<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
PXRE Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
December 30, 1998
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Date of Report (Date of earliest event reported)
<TABLE>
<CAPTION>
Delaware 0-15428 06-1183996
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<S> <C> <C>
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
</TABLE>
399 Thornall Street, Fourteenth Floor, Edison, NJ 08837
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(Address of principal executive offices) (Zip Code)
(732) 906-8100
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
<PAGE>
Item 5. Other Events.
In December 1998 PXRE Corporation ("PXRE") entered into a Credit
Agreement dated as of December 30, 1998 (the "Credit Agreement") with First
Union National Bank ("First Union") as Agent and as a Lender, pursuant to which
First Union and additional Lenders which may become parties thereto agree to
make available to PXRE a revolving credit facility. As at December 31, 1998,
PXRE had outstanding borrowings under the Credit Agreement of $50,000,000, the
net proceeds of which were contributed to the capital of PXRE's wholly-owned
subsidiary PXRE Reinsurance Company ("PXRE Reinsurance"). Loans under the Credit
Agreement bear interest at an annual rate equal to First Union's base rate, as
in effect from time to time, for base rate loans or at an annual rate equal to
.875% over First Union's Eurodollar rate for periods of 30, 60, 90 or 180 days
for LIBOR loans. In connection with the Credit Agreement, PXRE and First Union
entered into an interest rate swap which, effective December 31, 1998, has the
intended effect of converting such variable rate borrowings by PXRE into a fixed
rate borrowing at an annual interest rate of 6.215%. Commitments under the
Credit Agreement terminate on March 31, 2005 and are subject to annual
reductions of 13 1/3% commencing March 31, 2000 and 33 1/3% on March 31, 2005,
and, unless due or paid sooner, the aggregate principal of the loans are due and
payable in full on March 31, 2005.
The Credit Agreement contains covenants which, among other
things, limit the ability of PXRE and its subsidiaries (including PXRE
Reinsurance, Transnational Insurance Company and PXRE Limited): (a) to incur
additional Indebtedness (other than certain permitted Indebtedness); (b) to
create Liens upon their properties or assets (other than Permitted Liens); (c)
to sell, transfer or otherwise dispose of their assets, business or properties
(other than certain permitted dispositions); (d) to make additional Investments
(other than certain permitted Investments, including Permitted Acquisitions and
other Investments in compliance with, among other things, applicable law and the
limitations set forth in the investment policy of PXRE Reinsurance in effect on
December 30, 1998 and not exceeding specified limits); (e) to pay dividends or
repurchase stock if after giving effect thereto a Default or Event of Default
exists or the Fixed Charge Coverage Ratio would be less than 1.5 to 1.0; (f) to
enter into certain transactions with Affiliates; (g) to engage in any business
other than (1) the businesses engaged in on December 30, 1998 and businesses and
activities reasonably related thereto or (2) in the case of any Insurance
Subsidiary, the sale of any property and casualty insurance or reinsurance
products; (h) to enter into or remain a party to certain ceded reinsurance
agreements (1) with certain reinsurers that are neither rated "A-" or better by
A. M. Best & Company ("A. M. Best") nor have financial strength ratings of "A-"
or better by Standard & Poor's or Moody's unless such reinsurers are Lloyd's
syndicates and Lloyd's maintains a rating of "A-" or better by A. M. Best or
Standard & Poor's or such reinsurers have provided appropriate collateral in
respect of their obligations, or (2) which constitute Surplus Relief Reinsurance
Agreements and which increase Combined Statutory Capital and Surplus by more
than 5% as of the most recent fiscal year end; or (i) to consolidate, merge or
otherwise combine (or agree to do any of the foregoing) unless, among other
things, (1) PXRE is the surviving entity in such merger or consolidation, (2)
such merger or consolidation constitutes a Permitted Acquisition and the
conditions and
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requirements of the Credit Agreement are complied with and (3) immediately
thereafter no Default or Event of Default exists. The Credit Agreement also
requires PXRE and PXRE Reinsurance where applicable to meet Leverage Ratio,
Fixed Charge Coverage Ratio, Risk-Based Capital Ratio and Combined Statutory
Surplus requirements. As at December 31, 1998 PXRE was in compliance with the
covenants contained in the Credit Agreement.
The Credit Agreement enumerates various Events of Default,
including if: (1) any Person or group becomes the "beneficial owner" of
securities of PXRE representing 20% or more of the combined voting power of the
then outstanding securities of PXRE ordinarily having the right to vote in the
election of directors; or (2) the Board of Directors of PXRE ceases to consist
of a majority of the individuals who constituted the Board as of December 30,
1998 or who subsequently become members after having been nominated, or
otherwise approved in writing, by at least a majority of individuals who
constituted the Board as of December 30, 1998 (or their approved replacements).
A copy of the Credit Agreement is attached hereto as Exhibit 4.8 and is
incorporated herein by reference.
<TABLE>
<CAPTION>
Item 7. Financial Statements and Exhibits.
----------------------------------
<S> <C>
(c) Exhibits.
<CAPTION>
Number Exhibit
------ -------
<S> <C> <C>
4.8 Credit Agreement dated as of December 30,
1998 among PXRE Corporation, the banks and
financial institutions listed on the
signature pages thereto or that subsequently
become parties thereto (collectively, the
"Lenders") and First Union National Bank
("First Union") as agent for the Lenders
(attached hereto as Exhibit 4.8).
</TABLE>
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PXRE CORPORATION
Dated: January 8, 1999 By: /s/ Sanford M. Kimmel
---------------------------------------
Sanford M. Kimmel
Its Senior Vice President, Treasurer
and Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------- ----
<S> <C> <C>
4.8 Credit Agreement dated as of December 30, 1998
among PXRE Corporation, the banks and financial
institutions listed on the signature pages thereto
or that subsequently become parties thereto
(collectively, the "Lenders") and First Union
National Bank ("First Union") as agent for the
Lenders (attached hereto as Exhibit 4.8).
</TABLE>
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<PAGE>
================================================================================
CREDIT AGREEMENT
among
PXRE CORPORATION
THE LENDERS NAMED HEREIN,
and
FIRST UNION NATIONAL BANK,
as Agent
$75,000,000 Senior Credit Facility
Arranged by
FIRST UNION CAPITAL MARKETS
A division of Wheat First Securities, Inc.
Dated as of December 30, 1998
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
RECITALS ........................................................................................................ 1
ARTICLE I
DEFINITIONS
1.1 Defined Terms............................................................................................1
1.2 Accounting Terms........................................................................................22
1.3 Other Terms; Construction...............................................................................22
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments.............................................................................................23
2.2 Borrowings..............................................................................................23
2.3 Disbursements; Funding Reliance; Domicile of Loans......................................................24
2.4 Notes...................................................................................................25
2.5 Termination and Reduction of Commitments................................................................25
2.6 Mandatory Payments and Prepayments......................................................................26
2.7 Voluntary Prepayments...................................................................................27
2.8 Interest................................................................................................28
2.9 Fees....................................................................................................29
2.10 Interest Periods........................................................................................30
2.11 Conversions and Continuations...........................................................................30
2.12 Method of Payments; Computations........................................................................31
2.13 Recovery of Payments....................................................................................32
2.14 Use of Proceeds.........................................................................................33
2.15 Pro Rata Treatment......................................................................................33
2.16 Increased Costs; Change in Circumstances; Illegality; etc...............................................34
2.17 Taxes ...............................................................................................36
2.18 Compensation............................................................................................38
2.19 Additional Financing Adjustment.........................................................................38
ARTICLE III
Conditions of BORROWING
3.1 Conditions of Initial Borrowing.........................................................................38
3.2 Conditions of Additional Financing......................................................................42
3.3 Conditions of All Borrowings............................................................................43
</TABLE>
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<TABLE>
<S> <C> <C>
4.1 Corporate Organization and Power........................................................................44
4.2 Authorization; Enforceability...........................................................................44
4.3 No Violation............................................................................................44
4.4 Governmental and Third-Party Authorization; Permits.....................................................45
4.5 Litigation..............................................................................................45
4.6 Taxes...................................................................................................45
4.7 Subsidiaries............................................................................................46
4.8 Full Disclosure.........................................................................................46
4.9 Margin Regulations......................................................................................46
4.10 No Material Adverse Change..............................................................................46
4.11 Financial Matters.......................................................................................46
4.12 Ownership of Properties.................................................................................48
4.13 ERISA...................................................................................................48
4.14 Environmental Matters...................................................................................49
4.15 Compliance With Laws....................................................................................50
4.16 Regulated Industries....................................................................................50
4.17 Insurance...............................................................................................50
4.18 Material Contracts......................................................................................50
4.19 Reinsurance Agreements..................................................................................51
4.20 Labor Relations.........................................................................................51
4.21 Year 2000 Compatibility.................................................................................52
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Financial Statements....................................................................................52
5.2 Statutory Financial Statements..........................................................................53
5.3 Other Business and Financial Information................................................................54
5.4 Corporate Existence; Franchises; Maintenance of Properties..............................................57
5.5 Compliance with Laws....................................................................................57
5.6 Payment of Obligations..................................................................................57
5.7 Insurance...............................................................................................57
5.8 Maintenance of Books and Records; Inspection............................................................57
5.9 Permitted Acquisitions..................................................................................58
5.10 Year 2000 Compatibility.................................................................................59
5.11 Further Assurances......................................................................................59
</TABLE>
ii
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ARTICLE VI
FINANCIAL COVENANTS
<TABLE>
<S> <C> <C>
6.1 Leverage Ratio..........................................................................................59
6.2 Fixed Charge Coverage Ratio.............................................................................59
6.3 Risk-Based Capital Ratio................................................................................59
6.4 Statutory Surplus.......................................................................................60
ARTICLE VII
NEGATIVE COVENANTS
7.1 Merger; Consolidation...................................................................................60
7.2 Indebtedness............................................................................................61
7.3 Liens...................................................................................................62
7.4 Disposition of Assets...................................................................................64
7.5 Investments.............................................................................................65
7.6 Restricted Payments.....................................................................................66
7.7 Transactions with Affiliates............................................................................67
7.8 Lines of Business.......................................................................................67
7.9 Certain Amendments......................................................................................67
7.10 Limitation on Certain Restrictions......................................................................68
7.11 No Other Negative Pledges...............................................................................68
7.12 Fiscal Year.............................................................................................68
7.13 Accounting Changes......................................................................................68
7.14 Ratings.................................................................................................68
7.15 Reinsurance Agreements..................................................................................68
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default.......................................................................................70
8.2 Remedies: Termination of Commitments, Acceleration, etc.................................................72
8.3 Remedies: Set-Off.......................................................................................73
ARTICLE IX
THE AGENT
9.1 Appointment.............................................................................................74
9.2 Nature of Duties........................................................................................74
9.3 Exculpatory Provisions..................................................................................74
9.4 Reliance by Agent.......................................................................................74
9.5 Non-Reliance on Agent and Other Lenders.................................................................75
</TABLE>
iii
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<PAGE>
<TABLE>
<S> <C> <C>
9.6 Notice of Default.......................................................................................75
9.7 Indemnification.........................................................................................76
9.8 The Agent in its Individual Capacity....................................................................76
9.9 Successor Agent.........................................................................................77
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses.......................................................................................77
10.2 Indemnification.........................................................................................78
10.3 Governing Law; Consent to Jurisdiction..................................................................79
10.4 Arbitration; Preservation and Limitation of Remedies....................................................80
10.5 Notices.................................................................................................81
10.6 Amendments, Waivers, etc................................................................................81
10.7 Assignments, Participations.............................................................................82
10.8 No Waiver...............................................................................................84
10.9 Successors and Assigns..................................................................................85
10.10 Survival................................................................................................85
10.11 Severability............................................................................................85
10.12 Construction............................................................................................85
10.13 Confidentiality.........................................................................................85
10.14 Counterparts; Effectiveness.............................................................................86
10.15 Disclosure of Information...............................................................................86
10.16 Entire Agreement........................................................................................86
</TABLE>
iv
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<PAGE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A..................Form of Note
Exhibit B-1................Form of Notice of Borrowing
Exhibit B-2................Form of Notice of Conversion/Continuation
Exhibit C-1................Form of GAAP Compliance Certificate
Exhibit C-2................Form of SAP Compliance Certificate
Exhibit D..................Form of Assignment and Acceptance
Exhibit E-1................Form of Opinion of Morgan, Lewis & Bockius LLP
Exhibit E-2................Form of Opinion of Clyde & Co.
Exhibit F..................Form of Financial Condition Certificate
Exhibit G..................Form of Joinder Agreement
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule 4.4...............Consents and Approvals
Schedule 4.7...............Subsidiaries
Schedule 4.18..............Material Contracts
Schedule 4.19..............Reinsurance Agreements
Schedule 7.2...............Indebtedness
Schedule 7.3...............Liens
Schedule 7.5...............Investments; Investment Policy
Schedule 7.7...............Transactions with Affiliates
</TABLE>
v
<PAGE>
<PAGE>
Execution Copy
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 30th day of December, 1998 (this
"Agreement"), is made among PXRE CORPORATION, a Delaware corporation with its
principal offices in Edison, New Jersey (the "Borrower"), the banks and
financial institutions listed on the signature pages hereto or that become
parties hereto after the date hereof (collectively, the "Lenders"), and FIRST
UNION NATIONAL BANK ("First Union"), as agent for the Lenders (in such capacity,
the "Agent").
RECITALS
A. The Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility in the aggregate principal amount of up
to $75,000,000. The Borrower will use the proceeds of this facility to finance
permitted acquisitions and stock repurchases, to contribute capital to its
insurance subsidiaries, and for working capital and general corporate purposes,
all as more fully described herein.
B. First Union is willing to make available to the Borrower
$50,000,000 of the credit facility described herein subject to and on the terms
and conditions set forth in this Agreement. First Union intends to assign
$20,000,000 of the facility to other Lenders in accordance with this Agreement.
C. Additional Lenders may become parties to this Agreement
through execution of Joinder Agreements (as defined herein) pursuant to which
such Lenders, in the aggregate, would make available to the Borrower up to an
additional $25,000,000 of the credit facility.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants
and agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Agreement, in addition to
the terms defined elsewhere herein, the following terms shall have the meanings
set forth below (such meanings to be equally applicable to the singular and
plural forms thereof):
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<PAGE>
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer and in form and
substance satisfactory to the Agent, listing any one or more accounts to which
the Borrower may from time to time request the Agent to forward the proceeds of
any Loans made hereunder.
"Acquisition" shall mean any transaction or series of related
transactions, consummated on or after the date hereof, by which the Borrower
directly, or indirectly through one or more Subsidiaries, (i) acquires any going
business, or all or substantially all of the assets, of any Person or any line
of business, block of business or division of any Person, whether through
purchase of assets, merger or otherwise, or (ii) acquires securities or other
ownership interests of any Person having at least a majority of combined voting
power of the then outstanding securities or other ownership interests of such
Person.
"Acquisition Amount" shall mean, with respect to any Acquisition, the
sum (without duplication) of (i) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all Capital Stock of the Borrower issued or given in connection with such
Acquisition, (iii) the amount (determined by using the face amount or the amount
payable at maturity, whichever is greater) of all Indebtedness incurred, assumed
or acquired by the Borrower and its Subsidiaries in connection with such
Acquisition, (iv) all additional purchase price amounts in connection with such
Acquisition in the form of earnouts and other contingent obligations that should
be recorded as a liability on the balance sheet of the Borrower and its
Subsidiaries or expensed, in either event in accordance with GAAP, Regulation
S-X under the Securities Act of 1933, as amended, or any other rule or
regulation of the Securities and Exchange Commission, (v) all amounts paid in
respect of covenants not to compete, consulting agreements and other affiliated
contracts in connection with such Acquisition, (vi) the amount of all
transaction fees and expenses (including, without limitation, legal, accounting
and finders' fees and expenses) incurred by the Borrower and its Subsidiaries in
connection with such Acquisition and (vii) the aggregate fair market value of
all other consideration given by the Borrower and its Subsidiaries in connection
with such Acquisition.
"Additional Financing" shall mean the aggregate initial Commitments of
the Lenders executing Joinder Agreements as set forth on the signature pages
thereto, which aggregate amount shall not exceed $25,000,000 or such lesser
amount as the Borrower may determine (prior to the execution by the Borrower of
any Joinder Agreement) by providing written notice thereof to the Agent and the
Lenders.
"Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate Loan, a rate per annum equal to the Base Rate as in effect at such time
plus the Applicable Margin Percentage for Base Rate Loans as in effect at such
time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Margin Percentage for LIBOR Loans as in effect at such time.
2
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"Affiliate" shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person "control" shall mean (i) the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 10% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.
"Agent" shall mean First Union, in its capacity as Agent appointed
under ARTICLE IX, and its successors and permitted assigns in such capacity.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Annual Statement" shall mean, with respect to any Insurance Subsidiary
for any fiscal year, the annual financial statements of such Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority of
its jurisdiction of domicile and in accordance with the laws of such
jurisdiction, together with all exhibits, schedules, certificates and actuarial
opinions required to be filed or delivered therewith.
"Applicable Margin Percentage" shall mean, at any time from and after
the Closing Date, the applicable percentage (a) to be added to the Base Rate
pursuant to SECTION 2.8 for purposes of determining the Adjusted Base Rate, (b)
to be added to the LIBOR Rate pursuant to SECTION 2.8 for purposes of
determining the Adjusted LIBOR Rate, and (c) to be used in calculating the
commitment fee payable pursuant to SECTION 2.9(b), in each case as determined
under the following matrix with reference to the Borrower's senior unsecured
debt rating by Moody's or Standard & Poor's (in each case based upon the higher
of the two ratings), when available, or, if not available, then with reference
to an implied senior or unsecured debt rating, if available (provided that, for
purposes of this Agreement, the rating that is one level higher than the rating
of the Borrower's Trust Preferred Securities by Standard & Poor's shall be
deemed to be an implied senior or unsecured debt rating by Standard & Poor's):
3
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<TABLE>
<CAPTION>
Applicable Applicable Margin
Moody's / Margin Applicable Margin Percentage for
Standard & Percentage for Percentage for Unutilized
Level Poor's Rating Base Rate Loans LIBOR Loans Commitments Fee
----- ------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
I A3 / A- or above 0.0% 0.625% 0.175%
II Baa1 / BBB+ 0.0% 0.750% 0.200%
III Baa2 / BBB 0.0% 0.875% 0.250%
IV Baa3 / BBB- 0.0% 1.000% 0.300%
V Less than Baa3 /
BBB- 0.5% 1.500% 0.500%
</TABLE>
Notwithstanding anything set forth herein to the contrary, if at any time the
difference between the Borrower's senior unsecured debt ratings by Moody's and
Standard & Poor's is more than one rating grade, then for purposes of
determining the applicable level set forth above, the higher of the two ratings
shall be reduced to the rating that is the median between the higher rating and
the lower rating (or its equivalent); or, if the median is not determinable,
then the higher of such two ratings shall be reduced to one rating grade lower.
On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Loans and the commitment fee payable pursuant to SECTION
2.9(b) shall be adjusted effective as of such date in accordance with the above
matrix; provided, however, that, notwithstanding the foregoing or anything else
herein to the contrary, if at any time an Event of Default described in SECTION
8.1(a) shall have occurred and be continuing, then at the election of the
Required Lenders, at all times from and including the date on which such Event
of Default occurred to the date on which such Event of Default shall have been
cured or waived, each Applicable Margin Percentage shall be determined in
accordance with Level V of the above matrix (notwithstanding the actual level).
For purposes of this definition, "Adjustment Date" shall mean, with respect to
any fiscal period of the Borrower beginning with the fiscal quarter ending
December 31, 1998, the tenth (10th) Business Day after the announcement by
either Moody's or Standard & Poor's of any change in its rating with respect to
the Borrower's senior unsecured debt. Until the first Adjustment Date, each
Applicable Margin Percentage shall be determined in accordance with Level III of
the above matrix.
"Asset Disposition" shall mean any sale, assignment, transfer or other
disposition by the Borrower or any of its Subsidiaries to any other Person
(other than to the Borrower or to a Wholly Owned Subsidiary), whether in one
transaction or in a series of related transactions, of any of its assets,
business units or other properties (including any interests in property, whether
tangible or intangible, and including Capital Stock of Subsidiaries), excluding
(i) sales of investment assets in the ordinary course of business, (ii) sales
and licenses of inventory and other
4
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assets in the ordinary course of business, (iii) the sale or exchange of used or
obsolete equipment to the extent the proceeds of such sale are applied towards,
or such equipment is exchanged for, similar replacement equipment, and (iv) any
other disposition expressly permitted under SECTION 7.4.
"Assignee" shall have the meaning given to such term in SECTION 10.7(a).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
entered into between a Lender and an Assignee and accepted by the Agent and the
Borrower, in substantially the form of EXHIBIT D.
"Authorized Officer" shall mean, with respect to any action specified
herein, any officer of the Borrower duly authorized by resolution of the board
of directors of the Borrower to take such action on its behalf, and whose
signature and incumbency shall have been certified to the Agent by the secretary
or an assistant secretary of the Borrower.
"Available Dividend Amount" shall mean, with respect to any Insurance
Subsidiary for any period of four consecutive fiscal quarters, the aggregate
maximum amount of dividends that is or, if such period were a fiscal year, would
be permitted by the Insurance Regulatory Authority of its jurisdiction of
domicile, under applicable Requirements of Law (without the necessity of any
consent, approval or other action of such Insurance Regulatory Authority
involving the granting of permission or the exercise of discretion by such
Insurance Regulatory Authority), to be paid by such Insurance Subsidiary to the
Borrower or another Subsidiary of the Borrower in respect of such four-quarter
period as if such period were a fiscal year (whether or not any such dividends
are actually paid).
"Bankruptcy Code" shall mean 11 U.S.C. 'SS' 'SS' 101 et seq., as amended
from time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime rate (which may not necessarily be its best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds Rate plus
0.5% per annum, as adjusted to conform to changes as of the opening of business
on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the Adjusted Base Rate.
"Borrower Margin Stock" shall mean shares of capital stock of the
Borrower that are held by the Borrower or any of its Subsidiaries and that
constitute Margin Stock.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Loans pursuant to SECTION
2.11) on a single date of
5
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<PAGE>
a group of Loans of a single Type and, in the case of LIBOR Loans, as to which a
single Interest Period is in effect.
"Borrowing Date" shall mean, with respect to any Borrowing, the date
upon which such Borrowing is made.
"Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least "A-1" or the equivalent thereof by
Standard & Poor's or at least "P-1" or the equivalent thereof by Moody's, (iii)
time deposits and certificates of deposit maturing within 90 days from the date
of issuance and issued by a bank or trust company organized under the laws of
the United States of America or any state thereof that has combined capital and
surplus of at least $500,000,000 and that has (or is a subsidiary of a bank
holding company that has) a long-term unsecured debt rating of at least A or the
equivalent thereof by Standard & Poor's or at least A2 or the equivalent thereof
by Moody's, (iv) repurchase obligations with a term not exceeding seven (7) days
with respect to underlying securities of the types described in clause (i) above
entered into with any bank or trust company meeting the qualifications specified
in clause (iii) above, and (v) money market funds at least 95% of the assets of
which are continuously invested in securities of the type described in clause
(i) above.
"Closing Date" shall mean the date upon which all conditions to the
initial Borrowing set forth in SECTION 3.1 have been satisfied.
"CMOs" shall mean any security or certificate representing any interest
or participation in a pool of Mortgage Backed Securities (it being understood
that Mortgage Backed Securities themselves are not CMOs).
"Combined Net Cash Flow" shall mean, for any period and without
duplication, the aggregate Net Cash Flow of the non-Insurance Subsidiaries for
such period. For purposes of this
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definition, "non-Insurance Subsidiaries" shall not include any Subsidiary of an
Insurance Subsidiary.
"Combined Statutory Capital and Surplus" shall mean, at any time, the
aggregate (without duplication) of Statutory Capital and Surplus of each
Insurance Subsidiary at such time, after eliminating the effect thereupon of any
transactions among the Insurance Subsidiaries.
"Commitment" shall mean, with respect to any Lender at any time, as
applicable, (i) the amount set forth opposite such Lender's name on its
signature page hereto under the caption "Commitment"; (ii) if such Lender has
entered into a Joinder Agreement, the amount set forth opposite such Lender's
name on its signature page to such Joinder Agreement; or (iii) if such Lender
has entered into one or more Assignment and Acceptances, the amount set forth
for such Lender at such time in the Register maintained by the Agent pursuant to
SECTION 10.7(b) as such Lender's "Commitment," in each case as such amount may
be reduced at or prior to such time pursuant to the terms hereof.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of EXHIBIT C-1 or EXHIBIT C-2, together with a Covenant
Compliance Worksheet.
