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EXHIBIT 10.69
[Execution Copy]
CREDIT AGREEMENT
Dated as of October 15, 1996
among
RISCORP, INC.,
as Borrower,
THE SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N.A. (SOUTH),
as Agent
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TABLE OF CONTENTS
SECTION 1 DEFINITIONS............................................ 1
1.2 Definitions............................................ 1
1.2 Computation of Time Periods............................ 25
1.3 Accounting Terms....................................... 25
SECTION 2 CREDIT FACILITIES ..................................... 26
2.1 Revolving Loans ....................................... 26
2.2 Term Loan ............................................. 27
2.3 Interest .............................................. 28
2.4 Committed Notes ....................................... 29
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES ........ 29
3.1 Default Rate .......................................... 29
3.2 Extension and Conversion............................... 29
3.3 Prepayments ........................................... 30
3.4 Termination and Reduction of Revolving Committed
Amount................................................. 31
3.5 Fees .................................................. 31
3.6 Capital Adequacy ...................................... 32
3.7 Inability To Determine Interest Rate .................. 32
3.8 Illegality ............................................ 32
3.9 Requirements of Law ................................... 33
3.10 Taxes ................................................. 34
3.11 Indemnity ............................................. 36
3.12 Pro Rata Treatment .................................... 37
3.13 Sharing of Payments ................................... 38
3.14 Payments, Computations, Etc. .......................... 38
3.15 Evidence of Debt ...................................... 40
SECTION 4 GUARANTY .............................................. 41
4.1 The Guarantee ......................................... 41
4.2 Obligations Unconditional ............................. 41
4.3 Reinstatement ......................................... 42
4.4 Remedies .............................................. 43
4.5 Rights of Contribution ................................ 43
4.6 Continuing Guarantee .................................. 44
SECTION 5 CONDITIONS ............................................ 44
5.1 Closing Conditions .................................... 44
5.2 Conditions to all Extensions of Credit ................ 45
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SECTION 6 REPRESENTATIONS AND WARRANTIES ........................ 46
6.1 Financial Condition ................................... 46
6.2 No Change; Dividends .................................. 47
6.3 Organization; Existence; Compliance with Law .......... 47
6.4 Power; Authorization; Enforceable Obligations ......... 47
6.5 No Legal Bar .......................................... 48
6.6 No Material Litigation ................................ 48
6.7 No Default ............................................ 48
6.8 Ownership of Property; Liens .......................... 48
6.9 No Burdensome Restrictions ............................ 49
6.10 Taxes ................................................. 49
6.11 ERISA ................................................. 49
6.12 Governmental Regulations, Etc. ........................ 50
6.13 Subsidiaries .......................................... 52
6.14 Purpose of Loans ...................................... 52
6.15 Environmental Matters ................................. 52
6.16 Insurance Policies .................................... 53
SECTION 7 AFFIRMATIVE COVENANTS ................................. 53
7.1 Information Covenants ................................. 53
7.2 Preservation of Existence and Franchises .............. 57
7.3 Books and Records ..................................... 57
7.4 Compliance with Law ................................... 57
7.5 Payment of Taxes and Other Indebtedness ............... 57
7.6 Insurance/Reinsurance ................................. 57
7.7 Maintenance of Property ............................... 58
7.8 Performance of Obligations ............................ 58
7.9 Use of Proceeds ....................................... 58
7.10 Audits/Inspections .................................... 58
7.11 Financial Covenants ................................... 58
7.12 Additional Credit Parties ............................. 59
7.13 Ownership of Subsidiaries ............................. 60
7.14 Dividends ............................................. 60
SECTION 8 NEGATIVE COVENANTS .................................... 60
8.1 Indebtedness .......................................... 61
8.2 Liens ................................................. 62
8.3 Nature of Business .................................... 62
8.4 Consolidation, Merger, Sale or Purchase of
Assets, etc. .......................................... 62
8.5 Advances, Investments, Loans, etc. .................... 63
8.6 Restricted Payments ................................... 63
8.7 Prepayments of Indebtedness, etc. ..................... 63
8.8 Transactions with Affiliates .......................... 64
8.9 Fiscal Year ........................................... 64
8.10 Limitation on Restrictions on Subsidiary
Dividends and Other Distributions, etc. ............. 64
8.11 Issuance of Stock ..................................... 64
8.12 Sale Leasebacks ....................................... 64
8.13 Settlements ........................................... 65
8.14 No Further Negative Pledges ........................... 65
8.15 No Foreign Subsidiaries ............................... 65
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SECTION 9 EVENTS OF DEFAULT ..................................... 65
9.1 Events of Default ..................................... 65
9.2 Acceleration; Remedies ................................ 68
SECTION 10 AGENCY PROVISIONS ..................................... 69
10.1 Appointment ........................................... 69
10.2 Delegation of Duties .................................. 70
10.3 Exculpatory Provisions ................................ 70
10.4 Reliance on Communications ............................ 70
10.5 Notice of Default ..................................... 71
10.6 Non-Reliance on Agent and Other Lenders ............... 71
10.7 Indemnification ....................................... 72
10.8 Agent in its Individual Capacity ...................... 72
10.9 Successor Agent ....................................... 72
SECTION 11 MISCELLANEOUS ......................................... 73
11.1 Notices ............................................... 73
11.2 Right of Set-Off ...................................... 74
11.3 Benefit of Agreement .................................. 74
11.4 No Waiver; Remedies Cumulative ........................ 77
11.5 Payment of Expenses, etc. ............................. 78
11.6 Amendments, Waivers and Consents ...................... 78
11.7 Counterparts .......................................... 79
11.8 Headings .............................................. 79
11.9 Survival .............................................. 79
11.10 Governing Law; Submission to Jurisdiction;
Venue ............................................... 79
11.11 Severability .......................................... 80
11.12 Entirety .............................................. 80
11.13 Binding Effect; Termination ........................... 81
11.14 Confidentiality ....................................... 81
11.15 Source of Funds ....................................... 81
SCHEDULES
Schedule 1.1A Existing Affiliate Contracts
Schedule 1.1B Investments
Schedule 1.1C Liens
Schedule 2.1(a) Lenders
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.4 Form of Committed Note
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 5.1(e) Form of Legal Opinion
Schedule 6.1(a) Financial Statement Disclosures
Schedule 6.4 Required Consents, Authorizations, Notices
and Filings
Schedule 6.6 Litigation
Schedule 6.13 Subsidiaries
Schedule 7.1(c) Form of Officer's Compliance Certificate
Schedule 7.12 Form of Joinder Agreement
Schedule 8.1 Indebtedness
Schedule 11.3(b) Form of Assignment and Acceptance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of October 15, 1996 (the "Credit
Agreement"), is by and among RISCORP, INC., a Florida 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"), the several lenders identified on the signature pages
hereto and such other lenders as may from time to time become a party hereto
(the "Lenders") and NATIONSBANK, N.A. (SOUTH), as agent for the Lenders (in such
capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a $50,000,000
credit facility for the purposes hereinafter set forth;
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
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:
SECTION 1
DEFINITIONS
1.1 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 December 31 of any fiscal year (or such other date
requested by the Agent), with respect to the insurance business in force,
and covering such other subjects as are customary in actuarial reviews and
reasonably requested by the Agent, prepared by an independent actuarial
firm reasonably acceptable to the Agent 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 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.
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"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date by execution of a Joinder Agreement.
"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.
"Agency Services Address" means NationsBank, N.A., NC1-001-15-04, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attn: Agency Services,
or such other address as may be identified by written notice from the Agent
to the Borrower.
"Agent" shall have the meaning assigned to such term in the heading
hereof, together with any successors or assigns.
"Agent's Fee Letter" means that certain letter agreement, dated as of
October 11, 1996, between the Agent and the Borrower, as amended, modified,
supplemented or replaced from time to time.
"Agent's Fees" shall have the meaning assigned to such term in Section
3.5(b).
"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" means, for purposes of calculating the
applicable interest rate for any day for any Eurodollar Loan, the
appropriate applicable percentage corresponding to the Consolidated Funded
Debt Coverage Ratio in effect as of the most recent Calculation Date:
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=========================================================================
Applicable
Consolidated Percentage
Funded Debt for
Coverage Eurodollar
Pricing Level Ratio Loans
-------------------------------------------------------------------------
I Greater than 1.75%
1.75
-------------------------------------------------------------------------
II Greater than 1.50%
1.25 but less
than or equal
to 1.75
-------------------------------------------------------------------------
III Greater than 1.25%
1.00 but less
than or equal
to 1.25
-------------------------------------------------------------------------
IV Greater than 1.00%
0.75 but less
than or equal
to 1.00
-------------------------------------------------------------------------
V Less than or 0.75%
equal to 0.75
=========================================================================
The Applicable Percentages shall be determined and adjusted quarterly on
the date (each a "Calculation Date") five Business Days after the date by
which the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(c); provided, however that
(i) the initial Applicable Percentages shall be based on Pricing Level II
(as shown above) and shall remain at Pricing Level II until the first
Calculation Date subsequent to the Closing Date and, thereafter, the
Pricing Level shall be determined by the then current Consolidated Funded
Debt Coverage Ratio, and (ii) if the Borrower fails to provide the
officer's certificate to the Agency Services Address as required by Section
7.1(c), the Applicable Percentage from such Calculation Date shall be based
on Pricing Level I until such time as an appropriate officer's certificate
is provided, whereupon the Pricing Level shall be determined by the then
current Consolidated Funded Debt Coverage Ratio. Each Applicable Percentage
shall be effective from one Calculation Date until the next Calculation
Date. Any adjustment in the Applicable Percentages shall be applicable to
all existing Loans as well as any new Loans made or issued.
"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 to any Person, the occurrence of any of
the following with respect to such
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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
(iii) 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
(iv) 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 (a) the Federal Funds Rate in effect on such day plus 1/2 of 1%
or (b) the Prime Rate in effect on such day. If for any reason the
Agent 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 Agent to obtain sufficient quotations in accordance with the terms
hereof, the Base Rate shall be determined without regard to clause (a) 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 Loan bearing interest at a rate determined
by reference to the Base Rate.
"Borrower" means the Person identified as such in the heading hereof,
together with any permitted successors and assigns.
