SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10994
--------------
For the quarterly period ended March 31, 1998
PHOENIX INVESTMENT PARTNERS, LTD.
DELAWARE 95-4191764
(State of Incorporation) (I.R.S. Employer Identification No.)
56 Prospect St., Hartford, Connecticut 06115-0480 (860) 403-7667
(Address of principal executive offices) (Registrant's telephone number)
PHOENIX DUFF & PHELPS CORPORATION
(Former name)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
On April 30, 1998, the registrant had 44,008,044 shares of $.01 par value common
stock outstanding.
<PAGE>
PHOENIX INVESTMENT PARTNERS, LTD. AND SUBSIDIARIES
Quarter Ended March 31, 1998
Index
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION:
<S> <C> <C>
Page
Item 1. Consolidated Financial Statements:
Consolidated Condensed Statements of Financial Condition. 3
March 31, 1998 and December 31, 1997
Consolidated Statements of Income ....................... 4
Three Months Ended March 31, 1998 and
Three Months Ended March 31, 1997
Consolidated Condensed Statements of Cash Flows ......... 5
Three Months Ended March 31, 1998 and
Three Months Ended March 31, 1997
Notes to the Consolidated Financial Statements........... 6
Item 2. Management's Discussion and Analysis of:
Results of Operations and Financial Condition............ 11
Liquidity and Capital Resources.......................... 15
Impact of the Year 2000 Issue............................ 15
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995....................................... 16
PART II - OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security Holders...... 17
Item 6. Exhibits and Reports on Form 8-K......................... 17
Signatures........................................................ 18
</TABLE>
2
<PAGE>
PART I. Financial Information
Item 1. Consolidated Financial Statements
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Condensed Statements of Financial Condition
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1998 1997
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 17,005 $ 21,872
Marketable securities, at market 11,320 12,000
Accounts receivable 34,857 31,537
Prepaid expenses and other current assets 3,162 2,712
--------- --------
Total current assets 66,344 68,121
Deferred commissions 3,838 3,998
Furniture, equipment and leasehold improvements, net 9,916 10,071
Goodwill and intangible assets, net 462,673 468,117
Investment in Beutel, Goodman & Company Ltd. 29,752 29,884
Long-term investments and other assets 24,271 24,758
--------- --------
Total assets $ 596,794 $604,949
========= ========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and other accrued liabilities $ 23,250 $ 25,742
Payables to related parties 4,928 3,135
Broker-dealer payable 8,230 9,157
Short-term notes payable 5,853
Current portion of long-term debt 2,247 2,241
--------- --------
Total current liabilities 38,655 46,128
Deferred taxes, net 64,864 66,020
Long-term debt, net of current portion 2,531 2,682
Credit facility 185,000 185,000
Lease obligations and other long-term liabilities 6,192 6,617
--------- --------
Total liabilities 297,242 306,447
--------- --------
Minority Interest 822 976
--------- --------
Series A Convertible Exchangeable Preferred Stock 78,915 78,827
--------- --------
Stockholders' Equity
Common stock, $.01 par value, 100,000,000 shares
authorized, 44,382,098 and 44,295,261 shares issued,
and 43,943,098 and 43,950,261 shares outstanding 444 444
Additional paid-in capital 189,055 188,566
Retained earnings 23,215 21,624
Accumulated other comprehensive income 10,431 10,674
Treasury stock, at cost, 439,000 and 345,000 shares (3,330) (2,609)
--------- --------
Total stockholders' equity 219,815 218,699
--------- --------
Total liabilities and stockholders' equity $ 596,794 $604,949
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
(Unaudited)
Three months ended March 31,
1998 1997
<S> <C> <C>
Revenues
Investment management fees $ 45,654 $ 28,844
Mutual funds - ancillary fees 6,154 5,821
Other income and fees 649 1,221
--------- --------
Total revenues 52,457 35,886
--------- --------
Operating Expenses
Employment expenses 22,731 15,497
Other operating expenses 11,524 8,200
Restructuring charges 168
Depreciation and amortization of
leasehold improvements 913 641
Amortization of goodwill and intangible assets 5,504 2,365
Amortization of deferred commissions 340 1,702
--------- --------
Total operating expenses 41,180 28,405
--------- --------
Operating Income 11,277 7,481
--------- --------
Equity in Earnings of Unconsolidated Affiliates 1,026 (934)
--------- --------
Other Income (Expense) - Net 418 (229)
--------- --------
Interest (Expense) Income - Net
Interest expense (2,952) (240)
Interest income 395 293
--------- --------
Total interest (expense) income - net (2,557) 53
--------- --------
Income to Minority Interest (488)
Income Before Income Taxes 9,676 6,371
Provision for income taxes 4,251 2,612
--------- --------
Net Income 5,425 3,759
Series A preferred stock dividends 1,190 1,185
--------- --------
Income available to common stockholders 4,235 2,574
Other Comprehensive Income, Net of Tax
Foreign currency translation adjustment 192 (197)
Unrealized (losses) gains on securities available-for-sale (435) 477
--------- --------
Total other comprehensive income (243) 280
--------- --------
Comprehensive Income $ 3,992 $ 2,854
========= ========
Weighted average shares outstanding
Basic 43,936 44,055
Diluted 44,530 44,597
Earnings per share
Basic $ .10 $ .06
Diluted $ .10 $ .06
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
Three months ended March 31,
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 5,425 $ 3,759
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of
leasehold improvements 913 641
Amortization of goodwill and intangible assets 5,504 2,365
Amortization of deferred commissions 340 1,702
Income to minority interest 488
Equity in earnings of unconsolidated
affiliates, net of dividends 300 934
Payments of deferred commissions (180) (2,836)
Changes in other operating assets (3,937) (1,637)
Changes in other operating liabilities (2,960) 2,657
-------- -------
Net cash provided by operating activities 5,893 7,585
-------- -------
Cash Flows from Investing Activities:
Sale (purchase) of marketable securities, net 847 (47)
Repayment of short-term notes from acquisition (5,853)
Capital expenditures (758) (598)
Distributions to minority interests (643)
Purchase of long-term investments (408) (2,220)
Other investing activities 179 (418)
Proceeds from long-term investments 11,246
-------- -------
Net cash (used in) provided by investing activities (6,636) 7,963
-------- -------
Cash Flows from Financing Activities:
Repayment of debt, net (146) (6,500)
Dividends paid (3,834) (3,828)
Stock repurchases (721) (1,245)
Proceeds from issuance of stock 577 1,155
-------- -------
Net cash used in financing activities (4,124) (10,418)
-------- -------
Net (decrease) increase in cash and cash equivalents (4,867) 5,130
Cash and cash equivalents, beginning of period 21,872 22,466
-------- -------
Cash and Cash Equivalents, End of Period $ 17,005 $27,596
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The unaudited consolidated financial statements of Phoenix Investment
Partners, Ltd. and Subsidiaries (PXP or the Company), formerly Phoenix Duff &
Phelps Corporation, included herein have been prepared in accordance with the
instructions to the Quarterly Report on Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted. It is suggested that these consolidated financial
statements be read in conjunction with the financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
2. Recent Accounting Pronouncements
PXP adopted Statement of Financial Accounting Standard (SFAS) No. 130,
"Reporting Comprehensive Income," as of January 1, 1998. This statement
establishes standards for the reporting and display of comprehensive income
and its components in a full set of financial statements. This statement
requires that the reporting of comprehensive income items be reported as
separate components of income on the Consolidated Statements of Income, and
as a separate component of equity on the Consolidated Condensed Statement of
Financial Condition. (See Note 5.)
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," is effective for fiscal years beginning after December 15,
1997. This statement requires the disclosure of different types of business
activities and economic environments of an enterprise, as they relate to a
specific segment. These disclosures are not required for interim periods in
the initial year.
As these statements only address financial statement disclosure, they have no
impact on PXP's financial results.
3. First Quarter 1998 Compared to Pro Forma First Quarter 1997
On July 17, 1997, PXP acquired a 74.9% majority interest in GMG/Seneca
Capital Management LLC (Seneca), a San Francisco-based investment advisor,
for approximately $37.5 million. On September 3, 1997, PXP acquired Pasadena
Capital Corporation (PCC), the parent company of Roger Engemann & Associates,
Inc., for approximately $214.0 million. Since PXP's financial statements for
the first quarter of 1997 do not reflect the operations of PCC and Seneca,
management believes that, for comparative purposes, the most meaningful
financial presentation for the first quarter of 1997 is on a pro forma basis.
The following financial information for the three months ended March 31, 1998
reflects actual results for the quarter. The following pro forma financial
information for the three months ended March 31, 1997 is derived from the
historical financial statements of PXP, PCC and Seneca, and gives effect to
the acquisitions of PCC and a majority interest in Seneca by PXP. The pro
forma financial statement information has been prepared assuming these
acquisitions were effected on January 1, 1997 and does not necessarily
reflect the actual results that would have been obtained had the acquisitions
taken effect on the aforementioned assumed date.
6
<PAGE>
<TABLE>
<CAPTION>
Three months ended March 31,
1998 - Actual1997 - Pro Forma
(In thousands, except per share amounts)
<S> <C> <C>
Revenues $ 52,457 $ 52,120
--------- ---------
Employment expenses 22,731 21,045
Other operating expenses 12,945 15,236
Amortization of goodwill and
intangible assets 5,504 5,504
--------- ---------
Operating income 11,277 10,335
Other income (expense) - net 1,444 (1,163)
Interest expense - net (2,557) (2,758)
Income to minority interest (488) (290)
--------- ---------
Income before income taxes 9,676 6,124
Provision for income taxes 4,251 2,963
--------- ---------
Net income $ 5,425 $ 3,161
========= =========
Earnings per share
Basic $ .10 $ .04
Diluted $ .10 $ .04
</TABLE>
4. Dividends and Other Capital Transactions
On May 7, 1998, the Company's Board of Directors approved a quarterly
dividend of $.06 per common share, payable June 10, 1998, to stockholders of
record on May 29, 1998. A dividend on the Series A Convertible Preferred
Stock (Preferred Stock) was also declared in the amount of $.098 per
preferred share, payable May 15, 1998, to stockholders of record on April 2,
1998. This preferred dividend represents the final payment of the 6% dividend
on the Preferred Stock for the period prior to the April 3, 1998 exchange of
the Preferred Stock for the Company's 6% Convertible Subordinated Debentures
(Debentures). Interest began accruing on the Debentures beginning on April 4,
1998 and will be payable on June 10, 1998 to registered holders as of May 20,
1998. (See Note 7.)
As of March 31, 1998, the Company, in accordance with the previously
announced stock repurchase program, had purchased 439,000 shares of PXP
common stock at a total cost of $3.3 million.
5. Comprehensive Income
The components of, and related tax effects for, other comprehensive income
are as follows for the periods ended March 31, (in thousands):
<TABLE>
<CAPTION>
1998 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
<S> <C> <C> <C>
Foreign currency translation adjustment $ 325 $ (133) $ 192
Unrealized losses on securities
available-for-sale:
Unrealized holding losses arising
during period (737) 302 (435)
------- ------ -------
Other comprehensive income $ (412) $ 169 $ 243)
======== ======= ========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
1997 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
<S> <C> <C> <C>
Foreign currency translation adjustment $ (334) $ 137 $ (197)
-------- --------- --------
Unrealized gains on securities
available-for-sale:
Unrealized holding gains arising
during period 381 (156) 225
Plus: reclassification adjustment
for losses realized in net income 427 (175) 252
--------- -------- --------
Net unrealized gains 808 (331) 477
--------- -------- --------
Other comprehensive income $ 474 $ (194) $ 280
========= ======== ========
The following tables summarize accumulated other comprehensive income
balances (in thousands):
As of March 31, 1998: Accumulated
Foreign Unrealized Other
Currency Gains on Comprehensive
Items Securities Income
Balance as of December 31, 1997 $ (1,171) $ 11,845 $ 10,674
Current period change 192 (435) (243)
---------- ---------- -----------
Balance as of March 31, 1998 $ (979) $ 11,410 $ 10,431
========== ========== ============
As of December 31, 1997: Accumulated
Foreign Unrealized Other
Currency Gains on Comprehensive
Items Securities Income
Balance as of December 31, 1996 $ (330) $ 4,932 $ 4,602
Current period change (841) 6,913 6,072
---------- ---------- ------------
Balance as of December 31, 1997 $ (1,171) $ 11,845 $ 10,674
========== ========== ============
</TABLE>
6. Earnings Per Share
For the periods ended March 31, 1998 and March 31, 1997, basic and diluted
earnings per share (EPS) were computed in accordance with SFAS No. 128,
"Earnings per Share." Basic EPS is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS is computed by dividing net income by
the weighted average number of common stock equivalent shares outstanding for
the period, with the exception that common stock equivalents, and the related
earnings effect, are ignored if they are anti-dilutive. Common stock
equivalents are computed based on outstanding stock options under the
non-qualified stock option plans and the conversion of preferred stock to
common stock.
8
<PAGE>
The following tables reconcile PXP's basic earnings per share to diluted
earnings per share:
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1998
Per-Share
Income Shares Amount
(in thousands)
<S> <C> <C> <C>
Net income $ 5,425
Less: preferred stock dividends 1,190
Basic EPS
Income available to common
stockholders 4,235 43,936 $ .10
======
Effect of Dilutive Securities
Stock options 594
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 4,235 44,530 $ .10
======= ====== ======
For the Three Months Ended March 31, 1997
Per-Share
Income Shares Amount
(in thousands)
Net income $ 3,759
Less: preferred stock dividends 1,185
Basic EPS
Income available to common
stockholders 2,574 44,055 $ .06
======
Effect of Dilutive Securities
Stock options 542
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 2,574 44,597 $ .06
======= ====== ======
</TABLE>
In accordance with SFAS No. 128, the computation of diluted earnings per
share, and the respective weighted average diluted shares, excludes the
effect of the Preferred Stock since, for the periods presented, these
securities are anti-dilutive. Had the Preferred Stock not been anti-dilutive,
the weighted average diluted shares for the three months ended March 31, 1998
and 1997 would have been 54.7 million and 54.5 million, respectively.
9
<PAGE>
7. Subsequent Events
During the first quarter of 1998, PXP's Board of Directors voted to authorize
the exchange of the 3.2 million shares of Preferred Stock for 6% Convertible
Subordinated Debentures, due 2015. The exchange occurred on April 3, 1998.
Holders of outstanding Preferred Stock as of the exchange date received the
$25.00 principal amount of the Convertible Subordinated Debentures in
exchange for each share of Preferred Stock, including unpaid and accrued
dividends.
On May 7, 1998, at the Annual Meeting of Stockholders, the Company's
stockholders voted to change the Company's corporate name to Phoenix
Investment Partners, Ltd. A Certificate of Amendment to the Certificate of
Incorporation was filed with the State of Delaware effective May 11, 1998.
10
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Assets Under Management
At March 31, 1998, PXP had $49.3 billion of assets under management, an increase
of $2.9 billion from December 31, 1997, and $16.3 billion from March 31, 1997.
The increase from March 31, 1997 is primarily the result of the acquisitions of
Pasadena Capital Corporation (PCC), on September 3, 1997, and a majority
interest in Seneca Capital Management LLC (Seneca), on July 17, 1997, which
increased assets under management by $11.9 billion as of March 31, 1998. Since
the revenues of the Company are substantially earned based upon assets under
management, this information is important to an understanding of the business.
<TABLE>
<CAPTION>
(in millions)
Historical Pro Forma
March 31, December 31, March 31, March 31,
1998 1997 1997 1997
<S> <C> <C> <C> <C>
Open-end Mutual Funds $ 14,085 $ 13,001 $ 10,987 $ 11,766
Managed Accounts * 6,315 5,559 240 4,543
Closed-end Mutual Funds 3,373 3,336 2,878 2,878
Institutional Accounts ** 17,207 16,155 12,020 15,691
PHL General Account 8,324 8,351 6,845 6,845
----------- ----------- --------- ---------
$ 49,304 $ 46,402 $ 32,970 $ 41,723
=========== =========== ========= =========
</TABLE>
* Managed Accounts represent assets which are individually managed for retail
and institutional clients.
** Institutional Accounts include 100% of the assets managed by Seneca Capital
Management.
Three Months Ended March 31, 1998 Compared with Three Months Ended March 31,
1997 - Historical
Revenues for the three months ended March 31, 1998 of $52.5 million, which
includes $18.8 million for PCC and Seneca, increased $16.6 million (46%) from
$35.9 million for the same period in 1997. Excluding the effects of PCC and
Seneca, the Company's revenues for the three months ended March 31, 1998
decreased $2.3 million (6%) compared to the same period in 1997.
Investment management fees of $45.7 million for the three months ended March 31,
1998, which includes $16.9 million for PCC and Seneca, increased $16.8 million
(58%) as compared to $28.8 million for the same period in 1997. Management fees
earned from the open-end mutual funds, including institutional mutual funds,
increased $.5 million due to an increase in average assets under management.
Management fees earned from managing Phoenix Home Life Mutual Insurance
Company's (PHL) general account increased $.3 million as a result of a $1.5
billion increase in average assets under management offset, in part, by a change
in the fee structure. Management fees earned from closed-end mutual funds and
PHL sponsored variable products increased $.8 million primarily as a result of
an increase in average assets under management. Institutional accounts
management fees decreased $1.0 million due to a decrease in average assets under
management. Funds under reimbursement, a reduction to revenues, increased $.7
million due to the addition of several new funds in the latter part of 1997 for
which the advisors, subsidiaries of the Company, agreed to waive or reimburse
expenses to the extent they exceeded limits detailed in the funds' prospectuses.
11
<PAGE>
Mutual funds - ancillary fees of $6.2 million for the three months ended March
31, 1998, which includes $1.8 million for PCC, increased $.3 million (6%) as
compared to $5.8 million for the same period in 1997. Fund accounting fees
earned on open-end mutual funds and PHL sponsored variable products increased
$.3 million primarily as a result of an increase in average assets under
management. Net distributor fees decreased $1.7 million primarily as a result of
the sale of the deferred commissions asset in the second quarter of 1997.
Shareholder service agent fees decreased $.1 million as a result of a decline in
mutual fund shareholder accounts.
Other income and fees of $.6 million for the three months ended March 31, 1998,
which includes $.1 million of contingent deferred sales charge (CDSC) income
from the Phoenix-Engemann B share mutual funds, decreased $.6 million (47%) as
compared to $1.2 million for the same period in 1997, due to reduced CDSC income
resulting from the sale of the Company's deferred commissions asset.
Employment expenses of $22.7 million for the three months ended March 31, 1998,
which includes $6.4 million for PCC and Seneca, increased $7.2 million (47%) as
compared to $15.5 million for the same period in 1997. An increase in incentive
compensation of $.9 million is the result of hiring additional portfolio
managers and research analysts, as well as an increase in sales based
incentives. The resignation and retirement of two key executives in the first
and second quarters of 1997, respectively, decreased employment expenses in the
first quarter of 1998 by $.5 million. The remaining increase in employment
expense is the result of an expansion of the sales force and annual salary
adjustments.
Other operating expenses of $11.5 million for the three months ended March 31,
1998, which includes $2.6 million for PCC and Seneca, increased $3.3 million
(41%) as compared to $8.2 million for the same period in 1997. Other operating
expenses increased by $.2 million as a result of charges paid to a third party
administrator related to the outsourcing of substantially all of PXP's fund
accounting operations in the first quarter of 1998. The use of consultants
increased other operating expenses by $.3 million.
Restructuring charges of $.2 million for the three months ended March 31, 1998
are the result of the Company's decision to out-source substantially all of its
fund accounting operations effective in the first quarter of 1998.
Depreciation and amortization of leasehold improvements of $.9 million for the
three months ended March 31, 1998, which includes $.2 million for PCC and
Seneca, increased $.3 million (42%) from $.6 million for the same period in
1997. An increase in depreciation expense of $.1 million is related to capital
assets purchased in 1997.
Amortization of goodwill and intangible assets of $5.5 million for the three
months ended March 31, 1998 increased $3.1 million (133%) as compared to $2.4
million for the same period in 1997 as a result of the amortization of the
intangible assets and goodwill identified in the preliminary purchase price
allocation of PCC and Seneca.
Amortization of deferred commissions of $.3 million for the three months ended
March 31, 1998, which includes $.3 million related to Phoenix-Engemann B share
mutual funds, decreased $1.4 million (80%) as compared to $1.7 million for the
same period in 1997 primarily as a result of the sale of PXP's then existing
deferred commissions asset in the second quarter of 1997, which eliminated the
amortization charge.
Operating income of $11.3 million for the three months ended March 31, 1998
increased $3.8 million (51%) as compared to $7.5 million for the same period in
1997 as a result of the changes discussed above.
12
<PAGE>
Equity in earnings of unconsolidated affiliates of $1.0 million for the three
months ended March 31, 1998 increased $2.0 million as compared to $(.9) million
for the same period in 1997. PXP's share of equity earnings from WCCBO was zero
in the first quarter of 1998 compared to a $1.5 million loss for the first
quarter of 1997, due to the liquidation of WCCBO in early 1997. PXP's share of
equity earnings from Greystone Financial Group was zero in the first quarter of
1998 compared to a $.2 million loss in the first quarter of 1997. Income from
the investment in BG increased $.1 million.
Other income - net of $.4 million for the three months ended March 31, 1998,
which includes $.3 million for PCC and Seneca, increased $.6 million as compared
to $(.2) million for the same period in 1997. Realized gains on the sale of
marketable securities contributed $.2 million to other income.
Interest expense - net of $2.6 million for the three months ended March 31, 1998
increased $2.6 million (100%) as compared to net interest income of $.1 million
for the same period in 1997, due to interest charges resulting from the
financing of the PCC and Seneca acquisitions.
Income to minority interest of $.5 million for the three months ended March 31,
1998 represents the minority shareholders' interest in the equity earnings of
Seneca, which is fully consolidated in the Company's financial statements.
The effective tax rate of 44% for the three months ended March 31, 1998
increased from 41% for the same period in 1997. The increase in the effective
tax rate represents the effect of non-deductible goodwill amortization resulting
from the PCC acquisition.
As a result of the effects discussed above, net income for the three months
ended March 31, 1998 of $5.4 million represents an increase of $1.7 million
(44%) compared to the $3.8 million for the first quarter of 1997.
Three Months Ended March 31, 1998 Compared with Three Months Ended March 31,
1997 - Pro Forma
(see Note 3)
Revenues of $52.5 million for the three months ended March 31, 1998 increased
$.3 million (1%) as compared to pro forma $52.1 million for the same period in
1997.
Investment management fees of $45.7 million for the three months ended March 31,
1998 increased $2.6 million (6%) from pro forma $43.0 million for the same
period in 1997. Management fees from PCC increased approximately $2.0 million
due to an increase in assets under management and increased asset performance.
Management fees earned from closed-end mutual funds and PHL sponsored variable
products increased $.8 million primarily as a result of an increase in average
assets under management. Management fees earned from the open-end mutual funds,
including institutional mutual funds, increased $.5 million due to an increase
in average assets under management. Management fees earned managing PHL's
general account increased $.3 million as a result of a $1.5 billion increase in
average assets under management offset, in part, by a change in the fee
structure. Management fees earned from advisory and subadvisory accounts
decreased fees by a net of $.3 million as a result of lost accounts being
slightly in excess of new accounts. Funds under reimbursement, a reduction to
revenues, increased $.7 million, due to the addition of various new funds in the
latter part of 1997 for which the advisors, subsidiaries of the Company, agreed
to waive or reimburse expenses to the extent they exceeded limits detailed in
the funds' prospectuses.
