CREDIT AGREEMENT
among
ASCENT ASSURANCE, INC.,
as Borrower,
Each Lender Party Hereto from Time to Time,
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION,
as Administrative Agent and Arranger
Dated as of April 17, 2001
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS..................................................................................1
1.1 Defined Terms.................................................................................1
1.2 Interpretation...............................................................................12
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS.............................................................13
2.1 Commitments..................................................................................13
2.2 Notes........................................................................................13
2.3 Procedure for Borrowing......................................................................14
2.4 [Reserved.]..................................................................................15
2.5 Optional Prepayment and Repayment at Maturity................................................15
2.6 Interest Rate; Default Rate; Payment Dates...................................................16
2.7 Computation of Interest; Making of Payments..................................................17
2.8 Pro Rata Treatment and Payments; Funding Reliance............................................17
2.9 Illegality...................................................................................18
2.10 Requirements of Law..........................................................................18
2.11 Taxes........................................................................................18
2.12 Lending Offices..............................................................................20
ARTICLE 3. REPRESENTATIONS AND WARRANTIES..............................................................20
3.1 Financial Condition..........................................................................20
3.2 No Change....................................................................................21
3.3 Corporate Existence; Compliance with Law.....................................................21
3.4 Corporate Power; Authorization; Enforceable Obligations......................................22
3.5 No Legal Bar.................................................................................22
3.6 No Material Litigation.......................................................................22
3.7 No Default...................................................................................23
3.8 Ownership of Property; Liens.................................................................23
3.9 Intellectual Property........................................................................23
3.10 [Reserved.]..................................................................................23
3.11 Taxes........................................................................................23
3.12 Federal Margin Regulations...................................................................24
3.13 ERISA........................................................................................24
3.14 Holding Company; Investment Company Act; Other Regulations...................................25
3.15 Purpose of Loans.............................................................................25
3.16 Environmental Matters........................................................................25
3.17 Insurance; Reinsurance Agreements............................................................25
3.18 Accuracy and Completeness of Information.....................................................26
3.19 Leaseholds, Permits, etc.....................................................................26
3.20 No Restrictive Covenants.....................................................................27
3.21 Solvency.....................................................................................27
3.22 Subsidiaries.................................................................................27
3.23 Credit Arrangements..........................................................................27
3.24 Pledge Agreement.............................................................................28
ARTICLE 4. CONDITIONS PRECEDENT........................................................................28
4.1 Conditions to Initial Loans..................................................................28
4.2 Conditions to Each Loan......................................................................31
4.3 Representation...............................................................................32
ARTICLE 5. AFFIRMATIVE COVENANTS.......................................................................32
5.1 Financial Statements.........................................................................32
5.2 Certificates; Other Information..............................................................33
5.3 Payment of Obligations.......................................................................35
5.4 Maintenance of Existence.....................................................................35
5.5 Maintenance of Property; Insurance...........................................................36
5.6 Inspection of Property; Books and Records; Discussions.......................................36
5.7 Other Notices................................................................................36
5.8 Environmental Laws...........................................................................37
5.9 ERISA........................................................................................38
5.10 Use of Proceeds..............................................................................38
5.11 Margin Stock.................................................................................38
5.12 Maintain Ownership of Insurance Businesses...................................................38
5.13 Fees.........................................................................................38
5.14 Pledge Agreement.............................................................................38
5.15 Relief From Automatic Stay in Bankruptcy.....................................................38
5.16 Application of Capital Contributions.........................................................39
5.17 [Reserved]...................................................................................39
5.18 [Reserved]...................................................................................39
ARTICLE 6. NEGATIVE COVENANTS..........................................................................39
6.1 Financial Covenants..........................................................................40
6.2 Limitation on Fundamental Changes............................................................40
6.3 Limitation on Transactions with Affiliates...................................................40
6.4 Limitation on Liens..........................................................................41
6.5 Hedging Arrangements.........................................................................41
6.6 Limitation on Guaranties.....................................................................42
6.7 Limitation on Sale of Assets.................................................................42
6.8 Limitation on Investments, Loans and Advances................................................42
6.9 Limitations Relating to Stock of Subsidiaries, Dividends and Stock Repurchases...............42
6.10 Limitation on Indebtedness...................................................................43
6.11 Limitation on Capital Expenditures...........................................................44
6.12 Limitation on Negative Pledge Clauses; Payment Restrictions..................................44
6.13 Limitation on Businesses.....................................................................44
6.14 Limitation on Certain Prepayments and Amendments.............................................44
ARTICLE 7. EVENTS OF DEFAULT...........................................................................45
7.1 Events of Default............................................................................45
ARTICLE 8. THE ADMINISTRATIVE AGENT....................................................................47
8.1 Appointment..................................................................................47
8.2 Delegation of Duties.........................................................................47
8.3 Exculpatory Provisions.......................................................................48
8.4 Reliance by Administrative Agent.............................................................48
8.5 Notice of Default............................................................................48
8.6 Non-Reliance on Administrative Agent and Other Lenders......................................49
8.7 Indemnification..............................................................................49
8.8 Administrative Agent in Its Individual Capacity.............................................50
8.9 Successor Administrative Agent...............................................................50
ARTICLE 9. MISCELLANEOUS...............................................................................50
9.1 Amendments and Waivers.......................................................................50
9.2 Notice.......................................................................................51
9.3 No Waiver; Cumulative Remedies...............................................................52
9.4 Survival of Representations and Warranties...................................................52
9.5 Payment of Expenses and Taxes; Indemnification...............................................52
9.6 Successors and Assigns; Participations and Assignments.......................................53
9.7 Adjustments; Setoff..........................................................................55
9.8 Confidentiality..............................................................................56
9.9 Effectiveness................................................................................56
9.10 Counterparts.................................................................................56
9.11 Severability.................................................................................56
9.12 Integration..................................................................................56
9.13 GOVERNING LAW................................................................................56
9.14 Submission To Jurisdiction; Waivers..........................................................57
9.15 Acknowledgments..............................................................................57
9.16 Waivers of Jury Trial........................................................................58
EXHIBITS AND SCHEDULES
Schedule I Lending Offices of Lender and Commitments
Exhibit A-1 Form of Note
Exhibit A-2 Form of PIK Interest Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Closing Certificate
Exhibit D Form of Commitment Transfer Supplement
Exhibit E Form of Compliance Certificate
Exhibit F Form of Pledge Agreement
Exhibit G Minimum Statutory Surplus Requirements
Exhibit H Reports and Other Information Required by Section 5.2(e)
Exhibit I Form of Guaranty and Security Agreement
Schedule 1 Borrower Affiliates
Schedule 3.1(b) Variances from Financial Statements
Schedule 3.1(c) Identification of Projections Provided
Schedule 3.1(d) Variances to Annual Statements
Schedule 3.2 Material Adverse Events
Schedule 3.3 Legal Non-Compliance
Schedule 3.4 Requisite Authorizations
Schedule 3.6(a) Litigation
Schedule 3.6(b) Restrictions on New Insurance Business
Schedule 3.7 Defaults/Events of Default
Schedule 3.8 Liens
Schedule 3.11 Taxes
Schedule 3.13 ERISA
Schedule 3.14 Regulations Limiting Indebtedness
Schedule 3.17(a) Insurance Policies
Schedule 3.17(b) Reinsurance Contracts
Schedule 3.20 Agreements Containing Restrictive Covenants
Schedule 3.22 Subsidiaries
Schedule 3.23 Credit Agreements
Schedule 6.3 Transactions with Affiliates
Schedule 6.6 Guaranties
Schedule 6.7 Permitted Tax Benefit Purchases and Capital Contributions
Schedule 6.11 Permitted Capital Expenditures
CREDIT AGREEMENT, dated as of April 17, 2001, between ASCENT ASSURANCE,
INC., a Delaware corporation (the "Borrower"), the several entities identified
on the signature pages of this Agreement as Lenders and each other person that
becomes a lender hereunder (collectively, the "Lenders," and each individually,
a "Lender"), CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION ("CSFBM"), as
Administrative Agent (in such capacity the "Administrative Agent "), and as
Arranger (in such capacity, the "Arranger").
PRELIMINARY STATEMENT
The Borrower has requested that the Lenders make senior secured loans to
the Borrower in an aggregate principal amount not to exceed $11,000,000 for use
by the Borrower to make capital contributions to or purchase surplus notes
issued by a Subsidiary of the Borrower as permitted by the terms set forth
below. The Lenders, severally but not jointly, are willing to make loans, on the
terms and subject to the conditions set forth herein.
Therefore, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms defined in the recital
of the parties shall have the meanings given to them therein, the following
terms shall have the meanings indicated, and the terms defined in Schedule 1
setting forth the names of certain Affiliates of the Borrower shall have the
meanings given to them therein.
"Affiliate" means, as to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with that
other Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, to direct or cause the direction of the
management and policies of that Person, whether through the ownership of
voting securities, by contract or otherwise, and "controlling" and
"controlled" have correlative meanings.
"Annual Statement" means, in relation to any Insurance Subsidiary for
any fiscal year, the annual financial statements of that Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority
of its jurisdiction of domicile and in accordance with the laws of that
jurisdiction, together with all exhibits, schedules, certificates and
actuarial opinions required to be filed or delivered therewith.
"Applicable Rate" means 12% per annum.
"Assignee" shall have the meaning ascribed thereto in Section 9.6(c).
"Borrowing Date" means, with respect to any Loan, the date specified
as such in a notice given by the Borrower in accordance with Section 2.3.
"Business Day" means a day other than a Saturday, a Sunday or another
day on which commercial banks in Xxx Xxxx Xxxx xx Xxxx Xxxxx, Xxxxx are
authorized or required by law to close.
"Capital Expenditures" means, for any period, the Dollar amount of
gross expenditures (including payments in respect of Capital Lease
Obligations) made for fixed assets, real property, plant and equipment, and
all renewals, improvements and replacements thereto (but not repairs
thereof) incurred during such period, all as determined in accordance with
GAAP.
"Capital Lease" means any lease under which the lessee has or may have
obligations that should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
"Capital Lease Obligation" means, in relation to any Person at any
date, the amount of each obligation of that Person as lessee under a
Capital Lease which should, in accordance with GAAP, be shown on its
balance sheet as a liability at that date.
"Capital Stock" means, in relation to a corporation, any and all
shares, interests, participations or other equivalents (however designated)
of capital stock of that corporation, in relation to any Person other than
a corporation, any and all equivalent ownership interests in that Person,
and, in relation to all Persons, any and all warrants or options to
purchase any of the foregoing.
"Closing Date" means the date on or before the Termination Date on
which the conditions precedent set forth in Section 4.1 are satisfied or
waived, as determined by the Administrative Agent.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" means, as to each Lender, the amount specified opposite
the name of that Lender in Schedule I.
"Commitment Percentage" means, as to any Lender, at any time, the
quotient derived by dividing the Total Commitment by that Lender's
Commitment at that time.
"Common Stock" means the common stock, par value $.01 per share, of
the Borrower as it exists at the date of execution of this Agreement or as
it may be reconstituted from time to time. The foregoing reference to the
Common Stock as it may be reconstituted shall not be construed to derogate
from any restrictions in this Agreement on the borrower's actions in
respect of the Common Stock.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001(a)(14) of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Compliance Certificate" shall have the meaning ascribed thereto in
Section 5.2(b).
"Consolidated GAAP Net Worth" means, for any date, the sum of (a) the
Capital Stock (including mandatorily redeemable preferred capital stock)
and additional paid-in capital of the Borrower and its Subsidiaries on a
consolidated basis plus (without duplication) (b) the amount of retained
earnings, inclusive of deferred revenues, or, in the case of a deficit,
minus the deficit, minus (c) treasury stock, plus or minus (d) any other
account which is customarily added or deducted in determining shareholders'
equity (without giving effect to any increase or decrease to Consolidated
GAAP Net Worth attributable to the application of SFAS No. 115, 130 and 133
and related deferred tax effects), all determined on a consolidated basis
in accordance with GAAP.
"Contractual Obligation" means as to the Borrower or any Subsidiary,
any provision of any security issued by the Borrower or any Subsidiary or
of any agreement, instrument or other undertaking to which the Borrower or
any Subsidiary is a party or by which it or any of its property is bound.
"Debt for Borrowed Money" means, as to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, and (c) all Capital Lease obligations of such Person.
"Default" means any of the events specified in Section 7.1, whether or
not any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Environmental Laws" means any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning public health, public and workplace
safety or protection of the environment, as now or may at any time
hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" means any of the events specified in Section 7.1;
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Federal Funds Effective Rate" means, for any day, the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Funded Debt" means, with respect to any Person as of any date, all
Indebtedness of that Person that, by the terms of the agreement governing
or instrument evidencing the Indebtedness, matures more than one year from,
or is directly or indirectly renewable or extendable at the option of that
Person under a revolving credit or similar agreement obligating the lender
or lenders to extend credit over a period of more than one year from the
date of creation thereof, including current maturities of long-term
Indebtedness, revolving credit and short-term Indebtedness extendable
beyond one year at the option of that Person.
"Funded Debt Ratio" means, as at any date, the ratio of Funded Debt to
Total Capital, in each case, determined as of the end of the most recent
fiscal quarter ending on or prior to that date for which financial
statements are available.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time consistent with those
utilized in preparing the audited financial statements referred to in
Section 3.1.
"Governmental Authority" means any national government (United States
or foreign), any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any agency, authority,
instrumentality, or regulatory body of any thereof.
"Guaranty" means, as to any Person, any direct or indirect liability
of that Person with respect to any Indebtedness, liability or other
obligation, whether or not contingent (the "primary obligation"), of
another Person (the "primary obligor") in any manner, (i) to purchase,
repurchase or otherwise acquire the primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth, liquidity or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for
the purpose of assuring the owner of any primary obligation of the ability
of the primary obligor to make payment of that primary obligation or (iv)
otherwise to assure or hold harmless the owner of any primary obligation
against loss in respect thereof. "Guaranty" shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business.
"Guaranty and Security Agreement" means an agreement in the form set
forth in Exhibit I among the Administrative Agent, as secured party on its
own behalf and on behalf of the Lenders, and each of the Subsidiaries of
the Borrower identified therein as a Company, or debtor.
"Hedging Agreements" means, as to any Person, (a) any interest rate
protection agreement, interest rate future, interest rate option, interest
rate swap, interest rate cap or other interest rate hedge or arrangement to
which that Person is a party and (b) any other agreement or arrangement
designed to limit or eliminate the risk and/or exposure of that Person to
fluctuations in currency exchange rates, credit risk or any other variable
that is not within that Person's control.
"Indebtedness" means, with respect to any Person at any date, (a) Debt
for Borrowed Money of that Person, (b) all indebtedness of that Person for
the deferred purchase price of property or services (other than current
trade liabilities and accrued expenses incurred in the ordinary course of
that Person's business and payable in accordance with customary practices),
(c) all outstanding reimbursement obligations of that Person in respect of
outstanding letters of credit, acceptances and similar obligations issued
or created for the account of that Person, (d) all liabilities secured by
any Lien on any property owned by that Person even if that Person has not
assumed or otherwise become liable for the payment thereof, (e) liabilities
arising under Hedging Agreements of that Person (other than interest rate
caps purchased by it), (f) all Guaranties of that Person and (g) all
Capital Lease Obligations of that Person.
"Insolvency" means, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insurance Regulatory Authority" means, in relation to any Subsidiary,
the insurance department or similar Governmental Authority charged with
regulating insurance companies or insurance holding companies in the
jurisdiction of domicile of that Subsidiary and, to the extent that it has
regulatory authority over that Subsidiary, in each other jurisdiction in
which that Subsidiary conducts business or is licensed to conduct business.
"Insurance Subsidiary" means each Subsidiary the ability of which to
pay dividends is regulated by an Insurance Regulatory Authority or that is
otherwise required to be regulated thereby in accordance with the
applicable Requirements of Law of its jurisdiction of domicile, and shall
include each Subsidiary identified as an Insurance Subsidiary in Schedule
3.22.
"Intellectual Property" has the meaning given to the term in Section
3.9.
"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement, dated as of April 17, 2001 among LaSalle Bank National
Association and Credit Suisse First Boston Management Corporation, as
Administrative Agent under this Agreement on its own behalf and on behalf
of the Lenders.
"Interest Payment Date" means, as to each Loan, the last Business Day
of each month, beginning with the month in which the Borrowing Date occurs,
and the Maturity Date for that Loan or any earlier date on which that Loan
becomes due and payable pursuant to this Agreement.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction, other than
any such filing in connection with any true lease or operating lease).
"Loan Documents" means this Agreement, the Security Documents and each
other agreement, instrument or certificate executed and delivered to the
Lenders or the Administrative Agent pursuant hereto or to any other Loan
Document including, without limitation, the Notes.
"Loan" means the loans made by the Lenders to the Borrower pursuant to
this Agreement, including increases to the principal amount thereof through
conversion of PIK Interest pursuant to Section 2.6(d).
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its consolidated Subsidiaries (taken as a
whole) or (b) either singly or in the aggregate, any material adverse
effect on the validity or enforceability of this Agreement, any of the
Notes, the Pledge Agreement or the Lien created thereunder, or on any of
the other Loan Documents, or the rights or remedies of the Administrative
Agent or the Lenders hereunder or thereunder.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" means the third anniversary of the date of this
Agreement.
"Minimum Statutory Surplus Requirement" means, as of any day, the
amount identified as such in Exhibit G.
"Moody's" means Xxxxx'x Investors Service, Inc.
-------
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income" means, for any period, net income (or deficit) of the
Borrower and its Subsidiaries for that period determined on a consolidated
basis in accordance with GAAP reduced by preferred stock dividends.
"Note" means the notes referred to in Section 2.2(a) and PIK Interest
Notes.
"Notice of Borrowing" has the meaning given to the term in Section
2.3(a).
"Obligations" means the unpaid principal of and interest on the Loans
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower or any Subsidiary, as applicable, whether or not a
claim for post-filing or post-petition interest is allowed in the
proceeding and whether the Administrative Agent, for the benefit of the
Lenders, is oversecured or undersecured with respect to the Loans) and all
other obligations and liabilities of the Borrower to the Administrative
Agent and the Lenders, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement, the Notes, the other
Loan Documents or any other document made, delivered or given in connection
therewith or herewith, whether on account of principal, interest, fees,
indemnities, costs, expenses (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or the Lenders that
are required to be paid by the Borrower pursuant to the terms of this
Agreement or any other Loan Document) or otherwise.
