EXECUTION COPY
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AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of December 31, 1997
among
AmComp Incorporated,
as Borrower,
THE SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
AND
NATIONSBANK, N.A.,
as Bank
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS.................................................1
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Computation of Time Periods...................................23
SECTION 1.03. Accounting Terms..............................................23
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES..........................24
SECTION 2.01. The Committed Facilities......................................24
SECTION 2.02. Interest......................................................25
SECTION 2.03. Promissory Notes..............................................25
ARTICLE III
OTHER PROVISIONS RELATING TO CREDIT FACILITY...............26
SECTION 3.01. Default Rate..................................................26
SECTION 3.02. Prepayments...................................................26
SECTION 3.03. Fees..........................................................26
SECTION 3.04. Capital Adequacy..............................................27
SECTION 3.05. Inability To Determine Interest Rate..........................27
SECTION 3.06. Illegality....................................................27
SECTION 3.07. Requirements of Law...........................................28
SECTION 3.08. Taxes.........................................................28
SECTION 3.09. Indemnity.....................................................29
SECTION 3.10. Payments, Computations. Etc...................................30
SECTION 3.11. Confirmation of other Credit Documents........................31
ARTICLE IV
GUARANTY...................................................31
SECTION 4.01. The Guaranty..................................................31
SECTION 4.02. Obligations Unconditional.....................................32
SECTION 4.03. Reinstatement.................................................33
SECTION 4.04. Remedies......................................................33
SECTION 4.05. Rights of Contribution........................................33
SECTION 4.06. Continuing Guaranty...........................................34
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ARTICLE V
CONDITIONS.................................................34
SECTION 5.01. Closing Conditions............................................34
ARTICLE VI
REPRESENTATIONS AND WARRANTIES.............................36
SECTION 6.01. Financial Condition...........................................36
SECTION 6.02. No Change; Dividends..........................................37
SECTION 6.03. Organization; Existence; Compliance with Law..................37
SECTION 6.04. Power; Authorization; Enforceable Obligations.................37
SECTION 6.05. No Legal Bar..................................................37
SECTION 6.06. No Material Litigation........................................38
SECTION 6.07. No Default....................................................38
SECTION 6.08. Ownership of Property: Liens..................................38
SECTION 6.09. No Burdensome Restrictions...................................38
SECTION 6.10. Taxes.........................................................38
SECTION 6.11. ERISA.........................................................39
SECTION 6.12. Governmental Regulations, Etc.................................40
SECTION 6.13. Pinnacle......................................................41
SECTION 6.14. Subsidiaries..................................................41
SECTION 6.15. Purpose of Advances...........................................42
SECTION 6.16. Environmental Matters.........................................42
SECTION 6.17. Insurance Policies............................................43
SECTION 6.18. Places of Business............................................43
ARTICLE VII
AFFIRMATIVE COVENANTS......................................43
SECTION 7.01. Information Covenants.........................................43
SECTION 7.02. Preservation of Existence and Franchises......................46
SECTION 7.03. Books and Records.............................................46
SECTION 7.04. Compliance with Law...........................................47
SECTION 7.05. Payment of Taxes and Other Indebtedness.......................47
SECTION 7.06. Insurance/Reinsurance.........................................47
SECTION 7.07. Maintenance of Property.......................................47
SECTION 7.08. Performance of Obligations....................................47
SECTION 7.09. Use of Proceeds...............................................47
SECTION 7.10. Audits/Inspections............................................48
SECTION 7.11. Financial Covenants...........................................48
SECTION 7.12. Additional Credit Parties.....................................48
SECTION 7.13. Ownership of Subsidiaries.....................................49
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SECTION 7.14. Dividends.....................................................49
SECTION 7.15. Banking Accounts..............................................49
SECTION 7.16. Subordination of Other Loans, Etc.............................49
SECTION 7.17. Hedging Arrangements..........................................49
ARTICLE VIII
NEGATIVE COVENANTS.........................................50
SECTION 8.01. Indebtedness..................................................50
SECTION 8.02. Liens.........................................................50
SECTION 8.03. Nature of Business............................................50
SECTION 8.04. Consolidation, Merger, Sale or Purchase of Assets, Etc........50
SECTION 8.05. Advances, Investments, Loans, Etc.............................51
SECTION 8.06. Restricted Payments...........................................51
SECTION 8.07. Prepayments of Indebtedness, Etc..............................51
SECTION 8.08. Transactions with Affiliates..................................52
SECTION 8.09. Fiscal Year...................................................52
SECTION 8.10. Limitation on Restrictions on Subsidiary Dividends
and Other Distributions, Etc...............................52
SECTION 8.11. Issuance of Stock.............................................53
SECTION 8.12. Sale Leasebacks...............................................53
SECTION 8.13. Settlements...................................................53
SECTION 8.14. No Further Negative Pledges...................................53
SECTION 8.15. No Foreign Subsidiaries.......................................53
SECTION 8.16. No Amendments to Service Contracts............................53
SECTION 8.17. Changes in Management.........................................54
ARTICLE IX
EVENTS OF DEFAULT..........................................54
SECTION 9.01. Events of Default.............................................54
SECTION 9.02. Acceleration; Remedies........................................56
ARTICLE X
MISCELLANEOUS..............................................57
SECTION 10.01. Notices......................................................57
SECTION 10.02. Right of Set-Off.............................................58
SECTION 10.03. Benefit of Agreement.........................................58
SECTION 10.04. No Waiver; Remedies Cumulative...............................59
SECTION 10.05. Payment of Expenses, Etc.....................................59
SECTION 10.06. Amendments, Waivers and Consents.............................60
SECTION 10.07. Counterparts.................................................60
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SECTION 10.08. Headings.....................................................60
SECTION 10.09. Survival.....................................................60
SECTION 10.10. Governing Law; Arbitration...................................60
SECTION 10.11. Severability.................................................61
SECTION 10.12. Entirety.....................................................62
SECTION 10.13. Binding Effect: Termination..................................62
SECTION 10.14. Conflict.....................................................62
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SCHEDULES
-purposely omitted-
Schedule 1.01A Existing Affiliate Contracts
Schedule 1.01B Investments
Schedule 1.01C Liens
Schedule 2.01(b) Form of Advance Request
Schedule 2.03 Form of Facility A Note/Facility B Note
Schedule 3.03 Form of Warrantholders Rights Agreement
Schedule 5.01A Form of Legal Opinion
Schedule 5.01B Form of Legal Opinion of Special Counsel
Schedule 5.01C Form of Waiver Under Pledge Agreement
Schedule 5.01(d) Form of Assignment of Life Insurance Policy
Schedule 6.01(a) Financial Statement Disclosures
Schedule 6.01(b) Financial Statement Exceptions
Schedule 6.04 Required Consents, Authorizations, Notices
and Filings
Schedule 6.05 Conflicts
Schedule 6.06 Litigation
Schedule 6.14 Subsidiaries
Schedule 6.18 Places of Business
Schedule 7.01(d) Form of Officer's Compliance Certificate
Schedule 7.12 Form of Joinder Agreement
Schedule 8.01 Indebtedness
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 31,
1997 (the "Credit Agreement"), is by and among AMCOMP INCORPORATED, a Delaware
corporation (the "Borrower"), the subsidiaries of the Borrower identified on the
signature pages hereto and such other subsidiaries as may from time to time
become a party hereto (the "Guarantors") and NATIONSBANK, N.A. (the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower has entered into a Credit Agreement, dated as of
December 30, 1996 (the "Original Credit Agreement"), with the Guarantors and the
Bank;
WHEREAS, the parties to the Original Credit Agreement wish to amend and
restate the Original Credit Agreement as hereinafter set forth;
WHEREAS, any collateral, guarantee, pledge or assignment that has
heretofore been given as security under and in connection with the Original
Credit Agreement or any other agreement, instrument or other document for the
repayment of any Indebtedness incurred by the Borrower to the Bank shall
continue to secure the repayment of such Indebtedness previously incurred and
presently outstanding, together with all new Indebtedness now or hereafter
incurred by the Borrower to the Bank under this Credit Agreement or any other
Credit Document.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Credit Agreement, the
following terms shall have the meanings specified below unless the context
otherwise requires:
"Actuarial Report" shall mean an actuarial review and
valuation statement of an Insurance Subsidiary's loss and loss
adjustment expense reserve positions as of June 30 and December 31 of
any fiscal year (or such other date requested by the Bank), with
respect to the insurance business in force, and covering such other
subjects as are customary in actuarial reviews and reasonably requested
by the Bank, prepared by an independent actuarial firm reasonably
acceptable to the Bank in accordance with reasonable actuarial
assumptions and procedures, not inconsistent with the assumptions and
procedures previously employed, and accompanied by a report prepared by
such actuarial firm reviewing the adequacy of loss reserves of each
Insurance Subsidiary (which firm
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shall be provided access to or copies of all reserves analyses and
valuations relating to the insurance business of each such Insurance
Subsidiary) together with its opinion affirming the adequacy of such
loss reserves.
"Additional Credit Party" means each Person that becomes a
Guarantor after the Original Closing Date by execution of a Joinder
Agreement.
"Advance" means a Facility A Advance or a Facility B Advance.
"Advance Fee" shall have the meaning assigned to such term in
Section 3.03(c).
"Advance Request" means a written request for an Advance in
substantially the form of Schedule 2.01(b), as required by Section
2.01(b).
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the equity
interest in such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Annual Statement" means, with respect to any Insurance
Subsidiary, such Insurance Subsidiary's annual statement to the
insurance regulatory authorities of its domiciliary state, as the same
may be amended from time to time.
"Applicable Percentage Rate" shall have the meaning assigned
to such term in Section 2.02.
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"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Advance, the appropriate
applicable percentage corresponding on the following chart to the Debt
Service Coverage Ratio in effect as of the most recent Calculation
Date:
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Applicable
Percentage for
Pricing Level Debt Service Coverage Ratio Eurodollar Loans
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I Greater than or equal to 3.00 2.25%
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II Greater than or equal to 2.50 2.50%
but less than 3.00
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III Less than 2.00 2.75%
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The Applicable Percentages shall be determined and adjusted quarterly
on the date (each a "Calculation Date") which is the first day of the
month immediately following the date the Borrower provides the Bank
with the financial statements pursuant to Section 7.01(a) and (b) and
the officer's certificate in accordance with the provisions of Section
7.01(c); provided, however that (i) the initial Applicable Percentage
shall be based on Borrower's financial statements for the most recently
ended fiscal quarter and shall remain at such level until the first
Calculation Date subsequent to the Original Closing Date and,
thereafter, the Pricing Level shall be determined by the then current
Debt Service Coverage Ratio, and (ii) if the Borrower fails to provide
the Bank with the financial statements pursuant to Section 7.01(a) and
(b) and the officer's certificate as required by Section 7.01(c) to the
Bank in accordance with the requirements set forth therein, the
Applicable Percentage for such Calculation Date shall be based on
Pricing Level III until such time as financial statements and an
appropriate officer's certificate is provided, whereupon the Pricing
Level shall be determined by the then current Debt Service Coverage
Ratio. Each Applicable Percentage shall be effective from one
Calculation Date until the next Calculation Date. Any adjustment in the
Applicable Percentage shall be applicable to all existing Advances as
well as any new Advances made or issued.
"Assignment of Life Insurance Policy" means that Assignment of
Life Insurance Policy, dated as of June 12, 1997, and substantially in
the form of Schedule 5.01(d) hereto.
"Assumed Consolidated Scheduled Payments" means, as of any
date of determination, (i) for the period from the Original Closing
Date to the anniversary thereof, the then outstanding principal amount
of the Advances divided by 10 minus scheduled payments of principal
under the Notes for the succeeding twelve month period; (ii) for the
period from the date one year and one day after the Original Closing
Date to the
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anniversary thereof, then outstanding principal amount of the Advances
divided by 5 minus scheduled payments of principal under the Notes for
the succeeding twelve month period; and (iii) for any period
thereafter, zero dollars.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days; or (ii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (ii) such Person shall be unable to, or shall
admit in writing its inability to pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (i) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (ii) the Prime Rate in effect on such day. If for
any reason the Bank shall have determined (which determination shall be
conclusive absent manifest error) that it is unable after due inquiry
to ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Bank to obtain sufficient quotations in
accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (i) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Advance bearing interest at a rate
determined by reference to the Base Rate.
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"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"Borrower's Obligations" means, without duplication, (i) all
of the obligations of the Borrower to the Bank, whenever arising, under
this Credit Agreement, the Notes or any of the other Credit Documents
and (ii) all liabilities and obligations, whenever arising, owing from
the Borrower to the Bank, or any Affiliate of the Bank, arising under
any Hedging Agreement.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in West Palm Beach, Florida are
authorized or required by law to close, except that, such day shall
also be a day on which dealings between banks are carried on in U.S.
dollar deposits in London, England and New York, New York.
"Calculation Date" has the meaning set forth in the definition
of Applicable Percentage.
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Change of Control" means the occurrence of any of the
following events: (i) Xxxxxx Xxxxxxxx or, during the period from the
Closing Date until January 31, 1998, the trustee under that certain
Xxxxxx X. Xxxxxxxx Irrevocable Trust Agreement, shall fail to have
beneficial ownership, directly or indirectly, of at least 25% of the
combined voting power of all Voting Stock of the Borrower, (ii) The
Sprout Group and The Welsh, Carson, Xxxxxxxx and Xxxxx Group shall
fail, in the aggregate, to have beneficial ownership, directly or
indirectly, of at least 45% of the combined voting power of all Voting
Stock of the Borrower, (iii) the shareholders of the Borrower shall
approve any plan or proposal for the liquidation or dissolution of the
Borrower, or (iv) during any period of up to 24 consecutive months,
commencing after the Original Closing Date, individuals who at the
beginning of such 24 month period were directors of the Borrower
(together with any new director whose election by the Borrower's Board
of Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office. As used
herein, "beneficial ownership" shall have the meaning provided in Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Closing Date" means the date hereof.
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"Code" means the Internal Revenue Code of 1986, as amended,
and any successor thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time.
References to sections of the Code shall be construed also to refer to
any successor sections.
