Exhibit 10(e)
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$50,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
WHITE MOUNTAINS HOLDINGS, INC.,
as Borrower,
THE LENDERS NAMED HEREIN
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
DATED AS OF
July 30, 1997
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS ...................................................... 1
ARTICLE II THE CREDITS ..................................................... 16
2.1. Advances ....................................................... 16
2.2. Ratable Loans .................................................. 16
2.3. Types of Advances .............................................. 17
2.4. Facility Fee; Reductions in Aggregate Commitment ............... 17
2.5. Minimum Amount of Each Advance ................................. 17
2.6. Optional Principal Payments .................................... 17
2.7. Mandatory Commitment Reductions ................................ 17
2.8. Method of Selecting Types and
Interest Periods for New Advances .............................. 18
2.9. Conversion and Continuation of Outstanding Advances ............ 19
2.10. Changes in Interest Rate, etc. ................................. 19
2.11. Rates Applicable After Default ................................. 20
2.12. Method of Payment .............................................. 20
2.13. Notes .......................................................... 20
2.14. Interest Payment Dates; Interest and Fee Basis. ................ 20
2.15. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions .......................................... 21
2.16. Lending Installations .......................................... 21
2.17. Non-Receipt of Funds by the Agent .............................. 21
2.18. Taxes .......................................................... 21
2.19. Agent's Fees ................................................... 22
ARTICLE III CHANGE IN CIRCUMSTANCES ........................................ 23
3.1. Yield Protection ............................................... 23
3.2. Changes in Capital Adequacy Regulations ........................ 23
3.3. Availability of Types of Advances .............................. 24
3.4. Funding Indemnification ........................................ 24
3.5. Lender Statements; Survival of Indemnity ....................... 24
ARTICLE IV CONDITIONS PRECEDENT ............................................ 25
4.1. Initial Loans .................................................. 25
4.2. Each Future Advance ............................................ 26
ARTICLE V REPRESENTATIONS AND WARRANTIES ................................... 27
5.1. Corporate Existence and Standing ............................... 27
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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 ........................................ 28
5.7. Taxes .......................................................... 29
5.8. Litigation and Contingent Obligations .......................... 29
5.9. Capitalization ................................................. 29
5.10. ERISA .......................................................... 30
5.11. Defaults ....................................................... 30
5.12. Federal Reserve Regulations .................................... 30
5.13. Investment Company ............................................. 30
5.14. Certain Fees ................................................... 30
5.15. Solvency ....................................................... 31
5.16. Indebtedness ................................................... 31
5.17. Insurance Licenses ............................................. 31
5.18. Material Agreements ............................................ 31
5.19. Environmental Laws ............................................. 31
5.20. Insurance ...................................................... 32
5.21. Disclosure ..................................................... 32
ARTICLE VI COVENANTS ....................................................... 32
6.1. Financial Reporting ............................................. 32
6.2. Use of Proceeds ................................................. 34
6.3. Notice of Default ............................................... 35
6.4. Conduct of Business ............................................. 35
6.5. Taxes ........................................................... 35
6.6. Insurance ....................................................... 36
6.7. Compliance with Laws ............................................ 36
6.8. Maintenance of Properties ....................................... 36
6.9. Inspection ...................................................... 36
6.11. Indebtedness .................................................... 37
6.12. Merger .......................................................... 37
6.13. Investments and Purchases ....................................... 38
6.14. Contingent Obligations .......................................... 39
6.15. Liens ........................................................... 39
6.16. Affiliates ...................................................... 40
6.17. Environmental Matters ........................................... 40
6.18. Change in Corporate Structure; Fiscal Year ...................... 40
6.19. Inconsistent Agreements ......................................... 40
6.20. Financial Covenants ............................................. 41
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6.20.2. Leverage Ratio ............................................... 41
6.20.3. Fixed Charges Coverage Ratio ................................. 41
6.20.4. Finance Assets Ratio ......................................... 41
6.20.5. Statutory Surplus ............................................ 41
6.21. Tax Consolidation ............................................ 41
6.22. ERISA Compliance ............................................. 42
ARTICLE VII DEFAULTS ....................................................... 42
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES ................ 44
8.1. Acceleration ..................................................... 44
8.2. Amendments ....................................................... 45
8.3. Preservation of Rights ........................................... 45
ARTICLE IX GENERAL PROVISIONS ............................................. 46
9.1. Survival of Representations .................................... 46
9.2. Governmental Regulation ........................................ 46
9.3. Taxes .......................................................... 46
9.4. Headings ....................................................... 46
9.5. Entire Agreement ............................................... 46
9.6. Several Obligations; Benefits of this Agreement ................ 46
9.7. Expenses; Indemnification ...................................... 46
9.8. Numbers of Documents ........................................... 47
9.9. Accounting ..................................................... 47
9.10. Severability of Provisions ..................................... 47
9.11. Nonliability of Lenders ........................................ 47
9.12. CHOICE OF LAW .................................................. 48
9.13. CONSENT TO JURISDICTION ........................................ 48
9.14. WAIVER OF JURY TRIAL ........................................... 48
9.15. Disclosure ..................................................... 48
9.16. Counterparts ................................................... 48
9.17. Treatment of Certain Information: Confidentiality .............. 49
ARTICLE X THE AGENT ....................................................... 49
10.1. Appointment .................................................... 49
10.2. Powers ......................................................... 49
10.3. General Immunity ............................................... 50
10.4. No Responsibility for Loans, Recitals, etc. .................... 50
10.5. Action on Instructions of Lenders .............................. 50
10.6. Employment of Agents and Counsel ............................... 50
10.7. Reliance on Documents; Counsel ................................. 50
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10.8. Agent's Reimbursement and Indemnification ..................... 51
10.9. Notice of Default ............................................. 51
10.10. Rights as a Lender ............................................ 51
10.11. Lender Credit Decision ........................................ 51
10.12. Successor Agent ............................................... 51
ARTICLE XI SETOFF; RATABLE PAYMENTS ....................................... 52
11.1. Setoff ........................................................ 52
11.2. Ratable Payments .............................................. 52
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ............. 53
12.1. Successors and Assigns ....................................... 53
12.2. Participations. .............................................. 53
12.2.1. Permitted Participants; Effect. .............................. 53
12.2.2. Voting Rights ................................................ 53
12.2.3. Benefit of Setoff ............................................ 54
12.3. Assignments .................................................. 54
12.3.1. Permitted Assignments ........................................ 54
12.3.2. Effect; Effective Date ....................................... 54
12.4. Dissemination of Information ................................. 55
12.5. Tax Treatment ................................................ 55
ARTICLE XIII NOTICES ...................................................... 55
13.1. Giving Notice ................................................ 55
13.2. Change of Address ............................................ 55
ARTICLE XIV AMENDMENT AND RESTATEMENT ..................................... 55
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EXHIBITS
Exhibit A (Article 1) Note
Exhibit B (Section 6.1(g)) Compliance Certificate
Exhibit C (Section 6.12(d)) Assumption Agreement
Exhibit D (Section 12.3.1) Assignment Agreement
SCHEDULES
Schedule 1 - Margins
Schedule 5.3 - Approvals and Consents
Schedule 5.9 - Capitalization and Subsidiaries
Schedule 5.10 - ERISA
Schedule 5.16 - Indebtedness
Schedule 5.17 - Insurance Licenses
Schedule 5.18 - Material Restrictions
Schedule 6.15 - Liens
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AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of July 30, 1997, is
among WHITE MOUNTAINS HOLDINGS, INC., a New Hampshire corporation, the Lenders
and THE FIRST NATIONAL BANK OF CHICAGO, individually and as Agent.
R E C I T A L S:
A. The Borrower has requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $50,000,000, the
proceeds of which the Borrower will use for the working capital and 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
As used in this Agreement:
"ABR Advance" means an Advance which bears interest at the Alternate Base
Rate.
"Adjusted Net Worth" means, with respect to the Borrower, Net Worth of the
Borrower (on a consolidated basis) on the date of determination (without
duplication for amounts already excluded) minus the amount by which the
aggregate book value of the Borrower's equity interest in FAE and SOMSC at such
time exceeds $75,000,000.
"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 20% 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 $50,000,000.
