EXECUTION COPY
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$7,000,000
CREDIT AGREEMENT
AMONG
AMERICAN COUNTRY HOLDINGS INC.,
as Borrower,
THE LENDERS NAMED HEREIN
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
DATED AS OF
July 29, 1997
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS.............................................................. 1
ARTICLE II
THE CREDITS.............................................................. 14
2.1. Advances...................................................... 14
2.2. Ratable Loans................................................. 15
2.3. Types of Advances............................................. 15
2.4. Commitment Fee; Reductions in Aggregate Commitment............ 15
2.5. Minimum Amount of Each Advance................................ 16
2.6. Optional Principal Payments................................... 16
2.7. Mandatory Commitment Reductions............................... 16
2.8. Method of Selecting Types and Interest Periods for
New Advances.................................................. 17
2.9. Conversion and Continuation of Outstanding Advances........... 17
2.10. Interest Rate; Changes in Interest Rate, etc. ................ 18
2.11. Rates Applicable After Default................................ 18
2.12. Method of Payment............................................. 18
2.13. Notes; Notices................................................ 18
2.14. Interest Payment Dates; Interest and Fee Basis................ 19
2.15. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions..................................... 19
2.16. Lending Installations......................................... 19
2.17. Non-Receipt of Funds by the Agent............................. 19
2.18. Taxes......................................................... 20
2.19. Agent's Fees.................................................. 21
2.20. Mandatory Prepayment in the Event of a Change in Control...... 21
ARTICLE III
CHANGE IN CIRCUMSTANCES.................................................. 21
3.1. Yield Protection.............................................. 21
3.2. Changes in Capital Adequacy Regulations....................... 22
3.3. Availability of Eurodollar Advances........................... 23
3.4. Funding Indemnification....................................... 23
3.5. Lender Statements; Survival of Indemnity...................... 23
ARTICLE IV
CONDITIONS PRECEDENT..................................................... 23
4.1. Initial Loans................................................. 23
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4.2. Each Future Advance........................................... 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES........................................... 27
5.1. Corporate Existence and Standing.............................. 27
5.2. Authorization and Validity.................................... 27
5.3. Compliance with Laws and Contracts............................ 27
5.4. Governmental Consents......................................... 28
5.5. Financial Statements.......................................... 28
5.6. Material Adverse Change....................................... 29
5.7. Taxes......................................................... 29
5.8. Litigation.................................................... 29
5.9. Capitalization................................................ 29
5.10. ERISA......................................................... 30
5.11. Defaults...................................................... 30
5.12. Federal Reserve Regulations................................... 30
5.13. Investment Company............................................ 31
5.14. Certain Fees.................................................. 31
5.15. Solvency...................................................... 31
5.16. Ownership of Properties....................................... 31
5.17. Indebtedness.................................................. 31
5.18. Employee Controversies........................................ 32
5.19. Material Agreements........................................... 32
5.20. Acquisition Documents......................................... 32
5.21. Environmental Laws............................................ 32
5.22. Insurance..................................................... 33
5.23. Insurance Licenses............................................ 33
5.24. Reinsurance................................................... 33
5.25. Reserves...................................................... 33
5.26. Disclosure.................................................... 34
ARTICLE VI
COVENANTS................................................................ 34
6.1. Financial Reporting........................................... 34
6.2. Use of Proceeds............................................... 37
6.3. Notice of Default............................................. 37
6.4. Conduct of Business........................................... 37
6.5. Taxes......................................................... 38
6.6. Insurance..................................................... 38
6.7. Compliance with Laws.......................................... 38
6.8. Maintenance of Properties..................................... 38
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6.9. Inspection.................................................... 38
6.10. Dividends..................................................... 38
6.11. Indebtedness.................................................. 39
6.12. Merger........................................................ 39
6.13. Sale of Assets................................................ 39
6.14. Sale of Accounts.............................................. 40
6.15. Sale and Leaseback............................................ 40
6.16. Investments and Purchases..................................... 40
6.17. Contingent Obligations........................................ 41
6.18. Liens......................................................... 41
6.19. Capital Expenditures.......................................... 42
6.20. Lease Rentals................................................. 42
6.21. Affiliates.................................................... 42
6.22. Amendments to Agreements...................................... 42
6.23. Other Indebtedness............................................ 42
6.24. Environmental Matters......................................... 42
6.25. Change in Corporate Structure; Fiscal Year.................... 42
6.26. Inconsistent Agreements....................................... 43
6.27. Financial Covenants........................................... 43
6.27.1. Minimum Shareholders' Equity.......................... 43
6.27.2. Cash Flow Coverage Ratio............................. 43
6.27.3. Debt to Capitalization Ratio......................... 43
6.27.4. Operating Leverage Ratio............................. 43
6.27.5. ACF Net Worth........................................ 43
6.28. Tax Consolidation............................................. 43
6.29. ERISA Compliance.............................................. 44
6.30. Reinsurance................................................... 44
ARTICLE VII
DEFAULTS................................................................. 44
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES........................... 47
8.1. Acceleration.................................................. 47
8.2. Amendments.................................................... 47
8.3. Preservation of Rights........................................ 48
ARTICLE IX
GENERAL PROVISIONS....................................................... 48
9.1. Survival of Representations................................... 48
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9.2. Governmental Regulation....................................... 48
9.3. Taxes......................................................... 48
9.4. Headings...................................................... 48
9.5. Entire Agreement.............................................. 48
9.6. Several Obligations; Benefits of this Agreement............... 48
9.7. Expenses; Indemnification..................................... 49
9.8. Numbers of Documents.......................................... 49
9.9. Accounting.................................................... 49
9.10. Severability of Provisions.................................... 49
9.11. Nonliability of Lenders....................................... 49
9.12. CHOICE OF LAW................................................. 50
9.13. CONSENT TO JURISDICTION....................................... 50
9.14. WAIVER OF JURY TRIAL.......................................... 50
9.15. Disclosure.................................................... 51
9.16. Counterparts.................................................. 51
ARTICLE X
THE AGENT................................................................ 51
10.1. Appointment................................................... 51
10.2. Powers........................................................ 51
10.3. General Immunity.............................................. 51
10.4. No Responsibility for Loans, Recitals, etc.................... 51
10.5. Action on Instructions of Lenders............................. 52
10.6. Employment of Agents and Counsel.............................. 52
10.7. Reliance on Documents; Counsel................................ 52
10.8. Agent's Reimbursement and Indemnification..................... 52
10.9. Notice of Default............................................. 53
10.10. Rights as a Lender............................................ 53
10.11. Lender Credit Decision........................................ 53
10.12. Successor Agent............................................... 53
ARTICLE XI
SETOFF; RATABLE PAYMENTS................................................. 54
11.1. Setoff........................................................ 54
11.2. Ratable Payments.............................................. 54
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS........................ 54
12.1. Successors and Assigns........................................ 54
12.2. Participations................................................ 55
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12.2.1. Permitted Participants; Effect. ..................... 55
12.2.2. Voting Rights........................................ 55
12.2.3. Benefit of Setoff.................................... 55
12.3. Assignments................................................... 55
12.3.1. Permitted Assignments................................ 55
12.3.2. Effect; Effective Date............................... 56
12.4. Dissemination of Information.................................. 56
12.5. Confidentiality............................................... 56
12.6. Tax Treatment................................................. 57
ARTICLE XIII
NOTICES.................................................................. 57
13.1. Giving Notice................................................. 57
13.2. Change of Address............................................. 57
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EXHIBITS
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Exhibit A (Article 1) Note
Exhibit B (Section 6.1(h)) Compliance Certificate
Exhibit C (Section 12.3.1) Assignment Agreement
SCHEDULES
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Schedule 5.3 - Approvals and Consents
Schedule 5.4 - Governmental Consents
Schedule 5.5 - Borrower Consolidated Pro Forma
Schedule 5.8 - Litigation
Schedule 5.9 - Capitalization
Schedule 5.10 - ERISA
Schedule 5.14 - Brokers' Fees
Schedule 5.16 - Owned and Leased Properties
Schedule 5.17 - Indebtedness
Schedule 5.21 - Environmental
Schedule 5.23 - Insurance Licenses
Schedule 5.24 - Reinsurance Agreements
Schedule 5.25 - Reserves
Schedule 6.16 - Investments
Schedule 6.18 - Liens
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CREDIT AGREEMENT
This Credit Agreement, dated as of July 29, 1997, is among AMERICAN COUNTRY
HOLDINGS INC., a Delaware corporation, the Lenders and THE FIRST NATIONAL BANK
OF CHICAGO, individually and as Agent.
R E C I T A L S:
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A. The Borrower has requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $7,000,000, the
proceeds of which the Borrower will use (a) in part to finance the cash payment
to be made pursuant to the Purchase Agreement, and (b) for the general corporate
needs of the Borrower and its subsidiaries; and
B. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement:
"ACF" means American Country Financial Services Corp., an Illinois
corporation (formerly, New American Country Financial Services Corp.).
"ACI" means American Country Insurance Company, an Illinois insurance
company (formerly, New American Country Insurance Company).
"Acquisition" means (a) the acquisition by ACI of substantially all of the
assets of Old ACI, and (b) the acquisition by ACF of substantially all of the
assets of Old ACF, in each case pursuant to the Purchase Agreement.
"Acquisition Documents" means the Purchase Agreement and the other
documents, certificates and agreements delivered in connection with the
Acquisition.
"Advance" means a borrowing pursuant to Section 2.1 consisting of the
aggregate amount of the several Loans made on the same Borrowing Date by the
Lenders to the Borrower of the same Type and, in the case of Eurodollar
Advances, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person
if the controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.
"Agent" means First Chicago in its capacity as agent for the Lenders
pursuant to Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders hereunder. The initial Aggregate Commitment is $7,000,000.
"Agreement" means this Credit Agreement, as it may be amended, modified or
restated and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
those used in preparing the Financial Statements referred to in Section
5.5(a)(i) through (iv); provided, however, that for purposes of all computations
required to be made with respect to compliance by the Borrower with Section
6.27, such term shall mean generally accepted accounting principles as in effect
on the date hereof, applied in a manner consistent with those used in preparing
the Financial Statements referred to in Section 5.5(a)(i) through (iv).
"Annual Statement" means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority)
to be used for filing annual statutory financial statements and shall contain
the type of information permitted by such insurance commissioner (or such
similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Asset Disposition" means any sale, transfer or other disposition of any
asset of the Borrower or any Subsidiary in a single transaction or in a series
of related transactions (other than the sale of Investments in the ordinary
course of business by Insurance Subsidiaries).
"Authorized Officer" means any of the president or secretary of the
Borrower or, while he shall remain a director of the Borrower, Xxxxxxx X.
Xxxxxxx, acting singly.
"Bankruptcy Code" means Xxxxx 00, Xxxxxx Xxxxxx Code, sections 1 et seq.,
as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.
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"Borrower" means American Country Holdings Inc., a Delaware corporation,
and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago for the conduct of substantially all
of their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities.
"Capital Expenditures" means, without duplication, any expenditures for any
purchase or other acquisition for value of any asset that is classified on a
consolidated balance sheet of the Borrower with the Subsidiaries prepared in
accordance with Agreement Accounting Principles as a fixed or capital asset
excluding (a) expenditures of insurance proceeds to rebuild or replace any asset
after a casualty loss, and (b) leasehold improvement expenditures for which the
Borrower or a Subsidiary is reimbursed promptly by the lessor.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalents" means Investments maturing within one year from the date
of investment in (a) certificates of deposit, Eurodollar time deposits, other
interest-bearing deposits or accounts and repurchase agreements with high
quality United States commercial banks having a combined capital and surplus of
at least $500,000,000, (b) certificates of deposit, other interest-bearing
accounts or deposits and demand deposits with other United States commercial
banks, which deposits and accounts are in amounts fully insured by the Federal
Deposit Insurance Corporation, (c) obligations issued or unconditionally
guaranteed by the United States government or issued by an agency thereof, (d)
direct obligations issued by any state of the United States or any political
subdivision thereof which have the highest short-term rating obtainable from
Standard & Poor's Rating Group or Xxxxx'x Investors Services, Inc. on the date
of determination, (e) commercial paper rated A-1 or better by Standard & Poor's
Ratings Group or P-1 or better by Xxxxx'x Investors Services, Inc. or (f) money
market mutual funds investing in Investments of the types described in clause
(a) through (e).
"Cash Flow Coverage Ratio" means for any applicable computation period the
ratio of (a) the sum of (i) the greater of (A) the aggregate Statutory Net
Income of the Insurance Subsidiaries
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(without double counting) for the period of four Fiscal Quarters ending on the
date of determination and (B) 10% of the aggregate Statutory Capital and Surplus
of the Insurance Subsidiaries (without double counting) as of the date of
determination, if such date is the last day of a Fiscal Year, or as of the last
day of the immediately preceding Fiscal Year, if otherwise, and (ii) the Net
Income of ACF for the period of four Fiscal Quarters ending on the date of
determination, to (b) the sum of (i) the cash interest paid by the Borrower and
its Subsidiaries on a consolidated basis in respect of aggregate Indebtedness
for the period of four Fiscal Quarters ending on the date of determination, and
(ii) the aggregate principal payments due and mandatory commitment reductions
required in respect of all Indebtedness of the Borrower and its Subsidiaries, on
a consolidated basis, for the period of four Fiscal Quarters immediately
following the date of determination. For the purpose of calculating the Cash
Flow Coverage Ratio, Net Income and Statutory Net Income shall be adjusted by
deducting therefrom any amount which may not be paid by dividend or otherwise
advanced to the Borrower.
"Change" is defined in Section 3.2.