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"Borrower's Obligations" means, without duplication, (i) all of the
obligations of the Borrower to the Lenders and the Agent, 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 any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or Sarasota, Florida
are authorized or required by law to close, except that, when used in
connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in U.S. dollar deposits in London,
England, Charlotte, North Carolina 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) Xxxxxxx X. Xxxxxxx shall fail to have beneficial ownership,
directly or indirectly, of at least 51% of the of the combined voting power
of all Voting Stock of the Borrower, (ii) excluding Xxxxxxx X. Xxxxxxx, any
Person or two or more Persons acting in concert shall have acquired
beneficial ownership, directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of,
control over, Voting Stock of the Borrower (or other securities convertible
into such Voting Stock) representing 35% or more 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 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.
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"Closing Date" means the date hereof.
"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.
"Commitment" means with respect to each Lender, the Revolving
Commitment of such Lender and the Term Loan Commitment of such Lender.
"Commitment Percentage" means, for any Lender, the percentage
identified as its Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Committed Note" means a promissory note of the Borrower in favor of a
Lender delivered pursuant to Section 2.4 and evidencing the Loans of such
Lender, as such promissory note may be amended, modified, restated or
replaced from time to time.
"Consolidated Capital Expenditures" means, for any period, all capital
expenditures of the Borrower and its Subsidiaries, as determined in
accordance with GAAP.
"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, (iii) consolidated depreciation
and amortization expense of the Borrower and its Subsidiaries for such
period and (iv) all other non-cash expenses 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.
"Consolidated Current Maturities Coverage Ratio" means, as of the last
day of any fiscal quarter of the Borrower, the ratio of (a) (i)
Consolidated EBITDA for the four-quarter period ended as of such date minus
(ii) Consolidated Capital Expenditures for the four-quarter period ended as
of such date
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minus (iii) Consolidated Tax Expense for the four-quarter period ended as
of such date minus (iv) Consolidated Cash Restricted Payments for the
four-quarter period ended as of such date minus (v) all non-cash gains and
other items taken into account in determining Consolidated EBITDA for the
four-quarter period ended as of such date to (b) Consolidated Scheduled
Funded Indebtedness Payments as of such date.
"Consolidated Funded Debt Coverage 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 EBITDA for the four
fiscal-quarter period ended as of such date.
"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
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twelve month period ending on such date. With respect to the Revolving
Loans, Consolidated Scheduled Funded Indebtedness Payments shall be deemed
to be (i) as of the last day of any fiscal quarter ending on or before
September 30, 1997, one fifth (1/5) of the average daily outstanding
principal balance on the Revolving Loans during the immediately preceding
fiscal quarter and (ii) as of the last day of any fiscal quarter ending
after October 1, 1997 and on or before the Conversion Date, one-quarter
(1/4) of the average daily outstanding principal balance on the Revolving
Loans during the immediately preceding fiscal quarter.
"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.
"Conversion Date" means September 30, 1998.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, each Joinder Agreement, the Agent's Fee Letter, 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.
"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 (i) with respect to RISCORP
Insurance, that certain Annual Statement, as filed with the appropriate
Governmental Authorities of its state of domicile, for the fiscal
year ending December 31, 1995, (ii) with respect to RISCORP Property, those
certain Annual Statements, as filed with the appropriate Governmental
Authorities of its state of domicile, for the fiscal years ending December
31, 1995 and December 31, 1994 and (iii) with respect to RISCORP National
Insurance, those certain Annual Statements, as filed with the appropriate
Governmental Authorities of its state of domicile, for the fiscal years
ending December 31, 1995, December 31, 1994 and December 31, 1993.
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"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, 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 Loan bearing interest at a rate determined
by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to
the following formula:
Eurodollar Rate = Interbank Offered Rate
-----------------------------------
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 Eurodollar
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Loans is determined), whether or not Lender has any Eurocurrency
liabilities subject to such reserve requirement at that time. Eurodollar
Loans 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 a Lender. 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 9.1.
"Existing Affiliate Contracts" means those certain agreements
identified on Schedule 1.1A attached hereto, as such agreements exist as of
the Closing Date.
"Fees" means all fees payable pursuant to Section 3.5.
"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 (A) 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 (B) 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 Agent on such day on such transactions as determined by the
Agent.
"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.
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"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section
1.3 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) guaranteeing or intended to guarantee 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) 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 any Lender, or any Affiliate of a Lender, entered
into in order to manage existing or anticipated interest rate risks
associated with the obligations of the Borrower to the Lenders and the
Agent 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, at 0000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxx, and (iii)
the parking area dedicated to such office building, all of which is owned
by RISCORP Insurance.
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"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), (v) 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, 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.
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"Insurance Subsidiary" means RISCORP Insurance, RISCORP Property,
RISCORP National Insurance and all other Wholly Owned Subsidiaries of the
Borrower licensed to engage in the business of property and casualty
insurance.
"Interbank Offered Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), 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 Agent 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
Required Lenders.
"Interest Payment Date" means, (i) as to any Base Rate Loan, the last
day of each March, June, September and December, the date of repayment of
principal of such Loan, the Conversion Date and the Termination Date and
(ii) as to any Eurodollar Loan, the last day of each Interest Period for
such Loan, the date of repayment of principal of such Loan, the Conversion
Date and on the Termination Date, and in addition where the applicable
Interest Period is more than 3 months, then also on the date 3 months from
the beginning of the Interest Period, and each 3 months thereafter. 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 in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding Business Day.
"Interest Period" means, as to any Eurodollar Loan, a period of one,
two or three month's duration, as the Borrower may elect, commencing in
each case, on the date of the
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borrowing (including conversions, extensions and renewals); provided,
however, (A) if any Interest Period would end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day (except that in the case of Eurodollar Loans where the next
succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (B) with respect to any Revolving
Loan, no Interest Period shall extend beyond the Conversion Date, (C) with
respect to the Term Loan, no Interest Period shall extend beyond the
Termination Date, (D) with regard to any Eurodollar Loan constituting a
portion of the Term Loan, no Interest Period shall extend beyond any
principal amortization payment date unless the portion of the Term Loan
comprised of Base Rate Loans together with the portion of the Term Loan
comprised of Eurodollar Loans with Interest Periods expiring prior to the
date such principal amortization payment is due, is at least equal to the
amount of such principal amortization payment due on such date, and (E)
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 Al (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 A1 (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
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any investment there is made, of "A" (or higher) according to S&P or Moodys
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 other debt securities or debt
instruments with a rating of BBB- or higher by S&P, Baa-3 or higher by
Moody's, Class (2) or higher by NAIC or the equivalent of such rating by
S&P, Moody's or NAIC, or if none of S&P, Moody's and NAIC shall then exist,
the equivalent of such rating by any other nationally recognized securities
rating agency; (vi) preferred stock with a rating of BBB- or higher by S&P,
Baa-3 or higher by Moody's, Class (2) or higher by NAIC or the equivalent
of such rating by S&P, Moody's or NAIC, or if none of S&P, Moody's and NAIC
shall then exist, the equivalent of such rating by any other nationally
recognized securities rating agency, provided that such preferred stock is
mandatorily redeemable and required to be treated as a debt instrument in
accordance with GAAP and (vii) any fund investing exclusively in
investments of the types described in clauses (i) through (vi) 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 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.
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Lenders" means each of the Persons identified as a "Lender" on the
signature pages hereto, and each Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"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).
"Loan" or "Loans" means the Revolving Loans and/or the Term Loan (or a
portion of any Revolving Loan or Term Loan bearing interest at the Base
Rate or the Eurodollar Rate and referred to as a Base Rate Loan or a
Eurodollar Loan), individually or collectively, as appropriate.
"Management Agreements" means, collectively, (i) that certain
Management Agreement, dated as of January 1, 1995, by and between RISCORP
Insurance and the Borrower, (ii) that certain Management Agreement, dated
as of January 1, 1995, by and between RISCORP Property and the Borrower,
(iii) that certain Management and Services Agreement, dated as of June 13,
1996, by and between RISCORP National Insurance and the Borrower, and (iv)
any agreements assigning the rights and/or obligations of the Borrower
under the Management Agreements to RISCORP Management, each as may be
amended or modified from time to time hereafter by the parties thereto.
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), operations, business, assets,
liabilities or prospects of the Borrower or any of its Subsidiaries, (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.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
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"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. (South) and its successors.
"Non-Excluded Taxes" means such term as is defined in Section 3.10.
"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" or "Notes" means any Committed Note.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i) or Section 2.2(b).
"Notice of Extension/Conversion" means the written notice of extension
or conversion in substantially the form of Schedule 3.2, as required by
Section 3.2.
"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.
"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 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 of suppliers (A) made in the ordinary course
of business and consistent with the past
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practices of the Credit Parties or (B) to the extent not permitted by the
foregoing subclause (A), that do not exceed $2,000,000 in the aggregate at
any one time outstanding; (v) Investments in any Credit Party; (vi)
Intercompany Indebtedness permitted by Section 8.1(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 Closing Date and set forth in Schedule
1.1B; (xiv) Guaranty Obligations permitted by Section 8.1; (xv)
acquisitions permitted by Section 8.4(d); and (xvi) transactions permitted
by Section 8.8.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the Lenders;
(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 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
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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
(including Capital Leases) to the extent permitted under Section
8.1(f)(i), 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;
(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;
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(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 Closing Date and set forth on
Schedule 1.1C; provided that no such Lien shall at any time be
extended to or cover any Property other than the Property subject
thereto on the 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.
"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.
"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 Agent and
the Lenders have received the officer's certificate in accordance with the
provisions of Section 7.1(c). As used herein, "transaction" means (i) any
incurrence, assumption or retirement of Indebtedness as referred to in
Section 8.1(f)(i), (ii) any acquisition of capital stock or securities or
any purchase, lease or other acquisition of Property as referred to in
Section 8.4(d), (iii) any Restricted Payment as referred to in Section
8.6(d) or (iv) any settlement as referred to in Section 8.13. With respect
to any transaction of the type described in clause (i) above regarding
Indebtedness which has a floating or formula rate, the implied rate of
interest for such Indebtedness for the applicable period for purposes of
this definition shall be determined by utilizing the rate which is or would
be in effect with respect to such Indebtedness as at the relevant date of
determination.
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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.
"Register" shall have the meaning given such term in Section 11.3(c).
"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.
"Required Lenders" means, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent)
and holding in the aggregate at least 51% of (i) the Revolving Commitments
or (ii) if the Revolving Commitments have been terminated, the outstanding
Loans.