"Consolidated Indebtedness" shall mean, as of the last day of any
fiscal quarter, the aggregate (without duplication) of all Indebtedness (whether
or not reflected on the Borrower's or any Subsidiary's balance sheet) of the
Borrower and its Subsidiaries as of such date, determined on a consolidated
basis in accordance with GAAP, excluding reimbursement obligations with respect
to letters of credit issued on behalf of any Insurance Subsidiary for the
benefit of Lloyd's to satisfy capital requirements imposed by Lloyd's to support
such Insurance Subsidiary's business in the Lloyd's insurance Market and
reimbursement obligations in respect of letters of credit issued for the benefit
of any Insurance Subsidiary or the Borrower in the ordinary course of its
business to support the payment of obligations arising under insurance and
reinsurance contracts and weather and similar swap agreements, but only in each
case to the extent such letters of credit (i) are not drawn upon and (ii) are
collateralized by cash or Cash Equivalents.
"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total interest expense of the Borrower and its
Subsidiaries for such period in respect of Consolidated Indebtedness of the
Borrower and its Subsidiaries (including, without limitation, all such interest
expense accrued or capitalized during such period, whether or not actually paid
during such period), determined on a consolidated basis in accordance with GAAP,
(ii) all net amounts payable under or in respect of Hedge Agreements, to the
extent paid or accrued by the Borrower and its Subsidiaries during such period,
and (iii) all commitment fees and other ongoing fees in respect of Consolidated
Indebtedness (including the commitment fee provided for under SECTION 2.9(b) and
the fees provided for under the Fee Letter) paid, accrued or capitalized by the
Borrower and its Subsidiaries during such period.
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"Consolidated Net Income" shall mean, for any period, net income (or
loss) for the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date of determination,
the net worth of the Borrower and its Subsidiaries as of such date, determined
on a consolidated basis in accordance with GAAP but (i) excluding any
Disqualified Capital Stock and (ii) without regard to the requirements of FAS
115.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability or other obligation (the "primary obligation") of another Person (the
"primary obligor"), whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to the Borrower and its
Subsidiaries, the term Contingent Obligation shall not include (y) endorsements
for collection or deposit in the ordinary course of business or (z) obligations
entered into by an Insurance Subsidiary or by the Borrower in the ordinary
course of its business under insurance policies or contracts, reinsurance
agreements and weather and similar swap agreements issued by it or to which it
is a party (and security posted in the ordinary course of its business to secure
obligations thereunder).
"Covenant Compliance Worksheet" shall mean a fully completed worksheet
in the form of Attachment A to EXHIBIT C-1 or EXHIBIT C-2.
"Credit Documents" shall mean this Agreement, the Notes, the Fee
Letter, any Joinder Agreement, and all other agreements, instruments, documents
and certificates now or hereafter executed and delivered to the Agent or any
Lender by or on behalf of the Borrower or any of its Subsidiaries with respect
to this Agreement and the transactions contemplated hereby, in each case as
amended, modified, supplemented or restated from time to time.
"Debt Issuance" shall mean the issuance or sale by the Borrower or any
of its Subsidiaries of any debt securities, whether in a public offering of such
securities or otherwise.
"Debt Service" shall mean, for any period, the aggregate (without
duplication) of all principal and Consolidated Interest Expense paid or accrued
by the Borrower and its Subsidiaries during such period in respect of
Indebtedness (including, without limitation, the Loans).
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"Default" shall mean any event or condition that, with the passage of
time or giving of notice, or both, would constitute an Event of Default.
"Disqualified Capital Stock" shall mean, with respect to any Person,
any Capital Stock of such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event or otherwise, (i) matures or is mandatorily
redeemable or subject to any mandatory repurchase requirement, pursuant to a
sinking fund obligation or otherwise, (ii) is redeemable or subject to any
mandatory repurchase requirement at the sole option of the holder thereof, or
(iii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) or (ii) above, in each case under (i), (ii) or (iii) above at
any time on or prior to the first anniversary of the Maturity Date; provided,
however, that only the portion of Capital Stock that so matures or is
mandatorily redeemable, is so redeemable at the option of the holder thereof, or
is so convertible or exchangeable on or prior to such date shall be deemed to be
Disqualified Capital Stock.
"Dollar Roll Agreements" shall mean, as to any Person, an agreement
pursuant to which such Person sells securities to another Person and agrees to
repurchase "substantially the same" securities (as determined by the Public
Securities Association and GAAP) at a described or specified date and price.
"Dollars" or "$" shall mean dollars of the United States of America.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under "common
control" with, or a member of the same "controlled group" as, the Borrower or
any of its Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o)
of the Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA, (iii) the distribution
by the Borrower or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a
notice of intent to terminate any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer
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Plan against the Borrower or any ERISA Affiliate to enforce Section 515 of
ERISA, which is not dismissed within thirty (30) days, (vi) the imposition upon
the Borrower or any ERISA Affiliate of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA,
or the imposition or threatened imposition of any Lien upon any assets of the
Borrower or any ERISA Affiliate as a result of any alleged failure to comply
with the Internal Revenue Code or ERISA in respect of any Plan, (vii) the
engaging in or otherwise becoming liable for a nonexempt Prohibited Transaction
by the Borrower or any ERISA Affiliate, (viii) a violation of the applicable
requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Internal Revenue Code by any fiduciary of any Plan for
which the Borrower or any of its ERISA Affiliates may be directly or indirectly
liable or (ix) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Internal Revenue Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such Plan is a
part if the Borrower or an ERISA Affiliate fails to timely provide security to
such Plan in accordance with the provisions of such sections.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $1,000,000,000, provided
that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $500,000,000, (v)
any Affiliate of an existing Lender or (vi) any other Person approved by the
Required Lenders, which approval shall not be unreasonably withheld.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
accusations, allegations, notices of noncompliance or violation, investigations
(other than internal reports prepared by any Person in the ordinary course of
its business and not in response to any third party action or request of any
kind) or proceedings relating in any way to any actual or alleged violation of
or liability under any Environmental Law or relating to any permit issued, or
any approval given, under any such Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to human health or
the environment.
"Environmental Laws" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
rules of common law and orders of courts or Governmental Authorities, relating
to the protection of human health or occupational
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safety or the environment, now or hereafter in effect and in each case as
amended from time to time, including, without limitation, requirements
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Substances.
"Event of Default" shall have the meaning given to such term in SECTION
8.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"FAS 115" shall mean Statement of Financial Accounting Standards No.
115 issued by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants.
"Fair Market Value" shall mean, with respect to any Capital Stock of
the Borrower given in connection with an Acquisition, the value given to such
Capital Stock for purposes of such Acquisition by the parties thereto, as
determined in good faith pursuant to the relevant acquisition agreement or
otherwise in connection with such Acquisition.
"Federal Funds Rate" shall mean, for any period, a fluctuating per
annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Letter" shall mean the letter dated December 2, 1998 from First
Union to the Borrower relating to certain fees payable by the Borrower in
respect of the transactions contemplated by this Agreement, as amended, modified
or supplemented from time to time.
"Financial Condition Certificate" shall mean a fully completed and duly
executed certificate, substantially in the form of EXHIBIT F, together with the
attachments thereto.
"Financial Officer" shall mean the chief financial officer, vice
president - finance, principal accounting officer or treasurer of the Borrower.
"Fixed Charge Coverage Ratio" shall mean, as of the last day of any
period of four consecutive fiscal quarters (the "Measurement Period"), the ratio
of:
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(i) the sum (without duplication) of (t) the Available
Dividend Amount for the Measurement Period for the Insurance
Subsidiaries, other than each Insurance Subsidiary that is a Subsidiary
of another Insurance Subsidiary, plus (u) the Net Tax Sharing Payments
with respect to the Measurement Period, plus (v) the Combined Net Cash
Flow (whether positive or negative) of the non-Insurance Subsidiaries
for the Measurement Period, plus (w) other Net Cash Flow to the
Borrower (whether positive or negative) during the Measurement Period,
minus (x) Holding Company Expenses accrued during such Measurement
Period, minus (y) stock repurchases by the Borrower during such
Measurement Period, other than stock repurchases effected between
January 1, 1998 and the day immediately preceding the Closing Date,
minus (z) dividends reasonably estimated by the Borrower (based upon
the most recent quarterly dividend rate as set forth in the relevant
Covenant Compliance Worksheet) to be paid by the Borrower during the
period of four consecutive fiscal quarters immediately following the
Measurement Period (the "Pro Forma Period"), to
(ii) the Debt Service with respect to the Loans and all other
Consolidated Indebtedness reasonably determined by the Borrower (and as
set forth in the relevant Covenant Compliance Worksheet) to be required
to be paid or accrued by the Borrower during the Pro Forma Period,
based on the amount of the Loans and other Consolidated Indebtedness
outstanding at the beginning of such period and assuming that the rates
in effect at the beginning of such period, taking into account the
benefit and costs of any Hedge Agreement with respect to the Loans,
will remain in effect throughout such period;
provided that the stock repurchases referred to in subclause (y) of clause (i)
above shall not include the first $30,000,000 of such repurchases occurring
between the Closing Date and December 31, 1999.
"GAAP" shall mean generally accepted accounting principles, as set
forth in the statements, opinions and pronouncements of the Accounting
Principles Board, the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained, as in
effect from time to time (subject to the provisions of SECTION 1.2).
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any central bank thereof, any
municipal, local, city or county government, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Gross Written Premiums" shall mean, with respect to any Insurance
Subsidiary at any time, the amount of premiums written (after adding premiums on
business assumed from others) as shown on line 32, page 9, Part 2B, sum of
columns 1, 2a and 2b, of the Annual Statement of such Insurance Subsidiary, or
the amount determined in a consistent manner for any date other than a date as
of which an Annual Statement of such Insurance Subsidiary is prepared.
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"Hazardous Substances" shall mean any substances or materials (i) that
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance, or (vi)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Holding Company Expenses" shall mean, for any period, the aggregate of
all operating costs and expenses incurred or paid by the Borrower during such
period, including without limitation rent, utilities, professional fees, taxes
(without duplication for taxes included in the determination of Net Tax Sharing
Payments) and payroll expenses.
"Hybrid Securities Issuance" shall mean the issuance, sale or other
disposition by the Borrower or any of its Subsidiaries of any security that
creates an obligation of the Borrower or such Subsidiary to pay money or issue
(or cause an Affiliate to issue) Disqualified Capital Stock to the holder
thereof, whether or not such security is classified or presented on the
Borrower's or such Subsidiary's balance sheet as long-term debt.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness and obligations of such Person for borrowed
money or in respect of loans or advances of any kind, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (iii)
all reimbursement obligations of such Person with respect to surety bonds,
letters of credit and bankers' acceptances (in each case, whether or not drawn
or matured and in the stated amount thereof), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
obligations of such Person as lessee under leases that are or are required to
be, in accordance with GAAP, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all Disqualified Capital Stock
issued by such Person, with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to its involuntary liquidation
preference, but excluding accrued dividends, if any, (viii) the net termination
obligations of such Person under any Hedge Agreement that, as of any date of
calculation hereunder, the counterparty thereto has the right to terminate, (ix)
all indebtedness of such Person in respect of Dollar Roll Agreements and Reverse
Repurchase Agreements, other than Dollar Roll Agreements and Reverse Repurchase
Agreements of an Insurance Subsidiary entered into in the ordinary course of
such Insurance Subsidiary's business, (x) all Contingent Obligations of such
Person and (xi) all indebtedness referred to in clauses (i) through (x) above
secured by any
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Lien on any property or asset owned or held by such Person regardless of whether
the indebtedness secured thereby shall have been assumed by such Person or is
nonrecourse to the credit of such Person.
"Insurance Regulatory Authority" shall mean, with respect to any
Insurance Subsidiary, the insurance department or similar Governmental Authority
charged with regulating insurance companies or insurance holding companies, in
its jurisdiction of domicile and, to the extent that it has regulatory authority
over such Insurance Subsidiary, in each other jurisdiction in which such
Insurance Subsidiary conducts business or is licensed to conduct business.
"Insurance Subsidiary" shall mean any direct or indirect Subsidiary of
the Borrower the ability of which to pay dividends is regulated by an Insurance
Regulatory Authority or that is otherwise required to be regulated thereby in
accordance with the applicable Requirements of Law of its jurisdiction of
domicile, and shall mean and include, without limitation, each of PXRE
Reinsurance, Transnational Insurance and PXRE Ltd.
"Interest Period" shall have the meaning given to such term in SECTION
2.10.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Invested Assets" shall mean, as to any Insurance Subsidiary, as of any
date, the total amount shown on page 2, column 4, line 9 of the Annual Statement
of the Insurance Subsidiary, or an amount determined in a consistent manner for
any date other than one as of which an Annual Statement is prepared.
"Investment Policy" shall mean the Investment Policy of PXRE
Reinsurance as of the date hereof, as set forth in SCHEDULE 7.5.
"Joinder Agreement" shall mean a Joinder Agreement, substantially in
the form of EXHIBIT G, by and among the Borrower, the Agent and a bank or
financial institution, pursuant to which such bank or financial institution
shall become a Lender party to this Agreement and shall evidence its Commitment
hereunder.
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising
part of the same Borrowing for any Interest Period, an interest rate per annum
obtained by dividing (i) (y) the rate of interest appearing on Dow Jones
Telerate Page 3750 (or any successor page) or (z) if no such rate is available,
the rate of interest determined by the Agent to be the rate or the arithmetic
mean of rates (rounded upward, if necessary, to the nearest 1/16 of one
percentage point) at which Dollar deposits in immediately available funds are
offered by First Union to first-tier banks in the London interbank Eurodollar
market, in each case under (y) and (z) above at approximately
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11:00 a.m., London time, two (2) Business Days prior to the first day of such
Interest Period for a period substantially equal to such Interest Period and in
an amount substantially equal to the amount of First Union's LIBOR Loan
comprising part of such Borrowing, by (ii) the amount equal to 1.00 minus the
Reserve Requirement (expressed as a decimal) for such Interest Period.
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that becomes a "Lender" hereunder pursuant to
SECTION 10.7, and their respective successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the office of
such Lender designated as its "Lending Office" on its signature page hereto or
in an Assignment and Acceptance, or such other office as may be otherwise
designated in writing from time to time by such Lender to the Borrower and the
Agent. A Lender may designate separate Lending Offices as provided in the
foregoing sentence for the purposes of making or maintaining different Types of
Loans, and, with respect to LIBOR Loans, such office may be a domestic or
foreign branch or Affiliate of such Lender.
"Leverage Ratio" shall mean, as of any date of determination, the ratio
of (i) Consolidated Indebtedness as of such date, provided that, whether or not
any Trust Preferred Securities issued by the Borrower or any Subsidiary are
included in Consolidated Indebtedness, the aggregate redemption value of all
such securities shall be included in or added to, as the case may be, this
clause (i) but only to the extent such aggregate redemption value as of such
date exceeds fifteen percent (15%) of clause (ii) below, to (ii) the sum of
Consolidated Indebtedness and Consolidated Net Worth, each as of such date,
which sum shall include (without duplication) the aggregate redemption value of
Trust Preferred Securities issued by the Borrower or any Subsidiary.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
security interest, lien (statutory or otherwise), preference, priority, charge
or other encumbrance of any nature, whether voluntary or involuntary, including,
without limitation, the interest of any vendor or lessor under any conditional
sale agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.
"Lloyd's" shall mean the Society of Lloyd's of London, the Council of
Lloyd's of London, or any other Person similarly associated with Lloyd's of
London.
"Loans" shall have the meaning given to such term in SECTION 2.1.
"Margin Stock" shall have the meaning given to such term in Regulation
U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, business, properties or assets
of the Borrower and its Subsidiaries, taken as a whole; it being understood,
however, that the events occurring during the third fiscal quarter of 1998
described in the Borrower's Form 10-Q filed on November 12, 1998 do not
constitute, either individually or in the aggregate, a Material Adverse Change.
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"Material Adverse Effect" shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, business, properties or
assets of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability
of the Borrower or any Subsidiary to perform its obligations under this
Agreement or any of the other Credit Documents to which it is a party or (iii)
the legality, validity or enforceability of this Agreement or any of the other
Credit Documents or the rights and remedies of the Agent and the Lenders
hereunder and thereunder.
"Material Contract" shall have the meaning given to such term in
SECTION 4.18.
"Material Insurance Subsidiary" shall mean any Insurance Subsidiary
that is a Material Subsidiary.
"Material Subsidiary" shall mean each of (i) PXRE Reinsurance, (ii)
Transnational Insurance, (iii) at the relevant time of determination, any
Subsidiary having (after the elimination of intercompany accounts) (y) in the
case of a non-Insurance Subsidiary, (A) assets constituting at least ten percent
(10%) of the total assets of the Borrower and its Subsidiaries on a consolidated
basis, (B) revenues for the four quarters most recently ended constituting at
least ten percent (10%) of the total revenues of the Borrower and its
Subsidiaries on a consolidated basis, or (C) Net Income for the four quarters
most recently ended constituting at least ten percent (10%) of the Consolidated
Net Income of the Borrower and its Subsidiaries, in each case determined in
accordance with GAAP as of the date of the GAAP financial statements of the
Borrower and all its Subsidiaries most recently delivered under SECTION 5.1
prior to such time (or, with regard to determinations at any time prior to the
initial delivery of financial statements under SECTION 5.1, as of the date of
the most recent financial statements referred to in SECTION 4.11(a)), or (z) in
the case of an Insurance Subsidiary, (A) assets constituting at least ten
percent (10%) of the aggregate assets of all Insurance Subsidiaries, or (B)
Gross Written Premiums for the four quarters most recently ended constituting at
least ten percent (10%) of the aggregate Gross Written Premiums (without
duplication) of all Insurance Subsidiaries, in each case determined in
accordance with SAP as of the date of the statutory financial statements most
recently delivered under SECTION 5.2 prior to such time (or, with regard to
determinations at any time prior to the initial delivery of financial statements
under SECTION 5.2, as of the date of the most recent financial statements
referred to in SECTION 4.11(e)) and (iv) any Subsidiary that has one of the
foregoing as a Subsidiary.
"Maturity Date" shall mean March 31, 2005.
"Moody's" shall mean Moody's Investors Service, Inc., its successors
and assigns.
"Mortgage Backed Securities" shall mean investment securities
representing any undivided interest or participation in, or which are secured
by, a pool of loans secured by mortgages or deeds of trust.
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"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.
"NAIC" shall mean the National Association of Insurance Commissioners
and any successor thereto.
"Net Amount Recoverable from Reinsurers" shall mean, as to any
Insurance Subsidiary, as of any time, the amount as shown on Schedule F - Part
3, column 13 of the Annual Statement of such Insurance Subsidiary, or an amount
determined in a consistent manner as of any date other than one as of which an
Annual Statement is prepared.
"Net Cash Flow" shall mean, for any Person for any period, (i) the
aggregate Net Income of such Person for such period, plus (ii) the sum of
depreciation expense, amortization (whether positive or negative) of intangible
assets and other non-cash expenses, losses and charges reducing income, in each
case to the extent taken into account in the calculation of such Net Income for
such period, minus (iii) the sum of capital expenditures and all non-cash gains
and other non-cash items taken into account in determining such Net Income for
such period, plus (iv) any increase during such period in deferred taxes, minus
(v) any decrease during such period in deferred taxes.
"Net Cash Proceeds" shall mean, in the case of any Asset Disposition,
Hybrid Securities Issuance or Debt Issuance, the aggregate cash payments
received by the Borrower and its Subsidiaries less reasonable and customary fees
and expenses (including underwriting discounts and commissions) incurred by the
Borrower and its Subsidiaries in connection therewith.
"Net Income" shall mean, with respect to any Person for any period, the
net income (or loss), after extraordinary items, taxes and all other items of
expense and income of such person for such period, determined in accordance with
GAAP.
"Net Tax Sharing Payments" shall mean, for any period, (i) the
aggregate (without duplication) of all payments made or to be made to the
Borrower by its Subsidiaries pursuant to tax sharing or tax allocation
agreements or arrangements or otherwise in respect of taxable income realized
during such period, minus (ii) the aggregate (without duplication) of all
foreign, federal, state or local income, franchise and other tax payments made
or to be made by the Borrower in respect of taxable income realized during such
period and any payments made or to be made by the Borrower during such period
pursuant to such tax sharing or tax allocation agreement or arrangement. For
purposes of the Fixed Charge Coverage Ratio, if the amount in clause (ii)
exceeds the amount in clause (i) hereof, the result shall be expressed as a
negative amount.
"Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A, together with any amendments, modifications
and supplements thereto, substitutions therefor and restatements thereof.
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"Notice of Borrowing" shall have the meaning given to such term in
SECTION 2.2(b).
"Notice of Conversion/Continuation" shall have the meaning given to
such term in SECTION 2.11(b).
"Obligations" shall mean all principal of and interest (including, to
the greatest extent permitted by law, post-petition interest) on the Loans and
all fees, expenses, indemnities and other obligations owing, due or payable at
any time by the Borrower to the Agent, any Lender or any other Person entitled
thereto, under this Agreement or any of the other Credit Documents.
"PAC I" shall mean a planned amortization class bond which is a tranche
or class of CMO or REMIC that is retired according to a predetermined
amortization schedule independent of the prepayment rate on the underlying
collateral and which has the highest level of protection within the pool against
prepayment or extension.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"PXRE Ltd." shall mean PXRE Limited, a corporation organized under the
laws of the United Kingdom and a Wholly Owned Subsidiary of PXRE Reinsurance as
of the date hereof.
"PXRE Reinsurance" shall mean PXRE Reinsurance Company, a Connecticut
insurance company and a Wholly Owned Subsidiary of the Borrower as of the date
hereof.
"PXRE Syndicate" shall mean any syndicate operating in the Lloyd's
insurance Market in which PXRE Ltd. participates or is a member, including, as
of the date hereof and without limitation, PG Butler Non-Marine Syndicate 1224.
"Participant" shall have the meaning given to such term in SECTION
10.7(d).
"Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
shall be within the permitted lines of business described in SECTION 7.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of the Borrower, (iii) in the case of an Acquisition involving the
acquisition of control of Capital Stock of any Person, immediately after giving
effect to such Acquisition such Person (or the surviving Person, if the
Acquisition is effected through a merger or consolidation) shall be the Borrower
or a Wholly Owned Subsidiary, and (iv) all of the conditions and requirements of
SECTIONS 5.9 applicable to such Acquisition are satisfied; or (b) any other
Acquisition to which the Required Lenders (or the Agent on their behalf) shall
have given their prior written consent (which consent may be in their sole
discretion and may be given subject to such additional terms and conditions as
the Required Lenders shall establish) and with respect to which all of the
conditions and requirements set forth in this definition and in SECTION 5.9, and
in or pursuant to any such consent, have been satisfied or waived in writing by
the Required Lenders (or the Agent on their behalf).
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"Permitted CMOs and Mortgage Backed Securities" shall mean (i) mortgage
participation certificates issued by the Federal Home Loan Mortgage Corporation,
(ii) mortgage backed securities issued by the Federal National Mortgage
Association, (iii) securities guaranteed by the Government National Mortgage
Association, and (iv) other securities and certificates representing
participations in any CMO or REMIC which are PAC I's or which have comparable
priority in respect of the repayment thereof.
"Permitted Liens" shall have the meaning given to such term in SECTION
7.3.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA that is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which the Borrower or any
ERISA Affiliate may have any liability.
"Pro Forma Balance Sheet" shall have the meaning given to such term in
SECTION 4.11(b).
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
"Projections" shall have the meaning given to such term in SECTION
4.11(c).
"Quarterly Statement" shall mean, with respect to any Insurance
Subsidiary for any fiscal quarter, the quarterly financial statements of such
Insurance Subsidiary as required to be filed with the Insurance Regulatory
Authority of its jurisdiction of domicile, together with all exhibits,
schedules, certificates and actuarial opinions required to be filed or delivered
therewith.
"REMIC" shall mean a real estate mortgage investment conduit.
"Register" shall have the meaning given to such term in SECTION 10.7(b).
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reinsurance Agreement" shall mean any agreement, contract, treaty,
certificate or other arrangement whereby any Insurance Subsidiary agrees to
transfer, cede or retrocede to another insurer or reinsurer all or part of the
liability assumed or assets held by such Insurance Subsidiary under a policy or
policies of insurance issued by such Insurance Subsidiary or under a reinsurance
agreement assumed by such Insurance Subsidiary.
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"Reinsurance Premiums Ceded" shall mean, for any Insurance Subsidiary,
for any period, the amount as shown on Schedule F-Part 3, column 1 of the
Annual Statement of such Insurance Subsidiary, or an amount determined in a
manner consistent for any period other than one for which an Annual Statement is
prepared.