"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; provided, however, that if any
changes in accounting principles from those in effect on the date of this
Agreement are adopted which result in a material change in the method of
calculation of any of the financial covenants, standards or terms in this
Agreement, the parties agree to enter into negotiations to determine whether
such provisions require amendment and, if so, the terms of such amendment so as
to equitably reflect such changes. Until a resolution thereof is reached, all
calculations made for the purposes of determining compliance with the terms of
this Agreement shall be made by application of generally accepted accounting
principles in effect on the date of this Agreement applied, to the extent
applicable, on a basis consistent with that used in the preparation of the
Financial Statements furnished to the Lenders pursuant to Section 5.5 hereof.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Corporate Base Rate for such day, and (b) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum, in each
case changing when and as the Corporate Base Rate and the Federal Funds
Effective Rate, as the case may be, changes.
"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.
"Applicable Eurodollar Margin" has the meaning ascribed to it by, and shall
be determined in accordance with, Schedule 1.
"Applicable Facility Fee Margin" has the meaning ascribed to it by, and
shall be determined in accordance with, Schedule 1.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Asset Disposition" means any sale, transfer or other disposition (outside
the ordinary course of business) of any material asset of the Borrower in a
single transaction or in a series of related transactions (other than the sale
of (a) Margin Stock or (b) the sale of a Money Market Investment or of the
Borrower's equity interests in FAE and SOMSC the proceeds of which, in the case
of each of (a) and (b) are utilized to pay dividends permitted by Section 6.10),
including any such sale, transfer or disposition by means of a transaction
permitted by Section 6.12.
"Authorized Officer" means any of the chief executive officer, president,
chief financial officer, treasurer or controller of the Borrower, 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.
"Benefit Plan" means any deferred benefit plan for the benefit of present,
future or former employees, whether or not such benefit plan is a Plan.
"Borrower" means White Mountains Holdings, Inc., a New Hampshire
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.
"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.
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"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.
"Change" is defined in Section 3.2.
"Change in Control" means (a) the acquisition by any "person" or "group"
(as such terms are used in Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended) (other than Parent, any Wholly-Owned Subsidiary of
Parent, Xxxx X. Xxxxx or any Plan or any Benefit Plan of Parent, the Borrower or
any of their Subsidiaries), including without limitation any acquisition
effected by means of any transaction contemplated by Section 6.12, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 25% or more
of the outstanding shares of voting stock of the Borrower; or (b) during any
period of 12 consecutive calendar months, commencing on the date of the
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
(c) during any period of 12 consecutive calendar months, commencing on the date
of this Agreement, the ceasing of individuals who hold an office possessing the
title Senior Vice President or such title that ranks senior to a Senior Vice
President (collectively, "Senior Management") of the Borrower on the first day
of each such period to constitute a majority of the Senior Management of the
Borrower. Notwithstanding the foregoing, the FAE Merger shall not be deemed in
and of itself to constitute a Change in Control.
"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 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.
"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for a
Person 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
4
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, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract or application for a Letter of Credit,
excluding however (a) insurance policies and insurance contracts issued in the
ordinary course of business and (b) any financial guarantees issued by Financial
Security Assurance Holdings Ltd.
"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 publicly 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.
"Default" means an event described in Article VII.
"Environmental Laws" is defined in Section 5.19.
"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
5
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 the Applicable
Eurodollar Margin. The Eurodollar Rate shall be rounded to the next higher
multiple of 1/100 of 1% if the rate is not such a multiple.
"Facility Fee" is defined in Section 2.4(a).
"Facility Termination Date" means July 30, 2002.
"FAE" means, at any time prior to the FAE Merger, Fund American
Enterprises, Inc., a Delaware corporation and direct Wholly-Owned Subsidiary of
Parent, and on and after the consummation of the FAE Merger, Fund American
Enterprises, Inc. (f/k/a Fund American Enterprises II, Inc.), a Delaware
corporation and direct Wholly-Owned Subsidiary of the Borrower.
"FAE Merger" means the merger of the corporation known as of the date of
this Agreement as Fund American Enterprises, Inc. into the Borrower with Fund
American Enterprises, Inc. surviving the merger and changing its name to White
Mountain Holdings, Inc.
"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.
"Finance Assets" means each of the following: (a) investments in
securities issued or fully guaranteed by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof), (b) investments in
equity securities traded on the New York Stock Exchange, the American Stock
Exchange or NASDAQ and securities convertible in to such equity securities, (c)
investments in Investment Grade Obligations, (d) investments in money market
funds substantially all the assets of which are comprised of securities of the
types described in clauses (a) through (c) above, (e) investments in
Wholly-Owned Subsidiaries of the Borrower, (f) investments in Main Street
America Holdings, Inc., Folksamerica Holding Company Inc. and Financial Security
Assurance Holdings Ltd. and (g) so long as put rights with respect thereto are
available to the Borrower, investments in US West Preferred Stock; provided,
that Finance Assets shall not include any securities pledged to secure any
obligations (contingent or otherwise) or any Investments in FAE or SOMSC.
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"Finance Assets Ratio" means, at any time, the ratio of (a) Finance Assets
of the Borrower at such time to (b) the excess of (i) Funded Indebtedness of the
Borrower at such time over (ii) cash and Money Market Investments of the
Borrower at such time. For purposes of this definition, Finance Assets shall be
valued, without duplication, at fair market value to the extent there exists a
readily ascertainable fair market value for such Finance Asset or, in the event
there exists no such readily ascertainable fair market value for such Finance
Assets, at book value, as calculated in accordance with Agreement Accounting
Principles.
"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.
"Fixed Charges Coverage Ratio" means, as of the end of any Fiscal Quarter,
the ratio of:
(a) the sum, without duplication, of,
(i) investments of the Borrower and Valley in cash, Money Market
Investments and clauses (a) through (d) of the definition "Finance
Assets" as of the end of such Fiscal Quarter, plus
(ii) cash dividends received by the Borrower and Valley during the
four Fiscal Quarters then ended from Financial Security Assurance
Holdings Ltd., Folksamerica Holding Company Inc. and Main Street
America Holdings, Inc., as long as such Person was not a Wholly-Owned
Subsidiary of the Borrower or Valley at the time such payment was made
and to the extent that such Person would not be restricted from paying
such dividend during the succeeding four Fiscal Quarters, plus
(iii) an amount equal to the maximum amount of dividends and
intercompany fees available to be paid to the Borrower and Valley
without approval of any Governmental Authority by each Wholly-Owned
Subsidiary of the Borrower and Valley (other than FAE, SOMSC and each
Wholly-Owned Insurance Subsidiary) as of the end of such Fiscal
Quarter, plus
(iv) an amount equal to the maximum amount of dividends and
intercompany
7
fees available to be paid to the Borrower and Valley without approval
of any Governmental Authority by each present and future Wholly-Owned
Subsidiary of the Borrower that is a first-tier Insurance Subsidiary
of either the Borrower or any of its Subsidiaries that is not an
Insurance Subsidiary pursuant to applicable insurance statutes, rules
and regulations of the applicable Governmental Authority during the
succeeding four Fiscal Quarters,
to (b) Fixed Charges.
"Fixed Charges" means, with respect to the Borrower and Valley, as of the
end of any Fiscal Quarter, the sum, without duplication, of (a) interest
expenses payable on outstanding Indebtedness (determined by adjusting the
principal amount of such Indebtedness for scheduled amortization payments as
reflected in clauses (c), (d) and (e) below and assuming that the applicable
interest rate in effect as of the date of determination would remain constant
during the succeeding four Fiscal Quarter period), (b) dividends payable on
preferred stock, (c) Indebtedness payable pursuant to the scheduled amortization
of such Indebtedness, (d) Loans payable pursuant to Section 2.1(b) (determined
by assuming that the principal amount of Loans as of the date of determination
would remain constant during the succeeding four Fiscal Quarter period) as a
result of reductions in the Aggregate Commitment occurring in any such period
pursuant to Section 2.7(a) (other than on July 30, 2002), and (e) Loans (as
defined in the Valley Credit Agreement) payable pursuant to Section 2.1(b) of
the Valley Credit Agreement (determined by assuming that the outstanding
principal amount of such Loans as of the date of determination would remain
constant during the succeeding four Fiscal Quarter period) as a result of
reductions in the Aggregate Commitment (as defined in the Valley Credit
Agreement) occurring in any such period pursuant to Section 2.7(a) of the Valley
Credit Agreement (other than on July 30, 2002), in each case for the period of
four Fiscal Quarters immediately following the date of determination.