"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,
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26
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 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.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Commitment Percentage of the Revolving
Committed Amount, to make Revolving Loans in accordance with the provisions
of Section 2.1(a).
"Revolving Committed Amount" shall have the meaning assigned to such
term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term in
Section 2.1(a).
"RISCORP Insurance" means RISCORP Insurance Company, a Florida stock
insurance company.
"RISCORP Management" means RISCORP Management Services, Inc., a
Florida corporation.
"RISCORP National Insurance" means RISCORP National Insurance Company
(f/k/a Atlas Insurance Company), a Missouri corporation.
"RISCORP Property" means RISCORP Property & Casualty Insurance
Company, a Florida corporation.
"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 1.3 hereof.
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"SAP Statement" means an Annual Statement or a Quarterly Statement.
"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 realize upon
its assets and 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
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.
"Subordinated Debt Agreement" shall mean that certain Note Purchase
Agreement, dated as of January 1, 1995 (as amended by that certain Consent,
Waiver and First Amendment to Amended and Restated Note Purchase Agreement,
dated as of February 26, 1996, and as further amended by that certain
Second Amendment to Amended and Restated Note Purchase Agreement, dated as
October 15, 1996) between the Borrower and American Re-Insurance Company,
providing for the incurrence by the Borrower of the Subordinated Debt, as
may be hereafter amended, supplemented, renewed or replaced from time to
time as permitted by Section 8.7(a) hereof.
"Subordinated Indebtedness" shall mean the indebtedness owed by the
Borrower to American Re-Insurance Company, pursuant to the Subordinated
Debt Agreement.
"Subsidiary" means, as to any Person, (a) 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
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happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries, and (b) 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 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).
"Term Loan" shall have the meaning assigned to such term in Section
2.2(a).
"Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make its portion of the Term Loan in a
principal amount equal to such Lender's Commitment Percentage of the Term
Loan Committed Amount.
"Term Loan Committed Amount" shall have the meaning assigned to such
term in Section 2.2(a).
"Termination Date" means September 30, 2001.
"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.
"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.
"Unused Fee" shall have the meaning assigned to such term in Section
3.5(a).
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"Unused Fee Calculation Period" shall have the meaning assigned to
such term in Section 3.5(a).
"Unused Revolving Committed Amount" means, for any period, the amount
by which (a) the then applicable Revolving Committed Amount exceeds (b) the
daily average sum for such period of the outstanding aggregate principal
amount of all Revolving Loans.
"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.
"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.
1.2 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."
1.3 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 Lenders hereunder 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 6.1 hereof (or, prior to the delivery of the first financial
statements pursuant to Section 6.1 hereof, consistent with the financial
statements as at December 31, 1995); provided, however, if (a) a 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 Agent or the Required
Lenders 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 such
Borrower to the Lenders as to which no such objection shall have been made.
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(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.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower such
Lender's Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("Revolving Loans") from time to time from the Closing
Date until the Conversion Date, or such earlier date as the Revolving
Commitments shall have been terminated as provided herein for the purposes
hereinafter set forth; provided, however, that the sum of the aggregate
principal amount of outstanding Revolving Loans shall not exceed FIFTY
MILLION DOLLARS ($50,000,000) (as such aggregate maximum amount may be
reduced from time to time as provided in Section 3.4, the "Revolving
Committed Amount"); provided, further, (i) with regard to each Lender
individually, such Lender's outstanding Revolving Loans shall not exceed
such Lender's Commitment Percentage of the Revolving Committed Amount, and
(ii) with regard to the Lenders collectively, the aggregate principal
amount of outstanding Revolving Loans shall not exceed the Revolving
Committed Amount. Revolving Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may request,
and may be repaid and reborrowed in accordance with the provisions hereof;
provided, however, that, prior to the Conversion Date, no more than 8
Eurodollar Loans shall be outstanding hereunder at any time. For purposes
hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same
date, although borrowings, extensions and conversions may, in accordance
with the provisions hereof, be combined at the end of existing Interest
Periods to constitute a new Eurodollar Loan with a single Interest Period.
Revolving Loans hereunder may be repaid and reborrowed in accordance with
the provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a Revolving
Loan borrowing by written notice (or telephone notice promptly
confirmed in writing) to the Agent not later than 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day prior to the date
of the requested borrowing in the case of Base Rate Loans,
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and on the third Business Day prior to the date of the requested
borrowing in the case of Eurodollar Loans. Each such request for
borrowing shall be irrevocable and shall specify (A) that a Revolving
Loan is requested, (B) the date of the requested borrowing (which
shall be a Business Day), (C) the aggregate principal amount to be
borrowed, and (D) whether the borrowing shall be comprised of Base
Rate Loans, Eurodollar Loans or a combination thereof, and if
Eurodollar Loans are requested, the Interest Period(s) therefor. If
the Borrower shall fail to specify in any such Notice of Borrowing
(I) an applicable Interest Period in the case of a Eurodollar Loan,
then such notice shall be deemed to be a request for an Interest
Period of one month, or (II) the type of Revolving Loan requested,
then such notice shall be deemed to be a request for a Base Rate Loan
hereunder. The Agent shall give notice to each affected Lender
promptly upon receipt of each Notice of Borrowing pursuant to this
Section 2.1(b)(i), the contents thereof and each such Lender's share
of any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that
is a Revolving Loan shall be in a minimum aggregate principal amount
of $1,000,000 and integral multiples of $100,000 in excess thereof (or
the remaining amount of the Revolving Committed Amount, if less).
(iii) Advances. Each Lender will make its Commitment Percentage
of each Revolving Loan borrowing available to the Agent for the
account of the Borrower as specified in Section 3.14(a), or in such
other manner as the Agent may specify in writing, by 1:00 P.M.
(Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by
the Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be
due and payable in full on the Conversion Date.
2.2 Term Loan.
(a) Term Commitment. Subject to and upon the terms and conditions and
relying upon the representations and warranties herein set forth, each
Lender agrees, severally and not jointly, to make available to the Borrower
on the Conversion Date such Lender's Commitment Percentage of a term loan
in Dollars (the "Term Loan") in the aggregate principal amount equal to the
outstanding principal balance on the Revolving
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Loans as of such date (the "Term Loan Committed Amount"). The Term Loan may
consist of Base Rate Loans or Eurodollar Loans, or a combination thereof,
as the Borrower may request; provided, however, that, on and after the
Conversion Date, no more than 3 Eurodollar Loans shall be outstanding
hereunder at any time. For purposes hereof, Eurodollar Loans with different
Interest Periods shall be considered as separate Eurodollar Loans, even if
they begin on the same date, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined at
the end of existing Interest Periods to constitute a new Eurodollar Loan
with a single Interest Period. Amounts repaid on the Term Loan may not be
reborrowed.
(b) Borrowing Procedures. The Borrower shall submit an appropriate
Notice of Borrowing to the Agent not later than 11:00 A.M. (Charlotte, N.C.
time) on the Conversion Date, with respect to the portion of the Term Loan
initially consisting of a Base Rate Loan, or on the third Business Day
prior to the Conversion Date, with respect to the portion of the Term Loan
initially consisting of one or more Eurodollar Loans, which Notice of
Borrowing shall be irrevocable and shall specify (i) that the funding of a
Term Loan is requested and (ii) whether the funding of the Term Loan shall
be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof,
and if Eurodollar Loans are requested, the Interest Period(s) therefor. If
the Borrower shall fail to deliver such Notice of Borrowing to the Agent by
11:00 A.M. (Charlotte, N.C. time) on the third Business Day prior to the
Conversion Date, then the full amount of the Term Loan shall be disbursed
on the Conversion Date as a Base Rate Loan. Each Lender shall make its
Commitment Percentage of the Term Loan available to the Agent for the
account of the Borrower at the office of the Agent specified in Section
11.1, or at such other office as the Agent may designate in writing, by
1:00 P.M. (Charlotte, North Carolina time) on the Conversion Date in
Dollars and in funds immediately available to the Agent.
(c) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is
part of the Term Loan shall be in an aggregate principal amount that is not
less than $1,000,000 and integral multiples of $100,000 (or the then
remaining principal balance of the Term Loan, if less).
(d) Repayment of Term Loan. The principal amount of the Term Loan
shall be repaid in twelve (12) equal and consecutive quarterly
installments, such installments being (i) in an amount equal to one-twelfth
(1/12) of the outstanding balance of the Term Loan as of the Conversion
Date and (ii) due and payable as of the last day of each March, June,
September and December (beginning on December 31, 1998 and ending on the
Termination Date).
2.3 Interest. Subject to the provisions of Section 3.1, all Loans shall
bear interest at a per annum rate equal to:
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(a) Base Rate Loans. During such periods as Loans shall be comprised
in whole or in part of Base Rate Loans, such Base Rate Loans shall bear
interest at a per annum rate equal to the Base Rate;
(b) Eurodollar Loans. During such periods as Loans shall be comprised
in whole or in part of Eurodollar Loans, such Eurodollar Loans shall bear
interest at a per annum rate equal to the Eurodollar Rate plus the
Applicable Percentage.
Interest on Loans shall be payable in arrears on each applicable Interest
Payment Date (or at such other times as may be specified herein).
2.4 Committed Notes. The Loans made by each Lender shall be evidenced by a
duly executed promissory note of the Borrower to such Lender in an original
principal amount equal to such Lender's Commitment Percentage of the Revolving
Committed Amount and in substantially the form of Schedule 2.4.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 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 Loans 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
Base Rate).