"Reportable Event" shall mean (i) any "reportable event" within the
meaning of Section 4043(c) of ERISA for which the 30-day notice under Section
4043(a) of ERISA has not been waived by the PBGC (including any failure to meet
the minimum funding standard of, or timely make any required installment under,
Section 412 of the Internal Revenue Code or Section 302 of ERISA, regardless of
the issuance of any waivers in accordance with Section 412(d) of the Internal
Revenue Code), (ii) any such "reportable event" subject to advance notice to the
PBGC under Section 4043(b)(3) of ERISA, (iii) any application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Internal Revenue Code, and (iv) a cessation of operations described in Section
4062(e) of ERISA.
"Required Lenders" shall mean the Lenders holding outstanding Loans and
Unutilized Commitments (or, after the termination of the Commitments,
outstanding Loans) representing more than fifty-one percent (51%) of the
aggregate at such time of all outstanding Loans and Unutilized Commitments (or,
after the termination of the Commitments, the aggregate at such time of all
outstanding Loans).
"Requirement of Law" shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) in effect from time to time
during such Interest Period, as provided by the Federal Reserve Board, applied
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean the president, chief executive
officer, chief financial officer, or any other Financial Officer of the
Borrower, and any executive officer, other officer or similar official thereof
responsible for the administration of the obligations of the Borrower in respect
of this Agreement.
"Reverse Repurchase Agreement" shall mean, as to any Person, an
agreement pursuant to which such Person sells securities to another Person (the
"Counterparty") and agrees to
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repurchase such securities at a described or specified date and price, provided,
however, that "Reverse Repurchase Agreements" shall not include any agreement
pursuant to which such Person lends securities pursuant to a securities lending
arrangement to a Counterparty who collateralizes such borrowing with cash, Cash
Equivalents, letters of credit or other collateral acceptable to the Required
Lenders, and agrees to return such securities to such Person at a described or
specified date.
"SAP" shall mean, with respect to any Insurance Subsidiary, the
statutory accounting practices prescribed or permitted by the relevant Insurance
Regulatory Authority of its state of domicile, consistently applied and
maintained and in conformity with those used in the preparation of the most
recent statutory financial statements described in SECTION 4.11(e) (except where
changes are required by the relevant Insurance Regulatory Authority).
"Standard & Poor's" shall mean Standard & Poor's Rating Services, a
division of McGraw-Hill Companies, and its successors and assigns.
"Statutory Capital and Surplus" shall mean, as to any Insurance
Subsidiary, as of any date, the sum (without duplication) of the total amounts
shown (i) with respect to an Insurance Subsidiary not legally domiciled in the
United States, the shareholders' equity of such Insurance Subsidiary as
determined in accordance with GAAP (without regard to the requirements of FAS
115), and (ii) with respect to any other Insurance Subsidiary, on line 25,
column 1, page 3 of the Annual Statement of such Insurance Subsidiary, or the
sum of amounts determined in a consistent manner for any date other than one as
of which an Annual Statement is prepared.
"Subordinated Indebtedness" shall have the meaning given to such term
in SECTION 7.2.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and one or more
of its other Subsidiaries or a combination thereof (irrespective of whether, at
the time, securities of any other class or classes of any such corporation or
other Person shall or might have voting power by reason of the happening of any
contingency). When used without reference to a parent entity, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower.
"Surplus Relief Reinsurance Agreement" shall mean any agreement or
other arrangement whereby any Insurance Subsidiary cedes business under a
reinsurance agreement that would not be considered a transaction that
indemnifies an insurer against loss or liability relating to insurance risk, as
determined in accordance with Statement of Financial Accounting Standards No.
113 ("FAS 113") issued by the Financial Accounting Standards Board (without
regard to the effective date of FAS 113).
"Termination Date" shall mean the Maturity Date or such earlier date of
termination of the Commitments pursuant to SECTION 2.5 or SECTION 8.2.
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"Total Initial Commitments" shall mean $50,000,000 plus the amount of
the Additional Financing.
"Transnational Insurance" shall mean Transnational Insurance Company, a
Connecticut corporation and a Wholly Owned Subsidiary of PXRE Reinsurance as of
the date hereof.
"Trust Preferred Securities" shall mean the preferred securities issued
by PXRE Capital Trust I and any other preferred securities offered by a Delaware
statutory business trust of which the Borrower or any of its Subsidiaries is the
grantor, the proceeds of which securities are or have been used principally to
purchase debentures issued by the Borrower or an Affiliate of the Borrower or
such Subsidiary.
"Type" shall have the meaning given to such term in SECTION 2.2(a).
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Unutilized Commitment" shall mean, with respect to any Lender at any
time, such Lender's Commitment at such time less the aggregate principal amount
of all Loans made by such Lender that are outstanding at such time.
"Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, that 100% of the outstanding Capital Stock of such Subsidiary is owned,
directly or indirectly, by such Person.
1.2 Accounting Terms. Except as specifically provided otherwise in this
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them in accordance with GAAP (or, to
the extent that such terms apply solely to any Insurance Subsidiary or if
otherwise expressly required, SAP). Notwithstanding anything to the contrary in
this Agreement, for purposes of calculation of the financial covenants set forth
in ARTICLE VI, all accounting determinations and computations hereunder shall be
made in accordance with GAAP or SAP, as applicable, as in effect as of the date
of this Agreement applied on a basis consistent with the application used in
preparing the most recent financial statements of the Borrower referred to in
SECTIONS 4.11(a) and 4.11(e). In the event that any changes in GAAP or SAP after
such date are required to be applied to the Borrower and would affect the
computation of the financial covenants contained in ARTICLE VI, such changes
shall be followed only from and after the date this Agreement shall have been
amended to take into account any such changes. References to amounts on
particular exhibits, schedules, lines, pages and columns of any Annual Statement
or Quarterly Statement are based on the format promulgated by the NAIC for the
1997 Annual Statements and Quarterly Statements. In the event such format is
changed in future years so that different information is contained in such items
or they no longer exist, or if the Annual Statement or Quarterly Statement is
replaced by
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the NAIC or by any Insurance Regulatory Authority after the date hereof such
that different forms of financial statements are required to be furnished by the
Insurance Subsidiaries in lieu thereof, such references shall be to information
consistent with that reported in the referenced item in the 1997 Annual
Statements or Quarterly Statements, as the case may be.
1.3 Other Terms; Construction. Unless otherwise specified or unless the
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto. All references
herein to the Lenders or any of them shall be deemed to include the Issuing
Lender unless specifically provided otherwise or unless the context otherwise
requires.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments. Each Lender severally agrees, subject to and on the
terms and conditions of this Agreement, to make loans (each, a "Loan," and
collectively, the "Loans") to the Borrower, from time to time on any Business
Day during the period from and including the Closing Date to but not including
the Termination Date, in an aggregate principal amount at any time outstanding
not greater than its Commitment at such time, provided that no Borrowing of
Loans shall be made if, immediately after giving effect thereto, the aggregate
principal amount of Loans outstanding at such time would exceed the aggregate
Commitments at such time. Subject to and on the terms and conditions of this
Agreement, the Borrower may borrow, repay and reborrow Loans.
2.2 Borrowings. (a) The Loans shall, at the option of the Borrower and
subject to the terms and conditions of this Agreement, be either Base Rate Loans
or LIBOR Loans (each, a "Type" of Loan), provided that all Loans comprising the
same Borrowing shall, unless otherwise specifically provided herein, be of the
same Type.
(b) In order to make a Borrowing (other than Borrowings involving
continuations or conversions of outstanding Loans, which shall be made pursuant
to SECTION 2.11), the Borrower will give the Agent written notice of the
proposed Borrowing not later than 11:00 a.m., Charlotte time, three (3) Business
Days prior to each Borrowing to be comprised of LIBOR Loans and one (1) Business
Day prior to each Borrowing to be comprised of Base Rate Loans; provided,
however, that requests for the Borrowing of any Loans to be made on the Closing
Date may, at the discretion of the Agent, be given later than the times
specified hereinabove. Each such notice (each, a "Notice of Borrowing") shall be
irrevocable, shall be given in the form of EXHIBIT B-1 and shall specify (1) the
aggregate principal amount and initial Type of the Loans to be made pursuant to
such Borrowing, (2) in the case of a Borrowing of LIBOR Loans, the initial
Interest Period to be applicable thereto, and (3) the requested date of such
Borrowing (the "Borrowing Date"), which shall be a Business Day. Upon its
receipt of a Notice of Borrowing, the Agent
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will promptly notify each Lender of the proposed Borrowing. Notwithstanding
anything to the contrary contained herein:
(i) the aggregate principal amount of each Borrowing
comprised of Base Rate Loans shall not be less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof (or, if
less, in the amount of the aggregate Unutilized Commitments), and the
aggregate principal amount of each Borrowing comprised of LIBOR Loans
shall not be less than $3,000,000 or, if greater, an integral multiple
of $1,000,000 in excess thereof;
(ii) if the Borrower shall have failed to designate the Type
of Loans comprising a Borrowing, the Borrower shall be deemed to have
requested a Borrowing comprised of Base Rate Loans; and
(iii) if the Borrower shall have failed to select the duration
of the Interest Period to be applicable to any Borrowing of LIBOR
Loans, then the Borrower shall be deemed to have selected an Interest
Period with a duration of one month.
(c) Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, each Lender will make available to the Agent at its office
referred to in SECTION 10.5 (or at such other location as the Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the Loan to be made by such Lender. To the extent the Lenders have
made such amounts available to the Agent as provided hereinabove, the Agent will
make the aggregate of such amounts available to the Borrower in accordance with
SECTION 2.3(a) and in like funds as received by the Agent.
2.3 Disbursements; Funding Reliance; Domicile of Loans. (a) The
Borrower hereby authorizes the Agent to disburse the proceeds of each Borrowing
in accordance with the terms of any written instructions from any of the
Authorized Officers, provided that the Agent shall not be obligated under any
circumstances to forward amounts to any account not listed in an Account
Designation Letter. The Borrower may at any time deliver to the Agent an Account
Designation Letter listing any additional accounts or deleting any accounts
listed in a previous Account Designation Letter.
(b) Unless the Agent has received, prior to 1:00 p.m., Charlotte time,
on the relevant Borrowing Date, written notice from a Lender that such Lender
will not make available to the Agent such Lender's ratable portion of the
relevant Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent in immediately available funds on such Borrowing Date in
accordance with the applicable provisions of SECTION 2.2, and the Agent may, in
reliance upon such assumption, but shall not be obligated to, make a
corresponding amount available to the Borrower on such Borrowing Date. If and to
the extent that such Lender shall not have made such portion available to the
Agent, and the Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, (i) in the case
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of such Lender, at the Federal Funds Rate, and (ii) in the case of the Borrower,
at the rate of interest applicable at such time to the Type of Loans comprising
such Borrowing, as determined under the provisions of SECTION 2.8. If such
Lender shall repay to the Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement. The failure of any Lender to make any Loan required to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Loan as part of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender as part of any Borrowing.
(c) Each Lender may, at its option, make and maintain any Loan at, to
or for the account of any of its Lending Offices, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
2.4 Notes. (a) The Loans made by each Lender shall be evidenced by a
Note appropriately completed in substantially the form of EXHIBIT A.
(b) Each Note issued to a Lender shall (i) be executed by the Borrower,
(ii) be payable to the order of such Lender, (iii) be dated as of the Closing
Date (or, in the case of a Note issued after the Closing Date, dated the
effective date of such Lender's signature to the Joinder Agreement or the
Assignment and Acceptance with respect to such Lender, as applicable), (iv) be
in a stated principal amount equal to such Lender's Commitment, (v) bear
interest in accordance with the provisions of SECTION 2.8, as the same may be
applicable from time to time to the Loans made by such Lender, and (vi) be
entitled to all of the benefits of this Agreement and the other Credit Documents
and subject to the provisions hereof and thereof.
(c) Each Lender will record on its internal records the amount and Type
of each Loan made by it and each payment received by it in respect thereof and
will, in the event of any transfer of any of its Notes, either endorse on the
reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount and Type of the Loans evidenced
thereby as of the date of transfer or provide such information on a schedule to
the Assignment and Acceptance relating to such transfer; provided, however, that
the failure of any Lender to make any such recordation or provide any such
information, or any error therein, shall not affect the Borrower's obligations
under this Agreement or the Notes.
2.5 Termination and Reduction of Commitments. (a) The Commitments shall
be automatically and permanently terminated on the Termination Date (or on
December 31, 1998, but only if the Closing Date shall not have occurred on or
prior to such date).
(b) On each date set forth below, the aggregate Commitments shall be
automatically and permanently reduced by the percentage of the Total Initial
Commitments set forth below opposite such date:
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<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
March 31, 2000 13 1/3 %
March 31, 2001 13 1/3 %
March 31, 2002 13 1/3 %
March 31, 2003 13 1/3 %
March 31, 2004 13 1/3 %
March 31, 2005 33 1/3 %
</TABLE>
or, if less, the remaining balance of the aggregate Commitments.
(c) The Commitments shall, on the day two (2) Business Days after the
receipt of Net Cash Proceeds therefor, be automatically and permanently reduced
by the amount of the Net Cash Proceeds with respect to any Asset Disposition,
Hybrid Securities Issuance or Debt Issuance. Promptly upon (and in any event not
later than two (2) Business Days after) its receipt of such Net Cash Proceeds,
the Borrower will deliver to the Agent a certificate signed by a Financial
Officer of the Borrower in form and substance satisfactory to the Agent and
setting forth the calculation of such Net Cash Proceeds. Notwithstanding the
foregoing, nothing in this subsection shall be deemed to permit any Asset
Disposition not expressly permitted under SECTION 7.4.
(d) At any time and from time to time after the date hereof, upon not
less than five (5) Business Days' prior written notice to the Agent, the
Borrower may terminate in whole or reduce in part the aggregate Unutilized
Commitments, provided that any such partial reduction shall be in an aggregate
amount of not less than $1,000,000 or, if greater, an integral multiple thereof.
The amount of any termination or reduction made under this subsection (d) may
not thereafter be reinstated.
(e) Each reduction of the Commitments pursuant to this Section shall be
applied ratably among the Lenders according to their respective Commitments.
Each reduction of the Commitments pursuant to subsections (c) or (d) shall be
applied to reduce the scheduled reductions of the Commitments set forth in
subsection (b) pro rata among the remaining scheduled reductions.
2.6 Mandatory Payments and Prepayments. (a) Except to the extent due or
paid sooner pursuant to the provisions of this Agreement, the aggregate
outstanding principal of the Loans shall be due and payable in full on the
Maturity Date.
(b) In the event that, at any time (including, without limitation, in
the event of a mandatory reduction of the Commitments pursuant to SECTION
2.5(c)), the aggregate principal amount of Loans outstanding at such time shall
exceed the aggregate Commitments at such time (after giving effect to any
concurrent termination or reduction thereof), the Borrower will immediately
prepay the outstanding principal amount of the Loans in the amount of such
excess.
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(c) Each prepayment of the Loans made pursuant to SECTION 2.6(b) above
shall be applied first to prepay all Base Rate Loans before any LIBOR Loans are
prepaid. Each payment or prepayment pursuant to the provisions of this SECTION
2.6 shall be applied ratably among the Lenders holding the Loans being prepaid,
in proportion to the principal amount held by each.
(d) Each payment or prepayment of a LIBOR Loan made pursuant to the
provisions of this Section on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
SECTION 2.18 to be paid as a consequence thereof; provided, however, at the
request of the Borrower, any amount of any such prepayment of a LIBOR Loan
required by SECTION 2.6(b) as a result of the application of SECTION 2.5(c)
shall be deposited in a Prepayment Account (as defined below). The Agent shall
apply any cash deposited in the Prepayment Account to prepay LIBOR Loans on the
day interest on such LIBOR Loans would be due and payable under SECTION 2.8(c)
(or, at the direction of the Borrower, on any earlier date) until all
outstanding Loans have been prepaid or until all the allocable cash on deposit
in the Prepayment Account has been exhausted. Until the cash deposited in the
Prepayment Account is so applied, the applicable LIBOR Loan shall be deemed not
to have been repaid and shall continue to accrue interest pursuant to SECTION
2.8. For purposes of this Agreement, the term "Prepayment Account" shall mean an
account established by the Borrower with the Agent and over which the Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal for application in accordance with this paragraph. The Agent will, at
the request of the Borrower, invest amounts on deposit in the Prepayment Account
in Cash Equivalents that mature prior to the last day of the applicable Interest
Periods of the LIBOR Loans to be prepaid; provided, however, that (i) the Agent
shall not be required to make any investment that, in its sole judgment, would
require or cause the Agent to be in, or would result in any, violation of any
law, statute, rule or regulation, (ii) such Cash Equivalents shall be subjected
to a first priority perfected security interest in favor of the Agent and (iii)
if an Event of Default shall have occurred and be continuing, the selection of
such investments shall be in the sole discretion of the Agent. The Borrower
shall indemnify the Agent for any losses relating to the investments so that the
amount available to prepay LIBOR Loans on the last day of the applicable
Interest Period is not less than the amount that would have been available had
no investments been made pursuant thereto. Other than any interest or profits
earned on such investments, the Prepayment Accounts shall not bear interest.
Interest or profits, if any, on the investments in any Prepayment Account shall
accumulate in such Prepayment Account and shall be applied on the day when
prepayment is made (x) first, to pay interest due and payable under SECTION
2.8(c), (y) second, as a further prepayment of the applicable LIBOR Loan, and
(z) to the extent of any excess, at the direction of the Borrower. If the
maturity of the Loans has been accelerated pursuant to SECTION 8.2, the Agent
may, in its sole discretion, apply all amounts on deposit in the Prepayment
Account to satisfy any of the Obligations. The Borrower hereby pledges and
assigns to the Agent, for its benefit and the benefit of the Lenders, each
Prepayment Account established hereunder to secure the Obligations.
2.7 Voluntary Prepayments. (a) At any time and from time to time, the
Borrower shall have the right to prepay the Loans, in whole or in part, without
premium or penalty (except as provided in clause (iii) below), upon written
notice given to the Agent not later than 11:00 a.m., Charlotte time, three (3)
Business Days prior to each intended prepayment of LIBOR Loans
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and one (1) Business Day prior to each intended prepayment of Base Rate Loans,
provided that (i) each partial prepayment shall be in an aggregate principal
amount of not less than $1,000,000 or, if greater, an integral multiple of
$500,000 in excess thereof, (ii) no partial prepayment of LIBOR Loans made
pursuant to any single Borrowing shall reduce the aggregate outstanding
principal amount of the remaining LIBOR Loans under such Borrowing to less than
$3,000,000 or to any greater amount not an integral multiple of $1,000,000 in
excess thereof, and (iii) unless made together with all amounts required under
SECTION 2.18 to be paid as a consequence of such prepayment, a prepayment of a
LIBOR Loan may be made only on the last day of the Interest Period applicable
thereto. Each such notice shall specify the proposed date of such prepayment and
the aggregate principal amount and Type of the Loans to be prepaid (and, in the
case of LIBOR Loans, the Interest Period of the Borrowing pursuant to which
made), and shall be irrevocable and shall bind the Borrower to make such
prepayment on the terms specified therein. Loans prepaid pursuant to this
subsection (a) may be reborrowed, subject to the terms and conditions of this
Agreement.
(b) Each prepayment of the Loans made pursuant to subsection (a) above
shall be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each.
2.8 Interest. (a) The Borrower will pay interest in respect of the
unpaid principal amount of each Loan, from the date of Borrowing thereof until
such principal amount shall be paid in full, (i) at the Adjusted Base Rate, as
in effect from time to time during such periods as such Loan is a Base Rate
Loan, and (ii) at the Adjusted LIBOR Rate, as in effect from time to time during
such periods as such Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of an Event of
Default as the result of failure by the Borrower to pay any principal of or
interest on any Loan, any fees or other amount hereunder when due (whether at
maturity, pursuant to acceleration or otherwise), and (at the election of the
Required Lenders) upon the occurrence and during the continuance of any other
Event of Default, all outstanding principal amounts of the Loans and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other accrued and outstanding fees and other amounts hereunder, shall bear
interest at a rate per annum equal to the interest rate applicable from time to
time thereafter to such Loans (whether the Adjusted Base Rate or the Adjusted
LIBOR Rate) plus 2% (or, in the case of fees and other amounts, at the Adjusted
Base Rate plus 2%), and, in each case, such default interest shall be payable on
demand. To the greatest extent permitted by law, interest shall continue to
accrue after the filing by or against the Borrower of any petition seeking any
relief in bankruptcy or under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each Base Rate Loan (including any Base
Rate Loan or portion thereof paid or prepaid pursuant to the provisions
of SECTION 2.6, except as provided hereinbelow), in arrears on the last
Business Day of each calendar quarter, beginning with the first such
day to occur after the Closing Date; provided, that in the
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event the Loans are repaid or prepaid in full and the Commitments have
been terminated, then accrued interest in respect of all Base Rate
Loans shall be payable together with such repayment or prepayment on
the date thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan
or portion thereof paid or prepaid pursuant to the provisions of
SECTION 2.6, except as provided hereinbelow), in arrears (y) on the
last Business Day of the Interest Period applicable thereto (subject to
the provisions of clause (iv) in SECTION 2.10) and (z) in addition, in
the case of a LIBOR Loan with an Interest Period having a duration of
six months or longer, on each date on which interest would have been
payable under clause (y) above had successive Interest Period of three
months' duration been applicable to such LIBOR Loan; provided that in
the event all LIBOR Loans made pursuant to a single Borrowing are
repaid or prepaid in full, then accrued interest in respect of such
LIBOR Loans shall be payable together with such repayment or prepayment
on the date thereof; and
(iii) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Credit Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Agent to provide the Borrower or the Lenders
with any such notice shall neither affect any obligations of the Borrower or the
Lenders hereunder nor result in any liability on the part of the Agent to the
Borrower or any Lender. Each such determination (including each determination of
the Reserve Requirement) shall, absent manifest error, be conclusive and binding
on all parties hereto.
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2.9 Fees. The Borrower agrees to pay:
(a) To First Union, for its own account, on the date of its execution
of this Agreement, the fee described in paragraph (1) of the Fee Letter, in the
amount set forth therein as due and payable on such date and to the extent not
theretofore paid to First Union;
(b) To the Agent, for the account of each Lender, a commitment fee for
each calendar quarter (or portion thereof) for the period from the date of this
Agreement to the Termination Date, at a per annum rate equal to the Applicable
Margin Percentage in effect for such fee from time to time during such quarter,
on such Lender's ratable share (based on the proportion that its Commitment
bears to the aggregate Commitments) of the average daily aggregate Unutilized
Commitments, payable in arrears (i) on the last Business Day of each calendar
quarter, beginning with the first such day to occur after the Closing Date, and
(ii) on the Termination Date; and
(c) To the Agent, for its own account, the annual administrative fee
described in paragraph (3) of the Fee Letter, on the terms, in the amounts and
at the times set forth therein.
2.10 Interest Periods. Concurrently with the giving of a Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of Base Rate Loans to be converted into, or LIBOR Loans to be
continued as, LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, three or six-month period; provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at
all times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall
commence on the date of the Borrowing of such LIBOR Loan (including the
date of any continuation of, or conversion into, such LIBOR Loan), and
each successive Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) LIBOR Loans may not be outstanding under more than seven
(7) separate Interest Periods at any one time (for which purpose
Interest Periods shall be deemed to be separate even if they are
coterminous);
(iv) if any Interest Period otherwise would expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day unless such next succeeding Business Day
falls in another calendar month, in which case such Interest Period
shall expire on the next preceding Business Day;
(v) the Borrower may not select any Interest Period that
expires after the Maturity Date;
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(vi) no Interest Period may be selected that would end after a
scheduled date for repayment of principal of the Loans occurring on or
after the first day of such Interest Period unless, immediately after
giving effect to such selection, the aggregate principal amount of
Loans that are Base Rate Loans or that have Interest Periods expiring
on or before such principal repayment date equals or exceeds the
principal amount required to be paid on such principal repayment date;
and
(vii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month during which
such Interest Period would otherwise expire, such Interest Period shall
expire on the last Business Day of such calendar month.
2.11 Conversions and Continuations. (a) The Borrower shall have the
right, on any Business Day occurring on or after the Closing Date, to elect (i)
to convert all or a portion of the outstanding principal amount of any Base Rate
Loans into LIBOR Loans, or to convert any LIBOR Loans the Interest Periods for
which end on the same day into Base Rate Loans, or (ii) to continue all or a
portion of the outstanding principal amount of any LIBOR Loans the Interest
Periods for which end on the same day for an additional Interest Period,
provided that (x) any such conversion of LIBOR Loans into Base Rate Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; any such conversion
of Base Rate Loans into, or continuation of, LIBOR Loans shall involve an
aggregate principal amount of not less than $3,000,000 or, if greater, an
integral multiple of $1,000,000 in excess thereof; and no partial conversion of
LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding
principal amount of such LIBOR Loans to less than $3,000,000 or to any greater
amount not an integral multiple of $1,000,000 in excess thereof, (y) except as
otherwise provided in SECTION 2.16(d), LIBOR Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto (and,
in any event, if a LIBOR Loan is converted into a Base Rate Loan on any day
other than the last day of the Interest Period applicable thereto, the Borrower
will pay, upon such conversion, all amounts required under SECTION 2.18 to be
paid as a consequence thereof), and (z) no conversion of Base Rate Loans into
LIBOR Loans or continuation of LIBOR Loans shall be permitted during the
continuance of a Default or Event of Default.