Mutual funds - ancillary fees of $6.2 million for the three months ended March
31, 1998 decreased $1.3 million (17%) from pro forma $7.5 million for the same
period in 1997. Net distributor fees decreased $1.2 million primarily as a
result of the sale of the deferred commissions asset. Fund accounting fees
earned on open-end mutual funds and PHL sponsored variable products increased
$.3 million primarily as a result of an increase in average assets under
management. Shareholder service agent fees decreased $.1 million as a result of
a decline in mutual fund shareholder accounts.
Other ancillary fees decreased $.3 million.
13
<PAGE>
Other income and fees of $.6 million for the three months ended March 31, 1998
decreased $1.0 million (62%) from pro forma $1.6 million for the same period in
1997. A decrease of $.6 million is primarily due to a decrease in redemption
income as a result of the sale of the Company's then existing deferred
commissions asset in June 1997. Other income from PCC decreased $.4 million.
Employment expenses of $22.7 million for the three months ended March 31, 1998
increased $1.7 million (8%) as compared to pro forma $21.0 million for the same
period in 1997. This increase is primarily due to an expansion of the sales
force, an increase in sales-based and performance-based incentive compensation
and annual salary adjustments. The resignation and retirement of two key
executives in the first and second quarters of 1997, respectively, decreased
employment expenses in the first quarter of 1998 by $.5 million.
Other operating expenses of $12.9 million for the three months ended March 31,
1998 decreased $2.3 million (15%) as compared to pro forma $15.2 million for the
same period in 1997. Amortization of deferred commissions decreased $1.5 million
primarily as a result of the sale of the Company's deferred commissions asset,
excluding PCC's, in June 1997. Operating expenses from PCC, including
professional fees and travel, decreased $.8 million. The use of consultants
increased other operating expenses by $.3 million. Other operating expenses
increased by $.2 million as a result of charges paid to a third party
administrator related to the outsourcing of substantially all of PXP's fund
accounting operations in the first quarter of 1998. Restructuring charges
increased $.2 million also as a result of the outsourcing of substantially all
of PXP's fund accounting operations in the first quarter of 1998. Depreciation
and amortization of leasehold improvements decreased by $.1 million. Various
other expenses decreased by $.6 million.
Amortization of goodwill and intangibles of $5.5 million for the three months
ended March 31, 1998 was the same as pro forma 1997.
Other income - net of $1.4 million for the three months ended March 31, 1998
increased $2.6 million as compared to pro forma $(1.2) million for the same
period in 1997. Equity income from the Company's investment in BG increased $.1
million. PXP's share of equity earnings from WCCBO was zero in the first quarter
of 1998 compared to a $1.5 million loss for the first quarter of 1997, due to
the liquidation of WCCBO in early 1997. PXP's share of equity earnings from
Greystone Financial Group was zero in the first quarter of 1998 compared to a
$.2 million loss in the first quarter of 1997. Other miscellaneous income from
Seneca increased $.3 million.
Interest expense - net of $2.6 million for the three months ended March 31, 1998
decreased $.2 million (7%) as compared to pro forma $2.8 million for the same
period in 1997 primarily as a result of a decrease in total outstanding debt.
Income to minority interest of $.5 million for the three months ended March 31,
1998 increased $.2 million (68%) as compared to pro forma $.3 million for the
same period in 1997. The minority shareholders' interest in the equity earnings
of Seneca, which is fully consolidated in the Company's financial statements,
increased due to Seneca's increased earnings for the three months ended March
31, 1998.
Net income of $5.4 million for the three months ended March 31, 1998 reflects an
increase of $2.3 million (72%) as compared to pro forma $3.2 million for the
same period in 1997, resulting from the effects of the increased income and
expenses discussed above. The effective tax rate decreased to 44% for the three
months ended March 31, 1998 from 48% for the same period in 1997.
14
<PAGE>
Liquidity and Capital Resources
The Company's business is not considered to be capital intensive. Working
capital requirements for the Company have historically been provided by
operating cash flow. It is expected that such cash flows will continue to serve
as the principal source of working capital for the Company for the near future.
The Company's current capital structure, as of May 13, 1998, includes 43.9
million shares of common stock and $79.4 million of 6% Convertible Subordinated
Debentures with a principal value of $25.00 per debenture. The current dividend
rate on common stock is $.06 per share per quarter. If the dividend rate remains
constant for 1998, the total annual dividend on common stock would be
approximately $10.5 million based upon shares outstanding at March 31, 1998. The
total annual interest expense on the debentures based upon debentures
outstanding at March 31, 1998, at an interest rate of 6%, would be $4.8 million.
The Company has a bank credit agreement in place providing for a $200 million
five year credit facility, with no required principal repayments prior to
maturity in August 2002. The outstanding obligation under the credit agreement
at March 31, 1998 was $185 million. An interest rate of approximately 5.9% was
in effect on this borrowing as of March 31, 1998. The credit agreement contains
financial and operating covenants including, among other provisions,
requirements that the Company maintain certain financial ratios and satisfy
certain financial tests, restrictions on the ability to incur indebtedness, and
limitations on the amount of the Company's capital expenditures. At March 31,
1998, the Company was in compliance with all covenants contained in the credit
agreement. The Company believes that funds from operations and amounts available
under the Credit Agreement will provide adequate liquidity for the foreseeable
future.
Management considers the liquidity of the Company to be adequate to meet present
and anticipated needs.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000.
Based upon preliminary assessments, the Company has determined that it will be
required to modify or replace portions of its software so that its computer
systems will properly utilize dates beyond December 31, 1999. Since many of the
core systems of the Company's business are investment related, Company
management believes that the majority of these systems are already Year 2000
compliant. The Company believes that with modifications to existing software and
conversions to new software, the Year 2000 Issue will be mitigated. It is
anticipated that such modifications and conversions will be completed on a
timely basis. The failure to recognize the Year 2000 could have a negative
impact on, but is not limited to, the handling of securities trades, the pricing
of securities and the servicing of client accounts. It is not known at this time
if there could be a material impact on the operations of the Company if such
modifications and conversions are not completed timely.
The Company will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous Company initiatives
and it is expected that all core applications will be remediated by December 31,
1998 and tested by June, 1999. The total cost to the Company to become Year 2000
compliant is not expected to have a material impact on the Company's results of
operations.
15
<PAGE>
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995
This quarterly report contains forward looking statements that involve risks and
uncertainties including, but not limited to, the following: The Company's
performance is highly dependent on the amount of assets under management, which
may decrease for a variety of reasons including changes in interest rates and
adverse economic conditions; the Company's performance is very sensitive to
changes in interest rates, which may increase from current levels; the Company's
performance is affected by the demand for and the market acceptance of the
Company's products and services; the Company's business is extremely competitive
with several competitors being substantially larger than the Company; and the
Company's performance may be impacted by changes in the performance of financial
markets and general economic conditions. The costs involved to complete the Year
2000 modifications are based on management's best estimates, which were derived
based upon assumptions relative to future events including the continued
availability of certain resources, third party modification plans and other
factors. There can be no guarantee that these estimates will be achieved and
actual results could differ materially from those plans. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties. The
potential problems related to the Year 2000 issue could affect the ability to
provide advisory services for the Company's products. Accordingly, actual
results may differ materially from those set forth in the forward looking
statements. Attention is also directed to other risk factors set forth in
documents filed by the Company with the Securities and Exchange Commission.
16
<PAGE>
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
No items submitted.
Item 6. Exhibits and Reports on Form 8-K
(a) The following documents are filed as part of these reports:
4(u)Credit Agreement dated as of August 14, 1997 among the Registrant and
various financial institutions, Bank of America National Trust and
Savings Association as Syndication and Documentation Agent, and Bank of
New York as Administrative Agent.
(b) Reports on Form 8-K.
No items filed.
17
<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 thereunto duly authorized.
Phoenix Investment Partners, Ltd.
May 13, 1998 /s/ Philip R. McLoughlin
------------------------
Philip R. McLoughlin, Chairman and
Chief Executive Officer
May 13, 1998 /s/ William R. Moyer
--------------------
William R. Moyer, Chief Financial Officer
18
<PAGE>
EXHIBIT 4(u)
CREDIT AGREEMENT
Dated as of August 14, 1997
among
PHOENIX DUFF & PHELPS CORPORATION,
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Syndication and Documentation Agent,
THE BANK OF NEW YORK,
as Administrative Agent
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BANCAMERICA SECURITIES, INC.
and
BNY CAPITAL MARKETS, INC.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
<S> <C> <C>
ARTICLE I DEFINITIONS 1
1.1 Certain Defined Terms 1
1.2 Other Interpretive Provisions 23
1.3 Accounting Principles 24
ARTICLE II THE CREDITS 24
2.1 Amounts and Terms of Commitments 24
(a) The Facility A Credit. 24
(b) The Facility B Credit 25
2.2 Loan Accounts 25
2.3 Procedure for Borrowing. 26
2.4 Facility B Conversion 26
2.5 Facility A Conversion 27
2.6 Conversion and Continuation Elections 28
2.7 Voluntary Termination or Reduction of
Commitments 29
2.8 Optional Prepayments 30
Mandatory Prepayments of Loans;
Mandatory Commitment Reductions 30
2.10 Repayment 30
2.11 Interest 31
2.12 Fees 32
(a) Arrangement, Agency Fees 32
(b) Commitment Fees 32
2.13 Computation of Fees and Interest 32
2.14 Payments by the Company 33
2.15 Payments by the Banks to the Administrative
Agent 33
2.16 Sharing of Payments, Etc. 34
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 35
3.1 Taxes. 35
3.2 Illegality 37
3.3 Increased Costs and Reduction of
Return 37
3.4 Funding Losses 38
3.5 Inability to Determine Rates 39
3.6 Certificates of Banks 39
3.7 Survival 39
ARTICLE IV CONDITIONS PRECEDENT 39
4.1 Conditions of Initial Loans 39
(i) Credit Agreement 40
(ii) Resolutions; Incumbency 40
(iii) Organization Documents;
Good Standing 40
(iv) Legal Opinions 40
(v) Payment of Fees 40
(vi) Certificate 41
(vii) Other Documents 41
4.2 Conditions to All Borrowings and
<PAGE>
Section Page
Facility B Conversion 41
(a) Notice of Borrowing/Notice of Facility
B Conversion 41
(b) Continuation of Representations and
Warranties 41
(c) No Existing Default 41
(d) Acquisitions 42
4.3 Conditions to Facility B Conversion 42
ARTICLE V REPRESENTATIONS AND WARRANTIES 42
5.1 Corporate Existence and Power 42
5.2 Corporate Authorization; No Contravention 43
5.3 Governmental Authorization 43
5.4 Binding Effect 43
5.5 Litigation 43
5.6 Contractual Obligation 44
5.7 ERISA Compliance 44
5.8 Use of Proceeds; Margin Regulations 45
5.9 Title to Properties 45
5.10 Taxes 45
5.11 Financial Condition 45
5.12 Environmental Matters 46
5.13 Regulated Entities 46
5.14 No Burdensome Restrictions 46
5.15 Copyrights, Patents, Trademarks and
Licenses, etc. 47
5.16 Subsidiaries 47
5.17 Insurance 47
5.18 Full Disclosure 47
5.19 PCC Acquisition Agreement 47
5.20 Seneca Acquisition Agreement 48
ARTICLE VI AFFIRMATIVE COVENANTS 48
6.1 Financial Statements 49
6.2 Certificates; Other Information 50
6.3 Notices 50
6.4 Preservation of Corporate Existence,Etc. 51
6.5 Maintenance of Property 52
6.6 Insurance 52
6.7 Payment of Obligations 52
6.8 Compliance with Laws 52
6.9 Compliance with ERISA 52
6.10 Inspection of Property and Books and
Records 53
6.11 Environmental Laws 53
6.12 Use of Proceeds 53
6.13 Holding Agreement 53
- ii -
<PAGE>
Section Page
ARTICLE VII NEGATIVE COVENANTS 54
7.1 Limitation on Liens 54
7.2 Mergers, Consolidations and Sales of
Assets 55
7.3 Loans and Investments 55
7.4 Limitation on Indebtedness 56
7.5 Transactions with Affiliates 56
7.6 Use of Proceeds 56
7.7 Contingent Obligations 57
7.8 Joint Ventures 57
7.9 Lease Obligations 57
7.10 Restricted Payments 58
7.11 ERISA 58
7.12 Change in Business 58
7.13 Accounting Changes 58
7.14 Pari Passu 58
7.15 Phoenix 58
7.16 Subordinated Debt and Preferred Stock 58
7.17 Capital Expenditures 59
ARTICLE VIII GUARANTOR'S FINANCIAL COVENANTS 59
8.1 Guarantor's Minimum Total SAP Adjusted
Capital 59
8.2 Invested Assets 59
8.3 NAIC Ratings 59
8.4 Real Estate 59
8.5 Risk Based Capital 59
8.6 Non-Performing Real Estate 59
8.7 Indebtedness to Capital 59
ARTICLE IX COMPANY'S FINANCIAL COVENANTS 60
9.1 Shareholders' Equity 60
9.2 EBITDA to Interest Ratio 60
9.3 Total Debt to Capital Ratio 60
9.4 Senior Debt to EBITDA Ratio 60
ARTICLE X GUARANTY 61
10.1 Guaranty 61
10.2 Guaranty Unconditional 61
10.3 Discharge only upon Payment in Full;
Reinstatement in Certain
Circumstances 62
10.4 Waiver by the Guarantor 62
10.5 Subrogation 62
10.6 Stay of Acceleration 62
ARTICLE XI EVENTS OF DEFAULT 62
11.1 Event of Default 62
a) Non-Payment 62
(b) Representation or Warranty 63
(c) Specific Defaults 63
(d) Other Defaults 63
- iii -
Section Page
(e) Cross-Default 63
(f) Insolvency; Voluntary Proceedings 63
(g) Involuntary Proceedings 64
(h) ERISA 64
(i) Monetary Judgments 64
(j) Non-Monetary Judgments 64
(k) Change of Control 64
(l) Loss of Licenses 65
11.2 Remedies 65
11.3 Rights Not Exclusive 65
ARTICLE XII GUARANTOR EVENTS OF DEFAULT 65
12.1 Event of Default 65
12.2 Remedies 66
ARTICLE XIII COMPANY EVENTS OF DEFAULT 66
13.1 Event of Default 66
13.2 Remedies 66
ARTICLE XIV THE ADMINISTRATIVE AGENT 67
14.1 Appointment 67
14.2 Delegation of Duties 67
14.3 Exculpatory Provisions 67
14.4 Reliance by Administrative Agent 68
14.5 Notice of Default 68
14.6 Non-Reliance on Administrative Agent
and Other Banks. 69
14.7 Indemnification 69
14.8 Administrative Agent in Its
Individual Capacity 70
14.9 Successor Agent 71
14.10 Syndication and Documentation Agent 71
ARTICLE XV MISCELLANEOUS 72
15.1 Amendments and Waivers 72
15.2 Notices 72
15.3 No Waiver; Cumulative Remedies 73
15.4 Costs and Expenses 73
15.5 Indemnity 74
15.6 Payments Set Aside 74
15.7 Successors and Assigns 75
15.8 Assignments, Participations, etc. 75
15.9 Confidentiality 77
15.10 Set-off 78
15.11 Automatic Debits of Fees 78
15.12 Notification of Addresses, Lending
Offices, Etc. 78
15.13 Counterparts 78
15.14 Severability 78
15.15 No Third Parties Benefited 79
15.16 Governing Law and Jurisdiction 79
- iv -
Section Page
15.17 Waiver of Jury Trial 79
15.18 Entire Agreement 80
</TABLE>
- v -
<PAGE>
Schedule 2.1 Commitments
Schedule 5.5 Litigation
Schedule 5.7 ERISA
Schedule 5.11 Permitted Liabilities
Schedule 5.12 Environmental Matters
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 5.17 Insurance Matters
Schedule 7.1 Permitted Liens
Schedule 7.4 Permitted Indebtedness
Schedule 7.7 Contingent Obligations
Schedule 15.2 Lending Offices; Addresses for Notices
<PAGE>
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit D-2 Form of Legal Opinion of Guarantor's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
Exhibit G Form of Notice of Facility A Conversion
Exhibit H Form of Notice of Facility B Conversion
- vi -
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of August 14, 1997, among Phoenix
Duff & Phelps Corporation a Delaware corporation (the "Company"), Phoenix Home
Life Mutual Insurance Company, a New York domiciled mutual insurance company
(the "Guarantor"), the several financial institutions from time to time party to
this Agreement (collectively, the "Banks"; individually, a "Bank"), Bank of
America National Trust and Savings Association, as Syndication and Documentation
Agent for the Banks and The Bank of New York, as Administrative Agent for the
Banks.
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility guaranteed by the Guarantor and an unguaranteed
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
I. ARTICLE
DEFINITIONS
A. 1.1 Certain Defined Terms. The following terms have the
following meanings:
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a Person,
or of any business or division of a Person, (b) the acquisition of in
excess of 50% of the capital stock, partnership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person
(other than a Person that is a Subsidiary) provided that the Company or
the Subsidiary is the surviving entity.
"Administrative Agent" means BNY in its capacity as administrative
agent for the Banks hereunder, and any successor agent arising under
Section 14.9.
"Administrative Agent's Payment Office" means the address for
payments set forth on the signature page hereto in relation to the
Administrative Agent, or such other address as the Administrative Agent
may from time to time specify.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent-Related Persons" means BofA, BNY and any successor
Administrative Agent arising under Section 14.9, together with their
respective Affiliates (including, in the case of BofA and BNY, the
Arrangers), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agents" mean the Administrative Agent and BofA, as Syndication and
Documentation Agent.
"Agreement" means this Credit Agreement.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the higher of: (a) 0.50% per annum above the Federal Funds Rate in effect
on such date; and (b) the BNY Rate in effect on such day.
Any change in the BNY Rate shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Annual Statement" means the annual financial statement of any
insurance company as required to be filed with the Department, together
with all exhibits or schedules filed therewith, prepared in conformity
with SAP. References to amounts on particular exhibits, schedules, lines,
pages and columns on such Annual Statements are based on the formats
promulgated by the NAIC for 1996 Annual Statements for the applicable type
of insurance company. If such format is changed in future years so that
different information is contained in such items or they no longer exist,
it is understood that the reference is to information consistent with that
recorded in the referenced item in the 1996 Annual Statement of the
insurance company.
"Applicable Fee Rate" means initially 0.10%. On and after the date
specified below, the Applicable Fee Rate shall be adjusted to the rate per
annum set forth in the table below beneath the consolidated Senior Debt to
EBITDA Ratio (such Ratio being referred to as "X" below) for the Company
and its Subsidiaries set forth below:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Level 1 Level 2 Level 3 Level 4 Level 5
Senior X <1.4 1.4<X<2.0 2.0<X<2.55 2.55<X< 3.00<X
Debt 3.00
EBITDA
Ratio
Applicable
Fee Ratio 8.0 bps 9.0 bps 10.0 bps 12.5 bps 17.5 bps
</TABLE>
The Applicable Fee Rates shall be adjusted, to the extent applicable, 60
days (or, in the case of the last fiscal quarter of any fiscal year, 120 days)
after the end of each fiscal quarter, based on the Senior Debt to EBITDA Ratio
as of the last day of such fiscal quarter; it being understood that if the
Company failed to deliver the financial statements required by subsection 6.1(a)
or (b), as applicable, and the related certificate required by subsection 6.2(a)
by the 60th day (or, if applicable, the 120th day) after any fiscal quarter, the
applicable Fee Rate shall be based on Level 5 above until such financial
statements and certificate are delivered.
"Applicable Margin" means initially as to Facility A Eurodollar Rate
Loans, 0.195% and as to Facility A CD Rate Loans, 0.320%. Concurrently with any
change in the Rating, the rate set forth below for Facility A Eurodollar Rate
Loans and Facility A CD Rate Loans:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Facility A Level 1 Level 2 Level 3 Level 4 Level 5 Level 6
Rating of
the GuarantorAA/Aa2 Aa-/Aa3 A+/A1 A/A2 A-/A3 <Level 5
Applicable 0.1875% 0.195% 0.225% 0.250% 0.350% 0.50%
Margin For
Eurodollar
Rate Loans
Applicable 0.3125% 0.320% 0.350% 0.375% 0.475% 0.625%
Margin For
CD Rate
Loans
</TABLE>
In the event of a split between the Moody's Rating and the S&P Rating, the
higher interest rate shall be applicable.
"Applicable Margin" means initially as to Facility B Eurodollar Rate
Loans, 0.385%, and as to Facility B CD Rate Loans, 0.51%. On and after the date
specified below, the Applicable Margin shall be adjusted to the rate per annum
set forth in the table below beneath the consolidated Senior Debt to EBITDA
Ratio (such Ratio being referred to as "X") below) for the Company set forth
below:
<TABLE>
<S> <C> <C> <C> <C> <C>
Facility B Level 1 Level 2 Level 3 Level 4 Level 5
Senior X<1.4 1.4<X<2.0 2.0<X<2.55 2.55<X<3.00 3.00<X
Debt
to
EBITDA
Applicable 0.300% 0.360% 0.385% 0.450% 0.550%
Margin for
Eurodollar
Rate
Applicable 0.425% 0.485% 0.510% 0.575% 0.675%
Margin for
CD Rate
Loans
</TABLE>
The Applicable Margin for Facility B Loans shall be adjusted, to the extent
applicable, 60 days (or, in the case of the last fiscal quarter of any fiscal
year, 120 days) after the end of each fiscal quarter, based on the Senior Debt
to EBITDA Ratio as of the last day of such fiscal quarter; it being understood
that if the Company fails to deliver the financial statements required by
subsection 6.1(a) or (b), as applicable, and the related certificate required by
subsection 6.2(a) by the 60th day (or, if applicable, the 120th day) after any
fiscal quarter, the Applicable Margin shall be based on Level 5 above until such
financial statements and certificate are delivered.
"Arrangers" means BancAmerica Securities, Inc., a Delaware
corporation and BNY Capital Markets, Inc., a New York corporation.
"Assignee" has the meaning specified in subsection 12.8(a).
"Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel, the non-duplicative allocated cost
of internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause
hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C.ss.101, et seq.).
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
<PAGE>
"BNY" means The Bank of New York, a New York banking corporation.
"BNY Rate" means a rate of interest per annum equal to the rate
of interest publicly announced in New York City by BNY from time to time
as its prime commercial lending rate, such rate to be adjusted
automatically (without notice) on the effective date of any change in such
publicly announced rate. The BNY Rate is not the lowest rate available at
BNY at any time.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of
the same Type and of the same Facility made to the Company on the same day
by the Banks under Article II, and, other than in the case of Base Rate
Loans, having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or
required by law to close and, if the applicable Business Day relates to
any Eurodollar Rate Loan, means such a day on which dealings are carried
on in the applicable Eurodollar dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CD Rate" means, for any Interest Period with respect to CD Rate
Loans comprising part of the same Borrowing, the rate of interest (rounded
upward to the next 1/100th of 1%) determined as follows:
CD Rate = Certificate of Deposit Rate + Assessment
1.00 - Reserve Percentage Rate
<PAGE>
Where:
"Assessment Rate" means, for any day of such Interest Period,
the rate determined by the Administrative Agent as equal to the
annual assessment rate in effect on such day payable to the FDIC by a
member of the Bank Insurance Fund that is classified as adequately
capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification within the meaning of 12
C.F.R. ss.327.3) for insuring time deposits at offices of such member
in the United States; or, in the event that the FDIC shall at any
time hereafter cease to assess time deposits based upon such
classifications or successor classifications, equal to the maximum
annual assessment rate in effect on such day that is payable to the
FDIC by commercial banks (whether or not applicable to any particular
Bank) for insuring time deposits at offices of such banks in the
United States.