3.2 Extension and Conversion. Subject to the terms of Section 5.2, the
Borrower shall have the option, on any Business Day, to extend existing Loans
into a subsequent permissible Interest Period or to convert Loans into Loans of
another interest rate type; provided, however, that (i) except as provided in
Section 3.8, Eurodollar Loans may be converted into Base Rate Loans only on the
last day of the Interest Period applicable thereto, (ii) Eurodollar Loans may be
extended, and Base Rate Loans may be converted into Eurodollar Loans, only if no
Default or Event of Default is in existence on the date of extension or
conversion, (iii) Loans extended as, or converted into, Eurodollar Loans shall
be subject to the terms of the definition of "Interest Period" set forth in
Section 1.1 and shall be in such minimum amounts as provided in, with respect to
Revolving Loans, Section 2.1(b)(ii) or, with respect to the Term Loan, 2.2(c),
(iv) prior to the Conversion Date, no more than 8 Eurodollar Loans shall be
outstanding hereunder at any time and, on and after the Conversion Date, no more
than 3 Eurodollar Loans shall be outstanding hereunder at any time (it being
understood that, for purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they begin on
the
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same date, although borrowings, extensions and conversions may, in accordance
with the provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period), and (v) any
request for extension or conversion of a Eurodollar Loan which shall fail to
specify an Interest Period shall be deemed to be a request for an Interest
Period of one month. Each such extension or conversion shall be effected by the
Borrower by giving a Notice of Extension/Conversion (or telephone notice
promptly confirmed in writing) to the Agent prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day of, in the case of the conversion of a
Eurodollar Loan into a Base Rate Loan, and on the third Business Day prior to,
in the case of the extension of a Eurodollar Loan as, or conversion of a Base
Rate Loan into, a Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or conversion, the
Loans to be so extended or converted, the types of Loans into which such Loans
are to be converted and, if appropriate, the applicable Interest Periods with
respect thereto. Each request for extension or conversion shall be irrevocable
and shall constitute a representation and warranty by the Borrower of the
matters specified in subsections (ii), (iii), (iv), (v) and (vi) of Section 5.2.
In the event the Borrower fails to request extension or conversion of any
Eurodollar Loan in accordance with this Section, or any such conversion or
extension is not permitted or required by this Section, then such Eurodollar
Loan shall be automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Agent shall give each Lender notice as
promptly as practicable of any such proposed extension or conversion affecting
any Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to prepay
Loans in whole or in part from time to time, subject to Section 3.11, but
otherwise without premium or penalty; provided, however, that (i)
Eurodollar Loans may only be prepaid on three Business Days' prior written
notice to the Agent and specifying the applicable Loans to be prepaid; (ii)
any prepayment of Eurodollar Loans will be subject to Section 3.11; and
(iii) each such partial prepayment of Loans shall be in a minimum principal
amount of $1,000,000. Subject to the foregoing terms, amounts prepaid under
this Section 3.3(a) shall be applied as the Borrower may elect.
(b) Mandatory Prepayments. If at any time, the sum of the aggregate
principal amount of outstanding Revolving Loans shall exceed the Revolving
Committed Amount, the Borrower promises to prepay immediately the
outstanding principal balance on the Revolving Loans in an amount
sufficient to eliminate such excess.
(c) General. All prepayments made pursuant to this Section 3.3 shall
(i) be subject to Section 3.11 and (ii) unless the Borrower shall specify
otherwise, be applied first to Base Rate Loans, if any, and then to
Eurodollar Loans in
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direct order of Interest Period maturities. All prepayments of the
Term Loan pursuant to this Section 3.3 shall be applied to principal
installments thereof in inverse order of maturity. Amount prepaid on
the Revolving Loans may be reborrowed in accordance with the
provisions hereof. Amounts prepaid on the Term Loan may not be
reborrowed.
3.4 Termination and Reduction of Revolving Committed Amount.
(a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Revolving Committed Amount in whole or
in part (in minimum aggregate amounts of $3,000,000 or in integral
multiples of $1,000,000 in excess thereof (or, if less, the full remaining
amount of the then applicable Revolving Committed Amount)) upon five
Business Days' prior written notice to the Agent; provided, however, no
such termination or reduction shall be made which would cause the aggregate
principal amount of outstanding Revolving Loans to exceed the Revolving
Committed Amount unless, concurrently with such termination or reduction,
the Revolving Loans are repaid to the extent necessary to eliminate such
excess. The Commitments of the Lenders shall automatically terminate on (i)
with respect to the Revolving Commitments, the Conversion Date and (ii)
with respect to the Term Loan Commitments, the Termination Date. The Agent
shall promptly notify each affected Lender of receipt by the Agent of any
notice from the Borrower pursuant to this Section 3.4(a).
(b) Termination. The Revolving Commitments of the Lenders shall
automatically terminate on the Conversion Date.
(c) General. The Borrower shall pay to the Agent for the account of
the Lenders in accordance with the terms of Section 3.5(a), on the date of
each termination or reduction of the Revolving Committed Amount, the Unused
Fee accrued through the date of such termination or reduction on the amount
of the Revolving Committed Amount so terminated or reduced.
3.5 Fees.
(a) Unused Fee. In consideration of the Revolving Commitments of
the Lenders hereunder, the Borrower agrees to pay to the Agent for the
account of each Lender a fee (the "Unused Feel") on the Unused
Revolving Committed Amount computed at a per annum rate of 0.25% for
each day during the applicable Unused Fee Calculation Period
(hereinafter defined). The Unused Fee shall commence to accrue on the
Closing Date and shall be due and payable in arrears on the last
business day of each March, June, September and December (and any date
that the Revolving Committed Amount is reduced as provided in Section
3.4 (a) and the Conversion Date) for the immediately preceding quarter
(or portion thereof) (each such quarter or portion thereof for which
the Unused Fee is payable hereunder being, herein referred to as an
"Unused Fee Calculation Period"), beginning with the first of such
dates to occur after the Closing Date.
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(b) Administrative Fees. The Borrower agrees to pay to the Agent,
for its own account, the fees referred to in the Agent's Fee Letter
(collectively, the "Agent's Fees").
3.6 Capital Adequacy. If any Lender 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 such Lender 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 such Lender's capital or
assets as a consequence of its commitments or obligations hereunder to a
level below that which such Lender could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then, upon notice
from such Lender to the Borrower, the Borrower shall be obligated to pay to
such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and
binding on the parties hereto.
3.7 Inability To Determine Interest Rate. If prior to the first day of
any Interest Period, the Agent 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 Agent shall give telecopy or telephonic notice thereof to the Borrower
and the Lenders as soon as practicable thereafter. If such notice is given
(a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans and (b) any Loans that
were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base
Rate Loans. Until such notice has been withdrawn by the Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower
have the right to convert Base Rate Loans to Eurodollar Loans.
3.8 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 Closing Date
shall make it unlawful for any Lender to make or maintain Eurodollar
Loans as contemplated by this Credit Agreement, (a) such Lender shall
promptly give written notice of such circumstances to the Borrower and the
Agent (which notice shall be withdrawn whenever such circumstances no
longer exist), (b) the commitment of such Lender hereunder to make
Eurodollar Loans, continue Eurodollar Loans as such and convert a Base
Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such
time as it shall no longer be unlawful for such Lender to make or maintain
Eurodollar Loans, such Lender shall then have a commitment
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only to make a Base Rate Loan when a Eurodollar Loan is requested and (c)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of
the then current Interest Periods with respect to such Loans 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.
3.9 Requirements of Law. If, after the date hereof, the adoption of or
any change in any Requirement of Law or in the interpretation or
application thereof applicable to any Lender, or compliance by any Lender
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 Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind whatsoever
with respect to any Eurodollar Loans made by it or its obligation to
make Eurodollar Loans, or change the basis of taxation of payments to
such Lender in respect thereof (except for (i) Non-Excluded Taxes
covered by Section 3.10 (including Non-Excluded Taxes imposed solely
by reason of any failure of such Lender to comply with its obligations
under Section 3.10(b)) 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 such Lender 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 such Lender which is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(c) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, upon notice to
the Borrower from such Lender, through the Agent, in accordance herewith, the
Borrower shall be obligated to promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduce any amount receivable, provided that, in any such case, the Borrower
may elect to convert the Eurodollar Loans made by such Lender hereunder to Base
Rate Loans by giving the Agent at least one Business Day's notice of such
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election, in which case the Borrower shall promptly pay to such Lender, upon
demand, without duplication, such amounts, if any, as may be required pursuant
to Section 3.11. If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall provide prompt notice thereof to the
Borrower, through the Agent, 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 such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Agent, 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 Loans
and all other amounts payable hereunder.
3.10 Taxes.
(a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and any 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, 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 any Lender 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 any Lender 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 such Lender, 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
such Lender, applicable lending office, branch or affiliate other than a
connection arising solely from such Lender having executed, delivered or
performed its obligations, or received payment under or enforced, this
Credit Agreement or any 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 Agent
or any Lender hereunder or under any Notes, (A) the amounts so payable to
the Agent or such Lender shall be increased to the extent necessary to
yield to the Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Credit Agreement and any Notes, provided,
however, that the Borrower shall be entitled to deduct and
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withhold any Non-Excluded Taxes and shall not be required to increase any
such amounts payable to any Lender that is not organized under the laws of
the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this subsection whenever
any Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as
possible thereafter the Borrower shall send to the Agent for its own
account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrower showing
payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Agent or any Lender 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
Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X) (i) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Agent (A) two (2) duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income taxes and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two (2) further
copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code,(i) represent
to the Borrower (for the benefit of the Borrower and the Agent) that it is
not a bank within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (ii) agree to furnish to the Borrower on or before the date
of any payment by the Borrower, with a copy to the Agent two (2) accurate
and complete original signed copies of
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Internal Revenue Service Form W-8, or successor applicable form certifying
to such Lender's legal entitlement at the date of such certificate to an
exemption from U.S. withholding tax under the provisions of Section 881(c)
of the Internal Revenue Code with respect to payments to be made under this
Credit Agreement and any Notes (and to deliver to the Borrower and the
Agent two (2) further copies of such form on or before the date it expires
or becomes obsolete and after the occurrence of any event requiring a
change in the most recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower or the Agent for
filing and completing such forms), and (iii) agree, to the extent legally
entitled to do so, upon reasonable request by the Borrower, to provide to
the Borrower (for the benefit of the Borrower and the Agent) such other
forms as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with respect to
payments under this Credit Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Agent. Each Person that shall become
a Lender or a participant of a Lender pursuant to subsection 11.3 shall,
upon the effectiveness of the related transfer, be required to provide all
of the forms certifications and statements required pursuant to this
subsection, provided that in the case of a participant of a Lender the
obligations of such participant of a Lender pursuant to this subsection (b)
shall be determined as if the participant of a Lender were a Lender except
that such participant of a Lender shall furnish all such required forms,
certifications and statements to the Lender from which the related
participation shall have been purchased.
(c) 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 Agent and each Lender,
their 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 Agent, a Lender or their
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 Agent, a Lender, or any of
their directors, officers, agents or employees.