(b) The Borrower shall make each such election by giving the Agent
written notice not later than 11:00 a.m., Charlotte time, three (3) Business
Days prior to the intended effective date of any conversion of Base Rate Loans
into, or continuation of, LIBOR Loans and one (1) Business Day prior to the
intended effective date of any conversion of LIBOR Loans into Base Rate Loans.
Each such notice (each, a "Notice of Conversion/Continuation") shall be
irrevocable, shall be given in the form of EXHIBIT B-2 and shall specify (x) the
date of such conversion or continuation (which shall be a Business Day), (y) in
the case of a conversion into, or a continuation of, LIBOR Loans, the Interest
Period to be applicable thereto, and (z) the aggregate amount and Type of the
Loans being converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Agent will promptly notify each Lender of the
proposed conversion or continuation. In the event that the Borrower shall fail
to deliver a Notice of Conversion/Continuation as provided herein with respect
to any outstanding LIBOR Loans, such
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LIBOR Loans shall automatically be converted to Base Rate Loans upon the
expiration of the then current Interest Period applicable thereto (unless repaid
pursuant to the terms hereof). In the event the Borrower shall have failed to
select in a Notice of Conversion/Continuation the duration of the Interest
Period to be applicable to any conversion into, or continuation of, LIBOR Loans,
then the Borrower shall be deemed to have selected an Interest Period with a
duration of one month.
2.12 Method of Payments; Computations. (a) All payments by the Borrower
hereunder shall be made without setoff, counterclaim or other defense, in
Dollars and in immediately available funds to the Agent, for the account of the
Lenders entitled to such payment (except as otherwise expressly provided herein
as to payments required to be made directly to the Issuing Lender and the
Lenders) at its office referred to in SECTION 10.5, prior to 12:00 noon,
Charlotte time, on the date payment is due. Any payment made as required
hereinabove, but after 12:00 noon, Charlotte time, shall be deemed to have been
made on the next succeeding Business Day. If any payment falls due on a day that
is not a Business Day, then such due date shall be extended to the next
succeeding Business Day (except that in the case of LIBOR Loans to which the
provisions of clause (iv) in SECTION 2.10 are applicable, such due date shall be
the next preceding Business Day), and such extension of time shall then be
included in the computation of payment of interest, fees or other applicable
amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of the Lenders as follows: (i) if the
payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 12:00 noon,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be disbursed by the Agent until the date
repaid to such Lender. The Agent will distribute to the Issuing Lender like
amounts relating to payments made to the Agent for the account of the Issuing
Lender in the same manner, and subject to the same terms and conditions, as set
forth hereinabove with respect to distributions of amounts to the Lenders.
(c) Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment is due to any Lender hereunder
that such payment will not be made in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date, and the Agent
may, in reliance on such assumption, but shall not be obligated to, cause to be
distributed to such Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the
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Agent, and without limiting the obligation of the Borrower to make such payment
in accordance with the terms hereof, such Lender shall repay to the Agent
forthwith on demand such amount so distributed to such Lender, together with
interest thereon for each day from the date such amount is so distributed to
such Lender until the date repaid to the Agent, at the Federal Funds Rate.
(d) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 365 or 366 days, as the case may be (in the case of interest on
Base Rate Loans), or 360 days (in all other instances), and the actual number of
days (including the first day, but excluding the last day) elapsed.
2.13 Recovery of Payments. (a) The Borrower agrees that to the extent
the Borrower makes a payment or payments to or for the account of the Agent, any
Lender or the Issuing Lender, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or similar state or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, the Obligation intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been received.
(b) If any amounts distributed by the Agent to any Lender are
subsequently returned or repaid by the Agent to the Borrower or its
representative or successor in interest, whether by court order or by settlement
approved by the Lender in question, such Lender will, promptly upon receipt of
notice thereof from the Agent, pay the Agent such amount. If any such amounts
are recovered by the Agent from the Borrower or its representative or successor
in interest, the Agent will redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.
2.14 Use of Proceeds. The proceeds of the Loans shall be used to
finance Permitted Acquisitions and stock repurchases, to contribute capital to
the Insurance Subsidiaries and for working capital and general corporate
purposes and in accordance with the terms and provisions of this Agreement
(provided that Permitted Acquisitions may only be effected in accordance with
the terms and provisions of this Agreement, including without limitation the
provisions set forth in SECTION 5.9).
2.15 Pro Rata Treatment. (a) All fundings, continuations and
conversions of Loans shall be made by the Lenders pro rata on the basis of their
respective Commitments (in the case of the initial funding of Loans pursuant to
SECTION 2.2) or on the basis of their respective outstanding Loans (in the case
of continuations and conversions of Loans pursuant to SECTION 2.11, and
additionally in all cases in the event the Commitments have expired or have been
terminated), as the case may be from time to time. All payments on account of
principal of or interest on any Loans, fees or any other Obligations owing to or
for the account of any one or more Lenders shall be apportioned ratably among
such Lenders in proportion to the amounts of such principal, interest, fees or
other Obligations owed to them respectively.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien,
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counterclaim or cross action, or otherwise, other than pursuant to SECTION 10.7)
applicable to the payment of any of the Obligations that exceeds its ratable
share (according to the proportion of (i) the amount of such Obligations due and
payable to such Lender at such time to (ii) the aggregate amount of such
Obligations due and payable to all Lenders at such time) of payments on account
of such Obligations then or therewith obtained by all the Lenders to which such
payments are required to have been made, such Lender shall forthwith purchase
from the other Lenders such participations in such Obligations as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each such other Lender shall be rescinded and each
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery, together with an amount equal to such other Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to the provisions of this subsection may, to the fullest extent
permitted by law, exercise any and all rights of payment (including, without
limitation, setoff, banker's lien or counterclaim) with respect to such
participation as fully as if such participant were a direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or similar law, any Lender receives a secured claim in
lieu of a setoff to which this subsection 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 entitled under this subsection
to share in the benefits of any recovery on such secured claim.
2.16 Increased Costs; Change in Circumstances; Illegality; etc. (a) If,
at any time after the date hereof and from time to time, the introduction of or
any change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), shall (i) subject such Lender to any tax or other charge, or
change the basis of taxation of payments to such Lender, in respect of any of
its LIBOR Loans or any other amounts payable hereunder or its obligation to
make, fund or maintain any LIBOR Loans (other than any change in the rate or
basis of tax on the overall net income, or a franchise tax imposed in lieu of a
tax on the overall net income, of such Lender or its applicable Lending Office),
(ii) impose, modify or deem applicable any reserve, special deposit or similar
requirement (other than as a result of any change in the Reserve Requirement)
against assets of, deposits with or for the account of, or credit extended by,
such Lender or its applicable Lending Office, or (iii) impose on such Lender or
its applicable Lending Office any other condition, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any LIBOR Loans or to reduce the amount of any sum received or receivable by
such Lender hereunder, the Borrower will, promptly upon demand therefor by such
Lender, pay to such Lender such additional amounts as shall compensate such
Lender for such increase in costs or reduction in return.
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(b) If, at any time after the date hereof and from time to time, any
Lender shall have reasonably determined that the introduction of or any change
in any applicable law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law), has or would have the effect, as a consequence of
such Lender's Commitment or Loans hereunder, of reducing the rate of return on
the capital of such Lender or any Person controlling such Lender to a level
below that which such Lender or controlling Person could have achieved but for
such introduction, change or compliance (taking into account such Lender's or
controlling Person's policies with respect to capital adequacy), the Borrower
will, promptly upon demand therefor by such Lender therefor, pay to such Lender
such additional amounts as will compensate such Lender or controlling Person for
such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (y) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period or (z) the Agent
shall have received written notice from the Required Lenders of their
determination that the rate of interest referred to in the definition of "LIBOR
Rate" upon the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such
Interest Period is to be determined will not adequately and fairly reflect the
cost to such Lenders of making or maintaining LIBOR Loans during such Interest
Period, the Agent will forthwith so notify the Borrower and the Lenders. Upon
such notice, (i) all then outstanding LIBOR Loans shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans, (ii) the obligation of
the Lenders to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to the Borrowing to which such
Interest Period applies), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall be deemed to be a request for Base Rate Loans, in each case until the
Agent or the Required Lenders, as the case may be, shall have determined that
the circumstances giving rise to such suspension no longer exist (and the
Required Lenders, if making such determination, shall have so notified the
Agent), and the Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Agent and the Borrower. Upon such notice, (i) each of such Lender's then
outstanding LIBOR Loans shall automatically, on the expiration date of the
respective Interest Period applicable thereto (or, to the extent any such LIBOR
Loan may not lawfully be maintained as a LIBOR Loan until such expiration date,
upon such notice), be converted into a Base Rate Loan, (ii) the obligation of
such Lender to make, to convert Base Rate Loans into, or
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to continue, LIBOR Loans shall be suspended (including pursuant to any Borrowing
for which the Agent has received a Notice of Borrowing but for which the
Borrowing Date has not arrived), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall, as to such Lender, be deemed to be a request for a Base Rate Loan, in
each case until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the Agent,
and the Agent shall have so notified the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. No failure by the
Agent or any Lender at any time to demand payment of any amounts payable under
this Section shall constitute a waiver of its right to demand payment of any
additional amounts arising at any subsequent time. Nothing in this Section shall
require or be construed to require the Borrower to pay any interest, fees, costs
or other amounts in excess of that permitted by applicable law.
2.17 Taxes. (a) Any and all payments by the Borrower hereunder or under
any Note shall be made, in accordance with the terms hereof and thereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, other than net income and franchise taxes imposed on the Agent
or any Lender by the United States or by the jurisdiction under the laws of
which the Agent or such Lender, as the case may be, is organized or in which its
principal office or any country in which it receives payments hereunder or (in
the case of a Lender) its applicable Lending Office is located, or by any
political subdivision or taxing authority thereof, or by any other jurisdiction
as a result of a connection of the Lender or Agent to such jurisdiction other
than a connection resulting from entering into or enforcing this Agreement (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to the Agent or any Lender, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), the Agent or such Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower will make such deductions, (iii) the Borrower will pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower will deliver to the Agent
or such Lender, as the case may be, evidence of such payment.
(b) The Borrower will indemnify the Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Agent or such
Lender, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall be made within 30
days from the date the Agent or such Lender, as the case may be, makes written
demand therefor.
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(c) Each of the Agent and the Lenders agrees that if it subsequently
recovers, or receives a permanent net tax benefit (as opposed to a mere timing
difference benefit) with respect to, any amount of Taxes (i) previously paid by
it and as to which it has been indemnified by or on behalf of the Borrower or
(ii) previously deducted by the Borrower (including, without limitation, any
Taxes deducted from any additional sums payable under clause (i) of subsection
(a) above), the Agent or such Lender, as the case may be, shall reimburse the
Borrower to the extent of the amount of any such recovery or permanent net tax
benefit (but only to the extent of indemnity payments made, or additional
amounts paid, by or on behalf of the Borrower under this Section with respect to
the Taxes giving rise to such recovery or tax benefit); provided, however, that
the Borrower, upon the request of the Agent or such Lender, agrees to repay to
the Agent or such Lender, as the case may be, the amount paid over to the
Borrower (together with any penalties, interest or other charges), in the event
the Agent or such Lender is required to repay such amount to the relevant taxing
authority or other Governmental Authority. The determination by the Agent or any
Lender of the amount of any such recovery or permanent net tax benefit shall, in
the absence of manifest error, be conclusive and binding.
(d) If any Lender is incorporated or organized under the laws of a
jurisdiction other than the United States of America or any state thereof (a
"Non-U.S. Lender"), such Non-U.S. Lender will deliver to each of the Agent and
the Borrower, on or prior to the Closing Date (or, in the case of a Non-U.S.
Lender that becomes a party to this Agreement as a result of an assignment or
execution of a Joinder Agreement after the Closing Date, on the effective date
of such assignment or execution), (i) in the case of a Non-U.S. Lender that is a
"bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue Code, a
properly completed Internal Revenue Service Form 4224 or 1001, as applicable (or
successor forms), certifying that such Non-U.S. Lender is entitled to an
exemption from United States federal income taxes in connection with payments
under this Agreement or any of the Notes, together with a properly completed
Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms),
and (ii) in the case of a Non-U.S. Lender that is not a "bank" for purposes of
Section 881(c)(3)(A) of the Internal Revenue Code, a certificate in form and
substance reasonably satisfactory to the Agent and the Borrower and to the
effect that (x) such Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been treated as a
bank for purposes of any tax, securities law or other filing or submission made
to any governmental authority, any application made to a rating agency or
qualification for any exemption from any tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder for purposes of Section
881(c)(3)(B) of the Internal Revenue Code and (z) is not a controlled foreign
corporation receiving interest from a related person for purposes of Section
881(c)(3)(C) of the Internal Revenue Code, together with a properly completed
Internal Revenue Service Form W-8 (or a successor form). Each such Non-U.S.
Lender further agrees to deliver to each of the Agent and the Borrower an
additional copy of each such relevant form on or before the date that such form
expires or becomes obsolete or after the occurrence of any event (including a
change in its applicable Lending Office) requiring a change in the most recent
forms so delivered by it, in each case certifying that such Non-U.S. Lender is
entitled to an exemption from withholding or deduction for or on account of
United States federal income taxes in connection with payments under this
Agreement or any of the Notes, unless an event (including, without limitation,
any
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change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required, which event renders all such
forms inapplicable or the exemption to which such forms relate unavailable and
such Non-U.S. Lender notifies the Agent and the Borrower that it is not entitled
to receive payments without deduction or withholding of United States federal
income taxes. Each such Non-U.S. Lender will promptly notify the Agent and the
Borrower of any changes in circumstances that would modify or render invalid any
claimed exemption or reduction.
(e) If any of the forms or other documentation required under
subsection (d) above are not delivered to the Borrower and the Agent as therein
required, then the Borrower and the Agent may withhold from any interest payment
owed to such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax, and the Borrower shall not be
required to indemnify or make an increased payment to the Agent or Lender
pursuant to subsection (a) or (b) hereunder.
2.18 Compensation. The Borrower will compensate each Lender upon demand
for all losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund or maintain LIBOR
Loans) that such Lender may incur or sustain (i) if for any reason (other than a
default by such Lender) a Borrowing or continuation of, or conversion into, a
LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation, (ii) if any repayment, prepayment or
conversion of any LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of acceleration
of the maturity of the Loans pursuant to SECTION 8.2), (iii) if any prepayment
of any LIBOR Loan is not made on any date specified in a notice of prepayment
given by the Borrower or (iv) as a consequence of any other failure by the
Borrower to make any payments with respect to any LIBOR Loan when due hereunder.
Calculation of all amounts payable to a Lender under this Section shall be made
as though such Lender had actually funded its relevant LIBOR Loan through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an amount
equal to the amount of such LIBOR Loan, having a maturity comparable to the
relevant Interest Period; provided, however, that each Lender may fund its LIBOR
Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section. Determinations
by any Lender for purposes of this Section of any such losses, expenses or
liabilities shall, absent manifest error, be conclusive, provided that such
determinations are made in good faith.
2.19 Additional Financing Adjustment. Upon the execution of the Joinder
Agreements and the satisfaction of the conditions set forth in SECTION 3.2, each
Lender party to a Joinder Agreement shall make available to the Agent for
payment to the Lenders not party to any such Joinder Agreement, in immediately
available funds, its pro rata share of all outstanding Loans, such that
immediately thereafter, each Lender's share of the outstanding Loans shall equal
the percentage its Commitment bears to the aggregate Commitments.
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ARTICLE III
CONDITIONS OF BORROWING
3.1 Conditions of Initial Borrowing. The obligation of any Lender to
make Loans in connection with the initial Borrowing hereunder on the Closing
Date is subject to the satisfaction of the following conditions precedent:
(a) The Agent shall have received the following, each dated as of the
Closing Date (unless otherwise specified):
(i) a Note for each Lender that is a party hereto as of the
Closing Date, in the amount of such Lender's Commitment, each duly
completed in accordance with the relevant provisions of SECTION 2.4 and
executed by the Borrower;
(ii) the favorable opinions of Morgan, Lewis & Bockius LLP,
special counsel to the Borrower, and of Clyde & Co., special counsel to
PXRE Ltd., in substantially the form of EXHIBITS E-1 and E-2.
(b) The Agent shall have received a certificate, signed by the
president, the chief executive officer, an executive or senior vice president,
or the chief financial officer of the Borrower, in form and substance
satisfactory to the Agent, certifying that (i) all representations and
warranties of the Borrower contained in this Agreement and the other Credit
Documents are true and correct as of the Closing Date, both immediately before
and after giving effect to the consummation of the transactions contemplated
hereby, the making of the initial Loans hereunder and the application of the
proceeds thereof, (ii) no Default or Event of Default has occurred and is
continuing, both immediately before and after giving effect to the consummation
of the transactions contemplated hereby, the making of the initial Loans
hereunder and the application of the proceeds thereof, (iii) there are no
insurance regulatory proceedings pending or, to such individual's knowledge,
threatened against any Insurance Subsidiary in any jurisdiction that, if
adversely determined, would be reasonably likely to have a Material Adverse
Effect; (iv) both immediately before and after giving effect to the consummation
of the transactions contemplated hereby, the making of the initial Loans
hereunder and the application of the proceeds thereof, no Material Adverse
Change has occurred since December 31, 1997, and there exists no event,
condition or state of facts that could reasonably be expected to result in a
Material Adverse Change, and (v) all conditions to the initial extensions of
credit hereunder set forth in this Section and in SECTION 3.2 have been
satisfied or waived as required hereunder.
(c) The Agent shall have received a certificate of the secretary or an
assistant secretary of the Borrower, in form and substance satisfactory to the
Agent, certifying (i) that attached thereto is a true and complete copy of the
articles or certificate of incorporation and all amendments thereto of the
Borrower, certified as of a recent date by the Secretary of State (or comparable
Governmental Authority) of its jurisdiction of organization, and that the same
has not been amended since the date of such certification, (ii) that attached
thereto is a true and complete copy of the bylaws of the Borrower, as then in
effect and as in effect at all times from
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the date on which the resolutions referred to in clause (iii) below were adopted
to and including the date of such certificate, and (iii) that attached thereto
is a true and complete copy of resolutions adopted by the board of directors of
the Borrower authorizing the execution, delivery and performance of this
Agreement and the other Credit Documents to which it is a party, and as to the
incumbency and genuineness of the signature of each officer of the Borrower
executing this Agreement or any of such other Credit Documents, and attaching
all such copies of the documents described above.
(d) The Agent shall have received (i) a certificate as of a recent date
of the good standing of each of the Borrower and, to the extent available, its
Material Subsidiaries under the laws of its jurisdiction of organization, from
the Secretary of State (or comparable Governmental Authority) of such
jurisdiction and (ii) as to each Material Insurance Subsidiary, to the extent
available, a certificate of compliance as of a recent date, issued by the
Insurance Regulatory Authority of its jurisdiction of legal domicile and any
other jurisdiction in which such Insurance Subsidiary is reasonably likely to be
commercially domiciled as defined under the laws and regulations of such
jurisdiction.
(e) All legal matters, documentation, and corporate or other
proceedings incident to the transactions contemplated hereby shall be
satisfactory in form and substance to the Agent; all approvals, permits and
consents of any Governmental Authorities (including, without limitation, all
relevant Insurance Regulatory Authorities) or other Persons required in
connection with the execution and delivery of this Agreement and the other
Credit Documents and the consummation of the transactions contemplated hereby
and thereby shall have been obtained, without the imposition of conditions that
are not acceptable to the Agent, and all related filings, if any, shall have
been made, and all such approvals, permits, consents and filings shall be in
full force and effect and the Agent shall have received such copies thereof as
it shall have requested; all applicable waiting periods shall have expired
without any adverse action being taken by any Governmental Authority having
jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental Authority, in each case to enjoin, restrain or prohibit, to obtain
substantial damages in respect of, or that is otherwise related to or arises out
of, this Agreement, any of the other Credit Documents or the consummation of the
transactions contemplated hereby or thereby, or that, in the opinion of the
Agent, could reasonably be expected to have a Material Adverse Effect.
(f) The Agent shall have received certified reports from an independent
search service satisfactory to it listing any judgment or tax lien filing or
Uniform Commercial Code financing statement that names the Borrower or any
Material Subsidiary as debtor, and the results thereof shall be satisfactory to
the Agent.
(g) Since December 31, 1997, both immediately before and after giving
effect to the consummation of the transactions contemplated by this Agreement,
there shall not have occurred any Material Adverse Change or any event,
condition or state of facts that could reasonably be expected to result in a
Material Adverse Change.
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(h) The Borrower shall have paid (i) to First Union, the unpaid balance
of the fees described in paragraph (1) of the Fee Letter, (ii) to the Agent, the
initial payment of the annual administrative fee described in paragraph (3) of
the Fee Letter, and (iii) all other fees and expenses of the Agent and the
Lenders required hereunder or under any other Credit Document to be paid on or
prior to the Closing Date (including fees and expenses of counsel) in connection
with this Agreement and the transactions contemplated hereby.
(i) The Agent shall have received the financial statements as described
in SECTIONS 4.11(a) and 4.11(e), all of which shall be in form and substance
satisfactory to the Agent.
(j) The Agent shall have received a Financial Condition Certificate,
together with the Pro Forma Balance Sheet and the Projections as described in
SECTIONS 4.11(b) and 4.11(c), all of which shall be in form and substance
satisfactory to the Agent.
(k) The Agent shall have received Covenant Compliance Worksheets, duly
completed and certified by the chief financial officer of the Borrower and in
form and substance satisfactory to the Agent, demonstrating the Borrower's
compliance with the financial covenants set forth in SECTIONS 6.1 through 6.4,
determined on a pro forma basis as of September 30, 1998 after giving effect to
the making of the initial Loans hereunder and the consummation of the
transactions contemplated hereby.
(l) The Agent shall be satisfied with the actuarial review and
valuation statement of, and opinion as to the adequacy of, the loss and loss
adjustment expense reserve positions as of December 31, 1997 of any PXRE
Syndicate and each Material Insurance Subsidiary, with respect to its insurance
business then in force, prepared and given by an independent actuarial firm
acceptable to the Agent; and such review, valuation and opinion shall not differ
in any material and negative respect from any such materials previously
delivered to the Agent.
(m) The Agent shall have received satisfactory confirmation from A.M.
Best & Company that the current rating of each Material Insurance Subsidiary
(other than PXRE Ltd.) is "A-" or better.
(n) The Consolidated Net Worth of the Borrower, calculated without
regard to FAS 115 and on a pro forma basis after giving effect to the making of
the initial Loans hereunder and the consummation of the transactions
contemplated hereby, shall not be less than $320,000,000 as of the Closing Date.
(o) The Statutory Capital and Surplus of PXRE Reinsurance, calculated
on a pro forma basis after giving effect to the making of the initial Loans
hereunder and the consummation of the transactions contemplated hereby
(including, without limitation, the downstreaming by the Borrower of proceeds of
the initial Loans to PXRE Reinsurance), shall not be less than $400,000,000 as
of the Closing Date.
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(p) The Agent shall have received an Account Designation Letter,
together with written instructions from an Authorized Officer, including wire
transfer information, directing the payment of the proceeds of the initial Loans
to be made hereunder.
(q) The Agent shall have received evidence satisfactory to it that all
principal, interest and other amounts outstanding with respect to all existing
Indebtedness, other than Indebtedness described in SCHEDULE 7.2 or otherwise
permitted pursuant to SECTION 7.2, has been (or, concurrently with the making of
the initial Loans hereunder, shall be) repaid and satisfied in full.
(r) The Agent shall have received evidence of the Borrower's senior
unsecured debt rating by Moody's and/or Standard & Poor's, if available; or, if
not available, evidence of an implied senior or unsecured debt rating of the
Borrower by Moody's and evidence of a rating of the Borrower's Trust Preferred
Securities by Standard & Poor's.
(s) The Agent and each Lender shall have received such other documents,
certificates, opinions and instruments in connection with the transactions
contemplated hereby as it shall have reasonably requested.