"Participant" has the meaning ascribed thereto in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"Permitted Investment" means each of the following:
(a) investments of the Borrower or any Subsidiary in any other
Subsidiary (i) to the extent existing on the date of this Agreement
and identified in Schedule 3.22 (it being understood that a change in
value of any such investment will not for this purpose be considered
an investment), (ii) consisting of surplus notes purchased by the
Borrower or capital contributions made by the Borrower with the
proceeds of any Loan or (iii) consisting of investments by Ascent
Funding, Inc. in receivables generated by any other Subsidiary for the
purposes of obtaining financing under the Receivables Financing
Agreements;
(b) direct obligations of the United States of America or any
agency thereof, or obligations guaranteed as to principal and interest
by the United States of America or any agency thereof, in either case,
if the obligation matures not more than 90 days from the date of
acquisition;
(c) certificates of deposit issued by or other overnight deposits
with any commercial bank or trust company organized under the laws of
the United States of America or any state thereof and having capital,
surplus and undivided profits of at least $500,000,000 and long-term
unsecured and unguaranteed debt rated at least "BBB+" or "Baa1" by
Standard & Poor's or Moody's, respectively, in each case if the
deposit obligation matures not more than 90 days from the date of
acquisition;
(d) commercial paper of any issuer rated at least A-1 or P-1 by
Standard & Poor's or Moody's, respectively, and maturing not more than
90 days from the date of acquisition;
(e) repurchase agreements and reverse repurchase agreements with
any bank with combined capital and surplus of at least $500,000,000,
or any primary dealer in United States government securities, in each
case, if (1) the bank or dealer has long-term unsecured and
unguaranteed debt rated at least "BBB" or "Baa1" by Standard & Poor's
or Moody's, respectively, if the repurchase or reverse repurchase
agreement relates to marketable direct obligations that, (w) at the
time of execution of the agreement, mature within 60 days, (x) are
issued or unconditionally guaranteed or insured by the United States
of America or any agency thereof and are backed by the full faith and
credit of the United States of America, (y) provide for the payment of
principal and interest (and not principal alone or interest alone) and
(z) are not subject to any contingency regarding the payment of
principal or interest;
(f) long-term debt rated at least "BBB" or "Baa1" by Standard &
Poor's or Moody's, respectively; and
(g) investments of Subsidiaries permitted under Section 6.8.
"Permitted Lien" has the meaning given to the term in Section 6.4.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PIK Interest" has the meaning given to the term in Section 2.6(d).
"PIK Interest Note" has the meaning given to the term in Section 2.6(d).
"Plan" means, at any time, any employee benefit plan of a kind contemplated
in Section 3(2) of ERISA and in respect of which the Borrower or any Subsidiary
at the time is, an "employer" as defined in Section 3(5) of ERISA, other than a
Multiemployer Plan.
"Pledge Agreement" means an agreement in the form set forth in Exhibit F
between the Borrower and the Administrative Agent, as secured party on its own
behalf and on behalf of the Lenders.
"Pledged Collateral" has the meaning given to that term in the Pledge
Agreement.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code for which there is no applicable statutory or
regulatory exemption (including a class exemption or an individual exemption).
"QFL Note" has the meaning given to that term in Section 2.2(b).
"Quarterly Statement" means, in relation to any Insurance Subsidiary for
any fiscal quarter, the quarterly financial statements of that Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority of
its jurisdiction of domicile, together with all exhibits, schedules,
certificates and actuarial opinions required to be filed or delivered therewith.
"RBC Ratio" means, in relation to any Person as at the last day of any
fiscal year, the ratio of "Total Adjusted Capital" of that Person as at that
date to "Company Action Level RBC" of that Person as at that date, as those
terms are defined by either the NAIC Risk Based Capital (RBC) for Insurers Model
Act (the "Model Act") or the Insurance Commissioner of the State in which that
Person is incorporated, as amended from time to time. To the extent the Model
Act definition is used, using the annual SAP Financial Statements form
prescribed by the Model Act for the year ended December 31, 2000 is equal to the
quotient of (a) the amount that appears on line 27, column (1) on page 22 of the
Convention Blank, divided by (b) two times the amount that appears on line 28,
column (1) on page 22 of the Convention Blank.
"Receivables Financing Agreements" means the agreements identified as items
1 through 6 in Schedule 3.23, as in effect on the date of this Agreement or
hereafter amended with the prior written consent of the Lenders. For this
purpose an increase in the maximum amount of financing available under any such
agreement after the date of this Agreement shall be deemed made with the consent
of the Lenders to the extent the increase is identified as permitted in Schedule
3.23 (but this deemed consent shall not be treated as applicable to any increase
or change in the security or other credit support for any related obligations or
otherwise to derogate from the restrictions in Article 6).
"Register" has the meaning given to the term in Section 9.6(d).
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time, or any successor regulation.
"Reinsurance Agreement" means any agreement, contract, treaty, certificate
or other arrangement whereby any Insurance Subsidiary agrees or has agreed to
transfer, cede or retrocede to another insurer or reinsurer all or part of the
liability assumed or assets held by that Insurance Subsidiary under a policy or
policies of insurance issued by that Insurance Subsidiary or under a reinsurance
agreement assumed by that Insurance Subsidiary.
"Reorganization" means, with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA other than those events for which the notice requirement has been waived
under applicable regulations.
"Required Lenders" means, at any time, Lenders whose Commitment Percentages
aggregate at least 51% of the Total Commitment in effect at the time.
"Requirement of Law" mean, as to any Person, the articles of organization
and by-laws or other organizational or governing documents of that Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority (including, without limitation, any of the
foregoing relating to employee health and safety or public utilities and all
Environmental Laws), in each case, as applicable to or binding upon that Person
or any of its property or to which that Person or any of its property is
subject.
"Responsible Officer" means, with respect to a Person, the chairman of the
board of directors, the chief executive officer or the president of that Person
or, with respect to financial matters, the chief financial officer of that
Person in each case, acting in their capacity as such.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" means the reports filed by the Borrower with the SEC on Form
10-K, Form 10-Q or Form 8-K or any successor Form.
"Security Document" means each of the Pledge Agreement and the Guaranty and
Security Agreement.
"Single Employer Plan" means any Plan that is covered by Title IV of ERISA
but is not a Multiemployer Plan.
"Standard & Poor's" means Standard & Poor's Rating Group, a division of The
XxXxxx-Xxxx Companies, Inc.
"Statutory Capital and Surplus" means, as to any Insurance Subsidiary as of
any date, the amount shown on line 38, column 1, page 3, of the 2000 Annual
Statement of that Insurance Subsidiary, or the sum of amounts determined in a
manner consistent with that contemplated there, for any date other than one as
of which an Annual Statement is prepared.
"Statutory Accounting Practices" or "SAP" means, in relation to an
Insurance Subsidiary, the statutory accounting practices prescribed or permitted
by the relevant Insurance Regulatory Authority of that Insurance Subsidiary's
state of domicile, consistently applied and maintained and in conformity with
those used in the preparation of the most recent statutory financial statements
delivered hereunder (except where changes are required by the relevant Insurance
Regulatory Authority) and the Annual Statement.
"Subsidiary" means, in relation to any Person, any corporation, company or
other entity and any partnership or joint venture, whether now existing or
hereafter organized or acquired, which is under the control of that Person; and,
except as otherwise expressly provided in this Agreement, all references to any
Subsidiary are to direct or indirect subsidiaries of the Borrower. For this
purpose, a Person will be deemed to have control of a second Person if the first
Person has the power to elect at least a majority of the board of directors or
other managers of the second Person either by virtue of ownership (direct or
indirect, through one or more intermediaries) of the shares of stock or other
ownership interests with ordinary voting power of the second Person, or
otherwise; and a Person will be deemed to have control over a partnership if
that Person or one of its Subsidiaries is the general partner. Stock or other
ownership interests that have voting power only by reason of the occurrence of a
contingency will be disregarded for purposes of the preceding sentence.
"Tax" means any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature that is imposed by any Governmental Authority or
taxing authority.
"Termination Date" has the meaning given to that term in Section 2.1(b).
"Total Commitment" at any time means the aggregate of the respective
Commitments of individual Lenders at that time.
"Total Capital" means, on any date (a) Funded Debt on that date plus (b)
the Consolidated GAAP Net Worth.
"Transferee" has the meaning given to the term in Section 9.6(f).
"Wholly Owned Subsidiary" means, with respect to any Person, any
corporation or other entity of which all of the outstanding shares of stock or
other ownership interests in which, other than directors' qualifying shares (or
the equivalent thereof), are at the time directly or indirectly owned or
controlled by such Person or one or more of the Subsidiaries of such Person.
1.2 Interpretation
(a) . (a) As used in this Agreement, (i) the words "hereof," "herein" and
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Article, Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified; (ii) the words "include," "includes" and "including" shall be deemed
to be followed by the phrase "without limitation," (iii) the word "or" shall not
be exclusive, (iv) the word "will" shall be construed to have the same meaning
and effect as the word "shall" and (v) the plural form of any term defined in
the singular in this Agreement shall merely express the grammatical plural of
that defined term unless otherwise expressly provided herein.
(b) As used herein, in the Notes and in any certificate or other document made
or delivered pursuant hereto, accounting terms relating to the Borrower or any
Subsidiary that are not defined in Section 1.1 and accounting terms that are
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP or, to the extent that any such
term applies solely to an Insurance Subsidiary, the means given to that term in
SAP, where applicable. All financial data or statements that the Borrower is
required to deliver hereunder shall be prepared in accordance with GAAP or,
insofar as the data relates solely to an Insurance Subsidiary, in accordance
with SAP, if applicable, in each case, applied on a consistent basis, except as
otherwise expressly prescribed herein, subject to the following paragraph.
(c) If GAAP changes while any of the Obligations remains outstanding and, as a
result, the financial covenants set forth in Section 6.1 would be calculated in
a manner or with components different from those applicable prior to the change,
(i) the Borrower and the Lenders will enter into good faith negotiations to
amend this Agreement in such respects as are necessary to conform those
covenants as criteria for evaluating the Borrower's financial condition to
substantially the same criteria as were effective prior to the relevant change
in GAAP and (ii) the Borrower shall be deemed to be in compliance with those
financial covenants during the prior of 60 days beginning with the effective
date of that change in GAAP if and to the extent that the Borrower would have
been in compliance therewith under GAAP if the change had not occurred and
compliance were tested applying GAAP as in effect immediately before the change.
Where this Agreement or any other Loan Document refers, directly or indirectly,
to amounts on particular exhibits, schedules, lines, pages or columns of any
Annual Statement or Quarterly Statement, the references are based on the format
promulgated by the NAIC for the 2000 Annual Statements and Quarterly Statements.
If that format is changed for 2001 or any year thereafter so that different
information is required in the items referred to, or so that they no longer
exist, of if the Annual Statement or Quarterly Statement is replaced by the NAIC
or by any Insurance Regulatory Authority after the date of this Agreement so
that a different form of financial statement is required to be furnished by an
Insurance Subsidiary in lieu thereof, the relevant reference in this Agreement
or any other Loan Document shall be to information consistent with that reported
in the referenced item in the 2000 Annual Statements or Quarterly Statements, as
applicable.
(d) Unless the context requires otherwise (i) any definition of or reference to
any agreement, instrument or other document herein shall be construed as
referring to that agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include that Person's successors and
assigns (without prejudice to any restrictions on transfer or other consequences
of a transfer contemplated herein), and (iii) the words "asset" and "property"
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
(e) The terms defined in this Agreement shall have the meanings given to them
herein when they are used in the Notes or any certificate or other document made
or delivered pursuant hereto, unless otherwise specified therein.
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments.
(a) On the terms and subject to the conditions hereof, each Lender severally
agrees to make one or more term loans to the Borrower in an aggregate amount not
to exceed that Lender's Commitment in effect at the time. The aggregate amount
of the Loans to be made pursuant to this provision on any day by the Lenders
shall be as determined by the Lenders.
(b) The Commitment of each Lender will automatically be reduced on any Borrowing
Date by the amount of the Loan made by that Lender pursuant to Section 2.1(a) on
that Borrowing Date. Unless previously terminated, the Commitment of each Lender
will automatically be reduced to zero and terminate at 3:00 p.m., New York City
time, on April 30, 2001 (the "Termination Date").
2.2 Notes
(a) . (a) The Loans made by each Lender on any Borrowing Date pursuant to
Section 2.1(a) shall be evidenced by a promissory note of the Borrower (a
"Note"), substantially in the form set forth in Exhibit A-1, with appropriate
insertions as to payee, date and the principal amount of the Loan made by that
Lender, payable to the order of that Lender, and, if applicable with such other
features as are specified in paragraph (b) of this Section for a QFL Note. The
Borrower hereby irrevocably authorizes each Lender to record the date and amount
of each Loan made by it and the date and amount of each payment or prepayment of
principal thereof on the schedule annexed to and constituting a part of its
Note, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded absent manifest error. Failure by a
Lender to make any such recordation shall not, however, affect the Borrower's
obligations hereunder. Each Note shall (i) be dated the Closing Date, (ii) be
stated to mature on the Maturity Date and (iii) provide for the payment of
interest in accordance with Section 2.6.
(b) Any Lender that is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code and that is not incorporated or otherwise organized under the laws
of the Untied States of America or any state thereof (a "Qualified Foreign
Lender") shall, upon receipt of the written request of the Administrative Agent
or the Borrower, and may, upon its own written request to the Administrative
Agent, exchange any Note held by or assigned to it for a qualified foreign
lender Note ( a "QFL Note"). A QFL Note shall contain the following legend but
otherwise be in the same form as other Notes: "This Note is a QFL Note, and as
such, ownership of the obligation represented by such QFL Note may be
transferred only in accordance with Section 2.2(d) of the Credit Agreement." Any
QFL Note issued in replacement of any existing Note pursuant to this Section
shall be (i) dated the Closing Date, (ii) issued in the name of the entity in
whose name that existing Note was issued and (iii) issued in the same principal
amount as that existing Note.
(c) Upon the request of or delivery of a request to a Qualified Foreign Lender
pursuant to paragraph (b) of this Section, the Borrower shall execute and
deliver a QFL Note to the Administrative Agent in replacement of the Note
surrendered in connection with the request conforming to the requirements of
this paragraph. Each Qualified Foreign Lender shall surrender its Note in
connection with any replacement pursuant to this Section. In connection with any
such replacement, upon receipt by the Administrative Agent of a QFL Note and the
existing Note to be replaced by that QFL Note in accordance with this paragraph,
the Administrative Agent shall forward the QFL Note to the Lender which has
surrendered its Note for the replacement and shall forward the surrendered Note
to the Borrower marked "canceled." Once issued, QFL Notes (i) shall be deemed to
and shall be "Notes" for all purposes under the Loan Documents, (ii) may not be
exchanged for Notes which are not QFL Notes, notwithstanding anything to the
contrary in the Loan Documents and (iii) shall at all times thereafter be QFL
Notes, including, without limitation, following any transfer or assignment
thereof.
(d) Notwithstanding anything to the contrary in the Loan Documents, the QFL
Notes are registered obligations as to both principal and interest with the
Borrower, and transfer of the obligations underlying such QFL Note may be
effected only by surrender of the QFL Note to the Borrower and either reissuance
by the Borrower of that QFL Note to the transferee or issuance by the Borrower
of a new QFL Note to the transferee. A QFL Note shall only evidence the Lender's
or an assignee's right, title and interest in and to the related obligation, and
in no event is a QFL Note to be considered a bearer instrument or obligation.
This Section shall be construed so that the obligations underlying the QFL Notes
are at all times maintained in "registered form" within the meaning of Sections
871(h)(2) and 881(c)(3) of the Code.
2.3 Procedure for Borrowing
(a) . (a) The Borrower shall give the Administrative Agent notice of the date on
which it would like the Lenders to make Loans pursuant to Section 2.1(a) not
later than 10:00 a.m., New York City time, on the proposed Borrowing Date
identified in that notice. Any such notice shall be irrevocable and shall be
substantially in the form set forth in Exhibit B (a "Notice of Borrowing")
specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date
and shall be executed by a Responsible Officer of the Borrower.
(b) However, if the Borrower and the Lenders have agreed that any Loans
hereunder may be made on any floating-rate interest rate basis, the Notice of
Borrowing shall also contain all such additional information as may be required
to implement and set forth the parties' agreement on the subject (including all
relevant modifications to the terms of this Agreement as may be required to
address interest periods, relevant business day and other conventions and
related modifications to the Notes) and shall be given not later than the time
specified in that agreement. Any such Notice of Borrowing relating to proposed
floating-rate Loans shall be effective as such only when executed by the
Borrower and countersigned by the Lenders and the Administrative Agent and shall
automatically become a part of and amendment to this Agreement.
Upon receipt of a Notice of Borrowing from the Borrower, the Administrative
Agent shall promptly notify each Lender thereof and of that Lender's pro rata
share of the borrowing contemplated in that Notice of Borrowing (the Lender's
Commitment Percentage of the amount of the proposed borrowing). Each Lender will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in Section 9.2 prior to 11:00 a.m., New York City
time, on the relevant Borrowing Date in funds immediately available to the
Administrative Agent. The Administrative Agent shall, on that Borrowing Date,
make available to the Borrower the aggregate of the amounts made available to
the Administrative Agent by the Lenders, by wire transfer in like funds as
received by the Administrative Agent, to the Borrower's account identified on
the signature pages of this Agreement or such other account as the Borrower may
have identified by notice given to the Administrative Agent not later than the
Business Day preceding the Borrowing Date.
2.4 [Reserved.]
2.5 Optional Prepayment and Repayment at Maturity
(a) . (a) Each prepayment of
-
any portion of the Loans made pursuant to this Section 2.5 shall permanently
reduce the Commitments and the Total Commitment, and no amount that has been
prepaid may be reborrowed. In addition, an obligation to make a prepayment
pursuant to this Section 2.5 (by virtue of the Borrower's having given notice
electing to make the prepayment) shall permanently reduce the Commitments and
the Total Commitment with effect on the date the prepayment is due, regardless
of whether it is made. Each prepayment pursuant to this Section 2.5 shall be
made without premium or penalty but together with payment in full of all
interest on the amount being prepaid accrued to but excluding the date of
prepayment. The Administrative Agent shall promptly notify the Lenders of any
notice of prepayment, and of the amount of any prepayment, received by the
Administrative Agent.
(b) The Borrower may at any time prepay all or, subject to the following, any
portion of the Loans, upon notice given to the Administrative Agent not later
than two hours before the payment. Each such notice shall be irrevocable.
(c) The Borrower shall repay the outstanding principal amount of the Loans and
the Notes on the Maturity Date together with interest accrued and not paid to
but excluding the Maturity Date.
2.6 Interest Rate; Default Rate; Payment Dates
(a) . (a) Subject to paragraph (b), interest on each Loan shall accrue from and
including the Loan's Borrowing Date, in the case of a Loan made pursuant to
Section 2.1(a), and from and including the date specified in Section 2.6(d), in
the case of a Loan made through conversion of PIK Interest, and, in all cases,
to but excluding the day on which the Loan is repaid in full, at the Applicable
Rate, subject to the following. Until the Maturity Date, but only so long as the
Loans and other Obligations hereunder have not become or been declared due and
payable in connection with an Event of Default, interest on the Loans may be
paid, at the option of the Borrower, in PIK Interest Notes, as provided in
Section 2.6(d). The amount of PIK Interest Notes shall be treated as Loan
principal amounts.
(b) If any amount payable hereunder by the Borrower is not paid as and when due
(or a PIK Interest Note is not delivered with respect thereto), interest shall
accrue thereon, to the extent permitted by applicable law (both before and after
judgment) at a rate per annum equal to the sum of the rate that would otherwise
be applicable thereto pursuant to the foregoing provisions of this Section plus
2% from the date of occurrence of such Event of Default until the date such
Event of Default is cured or waived (after as well as before judgment). In
addition, should any interest on such Loans or any other amount (other than
principal) payable hereunder not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
(to the extent permitted by law in the case of interest on interest) at a rate
per annum as determined pursuant to the preceding sentence, in each case, from
the date of such non-payment until such amount is paid in full (after as well as
before judgment).