"Funded Indebtedness" means Indebtedness of the type described in clauses
(a), (d), (e) and (h) of the definition "Indebtedness".
"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 commissioner 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 5.19.
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"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
insurance business as an issuer or underwriter of insurance policies and/or
insurance contracts.
"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 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 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 Grade Obligations" means, as of any date, investments having an
NAIC investment rating of 1 or 2, or a Standard & Poor=s rating within the range
of ratings from AAA to BBB-, or a Xxxxx=s rating within the range of ratings
from Aaa to Baa3.
"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.
9
"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.
"Leverage Ratio" means, at any time, the ratio of (a) the consolidated
Funded Indebtedness of the Borrower and its Subsidiaries, other than FAE and
SOMSC, at such time to (b) the sum of the consolidated Funded Indebtedness of
the Borrower and its Subsidiaries, other than FAE and SOMSC, at such time plus
Net Worth (without giving effect to the Borrower's equity interests in FAE and
SOMSC) at such time, in all cases determined in accordance with Agreement
Accounting Principles.
"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), save in respect of liabilities and obligations arising out
of the underwriting of insurance policies and contracts of insurance.
"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, condition (financial or other), performance, results of
operations, or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the ability of the Borrower or any Subsidiary 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.
"Money Market Investments" means (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than one year from the date of
acquisition thereof; (b) certificates of deposit issued by any bank or trust
10
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; (c) commercial paper rated A-1 or better P-1 or better by Standard &
Poor's Ratings Group or Xxxxx'x Investors Services, Inc., respectively, maturing
not more than 90 days from the date of acquisition thereof; and (d) shares in an
open-end management investment company with U.S. dollar denominated investments
in fixed income obligations, including repurchase agreements, fixed time
deposits and other obligations, with a dollar weighted average maturity of not
more than one year, and for the calculation of this dollar weighted average
maturity, certain instruments which have a variable rate of interest readjusted
no less frequently than annually are deemed to have a maturity equal to the
period remaining until the next readjustment of the interest rate.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"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 (a) with respect to any Asset Disposition,
the sum of cash or readily marketable cash equivalents received (including by
way of a cash generating sale or discounting of a note or account receivable)
therefrom, whether at the time of such disposition or subsequent thereto, in
excess in the case of any Asset Disposition of any amounts derived from such
sale used (and permitted by this Agreement to be used) within five Business Days
after such sale to make a Permitted Reinvestment, or (b) with respect to any
sale or issuance of equity securities of the Borrower, cash or readily
marketable cash equivalents received therefrom, whether at the time of such sale
or issuance or subsequent thereto, net, in either case, of all legal, title and
recording tax expenses, commissions and other fees and all costs and expenses
incurred, including, without limitation, incremental income taxes resulting from
such transaction.
"Net Worth" means, with respect to any Person, at any date the consolidated
shareholders' equity of such Person and its Consolidated Subsidiaries determined
in accordance with Agreement Accounting Principles (but excluding the effect of
Statement of Financial Accounting Standards No. 115).
"Non-Excluded Taxes" is defined in Section 2.18(a).
11
"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.
"Parent" means Fund American Enterprises Holdings, Inc., a Delaware
corporation.
"Parent Credit Agreement" means the Credit Agreement to be entered into
among Parent, FAE (as defined after giving effect to the FAE Merger), the
financial institutions from time to time party thereto and First Chicago, as
agent, as the same may be amended, supplemented or otherwise modified from time
to time.
"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.
"Permitted Reinvestment" means an Investment in a Finance Asset or any
other Investment approved by the Required Lenders.
"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, as to which the Borrower or any member of the Controlled Group may
have any liability.
"Proceeding" is defined in Section 5.19.
"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-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
12
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.
"Purchasers" is defined in Section 12.3.1.
"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, buy backs, 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
13
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.
"Release" is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 39601 et seq.
"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.
14
"Restatement Effective Date" means the date on which all conditions
precedent set forth in Section 4.1 are satisfied or waived by all of the
Lenders.
"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; provided, however, that if
any changes in statutory accounting practices from those in effect on the date
of this Agreement are adopted which result in a material change in the method of
calculation of any of the financial covenants, standards or terms in this
Agreement, the parties agree to enter into negotiations to determine whether
such provisions require amendment and, if so, the terms of such amendment so as
to equitably reflect such changes. Until a resolution thereof is reached, all
calculations made for the purposes of determining compliance with the terms of
this Agreement shall be made by application of statutory accounting practices in
effect on the date of this Agreement applied, to the extent applicable, on a
basis consistent with that used in the preparation of the Financial Statements
furnished to the Lenders pursuant to Section 5.5 (g) and (h) hereof.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Significant Subsidiary" shall mean and include, at any time, each
Subsidiary of the Borrower to the extent that the Net Worth of such Subsidiary
is equal to or greater than $5,000,000.
"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.
"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.
15
"SOMSC" means Source One Mortgage Services Corporation, a Delaware
corporation.
"SOMSC Credit Agreement" means the credit agreement or credit agreements
from time to time in effect among SOMSC, the financial institutions from time to
time party thereto and First Chicago, as agent, as the same may be amended,
supplemented, restated, replaced or otherwise modified from time to time (and,
subsequent to the termination thereof, as in effect on the date of such
termination).
"Statutory 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 for the 1995 Fiscal
Year entitled "Surplus as Regards Policyholders").
"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, limited liability company 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.
"Termination Event" means, with respect to a Plan which is subject to Title
IV of ERISA, (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, (d) the institution by the
PBGC of proceedings to terminate such Plan or (e) any event or condition which
might constitute grounds under Section 4042 of ERISA for the termination of, or
appointment of a trustee to administer, such Plan.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as an ABR Advance or
Eurodollar Advance.
"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.
16
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Unrestricted Subsidiary" means SOMSC and its Subsidiaries and, following
the FAE Merger, FAE and its Subsidiaries.
"US West Preferred Stock" means the US West Series B cumulative redeemable
preferred stock $1.00 par value per share purchased by Parent pursuant to and
subject to the terms of the Securities Purchase Agreement dated April 10, 1994
among Parent, US West, Inc., US West Capital Corporation and Financial Security
Assurance Holdings, Ltd. (as such agreement may be amended from time to time).
"Valley Credit Agreement" means the Credit Agreement, dated as of July 30,
1997, among Valley, the financial institutions from time to time party thereto
and First Chicago, as agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Valley" means Valley Group, Inc., an Oregon corporation.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of the
outstanding voting securities of which (other than directors' qualifying or
similar shares) 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, limited liability
company or similar business organization 100% of the ownership interests having
ordinary voting power of which (other than directors' qualifying or similar
shares) 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. In the event that the columns, lines or sections of the
Annual Statement referenced herein are changed or renumbered, all such
references shall be deemed references to such column, line or section as so
renumbered or changed. Each accounting term used herein which is not otherwise
defined herein shall be defined in accordance with Agreement Accounting
Principles or SAP, as applicable, unless otherwise specified.
17
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 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 this Agreement, 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 Loans 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 ABR Advances or Eurodollar
Advances, or a combination thereof, selected by the Borrower in accordance with
Sections 2.8 and 2.9.
2.4. Facility Fee; Reductions in Aggregate Commitment. (a) The Borrower
agrees to pay to the Agent for the account of each Lender a facility fee
("Facility Fee") in an amount equal to the Applicable Facility Fee Margin per
annum times the daily average Commitment of such Lender from the date hereof to
and including the Facility Termination Date, payable on
18
each Payment Date hereafter and on the Facility Termination Date. All accrued
Facility 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
$2,000,000 upon at least three (3) Business Days' 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(b). Voluntary
commitment reductions pursuant to this Section 2.4(b) shall be applied to the
mandatory commitment reductions required to be made pursuant to Section 2.7(a)
in direct order of maturity.