"Change in Control" means (a) Xxxxxx X. Xxxxxx, Xx., Xxxxxx X. Xxxxxxx and
Frontier Insurance Group, Inc. shall collectively cease to own beneficially and
of record, free and clear of all Liens, other encumbrances, or voting
agreements, restrictions or trusts of any kind at least 51% of the outstanding
shares of voting capital stock of the Borrower on a fully diluted basis, (b)
either Xxxxxx X. Xxxxxxx or Frontier Insurance Group, Inc. shall cease to own
beneficially and of record, free and clear of all Liens, other encumbrances, or
voting agreements, restrictions or trusts of any kind at least 15% of the
outstanding shares of voting capital stock of the Borrower on a fully diluted
basis, (c) any other Person or group of related Persons for purposes of Section
13(d) of the Securities Exchange Act of 1934 shall own or control the voting of
20% or more of the outstanding shares of voting stock of the Borrower, (d)
during any period of 25 consecutive calendar months, commencing on the date of
this Agreement, the ceasing of those individuals (the "Continuing Directors")
who (i) were directors of the Borrower on the first day of each such period or
(ii) subsequently became directors of the Borrower and whose initial election or
initial nomination for election subsequent to that date was approved by a
majority of the Continuing Directors then on the board of directors of the
Borrower, to constitute a majority of the board of directors of the Borrower or
(e) the Borrower shall cease to own beneficially and of record, free and clear
of all Liens, other encumbrances or voting agreements, restrictions or trusts of
any kind 100% of the outstanding shares of capital stock of either ACF or ACI;
provided, that any voting capital stock transferred by either of Xxxxxx X.
Xxxxxx, Xx. or Xxxxxx X. Xxxxxxx to a spouse, the direct descendants of such
Person, an entity controlled by such Person and/or a trust for the benefit of
any of the foregoing shall be deemed to be held by such Person for the purposes
of this definition.
"Closing Transactions" is defined in Section 4.1(d).
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below and as set
forth in any Notice of
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Assignment relating to any assignment which has become effective pursuant to
Section 12.3.2, as such amount may be modified from time to time pursuant to the
terms hereof.
"Condemnation" is defined in Section 7.8.
"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with Agreement Accounting
Principles.
"Consolidated Person" means, for the taxable year of reference, each Person
which is a member of the affiliated group of the Borrower if Consolidated
returns are or shall be filed for such affiliated group for federal income tax
purposes or any combined or unitary group of which the Borrower is a member for
state income tax purposes.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, but excluding Contingent Obligations in respect of insurance
policies issued and reinsurance assumed in the ordinary course of business.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes. The Corporate Base Rate is a reference rate
and does not necessarily represent the lowest or best rate of interest actually
charged to any customer. First Chicago may make commercial loans or other loans
at rates of interest at, above or below the Corporate Base Rate.
"Debt to Capitalization Ratio" means, at any time, the ratio of (a) the
consolidated Indebtedness of the Borrower and its Subsidiaries at such time to
(b) the sum of the consolidated Indebtedness of the Borrower and its
Subsidiaries plus the Borrower's Shareholders' Equity at such time.
"Default" means an event described in Article VII.
"Environmental Laws" is defined in Section 5.21.
"Environmental Permits" is defined in Section 5.21.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means an Advance which bears interest at the
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the rate determined by the Agent to be the rate at
which deposits in U.S. dollars are offered by First Chicago to first-class banks
in the London interbank market at approximately 11 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the approximate
amount of First Chicago's relevant Eurodollar Advance and having a maturity
approximately equal to such Interest Period.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base
Rate applicable to such Interest Period, divided by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(b) 1.75 percent per annum. The Eurodollar Rate shall be rounded to the next
higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Existing Reinsurance Agreements" is defined in Section 5.24.
"Facility Termination Date" means July 29, 2002.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding 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 at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Fee Agreements" means, collectively, those two Agreements dated as of
April 30, 1997 among the Borrower, Frontier Insurance Group, Inc., Xxxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, Xx.
relating to the payment of certain fees, each as amended, supplemented or
modified in accordance with the terms of this Agreement.
"Financial Statements" is defined in Section 5.5.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fiscal Quarter" means one of the four three-month accounting periods
comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period ending December 31
of each year.
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"Floating Rate" means, for any day, a rate of interest per annum equal to
the higher of (a) the Corporate Base Rate for such day, changing when and as the
Corporate Base Rate changes, and (b) the sum of the Federal Funds Effective Rate
for such day plus 1/2% per annum.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Governmental Authority" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body, agency,
authority, department or commission (including without limitation any board of
insurance, insurance department or insurance commission and any taxing authority
or political subdivision) or any instrumentality or officer thereof (including
without limitation any court or tribunal) exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any corporation, partnership or other entity directly or indirectly owned or
controlled by or subject to the control of any of the foregoing.
"Hazardous Materials" is defined in Section 5.21.
"Indebtedness" of a Person means such Person's (a) obligations for borrowed
money, (b) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (c) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (d)
obligations which are evidenced by notes, acceptances, or similar instruments,
(e) Capitalized Lease Obligations, (f) Rate Hedging Obligations, (g) Contingent
Obligations, (h) obligations for which such Person is obligated pursuant to or
in respect of a Letter of Credit and (i) repurchase obligations or liabilities
of such Person with respect to accounts or notes receivable sold by such Person.
"Insurance Subsidiary" means any Subsidiary which is engaged in the
business of providing insurance.
"Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one, two, three or
six months thereafter; provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day; provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts or notes
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any other
Person
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or any investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of any other Person
made by such Person.
"Investment Agreement" means that certain Investment Agreement dated as of
April 30, 1997 among the Borrower, Frontier Insurance Group, Inc., Xxxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxx, Xx., as amended, supplemented or modified from
time to time.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"License" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental Authority
in connection with the operation, ownership or transaction of insurance
business.
"Lien" means any security interest, lien (statutory or other), mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.
"Loan Documents" means this Agreement, the Notes and the other documents
and agreements contemplated hereby and executed by the Borrower in favor of the
Agent or any Lender.
"Margin Stock" has the meaning assigned to that term under Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, financial condition, operations, or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole, (b) the ability
of the Borrower to perform its obligations under the Loan Documents, or (c) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of the Agent or the Lenders thereunder.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) or 3(37) of ERISA as to which the Borrower or any member of the
Controlled Group has, or within the past five years had, an obligation to
contribute.
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"NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.
"Net Available Proceeds" means, with respect to any sale or issuance of any
equity securities of the Borrower or any Subsidiary, cash or readily marketable
cash equivalents received therefrom, whether at the time of such disposition or
subsequent thereto, net of all legal, title and recording tax expenses,
commissions and other fees and all costs and expenses incurred.
"Net Income" means, for any computation period, with respect to any Person
on a consolidated basis with its Subsidiaries, cumulative net income earned
during such period as determined in accordance with Agreement Accounting
Principles.
"Net Written Premiums" means, with respect to any Insurance Subsidiary at
any time, the net written premiums of such Insurance Subsidiary at such time, as
determined in accordance with SAP ("Underwriting and Investment Exhibit", Part
2B, "Premiums Written" statement, Page 9, Line 32 of the Annual Statement).
"Non-Excluded Taxes" is defined in Section 2.18(a).
"Note" means a promissory note in substantially the form of Exhibit A
hereto, with appropriate insertions, duly executed and delivered to the Agent by
the Borrower and payable to the order of a Lender in the amount of its
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Notes, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Agent or any indemnified party hereunder arising under any of the
Loan Documents and any Rate Hedging Obligations or foreign exchange contracts of
the Borrower owing to the Agent or any Lender.
"Old ACF" means American Country Financial Services Corp., a Subsidiary of
Old Parent and the transferor of certain assets to ACF.
"Old ACI" means American Country Insurance Company, a Subsidiary of Old
Parent and the transferor of certain assets to ACI.
"Old Parent" means American Country Holding Corp., a Delaware corporation.
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"Operating Leverage Ratio" means, in respect of any Insurance Subsidiary
for any applicable computation period, the ratio of such Insurance Subsidiary's
(a) Net Written Premiums to (b) Statutory Capital and Surplus.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan, as defined in Section 3(2)
of ERISA, which currently is or within the past five years has been sponsored,
maintained or contributed to by the Borrower or any member of the Controlled
Group.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Pro Forma" is defined in Section 5.5.
"pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances.
"Purchase" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (a) acquires any going business or all or substantially all
of the assets of any firm, corporation or division or line of business thereof,
whether through purchase of assets, merger or otherwise, or (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of the
outstanding partnership interests of a partnership or membership interests of a
limited liability company.
"Purchase Agreement" means that certain Asset Purchase Agreement dated as
of April 30, 1997 among Old ACI, Old ACF, Old Parent, the Borrower, ACI, ACF and
the individuals named therein, as amended, supplemented or modified from time to
time.
"Purchasers" is defined in Section 12.3.1.
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"Quarterly Statement" means the quarterly statutory financial statement of
any Insurance Subsidiary required to be filed with the insurance commissioner
(or similar authority) of its jurisdiction of incorporation or, if no specific
form is so required, in the form of financial statements permitted by such
insurance commissioner (or such similar authority) to be used for filing
quarterly statutory financial statements and shall contain the type of financial
information permitted by such insurance commissioner (or such similar authority)
to be disclosed therein, together with all exhibits or schedules filed
therewith.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (b) any and all
cancellations, buybacks, reversals, terminations or assignments of any of the
foregoing.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to depositary institutions.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by Persons other than banks, brokers and dealers for
the purpose of purchasing or carrying margin stocks applicable to such Persons.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of such Board of Governors relating
to the extension of credit by securities brokers and dealers for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to such Persons.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
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"Release" is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 39601 et seq.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any lease of Property, including without limitation Capitalized
Leases having an original term (including any required renewals or any renewals
at the option of the lessor or lessee) of one year or more.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; provided, that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
"Required Lenders" means Lenders in the aggregate having at least 66-2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66-2/3% of the aggregate unpaid
principal amount of the outstanding Loans.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) in the jurisdiction of such Person for the preparation
of annual statements and other financial reports by insurance companies of the
same type as such Person in effect from time to time, applied in a manner
consistent with those used in preparing the financial statements referred to in
Section 5.5(a)(v) and (vi); provided, that with respect to the financial
covenants contained in Section 6.27 hereof, and the related definitions, "SAP"
means such statutory accounting practices in effect on the date hereof, applied
in a manner consistent with those used in preparing the financial statements
referred to in Section 5.5(a)(v) and (vi).
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Shareholders' Equity" means aggregate shareholders' equity of the Borrower
determined in accordance with Agreement Accounting Principles.
"Single Employer Plan" means a Plan subject to Title IV of ERISA maintained
by the Borrower or any member of the Controlled Group for employees of the
Borrower or any member of the Controlled Group, other than a Multiemployer Plan.
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"Solvent" means, when used with respect to a Person, that (a) the fair
saleable value of the assets of such Person is in excess of the total amount of
the present value of its liabilities (including for purposes of this definition
all liabilities (including loss reserves as determined by such Person), whether
or not reflected on a balance sheet prepared in accordance with Agreement
Accounting Principles and whether direct or indirect, fixed or contingent,
secured or unsecured, disputed or undisputed), (b) such Person is able to pay
its debts or obligations in the ordinary course as they mature and (c) such
Person does not have unreasonably small capital to carry out its business as
conducted and as proposed to be conducted. "Solvency" shall have a correlative
meaning.
"Statutory Capital and Surplus" means, with respect to any Insurance
Subsidiary at any time, the statutory capital and surplus of such Insurance
Subsidiary at such time, as determined in accordance with SAP ("Liabilities,
Surplus and Other Funds" Statement, Page 3, Line 25 of the Annual Statement).
"Statutory Net Income" means, with respect to any Insurance Subsidiary for
any computation period, the net income earned by such Insurance Subsidiary
during such period, as determined in accordance with SAP ("Underwriting and
Investment" Exhibit, "Income" Statement, Page 4, Line 16 of the Annual
Statement).
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, association, joint venture or similar business organization
more than 50% of the ownership interests having ordinary voting power of which
shall at the time be so owned or controlled. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the
Borrower.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (a) represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries, as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the end of the Fiscal Quarter next preceding the date on which such
determination is made, or (b) is responsible for more than 10% of the
consolidated net revenues or of the consolidated Net Income of the Borrower and
its Subsidiaries for the 12-month period ending as of the end of the Fiscal
Quarter next preceding the date of determination.
"Tax Sharing Agreement" means the Federal Income Tax Allocation Agreement
dated as of July 29, 1997 between the Borrower and ACI and ACF, as amended,
supplemented or modified in accordance with this Agreement.
"Termination Event" means, with respect to a Single Employer Plan, (a) a
Reportable Event, (b) the withdrawal of the Borrower or any other member of the
Controlled Group from such Plan during a plan year in which the Borrower or any
other member of the Controlled Group was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA,
(c) the termination of such Plan, the filing of a notice of intent to terminate
such Plan or the treatment of an amendment of such Plan as a termination under
Section 4041 of ERISA,
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(d) the institution by the PBGC of proceedings to terminate such Plan or (e) any
event or condition which could reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or appointment of a trustee
to administer, such Plan.
"Transaction Documents" means the Loan Documents, the Acquisition
Documents, the Investment Agreement and the Fee Agreements.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or Eurodollar Advance.
"UCC" means the Illinois Uniform Commercial Code as amended or modified and
in effect from time to time.