3.11 Indemnity. The Borrower promises to indemnify each Lender and to hold
each Lender harmless from an loss
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which such Lender may sustain or incur (other than through such Lender's gross
negligence or willful misconduct) as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans 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 a Eurodollar Loan 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 Eurodollar Loans on a day which is not the last day of
an Interest Period with respect thereto. With respect to Eurodollar Loans, 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, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
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 Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender 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 3.11 shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable hereunder.
3.12 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan, each payment or prepayment of
principal of any Revolving Loan, each payment of interest on the Revolving
Loans, each payment of Unused Fees, each reduction of the Revolving
Committed Amount and each conversion or extension of any Revolving Loan,
shall be allocated pro rata among the Lenders in accordance with the
respective principal amounts of their outstanding Loans.
(b) Advances. Unless the Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount
that would constitute its ratable share of such borrowing available to the
Agent, the Agent may assume that such Lender is making such amount
available to the Agent, and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Agent by such Lender within the time
period specified therefor hereunder, such Lender shall pay to the Agent, on
demand, such amount with interest thereon at a rate equal to the Federal
Funds Rate for the period until such Lender makes such amount immediately
available to the Agent. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this
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subsection shall be conclusive in the absence of manifest error.
3.13 Sharing of Payments. The Lenders agree among themselves that, in the
event that any Lender shall obtain payment in respect of any Loan or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a participation theretofore sold, return
its share of that benefit (together with its share of any accrued interest
payable with respect thereto) to each Lender whose payment shall have been
rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or counterclaim,
with respect to such participation as fully as if such Lender were a holder of
such Loan or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Agent shall fail to remit to the Agent or any other Lender an amount payable by
such Lender or the Agent to the Agent or such other Lender pursuant to this
Credit Agreement on the date when such amount is due, such payments shall be
made together with interest thereon for each date from the date such amount is
due until the date such amount is paid to the Agent or such other Lender at a
rate per annum equal to the Federal Funds Rate. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section 3.13 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders under this Section 3.13 to
share in the benefits of any recovery on such secured claim.
3.14 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available funds,
without offset, deduction counterclaim or withholding of any find, at the
Agent's office specified in Schedule 2.1(a) not later than 2:00 P.M. (Charlotte,
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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
Agent 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 Agent (with notice to the Borrower). The Borrower shall, at
the time it makes any payment under this Credit Agreement, specify to the Agent
the Loans, Fees, interest or other amounts payable by the Borrower hereunder to
which such payment is to be applied (and in the event that it fails so to
specify, or if such application would be inconsistent with the terms hereof, the
Agent shall distribute such payment to the Lenders in such manner as the Agent
may determine to be appropriate in respect of obligations owing by the Borrower
hereunder, subject to the terms of Section 3.12 (a)). The Agent will distribute
such payments to such Lenders, if any such payment is received prior to 12:00
Noon (Charlotte, North Carolina time) on a Business Day in like funds as
received prior to the end of such Business Day and otherwise the Agent will
distribute such payment to such Lenders on the next succeeding Business Day.
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 in the case of Eurodollar Loans, 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,
except with respect to computation of interest on Base Rate Loans which (unless
the Base Rate is determined by reference to the Federal Funds Rate) shall be
calculated based on a year of 365 or 366 days, as appropriate. 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 Agent or any Lender 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
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys, fees) of each
of the Lenders in connection with enforcing its rights under the Credit
Documents or otherwise
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with respect to the Borrower's Obligations owing to such Lender;
FOURTH, to the payment of all of the Borrower's obligations consisting
of accrued fees and interest, FIFTH, to the payment of the outstanding
principal amount of the Borrower's Obligations;
SIXTH, 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 "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate then outstanding Loans) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and
"SIXTH" above.
3.15 Evidence of Debt. (a) Each Lender shall maintain an account or
accounts evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Credit Agreement. Each Lender will make
reasonable efforts to maintain the accuracy of its account or accounts and to
promptly update its account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section 11.3 (c)
hereof, and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from or for the account of the
Borrower and each Lender's share thereof. The Agent will make reasonable efforts
to maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain any
such account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation
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of the Borrower to repay the Loans made by such Lender in accordance with the
terms hereof.
SECTION 4
GUARANTY
4.1 The Guarantee. Each of the Guarantors hereby jointly and severally
guarantees to each Lender, each Affiliate of a Lender that enters into a Hedging
Agreement and the Agent as hereinafter provided the prompt payment of the
Borrower's obligations in full when due (whether at stated maturity, as a
mandatory prepayment, 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.
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).
4.2 Obligations Unconditional. The obligations of the Guarantors under
Section 4.1 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 guarantee 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 4.2 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 Lenders
(and any Affiliates of Lenders entering into Hedging Agreements) have been paid
in full, all Commitments under the Credit Agreement have been terminated and no
Person or Governmental Authority shall
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have any right to request any return or reimbursement of funds from the Lenders
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 guarantee 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;
(iv) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders 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 Agent or any Lender 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 guarantee of, or security for, any of the Borrower's
Obligations.
4.3 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
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or reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender 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.
4.4 Remedies. The Guarantors agree that, to the fullest extent
permitted by law, as between the Guarantors, on the one hand, and. the Agent and
the Lenders, on the other hand, the Borrower's Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 hereof (and shall be deemed
to have become automatically due and payable in the circumstances provided in
said Section 9.2) for purposes of Section 4.1 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 4.1.
4.5 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 4.5), 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) of
such Excess Payment (as defined below). The payment obligation of any Guarantor
to any Excess Funding Guarantor under this Section 4.5 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 4.5, 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)
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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 Closing Date (if any Guarantor becomes a party hereto subsequent to the
Closing Date, then for the purposes of this Section 4.5 such subsequent
Guarantor shall be deemed to have been a Guarantor as of the 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 Closing
Date).
4.6 Continuing Guarantee. The guarantee in this Section 4 is a continuing
guarantee, and shall apply to all Borrower's obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions. The obligation of the Lenders to enter into this
Credit Agreement and to make the initial Loans, whichever shall occur first,
shall be subject to satisfaction of the following conditions (in form and
substance acceptable to the Lenders):
(a) The Agent shall have received original counterparts of this Credit
Agreement executed by each. of the parties hereto;
(b) The Agent shall have received an appropriate original Committed
Note for each Lender, executed by the Borrower;
(c) The Agent 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 Agent;
(d) The Agent 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;
(e) The Agent shall have received a legal opinion of Holland & Knight,
counsel for the Credit Parties, dated as of
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the Closing Date and substantially in the form of Schedule 5.1(e)
(f) No material adverse change shall have occurred since December 31,
1995 in the condition (financial or otherwise), business, management or
prospects of the Borrower and its Subsidiaries taken as a whole;
(g) The Agent 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;
(h) The Agent shall have received a copy, certified by an officer of
the Borrower as true and complete, of the Subordinated Debt Agreement,
together with any amendments thereto;
(i) The Agent shall have received, for its own account and for the
accounts of the Lenders, all fees and expenses required by this Credit
Agreement or any other Credit Document to be paid on or before the Closing
Date; and
(j) The Agent shall have received such other documents, agreements or
information which may be reasonably requested by the Agent.
5.2 Conditions to all Extensions of Credit. The obligations of each Lender
to make, convert or extend any Loan (including the initial Loans) are subject to
satisfaction of the following conditions in addition to satisfaction on the
Closing Date of the conditions set forth in Section 5.1:
(i) The Borrower shall have delivered, an appropriate Notice of
Borrowing or Notice of Extension/Conversion;
(ii) The representations and warranties set forth in Section 6 shall
be, subject to the limitations set forth therein, true and correct in all
material respects as of such date (except for those which expressly relate
to an earlier date);
(iii) There shall not have been commenced against the Borrower or any
Guarantor 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;
(iv) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto;
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(v) No material adverse change shall have occurred since December 31,
1995 in the condition (financial or otherwise), business, management or
prospects of the Borrower and its Subsidiaries taken as a whole; and
(vi) Immediately after giving effect to the making of such Loan (and
the application of the proceeds thereof), the sum of the aggregate
principal amount of outstanding Revolving Loans shall not exceed the
Revolving Committed Amount.
The delivery of each Notice of Borrowing and each Notice of Extension/Conversion
shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (ii), (iii), (iv), (v) and
(vi) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 Financial Condition. (a) The audited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as of December 31, 1995 and the
audited consolidated statements of earnings and statements of cash flows for the
years ended December 31, 1995 and December 31, 1994 have heretofore been
furnished to each Lender. Such financial statements (including the notes
thereto)(i) have been audited by KPMG Peat Marwick, (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 consolidated financial condition, results of
operations and cash flows of the Borrower and its consolidated 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, 1995 and prior to the Closing Date
have heretofore been furnished to each Lender. 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, 1995 to and including the Closing
Date, except as disclosed on Schedule 6.1(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
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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
Lenders 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 each Lender, have been prepared in
accordance with SAP applied on a consistent basis (except as otherwise disclosed
to the Lenders). 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, 1996 and June
30, 1996, copies of which have heretofore been delivered to each Lender, have
been prepared in accordance with SAP applied on a consistent basis (except as
otherwise disclosed to the Lenders). All SAP Statements which have heretofore
been delivered to the Lenders 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.
6.2 No Change; Dividends. Since December 31, 1995, (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.
6.3 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.
6.4 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
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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
6.4, all of which have been obtained or made or have the status described in
such Schedule 6.4. 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).
6.5 No Legal Bar. 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
reasonably be expected to have a Material Adverse Effect, (b) will not violate
any provision of the Subordinated Debt Agreement, (c) 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 (d) will not violate or
conflict with any provision of any Credit Party's articles of incorporation or
by-laws.
6.6 No Material Litigation. Except as disclosed and described in Schedule
6.6 attached hereto, 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.
6.7 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. No
Default or Event of Default has occurred and is continuing.
6.8 Ownership of Property: Liens. Each of the Borrower and its Subsidiaries
has good record and marketable title in fee simple
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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.
6.9 No Burdensome Restrictions. Except as previously disclosed in writing
to the Lenders 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.
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.
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.
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(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(l) 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.
(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.
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 any
Lender or the Agent, the Borrower will furnish to the Agent and each Lender
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 Loans 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
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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 Loans) 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 (other than
RISCORP Asset management, Inc.) 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 on the
condition (financial or otherwise), operations, business, assets,
liabilities or prospects of any Insurance Subsidiary, 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.
