, as a Co-Agent
and as a Bank
By:
------------------------------------------
Name:
Title:
MELLON BANK, N.A., as a Co-Agent
and as a Bank
By: /s/ XXXX X. XXXX
------------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
BANK OF MONTREAL, as a Co-Agent
and as a Bank
By: /s/ XXXXXX X. XXXXXX
------------------------------------------
Name: Xxxxxx X. XxXxxx
Title: Director
CIBC INC., as a Co-Agent and as a Bank
By: /s/ XXXXXX XXXXXXX
------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Executive Director
CIBC Xxxxxxxxxxx Corp. as Agent
00
XXXXXXXX XXXX XX, XXX XXXX
BRANCH & GRAND CAYMAN BRANCH, as a Co-Agent
and as a Bank
By: /s/ XXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
By: /s/ XXXXXXXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Assistant Vice President
SUNTRUST BANK, CENTRAL FLORIDA
NATIONAL ASSOCIATION
By: /s/ XXXXXX X. XXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: First Vice President
BANK ONE, TEXAS N.A.
By:
------------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By: /s/ [ILLEGIBLE]
------------------------------------------
Name: [ILLEGIBLE]
Title: Senior Vice President
LTCB TRUST COMPANY
By:
------------------------------------------
Name:
Title:
ING (U.S.) CAPITAL CORPORATION
By: /s/ XXXX XXXXXXXX
------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Senior Associate