"Certificate of Deposit Rate" means the rate of interest per
annum determined by the Administrative Agent to be the arithmetic
mean (rounded upward to the next 1/100th of 1%) of the rates notified
to the Administrative Agent as the rates of interest bid by two or
more certificate of deposit dealers of recognized standing selected
by the Administrative Agent for the purchase at face value of dollar
certificates of deposit issued by major United States banks, for a
maturity comparable to such Interest Period and in the approximate
amount of the CD Rate Loans to be made, at the time selected by the
Administrative Agent on the first day of such Interest Period.
"Reserve Percentage" means, for any day of such Interest
Period, the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%), as determined by the
Administrative Agent, in effect on such day (including any ordinary,
marginal, emergency, supplemental, special and other reserve
percentages), prescribed by the FRB for determining the maximum
reserves to be maintained by member banks of the Federal Reserve
System with deposits exceeding $1,000,000,000 for new non-personal
time deposits for a period comparable to such Interest Period and in
an amount of $100,000 or more.
The CD Rate shall be adjusted, as to all CD Rate Loans then
outstanding, automatically as of the effective date of any change in the
Assessment Rate or the Reserve Percentage.
"CD Rate Loan" means a Loan that bears interest based on the CD Rate.
"Change of Control" means
(a) the acquisition by any Person, or two or more Persons acting in
concert, of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934) of 20% or more of the voting power of the Guarantor; or
<PAGE>
(b) the failure of the Guarantor to own either directly or
indirectly, free and clear of all Liens or other encumbrances, 51% of the
outstanding shares of voting stock and of the capital stock of the Company
on a fully diluted basis.
"Closing Date" means the date on which all conditions precedent set forth
in Section 4.1 are satisfied or waived by all Banks (or, in the case of
subsection 4.1(a)(v), waived by the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations promulgated
thereunder.
"Commitment", as to each Bank, means its Facility A Commitment and its
Facility B Commitment without duplication.
"Company Action Level" means 200% of the Authorized Control Level
Risk-Based Capital of the Guarantor. The Authorized Control Level Risk-Based
Capital of the Guarantor shall be computed in the manner from time to time
prescribed by the Insurance Department of the State of New York for inclusion in
the Annual Statement of the Guarantor of such Department. Such Authorized
Control Level Risk-Based Capital currently appears on page 23 of such statement
in column 1, line 28.
"Company Default" means any event or circumstances which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute a Company Event of Default.
"Company Event of Default" means any of the events or circumstances
specified in Section 13.1.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or 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, (iii) 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
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Swap Contract. The amount of any
Contingent Obligation shall, in the case of Guaranty Obligations, be deemed
equal to the stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof,
and in the case of other Contingent Obligations, shall be equal to the maximum
reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under Section
2.6, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Department" means the applicable Governmental Authority of the state
of domicile of an insurance company responsible for the regulation of said
insurance company.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"EBITDA" means, with respect to the Company and its Subsidiaries, as
the end of any fiscal quarter for the four fiscal quarters then ending
earnings before interest, taxes, depreciation and amortization, calculated
in accordance with GAAP; provided, that, for any four fiscal quarter period
in which either the PCC Acquisition or the Seneca Acquisition shall have
occurred, EBITDA shall be calculated on a pro forma basis as if such
acquisition had occurred on the first day of such period.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000 (or its equivalent in foreign
currency); (ii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000 (or its equivalent in
foreign currency), provided that such bank is acting through a branch or
agency located in the United States; and (iii) a Person that is primarily
engaged in the business of commercial banking and that is (A) a Subsidiary
of a Bank, (B) a Subsidiary of a Person of which a Bank is a Subsidiary, or
(C) a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or
any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section
<PAGE>
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition
of any liability under Title IV of ERISA, other than PBGC premiums due but
not delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
"Eurodollar Rate" means with respect to the Interest Period
applicable to any Eurodollar Loan, a rate of interest per annum, as
determined by the Administrative Agent, obtained by dividing (and then
rounding to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%,
then to the next higher 1/16 of 1%):
(a) the rate, as reported by BNY to the Administrative Agent,
quoted by BNY to leading banks in the interbank eurodollar market as the
rate at which BNY is offering Dollar deposits in an amount equal
approximately to the Eurodollar Loan of BNY to which such Interest Period
shall apply for a period equal to such Interest Period, as quoted at
approximately 11:00 a.m. two Business Days prior to the first day of such
Interest Period, by
(b) a number equal to 1.00 minus the aggregate of the then
stated maximum rates during such Interest Period of all reserve
requirements (including, without limitation, marginal, emergency,
supplemental and special reserves), expressed as a decimal, established by
the Board of Governors of the Federal Reserve System and any other banking
authority to which BNY and other major United States money center banks are
subject, in respect of eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of the Board of Governors of the
Federal Reserve System) or in respect of any other category of liabilities
including deposits by reference to which the interest rate on Eurodollar
Loans is determined or any category of extensions of credit or other assets
which includes loans by non-domestic offices of any Bank to United States
residents. Such reserve requirements shall include, without limitation,
those imposed under such Regulation D. Eurodollar Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed to be
subject to such reserve requirements without benefit of credits for
proration, exceptions or offsets which may be available from time to time
to any Bank under such Regulation D. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in any such
reserve requirement.
"Eurodollar Rate Loan" means a Loan that bears interest based on the
Eurodollar Rate.
"Event of Default" means any of the events or circumstances specified
in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"Facility" means either Facility A or Facility B.
"Facility A" means the credit facility pursuant to which Facility A
Loans shall be made.
"Facility A Base Rate Loan" means a Facility A Loan which constitutes
a Base Rate Loan.
"Facility A Borrowing" means a Borrowing of Facility A Loans.
"Facility A CD Rate Loan" means a Facility A Loan which constitutes a
CD Rate Loan.
"Facility A Commitment", as to each Bank, has the meaning specified
in Section 2.1(a).
"Facility A Conversion" means a conversion of a Facility B Loan into
a Facility A Loan as set forth in Section 2.5.
"Facility A Eurodollar Rate Loan" means a Facility A Loan which
constitutes an Eurodollar Rate Loan.
"Facility A Loan" has the meaning specified in Section 2.1(a).
"Facility B" means the credit facility pursuant to which Facility B
Loans shall be made.
"Facility B Base Rate Loan" means a Facility B Loan which constitutes
a Base Rate Loan.
"Facility B CD Rate Loan" means a Facility B Loan which constitutes a
CD Rate Loan.
"Facility B Commitment" as to each Bank, has the meaning specified in
Section 2.1(b).
"Facility B Conversion" means a conversion of a Facility A Loan into
a Facility B Loan as set forth in Section 2.1(b).
"Facility B Eurodollar Rate Loan" means a Facility B Loan which
constitutes a Eurodollar Rate Loan.
"Facility B Loan" has the meaning specified in Section 2.1(b).
"Facility Conversion Date" means any date on which under Section
2.1(b) or Section 2.5, the Company converts a Facility A Loan to a Facility
B Loan or a Facility B Loan to a Facility A Loan.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, a rate per annum (expressed
as a decimal, rounded upwards, if necessary, to the next higher 1/100 of
1%) equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, provided that (i) if the
day for which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if such rate is not so published for any day, the
Federal Funds Rate for such day shall be the average of the quotations for
such day on such transactions received by BNY as determined by BNY and
reported to the Administrative Agent.
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the date hereof.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, 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.
"Guarantor Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute a Guarantor Event of
Default.
"Guarantor Event of Default" means any of the events or circumstances
specified in Section 12.1.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Highest Lawful Rate" means as to any Bank, the maximum rate of
interest, if any, that at any time or from time to time may be contracted
for, taken, charged or received by such Bank on the obligations owed to it
under the laws applicable to such Bank and this transaction.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses(but not including in the case of the Guarantor, Surplus
Notes); (e) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the
rights and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases (other than the $2,600,000
capital lease related to the National Securities and Research Corporation
transaction); (g) all net obligations with respect to Swap Contracts; (h)
all indebtedness referred to in clauses (a) through (g) above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through
(g) above.
"Indemnified Liabilities" has the meaning specified in Section 15.5.
"Indemnified Person" has the meaning specified in Section 15.5.
"Independent Auditor" has the meaning specified in subsection 6.1(a).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state
or foreign law, including the Bankruptcy Code.
"Insurance Code" means with respect to any insurance company, the
insurance code at the state of domicile and any successor statute of
similar import together with the regulations thereunder as amended or
otherwise modified and in effect from time to time. References to sections
of the Insurance Code shall be construed to also refer to successor
sections.
"Interest Expense" means consolidated interest expense, calculated in
accordance with GAAP including, without limitation, interest expense with
respect to Subordinated Debt; provided, however, that for the one year
period commencing on the date of exchange or, if earlier, December 31,
1997, 50% of the interest expense related to Subordinated Debt exchanged
for preferred stock outstanding on the Closing Date shall be excluded from
Interest Expense.
"Interest Payment Date" means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each calendar quarter and
each date such Loan is converted into another Type of Loan, provided,
however, that if any Interest Period for a CD Rate Loan or Eurodollar Rate
Loan exceeds 90 days or three months, respectively, the date that falls 90
days or three months (as the case may be) after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an
Interest Payment Date.
"Interest Period" means, (a) as to any Eurodollar Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Eurodollar Rate Loan, and ending on the date one, two,
three or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation; and (b) as to any CD Rate
Loan, the period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a CD Rate Loan, and ending 30, 60, 90 or 180 days thereafter,
as selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Eurodollar Rate
Loan, the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Eurodollar Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest
Period; and
(iii) no Interest Period shall extend beyond the Termination
Date.
"Invested Assets" means cash, cash equivalents, short term
investments, investments held for sale and any other assets which are
treated as investments under SAP.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture" means a single-purpose corporation, partnership,
joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) now or hereafter
formed by the Company or any of its Subsidiaries with another Person in
order to conduct a common venture or enterprise with such Person.
"Lending Office" means, as to any Bank, the office or offices of such
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Eurodollar Lending Office", as the case may be, on Schedule 15.2, or such
other office or offices as such Bank may from time to time notify the
Company and the Agent.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a lessor
under an operating lease.
"Loan" means an extension of credit by a Bank to the Company under
Article II, and may be a Base Rate Loan, CD Rate Loan or an Eurodollar Rate
Loan (each, a "Type" of Loan) and includes any Facility A Loan or Facility
B Loan.
"Loan Documents" means this Agreement, any Notes and all other
documents delivered to either Agent or any Bank in connection herewith.
"Majority Banks" means at any time Banks then holding at least
66-2/3% of the then aggregate unpaid principal amount of the Loans, or, if
no such principal amount is then outstanding, Banks then having at least
66-2/3% of the Facility A Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Guarantor, the
Company or the Company and its Subsidiaries taken as a whole or the
Guarantor and its Subsidiaries taken as a whole; (b) a material impairment
of the ability of the Company or the Guarantor to perform under any Loan
Document and to avoid any Event of Default, Guarantor Event of Default or
Company Event of Default; or (c) an adverse effect upon the legality,
validity, binding effect or enforceability against the Company or the
Guarantor of any Loan Document.
"Maximum Facility B Commitments" means $100,000,000 as such amount
may be reduced pursuant to Section 2.7 and Section 2.9 hereof.
"Moody's" means Moody's Investors Services, Inc.
"Moody's Rating" shall mean at any time the Insurance Financial
Strength Ratings of the Guarantor assigned by Moody's Investors Service,
Inc.
"Multiemployer Plan" means a "Multi employer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"NAIC" means the National Association of Insurance Commissioners or
any successor thereto.
"NAIC Ratings" shall mean the quality ratings assigned by the
Securities Valuation Office of the NAIC to investments of the Guarantor and
the Primary Insurance Subsidiaries. References in this Agreement to
particular NAIC ratings are references to such ratings as currently defined
and classified by the Securities Valuation Office of the National
Association of Insurance Commissioners and if such rating system is changed
then each reference to a particular rating
<PAGE>
in this Agreement shall be deemed to be a reference to the rating under
such changed rating system which most closely approximates the credit
quality of the particular rating as currently defined. The Guarantor will
use its best efforts to at all times have not less than 90% of its bond
portfolio and that of the Primary Insurance Subsidiaries covered by NAIC
Ratings. If for any reason beyond the control of the Guarantor NAIC Ratings
are unavailable for such percentage of the bond portfolios of the Guarantor
and the Primary Insurance Subsidiaries or the NAIC rating system is
discontinued then in that event the Guarantor and the Banks agree to
negotiate in good faith for an amendment to this Agreement replacing
Sections 8.2 and 8.3 hereof with new covenants measuring the credit quality
of the bond portfolio of the Guarantor and the Primary Insurance
Subsidiaries and which are not materially more liberal nor restrictive than
Sections 8.2 and 8.3 hereof as presently in effect, but in the event that
the Guarantor and the Majority Banks are unable to agree to such an
amendment within 60 days of the date the NAIC rating system is discontinued
or the Guarantor is unable to comply with the preceding sentence then in
that event this Agreement may, at the option of the Majority Banks or the
Guarantor, terminate whereupon the Commitments shall terminate and all
outstanding Loans, together with interest thereon and any amounts due the
Banks under this Agreement, including under Section 3.4 hereof, shall be
repaid.
"Net Cash Proceeds" means with respect to the sale, transfer, or
other disposition by the Guarantor or any Subsidiary of any asset
(including any stock of any Subsidiary), the aggregate cash proceeds
(including cash proceeds received by way of deferred payment of principal
pursuant to a note, installment receivable or otherwise, but only as and
when received) received by the Guarantor or any Subsidiary pursuant to such
sale, transfer or other disposition, net of (i) the direct costs relating
to such sale, transfer or other disposition (including, without limitation,
sales commissions and legal, accounting and investment banking fees), (ii)
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements),
(iii) amounts required to be applied to the repayment of any Indebtedness
secured by a Lien on the asset subject to such sale, transfer or other
disposition (other than the Loans) and (iv) any reserve for adjustment in
respect of the sale price of such asset (until such amount is available to
the Guarantor or the applicable Subsidiary).
"Net Invested Assets" shall mean the Guarantor's and the Primary
Insurance Subsidiaries' portfolios of stocks, bonds, mortgage loans, real
estate, policy loans and other assets classified as invested assets under
SAP less Separate Account assets.
"Non-Performing Real Estate" shall mean the book value of the sum of
(i) real estate acquired by the Guarantor and the Primary Insurance
Subsidiaries in satisfaction of indebtedness, whether by foreclosure, deed
in lieu of foreclosure or otherwise, which during the period of 180 days
prior to the date of determination had a net operating income (gross income
less taxes, maintenance and other operating expenses and also less
principal and interest on indebtedness not owing to the Guarantor or the
applicable Primary Insurance Subsidiary) of less than 6% of book value,
(ii) mortgage loans the terms of which have been modified because of the
borrower's inability to comply with the terms as originally agreed or which
are in the process of foreclosure and under which the amount received by
the Guarantor or the applicable Primary Insurance Subsidiary (exclusive of
amounts received for taxes or insurance or in payment of expenses) during
the 90 days preceding the date of determination is an amount which on an
annual basis would return to the Guarantor or the applicable Primary
Insurance Subsidiary less than 6% of the book value of the mortgage loan in
question and (iii) mortgage loans on which any payment of principal or
interest is more than 90 days past due.
"Note" means a promissory note executed by the Company in favor of a
Bank pursuant to subsection 2.2(b), in substantially the form of Exhibit F.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit B.
"Notice of Facility A Conversion" means a notice in substantially in
the form of Exhibit G.
"Notice of Facility B Conversion" means a notice in substantially in
the form of Exhibit H.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
or the Guarantor to any Bank, any Agent, or any other Indemnified Person,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Participant" has the meaning specified in subsection 15.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"PCC" means Pasadena Capital Corporation.
"PCC Acquisition" means the acquisition by the Company of the stock
of PCC pursuant to the PCC Acquisition Agreement.
"PCC Acquisition Agreement" means the Agreement and Plan of Merger by
and among the Company, Phoenix Apollo Corp. and PCC dated as of June 9,
1997.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.1.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Primary Insurance Subsidiaries" shall mean those Primary
Subsidiaries principally engaged in the business of insurance.
"Primary Subsidiaries" shall mean Phoenix American Life Insurance
Co., the Company, and any other Subsidiary of the Guarantor which at the
time of determination has capital or a net worth in excess of $25,000,000.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Facility A Commitment divided by the combined
Facility A Commitments of all Banks.
"Rating" means the Moody's Rating or the S&P Rating. All references
in this Agreement to particular Moody's Ratings and S&P Ratings are
references to such ratings as currently defined by Moody's and S&P, and in
the event either of such corporations changes its rating system, each
reference to a particular rating set forth in this Agreement shall be
deemed to be a reference to the rating under such changed rating system
which, in the reasonable judgment of the Administrative Agent, after
consultation with the rating service involved, most closely approximates
the level of claims paying ability associated with the particular rating as
currently defined. Whenever a determination of compliance with any
provision of this Agreement or any interest rate or fee is dependent upon
the availability of both a Moody's Rating and an S&P Rating and one or the
other (but not both) of such rating services ceases to rate the claims
paying ability of the Guarantor, compliance with the applicable provisions
of this Agreement and determinations of interest rates and fees shall be
made on the basis of the rating which is available. If for any reason
neither a Moody's Rating nor an S&P Rating is available for the Guarantor
then in that event compliance with the provisions of this Agreement where a
determination of such a rating is necessary, determinations of interest
rates and fees shall be made by the Majority Banks, after consultation with
the Guarantor, based on the Majority Banks' good faith estimates of what
such ratings would have been had they been available, the determination of
the Majority Banks in such regards to be final and conclusive provided that
they have been made in good faith.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Responsible Officer" means, with respect to any Person, the chief
executive officer, or the president of such Person, or any other officer
having substantially the same authority and responsibility; or, with
respect to compliance with financial covenants, the chief financial officer
or the treasurer of such Person, or any other officer having substantially
the same authority and responsibility.
"Risk Based Capital Ratio" shall mean, as of any time the same is to
be determined, the ratio of adjusted capital of the Guarantor to the
Company Action Level of the Guarantor. Adjusted capital, for the purpose of
this definition, shall be computed in the manner from time to time
prescribed by the Insurance Department of the State of New York as total
adjusted capital for inclusion in the Annual Statement of the Guarantor to
such department (currently appearing on page 23 of such annual statement in
column 1, line 27 and currently consisting of capital and surplus, the
asset valuation reserve of the Guarantor and 50% of the Guarantor's
dividend liability).
"S&P" means Standard & Poor's Ratings Group.
"S&P Rating" shall mean at any time the Insurer Claims Paying Ability
Rating of the Guarantor assigned by Standard & Poor's Ratings Services, a
Division of the McGraw Hill Companies, Inc.
"SAP" means, as to the Guarantor, the statutory accounting principles
prescribed or permitted by the Department, or in the event that the
Department fails to prescribe or address such practices, the NAIC
guidelines.
"SAP Capital" means unrestricted surplus accounts plus asset
valuation reserve plus surplus notes, all calculated in accordance with
SAP.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Seneca" means GMG/Seneca Capital Management, LLC.
"Seneca Acquisition" means the acquisition by the Company of the
majority of the equity interests of Seneca pursuant to the Seneca
Acquisition Agreement.
"Seneca Acquisition Agreement" means the Purchase Agreement by and
among the Company and certain other Persons dated as of June 18, 1997 with
respect to Seneca.
"Senior Debt" means Indebtedness less Subordinated Debt.
"Senior Debt to EBITDA Ratio" means the ratio for the Company, on a
consolidated basis in accordance with GAAP, as at the end of any fiscal
quarter of Senior Debt as of such quarter end to EBITDA as of such quarter
end for the four fiscal quarters then ending.
"Separate Accounts" shall mean accounts maintained by the Guarantor
and the Primary Insurance Subsidiaries pursuant to the New York Insurance
Law of a character such that the assets allocated thereto are to provide
for annuities or life insurance benefits under specific annuity and/or
insurance contracts and are not chargeable with other liabilities of the
Guarantor or the Primary Insurance Subsidiaries.
"Shareholders' Equity" means shareholders' equity determined in
accordance with GAAP.
"Subordinated Debt" means Indebtedness subordinated to the
Obligations in form and substance satisfactory to the Majority Banks.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50%
of the voting stock or other equity interests (in the case of Persons other
than corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a combination
thereof. Unless the context otherwise clearly requires, references herein
to a "Subsidiary" refer to a Subsidiary of the Guarantor.
"Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Surplus Notes" means surplus notes issued in accordance with Section
1307 of the New York Insurance Law and which are payable only out of free
and divisible surplus with the prior approval of the Department.
"Swap Contract" means any agreement (including any master agreement
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign exchange
agreement, rate cap, collar or floor agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option or any other,
similar agreement (including any option to enter into any of the
foregoing).
"Termination Date" means the earlier to occur of:
(a) August 14, 2002; and
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
"Total Debt to Capital Ratio" means the ratio for the Company, on a
consolidated basis in accordance with GAAP, of its Indebtedness to the sum
of its Indebtedness plus its Shareholders' Equity. For the purpose of the
calculations of Indebtedness for this ratio, Indebtedness shall be reduced
by an amount equal to the lesser of (i) 50% of any outstanding Subordinated
Debt which has been exchanged for Subordinated Debt from preferred stock
outstanding on the Closing Date and (ii) $40,000,000.
"Total SAP Adjusted Capital" means SAP Capital plus reserves for
losses on real estate.
"12b-1 Asset" means, with respect to any Person, such Person's right
to receive payments arising in connection with the sale of shares in a
registered open-end management investment company, which payment shall be
permitted pursuant to Rule 12b-1(b) (such payment, a so-called "12b-1 fee")
or Rule 6c-10 (such payment, a so-called "contingent deferred sales load")
of the Investment Company Act of 1940.
"Type" has the meaning specified in the definition of "Loan."
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Guarantor or by
one or more of the other Wholly-Owned Subsidiaries, or both.
1.2 Other Interpretive Provisions (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding", and the word "through"
means "to and including."
<PAGE>
(d) Except as otherwise stated, the terms "determine" or
"determination" mean to reasonably determine or reasonable determination,
respectively.
(e) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(f) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(g) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agents merely because of the
Agents' or Banks' involvement in their preparation.
1.3 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b)References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. (a) The Facility A Credit. Each Bank
severally agrees, on the terms and conditions set forth herein, to make loans to
the Company (each such loan, a "Facility A Loan") from time to time on any
Business Day during the period from the Closing Date to the Termination Date, in
an aggregate amount not to exceed at any time outstanding, together with the
principal amount of Loans outstanding (including both Facility A Loans and
Facility B Loans) in favor of such Bank at such time, the amount set forth next
to such Bank's name on Schedule 2.1 (such amount as the same may be reduced
under Section 2.7 or 2.9 or as a result of one or more assignments under Section
15.8, the Bank's "Facility A Commitment"); provided, however, that, after giving
effect to any Borrowing, the aggregate principal amount of all outstanding Loans
(including both Facility A Loans and Facility B Loans) shall not at any time
exceed the combined Facility A Commitments. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this Section 2.1(a), prepay under Section 2.8 and reborrow
under this Section 2.1(a).