(c) Interest accruing pursuant to Section 2.6(a) shall be payable in arrears on
each Interest Payment Date, subject to Section 2.6(d). Interest accruing
pursuant to Section 2.6(b) shall be payable from time to time on demand.
(d) The Borrower is executing and delivering to the Administrative Agent,
pursuant to Section 4.1(b), for each Lender a note in the form set forth in
Exhibit A-2 (a "PIK Interest Note"). The Borrower, may, subject to Section
2.6(a) and the last sentence of this Section 2.6(d), in lieu of tendering
payment of interest accruing under Section 2.6(a) in cash, on the Interest
Payment Date on which that interest is due, give the Administrative Agent notice
that the Borrower is electing to pay each Lender's pro rata share of the
relevant interest payment through conversion of the amount of that share (each
such amount "PIK Interest") to the principal of the Loans hereunder outstanding
to that Lender. If the Borrower gives such a notice to the Administrative Agent,
it shall give each Lender notice of the Borrower's election. The Borrower hereby
irrevocably authorizes each Lender to record the date and amount of each Loan
principal increase pursuant to this provision, and the date and amount of each
payment or prepayment of principal thereof, on the schedule annexed to and
constituting part of its PIK Interest Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded
absent manifest error. Failure by a Lender to make any such recordation shall
not, however, affect the Borrower's obligations hereunder. Interest shall accrue
on the principal amount of each PIK Interest Note at the Applicable Rate, from
and including the Interest Payment Date corresponding to the due date for that
PIK Interest. The Borrower's right to convert PIK Interest to Loan principal as
contemplated in this Section 2.6(d) will automatically cease if the Loans and
other Obligations hereunder become or are declared due and payable in connection
with an Event of Default.
2.7 Computation of Interest; Making of Payments
(a) . All interest accruing hereunder shall be calculated on the basis of the
actual number of days in the relevant period and a year of 360 days.
(b) All payments (including prepayments) to be made by the Borrower hereunder
and under the Notes, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, to the account of the Administrative
Agent at Citibank, N.A., ABA #000000000, Account no. 4080-4716, REF: Ascent Term
Loan, Attn: Xxxxx Xxxxx, CSFB, 000-000-0000, or to such other account as the
Administrative Agent may specify by notice to the Borrower or, if the
Administrative Agent so specifies, at the Administrative Agent's office
specified in Section 9.2, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder becomes due and
payable on a day other than a Business Day, the due date for such payment shall
be extended to the next following Business Day, and interest shall continue to
accrue thereon in respect of the extension.
2.8 Pro Rata Treatment and Payments; Funding Reliance
(a) . (a) Each borrowing by the Borrower from the Lenders hereunder and any
reduction of the Commitments of the Lenders shall be made pro rata according to
the respective Commitment Percentages of the Lenders. Each payment (including
each prepayment) by the Borrower on account of principal of and interest on the
Loans shall (except as may be required as a result of Section 2.9, Section 2.10
or Section 2.11) be made pro rata according to the respective outstanding
principal amounts of the Loans then held by the Lenders.
(b) On each Borrowing Date, the Administrative Agent shall be entitled to assume
that each Lender (other than any Lender that has given the Administrative Agent
notice to the contrary) has made funds available to the Administrative Agent as
required by Section 2.3(c), and the Administrative Agent may (but shall not be
required to) credit funds to the Borrower in an amount equal to the aggregate of
the principal amount of the Loans to be made on that date by all Lenders from
which no such notice has been received. If any Lender that has not given that
notice fails to make funds available as required by Section 2.3(c) and the
Administrative Agent has credited to the Borrower an amount equal to that
aggregate, the Administrative Agent shall be entitled at its option to recover
from either that Lender or the Borrower (without prejudice to the rights of the
Borrower against that Lender), on demand, an amount equal to the Loan that was
to have been made by that Lender on that date, together with interest on that
amount accrued for each day from and including the applicable Borrowing Date to
but excluding the date of that recovery at a rate per annum equal to the daily
average Federal Funds Rate for the period. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error. If a Lender pays
an amount due from it under this Section to the Administrative Agent, then that
amount shall constitute the Lender's Loan included in the relevant borrowing.
The obligations of the Lenders hereunder are several, and none of the Lenders
shall be responsible for any other Lender's failure to make any Loan as required
hereunder.
2.9 Illegality.
Notwithstanding any other provision herein, if any Lender determines at any time
that any Requirement of Law or any change therein or in the interpretation or
application thereof makes or will make it unlawful for that Lender to fulfill
its commitment to make Loans hereunder, to maintain a Loan or to claim or
receive any amount payable to it hereunder, the Lender shall give notice of that
determination to the Borrower, with a copy to the Administrative Agent,
whereupon the obligations of that Lender hereunder shall terminate and that
Lender's Commitment shall be reduced to zero. The Borrower shall repay the Loans
of that Lender in full on the following Business Day. Repayment pursuant to this
Section shall be made without premium but together with interest accrued on the
Loans being repaid to the date of repayment and all other amounts then payable
to the relevant Lender by the Borrower hereunder.
2.10 Requirements of Law.
If any Lender determines that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application
thereof or compliance by that Lender or any corporation controlling the Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made after the date hereof has
or will have the effect of reducing the rate of return on that Lender's or the
corporation's capital as a consequence of its obligations hereunder to a level
below that which the Lender or that corporation could have achieved but for the
change or compliance (taking into consideration the policies with respect to
capital adequacy of that Lender or corporation) by an amount deemed by the
Lender to be material, the Borrower shall pay to that Lender such additional
amount or amounts as will compensate the Lender for the reduction, in each case
promptly after submission by the Lender to the Borrower (with a copy to the
Administrative Agent ) of a written request for the payment. A Lender's
statements of additional amounts to be paid from time to time pursuant to this
Section shall be conclusive in the absence of manifest error. This covenant
shall survive the termination of this Agreement and the payment of the
Obligations hereunder.
2.11 Taxes
(a) . (a) Each payment by the Borrower under this Agreement or the Notes shall
be made without withholding on account of Taxes unless withholding is required
by applicable law. If applicable law requires withholding, the Borrower shall
give notice to that effect to the Administrative Agent, make the necessary
withholding and make timely payment of the amount withheld to the appropriate
Governmental Authority. All Taxes so withheld shall be paid before penalties
attach thereto or interest accrues thereon. If any such penalties or interest
nonetheless become due, the Borrower shall make prompt payment thereof to the
appropriate Governmental Authority. If any Lender pays any amount in respect of
a Tax that is not a franchise tax or imposed on the Lender's net income or in
lieu of net income taxes (an "Indemnifiable Tax"), which is imposed on any
payment due from the Borrower hereunder or penalties or interest thereon, the
Borrower shall reimburse that Lender in Dollars for that payment on demand. If
the Borrower pays any such Indemnifiable Taxes or penalties or interest thereon,
it shall deliver official tax receipts evidencing the payment or certified
copies thereof to the Administrative Agent not later than the thirtieth day
after payment.
(b) If any Lender is or becomes entitled to a reduced withholding rate or a
complete exemption from withholding with respect to Taxes on payments to it by
the Borrower under this Agreement or the Notes, including backup withholding
tax, that Lender shall complete and deliver from time to time to the Borrower
such form as the Borrower is required to obtain from that Lender in order to
give effect to the reduced rate or exemption and certify that the Lender is
entitled to the relevant exemption (whether the form relates to that Lender or
to any person to which it has sold a participation or other beneficial interest
in any of its rights hereunder). In particular, each Lender that is not
incorporated or otherwise organized under the laws of the United States of
America or a state thereof shall deliver to the Borrower two copies of the
following with the relevant certification, as and if applicable, from time to
time:
(i) Internal Revenue Service form W-8BEN, W-8ECI, W-8 or W-9 (or any successor
form) form, or,
(ii) if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code and intends to claim exemption from U.S. Federal withholding tax
under Section 871(h) or Section 881(c) of the Code with respect to payments
of "portfolio interest," a certificate (a "Non-Bank Status Certificate")
executed by that Lender representing that (1) it is not a bank for purposes
of Section 881(c) of the Code, is not a 10 percent shareholder (within the
meaning of Section 871 (h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning
of Section 864(d)(4) of the Code), claiming complete exemption from U.S.
Federal withholding tax on payments of interest by the Borrower under this
Agreement and the other Loan Documents and (2) that the Lender has received
in replacement of any Note held by or assigned to it, a QFL Note.
Each Person that becomes a Lender or a Participant pursuant to Section 9.6
shall, upon the effectiveness of the related transfer, be required to provide
all the forms and statements required pursuant to this Section; provided that,
in the case of a Participant, such Participant shall furnish all such required
forms and statements to the Lender from which it purchased the related
participation.
(c) If any Taxes withheld from a payment due to a Lender in accordance with
Section 2.11(a) are Indemnifiable Taxes, the Borrower shall promptly pay such
additional amount as is necessary to ensure that the net amount actually
received by that Lender free and clear of those Taxes is equal to the amount
that the Lender would have received had those Taxes not been withheld, except
that no such additional amount will be payable to the extent that the
withholding would not have been due but for failure by the relevant Lender to
furnish in a timely fashion any form or Non-Bank Status Certificate that it is
required to deliver pursuant to Section 2.11(b).
2.12 Lending Offices.
The Loans made by any Lender will be made and maintained by it at its office
identified in Schedule I or any other office designated by it from time to time
as its lending office, by notice to the Administrative Agent. If a Lender makes
a demand for a payment pursuant to Section 2.10 or Section 2.11, it will use
reasonable efforts to designate a different lending office, if doing so would
eliminate the need for the Borrower to make further additional payments, or
reduce the amounts of the additional payments it would be required to make,
pursuant to the relevant Section to that Lender, but a Lender will not be
required to make any efforts or change in lending office that it, in its
discretion, determines would be disadvantageous to it or inconsistent with its
internal policy or legal or regulatory restrictions.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Administrative Agent and each Lender as follows.
3.1 Financial Condition
(a) . (a) The unaudited consolidated and consolidating balance sheets of the
Borrower and the Subsidiaries as of December 31, 2000 and the related
consolidated and consolidating statements of operations, changes in
stockholder's equity and cash flows for the fiscal year ended on that date,
copies of which have been furnished to the Lenders, fairly present the
consolidated and consolidating financial condition of the Borrower and the
Subsidiaries as at such dates, and the results of their operations and their
retained earnings and cash flows for the fiscal year then ended. All such
financial statements, including the related schedules and notes thereto relating
to those financial statements, have been prepared in accordance with GAAP
applied consistently throughout the periods involved, except as disclosed
therein.
(b) Except as set forth in Schedule 3.1(b), during the period beginning on
January 1, 2001 and ending with the date of this Agreement, (i) neither the
Borrower nor any of its consolidated Subsidiaries has, on the date of this
Agreement, any material Guaranty obligation, contingent liability or liability
for taxes, or any long-term lease or unusual forward or long-term exchange
transaction or other Hedging Arrangement or other financial derivative which is
not reflected in the financial statements referred to above in this Section; and
(ii) there has been no sale, transfer or other disposition by the Borrower or
any of its consolidated Subsidiaries of any material part of its business or
property and no purchase or other acquisition of any business or property,
including Capital Stock of any other Person, that is material in relation to the
consolidated financial position of the Borrower and its consolidated
Subsidiaries at December 31, 2001.
(c) The operating forecast and cash flow projections of the Borrower and its
consolidated Subsidiaries, copies of which have been furnished to the Lenders as
set forth in Schedule 3.1(c), have been prepared in good faith under the
direction of a Responsible Officer of the Borrower, and in accordance with GAAP
or SAP, as applicable, except that the forecast and projections do not include
footnotes and other disclosures that may be required pursuant to GAAP or SAP, as
applicable. This representation is subject to the further representation of the
Borrower and to the qualification as to projections in Section 3.18.
(d) Except as set forth in Schedule 3.1(d), the Annual Statements of each of the
Insurance Subsidiaries as of December 31, 2000 and for the fiscal year then
ended, as delivered by the Borrower to the Administrative Agent and the Lenders,
are as filed with the relevant Insurance Regulatory Authority, have been
prepared in accordance with SAP where required, except as may be reflected in
the notes thereto, were in compliance with applicable Requirements of Law when
filed, and based on the information available on the date of such filings fairly
presented in all material respects the financial condition of the respective
Insurance Subsidiaries covered thereby for the relevant period and the results
of operations, changes in capital and surplus and cash flow of those Insurance
Subsidiaries for the period ended on that date; provided that, to the extent any
matter disclosed in Schedule 3.1(d) has been cured directly or indirectly
through the application of the proceeds of any Loan, that Schedule shall, as of
the date the cure occurs, be deemed to cease to refer to that matter.
3.2 No Change.
Except as set forth in Schedule 3.2, since December 31, 2000 there has been no
development or event which has had or could have a Material Adverse Effect, and
during the period beginning on that date and ending on the date of this
Agreement, no dividends or other distributions have been declared, paid or made
upon the Capital Stock of the Borrower or any Subsidiary (other than a Wholly
Owned Subsidiary), nor has any such Capital Stock been redeemed, retired,
purchased or otherwise acquired for value by the Borrower or any Subsidiary;
provided that, to the extent any matter disclosed in Schedule 3.2 has been cured
directly or indirectly through the application of the proceeds of any Loan, that
Schedule shall, as of the date the cure occurs, be deemed to cease to refer to
that matter.
3.3 Corporate Existence; Compliance with Law.
--------- ---------- ---------- ---- ----
Each of the Borrower and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation 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 a qualification except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect, and (d) except as disclosed in Schedule 3.3, is in
compliance with all Requirements of Law, except to the extent that the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect; provided that, to the extent any matter disclosed in Schedule 3.3 has
been cured directly or indirectly through the application of the proceeds of any
Loan, that Schedule shall, as of the date the cure occurs, be deemed to cease to
refer to that matter.
3.4 Corporate Power; Authorization; Enforceable Obligations
(a) . (a) The Borrower has the corporate power and authority, and the legal
right, to execute and deliver the Loan Documents and perform its obligations
thereunder, to borrow hereunder and to create the Lien contemplated in the
Pledge Agreement. The Borrower has taken all necessary corporate action to
authorize and create that Lien and the borrowings contemplated herein on the
terms and conditions set forth in this Agreement and in the Notes.
(b) Except as set forth in Schedule 3.4, no consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the Borrower's creation of the
Lien contemplated in the Pledge Agreement or any borrowings hereunder or with
the execution and delivery of the Loan Documents, performance by the Borrower of
its obligations thereunder or the validity or enforceability of the Loan
Documents other than any of the foregoing that, if not obtained, could not
reasonably be expected to have a Material Adverse Effect. No such consent,
authorization or filing is conditioned upon or otherwise imposes any materially
burdensome or adverse condition. The documents identified in Schedule 3.4 that
have been delivered by the Borrower to the Administrative Agent and each Lender
are complete and current copies of all such documents.
(c) This Agreement has been, and each other Loan Document delivered by the
Borrower at the time of its delivery will have been, duly executed and delivered
on behalf of the Borrower. This Agreement constitutes, and each other Loan
Document when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
the terms of this Agreement or, as applicable, that Loan Document, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar.
The execution and delivery by the Borrower of the Loan Documents and performance
by it of its obligations thereunder, the borrowings hereunder and the use of the
proceeds thereof, and the creation by the Borrower of the Lien created by the
Pledge Agreement and delivery thereunder of the Pledged Collateral do not and
will not violate any Requirement of Law or Contractual Obligation of the
Borrower or any Subsidiary, will not accelerate or result in the acceleration of
any payment obligations of the Borrower or any Subsidiary and, except for the
Lien created by the Pledge Agreement, will not result in, or require, the
creation or imposition of any Lien on any of the respective properties or
revenues of the Borrower or any Subsidiary pursuant to any Requirement of Law or
Contractual Obligation, except as specified in Schedule 3.4 in the case of any
Pledged Collateral issued by an Insurance Subsidiary, if creation of that Lien
or delivery of the relevant share certificates requires the approval of an
Insurance Regulatory Authority.
3.6 No Material Litigation.
(a) Except as set forth in Schedule 3.6(a), no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or against any of the respective properties or revenues of the
Borrower or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect.
(b) No litigation, investigation or, except as set forth in Schedule 3.6(b),
proceeding of or before any Governmental Authority is pending or, to the
knowledge of the Borrower, is threatened (i) restricting or seeking to restrict
any Subsidiary from engaging in further insurance underwriting or similar
business or (ii) seeking to obtain, or having resulted in the entry of, any
judgment, order or injunction that could reasonably be expected to affect the
ability of the Borrower to perform its obligations hereunder or would be
materially inconsistent with the stated assumptions underlying the projections
provided to the Administrative Agent or the Lenders or otherwise, singly or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
3.7 No Default.
Except as set forth in Schedule 3.7, No Default or Event of Default has occurred
and is continuing and neither the Borrower nor any Subsidiary is in default in
any material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
material to its business, including those identified in Schedule 3.23.
3.8 Ownership of Property; Liens.
Except as set forth in Schedule 3.8, each of the Borrower and its Subsidiaries
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its material real property, and good title to, or a valid
leasehold interest in, all its other material property. None of that property is
subject to any Lien other than Permitted Liens. Where applicable, the Liens
described in Schedule 3.8 correctly refer to the credit or other agreements and
instruments identified in Schedule 3.23 that are secured by the relevant Liens.
3.9 Intellectual Property.
Each of the Borrower and its Subsidiaries owns, or is licensed to use, all
patents, trademarks, trade names, copyrights, technology, know-how, processes,
logos and insignia (the "Intellectual Property") necessary for the conduct of
its business as currently conducted except for any case in which the failure to
own or license could not reasonably be expected to have a Material Adverse
Effect. There is no pending claim asserted by any Person that challenges or
questions the use of any Intellectual Property or the validity or effectiveness
of any Intellectual Property, which could reasonably be expected to have a
Material Adverse Effect, nor does the Borrower or any consolidated Subsidiary
know of any valid basis for any such claim. The use of Intellectual Property by
the Borrower or any Subsidiary does not infringe on the rights of any Person,
except for such infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.10 [Reserved.]
3.11 Taxes.
Except as set forth in Schedule 3.11, each of the Borrower and the Subsidiaries
has filed or caused to be filed all federal, state and other material tax
returns which are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any tax, fee or other charge
the amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrower or that Subsidiary (or,
where applicable, in conformity with SAP), as the case may be). No tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge. Neither the Borrower nor any
Subsidiary has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
3.12 Federal Margin Regulations
(a) . No part of the proceeds of any Loan will be used for "purchasing" or
"carrying" or extending credit for the purpose of purchasing or carrying any
"margin stock," as those terms are used under Regulation U, except in compliance
with applicable law and regulations. If any Lender or the Administrative Agent
so requests, the Borrower will furnish to the Administrative Agent, for itself,
any relevant Lenders and the Arranger a statement to the foregoing effect in
conformity with the requirements of an applicable form referred to in Regulation
U.