"Collateral" means the Surplus Notes and all promissory notes
of the Subsidiaries to the Borrower, now owned or hereafter acquired
(the "Collateral Notes"), life insurance on the life of Xxxxxx Xxxxxxxx
and 100% of the outstanding capital stock of Pinnacle (the "Collateral
Stock").
"Collateral Notes" shall have the meaning assigned in the
definition of Collateral.
"Collateral Stock" shall have the meaning assigned in the
definition of Collateral.
"Combined Ratio" means the combined ratio of Pinnacle
determined after payment of dividends and otherwise in accordance with
SAP.
"Commitment" means the Bank's obligation to make Advances
hereunder, including the Facility A Commitment or the Facility B
Commitment, together with the right of the Bank to receive all payments
of all principal, interest and other amounts due hereunder and under
the other Credit Documents from the Borrower and all other rights,
remedies, privileges, duties and obligations of the Bank hereunder and
under the other Credit Documents.
"Commitment Fee" shall have the meaning assigned to such term
in Section 3.03(a).
"Consolidated Capitalization" means, at any time, the sum of
(i) Consolidated Net Worth at such time plus (ii) Consolidated Funded
Indebtedness at such time.
"Consolidated Cash Restricted Payments" means, for any period,
all cash Restricted Payments made by the Borrower and any of its
Subsidiaries (other than any such Restricted Payments made to the
Borrower or a Subsidiary) for such period.
"Consolidated EBITDA" means, for any period, the sum of (a)
Consolidated Net Income for such period plus (b) an amount which, in
the determination of Consolidated Net Income for such period, has been
deducted for (i) Consolidated Interest Expense for such period, (ii)
Consolidated Tax Expense for such period and (iii) consolidated
depreciation and amortization expense of the Borrower and its
Subsidiaries for such period less (c) to the extent included in
Consolidated Net Income, amortization of negative goodwill, all as
determined in accordance with GAAP.
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"Consolidated Funded Indebtedness" means, at any time, the
outstanding principal amount of all Funded Indebtedness, without
duplication, of the Borrower and its Subsidiaries at such time.
"Consolidated Interest Expense" means, for any period, all
interest expense of the Borrower and its Subsidiaries for such period,
as determined in accordance with GAAP.
"Consolidated Leverage Ratio" means, as of the last day of any
fiscal quarter of the Borrower, the ratio of (i) Consolidated Funded
Indebtedness as of such date to (ii) Consolidated Capitalization as of
such date.
"Consolidated Net Income" means, for any period, net income
after taxes for such period for the Borrower and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"Consolidated Net Worth" means, as of any date, total
shareholders' equity of the Borrower and its Subsidiaries as of such
date, as determined in accordance with GAAP, excluding the effect of
FASB 115.
"Consolidated Net Written Premiums" means, as of the last day
of any fiscal year, with respect to the Insurance Subsidiaries, the sum
of the total amount of premiums written after deducting or adding
premiums on business ceded to or assumed from others (as shown on line
32, column 4, Part 2B of page 9 of the Annual Statement for such date)
by the Insurance Subsidiaries on a consolidated basis in accordance
with SAP.
"Consolidated Net Written Premiums to Statutory Surplus Ratio"
means, as of the last day of any fiscal year, the ratio of (i)
Consolidated Net Written Premiums as of such date to (ii) Consolidated
Statutory Surplus as of such date.
"Consolidated Scheduled Funded Indebtedness Payments" means,
as of the last day of any fiscal quarter of the Borrower, the scheduled
payments of principal on Funded Indebtedness for the Borrower and its
Subsidiaries for the succeeding twelve month period.
"Consolidated Statutory Surplus" means, as of any date, with
respect to the Insurance Subsidiaries, the aggregate amount (without
duplication) of policyholders' surplus (as shown on line 25 in column 1
on page 3 of such Person's most recent SAP Statement) of the Insurance
Subsidiaries on a consolidated basis in accordance with SAP, or an
amount determined in a consistent manner for any date other than one as
of which a SAP Statement is prepared.
"Consolidated Tax Expense" means, for any period, all income
tax expense of the Borrower and its Subsidiaries for such period, as
determined in accordance with GAAP.
8
"Consolidation" shall have the meaning assigned to such term
in Section 2.01(d)(ii) hereof.
"Consolidation Date" means August 31, 1998.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the Pledge Agreement, the Assignment of Life
Insurance Policy, each Joinder Agreement, the Warrantholders Rights
Agreement, the Warrants and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Debt Service Coverage Ratio" means, as of the last day of any
fiscal quarter of the Borrower, the ratio of (a)(i) Operating Company
Net Income for the four quarter period ended as of such date plus (ii)
depreciation and amortization expenses of the Operating Companies for
the four quarter period ended as of such date minus (iii) to the extent
included in item (i), interest not paid when due on the Surplus Notes
that remains outstanding as of any date of determination minus (iv)
cash dividends of the Borrower for the four quarter period ended as of
such date minus (v) capital expenditures determined in accordance with
GAAP of the Operating Companies for the four quarter period ended as of
such date to (b)(i) Consolidated Scheduled Funded Indebtedness Payments
plus (ii) Assumed Consolidated Scheduled Payments.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Delivered Annual Statements" means with respect to the
Borrower and its Subsidiaries, those Annual Statements, as filed with
the appropriate Governmental Authorities of their respective states of
domicile, for the fiscal year ending December 31, 1996.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing,
9
distribution, use, treatment, storage, disposal, transport, or handling
of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes the Borrower and
which is treated as a single employer under Sections 414(b), (c), (m),
or (o) of the Code.
"Eurodollar Loan" means any Advance bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Advance, a per annum interest rate determined pursuant to the following
formula:
Eurodollar Rate = Interbank Offered Rate
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1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of loans bearing interest at the
Eurodollar Rate is determined), whether or not the Bank has any
Eurocurrency liabilities subject to such reserve requirement at that
time. Advances shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets that may be
available from time to time to the Bank. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.01.
"Existing Affiliate Contracts" means those certain agreements
identified on Schedule 1.01A attached hereto, as such agreements exist
as of the Original Closing Date.
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"Facility A Advance" shall have the meaning assigned to such
term in Section 2.01(a).
"Facility A Commitment" shall have the meaning assigned to
such term in Section 2.01(a).
"Facility A Note" means a promissory note of the Borrower
payable to the order of the Bank, in substantially the form of Schedule
2.03 hereto, evidencing the indebtedness of the Borrower to the Bank
resulting from the Facility A Advance, as such amount may be increased
pursuant to Section 2.01(d)(ii) hereof, and as such promissory note may
be amended, modified, restated or replaced from time to time.
"Facility A Termination Date" means December 5, 2001 or such
earlier date of termination of the Facility A Commitment pursuant to
Article IX hereof.
"Facility B Advance" shall have the meaning assigned to such
term in Section 2.01(b).
"Facility B Commitment" shall have the meaning assigned to
such term in Section 2.01(b).
"Facility B Note" means a promissory note of the Borrower
payable to the order of the Bank, in substantially the form of Schedule
2.03 hereto, evidencing the indebtedness of the Borrower to the Bank
resulting from the Facility B Advance, as such promissory note may be
amended, modified, restated or replaced from time to time.
"Facility B Termination Date" means September 30, 1998 or such
earlier date of termination of the Facility B Commitment pursuant to
Article IX hereof.
"FDOI" means the Florida Department of Insurance.
"Fees" means all fees payable pursuant to Section 3.03.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole multiple
of 1/100 of 1%) 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 by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day and (ii) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the Bank on such day
on such transactions as determined by the Bank.
11
"Florida Insurance Laws" means all statutes, regulations,
interpretations of any nature whatsoever applicable to any entity
undertaking an insurance business in the State of Florida, including
Pinnacle.
"Funded Indebtedness" means, with respect to any Person,
without duplication, (i) all Indebtedness of such Person for borrowed
money, (ii) all purchase money Indebtedness of such Person, including
without limitation the principal portion of all obligations of such
Person under Capital Leases, (iii) all Guaranty Obligations of such
Person with respect to Funded Indebtedness of another Person, (iv) the
maximum available amount of all standby letters of credit or
acceptances issued or created for the account of such Person, (v) all
Funded Indebtedness of another Person secured by a Lien on any Property
of such Person, whether or not such Funded Indebtedness has been
assumed, and (vi) the principal balance outstanding under any synthetic
lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product to which such Person is a party,
where such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in accordance with
GAAP. The Funded Indebtedness of any Person shall include the Funded
Indebtedness of any partnership or joint venture in which such Person
is a general partner or joint venturer.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.03 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantor" means each of those Persons identified as a
"Guarantor" on the signature pages hereto, and each Additional Credit
Party which may hereafter execute a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guarantying or intended to
guaranty any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein)
12
be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of
which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement between the Borrower and the Bank, or any Affiliate of the
Bank, entered into in order to manage existing or anticipated interest
rate risks associated with the obligations of the Borrower to the Bank
under this Credit Agreement, the Notes or any of the other Credit
Documents.
"Home Office Building" means, collectively, (i) the office
building occupied by the Borrower and its Subsidiaries, (ii) the realty
upon which such building is located in North Palm Beach, Florida, and
(iii) the parking area dedicated to such office building.
"Indebtedness" of any Person means (i) all obligations of such
Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of
Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(vi) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (vii) all Guaranty
Obligations of such Person, (viii) the principal portion of all
obligations of such Person under Capital Leases, (ix) all obligations
of such Person in respect of interest rate protection agreements,
foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price
hedging agreements (including, but not limited to, the Hedging
Agreements) (it being understood that the amount of Indebtedness under
any agreement described in this subclause (ix), as of any date, shall
be deemed to be equal to the termination value payable by such Person
if such agreement were terminated on such date), (x) the maximum amount
of all standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed),
and (xi) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off- balance sheet loan or similar
off-balance sheet financing product to which such Person is a party,
where such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in accordance with
GAAP; provided that Indebtedness shall not include (i) obligations with
respect to insurance policies,
13
annuities, guaranteed investment contracts and similar products
underwritten by, or Reinsurance Agreements or Retrocession Agreements
(including, without limitation, cut- through endorsements related
thereto) entered into by, any Insurance Subsidiary in the ordinary
course of its business and (ii) obligations with respect to Surplus
Relief Reinsurance ceded by the Borrower or any Insurance Subsidiary.
The Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner
or a joint venturer.
"Insurance Subsidiary" means Pinnacle, AmComp Assurance
Corporation and each Wholly Owned Subsidiary of the Borrower licensed
to engage in the business of property and casualty insurance.
"Interbank Offered Rate" means, for the Interest Period for
each Advance, a per annum interest rate (rounded upwards, if necessary,
to the nearest whole multiple of 1/100 of 1%) equal to the rate of
interest, determined by the Bank on the basis of the offered rates for
deposits in dollars for a period of time corresponding to such Interest
Period (and commencing on the first day of such Interest Period),
appearing on Telerate Page 3750 (or, if, for any reason, Telerate Page
3750 is not available, the Reuters Screen LIBO Page) as of
approximately 11:00 A.M. (London time) two (2) Business Days before the
first day of such Interest Period. As used herein, "Telerate Page 3750"
means the display designated as page 3750 by Dow Xxxxx Telerate, Inc.
(or such other page as may replace such page on that service for the
purpose of displaying the British Bankers Association London interbank
offered rates) and "Reuters Screen LIBO Page" means the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service
(or such other page as may replace the LIBO page on that service for
the purpose of displaying London interbank offered rates of major
banks).
"Intercompany Indebtedness" means any Indebtedness of a Credit
Party which (i) is owing to any other Credit Party and (ii) by its
terms is specifically subordinated in right of payment to the prior
payment of the obligations of the Credit Parties under this Credit
Agreement and the other Credit Documents on terms and conditions
reasonably satisfactory to the Bank.
"Interest Payment Date" means the fifth day of each March,
June, September and December, the date of repayment of principal of the
applicable Advance and the applicable Termination Date. If an Interest
Payment Date falls on a date which is not a Business Day, such Interest
Payment Date shall be deemed to be the next succeeding Business Day,
except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day.
"Interest Period" means a period of one month's duration
commencing in each case, on the date of the borrowing (including
renewals); provided, however, (i) if any Interest Period would end on a
day which is not a Business Day, such Interest Period shall
14
be extended to the next succeeding Business Day (except that where the
next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding Business Day), (ii) no Interest
Period shall extend beyond the Termination Date applicable to an
Advance, (iii) no Interest Period shall extend beyond any Interest
Payment Date or any principal amortization payment date, and (iv) where
an Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is
to end, such Interest Period shall end on the last day of such calendar
month.
"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person.
"Investment Grade Securities" means (i) U.S. Government
Obligations; (ii) any certificate of deposit, maturing not more than
365 days after the date of acquisition, issued by, or time deposit of,
a commercial banking institution that has combined capital and surplus
of not less than $100,000,000 or its equivalent in foreign currency,
whose debt is rated at the time as of which any investment there is
made, of A (or higher) according to Standard & Poor's Corporation
("S&P") or Xxxxx'x Investors Services, Inc. ("Moody's"), or A1 (or
higher) by IBCA Ltd., or if none of S&P, Moody's and IBCA Ltd. shall
then exist, the equivalent of such rating by any other nationally
recognized securities rating agency; (iii) commercial paper, maturing
not more than 270 days after the date of acquisition, issued by a
corporation (other than an Affiliate or Subsidiary of the Company) with
a rating, at the time as of which any investment therein is made, of
A-1 (or higher) according to S&P or "P-1" (or higher) according to
Moody's, or if neither of S&P and Moody's shall then exist, the
equivalent of such rating by any other nationally recognized securities
rating agency; (iv) any bankers' acceptances or any money market
deposit accounts, in each case, issued or offered by any commercial
bank having capital and surplus in excess of $100,000,000 or its
equivalent in foreign currency, whose debt is rated at the time as of
which any investment there is made, of "A" (or higher) according to S&P
or Moody's or "A1" (or higher) by IBCA Ltd., or if none of S&P, Moody's
and IBCA Ltd. shall then exist, the equivalent of such rating by any
other nationally recognized securities rating agency; (v) any fund
investing exclusively in investments of the types described in clauses
(i) through (iv) above. For this purpose, "U.S. Government Obligations"
means securities that are (x) direct obligations of the United States
of America for the timely payment of which its full faith and credit is
pledged or (y) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank
(as defined in Section
15
3(a)(2) of the Securities Act of 1933, as amended), as custodian with
respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository
receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation evidenced by
such depository receipt.