2.5. Minimum Amount of Each Advance. Each Advance shall be in the minimum
amount of $2,000,000 (and in integral multiples of $500,000 if in excess
thereof); provided, however, that (a) any ABR Advance may be in the amount of
the unused Aggregate Commitment and (b) in no event shall more than six (6)
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 ABR Advances, or, in a minimum
aggregate amount of $2,000,000 any portion of the outstanding ABR Advances upon
two Business Days' prior notice to the Agent. Subject to Section 3.4 and upon
like notice, a Eurodollar Advance may be paid prior to the last day of the
applicable Interest Period in a minimum amount of $2,000,000 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 (or such
lesser amount as a result of reductions pursuant to Section 2.7(c)) on the
following dates:
Date Reduction Amount
------------- ----------------
June 30, 1999 $3,000,000
June 30, 2000 $3,000,000
June 30, 2001 $4,000,000
July 30, 2002 $40,000,000
(b) The Aggregate Commitment shall also be automatically and
permanently reduced in the amounts and at the times set forth below:
19
(i) within 5 Business Days after the receipt in the form of cash or
cash equivalents thereof by the Borrower, 100% of the aggregate Net
Available Proceeds in excess of $1,000,000 realized upon all Asset
Dispositions in any Fiscal Year of the Borrower; and
(ii) within 5 Business Days after the receipt in the form of cash or
cash equivalents thereof by the Borrower, 85% of the Net Available Proceeds
realized upon the sale by the Borrower of any equity securities issued by
it after the date of this Agreement in excess of an aggregate amount of
$1,000,000 (other than a sale of common stock of the Borrower to Parent).
(c) Mandatory commitment reductions under Section 2.7(b) shall be
cumulative and in addition to reductions occurring pursuant to Section 2.4(b).
Any mandatory commitment reductions under Section 2.7(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.
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;
provided, however, that in the event Loans are incurred on the date of this
Agreement, all Loans incurred on such date shall be ABR Advances. The Borrower
shall give the Agent irrevocable notice (a "Borrowing Notice") not later than
10:00 a.m. (Chicago time) on the Borrowing Date of each ABR 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;
(d) in the case of each Eurodollar Advance, the Interest Period
applicable thereto, which shall end on or prior to
the Facility Termination Date; and
(e) any changes to money transfer instructions previously delivered
to the Agent.
20
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 or at such account at such other institution in the
United States of America as the Borrower may indicate in the Borrowing Notice.
2.9. Conversion and Continuation of Outstanding Advances. ABR Advances
shall continue as ABR Advances unless and until such ABR 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 an ABR 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 an
ABR Advance or continuation of a Eurodollar Advance not later than 10:00 a.m.
(Chicago time) on the conversion date, in the case of a conversion into an ABR
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
(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. Changes in Interest Rate, etc. Each ABR Advance shall bear
interest at the Alternate Base Rate from and including the date of such Advance
or the date on which such Advance was converted into an ABR Advance to (but not
including) the date on which such ABR Advance is paid or converted to a
Eurodollar Advance. Changes in the rate of interest on that portion of any
Advance maintained as an ABR Advance will take effect simultaneously with
21
each change in the Alternate Base 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 plus the
Applicable Eurodollar Margin. 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(a).
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 ABR 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%) 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 (at least two Business Days in advance) 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 the Agent for each payment of principal,
interest and fees as it becomes due hereunder.
2.13. Notes. 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 obligations under such Note.
2.14. Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each ABR Advance shall be payable on each Payment Date, commencing with the
first such date to occur
22
after the date hereof, on any date on which an ABR Advance is prepaid, whether
due to acceleration or otherwise, and at maturity. Interest accrued on that
portion of the outstanding principal amount of any ABR 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
Alternate Base 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 telex
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 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
23
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 maintains its Lending Installation. 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 and properly executed copies of United States Internal
Revenue Service Form 1001 or 4224 (or a successor form), certifying in either
case 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. Each Lender which so
24
delivers a Form 1001 or 4224 (or a successor form) further undertakes to deliver
to each of the Borrower and the Agent two additional duly completed and properly
executed 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
each tax 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 Facility Fees referenced in Section 2.4(a), in the amounts and
at the times separately agreed to between the Agent and the Borrower.
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
new interpretation thereof, or the compliance of any Lender with such adoption,
change or interpretation,
(a) subjects 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 any Lender or
applicable Lending Installation imposed by the jurisdiction in which such
Lender or 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 any Lender or Lending Installation in respect of its
Loans or other amounts due it hereunder, 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, any
Lender or any applicable Lending
25
Installation (other than reserves and assessments taken into account in
determining the interest rate applicable to Eurodollar Advances), or
(ci 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
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 such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an amount
received which such Lender 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 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.
3.3. Availability of Types of 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 the Eurodollar Advances until
such circumstance no longer exists and require any Eurodollar Advances to be
repaid.
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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 2.18, 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 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 3.1,
3.2 and 3.4 shall survive payment of the Obligations and termination of this
Agreement.
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:
(ai Charter Documents; Good Standing Certificates. Copies of the
certificate of incorporation of the Borrower, together with all amendments
thereto, both certified by the appropriate governmental officer in its
jurisdiction of incorporation, together with a good standing certificate
issued by the Secretary of State of the jurisdiction of its incorporation
and such other jurisdictions as shall be reasonably requested by the Agent.
(bi By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant
27
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.
(ci 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.
(di Officer's Certificate. A certificate signed by an Authorized
Officer of the Borrower, in form and substance satisfactory to the Agent,
to the effect that on the Restatement Effective Date (both before and after
giving effect to the consummation of the transactions contemplated hereby
and the making of the Loans hereunder, if any, being made on such date):
(i) no Default or Unmatured Default has occurred and is continuing; (ii) no
injunction or temporary restraining order which would prohibit the making
of any Loans 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 Authority required in connection
with the execution, delivery and performance of this Agreement 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) each of the
representations and warranties set forth in Article V of this Agreement is
true and correct on and as of the Restatement Effective Date; and (v) since
December 31, 1996, no event or change has occurred that has caused or
evidences a Material Adverse Effect.
(ei Legal Opinion. A written opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx
LLP, counsel to the Borrower, addressed to the Agent and the Lenders in
form and substance acceptable to the Agent and its counsel.
(fi Notes. Notes payable to the order of each of the Lenders duly
executed by the Borrower.
(gi 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.
28
(hi 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.
(ii Solvency Certificate. A written solvency certificate from the
chief financial officer of the Borrower in form and content satisfactory to
the Agent with respect to the value, Solvency and other factual
information, or relating to, as the case may be of the Borrower on a
consolidated basis.
(ji Regulatory Matters. Receipt of any required regulatory
approvals from any Governmental Authority.
(ki Investment Policy Guidelines. Certified copy of the investment
policy guidelines adopted by the finance committee of the board of
directors of the Borrower.
(li Other. Such other documents as the Agent, any Lender or their
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:
(ai There exists no Default or Unmatured Default and none would
result from such Advance;
(bi The representations and warranties contained in Article V are
true and correct as of such Borrowing Date (except to the extent such
representations and warranties are expressly made as of a specified date,
in which event such representations and warranties shall be true and
correct as of such specified date);
(ci A Borrowing Notice shall have been properly submitted; and
(di All legal matters incident to the making of such Advance shall be
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(a), (b) and (c) have been satisfied. Any Lender may require a duly
completed compliance certificate in substantially the form of Exhibit B hereto
as a condition to making an Advance.
29
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
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 and in good standing as a foreign corporation 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 could not reasonably be expected to have a Material Adverse Effect.
5.2. Authorization and Validity. The Borrower has all requisite power and
authority (corporate and otherwise) and legal right to execute and deliver each
of the Loan Documents and to perform its obligations thereunder. The execution
and delivery by the Borrower of the Loan Documents and the performance of its
obligations thereunder have been duly authorized by proper corporate proceedings
and the Loan Documents constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
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 of
the Loan Documents, the application of the proceeds of the Loans or the
consummation of the transactions contemplated in the Loan Documents, nor
compliance with the provisions of the Loan 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 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
30
the initial Advance and are disclosed on Schedule 5.3, except for any violation
of, or failure to obtain an approval or consent required under, any such
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 application of the proceeds
of the Loans or any other transaction contemplated in the Loan Documents.