3.13 ERISA.
Neither the Borrower nor any Subsidiary maintains, contributes to or has
material obligation with respect to, any welfare plan (as defined in
Section(3)(1) of ERISA) which provides benefits to employees after termination
of employment other than as required by Part 6 of Title I of ERISA or similar
state laws regarding continuation of benefits. Each Plan has complied and is in
compliance in all respects with the applicable provisions of ERISA and the Code
except where failure of compliance could not reasonably be expected to have a
Material Adverse Effect. There has not been any breach by the Borrower or any
Subsidiary of any of the responsibilities, obligations or duties imposed on it
by ERISA, the Code, or regulations promulgated thereunder which could reasonably
be expected to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary nor any fiduciary of any Plan who is an officer or an employee of the
Borrower or any Subsidiary has engaged in a nonexempt prohibited transaction
described in Section 406 of ERISA or 4975 of the Code with respect to a Plan
which could reasonably be expected to have a Material Adverse Effect. With
respect to any employee benefit plan (as defined in Section 3(3) of ERISA)
currently or formerly maintained or contributed to by any Commonly Controlled
Entity, no liability exists and no event has occurred which could subject the
Borrower or any Subsidiary to any liability which could reasonably be expected
to have a Material Adverse Effect. Except as disclosed in Schedule 3.13, none of
the Borrower or any Subsidiary has any liability, direct or indirect, contingent
or otherwise, under Section 4201 or 4204 or 4212(c) of ERISA which could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any Subsidiary has any outstanding liability in respect of (i) a failure to
make a required contribution or payment to a Multiemployer Plan or (ii) a
complete or partial withdrawal under Section 4203 or 4205 of ERISA from such a
Plan, which in either case could reasonably be expected to have a Material
Adverse Effect.
3.14 Holding Company; Investment Company Act; Other Regulations.
------- -------- ---------- ------- ---- ----- ------------
Neither the Borrower nor any of the Subsidiaries is an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, or except as described in Schedule
3.14, subject to regulation under any Federal or state statute, regulation,
decree or order which limits its ability to incur Indebtedness or conditions its
ability to do so upon any act, approval or consent of any Governmental
Authority.
3.15 Purpose of Loans.
The proceeds of the Loans will be used solely (a) to purchase one or more
surplus notes, in form and substance acceptable to the Lenders, from FLICA as
the issuer of the relevant surplus note or notes, in a transaction in form and
substance acceptable to the Lenders at the time, unless the Borrower is unable
at the time to make the purchase without approval of an Insurance Regulatory
Authority and, with the consent of the Lenders, has not sought or has been
unable to obtain that approval, or (b) to make a capital contribution to FLICA,
if the Lenders are at the time satisfied with arrangements for use by FLICA in
compliance with the requirements of Section 5.16.
3.16 Environmental Matters
(a) . (a) The facilities and properties owned, leased or operated by the
Borrower and its Subsidiaries (referred to in this Section as the "Properties")
and all operations at the Properties are in compliance in all material respects
with all applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by the Borrower and its Subsidiaries
(referred to in this Section as the "Business") which could reasonably be
expected to have a Material Adverse Effect.
(b) Neither the Borrower nor any Subsidiary has received any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor do the Borrower or any
Subsidiary have knowledge or reason to believe that any such notice will be
received or is being threatened, in each case which could reasonably be expected
to have a Material Adverse Effect.
(c) There has been no release or threat of release of Materials of Environmental
Concern at or from any of the Properties, or arising from or related to the
operations of the Borrower or any Subsidiary in connection with any of the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably be expected to have a Material
Adverse Effect.
3.17 Insurance; Reinsurance Agreements
(a) . (a) Except as set forth in Schedule 3.17(a), all policies of insurance of
any kind or nature maintained by or issued to the Borrower or any Subsidiary,
including, without limitation, policies of life, fire, theft, public liability,
property damage, other casualty, employee fidelity, worker's compensation,
employee health and welfare, title, property and liability insurance, are in
full force and effect in all material respects and are of a nature and provide
such coverage as is sufficient and as is customarily carried by companies of
similar size and character.
(b) Each Reinsurance Agreement is in full force and effect. None of the
Insurance Subsidiaries and no other party to any Reinsurance Agreement is in
breach of or default under any Reinsurance Agreement, other than breaches or
defaults that are being contested in good faith and by proper proceedings, in
the case of any alleged breach or default by any Insurance Subsidiary. The
Borrower and the Insurance Subsidiaries have no reason to believe that the
financial condition of any party to any Reinsurance Agreement other than an
Insurance Subsidiary is impaired such that a default thereunder by that party
could reasonably be anticipated. Each Reinsurance Agreement is qualified under
all applicable Requirements of Law to receive the statutory credit assigned to
that Reinsurance Agreement in the relevant Annual Statement or Quarterly
Statement at the time prepared, except where the failure to receive the relevant
statutory credit is not reasonably likely to have a Material Adverse Effect.
There are no reinsurance contracts or arrangements entered into by an Insurance
Subsidiary in which an Insurance Subsidiary has ceded risk to any other Person
which are material, individually or in the aggregate, to the Borrower and the
Subsidiaries taken as a whole, except as identified in Schedule 3.17(b).
3.18 Accuracy and Completeness of Information.
-------- --- ------------ -- ------------
All information, reports and other papers and data (other than projections) with
respect to the Borrower or any consolidated Subsidiary, or, to the knowledge of
the Borrower, any Subsidiary furnished to the Lenders by the Borrower, or on
behalf of the Borrower, in connection with the negotiation, preparation or
execution of this Agreement or any of the other Loan Documents were, at the time
furnished, complete and correct in all material respects, or have been
subsequently supplemented by other information, reports or other papers or data,
to the extent necessary to correct any material misstatement or omission. All
projections with respect to the Borrower or any consolidated Subsidiary, or, to
the knowledge of the Borrower, any Subsidiary, furnished by the Borrower, in
connection with the negotiation, preparation or execution of this Agreement or
any of the other Loan Documents were prepared and presented in good faith by the
Borrower based upon facts and assumptions that the Borrower believed to be
reasonable in light of current and foreseeable conditions, it being understood
that projections are subject to significant uncertainties and contingencies,
many of which are beyond the control of the Borrower and that no assurance can
be given that the financial results set forth in those projections will actually
be realized. There is no fact known to the Borrower or any of its Subsidiaries
which has a Material Adverse Effect and has not been disclosed to the
Administrative Agent and the Lenders.
3.19 Leaseholds, Permits, etc.
The Borrower possesses or has the right to use, all leaseholds, easements,
franchises and permits and all authorizations and other rights which are
material to and necessary for the conduct of its business. All the foregoing are
in full force and effect, and each of the Borrower and the Subsidiaries is in
substantial compliance with the foregoing without any known conflict with the
valid rights of others, except for such noncompliance with the foregoing which
could not reasonably be expected to have a Material Adverse Effect. No event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such leasehold, easement, franchise,
license or other right which, when considered with any other revocation or
termination could reasonably be expected to have a Material Adverse Effect.
3.20 No Restrictive Covenants.
Excepts as disclosed in Schedule 3.20, no Subsidiary of the Borrower is party
to, or otherwise bound by, and the Borrower is not party to, any agreement or
other arrangement that prohibits any Subsidiary, or requires the Borrower to
prevent a Subsidiary, from making any payments, directly or indirectly, to the
Borrower or to any other Subsidiary, by way of dividends, advances, repayment of
loans or advances, reimbursements of management or other intercompany charges,
expenses and accruals or other returns on investment, or any other agreement or
arrangement that restricts the ability of that Subsidiary to make any payment,
directly or indirectly, to the Borrower or another Subsidiary, other than
prohibitions and restrictions proscribed by law or permitted to exist under
Section 6.12.
3.21 Solvency.
The Borrower is solvent, is able to pay its debts as they mature, owns property
with fair saleable value greater than the amount required to pay its debts and,
after giving effect to the making of Loans in an aggregate amount equal to the
Total Commitment, will have capital sufficient to carry on its business as
currently constituted and proposed.
3.22 Subsidiaries.
Schedule 3.22 correctly sets forth the names of all Subsidiaries of the
Borrower, identifies those that are Insurance Subsidiaries, and sets forth all
outstanding shares of Capital Stock or other units of equity or other ownership
interests of each Subsidiary, and the number of those shares or units owned by
the Borrower, directly or indirectly. All such shares and other units are duly
authorized, validly issued, fully paid, nonassessable and were issued in
compliance with all Requirements of Law. Except as disclosed in Schedule 3.22,
the Borrower is the owner of record and beneficial owner of all of the Capital
Stock and other such interests of the Subsidiaries either directly or through
another Subsidiary indicated in that Schedule, free and clear of Liens and,
except as disclosed in Schedule 3.22, free of all other restrictions other than
those imposed upon the sale of stock of the Insurance Subsidiaries by an
applicable Insurance Regulatory Authority. Except as disclosed in Schedule 3.22,
there are no outstanding options, warrants or other rights to purchase Capital
Stock or other ownership interests of any Subsidiary. Except for any Subsidiary
identified in Schedule 3.22, each Subsidiary is a corporation or a limited
liability company and none of the Subsidiaries is a partner in any partnership.
3.23 Credit Arrangements.
Schedule 3.23 is a complete and correct list, as of the date of this Agreement,
of all credit agreements, indentures, Guaranties, Capital Leases, mortgages and
other material instruments, agreements and arrangements (including those
contemplating the issuance of letters of credit or acceptance financing) in
respect of which the Borrower or any of the Subsidiaries is in any manner
directly or contingently obligated, other than trade payables in the ordinary
course of business. Schedule 3.23 correctly and completely sets forth the
maximum principal or face amounts of the credit that in each case is outstanding
and can be outstanding, as of the date of this Agreement, and describes all
Liens created or given or agreed to be created or given as security therefor.
3.24 Pledge Agreement.
The provisions of the Pledge Agreement are effective to create in favor of the
Administrative Agent for the ratable benefit of the Lenders and for the benefit
of the Administrative Agent itself, to the extent there provided, a legal, valid
and enforceable security interest in all right, title and interest of the
Borrower in the "Pledged Collateral" described therein. When certificates
representing the Pledged Stock and Pledged Notes (each as defined in the Pledge
Agreement) are delivered to the Administrative Agent, together with stock powers
or another instrument of assignment endorsed in blank by a duly authorized
officer of the Borrower, the Pledge Agreement will constitute a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the Borrower in that Pledged Stock or Pledged Note pursuant to the Pledge
Agreement.
ARTICLE 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans.
The agreement of each Lender to make the Loan requested to be made by it on the
Closing Date or, if no Loan is made on that date, on the first Borrowing Date
thereafter, is subject to the satisfaction, immediately prior to or concurrently
with the making of those Loans, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received each of
the following, in form and substance satisfactory to the Administrative Agent,
executed and delivered by a duly authorized Responsible Officer of the Borrower
or, in the case of the items identified in subparagraphs (iv) and (v), by a duly
authorized Responsible Officer of each of the Borrower's Subsidiaries identified
in the Guaranty and Security Agreement as a Debtor:
(i) this Agreement (in sufficient counterparts for each of the Lenders and
the Administrative Agent);
(ii) the Pledge Agreement (in the same number of counterparts);
(iii)the certificates representing the shares of the Pledged Stock referred
to therein which are owned by the Borrower on the Closing Date
(together with stock transfer powers endorsed in blank), to the extent
no further authorizations, consents or approvals of any Insurance
Regulatory Authority are required for the pledge and delivery of those
Shares on the Closing Date;
(iv) the Guaranty and Security Agreement (in sufficient counterparts for
each of the Lenders and the Administrative Agent);
(v) each of the Financing Statements and other documents to be delivered
to the Administrative Agent pursuant to Section 5 of the Guaranty and
Security Agreement; and
(vi) the Note and PIK Interest Note for each Lender.
(b) Corporate Proceedings of the Borrower and Certain Subsidiaries. The
--- --------- ----------- -- --- -------- --- ------- ------------
Administrative Agent shall have received with a counterpart for each Lender, a
copy of each of the following:
(i) the resolutions of the Board of Directors of the Borrower authorizing
(A) the execution, delivery and performance of this Agreement, the
Notes, the Pledge Agreement and the other Loan Documents to which it
is a party, and (B) the borrowings contemplated hereunder and the
creation of the Lien provided for in the Pledge Agreement in
connection herewith and therewith; and
(ii) the resolutions of the respective Boards of Directors of each of the
Borrower's Subsidiaries which is a party to the Guaranty and Security
Agreement authorizing (A) the execution and delivery by that
Subsidiary of the Guaranty and Security Agreement and the other Loan
Documents to be executed and delivered by it thereunder and
performance of its Obligations thereunder, and (B) the creation of the
Lien provided for in the Guaranty and Security Agreement in respect of
the property and assets of the Subsidiary identified therein as
Collateral.
These resolutions shall be in form and substance satisfactory to the
Administrative Agent and delivered with a certificate of the Borrower or the
relevant Subsidiary, executed by the Secretary or an Assistant Secretary of the
Borrower or the relevant Subsidiary, to the effect that, as of the Closing Date,
the resolutions have not been amended, modified, revoked or rescinded. The
Administrative Agent also shall have received, with a counterpart for each
Lender, a certificate of the Borrower and each such Subsidiary, dated the
Closing Date, executed by a Responsible Officer of the Borrower or the relevant
Subsidiary and satisfactory in form and substance to the Administrative Agent,
as to the incumbency and signature of the officers of the Borrower or the
relevant Subsidiary executing any Loan Document.
(c) Corporate Documents; Good Standing. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies of (i)
the charter documents of the Borrower, certified as of the Closing Date as
complete and correct copies thereof by the Secretary or an Assistant Secretary
of the Borrower, (ii) a certificate as of a recent date of good standing of each
of the Borrower and its Subsidiaries under the laws of its jurisdiction of
organization, from the Secretary of State or a comparable Governmental Authority
of that jurisdiction and (iii) for each of the Insurance Subsidiaries, a
certificate of compliance as of a recent date, from the relevant Insurance
Regulatory Authority of the jurisdiction in which that Subsidiary is domiciled
and any other jurisdiction in which that Subsidiary is reasonably likely to be
commercially domiciled, as defined under the laws and regulations of that
jurisdiction, other than a jurisdiction identified in Section 3.6(b) in which
that Subsidiary is not permitted to engage in further insurance underwriting.
(d) Consents, Licenses and Approvals. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of a Responsible
Officer of the Borrower (i) attaching copies of all consents, authorizations and
filings referred to in Schedule 3.4, and (ii) stating that such consents,
licenses and filings are in full force and effect, and each such consent,
authorization and filing shall be in form and substance satisfactory to the
Administrative Agent, subject to the following. If any consent or authorization
of the creation of the Lien contemplated in the Pledge Agreement is required and
has not yet been obtained from any Insurance Regulatory Authority, the
Administrative Agent shall have received, with a counterpart for each Lender, a
certificate of a Responsible Officer of the Borrower evidencing the steps taken
to obtain that consent or authorization and certifying as to the status of and
expected completion date for the approval process, along with any conditions
that may be imposed in connection therewith, as described to the Borrower by the
relevant Insurance Regulatory Authority.
(e) Intercreditor Agreement. The Administrative Agent shall have received
the Intercreditor Agreement, in form and substance satisfactory to the
Administrative Agent, executed and delivered by a duly authorized Responsible
Officer of (i) the Borrower, (ii) the Borrower and each of its Subsidiaries that
is a party to the Guaranty and Security Agreement, and (iii) LaSalle Bank
National Association.
(f) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender and the Administrative Agent, the executed legal
opinions of counsel to the Borrower and each of its Subsidiaries that is a party
to the Guaranty and Security Agreement, in form and substance satisfactory to
the Administrative Agent.
(g) Closing Certificate. The Administrative Agent shall have received, with
a counterpart for each Lender, a closing certificate of each of the Borrower and
each of its Subsidiaries that is a party to the Guaranty and Security Agreement,
dated as of the Closing Date, substantially in the form of Exhibit C.
(h) Insurance and Insurance Subsidiary Matters. The Administrative Agent
--- --------- --- --------- ---------- -------
shall have received evidence satisfactory to it of the existence of the
insurance required hereunder.
(i) Financial Information. The Administrative Agent shall have received,
with a copy for each Lender, a copy of each of the financial statements,
projections and the like referred to in Section 3.1, in form and substance
satisfactory to the Administrative Agent.
(j) Compliance Certificate. The Administrative Agent shall have received,
with a counterpart for each Lender, a Compliance Certificate, substantially in
the form set forth in Exhibit E, executed by a chief financial officer or
treasurer of the Borrower, dated as of the Closing Date and satisfactory in form
and substance to the Administrative Agent.
(k) No Material Adverse Effect. Since December 31, 2000, there shall have
been no development or event which, singly or in the aggregate, could reasonably
be expected to have a Material Adverse Effect other than those identified in
Schedule 3.2.
(l) Waivers. The Administrative Agent shall have received evidence,
satisfactory in form and substance to it, that any existing defaults or events
of default or other breaches by the Borrower or any Subsidiary under any of the
agreements or instruments referred to in Schedule 3.23, as described by the
Borrower in Schedule 3.7, have been waived, that the waivers remain in effect on
the Closing Date and that the terms of the waivers are such that they will
remain in effect subject only to conditions that are satisfactory to the
Lenders.
4.2 Conditions to Each Loan.
-----------------------
The agreement of each Lender to make any Loan is subject to the satisfaction of
the following additional conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by each of the Borrower and each of its Subsidiaries in or
pursuant to the Loan Documents shall be true and correct in all material
respects on and as of the relevant Borrowing Date as if made on and as of such
date (both before and after giving effect to the proposed Loan).
(b) No Default. No Default or Event of Default shall have occurred and be
--- -- -------
continuing on the relevant Borrowing Date or after giving effect to the proposed
Loans.
(c) No Material Adverse Effect. Since the date of the last borrowing under
this Agreement, no event shall have occurred and no circumstance shall have
arisen that could reasonably be expected to have a Material Adverse Effect.
(d) Aggregate Amount. Immediately before and immediately after giving
--- --------- ------
effect to the relevant Loans, the aggregate outstanding principal amount of the
Loans will not exceed the Total Commitment.
(e) Use of Proceeds. The Lenders shall be satisfied that the proceeds of
the relevant Loans are being applied strictly in accordance with Section 3.15
and Section 5.16.
(f) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with this
Agreement, the Security Documents and the other Loan Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received such other documents, instruments
and legal opinions in respect of any aspect or consequence of each such
agreement and document and the transactions contemplated hereby or thereby as it
shall reasonably request.
(g) Statutory Surplus.
--- --------- -------
(h) In the case of each borrowing after the first, the statutory surplus of
the Insurance Subsidiaries shall be sufficient to enable each of the Insurance
Subsidiaries to continue underwriting at least such further insurance business
as it is permitted to underwrite after giving effect to the capital contribution
made with the proceeds of the Loans made on the initial Borrowing Date.