(b) The Facility B Credit. Each Bank severally agrees, on the terms
and conditions set forth herein, to convert Facility A Loans into loans to the
Company (each such loan, a "Facility B Loan") from time to time on any Business
Day during the period from the Closing Date to the Termination Date, in an
aggregate amount not to exceed at any time outstanding, the amount set forth in
Schedule 2.1 (such amount, as the same may be reduced under Section 2.7 or 2.9
or as a the result of one or more assignments under Section 15.8, the Bank's
"Facility B Commitment"); provided, however, that, after giving effect to any
Facility B Conversion, the aggregate principal amount of all outstanding
Facility B Loans shall not at any time exceed the combined Maximum Facility B
Commitments. Within the limits of each Bank's Facility B Commitment, and subject
to the other terms and conditions hereof, the Company may convert under this
Section 2.1(b), prepay under Section 2.8 and convert again under this Section
2.1(b). At no time shall any Bank's Facility B Commitment exceed its Pro Rata
Share of the Maximum Facility B Commitments. Each Facility B Loan shall be of
the same Type, be in the same amount and have an Interest Period equal to the
remainder of the same Interest Period of the Facility A Loans being converted
(with its interest rate calculated for the remainder of the Interest Period,
based on the same Eurodollar Rate, if a Eurodollar Rate Loan and the same CD
Rate, if a CD Rate Loan).
2.2 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the
Administrative Agent shall be conclusive absent manifest error of the amount of
the Loans made by the Banks to the Company and the interest and payments
thereon. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Company hereunder to pay any
amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of loan accounts. Each such Bank shall endorse on the schedules annexed
to its Note(s) the date, amount and maturity of each Loan made by it and the
amount of each payment of principal made by the Company with respect thereto.
Each such Bank is irrevocably authorized by the Company to endorse its Note(s);
provided, however, that the failure of a Bank to make, or an error in making, a
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing. (a) Each Facility A Borrowing shall be
made upon the Company's irrevocable written notice delivered to the
Administrative Agent in the form of a Notice of Borrowing (which notice must be
received by the Administrative Agent prior to 11:00 a.m. (New York City time)
(i) three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Rate Loans; (ii) two Business Days prior to the requested Borrowing
Date, in the case of CD Rate Loans, and (iii) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $5,000,000 or any multiple of $1,000,000 in excess
thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) the duration of the Interest Period applicable to such Loans
included in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised of CD Rate
Loans or Eurodollar Rate Loans, such Interest Period shall be 90 days or
three months, respectively.
(b) after giving effect to any Borrowing, there may be no more than
10 different Interest Periods in effect.
2.4 Facility B Conversion. (a) Each Facility B Conversion shall be made
upon the Company's irrevocable written notice delivered to the
Administrative Agent in the form of a Notice of Facility B Conversion
(which notice must be received by the Administrative Agent prior to 11:00
a.m. (New York City time) one Business Day prior to the requested Facility
Conversion Date, specifying:
(i) the amount of the Facility B Conversion which shall be in an
aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in
excess thereof;
(ii) the requested Facility Conversion Date, which shall be a
Business Day; and
(iii) the particular Loans to be converted (identified by Type of
Loan and Interest Period, if applicable) comprising the Facility B
Conversion.
(b) The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Facility B Conversion and of the amount of such
Bank's Pro Rata Share of that Facility B Conversion.
(c) After giving effect to any Facility B Conversion, there may not
be more than 10 different Interest Periods in effect.
It is understood and agreed that, subject to the terms and conditions
set forth herein, the Company may concurrently request a Facility A Loan
and a Facility B Conversion, in which case the applicable Borrowing Date
shall also be the applicable Facility Conversion Date.
2.5 Facility A Conversion. The Company may, upon irrevocable written
notice to the Agent in accordance with subsection 2.5(b), elect, as of any
Business Day, to convert any Facility B Loans into Facility A Loans.
(b) The Company shall deliver a Notice of Facility A Conversion
co-signed by the Guarantor to be received by the Administrative Agent not
later than 11:00 a.m. (New York City time) at least one Business Day in
advance of the Facility Conversion Date specifying:
(i) the aggregate amount of Facility B Loans to be converted which
shall be in a minimum amount of $5,000,000 or any multiple of $1,000,000 in
excess thereof;
(ii) the requested Facility Conversion Date, which shall be a
Business Day; and
(iii) the particular Loans to be converted (identified by Type of
Loan and Interest Period, if applicable) resulting from the proposed
conversion or continuation.
(c) The Administrative Agent will promptly notify each Bank of
its receipt of any Notice of Facility A Conversion and of the amount of
such Bank's Pro Rata Share of that Facility A Conversion.
(d) After giving effect to any Facility A Conversion, there may not
be more than 10 different Interest Periods in effect.
(e) Upon (i) the occurrence of an Event of Default with respect to
the Company described in Section 11.1(f) or 11.1(g) or (ii) upon the
acceleration of any Subordinated Debt issued in exchange for preferred
stock outstanding on the Closing Date, all Facility B Loans shall be
automatically converted into Facility A Loans, without any further action
by any Person, including the Company and the Guarantor, and notwithstanding
any failure to meet any conditions set forth in Article IV hereof.
(f) Each Facility A Loan arising from a Facility A Conversion shall
be of the same Type, be in the same amount and have an Interest Period
equal to the remainder of the same Interest Period of the Facility B Loans
being converted (with the interest rate calculated for the remainder of the
Interest Period, based on the same Eurodollar Rate, if a Eurodollar Rate
Loan and the same CD Rate, if a CD Rate Loan.)
2.6 Conversion and Continuation Elections. (a) The Company may,
upon irrevocable written notice to the Agent in accordance with subsection
2.6(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of any other Type of Loans, to convert any such Loans (or any part thereof
in an amount not less than $5,000,000, or that is in an integral multiple
of $1,000,000 in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $5,000,000, or that is in
an integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of CD Rate Loans or
Eurodollar Rate Loans in respect of any Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to be less than $5,000,000, such
CD Rate Loans or Eurodollar Rate Loans shall automatically convert into
Base Rate Loans.
(b) The Company shall deliver a Notice of Conversion/
Continuation to be received by the Administrative Agent not later than
11:00 a.m. (New York City time) at least (i) three Business Days in advance
of the Conversion/Continuation Date, if the Loans are to be converted into
or continued as Eurodollar Rate Loans; (ii) two Business Days in advance of
the Conversion/Continuation Date, if the Loans are to be converted into or
continued as CD Rate Loans; and (iii) one Business Day in advance of the
Conversion/ Continuation Date, if the Loans are to be converted into Base
Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the Type of Loans result from the proposed conversion or
continuation; and
(D) other than in the case of conversions into Base Rate Loans,
the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to CD
Rate Loans or Eurodollar Rate Loans, the Company has failed to select timely a
new Interest Period to be applicable to such CD Rate Loans or Eurodollar Rate
Loans, as the case may be, or if any Default, Event of Default, Guarantor
Default or Guarantor Event of Default then exists, or, with respect to the
Facility B Loans, any Company Default or Company Event of Default then exists,
the Company shall be deemed to have elected to convert such CD Rate Loans or
Eurodollar Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each Bank
of the details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts
of the Loans with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, with respect to all
Loans during the existence of a Default, Event of Default, Guarantor Default or
Guarantor Event of Default or, with respect to Facility B Loans, during the
existence of a Company Default or Company Event of Default, the Company may not
elect to have a Loan converted into or continued as an Eurodollar Rate Loan or a
CD Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than 10 different Interest Periods in effect.
2.7 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than three Business Days' prior notice to the Administrative
Agent, terminate the Facility A Commitments, or permanently reduce the Facility
A Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; provided, however, that any reduction of the
Facility A Commitment shall be accompanied by a reduction of Maximum Facility B
Commitments in an amount equal to one-half of the reduced Facility A
Commitments; and, provided, further, that after giving effect thereto and to any
prepayments of Loans made on the effective date thereof, the then-outstanding
principal amount of the Loans (including both Facility A Loans and Facility B
Loans) may not exceed the amount of the combined Commitments then in effect and
the then-outstanding amount of the Facility B Loans may not exceed the amount of
the combined Maximum Facility B Commitments then in effect. Once reduced in
accordance with this Section, the Facility A Commitments and the Maximum
Facility B Commitments may not be increased. Any reduction of the Facility A
Commitments and the Maximum Facility B Commitments shall be applied to each Bank
according to its Pro Rata Share. All accrued commitment fees to, but not
including the effective date of any reduction or termination of Commitments,
shall be paid on the effective date of such reduction or termination.
2.8 Optional Prepayments. Subject to Section 3.4, the Company may, at any
time or from time to time, upon not less than three Business Days' irrevocable
notice to the Agent, ratably prepay Loans in whole or in part, in minimum
amounts of $5,000,000 or any multiple of $1,000,000 in excess thereof; provided,
that all prepayments shall be applied to the Facility B Loans until the Facility
B Loans shall be repaid in full, and then to the Facility A Loans. Such notice
of prepayment shall specify the date and amount of such prepayment and the
Type(s) of Loans to be prepaid. The Agent will promptly notify each Bank of its
receipt of any such notice, and of such Bank's Pro Rata Share of such
prepayment. If such notice is given by the Company, the Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to Section
3.4.
2.9 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. The
Company shall make a prepayment of the Loans within 30 days after receipt of
proceeds from any sale, transfer or other disposition by the Company or any
Subsidiary of the Company of any asset outside the ordinary course of its
business (other than any sale of 12b-1 Assets pursuant to the Purchase and Sale
Agreement among Phoenix Equity Planning Corporation, the Company and FEP Capital
L.P. dated as of June 1, 1997, additional sales of 12b-1 Assets for up to an
aggregate amount of $4,000,000 or any capital stock of Beutel Goodman and
Company Ltd., so long as in either case the proceeds of such sale shall be
reinvested within 365 days in businesses or assets substantially similar to the
business or assets of the Company in an amount equal to 100% of the Net Cash
Proceeds of such sale, to the extent the aggregate proceeds thereof shall exceed
$2,000,000 in any fiscal year. All prepayments of Loans pursuant to this Section
2.9 shall be applied to the Facility B Loans until the Facility B Loans are
repaid in full, and then to the Facility A Loans. On the date of any prepayment
pursuant to this Section 2.9, accrued interest on the amount of such prepayment,
together with any amounts owing under Section 3.4, shall be due and payable. The
Facility A Commitments shall be reduced by the amount of such prepayments and
the Maximum Facility B Commitments shall be reduced by an amount equal to
one-half of the amount of such prepayment.
2.10 Repayment. The Company shall repay to the Banks on the Termination
Date the aggregate principal amount of Loans outstanding on such date.
2.11 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the CD Rate, the Eurodollar Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to other Types of Loans under
Section 2.6), plus the Applicable Margin, in the case of Eurodollar Rate Loans
and CD Rate Loans.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of Loans
under Section 2.8 or 2.9 for the portion of the Loans so prepaid and upon
payment (including prepayment) in full thereof and, with respect to any Loan
during the existence of any Event of Default or Guarantor Event of Default, or,
with respect to any Facility B Loan during any Company Event of Default,
interest shall be paid on demand of the Administrative Agent at the request or
with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section with respect to
any Loan, while any Event of Default or Guarantor Event of Default exists or
after acceleration, or with respect to any Facility B Loan, while any Company
Event of Default exists, the Company shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the principal
amount of all outstanding Loans, at a rate per annum which is determined by
adding 2% per annum to the Applicable Margin then in effect for such Loans and,
in the case of Base Rate Loans, at a rate per annum equal to the Base Rate plus
2%; provided, however, that, on and after the expiration of any Interest Period
applicable to any Eurodollar Rate Loan or CD Rate Loan outstanding on the date
of occurrence of such Event of Default or acceleration, the principal amount of
such Loan shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base Rate plus 2%.
(b) Highest Lawful Rate. At no time shall the interest rate payable
on the Loans of any Bank, together with the fees and all other amounts payable
under the Loan Documents to such Bank, to the extent the same are construed to
constitute interest, exceed the Highest Lawful Rate applicable to such Bank. If
with respect to any Bank for any period during the term of this Agreement, any
amount paid to such Bank under the Loan Documents, to the extent the same shall
(but for the provisions of this Section) constitute or be deemed to constitute
interest, would exceed the maximum amount of interest permitted by the Highest
Lawful Rate applicable to such Bank during such period (such amount being
hereinafter referred to as an "Unqualified Amount"), then (i) such Unqualified
Amount shall be applied or shall be deemed to have been applied as a prepayment
of the Loans of such Bank, and (ii) if in any subsequent period during the term
of this Agreement, all amounts payable under the Loan Documents to such Bank in
respect of such period which constitute or shall be deemed to constitute
interest shall be less than the maximum amount of interest permitted by the
Highest Lawful Rate applicable to such Lender during such period, then the
Company shall pay to such Bank in respect of such period an amount (each a
"Compensatory Interest Payment") equal to the lesser of (x) a sum which, when
added to all such amounts, would equal the maximum amount of interest permitted
by the Highest Lawful Rate applicable to such Bank during such period, and (y)
an amount equal to the Unqualified Amount less all other Compensatory Interest
Payments made in respect thereof.
2.12 Fees. (a) Arrangement, Agency Fees. The Company shall pay such fees to
the Arrangers and the Agents for their own accounts as may be agreed to between
the Company and the applicable Arranger and Agent from time to time.
(b) Commitment Fees. The Company shall pay to the Administrative
Agent for the account of each Bank a commitment fee on the average daily unused
portion of such Bank's Facility A Commitment (which, with respect to each Bank
on any day, shall equal such Bank's Facility A Commitment less the sum of all
outstanding Facility A Loans and Facility B Loans of such Bank), computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
based upon the daily utilization for that quarter as calculated by the
Administrative Agent, equal to the Applicable Fee Rate per annum. Such
commitment fee shall accrue from the date hereof to the Termination Date and
shall be due and payable quarterly in arrears on the last Business Day of each
calendar quarter commencing on September 30, 1997 through the Termination Date,
with the final payment to be made on the Termination Date; provided that, in
connection with any reduction or termination of Facility A Commitments under
Section 2.7 or Section 2.9, the accrued commitment fee calculated for the period
ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment
date. The commitment fees provided in this subsection shall accrue at all times
after the above-mentioned commencement date, including at any time during which
one or more conditions in Article IV are not met.
2.13 Computation of Fees and Interest. (a) All computations of interest for
Base Rate Loans when the Base Rate is determined by BNY's "reference rate" and
all computations of commitment fees shall be made on the basis of a year of 365
or 366 days, as the case may be, and actual days elapsed. All other computations
of interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each Interest Period or
other period during which interest or such fees are computed from the first day
thereof to but excluding the last day thereof. With regard to CD Rate Loans or
Eurodollar Rate Loans, which are converted from Facility A Loans to Facility B
Loans during an Interest Period, or vice versa, interest shall be calculated
based on the old Applicable Margin to but excluding the Facility Conversion Date
and on the new Applicable Margin from and including the Facility Conversion
Date.
(b) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Company and the Banks in the
absence of manifest error.
2.14 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Banks at the Administrative Agent's
Payment Office, and shall be made in dollars and in immediately available funds,
no later than 12:00 p.m. (New York City time) on the date specified herein. The
Administrative Agent will promptly distribute to each Bank its Pro Rata Share
(or other applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the Administrative Agent later than
12:00 p.m. (New York City time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(c) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(d) Unless the Administrative Agent receives notice from the Company
prior to the date on which any payment is due to the Banks that the Company will
not make such payment in full as and when required, the Administrative Agent may
assume that the Company has made such payment in full to the Administrative
Agent on such date in immediately available funds and the Administrative Agent
may (but shall not be so required), in reliance upon such assumption, distribute
to each Bank on such due date an amount equal to the amount then due such Bank.
If and to the extent the Company has not made such payment in full to the
Administrative Agent, each Bank shall repay to the Administrative Agent on
demand such amount distributed to such Bank, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Bank until the date repaid.
2.15 Payments by the Banks to the Administrative Agent. (a) Unless
the Administrative Agent receives notice from a Bank on or prior to the Closing
Date or, with respect to any Borrowing after the Closing Date, at least one
Business Day prior to the date of such Borrowing, that such Bank will not make
available as and when required hereunder to the Administrative Agent for the
account of the Company the amount of that Bank's Pro Rata Share of the
Borrowing, the Administrative Agent may assume that each Bank has made such
amount available to the Administrative Agent in immediately available funds on
the Borrowing Date and the Administrative Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent any Bank shall not have
made its full amount available to the Administrative Agent in immediately
available funds and the Administrative Agent in such circumstances has made
available to the Company such amount, that Bank shall on the Business Day
following such Borrowing Date make such amount available to the Administrative
Agent, together with interest at the Federal Funds Rate for each day during such
period. A notice of the Administrative Agent submitted to any Bank with respect
to amounts owing under this subsection (a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the Administrative
Agent shall constitute such Bank's Loan on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to the
Administrative Agent on the Business Day following the Borrowing Date, the
Administrative Agent will notify the Company of such failure to fund and, upon
demand by the Administrative Agent, the Company shall pay such amount to the
Administrative Agent for the Administrative Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.16 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 15.10) with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation. The Administrative Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Payments to be Free and Clear. All payments by the Company
or the Guarantor under the Loan Documents to or for the account of the
Administrative Agent, or any Bank (each, an "Indemnified Tax Person") shall be
made free and clear of, and without any deduction or withholding for or on
account of, any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto (including
interest, additions to tax, and penalties thereon) imposed, levied, collected,
withheld or assessed by the United States or any political subdivision or taxing
authority thereof (collectively, "Taxes"), excluding as to any Indemnified Tax
Person, (i) a Tax on the Income imposed on such Indemnified Tax Person and (ii)
any interest, fees, additions to tax or penalties for late payment thereof (each
such nonexcluded Tax, an "Indemnified Tax"). For purposes hereof, "Tax on the
Income" shall mean, as to any Person, a Tax imposed by one of the following
jurisdictions or by any political subdivision or taxing authority thereof: (i)
the United States, (ii) the jurisdiction in which such Person is organized,
(iii) the jurisdiction in which such Person's principal office is located, or
(iv) in the case of each Bank, any jurisdiction in which such Bank's applicable
Lending Office is located; which Tax is an income tax or franchise tax imposed
on all or part of the net income or net profits of such Person or which Tax
represents interest, fees, or penalties for late payment of such an income tax
or franchise tax.
(b) Grossing Up of Payments. If the Company, the Guarantor or any
other Person is required by law, rule, regulation, order, directive, treaty or
guideline to make any deduction or withholding (which deduction or withholding
would constitute an Indemnified Tax) from any amount required to be paid by the
Company or the Guarantor to or on behalf of an Indemnified Tax Person under any
Loan Document (i) the Company or the Guarantor shall pay such Indemnified Tax
before the date on which penalties attach thereto, such payment to be made for
its own account (if the liability to pay is imposed on the Company or the
Guarantor) or on behalf of and in the name of such Indemnified Tax Person (if
the liability is imposed on such Indemnified Tax Person), and (ii) the sum
payable to such Indemnified Tax Person shall be increased as may be necessary so
that after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section) such
Indemnified Tax Person receives an amount equal to the sum it would have
received had no such deductions or withholdings been made.
(c) Other Taxes. The Company and the Guarantor agree to pay any
current or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that rise from any payment made hereunder or
from the execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents (collectively, the
"Other Taxes").
(d) Evidence of Payment. Within 30 days after the reasonable request
therefor by the Agent in connection with any payment of Indemnified Taxes or
Other Taxes, the Company or the Guarantor, as applicable, will furnish to the
Administrative Agent the original or a certified copy of an official receipt
from the jurisdiction to which payment is made evidencing payment thereof or, if
unavailable, a certificate from a Responsible Officer that states that such
payment has been made and that sets forth the date and amount of such payment.
(e) U.S. Tax Certificates. Each Indemnified Tax Person that is
organized under the laws of any jurisdiction other than the United States or any
political subdivision thereof that is exempt from United States federal
withholding tax, or that is subject to such tax at a reduced rate under an
applicable treaty, with respect to payments under the Loan Documents shall
deliver to the Administrative Agent for transmission to the Company, on or prior
to the Closing Date (in the case of each Indemnified Tax Person listed on the
signature pages hereof) or on the effective date of the Assignment and
Acceptance Agreement or other document pursuant to which it becomes an
Indemnified Tax Person (in the case of each other Indemnified Tax Person), and
at such other times as the Company or the Administrative Agent may reasonably
request, Internal Revenue Form 4224 or Form 1001 or other certificate or
document required under United States law to establish entitlement to such
exemption or reduced rate. Neither the Company nor the Guarantor shall be
required to pay any additional amount to any such Indemnified Tax Person under
subsection (b) above if such Indemnified Tax Person shall have failed to satisfy
the requirements of the immediately preceding sentence; provided that if such
Indemnified Tax Person shall have satisfied such requirements on the Closing
Date (in the case of each Indemnified Tax Person listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance Agreement or
other document pursuant to which it became an Indemnified Tax Person (in the
case of each other Indemnified Tax Person), nothing in this subsection shall
relieve the Company or the Guarantor of its obligation to pay any additional
amounts pursuant to subsection (b) in the event that, as a result of any change
in applicable law or treaty, such Indemnified Tax Person is no longer properly
entitled to deliver certificates, documents or other evidence at a subsequent
date establishing the fact that such Indemnified Tax Person is no longer
entitled to such exemption or reduced rate.
3.2 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Eurodollar Rate Loans, then, on notice thereof by the Bank to the Company
through the Administrative Agent, any obligation of that Bank to make Eurodollar
Rate Loans shall be suspended until the Bank notifies the Administrative Agent
and the Company that the circumstances giving rise to such determination no
longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Eurodollar Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Administrative Agent), prepay in
full such Eurodollar Rate Loans of that Bank then outstanding, together with
interest accrued thereon and amounts required under Section 3.4, either on the
last day of the Interest Period thereof, if the Bank may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Eurodollar Rate Loan. If the Company is
required to so prepay any Eurodollar Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
3.3 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the CD Rate or the Eurodollar Rate or in respect of the
assessment rate payable by any Bank to the FDIC for insuring U.S. deposits) in
or in the interpretation of any law or regulation or (ii) the compliance by that
Bank with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Bank of agreeing to make or making, funding or maintaining
any Eurodollar Rate Loans or CD Rate Loans, then the Company shall be liable
for, and shall from time to time, upon demand (with a copy of such demand to be
sent to the Administrative Agent), pay to the Administrative Agent for the
account of such Bank, additional amounts as are sufficient to compensate such
Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment[s], loans, credits or obligations under this
Agreement, then, upon demand of such Bank to the Company through the
Administrative Agent, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.
3.4 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any payment
of principal of any Eurodollar Rate Loan or CD Rate Loan;
(b) the failure of the Company to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.8;
(d) the prepayment (including pursuant to Section 2.9) or other
payment (including after acceleration thereof) of an Eurodollar Rate Loan or a
CD Rate Loan on a day that is not the last day of the relevant Interest Period;
or
(e) the automatic conversion under Section 2.6 of any Eurodollar Rate
Loan or CD Rate Loan to a Base Rate Loan on a day that is not the last day of
the relevant Interest Period; including any such loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain its
Eurodollar Rate Loans or CD Rate Loans or from fees payable to terminate the
deposits from which such funds were obtained. For purposes of calculating
amounts payable by the Company to the Banks under this Section and under
subsection 3.3(a), (i) each Eurodollar Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the Dollar deposits used in determining the
Eurodollar Rate for such Eurodollar Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Loan is in fact so
funded, and (ii) each CD Rate Loan made by a Bank (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have
been funded at the Certificate of Deposit Rate used in determining the CD Rate
for such CD Rate Loan by the issuance of its certificate of deposit in a
comparable amount and for a comparable period, whether or not such CD Rate Loan
is in fact so funded.