Neither the Borrower nor any Subsidiary is in default under or in violation of
any foreign, federal, state or local law, rule, regulation, order, writ,
judgment, injunction, decree or award binding upon or applicable to the Borrower
or such Subsidiary, in each case the consequences of which default or violation
could reasonably be expected to have a Material Adverse Effect.
5.5. Financial Statements. The Borrower has heretofore furnished to each
of the Lenders (a) the December 31, 1996 unaudited consolidated financial
statements of the Borrower and its Subsidiaries, (b) the unaudited consolidated
financial statements of the Borrower and its Subsidiaries as of March 31, 1997,
(c) the December 31, 1996 audited financial statements of Charter Group, Inc.
and its Subsidiaries, (d) the December 31, 1996 audited financial statements of
Valley Insurance Co. and its Subsidiaries, (e) the December 31, 1996 audited
financial statements of Valley and its Subsidiaries, (f) the December 31, 1996
audited financial statements of SOMSC and its Subsidiaries, (g) the December 31,
1996 audited financial statements of Parent and its Subsidiaries, (h) the March
31, 1997 unaudited balance sheets and income statements of Parent, the Borrower,
Valley (excluding White Mountains Insurance Company related transactions), While
Mountains Insurance Company (as if no business was reinsured through Valley
Insurance Company), SOMSC, Financial Security Assurance Holdings Ltd.,
Folksamerica Holding Company, Inc. and Main Street America Holdings, Inc.; (i)
the December 31, 1996 Annual Statement of each Insurance Subsidiary and (j) the
March 31, 1997 Quarterly Statement of each Insurance Subsidiary (collectively,
the "Financial Statements"). Each of the Financial Statements (other than as
described in clause (h)) was prepared in accordance with Agreement Accounting
Principles or SAP, as applicable, and fairly presents the consolidated financial
condition and operations of the Person which is the subject of such Financial
Statements at such dates and the consolidated results of their operations for
the respective periods then ended (except, in the case of such unaudited
statements, for normal year-end audit adjustments).
5.6. Material Adverse Change. No material adverse change in the business,
Property, condition (financial or otherwise), performance, prospects or results
of operations of
31
the Borrower and its Subsidiaries has occurred since December 31, 1996, except
as specifically disclosed in the Financial Statements.
5.7. Taxes. Neither the Borrower nor any of its Subsidiaries is required
to file United States federal, foreign, state or local tax returns. As of the
date hereof, the United States income tax returns of Parent on a consolidated
basis have been audited by the Internal Revenue Service through its fiscal
period ending December 31, 1985, and all tax years beginning on or after January
1, 1986 are currently being audited or are subject to audit. No tax liens have
been filed and no claims are being asserted with respect to any taxes of Parent
which could reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of Parent in respect of any taxes or
other governmental charges of Parent are in accordance with Agreement Accounting
Principles.
5.8. Litigation and Contingent Obligations. 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. Neither the
Borrower nor any Subsidiary has any material contingent obligations incurred
outside of the ordinary course of its business except as set forth on Schedule
5.16 or disclosed in the Financial Statements or in financial statements
required to be delivered under Section 6.1(a) and (b) and as permitted under
this Agreement.
5.9. Capitalization. Schedule 5.9 hereto contains (a) an accurate
description of the Borrower's capitalization as of March 31, 1997 (after giving
effect to the application of the proceeds of Loans incurred by the Borrower on
the initial Borrowing Date and to the FAE Merger) and (b) an accurate list of
all of the existing Subsidiaries as of the date of this Agreement, 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, are fully paid and non-assessable,
and are free and clear of all Liens. 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 or pursuant to management incentive plans
implemented after the date of this Agreement, 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 other than as
expressly set forth in the certificate or articles of incorporation of the
Borrower or such Subsidiary. Neither
32
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 or pursuant to management incentive plans implemented after the date of this
Agreement.
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 other than any such failure to comply which
could not reasonably be expected to have a Material Adverse Effect. 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 which could reasonably be expected to have a Material Adverse
Effect. No Termination Event has occurred or is reasonably expected to occur
with respect to any Plan which is subject to Title IV of ERISA 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 nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation G, Regulation T, Regulation U or Regulation X.
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.
33
5.14. Certain Fees. 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 contemplated by this Agreement, except as described in Section 9.5.
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 contemplated
by this Agreement and any expenses (including, without limitation, 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 contemplated by
this Agreement.
5.15. Solvency. As of the date hereof, after giving effect to the
consummation of the transactions contemplated by the Loan 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 application of the proceeds of Loans incurred by the Borrower on the
initial Borrowing Date, each of the Borrower and each Subsidiary is Solvent.
5.16. Indebtedness. Attached hereto as Schedule 5.16 is a complete and
correct list of all Indebtedness of the Borrower and its Subsidiaries
outstanding on the date of this Agreement (other than Indebtedness in a
principal amount not exceeding $500,000 for a single item of Indebtedness and
$2,000,000 in the aggregate for all such Indebtedness listed, it being
understood and agreed that any such Indebtedness shall be permitted to exist
pursuant to Section 6.11(b) notwithstanding the absence thereof on Schedule
5.16), showing the aggregate principal amount which was outstanding on such date
after giving effect to the application of the proceeds of Loans incurred by the
Borrower on the initial Borrowing Date.
5.17. Insurance Licenses. Schedule 5.17 hereto lists all of the
jurisdictions in which any Insurance Subsidiary holds a License and is
authorized to and does transact insurance business as of the date of this
Agreement. No such License, 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.
5.18. Material Agreements. Except as set forth in Schedule 5.18 and
except for agreements or arrangements with regulatory agencies with regard to
Insurance Subsidiaries, neither the Borrower nor any Subsidiary is a party to
any agreement or instrument or subject to any charter or other corporate
restriction which could reasonably be expected to have a Material
34
Adverse Effect or which restricts or imposes conditions upon the ability of any
Subsidiary (other than an Unrestricted Subsidiary) to (a) pay dividends or make
other distributions on its capital stock (b) make loans or advances to the
Borrower, (c) repay loans or advances from Borrower or (d) 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.
5.19. 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, other than in connection with an insurance policy issued in the
ordinary course of business to any Person (other than Parent or any Subsidiary
of Parent), which, in any case, could reasonably be expected to have a Material
Adverse Effect. 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 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 the generation, treatment, storage, disposal, release, investigation or
cleanup of Hazardous Materials.
5.20. 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.
5.21. Disclosure. No information, exhibit or report furnished by the
Borrower or any of its Subsidiaries to the Agent or to any Lender in connection
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
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.
35
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 Lenders:
(ai As soon as practicable and in any event within 100 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 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 any
Default or Unmatured Default, or if, in the opinion of such accountants,
any Default or Unmatured Default shall exist, stating the nature and status
thereof.
(bi As soon as practicable and in any event within 60 days after the
close of each of the first three Fiscal Quarters of each of its Fiscal
Years, for itself and its Subsidiaries, consolidated and consolidating
unaudited balance sheets as at the close of each such period and
consolidated and consolidating statements of income, retained earnings and
cash flows for the period from the beginning of such Fiscal Year to the end
of such quarter, all certified by its chief financial officer.
(ci (i) Upon the earlier of (A) fifteen (15) days after the
regulatory filing date or (B) seventy-five (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
financial officer or the treasurer of such Insurance Subsidiary, all such
statements to be prepared in accordance with SAP and (ii) no later than
each June 15, copies of financial statements prepared in accordance with
SAP, or generally accepted accounting principles with a reconciliation to
SAP, and certified by independent certified public accountants of
recognized national standing.
(di Upon the earlier of (i) ten (10) days after the regulatory filing
date or (ii) sixty (60) days after the close of each of the first three (3)
fiscal quarters of each fiscal
36
year of each Insurance Subsidiary, copies of the unaudited Quarterly
Statement of each of the Insurance Subsidiaries, certified by the chief
financial officer or the treasurer of such Insurance Subsidiary, all such
statements to be prepared in accordance with SAP.
(ei Promptly and in any event within ten (10) days after (i) learning
thereof, notification of any changes after the date of this Agreement 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.
(fi Copies of any outside actuarial reports prepared with respect to
any valuation or appraisal of any Insurance Subsidiary, promptly after the
receipt thereof.