4.3 Representation.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the relevant Borrowing Date that (a) the
statements in any document delivered by the Borrower in connection with that
borrowing are true and correct in all material respects, (b) after due inquiry,
it has no reason to believe that any of the statements made by any Subsidiary in
the Guaranty and Security Agreement or any other Loan Document is not true and
correct in all material respects, and (c) the applicable conditions contained in
this Article 4 have been satisfied.
ARTICLE 5. AFFIRMATIVE COVENANTS
So long as any of the Commitments remains in effect, any Note remains
outstanding and unpaid or any Obligation is owing to any Lender or the
Administrative Agent hereunder, the Borrower shall:
5.1 Financial Statements.
Furnish to each Lender:
(a) as soon as available, but in any event within 120 days after the end of
each fiscal year of the Borrower (or such earlier date as the Borrower's Form
10-K is filed with the SEC), copies of (i) the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of that year
and (ii) the related consolidated and consolidating statements of operations and
consolidated statements of stockholders' equity and cash flows of the Borrower
and the Subsidiaries for that year, setting forth in each case in comparative
form the figures as of the end of and for the previous year, in each case
prepared in accordance with GAAP, all in reasonable detail and accompanied by an
opinion of PricewaterhouseCoopers or other independent certified public
accountants of nationally recognized standing reasonably acceptable to the
Lenders, to the effect that the consolidated financial statements have been
prepared in accordance with GAAP (except for changes in application in which
those accountants concur) and present fairly in all material respects in
accordance with GAAP the financial condition of the Borrower and its
Subsidiaries as of the end of that fiscal year and the results of its operations
for the fiscal year then ended, and that the examination by those accountants in
connection with these financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, included such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances; provided that the submission of the Borrower's
report on Form 10-K shall satisfy the foregoing requirements;
(b) as soon as available, but in any event within 150 days after the end of
each fiscal year of each Insurance Subsidiary (or such earlier date as filed
with the applicable Insurance Regulatory Authority), a copy of the audited SAP
financial statements for each Insurance Subsidiary, in each case setting forth
in comparative form the figures for the preceding fiscal year, prepared in
accordance with SAP, all in reasonable detail and accompanied by an opinion of
PricewaterhouseCoopers or another firm of independent public accountants of
recognized national standing reasonably acceptable to the Administrative Agent,
to the effect that the financial statements have been prepared in accordance
with SAP (except for changes in application in which those accountants concur)
and fairly present in all material respects in accordance with SAP the financial
condition of that Insurance Subsidiary as of the end of that fiscal year and the
results of its operations for the fiscal year then ended, and that the
examination by those accountants in connection with those financial statements
has been made in accordance with generally accepted auditing standards and,
accordingly, included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances; provided
that the submission of the Annual Statement for that Insurance Subsidiary as
filed with the applicable Insurance Regulatory Authority shall satisfy the
foregoing requirements;
(c) as soon as available, but in any event not later than 60 days after the
end of each fiscal quarter of each fiscal year of the Borrower (or such earlier
date as the Borrower's Form 10-Q for that quarter is filed with the SEC), a copy
of the unaudited consolidated balance sheet of the Borrower and the Subsidiaries
as at the end of that quarter and the related unaudited consolidated statements
of operations and statements of shareholders' equity and cash flows of the
Borrower and the Subsidiaries for that quarter and the portion of the fiscal
year through the end of that quarter and setting forth the actual figures for
the corresponding date or period in the previous year, certified by the chief
financial officer or treasurer of the Borrower as being fairly stated in all
material respects (subject to normal year-end audit adjustments); provided that
the submission of the Borrower's report on Form 10-Q shall satisfy the foregoing
requirements;
(d) as soon as available, but in any event not later than 60 days after the
end of each fiscal quarter of each fiscal year of each Insurance Subsidiary (or
such earlier date as filed with the applicable Insurance Regulatory Authority),
a copy of the unaudited balance sheet of that Insurance Subsidiary as at the end
of that quarter and the related unaudited statements of income, retained
earnings and cash flows of that Insurance Subsidiary for that quarter and the
portion of the fiscal year through the end of that quarter and setting forth the
actual figures for the corresponding date or period in the previous year, all
prepared in accordance with SAP and certified by the chief financial officer or
treasurer of that Insurance Subsidiary as being fairly stated in all material
respects (subject to normal year-end audit adjustments); provided that the
submission of the Quarterly Statement for that Insurance Subsidiary as filed
with the applicable Insurance Regulatory Authority shall satisfy the foregoing
requirements;
All such financial statements shall be complete and correct in all material
respects and shall be prepared in accordance with GAAP or, as applicable, SAP,
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by the relevant accountants or officer, as the case
may be, and disclosed therein).
5.2 Certificates; Other Information.
Furnish to each Lender:
(a) concurrently with the delivery of the financial statements referred to
in Section 5.1(a) or Section 5.1(b), a certificate of the independent certified
public accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to
in Section 5.1, a compliance certificate substantially in the form set forth in
Exhibit E of the chief financial officer or treasurer of the Borrower (the
"Compliance Certificate"), in form and substance satisfactory to the
Administrative Agent, showing compliance by the Borrower and the Subsidiaries
with the covenants contained in Section 6.1;
(c) promptly after the sending or filing thereof, and in any event within
five days after the filing thereof, copies of all reports that the Borrower
sends to any of its stockholders, and copies of all registration statements,
reports on Form 10-K, Form 10-Q or Form 8-K (or, in each case, any successor
form) and other material reports that the Borrower or any Subsidiary files with
the SEC or any successor or analogous Governmental Authority or that any
Insurance Subsidiary files with any Insurance Regulatory Authority (other than
public offerings of securities under employee benefit plans or dividend
reinvestment plans);
(d) as soon as available and, in any event by April 30 of each fiscal year
of each Insurance Subsidiary (or such earlier date as filed with the applicable
Insurance Regulatory Authority), statements showing the RBC Ratio and IRIS
Ratios for each Insurance Subsidiary as of the immediately prior fiscal year
end;
(e) at the times specified in Exhibit H, the reports and other information
there specified (or reports of the Borrower containing the same information in
such other form as at the time is used by the Borrower and reasonably
satisfactory to the Administrative Agent), certified by a Responsible Officer to
be true and correct as of the dates there specified, and promptly after request,
such additional financial and other information as the Administrative Agent or
any Lender may from time to time reasonably request;
(f) promptly after receipt, a copy of any report or management letter
relating to internal financial controls and procedures delivered to the Borrower
or any Subsidiary by any independent firm of public accountants in connection
with the examination of the financial statements of the Borrower or any
Subsidiary;
(g) promptly and in event within five days after any Responsible Officer of
the Borrower or, where applicable, any Insurance Subsidiary learns of the facts,
notice of the following, setting forth in reasonable detail the underlying facts
and circumstances and the action that the Borrower or, if applicable, an
Insurance Subsidiary has taken or proposes to take in connection with the facts
and circumstances:
(i) the receipt by the Borrower or any Insurance Subsidiary from any
Governmental Authority or Insurance Regulatory Authority of written
notice asserting any failure of compliance with any applicable
Requirement of Law which is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect or that threatens the
taking of any action against the Borrower or any Subsidiary or sets
forth circumstances that, if taken or adversely determined, would be
reasonably likely to have a Material Adverse Effect; or
(ii) the receipt by the Borrower or any Insurance Subsidiary from any
Governmental Authority or Insurance Regulatory Authority of a notice
of any actual or threatened suspension, limitation or revocation of,
failure to renew, or imposition of any restraining order, escrow or
impoundment of funds in connection with, any license, permit,
accreditation or authorization of any Subsidiary, if the relevant
action would be reasonably likely to have a Material Adverse Effect;
(iii)the occurrence of any actual changes in any insurance statute or
regulation governing the investment or dividend practices of any
Insurance Subsidiary that would be reasonably likely to have a
Material Adverse Effect;
(iv) the occurrence of any material amendment or modification (other than
expiration) of any Reinsurance Agreement (whether entered into before
or after the date of this Agreement), including any such agreements
that are in a runoff mode on the date of this Agreement, if the
amendment or modification would be reasonably likely to have a
Material Adverse Effect;
(v) the receipt by any Insurance Subsidiary of any written notice of
denial of coverage or claim, litigation or arbitration with respect to
any Reinsurance Agreement to which it is a ceding party, if the
circumstances would be reasonably likely to have a Material Adverse
Effect;
(vi) any other matter or event that has, or would be reasonably likely to
have, a Material Adverse Effect.
5.3 Payment of Obligations.
Pay, discharge or otherwise satisfy, and cause each Subsidiary to pay, discharge
or otherwise satisfy, at or before maturity or before they become delinquent, as
the case may be, all taxes, fees or other charges imposed on it or on any of its
properties by any Governmental Authority and all its other material obligations
of whatever nature, except, in each case, where the amount or validity thereof
is currently being diligently contested in good faith and reserves in conformity
with GAAP or, if applicable, SAP, with respect thereto have been provided on the
books of the Borrower or the relevant Subsidiary, as the case may be.
5.4 Maintenance of Existence.
Continue and cause each Subsidiary to continue to engage only in a business of
the same type as is conducted by it on the date of this Agreement; and renew and
keep in full force and effect, and cause each Subsidiary to renew and keep in
full force and effect, its corporate existence, and take all reasonable action
to maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business except to the extent such failure to maintain
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect and comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance.
Keep and cause each Subsidiary to keep all property useful and necessary in its
business in good working order and condition (ordinary wear and tear, and
casualties, excepted), maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business, and furnish to each Lender,
upon request, full information as to the insurance carried including certified
copies of policies and certificates of insurance from a recognized insurance
broker.
5.6 Inspection of Property; Books and Records; Discussions.
---------- -- --------- ----- --- -------- ------------
Keep and cause each Subsidiary to keep proper books of records and account, in
which full, true and correct entries in conformity with GAAP (or, where
applicable, in conformity with SAP) and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and
permit, and cause each Subsidiary to permit, after reasonable notice,
representatives of the Administrative Agent or any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired, and to
discuss the business, operations, properties and financial and other condition
of the Borrower and each Subsidiary with officers and employees of the Borrower
and that Subsidiary and with their independent certified public accountants so
long as such actions do not materially interfere with the operations of the
Borrower or any of its Subsidiaries.
5.7 Other Notices
(a) . (a) Promptly after the Borrower or any Subsidiary knows and, in any
event, within 5 days after the Borrower or the relevant Subsidiary knows with
respect to any notice under clause (i) or within 10 days with respect to any
other notice under this Section 5.7(a), give notice to the Administrative Agent
and each Lender of:
(i) the occurrence of any Default or Event of Default;
(ii) any (A) default or event of default under any Contractual Obligation
of the Borrower or any Subsidiary, or (B) litigation, investigation or
proceeding which may exist at any time between the Borrower or any
Subsidiary and any Governmental Authority, which in either case, if
not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(iii)any litigation, investigation or proceeding of the type referred to
in Section 3.6(b);
(iv) any material labor dispute to which the Borrower or any Subsidiary may
become a party and which involves any group of employees, any strikes
or walkouts relating to any of its facilities and the expiration or
termination of any labor contract to which the Borrower or a
Subsidiary is a party or by which the Borrower or a Subsidiary is
bound, if the dispute could reasonably be expected to materially
disrupt the operations of the Borrower or a Subsidiary;
(v) any Reportable Event or Prohibited Transaction that the Borrower or
any Subsidiary knows or has reason to know has occurred with respect
to any Plan, or receipt by the Borrower or any Subsidiary of notice
that the PBGC has instituted or will institute proceedings under Title
IV of ERISA to terminate any Plan.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or the relevant Subsidiary has taken or
proposes to take with respect thereto. For the purposes of this Section 5.7(a),
the Borrower shall be deemed to have knowledge when any officer of the Borrower
charged with responsibility for any matter that is the subject of such notice
requirement knows that such notice was required.
5.8 Environmental Laws
(a) . (a) Comply and cause the Subsidiaries to comply in all material
respects with all applicable Environmental Laws and obtain and comply and cause
the Subsidiaries to obtain and comply in all material respects with and maintain
and cause the Subsidiaries to maintain any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws except to the extent that failure to do so could not be reasonably expected
to have a Material Adverse Effect.
(b) Conduct and complete and cause the Subsidiaries to conduct and complete
all investigations, studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the pendency of
such proceedings could not be reasonably expected to have a Material Adverse
Effect.
(c) Defend, indemnify and hold harmless, and cause the Subsidiaries to
defend, indemnify and hold harmless, the Administrative Agent and the Lenders,
and their respective parents, subsidiaries, affiliates, employees, agents,
officers and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the Business of any Subsidiary or the
Properties (as defined in Section 3.16), or any orders, requirements or demands
of Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor. This indemnity shall continue in
full force and effect regardless of the termination of this Agreement.
5.9 ERISA.
Establish, maintain and operate and cause each Subsidiary to establish, maintain
and operate all Plans to comply in all material respects with the applicable
provisions of ERISA, the Code, and all other applicable laws, and the
regulations and interpretations thereunder and the respective requirements of
the governing documents for such Plans except to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect.
5.10 Use of Proceeds.
Use the proceeds of each Loan solely for the purposes specified in Section 3.15.
5.11 Margin Stock.
Not permit the aggregate value of margin stock (as defined in Regulation U) at
any time owned or held by the Borrower or any Subsidiary to exceed an amount
equal to 25% of the value of all consolidated assets subject at such time to any
"arrangement" (as such term is used in the definition of "indirectly secured" in
Section 221.2 of Regulation U).
5.12 Maintain Ownership of Insurance Businesses.
Maintain direct or indirect ownership of all of the issued and outstanding
Capital Stock of each Insurance Subsidiary.
5.13 Fees.
(a) On the earlier of the Maturity Date and the date on which a Change
in Control occurs, pay to the Administrative Agent for distribution by it among
the Administrative Agent and the Lenders in such proportions as they shall
separately have agreed a facility fee in the amount of $1,500,000.00.
For this purpose, "Change in Control" means the acquisition, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning given to that term in the Securities Exchange Act of 1934 and the rules
of the SEC thereunder as in effect on the date of this Agreement) other than
CSFBM or any of its Affiliates of shares representing more than 50% of the
aggregate voting power for the election of directors of the issued and
outstanding Capital Stock of the Borrower.
5.14 Pledge Agreement.
Comply in a timely manner with all obligations of the Borrower under the Pledge
Agreement, and cause each Subsidiary that issues a surplus note purchased with
the proceeds of any Loan or identified in the Pledge Agreement as a Company, to
deliver to the Administrative Agent an acknowledgment of and consent to the
Pledge Agreement, executed by a Responsible Officer of that Subsidiary.
5.15 Relief From Automatic Stay in Bankruptcy
(a) . (a) Upon the occurrence of an Event of Default under subparagraph
(g)(i), (ii), (iii) or (iv) of Section 7.1, deliver, and cause each of its
Subsidiaries, to immediately, upon request therefor by the Administrative Agent,
deliver to the Administrative Agent its written consent to the entry of an order
modifying the automatic stay provided for under 11 U.S.C. Section 362(a)
(including any similar or analogous provision under applicable state law,
whether automatic or imposed by court order at the request of an Insurance
Regulatory Authority or otherwise (the "Stay")) to the extent necessary to
permit the Administrative Agent to exercise and enforce any and all rights and
remedies that the Administrative Agent has under the Loan Documents and
applicable law.
(b) Not seek, apply for or cause, and not permit any Subsidiary to seek,
apply for or cause, the entry of any order enjoining, staying or otherwise
interfering with the exercise and enforcement of any of the Administrative
Agent's rights or remedies under the Loan Documents and applicable law after the
Stay shall have been modified under the circumstances contemplated under
subparagraph (a) of this Section 5.15 or otherwise.
(c) Acknowledge and cause each of its Subsidiaries to acknowledge the
exigent circumstances surrounding the execution and delivery of the Loan
Documents and the making of the Loans, that the inclusion of this Section 5.15
in this Agreement and provision of the relief contemplated hereby is a material
inducement to the making of the Loans and that the occurrence of an Event of
Default under subparagraph (g)(i), (ii), (iii) or (iv) of Section 7.1 of this
Agreement would constitute "cause" within the meaning of the Stay as imposed
under 11 U.S.C. Section 362(a).
5.16 Application of Capital Contributions.
Cause and permit FLICA or any other Insurance Subsidiary that receives a capital
contribution made with the proceeds of any Loan to use the capital contribution
solely for the purpose of preventing statutory surplus from ceasing to meet any
applicable Requirements of Law which, if not met, could result in an event of a
kind specified in Section 7.1(g)(iii).
5.17 [Reserved](a)
----------
5.18 [Reserved](a)
----------
ARTICLE 6. NEGATIVE COVENANTS
So long as the Commitments remain in effect, any Note remains outstanding and
unpaid or any Obligation is owing to any Lender or the Administrative Agent
hereunder, the Borrower shall not:
6.1 Financial Covenants
(a) . (a) Minimum Net Worth. Permit Consolidated GAAP Net Worth as of the
last day of any fiscal quarter to be less than an amount equal to the sum of (i)
$31,000,000 plus (ii) 50% of any cumulative positive Net Income of the Borrower
and its Subsidiaries for each fiscal quarter following the fiscal quarter ended
December 31, 2000 plus (c) deferred revenues as of the end of the most recent
fiscal quarter.
(b) Funded Debt. Permit the Funded Debt Ratio as of the last day of any
fiscal quarter of the Borrower to exceed 0.65 to 1.0, determined on a
consolidated basis for the Borrower and its Subsidiaries.
(c) RBC Ratio. Permit the RBC Ratio of any Insurance Subsidiary other than
National Financial Insurance Company or Pacific Casualty Company, Inc. to be
less than 105% at any time. If, after the date of this Agreement, there is any
change that affects any State's calculation or interpretation of the RBC Ratio,
(i) the Borrower and the Lenders will enter into good faith negotiations to
amend this Agreement in such respects as are necessary to conform this paragraph
as a measurement of the sufficiency of the risk-based capital of each Insurance
Subsidiary to substantially the same measurement as was effective before that
change and (ii) the Borrower will be deemed to be in compliance with this
paragraph during period of 60 days beginning on the effective date of the change
if and to the extent that it would have been in compliance with this paragraph
if the change had not occurred and the calculation and interpretation of the RBC
Ratio within the context of this paragraph were being determined on the basis of
its calculation and interpretation as in effect immediately prior to the change.
(d) Minimum Statutory Surplus of Insurance Subsidiaries. Permit the
Statutory Capital and Surplus of any Insurance Subsidiary as of the last day of
any fiscal quarter to be less than the Minimum Statutory Surplus Requirement for
that Insurance Subsidiary, as specified in Exhibit G.
6.2 Limitation on Fundamental Changes.
Enter into or permit any Subsidiary to enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all its property, business or assets,
except that any Wholly Owned Subsidiary may be merged or consolidated with or
into, or make such a transfer to, another Wholly Owned Subsidiary, or with or to
the Borrower, if, as of the consummation of, and after giving effect to, the
merger or consolidation, no Event of Default would occur and, in the case of a
merger or consolidation or transfer involving the Borrower, the Borrower is the
entity that survives the merger, consolidation or transfer.