"Unfunded Liability" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under a Single Employer Plan exceeds
the fair market value of assets allocable to such benefits, all determined as of
the then most recent valuation date for such Plans using PBGC actuarial
assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary, all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (b) any partnership, association, joint venture or similar
business organization, 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. References herein to particular columns,
lines or sections of any Person's Annual Statement shall be deemed, where
appropriate, to be references to the corresponding column, line or section of
such Person's Quarterly Statement, or if no such corresponding column, line or
section exists or if any report form changes, then to the corresponding item
referenced thereby. Each accounting term used herein which is not otherwise
defined herein shall be defined in accordance with Agreement Accounting
Principles unless otherwise specified.
ARTICLE II
THE CREDITS
-----------
2.1. Advances. (a) From and including the date hereof to but excluding the
Facility Termination Date, each Lender severally (and not jointly) agrees, on
the terms and conditions set
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forth in this Agreement, to make Advances to the Borrower from time to time in
amounts not to exceed in the aggregate at any one time outstanding the amount of
its pro-rata share of the Aggregate Commitment existing at such time. Subject to
the terms of this Agreement, the Borrower may borrow, repay and reborrow
Advances at any time prior to the Facility Termination Date.
(b) The Borrower hereby agrees that if at any time, as a result of
reductions in the Aggregate Commitment pursuant to Section 2.7 or otherwise, the
aggregate balance of the Loans exceeds the Aggregate Commitment, the Borrower
shall repay immediately its then outstanding Loans in such amount as may be
necessary to eliminate such excess.
(c) The Borrower's obligation to pay the principal of, and interest
on, the Loans shall be evidenced by the Notes. Although the Notes shall be dated
the date of the initial Advance, interest in respect thereof shall be payable
only for the periods during which the Loans evidenced thereby are outstanding
and, although the stated amount of each Note shall be equal to the applicable
Lender's Commitment, each Note shall be enforceable, with respect to the
Borrower's obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the Loan at the time evidenced thereby.
(d) All Advances and all Loans shall mature, and the principal amount
thereof and the unpaid accrued interest thereon shall be due and payable, on the
Facility Termination Date.
2.2. Ratable Loans. Each Advance hereunder shall consist of Loans made from
the several Lenders ratably in proportion to the ratio that their respective
Commitments bear to the Aggregate Commitment.
2.3. Types of Advances. The Advances may be Floating Rate Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9.
2.4. Commitment Fee; Reductions in Aggregate Commitment. (a) The Borrower
agrees to pay to the Agent for the account of each Lender a commitment fee of
.3875 percent per annum on the average daily unborrowed portion of such Lender's
Commitment from the date hereof to and including the Facility Termination Date,
payable in arrears on each Payment Date hereafter and on the Facility
Termination Date. All accrued commitment fees shall be payable on the effective
date of any termination of the obligations of the Lenders to make Loans
hereunder.
(b) The Borrower may permanently reduce the Aggregate Commitment in
whole, or in part ratably among the Lenders in a minimum aggregate amount of
$500,000 or any integral multiple of $100,000 in excess thereof, upon at least
three (3) Business Days' prior written notice to the Agent, which notice shall
specify the amount of any such reduction; provided, however, that the amount of
the Aggregate Commitment may not be reduced below the aggregate principal amount
of the outstanding Advances. Such reductions shall be in addition to reductions
occurring pursuant to Section 2.7.
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2.5. Minimum Amount of Each Advance. Each Advance shall be in the minimum
amount of $250,000 (and in multiples of $100,000 if in excess thereof);
provided, however, that (a) any Floating Rate Advance may be in the amount of
the unused Aggregate Commitment and (b) in no event shall more than four (4)
Eurodollar Advances be permitted to be outstanding at any time.
2.6. Optional Principal Payments. The Borrower may from time to time pay,
without penalty or premium, all outstanding Floating Rate Advances, or, in a
minimum aggregate amount of $500,000 or any integral multiple of $500,000 in
excess thereof, any portion of the outstanding Floating Rate Advances upon
notice to the Agent by not later than 12:00 noon (Chicago time) on the day of
such payment. Subject to Section 3.4 and upon at least two Business Days' prior
notice to the Agent, a Eurodollar Advance may be paid prior to the last day of
the applicable Interest Period in a minimum amount of $500,000 or an integral
multiple of $500,000 in excess thereof.
2.7. Mandatory Commitment Reductions. (a) The Aggregate Commitment shall be
automatically and permanently reduced by the following amounts on the following
dates:
Date Reduction Amount
July 29, 2000 $2,333,333
July 29, 2001 $2,333,333
July 29, 2002 $2,333,334 or such other amount as
shall then be outstanding
(b) The Aggregate Commitment shall also be automatically and
permanently reduced, concurrently with the receipt thereof by the Borrower or
any Subsidiary, by an amount equal to one-third of the Net Available Proceeds
realized upon the sale by the Borrower or such Subsidiary of any equity
securities, including without limitation, proceeds realized upon the exercise of
any options, warrants or similar instruments for the purchase of such equity
securities. Contemporaneously with any automatic reductions in the Aggregate
Commitment pursuant to this Section 2.7(b), the Borrower shall prepay the Loans
in any amount equal to the lesser of (i) the outstanding principal amount of
Loans and (ii) the amount of such reduction; provided, that no such prepayment
shall be required if, at such time, the Borrower could satisfy the conditions
set forth in Section 4.2(a) and (b) for the reborrowing thereof. The preceding
sentence shall not affect the obligations of the Borrower under Section 2.1(b).
(c) Mandatory commitment reductions under this Section 2.7 shall be
cumulative and in addition to reductions occurring pursuant to Section 2.4(b).
Any mandatory commitment reduction under Section 2.7(b) or voluntary commitment
reduction pursuant to Section 2.4(b) shall be applied to the mandatory
commitment reductions required to be made pursuant to Section 2.7(a) in the
inverse order of maturity.
(d) Any reduction in the Aggregate Commitment pursuant to this
Section 2.7 or otherwise shall ratably reduce the Commitment of each Lender.
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2.8. Method of Selecting Types and Interest Periods for New Advances. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable to each Advance from time to time. The
Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not
later than 10:00 a.m. (Chicago time) at least one (1) Business Day before the
Borrowing Date of each Floating Rate Advance and at least three (3) Business
Days before the Borrowing Date for each Eurodollar Advance, specifying:
(a) the Borrowing Date of such Advance, which shall be a Business
Day;
(b) the aggregate amount of such Advance;
(c) the Type of Advance selected; and
(d) in the case of each Eurodollar Advance, the Interest Period
applicable thereto, which shall end on or prior to the Facility Termination
Date.
Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available its Loan or Loans, in funds immediately available in Chicago, to
the Agent at its address specified pursuant to Article XIII. The Agent will make
the funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address as soon as practicable, following its receipt thereof.
2.9. Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into Eurodollar Advances. Each Eurodollar Advance
shall continue as a Eurodollar Advance until the end of the then applicable
Interest Period therefor, at which time such Eurodollar Advance shall be
automatically converted into a Floating Rate Advance unless the Borrower shall
have given the Agent a Conversion/Continuation Notice requesting that, at the
end of such Interest Period, such Eurodollar Advance continue as a Eurodollar
Advance for the same or another Interest Period. Subject to the terms of Section
2.5, the Borrower may elect from time to time to convert all or any part of an
Advance of any Type into any other Type or Types of Advances; provided, however,
that any conversion of any Eurodollar Advance shall be made on, and only on, the
last day of the Interest Period applicable thereto. The Borrower shall give the
Agent irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of a Floating Rate Advance or continuation of a Eurodollar Advance
not later than 10:00 a.m. (Chicago time) at least one (1) Business Day, in the
case of a conversion into a Floating Rate Advance, or at least three (3)
Business Days, in the case of a conversion into or continuation of a Eurodollar
Advance, prior to the date of the requested conversion or continuation,
specifying:
(a) the requested date of such conversion or continuation, which
shall be a Business Day;
(b) the aggregate amount and Type of the Advance which is to be
converted or continued; and
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(c) the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Advance, the duration of the Interest Period
applicable thereto, which shall end on or prior to the Facility Termination
Date.
2.10. Interest Rate; Changes in Interest Rate, etc. Each Floating Rate
Advance shall bear interest at the Floating Rate from and including the date of
such Advance or the date on which such Advance was converted into a Floating
Rate Advance to (but not including) the date on which such Floating Rate Advance
is paid or converted to a Eurodollar Advance. Changes in the rate of interest on
that portion of any Advance maintained as a Floating Rate Advance will take
effect simultaneously with each change in the Floating Rate. Each Eurodollar
Advance shall bear interest from and including the first day of the Interest
Period applicable thereto to, but not including, the last day of such Interest
Period at the Eurodollar Rate determined as applicable to such Eurodollar
Advance. No Interest Period may end after the Facility Termination Date. The
Borrower shall select Interest Periods so that it is not necessary to repay any
portion of a Eurodollar Advance prior to the last day of the applicable Interest
Period in order to make a mandatory repayment required pursuant to Section 2.7.
2.11. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.8 or 2.9, no Advance may be made as, converted
into or continued as a Eurodollar Advance (except with the consent of the Agent
and the Required Lenders) when any Default or Unmatured Default has occurred and
is continuing. During the continuance of a Default the Required Lenders may, at
their option, by notice to the Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that each Eurodollar Advance and Floating Rate Advance shall bear
interest (for the remainder of the applicable Interest Period in the case of
Eurodollar Advances) at a rate per annum equal to the rate otherwise applicable
plus two percent (2.0%) per annum; provided, however, that such increased rate
shall automatically and without action of any kind by the Lenders become and
remain applicable until revoked by the Required Lenders in the event of a
Default described in Section 7.6 or 7.7.
2.12. Method of Payment. All payments of the Obligations hereunder shall be
made, without setoff, deduction or counterclaim, in immediately available funds
to the Agent at the Agent's address specified pursuant to Article XIII, or at
any other Lending Installation of the Agent specified in writing by the Agent to
the Borrower, by noon (Chicago time) on the date when due and shall be applied
ratably by the Agent among the Lenders. Each payment delivered to the Agent for
the account of any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds that the Agent received at its address
specified pursuant to Article XIII or at any Lending Installation specified in a
notice received by the Agent from such Lender. The Agent is hereby authorized to
charge the account of the Borrower maintained with First Chicago for each
payment of principal, interest and fees as it becomes due hereunder.
2.13. Notes; Notices. Each Lender is hereby authorized to record the
principal amount of each of its Loans and each repayment on the schedule
attached to its Note; provided, however, that neither the failure to so record
nor any error in such recordation shall affect the Borrower's
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obligations under such Note. The Borrower hereby authorizes the Lenders and the
Agent only to extend, convert or continue Advances, effect selections of Types
of Advances and to transfer funds based on (a) written notice signed by any
Authorized Officer or (b) telephonic notices made by any Authorized Officer. The
Borrower agrees to deliver promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each telephonic notice,
signed by an Authorized Officer. If the written confirmation differs in any
material respect from the action taken by the Agent and the Lenders, the records
of the Agent and the Lenders shall govern absent manifest error.
2.14. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which a
Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and
at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Advance on a day
other than a Payment Date shall be payable on the date of conversion. Interest
accrued on each Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar Advance is
prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued
on each Eurodollar Advance having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval during such
Interest Period. Interest and commitment fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest shall be payable for the
day an Advance is made but not for the day of any payment on the amount paid if
payment is received prior to noon (Chicago time) at the place of payment. If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.
2.15. Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Agent will notify each Lender of
the contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each
Eurodollar Advance promptly upon determination of such interest rate and will
give each Lender prompt notice of each change in the Floating Rate.
2.16. Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written or facsimile notice to
the Agent and the Borrower, designate a Lending Installation through which Loans
will be made by it and for whose account Loan payments are to be made.
2.17. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan, or (b) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but
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shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If the Borrower has not in
fact made such payment to the Agent, the Lenders shall, on demand by the Agent,
repay to the Agent the amount so made available together with interest thereon
in respect of each day during the period commencing on the date such amount was
so made available by the Agent until the date the Agent recovers such amount at
a rate per annum equal to the Federal Funds Effective Rate for such day. If any
Lender has not in fact made such payment to the Agent, such Lender or the
Borrower shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to (a)
in the case of payment by a Lender, the Federal Funds Effective Rate for such
day, or (b) in the case of payment by the Borrower, the interest rate applicable
to the relevant Loan.
2.18. Taxes. (a) Any payments made by the Borrower under this Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes or any other tax based upon any income
imposed on the Agent or any Lender by the jurisdiction in which the Agent or
such Lender is incorporated or has its principal place of business or in which
the applicable Lending Installation is located. If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Agent or any Lender hereunder, the amounts so payable to the Agent or such
Lender shall be increased to the extent necessary to yield to the Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in or
pursuant to this Agreement; provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the U.S. or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this Section 2.18. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as practicable
thereafter the Borrower shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in this
Section 2.18 shall survive the termination of this Agreement and the payment of
all other amounts payable hereunder.
(b) At least five Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of America,
or a state thereof, agrees that it will deliver to each of the Borrower and the
Agent two duly completed copies of United States Internal Revenue Service Form
1001 or 4224 (and any other documentary evidence issued by any non-U.S.
governmental authorities as required by U.S. Treasury regulations), certifying
in any case that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
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federal income taxes. Each Lender which so delivers a Form 1001 or 4224 further
undertakes to deliver to each of the Borrower and the Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires (currently, three successive calendar years for Form 1001 and one
calendar year for Form 4224) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Lender
is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
2.19. Agent's Fees. The Borrower shall pay to the Agent those fees, in
addition to the commitment fees referenced in Section 2.4(a), separately agreed
to between the Agent and the Borrower.