"IRIS Tests" shall mean the ratios and other financial
measurements developed by the NAIC under its Insurance Regulatory
Information System or, in lieu thereof, any successor thereto,
replacement thereof, substitute therefor or other substantially similar
guidelines intended to measure the financial performance of companies
in the property and casualty insurance industry, as the same shall be
in effect from time to time.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Schedule 7.12 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.12.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Material Adverse Effect" means a material adverse effect on
(i) the combined condition (financial or otherwise), operations,
business, assets or liabilities or prospects of the Borrower and its
Subsidiaries, taken as a whole, (ii) the ability of any Credit Party to
perform any material obligation under the Credit Documents to which it
is a party or (iii) the material rights and remedies of the Lenders
under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea- formaldehyde insulation.
"Maximum Consolidated Capitalization" means, as of the last
day of any fiscal quarter of the Borrower, the ratio of Consolidated
Funded Indebtedness to Consolidated Capitalization.
16
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001 (a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate are contributing sponsors.
"NAIC" means the National Association of Insurance
Commissioners and any successor thereof.
"NationsBank" means NationsBank, N.A. and its successors and
assigns.
"Non-Excluded Taxes" means such term as is defined in Section
3.08.
"Non-Guarantor Subsidiary" means any Non-Insurance Subsidiary
which is not a Guarantor.
"Non-Insurance Subsidiary" means any Subsidiary of the
Borrower which is not an Insurance Subsidiary.
"Note" means the Facility A Note or the Facility B Note.
"Operating Companies" means, collectively, the Borrower (on an
unconsolidated basis), Pinnacle Administrative Company (as successor to
Florida Administrators, Inc.) and Pinnacle Benefits, Inc. (as successor
to Compensation Benefits, Inc.).
"Operating Company Net Income" means, for any period, net
income after taxes, without duplication, for such period for the
Operating Companies, as determined in accordance with GAAP.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Original Closing Date" means December 30, 1996.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means any of the following: (i) cash;
(ii) Investment Grade Securities; (iii) Investments in non-Investment
Grade Securities so long as (a) the fair saleable value of all
non-Investment Grade Securities held by the Insurance
17
Subsidiaries does not exceed 10% of the consolidated Total Invested
Assets of the Insurance Subsidiaries and (b) the fair saleable value of
all non-Investment Grade Securities held by the Borrower and its
Subsidiaries (including Insurance Subsidiaries) does not exceed 10% of
the aggregate fair saleable value of all securities held by the
Borrower and its Subsidiaries (including the Insurance Subsidiaries) on
a consolidated basis; (iv) advances or loans to directors, officers,
employees, agents, customers or suppliers (A) made in the ordinary
course of business and consistent with the past practices of the Credit
Parties or (B) to the extent not permitted by the foregoing subclause
(A), that do not exceed $250,000 in the aggregate at any one time
outstanding; (v) Investments in any Credit Party; (vi) Intercompany
Indebtedness permitted by Section 8.01(c); (vii) Investments in a Non-
Guarantor Subsidiary, provided that such Investments do not exceed
$500,000 in the aggregate at any one time outstanding; (viii) accounts
receivable created, acquired or made by the Borrower or any of its
Subsidiaries in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (ix)
Investments consisting of stock, obligations, securities or other
property received by the Borrower or any of its Subsidiaries in
settlement of accounts receivable (created in the ordinary course of
business) from bankrupt obligors; (x) repurchase agreements entered
into by a Person with a commercial banking institution (including any
of the Lenders) or recognized securities dealer having capital and
surplus in excess of $100,000,000 for direct obligations issued by or
fully guaranteed by the United States of America in which such Person
shall have a perfected first priority security interest (subject to no
other Liens) and having, on the date of purchase thereof, a fair market
value of at least 100% of the amount of the repurchase obligations;
(xi) the Home Office Building; (xii) Investments of the Borrower in any
Insurance Subsidiary, provided that no Default or Event of Default
exists hereunder or would occur as a result thereof; (xiii) other
Investments existing as of the Original Closing Date and set forth in
Schedule 1.01B; (xiv) Guaranty Obligations permitted by Section 8.01;
(xv) acquisitions permitted by Section 8.04(d); and (xvi) transactions
permitted by Section 8.08.
"Permitted Liens" means:
(i) Liens in favor of the Bank;
(ii) Liens (other than Liens created or imposed under
ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of
18
business, provided that such Liens secure only amounts not yet
due and payable or, if due and payable, are unfiled and no
other action has been taken to enforce the same or are being
contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such
Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(iv) Liens (other than Liens created or imposed under
ERISA) incurred or deposits made by the Borrower and its
Subsidiaries in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment
of borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the
judgments secured shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness to the extent permitted under Section 8.01,
provided that (i) the Indebtedness secured by such Liens does
not exceed the purchase price of the assets financed and (ii)
any such Lien attaches to such Property concurrently with or
within 90 days after the acquisition thereof;
(viii) Liens arising under escrows, trusts,
custodianships, separate accounts, funds withheld procedures,
and similar deposits, arrangements or agreements established
with respect to insurance policies, annuities, guaranteed
investment contracts and similar products underwritten by, or
Reinsurance Agreements entered into by, the Borrower or any
Insurance Subsidiary in the ordinary course of business;
(ix) deposits with insurance regulatory authorities;
19
(x) Liens on assets at the time such assets are
acquired by the Borrower or any Subsidiary; provided that such
Liens are not created in contemplation of such acquisition;
(xi) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions; and
(xii) Liens existing as of the Original Closing Date
and set forth on Schedule l.01C; provided that no such Lien
shall at any time be extended to or cover any Property other
than the Property subject thereto on the Original Closing
Date.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Pinnacle" means Pinnacle Assurance Corporation, a Wholly
Owned Subsidiary of the Borrower.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Pledge Agreement" means that certain Pledge and Security
Agreement, dated as of December 30, 1996, pursuant to which the
Borrower has granted to the Bank a security interest for the Borrower's
Obligations in the Collateral.
"Prepayment Fee" shall have the meaning assigned to such term
in Section 3.02.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by NationsBank as its prime rate in effect
at its principal office in Charlotte, North Carolina, with each change
in the Prime Rate being effective on the date such change is publicly
announced as effective (it being understood and agreed that the Prime
Rate is a reference rate used by NationsBank in determining interest
rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit by NationsBank to any
debtor).
"Pro Forma Basis" means, with respect to any transaction, that
such transaction shall be deemed to have occurred as of the first day
of the four fiscal-quarter period ending as of the most recent fiscal
quarter end preceding the date of such transaction with respect to
which the Bank has received the officer's certificate in accordance
with the provisions
20
of Section 7.01(d). As used herein, "transaction" means (i) any
acquisition of capital stock or securities or any purchase, lease or
other acquisition of Property as referred to in Section 8.04(d), (ii)
any Restricted Payment as referred to in Section 8.06(d) or (iii) any
settlement as referred to in Section 8.13.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Quarterly Statement" means, with respect to any Insurance
Subsidiary, such Insurance Subsidiary's quarterly statement to the
insurance regulatory authorities of its domiciliary state, as the same
may be amended from time to time.
"Regulation G, T, U, or X" means Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Reinsurance Agreements" shall mean any agreement, contract,
treaty, certificate or other arrangement whereby an Insurance
Subsidiary agrees to transfer, cede or retrocede to another insurer or
reinsurer all or part of the liability assumed by such an Insurance
Subsidiary under a policy or policies of insurance issued by such an
Insurance Subsidiary.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
post-event notice requirement is waived under subsections .13, .14,
.18, .19, or .20 of PBGC Reg. Section 2615.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of the Borrower or any of its Subsidiaries, now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of the Borrower or any of its
Subsidiaries, now or hereafter outstanding and (iii) any payment made
to retire, or to obtain the surrender of, any
21
outstanding warrants, options or other rights to acquire shares of any
class of stock of the Borrower or any of its Subsidiaries, now or
hereafter outstanding.
"Retrocession Agreement" means any agreement, contract, treaty
or other arrangement (other than Surplus Relief Reinsurance) whereby
any insurer cedes or assumes reinsurance to or from other insurers.
"Risk Based Capital Act" means the Risk Based Capital Model
Act and the rules, regulations and procedures prescribed from time to
time by the NAIC with respect thereto, in each case as amended,
modified or supplemented from time to time by the NAIC.
"SAP" means, with respect to any Insurance Subsidiary, the
accounting practices prescribed or permitted by the insurance
commissioner (or other similar authority) in the jurisdiction of
domicile of such insurance company for the preparation of Annual
Statements, Quarterly Statements and other financial reports by
insurance corporations of the same type as such Insurance Subsidiary,
as applied on a consistent basis and subject to the terms of Section
1.03 hereof.
"SAP Statement" means an Annual Statement or a Quarterly
Statement
"Service Contracts" means (i) that certain Management Company
Contract, dated as of April 7, 1995, between Pinnacle Administrative
Company (formerly known as Florida Administrators, Inc.) and Pinnacle,
as amended by the Amendment, dated as of January 26, 1996 and (ii) that
certain Service Company Contract, dated as of April 7, 1995, between
Pinnacle Administrative Company (formerly known as Florida
Administrators, Inc.) and Pinnacle Benefits, Inc. (formerly known as
Compensation Benefits, Inc.), as amended by the Amendment, dated as of
January 26, 1996, as each such agreement is in effect on the Original
Closing Date.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
generally pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business,
(ii) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature in their ordinary course, (iii) such
Person is not engaged in a business or a transaction, and is not about
to engage in a business or a transaction, for which such Person's
Property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such
Person is engaged or is to engage, (iv) the fair value of the Property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person
and (v) the present fair saleable
22
value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its
debts as they become absolute and matured. In computing the amount of
contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured
liability.
"Subsidiary" means, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (ii) any
partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than 50%
equity interest at any time.
"Surplus Notes" means those certain promissory notes, dated
the Original Closing Date, in the principal amount of $10,000,000 and
dated the Closing Date, in the principal amount of $5,000,000, issued
by Pinnacle to the Borrower.
"Surplus Relief Reinsurance" means any transaction in which
any Insurance Subsidiary cedes business under a Reinsurance Agreement
that would be considered a "financing-type" Reinsurance Agreement as
determined by the independent certified public accountants of the
Borrower in accordance with principles published by the Financial
Accounting Standards Board (including, but not limited to FASB 113 and
EITF #93-6).
"Termination Date" means, with respect to the Facility A
Advance, the Facility A Termination Date and, with respect to the
Facility B Advance, the Facility B Termination Date.
"Termination Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; or (vi) the complete or partial withdrawal of the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.
23
"Total Invested Assets" means, with respect to any Insurance
Subsidiary, the amount set forth on line 8(a) in column 1 on page 2 of
such Insurance Subsidiary's most recent SAP Statement.
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
"Warrantholders Rights Agreement" means the Warrantholders
Rights Agreement, dated as of the date hereof, among the Borrower and
the Bank in substantially the form of Schedule 3.03.
"Warrants" has the meaning set forth in the Warrantholders
Rights Agreement.
"Wholly Owned Subsidiary" of any Person means any Subsidiary
100% of whose Voting Stock or other equity interests is at the time
owned by such Person directly or indirectly through other Wholly Owned
Subsidiaries.
SECTION 1.02. Computation of Time Periods. For purposes of computation
of periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
SECTION 1.03. Accounting Terms.
(a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Bank shall
be prepared, (i) with respect to the Borrower and its consolidated Subsidiaries,
in accordance with GAAP applied on a consistent basis and (ii) with respect to
the Insurance Subsidiaries, in accordance with SAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP or SAP, as appropriate, applied on a basis
consistent with the most recent annual or quarterly financial statements
delivered pursuant to Section 6.01 hereof; provided, however, if (a) the
Borrower shall object to determining such compliance on such basis at the time
of delivery of such financial statements due to any change in GAAP, SAP or the
rules promulgated with respect thereto or (b) the Bank shall so object in
writing within 30 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrower to the Bank as to which no such objection
shall have been made.
(b) All references to line items in any column and on any page of an
Insurance Subsidiary's SAP Statement are deemed to be references to the
equivalent item in the event that the form of such Person's SAP Statement is
amended.
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ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Committed Facilities.
(a) $15,000,000 Facility A. Subject to and upon the terms and
conditions and relying upon the representations and warranties herein set forth,
the Bank agrees to make an advance (the "Facility A Advance") to the Borrower on
the date hereof in an amount not to exceed $15,000,000 (the "Facility A
Commitment").
(b) $5,000,000 Facility B. In addition to the Facility A Commitment,
subject to and upon the terms and conditions and relying upon the
representations and warranties herein set forth, the Bank agrees to make an
advance (the "Facility B Advance") to the Borrower on the date hereof in an
amount not to exceed $5,000,000 (the "Facility B Commitment").
(c) Borrowing Procedure. The Borrower shall submit an appropriate
Advance Request to the Bank not later than 11:00 A.M. (New York City time) on
the proposed date for the making of an Advance, which Advance Request shall be
irrevocable and shall specify, among other things, that the funding of an
Advance is requested and the type of the Advance. Upon fulfillment of the
conditions set forth in Section 5.01 on or prior to such date, the Bank shall
make the Advance relating to such Advance Request available to the Borrower in
same day funds on such date at the Bank's address referred to in Section 10.01.
(d) Repayment.
(i) Facility A. Subject to the provisions of paragraph (ii)
hereof, the principal amount of the Facility A Advance shall be repaid
in eleven (11) equal and consecutive quarterly installments of $750,000
due and payable as of the fifth day of each March, June, September and
December, commencing on March 5, 1999; provided, that, the final
installment of principal shall be payable on the Facility A Termination
Date and shall be in an amount sufficient to pay the entire principal
amount of the Facility A Advance outstanding on the Facility A
Termination Date.