(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 any Lender. For the purposes hereof the terms
"director", "executive officer" and "principal shareholder" (when used with
reference to any Lender) have the respective meanings assigned thereto in
Regulation 0 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, count or an other
Jurisdiction or
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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.
6.13 Subsidiaries. Schedule 6.13 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.
6.14 Purpose of Loans. The proceeds of the Revolving Loans hereunder shall
be used solely by the Borrower for the working capital and general corporate
purposes of the Borrower and its Wholly Owned Subsidiaries (other than RISCORP
Asset Management, Inc.). The proceeds of the Term Loan shall be used solely by
the Borrower to repay in full the Revolving Loans.
6.15 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
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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.
6.16 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.
SECTION 7
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 of the Commitments
hereunder shall have terminated:
7.1 Information Covenants. The Borrower will furnish, or cause to be
furnished, to the Agent:
(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
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its Subsidiaries, a consolidated 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
Agent 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.
(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.
(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 Agent, 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
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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) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of the chief financial officer of the Borrower; substantially in the form
of Schedule 7.1(c), (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.
(d) Actuarial Report. Within the period for delivery of the annual
financial statements provided in Section 7.1(a)(ii), an Actuarial Report
prepared by an independent actuary reasonably acceptable to the Agent and
certified as to such Insurance Subsidiary's reserve position as of such
fiscal year end by such independent actuary.
(e) 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.
(f) 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.
(g) Reports. Promptly upon 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 Agent, 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
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successor agencies or authorities concerning environmental, health or
safety matters.
(h) Notices. Upon obtaining knowledge thereof, the Borrower will give
written notice to the Agent immediately of (a) the occurrence of an event
or condition consisting 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 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.
(i) ERISA. Upon obtaining knowledge thereof, the Borrower will give
written notice to the Agent 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 Agent and the Lenders with
such additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of
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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).
(j) 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
Agent or the Required Lenders may reasonably request.
7.2 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 8.4(a), Section
8.4(b) or Section 8.4(c) or (b) as would not, in the reasonable opinion of
the Agent, result in a Material Adverse Effect.
7.3 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).
7.4 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.
7.5 Payment of Taxes and Other Indebtedness. Except as otherwise
provided pursuant to the terms of the definition of "Permitted Liens" set
forth in Section 1.1, the Borrower will, and will cause each of its
Subsidiaries to, pay and discharge (i) all taxes, assessments and
governmental charges for 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.
7.6 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
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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., provided that up to $3,000,000 in
Reinsurance Agreements may be with reinsurers that are rated less than
"A-" but no worse than "B" by A.M. Best & Company, Inc.
7.7 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.
7.8 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.
7.9 Use of Proceeds. The Borrower will use the proceeds of the
Loans solely for the purposes set forth in Section 6.14.
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 Agent, 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 Agent 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.
7.11 Financial Covenants.
(a) Consolidated Leverage Ratio. As of the last day of each
fiscal quarter, the Borrower shall cause the Consolidated
Leverage Ratio to be no greater than 0.45 to 1.00.
(b) Consolidated Current Maturities Coverage Ratio. The
Borrower shall cause the Consolidated Current Maturities
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Coverage Ratio as of the last day of each fiscal quarter to be at least:
Period Ratio
------ -----
Each fiscal quarter end
occurring from the Closing
Date through and including
September 30, 1997 1.2 to 1.0
Each fiscal quarter end
occurring from October 1, 1997
through and including September
30, 1998 1.5 to 1.0
Each fiscal quarter end
occurring from October 1,
1998 and thereafter 1.2 to 1.0
(c) Consolidated Net Written Premiums to Statutory Surplus Ratio. The
Borrower shall cause the Consolidated Net Written Premiums to Statutory
Surplus Ratio to be no greater than 3.0 to 1.0 as of the last day of each
fiscal year of its Insurance Subsidiaries.
(d) Risk Based Capital.
(i) The Borrower shall 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 one
hundred twenty-five percent (125%).
(ii) Notwithstanding the subsection (i) hereof, the Borrower
shall cause those Insurance Subsidiaries representing 75%, in the
aggregate, of Consolidated Net Written Premiums to maintain a
consolidated 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 one
hundred fifty-percent (150%).
7.12 Additional Credit Parties. At any time that the Non-Guarantor
Subsidiaries shall at any time have total assets equal to or greater than
$500,000, in any instance, or $2,000,000, collectively, then the Borrower will
promptly notify the Agent
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thereof, and promptly cause one or more Non-Guarantor Subsidiaries to
become a "Guarantor" hereunder by
(A) execution of a Joinder Agreement in substantially the same
form as Schedule 7.12 attached hereto;
(B) delivery of such other documentation as the Agent 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 Agent,
such that immediately after the joinder of such Subsidiary or Subsidiaries,
the remaining Non-Guarantor Subsidiaries shall not have total assets equal
to or greater than $500,000, in any instance, or $2,000,000, collectively.
7.13 Ownership of Subsidiaries. Except to the extent otherwise
provided in Section 8.4 (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.
7.14 Dividends. 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 Loans and all other indebtedness or obligations of any
and every kind owing by the Borrower to the Agent and/or any of the Lenders
hereunder 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 Management Agreements, 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 8
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 of the
Commitments hereunder shall have terminated:
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8.1 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 8.1 (and renewals, refinancings and extensions
thereof on terms, and conditions no less favorable to such Person than
such existing Indebtedness);
(c) Intercompany Indebtedness incurred in the ordinary course of
business and consistent with the past practices of the Credit Parties
or for cash management purposes;
(d) obligations of the Borrower in respect of any interest rate
protection agreement or foreign currency exchange agreement
(including, but not limited to, the Hedging Agreements) entered into
in order to manage existing or anticipated interest rate or exchange
rate risks and not for speculative purposes; provided that, so long as
any Subordinated Indebtedness shall remain outstanding, Indebtedness
permitted under this Section 8.1(d) may only be incurred to the extent
allowed under Section 8.8(a)(i)(C) of the Subordinated Debt Agreement;
(e) Subordinated Indebtedness; and
(f) in addition to the Indebtedness otherwise permitted by this
Section 8.1,
(i) other Indebtedness hereafter incurred by the Borrower
provided that (A) the loan documentation with respect to such
Indebtedness shall not contain covenants or default provisions
relating to the Borrower that are more restrictive than the
covenants and default provisions contained in the Credit
Documents, (B) on the date of incurrence of such Indebtedness
after giving effect on a Pro Forma Basis to the incurrence of
such Indebtedness and to the concurrent retirement of any other
Indebtedness, if any, of the Borrower or any of its Subsidiaries,
no Default or Event of Default would exist hereunder and (C) so
long as any Subordinated Indebtedness shall remain outstanding,
Indebtedness permitted under subsection (f)(i) may only be
incurred to the extent allowed under Section 8.8 (b) of the
Subordinated Debt Agreement; and
(ii) Guaranty obligations of any Subsidiary of the Borrower
that is a Guarantor with respect to any Indebtedness of the
Borrower permitted under this Section 8.1(f).
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8.2 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, except for Permitted Liens.
8.3 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 Closing Date.
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrower will not, nor will it permit any of its Subsidiaries to:
(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
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, and (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;
(d) except as otherwise permitted by Section 8.4(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, unless (i) such Person is engaged in a
business or businesses substantially similar to any business currently
conducted by the Borrower or any of its Subsidiaries, (ii) such
acquisition is approved by the board of directors of such Person,
(iii) after giving effect on a Pro Forma Basis to any such
acquisition:(including but not limited to any
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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 and (iv) so long as any Subordinated Indebtedness
shall remain outstanding, acquisitions permitted under this Section
8.4(d) may only be undertaken to the extent allowed under Section 8.11
of the Subordinated Debt Agreement.
8.5 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.
8.6 Restricted Payments. 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), (c) the
Subsidiaries of RISCORP Management may make dividends or other
distributions payable to RISCORP Management (directly or indirectly through
Subsidiaries of RISCORP Management) and (d) the Borrower may make
Restricted Payments if (i) the Subordinated Indebtedness shall have been
repaid in full, (ii) the Subordinated Debt Agreement shall have been
terminated and (iii) after giving effect on a Pro Forma Basis to such
Restricted Payment (including but not limited to 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.
8.7 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 (including, without limitation, the Subordinated
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 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, provided that the Borrower may use cash
proceeds
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received from the issuance of common stock to prepay the 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.
8.8 Transactions with Affiliates. 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 Director's of the Borrower, and (c) with respect
to any transaction (or series of related transactions) involving aggregate
payments or commitments in excess of $7,000,000, 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.
8.9 Fiscal Year. The Borrower will not, nor will it permit any of its
Subsidiaries to, change its fiscal year.
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, (ii) the Subordinated Debt Agreement, as in
existence on the date hereof, and (iii) this Credit Agreement and the other
Credit Documents.
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.
8.12 Sale Leasebacks. The Borrower will not, nor will it permit any of
its Subsidiaries to, directly or indirectly, become.
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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, (i) which such Person has sold or transferred or is to sell or
transfer to any other Person other than a Credit Party or (ii) 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.
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.
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.
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 9
EVENTS OF DEFAULT
9.1 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 defaults shall continue for five (5) or
more Business Days, in the payment when due of any interest on the
Loans or of any
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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 here to 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 7.2, 7.9, 7.11,
7.12 or 8.1 through 8.15, inclusive, or
(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 9.1) contained in
this Credit Agreement and such default shall continue unremedied
for a period of at least 45 days after the earlier of a
responsible officer of a Credit Party becoming aware of such
default or notice thereof by the Agent; 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 8.4 (a), Section 8.4 (b) or Section 8.4 (c), any
Credit Document shall fail to be in. full force and effect or to give
the Agent and/or the Lenders 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 8.4 (a), Section 8.4 (b) or Section 8.4(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
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(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 Subordinated Debt Agreement; 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) in excess
of $1,000,000 in the aggregate for the Borrower and its
Subsidiaries taken as a whole, (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 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) Subordinated Indebtedness.