6.3 Limitation on Transactions with Affiliates.
Enter into or, except for any transaction provided for in any of the
Receivables Financing Agreements identified in Schedule 6.3, permit any
Subsidiary to enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate or any other Person that owns 5% or more of the outstanding
Capital Stock of the first Person, unless the transaction is (a) between or
among the Borrower and one or more of its Wholly Owned Subsidiaries or between
or among Wholly Owned Subsidiaries of the Borrower or (b) is on fair and
reasonable terms that are at least as favorable to the Borrower and its
Subsidiaries as would be obtained in a comparable arm's length transaction
between unrelated Persons of equal bargaining power.
6.4 Limitation on Liens
(a) . Except as contemplated in this Agreement and the Security Documents,
create, incur, assume or suffer to exist, or permit any Subsidiary to create,
incur, assume or suffer to exist, any Lien upon any of its properties, assets or
revenues, whether now owned or hereafter acquired, except for the following
(each of which is a "Permitted Lien"):
(a) inchoate Liens for taxes, assessments or other governmental
charges or levies or Liens for taxes, assessments, governmental
charges or levies not yet due or which are being contested in good
faith by appropriate proceedings, but only if adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as relevant, in conformity with GAAP;
(b) Liens imposed by law in the nature of carriers',
warehousemen's, mechanics', materialmen's or similar Liens arising,
and securing obligations incurred, in the ordinary course of business
which are not overdue for more than 45 days or which are being
contested in good faith by appropriate proceedings, if appropriate
reserves with respect thereto are maintained in accordance with GAAP;
(c) pledges or deposits under workers' compensation, unemployment
insurance and other social security legislation (other than ERISA);
(d) any attachment or judgment Lien arising in connection with
court proceedings, but only if (1) the execution or other enforcement
of the relevant Lien is effectively stayed and claims secured thereby
are being actively contested in good faith and by appropriate
proceedings and (2) the Lien (together with other Liens) has not given
rise to an Event of Default under Section 7.1(h);
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
landlords' Liens which, in the aggregate and individually, do not
materially detract from the value of the property subject thereto or
materially interfere with the occupation, use and enjoyment by the
Borrower or any of its Subsidiaries of the property subject thereto in
the normal course of business;
(f) Liens existing on the date hereof to the extent disclosed in
Schedule 3.8; and
(g) the Liens created in and pursuant to the Security Documents.
6.5 Hedging Arrangements.
Enter into, or permit any Subsidiary to enter into, any Hedging Arrangement
providing for the transfer or mitigation of interest rate risk relating to the
Loans either generally or under specific contingencies, except on terms that are
reasonably acceptable to the Lenders.
6.6 Limitation on Guaranties.
Create, incur, assume or suffer to exist, or permit any Subsidiary to create,
incur, assume or suffer to exist, any Guaranty except:
(a) Guaranties existing on the date of this Agreement, to the extent
identified in Schedule 6.6; and
(b) Guaranties by the Borrower of Indebtedness and other obligations of its
Subsidiaries, and by Subsidiaries of Indebtedness and other obligations of other
Subsidiaries and the Borrower, in each case to the extent that Indebtedness is
permitted under this Agreement.
6.7 Limitation on Sale of Assets.
Convey, sell, lease, assign, transfer or otherwise dispose of, or, except for a
transaction of a kind described in Schedule 6.7, permit any Subsidiary to
convey, sell, lease, assign, transfer or otherwise dispose of any of, its
property, business or assets (including, without limitation, tax benefits,
receivables and leasehold interests), whether now owned or hereafter acquired
except for (a) the sale or other disposition of any property that, in the
reasonable judgment of the Borrower, has become uneconomic, obsolete or worn
out, and which is disposed of in the ordinary course of business; and (b)
reinsurance, sales of inventory and receivables made in the ordinary course of
business.
6.8 Limitation on Investments, Loans and Advances.
Make any advances or permit any Subsidiary to make any advance, loan, extension
of credit or capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of, or make any other investment in, any Person
except for (a) the Permitted Investments, (b) a transaction of a kind described
in Schedule 6.7, or (c) an investment permitted by section 6.5 ("Investment
Grade Assets") of the Guaranty Agreement identified as item 1 of Schedule 6.6 as
amended through and including the date of this Agreement.
6.9 Limitations Relating to Stock of Subsidiaries, Dividends and Stock
Repurchases.
Except as contemplated in this Agreement:
(a) transfer, convey, sell or otherwise dispose of any shares of Capital
Stock of any Insurance Subsidiary or permit any Insurance Subsidiary to issue
any additional shares of its capital stock to any Person other than the Borrower
or any Subsidiary; or
(b) permit any Subsidiary to declare any dividends on any shares of any
class of Capital Stock or to make any payment on account of, or set apart assets
for a sinking or other analogous fund for, the purchase, redemption, retirement
or other acquisition of any shares of any class of Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any of its Subsidiaries (all of the foregoing being referred to
herein as "Restricted Payments"); except that: (i) Subsidiaries may pay
dividends directly or indirectly to the Borrower or to Wholly Owned Subsidiaries
of the Borrower; (ii) Subsidiaries may pay dividends directly or indirectly to
the Borrower or other Subsidiaries and each other owner of an equity interest in
such Subsidiary on a pro rata basis based on their relative ownership interests;
and (iii) the Borrower may make Restricted Payments on or with respect to its
Capital Stock so long as, after giving effect to those Restricted Payments, no
Default or Event of Default shall have occurred and be continuing or shall
result therefrom.
(c) Except for any shares of Capital Stock of a Subsidiary identified in
Schedule 3.8 as subject to a Lien that exists on the date of this Agreement and
is a Permitted Lien, permit any Subsidiary to issue any shares of Capital Stock
that are not "certificated securities" (as defined in ss. 8-102 of the Uniform
Commercial Code as in effect in the State of New York on the date hereof) and
are not pledged to the Administrative Agent pursuant to the Pledge Agreement to
the extent required hereunder or thereunder or (B) permit any Subsidiary to
issue any shares of preferred stock.
6.10 Limitation on Indebtedness.
Create, incur, issue, assume or suffer to exist, or permit any Subsidiary to
create, incur, issue, assume or suffer to exist or permit any of its
Subsidiaries to create, incur, issue, assume or suffer to exist, any
Indebtedness or any Mandatory Redeemable Stock (as defined below) or preferred
stock, except:
(a) Indebtedness of the Borrower under this Agreement and under the Notes;
(b) Indebtedness of the Borrower under the agreements and instruments
listed in Schedule 3.23 in a maximum principal amount equal to the commitments
of the lenders thereunder as in effect on the date of this Agreement, or (if
applicable) increased to the extent specified as permitted in Schedule 3.23;
(c) Indebtedness and Mandatory Redeemable Stock outstanding on the date of
this Agreement and any additional shares of Series A preferred stock issuable as
dividends in accordance with the terms of that Mandatory Redeemable Stock as in
effect on the date of this Agreement; and
(d) Surplus notes of an Insurance Subsidiary which are purchased by the
Borrower with the proceeds of the Loans in accordance with this Agreement and
pledged pursuant to the Pledge Agreement.
For this purpose, "Mandatory Redeemable Stock" means, with respect to any
Person, any share of that Person's Capital Stock, to the extent that it is (i)
redeemable, payable or required to be purchased or otherwise retired or
extinguished, or convertible into any Indebtedness or other liability,
obligation, covenant or duty of or binding upon, or any term or condition to be
observed by or binding upon such Person or any of its assets, (A) at a fixed or
determinable date, whether by operation of a sinking fund or otherwise, (B) at
the option of any other Person or (C) upon the occurrence of a condition not
solely within the control of that Person such as a redemption required to be
made utilizing future earnings or (ii) convertible into Capital Stock which has
the features set forth in clause (i).
6.11 Limitation on Capital Expenditures.
Make or permit any Subsidiary to make any Capital Expenditure, except as
contemplated in Schedule 6.11.
6.12 Limitation on Negative Pledge Clauses; Payment Restrictions.
Enter into or suffer to exist, or permit any Subsidiary to enter into or suffer
to exist, any agreement or other consensual encumbrance or restriction that (i)
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, or (ii) prohibits
or limits the ability of the Borrower or any of its Subsidiaries to make
payments or dividends to or investments in the Borrower or any of its
Subsidiaries, other than (a) this Agreement, (b) the agreements containing such
restrictions that exist on the date of this Agreement, as identified in Schedule
3.20 or Schedule 3.23, (c) purchase money mortgages or Capital Leases permitted
by this Agreement (in which cases, any prohibition or limitation shall only be
effective against the assets financed thereby) or (d) any other Contractual
Obligation which prohibits the assignment of that Contractual Obligation, or the
property that is the subject of that Contractual Obligation (in which case, any
prohibition or limitation shall only be effective against such Contractual
Obligation or the property that is the subject of such Contractual Obligation).
6.13 Limitation on Businesses.
Enter into or engage in any business, either directly or through any Subsidiary,
except for businesses of the same general type as those in which the Borrower
and its Subsidiaries are engaged on the date hereof or other business activities
reasonably incidental or related to any of the foregoing.
6.14 Limitation on Certain Prepayments and Amendments.
Make or permit any Subsidiary to make, any optional payment or prepayment on or
redemption, defeasance or purchase of any Debt for Borrowed Money (other than
with respect to (i) Indebtedness hereunder or under the Notes, (ii) Indebtedness
under the Contractual Obligations identified in items 1-6 of Schedule 3.23, and
(iii) any Indebtedness to the extent that Indebtedness by the terms thereof
would otherwise have become due and payable within three months of such payment,
redemption, defeasance or purchase); or amend, modify or change, or consent to
any amendment, modification or change to any of the terms relating to the
payment or prepayment of principal of or interest on, any such Indebtedness,
other than any amendment, modification or change which would extend the maturity
or reduce the amount of any payment or prepayment of principal thereof or which
would reduce the rate or extend the date for payment of interest thereon or
which would not be adverse to the Lenders.
ARTICLE 7. EVENTS OF DEFAULT
7.1 Events of Default.
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or the fee
payable pursuant to Section 5.13 when due in accordance with the terms hereof;
or the Borrower shall fail to pay any interest on any Loan, or any other amount
payable hereunder or any other Loan Document, within five days after any such
interest or other amount becomes due in accordance with the terms thereof or
hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
herein or in any other Loan Document or which is contained in any certificate,
document or financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Loan Document shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower shall default in the observance or performance of any
agreements contained in Article 6 or in Section 5.4, Section 5.6, Section
5.7(a), Section 5.10, Section 5.12 or Section 5.16; or
(d) The Borrower or any Subsidiary shall default in the observance or
performance of any of its agreements contained any of the Security Documents or
any of the Security Documents shall cease or fail for any reason to constitute a
first priority Lien on any of the "Pledged Collateral" or "Collateral" referred
to therein for any reason other than the inability of the Borrower, using its
best efforts, to obtain any authorization from an Insurance Regulatory Authority
that is required to enable the Borrower to create or perfect the Lien
contemplated in any of the Security Documents; or
(e) The Borrower shall default in the observance or performance of any
other agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days; or
(f) The Borrower or any Subsidiary shall (i) default in any payment
(regardless of amount) of principal of or interest on any Indebtedness having an
aggregate principal amount in excess of $20,000,000 (other than the Notes)
beyond the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness is incurred or (ii)
default in the observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
Administrative Agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice, if required, such
Indebtedness to become due prior to its stated maturity; or (iii) any
combination of defaults referred to in clauses (i) and (ii) of this paragraph in
the aggregate involve Indebtedness in excess of $20,000,000; or
(g) (i) The Borrower or any Subsidiary shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the
Borrower or any Subsidiary shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower or any
Subsidiary any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
un-bonded for a period of 60 days; or (iii) any Insurance Regulatory Authority
applies for an order pursuant to any section of the applicable insurance code,
directing the rehabilitation, conservation or liquidation of any Insurance
Subsidiary, and any such application shall not be dismissed or otherwise
terminated during a period of sixty (60) consecutive days, or a court of
competent jurisdiction shall enter an order granting the relief sought; or (iv)
any Insurance Regulatory Authority files a complaint or petition pursuant to any
applicable insurance code seeking the dissolution of any Insurance Subsidiary,
and any such complaint or petition is not dismissed or otherwise terminated for
a period of sixty (60) consecutive days, or a court of competent jurisdiction
shall order the dissolution of any Insurance Subsidiary; or, (v) there shall be
commenced against the Borrower or any Subsidiary any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distrait or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (vi) the Borrower or any Subsidiary shall take any action to
authorize or approve of, or in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii),
(iii), (iv) or (v) above; or (vii) the Borrower or any Subsidiary shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(h) (i) Any Person shall engage in any Prohibited Transaction involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Single Employer
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower, any Subsidiary or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(i) One or more judgments or decrees shall be entered against the Borrower
or any Subsidiary involving in the aggregate a liability (to the extent not
covered by third-party insurance as to which the insurer has acknowledged
coverage) of $5,000,000 or more and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (ii), (iii) or (iv) of paragraph (g) above with respect to the
Borrower or any Subsidiary, the Commitment shall automatically and immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes shall immediately become due
and payable, and (B) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, by notice to the Borrower, declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Except as expressly provided above in
this Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
ARTICLE 8. THE ADMINISTRATIVE AGENT
8.1 Appointment.
Each Lender hereby irrevocably designates and appoints CSFBM as Administrative
Agent of such Lender under this Agreement and the other Loan Documents. Each
Lender irrevocably authorizes CSFBM, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Administrative Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
8.2 Delegation of Duties.
The Administrative Agent may execute any of its duties under this Agreement and
the other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to rely on the advice of counsel concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions.
Neither the Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except for its own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties, made
by the Borrower or any officer or any of them contained in this Agreement or any
other Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the Notes or any other Loan Document or for the value of any
"Collateral" or "Pledged Collateral" under (and as defined in) the Guaranty and
Security Agreement or the Pledge Agreement or any failure of the Borrower to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower or any Subsidiary.
8.4 Reliance by Administrative Agent .
The Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Notes and the other Loan
Documents in accordance with a request of the Required Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes.
8.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Administrative Agent
has received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative 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 analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower and the Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder or furnished to the Administrative Agent for
the account of, or with a counterpart or copy for, each Lender, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower or any Subsidiary which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
8.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its capacity as such
(to the extent not reimbursed by the Borrower and without limiting the joint and
several obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought under this Section (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this Section
shall survive the payment of the Obligations hereunder.
8.8 Administrative Agent in Its Individual Capacity.
The Administrative Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower and any
Subsidiary as though the Administrative Agent were not an Administrative Agent
hereunder and under the other Loan Documents. With respect to Loans made by it
and any Note issued to it, the Administrative Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not the Administrative Agent, and the
terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
8.9 Successor Administrative Agent .
The Administrative Agent may resign as Administrative Agent upon 10 days' notice
to the Lenders and the Borrower. If the Administrative Agent resigns as
Administrative Agent under this Agreement and the other Loan Documents, then the
Required Lenders shall, with the consent of the Borrower (which consent shall
not be unreasonably withheld and shall not be required if an Event of Default
shall have occurred that is continuing) appoint a successor administrative
agent, whereupon the successor administrative agent shall succeed to the rights,
powers and duties of the Administrative Agent, and the term "Administrative
Agent" shall mean that successor Administrative Agent effective upon its
appointment and approval as provided above, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of that former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring or terminated Administrative Agent's resignation
or termination, as the case may be, as Administrative Agent, the provisions of
this Section shall inure to its benefit as to any actions taken or omitted by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
8.10 Intercreditor Agreement.
Each Lender hereby irrevocably instructs the Administrative Agent to enter into
the Intercreditor Agreement on behalf of that Lender and to take and refrain
from taking all actions provided for therein in accordance with the terms of
that agreement. Each Lender confirms that it is bound by the terms of the
Intercreditor Agreement, acknowledging that they provide for the subordination
of such Lender's claims hereunder and under the other Loan Documents to certain
claims of LaSalle Bank National Association identified in the Intercreditor
Agreement.
ARTICLE 9. MISCELLANEOUS
9.1 Amendments and Waivers.
This Agreement, the Notes and the other Loan Documents may not be amended,
supplemented or modified except in accordance with the provisions of this
Section. The Required Lenders may, or, with the written consent of the Required
Lenders, the Administrative Agent may, from time to time, (a) enter into written
amendments, supplements or modifications hereto with the Borrower for the
purpose of adding any provisions to this Agreement or changing in any manner the
rights of the Lenders or of the Borrower hereunder, (b) enter into written
amendments, supplements or modifications to the Notes and the other Loan
Documents with the Borrower for the purpose of adding provisions to the Notes or
such other Loan Documents or changing in any manner the rights of the Lenders or
the Borrower thereunder or (c) waive, on such terms and conditions as the
Required Lenders or the Administrative Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement, the Notes or the
other Loan Documents or any Default or Event of Default and its consequences;
provided that no such waiver and no such amendment, supplement or modification
(i) shall reduce the amount or extend the scheduled date of maturity of any Note
or of any installment thereof, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's Commitments,
in each case, without the consent of all the Lenders, or (ii) shall amend,
modify or waive any provision of this Section, or vary any provision of this
Agreement or any other Loan Document which specifically by its terms requires
the approval or consent of all the Lenders or reduce the percentage specified in
the definition of Required Lenders, or consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement, the
Notes and the other Loan Documents, in each case, without the written consent of
all the Lenders, or (iii) shall amend, modify or waive any provision of Article
8 without the written consent of the then Administrative Agent. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Borrower, the Lenders, the
Administrative Agent and all future holders of the Notes. In the case of any
waiver, the Borrower, the Lenders and the Administrative Agent shall be restored
to their former position and rights hereunder and under the outstanding Notes
and any other Loan Documents, and any Default or Event of Default waived shall
be deemed to be cured and not continuing, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
9.2 Notice.
All notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or, in the case of notice by mail, when received, or, in the
case of telecopy notice, when received, addressed as follows or, if addressed to
a Lender, to its address specified in Schedule I or, in any case, to such other
address as may be hereafter notified by the respective parties hereto and any
future holders of the Notes:
The Borrower: Ascent Assurance, Inc.
000 X. 0xx Xx., Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
The Administrative Agent: Credit Suisse First Boston Management Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxx
Xx. Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.3, Section 2.5, Section 2.8, Section 2.9,
Section 2.10 or Section 2.15 shall not be effective until received.
9.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents 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. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties.
All representations and warranties made hereunder, in the other Loan Documents
and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the Notes and the making of the Loans hereunder.
9.5 Payment of Expenses and Taxes; Indemnification.
The Borrower shall (a) promptly upon written request, pay or reimburse the
Administrative Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement, the Notes and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent, (b) pay or
reimburse the Administrative Agent and each Lender for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the other Loan Documents and any such
other documents, including, without limitation, the fees and disbursements of
counsel to the Administrative Agent and each Lender, and (c) pay, indemnify and
hold harmless the Administrative Agent and each Lender from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Notes, the other Loan
Documents and any such other documents, and (d) pay, and indemnify and hold
harmless the Administrative Agent and each Lender (including each of their
respective parents, subsidiaries, officers, directors, employees, agents and
affiliates) from and against, any and all other claims, demands, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
settlements, expenses or disbursements of whatever kind or nature arising from,
in connection with or with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the Notes, the other Loan
Documents, or any other documents or the use of the proceeds of the Loans or any
other purpose (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"); provided that the Borrower shall not have any
obligation hereunder to any Lender with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the Administrative
Agent or that Lender. The agreements in this Section 9.5 shall survive repayment
of the Obligations hereunder.