(ii) Facility B. The principal amount of the Facility B
Advance shall be due and payable in one installment on the Facility B
Termination Date, provided, that, upon the Borrower's request and at
the Bank's election in its sole discretion, which election shall be in
writing on notice to the Borrower as provided herein, the principal
amount of the Facility B Advance may be consolidated with and added to
the principal amount of the Facility A Advance on the Consolidation
Date (the "Consolidation"). The Consolidation shall be subject to the
satisfaction or waiver by the Bank on or prior to the Consolidation
25
Date of conditions, in the Bank's sole discretion, including, but not
limited to, the following:
(A) Consolidated EBITDA for the six-month period
ending June 30, 1998 shall be greater than
$6,000,000;
(B) the Borrower shall have received at least
$10,000,000 in net proceeds from the
issuance in an offering of its equity
securities or subordinated debt on terms
satisfactory to the Bank;
(C) the results of the December 31, 1997 and
June 30, 1998 Actuarial Reports delivered to
the Bank pursuant to Section 7.01(e) hereof
are satisfactory to the Bank in its sole
discretion;
(D) an Event of Default shall not have occurred
(including any Event of Default waived by
the Bank) or be continuing; and
(E) a Material Adverse Effect shall not have
occurred.
Upon the Consolidation, (1) the Facility B Advance shall be deemed to
be repaid; (2) the outstanding principal amount of the Facility A
Advance and the Facility A Commitment shall be deemed to be increased
by the amount so consolidated, (3) the principal amount of the Facility
A Advance shall be due and payable in quarterly installments of
$1,000,000 and (4) the Borrower shall execute a replacement Facility A
Note in substantially the form of Schedule 2.03 in the principal amount
of the increased Facility A Commitment.
SECTION 2.02. Interest. Subject to the provisions of Section 3.01, the
Advances shall bear interest at a per annum rate equal to the Eurodollar Rate
plus the Applicable Percentage (the "Applicable Percentage Rate"). The interest
on the Facility A Advance shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein). The
interest on the Facility B Advance shall be payable in arrears on each
applicable Interest Payment Date occurring on and after March 5, 1998 (or at
such other times as may be specified herein).
SECTION 2.03. Promissory Notes. The Facility A Advance shall be
evidenced by a Facility A Note. The Facility B Advance shall be evidenced by a
Facility B Note.
26
ARTICLE III
OTHER PROVISIONS RELATING TO CREDIT FACILITY
SECTION 3.01. Default Rate. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Advances and any other amounts owing hereunder
or under the other Credit Documents shall bear interest, payable on demand, at a
per annum rate 3% greater than the rate which would otherwise be applicable (or
if no rate is applicable, whether in respect of interest, fees or other amounts,
then 3% greater than the Applicable Percentage Rate).
SECTION 3.02. Prepayments. The Borrower shall have the right to prepay
the Advances in whole or in part, provided, however, that (i) Borrower shall
additionally pay (a) all accrued and unpaid interest on such prepayment amount
to the date of such prepayment and, (b) in the event such prepayment occurs
within 36 months of the Original Closing Date, an amount equal to .50% of such
prepayment amount (the "Prepayment Fee") to compensate the Bank for any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Bank to make, continue
or extend any portion of the principal amount of the Advances) as a result of
such prepayment; (ii) the Advances may only be prepaid on three Business Days'
prior written notice to the Bank which notice shall specify the amounts to be
prepaid; (iii) any prepayment of the Advances will be subject to Section 3.07;
and (iv) each such partial prepayment of the Advances shall be in a minimum
principal amount of $250,000. Subject to the foregoing terms, amounts prepaid
under this Section 3.02 shall be applied to principal installments thereof in
inverse order of maturity. Amounts prepaid may not be reborrowed.
SECTION 3.03. Fees.
(a) Commitment Fee. In consideration of the Facility A Commitment, the
Borrower agrees to pay the Bank a commitment fee in the amount of $50,000 (the
"Commitment Fee"), the entire amount of which the Bank acknowledges has been
irrevocably paid prior to the date hereof.
(b) Commitment Warrant. In consideration of the Facility B Commitment,
the Borrower agrees to grant to the Bank on the Closing Date warrants to
purchase 55,000 shares of the common stock of the Borrower on the terms and
conditions set forth in the Warrantholders Rights Agreement and as evidenced by
the Warrants.
(c) Advance Fee. The Borrower agrees to pay the Bank from time to time
an Advance Fee (each, an "Advance Fee") on the anniversary of the Original
Closing Date and on each anniversary thereafter in the amount of .15% of the
then outstanding principal amount of the Facility A Advance.
27
SECTION 3.04. Capital Adequacy. If the Bank has determined, after the
date hereof, that the adoption or the becoming effective of, or any change in,
or any change by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof in the interpretation
or administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which the Bank could have achieved
but for such adoption, effectiveness, change or compliance (taking into
consideration the Bank's policies with respect to capital adequacy), then, upon
notice from the Bank to the Borrower, the Borrower shall be obligated to pay to
the Bank such additional amount or amounts as will compensate The Bank for such
reduction. Each determination by the Bank of amounts owing under this Section
shall, absent manifest error, be conclusive and binding on the parties hereto.
SECTION 3.05. Inability To Determine Interest Rate. If prior to the
first day of any Interest Period, the Bank shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, the
Bank shall give telecopy or telephonic notice thereof to the Borrower as soon as
practicable thereafter. If such notice is given (a) any Advances requested to be
made on the first day of such Interest Period shall be made as Base Rate Loans
and (b) any Advances that were to have been continued as Eurodollar Loans shall
be continued as Base Rate Loans. Until such notice has been withdrawn by the
Bank, no further Eurodollar Loans shall be made or continued as such.
SECTION 3.06. Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof occurring after the Original Closing Date
shall make it unlawful for the Bank to make or maintain Eurodollar Loans as
contemplated by this Credit Agreement, (a) the Bank shall promptly give written
notice of such circumstances to the Borrower (which notice shall be withdrawn
whenever such circumstances no longer exist), (b) the commitment of the Bank
hereunder to make Eurodollar Loans and continue Eurodollar Loans as such shall
forthwith be canceled and, until such time as it shall no longer be unlawful for
the Bank to make or maintain Eurodollar Loans, the Bank shall then have a
commitment only to make a Base Rate Loan when an Advance is requested and (c)
Advances then outstanding, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Advances or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.11.
28
SECTION 3.07. Requirements of Law. If, after the Original Closing Date,
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof applicable to the Bank, or compliance by the Bank with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority, in each case made subsequent to
the Original Closing Date:
(a) shall subject the Bank to any tax of any kind whatsoever
with respect to any Advances made by it or its obligation to make
Advances, or change the basis of taxation of payments to the Banks in
respect thereof (except for (i) Non-Excluded Taxes covered by Section
3.08 and (ii) changes in taxes measured by or imposed upon the overall
net income, or franchise tax (imposed in lieu of such net income tax),
of the Bank or its applicable lending office, branch, or any affiliate
thereof));
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of the Bank which is not otherwise
included in the determination of the Eurodollar Rate hereunder; or
(c) shall impose on the Bank any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to the Bank, by
an amount which the Bank deems to be material, of making, continuing or
maintaining Advances or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from the Bank, in
accordance herewith, the Borrower shall be obligated to promptly pay the Bank,
upon its demand, any additional amounts necessary to compensate the Banks for
such increased cost or reduced amount receivable. If the Bank becomes entitled
to claim any additional amounts pursuant to this subsection, it shall provide
prompt notice thereof to the Borrower, certifying (x) that one of the events
described in this paragraph (a) has occurred and describing in reasonable detail
the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by the
Bank and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this subsection
submitted by the Bank, to the Borrower shall be conclusive and binding on the
parties hereto in the absence of manifest error. This covenant shall survive the
termination of this Credit Agreement and the payment of the Advances and all
other amounts payable hereunder.
SECTION 3.08. Taxes.
(a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and the Notes 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,
29
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or governmental
body, agency or other official, excluding taxes measured by or imposed upon the
overall net income of the Bank or its applicable lending office, or any branch
or affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of the Bank or its
applicable lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under the
laws of which the Bank, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive office is located,
or any nation within which such jurisdiction is located or any political
subdivision thereof; or (ii) by reason of any connection between the
jurisdiction imposing such tax and the Bank, applicable lending office, branch
or affiliate other than a connection arising solely from the Bank having
executed, delivered or performed its obligations, or received payment under or
enforced, this Credit Agreement or the Notes. 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 Bank hereunder or under the Notes, (A) the amounts so payable to the Bank
shall be increased to the extent necessary to yield to the Bank (after payment
of all Non-Excluded Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Credit Agreement and the Notes,
and (B) as promptly as possible thereafter the Borrower shall send to the Bank
for its own account, 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 Bank the required receipts or other required documentary evidence,
the Borrower shall indemnify the Bank for any incremental taxes, interest or
penalties that may become payable by the Bank as a result of any such failure.
The agreements in this subsection shall survive the termination of this Credit
Agreement and the payment of the Advances and all other amounts payable
hereunder.
(b) In connection with this transaction there may or may not be due
certain documentary stamp taxes and/or intangible taxes imposed by the State of
Florida (the "Florida Taxes"). In addition to (and not in limitation of) the
indemnification with respect to tax liabilities set forth above, the Borrower
agrees to indemnify the Bank, its directors, officers, agents and employees from
and against any and all liability, damage, loss, cost, expense or reasonable
attorney fees which may accrue to or be sustained by the Bank or its directors,
officers, agents or employees on account of or arising from any claim or action
raised by, filed or brought by or in the name of any Florida governmental or
administrative department with respect to nonpayment of the Florida Taxes
against the Bank, or any of its directors, officers, agents or employees.
SECTION 3.09. Indemnity. The Borrower promises to indemnify the Bank
and to hold the Bank harmless from any loss or expense which the Bank may
sustain or incur (other than through the Bank's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, Advances after the Borrower has given a notice requesting the same
in accordance with the provisions of this Credit Agreement, (b) default by the
Borrower in making any prepayment of an Advance after the Borrower has given a
notice thereof in accordance with the provisions of this Credit Agreement or (c)
the making of a prepayment of an
30
Advance on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, or continued, for the period from the date of such
prepayment or of such failure to borrow or continue to the last day of the
applicable Interest Period (or, in the case of a failure to borrow or continue,
the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such Advances provided for
herein (excluding, however, the Applicable Percentage included therein, if any)
over (ii) the amount of interest (as reasonably determined by the Bank) which
would have accrued to the Bank on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank Eurodollar market.
The covenants of the Borrower set forth in this Section 3.07 shall survive the
termination of this Credit Agreement and the payment of the Advances and all
other amounts payable hereunder.
SECTION 3.10. Payments, Computations. Etc.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Bank in dollars in immediately available funds,
without offset, deduction, counterclaim or withholding of any kind, at the
Bank's Charlotte, North Carolina office specified in Section 10.01 not later
than 2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Bank may (but shall not be obligated to) debit the
amount of any such payment which is not made by such time to any ordinary
deposit account of the Borrower maintained with the Bank (with notice to the
Borrower). The Borrower shall, at the time it makes any payment under this
Credit Agreement, specify to the Bank the Advances, Fees, interest or other
amounts payable by the Borrower hereunder to which such payment is to be
applied. Whenever any payment hereunder shall be stated to be due on a day which
is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the period
of such extension), except that, if the extension would cause the payment to be
made in the next following calendar month, then such payment shall instead be
made on the next preceding Business Day. Except as expressly provided otherwise
herein, all computations of interest and fees shall be made on the basis of
actual number of days elapsed over a year of 360 days. Interest shall accrue
from and include the date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the occurrence
and during the continuance of an Event of Default, all amounts collected or
received by the Bank on account of the Borrower's Obligations or any other
amounts outstanding under any of the Credit Documents shall be paid over or
delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Bank in connection with enforcing its rights under the Credit
Documents;
31
SECOND, to payment of any Fees owed to the Bank;
THIRD, to the payment of all of the Borrower's Obligations
consisting of interest;
FOURTH, to the payment of the outstanding principal amount of
the Borrower's Obligations;
FIFTH, to all other Borrower's Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "FOURTH" above; and
SIXTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category.
SECTION 3.11. Confirmation of other Credit Documents. The Borrower and
the other Credit Parties hereby acknowledge and agree that the Pledge Agreement
and the Assignment of Life Insurance Policy are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Borrower and the other Credit
Parties hereby further acknowledge and confirm that the Pledge Agreement and the
Assignment of Life Insurance Policy do and shall continue to secure the payment
in full of all of the Borrower's Obligations.
ARTICLE IV
GUARANTY
SECTION 4.01. The Guaranty. Each of the Guarantors hereby jointly and
severally guarantees to the Bank, and each Affiliate of the Bank that enters
into a Hedging Agreement, the prompt payment of the Borrower's Obligations in
full when due (whether at stated maturity, by acceleration or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Borrower's Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise), the Guarantors will, jointly and severally, promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Borrower's Obligations, the same
will be promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.
32
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
SECTION 4.02. Obligations Unconditional. The obligations of the
Guarantors under Section 4.01 hereof are joint and several, absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or Hedging Agreements, or any
other agreement or instrument referred to therein, or any substitution, release
or exchange of any other guaranty of or security for any of the Borrower's
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.02 that the obligations of the Guarantors
hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor agrees that such Guarantor shall have no right of subrogation,
indemnity, reimbursement or contribution against the Borrower or any other
Guarantor of the Borrower's Obligations for amounts paid under this Guaranty
until such time as the Bank (and any Affiliates of the Banks entering into
Hedging Agreements) have been paid in full, the Commitments under the Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Bank in
connection with monies received under the Credit Documents or Hedging
Agreements. Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of any Guarantor hereunder
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Borrower's Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents, any Hedging Agreement or any other agreement
or instrument referred to in the Credit Documents or Hedging Agreements
shall be done or omitted;
(iii) the maturity of any of the Borrower's Obligations shall
be accelerated, or any of the Borrower's Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreements or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements
shall be waived or any other guaranty of any of the Borrower's
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with;
33
(iv) any Lien granted to, or in favor of, the Bank as security
for any of the Borrower's Obligations shall fail to attach or be
perfected; or
(v) any of the Borrower's Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Bank exhaust any right, power or remedy
or proceed against any Person under any of the Credit Documents, any Hedging
Agreements or any other agreement or instrument referred to in the Credit
Documents or Hedging Agreements or against any other Person under any other
guaranty of, or security for, any of the Borrower's Obligations.