3.2 Conditions of Additional Financing. The obligation of any Lender to
make the initial Loans under the Additional Financing or the payments required
under SECTION 2.19 is subject to the satisfaction of the following conditions
precedent (such date of satisfaction being the "Additional Financing Closing
Date"):
(a) The Agent shall have received the following, each dated as of the
Additional Financing Closing Date and, except in the case of the Notes, in
sufficient copies for each Lender:
(i) a Note for each Lender that executes a Joinder Agreement,
in the amount of such Lender's Commitment pursuant to such Joinder
Agreement, each duly completed in accordance with the relevant
provisions of SECTION 2.4 and executed by the Borrower;
(ii) a confirmation and update from Morgan, Lewis & Bockius
LLP, special counsel to the Borrower, (1) of its opinion rendered
pursuant to SECTION 3.1(a)(II) and (2) that such opinion shall be
deemed to be for the benefit of, and may be relied upon, by each Lender
executing a Joinder Agreement.
(b) The Agent shall have received a certificate, signed by the
president, the chief executive officer, an executive or senior vice president or
the chief financial officer of the Borrower, in form and substance satisfactory
to the Agent, certifying that (i) all representations and warranties of the
Borrower contained in this Agreement and the other Credit Documents are true and
correct as of the Additional Financing Closing Date, both immediately before and
after giving effect to the consummation of the transactions contemplated by the
Joinder Agreements, (ii) no Default or Event of Default has occurred and is
continuing, both immediately before and after giving effect to the consummation
of the transactions contemplated by the Joinder Agreements, (iii) there are no
insurance regulatory proceedings pending or, to such individual's knowledge,
threatened against any Insurance Subsidiary in any jurisdiction that, if
adversely
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determined, would be reasonably likely to have a Material Adverse Effect; (iv)
both immediately before and after giving effect to the consummation of the
transactions contemplated by the Joinder Agreements, no Material Adverse Change
has occurred since December 31, 1997, and there exists no event, condition or
state of facts that could reasonably be expected to result in a Material Adverse
Change, and (v) all conditions to the Additional Financing set forth in this
Section and, if applicable, all conditions to the extensions of credit set forth
in SECTION 3.3, have been satisfied or waived as required hereunder.
(c) Since December 31, 1997, both immediately before and after giving
effect to the consummation of the transactions contemplated by the Joinder
Agreements, there shall not have occurred any Material Adverse Change or any
event, condition or state of facts that could reasonably be expected to result
in a Material Adverse Change.
(d) The Borrower shall have paid (i) to First Union Capital Markets, a
division of Wheat First Securities, Inc., for the account of each Lender that
executes a Joinder Agreement, the fee described in paragraph (2) of the Fee
Letter, and (ii) all other fees and expenses of the Agent and the Lenders
required hereunder or under any other Credit Document to be paid on or prior to
the Additional Financing Closing Date (including fees and expenses of counsel)
in connection with the execution of the Joinder Agreements and the transactions
contemplated thereby.
(e) The Agent shall have received Projections, as described in SECTION
4.11, for the period beginning with the year ended December 31, 1998 and
continuing through the Maturity Date, which shall be in form and substance
satisfactory to the Agent.
3.3 Conditions of All Borrowings. The obligation of any Lender to make
any Loans hereunder, including the initial Loans, is subject to the satisfaction
of the following conditions precedent on the relevant Borrowing Date:
(a) The Agent shall have received a Notice of Borrowing in accordance
with SECTION 2.2(b);
(b) Each of the representations and warranties contained in ARTICLE IV
and in the other Credit Documents shall be true and correct on and as of such
Borrowing Date (including the Closing Date, in the case of the initial Loans
made hereunder) with the same effect as if made on and as of such date, both
immediately before and after giving effect to the Loans to be made on such date
(except to the extent any such representation or warranty is expressly stated to
have been made as of a specific date, in which case such representation or
warranty shall be true and correct in all material respects as of such date);
and
(c) No Default or Event of Default shall have occurred and be
continuing on such date, both immediately before and after giving effect to the
Loans to be made on such date.
Each giving of a Notice of Borrowing, and the consummation of each
Borrowing, shall be deemed to constitute a representation by the Borrower that
the statements contained in
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subsections (b) and (c) above are true, both as of the date of such notice and
as of the relevant Borrowing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to extend the credit contemplated hereby, the Borrower
represents and warrants to the Agent and the Lenders as follows:
4.1 Corporate Organization and Power. Each of the Borrower and its
Material Subsidiaries (i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, (ii)
has the full corporate power and authority to execute, deliver and perform the
Credit Documents to which it is or will be a party, to own and hold its property
and to engage in its business as presently conducted, and (iii) is duly
qualified, licensed, admitted or approved to do business as a foreign
corporation and is in good standing in each jurisdiction where the nature of its
business or the ownership of its properties requires it to be so qualified,
except where the failure to be so qualified, licensed, admitted or approved
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.
4.2 Authorization; Enforceability. The Borrower has taken, or on the
Closing Date will have taken, all necessary corporate action to execute, deliver
and perform each of the Credit Documents to which it is or will be a party, and
has, or on the Closing Date (or any later date of execution and delivery) will
have, validly executed and delivered each of the Credit Documents to which it is
or will be a party. This Agreement constitutes, and each of the other Credit
Documents upon execution and delivery will constitute, the legal, valid and
binding obligation of the Borrower enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, by general equitable principles or by principles of good faith and
fair dealing.
4.3 No Violation. The execution, delivery and performance by the
Borrower of this Agreement and each of the other Credit Documents, and
compliance by it with the terms hereof and thereof, do not and will not (i)
violate any provision of its certificate of incorporation or bylaws or
contravene any other material Requirement of Law applicable to it, (ii) conflict
with, result in a breach of or constitute (with notice, lapse of time or both) a
default under any indenture, agreement or other instrument to which it is a
party, by which it or any of its properties is bound or to which it is subject,
or (iii) result in or require the creation or imposition of any Lien upon any of
its properties or assets. No Subsidiary is a party to any agreement or
instrument or otherwise subject to any restriction or encumbrance that restricts
or limits its ability to make dividend payments or other distributions in
respect of its Capital Stock, to repay Indebtedness owed to the Borrower or any
other Subsidiary, to make loans or advances to the Borrower or any other
Subsidiary, or to transfer any of its assets or properties to the Borrower or
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any other Subsidiary, in each case other than such restrictions or encumbrances
existing under or by reason of the Credit Documents or applicable Requirements
of Law.
4.4 Governmental and Third-Party Authorization; Permits. (a) No
consent, approval, authorization or other action by, notice to, or registration
or filing with, any Governmental Authority or other Person is or will be
required as a condition to or otherwise in connection with the due execution,
delivery and performance by the Borrower of this Agreement or any of the other
Credit Documents or the legality, validity or enforceability hereof or thereof,
other than (i) consents, authorizations and filings that have been (or on or
prior to the Closing Date will have been) made or obtained and that are (or on
the Closing Date will be) in full force and effect, which consents,
authorizations and filings are listed on SCHEDULE 4.4, (ii) filings pursuant to
the Exchange Act, which will be made as soon as practicable after the Closing
Date, and (iii) consents and filings the failure to obtain or make which would
not, individually or in the aggregate, have a Material Adverse Effect.
(b) Each of the Borrower and its Subsidiaries has, and is in good
standing with respect to, all governmental approvals, licenses, permits and
authorizations necessary to conduct its business as presently conducted and to
own or lease and operate its properties, except for those the failure to obtain
which would not be reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect.
(c) To the knowledge of the Borrower, (i) no license, permit or
authorization to transact insurance and reinsurance business is the subject of a
proceeding for suspension, revocation or limitation or any similar proceedings;
(ii) there is no sustainable basis for such a suspension, revocation or
limitation; and (iii) no such suspension, revocation or limitation is threatened
by any relevant Insurance Regulatory Authority. No Material Insurance Subsidiary
transacts any insurance business, directly or indirectly, in any jurisdiction
other than those listed on SCHEDULE 4.4, where such business requires any
license, permit or other authorization of an Insurance Regulatory Authority of
such jurisdiction.
4.5 Litigation. There are no actions, investigations, suits or
proceedings pending or, to the knowledge of the Borrower, threatened, at law, in
equity or in arbitration, before any court, other Governmental Authority or
other Person, (i) against the Borrower or any of its Subsidiaries or against or
affecting any of their respective properties that would, if adversely
determined, be reasonably likely to have a Material Adverse Effect, other than
actions, investigations, suits or proceedings arising in the ordinary course of
business of the Insurance Subsidiaries for which reserves have been prudently
estimated and set aside in accordance with sound and standard industry
practices; or (ii) with respect to this Agreement or any of the other Credit
Documents.
4.6 Taxes. Each of the Borrower and its Subsidiaries has timely filed
all federal, state and local tax returns and reports required to be filed by it
except where the failure to timely file would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes, assessments,
fees and other charges levied upon it or upon its properties that are shown
thereon as due and payable, other than those that are being contested in good
faith and by proper proceedings and for which adequate reserves have been
established in accordance with GAAP.
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Such returns accurately reflect in all material respects all liability for taxes
of the Borrower and its Subsidiaries for the periods covered thereby. There is
no ongoing audit or examination or, to the knowledge of the Borrower, other
investigation by any Governmental Authority of the tax liability of the Borrower
or any of its Subsidiaries, and there is no unresolved claim by any Governmental
Authority concerning the tax liability of the Borrower or any of its
Subsidiaries for any period for which tax returns have been or were required to
have been filed, other than claims for which adequate reserves have been
established in accordance with GAAP. Neither the Borrower nor any of its
Subsidiaries has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
4.7 Subsidiaries. SCHEDULE 4.7 sets forth a list, as of the Closing
Date, of all of the Subsidiaries of the Borrower and, as to each such
Subsidiary, the percentage ownership (direct and indirect) of the Borrower in
each class of its capital stock and each direct owner thereof and indicates in
each case whether such Subsidiary is a Material Subsidiary. Except for the
shares of capital stock expressly indicated on SCHEDULE 4.7, there are no shares
of capital stock, warrants, rights, options or other equity securities, or other
Capital Stock of any Subsidiary of the Borrower outstanding or reserved for any
purpose. All outstanding shares of capital stock of each Subsidiary of the
Borrower are duly and validly issued, fully paid and nonassessable.
4.8 Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Agent or any Lender in writing by or on
behalf of the Borrower or any of its Subsidiaries for purposes of or in
connection with this Agreement and the transactions contemplated hereby is, and
all other such factual information hereafter furnished to the Agent or any
Lender in writing by or on behalf of the Borrower or any of its Subsidiaries
will be, true and accurate in all material respects on the date as of which such
information is dated or certified (or, if such information has been amended or
supplemented, on the date as of which any such amendment or supplement is dated
or certified) and, when all such information is taken together, not made
incomplete by omitting to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which such information
was provided, not materially misleading.
4.9 Margin Regulations. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock. No proceeds of the Loans will be used, directly or indirectly, to
purchase or carry any Margin Stock (except as expressly permitted under SECTION
7.6(a)(i)), to extend credit for such purpose or for any other purpose that
would violate Regulations T, U or X or any provision of the Exchange Act.
4.10 No Material Adverse Change. There has been no Material Adverse
Change since December 31, 1997, and there exists no event, condition or state of
facts that could reasonably be expected to result in a Material Adverse Change.
4.11 Financial Matters. (a) The Borrower has heretofore furnished to
the Agent copies of (i) the audited consolidated balance sheets of the Borrower
and its Subsidiaries as of December 31, 1997, 1996, and 1995, and the related
statements of income, cash flows and
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stockholders' equity for the fiscal years then ended, together with the opinion
of PriceWaterhouseCoopers LLP thereon, and (ii) the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as of September 30, 1998, and
the related statements of income, cash flows and stockholders' equity for the
nine-month period then ended. Such financial statements have been prepared in
accordance with GAAP (subject, with respect to the unaudited financial
statements, to the absence of notes required by GAAP and to normal year-end
adjustments) and present fairly the financial condition of the Borrower and its
Subsidiaries on a consolidated basis as of the respective dates thereof and the
consolidated results of operations of the Borrower and its Subsidiaries for the
respective periods then ended. Except as fully reflected in (x) the most recent
financial statements referred to above and the notes thereto, (y) the financial
statements previously delivered pursuant to SECTION 5.1, or (z) any Form 8-K
filed by the Borrower with the Securities and Exchange Commission and previously
delivered by the Borrower to the Lenders, there were, as of the date of the most
recent financial statements described in the immediately foregoing clause (x) or
(y) or, if later, the date of the most recently delivered Form 8-K, no material
liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due) that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, and since the date thereof
neither the Borrower nor any Subsidiary has incurred any liabilities or
obligations that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(b) The unaudited pro forma balance sheet of the Borrower as of
September 30, 1998, a copy of which has heretofore been delivered to the Agent,
gives pro forma effect to the consummation of the initial extensions of credit
made under this Agreement, and the payment of transaction fees and expenses
related to the foregoing, all as if such events had occurred on such date (the
"Pro Forma Balance Sheet"). The Pro Forma Balance Sheet has been prepared in
accordance with GAAP (subject to the absence of footnotes required by GAAP and
subject to normal year-end adjustments) and, subject to stated assumptions made
in good faith and having a reasonable basis set forth therein, presents fairly
the financial condition of the Borrower on an unaudited pro forma basis as of
the date set forth therein after giving effect to the consummation of the
transactions described above.
(c) The Borrower has prepared, and has heretofore furnished to the
Agent a copy of, annual projected balance sheets and statements of income and
cash flows of the Borrower giving effect to the initial extensions of credit
made under this Agreement and the payment of transaction fees and expenses
related to the foregoing (the "Projections") for the period beginning with the
year ended December 31, 1998 and continuing through December 31, 2003. In the
opinion of management of the Borrower, the assumptions used in the preparation
of the Projections were fair, complete and reasonable when made and continue to
be fair, complete and reasonable as of the date hereof. The Projections have
been prepared in good faith by the executive and financial personnel of the
Borrower, are complete and represent a reasonable estimate of the future
performance and financial condition of the Borrower, subject to the
uncertainties and approximations inherent in any projections.
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(d) Each of the Borrower and its Subsidiaries, after giving effect to
the consummation of the transactions contemplated hereby, (i) has capital
sufficient to carry on its businesses as conducted and as proposed to be
conducted, (ii) has assets with a fair saleable value, determined on a going
concern basis, (y) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (z)
greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.
(e) The Borrower has heretofore furnished to the Agent copies of (i)
the Annual Statements of each of its Insurance Subsidiaries (other than PXRE
Ltd.) as of December 31, 1997, 1996 and 1995, and for the fiscal years then
ended, (ii) the Quarterly Statements of each of its Insurance Subsidiaries
(other than PXRE Ltd.) as of the end of the first three fiscal quarters of 1998,
and for the end of the fiscal quarters then ended, each as filed with the
relevant Insurance Regulatory Authority, and (iii) the annual report with
respect to PXRE Ltd. filed with Lloyd's (collectively, the "Historical Statutory
Statements"). The Historical Statutory Statements (including, without
limitation, the provisions made therein for investments and the valuation
thereof, reserves, policy and contract claims and statutory liabilities) have
been prepared in accordance with SAP where required (except as may be reflected
in the notes thereto and subject, with respect to the Quarterly Statements, to
the absence of notes required by SAP and to normal year-end adjustments), were
in compliance with applicable Requirements of Law when filed and present fairly
the financial condition of the respective Insurance Subsidiaries covered thereby
as of the respective dates thereof and the results of operations, changes in
capital and surplus and cash flow of the respective Insurance Subsidiaries
covered thereby for the respective periods then ended. Except for liabilities
and obligations disclosed or provided for in the Historical Statutory Statements
(including, without limitation, reserves, policy and contract claims and
statutory liabilities), no Insurance Subsidiary had, as of the date of its
respective Historical Statutory Statements, any material liabilities or
obligations of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due) that, in accordance with SAP (or, with respect to PXRE
Ltd., the requirements of Lloyd's), would have been required to have been
disclosed or provided for in such Historical Statutory Statements. All books of
account of each Insurance Subsidiary fully and fairly disclose all of its
material transactions, properties, assets, investments, liabilities and
obligations, are in its possession and are true, correct and complete in all
material respects.
4.12 Ownership of Properties. Each of the Borrower and its Subsidiaries
(i) has good and marketable title to all real property owned by it, (ii) holds
interests as lessee under valid leases in full force and effect with respect to
all material leased real and personal property used in connection with its
business, (iii) possesses or has rights to use licenses, patents, copyrights,
trademarks, service marks, trade names and other assets sufficient to enable it
to continue to conduct its business substantially as heretofore conducted and
without any material conflict with the rights of others, and (iv) has good title
to all of its other properties and assets reflected in the most recent financial
statements referred to in SECTION 4.11(a) (except as sold or otherwise disposed
of since the date thereof in the ordinary course of business), in each case
under (i), (ii), (iii) and (iv) above free and clear of all Liens other than
Permitted Liens.
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4.13 ERISA. (a) Each of the Borrower and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA, and
each Plan is and has been administered in compliance in all material respects
with all applicable Requirements of Law, including, without limitation, the
applicable provisions of ERISA and the Internal Revenue Code. No ERISA Event (i)
has occurred within the five-year period prior to the Closing Date, (ii) has
occurred and is continuing, or (iii) to the knowledge of the Borrower, is
reasonably expected to occur with respect to any Plan, except in each case where
such occurrence would not be reasonably likely to have a Material Adverse
Effect. No Plan has any Unfunded Pension Liability as of the most recent annual
valuation date applicable thereto, and neither the Borrower nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA, except where such Unfunded Pension Liability or transaction
would not be reasonably likely to have a Material Adverse Effect.
(b) Neither the Borrower nor any ERISA Affiliate has had a complete or
partial withdrawal from any Multiemployer Plan, and neither the Borrower nor any
ERISA Affiliate would become subject to any liability under ERISA if the
Borrower or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans as of the most recent valuation date. No Multiemployer Plan
is in "reorganization" or is "insolvent" within the meaning of such terms under
ERISA.
4.14 Environmental Matters. (a) No Hazardous Substances are or have
been generated, used, located, released, treated, disposed of or stored by the
Borrower or any of its Subsidiaries or, to the knowledge of the Borrower, by any
other Person (including any predecessor in interest) or otherwise, in, on or
under any portion of any real property, leased or owned, of the Borrower or any
of its Subsidiaries, except in material compliance with all applicable
Environmental Laws, and no portion of any such real property or, to the
knowledge of the Borrower, any other real property at any time leased, owned or
operated by the Borrower or any of its Subsidiaries, has been contaminated by
any Hazardous Substance; and no portion of any real property, leased or owned,
of the Borrower or any of its Subsidiaries has been or is presently the subject
of an environmental audit, assessment or remedial action.
(b) No portion of any real property, leased or owned, of the Borrower
or any of its Subsidiaries has been used by the Borrower or any of its
Subsidiaries or, to the knowledge of the Borrower, by any other Person, as or
for a mine, a landfill, a dump or other disposal facility, a gasoline service
station, or (other than for petroleum substances stored in the ordinary course
of business) a petroleum products storage facility; no portion of such real
property or any other real property at any time leased, owned or operated by the
Borrower or any of its Subsidiaries has, pursuant to any Environmental Law, been
placed on the "National Priorities List" or "CERCLIS List" (or any similar
federal, state or local list) of sites subject to possible environmental
problems; and there are not and have never been any underground storage tanks
situated on any real property, leased or owned, of the Borrower or any of its
Subsidiaries.
(c) All activities and operations of the Borrower and its Subsidiaries
are in compliance with the requirements of all applicable Environmental Laws,
except to the extent the
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failure so to comply, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect. Each of the Borrower and its
Subsidiaries (i) has obtained all licenses and permits under Environmental Laws
necessary to its respective operations, (ii) all such licenses and permits are
being maintained in good standing, and (iii) each of the Borrower and its
Subsidiaries is in compliance with all terms and conditions of such licenses and
permits, except for such licenses and permits the failure to obtain, maintain or
comply with which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Other than normal claims in the
ordinary course of business pursuant to insurance policies written or reinsured
by an Insurance Subsidiary, the loss reserves for which are adequately and
properly reflected in such Insurance Subsidiary's most recent Annual or
Quarterly Statements, neither the Borrower nor any of its Subsidiaries is
involved in any suit, action or proceeding, or has received any notice,
complaint or other request for information from any Governmental Authority or
other Person, with respect to any actual or alleged Environmental Claims that,
if adversely determined, would be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect; and, to the knowledge of the
Borrower, there are no threatened actions, suits, proceedings or investigations
with respect to any such Environmental Claims.
4.15 Compliance With Laws. Each of the Borrower and its Subsidiaries
has timely filed all material reports, documents and other materials required to
be filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and operation of its properties, except for such
Requirements of Law the failure to comply with which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.
4.16 Regulated Industries. Neither the Borrower nor any of its
Subsidiaries is (i) an "investment company," a company "controlled" by an
"investment company," or an "investment advisor," within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a "holding company," a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.17 Insurance. The assets, properties and business of the Borrower and
its Subsidiaries are insured against such hazards and liabilities, under such
coverages and in such amounts, as are customarily maintained by prudent
companies similarly situated and under policies issued by insurers of recognized
responsibility.
4.18 Material Contracts. SCHEDULE 4.18 lists, as of the Closing Date,
each "material contract" (within the meaning of Item 601(b)(10) of Regulation
S-K under the Exchange Act) (other than insurance policies and contracts,
reinsurance agreements and weather and similar swap agreements and directly
related documentation) to which the Borrower or any of its Subsidiaries is a
party, by which any of them or their respective properties is bound or to which
any of them is subject (collectively, "Material Contracts"), other than
contracts disclosed in any filing by the Borrower with the Securities Exchange
Commission pursuant to the Exchange Act,
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and also indicates the parties, subject matter and term thereof. As of the
Closing Date, (i) each Material Contract is in full force and effect and is
enforceable by the Borrower or the Subsidiary that is a party thereto in
accordance with its terms, and (ii) neither the Borrower nor any of its
Subsidiaries (nor, to the knowledge of the Borrower, any other party thereto) is
in breach of or default under any Material Contract in any material respect or
has given notice of termination or cancellation of any Material Contract.
4.19 Reinsurance Agreements. (a) Except as set forth on Schedule F to
the Annual Statements for the Insurance Subsidiaries or, with respect to PXRE
Ltd., as set forth in the annual report filed with Lloyd's, for the fiscal year
ending December 31, 1997, and except as set forth on SCHEDULE 4.19, there were
no material liabilities outstanding as of September 30, 1998 under any
Reinsurance Agreement and since September 30, 1998, except as previously
disclosed in writing by the Borrower to the Lenders pursuant to this Agreement,
no Insurance Subsidiary has incurred any material liabilities under any
Reinsurance Agreement that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. Each such Reinsurance Agreement
(except any Reinsurance Agreement that has expired by its terms in the ordinary
course) is in full force and effect; none of the Insurance Subsidiaries or, to
the knowledge of the Borrower, any other party thereto, is in breach of or
default under any such contract; and the Borrower has no reason to believe that
the financial condition of any other party to any such contract is impaired such
that a default thereunder by such party could reasonably be anticipated. Each
such Reinsurance Agreement (except any Reinsurance Agreement that has expired by
its terms in the ordinary course) is qualified under all applicable Requirements
of Law to receive the statutory credit assigned to such Reinsurance Agreement in
the relevant Annual Statement or Quarterly Statement at the time prepared. Each
Person to whom any of the Insurance Subsidiaries has ceded any material
liability pursuant to any Reinsurance Agreement on the Closing Date, other than
Select Re, either (i) has a rating of "A-" or better by A.M. Best & Company,
(ii) has a financial strength rating of "A-" or better by Standard & Poor's or
Moody's, (iii) is a syndicate that is operating as part of the Lloyd's insurance
Market, and the Lloyd's insurance Market is rated "A-" or better by A.M. Best &
Company or "A-" or better by Standard & Poors, (iv) has provided collateral in
favor of the applicable Insurance Subsidiary of the type described in SCHEDULE
4.19, or (v) has an aggregate amount of Net Amount Recoverable from Reinsurers
for the Insurance Subsidiaries attributable to it (collectively with all other
such Persons not described in clauses (i) through (iv) above) that is less than
$5,000,000 as of the end of the most recent fiscal year, and an aggregate amount
of Reinsurance Premiums Ceded by the Insurance Subsidiaries for the current
fiscal year (or portion thereof) to it (collectively with all other such Persons
not described in clauses (i) through (iv) above) that is less than $10,000,000,
or (vi) is a pooling arrangement composed solely of Persons who meet one of the
requirements described in clauses (i) through (iv) above; and with respect to
Select Re, (y) no more than $15,000,000 in Reinsurance Premiums Ceded is ceded
to it by the Insurance Subsidiaries as of the Closing Date and (z) the Borrower
has submitted to the Agent recent financial statements of Select Re showing, to
the satisfaction of the Agent, that there has been no Material Adverse Change in
the financial condition of Select Re.
(b) As of the Closing Date, no Insurance Subsidiary is a ceding party
to any Surplus Relief Reinsurance Agreement.