2.20. Mandatory Prepayment in the Event of a Change in Control. Upon the
earlier of (a) ten (10) Business Days prior to the consummation of any
transaction which would cause a Change in Control, and (b) the execution of a
definitive agreement in respect of any such transaction, the Borrower shall
notify the Agent and each Lender of such expected transaction, including the
expected closing date of such transaction. Upon the execution of any such
agreement and while such agreement shall continue in effect, each Lender's
Commitment shall be suspended. Unless an earlier date is otherwise agreed upon
among the Borrower, the Agent and the Lenders, each Lender's Commitment shall
terminate simultaneously with the closing of such transaction and the Borrower
shall repay at such time all of the Lenders' outstanding Loans, together with
accrued interest thereon, any accrued fees with respect to the Commitments, any
costs, losses or expenses incurred by the Lenders in connection with such
prepayment pursuant to Section 3.4 and any other Obligations of the Borrowers to
the Agent and the Lenders hereunder.
ARTICLE III
CHANGE IN CIRCUMSTANCES
-----------------------
3.1. Yield Protection. If, after the date hereof, the adoption of, or any
change in, any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
interpretation thereof, or the compliance of the Agent or any Lender therewith,
(a) subjects the Agent, any Lender or any applicable Lending
Installation to any tax, duty, charge or withholding on or from payments due
from the Borrower (excluding taxation of the overall net income of the Agent,
any Lender or applicable Lending Installation imposed by the
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jurisdiction in which the Agent, such Lender or such Lending Installation is
incorporated or has its principal place of business), or changes the basis of
taxation of principal, interest or any other payments to the Agent, any Lender
or any Lending Installation in respect of its Loans or other amounts due it
hereunder (excluding taxation of the overall net income of the Agent, any Lender
or applicable Lending Installation imposed by the jurisdiction in which the
Agent, such Lender or such Lending Installation is incorporated or has its
principal place of business), or
(b) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by the Agent, any Lender
or any applicable Lending Installation (other than reserves and assessments
taken into account in determining the interest rate applicable to Eurodollar
Advances), or
(c) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of making, funding
or maintaining Loans or reduces any amount receivable by the Agent, any Lender
or any applicable Lending Installation in connection with any Loans, or requires
any Lender or any applicable Lending Installation to make any payment calculated
by reference to the amount of Loans held, or interest received by it, by an
amount deemed material by such Lender,
then, within 15 days of demand by the Agent or such Lender, the Borrower shall
pay the Agent or such Lender that portion of such increased expense incurred or
resulting in an amount received which such Lender reasonably determines is
attributable to making, funding and maintaining its Loans and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender reasonably determines is attributable to this Agreement, its
Loans or its obligation to make Loans hereunder (after taking into account such
Lender's policies as to capital adequacy). "Change" means (a) any change after
the date of this Agreement in the Risk-Based Capital Guidelines, or (b) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. "Risk-Based
Capital Guidelines" means (a) the risk-based capital guidelines in effect in the
United States on the date of this Agreement and (b) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices entitled "International Convergence of Capital
Measurements and Capital Standards" and any amendments to such regulations
adopted prior to the date of this Agreement.
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3.3. Availability of Eurodollar Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available, or (b) the interest rate applicable to a Eurodollar Advance does not
accurately or fairly reflect the cost of making or maintaining such Advance,
then the Agent shall suspend the availability of Eurodollar Advances until such
circumstance no longer exists and require any Eurodollar Advances to be repaid.
3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify the Agent and each Lender for any loss
or cost incurred by it resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
the Eurodollar Advance.
3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Advances to reduce any liability of the Borrower to
such Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a Type
of Advance under Section 3.3, so long as such designation is not disadvantageous
to such Lender. Each Lender shall deliver a written statement of such Lender to
the Borrower (with a copy to the Agent) as to the amount due, if any, under
Section 3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable
detail the calculations upon which such Lender reasonably determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Advance shall be calculated as though each Lender
funded its Eurodollar Advances through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement of any Lender shall be payable on demand after receipt by the Borrower
of the written statement. The obligations of the Borrower under Sections 2.18,
3.1, 3.2 and 3.4 shall survive payment of the Obligations and termination of
this Agreement; provided, that the Borrower will have no obligation to pay any
amount pursuant to Section 2.18, 3.1 or 3.2 if a demand is not made within 180
days of the date on which the Lender's right to reimbursement arises.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1. Initial Loans. The Lenders shall not be required to make the initial
Advance hereunder unless the Borrower has furnished the following to the Agent
with sufficient copies for the Lenders and the other conditions set forth below
have been satisfied, in each case on or before July 31, 1997 :
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(a) Charter Documents; Good Standing Certificates. Copies of the
certificate of incorporation of the Borrower, together with all amendments
thereto, certified by the Secretary of State of Delaware, together with a good
standing certificate issued by the Secretary of State of Delaware and such other
jurisdictions as shall be requested by the Agent.
(b) By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant Secretary of the Borrower, of its by-laws and of its Board of
Directors' resolutions authorizing the execution, delivery and performance of
the Loan Documents to which the Borrower is a party.
(c) Secretary's Certificate. An incumbency certificate, executed by
the Secretary or Assistant Secretary of the Borrower, which shall identify by
name and title and bear the signature of the officers of the Borrower authorized
to sign the Loan Documents and to make borrowings hereunder, upon which
certificate the Agent and the Lenders shall be entitled to rely until informed
of any change in writing by the Borrower.
(d) Officer's Certificate. A certificate, dated the initial Borrowing
Date, signed by an Authorized Officer of the Borrower, in form and substance
satisfactory to the Agent, to the effect that: (i) on the initial Borrowing Date
(both before and after giving effect to the consummation of the Acquisition, the
consummation of the other transactions contemplated hereby and the making of the
Loans hereunder (collectively, the "Closing Transactions")) no Default or
Unmatured Default has occurred and is continuing; (ii) no injunction or
temporary restraining order which would prohibit the making of the Loans or the
consummation of any of the Closing Transactions, or other litigation which could
reasonably be expected to have a Material Adverse Effect is pending or, to the
best of such Person's knowledge, threatened; (iii) all orders, consents,
approvals, licenses, authorizations, or validations of, or filings, recordings
or registrations with, or exemptions by, any governmental or public body or
authority, or any subdivision thereof, required to make or consummate the
Closing Transactions have been or, prior to the time required, will have been,
obtained, given, filed or taken and are or will be in full force and effect (or
the Borrower has obtained effective judicial relief with respect to the
application thereof) and all applicable waiting periods have expired; (iv) the
Acquisition is being consummated contemporaneously with the initial Advance in
accordance with the Purchase Agreement, the Transaction Documents are in full
force and effect and no term or condition thereof has been amended, modified or
waived after the execution thereof without notice to the Agent thereof; (v)
neither the Borrower nor any Subsidiary has failed to perform any material
obligation or covenant required in connection with any Closing Transaction to be
performed or complied with by it on or before the initial Borrowing Date; (vi)
each of the representations and warranties set forth in Article V of this
Agreement is true and correct on and as of the initial Borrowing Date; (vii)
since December 31, 1996, no event or change has occurred that has caused or
evidences a Material Adverse Effect; and (viii) since December 31, 1996, there
has been no material adverse change in the business, financial condition,
operations, Property or prospects of Old ACI and Old ACF, taken as a whole.
(e) Legal Opinions. (i) A written opinion of Xxxxxxx, Xxxxxx & Green,
counsel to the Borrower and its Subsidiaries, and of Beermann, Swerdlove,
Woloshin, Barezky, Xxxxxx, Genin & London, Illinois counsel to the Borrower and
its Subsidiaries, each addressed to the Agent and the Lenders in form and
substance acceptable to the Agent and its counsel, and (ii) confirmation
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from counsel to each party to the Purchase Agreement that the Agent and the
Lenders may rely upon its opinion delivered pursuant to the Purchase Agreement.
(f) Notes. Notes payable to the order of each of the Lenders duly
executed by the Borrower.
(g) Loan Documents. Executed originals of this Agreement and each of
the Loan Documents, which shall be in full force and effect, together with all
schedules, exhibits, certificates, instruments, opinions, documents and
financial statements required to be delivered pursuant hereto and thereto.
(h) Letters of Direction. Written money transfer instructions with
respect to the initial Advances and to future Advances in form and substance
acceptable to the Agent and its counsel addressed to the Agent and signed by an
Authorized Officer, together with such other related money transfer
authorizations as the Agent may have reasonably requested.
(i) Purchase Agreement. A copy of the Purchase Agreement and any
amendments, supplements and modifications thereto.
(j) Equity Contribution. The Borrower shall have (i) received at
least $26,000,000 from the issuance of common stock, which proceeds shall be
available to satisfy obligations under the Purchase Agreement and the payment of
fees and expenses related to the Acquisition or shall have been expended
previously for such purposes, and (ii) delivered to the Agent a copy of each
such agreement relating to such equity capital, in each case as actually
executed by the parties thereto and as in effect on the initial Borrowing Date.
(k) Solvency Certificate. A written solvency certificate from the
chief financial officer of the Borrower in form and content satisfactory to the
Agent, dated the initial Borrowing Date, with respect to the Solvency of the
Borrower (both individually and on a consolidated basis), both before and after
giving effect to the Closing Transactions contemplated by the Transaction
Documents.
(l) Financial Statements. The Agent shall have received (i) pro forma
opening financial statements giving effect to the Acquisition which must not be
materially less favorable, in the Agent's reasonable judgment, than the
projections previously provided to it and which must demonstrate, in its
reasonable judgment, together with all other information then available to the
Agent, that the Borrower (both individually and together with its Subsidiaries
on a consolidated basis) can repay its debts and satisfy its other obligations
as and when due, and can comply with the financial covenants set forth herein
and (ii) such information as the Agent may reasonably request to confirm the
tax, legal and business assumptions made in such pro forma financial statements.
(m) A.M. Best Rating. Old ACI shall have a rating by A.M. Best & Co.
no less favorable than A- (Excellent), and no negative modifiers shall be
attached to such rating, as of the date of this Agreement.
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(n) Subsidiary Charter Documents; Good Standing Certificates. Copies
of the articles of incorporation of each Subsidiary of the Borrower, together
with all amendments thereto, certified by the Secretary of State of Illinois,
together with a good standing certificate issued by the Secretary of State of
Illinois and such other jurisdictions as shall be requested by the Agent.
(o) Subsidiary By-Laws. Copies, certified by the Secretary or
Assistant Secretary of each Subsidiary, of its by-laws.
(p) Lien Searches. Copies of searches of financing statements filed
under the Uniform Commercial Code, together with tax lien and judgment searches
with respect to the assets of Old ACI and Old ACF, in both cases in such
jurisdictions as the Agent may request.
(q) Tax Sharing Agreement. Executed originals of the Tax Sharing
Agreement.
(r) Regulatory Matters. Receipt of any required regulatory approvals
from any Governmental Authority, including the Illinois Department of Insurance,
with respect to the transactions contemplated by the Transaction Documents, and
evidence of the issuance of all necessary Licenses to each of ACI and ACF,
except for any such approvals required to be provided by the insurance
departments of the States of Indiana, Iowa, Michigan and Wisconsin. No findings,
recommendations, requirements or restrictions on Old ACI or its assets or
operations, except to the extent reasonably acceptable to the Agent, shall have
been issued, proposed or threatened or otherwise made known to the Borrower and
its Subsidiaries or Old ACI by the Illinois Department of Insurance, pursuant to
the examination of the condition and affairs of Old ACI for the period from
January 1, 1993 through December 31, 1996, or otherwise, on or before the date
hereof.
(s) Other. Such other documents as the Agent or its counsel may have
reasonably requested.
4.2. Each Future Advance. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default and none would
result from such Advance;
(b) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date (or if any such representation or
warranty is given as of a specific date, as of such specific date);
(c) A Borrowing Notice shall have been properly submitted; and
(d) All legal matters incident to the making of such Advance shall be
reasonably satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Borrower that the conditions contained in
Section 4.2 have been satisfied. Any
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Lender may require a duly completed compliance certificate in substantially the
form of Exhibit B hereto as a condition to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lenders that, both before and
after giving effect to the Closing Transactions:
5.1. Corporate Existence and Standing. Each of the Borrower and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
duly qualified or licensed and in good standing and is duly authorized to
conduct its business in each jurisdiction in which its business is conducted or
proposed to be conducted, except where the failure to be so qualified, licensed
or authorized could not reasonably be expected to have a Material Adverse
Effect.
5.2. Authorization and Validity. The Borrower and each Subsidiary have all
requisite corporate power and authority and legal right to execute and deliver
(or file, as the case may be) each of the Loan Documents and the other
Transaction Documents to which it is a party and to perform its obligations
thereunder. The execution and delivery (or filing, as the case may be) by the
Borrower and each Subsidiary of the Loan Documents and the other Transaction
Documents to which it is a party and the performance of their respective
obligations thereunder have been duly authorized by proper corporate proceedings
and the Loan Documents and the other Transaction Documents constitute legal,
valid and binding obligations of the Borrower or such Subsidiary, as applicable,
enforceable against the Borrower or such Subsidiary, as applicable, in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by equitable principles (regardless of whether enforcement
is sought in equity or at law).