(i) The violation by any party to the Subordinated Debt
Agreement of any provision of Section 10 thereof, or the ceasing
of such agreement to be in full force and effect; or
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(ii) The Borrower shall make any payments of principal in
respect of the Subordinated Indebtedness prior to the repayment
in full of the Loans, other than as permitted under Section 8.7;
or
(j) Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving an aggregate
liability in excess of $2,000,000 (or, if less and so long as the
Subordinated Indebtedness shall remain outstanding, the aggregate
amount of judgment liabilities permitted under Section 11.1(j) of the
Subordinated Debt Agreement) and any such judgments or decrees shall
not (i) have been vacated, discharged or stayed or bonded pending
appeal within 45 days from the entry therefor (ii) have been paid or
fully covered by insurance provided by a carrier who has acknowledged
coverage; or
(k) 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 Agent, likely to result in the termination of such Plan
for purposes of Title IV of ERISA; (3) a Termination Event shall occur
with respect to a Multiemployer Plan or Multiple Employer Plan, which
is, in the reasonable opinion of the Agent, 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(l) 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
(1) Ownership. There shall occur a Change of Control.
9.2 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 Required Lenders or cured to the
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satisfaction of the Required Lenders (pursuant to the voting procedures in
Section 11.6), the Agent shall, upon the request and direction of the
Required Lenders, 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 the unpaid principal of and any
accrued interest in respect of all Loans and any and all other
indebtedness or obligations of any and every kind owing by the
Borrower to the Agent and/or any of the Lenders 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 9.1(f) shall occur, then the Commitments shall automatically
terminate and all Loans all accrued interest in respect thereof, all
accrued and unpaid fees and other indebtedness or obligations owing to the
Agent and/or any of the Lenders hereunder automatically shall immediately
become due and payable without the giving of any notice or other action by
the Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment. Each Lender hereby designates and appoints
NationsBank, N.A. (South) as administrative agent (in such capacity as
Agent hereunder, the "Agent") of such Lender to act as specified herein and
the other Credit Documents, and each such Lender hereby authorizes the
Agent as the agent for such Lender, to take such action on its behalf under
the provisions of this Credit Agreement and the other Credit Documents and
to exercise such powers and perform such duties as are expressly delegated
by the terms hereof and of the other Credit Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere herein and in the other Credit
Documents, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein And therein, or any fiduciary relationship
with any Lender, and no implied covenants, obligations or liabilities
functions, responsibilities, duties, shall be read into this Credit
Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the
benefit of the Agent and the Lenders and none of the, Credit Parties shall
have any rights as a third party beneficiary of the provisions hereof. In
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performing its functions and duties under this Credit Agreement and the
other Credit Documents, the Agent shall act solely as agent of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
or relationship of agency or trust with or for any Credit Party or any of
their respective Affiliates.
10.2 Delegation of Duties. The Agent may execute any of their
respective duties hereunder or under the other Credit Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions. The Agent and its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall not be (i) liable
for any action lawfully taken or omitted to be taken by it or such Person
under or in connection herewith or in connection with any of the other
Credit Documents (except for its or such Person's own gross negligence
or willful misconduct), or (ii) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made
by any of the Credit Parties contained herein or in any of the other
Credit Documents or in any certificate, report, document, financial
statement or other written or oral statement referred to or provided for
in, or received by the Agent under or in connection herewith or in
connection with the other Credit Documents, or enforceability or
sufficiency therefor of any of the other Credit Documents, or for any
failure of any Credit Party to perform its obligations hereunder or
thereunder. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents
or for any representations, warranties, recitals or statements made herein
or therein or made by the Borrower or any Credit Party in any written or
oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents in connection herewith or
therewith furnished or made by the Agent to the Lenders or by or on behalf
of the Credit Parties to the Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements contained herein or
therein or as to the use of the proceeds of the Loans or of the existence
or possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties or any of their
respective Affiliates.
10.4 Reliance on Communications. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to any of the Credit Parties, independent accountants and other
experts
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selected by the Agent with reasonable care). The Agent may deem and treat
the Lenders as the owner of their respective interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent in accordance with Section
11.3(b) hereof. The Agent shall be fully justified in failing or refusing
to take any action under this Credit Agreement or under any of the other
Credit Documents unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or under any
of the other Credit Documents in accordance with a request of the Required
Lenders (or to the extent specifically provided in Section 11.6, all the
Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors
and assigns).
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or a Credit
Party referring to the Credit Document, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the
Required Lenders.
10.6 Non-Reliance on Agent an Lenders. Each Lender expressly
acknowledges that each of the Agent and its officers, directors, employees,
agents, attorneys-in-fact or affiliates has not made any representations or
warranties to it and that no act by the Agent or any affiliate thereof
hereinafter taken, including any review of the affairs of any Credit Party
or any of their respective Affiliates, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial
and other conditions, prospects and creditworthiness of the Borrower, the
other Credit Parties or their respective Affiliates and made its own
decision to make its Loans hereunder and enter into this Credit Agreement.
Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking
action under this Credit Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of
the Borrower, the Parties and their respective Affiliates. Except for
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notices, reports and other documents expressly required to be furnished to
the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Borrower, the other Credit
Parties or any of their respective Affiliates which may come into the
possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to
their respective Commitments (or if the Commitments have expired or been
terminated, in accordance with the respective principal amounts of
outstanding Loans of the Lenders), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at
any time (including without limitation at any time following the final
payment of all of the obligations of the Borrower hereunder and under the
other Credit Documents) be imposed on, incurred by or asserted against the
Agent in its capacity as such in any way relating to or arising out of this
Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any
purpose shall, in the opinion of the Agent, be insufficient or become
impaired, the Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this Section shall survive the
repayment of the Loans and other obligations under the Credit Documents and
the termination of the Commitments hereunder.
10.8 Agent in its Individual Capacity. The Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower, its Subsidiaries or their respective Affiliates
as though the Agent were not the Agent hereunder. With respect to the Loans
made by and all obligations of the Borrower hereunder and under the other
Credit Documents, the Agent shall have the same rights and powers under,
this Credit Agreement as any Lender and may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" shall include the
Agent in its individual capacity.
10.9 Successor Agent. The Agent may, at any time resign upon 20 days'
written notice to the Lenders, and be removed with or without cause by the
Required Lenders upon 30 days written notice to the Agent. Upon any such
resignation or removal, the Required Lenders shall have the right to
appoint a successor Agent. If no
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successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the notice of
resignation or notice of removal, as appropriate, then the retiring Agent
shall select a successor Agent provided such successor is a Lender
hereunder or a commercial bank organized under the laws of the United
States of America or of any State thereof and has a combined capital and
surplus of at least $400,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations as Agent, as appropriate, under this Credit
Agreement and the other Credit Documents and the provisions of this Section
10.9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 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 Agent, set forth below, and, in the
case of the Lenders, set forth on Schedule 2.1(a), or at such other address
as such party may specify by written notice to the other parties hereto:
if to the Borrower or the Guarantors:
RISCORP, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000-0000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxxxx
Sarasota City Center, Suite 1100
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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if to the Agent:
NationsBank, N.A. (South)
Independence center, 15th Floor
NCl-001-15-04
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Agency Services
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
NationsBank, N.A. (South)
0000 Xxxx Xxxxxx, Xxxxx 000
XX0-000-00-00
Xxxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. XxXxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
11.2 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, each Lender 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 such Lender
(including, without limitation branches, agencies or Affiliates of such Lender
wherever located) to or for the credit or the account of any Credit Party
against obligations and liabilities of such Person to such Lender hereunder,
under the Notes, the other Credit Documents or otherwise, irrespective of
whether such Lender 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 such Lender subsequent thereto. Any Person purchasing a.
participation in the Loans and Commitments hereunder pursuant to Section 3.13 or
Section 11.3(d) may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
(a) Generally This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; Provided that none of
the Credit Parties may assign or transfer any of its interests without
prior written consent of the Lenders; provided further that the rights
of each Lender to transfer, assign or grant participations in its
rights and/or obligations hereunder shall be limited as set forth in
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this Section 11.3, Provided however that nothing herein shall prevent
or prohibit any Lender from (i) pledging its Loans hereunder to a
Federal Reserve Bank in support of borrowings made by such Lender from
such Federal Reserve Bank, or (ii) granting assignments or selling
participations in such Lender's Loans and/or Commitments hereunder to
its parent company and/or to any Affiliate or Subsidiary of such
Lender.
(b) Assignments. Each Lender may assign all or a portion of its
rights and obligations hereunder, pursuant to an assignment agreement
substantially in the form of Schedule 11.3(b), to (i) any Lender or
any Affiliate or Subsidiary of a Lender, or (ii) any other commercial
bank, financial institution or "accredited investor" (as defined in
Regulation D of the Securities and Exchange Commission) reasonably
acceptable to the Agent and, so long as no Default or Event of Default
has occurred and is continuing, the Borrower; Provided that (i) any
such assignment (other than any assignment to an existing Lender)
shall be in a minimum aggregate amount of $5,000,000 (or, if less, the
remaining amount of the Commitment being assigned by such Lender) of
the Commitments and in integral multiples of $1,000,000 above such
amount and (ii) each such assignment shall be of a constant, not
varying, percentage of all such Lender's rights and obligations under
this Credit Agreement. Any assignment hereunder shall be effective
upon delivery by the assigning Lender to the Agent of written notice
of the assignment together with a transfer fee of $3,500 payable to
the Agent for its own account from and after the later of W the
effective date specified in the applicable assignment agreement and
(ii) the date of recording of such assignment in the Register pursuant
to the terms of subsection (c) below. The assigning Lender will give
prompt notice to the Agent and the Borrower of any such assignment.
Upon the effectiveness of any such assignment (and after notice to,
and (to the extent required pursuant to the terms hereof), with the
consent of, the Borrower as provided herein), the assignee shall
become a "Lender" for all purposes of this Credit Agreement and the
other Credit Documents and, to the extent of such assignment, the
assigning Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned. Along
such lines the Borrower agrees that upon notice of any such assignment
and surrender of the appropriate Note or Notes, it will promptly
provide to the assigning Lender and to the assignee separate
promissory notes in the amount of their respective interests
substantially in the form of the original Note (but with notation
thereon that it is given in substitution for and replacement of the
original Note or any replacement notes thereof). By executing and
delivering an assignment agreement in accordance with this Section
11.3(b), the assigning Lender thereunder and the assignee thereunder
shall be deemed to confirm to and agree with each other and the other
parties hereto as follows: (i) such assigning Lender, warrants that it
is the legal and beneficial owner of the interest being assigned
thereby free and clear of an adverse
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claim; (ii) except as set forth in clause (i) above, such assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Credit Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto or the
financial condition of any Credit Party or any of their respective
Affiliates or the performance or observance by any Credit Party of any
of its obligations under this Credit Agreement, any of the other
Credit Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee represents and
warrants that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a copy of
this Credit Agreement, the other Credit Documents and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such assignment agreement;
(v) such assignee will independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Credit Agreement and the other Credit Documents;
(vi) such assignee appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers under this Credit
Agreement or any other Credit Document as are delegated to the Agent
by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender. Notwithstanding the
provisions of Section 11.5, each assigning Lender shall pay any and
all fees and expenses incurred in connection with any assignments made
by it pursuant to this Section 11.3(b).