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4.20 Labor Relations. Neither the Borrower nor any of its Subsidiaries
is engaged in any unfair labor practice within the meaning of the National Labor
Relations Act of 1947, as amended. There is (i) no unfair labor practice
complaint before the National Labor Relations Board, or grievance or arbitration
proceeding arising out of or under any collective bargaining agreement, pending
or, to the knowledge of the Borrower, threatened, against the Borrower or any of
its Subsidiaries, (ii) no strike, lock-out, slowdown, stoppage, walkout or other
labor dispute pending or, to the knowledge of the Borrower, threatened, against
the Borrower or any of its Subsidiaries, and (iii) to the knowledge of the
Borrower, no petition for certification or union election or union organizing
activities taking place with respect to the Borrower or any of its Subsidiaries.
4.21 Year 2000 Compatibility. Any reprogramming required to permit the
proper functioning, before, on and after January 1, 2000, of (i) the Borrower's
and its Subsidiaries' material computer-based systems and (ii) equipment
containing material embedded microchips, and the testing of all such systems and
equipment, as so reprogrammed, are scheduled to be completed by June 30, 1999.
The cost to the Borrower and its Subsidiaries of such reprogramming and testing
and of the reasonably foreseeable consequences of the year 2000 to the Borrower
and its Subsidiaries (including, without limitation, reprogramming errors and
the failure of others' systems or equipment) are not expected to result in a
Default or Material Adverse Effect. Except for such of the reprogramming
referred to in the preceding sentence as may be necessary, the computer and
management information systems of the Borrower and its Subsidiaries are and,
with ordinary course upgrading and maintenance will continue for the term of
this Agreement to be, sufficient to permit the Borrower and its Subsidiaries to
conduct their respective businesses without a Material Adverse Effect.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans, together with all other amounts then due and owing hereunder:
5.1 Financial Statements. The Borrower will deliver to each Lender:
(a) As soon as available and in any event within the earlier of fifteen
(15) days after filing with the Securities Exchange Commission and sixty (60)
days after the end of each of the first three fiscal quarters of each fiscal
year, beginning with the fiscal quarter ending March 31, 1999, unaudited
consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of such fiscal quarter and unaudited consolidated statements of income, cash
flows and stockholders' equity for the Borrower and its Subsidiaries for the
fiscal quarter then ended and for that portion of the fiscal year then ended, in
each case setting forth comparative consolidated figures as of the end of and
for the corresponding period in the preceding fiscal year, all in
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reasonable detail and prepared in accordance with GAAP (subject to the absence
of notes required by GAAP and subject to normal year-end adjustments) applied on
a basis consistent with that of the preceding quarter or containing disclosure
of the effect on the financial condition or results of operations of any change
in the application of accounting principles and practices during such quarter;
and
(b) As soon as available and in any event within the earlier of fifteen
(15) days after filing with the Securities Exchange Commission and one hundred
five (105) days after the end of each fiscal year, beginning with the fiscal
year ending December 31, 1998, an audited consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and audited
consolidated statements of income, cash flows and stockholders' equity for the
Borrower and its Subsidiaries for the fiscal year then ended, including the
notes thereto, in each case setting forth comparative figures as of the end of
and for the preceding fiscal year, all in reasonable detail and certified by the
independent certified public accounting firm regularly retained by the Borrower
or another independent certified public accounting firm of recognized national
standing reasonably acceptable to the Required Lenders, together with (y) a
report thereon by such accountants that is not qualified as to going concern or
scope of audit and to the effect that such financial statements present fairly
the consolidated financial condition and results of operations of the Borrower
and its Subsidiaries as of the dates and for the periods indicated in accordance
with GAAP applied on a basis consistent with that of the preceding year or
containing disclosure of the effect on the financial condition or results of
operations of any change in the application of accounting principles and
practices during such year, and (z) a report by such accountants to the effect
that, based on and in connection with their examination of the financial
statements of the Borrower and its Subsidiaries, they obtained no knowledge of
the occurrence or existence of any Default or Event of Default relating to
accounting or financial reporting matters, or a statement specifying the nature
and period of existence of any such Default or Event of Default disclosed by
their audit; provided, however, that such accountants shall not be liable by
reason of the failure to obtain knowledge of any Default or Event of Default
that would not be disclosed or revealed in the course of their audit
examination.
5.2 Statutory Financial Statements. The Borrower will deliver to each
Lender:
(a) As soon as available and in any event within sixty (60) days after
the end of each of the first three fiscal quarters of each fiscal year,
beginning with the fiscal quarter ending March 31, 1999, a Quarterly Statement
of each Insurance Subsidiary as of the end of such fiscal quarter and for that
portion of the fiscal year then ended, in the form filed with the relevant
Insurance Regulatory Authority, prepared in accordance with SAP;
(b) As soon as available and in any event within seventy-five (75) days
after the end of each fiscal year, beginning with the fiscal year ended December
31, 1998, an Annual Statement of each Insurance Subsidiary as of the end of such
fiscal year and for the fiscal year then ended, in the form filed with the
relevant Insurance Regulatory Authority, prepared in accordance with SAP; and
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(c) As soon as available and in any event within one hundred
thirty-five (135) days after the end of each fiscal year, beginning with the
fiscal year ended December 31, 1998, the combined Annual Statement of the
Insurance Subsidiaries as of the end of such fiscal year and for the fiscal year
then ended, in the form filed with the relevant Insurance Regulatory Authority,
prepared in accordance with SAP.
5.3 Other Business and Financial Information. The Borrower will deliver
to each Lender:
(a) Concurrently with each delivery of the financial statements
described in SECTIONS 5.1 and 5.2, a Compliance Certificate in the form of
EXHIBIT C-1 (in the case of the financial statements described in SECTION 5.1)
or EXHIBIT C-2 (in the case of the financial statements described in SECTION
5.2) with respect to the period covered by the financial statements then being
delivered, executed by a Financial Officer of the Borrower, together in each
case with a Covenant Compliance Worksheet reflecting the computation of the
respective financial covenants set forth in the Worksheets as of the last day of
the period covered by such financial statements;
(b) As soon as available and in any event prior to the end of each
fiscal year, beginning with the fiscal year ending December 31, 1998, a complete
set of projections for the Borrower and its Subsidiaries for each of the
succeeding fiscal years remaining through the Maturity Date, consisting of (i)
consolidated projections prepared based on GAAP principles, (ii) consolidated
projections prepared based on SAP principles, (iii) individual projections for
each Material Subsidiary prepared based on GAAP principles, and (iv) individual
projections for each Material Insurance Subsidiary prepared based on SAP
principles or in accordance with the requirements imposed by Lloyd's, as
applicable, together with a certificate of a Financial Officer of the Borrower
to the effect that such projections have been prepared in good faith and are
reasonable estimates of the financial position and results of operations of the
Borrower and its Subsidiaries for the period covered thereby; and as soon as
available from time to time thereafter, any modifications or revisions to or
restatements of such projections;
(c) Promptly upon filing with the relevant Insurance Regulatory
Authority and in any event within ninety (90) days after the end of each fiscal
year, beginning with the fiscal year ended December 31, 1998, a copy of each
Insurance Subsidiary's "Statement of Actuarial Opinion" (or equivalent
information should the relevant Insurance Regulatory Authority not require such
a statement) as to the adequacy of such Insurance Subsidiary's loss reserves for
such fiscal year, together with a copy of its management discussion and analysis
in connection therewith, each in the format prescribed by the applicable
insurance laws of such Insurance Subsidiary's jurisdiction of domicile;
(d) Promptly upon receipt thereof, copies of any "management letter"
submitted to the Borrower or any of its Subsidiaries by its certified public
accountants in connection with an annual, interim or special audit, and promptly
upon completion thereof, any response reports from the Borrower or any such
Subsidiary in respect thereof;
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(e) Promptly upon the sending, filing or receipt thereof, copies of (i)
all financial statements, reports, notices and proxy statements that the
Borrower or any of its Subsidiaries shall send or make available generally to
its shareholders, (ii) all regular, periodic and special reports, registration
statements and prospectuses (other than on Form S-8) that the Borrower or any of
its Subsidiaries shall render to or file with the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any national
securities exchange, and (iii) all press releases and other statements made
available generally by the Borrower or any of its Subsidiaries to the public
concerning material developments in the business of the Borrower or any of its
Subsidiaries; (iv) all significant reports on examination or other similar
significant reports, financial examination reports or market conduct examination
reports by the NAIC or any Insurance Regulatory Authority or other Governmental
Authority with respect to any Insurance Subsidiary's insurance business; (v) all
significant filings made under applicable state insurance holding company acts
by the Borrower or any of its Subsidiaries, including, without limitation,
filings seeking approval of material transactions with Affiliates; and (vi) all
material information sent to rating agencies, including without limitation
Moody's, Standard & Poor's, A.M. Best & Company and Duff & Phelps Rating Co.
(f) Promptly upon (and in any event within five (5) Business Days
after) any Responsible Officer of the Borrower obtaining knowledge thereof,
written notice of any of the following:
(i) the occurrence of any Default or Event of Default,
together with a written statement of a Responsible Officer of the
Borrower specifying the nature of such Default or Event of Default, the
period of existence thereof and the action that the Borrower has taken
and proposes to take with respect thereto;
(ii) the institution or threatened institution of any action,
suit, investigation or proceeding against or affecting the Borrower or
any of its Subsidiaries, including any such investigation or proceeding
by any Governmental Authority (other than routine periodic inquiries,
investigations or reviews), that would, if adversely determined, be
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect, and any material development in any litigation or other
proceeding previously reported pursuant to SECTION 4.5 or this
subsection;
(iii) the receipt by the Borrower or any of its Subsidiaries
from any Governmental Authority of (y) any notice asserting any failure
by the Borrower or any of its Subsidiaries to be in compliance with
applicable Requirements of Law, which failure is reasonable likely to
have a Material Adverse Effect, or that threatens the taking of any
action against the Borrower or such Subsidiary, in each case that, if
taken or adversely determined, would be reasonably likely to have a
Material Adverse Effect; or (z) any notice of any actual or threatened
suspension, limitation or revocation of, failure to renew, or
imposition of any restraining order, escrow or impoundment of funds in
connection with, any license, permit, accreditation or authorization of
the Borrower or any of its Subsidiaries, where in each case such action
would be reasonably likely to have a Material Adverse Effect;
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(iv) the occurrence of any ERISA Event, together with (x) a
written statement of a Responsible Officer of the Borrower specifying
the details of such ERISA Event and the action that the Borrower has
taken and proposes to take with respect thereto, (y) a copy of any
notice with respect to such ERISA Event that may be required to be
filed with the PBGC and (z) a copy of any notice delivered by the PBGC
to the Borrower or such ERISA Affiliate with respect to such ERISA
Event;
(v) the occurrence of any material default under, or any
proposed or threatened termination or cancellation (other than upon
expiration) of, any Material Contract or other material contract or
agreement to which the Borrower or any of its Subsidiaries is a party
(other than insurance policies and contracts and reinsurance agreements
pursuant to which an Insurance Subsidiary is the assuming party and
weather and similar swap agreements), the termination or cancellation
of which would be reasonably likely to have a Material Adverse Effect;
(vi) the occurrence of any of the following: (x) the assertion
of any Environmental Claim against or affecting the Borrower, any of
its Subsidiaries or any of their respective real property, leased or
owned; (y) the receipt by the Borrower or any of its Subsidiaries of
notice of any alleged violation of or noncompliance with any
Environmental Laws; or (z) the taking of any remedial action by the
Borrower, any of its Subsidiaries or any other Person in response to
the actual or alleged generation, storage, release, disposal or
discharge of any Hazardous Substances on, to, upon or from any real
property leased or owned by the Borrower or any of its Subsidiaries;
but in each case under clauses (x), (y) and (z) above, only to the
extent the same would be reasonably likely to have a Material Adverse
Effect;
(vii) the occurrence of any actual changes in any insurance
statute or regulation governing the investment or dividend practices of
any Material Insurance Subsidiary that would be reasonably likely to
have a Material Adverse Effect; and
(viii) any other matter or event pertaining directly to the
Borrower or any Insurance Subsidiary that has, or would be reasonably
likely to have, a Material Adverse Effect, together with a written
statement of a Responsible Officer of the Borrower setting forth the
nature and period of existence thereof and the action that the Borrower
has taken and proposes to take with respect thereto;
(g) Promptly, notice of (i) the occurrence of any material amendment or
modification (other than expiration) to any Reinsurance Agreement (whether
entered into before or after the Closing Date), including any such agreements
that are in a runoff mode on the Closing Date, which amendment or modification
would be reasonably likely to have a Material Adverse Effect, or (ii) the
receipt by the Borrower or any of its Subsidiaries of any written notice of any
denial of coverage or claim, litigation or arbitration with respect to any
Reinsurance Agreement to which it is a ceding party which would be reasonably
likely to have a Material Adverse Effect;
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(h) As promptly as reasonably possible, such other information about
the business, condition (financial or otherwise), operations or properties of
the Borrower or any of its Subsidiaries (including any Plan and any information
required to be filed under ERISA) as the Agent or any Lender may from time to
time reasonably request.
(i) If prepared or upon the request of the Agent at the direction of
the Required Lenders, deliver to each Lender, within the earlier of (y) sixty
(60) days of such request or (z) ten (10) days of receipt by the Borrower or any
Insurance Subsidiary, an actuarial review of the liabilities and other items of
each Insurance Subsidiary prepared at the Borrower's expense, by an actuary or a
firm of actuaries reasonably acceptable to the Agent, such actuarial review to
be in form and substance reasonably acceptable to the Required Lenders.
5.4 Corporate Existence; Franchises; Maintenance of Properties. The
Borrower will, and will cause each of its Material Subsidiaries to, (i) maintain
and preserve in full force and effect its corporate existence, except as
expressly permitted otherwise by SECTION 7.1, (ii) obtain, maintain and preserve
in full force and effect all other rights, franchises, licenses, permits,
certifications, approvals and authorizations required by Governmental
Authorities and necessary to the ownership, occupation or use of its properties
or the conduct of its business, except to the extent the failure to do so would
not be reasonably likely to have a Material Adverse Effect, and (iii) keep all
material properties in good working order and condition (normal wear and tear
excepted) and from time to time make all necessary repairs to and renewals and
replacements of such properties, except to the extent that any of such
properties are obsolete or are being replaced.
5.5 Compliance with Laws. The Borrower will, and will cause each of its
Subsidiaries to, comply in all respects with all Requirements of Law applicable
in respect of the conduct of its business and the ownership and operation of its
properties, except to the extent the failure so to comply would not be
reasonably likely to have a Material Adverse Effect.
5.6 Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, might become a Lien upon any of the properties of
the Borrower or any of its Subsidiaries; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings and as to which the Borrower or such Subsidiary is
maintaining adequate reserves with respect thereto in accordance with GAAP.
5.7 Insurance. The Borrower will, and will cause each of its Material
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance with respect to its assets, properties and business, against
such hazards and liabilities, of such types and in such
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amounts, as is customarily maintained by companies in the same or similar
businesses similarly situated.
5.8 Maintenance of Books and Records; Inspection. The Borrower will,
and will cause each of its Subsidiaries to, (i) maintain adequate books,
accounts and records, in which full, true and correct entries shall be made of
all financial transactions in relation to its business and properties, and
prepare all financial statements required under this Agreement, in each case in
accordance with GAAP and in compliance with the requirements of any Governmental
Authority having jurisdiction over it, and (ii) permit employees or agents of
the Agent or any Lender to inspect its properties and examine or audit its
books, records, working papers and accounts and make copies and memoranda of
them, and to discuss its affairs, finances and accounts with its officers and
employees and, upon notice to the Borrower, the independent public accountants
and actuarial firms of the Borrower and its Subsidiaries (and by this provision
the Borrower authorizes such accountants and actuarial firms to discuss the
finances and affairs of the Borrower and its Subsidiaries), all at such times
and from time to time, upon reasonable notice and during business hours, as may
be reasonably requested.
5.9 Permitted Acquisitions. (a) Subject to the provisions of subsection
(b) below and the requirements contained in the definition of Permitted
Acquisition, and subject to the other terms and conditions of this Agreement,
the Borrower may from time to time on or after the Closing Date effect Permitted
Acquisitions, provided that, with respect to each Permitted Acquisition:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of the consummation of such Permitted
Acquisition or would exist immediately after giving effect thereto; and
(ii) the Acquisition Amount with respect thereto (regardless
of the form of consideration) (y) shall not exceed $35,000,000, and (z)
together with the aggregate of the Acquisition Amounts (regardless of
the form of consideration) for all other Permitted Acquisitions
consummated during the same fiscal quarter, or the period of three
consecutive fiscal quarters immediately prior thereto, shall not exceed
$50,000,000.
(b) Not less than ten (10) Business Days prior to the consummation of
any Permitted Acquisition with respect to which the Acquisition Amount exceeds
$10,000,000, the Borrower shall have delivered to the Agent and each Lender the
following:
(i) a reasonably detailed description of the material terms
of such Permitted Acquisition (including, without limitation, the
purchase price and method and structure of payment) and of each Person
or business that is the subject of such Permitted Acquisition (each, a
"Target"); and
(ii) historical financial statements of the Target (or, if
there are two or more Targets that are the subject of such Permitted
Acquisition and that are part of the same consolidated group,
consolidated historical financial statements for all such Targets) for
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the two (2) most recent fiscal years available and, if available, for
any interim periods since the most recent fiscal year-end.
(c) As soon as reasonably practicable after the consummation of any
Permitted Acquisition, the Borrower will deliver to the Agent and each Lender a
copy of the fully executed acquisition agreement (including schedules and
exhibits thereto) and other material documents and closing papers delivered in
connection therewith.
(d) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by the Borrower that (except as shall have been
approved in writing by the Required Lenders) all conditions thereto set forth in
this Section and in the description furnished under clause (i) of subsection (b)
above have been satisfied and that the same is permitted in accordance with the
terms of this Agreement, which representation and warranty shall be deemed to be
a representation and warranty as of the date thereof for all purposes hereunder,
including, without limitation, for purposes of SECTIONS 3.2 and 8.1.
5.10 Year 2000 Compatibility. The Borrower will, and will cause each of
its Material Subsidiaries to, take all action necessary to ensure that its
material computer-based systems are able to operate and effectively process data
including dates on and after January 1, 2000. At the request of the Agent or the
Required Lenders, the Borrower will provide reasonable assurance of its Year
2000 compatibility.
5.11 Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Agent or the Required
Lenders to effect, confirm or protect and preserve the interests, rights and
remedies of the Agent and the Lenders under this Agreement and the other Credit
Documents.
ARTICLE VI
FINANCIAL COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans, together with all other amounts then due and owing hereunder:
6.1 Leverage Ratio. The Borrower will not permit the Leverage Ratio to
exceed 0.3 to 1.0 at any time.
6.2 Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed
Charge Coverage Ratio, as of the last day of any fiscal quarter beginning with
the fiscal quarter ending December 31, 1998, to be less than 1.5 to 1.0.
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6.3 Risk-Based Capital Ratio. The Borrower will not permit "total
adjusted capital" (within the meaning of the Risk-Based Capital for Insurers
Model Act as promulgated by the NAIC as of the date hereof (the "Model Act")),
as of the last day of any fiscal year beginning with the fiscal year ending
December 31, 1998, of any Material Insurance Subsidiary to be less than 250% of
the applicable "Company Action Level RBC" (within the meaning of the Model Act)
as of such date.
6.4 Combined Statutory Surplus. The Borrower will not permit the
Combined Statutory Capital and Surplus of the Insurance Subsidiaries, as of the
last day of any fiscal quarter beginning with the fiscal quarter ending March
31, 1999, to be less than 75% of Combined Statutory Capital and Surplus as of
December 31, 1998 plus 50% of the aggregate increases in the stated capital and
additional paid-in capital accounts of the Insurance Subsidiaries (without
duplication) occurring after December 31, 1998, as determined in each case in
accordance with SAP.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans, together with all other amounts then due and owing hereunder:
7.1 Merger; Consolidation. (a) The Borrower will not, and will not
permit or cause any of its Material Subsidiaries to, liquidate, wind up or
dissolve, or enter into any consolidation, merger or other combination, or agree
to do any of the foregoing; provided, however, that:
(i) the Borrower may merge or consolidate with another Person
so long as (x) the Borrower is the surviving entity, (y) unless such
other Person is a Wholly Owned Subsidiary immediately prior to giving
effect thereto, such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
SECTION 5.9 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist; and
(ii) any Material Subsidiary may merge or consolidate with
another Person so long as (x) the surviving entity is the Borrower or a
Wholly Owned Subsidiary, (y) unless such other Person is a Wholly Owned
Subsidiary immediately prior to giving effect thereto, such merger or
consolidation shall constitute a Permitted Acquisition and the
applicable conditions and requirements of SECTION 5.9 shall be
satisfied, and (z) immediately after giving effect thereto, no Default
or Event of Default would exist.
(b) The Borrower will not permit or cause any of its non-Material
Subsidiaries to undertake any transaction or series of related transactions that
would not be permitted under
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SECTION 7.1(a) to be undertaken by a Material Subsidiary if, immediately after
the consummation of such transaction or series of related transactions, the
non-Material Subsidiary would be a Material Subsidiary.
7.2 Indebtedness. The Borrower will not, and will not permit or cause
any of its Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness other than:
(i) Indebtedness incurred under this Agreement and the Notes;
(ii) Indebtedness existing on the Closing Date and described in
SCHEDULE 7.2;
(iii) accrued expenses (including salaries, accrued vacation
and other compensation), current trade or other accounts payable and
other current liabilities arising in the ordinary course of business
and not incurred through the borrowing of money, provided that the same
shall be paid when due except to the extent being contested in good
faith and by appropriate proceedings;
(iv) loans and advances by the Borrower or any Subsidiary to
any other Subsidiary or by any Subsidiary to the Borrower, provided
that any such loan or advance by any Subsidiary to the Borrower is
subordinated in right and time of payment to the Obligations, except
that PXRE Reinsurance may, during the 1999 fiscal year, make and
maintain a short-term loan to the Borrower that, so long as no Event of
Default has occurred and is continuing, is not subordinated in time of
payment to the Obligations, and provided further that the sole use of
such short-term loan shall be to repurchase shares of the Borrower's
Capital Stock and the principal amount thereof shall not exceed
$17,000,000;
(v) unsecured Indebtedness of the Borrower that is expressly
subordinated and made junior in right and time of payment to the
Obligations and that is evidenced by one or more written agreements or
instruments having terms, conditions and provisions (including, without
limitation, provisions relating to principal amount, maturity,
covenants, defaults, interest, and subordination) satisfactory in form
and substance to the Required Lenders in their sole discretion and
which shall provide, at a minimum and without limitation, that such
Indebtedness (a) shall mature by its terms no earlier than the first
anniversary of the Maturity Date, (b) shall not require any scheduled
payment of principal prior to the first anniversary of the Maturity
Date, and (c) shall have covenants and undertakings that, taken as a
whole, are materially less restrictive than those contained herein (the
Indebtedness described hereinabove, "Subordinated Indebtedness");
provided that, as further conditions to the issuance of any
Subordinated Indebtedness, (1) immediately after giving effect to the
issuance of such Subordinated Indebtedness, no Default or Event of
Default shall exist, (2) all agreements and instruments evidencing or
governing such Subordinated Indebtedness shall have been approved in
writing by the Required Lenders (or the Agent on their behalf), and (3)
prior to or concurrently with the issuance of such Subordinated
Indebtedness, the Borrower shall have delivered to each Lender a
certificate, signed by a Financial Officer of the Borrower,
satisfactory in form
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and substance to the Required Lenders and to the effect that,
after giving effect to the incurrence of such Subordinated
Indebtedness, the Borrower is in compliance with the financial
covenants set forth in SECTIONS 6.1 and 6.2, such compliance being
determined with regard to calculations made on a pro forma basis in
accordance with GAAP as of the last day of the fiscal quarter then most
recently ended and as if such Subordinated Indebtedness had been
incurred on the first day of the period applicable to such covenants
(such calculations to be attached to such certificate); and provided
further that the Net Cash Proceeds from the issuance of such
Subordinated Indebtedness shall be applied to reduce the Commitments in
accordance with, and to the extent required under, the provisions of
SECTION 2.5(c);
(vi) purchase money Indebtedness of the Borrower and its
Subsidiaries incurred solely to finance the payment of all or part of
the purchase price of any equipment, real property or other fixed
assets acquired in the ordinary course of business, including
Indebtedness in respect of capital lease obligations, and any renewals,
refinancings or replacements thereof (subject to the limitations on the
principal amount thereof set forth in this clause (vi)), which
Indebtedness shall not exceed $10,000,000 in aggregate principal amount
outstanding at any time;
(vii) Indebtedness in respect of outstanding letters of credit,
in the aggregate not to exceed twenty-five percent (25%) of the
Statutory Capital and Surplus of PXRE Reinsurance at any time, issued
on behalf of any Insurance Subsidiary for the benefit of Lloyd's to
satisfy capital requirements imposed by Lloyd's to support such
Insurance Subsidiary's business in the Lloyd's insurance Market, and
Indebtedness in respect of reimbursement obligations in respect of
letters of credit issued for the benefit of any Insurance Subsidiary or
the Borrower in the ordinary course of its business to support the
payment of obligations arising under insurance and reinsurance
contracts and weather and similar swap agreements; and
(viii) other unsecured Indebtedness not exceeding $20,000,000 in
aggregate principal amount outstanding at any time.