9.6 Successors and Assigns; Participations and Assignments
(a) . (a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Administrative Agent, the Arranger, all future
holders of the Notes and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. If amounts
outstanding under this Agreement and the Notes are due or 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 setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement or any Note; provided
that, in purchasing such participating interest, such Participant shall be
deemed to have agreed to share with the Lenders the proceeds thereof as provided
in Section 9.7(a) as fully as if it were a Lender hereunder. Each Participant
shall be entitled to the benefits of Section 2.10 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it were a Lender; provided that such Participant shall have complied with the
requirements of said Section and provided, further, that no Participant shall be
entitled to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender, in the ordinary course of its commercial banking business
and in accordance with applicable law, at any time and from time to time may
assign to any Lender or any affiliate thereof with the consent of the
Administrative Agent, or, with the consent of the Borrower (so long as no Event
of Default shall have occurred which is continuing) and the Administrative Agent
(which consent, in the case of either the Borrower or the Administrative Agent,
shall not be unreasonably withheld), to another Person (an "Assignee") all or
any part of its rights and obligations under this Agreement and the Notes
pursuant to a supplement substantially in the form of Exhibit D (a "Commitment
Transfer Supplement"), executed by that Assignee, the assigning Lender and, in
the case of an Assignee that is not then a Lender or an affiliate thereof, by
the Borrower and the Administrative Agent and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that, after
giving effect to any such assignment, the assigning Lender shall have either (x)
sold all its rights and obligations hereunder and under the Notes or (y)
retained at least $1,000,000 of the aggregate Commitment. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Commitment Transfer Supplement, (1) the Assignee thereunder
shall be a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender hereunder with a
Commitment as set forth therein and (2) the assigning Lender thereunder, to the
extent provided in such Commitment Transfer Supplement, shall be released from
its obligations under this Agreement (and, in the case of a Commitment Transfer
Supplement covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto; provided that the provisions of Section 2.10, Section 2.11 and
Section 9.5 shall continue to benefit the assigning Lender to the extent
required by such Sections).
(d) The Administrative Agent shall maintain, at its address referred to in
Section 9.2, a copy of each Commitment Transfer Supplement delivered to it and a
register (the "Register") for the recordation of the names and addresses of any
Assignees and the Commitment of, and principal amount of the Loans owing to, any
Assignees from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower and the Administrative Agent may
treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by the
assigning Lender, an Assignee (and, in the case of an Assignee that is not then
a Lender or an affiliate thereof, by the Borrower and the Administrative Agent )
and the Borrower together with payment by the assigning Lender or by the
Assignee to the Administrative Agent of a registration and processing fee of
$3,500, the Administrative Agent shall promptly accept such Commitment Transfer
Supplement and, on the effective date determined pursuant thereto, shall record
the information contained therein in the Register and give notice of such
acceptance and recordation to the Borrower. On or prior to such effective date,
the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent (in exchange for the Note of the assigning Lender) a new
Note to the order of such Assignee in an amount equal to the Commitment, assumed
by such Assignee pursuant to such Commitment Transfer Supplement and, if the
assigning Lender has retained a Commitment, a new Note to the order of the
assigning Lender in an amount equal to the Commitment retained by it hereunder.
Such new Notes shall be dated the Closing Date and shall otherwise be in the
form of the Notes replaced thereby.
(f) The Borrower authorizes the Lenders to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee, any and all
financial information in the Lenders' possession concerning the Borrower and its
Affiliates which has been delivered to the Administrative Agent or the Lenders
by or on behalf of the Borrower pursuant to this Agreement or which has been
delivered to the Administrative Agent or the Lenders by or on behalf of the
Borrower in connection with the Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement; provided that each
such Transferee and prospective Transferee agrees in writing to be bound by the
provisions of Section 9.8.
(g) Nothing herein shall prohibit any Lender from pledging or assigning any
Note to any Federal Reserve Bank in accordance with applicable law.
9.7 Adjustments; Setoff
(a) . (a) If any Lender (a "Benefited Lender") shall at any time receive
any payment of all or part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by setoff,
pursuant to events or proceedings of the nature referred to in Section 7.1(f),
or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans,
or interest thereon, such Benefited Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender's Loans, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided that if all or any portion
of such excess payment or benefits is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right (without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law), upon any amount becoming due and payable by the Borrower
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise), to setoff and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender; provided that the failure to give
such notice shall not affect the validity of such setoff and application.
9.8 Confidentiality.
Each Lender agrees to exercise all reasonable efforts (consistent with its
customary methods for keeping information confidential) to keep any information
delivered or made available by the Borrower confidential from anyone other than
persons employed or retained by such Lender who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans;
provided that nothing herein shall prevent any Lender from disclosing such
information (a) to any Affiliate of such Lender or to any other Lender, (b) upon
the order of any court or administrative agency, (c) upon the request or demand
of any regulatory agency or authority having jurisdiction over such Lender, (d)
that has been publicly disclosed, (e) in connection with any litigation relating
to the Loans, this Agreement or any transaction contemplated hereby to which any
Lender or the Administrative Agent may be a party, (f) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (g) to such
Lender's legal counsel and independent auditors, and (h) to any actual or
proposed participant or assignee of all or any part of its Loans hereunder, if
such other Person, prior to such disclosure, agrees, in writing, for the benefit
of the Borrower to comply with the provisions of this Section 9.8.
9.9 Effectiveness.
This Agreement shall become effective on the date when counterparts hereof
executed on behalf of the Borrower, the Administrative Agent and each Lender
shall have been received by the Administrative Agent and notice thereof shall
have been given by the Administrative Agent to the Borrower.
9.10 Counterparts.
This Agreement may be executed by one or more of the parties to this Agreement
on any number of separate counterparts (including by telecopy), and all said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with each of the Borrower and the Administrative Agent.
9.11 Severability.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.12 Integration.
This Agreement and the other Loan Documents represent the agreement of the
Borrower, the Administrative Agent and the Lenders with respect to the subject
matter hereof and thereof.
9.13 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK.
9.14 Submission To Jurisdiction; Waivers.
The Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower, as the case may be, at its address set forth in Section 9.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing contained herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
9.15 Acknowledgments.
Each of the parties hereby acknowledges that:
(a) Neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent and the Lenders, on the one
hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of creditor and debtor;
(b) the Arranger has no obligations under this Agreement or any of the
other Loan Documents and has no fiduciary relationship with or duty to the
Borrower, the Lenders or the Administrative Agent arising out of or in
connection with this Agreement or any of the other Loan Documents; and the
Arranger shall be entitled to the benefit of the provisions set forth in
Section 8.3, Section 8.6 and Section 8.7 as if references in each such
Section to the Administrative Agent were references to the Arranger;
provided, however, that the extension of those benefits to the Arranger
shall not be deemed to give rise to any implication that the Arranger has
any obligations under this Agreement; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby
between the Administrative Agent, the Lenders and the Borrower.
9.16 Waivers of Jury Trial.
THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
BORROWER:
ASCENT ASSURANCE, INC.
By: /s/Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman
Account for Disbursement of Loans:
ADMINISTRATIVE AGENT AND ARRANGER:
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Director
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Director
LENDERS:
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Director
SCHEDULE I
LENDING OFFICES OF LENDER AND COMMITMENTS
Lenders and Addresses Commitments
Commitment Commitment
Percentage
Credit Suisse First Boston Management Corporation $11,000,000 100%
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
EXHIBIT A-1
TO CREDIT
AGREEMENT
FORM OF NOTE
$ * New York, New York
------------------ April ( ), 2001
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
_________________ (the "Lender"), the principal amount of _____________ DOLLARS
($____________) or such lesser aggregate principal amount of the Loans of the
Lender that may be outstanding from time to time under the Credit Agreement
referred to below, payable as hereinafter set forth. The undersigned promises to
pay interest on the principal amount hereof remaining unpaid from time to time
from the date hereof until the date of payment in full, payable as hereinafter
set forth.
Reference is made to the Agreement dated as of April 17, 2001 (as it
may be amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement") among Ascent Assurance, Inc., a Delaware corporation, as
borrower, Credit Suisse First Boston Management Corporation, as Administrative
Agent (in that capacity, the "Administrative Agent") and Arranger, and the
Lenders from time to time party thereto. Terms defined in the Credit Agreement
and not otherwise defined herein are used herein with the meanings given those
terms in the Credit Agreement. This is one of the Notes referred to in the
Credit Agreement, and any holder hereof is entitled to all of the rights,
remedies, benefits and privileges provided for in the Credit Agreement as
originally executed or as it may from time to time be supplemented, modified or
amended. The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof, and the optional and mandatory prepayment
in whole or in part hereof, upon the happening of certain stated events upon the
terms and conditions therein specified.
This Note is secured by Collateral and Pledged Collateral as more fully
set forth in the Security Documents.
The outstanding principal indebtedness evidenced by this Note shall be
payable as provided in the Credit Agreement and in any event on the Maturity
Date.
Interest shall be payable hereunder on the outstanding daily unpaid
principal amount of each Loan hereunder, and, to the extent permitted by
applicable law, on any unpaid interest payable hereon, from the date that Loan
is made or, in the case of interest, from the date it falls due, shall accrue at
the rate of 12% per annum and shall be payable on the dates set forth in the
Credit Agreement until each such amount of principal and interest is paid in
full (both before and after judgment).
The amount of each payment due hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office for the account of the
Lender in immediately available funds not later than 12:00 noon (New York City
time) on the day the payment is due. All payments received after 12:00 noon (New
York City time) on any particular Business Day shall be deemed received on the
next succeeding Business Day. All payments shall be made in lawful money of the
United States of America, provided however, that interest hereon may be paid in
the form of PIK Interest Notes in the circumstances permitted in the Credit
Agreement.
The holder of this Note is authorized to record the date and amount of
each Loan of the Lender and the date and amount of each payment or prepayment of
principal thereof on the schedules annexed hereto and made a part hereof, and
any such recordation shall constitute prima facie evidence of the accuracy of
the information so recorded absent manifest error; provided that the failure of
the holder to make such recordation (or any error in such recordation) shall not
affect the obligations of the Borrower hereunder or under the Credit Agreement.
The undersigned hereby promises to pay all reasonable costs and
expenses of any rightful holder hereof incurred in collecting the undersigned's
obligations hereunder or in enforcing or attempting to enforce any of such
holder's rights hereunder, including reasonable attorneys' fees and
disbursements as contemplated in the Credit Agreement, whether or not an action
is filed in connection therewith.
Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts remaining unpaid on this Note
shall become, or may be declared to be, immediately due and payable all as
provided therein.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand for payment, dishonor, notice of dishonor, protest, notice
of protest and (except to the extent expressly required in the Credit Agreement)
any other notice or formality, to the fullest extent permitted by applicable
laws.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).
ASCENT ASSURANCE, INC.
By:
-----------------------------------------
Name:
Title:
Schedule
to Note
LOANS AND
PAYMENTS
======================= ============================ ============================= ============================ ==============
Date Amount of Loan Made Amount of Principal Repaid Unpaid Amount of Principal Notation
or Prepaid Made by
----------------------- ---------------------------- ----------------------------- ---------------------------- --------------
----------------------- ---------------------------- ----------------------------- ---------------------------- --------------
----------------------- ---------------------------- ----------------------------- ---------------------------- --------------
----------------------- ---------------------------- ----------------------------- ---------------------------- --------------
----------------------- ---------------------------- ----------------------------- ---------------------------- --------------
======================= ============================ ============================= ============================ ==============
EXHIBIT A-2
TO CREDIT
AGREEMENT
FORM OF PIK INTEREST NOTE
$* New York, New York
April [ ], 2001
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
_________________ (the "Lender"), the principal amount of ($ ) or such lesser
amount as equals the aggregate outstanding amount of PIK Interest (as defined in
the Credit Agreement referred to below) that has been paid through its
conversion to the principal amount of a Loan of the Lender pursuant to Section
2.6(d) of the Credit Agreement, payable as hereinafter set forth. The
undersigned promises to pay interest on each amount of PIK Interest that remains
unpaid from time to time from the date such amount of PIK Interest becomes
principal as provided in Section 2.6(d) of the Credit Agreement (the "Increase
Date" for such PIK Interest) until the date of payment in full, payable as
hereinafter set forth.
Reference is made to the Credit Agreement dated as of April 17, 2001
(as it may be amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Ascent Assurance, Inc., a Delaware
corporation, as borrower, Credit Suisse First Boston Management Corporation, as
Administrative Agent (in that capacity, the "Administrative Agent") and
Arranger, and the Lenders from time to time party thereto. Terms defined in the
Credit Agreement and not otherwise defined herein are used herein with the
meanings given those terms in the Credit Agreement. This Note is one of the PIK
Interest Notes and Notes referred to in the Credit Agreement, and any holder
hereof is entitled to all of the rights, remedies, benefits and privileges
provided for in the Credit Agreement as originally executed or as it may from
time to time be supplemented, modified or amended. The Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof, and
the optional and mandatory prepayment in whole or in part hereof, upon the
happening of certain stated events upon the terms and conditions therein
specified.
This Note has been issued to evidence interest paid in kind under the
Credit Agreement, and all amounts due hereunder shall be treated as additional
amounts of principal due in respect of the Loans of the Lender.
This Note is secured by Collateral and Pledged Collateral as more fully
set forth in the Security Documents.
The outstanding principal indebtedness evidenced by this Note shall be
payable as provided in the Credit Agreement and in any event on the Maturity
Date.
Interest shall be payable hereunder on the outstanding daily unpaid
principal amount hereof, and, to the extent permitted by applicable law, on any
unpaid interest payable hereon, from the Increase Date for such PIK Interest,
shall accrue at the rate of 12% per annum and shall be payable dates set forth
in the Credit Agreement until each such amount of principal and interest is paid
in full (both before and after judgment).
The amount of each payment due hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office for the account of the
Lender in immediately available funds not later than 12:00 noon (New York City
time) on the day the payment is due. All payments received after 12:00 noon (New
York City time) on any particular Business Day shall be deemed received on the
next succeeding Business Day. All payments shall be made in lawful money of the
United States of America, provided however, that interest hereon may be paid in
the form of PIK Interest Notes in the circumstances permitted in the Credit
Agreement.
The holder of this Note is authorized to record the date and amount of
each of its Loans consisting of PIK Interest added to the principal hereof and
the date and amount of each payment or prepayment of principal thereof on the
schedules annexed hereto and made a part hereof, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded
absent manifest error; provided that the failure of the holder to make such
recordation (or any error in such recordation) shall not affect the obligations
of the Borrower hereunder or under the Credit Agreement.
The undersigned hereby promises to pay all reasonable costs and
expenses of any rightful holder hereof incurred in collecting the undersigned's
obligations hereunder or in enforcing or attempting to enforce any of such
holder's rights hereunder, including reasonable attorneys' fees and
disbursements as contemplated in the Credit Agreement, whether or not an action
is filed in connection therewith.
Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts remaining unpaid on this Note
shall become, or may be declared to be, immediately due and payable all as
provided therein.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand for payment, dishonor, notice of dishonor, protest, notice
of protest and (except to the extent expressly required in the Credit Agreement)
any other notice or formality, to the fullest extent permitted by applicable
laws.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).
ASCENT ASSURANCE, INC.
By:
---------------------------------------
Name:
Title:
Schedule
to Note
LOANS AND
PAYMENTS
================= =========================== =========================== ====================== ==============
Date* Amount of PIK Interest
Increase to Outstanding Amount of Principal Unpaid Amount of Notation
Note Principal Repaid or Prepaid Principal Made by
----------------- --------------------------- --------------------------- ---------------------- --------------
----------------- --------------------------- --------------------------- ---------------------- --------------
----------------- --------------------------- --------------------------- ---------------------- --------------
----------------- --------------------------- --------------------------- ---------------------- --------------
----------------- --------------------------- --------------------------- ---------------------- --------------
================= =========================== =========================== ====================== ==============
EXHIBIT B
TO CREDIT
AGREEMENT
FORM OF NOTICE OF BORROWING
To: Credit Suisse First Boston Management Corporation, as Administrative Agent
under the Credit Agreement dated as of April 17, 2001 among Ascent
Assurance, Inc., a Delaware corporation (the "Borrower"), the Lenders party
thereto, the Administrative Agent and the Arranger thereunder (as amended
from time to time, the "Credit Agreement").
Pursuant to Section 2.3 of the Credit Agreement, this Notice of Borrowing
("Notice") represents the request of Borrower to borrow on [ , ] (the "Borrowing
Date")1 from the Lenders the principal amount of [$ ] in Loans to be used for
the Borrower's [contribution of capital to] [purchase of surplus notes of] its
Insurance Subsidiary, [name] (the "Subsidiary") as contemplated in the
arrangements approved by the Lenders and the Administrative Agent on [ ].
Proceeds of such Loans are to be wire-transferred in accordance with the
following wire instructions, which is the account of the Subsidiary to which the
Borrower is required to deposit [that capital contribution] [the purchase price
for those surplus notes]:
[The Commitment on the Borrowing Date is $ .]
The undersigned hereby certifies that, as of the Borrowing Date, all the
applicable conditions contained in [Sections 4.1 and 4.2]2 [Section 4.2]3 of the
Credit Agreement have been satisfied (or waived pursuant to Section 9.1 of the
Credit Agreement).
Unless otherwise defined herein, terms defined in the Credit Agreement have
the same meanings in this Notice.
Dated this ___ day of _______, ___.
ASCENT ASSURANCE, INC.
By:
-------------------------------------
Name:
Title:
EXHIBIT C
TO CREDIT
AGREEMENT
FORM OF CLOSING CERTIFICATE
[ASCENT ASSURANCE, INC.]
[NAME OF RELEVANT SUBSIDIARY]*
Pursuant to Section 4.1(g) of the Credit Agreement dated as of April 17,
2001 among Ascent Assurance, Inc., a Delaware corporation, the several Lender
parties thereto from time to time parties thereto, and Credit Suisse First
Boston Management Corporation, as Administrative Agent and Arranger (the "Credit
Agreement"), the undersigned (the "Company") hereby certifies as follows (using
capitalized terms that are not otherwise defined herein with the meanings given
to them in the Credit Agreement):
1. The representations and warranties of the Company set forth in each of
the Loan Documents to which it is a party, or which are contained in any
certificate, document or financial or other statement furnished by it pursuant
to or in connection therewith or any such other document are true and correct in
all material respects on and as of the date hereof with the same effect as if
made on and as of the date hereof.
2. The Company has received all documents and instruments, including all
consents, authorizations and filings, required or advisable under any
Requirement of Law or Contractual Obligation of the Company in connection with
the execution, delivery, performance, validity and enforceability of the Loan
Documents to which it is a party except as expressly set forth in each document.