5.3. Compliance with Laws and Contracts. The Borrower and its Subsidiaries
have complied in all material respects with all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
their respective businesses or the ownership of their respective properties,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. Neither the execution and delivery by the Borrower and
each Subsidiary of the Loan Documents and the other Transaction Documents to
which it is a party, the application of the proceeds of the Loans, the
consummation of the Closing Transactions or any other transaction contemplated
in the Loan Documents or the other Transaction Documents, nor compliance with
the provisions of the Loan Documents or the other Transaction Documents will, or
at the relevant time did, (a) violate any law, rule, regulation (including
Regulations G, T, U and X), order, writ, judgment, injunction, decree or award
binding on the Borrower or any Subsidiary or the Borrower's or any Subsidiary's
charter, articles or certificate of incorporation or by-laws, (b) violate the
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provisions of or require the approval or consent of any party to any indenture,
instrument or agreement to which the Borrower or any Subsidiary is a party or is
subject, or by which it, or its property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien (other than Liens permitted by, the Loan Documents) in, of or on the
property of the Borrower or any Subsidiary pursuant to the terms of any such
indenture, instrument or agreement, or (c) require any consent of the
stockholders of any Person, except for approvals or consents which will be
obtained on or before the initial Advance and are disclosed on Schedule 5.3,
except, with respect to each of clauses (a), (b) and (c) of this Section 5.3,
for any violation of, conflict with, default under or failure to obtain an
approval or consent required under, any such law, rule, regulation, order, writ,
judgment, injunction, decree, award, indenture, instrument or agreement that
could not reasonably be expected to have a Material Adverse Effect.
5.4. Governmental Consents. No order, consent, approval, qualification,
License, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any court, governmental or
public body or authority, or any subdivision thereof, any securities exchange or
other Person is or at the relevant time was required to authorize, or is or at
the relevant time was required in connection with the execution, delivery,
consummation or performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents or the Transaction Documents, the
application of the proceeds of the Loans or the consummation of the Acquisition
or any other transaction contemplated in the Loan Documents or the Transaction
Documents, except for (a) the approvals and Licenses set forth on Schedule 5.4,
which have been obtained and are in full force and effect and (b) the approvals
required to be obtained from the insurance departments of the States of Indiana,
Iowa, Michigan and Wisconsin, the failure to obtain which could not reasonably
be expected to have a Material Adverse Effect. No filings were required to be
made with respect to the Acquisition under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
5.5. Financial Statements. (a) The Borrower has heretofore furnished to the
Agent (i) the December 31, 1996 audited consolidated financial statements of the
Borrower, (ii) the unaudited consolidated financial statements of the Borrower
and its Subsidiaries at and for the six months ended June 30, 1997, (iii) the
December 31, 1996 audited consolidated financial statements of Old ACI and its
Subsidiary, Old ACF, (iv) the unaudited consolidated financial statements of Old
ACI and its Subsidiary, Old ACF at and for the five months ended May 31, 1997,
(v) the December 31, 1996 audited Annual Statement of Old ACI, and (vi) the
March 31, 1997 Quarterly Statement of Old ACI (collectively, the "Financial
Statements"). Each of the Financial Statements was prepared in accordance with
generally accepted accounting principles or SAP, as applicable, and (in the case
of the Financial Statements prepared in accordance with generally accepted
accounting principles) fairly presents the financial condition of the Persons
described therein at such dates and the results of their operations for the
respective periods then ended (except, in the case of such unaudited statements,
for normal year-end audit adjustments).
(b) The unaudited pro forma consolidated balance sheet at March 31,
1997 and unaudited pro forma consolidated profit and loss statement for the year
ended December 31, 1996 and the three months ended March 31, 1997 (the "Pro
Forma") of the Borrower and its Subsidiaries is attached hereto as Schedule 5.5.
As of the date of this Agreement, the Pro Forma is complete and
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accurate and fairly represents the Borrower's and the Subsidiaries' assets,
liabilities, financial condition and results of operations on a consolidated
basis in accordance with Agreement Accounting Principles, consistently applied,
and taking into account the Closing Transactions and the other transactions and
actions contemplated by this Agreement, the Loan Documents and the Transaction
Documents.
5.6. Material Adverse Change. No material adverse change in the business,
Property, financial condition, prospects or operations of either the Borrower or
the Borrower and its Subsidiaries taken as a whole has occurred since December
31, 1996.
5.7. Taxes. The Borrower and its Subsidiaries have filed or caused to be
filed on a timely basis and in correct form all United States federal and
applicable foreign, state and local tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by any such Person, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided in accordance with Agreement Accounting Principles and as to which
no Lien exists. No tax liens have been filed and no claims are being asserted
with respect to any taxes owed by Borrower or any Subsidiary which could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are in accordance with Agreement Accounting
Principles or SAP, as applicable.
5.8. Litigation. Except as set forth on Schedule 5.8, there is no
litigation, arbitration, proceeding, inquiry or governmental investigation
pending or, to the knowledge of any of their officers, threatened against or
affecting the Borrower or any Subsidiary or any of their respective properties
which could reasonably be expected to have a Material Adverse Effect or to
prevent, enjoin or unduly delay the making of the Loans under this Agreement or
the consummation of any other Closing Transaction.
5.9. Capitalization. Schedule 5.9 hereto contains (a) an accurate
description of the Borrower's capitalization as of the date of this Agreement
after giving effect to the Closing Transactions and (b) an accurate list of all
of the existing Subsidiaries as of the date of this Agreement after giving
effect to the Acquisition and the other Closing Transactions and setting forth
their respective jurisdictions of incorporation and the percentage of their
capital stock owned by the Borrower or other Subsidiaries. All of the issued and
outstanding shares of capital stock of the Borrower and of each Subsidiary have
been duly authorized and validly issued and are fully paid and non-assessable,
and all such shares of each Subsidiary are free and clear of all Liens. Except
as set forth on Schedule 5.9, as of the date hereof, no authorized but unissued
or treasury shares of capital stock of the Borrower or any Subsidiary are
subject to any option, warrant, right to call or commitment of any kind or
character. Except as set forth on Schedule 5.9, neither the Borrower nor any
Subsidiary has any outstanding stock or securities convertible into or
exchangeable for any shares of its capital stock, or any right issued to any
Person (either preemptive or other) to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to any of its capital stock or any stock or securities
convertible into or exchangeable for any of its capital stock
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other than as expressly set forth in the certificate or articles of
incorporation of the Borrower or such Subsidiary. Neither the Borrower nor any
Subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital stock or any
convertible securities, rights or options of the type described in the preceding
sentence except as otherwise set forth on Schedule 5.9. Except as set forth on
Schedule 5.9, as of the date hereof the Borrower does not own or hold, directly
or indirectly, any capital stock or equity security of, or any equity or
partnership interest in any Person other than such Subsidiaries.
5.10. ERISA. Except as disclosed on Schedule 5.10, neither the Borrower nor
any other member of the Controlled Group maintains any Single Employer Plans,
and no Single Employer Plan has any Unfunded Liability. Neither the Borrower nor
any other member of the Controlled Group maintains, or is obligated to
contribute to, any Multiemployer Plan or has incurred, or is reasonably expected
to incur, any withdrawal liability to any Multiemployer Plan. Each Plan complies
in all material respects with all applicable requirements of law and
regulations. Neither the Borrower nor any member of the Controlled Group has,
with respect to any Plan, failed to make any contribution or pay any amount
required under Section 412 of the Code or Section 302 of ERISA or the terms of
such Plan. There are no pending or, to the knowledge of the Borrower, threatened
claims, actions, investigations or lawsuits against any Plan, any fiduciary
thereof, or the Borrower or any member of the Controlled Group with respect to a
Plan. Neither the Borrower nor any member of the Controlled Group has engaged in
any prohibited transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) in connection with any Plan which would subject such Person to any
material liability. Within the last five years neither the Borrower nor any
member of the Controlled Group has engaged in a transaction which resulted in a
Single Employer Plan with an Unfunded Liability being transferred out of the
Controlled Group. No Termination Event has occurred or is reasonably expected to
occur with respect to any Single Employer Plan. Except for the Unfunded
Liability referenced on Schedule 5.10, there are no liabilities payable by the
Borrower or any member of the Controlled Group in respect of any employee
pension benefit plan, as defined in Section 3(2) of ERISA, after giving effect
to any indemnity payments received or to be received by any such Person, which
could reasonably be expected to have a Material Adverse Effect.
5.11. Defaults. No Default or Unmatured Default has occurred and is
continuing.
5.12. Federal Reserve Regulations. Neither the Borrower nor any Subsidiary
is engaged, directly or indirectly, principally, or as one of its important
activities, in the business of extending, or arranging for the extension of,
credit for the purpose of purchasing or carrying Margin Stock. No part of the
proceeds of any Loan will be used in a manner which would violate, or result in
a violation of, Regulation G, Regulation T, Regulation U or Regulation X.
Neither the making of any Advance hereunder, the use of the proceeds thereof,
nor any other aspect of the financing of the Acquisition, will violate or be
inconsistent with the provisions of Regulation G, Regulation T, Regulation U or
Regulation X. Following the application of the proceeds of the Loans, less than
25% of the value (as determined by any reasonable method) of the assets of the
Borrower and its Subsidiaries which are subject to any limitation on sale,
pledge, or other restriction hereunder taken as a whole have been, and will
continue to be, represented by Margin Stock.
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5.13. Investment Company. Neither the Borrower nor any Subsidiary is, or
after giving effect to any Advance will be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
5.14. Certain Fees. Other than as disclosed on Schedule 5.14, no broker's
or finder's fee or commission was, is or will be payable by the Borrower or any
Subsidiary with respect to any of the transactions (including, without
limitation, the Acquisition) contemplated by this Agreement or the Transaction
Documents. The Borrower hereby agrees to indemnify the Agent and the Lenders
against and agrees that it will hold each of them harmless from any claim,
demand or liability for broker's or finder's fees or commissions alleged to have
been incurred by the Borrower in connection with any of the transactions
(including, without limitation, the Acquisition) contemplated by this Agreement
or the Transaction Documents and any expenses (including, without limitation,
reasonable attorneys' fees and time charges of attorneys for the Agent or any
Lender, which attorneys may be employees of the Agent or any Lender) arising in
connection with any such claim, demand or liability. No other similar fee or
commissions will be payable by the Borrower or any Subsidiary for any other
services rendered to the Borrower or any Subsidiary ancillary to any of the
transactions (including, without limitation, the Acquisition) contemplated by
this Agreement or the Transaction Documents.
5.15. Solvency. As of the date hereof, both before and after giving effect
to the consummation of the transactions contemplated by the Loan Documents and
the Transaction Documents and the payment of all fees, costs and expenses
payable by the Borrower or its Subsidiaries with respect to the transactions
contemplated by the Loan Documents and the Transaction Documents, the Borrower
(both individually and on a consolidated basis) is Solvent.
5.16. Ownership of Properties. Except as set forth on Schedule 5.16 hereto,
on the date of this Agreement, the Borrower and its Subsidiaries have a
subsisting leasehold interest in, or good and marketable title, free of all
Liens, other than those permitted by Section 6.18 or by any of the other Loan
Documents, to all of the properties and assets reflected in the Financial
Statements as being owned by it, except for assets sold, transferred or
otherwise disposed of in the ordinary course of business since the date thereof.
To the knowledge of the Borrower, there are no actual, threatened or alleged
defaults with respect to any leases of real property under which the Borrower or
any Subsidiary is lessee or lessor which could reasonably be expected to have a
Material Adverse Effect. The Borrower and its Subsidiaries own or possess rights
to use all licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names necessary to continue to conduct their business as
heretofore conducted, and no such license, patent or trademark has been declared
invalid, been limited by order of any court or by agreement or is the subject of
any infringement, interference or similar proceeding or challenge, except for
proceedings and challenges which could not reasonably be expected to have a
Material Adverse Effect.
5.17. Indebtedness. Attached hereto as Schedule 5.17 is a complete and
correct list of all Indebtedness (including without limitation all Contingent
Obligations) of the Borrower and its Subsidiaries outstanding on the date of
this Agreement (other than Indebtedness in a principal amount not exceeding
$25,000 for a single item of Indebtedness and $100,000 in the aggregate for all
such Indebtedness listed), showing the aggregate principal amount which was
outstanding on such
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date after giving effect to the Closing Transactions. The Borrower has
delivered or caused to be delivered to the Lenders a true and complete copy of
each instrument evidencing any Indebtedness listed on Schedule 5.17 and of each
document pursuant to which any of such Indebtedness was issued.
5.18. Employee Controversies. There are no strikes, work stoppages or
controversies pending or, to the knowledge of the Borrower, threatened between
the Borrower or any Subsidiary and any of its employees, other than employee
grievances arising in the ordinary course of business, which, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
5.19. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other internal
corporate restriction (a) which could reasonably be expected to have a Material
Adverse Effect or (b) which restricts or imposes conditions upon the ability of
any Subsidiary to (i) pay dividends or make other distributions on its capital
stock, (ii) make loans or advances to the Borrower, (iii) repay loans or
advances from the Borrower or (iv) grant Liens to the Agent to secure the
Obligations. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.
5.20. Acquisition Documents. The Borrower has delivered to each of the
Lenders true, complete and correct copies of the Acquisition Documents
(including all schedules, exhibits, annexes, amendments, supplements,
modifications, and all other documents delivered pursuant thereto or in
connection therewith). The Acquisition Documents as originally executed and
delivered by the parties thereto have not been amended, waived, supplemented or
modified without the consent of the Agent. Each of the representations and
warranties of the Borrower and its Subsidiaries and, to its knowledge, all other
parties therein is true and correct in all material aspects as of the date
hereof. Neither the Borrower nor any of its Subsidiaries nor, to the Borrower's
knowledge, any other party thereto is in default in the performance of or
compliance with any provisions thereof. The Acquisition is being consummated
contemporaneously with the initial Advance in accordance with applicable laws
and regulations.