3.5 Inability to Determine Rates. If the Majority Banks determine that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate or the CD Rate for any requested Interest Period with respect to
a proposed Eurodollar Rate Loan or CD Rate Loan, or that the Eurodollar Rate or
the CD Rate applicable pursuant to subsection 2.11(a) for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan or CD Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Loan, the
Administrative Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain CD Rate Loans or
Eurodollar Rate Loans, as the case may be, hereunder shall be suspended until
the Administrative Agent upon the instruction of the Majority Banks revokes such
notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Company does not revoke such Notice, the Banks shall make, convert or
continue the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Loans instead of CD Rate Loans or Eurodollar
Rate Loans, as the case may be.
3.6 Certificates of Banks. Any Bank or Agent claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank or Agent hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error.
3.7 Survival. The agreements and obligations of the Company in this Article
III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the following conditions:
(a) The Administrative Agent shall have received on or before the
initial borrowing date all of the following, in form and substance satisfactory
to the Administrative Agent and each Bank, and in sufficient copies for each
Bank:
(i) Credit Agreement. This Agreement executed by each party
thereto;
(ii) Resolutions; Incumbency.
(A) Copies of the resolutions of the board of directors
of the Company and the Guarantor authorizing the transactions contemplated
hereby, certified as of the Closing Date by the Secretary or an Assistant
Secretary of such Person; and
(B) A certificate of the Secretary or Assistant Secretary
of the Company and the Guarantor certifying the names and true signatures
of the officers of the Company or the Guarantor authorized to execute,
deliver and perform, as applicable, this Agreement, and all other Loan
Documents to be delivered by it hereunder;
(iii) Organization Documents; Good Standing. Each of the
following documents:
(A) the articles or certificate of incorporation and the
bylaws of the Company and the Guarantor as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the Company or the
Guarantor as of the Closing Date; and
(B) a good standing certificate for the Company and the
Guarantor from the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation;
(iv) Legal Opinions.
(A) An opinion of Thomas Steenburg, counsel to the
Company and addressed to the Agents and the Banks, substantially in the
form of Exhibit D-1; and
(B) An opinion of John T. Mulrain, counsel to the
Guarantor and addressed to the Agents and the Banks, substantially in the
form of Exhibit D-2;
(v) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of Attorney Costs
as shall constitute BofA's reasonable estimate of Attorney Costs incurred or to
be incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude final settling of accounts between the Company and
BofA); including any such costs, fees and expenses arising under or referenced
in Sections 2.12 and 15.4;
(vi) Certificate. A certificate signed by a Responsible Officer
of each of the Company and the Guarantor, dated as of the Closing Date, stating
that:
(A) the representations and warranties contained in
Article V are true and correct on and as of such date, as though made on
and as of such date;
(B) no Default, Event of Default, Guarantor Default or
Guarantor Event of Default exists or would result from the initial
Borrowing; and
(C) there has occurred since December 31, 1996, no event
or circumstance that has resulted or could reasonably be expected to result
in a Material Adverse Effect; and
(vii) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Bank may request.
1. (b) Existing Debt. All obligations under the Amended and Restated Credit
Agreement dated as of October 31, 1995 among the Company, various financial
institutions and Bank of America Illinois, as Agent shall have been paid in full
and such agreement shall have been terminated.
4.2 Conditions to All Borrowings and Facility B Conversion. The obligation
of each Bank to make any Loan to be made by it (including its initial Loan) or
to make a Facility B Conversion is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or, in the case of a
Facility B Conversion, the relevant Facility Conversion Date:
(a) Notice of Borrowing/Notice of Facility B Conversion. The Agent
shall have received (with, in the case of the initial Loan only, a copy for each
Bank) a Notice of Borrowing or Notice of Facility B Conversion, as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Facility Conversion Date with the same effect as if
made on and as of such Borrowing Date or Facility Conversion Date(except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier date and in the
case of Section 5.16, as otherwise permitted hereunder); and
(c) No Existing Default. No Event of Default or Default, and with
respect to any Facility A Loan, Guarantor Default or Guarantor Event of Default,
or with respect to a Facility B Conversion, Company Default or Company Event of
Default, shall exist or shall result from such Borrowing or Facility B
Conversion.
(d) Acquisitions. As to any Loan, which would cause the outstanding
principal amount of the Loans to exceed $80,000,000, the PCC Acquisition shall
have occurred.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date of each
such notice and as of each Borrowing Date, that the conditions in Section 4.2
are satisfied.
4.3 Conditions to Facility B Conversion. The obligation of each Bank to
convert any Facility A Loan to a Facility B Loan is subject to the satisfaction
of the following conditions precedent on the relevant Facility Conversion Date:
(a) Senior Debt to EBITDA Ratio. The Senior Debt to EBITDA Ratio of
the Company and its Subsidiaries as of the last prior quarter shall not be
greater than 3.25 to 1.0.
(b) Total Debt to Capital Ratio. The Total Debt to Capital Ratio,
giving effect to the proposed Facility B Loans, shall not be greater than the
following percentages during the following periods:
Percentage Periods
58% date hereof through August 14, 1998
53% August 15, 1998 through August 14, 2000
48% August 15, 2000 and thereafter
(c) Certificate. A certificate signed by Responsible Officer of the
Company, dated as of the date of the proposed Facility B Loan, stating that the
conditions set forth in the clauses (a) and (b) have been met.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Guarantor and the Company represent and warrant to each Agent and each
Bank that:
5.1 Corporate Existence and Power. The Guarantor and each of its
Subsidiaries:
1. (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
<PAGE>
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license; and
(d) is in compliance with all Requirements of Law; except, in each
case referred to in clause (c) or clause (d), to the extent that the failure to
do so could not reasonably be expected to have a Material Adverse Effect.
5.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by the Guarantor and its Subsidiaries of this Agreement and each
other Loan Document to which such Person is party, have been duly authorized by
all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or
(c) violate any Requirement of Law.
5.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Guarantor or
any of its Subsidiaries of the Agreement or any other Loan Document, except
filings made prior to the date hereof and other filings which will be made as
required by law.
5.4 Binding Effect. This Agreement and each other Loan Document to which
the Guarantor or the Company is a party constitute the legal, valid and binding
obligations of the Guarantor and the Company, enforceable against such Person in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
5.5 Litigation. Except as specifically disclosed in Schedule 5.5, there are
no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Guarantor, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Guarantor or the
Company or its Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) as to which there exists a substantial likelihood of an adverse
determination, which determination would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining order or any
order of any nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any other Loan Document, or directing that the transactions
provided for herein or therein not be consummated as herein or therein provided.
5.6 Contractual Obligation. As of the Closing Date, neither the Guarantor
nor any Subsidiary is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse Effect.
5.7 ERISA Compliance. Except as specifically disclosed in Schedule 5.7:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. The
Guarantor and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Guarantor,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Guarantor nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Guarantor nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither the Guarantor nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
5.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 6.12 and
Section 7.6. Neither the Guarantor nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
5.9 Title to Properties. The Guarantor and each Subsidiary have good record
and marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Guarantor and its Subsidiaries is subject to no Liens, other
than Permitted Liens.
5.10 Taxes. The Guarantor and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Guarantor
or any Subsidiary that would, if made, have a Material Adverse Effect.
5.11 Financial Condition. (a) The statutory financial statements of the
Guarantor and its Primary Insurance Subsidiaries dated December 31, 1996, and
the statutory statements of the Guarantor and its Primary Insurance Subsidiaries
dated March 31, 1997, and the related statements of income or operations,
shareholders' equity and cash flows for the fiscal periods ended on those dates:
(i) were prepared in accordance with SAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject in the case of the March 31, 1997 statements to ordinary,
good faith year end audit adjustments;
(ii) fairly present the financial condition of the Guarantor
and its Primary Insurance Subsidiaries as of the date thereof and results
of operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11, show
all material indebtedness and other liabilities, direct or contingent, of
the Guarantor and its Primary Insurance Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b) The audited consolidated financial statements of the Company and
its Subsidiaries dated December 31, 1996, and the unaudited consolidated
statements of the Company and its Subsidiaries dated March 31, 1997 and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal periods ended on those dates:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject in the case of the March 31, 1997 statements to ordinary,
good faith year end audit adjustments;
(ii) fairly present the financial condition of the Company and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11, show
all material indebtedness and other liabilities, direct or contingent, of
the Company and its consolidated Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(c) Since December 31, 1996, there has been no Material Adverse
Effect.
5.12 Environmental Matters. The Guarantor conducts in the ordinary course
of business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Guarantor has reasonably concluded to the best of its knowledge
that, except as specifically disclosed in Schedule 5.12, such Environmental Laws
and Environmental Claims could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
5.13 Regulated Entities. The Company is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness. No
filings, approvals or consents are required under the Investment Company Act of
1940 for the enforceability of this Agreement or any other Loan Document.
5.14 No Burdensome Restrictions. Neither the Guarantor nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Guarantor or
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Guarantor, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Guarantor or any
Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 5.5, no claim or litigation regarding any of
the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Guarantor, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
5.16 Subsidiaries. As of the Closing Date, the Guarantor has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
5.16 hereto and the Company has no equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of Schedule 5.16.
5.17 Insurance. Except as specifically disclosed in Schedule 5.17, the
properties of the Guarantor and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Guarantor, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Guarantor or such Subsidiary operates.
5.18 Full Disclosure. None of the representations or warranties made by the
Guarantor or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Guarantor or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Guarantor to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered; provided, that, to the extent the representations and warranties
set forth in this Section 5.18 relate to Seneca or PCC, they shall be made to
the best of the knowledge of the Guarantor and the Company after due inquiry.
5.19 PCC Acquisition Agreement. The representations and warranties of the
Company and, to the best of the knowledge of the Company after due inquiry, the
seller contained in the PCC Acquisition Agreement (a true and correct copy of
which PCC Acquisition Agreement, together with all schedules and exhibits
thereto, has been delivered to the Banks), are true and correct in all respects
which, upon consummation of the PCC Acquisition, could have a Material Adverse
Effect. As of the date of the PCC Acquisition, (i) the Company shall have taken
all necessary corporate actions to authorize the PCC Acquisition; and (ii) no
representation made by the Company or, to the best of the knowledge of the
Company after due inquiry, the seller under such PCC Acquisition Agreement in
any notices or filings with the shareholders of the Company or such seller, with
the SEC or any applicable state securities commissions or with any governmental
authority including, without limitation, any representations concerning any
agreement with, or financing provided by, the Banks, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading as of the
time when made or delivered.
5.20 Seneca Acquisition Agreement. The representations and warranties of
the Company and, to the best of the knowledge of the Company after due inquiry,
the seller contained in the Seneca Acquisition Agreement (a true and correct
copy of which Seneca Acquisition Agreement, together with all schedules and
exhibits thereto, has been delivered to the Seneca), are true and correct in all
respects which, upon consummation of the Seneca Acquisition, could have a
Material Adverse Effect. As of the date of the Seneca Acquisition, (i) the
Company shall have taken all necessary corporate actions to authorize the Seneca
Acquisition; and (ii) no representation made by the Company or, to the best of
the knowledge of the Company after due inquiry, the seller under said Seneca
Acquisition Agreement in any notices or filings with the shareholders of the
Company or such seller, with the SEC or any applicable state securities
commissions or with any governmental authority including, without limitation,
any representations concerning any agreement with, or financing provided by, the
Banks, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
<PAGE>
6.1 Financial Statements. The Guarantor shall deliver to the Agent, in form
and detail satisfactory to the Administrative Agent and the Majority Banks, with
sufficient copies for each Bank:
(a) as soon as available, but not later than 120 days after the end
of each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of Price Waterhouse
LLP or another nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such consolidated
financial statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material portion of the
Company's or any Subsidiary's records;
(b) as soon as available, but not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer of the Company as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position and the
results of operations of the Company and the Subsidiaries;
(c) as soon as available, but not later than 120 days after the end
of each fiscal year, a copy of the Annual Statement of the Guarantor for such
fiscal year prepared in accordance with SAP and accompanied by the certification
of the chief executive a Responsible Officer of the Guarantor that such Annual
Statement presents fairly in accordance with SAP the financial position of the
Guarantor for the period then ended;
(d) as soon as possible, but no later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year, a copy of the
quarterly statement of the Guarantor for each such fiscal quarter, all prepared
in accordance with GAAP and accompanied by the certification of a Responsible
Officer of the Guarantor that all such quarterly statements present fairly in
accordance with GAAP the financial position of the Guarantor for the period then
ended;
(e) as soon as available, a copy of the Guarantor's "Statement of
Actuarial Opinion" which is provided to the Department (or equivalent
information should the Department no longer require such a statement) as to the
adequacy of loss reserves of the Guarantor, which opinion shall be in the format
prescribed by the Insurance Code;
(f) as soon as available, a copy of the Management Discussion and
Analysis filed with the Department with respect to any of the foregoing
financial statements and such other information; and
(g) within 90 days after each fiscal year, projections of the
Company's financial performance on an annual basis for the next fiscal year,
prepared by the Company's management.
6.2 Certificates; Other Information. The Company shall furnish to the
Administrative Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer of the Company;
(b) promptly, copies of all financial statements and reports that the
Guarantor or the Company sends to its policyholders or shareholders, and copies
of all financial statements and regular, periodical or special reports that the
Guarantor or any Subsidiary may make to, or file with, the SEC;
(c) promptly, upon a change in the Guarantor's Claims Paying Rating,
written notice of such change by a Responsible Officer; and
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Guarantor or any Subsidiary as the
Administrative Agent, at the request of any Bank, may from time to time
reasonably request.
6.3 Notices. The Company and the Guarantor shall promptly notify the
Administrative Agent and each Bank:
(a) of any change in a Rating;
(b) of the occurrence of any Default, Event of Default, Guarantor
Default, Guarantor Event of Default, Company Default or Company Event of Default
and of the occurrence or existence of any event or circumstance that foreseeably
will become a Default, Event of Default, Guarantor Default, Guarantor Event of
Default; Company Default or Company Event of Default;
(c) of any matter that has resulted or may result in a Material
Adverse Effect, including (i) breach or non-performance of, or any default
under, a Contractual Obligation of the Guarantor or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the
Guarantor or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Guarantor or any Subsidiary; including pursuant to any applicable
Environmental Laws;
(d) of the occurrence of any of the following events affecting the
Guarantor or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Administrative Agent and each Bank a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Guarantor or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results; in a material increase in
contributions or Unfunded Pension Liability;
(e) of any material change in accounting policies or financial
reporting practices by the Guarantor or any of its Primary Subsidiaries; and
(f) of any proposed Acquisition by the Company or any of its
Subsidiaries, the total consideration for which shall exceed $10,000,000,
together with pro forma financial statements giving effect to such Acquisition
but subject to the requirements of any applicable confidentiality agreement.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer of the Company setting forth details of the
occurrence referred to therein, and stating what action the Company or any
affected Subsidiary proposes to take with respect thereto and at what time. Each
notice under subsection 6.3(b) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
(or foreseeably will be) breached or violated.
6.4 Preservation of Corporate Existence, Etc. The Guarantor and the Company
shall, and shall cause each of their respective Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.5 Maintenance of Property. The Guarantor and the Company shall maintain,
and shall cause each of their respective Subsidiaries to maintain, and preserve
all its property which is used or useful in its business in good working order
and condition, ordinary wear and tear excepted.
6.6 Insurance. The Guarantor and the Company shall maintain, and shall
cause each of their respective Subsidiaries to maintain, with financially sound
and reputable independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons.
6.7 Payment of Obligations. The Guarantor and the Company shall, and shall
cause each of their respective Subsidiaries to, pay and discharge as the same
shall become due and payable, all their respective obligations and liabilities,
including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Guarantor, the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
6.8 Compliance with Laws. The Guarantor and the Company shall comply, and
shall cause each of their respective Subsidiaries to comply, in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
6.9 Compliance with ERISA. The Company shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records The Guarantor and the
Company shall maintain, and shall cause each of their respective Subsidiaries to
maintain, proper books of record and account, in which full, true and correct
entries in conformity with GAAP or SAP, as applicable, consistently applied
shall be made of all financial transactions and matters involving the assets and
business of the Guarantor, the Company and such Subsidiary. The Guarantor and
the Company shall permit, and shall cause each of their respective Subsidiaries
to permit, representatives and independent contractors of the Agent or any Bank
to visit and inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent public
accountants, all at the expense of the Guarantor and the Company and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Company; provided, however, when
an Event of Default, Guarantor Event of Default or Company Event of Default
exists the Agent or any Bank may do any of the foregoing during normal business
hours and without advance notice.
6.11 Environmental Laws. The Guarantor and the Company shall, and shall
cause each of their respective Subsidiaries to, conduct its operations and keep
and maintain its property in compliance with all Environmental Laws.
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans for
working capital purposes including the acquisition of PCC, Seneca and certain of
its Affiliates and other Acquisitions not in contravention of any Requirement of
Law or of any Loan Document; provided, however, that such proceeds shall not be
used for any Acquisition, if the board of directors of the entity to be acquired
shall not have approved such Acquisition.
6.13 Holding Agreement. The Guarantor agrees that on or before March 31,
1998, it will cause the obligations under the Term Credit Agreement extended to
PM Holdings, Inc. and guaranteed by the Guarantor, dated November 15, 1995 to be
paid in full and such agreement to be terminated.
<PAGE>
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.1 Limitation on Liens. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Guarantor or any Subsidiary
on the Closing Date and set forth in Schedule 7.1 securing Indebtedness
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.7, provided that no notice of
lien has been filed or recorded under the Code;
(d) Liens on 12b-1 Assets which have been sold;
(e) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty;
(f) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Guarantor and its
Subsidiaries do not exceed $10,000,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Guarantor and its
Subsidiaries;
(i) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, securities intermediary's liens, rights of
set-off or similar rights and remedies as to deposit accounts, securities
accounts or other funds maintained with a creditor depository institution;
provided that (i) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by the Guarantor in
excess of those set forth by regulations promulgated by the FRB, and (ii) such
deposit account or securities account is not intended by the Guarantor or any
Subsidiary to provide collateral to the depository institution providing such
account;
(j) Liens on real property and related assets of the Guarantor
granted to any home loan bank, provided that the aggregate amount of
Indebtedness secured by all such Liens, when taken together with the aggregate
amount of Indebtedness secured by Liens permitted by clause (k) of this Section
7.1 shall not exceed $100,000,000 at any one time outstanding; and
(k) additional Liens securing Indebtedness not in excess of
$10,000,000 at any time outstanding.
7.2 Mergers, Consolidations and Sales of Assets. The Guarantor will not,
and will not permit any Primary Subsidiary to
(a) consolidate with or be a party to a merger with any other Person
or
(b) sell, lease or otherwise dispose of any substantial part of its
Properties, provided that the foregoing shall not apply to or operate to
prevent (i) reinsurance and similar risk sharing arrangements entered into
in the ordinary course of business, (ii) sales or other dispositions of
assets acquired in satisfaction of obligations owing the Guarantor or a
Primary Subsidiary, (iii) mergers of a Primary Subsidiary with and into the
Guarantor and other mergers not involving the Guarantor, or (iv) the sale
of all or any substantial part of the assets of, or of the equity interests
held by the Guarantor in, any Primary Subsidiary so long as in the case of
each of the matters described in clauses (i) through (iv) above, no
Default, Event of Default, Company Default, Company Event of Default,
Guarantor Default or Guarantor Event of Default shall have occurred and be
continuing or would occur as a result thereof. The foregoing to the
contrary notwithstanding, the Guarantor will not in any event sell,
transfer or otherwise dispose of capital stock of the Borrower or permit
the merger of the Borrower into any other Person other than the Guarantor
if after giving effect thereto the Borrower would no longer be a Subsidiary
of the Guarantor or would not be the survivor of the merger in question.
7.3 Loans and Investments. The Guarantor shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan, extension of credit
or capital contribution to or any other investment in, any Person including any
Affiliate of the Company, except for:
(a) investments in cash equivalents;
(b) investments by the Guarantor in compliance with all applicable
regulatory requirements;
(c) investments by the Company in the ordinary course of business
consistent with past practices; and
(d) Acquisitions, so long as (i) the acquired entity is in the
similar or related business as the Guarantor and its Subsidiaries and (ii) after
giving effect to the Acquisition, (A) no Default, Event of Default, Company
Default, Company Event of Default, Guarantor Default or Guarantor Event or
Default shall have occurred and be continuing and (B) the Guarantor and the
Company would be in compliance with all financial covenants hereof, calculated
on a pro forma basis at the time of the Acquisition and as if the Acquisition
had taken place at the beginning of the four fiscal quarter period ending as of
the last fiscal quarter end, with the Guarantor providing a certificate with
respect thereto.
7.4 Limitation on Indebtedness. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness available pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 7.7;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 7.4; and
(d) Indebtedness of the Company and its Subsidiaries in an amount at
any time outstanding not in excess of (i) $20,000,000 or (ii) $30,000,000 when
added to the Contingent Obligations permitted pursuant to Section 7.7(c).
7.5 Transactions with Affiliates. The Guarantor shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Guarantor, except upon fair and reasonable terms no less
favorable to the Guarantor or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Guarantor or such
Subsidiary.
7.6 Use of Proceeds. The Company shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Company or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
7.7 Contingent Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 7.7;
(c) other Contingent Obligations in aggregate amounts not to exceed
(i) $15,000,000 or (ii) $30,000,000 when added to the Indebtedness permitted
pursuant to Section 7.4(d),at any time outstanding; and
(d) Guarantees of Indebtedness of Subsidiaries.
7.8 Joint Ventures. The Company shall not enter into or permit any
Subsidiary to enter into, any Joint Venture involving an investment by it in
excess of $10,000,000 for all Joint Ventures after the date hereof except Joint
Ventures with its Affiliates.
7.9 Lease Obligations. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, create or suffer to exist not in excess of any
obligations for the payment of rent for any property under lease or agreement to
lease, except for:
(a) operating leases entered into by the Guarantor or any
Subsidiary in the ordinary course of business; and
(b) capital leases entered into by the Guarantor or any Subsidiary
to finance the acquisition of equipment;
7.10 Restricted Payments. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities to
its policy holders or shareholders, except that:
(a) the Guarantor and its Insurance Subsidiaries may pay policy
holder dividends;
(b) the Company may make dividends and distributions, payable
solely in common stock;
<PAGE>
(c) the Company may in any fiscal quarter pay cash dividends and
repurchase stock not in excess of its income (not including any gain from the
sale of capital stock of Beutel Goodman and Company Ltd.) in such fiscal
quarter, so long as after giving effect thereto, no Default, Event of Default,
Company Default, Company Event of Default, Guarantor Default or Guarantor Event
of Default shall have occurred and be continuing; and
(d) Any Subsidiary of the Guarantor (other than the Company) may pay
in any fiscal quarter cash dividends, so long as after giving effect thereto, no
Default, Event of Default, Company Default, Company Event of Default, Guarantor
Default or Guarantor Event of Default shall have occurred and be continuing.
7.11 ERISA. The Guarantor shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably be expected to result in liability of the Company in an
aggregate amount in excess of $5,000,000 or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
7.12 Change in Business. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Guarantor and its
Subsidiaries on the date hereof.
7.13 Accounting Changes. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP or SAP, or change the fiscal
year of the Guarantor or of any Subsidiary.