(gi 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 the Borrower's chief financial officer showing
the calculations necessary to determine compliance with this Agreement and
stating that no Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof.
(hi Promptly after the same becomes available after the close of each
Fiscal Year, a statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary enrolled under ERISA.
(ii 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.
(ji 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 or any of its
Subsidiaries 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 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.
(ki Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements
so furnished.
37
(li 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 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.
(mi Promptly and in any event within ten (10) days after learning
thereof, notification of (i) any material tax assessment, demand, notice of
proposed deficiency or notice of deficiency received by Parent 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 net worth (determined
according to generally accepted accounting standards and without reduction
for any reserve for such liabilities) of the Borrower and its Subsidiaries
taken as a whole.
(ni Promptly after available, any management letter prepared by the
accountants conducting the audit of the financial statements delivered
pursuant to Section 6.1(a).
(oi Promptly after reviewed by the board of directors of the
Borrower, a copy of the Borrower's investment policy compliance report.
(pi 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. and non-financial
information) as the Agent or any Lender may from time to time reasonably
request.
6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to meet the working capital and general
corporate needs of the Borrower and its Subsidiaries, including but not limited
to the purchase of Finance Assets. The Borrower will not, nor will it permit
any Subsidiary to, use any of the proceeds of the Advances in any manner which
would violate, or result in the violation of, Regulation G, Regulation T,
Regulation U or Regulation X 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 give prompt notice in writing to
the Lenders of the occurrence of (a) any Default or Unmatured Default, (b) of
any other event or
38
development, financial or other, 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) receipt by the
Borrower or any Subsidiary 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
Insurance Subsidiary which is required to conduct insurance 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) receipt by the Borrower or any Subsidiary of any
notice from any Governmental Authority of the institution of any disciplinary
proceedings against or in respect of any Insurance 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 material
judicial or administrative order of which the Borrower or any Subsidiary is
aware limiting or controlling the insurance business of any Insurance Subsidiary
(and not the insurance industry generally) which has been issued or adopted or
(f) the commencement of any litigation of which the Borrower or any Subsidiary
is aware 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 in substantially the same
manner as it is presently conducted, (b) not conduct any significant business
except for financial services, (c) do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
except where the failure to maintain such authority 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 Insurance Subsidiary to operate its insurance
business in compliance with all applicable laws and regulations except for any
License the loss of which could not reasonably be expected to have a Material
Adverse Effect; 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.
6.5. Taxes. At any time on and after the date the Borrower or any of its
Subsidiaries is required to do so, 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 generally accepted accounting
principles or SAP, as applicable.
39
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, 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, at reasonable times during normal business hours and upon reasonable
notice, 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. 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.
6.10. Dividends. The Borrower will not 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 so long as no Default or
Unmatured Default exists before or after giving effect to the declaration or
payment of such dividends or distributions or repurchase or redemption of
such stock or other transaction, (a) the Borrower may declare and pay
dividends, and make distributions, on its common stock and repurchase and
redeem and otherwise acquire or retire its common stock and any options or
other rights thereof in an aggregate amount not to exceed (i) during the
Borrower's 1997 Fiscal Year, 1% of Adjusted Net Worth as of December 31,
1996, (ii) during the Borrower's 1998 Fiscal Year, 2% of Adjusted Net Worth
as of December 31, 1997, and (iii) during any Fiscal Year thereafter, 3% of
Adjusted Net Worth as of the end of the Fiscal Year preceding the Fiscal Year
during which such
40
transaction is consummated and (b) in addition to any dividends, distributions,
repurchases, redemptions, acquisitions or retirements which may be declared,
paid or made pursuant to the preceding clause (a), the Borrower may declare and
pay dividends, and make distributions, on its common stock and repurchase and
redeem and otherwise acquire or retire its common stock, and any options or
rights thereof, (x) in an amount equal to the proceeds received by the Borrower
from dividends, sales, transfers or other dispositions of its equity interests
in FAE (as defined after giving effect to the FAE Merger) and SOMSC and (y)
utilizing its equity interests in SOMSC.
6.11. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary (other than an Unrestricted Subsidiary) to, create, incur or suffer
to exist any Indebtedness, except:
(ai the Loans;
(bi Indebtedness existing on the date hereof and described in
Schedule 5.16 hereto and any renewals, extensions, refundings or
refinancings of such Indebtedness; provided that the amount thereof is not
increased and the maturity of principal thereof is not shortened (unless to
a maturity occurring after the Facility Termination Date);
(ci Indebtedness owing by (x) the Borrower to any Wholly-Owned
Subsidiary and (y) any Wholly-Owned Subsidiary to a Wholly-Owned Subsidiary
or the Borrower;
(di Indebtedness permitted under the Valley Credit Agreement;
(ei Indebtedness secured by Liens permitted pursuant to Section
6.15(f); and
(fi other Indebtedness of the Borrower or any Subsidiary to the
extent not otherwise included in subparagraphs (a) through (e) of this
Section 6.11 or in Section 6.14, in an aggregate amount outstanding at any
one time not to exceed $5,000,000.
6.12. Merger. The Borrower will not, nor will it permit any
Significant Subsidiary to, merge or consolidate with or into any other Person,
except that;
(a) a Wholly-Owned Subsidiary may merge with (i) the Borrower, (ii)
any Wholly-Owned Subsidiary of the Borrower or (iii) any other Person so
long as no Default or Unmatured Default shall have occurred or be
continuing before and after giving effect to such merger and the surviving
entity of such merger is a Wholly-Owned Subsidiary of the Borrower;
(b) a Significant Subsidiary (other than Valley and FAE (as defined
after giving effect to the FAE Merger)) may merge or consolidate with any
Person so long as
41
neither the Borrower nor any of its Subsidiaries shall hold any capital
stock of such Significant Subsidiary after giving effect to such merger or
consolidation;
(c) the Borrower or Valley may merge into any Person so long as (i)
the Borrower or Valley, as the case may be, is the surviving entity of such
merger, (ii) no Default or Unmatured Default shall have occurred or be
continuing before and after giving effect to such merger and (iii) the
covenants contained in Section 6.20 shall be complied with on a pro forma
basis on the date of, and after giving effect to, such merger;
(d) the FAE Merger shall be permitted so long as:
(i) no Default or Unmatured Default shall have occurred or be
continuing before and after giving effect to the FAE Merger;
(ii) the Agent shall have received on or prior to the date
thereof (x) a certificate from the chief financial officer of FAE (as
defined before giving effect to the FAE Merger) demonstrating that the
covenants contained in Section 6.20 shall be complied with on a pro
forma basis on the date of, and after giving effect to, the FAE
Merger, (y) a certificate from the Secretary or Assistant Secretary of
FAE (as defined before giving effect to the FAE Merger) certifying a
true and correct copy of the agreement and plan of merger in
connection with such merger, true and correct copies of all
resolutions passed by the Board of Directors of the Persons subject to
such merger, incumbency of officers and a true and correct copy of the
certificate of incorporation and by-laws of the surviving Person, and
(z) a legal opinion of Cravath, Swaine & Xxxxx addressed to the Agent
and the Lenders, in form and substance acceptable to the Agent and its
counsel, with respect to such merger;
(iii) Parent shall have satisfied all of the conditions
precedent contained in Section 4.1 of the Parent Credit Agreement, and
a fully executed copy of the Parent Credit Agreement, in form and
substance as to FAE (as defined after giving effect to the FAE Merger)
acceptable to the Lenders, shall have been delivered to the Lenders;
and
(iv) FAE, as survivor of the merger with the Borrower, shall
enter into an agreement in the form of Exhibit C hereto, assuming the
obligations and liabilities of the "Borrower" under this Agreement;
and
(e) after the consummation of the FAE Merger, FAE and any Subsidiary
of FAE may merge or consolidate with any other Person.