5.21. Environmental Laws. There are no claims, investigations, litigation,
administrative proceedings, notices, requests for information (each a
"Proceeding"), whether pending or threatened, or judgments or orders asserting
violations of applicable federal, state and local environmental, health and
safety statutes, regulations, ordinances, codes, rules, orders, decrees,
directives and standards ("Environmental Laws") or relating to any toxic or
hazardous waste, substance or chemical or any pollutant, contaminant, chemical
or other substance defined or regulated pursuant to any Environmental Law,
including, without limitation, asbestos, petroleum, crude oil or any fraction
thereof ("Hazardous Materials"), asserted against the Borrower or any of its
Subsidiaries which, in any case, could reasonably be expected to have a Material
Adverse Effect. As of the date hereof, there are no Proceedings pending, or to
the Borrower's knowledge threatened, except as disclosed on Schedule 5.21. The
Borrower and each of its Subsidiaries have obtained and are in compliance in all
material respects with all permits, certificates, licenses, approvals and other
authorizations ("Environmental Permits") required for the operation of their
business and have filed all required
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notifications or reports relating to chemical substances, air emissions,
effluent discharges and the storage, treatment, transport and disposal of
Hazardous Materials. As of the date hereof, the Borrower and its Subsidiaries do
not have liabilities exceeding $100,000 in the aggregate for all of them with
respect to compliance with applicable Environmental Laws and Environmental
Permits or related to the generation, treatment, storage, disposal, release,
investigation or cleanup of Hazardous Materials, and no facts or circumstances
exist which could give rise to such liabilities with respect to compliance with
applicable Environmental Laws and Environmental Permits and the generation,
treatment, storage, disposal, release, investigation or cleanup of Hazardous
Materials.
5.22. Insurance. The Borrower and its Subsidiaries maintain with
financially sound and reputable insurance companies insurance on their Property
in such amounts and covering such risks as is consistent with sound business
practice.
5.23. Insurance Licenses. Schedule 5.23 hereto lists the jurisdiction of
domicile of each Insurance Subsidiary, all of the jurisdictions in which such
Insurance Subsidiary holds a License and is authorized to transact insurance
business, the line or lines of insurance in which such Insurance Subsidiary is
engaged and the state or states in which such Insurance Subsidiary is licensed
to engage in any line of insurance, in each case as of the date of this
Agreement. No License held by any Insurance Subsidiary or ACF, the loss of which
could reasonably be expected to have a Material Adverse Effect, is the subject
of a proceeding for suspension or revocation. To the Borrower's knowledge, there
is no sustainable basis for such suspension or revocation, and no such
suspension or revocation has been threatened by any Governmental Authority. To
the Borrower's knowledge, no Insurance Subsidiary has received written notice
from any Governmental Authority that it is deemed to be "commercially domiciled"
for insurance regulatory purposes in any jurisdiction other than that indicated
on Schedule 5.23.
5.24. Reinsurance. Schedule 5.24 lists all ceded or assumed reinsurance
agreements to which ACI is, as of the date of this Agreement, a party, which are
currently in force, and under which there is liability by either party to the
agreement (collectively, the "Existing Reinsurance Agreements"). Each of the
Existing Reinsurance Agreements is in full force and effect and is valid and
binding in all material respects in accordance with its terms, and, as of the
date hereof, ACI has not, to the Borrower's knowledge, received notice that any
other party to an in-force Existing Reinsurance Agreement will cancel or not
renew such agreement, which cancellation or nonrenewal could reasonably be
expected to have a Material Adverse Effect. The Borrower does not have knowledge
as of the date hereof that any amount recoverable by ACI pursuant to any
Existing Reinsurance Agreement is not fully collectible in due course. To the
knowledge of the Borrower, ACI is not in default in any material respect as to
any Existing Reinsurance Agreement. Except as disclosed in Schedule 5.24, ACI is
entitled to take full credit in its statutory financial statements for ceded
reinsurance under the Existing Reinsurance Agreements pursuant to applicable
insurance laws. Except as disclosed in Schedule 5.24, there is no claim under
any Existing Reinsurance Agreement in excess of $100,000 which is disputed by
any other party to such agreement.
5.25. Reserves. Except as set forth on Schedule 5.25, each reserve and
other material liability amount in respect of the insurance business, including,
without limitation, material reserve and other material liability amounts in
respect of insurance policies of ACI, established or reflected
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in the SAP Financial Statements for the year ended December 31, 1996 of Old ACI,
was determined in accordance with generally accepted actuarial standards
consistently applied, was fairly stated in accordance with sound actuarial
principles and was in compliance with the requirements of the insurance laws,
rules and regulations of the State of Illinois as of the date thereof. ACI owns
assets that qualify as admitted assets under applicable law in an amount at
least equal to the sum of all such reserves and liability amounts and its
minimum Statutory Capital and Surplus as required by the insurance laws, rules
and regulations of the State of Illinois.
5.26. Disclosure. None of the (a) information, exhibits or reports
furnished or to be furnished by the Borrower or any Subsidiary to the Agent or
to any Lender in connection with the negotiation of the Loan Documents, or (b)
representations or warranties of the Borrower or any Subsidiary contained in
this Agreement, the other Loan Documents, the Transaction Documents or any other
document, certificate or written statement furnished to the Agent or the Lenders
by or on behalf of the Borrower or any Subsidiary for use in connection with the
transactions contemplated by this Agreement or the Transaction Documents, as the
case may be, contained, contains or will contain any untrue statement of a
material fact or omitted, omits or will omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances in which the same were made. The pro forma financial
information contained in such materials is based upon good faith estimates and
assumptions believed by the Borrower to be reasonable at the time made. There is
no fact known to the Borrower (other than matters of a general economic or
political nature) that has had or could reasonably be expected to have a
Material Adverse Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
---------
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, consistently applied, and furnish
to the Agent:
(a) As soon as practicable and in any event within 90 days after the
close of each of its Fiscal Years, an unqualified audit report certified by
independent certified public accountants, acceptable to the Lenders, prepared in
accordance with Agreement Accounting Principles on a consolidated and
consolidating basis (consolidating statements need not be certified by such
accountants) for itself and its Subsidiaries, including balance sheets as of the
end of such period and related statements of income, retained earnings and cash
flows accompanied by (i) any management letter prepared by said accountants, and
(ii) a certificate of said accountants that, in the course of the examination
necessary for their certification of the foregoing, they have obtained no
knowledge of
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any Default or Unmatured Default arising in respect of Section 6.27, or if, in
the opinion of such accountants, any such Default or Unmatured Default shall
exist, stating the nature and status thereof.
(b) As soon as practicable and in any event within 45 days after the
close of each of the first three Fiscal Quarters of each of its Fiscal Years,
(i) for itself and its Subsidiaries, consolidated unaudited balance sheets as at
the close of each such period and consolidated statements of income, retained
earnings and cash flows for the period from the beginning of such Fiscal Year to
the end of such Fiscal Quarter, and (ii) for each Subsidiary which is not
delivering a Quarterly Statement pursuant to clause (d), balance sheets as at
the close of each such period and statements of income, retained earnings and
cash flows from the beginning of such Fiscal Year to the end of such Fiscal
Quarter, all certified by its chief financial officer.
(c) (i) Upon the earlier of (A) fifteen days after the regulatory
filing date or (B) 75 days after the close of each Fiscal Year of each Insurance
Subsidiary, copies of the unaudited Annual Statement of such Insurance
Subsidiary, certified by the chief executive officer and/or chief financial
officer of such Insurance Subsidiary, all such statements to be prepared in
accordance with SAP consistently applied throughout the periods reflected
therein and (ii) no later than each June 15, copies of such Annual Statements
audited and certified by independent certified public accountants of recognized
national standing.
(d) Upon the earlier of (i) ten (10) days after the regulatory filing
date or (ii) 60 days after the close of each of the first three Fiscal Quarters
of each Fiscal Year of each Insurance Subsidiary, copies of the Quarterly
Statement of each of the Insurance Subsidiaries, certified by the chief
executive officer and/or chief financial officer of such Insurance Subsidiary,
all such statements to be prepared in accordance with SAP consistently applied
through the period reflected herein.
(e) Promptly and in any event within ten days after (i) learning
thereof, notification of any changes after the date hereof in the rating given
by A.M. Best & Co. in respect of any Insurance Subsidiary and (ii) receipt
thereof, copies of any ratings analysis by A.M. Best & Co. relating to any
Insurance Subsidiary.
(f) Copies of any actuarial certificates prepared with respect to any
Insurance Subsidiary, promptly after the receipt thereof, and not later than 90
days after each Fiscal Year, an actuarial opinion with respect to each Insurance
Subsidiary in form and substance satisfactory to the Agent and the Required
Lenders from an independent actuarial firm reasonably satisfactory to the Agent
and the Required Lenders.
(g) As soon as available, but in any event not later than the last
Business Day in February of each year, a copy of the plan and forecast
(including a projected consolidated and consolidating balance sheet, income
statement and funds flow statement) of the Borrower and its Subsidiaries for
such Fiscal Year.
(h) Together with the financial statements required by clauses (a)
and (b) above, a compliance certificate in substantially the form of Exhibit B
hereto signed by its chief financial officer showing the calculations necessary
to determine compliance with this Agreement and stating
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that no Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
(i) No later than the due date (including extensions) therefor with
respect to each plan year, a copy of the Form 5500, including Schedule B
thereto, with respect to each Single Employer Plan.
(j) As soon as possible and in any event within 10 days after the
Borrower knows that any Termination Event has occurred with respect to any Plan,
a statement, signed by the chief financial officer of the Borrower, describing
said Termination Event and the action which the Borrower proposes to take with
respect thereto.
(k) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (i) any notice, claim, complaint or order to the
effect that the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower, any of its Subsidiaries, or
any other Person of any Hazardous Materials into the environment or requiring
that action be taken to respond to or clean up a Release of Hazardous Materials
into the environment, and (ii) any notice, complaint or citation alleging any
violation of any Environmental Law or Environmental Permit by the Borrower or
any of its Subsidiaries. Within ten days of the Borrower or any Subsidiary
having knowledge of the proposal, enactment or promulgation of any Environmental
Law which could reasonably be expected to have a Material Adverse Effect, the
Borrower shall provide the Agent with written notice thereof.
(l) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements so
furnished.
(m) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which the
Borrower or any of its Subsidiaries files with the Securities and Exchange
Commission, the National Association of Securities Dealers, any securities
exchange, the NAIC or any insurance commission or department or analogous
Governmental Authority (including without limitation, any filing made by the
Borrower or any Subsidiary pursuant to any insurance holding company act or
related rules or regulations), but excluding routine or non-material filings
with the NAIC, any insurance commissioner or department or analogous
Governmental Authority.
(n) Promptly and in any event within ten (10) days after learning
thereof, notification of (i) any tax assessment, demand, notice of proposed
deficiency or notice of deficiency received by the Borrower or any other
Consolidated Person or (ii) the filing of any tax Lien or commencement of any
judicial proceeding by or against any such Consolidated Person, if any such
assessment, demand, notice, Lien or judicial proceeding relates to tax
liabilities in excess of ten percent (10%) of the Shareholders' Equity of the
Borrower.
(o) Such other information (including, without limitation, the annual
Best's Advance Report Service report prepared with respect to each Insurance
Subsidiary rated by A.M. Best & Co.) as the Agent or any Lender may from time to
time reasonably request.
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6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary to,
use the proceeds of the Advances to provide funds for the Acquisition and the
payment of related fees and expenses and to meet the general corporate needs of
the Borrower and its Subsidiaries. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
Margin Stock or to finance the Purchase of any Person which has not been
approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.
6.3. Notice of Default. The Borrower will, and will cause each Subsidiary
to, give prompt notice in writing to the Lenders of (a) the occurrence of any
Default or Unmatured Default, (b) the occurrence of any other development,
financial or otherwise, relating specifically to the Borrower or any of its
Subsidiaries (and not of a general economic or political nature) which could
reasonably be expected to have a Material Adverse Effect, (c) the receipt of any
notice from any Governmental Authority of the expiration without renewal,
revocation or suspension of, or the institution of any proceedings to revoke or
suspend, any License now or hereafter held by any Subsidiary which is required
to conduct its business in compliance with all applicable laws and regulations
and the expiration, revocation or suspension of which could reasonably be
expected to have a Material Adverse Effect, (d) the receipt of any notice from
any Governmental Authority of the institution of any disciplinary proceedings
against or in respect of any Subsidiary, or the issuance of any order, the
taking of any action or any request for an extraordinary audit for cause by any
Governmental Authority which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect, (e) any judicial or administrative
order limiting or controlling the business of any Subsidiary (and not the
industry in which such Subsidiary is engaged generally) which has been issued or
adopted and which has had, or could reasonably be expected to have, a Material
Adverse Effect, or (f) the commencement of any litigation which could reasonably
be expected to create a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each Subsidiary
to, (a) carry on and conduct its business only in substantially the same manner
and in substantially the same fields of enterprise as it is presently conducted,
(b) (i) with respect to the Borrower, only engage in the business of a holding
company owning entities engaged in the business of insurance or reasonably
incidental activities, (ii) with respect to each Insurance Subsidiary, only
engage in the property and casualty insurance business, and (iii) with respect
to each other Subsidiary, only engage in the premium and other finance
businesses and other activities reasonably incidental to the property and
casualty insurance business, all substantially to the extent in which it is
engaged as of the date hereof, (c) do all things necessary to remain duly
incorporated, validly existing and in good standing in its jurisdiction of
incorporation and its jurisdiction of domicile and maintain all requisite
authority to conduct its business in each other jurisdiction in which such
qualification is required, except where the failure to maintain such
qualification could not reasonably be expected to have a Material Adverse
Effect, and (d) do all things necessary to renew, extend and continue in effect
all Licenses which may at any time and from time to time be necessary for any
Subsidiary to operate its business in compliance with all applicable laws and
regulations; provided, that any Insurance Subsidiary may withdraw from one or
more states (other than its state of domicile) as an admitted insurer if such
withdrawal is determined by the Borrower's Board of Directors to be in the best
interest of the Borrower and could not reasonably be expected to have a Material
Adverse Effect. No Insurance
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Subsidiary shall change its state of domicile or incorporation without the prior
written consent of the Required Lenders. Each Wholly-Owned Subsidiary in
existence as of the date of this Agreement shall continue to be a Wholly-Owned
Subsidiary.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to, timely
file complete and correct United States federal and applicable foreign, state
and local tax returns required by applicable law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside in
accordance with Agreement Accounting Principles or SAP, as applicable.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to the Agent and any
Lender upon request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect.