(c) Maintenance of Register. The Agent shall maintain at one of
its offices in Charlotte, North Carolina a copy of each Lender
assignment agreement delivered to it in accordance with the terms of
subsection (b) above and a register for the recordation of the
identity of the principal amount, type and Interest Period of each
Loan outstanding hereunder, the names, addresses and the Commitments
of the Lenders pursuant to the terms hereof from time to time (the
"Register"). The Agent will make reasonable efforts to maintain the
accuracy of the Register and to promptly update the Register from time
to time as necessary. The entries in the Register shall be conclusive
in the absence of manifest error and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of
this Credit Agreement. The Register shall be available for inspection
by the Borrower
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and each Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(d) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests
and obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Credit Agreement (such
selling Lender's obligations under the Credit Documents remaining
unchanged) and the participant shall not constitute a Lender
hereunder, (ii) no such participant shall have, or be granted, rights
to approve any amendment or waiver relating to this Credit Agreement
or the other Credit Documents except to the extent any such amendment
or waiver would (A) reduce the principal" of or rate of interest on or
Fees in respect of any Loans in which the participant is
participating, (B) postpone the date fixed for any payment of
principal (including extension of the Conversion Date, the Termination
Date or the date of any mandatory prepayment), interest or Fees in
which the participant is participating, or (C) except as expressly
provided in the Credit Documents, release any Guarantor from its
guaranty obligations hereunder, and (iii) sub-participations by the
participant (except to an affiliate, parent company or affiliate of a
parent company of the participant) shall be prohibited. In the case of
any such participation, the participant shall not have any rights
under this Credit Agreement or the other Credit Documents (the
participant's rights against the selling Lender in respect of such
participation to be those set forth in the participation agreement
with such Lender creating such participation) and all amounts payable
by the Borrower hereunder shall be determined as if such Lender had
not sold such participation, provided, however, that such participant
shall be entitled to receive additional amounts under Sections 3.6,
3.9, 3.10 and 3.11 on the same basis as if it were a Lender.
11.4 No Waiver; Remedies Cumulative. No failure or delay on the part
of the Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing
between the Agent or any Lender 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 Agent or any Lender 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 Agent or the
Lenders to any other or further action in any circumstances without notice
or demand.
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11.5 Payment of Expenses, etc. The Borrower agrees to: (i) pay all
reasonable out-of-pocket costs and expenses (A) of the Agent 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 Xxxxx & Xxx Xxxxx, PLLC,
special counsel to the Agent) 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 Agent and the Lenders 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 Agent and each of the Lenders); (ii) pay and hold each
of the Lenders harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and
save each of the Lenders 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 such Lender) to pay such taxes; and (iii) indemnify
each Lender, 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 any
Lender is a party thereto) related to the entering into and/or performance
of any Credit Document or the use of proceeds of any Loans (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, damages or expenses to the extent incurred by reason of gross
negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 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 Required Lenders and the Borrower, provided
that no such amendment, change, waiver, discharge or termination shall,
without the consent of each Lender:
(i) extend the final maturity of any Loan, or any portion
thereof;
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(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) on any Loan or fees
hereunder;
(iii) reduce the principal amount on any Loan, or increase the
Commitments of the Lenders over the amount thereof in effect (it being
understood and agreed that a waiver of any Default or Event of Default
or of a mandatory reduction in the total commitments shall not
constitute a change in the terms of any Commitment of any Lender);
(iv) except as the result of or in connection with a dissolution,
merger or disposition of a Subsidiary permitted by Section 8.4(a),
Section 8.4(b) or Section 8.4(c), release all or substantially all of
the Guarantors from the guaranty obligations hereunder;
(v) amend, modify or waive any provision of this Section 11.6 or
Section 3.6, 3.10, 3.11, 3.12, 3.13, 5.1, 5.2, 9.1(a), 11.2., 11.3,
11.5 or 11.9;
(vi) reduce any percentage specified in, or otherwise modify, the
definition of "Required Lenders;" or
(vii) consent to the assignment or transfer by the Borrower (or
any Guarantor) of any of its rights and obligations under (or in
respect of) the Credit Documents to which it is a party.
No provision of Section 10 may be amended without the consent of the
Agent.
11.7 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.
11.8 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.
11.9 Survival. All indemnities set forth herein, including, without
limitation, in Section 3.9, 3.11, 10.7 or 11.5 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.
11.10 Governing Law; Submission to Jurisdiction; Venue.
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(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 FLORIDA. Any legal
action or proceeding with respect to this Credit Agreement or any
other Credit Document may be brought in the courts of the State
of Florida in Sarasota County, or of the United, States for the
Middle District of Florida, and, by execution and delivery of
this Credit Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the Credit Parties further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices
pursuant to Section 11.1, such service to become effective three
(3) days after such mailing. Nothing herein shall affect the
right of the Agent to serve process in any other manner permitted
by law or to commence legal proceedings or to otherwise proceed
against any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Credit Agreement or any other
Credit Document brought in the courts referred to in
subsection (a) hereof and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought
in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF RELATING TO THIS CREDIT AGREEMENT,
ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11.11 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.
11.12 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.
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11.13 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 Agent, and the
Agent shall have received copies hereof (telefaxed or otherwise) which,
when taken together, bear the signatures of each Lender, and thereafter
this Credit Agreement shall be binding upon and inure to the benefit of the
Borrower, the Guarantors, the Agent and each Lender and their respective
successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans or any
other amounts payable hereunder or under any of the other Credit Documents
shall remain outstanding and until all of the Commitments hereunder shall
have expired or been terminated.
11.14 Confidentiality. The Agent and the Lenders agree to keep
confidential (and to cause their respective affiliates, officers,
directors, employees, agents and representatives to keep confidential) all
information, materials and documents furnished to the Agent or any such
Lender by or on behalf of any Credit Party (whether before or after the
Closing Date) which relates to the Borrower or any of its Subsidiaries (the
"Information"). Notwithstanding the foregoing, the Agent and each Lender
shall be permitted to disclose Information (i) to its affiliates, officers,
directors, employees, agents and representatives in connection with its
participation in any of the transactions evidenced by this Credit Agreement
or any other Credit Documents or the administration of this Credit
Agreement or any other Credit Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal
process, or requested by any Governmental Authority; (iii) to the extent
such Information (A) becomes publicly available other than as a result of a
breach of this Credit Agreement or any agreement entered into pursuant to
clause (iv) below, (B) becomes available to the Agent or such Lender on a
non-confidential basis from a source other than o Credit Party or (C) was
available to the Agent or such Lender on o non-confidential basis prior to
its disclosure to the Agent or such Lender by a Credit Party; (iv) to any
assignee or participant (or prospective assignee or participant) so long as
such assignee or participant (or prospective assignee or participant) first
specifically agrees in a writing furnished to and for the benefit of the
Credit Parties to be bound by the terms of this Section 11.14; or (v) to
the extent that the Borrower shall have consented in writing to such
disclosure. Nothing set forth in this Section 11.14 shall obligate the
Agent or any Lender to return any materials furnished by the Credit
Parties.
11.15 Source of Funds. Each of the Lenders hereby represents and
warrants to the Borrower that at least one of the following statements is
an accurate representation as to the source of funds to be used by such
Lender in connection with the financing hereunder:
(a) no part of such funds constitutes assets allocated to any
separate. account maintained by such Lender in
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which any employee benefit plan (or its related trust) has any
interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such
Lender has disclosed to the Borrower the name of each employee benefit
plan whose assets in such account exceed 10% of the total assets of
such account as of the date of, such purchase (and, for purposes of
this subsection (b), all employee benefit plans maintained by the same
employer or employee organization are deemed to be a single plan); or
(c) such funds constitute assets of one or more specific benefit plans
which such Lender has identified in writing to the Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and
"separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
11.16 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 Page to Follow]
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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: RISCORP, INC.,
a Florida corporation
By: /s/ Xxxxxxx Xxxx
--------------------------------
Name: Xxxxxxx Xxxx
Title: Vice President of Treasury
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GUARANTORS: RISCORP ACQUISITION, INC.,
a Florida corporation
RISCORP OF FLORIDA, INC.,
a Florida corporation
RISCORP SERVICES, INC.,
a Florida corporation
RISCORP MANAGEMENT SERVICES, INC.,
a Florida corporation
RISCORP WEST, INC.,
an Oklahoma corporation
RISCORP OF VIRGINIA, INC.,
a Virginia corporation
RISCORP OF NORTH CAROLINA, INC.,
a North Carolina corporation
RISCORP INSURANCE SERVICES, INC.,
a Florida corporation
RISCORP MANAGED CARE SERVICES, INC.,
a Florida corporation
RISCORP OF ILLINOIS, INC.,
an Illinois corporation
SARASOTA INTERNATIONAL RISK AND INSURANCE
SERVICES, INC., a Florida corporation
SARASOTA CLAIMS AND INSURANCE SERVICES
CORPORATION, a Florida corporation
COMPSOURCE ACQUISITION, INC.,
a Florida corporation
COMPSOURCE, INC.,
a North Carolina corporation
INDEPENDENT ASSOCIATION ADMINISTRATORS
INCORPORATED, a Florida corporation
By: /s/ Xxxxxxx Xxxx
---------------------------------------
Name: Xxxxxxx Xxxx
Title: Vice President of Treasury of
each of the above Guarantors
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LENDERS: NATIONSBANK, N.A. (SOUTH),
individually in its capacity as a
Lender and in its capacity as Agent
By /s/ Xxxx X. XxXxxxxx
-----------------------------------------
Name: Xxxx X. XxXxxxxx
Title: Senior Vice President
SOUTHTRUST BANK OF ASSOCIATION
By Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President
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