SECTION 4.03. Reinstatement. The obligations of the Guarantors under
this Section 4 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Person in respect of the
Borrower's Obligations is rescinded or must be otherwise restored by any holder
of any of the Borrower's Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Bank on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Bank in connection with such rescission or restoration, including any such costs
and expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
SECTION 4.04. Remedies. The Guarantors agree that, to the fullest
extent permitted by law, as between the Guarantors, on the one hand, and the
Bank, on the other hand, the Borrower's Obligations may be declared to be
forthwith due and payable as provided in Section 9.02 hereof (and shall be
deemed to have become automatically due and payable in the circumstances
provided in said Section 9.02) for purposes of Section 4.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Borrower's Obligations from becoming
automatically due and payable) as against any other Person and that, in the
event of such declaration (or the Borrower's Obligations being deemed to have
become automatically due and payable), the Borrower's Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by the Guarantors for purposes of said Section 4.01.
SECTION 4.05. Rights of Contribution. The Guarantors hereby agree, as
among themselves, that if any Guarantor shall become an Excess Funding Guarantor
(as defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the succeeding provisions of this Section 4.05), pay
to such Excess Funding Guarantor an amount equal to such Guarantor's Pro Rata
Share (as defined below and determined, for this purpose, without reference to
the properties, assets, liabilities and debts of such Excess Funding Guarantor)
34
of such Excess Payment (as defined below) . The payment obligation of any
Guarantor to any Excess Funding Guarantor under this Section 4.05 shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Guarantor under the other provisions of this Section 4, and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full of all of such
obligations. For purposes hereof, (i) "Excess Funding Guarantor" shall mean, in
respect of any obligations arising under the other provisions of this Section 4
(hereafter, the "Guaranteed Obligations"), a Guarantor that has paid an amount
in excess of its Pro Rata Share of the Guaranteed Obligations; (ii) "Excess
Payment" shall mean, in respect of any Guaranteed Obligations, the amount paid
by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations; and (iii) "Pro Rata Share", for the purposes of this
Section 4.05, shall mean, for any Guarantor, the ratio (expressed as a
percentage) of (a) the amount by which the aggregate present fair saleable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (b) the amount by which the aggregate present fair saleable value
of all assets and other properties of the Borrower and all of the Guarantors
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Borrower and the Guarantors hereunder) of the Borrower and
all of the Guarantors, all as of the Original Closing Date (if any Guarantor
becomes a party hereto subsequent to the Original Closing Date, then for the
purposes of this Section 4.05 such subsequent Guarantor shall be deemed to have
been a Guarantor as of the Original Closing Date and the information pertaining
to, and only pertaining to, such Guarantor as of the date such Guarantor became
a Guarantor shall be deemed true as of the Original Closing Date).
SECTION 4.06. Continuing Guaranty. The guaranty in this Section 4 is a
continuing guaranty, and shall apply to all Borrower's Obligations whenever
arising.
ARTICLE V
CONDITIONS
SECTION 5.01. Closing Conditions. The obligation of the Bank to enter
into this Credit Agreement and to make the Facility A Advance or the Facility B
Advance, shall be subject to satisfaction or waiver by the Bank of the following
conditions (in form and substance acceptable to the Bank):
(a) The Bank shall have received original counterparts of this
Credit Agreement executed by each of the parties hereto;
(b) The Bank shall have received (i) an original Facility A
Note and an original Facility B Note, each executed by the Borrower
(ii) original counterparts of the Waiver under the Pledge Agreement, in
substantially the form of Schedule 5.01C, executed by
35
each party thereto; (iii) original counterparts of the Warrantholders
Rights Agreement executed by each of the parties thereto, and (iv) an
original Warrant, executed by the Borrower;
(c) The Bank shall have received an Advance Request;
(d) The Bank shall have received all documents it may
reasonably request relating to the existence and good standing of each
of the Credit Parties, the corporate or other necessary authority for
and the validity of the Credit Documents, and any other matters
relevant thereto, all in form and substance reasonably satisfactory to
the Bank;
(e) The Bank shall have received a certificate executed by the
chief financial officer of the Borrower as of the Closing Date stating
that immediately after giving effect to this Credit Agreement and the
other Credit Documents, (i) the Borrower on a consolidated basis is
Solvent, (ii) no Default or Event of Default exists and (iii) the
representations and warranties set forth in Section 6 are true and
correct in all material respects;
(f) The Bank shall have received legal opinions of Olshan,
Grundman, Frome & Xxxxxxxxxx, LLP, special counsel for the Credit
Parties, and Xxxxx Xxxxxxxx & Xxxx, P.C., special Florida counsel for
the Credit Parties, dated as of the Closing Date and substantially in
the form of Schedule 5.01A or 5.01B;
(g) The Bank shall have received copies of insurance policies
or certificates of insurance of the Credit Parties evidencing liability
and casualty insurance meeting the requirements of the Credit Documents
including, without limitation, those set forth in Section 7.06(a);
(h) The Bank shall have received, for its own account, all
fees and expenses required by this Credit Agreement or any other Credit
Document to be paid on or before the Closing Date; and
(i) The Bank shall have received such other documents,
agreements or information which may be reasonably requested by the
Bank, including, without limitation, additional Collateral required to
be pledged in accordance with the Pledge Agreement.
36
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Bank that:
SECTION 6.01. Financial Condition. (a) The audited consolidated balance
sheets of the Subsidiaries as of December 31, 1996 and the audited statements of
earnings and statements of cash flows for the years ended December 31, 1996 and
December 31, 1995 have heretofore been furnished to the Bank. Such financial
statements (including the notes thereto) (i) have been audited by Ernst & Young,
(ii) have been prepared in accordance with GAAP consistently applied throughout
the periods covered thereby and (iii) present fairly (on the basis disclosed in
the footnotes to such financial statements) the financial condition, results of
operations and cash flows of the Subsidiaries as of such date and for such
periods. The unaudited interim balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of, and the related unaudited interim
statements of earnings and of cash flows for, each fiscal quarterly period ended
after December 31, 1996 and prior to the Closing Date have heretofore been
furnished to the Bank. Such interim financial statements for each such quarterly
period, (i) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby and (ii) present fairly (on the basis
disclosed in the footnotes to such financial statements) the consolidated
financial condition, results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such date and for such periods. During the
period from December 31, 1996 to and including the Closing Date, except as
disclosed on Schedule 6.01(a), there has been no sale, transfer or other
disposition by the Borrower or any of its Subsidiaries of any material part of
the business or property of the Borrower and its consolidated Subsidiaries,
taken as a whole, and no purchase or other acquisition by any of them of any
business or property (including any capital stock of any other person) material
in relation to the consolidated financial condition of the Borrower and its
consolidated Subsidiaries, taken as a whole, in each case, which, is not
reflected in the foregoing financial statements or in the notes thereto and has
not otherwise been disclosed in writing to the Bank on or prior to the Closing
Date.
(b) The Delivered Annual Statements, including, without limitation, the
provisions made therein for reserves, policy and contract claims, copies of
which have heretofore been delivered to the Bank, have been prepared in
accordance with SAP applied on a consistent basis (except as otherwise disclosed
to the Bank). The Quarterly Statements of each of the Insurance Subsidiaries,
including, without limitation, the provisions made therein for reserves, policy
and contract claims, as filed with the appropriate Governmental Authorities of
its state of domicile, for the fiscal quarters ending March 31, 1997, June 30,
1997 and September 30, 1997, copies of which have heretofore been delivered to
the Bank, have been prepared in accordance with SAP applied on a consistent
basis (except as otherwise set forth in Schedule 6.01(b)). All SAP Statements
which have heretofore been delivered to the Bank fairly present the financial
condition, the results of operations, changes in equity and changes in financial
position of the Insurance Subsidiaries as of and for the respective dates and
period indicated therein.
37
SECTION 6.02. No Change; Dividends. Since December 31, 1996, (a) there
has been no development or event relating to or affecting the Borrower or any of
its Subsidiaries which has had or would be reasonably expected to have a
Material Adverse Effect and (b) except as permitted under this Credit Agreement,
no dividends or other distributions have been declared, paid or made upon the
capital stock or other equity interest in the Borrower or any of its
Subsidiaries nor, except to the extent permitted under this Credit Agreement,
has any of the capital stock or other equity interest in the Borrower or any of
its Subsidiaries been redeemed, retired, purchased or otherwise acquired for
value by such Person.
SECTION 6.03. Organization; Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is a corporation duly organized, validly
existing and is in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has the corporate or other necessary power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, and (d) is in compliance with all material Requirements of Law.
SECTION 6.04. Power; Authorization; Enforceable Obligations. Each of
the Credit Parties has the corporate or other necessary power and authority, and
the legal right, to make, deliver and perform the Credit Documents to which it
is a party, and in the case of the Borrower, to borrow hereunder, and has taken
all necessary corporate action to authorize the borrowings on the terms and
conditions of this Credit Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of the Credit Documents to which such Credit Party is a party,
except for consents, authorizations, notices and filings described in Schedule
6.04, all of which have been obtained or made or have the status described in
such Schedule 6.04. This Credit Agreement has been, and each other Credit
Document to which any Credit Party is a party will be, duly executed and
delivered on behalf of the Credit Parties. This Credit Agreement constitutes,
and each other Credit Document to which any Credit Party is a party when
executed and delivered will constitute, a legal, valid and binding obligation of
such Credit Party enforceable against such party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
SECTION 6.05. No Legal Bar. Except as otherwise described in Schedule
6.05, the execution, delivery and performance of the Credit Documents by the
Credit Parties, the borrowings hereunder and the use of the proceeds thereof (a)
will not violate any Requirement of Law or contractual obligation of the
Borrower or any of its Subsidiaries in any respect that would
38
reasonably be expected to have a Material Adverse Effect, (b) will not result
in, or require, the creation or imposition of any Lien on any of the properties
or revenues of any of the Borrower or any of its Subsidiaries pursuant to any
such Requirement of Law or contractual obligation, and (c) will not violate or
conflict with any provision of any Credit Party's articles of incorporation or
by-laws.
SECTION 6.06. No Material Litigation. Except as disclosed and described
in Schedule 6.06, no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the
Credit Parties, threatened by or against the Borrower or any of its Subsidiaries
or against any of their respective properties or revenues which (a) relates to
any of the Credit Documents or any of the transactions contemplated hereby or
thereby or (b) would be reasonably expected to have a Material Adverse Effect.
SECTION 6.07. No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of their contractual
obligations in any respect which would be reasonably expected to have a Material
Adverse Effect.
SECTION 6.08. Ownership of Property: Liens. Each of the Borrower and
its Subsidiaries has good record and marketable title in fee simple to, or a
valid leasehold interest in, all its material real property, and good title to,
or a valid leasehold interest in, all its other material property, and none of
such property is subject to any Lien, except for Permitted Liens.
SECTION 6.09. No Burdensome Restrictions. Except as previously
disclosed in writing to the Bank on or prior to the Closing Date, no Requirement
of Law or contractual obligation of the Borrower or any of its Subsidiaries
would be reasonably expected to have a Material Adverse Effect.
SECTION 6.10. Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all United States federal income tax returns and all
other material tax returns which, to the best knowledge of the Credit Parties,
are required to be filed and has paid (a) all taxes shown to be due and payable
on said returns or (b) all taxes shown to be due and payable on any assessments
of which it has received notice made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any (i) taxes, fees or other charges with
respect to which the failure to pay, in the aggregate, would not have a Material
Adverse Effect or (ii) taxes, fees or other charges the amount or validity of
which are currently being contested and with respect to which reserves in
conformity with GAAP have been provided on the books of such Person), and no tax
Lien has been filed, and, to the best knowledge of the Credit Parties, no claim
is being asserted, with respect to any such tax, fee or other charge.
39
SECTION 6.11. ERISA. Except as would not result in a Material Adverse
Effect:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no Termination Event
has occurred, and, to the best knowledge of the Credit Parties, no
event or condition has occurred or exists as a result of which any
Termination Event could reasonably be expected to occur, with respect
to any Plan; (ii) no "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, has occurred with respect to any Plan; (iii) each Plan has
been maintained, operated, and funded in compliance with its own terms
and in material compliance with the provisions of ERISA, the Code, and
any other applicable federal or state laws; and (iv) no lien in favor
of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
under all Single Employer Plans (determined within the meaning of
Section 401(a) (2) of the Code, utilizing the actuarial assumptions
used to fund such Plans), whether or not vested, did not, as of the
last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the current value of the
assets of all such Plans.
(c) Neither the Borrower, any of the Subsidiaries of the
Borrower nor any ERISA Affiliate has incurred, or, to the best
knowledge of the Credit Parties, could be reasonably expected to incur,
any withdrawal liability under ERISA to any Multiemployer Plan or
Multiple Employer Plan. Neither the Borrower, any of the Subsidiaries
of the Borrower nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if the Borrower, any of the
Subsidiaries of the Borrower or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. Neither the Borrower, any of the
Subsidiaries of the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within
the meaning of Section 4241 of ERISA) is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning
of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject the Borrower, any of the Subsidiaries of the Borrower or
any ERISA Affiliate to any liability under Sections 406, 409, 502(i),
or 502(1) of ERISA or Section 4975 of the Code, or under any agreement
or other instrument pursuant to which the Borrower, any of the
Subsidiaries of the Borrower or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
40
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided
and the employees participating) of the liability of the Borrower, each
Subsidiary of the Borrower and each ERISA Affiliate for post-retirement
welfare benefits to be provided to their current and former employees
under Plans which are welfare benefit plans (as defined in Section 3(1)
of ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the Financial Statements in accordance with
FAS 106.
SECTION 6.12. Governmental Regulations, Etc.
(a) No part of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation G or Regulation U, or for the purpose of purchasing or
carrying or trading in any securities. If requested by the Bank, the Borrower
will furnish to the Bank a statement to the foregoing effect in conformity with
the requirements of FR Form U-1 referred to in said Regulation U. No
indebtedness being reduced or retired out of the proceeds of the Advances was or
will be incurred for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U or any "margin security" within the meaning
of Regulation T. "Margin stock" within the meanings of Regulation U does not
constitute more than 25% of the value of the consolidated assets of the Borrower
and its Subsidiaries. None of the transactions contemplated by this Credit
Agreement (including, without limitation, the direct or indirect use of the
proceeds of the Advances) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, or regulations issued pursuant thereto, or Regulation G, T, U or X.