7.14 Pari Passu. The Guarantor shall cause the Obligations to rank at least
pari passu with all other senior unsecured Indebtedness of the Guarantor. The
Company shall cause the Obligations to rank at least pari passu with all other
senior unsecured Indebtedness of the Company.
7.15 Phoenix. The Company shall retain the word "Phoenix" in its name.
7.16 Subordinated Debt and Preferred Stock. The Company shall not make any
payments, or set aside funds to make payments, on preferred stock or any
Subordinated Debt into which preferred stock is converted; except that the
Company may make regularly scheduled interest and dividend payments thereon so
long as after giving effect thereto, no Default, Event of Default, Company
Default, Company Event of Default, Guarantor Default or Guarantor Event of
Default shall have occurred and be continuing.
<PAGE>
7.17 Capital Expenditures. The Company and its Subsidiaries shall not make
any capital expenditures in excess of $15,000,000 in any fiscal year.
ARTICLE VIII
GUARANTOR'S FINANCIAL COVENANTS
So long as any Bank shall have any Commitments hereunder, or any Loan or
other Obligations shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
8.1 Guarantor's Minimum Total SAP Adjusted Capital. The Guarantor shall
maintain a Total SAP Adjusted Capital of not less than $825,000,000 plus 50% of
net income (if greater than zero) for each fiscal quarter ending on or after
September 30, 1997.
8.2 Invested Assets. The Guarantor shall not permit Invested Assets of the
Guarantor and its Primary Insurance Subsidiaries consisting of notes, bonds and
other obligations classified as bonds which bear NAIC Ratings from three to six,
both inclusive, to exceed 5.5% of Net Invested Assets.
8.3 NAIC Ratings. The Guarantor shall not permit the portion of the
Invested Assets of the Guarantor and its Primary Insurance Subsidiaries
consisting of notes, bonds and other obligations classified as bonds which bear
NAIC Ratings from five to six to exceed 13% of Total SAP Adjusted Capital.
8.4 Real Estate. The Guarantor shall not permit the portion of the Invested
Assets of the Guarantor and its Primary Insurance Subsidiaries in real estate,
real estate acquired in satisfaction of indebtedness (exclusive of such
investments of either category occupied by the Guarantor or its Primary
Insurance Subsidiaries for use in their business) plus mortgage loans on real
estate to exceed 32% of Net Invested Assets.
8.5 Risk Based Capital. The Guarantor shall maintain a minimum Risk-Based
Capital Ratio of not less than 1.75 to 1.0.
8.6 Non-Performing Real Estate. The Guarantor shall not permit the book
value of the investment of the Guarantor and its Primary Insurance Subsidiaries
in non-performing real estate under SAP, prior to any reserves or write-offs
with respect thereto, to exceed 30% of Total SAP Adjusted Capital.
8.7 Indebtedness to Capital. The Guarantor shall not permit the
consolidated Indebtedness of the Guarantor and its Subsidiaries to exceed 75% of
Total SAP Adjusted Capital.
ARTICLE IX
COMPANY'S FINANCIAL COVENANTS
So long as any Bank shall have any Commitments hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
9.1 Shareholders' Equity. The Company shall maintain a minimum
Shareholders' Equity (excluding any preferred shares) of $165,000,000 plus 50%
of net income (if greater than zero) for each quarter ending on or after
September 30, 1997.
9.2 EBITDA to Interest Ratio. The Company shall maintain a ratio of EBITDA
to Interest Expense as at the end of any fiscal quarter for the four fiscal
quarters then ending of not less than 4.0 to 1.0.
9.3 Total Debt to Capital Ratio. The Company shall maintain a Total Debt to
Capital Ratio of not in excess of the following percentages at any time during
the following periods:
Percentage Periods
60% Date hereof through August 14, 1998
55% August 14, 1998 through August 15, 2000
50% August 15, 2000 and thereafter
9.4 Senior Debt to EBITDA Ratio. The Company shall maintain a ratio of
Senior Debt to EBITDA Ratio of not in excess of the following amounts during the
following periods:
Amount Period
3.5 to 1 Date hereof through August 14,1999
3.0 to 1 August 15, 1999 through August 14, 2000
2.5 to 1 August 15, 2000 through August 14, 2001
2.0 to 1 August 15, 2001 and thereafter
<PAGE>
ARTICLE X
GUARANTY
10.1 Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Facility A
Note issued by the Company pursuant to this Agreement, and the full and punctual
payment of all other Obligations of the Company under this Agreement except with
respect to principal and interest on the Facility B Loans. Upon failure by the
Company to pay punctually any such amount, the Guarantor shall forthwith on
demand pay the amount not so paid at the place and in the manner specified in
this Agreement. In addition (and without limiting the foregoing), upon any
Facility A Loan being declared or otherwise becoming immediately due and payable
pursuant to Sections 11.2 or 12.2, the Guarantor shall forthwith on demand pay
all amounts payable under such Facility A Loan at the place and in the manner
specified in this Agreement.
10.2 Guaranty Unconditional. The obligations of the Guarantor under this
Article X shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Company under this Agreement or any
Note, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any Note;
(c) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the Company under this
Agreement or any Note;
(d) any change in the corporate existence, structure or ownership of
the Company or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in this Agreement or
any Note;
(e) the existence of any claim, set-off or other right which the
Guarantor may have at any time against the Company, the Administrative
Agent, any Bank or any other Person, whether in connection herewith or any
unrelated transaction, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the
Company for any reason of this Agreement or any Note, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Company of the principal of or interest on any Note or any other amount
payable by the Company under this Agreement; or
(g) any other act or omission to act or delay of any kind by the
Company, the Administrative Agent, any Lender or any other Person or any
other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the Company or the
Guarantor obligations as guarantor hereunder.
10.3 Discharge only upon Payment in Full; Reinstatement in Certain
Circumstances. The Guarantor's obligations as guarantor hereunder shall remain
in full force and effect until the Commitments shall have terminated and all
Obligations (except as to principal and interest with respect to the Facility B
Loans) shall have been paid in full in money. If at any time any payment of
principal, interest or any other amount payable by the Company under this
Agreement or any Note is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
the Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
10.4 Waiver by the Guarantor. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against the Company or any other Person.
10.5 Subrogation. Notwithstanding any payment made by or for the account of
the Guarantor pursuant to this Article X, the Guarantor shall not be subrogated
to any right of the Administrative Agent or any Bank until such time as the
Administrative Agent and the Banks shall have received final payment in cash of
the full amount of all Obligations.
10.6 Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Company under this Agreement or any Note is stayed upon
the insolvency, bankruptcy or reorganization of the Company, all such amounts
otherwise subject to acceleration under the terms of this Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on demand by the
Administrative Agent made at the request of the Majority Banks.
ARTICLE XI
EVENTS OF DEFAULT
11.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to pay, (i) when and as required
to be paid herein, any amount of principal of any Loan, or (ii) within five days
after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Guarantor or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Guarantor, any Subsidiary, or any Responsible Officer of
the Guarantor or any Subsidiary, furnished at any time under this Agreement, or
in or under any other Loan Document, is incorrect in any material respect on or
as of the date made or deemed made; or
(c) Specific Defaults. The Guarantor or the Company, as applicable,
fails to perform or observe any term, covenant or agreement contained in any of
Section 6.1, 6.2, 6.3 or 6.9 or in Article VII hereof; or
(d) Other Defaults. The Guarantor or the Company fails to perform or
observe any other term or covenant contained in this Agreement or any other Loan
Document (other than under Articles VIII and IX hereof), and such default shall
continue unremedied for a period of 20 days after the date upon which written
notice thereof is given to the Guarantor by the Administrative Agent or any
Bank; or
(e) Cross-Default. The Guarantor or any Subsidiary (i) fails to make
any payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000 with respect to the Guarantor, or
$5,000,000 with respect to the Company or any other Subsidiary of the Guarantor,
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise); or (ii) fails to perform or observe any other condition
or covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such Indebtedness or Contingent
Obligation, if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or
(f) Insolvency; Voluntary Proceedings. The Guarantor or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself or its property; or
(iv) takes any action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Guarantor or any Subsidiary or its
property, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Guarantor's or
any Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Guarantor or any Subsidiary admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Guarantor or any Subsidiary acquiesces in
the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multi employer Plan which has resulted or could reasonably be expected
to result in liability of the Guarantor under Title IV of ERISA to the Pension
Plan, Multi employer Plan or the PBGC; (ii) there exists an Unfunded Pension
Liability; or (iii) the Company or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multi employer Plan; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Guarantor or any Subsidiary involving in the aggregate a liability (to the
extent not covered by independent third-party insurance as to which the insurer
does not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $10,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 10 days after
the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Guarantor or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Loss of Licenses. Any other Governmental Authority revokes or
fails to renew any material license, permit or franchise of the Guarantor or any
Subsidiary, or the Guarantor or any Subsidiary for any reason loses any material
license, permit or franchise, or the Guarantor or any Subsidiary suffers the
imposition of any restraining order, escrow, suspension or impound of funds in
connection with any proceeding (judicial or administrative) with respect to any
material license, permit or franchise].
11.2 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law; provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 11.1 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Bank to make Loans shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further act of the
Administrative Agent or any Bank.
11.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE XII
GUARANTOR EVENTS OF DEFAULT
12.1 Event of Default. If the Guarantor fails to perform or observe any
term, covenant or agreement contained in any of Sections 8.1 through 8.7 it
shall constitute a "Guarantor Event of Default".
12.2 Remedies. If any Guarantor Event of Default occurs, the Administrative
Agent shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Facility A Loans and
Facility B Conversions to be terminated, whereupon such commitments shall be
terminated;
(b) declare the unpaid principal amount of all outstanding Facility A
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law.
ARTICLE XIII
COMPANY EVENTS OF DEFAULT
13.1 Event of Default. If the Company fails to perform or observe any term,
covenant or agreement contained in any of Sections 9.1 through 9.4 and the
Company shall fail to deliver a Notice of Facility A Conversion co-signed by the
Guarantor pursuant to Section 2.6 or shall fail to deliver a guarantee of the
Guarantor of the obligations with respect to Facility B hereunder, together with
such certified resolutions, incumbency certificates and opinions of counsel as
the Administrative Agent may require, within 10 days after the date upon which
written notice thereof is given to the Company by the Administrative Agent or
any Bank, it shall constitute a "Company Event of Default".
13.2 Remedies. If any Company Event of Default occurs, the Administrative
Agent shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Facility B
Conversions to be terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Facility B
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document (other than amounts owing or
payable solely with respect to outstanding Facility A Loans) to be immediately
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law.
ARTICLE XIV
THE ADMINISTRATIVE AGENT
14.1 Appointment. Each Bank hereby irrevocably designates and appoints BNY
as the Administrative Agent of such Bank under the Loan Documents and each Bank
hereby irrevocably authorizes the Administrative Agent to take such action on
its behalf under the provisions of the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of the Loan Documents, together with such powers as are
reasonably incidental thereto. The duties of the Administrative Agent shall be
mechanical and administrative in nature, and, notwithstanding any provision to
the contrary elsewhere in any Loan Document, the Administrative Agent shall not
have any duties or responsibilities other than those expressly set forth
therein, or any fiduciary relationship with, or fiduciary duty to, any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist against the
Administrative Agent.
14.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under the Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to rely upon, and shall be fully protected in, and shall not
be under any liability for, relying upon, the advice of counsel concerning all
matters pertaining to such duties.
14.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with the Loan Documents (except the
Administrative Agent for its own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Company or the Guarantor or any
officer thereof contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, perfection, enforceability or
sufficiency of any of the Loan Documents or for any failure of the Company or
the Guarantor or any other Person to perform its obligations thereunder. The
Administrative Agent shall not be under any obligation to any Bank to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, the Loan Documents, or to inspect the property,
books or records of the Company or the Guarantor. The Banks acknowledge that the
Administrative Agent shall not be under any duty to take any discretionary
action permitted under the Loan Documents unless the Administrative Agent shall
be instructed in writing to do so by the Majority Banks and such instructions
shall be binding on the Banks and all holders of the Notes; provided, however,
that the Administrative Agent shall not be required to take any action which
exposes the Administrative Agent to personal liability or its contrary to law or
any provision of the Loan Documents. The Administrative Agent shall not be under
any liability or responsibility whatsoever, as Administrative Agent, to the
Company or the Guarantor or any other Person as a consequence of any failure or
delay in performance, or any breach, by any Bank of any of its obligations under
any of the Loan Documents.
14.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, opinion, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by a proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Company or the Guarantor), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may treat each Bank, or the
Person designated in the last notice filed with it under this Section, as the
holder of all of the interests of such Bank, in its Loans and Notes, until
written notice of transfer, signed by such Bank (or the Person designated in the
last notice filed with the Administrative Agent) and by the Person designated in
such written notice of transfer, in form and substance satisfactory to the
Administrative Agent, shall have been filed with the Administrative Agent. The
Administrative Agent shall not be under any duty to examine or pass upon the
validity, effectiveness, enforceability or genuineness of the Loan Documents or
any instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Administrative Agent shall be entitled to assume
that the same are valid, effective and genuine, have been signed or sent by the
proper parties and are what they purport to be. The Administrative Agent shall
be fully justified in failing or refusing to take any action under the Loan
Documents unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under the Loan
Documents in accordance with a request or direction of the Majority Banks, and
such request or direction and any action taken or failure to act pursuant
thereto shall be binding upon all the Banks and all future holders of the Notes.
14.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default, Event of Default,
Company Default, Company Event of Default, Guarantor Default or Guarantor Event
of Default unless the Administrative Agent has received written notice thereof
from a Bank, the Company or the Guarantor. In the event that the Administrative
Agent receives such a notice, the Administrative Agent shall promptly give
notice thereof to the Banks, the Company or the Guarantor. The Administrative
Agent shall take such action with respect to such Default, Event of Default,
Company Default, Guarantor Default or Guarantor Event of Default as shall be
directed by the Majority Banks, provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default, Event of Default, Company
Default, Company Event of Default, Guarantor Default or Guarantor Event of
Default as it shall deem to be in the best interests of the Banks.
14.6 Non-Reliance on Administrative Agent and Other Banks. Each Bank
expressly acknowledges that neither the Administrative Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter, including any review of the affairs of the
Company or the Guarantor, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Bank. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any Bank, and based on such documents and information as
it has deemed appropriate made its own evaluation of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company the Guarantor and made its own decision to enter
into this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Administrative Agent or any Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, evaluations and decisions in taking or not taking
action under any Loan Document, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Company or the Guarantor. Except
for notices, reports and other documents expressly required to be furnished to
the Banks by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide the Bank with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Company or the Guarantor which at any time
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
14.7 Indemnification. Each Bank agrees to indemnify and hold harmless the
Administrative Agent in its capacity as such (to the extent not promptly
reimbursed by the Company or the Guarantor and without limiting the obligation
of the Company or the Guarantor to do so), pro rata according to the aggregate
of the outstanding principal balance of the Loans (or at any time when no Loans
are outstanding, according to its Pro Rata Share), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever including, without
limitation, any amounts paid to the Banks (through the Administrative Agent) by
the Company or the Guarantor pursuant to the terms of the Loan Documents, that
are subsequently rescinded or avoided, or must otherwise be restored or
returned) which may at any time (including, without limitation, at any time
following the payment of the Loans or the Notes) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of the Loan Documents or any other documents contemplated by or referred to
therein or the transactions contemplated thereby or any action taken or omitted
to be taken by the Administrative Agent under or in connection with any of the
foregoing; provided, however, that no Bank shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting solely from the finally adjudicated gross negligence or willful
misconduct of the Administrative Agent. Without limitation of the foregoing,
each Bank agrees to reimburse the Administrative Agent promptly upon demand for
its pro rata share of any unpaid fees owing to the Administrative Agent, and any
costs and expenses (including, without limitation, reasonable fees and expenses
of counsel) payable by the Company or the Guarantor under Section 15.4, to the
extent that the Administrative Agent has not been paid such fees or has not been
reimbursed for such costs and expenses, by the Company or the Guarantor. The
failure of any Bank to reimburse the Administrative Agent promptly upon demand
for its pro rata share of any amount required to be paid by the Banks to the
Administrative Agent as provided in this Section shall not relieve any other
Bank of its obligation hereunder to reimburse the Administrative Agent for its
pro rata share of such amount, but no Bank shall be responsible for the failure
of other Bank to reimburse the Administrative Agent for such other Bank's pro
rata share of such amount. If after having been indemnified or reimbursed by the
Banks as provided by this Section, the Administrative Agent shall have received
payment from the obligor in respect of the obligation or liability for which it
received such indemnification or reimbursement from the Banks, the
Administrative Agent shall disburse to the Banks an amount equal to the amount
of the payment so received on a pro rata basis. The agreements in this Section
shall survive the termination of the Commitments of all of the Banks, and the
payment of all amounts payable under the Loan Documents.
14.8 Administrative Agent in Its Individual Capacity. BNY and its
affiliates may make secured or unsecured loans to, accept deposits from, issue
letters of credit for the account of, act as trustee under indentures of, and
generally engage in any kind of business with, the Company or the Guarantor as
though BNY were not an Agent hereunder and BNY Capital Markets did not arrange
the transactions contemplated hereby. With respect to the Commitments made or
renewed by BNY and the Note issued to BNY, BNY shall have the same rights and
powers under the Loan Documents as any Bank and may exercise the same as though
it were not the Administrative Agent, and the terms "Bank" and "Banks" shall in
each case include BNY.
14.9 Successor Agent. If at any time the Administrative Agent deems it
advisable, in its sole discretion, it may submit to the Banks a written notice
of its resignation as Agent under the Loan Documents, such resignation to be
effective upon the earlier of (i) the written acceptance of the duties of the
Administrative Agent under the Loan Documents by a successor Agent and (ii) on
the 30th day after the date of such notice. Upon any such resignation, the
Majority Banks shall have the right to appoint from among the Banks a successor
Agent. If no successor Agent shall have been so appointed by the Majority Banks
and accepted such appointment in writing within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Bank, appoint a successor
Administrative Agent, which successor Administrative Agent shall be a commercial
bank organized under the laws of the United States or any State thereof and
having a combined capital, surplus, and undivided profits of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent's rights, powers, privileges and duties as Administrative
Agent under the Loan Documents shall be terminated. The Company, the Guarantor
and the Banks shall execute such documents as shall be necessary to effect such
appointment. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of the Loan Documents shall inure to its
benefit as to any actions taken or omitted to be taken by it, and any amounts
owing to it, while it was Administrative Agent under the Loan Documents. If at
any time there shall not be a duly appointed and acting Administrative Agent,
the Company and the Guarantor agree to make each payment due under the Loan
Documents directly to the Banks entitled thereto during such time.
14.10 Syndication and Documentation Agent. None of the Banks identified on
the facing page or signature pages of this Agreement as a "syndication and
documentation agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of the Banks so identified
as a "co-agent" or "lead manager" shall have or be deemed to have any fiduciary
relationship with any Bank. Each Bank acknowledges that it has not relied, and
will not rely, on any of the Banks so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
ARTICLE XV
MISCELLANEOUS
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Guarantor or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Administrative Agent at the written request of the Majority Banks)
and the Company and acknowledged by the Administrative Agent, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks, the
Company and the Guarantor and acknowledged by the Administrative Agent, do any
of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Sections 11.2,12.2 or 13.2);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (ii) below) any fees or other amounts payable
hereunder or under any other Loan Document;
(d) change the percentage of the Facility A Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder; or
(e) amend this Section, or Section 2.16, or any provision herein
providing for consent or other action by all Banks;
(f) amend or terminate any guaranty including the guaranty pursuant
to Article X; and, provided further, that no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights or duties
of the Administrative Agent under this Agreement or any other Loan Document.
15.2 Notices. (a) All notices, requests and other communications shall be
in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company or
the Guarantor by facsimile (i) shall be immediately confirmed by a telephone
call to the recipient at the number specified on Schedule 15.2, and (ii) shall
be followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
Schedule 15.2; or, as directed to the Guarantor, the Company or the
Administrative Agent, to such other address as shall be designated by such party
in a written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Guarantor, the Company and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or XIV shall not be effective until actually
received by the Administrative Agent.
(c) Any agreement of the Administrative Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Administrative Agent and the Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by the Company to give such notice and the Administrative Agent and
the Banks shall not have any liability to the Company or other Person on account
of any action taken or not taken by the Administrative Agent or the Banks in
reliance upon such telephonic or facsimile notice. The obligation of the Company
to repay the Loans shall not be affected in any way or to any extent by any
failure by the Administrative Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the
Administrative Agent and the Banks of a confirmation which is at variance with
the terms understood by the Administrative Agent and the Banks to be contained
in the telephonic or facsimile notice.
15.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
15.4 Costs and Expenses. The Guarantor and the Company, jointly and
severally shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA within five Business Days after demand
(subject to subsection 4.1(a)(v)) for all costs and expenses incurred by BofA in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by BofA with respect thereto; and
(b) pay or reimburse each Agent, each Arranger and each Bank within
five Business Days after demand (subject to subsection 4.1(a)(v)) for all costs
and expenses (including reasonable Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default, Guarantor Event of Default (or in the case of
the Company, a Company Event of Default) or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).
15.5 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Guarantor and the Company, jointly and severally, shall
indemnify and hold the Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted against
any such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with any of the foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Guarantor and the Company shall have no obligation hereunder
to any Indemnified Person with respect to Indemnified Liabilities resulting
solely from the gross negligence or willful misconduct of such Indemnified
Person; and provided, further, that the Indemnified Persons shall, at the
Company's request, only use one counsel among them unless any such Indemnified
Person determines in its sole discretion that its interests may differ from any
other Indemnified Person. The agreements in this Section shall survive payment
of all other Obligations.
15.6 Payments Set Aside. To the extent that the Company or the Guarantor
makes a payment to the Administrative Agent or the Banks, or the Administrative
Agent or the Banks exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Administrative Agent or such Bank
in its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.
15.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Guarantor and the Company may not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and each Bank.
15.8 Assignments, Participations, etc. (a) Any Bank may, with the written
consent of the Company at all times other than during the existence of an Event
of Default, Guarantor Event of Default or Company Event of Default and the
Administrative Agent, which consents shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company or the Administrative Agent shall be required in
connection with any assignment and delegation by a Bank to an Eligible Assignee
that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Commitments and the other rights and obligations of
such Bank hereunder, in a minimum amount such that the Assignee after giving
effect to such assignment shall hold at least $10,000,000 of the Commitments (or
if less the aggregate amount of the Commitments of the Bank so assigning);
provided, however, that the Company and the Administrative Agent may continue to
deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Administrative Agent by
such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered
to the Company and the Administrative Agent an Assignment and Acceptance in the
form of Exhibit E ("Assignment and Acceptance") together with any Note or Notes
subject to such assignment, (iii) the assignor Bank or Assignee has paid to the
Agent a processing fee in the amount of $3,000 and (iv) any assignment shall be
pro rata between Facility A and Facility B.