6.13. Investments and Purchases. The Borrower will not, and will not
permit any
42
Subsidiary (other than an Unrestricted 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 create any Subsidiary
or become or remain a partner in any partnership or joint venture, or make any
Purchases, except:
(a) Investments in existence on the date hereof;
(b) loans and advances to employees in the ordinary course of
business and consistent with past practices;
(c) Investments made in Subsidiaries and in Main Street America
Holdings, Inc., Folksamerica Holding Company Inc. and Financial Security
Assurance Holdings Ltd.;
(d) Purchases of businesses or entities engaged in the insurance
and/or insurance services business which do not constitute hostile
takeovers;
(e) other Investments, so long as any such Investment is
materially consistent with the Borrower's investment policy guidelines as
approved from time to time by the finance committee of the board of directors
of the Borrower (a copy of the current version of such guidelines having been
delivered to each Lender); provided that any change from the guidelines
previously submitted to the Lenders shall not materially adversely affect the
Lenders.
6.14. Contingent Obligations. The Borrower will not, nor will it
permit any Subsidiary (other than an Unrestricted 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) the issuance of financial guarantees in the ordinary course of business,
(b) by endorsement of instruments for deposit or collection in the ordinary
course of business, (c) for insurance policies issued in the ordinary course of
business and (d) the issuance of intercompany guarantees so long as the primary
obligation is permitted under this Agreement.
6.15. Liens. The Borrower will not, nor will it permit any Subsidiary
(other than an Unrestricted Subsidiary) to, create, incur, or suffer to exist
any Lien in, of or on the Property (other than Margin Stock) of the Borrower or
any of its Subsidiaries (other than an Unrestricted Subsidiary), 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
43
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 its Subsidiaries;
(e) Liens existing on the date hereof and described in Schedule 6.15
hereto;
(f) Liens in, of or on Property acquired after the date of this
Agreement (by purchase, construction or otherwise), each of which Liens
either (1) existed on such Property before the time of its acquisition and
was not created in anticipation thereof, or (2) was created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of such
Property; provided that no such Lien shall extend to or cover any Property
of the Borrower or such Subsidiary other than the Property so acquired and
improvements thereon; and provided, further, that the principal amount of
Indebtedness secured by any such Lien shall at the time the Lien is
incurred not exceed 75% of the fair market value (as determined in good
faith by a financial officer of the Borrower and, in the case of such
Property having a fair market value in excess of $500,000, certified by
such officer to the Agent, with a copy for each Lender) of the Property at
the time it was so acquired; and
(g) Liens not otherwise permitted by the foregoing clauses (a)
through (f) securing any Indebtedness of the Borrower, provided that the
aggregate principal amount of Indebtedness secured by Liens permitted by
this clause (g) shall not exceed $3,000,000 at any time.
6.16. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any material transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliates (other than a Wholly-Owned
44
Subsidiary), except 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
transactions, except that any Unrestricted Subsdidiary may make loans to Parent.
6.17. 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) 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.
6.18. 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 or (b)
change its Fiscal Year to end on any date other than December 31 of each year.
6.19. Inconsistent Agreements. The Borrower shall not, nor shall it
permit any Subsidiary (other than an Unrestricted Subsidiary) to, enter into any
indenture, agreement, instrument or other arrangement which by its terms, (a)
other than pursuant to the Valley Credit Agreement or pursuant to agreements or
arrangements with regulatory agencies with regard to Insurance Subsidiaries,
directly or indirectly contractually prohibits or restrains, or has the effect
of contractually prohibiting or restraining, or contractually 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 or any Subsidiary of any of its obligations under any Loan Document.
6.20. Financial Covenants. The Borrower shall (or, in the case of
Section 6.20.5, shall cause its Insurance Subsidiaries to):
6.20.1 Minimum Adjusted Net Worth. At all times after the date hereof,
maintain a minimum Adjusted Net Worth at least equal to the sum of (a) an amount
equal to 85% of Net Worth (without giving effect to the Borrower's equity
interests in FAE (as defined
45
after giving effect to the FAE Merger) and SOMSC) as of July 31, 1997, plus (b)
an amount equal to 85% of the cash and non-cash proceeds of any equity
securities issued by the Borrower after July 30, 1997, plus (c) an amount equal
to (i) $75,000,000 minus (ii) the aggregate amount of mandatory commitment
reductions pursuant to Section 2.7(b)(i) which occur after July 30, 1997 from
the Net Available Proceeds of all sales by the Borrower of its equity interests
in FAE (as defined after giving effect to the FAE Merger) or SOMSC minus (iii)
the aggregate amount of Permitted Reinvestments made by the Borrower after July
30, 1997 utilizing proceeds of sales of its equity interests in FAE (as defined
after giving effect to the FAE Merger) or SOMSC ("Specified Permitted
Reinvestments"), plus (d) an amount equal to 85% of Specified Permitted
Reinvestments made after July 30, 1997.
6.20.2. Leverage Ratio. At all times after the date hereof, maintain a
Leverage Ratio of (a) not greater than 30% through and including December 31,
1999 and (b) not greater than 25% at all times thereafter.
6.20.3. Fixed Charges Coverage Ratio. As of the end of each Fiscal
Quarter maintain a Fixed Charges Coverage Ratio of not less than 1.5:1.0
6.20.4. Finance Assets Ratio. At any time Loans are outstanding and the
sum of cash and Money Market Investments of the Borrower is less than the
aggregate outstanding principal amount of Funded Indebtedness of the Borrower at
such time, maintain a Finance Assets Ratio of not less than 2.5:1.0.
6.20.5. Statutory Surplus. At all times, maintain Statutory Surplus for
each Insurance Subsidiary in an amount not less than an amount equal to (a) 85%
of the Statutory Surplus of each such Insurance Subsidiary on September 30,
1996, plus (b) 85% of all subsequent capital contributions to each such
Insurance Subsidiary, less (c) in the event such Insurance Subsidiary dividends
or otherwise distributes to its parent all the capital stock of a Wholly-Owned
Insurance Subsidiary, 100% of the book value (calculated in accordance with SAP)
of such Wholly-Owned Insurance Subsidiary at the time of such dividend or
distribution.
6.21. 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
Parent and its Subsidiaries or (b) amend, terminate or fail to enforce any
existing tax sharing agreement or similar arrangement if such action would cause
a Material Adverse Effect.
6.22. 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;
46
(b) incur any "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA) in excess of $100,000, whether or not
waived, or permit any Unfunded Liability to exceed $100,000;
(c) permit the occurrence of any Termination Event which could result
in a liability to the Borrower or any other member of the Controlled Group
in excess of $100,000;
(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.
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 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 6.16 or Sections 6.18
through 6.22.
7.4. The breach by the Borrower (other than a breach which constitutes a
Default
47
under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this
Agreement which is not remedied within twenty (20) days after written notice
from the Agent or any Lender.
7.5. The default by the Borrower or any of its Subsidiaries (or, at
any time the Borrower is a Subsidiary of Parent, by Parent) in the
performance of any term, provision or condition contained in any agreement or
agreements under which any Funded Indebtedness aggregating in excess of
$2,000,000 ($10,000,000 in the case of Parent and FAE and $20,000,000, or
such lower cross-default threshold amount as is provided in the SOMSC Credit
Agreement, in the case of SOMSC) 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
Funded Indebtedness to cause, such Funded Indebtedness to become due prior to
its stated maturity; or any such Funded Indebtedness of the Borrower, any of
its Subsidiaries or Parent 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 Significant 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 any substantial portion of 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 Significant Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for the Borrower or any of
its Significant Subsidiaries or any substantial portion of its Property, or a
proceeding described in Section 7.6(d) shall be instituted against the
Borrower or any of its Significant Subsidiaries and such appointment
continues undischarged or such proceeding continues undismissed or unstayed
for a period of sixty consecutive days.
7.8. 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 $1,000,000 (or multiple judgments or orders for
the payment of an aggregate amount in excess of $5,000,000), which is not
stayed on appeal or otherwise being appropriately contested in good
48
faith and as to which no enforcement actions have been commenced.
7.9. Any Change in Control shall occur.
7.10. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement or the Notes) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement or the Notes), which
default or breach continues beyond any period of grace therein provided.
7.11. Any License of any Insurance 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 Insurance Subsidiary and shall not have been dismissed within
thirty (30) days after the commencement thereof, (b) shall be suspended by such
Governmental Authority for a period in excess of thirty (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 Insurance
Subsidiary, which, in any case, could reasonably be expected to have a Material
Adverse Effect.