(b) Neither the Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
neither the Borrower nor any of its Subsidiaries is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) The Insurance Subsidiaries have filed all reports, statements,
documents, registrations, filings, or submissions required to be filed with any
Governmental Authority with respect to which the failure to so file will
individually or in the aggregate have a Material Adverse Effect, or except as
otherwise agreed to by the applicable Governmental Authority. All such filings
complied with applicable law in all material respects when filed, and no
material deficiencies have been asserted by any Governmental Authority with
respect to such filings or submissions.
41
(d) No director, executive officer or principal shareholder of the
Borrower or any of its Subsidiaries is a director, executive officer or
principal shareholder of the Bank. For the purposes hereof the terms "director",
"executive officer" and "principal shareholder" (when used with reference to the
Bank) have the respective meanings assigned thereto in Regulation O issued by
the Board of Governors of the Federal Reserve System.
(e) Each of the Borrower and its Subsidiaries has obtained all material
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its respective Property and to the conduct of its business.
(f) Neither the Borrower nor any of its Subsidiaries is in violation of
any applicable statute, regulation or ordinance of the United States of America,
or of any state, city, town, municipality, county or any other jurisdiction, or
of any agency thereof (including without limitation, environmental laws and
regulations) , which violation could reasonably be expected to have a Material
Adverse Effect.
(g) Each of the Borrower and its Subsidiaries is current with all
material reports and documents, if any, required to be filed with any state or
federal securities commission or similar agency and is in full compliance in all
material respects with all applicable rules and regulations of such commissions.
(h) Pinnacle has obtained from the FDOI all requisite approvals,
authorizations and consents necessary for the conversion of Pinnacle from an
assessable mutual to a domestic stock insurer and to undertake the transactions
contemplated in this Agreement and the other Credit Documents including the
purchase by the Borrower of all the issued and outstanding capital stock of
Pinnacle.
SECTION 6.13. Pinnacle. In regard to Pinnacle:
(a) Pinnacle has converted from an assessable mutual on
January 26, 1996 and is a domestic stock insurer under the Florida
Insurance Laws.
(b) Pinnacle has complied or otherwise caused all other
applicable persons to comply with the terms and conditions of the
Consent Order.
(c) The transaction by which the Borrower acquires all the
issued and outstanding stock in Pinnacle is in compliance with the
Consent Order.
SECTION 6.14. Subsidiaries. Schedule 6.14 sets forth all the
Subsidiaries of the Borrower at the Closing Date, the jurisdiction of their
incorporation and the direct or indirect ownership interest of the Borrower
therein.
42
SECTION 6.15. Purpose of Advances. The proceeds of the Advances shall
be used by the Borrower only to provide a subordinated working capital loan to
Pinnacle, as evidenced by the Surplus Notes, to facilitate premium growth for
Pinnacle.
SECTION 6.16. Environmental Matters.
(a) Each of the facilities and properties owned, leased or operated by
the Borrower or any of its Subsidiaries (the "Properties") and all operations at
the Properties are in compliance with all applicable Environmental Laws, and
there is no violation of any Environmental Law with respect to the Properties or
the businesses operated by the Borrower or any of its Subsidiaries (the
"Businesses"), and there are no conditions relating to the Businesses or
Properties that could give rise to liability under any applicable Environmental
Laws.
(b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in amounts or
concentrations that constitute or constituted a violation of, or could give rise
to liability under, Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Businesses, nor
does the Borrower or any of its Subsidiaries have knowledge or reason to believe
that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf of the Borrower or any of its Subsidiaries in violation of, or in a
manner that would be reasonably likely to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which the Borrower or any of its Subsidiaries is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Borrower or any of its Subsidiaries, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of the Borrower or any
of its Subsidiaries in connection with the Properties or otherwise in connection
with the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
43
SECTION 6.17. Insurance Policies. All insurance policies or contracts,
including, without limitation, annuities issued or assumed by the Insurance
Subsidiaries and now in force, are, to the extent required under applicable law,
on forms approved by the insurance regulatory authority of the state or
jurisdiction where issued or have been filed with and not objected to by such
authority within the period provided for objection except where the issuance of
such policies or contracts without such approval or expiration of the period for
objection will not, individually or in the aggregate, have a Material Adverse
Effect. All policy or annuity dividends and benefits payable by the Insurance
Subsidiaries have in all material respects been paid in accordance with the
terms of the policies and annuities under which they arose, except for such
dividends or other benefits for which such Insurance Subsidiary reasonably
believes there is a reasonable basis to contest payment, or will not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 6.18. Places of Business. The places of business of the
Borrower and each Subsidiary set forth in Schedule 6.18 are true and correct and
set forth, whenever applicable, whether said place of business is owned or
leased by the Borrower and each Subsidiary, as the case may be, and, if leased,
the name and address of the lessor.
ARTICLE VII
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all Commitments
hereunder shall have terminated:
SECTION 7.01. Information Covenants. The Borrower will furnish, or
cause to be furnished, to the Bank:
(a) Annual Financial Statements.
(i) As soon as available, and in any event within 120 days
after the close of each fiscal year of the Borrower and its
Subsidiaries, a consolidated and consolidating balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such
fiscal year, together with related consolidated statements of
operations, retained earnings, changes in stockholders' equity and cash
flows for such fiscal year, setting forth in comparative form
consolidated figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
audited by independent certified public accountants of recognized
national standing reasonably acceptable to the Bank and whose opinion
shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the
audit or qualified as to the status of the Borrower and its
Subsidiaries as a going concern.
44
(ii) As soon as available, and in any event within 120 days
(or, if later, as required by applicable law) after the close of each
fiscal year of an Insurance Subsidiary, the most recent SAP Statement
of such Insurance Subsidiary, as audited in accordance with applicable
law and accompanied by a certificate of a knowledgeable officer of such
Insurance Subsidiary to the effect that such SAP Statement fairly
presents in all material respects the financial condition of such
Insurance Subsidiary and has been prepared in accordance with SAP.
(iii) As soon as available, and in any event within 30 days of
the close of each fiscal year end of the Borrower and its Subsidiaries,
copies of annual budgets and projections for the following fiscal
period.
(b) Quarterly Financial Statements.
(i) As soon as available, and in any event within 45 days
after the close of each fiscal quarter of the Borrower and its
Subsidiaries (other than the fourth fiscal quarter, in which case 120
days after the end thereof) a consolidated and consolidating balance
sheet and income statement of the Borrower and its Subsidiaries, as of
the end of such fiscal quarter, together with related consolidated
statements of operations, retained earnings and cash flows for such
fiscal quarter in each case setting forth in comparative form
consolidated figures for the corresponding period of the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and reasonably acceptable to the Bank, and
accompanied by a certificate of the chief financial officer of the
Borrower to the effect that such quarterly financial statements fairly
present in all material respects the financial condition of the
Borrower and its Subsidiaries and have been prepared in accordance with
GAAP, subject to changes resulting from audit and normal year-end audit
adjustments.
(ii) As soon as available, and in any event within 45 days
after the close of each fiscal quarter of an Insurance Subsidiary
(other than the fourth fiscal quarter, in which case 120 days after the
end thereof), the most recent SAP Statement of such Insurance
Subsidiary, in each case accompanied by a certificate of a
knowledgeable officer of such Insurance Subsidiary to the effect that
such SAP Statement fairly presents in all material respects the
financial condition of such Insurance Subsidiary and has been prepared
in accordance with SAP.
(c) Monthly Financial Statements. As soon as available, and in any
event within 30 days of the end of each month, internally prepared consolidated
financial statements of the Borrower and its Subsidiaries, including a
consolidated and consolidating balance sheet and income statement as of the end
of such month.
(d) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.01(a) and 7.01(b) above, a certificate of
the chief financial officer of the
45
Borrower; substantially in the form of Schedule 7.01(d), (i) demonstrating
compliance with the financial covenants contained in Section 7.11 by calculation
thereof as of the end of each such fiscal period and (ii) stating that no
Default or Event of Default exists, or if any Default or Event of Default does
exist, specifying the nature and extent thereof and what action the Borrower
proposes to take with respect thereto.
(e) Actuarial Report. On or prior to each March 15 and August 15, an
Actuarial Report, dated December 31 and June 30, respectively, prepared by an
independent actuary reasonably acceptable to the Bank and certified as to such
Insurance Subsidiary's, including Pinnacle's, reserve position as of the date of
such report by such independent actuary.
(f) IRIS Test Results. As soon as received after the end of each Fiscal
Year of each Insurance Subsidiary, a copy of the final report to such Insurance
Subsidiary from the NAIC as to such Insurance Subsidiary's status under the IRIS
Tests.
(g) Auditor's Reports. Promptly upon receipt thereof, a copy of any
other report or "management letter" submitted by independent accountants to the
Borrower or any of its Subsidiaries in connection with any annual, interim or
special audit of the books of such Person.
(h) Reports. Promptly after transmission or receipt thereof, (a) copies
of any filings and registrations with, and reports to or from, the Securities
and Exchange Commission, or any successor agency, and copies of all financial
statements, proxy statements, notices and reports as the Borrower or any of its
Subsidiaries shall send to its shareholders or to a holder of any Indebtedness
owed by the Borrower or any of its Subsidiaries in its capacity as such a
holder; (b) copies of any reports on examination or similar reports, financial
examination reports or market conduct examination reports by a Governmental
Authority with respect to any Insurance Subsidiary relating to such Insurance
Subsidiary's insurance business, (c) copies of all Insurance Holding Company
Systems Act filings and (d) upon the request of the Bank, all reports and
written information to and from the United States Environmental Protection
Agency, or any state or local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration, or any state or
local agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety matters.
(i) Notices. Promptly after obtaining knowledge thereof, the Borrower
will give written notice to the Bank immediately of (a) the occurrence of an
event or condition comprising of a Default or Event of Default, specifying the
nature and existence thereof and what action the Credit Parties propose to take
with respect thereto, and (b) the occurrence of any of the following with
respect to the Borrower or any of its Subsidiaries (i) the pendency or
commencement of any litigation, arbitral or governmental proceeding against such
Person which if adversely determined is likely to have a Material Adverse
Effect, (ii) the institution of any proceedings against such Person with respect
to, or the receipt of notice by such Person of potential liability or
responsibility for violation, or, alleged violation of any federal, state or
local law, rule or regulation, including but not limited to, Environmental Laws,
the violation of which would likely
46
have a Material Adverse Effect, or (iii) any notice or determination concerning
the imposition of any withdrawal liability by a Multiemployer Plan against such
Person or any ERISA Affiliate, the determination that a Multiemployer Plan is,
or is expected to be, in reorganization within the meaning of Title IV of ERISA
or the termination of any Plan.
(j) ERISA. Upon obtaining knowledge thereof, the Borrower will give
written notice to the Bank promptly (and in any event within five business days)
of: (i) of any event or condition, including, but not limited to, any Reportable
Event, that constitutes, or might reasonably lead to, a Termination Event; (ii)
with respect to any Multiemployer Plan, the receipt of notice as prescribed in
ERISA or otherwise of any withdrawal liability assessed against the Borrower or
any of its ERISA Affiliates, or of a determination that any Multiemployer Plan
is in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due date
(including extensions) thereof of all amounts which the Borrower, any of the
Subsidiaries of the Borrower or any ERISA Affiliate is required to contribute to
each Plan pursuant to its terms and as required to meet the minimum funding
standard set forth in ERISA and the Code with respect thereto; or (iv) any
change in the funding status of any Plan that could have a Material Adverse
Effect; together, with a description of any such event or condition or a copy of
any such notice and a statement by the chief financial officer of the Borrower
briefly setting forth the details regarding such event, condition, or notice,
and the action, if any, which has been or is being taken or is proposed to be
taken by the Credit Parties with respect thereto. Promptly upon request, the
Borrower shall furnish the Bank with such additional information concerning any
Plan as may be reasonably requested, including, but not limited to, copies of
each annual report/return (Form 5500 series) , as well as all schedules and
attachments thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for each
"plan year" (within the meaning of Section 3 (39) of ERISA).
(k) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or financial
condition of the Borrower or any of its Subsidiaries as the Bank may reasonably
request.
SECTION 7.02. Preservation of Existence and Franchises. The Borrower
will, and will cause each of its Subsidiaries to, do all things necessary to
preserve and keep in full force and effect its existence, rights, franchises and
authority, except (a) as a result of or in connection with a dissolution, merger
or disposition of a Subsidiary permitted by Section 8.04(a), Section 8.04(b) or
Section 8.04(c) or (b) as would not, in the reasonable opinion of the Bank,
result in a Material Adverse Effect.
SECTION 7.03. Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
and, with respect to any Insurance Subsidiary, SAP (including the establishment
and maintenance of appropriate reserves).
47
SECTION 7.04. Compliance with Law. The Borrower will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its property if noncompliance with any such law, rule,
regulation, order or restriction would have a Material Adverse Effect.
SECTION 7.05. Payment of Taxes and Other Indebtedness. Except as
otherwise provided pursuant to the terms of the definition of "Permitted Liens"
set forth in Section 1.01, the Borrower will, and will cause each of its
Subsidiaries to, pay and discharge (i) all taxes, assessments and governmental
charges or levies imposed upon it, or upon its income or profits, or upon any of
its properties, before they shall become delinquent, (ii) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (iii) except as prohibited
hereunder, all of its other Indebtedness as it shall become due.
SECTION 7.06. Insurance/Reinsurance.
(a) The Borrower will, and will cause each of its Subsidiaries to, at
all times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and liabilities and
with such deductibles or self-insurance retentions as are in accordance with
normal industry practice.
(b) The Borrower will cause each of its Insurance Subsidiaries to
maintain, at all time and in accordance with normal industry practice,
Reinsurance Agreements that are with reinsurers rated "A-" or better by A.M.
Best & Company, Inc.
SECTION 7.07. Maintenance of Property. The Borrower will, and will
cause each of its Subsidiaries to, maintain and preserve its properties and
equipment material to the conduct of its business in good repair, working order
and condition, normal wear and tear and casualty and condemnation excepted, and
will make, or cause to be made, in such properties and equipment from time to
time all repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses.