6.8. Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition (ordinary wear and tear
excepted), and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times.
6.9. Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records of
the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lenders may designate upon reasonable
notice. The Borrower will keep or cause to be kept, and cause each Subsidiary to
keep or cause to be kept, appropriate records and books of account in which
complete entries are to be made reflecting its and their business and financial
transactions, such entries to be made in accordance with Agreement Accounting
Principles or SAP, as applicable, consistently applied.
6.10. Dividends. The Borrower will not, nor will it permit any Subsidiary
to, declare or pay any dividends or make any distributions on its capital stock
(other than dividends payable in its own capital stock) or redeem, repurchase or
otherwise acquire or retire any of its capital stock or any options or other
rights in respect thereof at any time outstanding, except that (a) any
Subsidiary may declare and pay dividends or make distributions to the Borrower
or any Wholly-Owned Subsidiary and (b) the Borrower may apply up to 25% of the
Net Available Proceeds realized upon the sale by
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the Borrower or any Subsidiary of any equity securities, including without
limitation, proceeds realized upon the exercise of any options, warrants or
similar instruments for the purchase of such equity securities, toward the
payment of any dividend on its capital stock or to redeem, repurchase or
otherwise acquire or redeem any of its capital stock or any options or other
rights in respect thereof.
6.11. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(a) the Loans;
(b) Indebtedness existing on the date hereof and described in
Schedule 5.17 hereto;
(c) Indebtedness with respect to Contingent Obligations permitted
under Section 6.17;
(d) Rate Hedging Obligations related to the Loans;
(e) Indebtedness owed by the Borrower to any Subsidiary;
(f) Indebtedness incurred by ACF in the ordinary course of
business and owing to ACI with a principal amount not to exceed $3,000,000 at
any one time outstanding; and
(g) other Indebtedness with an aggregate principal amount not to
exceed $250,000 at any one time outstanding.
6.12. Merger. The Borrower will not, nor will it permit any Subsidiary to,
merge or consolidate with or into any other Person, except that (a) a Subsidiary
may merge into (i) the Borrower, (ii) any Wholly-Owned Subsidiary of the
Borrower or (iii) any other entity if the purpose of such merger is to effect a
Purchase permitted under Section 6.16 and (b) the Borrower may merge with any
entity organized under the laws of the United States so long as (i) the Borrower
is the surviving entity in such merger, (ii) all applicable regulatory
requirements have been satisfied and (iii) no Default has occurred and is
continuing or would occur after giving effect thereto.
6.13. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell, transfer or otherwise dispose of its Property, to
any other Person except for (a) sales of Investments by Insurance Subsidiaries
in the ordinary course of business, and (b) leases, sales, transfers or other
dispositions of its Property that, together with all other Property of the
Borrower and its Subsidiaries previously leased, sold or disposed of (other than
Investments sold in the ordinary course of business by Insurance Subsidiaries)
as permitted by this Section 6.13 since the date hereof do not constitute a
Substantial Portion of the Property of the Borrower and its Subsidiaries.
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6.14. Sale of Accounts. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any premiums receivable or accounts
receivable, with or without recourse.
6.15. Sale and Leaseback. The Borrower will not, nor will it permit any
Subsidiary to, sell or transfer any of its Property in order to concurrently or
subsequently lease as lessee such or similar Property.
6.16. Investments and Purchases. (a) The Borrower will not, nor will it
permit any Subsidiary which is not an Insurance Subsidiary to, make or suffer to
exist any Investments (including, without limitation, loans and advances to, and
other Investments in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint venture,
or to make any Purchases, except:
(i) Cash and Cash Equivalents;
(ii) Investments in existence on the date hereof (including
Investments in Subsidiaries) and described in Schedule 6.16 hereto;
(iii) Purchases of businesses or entities engaged in the property
and casualty insurance business which do not constitute hostile takeovers
made for consideration not to exceed (A) $5,000,000 in the aggregate after
the date of this Agreement less (B) the aggregate consideration paid in
respect of any Purchases made pursuant to Section 6.16(b)(v); and
(iv) Investments by ACI consisting of loans to ACF to the extent
permitted under Section 6.11(f).
(b) The Borrower will not permit any Insurance Subsidiary to make or
suffer to exist any Investments (including, without limitation, loans and
advances to and other Investments in, Subsidiaries), or commitments therefor, or
to create any Subsidiary or to become or remain a partner in any partnership or
joint venture, or to make any Purchases, except:
(i) Cash and Cash Equivalents;
(ii) Investments in debt securities rated BBB or better by Standard
& Poor's Ratings Group, Baa-2 or better by Xxxxx'x Investors Services,
Inc. or NAIC-2 or better by the NAIC; provided, that any such Investment
which, at any time after which it is made, ceases to meet such rating
requirements shall (A) cease to be permitted hereby if then permitted by
Section 6.16(b)(iii) and (B) if not then permitted by Section 6.16(b)(iii)
remain permitted hereby until the earlier of the time it is permitted
under Section 6.16(b)(iii) and the date which is 30 days after the date on
which such rating requirement is no longer met;
(iii) Other Investments made in compliance with the insurance laws
of the domiciliary state of such Insurance Subsidiary; provided, that such
Investments do not
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exceed, in the aggregate at any one time outstanding, 10% of the
Investments of any Insurance Subsidiary;
(iv) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule 6.16 hereto; and
(v) Purchases of businesses or entities engaged in the property
and casualty insurance business (which do not constitute hostile
takeovers) made after the date of this Agreement for an aggregate
consideration not to exceed (A) $5,000,000, less (B) the aggregate
consideration paid in respect of any Purchases made pursuant to Section
6.16(a)(iii).
6.17. Contingent Obligations. The Borrower will not, nor will it permit
any Subsidiary to, make or suffer to exist any Contingent Obligation (including,
without limitation, any Contingent Obligation with respect to the obligations of
a Subsidiary), except (a) Contingent Obligations in existence on the date hereof
and set forth on Schedule 5.17 and (b) by endorsement of instruments for deposit
or collection in the ordinary course of business.
6.18. Liens. The Borrower will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(a) Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure the payment of obligations not more than 60 days past due
or which are being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation;
(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries; and
(e) Liens existing on the date hereof and described in Schedule
6.18 hereto.
6.19. Capital Expenditures. The Borrower will not, nor will it permit any
Subsidiary to, expend, or be committed to expend for Capital Expenditures
(including, without limitation, for the
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acquisition of fixed assets) on a non-cumulative basis in the aggregate for the
Borrower and its Subsidiaries more than $300,000 during any Fiscal Year.
6.20. Lease Rentals. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist obligations for Rentals in
excess of $1,000,000 during any one Fiscal Year on a non-cumulative basis in the
aggregate for the Borrower and its Subsidiaries.
6.21. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except (a) so long as in any such case no Default or
Unmatured Default has occurred and is continuing or would result after giving
effect thereto (as determined in respect of Section 6.27, on a pro forma basis,
as of the last day of the immediately preceding Fiscal Quarter), for payments
under the Fee Agreements in respect of transactions consummated after the date
of this Agreement; provided, that any payments to Frontier Insurance Group, Inc.
pursuant to the Fee Agreements other than "M&A Fees" or "Portfolio Fees" (as
defined therein) shall be made subject to clause (b) below; and (b) in the
ordinary course of business and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary than the Borrower or such
Subsidiary would obtain in a comparable arms-length transaction. Any payments
prohibited pursuant to clause (a) hereof may be subsequently made by the
Borrower or any Subsidiary so long as no Default or Unmatured Default has
occurred and is continuing or would occur after giving effect thereto.
6.22. Amendments to Agreements. The Borrower will not, and will not permit
any Subsidiary to, amend, waive, modify or terminate the Investment Agreement or
the Acquisition Documents or amend, waive or modify the Fee Agreements so as to
increase the amounts payable thereunder, in any case without the prior written
consent of the Required Lenders.
6.23. Other Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire, any
Indebtedness prior to the date when due (other than the Loans) if a Default or
Unmatured Default has occurred and is continuing or would occur after giving
effect thereto.
6.24. Environmental Matters. The Borrower shall and shall cause each of
its Subsidiaries to (a) at all times comply in all material respects with all
applicable Environmental Laws and (b) to the extent required of the Borrower and
its Subsidiaries pursuant to applicable Environmental Laws, promptly take any
and all necessary remedial actions in response to the presence, storage, use,
disposal, transportation or Release of any Hazardous Materials on, under or
about any real property owned, leased or operated by the Borrower or any of its
Subsidiaries.
6.25. Change in Corporate Structure; Fiscal Year. The Borrower shall not,
nor shall it permit any Subsidiary to, (a) permit any amendment or modification
to be made to its certificate or articles of incorporation or by-laws which is
materially adverse to the interests of the Lenders (provided that the Borrower
shall notify the Agent of any other amendment or modification thereto
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as soon as practicable thereafter) or (b) change its Fiscal Year to end on any
date other than December 31 of each year.
6.26. Inconsistent Agreements. The Borrower shall not, nor shall it permit
any Subsidiary to, enter into any indenture, agreement, instrument or other
arrangement which, (a) directly or indirectly prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence of the Obligations, the granting of Liens to secure the
Obligations, the amending of the Loan Documents or the ability of any Subsidiary
to (i) pay dividends or make other distributions on its capital stock, (ii) make
loans or advances to the Borrower or (iii) repay loans or advances from the
Borrower or (b) contains any provision which would be violated or breached by
the making of Advances or by the performance by the Borrower of any of its
obligations under any Loan Document.
6.27. Financial Covenants. The Borrower shall:
6.27.1. Minimum Shareholders' Equity. At all times after the date
hereof, maintain a minimum Shareholders' Equity at least equal to the sum of (a)
90% of Shareholders' Equity as of the date of this Agreement, plus (b) 50% of
the Borrower's positive consolidated Net Income, if any, for each Fiscal Quarter
ending after the date hereof and on or prior to the date of determination, plus
(c) 50% of the Net Available Proceeds received by the Borrower or any Subsidiary
from the issuance of equity securities after the date of this Agreement, plus
(d) 50% of the aggregate amount of capital contributions made to the Borrower
after the date of this Agreement.
6.27.2. Cash Flow Coverage Ratio. As of the end of each Fiscal
Quarter, maintain a Cash Flow Coverage Ratio of not less than 1.5 to 1.0. For
the purpose of each calculation of the Cash Flow Coverage Ratio made from the
date of this Agreement through September 30, 1998, such calculation shall, to
the extent applicable, include the financial results of Old ACI and Old ACF.
6.27.3. Debt to Capitalization Ratio. At all times maintain a Debt
to Capitalization Ratio of not greater than 30%.
6.27.4. Operating Leverage Ratio. As of the end of any Fiscal
Quarter, cause each Insurance Subsidiary to maintain an Operating Leverage Ratio
of not more than 3.0 to 1.0.
6.27.5. ACF Net Worth. At all times after the date hereof, cause ACF
to maintain a minimum shareholder's equity, as determined in accordance with
Agreement Accounting Principles, at least equal to the sum of (a) $1,000,000,
plus (b) 50% of ACF's positive consolidated Net Income, if any, for each Fiscal
Quarter ending after the date hereof and on or prior to the date of
determination, plus (c) 50% of the aggregate amount of capital contributions
made to ACF after the date of this Agreement.
6.28. Tax Consolidation. The Borrower will not and will not permit any of
its Subsidiaries to (a) file or consent to the filing of any consolidated,
combined or unitary income tax return with any Person other than the Borrower
and its Subsidiaries or (b) amend, terminate or fail to enforce the Tax Sharing
Agreement or enter into any other tax sharing agreement or similar arrangement.
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6.29. ERISA Compliance.
With respect to any Plan, neither the Borrower nor any Subsidiary
shall:
(a) engage in any "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) for which a civil
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975 of
the Code in excess of $100,000 could be imposed;
(b) incur any "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA) in excess of $250,000, whether or not waived,
or permit any Unfunded Liability to exceed $2,000,000;
(c) permit the occurrence of any Termination Event which could
reasonably be expected to result in a liability to the Borrower or any other
member of the Controlled Group in excess of $250,000;
(d) be an "employer" (as such term is defined in Section 3(5) of
ERISA) required to contribute to any Multiemployer Plan or a "substantial
employer" (as such term in defined in Section 4001(a)(2) of ERISA) required to
contribute to any Multiple Employer Plan; or
(e) permit the establishment or amendment of any Plan or fail to
comply with the applicable provisions of ERISA and the Code with respect to any
Plan which could result in liability to the Borrower or any other member of the
Controlled Group which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
6.30. Reinsurance. After the Closing Date the Borrower will not permit any
Insurance Subsidiary to (a) enter into bulk reinsurance arrangements, including
without limitation any bulk financial reinsurance arrangements, or (b) enter
into any other (or renew, extend or materially modify any existing) reinsurance
arrangements except (i) with reinsurers rated at least "A-" (at the time such
reinsurance arrangements are entered into) by A.M. Best & Co. or its equivalent
by another reputable rating agency or reinsurers whose obligations to the
Insurance Subsidiaries are secured by letters of credit or other collateral
reasonably acceptable to the Agent and (ii) in the ordinary course of business
and on substantially the same terms and conditions as in arrangements
customarily entered into by such Insurance Subsidiary.