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) 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 rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, (and provided that it consents to such
assignment in accordance with subsection 15.8(a)), the Company shall execute and
deliver to the Administrative Agent, new Notes evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Bank has retained a portion
of its Loans and its Commitment, replacement Notes in the principal amount of
the Loans retained by the assignor Bank (such Notes to be in exchange for, but
not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Bank
pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company and the
Agent shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in the first proviso
to Section 15.1. In the case of any such participation, the Participant shall be
entitled to the benefit of Sections 3.1, 3.3 and 15.5 as though it were also a
Bank hereunder, and not have any rights under this Agreement, or any of the
other Loan Documents, and all amounts payable by the Company hereunder shall be
determined as if such Bank had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, Guarantor Event of Default or Company Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
15.9 Confidentiality. Each Bank agrees to take and to cause its Affiliates
to take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
the Company and provided to it by the Guarantor or any Subsidiary, or by the
Agents or the Arrangers on such Guarantor's or Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents or in connection with other
business now or hereafter existing or contemplated with the Guarantor or any
Subsidiary; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Guarantor or the Company, provided that such source is not bound by a
confidentiality agreement with the Guarantor or the Company known to the Bank;
provided, however, that any Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of such Bank by any
such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Administrative Agent, any Bank or their
respective Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Bank's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Banks hereunder; (H) as to any Bank or its Affiliate, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Guarantor or any Subsidiary is party or is deemed
party with such Bank or such Affiliate; and (I) to its Affiliates.
15.10 Set-off. In addition to any rights and remedies of the Banks provided
by law, if an Event of Default exists or with respect to the Facility A Loans, a
Guarantor Event of Default or with respect to the Facility B Loans, a Company
Event of Default, or the Loans have been accelerated, each Bank is authorized at
any time and from time to time, without prior notice to the Company or the
Guarantor, any such notice being waived by the Company and the Guarantor to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company or the Guarantor against any and all Obligations
owing to such Bank by the Company or the Guarantor, as applicable, now or
hereafter existing, irrespective of whether or not the Administrative Agent or
such Bank shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Administrative Agent after any such
set-off and application made by such Bank; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application.
15.11 Automatic Debits of Fees. With respect to any fee, or any other cost
or expense (including Attorney Costs) due and payable to the Agents, BNY, BofA
or any Arranger under the Loan Documents, the Company hereby irrevocably
authorizes BNY and BofA to debit any deposit account of the Company with BNY or
BofA in an amount such that the aggregate amount debited from all such deposit
accounts does not exceed such fee or other cost or expense. If there are
insufficient funds in such deposit accounts to cover the amount of the fee or
other cost or expense then due, such debits will be reversed (in whole or in
part, in BNY's or BofA's sole discretion) and such amount not debited shall be
deemed to be unpaid. No such debit under this Section shall be deemed a set-off.
15.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
15.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
15.14 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
15.15 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Guarantor, the Company, the
Banks, the Agents and the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents.
15.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK; PROVIDED THAT THE AGENTS AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE GUARANTOR, THE COMPANY, THE AGENTS AND
THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE GUARANTOR, THE COMPANY,
THE AGENTS AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE GUARANTOR, THE COMPANY, THE AGENTS AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
15.17 Waiver of Jury Trial. THE GUARANTOR, THE COMPANY, THE BANKS AND THE
AGENTS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
GUARANTOR, THE COMPANY, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
15.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Guarantor,
the Company, the Banks and the Agents, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
<PAGE>
118289690.9 April 3,1998 14:33C 97375844
S-10
IN WITNESS WHEREOF, the parties herto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
PHOENIX DUFF & PHELPS CORPORATION
By:____________________
William R. Moyer
Title: ________________
Senior Vice President and
Chief Financial Officer
<PAGE>
PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY
By:____________________
David W. Searfoss
Title: ________________
Executive Vice President
and Chief Financial Officer
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Syndication Agent and
Documentation Agent
By:____________________
Elizabeth W.F. Bishop
Title: ________________
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Bank
By:____________________
Elizabeth W.F. Bishop
Title: ________________
Vice President
<PAGE>
THE BANK OF NEW YORK, as
Administrative Agent
By:____________________
Melanie Shorofsky
Title: ________________
Vice President
THE BANK OF NEW YORK, as
a Bank
By:____________________
Melanie Shorofsky
Title: ________________
Vice President
<PAGE>
FLEET NATIONAL BANK, as a Bank
By:____________________
Juliana B. Dalton
Title: ________________
Vice President
<PAGE>
BANK OF MONTREAL, as a Bank
By:____________________
Charles W. Reed
Title: ________________
Director
<PAGE>
SUNTRUST BANK, ATLANTA,
as a Bank
By:____________________
Craig W. Farnsworth
Title: ________________
Vice President and
Manager
By:____________________
Maria C. Mamilovich
Title: ________________
Vice President
<PAGE>
STATE STREET BANK AND TRUST
COMPANY, as a Bank
By:____________________
Edward M. Anderson
Title: ________________
Vice President
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES, as a Bank
By:____________________
Louis Caltavuturo
Title: ________________
Vice President
By:____________________
Gayma Z. Shivnarain
Title: ________________
Vice President
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
as a Bank
By:____________________
Sebastian Rocco
Title: ________________
First Vice President
<PAGE>
SCHEDULE 2.1
<TABLE>
<CAPTION>
COMMITMENTS
AND PRO RATA SHARES
<S> <C> <C> <C>
Facility A Facility B Pro Rata
Bank Commitments Commitments Share
Bank of America National
Trust and Savings
Association $ 40,000,000 $ 20,000,000 20.0%
The Bank of New York $ 40,000,000 $ 20,000,000 20.0%
Fleet National Bank $ 35,000,000 $ 17,500,000 17.5%
Bank of Montreal $ 25,000,000 $ 12,500,000 12.5%
State Street Bank $ 20,000,000 $ 10,000,000 10.0%
and Trust Company
SunTrust Bank, Atlanta $ 20,000,000 $ 10,000,000 10.0%
Deutsche Bank AG,
New York and/or $ 10,000,000 $ 5,000,000 5.0%
Cayman Islands Branches
Credit Lyonnais New York
Branch $ 10,000,000 $ 5,000,000 5.0%
TOTAL $200,000,000 $100,000,000 100.0%
</TABLE>
<PAGE>
Schedule 5.5
Litigation
NONE
<PAGE>
Schedule 5.7
ERISA
NONE
<PAGE>
Schedule 5.11
Permitted Liabilities
None, other than as contained in the footnotes to the financial
statements referred to in Section 5.11(b).
<PAGE>
Schedule 5.12
Environmental Matters
NONE
<PAGE>
Schedule 5.16
Subsidiaries and Minority Interests
Subsidiaries of Guarantor
Phoenix Home Life Mutual Insurance Company
Phoenix Foundation (0%)
PM Holdings, Inc. (100%)
Aberdeen Asset Managers PLC (16%)
American Phoenix Corporation (92%)
American Brokerage Corporation of Philadelphia (96.2%)
American Phoenix Corporation of Connecticut (71.5%)
American Phoenix Corporation of Maryland (100%)
Poor, Bowen, Bartlett & Kennedy of PA, Inc. (51%)
American Phoenix Corporation of Miami (85%)
American Phoenix Corporation of Orlando (80%)
American Phoenix Corporation of Western New York (94.5%)
American Phoenix Insurance Agency of Georgia, Inc. (100%)
American Phoenix Insurance Agency, Inc. (FL) (100%)
American Phoenix Insurance Agency, Inc. (NJ) (100%)
Giaconia Life Associates, Inc. (100%)
Caddell & Byers Insurance Agency, Inc. (80%)
Howard Hall Agency, Inc. (100%)
Kalvin-Miller Holdings Limited (100%)
American Phoenix Corporation of New York (100%)
Kalvin-Miller Life Consultants, Inc. (100%)
Kalvin-Miller Consulting Group, Inc. (100%)
KAMSAC International, ltd. (100%)
Property Owners & Managers Purchasing Group, Inc. (100%)
Lees Preston Fairy (Holdings) Ltd. (63%)
McDowell Insurance, Inc. (87.4%)
Nicholas & Cannon Agency, Inc. (100%)
Premium Funding Associates Inc. (100%)
American Phoenix Life and Reassurance Company (100%)
APLAR Services, Ltd. (100%)
Phoenix Life and Reassurance Company of New York (100%)
Financial Administrative Services, Inc. (100%)
HLI Management Corporation (100%)
HLI Securities Processing Corporation (100%)
Investors Advantage Corporation (100%)
Investors Liquidity Financial, Inc. - dissolved 8/13/93 (100%)
PHL Associates, Inc. (100%)
PHL Associates Insurance Agency of AL, Inc. (100%)
PHL Associates Insurance Agency of MA, Inc. (100%)
<PAGE>
PHL Associates Insurance Agency of MS, P.C.. (%)
PHL Associates Insurance Agency of NM, Inc. (100%)
PHL Associates Insurance Agency of OH, Inc. (%)
PHL Associates of Texas, Inc. (%)
PHL Global Holding Company (100%)
Command International Software (49%)
PHL Software Services, Ltd. (100%)
PHL Variable Insurance Company (100%) Phoenix-Aberdeen
International Advisors, LLD (50%) Phoenix Charter Oak Trust
Company (100%) Phoenix Duff & Phelps Corporation (60% of voting
common stock)
CBO Investments Co. (100%)
DP Holdings Ltd. (100%)
DPCM Holdings, Inc. - Name Change 10/1/96 (100%)
Duff & Phelps Securities Co. - Sold 7/1/96 (100%)
Duff & Phelps Investment Management Co. (100%)
National Securities & Research Corporation (100%)
Phoenix Equity Planning Corporation (100%)
Phoenix Investment Counsel, Inc. (100%)
Windy City Investments Co. (100%)
Seneca Capital Managment LLC (74.9%)
IPWC CBO Corporation (100%)
Phoenix Duff & Phelps Investment Advisors (100%)
DPIM, Inc. (100%)
Phoenix Founders Inc. (100%)
238 Columbus Blvd., Inc. (100%)
Phoenix Realty Equity Investments, Inc. (100%)
Phoenix Realty Investors, Inc. (100%)
Phoenix Group Holdings, Inc. (100%)
Phoenix American Life Insurance Company (100%)
Phoenix Group Services, Inc. (100%)
Benefit Resource Management, Inc. (100%)
Phoenix Life and Annuity Company (100%)
Phoenix Life Insurance Company (100%)
Phoenix Real Estate Securities Inc. (100%)
Phoenix Realty Group, Inc. (100%)
Phoenix Realty Advisors, Inc. (100%)
Phoenix Corporate Services, LLC (55%)
Pinnacle Realty Management Company, Inc. (50%)
Phoenix Realty Securities, Inc. (100%)
Phoenix Strategic Capital Corporation (100%)
Phoenix Variable Advisors, Inc. (0%)
PML International Insurance Limited (100%)
Townsend Financial Advisors, Inc. -- Dissolved 6/15/96 (100%)
<PAGE>
Worldwide Phoenix Limited (100%)
American Phoenix Investments Limited (100%)
Worldwide Phoenix Offshore, Inc. (100%)
W.S. Griffith & Co., Inc. (100%)
W.S. Griffith Insurance Agency of AL, Inc. (100%)
W.S. Griffith Insurance Agency of MA, Inc. (100%)
W.S. Griffith Insurance Agency of MS, P.C. (0%)
W.S. Griffith Insurance Agency of NM, Inc. (100%)
W.S. Griffith Insurance Agency of OH, Inc. (100%)
W.S. Griffith Insurance Agency of TX, Inc. (0%)
Subsidiaries and Equity Interests of Company
Schedule 5.16(b)
Subsidiaries: Phoenix Equity Planning Corporation
Phoenix Investment Counsel, Inc.
National Securities and Research Corporation
Duff & Phelps Investment Management Co.
DPIM, Inc.
Phoenix Duff & Phelps Investment Advisors
DPCM Holdings, Inc.
DP Holdings Ltd.
CBO Investments Company
Windy City Investment Management Company
IPWC CBO Corporation
Seneca Capital Management LLC
Equity Investments
Beutel Goodman & Co. Ltd.
The Greystone Group LLC
DP/Inverness LLC; DPI Partners I; DPI Partners II FA Capital
LLC; FA Investors I, L.P.
<PAGE>
Schedule 5.17
Insurance Matters
NONE
<PAGE>
Schedule 7.1
Permitted Liens
NONE
<PAGE>
Schedule 7.4
Permitted Indebtedness
Loan from Phoenix Home Life Mutual Insurance Company in the original principal
amount of $30,103,337.50 due September 4, 1997.
Notesto three former members of GMG/Seneca Capital Management LLC in the amount
of $2,209,828, $4,366,466, and $2,920,648, respectively, due January 2,
2000.
<PAGE>
Schedule 7.7
Contingent Obligations
NONE
<PAGE>
SCHEDULE 15.2
EURODOLLAR AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
THE BANK OF NEW YORK, as
Administrative Agent
The Bank of New York
One Wall Street
New York, New York 10286
Attention: Melanie Shorofsky
Telephone:(212) 635-6482
Facsimile:(212) 809-9520
With A Copy To:
William Fahey
The Bank of New York
One Wall Street
New York, New York 10286
Telephone:(212) 635-4690
Facsimile:(212) 635-6365
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Syndication and Documentation Agent
Bank of America National Trust
and Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Lizet Flores
Telephone: (312) 828-6642
Facsimile: (312) 987-0889
THE BANK OF NEW YORK,
as a Bank
Domestic and Eurodollar
Lending Office:
One Wall Street
New York, New York 10286
Attention: Melanie Shorofsky
<PAGE>
Telephone: (212) 635-6482
Facsimile: (212) 809-9520
With A Copy To:
William Fahey
The Bank of New York
One Wall Street
New York, New York 10286
Telephone: (212) 635-4690
Facsimile: (212) 635-6365
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
One Wall Street
New York, New York 10286
Attention: Melanie Shorofsky
Telephone: (212) 635-6482
Facsimile: (212) 809-9520
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Eurodollar Lending Office:
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Denise Stewart
Telephone: (312) 828-6552
Facsimile: (312) 974-9626
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Elizabeth Bishop
Telephone: (312) 828-6550
FLEET NATIONAL BANK,
as a Bank
Domestic and Eurodollar
Lending Office:
777 Main Street
CT/MO/0250
Hartford, Connecticut 06115
Attention: Icy L. Mounds
Insurance Industry Dept.
Telephone: (860) 986-4616
Facsimile: (860) 986-1094
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
777 Main Street
CT/MO/0250
Hartford, Connecticut 06115
Attention: Julianna Dalton,
Insurance Industry Dept.
Telephone: (860)986-3127
Facsimile: (860)986-1264
BANK OF MONTREAL,
as a Bank
Domestic and Eurodollar
Lending Office:
115 South LaSalle Street
12th Floor West
Chicago, Illinois 60603
Attention: Lora Benton
Telephone: )312) 750-3844
Facsimile: (312) 750-4345
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
115 South LaSalle Street
12th Floor West
Chicago, Illinois 60603
Attention: Charles Reed, Corporate Banking
Telephone: (312) 750-5912
Facsimile: (312) 845-2199
SUNTRUST BANK, ATLANTA,
as a Bank
Domestic and Eurodollar
Lending Office
25 Park Place
Atlanta, Georgia 30303
Attention: Kathy Dorsey,
U.S. Corporate Banking - Operations
Telephone: (404) 588-8375
Facsimile: (404) 658-4905
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
711 5th Avenue
16th Floor
New York, New York 10022
Attention: Jamie McQueen - Banking Officer,
U.S. Corporate Banking - Northeast Division
Telephone: (212) 583-2611
Facsimile: (212) 371-9386
STATE STREET BANK AND TRUST COMPANY,
as a Bank
Domestic and Eurodollar
Lending Office:
108 Myrtle Street
North Quincy, Massachusetts 02171
Attention: Toni Pace, Credit Services
Telephone: (617) 985-4685
Facsimile: (617) 537-2580
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
108 Myrtle Street
North Quincy, Massachusetts 02171
Attention: Edward M. Anderson, Credit Services
Telephone: (617) 985-5301
Facsimile: (617) 537-2580
DEUTSCHE BANK AG,
as a Bank
Domestic and Eurodollar
Lending Office:
Deutsche Bank AG
31 West 52nd Street
New York, New York 10019
Attention: Cheryl Mandelbaum
Telephone: (212) 469-4092
Facsimile: (212) 469-4138
Notice (other than Borrowing notices and Notices of Conversion/Continuation):
Deutsche Bank AG
31 West 52nd Street
New York, New York 10019
Attention: Eckhard Osenberg, AVP
Telephone: (212) 469-8242
Facsimile: (212) 469-8366
CREDIT LYONNAIS NEW YORK BRANCH,
as a Bank
Domestic and Eurodollar
Lending Office:
Exchange Plaza
Floor 27
53 State Street
Boston, MA 02109
Attention: Lisa Leahy
Telephone: (617) 723-2615
Facsimile: (617) 723-4803
Notice (other than Borrowing notices and Notices of Conversion/Continuation):
Exchange Plaza
Floor 27
53 State Street
Boston, MA 02109
Attention: Lisa Turilli
Telephone: (617) 723-2615
Facsimile: (617) 723-4803
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
Date: _________________, _______
To: The Bank of New York, as Administrative Agent for the Banks parties to the
Credit Agreement dated as of _______________, 1997 (as extended, renewed,
amended or restated from time to time, the "Credit Agreement") among
Phoenix Duff & Phelps Corporation, Phoenix Home Life Mutual Insurance
Company, certain Banks which are signatories thereto, Bank of America
National Trust and Savings Association, as Syndication and Documentation
Agent and The Bank of New York, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Phoenix Duff & Phelps Corporation (the "Company"), refers
to the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.3 of the
Credit Agreement, of the Borrowing of Facility A Loans specified below:
1. The Business Day of the proposed Borrowing is
__________________, 19___.
2. The aggregate amount of the proposed Borrowing is
$-----------------.
3. The Borrowing is to be comprised of $___________ of [Base Rate]
[CD Rate] [Eurodollar Rate] Loans.
4. The duration of the Interest Period for the [CD Rate Loans]
[Eurodollar Rate Loans] included in the Borrowing shall be
[_____ days] [_____ months].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained in
Article V of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date);
(b) no Default, Event of Default, Guarantor Default or Guarantor
Event of Default has occurred and is continuing, or would result from such
proposed Borrowing; and
(c)The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Facility A Loans to exceed the combined
Facility A Commitments of the Banks.
(d) The PCC Acquisition has occurred.]
PHOENIX DUFF & PHELPS
CORPORATION
By: ____________________
Title:__________________
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
Date: _______________, _____
To: The Bank of New York, as Administrative Agent for the Banks parties to the
Credit Agreement dated as of _____________, 1997 (as extended, renewed,
amended or restated from time to time, the "Credit Agreement") among
Phoenix Duff & Phelps Corporation, Phoenix Home Life Mutual Insurance
Company, certain Banks which are signatories thereto, Bank of America
National Trust and Savings Association, as Syndication and Documentation
Agent and The Bank of New York, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Phoenix Duff & Phelps Corporation (the "Company"), refers
to the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.6 of the
Credit Agreement, of the [conversion] [continuation] of the Loans specified
herein, that:
1. The Conversion/Continuation Date is __________, 19__.
2. The Loans to be [converted] [continued] are Facility [A][B]
Loans.
3. The aggregate amount of the Loans to be [converted]
[continued] is $_______________.
4. The Loans are to be [converted into] [continued as] [CD Rate]
[Eurodollar Rate] [Base Rate] Loans.
5. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be
[_____ days] [_____ months].
PHOENIX DUFF & PHELPS
CORPORATION
By:_________________________
Title:______________________
<PAGE>
EXHIBIT C
PHOENIX DUFF & PHELPS CORPORATION
COMPLIANCE CERTIFICATE
Financial
Statement Date: __________, 199__
Reference is made to that certain Credit Agreement dated as
of______________, 1997 (as extended, renewed, amended or restated from time to
time, the "Credit Agreement") among Phoenix Duff & Phelps Corporation (the
"Company"), Phoenix Home Life Mutual Insurance Company, the several financial
institutions from time to time parties to this Credit Agreement (the "Banks"),
Bank of America National Trust and Savings Association, as Syndication and
Documentation Agent and The Bank of New York, as Administrative Agent. Unless
otherwise defined herein, capitalized terms used herein have the respective
meanings assigned to them in the Credit Agreement.
The undersigned Responsible Officer of the Company, hereby certifies as
of the date hereof that he/she is the_______________ of the Company, and that,
as such, he/she is authorized to execute and deliver this Certificate to the
Banks and the Administrative Agent on the behalf of the Company and its
consolidated Subsidiaries, and that:
1. Enclosed herewith is a copy of the [annual audit/quarterly] report of
the Company as at _______ (the "Computation Date") which report fairly presents
the financial condition and results of operation of the Company and its
Subsidiaries, as of the Computation Date.
2. The undersigned has reviewed and is familiar with the terms of
the Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the attached
financial statements.
3. To the best of the undersigned's knowledge, the Company, during such
period, has observed, performed or satisfied all of its covenants and other
agreements, and satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Company, and the undersigned has no
knowledge of any Default, Event of Default, Company Default, Company Event of
Default, Guarantor Default or Guarantor Event of Default.
<PAGE>
4. The following financial covenant analyses and information set
forth on Schedule 1 attached hereto are true and accurate on and as of the date
of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
as of _______________, 199__.
PHOENIX DUFF & PHELPS CORPORATION
By: _____________________________
Title: __________________________
<PAGE>
<TABLE>
<CAPTION>
Schedule 1
<S><C> <C> <C>
1. Guarantor's Financial Covenants
A. Section 8.1 -- Total SAP Adjusted Capital
1. Unrestricted Surplus Accounts $
2. Asset Valuation Reserve $
3. Surplus Notes $
4. SAP Capital (Sum of Items 1, 2 and $
3)
5. Reserves for Losses On Real Estate $
6. Total SAP Adjusted Capital
(Sum of Items 4 and 6) $
7. $825,000,000 $825,000,000
8. Net Income for last quarter $
9. 50% of Item 8 $
10. Sum of Item 9 for last
Compliance Certificate plus
Item 10 of last Compliance
Certificate $
11. Required Minimum (Sum of
Items 7, 9, and 10) $
B. Section 8.2 -- Invested Assets -- NAIC
Ratings 3 through 6
1. Net Invested Assets $
2. Maximum amount of notes, bonds and other
obligations classified as bonds which bear
NAIC Ratings from three to six, both inclusive
(5.5% of Item 1) $
3. Amount of such assets so rated $
C. Section 8.3 -- Invested Assets -- NAIC
Ratings 5 through 6
1. Total SAP Adjusted Capital
(Item A6 above) $
<PAGE>
2. Maximum amounts of notes, bonds, and other
obligations classified as bonds which bear
NAIC Ratings from five to six both inclusive
(13% of Item 1) $
3. Amount of such assets so rated $
D. Real Estate
1. Real estate and real estate acquired in satisfaction of indebtedness
(exclusive of either category occupied by the Guarantor or its
Primary Insurance Subsidiaries for
use in their business) $
2. Mortgage Loans $
3. Sum of Items 1 and 2 $
4. Permitted Real Estate
(32% of Item B1 above) $
E. Section 8.5-- Risk-Based Capital Ratio
1. Adjusted Capital $
2. Authorized Control Level Risk-Based
Capital $
3. Company Action Level (200% of Item 2) $
4. Risk Based Capital Ratio
(Item 1 to Item 3) __ to 1.0
5. Required Minimum 1.75 to 1.0
F. Section 8.6 -- Non-Performing Real Estate
1. Investment in non-performing real
estate (prior to reserves or write-
offs) $
2. Permitted investment
(30% of Item A6) $
G. Section 8.7-- Indebtedness to Capital
1. Indebtedness $
2. Maximum permitted Indebtedness
(75% of Item A6) $
<PAGE>
2. Company's Financial Covenants
A. Section 9.1 -- Shareholders' Equity
1. Shareholders' equity $
2. Preferred stock $
3. Item 1 minus Item 2 $
4. $165,000,000 $165,000,000
5. Net income for last quarter $
6. 50% of Item 5 $
7. Sum of Item 6 of last
Compliance Certificate plus
Item 7 of last Compliance
Certificate $
8. Required Minimum
(Sum of Items 4, 6 and 7) $
B. Section 9.2-- EBITDA to Interest Ratio
1. Earnings $
2. Interest $
3. Taxes $
4. Depreciation $
5. Amortization $
6. EBITDA (Sum of Items 1, 2, 3,
4 and 5) $
7. Interest Expense $
8. Ratio (Item 6 to Item 7) ___ to 1.0
a. Required Ratio 4.0 to 1.0
C. Section 9.3-- Total Debt to Capital Ratio
1. Indebtedness $
2. 50% of Subordinated Debt which has
been converted from preferred stock
outstanding on the Closing Date $
3. Item 1 less the lesser of Item 2 or
$40,000,000 $
4. Item 1 minus Item 3 $
5. Shareholders' equity $
6. Ratio of Item 4 to Item 5 _____%
7. Maximum permitted ratio _____%
D. Section 9.4-- Senior Debt to EBITDA Ratio
1. Indebtedness $
2. Subordinated Debt $
3. Senior Debt (Item 1 minus Item) $
4. EBITDA (Item B6) $
5. Ratio (Item 3 to Item 4) ____ to 1.0
6. Maximum permitted ratio ____ to 1.0
</TABLE>
<PAGE>
EXHIBIT D-1
FORM OF OPINION OF BORROWER'S COUNSEL
_____________, 1997
To: Bank of America National Trust and Savings Association, as Syndication and
Documentation Agent, The Bank of New York, as Administrative Agent and the
other Banks parties from time to time to the Credit Agreement hereinafter
referred to
Re: Credit Agreement dated as of __________, 1997 among Phoenix Duff &
Phelps Corporation (the Company"),Phoenix Home Life Mutual Insurance
(the Guarantor"), Bank of America National Trust and Savings
Association, as Syndication and Documentation Agent, The Bank of New
York, as Administrative Agent and certain other financial
institutions
Ladies and Gentlemen:
The undersigned has acted as counsel for the Company in connection with the
negotiation, execution and delivery of the Credit Agreement and the other Loan
Documents. This opinion letter is delivered pursuant to Section 4.1(a)(iv) of
the Credit Agreement. Unless otherwise defined herein or the context otherwise
requires, all capitalized terms used in this opinion letter shall have the
respective meanings assigned to them in the Credit Agreement.