7.3 Liens. The Borrower will not, and will not permit or cause any of
its Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist, any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or file or permit the filing
of, or permit to remain in effect, any financing statement or other similar
notice of any Lien with respect to any such property, asset, income or profits
under the Uniform Commercial Code of any state or under any similar recording or
notice statute, or agree to do any of the foregoing, other than the following
(collectively, "Permitted Liens"):
(i) Liens in existence on the Closing Date and set forth on
SCHEDULE 7.3;
(ii) Liens imposed by law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar
Liens incurred in the ordinary course of business for sums not
constituting borrowed money that are not overdue for a
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period of more than thirty (30) days or that are being contested in
good faith by appropriate proceedings and for which adequate reserves
have been established in accordance with GAAP (if so required);
(iii) Liens (other than any Lien imposed by ERISA, the creation
or incurrence of which would result in an Event of Default under
SECTION 8.1(i)) incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure the
performance of letters of credit, bids, tenders, statutory obligations
(including statutory obligations of Insurance Subsidiaries), surety and
appeal bonds, leases, government contracts and other similar
obligations (other than obligations for borrowed money) entered into in
the ordinary course of business;
(iv) Liens for taxes, assessments or other governmental
charges or statutory obligations that are not delinquent or remain
payable without any penalty or that are being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(v) Liens securing the purchase money Indebtedness permitted
under clause (vi) of SECTION 7.2, provided that any such Lien (a) shall
attach to such property concurrently with or within ten (10) days after
the acquisition thereof by the Borrower or such Subsidiary, (b) shall
not exceed the lesser of (y) the fair market value of such property or
(z) the cost thereof to the Borrower or such Subsidiary and (c) shall
not encumber any other property of the Borrower or any of its
Subsidiaries;
(vi) any attachment or judgment Lien not constituting an Event
of Default under SECTION 8.1(h) that is being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(vii) Liens arising from the filing, for notice purposes only,
of financing statements in respect of true leases;
(viii) Liens on Borrower Margin Stock, to the extent the fair
market value thereof exceeds 25% of the fair market value of the assets
of the Borrower and its Subsidiaries (including Borrower Margin Stock);
(ix) with respect to any real property occupied by the
Borrower or any of its Subsidiaries, all easements, rights of way,
licenses and similar encumbrances on title that do not materially
impair the use of such property for its intended purposes;
(x) Liens on assets, not to exceed thirty percent (30%) of
the Statutory Capital and Surplus of PXRE Reinsurance at any time, (y)
pledged to secure letters of credit described in SECTION 7.2(vii) or
(z) held in trust for the benefit of Lloyd's to satisfy
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capital requirements imposed by Lloyd's to support an Insurance
Subsidiary's business in the Lloyd's insurance Market; and
(xi) other Liens securing obligations of the Borrower and its
Subsidiaries not exceeding $5,000,000 in aggregate amount outstanding
at any time.
7.4 Disposition of Assets. The Borrower will not, and will not permit
or cause any of its Subsidiaries to, sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one or a series of transactions) all or any
portion of its assets, business or properties (including, without limitation,
any Capital Stock of any Subsidiary, but excluding any payments of losses
incurred by an Insurance Subsidiary or the Borrower pursuant to insurance
policies and contracts, reinsurance agreements, and weather and similar swap
agreements entered into by such Insurance Subsidiary or the Borrower in the
ordinary course of business), or enter into any arrangement with any Person
providing for the lease by the Borrower or any Subsidiary as lessee of any
material asset that has been sold or transferred by the Borrower or such
Subsidiary to such Person, or agree to do any of the foregoing, except for:
(i) sales of inventory and licenses or leases of intellectual
property and other assets, in each case in the ordinary course of
business;
(ii) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such
equipment is exchanged for, replacement equipment or (z) such equipment
is no longer necessary for the operations of the Borrower or its
applicable Subsidiary in the ordinary course of business;
(iii) the sale or other disposition by the Borrower and its
Subsidiaries of any Borrower Margin Stock to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of the
Borrower and its Subsidiaries (including Borrower Margin Stock),
provided that fair value is received in exchange therefor;
(iv) the sale, lease or other disposition of assets by a
Subsidiary of the Borrower to the Borrower or to a Subsidiary if,
immediately after giving effect thereto, no Default or Event of Default
would exist;
(v) sales of investment assets in the ordinary course of
business; and
(vi) the sale by the Borrower and its Subsidiaries of (x) the
capital stock or all or any portion of the assets, business or
properties of a Subsidiary that is not a Material Subsidiary; (y) any
asset or group of assets of an Insurance Subsidiary constituting less
than (A) in any single transaction or series of related transactions,
ten percent (10%) of Combined Statutory Capital and Surplus as of the
last day of the fiscal quarter ending on or immediately prior to the
date of such sale, and (B) during the term of this Agreement, in the
aggregate with all such other sales pursuant to this clause (vi),
thirty percent (30%) of Combined Statutory Capital and Surplus as of
the end of the immediately preceding fiscal quarter; and (z) any asset
or group of assets of a non-Insurance Subsidiary
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constituting less than (A) in any single transaction or series of
related transactions, ten percent (10%) of the total assets of the
Borrower and its Subsidiaries on a consolidated basis, determined in
accordance with GAAP as of the last day of the fiscal quarter ending
on or immediately prior to the date of such sale, and (B) during the
term of this Agreement, in the aggregate with all such other sales
pursuant to this clause (vi), thirty percent (30%) of the total assets
of the Borrower and its Subsidiaries on a consolidated basis,
determined in accordance with GAAP as of the end of the immediately
preceding fiscal quarter; provided in the case of any sale pursuant to
this clause (vi) that immediately after giving effect thereto, no
Default or Event of Default would exist.
7.5 Investments. The Borrower will not, and will not permit or cause
any of its Subsidiaries to, directly or indirectly, purchase, own, invest in or
otherwise acquire any Capital Stock, evidence of indebtedness or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or purchase
or otherwise acquire (whether in one or a series of related transactions) any
portion of the assets, business or properties of another Person (including
pursuant to an Acquisition), or create or acquire any Subsidiary, or become a
partner or joint venturer in any partnership or joint venture (collectively,
"Investments"), or make a commitment or otherwise agree to do any of the
foregoing, other than:
(i) Cash Equivalents;
(ii) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
intellectual property and other assets, in each case in the ordinary
course of business,
(iii) Investments consisting of loans and advances to employees
for reasonable travel, relocation and business expenses in the ordinary
course of business, extensions of trade credit in the ordinary course
of business, and prepaid expenses incurred in the ordinary course of
business;
(iv) without duplication, Investments consisting of
intercompany Indebtedness permitted under clause (iv) of SECTION 7.2;
(v) Investments existing on the date hereof and described in
SCHEDULE 7.5, provided that any such Investment must satisfy the
requirements of SECTION 7.5(viii) no later than March 31, 1999;
(vi) Investments consisting of the making of capital
contributions or the purchase of Capital Stock (a) by the Borrower or
any Subsidiary in any other Wholly Owned Subsidiary and (b) by any
Subsidiary in the Borrower;
(vii) Permitted Acquisitions; and
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(viii) other Investments by the Borrower and its Subsidiaries to
the extent permitted under applicable Requirements of Law and in
compliance with the following restrictions:
(a) all investments shall be in compliance at all
times with (i) the Insurance Code, if applicable, (ii) the
requirements of the Lloyd's insurance Market, if applicable,
(iii) all applicable insurance laws and regulations of any
other relevant jurisdictions relating to investments by an
Insurance Subsidiary, and (iv) the limitations set forth in
the Investment Policy;
(b) the amount equal to forty percent (40%) of the
carrying value of the aggregate admitted assets of the
Insurance Subsidiaries (determined in accordance with SAP) and
the aggregate investment assets of the Borrower and its
non-Insurance Subsidiaries (determined in accordance with
GAAP) that comprise the "Excess Capital and Surplus
Portfolio," as defined in the Investment Policy, shall be less
than one-third of the Combined Statutory Capital and Surplus
of the Insurance Subsidiaries at any time; and
(c) with respect to Investments in securities
(including, without limitation, Investments in partnerships
and joint ventures) other than those issued or unconditionally
guaranteed by the United States Government, the aggregate
Investments of the Borrower or any Subsidiary in the
securities of any single issuer shall constitute at all times
no more than five percent (5%) of (i) with respect to
Investments of the Borrower or any non-Insurance Subsidiary,
the carrying value of the investment assets of the Borrower or
such non-Insurance Subsidiary, as applicable (excluding
investments in Subsidiaries), in each case determined in
accordance with GAAP or (ii) with respect to each Insurance
Subsidiary's Investments, the Invested Assets of such
Insurance Subsidiary.
7.6 Restricted Payments. (a) The Borrower will not, and will not permit
or cause any of its Subsidiaries to, directly or indirectly, declare or make any
dividend payment, or make any other distribution of cash, property or assets, in
respect of any of its Capital Stock or any warrants, rights or options to
acquire its Capital Stock, or purchase, redeem, retire or otherwise acquire for
value any shares of its Capital Stock or any warrants, rights or options to
acquire its Capital Stock, or set aside funds for any of the foregoing, except
that:
(i) the Borrower may (v) declare and make dividend payments
or other distributions to holders of the Borrower's Capital Stock
(including, without limitation, its common stock), in cash or in shares
of such Capital Stock, (w) make payments to any Subsidiary pursuant to
Indebtedness related to any Trust Preferred Securities, and (x)
purchase, redeem, retire or otherwise acquire shares of its Capital
Stock, in cash or in-kind, and the Subsidiary of the Borrower that has
issued Trust Preferred Securities may declare and make dividend
payments or other distributions to holders of such Trust Preferred
Securities and purchase, redeem, retire or otherwise acquire such Trust
Preferred Securities, in cash or in-kind, in each case provided that,
immediately after
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giving effect thereto, (y) no Default or Event of Default would exist,
and (z) the Fixed Charge Coverage Ratio would be at least 1.5 to 1.0,
such ratio to be determined for purposes of this clause (i) as of the
last day of the most recently ended fiscal quarter as if such
dividend, distribution, payment or acquisition had been effected as of
such date; and
(ii) each Wholly Owned Subsidiary of the Borrower may declare
and make dividend payments or other distributions to the Borrower or
another Wholly Owned Subsidiary of the Borrower, to the extent not
prohibited under applicable Requirements of Law.
(b) The Borrower will not, and will not permit or cause any of its
Subsidiaries to, make (or give any notice in respect of) any voluntary or
optional payment or prepayment of principal on any Subordinated Indebtedness, or
directly or indirectly make any redemption (including pursuant to any change of
control provision), retirement, defeasance or other acquisition for value of any
Subordinated Indebtedness, or make any deposit or otherwise set aside funds for
any of the foregoing purposes.
7.7 Transactions with Affiliates. The Borrower will not, and will not
permit or cause any of its Subsidiaries to, enter into any transaction
(including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service) with any officer, director,
stockholder or other Affiliate of the Borrower or any Subsidiary, except in the
ordinary course of its business and upon fair and reasonable terms that are no
less favorable to it than would obtain in a comparable arm's length transaction
with a Person other than an Affiliate of the Borrower or such Subsidiary;
provided, however, that nothing contained in this Section shall prohibit:
(i) transactions described in Borrower's filings under the
Exchange Act or on SCHEDULE 7.7 or otherwise expressly permitted under
this Agreement; and
(ii) the payment by the Borrower of reasonable and customary
fees to members of its board of directors.
7.8 Lines of Business. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by it on the date hereof and businesses and activities
reasonably related thereto (including without limitation insurance agency and
brokerage business undertaken through a Subsidiary other than a Material
Subsidiary) or (ii) in the case of an Insurance Subsidiary, the sale of any
property and casualty insurance or reinsurance products.
7.9 Certain Amendments. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, (i) amend, modify or waive, or permit the
amendment, modification or waiver of, any provision of any agreement or
instrument evidencing or governing any Subordinated Indebtedness, the effect of
which would be to (a) increase the principal amount due thereunder, (b) shorten
or accelerate the time of payment of any amount due thereunder, (c) increase the
applicable interest rate or amount of any fees or costs due thereunder, (d)
amend any of the subordination provisions thereunder (including any of the
definitions relating thereto), (e) make
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any covenant therein more restrictive or add any new covenant, or (f) otherwise
materially and adversely affect the Lenders, or breach or otherwise violate any
of the subordination provisions applicable thereto, including, without
limitation, restrictions against payment of principal and interest thereon, or
(ii) amend, modify or change any provision of its articles or certificate of
incorporation or bylaws, or the terms of any class or series of its Capital
Stock, other than in a manner that could not reasonably be expected to adversely
affect the Lenders.
7.10 Limitation on Certain Restrictions. The Borrower will not, and
will not permit or cause any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any restriction
or encumbrance on (i) the ability of the Borrower and its Subsidiaries to
perform and comply with their respective obligations under the Credit Documents
or (ii) the ability of any Subsidiary of the Borrower to make any dividend
payments or other distributions in respect of its Capital Stock, to repay
Indebtedness owed to the Borrower or any other Subsidiary, to make loans or
advances to the Borrower or any other Subsidiary, or to transfer any of its
assets or properties to the Borrower or any other Subsidiary, in each case other
than such restrictions or encumbrances existing under or by reason of the Credit
Documents or applicable Requirements of Law.
7.11 No Other Negative Pledges. The Borrower will not, and will not
permit or cause any of its Subsidiaries to, directly or indirectly, enter into
or suffer to exist any agreement or restriction that prohibits or conditions the
creation, incurrence or assumption of any Lien upon or with respect to any part
of its property or assets, whether now owned or hereafter acquired, or agree to
do any of the foregoing, other than as set forth in (i) this Agreement, (ii) any
agreement or instrument creating a Permitted Lien (but only to the extent such
agreement or restriction applies to the assets subject to such Permitted Lien),
and (iii) operating leases of real or personal property entered into by the
Borrower or any of its Subsidiaries as lessee in the ordinary course of
business.
7.12 Fiscal Year. The Borrower will not, and will not permit or cause
any of its Subsidiaries (other than PXRE Ltd.) to, change the ending date of its
fiscal year to a date other than December 31.
7.13 Accounting Changes. The Borrower will not, and will not permit or
cause any of its Subsidiaries (other than PXRE Ltd.) to, make or permit any
material change in its accounting policies or reporting practices, except as may
be required by GAAP or SAP.
7.14 Ratings. The Borrower will not permit or cause (i) the rating and
financial strength rating of any Material Insurance Subsidiary (other than PXRE
Ltd.) by A.M. Best & Company and Standard & Poor's, respectively, to be lower
than "A-" at any time, or (ii) the rating of each PXRE Syndicate by Standard &
Poor's to be lower than "A-" at any time (in each case to the extent such
ratings are provided).
7.15 Reinsurance Agreements. The Borrower will not, and will not permit
or cause any of its Insurance Subsidiaries to do any of the following:
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(i) enter into any Reinsurance Agreement, or remain a party to
any Reinsurance Agreement (whether in effect as of the Closing Date or
at any time thereafter) for any period longer than the period legally
required under the terms of such Reinsurance Agreement (after taking
into account all rights not to renew such Reinsurance Agreement or to
withdraw from or terminate it without material penalty or financial
detriment to the Borrower or its Material Subsidiaries) with any
reinsurer that is neither rated "A-" or better by A.M. Best & Company
nor has a financial strength rating of "A-" or better by Standard &
Poor's or Moody's (any such reinsurer, a "Rating Deficient Reinsurer")
unless such Rating Deficient Reinsurer either
(u) is a syndicate that is operating as part of the Lloyd's
insurance Market during any period that the Lloyd's insurance
Market maintains a rating of "A-" or better by A.M. Best &
Company or "A-" or better by Standard & Poor's;
(v) is Select Re, provided that without the consent of the
Agent (which shall not be unreasonably withheld), the amount of
gross premium ceded to Select Re by the Insurance Subsidiaries
during any calendar year shall not materially exceed that amount
of gross premium determined by multiplying Select Re's capital
and surplus as at December 31 of the prior year by a fraction the
numerator of which is the aggregate amount of gross premiums
written by the Insurance Subsidiaries and retained for their own
account during such prior year and the denominator of which is
the Combined Statutory Capital and Surplus of the Insurance
Subsidiaries as at December 31 of such prior year (all determined
in accordance with SAP), and provided further that the
obligations of Select Re to the Insurance Subsidiaries shall be
secured by one or more trust accounts, one or more clean,
irrevocable and unconditional letters of credit, or other
security arrangements or combination of the foregoing, all as
more fully described in retrocessional agreements substantially
in the form of the existing retrocessional agreements between
Select Re and the Insurance Subsidiaries.
(w) is a pooling arrangement composed solely of Persons that
are not, on an individual basis, Rating Deficient Reinsurers;
(x) has provided a letter of credit, issued by a "qualified"
bank (as defined in the Requirements of Law of Connecticut)
having a long term senior debt rating of "A" or better by
Standard & Poor's and Moody's, in favor of the Borrower or the
applicable Insurance Subsidiary in an amount equal to or greater
than the obligations transferred pursuant to such Reinsurance
Agreement;
(y) has placed assets in a trust with a fiduciary and under
terms, including investment restrictions consistent with this
Agreement, such that the ceding Insurance Subsidiary shall be
entitled to receive credit as admitted reinsurance, under the
requirements of the applicable Insurance Regulatory Authority,
for the reinsurer's share of the obligations transferred pursuant
to such Reinsurance Agreement;
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(z) has otherwise provided collateral in favor of the
Borrower or the applicable Insurance Subsidiary in form and
amount satisfactory to the Required Lenders;
provided, however, that any Insurance Subsidiary may remain a party to
a Reinsurance Agreement with a Rating Deficient Reinsurer that does not
meet the description of clause (u), clause (v) or clause (w) above and
has not provided the collateral of the type described in clauses (x),
(y) and (z) above (all such Ratings Deficient Reinsurers, collectively,
the "Non-Approved Reinsurers") provided that for each fiscal year (or
portion thereof) ending with each fiscal quarter thereof, the aggregate
amount of Reinsurance Premiums Ceded by the Insurance Subsidiaries
during such fiscal year (or portion thereof) to all Non-Approved
Reinsurers as of each such quarter ended is not greater than
$15,000,000;
(ii) enter into any Reinsurance Agreements or, except to the
extent required by an applicable Requirement of Law, make any
amendment or modification to or waiver of any Reinsurance Agreements,
that would, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect; or
(iii) be or become a party to any Surplus Relief Reinsurance
Agreement if the increase in Combined Statutory Capital and Surplus as
a result of or arising from such Surplus Relief Reinsurance Agreement,
when added to the increase in Combined Statutory Capital and Surplus
as a result of or arising from all other Surplus Relief Reinsurance
Agreements theretofore entered into by any Insurance Subsidiary, net
of any surplus relief recaptured in respect of such Surplus Relief
Reinsurance Agreements, exceeds five percent (5%) of Combined
Statutory Capital and Surplus as of the most recent fiscal year end.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay any principal of any Loan when due
or shall fail to pay any interest on any Loan or any fee or any other Obligation
within three (3) Business Days of the date due;
(b) The Borrower shall fail to observe, perform or comply with any
condition, covenant or agreement contained in any of SECTIONS 2.14, 5.1, 5.2,
5.3(f), 5.8, 5.9, 5.10 or in ARTICLE VI or ARTICLE VII;
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(c) The Borrower or any of its Subsidiaries shall fail to observe,
perform or comply with any condition, covenant or agreement contained in this
Agreement or any of the other Credit Documents other than those enumerated in
subsections (a) and (b) above, and such failure (i) is deemed by the terms of
the relevant Credit Document to constitute an Event of Default or (ii) shall
continue unremedied for any grace period specifically applicable thereto or, if
no such grace period is applicable, for a period of thirty (30) days after the
earlier of (y) the date on which a Responsible Officer of the Borrower acquires
knowledge thereof and (z) the date on which written notice thereof is delivered
by the Agent or any Lender to the Borrower;
(d) Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries in this Agreement, any of the other
Credit Documents or in any certificate, instrument, report or other document
furnished in connection herewith or therewith or in connection with the
transactions contemplated hereby or thereby shall prove to have been false or
misleading in any material respect as of the time made, deemed made or
furnished;
(e) The Borrower or any of its Subsidiaries shall (i) fail to pay when
due (whether by scheduled maturity, acceleration or otherwise and after giving
effect to any applicable grace period) (y) any principal of or interest on any
Indebtedness (other than the Indebtedness incurred pursuant to this Agreement)
having an aggregate principal amount of at least $5,000,000 or (z) any
termination or other payment under any Hedge Agreement covering a notional
amount of Indebtedness of at least $25,000,000 or (ii) fail to observe, perform
or comply with any condition, covenant or agreement contained in any agreement
or instrument evidencing or relating to any such Indebtedness, or any other
event shall occur or condition exist in respect thereof, and the effect of such
failure, event or condition is to cause such Indebtedness to become due, or to
be required to be prepaid, redeemed, purchased or defeased, prior to its stated
maturity;
(f) The Borrower or any of its Subsidiaries shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in subsection (g) below, (iii) apply for
or consent to the appointment of or taking possession by a custodian, trustee,
receiver or similar official for or of itself or all or a substantial part of
its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;
(g) Any involuntary petition or case shall be filed or commenced
against the Borrower or any of its Subsidiaries seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty
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(60) days; or an order, judgment or decree approving or ordering any of the
foregoing shall be entered in any such proceeding;
(h) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$3,000,000 shall be entered or filed against the Borrower or any of its
Subsidiaries or any of their respective properties and the same shall not be
dismissed, stayed or discharged for a period of thirty (30) days or in any event
later than five days prior to the date of any proposed sale thereunder;
(i) Any ERISA Event or any other event or condition shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result thereof,
together with all other ERISA Events and other events or conditions then
existing, the Borrower and its ERISA Affiliates have incurred or would be
reasonably likely to incur liability to any one or more Plans or Multiemployer
Plans or to the PBGC (or to any combination thereof) that has or would be
reasonably likely to have a Material Adverse Effect;
(j) Any one or more licenses, permits, accreditations or authorizations
of the Borrower or any of its Subsidiaries shall be suspended, limited or
terminated or shall not be renewed, or any other action shall be taken, by any
Governmental Authority in response to any alleged failure by the Borrower or any
of its Subsidiaries to be in compliance with applicable Requirements of Law, and
such action, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect;
(k) Any one or more Environmental Claims shall have been asserted
against the Borrower or any of its Subsidiaries (or a reasonable basis shall
exist therefor); the Borrower and its Subsidiaries have incurred or would be
reasonably likely to incur liability as a result thereof; and such liability,
individually or in the aggregate, has or would be reasonably likely to have a
Material Adverse Effect;
(l) Any of the following shall occur: (i) any Person or group of
Persons acting in concert as a partnership or other group shall, as a result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become, after the date hereof, the "beneficial
owner" (within the meaning of such term under Rule 13d-3 under the Exchange Act)
of securities of the Borrower representing 20% or more of the combined voting
power of the then outstanding securities of the Borrower ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors; or (ii) the Board of Directors of the Borrower shall
cease to consist of a majority of the individuals who constituted the Board of
Directors as of the date hereof or who shall have become a member thereof
subsequent to the date hereof after having been nominated, or otherwise approved
in writing, by at least a majority of individuals who constituted the Board of
Directors of the Borrower as of the date hereof (or their replacements approved
as herein required).
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8.2 Remedies: Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments to be terminated, whereupon the same shall
terminate (provided that, upon the occurrence of an Event of Default pursuant to
SECTION 8.1(f) or SECTION 8.1(g), the Commitments shall automatically be
terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to SECTION 8.1(f) or SECTION 8.1(g), all of the outstanding
principal amount of the Loans and all other amounts described in this subsection
(b) shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower);
(c) Obtain, at the Borrower's expense and as soon as reasonably
possible, with respect to each Insurance Subsidiary, a current actuarial review
and valuation statement of, and opinion as to the adequacy of, such Insurance
Subsidiary's loss and loss adjustment expense reserve positions with respect to
the insurance business then in force, and covering such other subjects as are
customary in actuarial reviews and as may be requested by the Required Lenders,
prepared by an independent actuarial firm acceptable to the Required Lenders in
accordance with reasonable actuarial assumptions and procedures (the Borrower
hereby agreeing to cooperate in connection therewith); and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.