Attached hereto are copies of all consents, authorizations and filings referred
to in [ ]**, which consents, authorizations and filings are in full force and
effect as of the date hereof.
3. No Default or Event of Default has occurred and is continuing as of the
date hereof or after giving effect to the making of the Loans on the date
hereof.
4. There are no liquidation or dissolution proceedings pending or, to the
Borrower's knowledge, threatened against the Borrower, nor has any other event
occurred affecting or threatening the existence of the Borrower.
IN WITNESS WHEREOF, the undersigned has hereunto set his name.
[ASCENT ASSURANCE, INC.]
[NAME OF SUBSIDIARY]
By:
---------------------------------------
Name:
Title:
Date: , 2001
---------------------
EXHIBIT D
TO CREDIT
AGREEMENT
FORM OF COMMITMENT TRANSFER SUPPLEMENT
COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in Item 1 of
Schedule I hereto, among the Transferor Lender identified in Item 2 of Schedule
I hereto (the "Transferor Lender"), each Purchasing Lender identified in Item 3
of Schedule I hereto (each, a "Purchasing Lender"), and Credit Suisse First
Boston Management Corporation, as Administrative Agent for the Lenders under the
Credit Agreement described below (in such capacity, the "Administrative Agent
").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with Section 9.6(c) of the Credit Agreement, dated as of
April 17, 2001, among Ascent Assurance, Inc., a Delaware corporation (the
"Borrower"), the Transferor Lender identified below and the other Lenders party
thereto, Credit Suisse First Boston Management Corporation, as Administrative
Agent and Arranger (as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof, the "Credit Agreement");
WHEREAS, each Purchasing Lender (if it is not already a Lender party to the
Credit Agreement) wishes to become a Lender party to the Credit Agreement; and
WHEREAS, the Transferor Lender is selling and assigning to each Purchasing
Lender its rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows (using
capitalized terms that are not otherwise defined herein with the meanings given
to them in the Credit Agreement):
1. Upon receipt by the Administrative Agent of (i) a counterpart of
this Commitment Transfer Supplement, to which is attached a fully completed
Schedule I and Schedule II, and which has been executed by the Transferor
Lender, each Purchasing Lender and any other person required by the Credit
Agreement to consent to the transfer evidenced by this Commitment Transfer
Supplement, and (ii) the processing fee referred to in Section 9.6(e) of
the Credit Agreement, the Administrative Agent will transmit to the
Borrower, the Transferor Lender and each Purchasing Lender, a Transfer
Effective Notice, substantially in the form of Schedule III to this
Commitment Transfer Supplement (a "Transfer Effective Notice"). That
Transfer Effective Notice shall set forth, inter alia, the date on which
the transfer effected by this Commitment Transfer Supplement shall become
effective (the "Transfer Effective Date"), which date shall be the fifth
Business Day following the date of such Transfer Effective Notice. From and
after the Transfer Effective Date, each Purchasing Lender shall be a Lender
party to the Credit Agreement for all purposes thereof.
2. At or before 12:00 noon, local time for the Transferor Lender on
the Transfer Effective Date, each Purchasing Lender shall pay to the
Transferor Lender, in immediately available funds, an amount equal to the
purchase price, as agreed between the Transferor Lender and that Purchasing
Lender (the "Purchase Price"), of the portion being purchased by that
Purchasing Lender (that Purchasing Lender's "Purchased Percentage") of the
outstanding Loans and other amounts owing to the Transferor Lender under
the Credit Agreement and its Note(s). Effective upon receipt by the
Transferor Lender of the Purchase Price from a Purchasing Lender, the
Transferor Lender hereby irrevocably sells, assigns and transfers to that
Purchasing Lender, without recourse, representation or warranty, and each
Purchasing Lender hereby irrevocably purchases, takes and assumes from the
Transferor Lender, that Purchasing Lender's Purchased Percentage of the
Commitments and the presently outstanding Loans and other amounts owing to
the Transferor Lender under the Credit Agreement and its Note(s) together
with all instruments, documents and collateral security pertaining thereto.
3. The Transferor Lender has made arrangements with each Purchasing
Lender with respect to (i) the portion, if any, to be paid, and the date or
dates for payment, by the Transferor Lender to that Purchasing Lender of
any fees heretofore received by the Transferor Lender pursuant to the
Credit Agreement prior to the Transfer Effective Date and (ii) the portion,
if any, to be paid, and the date or dates for payment, by such Purchasing
Lender to the Transferor Lender of fees or interest received by such
Purchasing Lender pursuant to the Credit Agreement from and after the
Transfer Effective Date.
4. (a) All principal payments that would otherwise be payable from and
after the Transfer Effective Date to or for the account of the Transferor
Lender pursuant to the Credit Agreement and its Note(s) shall, instead, be
payable to or for the account of the Transferor Lender and the Purchasing
Lenders, as the case may be, in accordance with their respective interests
as reflected in this Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise accrue
for the account of the Transferor Lender from and after the Transfer
Effective Date pursuant to the Credit Agreement and its Note(s) shall,
instead, accrue for the account of, and be payable to, the Transferor
Lender and the Purchasing Lenders, as the case may be, in accordance with
their respective interests as reflected in this Commitment Transfer
Supplement. In the event that any amount of interest, fees or other amounts
accruing prior to the Transfer Effective Date was included in the Purchase
Price paid by any Purchasing Lender, the Transferor Lender and each
Purchasing Lender will make appropriate arrangements for payment by the
Transferor Lender to that Purchasing Lender of the relevant amount upon
receipt thereof from the Borrower.
5. On or prior to the Transfer Effective Date, the Transferor Lender
will deliver to the Administrative Agent its Note(s). On or prior to the
Transfer Effective Date, the Borrower will deliver to the Administrative
Agent a new Note or Notes of the Borrower for each Purchasing Lender and
(if the Transferor Lender shall, after giving effect to the transfer
effected by this Commitment Transfer Supplement, remain a Lender party to
the Credit Agreement) the Transferor Lender, in each case in principal
amounts reflecting, in accordance with the Credit Agreement, their
Commitments as adjusted pursuant to this Commitment Transfer Supplement.
Each new Note shall be dated the Closing Date. Promptly after the Transfer
Effective Date, the Administrative Agent will send to each of the
Transferor Lender and the Purchasing Lender its new Note(s) and will send
to the Borrower the superseded Note(s) of the Transferor Lender, marked
"cancelled."
6. Concurrently with the execution and delivery hereof, the Transferor
Lender will provide to each Purchasing Lender (if it is not already a
Lender party to the Credit Agreement) conformed copies of all documents
delivered to that Transferor Lender on the Closing Date or any other
Borrowing Date prior to the date of this Commitment Transfer Supplement in
satisfaction of the conditions precedent set forth in the Credit Agreement.
7. Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as that other party may reasonably request in order
to effect the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer Supplement,
the Transferor Lender and each Purchasing Lender confirm to and agree with
each other and the Administrative Agent and the Lenders as follows: (i)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned hereby free and clear of
any adverse claim, the Transferor Lender 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, the Note(s) or
any other instrument or document furnished pursuant thereto; (ii) the
Transferor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or
any of its Subsidiaries or the performance or observance by the Borrower of
any of its obligations under the Credit Agreement, the Note(s), the Pledge
Agreement or any other instrument or document furnished pursuant hereto;
(iii) each Purchasing Lender confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred
to in Section 3.1 of the Credit Agreement, the financial statements
delivered pursuant to Section 5.1 of the Credit Agreement, if any, and such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Commitment Transfer
Supplement; (iv) each Purchasing Lender will, independently and without
reliance upon the Administrative Agent, the Transferor Lender or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (v) each Purchasing
Lender appoints and authorizes the Administrative Agent to take such action
as Administrative Agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, all in accordance with Section 9.6 of the
Credit Agreement; and (vi) each Purchasing Lender will perform in
accordance with their terms all the obligations which, by the terms of the
Credit Agreement, are required to be performed by it as a Lender.
9. Schedule II hereto sets forth the revised Commitment and Commitment
Percentage of the Transferor Lender and each Purchasing Lender as well as
administrative information with respect to each Purchasing Lender.
10. By executing and delivering this Commitment Transfer Supplement,
each Purchasing Lender acknowledges that its claims on account of amounts
payable in respect of the Loans under the Credit Agreement and the other
Loan Documents are subordinate to the terms and conditions of the
Intercreditor Agreement on the terms provided therein.
11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer
Supplement to be executed by their respective duly authorized officers on
Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
SCHEDULE I
TO COMMITMENT
TRANSFER
SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Item 1 (Date of Commitment
Transfer Supplement):
Item 2 (Transferor Lender):
Item 3 (Purchasing Lender):
Item 4 (Signatures of Parties
to Commitment Transfer
Supplement):
---------------------, as
Transferor Lender
By:
---------------------
Name:
Title:
--------------------, as
Purchasing Lender
By:
----------------------
Name:
Title:
The undersigned consents to the transfer hereunder in favor of the Purchasing
Lender(s) specified herein:
ASCENT ASSURANCE, INC.,
as Borrower
By:
---------------------------------------
Name:
Title:
ACCEPTED FOR RECORDATION
IN REGISTER:
CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION,
as Administrative Agent
By:
---------------------------------------
Name:
Title:
SCHEDULE II
TO COMMITMENT
TRANSFER
SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor
Lender]
Revised Commitment Amount: $
---------------------
Revised Commitment Percentage: %
---------------------
[Name of Purchasing Lender]
New Commitment Amount: $
---------------------
New Commitment Percentage: %
--------------------
Address for Notices:
-------------------
[Address]
Attention:
------------------------
Telephone:
------------------------
Telecopy:
-------------------------
Telephone
Confirmation:
-----------------------
Lending Office:
----------------------------------
----------------------------------
----------------------------------
SCHEDULE III
TO COMMITMENT
TRANSFER
SUPPLEMENT
Form of Transfer Effective Notice
To: Ascent Assurance, Inc., [Transferor Lender and each Purchasing Lender]
The undersigned, as Administrative Agent under the Credit Agreement, dated
as of April 17, 2001 among Ascent Assurance, Inc., a Delaware corporation (the
"Borrower"), the Lenders party thereto from time to time, and Credit Suisse
First Boston Management Corporation, as Administrative Agent and Arranger,
acknowledges receipt of an executed counterpart of a completed Commitment
Transfer Supplement. Terms defined in that Commitment Transfer Supplement are
used herein as therein defined.
1. Pursuant to such Commitment Transfer Supplement, you are advised that
the Transfer Effective Date will be _____________, ______ [insert fifth Business
Day following date of Transfer Effective Notice].
2. Pursuant to such Commitment Transfer Supplement, the Transferor Lender
is required to deliver to the Administrative Agent on or before the Transfer
Effective Date its Notes.
3. Pursuant to such Commitment Transfer Supplement, the Borrower is
required to deliver to the Administrative Agent on or before the Transfer
Effective Date the following Notes, each dated the Closing Date:
[Describe each new Note for Transferor Lender and Purchasing Lender as to
principal amount and payee.]
4. Pursuant to that Commitment Transfer Supplement, each Purchasing Lender
is required to pay its Purchase Price to the Transferor Lender at or before
12:00 noon on the Transfer Effective Date in immediately available funds.
Very truly yours,
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION, as
Administrative Agent
By:
------------------------
Name:
Title:
EXHIBIT E
TO CREDIT
AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
ASCENT ASSURANCE, INC.
Pursuant to Section 4.1(j) of the Credit Agreement dated as of April 17,
2001 among Ascent Assurance, Inc., a Delaware corporation (the "Borrower"), the
several Lenders from time to time parties thereto (the "Lenders") and Credit
Suisse First Boston Management Corporation, as Administrative Agent and Arranger
(the "Credit Agreement"), the undersigned hereby certifies that [he/she] is a
Responsible Officer of the Borrower and further certifies as follows (using
capitalized terms that are not defined in this Certificate with the meanings
given to them in the Credit Agreement):
1. No Default or Event of Default has occurred and is continuing as of
the date hereof[, except as set forth in this Certificate].
2. As of ________ (the "Computation Date"), the Consolidated GAAP Net
Worth of the Borrower was $ ___________, ---------------- as computed on
Attachment 1 hereto.
3. The consolidated Funded Debt Ratio of the Borrower and its
Subsidiaries for the fiscal quarter ended most recently before the
Computation Date was ______% as computed on Attachment 2 hereto.
4. As of the Computation Date, the RBC Ratio of each Insurance
Subsidiary other than National Financial Insurance Company or Pacific
Casualty Company, Inc. is not less than 105%.
5. As of the Computation Date, the Statutory Capital and Surplus of
each Insurance Subsidiary (shown on Attachment 5 hereto) as of the last day
of the fiscal quarter ended most recently before the Computation Date is
not less than the Minimum Statutory Surplus Requirement for that Insurance
Subsidiary, as specified in Exhibit G (as shown on Attachment 5 hereto).
IN WITNESS WHEREOF, the undersigned has hereunto set his name on this
___ day of ________, ___.
ASCENT ASSURANCE, INC.
By:
------------------------------
Name:
Title:
ATTACHMENT 1
CONSOLIDATED GAAP NET WORTH
1. The Capital Stock and additional
paid-in capital of the Borrower and its
Subsidiaries on a consolidated basis plus $
----------------
2. The amount of retained earnings, inclusive
of deferred revenues, or, in the case of a
deficit, minus the deficit, minus $
----------------
3. The treasury stock, plus or minus $
----------------
4. Any other account which is customarily
added or deducted in determining shareholders'
equity (without giving effect to any increase
or decrease to Consolidated GAAP Net Worth
attributable to the application of SFAS No. 115,
130 or 133) $
-----------------
5. Consolidated GAAP Net Worth of the Borrower
(The sum of Item 1, Item 2, Item 3 and Item 4) $___________
6. Covenant Requirement: Consolidated GAAP Net Worth of the Borrower
(line 5) shall be an amount greater than or equal to the amount shown
in Item 6(v) below:
(i) $31,000,000
(ii) Any cumulative positive Net Income
of the Borrower and its Subsidiaries
for each fiscal quarter following the
fiscal quarter ended December 31, 2000 $ ___________
(iii) 50% of Item 6(ii) $ ___________
(iv) Deferred revenues as of the end of the
most recent fiscal quarter $ ___________
(v) Required Consolidated GAAP Net Worth
of the Borrower (The sum of Item 6(i),
Item 6(iii), and Item 6(iv)) $ ___________
ATTACHMENT 2
FUNDED DEBT RATIO
1. Funded Debt: (Item 8 column A of Attachment 4) $
-----------------
2. Total Capital (Item 4 of Attachment 3) $
-----------------
3. Funded Debt Ratio (Item 1 divided by Item 2) _____%
4. Covenant Requirement: Funded Debt Ratio shall not be greater than 0.65
to 1
ATTACHMENT 3
TOTAL CAPITAL
1. Funded Debt (Item 4 of Attachment 3) plus $
-----------------
2. Stockholders' equity plus $
-----------------
3. Preferred stock, preference stock and
preferred securities of the Borrower
and its Consolidated Subsidiaries $
-----------------
4. Total Capital (sum of Item 1, Item 2 and Item 3) $
-----------------
ATTACHMENT 4
INDEBTEDNESS4
--------------------------------------- ---------------------- ---------------------- --------------------
A. Long-Term B. Short-Term C. Total
Indebtedness5 ($) Indebtedness ($) Indebtedness ($)
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
1. Indebtedness for borrowed
money or for the deferred
purchase price of property or
services (other than current
trade liabilities incurred in
the ordinary course of business
and payable in accordance with
customary practices)
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
2. To the extent not included
above, indebtedness evidenced by
a note, bond, debenture or
similar instrument
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
3. Capital Lease Obligations
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
4. Reimbursement obligations
under outstanding letters of
credit and other obligations
under acceptances and similar
obligations
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
5. To the extent not included
above, liabilities secured by
any Lien on owned property even
if not assumed or otherwise
liable for payment
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
6. To the extent not included
above, liabilities arising under
the Hedging Agreements (other
than interest rate caps)
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
7. To the extent not included
above, Guaranties
--------------------------------------- ---------------------- ---------------------- --------------------
--------------------------------------- ---------------------- ---------------------- --------------------
8. Total Indebtedness (sum of
Item 1, Item 2, Item 3, Item 4,
Item 5, Item 6, and Item 7)
--------------------------------------- ---------------------- ---------------------- --------------------
ATTACHMENT 5
MINIMUM STATUTORY CAPITAL AND SURPLUS REQUIREMENT
-------------------------------------------------
-------------------------------------------------------------- -----------------------------------------
B. Minimum Statutory Surplus
Requirement for that Insurance
Subsidiary, as specified in Exhibit G
A. Insurance Subsidiary to the Credit Agreement
-------------------------------------------------------------- -----------------------------------------
-------------------------------------------------------------- -----------------------------------------
1. National Foundation Life Insurance Company $5.2 million
-------------------------------------------------------------- -----------------------------------------
-------------------------------------------------------------- -----------------------------------------
2. National Financial Insurance Company $1.4 million
-------------------------------------------------------------- -----------------------------------------
-------------------------------------------------------------- -----------------------------------------
3. American Insurance Company of Texas, Inc. $1.4 million
-------------------------------------------------------------- -----------------------------------------
-------------------------------------------------------------- -----------------------------------------
4. Freedom Life Insurance Company of America $7.5 million
-------------------------------------------------------------- -----------------------------------------
-------------------------------------------------------------- -----------------------------------------
5.
-------------------------------------------------------------- -----------------------------------------
-------------------------------------------------------------- -----------------------------------------
6.
-------------------------------------------------------------- -----------------------------------------
-------------------------------------------------------------- -----------------------------------------
7.
-------------------------------------------------------------- -----------------------------------------
EXHIBIT F
TO CREDIT
AGREEMENT
FORM OF PLEDGE AGREEMENT
[Following this page]
EXHIBIT G
TO CREDIT
AGREEMENT
MINIMUM STATUTORY SURPLUS REQUIREMENT
-------------------------------------------------------------- -----------------------------------------
B. Minimum Statutory Surplus
Requirement for that Insurance
Subsidiary, as specified in Exhibit G
A. Insurance Subsidiary to the Credit Agreement
-------------------------------------------------------------- -----------------------------------------
1. National Foundation Life Insurance Company $5.2 million
-------------------------------------------------------------- -----------------------------------------
2. National Financial Insurance Company $1.4 million
-------------------------------------------------------------- -----------------------------------------
3. American Insurance Company of Texas, Inc. $1.4 million
-------------------------------------------------------------- -----------------------------------------
4. Freedom Life Insurance Company of America $7.5 million
-------------------------------------------------------------- -----------------------------------------
5.
-------------------------------------------------------------- -----------------------------------------
6.
-------------------------------------------------------------- -----------------------------------------
7.
-------------------------------------------------------------- -----------------------------------------
EXHIBIT H
TO CREDIT
AGREEMENT
REPORTS AND OTHER INFORMATION
REQUIRED BY SECTION 5.2(e)
[Format attached behind this page]
Monthly Management Report
Freedom Life Insurance Company of America
[Month and Year]
EXHIBIT I
TO CREDIT
AGREEMENT
FORM OF GUARANTY AND SECURITY AGREEMENT
[Following this page]