ARTICLE VII
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or
in connection with this
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Agreement, any other Loan Document, any Loan, or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall be
false in any material respect on the date as of which made.
7.2. Nonpayment of (a) any principal of any Note when due, or (b) any
interest upon any Note or any commitment fee or other fee or obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.2, Section 6.3(a) or Sections 6.10 through 6.30.
7.4. The breach by the Borrower (other than a breach which constitutes a
Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this
Agreement which is not remedied within ten (10) days after written notice from
the Agent or any Lender.
7.5. The default by the Borrower or any of its Subsidiaries in the
performance of any term, provision or condition contained in any agreement or
agreements under which any Indebtedness aggregating in excess of $25,000 was
created or is governed, or the occurrence of any other event or existence of any
other condition, the effect of any of which is to cause, or to permit the holder
or holders of such Indebtedness to cause, such Indebtedness to become due prior
to its stated maturity; or any such Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof.
7.6. The Borrower or any of its Subsidiaries shall (a) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (b) make an assignment for the benefit of creditors, (c)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or its
Property, (d) institute any proceeding seeking an order for relief under the
Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate
it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (e) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6, (f) fail to contest in good faith any appointment or proceeding
described in Section 7.7 or (g) become unable to pay, not pay, or admit in
writing its inability to pay, its debts generally as they become due.
7.7. Without the application, approval or consent of the Borrower or any
of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or its
Property, or a proceeding described in Section 7.6(d) shall be instituted
against the Borrower or any of its Subsidiaries and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of thirty consecutive days.
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7.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of (each a "Condemnation"),
all or any portion of the Property of the Borrower and its Subsidiaries which,
when taken together with all other Property of the Borrower and its Subsidiaries
so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation occurs,
constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within thirty
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $100,000 (or multiple judgments or orders for the payment
of an aggregate amount in excess of $250,000), which is not stayed on appeal or
otherwise being appropriately contested in good faith and as to which no
enforcement actions have been commenced.
7.10. Nonpayment by the Borrower of any Rate Hedging Obligation or the
breach by the Borrower of any term, provision or condition contained in any
agreement, device or arrangement giving rise to any Rate Hedging Obligation.
7.11. Any material License of any Subsidiary (a) shall be revoked by the
Governmental Authority which issued such License, or any action (administrative
or judicial) to revoke such License shall have been commenced against such
Subsidiary and shall not have been dismissed within 30 days after the
commencement thereof, (b) shall be suspended by such Governmental Authority for
a period in excess of 30 days or (c) shall not be reissued or renewed by such
Governmental Authority upon the expiration thereof following application for
such reissuance or renewal of such Subsidiary.
7.12. Any Subsidiary shall be the subject of a final non-appealable order
imposing a fine in an amount in excess of $250,000 in any single instance or
other such orders imposing fines in excess of $500,000 in the aggregate after
the date of this Agreement by or at the request of any state insurance
regulatory agency as a result of the violation by such Subsidiary of such
state's applicable insurance laws or the regulations promulgated in connection
therewith.
7.13. Any Insurance Subsidiary shall become subject to (a) any
conservation or liquidation order, directive or mandate issued by any
Governmental Authority or (b) any other directive or mandate issued by any
Governmental Authority which could reasonably be expected to have a Material
Adverse Effect, which in either case is not stayed within ten (10) days.
7.14. The Borrower or any other member of the Controlled Group shall
become liable for any amount in respect of any employee pension benefit plan, as
defined in Section 3(2) of ERISA, except for the Plan referenced on Schedule
5.10, which could reasonably be expected to have a Material Adverse Effect.
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ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent
or any Lender. If any other Default occurs, the Required Lenders (or the Agent
with the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.
If, within ten Business Days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender:
(a) Extend the final maturity of any Loan or Note or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest or fees thereon;
(b) Reduce the percentage specified in the definition of Required
Lenders;
(c) Reduce the amount of or extend the date for the mandatory
payments and commitment reductions required under Section 2.1(b) or 2.7, or
increase the amount of the Commitment of any Lender hereunder;
(d) Extend the Facility Termination Date;
(e) Amend this Section 8.2; or
(f) Permit any assignment by the Borrower of its Obligations or
its rights hereunder.
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No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1. Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement or of the Borrower or any Subsidiary
contained in any Loan Document shall survive delivery of the Notes and the
making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Taxes. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent and the Lenders and supersede all
prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof other than the fee letter dated
April 18, 1997 in favor of First Chicago.
9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to
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perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse the Agent
for any costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, modification,
and administration of the Loan Documents. The Borrower also agrees to reimburse
the Agent and the Lenders for any costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for the Agent
and each Lender, which attorneys may be employees of the Agent or such Lender)
paid or incurred by the Agent or any Lender in connection with the collection
and enforcement of the Loan Documents. The Borrower further agrees to indemnify
the Agent and each Lender, its directors, officers and employees against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor whether or not the Agent or any Lender is a party thereto) which any of
them may pay or incur arising out of or relating to this Agreement, the other
Loan Documents or the Transaction Documents, the transactions contemplated
hereby or thereby or the direct or indirect application or proposed application
of the proceeds of any Loan hereunder except to the extent that they arise out
of the gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrower under this Section shall
survive the termination of this Agreement.
9.8. Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.11. Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations. The Borrower shall rely entirely
upon its own judgment with respect to its business, and any review, inspection
or supervision of, or information supplied to the Borrower by the Agent or the
Lenders is for the protection of the Agent and the Lenders and neither the
Borrower nor any other Person is entitled to rely thereon. The Borrower
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agrees that neither the Agent nor any Lender shall have liability to the
Borrower (whether sounding in tort, contract or otherwise) for losses suffered
by the Borrower in connection with, arising out of, or in any way related to,
the transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined by a judgment of a court that is binding on the Agent,
or such Lender, final and not subject to review on appeal, that such losses were
the result of acts or omissions on the part of the Agent or such Lender, as the
case may be, constituting gross negligence or willful misconduct of the party
from which recovery is sought. Whether or not such damages are related to a
claim that is subject to the waiver effected above and whether or not such
waiver is effective, neither the Agent nor any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases and agrees not to xxx
for, any special, indirect, or consequential or punitive damages suffered by the
Borrower in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby or the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS; PROVIDED, THAT SUCH PROCEEDINGS MAY BE BROUGHT IN OTHER COURTS IF
JURISDICTION MAY NOT BE OBTAINED IN A COURT IN CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR
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CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. Disclosure. The Borrower and each Lender hereby (a) acknowledge and
agree that First Chicago and/or its Affiliates from time to time may hold other
investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from any conflict of interest arising
from such investments, loans or relationships.
9.16. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Agent and the Lenders and each party has notified the Agent that
it has taken such action.
ARTICLE X
THE AGENT
---------
10.1. Appointment. First Chicago is hereby appointed Agent hereunder and
under each other Loan Document, and each of the Lenders authorizes the Agent to
act as the agent of such Lender. The Agent agrees to act as such upon the
express conditions contained in this Article X. The Agent shall not have a
fiduciary relationship in respect of the Borrower or any Lender by reason of
this Agreement.
10.2. Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower or any Lender for
any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except for its or
their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder, (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition
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specified in Article IV, except receipt of items required to be delivered to the
Agent and not waived at closing, or (d) the validity, effectiveness,
sufficiency, enforceability or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith. The Agent shall have no
duty to disclose to the Lenders information that is not required to be furnished
by the Borrower to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its individual
capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders (or, to the extent required by Section 8.2, all Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all holders of Notes. The Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (a) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (b) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents, and
(c) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents;
provided, that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Agent. The
obligations of the Lenders under this Section 10.8 shall survive payment of the
Obligations and termination of this Agreement.
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10.9. Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.
10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a Lender.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
10.12. Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty days after the resigning Agent's
giving notice of its intention to resign, then the resigning Agent may appoint,
on behalf of the Borrower and the Lenders, a successor Agent. If the Agent has
resigned and no successor Agent has been appointed, the Lenders may perform all
the duties of the Agent hereunder and the Borrower shall make all payments in
respect of the Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the appointment. Any
such successor Agent shall be a commercial bank having capital and retained
earnings of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Agent. Upon the effectiveness of the resignation of the Agent,
the resigning Agent shall be discharged from its further duties and obligations
hereunder and under the Loan Documents. After the effectiveness of the
resignation of an Agent, the provisions of this Article X shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents.
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ARTICLE XI
SETOFF; RATABLE PAYMENTS
------------------------
11.1. Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Section 2.18(a), 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata
share of such Loans, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made. If an amount to be setoff is to be applied to Indebtedness of the
Borrower to a Lender, other than Indebtedness evidenced by any of the Notes held
by such Lender, such amount shall be applied ratably to such other Indebtedness
and to the Indebtedness evidenced by such Notes.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (a) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents, and (b) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (b) of this Section, any Lender may at
any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment to a Federal Reserve Bank shall
release the transferor Lender from its obligations hereunder. The Agent may
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until such payee complies with Section 12.3 in the case of an assignment
thereof or, in the case of any other transfer, a written notice of the transfer
is filed with the Agent. Any assignee or transferee of
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a Note agrees by acceptance thereof to be bound by all the terms and provisions
of the Loan Documents. Any request, authority or consent of any Person, who at
the time of making such request or giving such authority or consent is the
holder of any Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in exchange
therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its 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 of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver which effects any of the modifications referenced in
clauses (a) through (f) of Section 8.2.
12.2.3. Benefit of Setoff. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents; provided, that each Lender shall
retain the right of setoff provided in Section 11.1 with respect to the amount
of participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 11.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of its
rights and obligations under the Loan Documents; provided, however, that in the
case of an assignment to an entity which is not a Lender or an Affiliate of a
Lender, such assignment shall be in a minimum amount of $1,000,000. Such
assignment shall be substantially in the form of Exhibit C hereto or in such
other form as may be agreed to by the parties thereto. The consent of the Agent
and, so long as no Default is continuing, the Borrower
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shall be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof. Such consent shall not
be unreasonably withheld.
12.3.2. Effect; Effective Date. Upon (a) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit I to Exhibit
C hereto (a "Notice of Assignment"), together with any consents required by
Section 12.3.1, and (b) payment of a $3,500 fee to the Agent for processing such
assignment, such assignment shall become effective on the effective date
specified in such Notice of Assignment. On and after the effective date of such
assignment, (a) such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and (b) the transferor Lender
shall be released with respect to the percentage of the Aggregate Commitment and
Loans assigned to such Purchaser without any further consent or action by the
Borrower, the Lenders or the Agent. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent and
the Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their Commitments, as adjusted pursuant to such assignment.
12.4. Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, subject,
to the extent applicable, to Section 12.5.
12.5. Confidentiality. Each Lender shall hold all information relating to
the Borrower or any of its Subsidiaries obtained by such Lender pursuant to this
agreement (including, without limitation, pursuant to Section 6.9) in confidence
in accordance with such Lender's customary procedures for handling information
of this nature, except to the extent such information (a) was or becomes
generally available to the public other than as a result of disclosure by the
Lender or (b) was or becomes available on a non-confidential basis from a source
other than the Borrower or any Subsidiary, provided that such source is not
bound by a confidentiality agreement with the Borrower or such Subsidiary known
to such Lender. Notwithstanding the foregoing, any Lender may make such
disclosure (i) as is reasonably required by any actual or prospective Transferee
in connection with the transfer of, or participation in, any Loans hereunder,
provided that such actual or prospective Transferee executes an agreement for
the benefit of the Borrower with such Lender containing provisions substantially
identical to those contained in this Section 12.5, (ii) at the request or
pursuant to any requirement of any Governmental Authority to which the Lender is
subject or in connection with an examination of such Lender by any such
authority, (iii) pursuant to subpoena or other court process, provided that if
not prohibited by law, such Lender will use its best efforts to provide notice
to the Borrower of the receipt of such subpoena prior to delivering confidential
material in response thereto, (iv) when required to do so in accordance with the
provisions of any applicable requirement of law, (v) to the extent reasonably
required in connection with any litigation or proceeding with respect to the
transactions contemplated hereby to which the Agent or any Lender or their
respective Affiliates may be party, (vi) to the extent reasonably required in
connection with
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the exercise of any remedy hereunder or under any other Loan Document, (vii) to
such Lender's independent auditors and other professional advisors with a need
to know and who agree to keep such information confidential to the extent
required of such Lender hereunder, (viii) as to any Lender or its Affiliate, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Borrower or any Subsidiary is party or is deemed
party with such Lender or such Affiliate and (ix) to its Affiliates, provided
that any such Affiliate agrees in writing to keep such information confidential
to the same extent required of such Lender hereunder.
12.6. Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.18.
ARTICLE XIII
NOTICES
-------
13.1. Giving Notice. Except as otherwise permitted by Section 2.13 with
respect to telephonic notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with first class
postage prepaid, return receipt requested, shall be deemed given three (3)
Business Days after deposit in the U.S. mail; any notice, if transmitted by
facsimile or overnight courier shall be deemed given when received by the
addressee.
13.2. Change of Address. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
AMERICAN COUNTRY HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Print Name: Xxxxxx X. Xxxxxxx
----------------------------------
Title: President
---------------------------------------
Address: Xxxxxx X. Xxxxxxx
Grand Bay Plaza
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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Commitments
-----------
THE FIRST NATIONAL BANK OF CHICAGO,
Commitment $7,000,000 Individually and as Agent
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Print Name: Xxxxxxx X. Xxxxxx
------------------------------
Title: Vice President
-----------------------------------
Address: Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Aggregate Initial
Commitment $7,000,000
==========
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