8.3 Remedies: Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law or otherwise, upon and at
any time after the occurrence and during the continuance of any Event of
Default, each Lender may, and each is hereby authorized by the Borrower, at any
such time and from time to time, to the fullest extent permitted by applicable
law, without presentment, demand, protest or other notice of any kind, all of
which are hereby knowingly and expressly waived by the Borrower, to set off and
to apply any and all deposits (general or special, time or demand, provisional
or final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
such Lender to or for the credit or the account of the Borrower against any or
all of the Obligations to such Lender now or hereafter existing, whether or not
such Obligations may be contingent or unmatured, the Borrower hereby granting to
each Lender a continuing security interest in and Lien upon all such deposits
and other property as
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security for such Obligations. Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application.
ARTICLE IX
THE AGENT
9.1 Appointment. Each Lender hereby irrevocably appoints and authorizes
First Union to act as Agent hereunder and under the other Credit Documents and
to take such actions as agent on its behalf hereunder and under the other Credit
Documents, and to exercise such powers and to perform such duties, as are
specifically delegated to the Agent by the terms hereof or thereof, together
with such other powers and duties as are reasonably incidental thereto.
9.2 Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Credit Documents. The Agent shall not have, by reason of this Agreement or
any other Credit Document, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Credit Document, express or implied,
is intended to or shall be so construed as to impose upon the Agent any
obligations or liabilities in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein. The Agent may execute
any of its duties under this Agreement or any other Credit Document by or
through agents or attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact that it selects with
reasonable care. The Agent shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Credit Documents and its
duties hereunder and thereunder and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts. The Lenders hereby acknowledge that the Agent
shall not be under any duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Agreement or any other Credit
Document unless it shall be requested in writing to do so by the Required
Lenders (or, where a higher percentage of the Lenders is expressly required
hereunder, such Lenders).
9.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by it or such Person under or
in connection with the Credit Documents, except for its or such Person's own
gross negligence or willful misconduct, (ii) responsible in any manner to any
Lender for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Credit Document, or
for the financial condition of the Borrower, its Subsidiaries or any other
Person, or (iii) required to ascertain or make any inquiry concerning the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document or the
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existence or possible existence of any Default or Event of Default, or to
inspect the properties, books or records of the Borrower or any of its
Subsidiaries.
9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Credit Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable law or any provision
of this Agreement or any other Credit Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a result of the
Agent's acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders (or, where
a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such instructions and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders (including all subsequent
Lenders).
9.5 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereinafter
taken, including any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that (i) 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, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries
and made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder, and (ii) 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 hereunder and under the
other Credit Documents and to make such investigation as it deems necessary to
inform itself as to the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries.
Except as expressly provided in this Agreement and the other Credit Documents,
the Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
concerning the business, prospects, operations, properties, financial or other
condition or
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creditworthiness of the Borrower, its Subsidiaries or any other Person that may
at any time come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.6 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from the Borrower or a Lender referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent will give notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also been
furnished to the Lenders, the Agent shall have no obligation to notify the
Lenders with respect thereto. The Agent shall (subject to SECTIONS 9.4 and 10.6)
take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders except to the extent that this Agreement expressly
requires that such action be taken, or not be taken, only with the consent or
upon the authorization of the Required Lenders or all of the Lenders.
9.7 Indemnification. To the extent the Agent is not reimbursed by or on
behalf of the Borrower, and without limiting the obligation of the Borrower to
do so, the Lenders agree (i) to indemnify the Agent and its officers, directors,
employees, agents, attorneys-in-fact and Affiliates, ratably in proportion to
their respective percentages as used in determining the Required Lenders as of
the date of determination, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including,
without limitation, at any time following the repayment in full of the Loans and
the termination of the Commitments) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or any
other Credit Document or any documents contemplated by or referred to herein 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, and (ii) to
reimburse the Agent upon demand, ratably in proportion to their respective
percentages as used in determining the Required Lenders as of the date of
determination, for any expenses incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, administration, amendment,
modification, waiver or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any of the other Credit Documents
(including, without limitation, reasonable attorneys' fees and expenses and
compensation of agents and employees paid for services rendered on behalf of the
Lenders); provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent resulting from the gross
negligence or willful misconduct of the party to be indemnified.
9.8 The Agent in its Individual Capacity. With respect to its
Commitment, the Loans made by it and the Note or Notes issued to it, the Agent
in its individual capacity and not as
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Agent shall have the same rights and powers under the Credit Documents as any
other Lender and may exercise the same as though it were not performing the
agency duties specified herein; and the terms "Lenders," "Required Lenders,"
"holders of Notes" and any similar terms shall, unless the context clearly
otherwise indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may accept deposits from, lend money to, make investments in, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Borrower, any of its Subsidiaries or any of their respective
Affiliates as if the Agent were not performing the agency duties specified
herein, and may accept fees and other consideration from any of them for
services in connection with this Agreement and otherwise without having to
account for the same to the Lenders.
9.9 Successor Agent. The Agent may resign at any time by giving ten
(10) days' prior written notice to the Borrower and the Lenders. Upon any such
notice of resignation, the Required Lenders will, with the prior written consent
of the Borrower (which consent shall not be unreasonably withheld), appoint from
among the Lenders a successor to the Agent (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing). If no successor to the Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within such ten-day period, then the retiring Agent may, on behalf of the
Lenders and after consulting with the Lenders and the Borrower, appoint a
successor Agent from among the Lenders. Upon the acceptance of any appointment
as Agent by a successor Agent, 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 hereunder and under the other Credit Documents. After any retiring
Agent's resignation as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent.
If no successor to the Agent has accepted appointment as Agent by the thirtieth
(30th) day following a retiring Agent's notice of resignation, the retiring
Agent's resignation shall nevertheless thereupon become effective, and the
Lenders shall thereafter perform all of the duties of the Agent hereunder and
under the other Credit Documents until such time, if any, as the Required
Lenders appoint a successor Agent as provided for hereinabove.
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and expenses of counsel to the Agent) in
connection with the Agent's due diligence investigation in connection with, and
the preparation, negotiation, execution, delivery and syndication of, this
Agreement and the other Credit Documents, and any amendment, modification or
waiver hereof or thereof or consent with respect hereto or thereto, (ii) to pay
upon demand all reasonable out-of-pocket costs and expenses of the Agent and
each Lender (including, without limitation, reasonable attorneys' fees and
expenses) in connection with (y) any refinancing or restructuring
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of the credit arrangement provided under this Agreement, whether in the nature
of a "work-out," in any insolvency or bankruptcy proceeding or otherwise and
whether or not consummated, and (z) the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or any of the other
Credit Documents, whether in any action, suit or proceeding (including any
bankruptcy or insolvency proceeding) or otherwise, and (iii) to pay and hold the
Agent and each Lender harmless from and against all liability for any
intangibles, documentary, stamp or other similar taxes, fees and excises, if
any, including any interest and penalties, and any finder's or brokerage fees,
commissions and expenses (other than any fees, commissions or expenses of
finders or brokers engaged by the Agent or any Lender), that may be payable in
connection with the transactions contemplated by this Agreement and the other
Credit Documents.
10.2 Indemnification. (a) The Borrower agrees, whether or not the
transactions contemplated by this Agreement shall be consummated, to indemnify
and hold the Agent and each Lender and each of their respective directors,
officers, employees, agents and Affiliates (each, an "Indemnified Person")
harmless from and against any and all claims, losses, damages, obligations,
liabilities, penalties, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) of any kind or nature whatsoever,
whether direct, indirect or consequential (collectively, "Indemnified Costs"),
that may at any time be imposed on, incurred by or asserted against any such
Indemnified Person as a result of, arising from or in any way relating to the
preparation, execution, performance or enforcement of this Agreement or any of
the other Credit Documents, any of the transactions contemplated herein or
therein or any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loans (including, without
limitation, in connection with the actual or alleged generation, presence,
discharge or release of any Hazardous Substances on, into or from, or the
transportation of Hazardous Substances to or from, any real property at any time
owned or leased by the Borrower or any of its Subsidiaries, any other
Environmental Claims or any violation of or liability under any Environmental
Law), or any action, suit or proceeding (including any inquiry or investigation)
by any Person, whether threatened or initiated, related to any of the foregoing,
and in any case whether or not such Indemnified Person is a party to any such
action, proceeding or suit or a subject of any such inquiry or investigation;
provided, however, that no Indemnified Person shall have the right to be
indemnified hereunder for any Indemnified Costs to the extent resulting from the
gross negligence or willful misconduct of such Indemnified Person. Subject only
to paragraph (b) below, all of the foregoing Indemnified Costs of any
Indemnified Person shall be paid or reimbursed by the Borrower, as and when
incurred and upon demand.
(b) Any Indemnified Person shall give prompt written notice to the
Borrower after the receipt by such Indemnified party of any written notice, or
after such Indemnified Person becomes aware, of the commencement of any action,
suit, claim or proceeding for which such Indemnified Person seeks
indemnification hereunder. Upon such notice, the Borrower shall be entitled to
defend such action, suit, claim or proceeding at its own expense and by its own
counsel, provided that (i) such counsel is reasonably satisfactory to the
Indemnified Person, (ii) the Indemnified Person is kept reasonably informed of
developments, and (iii) such counsel proceeds with diligence and in good faith
with respect thereto. The Indemnified Person shall have the right to participate
in the defense and investigation of such action, suit, claim or
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proceeding with its own counsel and at its own expense, except that the Borrower
shall bear the reasonable expense of such separate counsel if (x) in the
reasonable judgment of the Indemnified Person, based upon written advice of its
counsel, a conflict of interest may exist between such Indemnified Person and
the Borrower with respect to the matter, in which case if the Indemnified Person
notifies the Borrower in writing that such Indemnified Person elects to employ
separate counsel at the Borrower's expense, the Borrower shall not have the
right to assume the defense of such action, suit, claim or proceeding on behalf
of such Indemnified Person, or (y) the Borrower shall have failed to assume the
defense of such claim in the manner provided above within a reasonable time
after notice thereof is given to the Borrower; provided, however, that the
Borrower shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees and expense of more
than one separate firm for all Indemnified Persons unless, in the reasonable
judgment of any Indemnified Person, based upon written advice of its counsel, a
conflict of interest may exist between or among the Indemnified Persons. No
Indemnified Person seeking indemnification hereunder will, without the
Borrower's prior written consent, settle, compromise, consent to the entry of
any judgment in or otherwise seek to terminate any action, suit, claim or
proceeding referred to above.
10.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE
OTHER CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL
BE DEEMED TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF). THE
BORROWER HEREBY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE COURT
WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN
THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING
INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR
ANY PROCEEDING TO WHICH THE AGENT OR ANY LENDER OR THE BORROWER IS A PARTY,
INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT OR ANY LENDER OR THE BORROWER. THE BORROWER IRREVOCABLY
AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT
RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY
HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO
THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER CONSENTS THAT ALL SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS
SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN
THIS
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SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
10.4 Arbitration; Preservation and Limitation of Remedies. (a) Upon
demand of any party hereto, whether made before or after institution of any
judicial proceeding, any dispute, claim or controversy arising out of, connected
with or relating to this Agreement or any other Credit Document ("Disputes")
between or among the Borrower, its Subsidiaries, the Agent and the Lenders, or
any of them, shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions, claims arising from
documents executed in the future, disputes as to whether a matter is subject to
arbitration, or claims arising out of or connected with the transactions
contemplated by this Agreement and the other Credit Documents. Arbitration shall
be conducted under and governed by the Commercial Financial Disputes Arbitration
Rules (the "Arbitration Rules") of the American Arbitration Association (the
"AAA"), as in effect from time to time, and the Federal Arbitration Act, Title 9
of the U.S. Code, as amended. All arbitration hearings shall be conducted in the
city in which the principal office of the Agent is located. A hearing shall
begin within ninety (90) days of demand for arbitration and all hearings shall
be concluded within 120 days of demand for arbitration. These time limitations
may not be extended unless a party shows cause for extension and then for no
more than a total of sixty (60) days. The expedited procedures set forth in Rule
51 et seq. of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any Dispute. A
judgment upon the award may be entered in any court having jurisdiction. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted. Notwithstanding the foregoing,
this arbitration provision does not apply to Disputes under or related to any
Hedge Agreement. The parties do not waive applicable federal or state
substantive law except as provided herein.
(b) Notwithstanding the preceding binding arbitration provisions, the
parties hereto agree to preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Any party hereto shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights of self-help, including peaceful
occupation of real property and collection of rents, set-off, and peaceful
possession of personal property; (ii) obtaining provisional or ancillary
remedies, including injunctive relief, sequestration, garnishment, attachment,
appointment of a receiver and filing an involuntary bankruptcy proceeding; and
(iii) when applicable, a judgment by confession of judgment. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute. Preservation of these remedies does not limit the power of an
arbitrator to grant similar remedies that may be requested by a party in a
Dispute. The parties hereto agree that no party shall have a
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remedy of punitive or exemplary damages against any other party in any Dispute,
and each party hereby waives any right or claim to punitive or exemplary damages
that it has now or that may arise in the future in connection with any Dispute,
whether such Dispute is resolved by arbitration or judicially. The parties
acknowledge that by agreeing to binding arbitration they have irrevocably waived
any right they may have to a jury trial with regard to a Dispute.
10.5 Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
(a) if to the Borrower, to 399 Thornall Street, Edison, New
Jersey 08837, Attention: Mr. Sanford M. Kimmel, Senior Vice President,
Treasurer & Chief Financial Officer, Telecopy No. (732) 906-9157, with
a copy to Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New
York 10178, Attention: F. Sedgwick Browne, Telecopy No. (212)
309-6273;
(b) if to the Agent, to First Union National Bank, One First
Union Center, DC-4, 301 South College Street, Charlotte, North
Carolina 28288-0680, Attention: Syndication Agency Services, Telecopy
No. (704) 383-0288; and
(c) if to any Lender, to it at the address set forth on its
signature page hereto (or if to any Lender not a party hereto as of
the date hereof, at the address set forth in its Assignment and
Acceptance);
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery; provided that notices and communications to
the Agent shall not be effective until received by the Agent.
10.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the Borrower from,
any provision of this Agreement or any other Credit Document, shall be effective
unless in a writing signed by the Required Lenders (or by the Agent at the
direction or with the consent of the Required Lenders), and then the same shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, modification, waiver,
discharge, termination or consent shall:
(a) unless agreed to by each Lender directly affected thereby, (i)
reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other Obligations
(other than fees payable to the Agent for its own account),
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or (ii) extend the Maturity Date or any other date (including any scheduled date
for the mandatory reduction or termination of any Commitments) fixed for the
payment of any principal of or interest on any Loan (other than additional
interest payable under SECTION 2.8(b) at the election of the Required Lenders,
as provided therein), any fees (other than fees payable to the Agent for its own
account) or any other Obligations;
(b) unless agreed to by all of the Lenders, (i) increase or extend any
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase), (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Agent to take, any action hereunder (including as set
forth in the definition of "Required Lenders"), or (iii) change any provision of
SECTION 2.15 or this Section; and
(c) unless agreed to by the Issuing Lender or the Agent in addition to
the Lenders required as provided hereinabove to take such action, affect the
respective rights or obligations of the Issuing Lender or the Agent, as
applicable, hereunder or under any of the other Credit Documents;
and provided further that the Fee Letter may be amended or modified, and any
rights thereunder waived, in a writing signed by the parties thereto.
10.7 Assignments, Participations. (a) Each Lender may assign to one or
more other Eligible Assignees (each, an "Assignee") all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment, the outstanding Loans made by it, and the Note
or Notes held by it); provided, however, that (i) any such assignment (other
than an assignment to a Lender or an Affiliate of a Lender) shall not be made
without the prior written consent of the Agent and the Borrower (to be evidenced
by its counterexecution of the relevant Assignment and Acceptance), which
consent shall not be unreasonably withheld (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing), (ii) each such assignment shall be of a uniform,
and not varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement, (iii) except in the case of an assignment to a
Lender or an Affiliate of a Lender, no such assignment shall be in an aggregate
principal amount (determined as of the date of the Assignment and Acceptance
with respect to such assignment) less than $5,000,000 determined by combining
the amount of the assigning Lender's outstanding Loans and Unutilized Commitment
being assigned pursuant to such assignment, and (iv) the parties to each such
assignment will execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment, and will pay a nonrefundable processing fee
of $3,000 to the Agent for its own account. Upon such execution, delivery,
acceptance and recording of the Assignment and Acceptance, from and after the
effective date specified therein, which effective date shall be at least five
(5) Business Days after the execution thereof (unless the Agent shall otherwise
agree), (A) the Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the
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rights and obligations of the assigning Lender hereunder with respect thereto
and (B) the assigning Lender shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than rights under the provisions of this Agreement
and the other Credit Documents relating to indemnification or payment of fees,
costs and expenses, to the extent such rights relate to the time prior to the
effective date of such Assignment and Acceptance) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto). The terms and provisions of each Assignment and Acceptance shall,
upon the effectiveness thereof, be incorporated into and made a part of this
Agreement, and the covenants, agreements and obligations of each Lender set
forth therein shall be deemed made to and for the benefit of the Agent and the
other parties hereto as if set forth at length herein.
(b) The Agent will maintain at its address for notices referred to
herein a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and each Lender at any reasonable time
and from time to time upon reasonable prior notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee and, if required,
counterexecuted by the Borrower, together with the Note or Notes subject to such
assignment and the processing fee referred to in subsection (a) above, the Agent
will (i) accept such Assignment and Acceptance, (ii) on the effective date
thereof, record the information contained therein in the Register and (iii) give
notice thereof to the Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, will execute
and deliver to the Agent, in exchange for the surrendered Note or Notes, a new
Note or Notes to the order of the Assignee (and, if the assigning Lender has
retained any portion of its rights and obligations hereunder, to the order of
the assigning Lender), prepared in accordance with the provisions of SECTION 2.4
as necessary to reflect, after giving effect to the assignment, the Commitments
of the Assignee and (to the extent of any retained interests) the assigning
Lender, dated the date of the replaced Note or Notes and otherwise in
substantially the form of EXHIBIT A. The Agent will return canceled Notes to the
Borrower.
(d) Each Lender may, without the consent of the Borrower, the Agent or
any other Lender, sell to one or more other Persons (each, a "Participant")
participations in any portion comprising less than all of its rights and
obligations under this Agreement (including, without limitation, a portion of
its Commitment, the outstanding Loans made by it and the Note or Notes held by
it); provided, however, that (i) except in the case of a participation sold to a
Lender or an Affiliate of a Lender, no such participation shall be in an
aggregate principal amount less than $3,000,000, (ii) such Lender's obligations
under this Agreement shall remain unchanged and
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such Lender shall remain solely responsible for the performance of such
obligations, (iii) no Lender shall sell any participation that, when taken
together with all other participations, if any, sold by such Lender, covers all
of such Lender's rights and obligations under this Agreement, (iv) the Borrower,
the Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, and no Lender shall permit any Participant to have any voting rights
or any right to control the vote of such Lender with respect to any amendment,
modification, waiver, consent or other action hereunder or under any other
Credit Document (except as to actions that would (x) reduce or forgive the
principal amount of any Loan, reduce the rate of or forgive any interest
thereon, or reduce or forgive any fees or other Obligations, (y) extend the
Maturity Date or any other date fixed for the payment of any principal of or
interest on any Loan, any fees or any other Obligations, or (z) increase or
extend any Commitment of any Lender), and (v) no Participant shall have any
rights under this Agreement or any of the other Credit Documents, each
Participant's rights against the granting Lender in respect of any participation
to be those set forth in the participation agreement, and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not granted
such participation. Notwithstanding the foregoing, each Participant shall have
the rights of a Lender for purposes of SECTIONS 2.16(a), 2.16(b), 2.17, 2.18 and
8.3 and the obligations of a Lender under SECTION 2.17, and shall be entitled to
the benefits thereto, to the extent that the Lender granting such participation
would be entitled to such benefits if the participation had not been made,
provided that no Participant shall be entitled to receive any greater amount
pursuant to any of such Sections than the Lender granting such participation
would have been entitled to receive in respect of the amount of the
participation made by such Lender to such Participant had such participation not
been made.
(e) Nothing in this Agreement shall be construed to prohibit any Lender
from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release a Lender from any of its obligations hereunder.
(f) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the Assignee or Participant or proposed Assignee or Participant any
information relating to the Borrower and its Subsidiaries furnished to it by or
on behalf of any other party hereto, provided that such Assignee or Participant
or proposed Assignee or Participant agrees in writing to keep such information
confidential to the same extent required of the Lenders under SECTION 10.13.
10.8 No Waiver. The rights and remedies of the Agent and the Lenders
expressly set forth in this Agreement and the other Credit Documents are
cumulative and in addition to, and not exclusive of, all other rights and
remedies available at law, in equity or otherwise. No failure or delay on the
part of the Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof or
the exercise of any other right, power or privilege or be construed to be a
waiver of any Default or Event of Default. No course of dealing between any of
the Borrower and the Agent or the Lenders or their agents or employees shall be
effective to amend, modify or discharge any provision of this Agreement or any
other Credit
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Document or to constitute a waiver of any Default or Event of Default. No notice
to or demand upon the Borrower in any case shall entitle the Borrower to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of the Agent or any Lender to exercise any
right or remedy or take any other or further action in any circumstances
without notice or demand.
10.9 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, and all references herein to any party shall be
deemed to include its successors and assigns; provided, however, that (i) the
Borrower shall not sell, assign or transfer any of its rights, interests, duties
or obligations under this Agreement without the prior written consent of all of
the Lenders and (ii) any Assignees and Participants shall have such rights and
obligations with respect to this Agreement and the other Credit Documents as are
provided for under and pursuant to the provisions of SECTION 10.7.
10.10 Survival. All representations, warranties and agreements made by
or on behalf of the Borrower or any of its Subsidiaries in this Agreement and in
the other Credit Documents shall survive the execution and delivery hereof or
thereof and the making and repayment of the Loans. In addition, notwithstanding
anything herein or under applicable law to the contrary, the provisions of this
Agreement and the other Credit Documents relating to indemnification or payment
of fees, costs and expenses, including, without limitation, the provisions of
SECTIONS 2.16(a), 2.16(b), 2.17, 2.18, 9.7, 10.1 and 10.2, shall survive the
payment in full of all Loans, the termination of the Commitments, and any
termination of this Agreement or any of the other Credit Documents.
10.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
10.12 Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
10.13 Confidentiality. Each Lender agrees to keep confidential,
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance with safe and sound banking practices, all
nonpublic information provided to it by or on behalf of the Borrower or any of
its Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that any Lender may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors, (ii) at the demand or request of any bank regulatory
authority, court or other Governmental Authority
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having or asserting jurisdiction over such Lender, as may be required pursuant
to subpoena or other legal process, or otherwise in order to comply with any
applicable Requirement of Law, (iii) in connection with any proceeding to
enforce its rights hereunder or under any other Credit Document or any other
litigation or proceeding related hereto or to which it is a party, (iv) to the
Agent or any other Lender, (v) to the extent the same has become publicly
available other than as a result of a breach of this Agreement and (vi) pursuant
to and in accordance with the provisions of SECTION 10.7(f).
10.14 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by the Agent and the Borrower of written
or telephonic notification of such execution and authorization of delivery
thereof.
10.15 Disclosure of Information. The Borrower agrees and consents to
the Agent's disclosure of information relating to this transaction to Gold
Sheets and other similar bank trade publications. Such information will consist
of deal terms and other information customarily found in such publications.
10.16 Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (B) SUPERSEDE ANY AND ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF, INCLUDING, WITHOUT LIMITATION, THE COMMITMENT
LETTER FROM FIRST UNION TO THE BORROWER DATED DECEMBER 2, 1998 (EXCEPT FOR
PROVISIONS THE SURVIVAL OF WHICH IS EXPLICITLY SET FORTH THEREIN) BUT
SPECIFICALLY EXCLUDING THE FEE LETTER, AND (C) MAY NOT BE AMENDED, SUPPLEMENTED,
CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
PXRE CORPORATION
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
(signatures continued)
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FIRST UNION NATIONAL BANK, as Agent
and as a Lender
By: ____________________________________
Commitment: Name: ____________________________________
$50,000,000
Title: ____________________________________
Instructions for wire
transfers to the Agent:
First Union National Bank
ABA Routing No. 053000219
Charlotte, North Carolina
Account Number: 5000000018631
Account Name: PXRE Corporation
Attention: Syndication Agency Services
Address for notices as a Lender:
First Union National Bank
Financial Institutions Group
1339 Chestnut Street, PA4819
Philadelphia, Pennsylvania 19101-4819
Attention: Joseph DiFrancesco
Telephone: (215) 973-2944
Telecopy: (215) 786-4114
Lending Office:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Mr. Kevin Stephens
Telephone: (704) 383-3721
Telecopy: (704) 383-0288