SECTION 7.08. Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements, indentures, mortgages
security agreements or other debt instruments (including, without limitation,
the Subordinated Debt Agreement) to which it is a party or by which it is bound.
SECTION 7.09 Use of Proceeds. The Borrower will use the proceeds of the
Loans solely for the purposes set forth in Section 6.15.
48
SECTION 7.10. Audits/Inspections. Upon reasonable notice and during
normal business hours, the Borrower will, and will cause each of its
Subsidiaries to, permit representatives appointed by the Bank, including,
without limitation, independent accountants, agents, attorneys, and appraisers
to visit and inspect its property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Bank or its
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees and
representatives of such Person, all (unless an Event of Default shall have
occurred and be continuing) at the Lenders' sole cost and expense and so long as
Bank does not unreasonably interfere with the conduct or activities of the
Borrower and its Subsidiaries.
SECTION 7.11. Financial Covenants.
(a) Consolidated Leverage Ratio. The Borrower will cause the
Consolidated Leverage Ratio, as of the last day of each fiscal quarter, to be no
greater than 0.40.
(b) Debt Service Coverage Ratio. The Borrower will cause the Debt
Service Coverage Ratio, as of the last day of each fiscal quarter, to be at
least 1.40.
(c) Consolidated Net Written Premiums to Statutory Surplus Ratio. The
Borrower will cause the Consolidated Net Written Premiums to Statutory Surplus
Ratio, as of the last day of each fiscal year of its Insurance Subsidiaries, to
be no greater than 3.0 to 1.0.
(d) Risk Based Capital. The Borrower will cause each Insurance
Subsidiary to maintain a ratio, as of the last day of each fiscal year, of (A)
Total Adjusted Capital (as defined in the Risk- Based Capital Act or in the
rules and procedures prescribed from time to time by the NAIC with respect
thereto) to (B) the Company Action Level RBC (as defined in the Risk-Based
Capital Act or in the rules and procedures prescribed from time to time by the
NAIC with respect thereto) of at least 175%.
(e) Combined Ratio. The Borrower will cause Pinnacle's Combined Ratio
as of the last day of each fiscal quarter, to be no greater than 101%.
SECTION 7.12. Additional Credit Parties. Except as otherwise prevented
by law (including with respect to an insurance company's ability to guaranty the
obligations of an affiliate), upon the formation of any new Subsidiary by the
Borrower or any Subsidiary, such new subsidiary shall promptly become a
"Guarantor" hereunder by
(A) execution of a Joinder Agreement in substantially the form
of Schedule 7.12 attached hereto;
49
(B) delivery of such other documentation as the Bank may
reasonably request, including, without limitation, certified
resolutions and other organizational and authorizing documents of such
Person and favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form,
content and scope reasonably satisfactory to the Bank.
SECTION 7.13. Ownership of Subsidiaries. Except to the extent otherwise
provided in Section 8.04(b) and Section 8.11, the Borrower shall, directly or
indirectly, own at all times 100% of the capital stock of each of its
Subsidiaries.
SECTION 7.14. Dividends. Except as otherwise provided by law, the
Borrower shall (a) cause each of its Subsidiaries from time to time to pay cash
dividends or make other distributions or payments in cash (directly or, through
other Subsidiaries of the Borrower, indirectly) to the Borrower in amounts that,
taken together, are sufficient to permit the Borrower to (i) pay all principal
of and any accrued interest in respect of the Advances and all other
indebtedness or obligations of any and every kind owing by the Borrower to the
Bank as the same shall become due and payable (whether at stated maturity, by
mandatory prepayment, by acceleration or otherwise) and (ii) pay for all capital
expenditures made by the Borrower, (b) cause each of its Insurance Subsidiaries
to make payments in accordance with the terms of the Service Contracts, and (c)
cause each of its Insurance Subsidiaries to request on a timely basis regulatory
approval to the extent necessary for such Subsidiary to pay such dividends or
make such distributions or payments.
SECTION 7.15. Banking Accounts. The Borrower and its Subsidiaries shall
maintain all their depository investment and other accounts with the Bank.
SECTION 7.16. Subordination of Other Loans, Etc. All loans or fees owed
to Affiliates of the Borrower shall, at all times, be subordinate to the
Advances and the Borrower shall cause its Affiliates from time to time, to
execute and deliver to the Bank subordination agreement in form and content
satisfactory to the Bank; provided, however, so long as no Default exists or has
occurred, the Borrower may pay (but not prepay) current principal and interest
on such loans to such Affiliates.
SECTION 7.17. Hedging Arrangements. The Borrower will cause the
obligations of the Borrower under any Hedging Agreement to be secured by the
Collateral.
50
ARTICLE VIII
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all Commitments
hereunder shall have terminated:
SECTION 8.01. Indebtedness. The Borrower will not, nor will it permit
any of its Subsidiaries to, contract, create, incur; assume or permit to exist
any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and any of its Subsidiaries
set forth in Schedule 8.01 (and renewals, refinancings and extensions
thereof on terms and conditions no less favorable to such Person than
such existing Indebtedness);
(c) Indebtedness of the Borrower and any of its Subsidiaries
incurred in the ordinary course of business and consistent with the
past practices of the Credit Parties.
(d) Intercompany Indebtedness incurred in the ordinary course
of business and consistent with the past practices of the Credit
Parties or for cash management purposes; and
(e) obligations of the Borrower in respect of the Hedging
Agreements.
SECTION 8.02. Liens. The Borrower will not, nor will it permit any of
its Subsidiaries to, contract, create, incur, assume or permit to exist any Lien
with respect to any of their Property, whether now owned or after acquired,
including, without limitation, the Service Contracts, except for Permitted
Liens.
SECTION 8.03. Nature of Business. The Borrower will, and will cause its
Subsidiaries to, remain principally engaged in the property and casualty
insurance business and such business activities incidental or related thereto
and will not engage in (i) writing lines of insurance for which it does not
currently hold all necessary licenses or (ii) any line of business in which they
are not currently engaged to such an extent that the business of the Borrower
and its Subsidiaries taken as a whole would be fundamentally different in nature
from the business of the Borrower and its Subsidiaries on the Original Closing
Date.
SECTION 8.04. Consolidation, Merger, Sale or Purchase of Assets, Etc.
The Borrower will not, nor will it permit any of its Subsidiaries to:
51
(a) except in connection with a disposition of assets
permitted by the terms of subsection (c) below, dissolve, liquidate or
wind up their affairs;
(b) enter into any transaction of merger or consolidation;
provided, however, that, so long as no Default or Event of Default
would be directly or indirectly caused as a result thereof, (i) the
Borrower may merge or consolidate with any of its Subsidiaries provided
that the Borrower is the surviving corporation; (ii) any Subsidiary of
the Borrower may merge or consolidate with any other Subsidiary of the
Borrower, provided after giving effect to such merger or consolidation,
no Default or Event of Default would exist hereunder;
(c) sell, lease, transfer or otherwise dispose of any Property
or Subsidiary other than (i) the sale of assets pursuant to Reinsurance
Agreements entered into in the ordinary course of business, (ii) the
sale or disposition of machinery and equipment no longer used or useful
in the conduct of such Person's business, (iii) the sale of assets to
the Borrower or any Subsidiary of the Borrower, provided that after
giving effect to such sale or other disposition, no Default or Event of
Default would exist hereunder, and (iv) as permitted by Section 8.11;
(d) except as otherwise permitted by Section 8.04(b), acquire
all or any portion of the capital stock or securities of any other
Person or purchase, lease or otherwise acquire (in a single transaction
or a series of related transactions) all or any substantial part of the
Property of any other Person.
SECTION 8.05. Advances, Investments, Loans, Etc. The Borrower will not,
nor will it permit any of its Subsidiaries to, acquire, make or permit to exist
any Investments other than Permitted Investments.
SECTION 8.06. Restricted Payments. Except as otherwise contemplated by
Section 7.14, the Borrower will not, nor will it permit any of its Subsidiaries
to, directly or indirectly, declare, order, make or set apart any sum for or pay
any Restricted Payment, except (a) to make dividends payable solely in the same
class of capital stock of such Person, (b) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the Borrower) and (c) policyholder dividends from Pinnacle.
SECTION 8.07. Prepayments of Indebtedness, Etc. The Borrower will not,
nor will it permit any of its Subsidiaries to, (i) after the issuance thereof,
amend or modify (or permit the amendment or modification of) any of the terms of
any Indebtedness if such amendment or modification would add or change any terms
in a manner adverse to the issuer of such Indebtedness, or shorten the final
maturity or average life to maturity or require any payment to be made sooner
than originally scheduled or increase the interest rate applicable thereto or
change any subordination provision thereof, or (ii)(A) if any Default or Event
of Default has occurred and is continuing or would be directly or indirectly
caused as a result thereof, make (or give any
52
notice with respect thereto) any voluntary or optional payment, any prepayment
or any redemption or acquisition for value of (including without limitation, by
way of depositing money or securities with the trustee with respect thereto
before due for the purpose of paying when due), refund, refinance or exchange of
any other Indebtedness (other than Subordinated Indebtedness) or (B) make (or
give any notice with respect thereto) any voluntary or optional payment, any
prepayment or any redemption or acquisition for value of (including without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any Subordinated Indebtedness or (C) amend, modify or
change its articles of incorporation (or corporate charter or other similar
organizational document) or bylaws (or other similar document) where such change
would have a Material Adverse Effect.
SECTION 8.08. Transactions with Affiliates. Except as contemplated
under this Credit Agreement, the Borrower will not, nor will it permit any of
its Subsidiaries to, enter into any transaction (or series of related
transactions) directly or indirectly with or for the benefit of any Affiliate of
the Borrower (other than a Subsidiary) or any officer or director of any
Affiliate unless (a) such transaction (or series of related transactions) is in
the ordinary course of business on terms that are no less favorable to the
Borrower or such Subsidiary, as the case may be, than the Borrower or any such
Subsidiary would obtain in a comparable transaction (or series of related
transactions) with a Person not an Affiliate, (b) such transaction (or series of
related transactions) is approved by the Board of Directors of the Borrower, and
(c) with respect to any transaction (or series of related transactions)
involving aggregate payments or commitments in excess of $10,000,000, the
Borrower receives an opinion from a nationally recognized investment banking
firm, or other nationally or regionally recognized appraisal firm, that such
transaction (or series of related transactions) is fair to the Borrower or such
Subsidiary, as the case may be, from a financial point of view. The restrictions
contained in the foregoing sentence shall not apply to any payments made under
the Existing Affiliate Contracts.
SECTION 8.09. Fiscal Year. The Borrower will not, nor will it permit
any of its Subsidiaries to, change its fiscal year.
SECTION 8.10. Limitation on Restrictions on Subsidiary Dividends and
Other Distributions, Etc. The Borrower will not, nor will it permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause, incur,
assume, suffer or permit to exist or become effective any consensual encumbrance
or restriction of any kind on the ability of any such Person to (a) pay
dividends or make any other distribution on any of such Person's capital stock,
(b) subject to subordination provisions, pay any Indebtedness owed to the
Borrower or any other Credit Party, (c) make loans or advances to any other
Credit Party or (d) transfer any of its Property to any other Credit Party,
except for encumbrances or restrictions existing under or by reason of (i)
customary non-assignment provisions in any lease governing a leasehold interest
and (ii) this Credit Agreement and the other Credit Documents.
53
SECTION 8.11. Issuance of Stock. The Borrower will not, nor will it
permit any of its Subsidiaries to, issue, sell or otherwise dispose of any
shares of capital stock of any Subsidiary of the Borrower (including by way of
sales of treasury stock) or any options or warrants to purchase, or securities
convertible into, capital stock of any Subsidiary of a Borrower, provided, that
AmComp Assurance Corporation may issue options to its employees and agents
exercisable for no more than 10% of the common stock of AmComp Assurance
Corporation outstanding at the time of any such issuance.
SECTION 8.12. Sale Leasebacks. The Borrower will not, nor will it
permit any of its Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as guarantor or other surety with respect to any lease,
whether an Operating Lease or a Capital Lease, of any Property (whether real or
personal or mixed), whether now owned or hereafter acquired, (iii) which such
Person has sold or transferred or is to sell or transfer to any other Person
other than a Credit Party or (iv) which such Person intends to use for
substantially the same purpose as any other Property which has been sold or is
to be sold or transferred by such Person to any other Person in connection with
such lease.
SECTION 8.13. Settlements. The Borrower will not, nor will it permit
any of its Subsidiaries to, enter into any binding settlement agreement with
respect to any litigation, investigation or proceeding, whether pending or
threatened, by or against the Borrower or any of its Subsidiaries, unless after
giving effect on a Pro Forma Basis to any such settlement (including but not
limited to any payment made or any Indebtedness to be incurred or assumed by the
Borrower or any of its Subsidiaries in connection therewith), no Default or
Event of Default would exist hereunder.
SECTION 8.14. No Further Negative Pledges. Except with respect to
prohibitions against other encumbrances on specific Property encumbered to
secure payment of particular Indebtedness (which Indebtedness relates solely to
such specific Property, and improvements and accretions thereto, and is
otherwise permitted hereby), the Borrower will not, nor will it permit any of
its Subsidiaries to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation.
SECTION 8.15. No Foreign Subsidiaries. Neither the Borrower nor any of
its Subsidiaries will create, acquire or permit to exist any direct or indirect
Subsidiary of such Person which is not incorporated or organized under the laws
of any State of the United States or the District of Columbia.
SECTION 8.16. No Amendments to Service Contracts. Except as otherwise
required by law, the Borrower will not, nor will it permit any of its
Subsidiaries to, amend, modify or alter any of the terms or provisions of the
Service Contracts, provided, that the Service Contracts may be amended,
supplemented or modified to add AmComp Assurance Corporation as a party on
54
terms no less favorable to Pinnacle Administrative Company than those set forth
in the existing Service Contracts.
SECTION 8.17 Changes in Management. Neither the Borrower nor any of its
Subsidiaries will, without the prior written consent of the Bank, which consent
will not be unreasonably withheld and the granting or withholding of which will
be delivered promptly, materially change, or permit a material change in, the
nature or scope of responsibilities or duties of Xxxx Xxxx or Xxxxxx Xxxxxxxx
with respect to the management of the Borrower or any of its Subsidiaries.