7.12. Any Insurance Subsidiary shall be the subject of a final
non-appealable order imposing a fine by or at the request of any state insurance
regulatory agency as a result of the violation by such Insurance Subsidiary of
such state's applicable insurance laws or the regulations promulgated in
connection therewith which could reasonably be expected to have a Material
Adverse Effect.
7.13. Any Insurance Subsidiary shall become subject to any
conservation, rehabilitation or liquidation order, directive or mandate issued
by any Governmental Authority or any Insurance Subsidiary shall become subject
to any other directive or mandate issued by any Governmental Authority in either
case which could reasonably be expected to have a Material Adverse Effect and
which is not stayed within thirty (30) days.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
49
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, subject to Section 2.11, 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 or reduce the amount or
extend the time of any mandatory commitment reduction required by Section
2.7;
(e) Amend this Section 8.2;
(f) Permit any assignment by the Borrower of its Obligations or its
rights hereunder.
50
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
51
subject matter thereof other than the fee letter, dated July 30, 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
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 reasonable costs, internal charges and out-of-pocket expenses
(including 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
reasonable costs, internal charges and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Agent and the Lenders,
which attorneys may be employees of the Agent or the Lenders) 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, the transactions contemplated hereby or thereby or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder arising from claims or assertions by third parties 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
52
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. 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 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;
53
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 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 such investments, loans or
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates to the extent that such
liability would not have arisen but for First Chicago's status as Agent
hereunder.
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.
9.17. Treatment of Certain Information: Confidentiality.
(a) The Borrower acknowledges that (i) services may be offered or
provided to it (in connection with this Agreement or otherwise) by each Lender
or by one or more subsidiaries or affiliates of such Lender and (ii) information
delivered to each Lender by the Borrower and its Subsidiaries may be provided to
each such Subsidiary and Affiliate, it being understood that any such Subsidiary
or Affiliate receiving such information shall be bound by the provisions of
clause (b) below as if it were a Lender hereunder.
(b) Each Lender and the Agent agrees (on behalf of itself and each of
its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement, provided that nothing
herein shall limit the disclosure of any such information (i) to the extent
required by
54
statue, rule, regulation or judicial process, (ii) to counsel for any of the
Lenders or the Agent, (iii) to bank examiners, auditors or accountants, (iv) to
the Agent or any other Lender (or to First Chicago Capital Markets, Inc.), (v)
in connection with any litigation to which any one or more of the Lenders or the
Agent is a party, (vi) to a subsidiary or affiliate of such Lender as provided
in clause (a) above, (vii) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) agrees with the respective Lender to keep such
information confidential on substantially the terms set forth in this Section
9.17(b), (viii) to any other Person as may be reasonably required in the course
of the enforcement of any Lender's rights or remedies hereunder or under any of
such Lender's Note, or (ix) to any other creditor of the Borrower or any of its
Subsidiaries at any time during the continuance of a Default; provided that in
no event shall any Lender or the Agent be obligated or required to return any
materials furnished by the Borrower.
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,
55
any agreement by an obligor to furnish information directly to each Lender; (c)
the satisfaction of any condition 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
56
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.
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, including, without limitation, pursuant to Article XII
hereof, 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.
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
57
Lenders, a successor Agent, which successor Agent, so long as no Default is
continuing, shall be reasonably acceptable to the Borrower. 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, which successor
Agent, so long as no Default is continuing, shall be reasonably acceptable to
the Borrower. 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 $50,000,000 and
with a Lending Installation in the United States of America. 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 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.
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, 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
58
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 the preceding sentence, 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 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.
59
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 (when added to the amount
of the assignment of such Lender's obligations under the Valley Credit
Agreement) of $5,000,000 (or, if less, the entire amount of such Lender's
Commitment). Such assignment shall be substantially in the form of Exhibit D
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 under Section 7.2, 7.6 or 7.7 is
continuing, the Borrower, 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. Notwithstanding
anything to the contrary contained herein, any assignment by a Lender of its
rights and obligations under the Loan Documents shall be accompanied by an
assignment to the same assignee of the same ratable share of the rights and
obligations of such Lender under the Valley Credit Agreement in respect of its
obligations thereunder.
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
D hereto (a "Notice of Assignment"), together with any consents required by
Section 12.3.1, and (b) payment of a $3,000 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
60
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 Commitment, as adjusted pursuant to such assignment.
12.4. Dissemination of Information. Subject to Section 9.17(b), 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.
12.5. 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. 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, shall be deemed given when transmitted; and any notice given by
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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ARTICLE XIV
AMENDMENT AND RESTATEMENT
14.1. (a) This Agreement amends and restates in its entirety the Credit
Agreement, dated as of November 26, 1996, among the Borrower, the financial
institutions from time to time party thereto and First Chicago, as agent (as
amended, supplemented or otherwise modified through the date hereof, the "Prior
Credit Agreement") and, upon the Restatement Effective Date, the terms and
provisions of Prior Credit Agreement shall, subject to this Article XIV, be
superseded hereby and thereby. Prior to the Restatement Effective Date, the
Prior Credit Agreement shall continue to govern the making of any Loans and any
outstanding Loans and Obligations.
(b) Notwithstanding the amendment and restatement of the Prior Credit
Agreement by this agreement, the Loans under, and as defined in, the Prior
Credit Agreement ("Continuing Loans") and all accrued interest, fees and
expenses owing to First Chicago and Fleet National Bank by the Borrower shall
remain outstanding as of the Restatement Effective Date and constitute
continuing Obligations under this Agreement. The Continuing Loans shall in all
respects be continuing, and this Agreement shall not be deemed to evidence or
result in a novation or repayment and re-borrowing of the Continuing Loans. In
furtherance of and without limiting the foregoing (i) all interest, fees and
expenses which have arisen under the Prior Agreement shall be paid on the
applicable due date therefor specified in this Agreement and (ii) from and after
the Restatement Effective Date, the terms, conditions and covenants governing
the Continuing Loans shall be solely as set forth in this Agreement, which shall
supersede the Prior Credit Agreement to the extent provided in this Article XIV.
[signature pages to follow]
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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.
WHITE MOUNTAINS HOLDINGS, INC.
By:
Print Name:
Title:
Address: 00 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attn:
Fax No.:
Tel. No.:
Commitments
THE FIRST NATIONAL BANK OF CHICAGO,
Commitment $ Individually and as Agent
By:
Print Name:
Title:
Address: 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
First Vice President
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
$ [OTHER LENDERS]
63
Aggregate Initial
Commitment $
64
SCHEDULE 1
TO CREDIT AGREEMENT
MARGINS
"Applicable Eurodollar Margin" and "Applicable Facility Fee Margin"
means, for any period, the applicable of the following percentages in effect
with such period based on the Leverage Ratio and the Fixed Charges Coverage
Ratio as follows:
------------------------------------------------------------------------------------------
I II III IV
------------------------------------------------------------------------------------------
Leverage Ratio is: GREATER THAN 15% $15% LESS THAN 15% $15%
------------------------------------------------------------------------------------------
If Fixed Charges GREATER THAN 2:1 GREATER THAN 2:1 #2:1 #2:1
Coverage Ratio is:
------------------------------------------------------------------------------------------
The applicable
margin will be:
------------------------------------------------------------------------------------------
Applicable Facility .150% .175% .175% .200%
Fee Margin
------------------------------------------------------------------------------------------
Applicable
Eurodollar Margin .350% .450% .450% .550%
------------------------------------------------------------------------------------------
The Leverage Ratio and Fixed Charges Coverage Ratio shall be
calculated by the Borrower as of the end of each of its Fiscal Quarters
commencing September 30, 1997 and shall be reported to the Agent pursuant to a
certificate executed by an authorized officer of the Borrower and delivered in
accordance with Section 6.1(g) of the Agreement. The foregoing margins shall be
adjusted, if necessary, quarterly as of the fifth day after the delivery of the
certificate provided for above; provided that if such certificate, together with
the financial statements to which such certificate relates, are not delivered by
the fifth day after the due date therefor specified in Section 6.1(g), then
until the fifth day after such delivery, each of the margins specified above
shall be as set forth in Column IV above. Until adjusted as described above
after September 30, 1997, the Applicable Eurodollar Margin and Applicable
Facility Fee Margin, as the case may be, shall be as specified in Column II
above.