Neither the Borrower nor any of its Subsidiaries will, without prior written
notice to the Bank, materially change the nature or scope of responsibilities or
duties of any person serving in senior management of the Borrower or any of its
Subsidiaries, including any President, Chairman, Vice President, Secretary,
Treasurer, Chief Executive Officer or Chief Financial Officer.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.01. Events of Default. An Event of Default shall exist upon
the occurrence of any of the following specified events (each an "Event of
Default")
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of any of
the Loans, or
(ii) default, and such default shall continue for five (5) or
more Business Days, in the payment when due of any interest on the
Loans or of any Fees or other amounts owing hereunder, under any of the
other Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or statement made or
deemed to be made by any Credit Party herein, in any of the other Credit
Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material respect
on the date as of which it was deemed to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.02, 7.09, 7.11, 7.12 or
8.01 through 8.16, inclusive, or
55
(ii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) of this Section 9.01) contained in this
Credit Agreement and such default shall continue unremedied for a
period of at least 30 days after the earlier of a responsible officer
of a Credit Party becoming aware of such default or notice thereof by
the Bank; or
(d) Other Credit Documents. (i) Any Credit Party shall default in the
due performance or observance of any term, covenant or agreement in any of the
other Credit Documents (subject to applicable grace or cure periods, if any), or
(ii) except as the result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted by Section 8.04(a), Section 8.04(b) or
Section 8.04(c), any Credit Document shall fail to be in full force and effect
or to give the Bank the Liens, rights, powers and privileges purported to be
created thereby; or
(e) Guaranties. Except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted by Section 8.04(a),
Section 8.04(b) or Section 8.04(c), the guaranty given by any Guarantor
hereunder (including any Additional Credit Party) or any provision thereof shall
cease to be in full force and effect, or any Guarantor (including any Additional
Credit Party) hereunder or any Person acting by or on behalf of such Guarantor
shall deny or disaffirm such Guarantor's obligations under such guaranty, or any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
the Borrower or any of its Subsidiaries; or
(g) Insurance Regulatory Orders. There shall occur any seizure,
vesting, or intervention by or under the authority of any Governmental Authority
by which (i) the management of any Insurance Subsidiary is displaced, or (ii)
the authority of any Insurance Subsidiary is displaced, or is curtailed, in any
materially adverse manner; or
(h) Defaults under Other Agreements.
(i) The Borrower or any of its Subsidiaries shall default in
the performance or observance (beyond the applicable grace period with
respect thereto, if any) of any obligation or condition of the Service
Contracts; or
(ii) The Borrower or any of its Subsidiaries shall default, in
any materially adverse manner, in the performance or observance (beyond
the applicable grace period with respect thereto, if any) of any
obligation or condition of any contract or lease; or
(iii) With respect to any Indebtedness (other than
Indebtedness outstanding under this Credit Agreement), (A) the Borrower
or any of its Subsidiaries shall (1) default in any payment (beyond the
applicable grace period with respect thereto, if any) with respect to
56
any such Indebtedness, or (2) the occurrence and continuance of a
default in the observance or performance relating to such Indebtedness
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is
required) , any such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be declared due and
payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or
(i) Judgments.
(i) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving a liability of
$50,000 or more in the aggregate (to the extent not paid or fully
covered by insurance provided by a carrier who has acknowledged
coverage) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days
from the entry thereof; or
(j) ERISA. Any of the following events or conditions, if such event or
condition could have a Material Adverse Effect: (1) any "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, shall exist with respect to any Plan, or any
lien shall arise on the assets of the Borrower, any Subsidiary of the Borrower
or any ERISA Affiliate in favor of the PBGC or a Plan; (2) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the reasonable
opinion of the Bank, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (3) Termination Event shall occur with respect to
a Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Bank, likely to result in (i) the termination of, such Plan for
purposes of Title IV of ERISA, or (ii) the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency or (within the meaning of Section 4245 of ERISA) such
Plan; or (4) any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which may subject the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(1) of
ERISA or Section 4975 of the Code, or under any agreement or other instrument
pursuant to which the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability; or
(k) Ownership. There shall occur a Change of Control.
SECTION 9.02. Acceleration; Remedies. Upon the occurrence of an Event
of Default, and at any time thereafter unless and until such Event of Default
has been waived by the Bank or
57
cured to the satisfaction of the Bank (pursuant to the voting procedures in
Section 11.06), the Bank shall by written notice to the Credit Parties take any
of the following actions:
(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare (i) the unpaid principal of, (ii)
any accrued interest in respect of and (iii) Prepayment Fee relating
to, all Advances and any and all other indebtedness or obligations of
any and every kind owing by the Borrower to the Bank hereunder to be
due whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.
(iii) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.01(f) shall occur, then the Commitments shall automatically terminate
and all Advances, all accrued interest in respect thereof, all accrued and
unpaid Fees and other indebtedness or obligations owing to the Bank hereunder
automatically shall immediately become due and payable without the giving of any
notice or other action by the Bank.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. Except as otherwise expressly provided herein,
all notices and other communications shall have been duly given and shall be
effective (i) when delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the day following the day
on which the same has been delivered prepaid to a reputable national overnight
air courier service, or (iv) the third Business Day following the day on which
the same is sent by certified or registered mail, postage prepaid, in each case
to the respective parties at the address, in the case of the Borrower,
Guarantors and the Bank, set forth below, or at such other address as such party
may specify by written notice to the other parties hereto:
58
if to the Borrower or the Guarantors:
AmComp Incorporated
X.X. Xxx 00000
Xxxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Bank:
NationsBank, N.A.
1555 Palm Beach Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000-0000
Attn: Commercial Banking Manager
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SECTION 10.02. Right of Set-Off. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, the
Bank is authorized at any time and from time to time, without presentment,
demand, protest or other notice of any kind (all of which rights being hereby
expressly waived), to set-off and to appropriate and apply any and all deposits
(general or special) and any other indebtedness at any time held or owing by the
Bank (including, without limitation branches, agencies or Affiliates of the Bank
wherever located) to or for the credit or the account of any Credit Party
against obligations and liabilities of such Person to the Bank hereunder, under
the Notes, the other Credit Documents or otherwise, irrespective of whether the
Bank shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon the occurrence
of an Event of Default even though such charge is made or entered on the books
of the Bank subsequent thereto.
SECTION 10.03. Benefit of Agreement. This Credit Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the
59
parties hereto; provided that none of the Credit Parties may assign or transfer
any of its interests without prior written consent of the Lenders.
SECTION 10.04. No Waiver; Remedies Cumulative. No failure or delay on
the part of the Bank in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between the Bank and
any of the Credit Parties shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Bank would otherwise have. No notice to or demand
on any Credit Party in any case shall entitle the Borrower or any other Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of the Bank to any other or further action
in any circumstances without notice or demand.
SECTION 10.05. Payment of Expenses, Etc. The Borrower agrees to: (i)
pay all reasonable out-of-pocket costs and expenses (A) of the Bank in
connection with the negotiation, preparation, execution and delivery and
administration of this Credit Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of King & Spalding, special counsel to the
Bank) and any amendment, waiver or consent relating hereto and thereto
including, but not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the performance by the Credit Parties under this Credit Agreement and (B) of
the Bank in connection with enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Bank and each of the Lenders); (ii) pay and hold the Bank
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to the Bank) to pay such taxes;
and (iii) indemnify the Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of (A)
any investigation, litigation or other proceeding (whether or not the Bank is a
party thereto) related to the entering into and/or performance of any Credit
Document or the use of proceeds of any Advances (including other extensions of
credit) hereunder or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding or (B) the presence or Release of any Materials
of Environmental Concern at, under or from any Property owned, operated or
leased by the Borrower or any of its Subsidiaries, or the failure by the
Borrower or any of its Subsidiaries to comply with any Environmental Law (but
excluding, in the case of either of clause (A) or (B) above, any such losses,
liabilities, claims,
60
damages or expenses to the extent incurred by reason of gross negligence or
willful misconduct on the part of the Person to be indemnified).
SECTION 10.06. Amendments, Waivers and Consents. Neither this Credit
Agreement nor any other Credit Document nor any of the terms hereof or thereof
may be amended, changed, waived, discharged or terminated unless such amendment,
change, waiver, discharge or termination is in writing entered into by, or
approved in writing by, the Bank and the Borrower.
SECTION 10.07. Counterparts. This Credit Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the same instrument.
It shall not be necessary in making proof of this Credit Agreement to produce or
account for more than one such counterpart.
SECTION 10.08. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Credit Agreement.
SECTION 10.09. Survival. All indemnities set forth herein, including,
without limitation, in Section 3.07, 3.09, or 10.05 shall survive the execution
and delivery of this Credit Agreement, the making of the Loans, the repayment of
the Loans and other obligations under the Credit Documents and the termination
of the Commitments hereunder, and all representations and warranties made by the
Credit Parties herein shall survive delivery of the Notes and the making of the
Loans hereunder.
SECTION 10.10. Governing Law; Arbitration.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ ENDISPUTE AND
ANY SUCCESSOR THEREOF (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS
61
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(c) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT
OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
(d) RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT SHALL BE DEEMED TO (i) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN T HIS
AGREEMENT; OR (ii) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (iii) LIMIT THE
RIGHT OF THE BANK HERETO (a) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SETOFF, OR (b) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (c) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
SECTION 10.11. Severability. If any provision of any of the Credit
Documents is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.
62
SECTION 10.12. Entirety. This Credit Agreement together with the other
Credit Documents represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written,
if any, including any commitment letters or correspondence relating to the
Credit Documents or the transactions contemplated herein and therein.
SECTION 10.13. Binding Effect: Termination. (a) This Credit Agreement
shall become effective at such time on or after the Closing Date when it shall
have been executed by the Borrower, the Guarantors and the Bank, and the Bank
shall have received copies hereof (telefaxed or otherwise) and thereafter this
Credit Agreement shall be binding upon and inure to the benefit of the Borrower,
the Guarantors and the Bank and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Advances or any
other amounts payable hereunder or under any of the other Credit Documents shall
remain outstanding and until the Commitments hereunder shall have expired or
been terminated.
SECTION 10.14. Conflict. To the extent that there is a conflict or
inconsistency between any provision hereof, on the one hand, and any provision
of any Credit Document, on the other hand, this Credit Agreement shall control.
[Signature Pages to Follow]
S-1
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: AMCOMP INCORPORATED,
a Delaware corporation
By /s/ Xxx Xxxxxxx
---------------------
Name: Xxx Xxxxxxx
Title: Vice President
STATE OF NEW YORK )
) to wit:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State and County listed above to take acknowledgments,
personally appeared Xxx Xxxxxxx who is personally known to me to be the person
named as attorney-in-fact in the foregoing and who executed the foregoing
instrument on December 31, 1997, and who acknowledged before me in the State of
New York, County of New York, that he executed same.
This acknowledgment is given for the sole purpose of verifying the
identity of the parties who signed the foregoing instrument and the place of its
signing, and without any liability on the part of the Notary with regard to the
obligations of the foregoing instrument.
WITNESS my hand and official seal this 31 day of December, 1997.
/s/ Xxxxxx Xxxxxx
-----------------------------------
Print Name: Xxxxxx Xxxxxx
----------------------
Notary Public - State of New York
-----------
Commission Number:
-----------------
Commission Expires:
----------------
(NOTARIAL SEAL)
Xxxxxx Xxxxxx
Notary Public, State of New York
No. 01GI5044850
Qualified in Kings County
Certificate Filed in New York County
Commission Expires 6/5/99
--------
S-2
GUARANTORS: PINNACLE ADMINISTRATIVE COMPANY,
a Florida corporation
By /s/ Xxx Xxxxxxx
---------------------
Name: Xxx Xxxxxxx
Title: Vice President
PINNACLE BENEFITS, INC.,
a Florida corporation
By /s/ Xxx Xxxxxxx
---------------------
Name: Xxx Xxxxxxx
Title: Vice President
STATE OF NEW YORK )
) to wit:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that on this day, before me, an officer duly authorized in
the State and County listed above to take acknowledgments, personally appeared
Xxx Xxxxxxx who has produced the following identification DRIVERS LICENSE and
who executed the foregoing instrument on December 31, 1997, and who acknowledged
before me in the State of New York, County of New York, that he executed same.
This acknowledgment is given for the sole purpose of verifying the identity
of the parties who signed the foregoing instrument and the place of its signing,
and without any liability on the part of the Notary with regard to the
obligations of the foregoing instrument.
WITNESS my hand and official seal this 31 day of December, 1997.
/s/ Xxxxxx Xxxxxx
-----------------------------------
Print Name: Xxxxxx Xxxxxx
----------------------
Notary Public - State of
-----------
Commission Number:
-----------------
Commission Expires:
----------------
(NOTARIAL SEAL)
Xxxxxx Xxxxxx
Notary Public, State of New York
No. 01GI5044850
Qualified in Kings County
Certificate Filed in New York County
Commission Expires 6/5/99
--------
S-3
BANK: NATIONSBANK, N.A.
By /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
STATE OF NEW YORK )
) to wit:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that on this day, before me, an officer duly authorized in
the State and County listed above to take acknowledgments, personally appeared
Xxxx X. Xxxxxx who is personally known to me to be the person named as
attorney-in-fact in the foregoing and who executed the foregoing instrument on
December 31, 1997, and who acknowledged before me in the State of New York,
County of New York, that he executed same.
This acknowledgment is given for the sole purpose of verifying the identity
of the parties who signed the foregoing instrument and the place of its signing,
and without any liability on the part of the Notary with regard to the
obligations of the foregoing instrument.
WITNESS my hand and official seal this 31 day of December, 1997.
/s/ Xxxxxx Xxxxxx
-----------------------------------
Print Name: Xxxxxx Xxxxxx
----------------------
Notary Public - State of
-----------
Commission Number:
-----------------
Commission Expires:
----------------
(NOTARIAL SEAL)
Notary Public, State of New York
No. 01GI5044850
Qualified in Kings County
Certificate Filed in New York County
Commission Expires 6/5/99
--------