[Assumptions]
Based upon and subject to the foregoing, I am of the opinion that
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, and
has full corporate power and authority to own and hold under lease its property
and to conduct its business substantially as currently conducted by it. The
Company has full corporate power and authority to obtain the Loans and to enter
into and perform its obligations under each Loan Document.
2. The Company's execution, delivery and performance of the Loan
Documents are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, and do not:
A. contravene the Company's Certificate of Incorporation
or Bylaws;
B. contravene any Requirement of Law which is applicable to
transactions of the type provided for in the Loan Documents (a "Relevant
Law");
C. to the best of my knowledge, contravene any order,
injunction, writ or decree of any court or any other Governmental
Authority (a "Relevant Order");
D. conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any
Contractual Obligation to which the Company is a party; or
E. result in, or require the creation or imposition of, any
Lien on the Company's property under any Relevant Law or Relevant Order.
3. No authorization or approval or other action by, and no notice
to or filing with, any Governmental Authority is required for the Company's due
execution, delivery or performance of the Loan Documents, to which it is a
party.
4. The Loan Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms except that the enforceability thereof may be limited by
(a) applicable bankruptcy, insolvency, fraudulent conveyance, liquidation,
rehabilitation, conservation, supervision, reorganization, moratorium or similar
laws affecting the rights and remedies of creditors generally, and (b) equitable
principles of general applicability, regardless of whether enforcement is sought
in a proceeding in equity or at law.
I am admitted to practice law in the State of Connecticut. Except as
noted, for purposes of this opinion, and to the extent necessary I have assumed
that the law of the State of New York is identical to the law of the State of
Connecticut. Nothing contained herein shall be deemed to be an opinion as to any
law other than the laws of the State of Connecticut, the State of Delaware and
any applicable federal laws of the United States of America, except as set forth
in the immediately following sentence. Accordingly, I express no opinion as to
the laws of any state or jurisdiction other than the State of Connecticut, the
State of New York (as qualified herein) and the United States of America.
<PAGE>
[Qualifications]
This opinion letter is rendered solely for the Agents' and the Banks' benefit in
connection with the above transaction. Without my prior written consent, this
opinion letter may not be: (i) relied upon by any other party or for any other
purpose; (ii) quoted in whole or in part or otherwise referred to in any report
or document; or (iii) furnished (the original or copies thereof) to any party
except in connection with the enforcement of the Loan Documents by the Agents or
the Banks; provided, however, that copies of this opinion letter may be
furnished to regulatory authorities, assignees and participants in the Loans and
pursuant to the requirements of process.
Very truly yours,
<PAGE>
EXHIBIT D-2
FORM OF OPINION OF GUARANTOR'S COUNSEL
_____________, 1997
To: Bank of America National Trust and Savings Association, as Syndication and
Documentation Agent, The Bank of New York, as Administrative Agent and the
other Banks parties from time to time to the Credit Agreement hereinafter
referred to
Re: Credit Agreement dated as of __________, 1997 among Phoenix Duff &
Phelps Corporation (the "Company"), Phoenix Home Life Mutual
Insurance (the Guarantor"), Bank of America National Trust and
Savings Association, as Syndication and Documentation Agent, The
Bank of New York, as Administrative Agent and certain other
financial institutions
Ladies and Gentlemen:
The undersigned has acted as counsel for the Company and the Guarantor in
connection with the negotiation, execution and delivery of the Credit Agreement
and the other Loan Documents. This opinion letter is delivered pursuant to
Section 4.1(a)(iv) of the Credit Agreement. Unless otherwise defined herein or
the context otherwise requires, all capitalized terms used in this opinion
letter shall have the respective meanings assigned to them in the Credit
Agreement.
I have reviewed the corporate proceedings taken by the Guarantor in
connection with the Credit Agreement and the other Loan Documents. In addition,
I have examined and relied upon copies of such Credit Agreement, the Charter and
the Bylaws of the Guarantor as in effect on the date hereof, copies of
supporting resolutions adopted by the Board of Directors of the Guarantor in
connection with the Credit Agreement and the transactions contemplated thereby
and certificates executed by officers of the Guarantor addressing facts material
to my opinions as I consider necessary or appropriate for the basis of the
opinions expressed.
In making the examination of such agreements and instruments in connection
with the opinions expressed herein, I have assumed the genuineness of all
signatures (other than those on behalf of the Guarantor) and the authenticity of
all documents submitted to me as originals and the conformity with the originals
of all documents submitted to me as copies and have further assumed that each
<PAGE>
of the Banks has the corporate power to enter into and perform its obligations
under the Credit Agreement and have assumed with respect to each of them due
authorization by all requisite corporate action, due execution and delivery and
the valid and binding effect of such documents and agreements and compliance by
the Banks with applicable law. I am admitted to practice law only in the State
of Connecticut and as to matters involving New York law, I have relied upon the
review and analysis of another attorney within the Legal Division of Phoenix
Home Life Mutual Insurance Company who is admitted to practice law in the State
of New York.
Based upon and subject to the foregoing, I am of the opinion that
1. The Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and has
full corporate power and authority to own and hold under lease its property and
to conduct its business substantially as currently conducted by it. The
Guarantor has full corporate power and authority to enter into and perform its
obligations under each Loan Document to which it is a party.
2. The Guarantor's execution, delivery and performance of the Loan
Documents to which it is a party are within the Guarantor's corporate powers,
have been duly authorized by all necessary corporate action, and do not:
A. contravene the Guarantor's Charter or Bylaws;
B. to the best of our knowledge, contravene any relevant law;
C. contravene any relevant order;
D. conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any
Contractual Obligation to which the Guarantor is a party; or
E. result in, or require the creation or imposition of, any
Lien on the Guarantor's property under any relevant law or relevant
order.
3. No authorization or approval or other action by, and no notice
to or filing with, any Governmental Authority is required for the
Guarantor's due execution, delivery or performance of the Loan Documents to
which it is a party.
<PAGE>
4. The Loan Documents to which the Guarantor is a party constitute the
legal, valid and binding obligations of the Guarantor, enforceable against
the Guarantor in accordance with their terms.
With respect to matters of fact on which my opinion is based, I have
relied on appropriate certificates of public officials and officers of the
Guarantor and I have no reason to believe such certificates are inaccurate. My
opinion is limited to the laws of the United States of America and the State of
New York and Connecticut.
This opinion letter is rendered solely for the Agents' and the Banks' benefit in
connection with the above transaction. Without our prior written consent, this
opinion letter may not be: (i) relied upon by any other party or for any other
purpose; (ii) quoted in whole or in part or otherwise referred to in any report
or document; or (iii) furnished (the original or copies thereof) to any party
except in connection with the enforcement of the Loan Documents by the Agents or
the Banks; provided, however, that copies of this opinion letter may be
furnished to regulatory authorities, assignees and participants in the Loans and
pursuant to the requirements of process.
Very truly yours,
<PAGE>
EXHIBIT E
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, ___ is made between
______________________________ (the "Assignor") and
__________________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit Agreement
dated as of _____________, 1997 (as amended, amended and restated, modified,
supplemented or renewed, the "Credit Agreement") among Phoenix Duff & Phelps
Corporation (the "Company"), Phoenix Home Life Mutual Insurance Company, the
several financial institutions from time to time party thereto (including the
Assignor, the "Banks"), Bank of America National Trust and Savings Association,
as Syndication and Documentation Agent, and The Bank of New York, as
Administrative Agent. Any terms defined in the Credit Agreement and not defined
in this Assignment and Acceptance are used herein as defined in the Credit
Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making Loans (the "Loans") to the Company in an aggregate amount
not to exceed $__________ (its "Commitments");
WHEREAS, the Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitments, [together with a corresponding portion of each of
its outstanding Loans,] in an amount equal to $__________ (the "Assigned
Amount") on the terms and subject to the conditions set forth herein and the
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and Acceptance,
(i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii)
the Assignee hereby purchases, assumes and undertakes from the Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) __% (the "Assignee's Percentage Share") of (A) the
Commitments [and the Loans] of the Assignor and (B) all related rights,
benefits, obligations, liabilities and indemnities of the Assignor under and in
connection with the Credit Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor
by Assignee of outstanding principal of, accrued interest on, and fees with
respect to, Loans assigned.]
(b) With effect on and after the Effective Date (as defined in Section 5
hereof), the Assignee shall be a party to the Credit Agreement and succeed to
all of the rights and be obligated to perform all of the obligations of a Bank
under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with Commitments in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitments of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections 15.4 and 15.5 of the Credit Agreement to the extent such rights relate
to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignee's Commitments will be $__________.
(d) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignor's Commitments will be $__________.
<PAGE>
2. Payments.
(a) As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $__________, representing the
Assignee's Pro Rata Share of the principal amount of all Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the
Administrative Agent a processing fee in the amount specified in Section 15.8 of
the Credit Agreement.
3. Reallocation of Payments
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitments and Loans shall be for the account of the Assignor.
Any interest, fees and other payments accrued on and after the Effective Date
with respect to the Assigned Amount shall be for the account of the Assignee.
Each of the Assignor and the Assignee agrees that it will hold in trust for the
other party any interest, fees and other amounts which it may receive to which
the other party is entitled pursuant to the preceding sentence and pay to the
other party any such amounts which it may receive promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 6.1 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, either Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective date for this
Assignment and Acceptance shall be __________, 199__ (the "Effective Date");
provided that the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Administrative Agent
required for an effective assignment of the Assigned Amount by the Assignor to
the Assignee under Section 15.8 of the Credit Agreement shall have been duly
obtained and shall be in full force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to the
Assignor under this Assignment and Acceptance; and
(iv) the processing fee referred to in Section 2(b) hereof and in
Section 15.8 of the Credit Agreement shall have been paid to the Administrative
Agent; and
(v) the Assignor shall have assigned and the Assignee shall have
assumed a percentage equal to the Assignee's Percentage Share of the rights and
obligations of the Assignor under the Credit Agreement (if such agreement
exists).
(b) Promptly following the execution of this Assignment and Acceptance,
the Assignor shall deliver to the Company and the Administrative Agent for
acknowledgment by the Administrative Agent, a Notice of Assignment substantially
in the form attached hereto as Schedule 1.
[6. Administrative Agent. [INCLUDE ONLY IF ASSIGNOR IS
ADMINISTRATIVE AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to
take such action as administrative agent on its behalf and to exercise such
powers under the Credit Agreement as are delegated to the Administrative Agent
by the Banks pursuant to the terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Administrative Agent under the Credit Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Bank, the Administrative
Agent and the Company that under applicable law and treaties no tax will be
required to be withheld by the Bank with respect to any payments to be made to
the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws
of any jurisdiction other than the United States or any State thereof) to the
Administrative Agent and the Company prior to the time that the Administrative
Agent or Company is required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein the Assignee
claims entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new Forms 4224 or 1001 upon the expiration of any
previously delivered form or comparable statements in accordance with applicable
U.S. law and regulations and amendments thereto, duly executed and completed by
the Assignee, and (c) agrees to comply with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim; (ii) it is
duly organized and existing and it has the full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company or the Guarantor, or the performance or observance by the Company
or the Guarantor, of any of its respective obligations under the Credit
Agreement or any other instrument or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Administrative Agent, which may
be required in connection with the assignment and assumption contemplated
hereby.
<PAGE>
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off
or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in New York over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:_______________________
Title:____________________
Address:
<PAGE>
[ASSIGNEE]
By:_______________________
Title:____________________
Address:__________________
<PAGE>
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 19__
The Bank of New York, as
Administrative Agent
Phoenix Duff & Phelps Corporation
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of _________, 1997 (as amended,
amended and restated, modified, supplemented or renewed from time to time the
"Credit Agreement") among Phoenix Duff & Phelps Corporation, Phoenix Home Life
Mutual Insurance Company, the Banks referred to therein, Bank of America
National Trust and Savings Association, as Syndication and Documentation Agent,
and The Bank of New York, as Administrative Agent. Terms defined in the Credit
Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor and all
outstanding Loans made by the Assignor pursuant to the Assignment and Acceptance
Agreement attached hereto (the "Assignment and Acceptance").
2. The Assignee agrees that, upon receiving the consent of the
Administrative Agent and, if applicable, the Company to such assignment, the
Assignee will be bound by the terms of the Credit Agreement as fully and to the
same extent as if the Assignee were the Bank originally holding such interest in
the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: __________________________
Address: _______________________________
_______________________________
_______________________________
Attention: _____________________________
Telephone: (___) _______________________
Telecopier: (___) _______________________
Payment Instructions:
Account No.:_____________________________
At: _____________________________
Reference:_______________________________
Attention:_______________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:______________________
Title:___________________
[NAME OF ASSIGNEE]
By:______________________
Title:___________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
PHOENIX DUFF & PHELPS CORPORATION
By: _____________________________
Title: __________________________
THE BANK OF NEW YORK, as
Administrative Agent
By: __________________________
Its: _________________________
<PAGE>
EXHIBIT F
[FORM OF] PROMISSORY NOTE
$_____________ _____________, 1997
FOR VALUE RECEIVED, the undersigned, Phoenix Duff & Phelps
Corporation, (the "Company"), hereby promises to pay to the order of
___________________ (the "Bank") the principal sum of ____________ Dollars
($___________) or, if less, the aggregate unpaid principal amount of all Loans
made by the Bank to the Company pursuant to the Credit Agreement, dated as of
______________, 1997 (such Credit Agreement, as it may be amended, restated,
supplemented or otherwise modified from time to time, being hereinafter called
the "Credit Agreement"), among the Company, Phoenix Home Life Mutual Insurance
Company, the Bank, the other banks parties thereto, Bank of America National
Trust and Savings Association, as Syndication and Documentation Agent, and The
Bank of New York, as Administrative Agent, on the dates and in the amounts
provided in the Credit Agreement. The Company further promises to pay interest
on the unpaid principal amount of the Loans evidenced hereby from time to time
at the rates, on the dates, and otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on which
each Loan is made, the maturity date therefor and each payment of principal with
respect thereto on the schedules annexed hereto and made a part hereof, or on
continuations thereof which shall be attached hereto and made a part hereof;
provided, that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Promissory Note (the "Note").
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, which Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
<PAGE>
Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State.
PHOENIX DUFF & PHELPS CORPORATION
By:_______________________________
Title: __________________________
<PAGE>
<TABLE>
<CAPTION>
Schedule A to Note
BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
<S> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
Date Facility of Amount of Amount of Notation Made BY
Base Rate Base Rate Base Rate
Loan Loan Loan Repaid
or Converted
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule B to Note
EURODOLLAR RATE LOANS AND REPAYMENT OF EURODOLLAR RATE LOANS
<S> <C> <C> <C> <C> <C>
(1) (2) (3) (4) (5) (6)
Date Facility of Amount of Interest Amount of Notation
Eurodollar Eurodollar Period of Eurodollar Made By
Rate Loan Rate Loan Eurodollar Rate Loan
Rate Loan Repaid or
Converted
<PAGE>
Schedule C to Note
CD RATE LOANS AND REPAYMENT OF CD RATE LOANS
(1) (2) (3) (4) (5) (6)
Date Facility of Amount of Interest Amount of Notation
CD Rate CD Rate Period of CD Rate Made By
Loan Loan CD Rate Loan
Repaid or
Converted
</TABLE>
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
EXHIBIT G
NOTICE OF FACILITY A CONVERSION
Date: _____________________, _____
To: The Bank of New York, as Administrative Agent for the Banks
parties to the Credit Agreement dated as of _________, 1997 (as
extended, renewed, amended or restated from time to time, the
"Credit Agreement") among Phoenix Duff & Phelps Corporation,
-----------------
Phoenix Home Life Mutual Insurance Company, certain Banks which
are signatories thereto, Bank of America National Trust and
Savings Association, as Syndication and Documentation Agent, and
The Bank of New York, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Phoenix Duff & Phelps Corporation and Phoenix Home Life
Mutual Insurance Company refer to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby give you notice
irrevocably, pursuant to Section 2.5 of the Credit Agreement, of the conversion
of the Facility B Loans specified herein into Facility A Loans, that:
1. The Facility Conversion Date is ___________, 19__.
2. The aggregate amount of the Loans to be converted is
$______________.
3. The Loans to be converted are [CD Rate] [Eurodollar Rate] [Base Rate]
Loans.
4. [If applicable:] The Interest Period for the Loans to be converted ends
on _________________.
PHOENIX DUFF & PHELPS CORPORATION
By:_______________________________
Title:____________________________
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
By:_______________________________
Title:____________________________
<PAGE>
EXHIBIT H
NOTICE OF FACILITY B CONVERSION
Date: _____________________, ____
To: The Bank of New York, as Administrative Agent for the Banks
parties to the Credit Agreement dated as of __________, 1997 (as
extended, renewed, amended or restated from time to time, the
"Credit Agreement") among Phoenix Duff & Phelps Corporation,
-----------------
Phoenix Home Life Mutual Insurance Company, certain Banks which
are signatories thereto, Bank of America National Trust and
Savings Association, as Syndication and Documentation Agent, and
The Bank of New York, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Phoenix Duff & Phelps Corporation (the "Company"), refers
to the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.4 of the
Credit Agreement, of the conversion of the Facility A Loans specified herein
into Facility B Loans, that:
1. The Facility Conversion Date is _____________, 19__.
2. The aggregate amount of the Loans to be converted is
$________________.
3. The Loans to be converted are [CD Rate] [Eurodollar Rate] [Base Rate]
Loans.
4. [If applicable:] The Interest Period for the Loans to be converted ends
on __________________.
5. The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Facility Conversion
Date, before and after giving effect thereto and to the application of
the proceeds therefrom:
(a) the representations and warranties of the Company contained in Article
V of the Credit Agreement are true and correct as though made on and as of
such date (except to the extent such representations and warranties relate
to an earlier date, in which case they are true and correct as of such
date);
(b) no Default, Event of Default, Company Default or Company Event of
Default has occurred and is continuing, or would result from such proposed
conversion;
(c) the proposed conversion will not cause the aggregate principal amount
of all outstanding Facility B Loans to exceed the combined Facility B
Commitments of the Banks;
(d) the Senior Debt to EBITDA Ratio of the Company and its Subsidiaries as
of ____________ was ____________; and
(e) the Total Debt to Capital Ratio, giving effect to the proposed
Facility B Loans, is ________________.
PHOENIX DUFF & PHELPS CORPORATION
By:_______________________________
Title:____________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
March 31, 1998 From 10-Q Schedule 27
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 17,005
<SECURITIES> 11,320
<RECEIVABLES> 34,857
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 66,344
<PP&E> 18,220
<DEPRECIATION> 8,304
<TOTAL-ASSETS> 596,794
<CURRENT-LIABILITIES> 38,655
<BONDS> 0
0
78,915
<COMMON> 444
<OTHER-SE> 219,371
<TOTAL-LIABILITY-AND-EQUITY> 596,794
<SALES> 0
<TOTAL-REVENUES> 53,901
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 41,668
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,557
<INCOME-PRETAX> 9,676
<INCOME-TAX> 4,251
<INCOME-CONTINUING> 5,425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,425
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Revised 1997 Schedule 27 for Basic and Diluted EPS. Quarters 1,2,3 of 1997
and Fiscal Year End 1996
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-Mos 3-Mos 3-Mos 12-Mos
<FISCAL-YEAR-END> Dec-31-1997 Dec-31-1997 Dec-31-1997 Dec-31-1996
<PERIOD-END> Mar-31-1997 Jun-30-1997 Sep-30-1997 Dec-31-1996
<CASH> 27,596 40,021 58,485 22,466
<SECURITIES> 4,059 4,174 12,932 4,070
<RECEIVABLES> 27,050 25,495 29,997 25,668
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 62,408 71,580 103,279 56,491
<PP&E> 18,448 14,027 16,892 12,815
<DEPRECIATION> 10,114 5,685 6,383 4,438
<TOTAL-ASSETS> 360,829 365,189 650,069 365,684
<CURRENT-LIABILITIES> 25,632 26,267 79,646 28,167
<BONDS> 0 0 0 0
0 0 0 0
78,822 78,822 78,822 78,504
<COMMON> 442 443 443 440
<OTHER-SE> 204,415 212,673 217,922 202,829
<TOTAL-LIABILITY-AND-EQUITY> 360,829 356,189 650,069 365,684
<SALES> 0 0 0 0
<TOTAL-REVENUES> 35,245 40,992 44,002 157,852
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> 28,927 28,533 33,515 113,350
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> (53) (121) 729 (404)
<INCOME-PRETAX> 6,371 12,580 9,758 44,906
<INCOME-TAX> 2,612 5,253 3,676 18,187
<INCOME-CONTINUING> 3,759 7,327 6,082 26,719
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 3,759 7,327 6,082 26,719
<EPS-PRIMARY> .06 .14 .11 .50
<EPS-DILUTED> .06 .14 .11 .50
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Revised 1996 Schedule 27 for Basic and Diluted EPS. Quarters 1,2,3 of 1996
and Fiscal Year End 1995.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-Mos 3-Mos 3-Mos 12-Mos
<FISCAL-YEAR-END> Dec-31-1996 Dec-31-1996 Dec-31-1996 Dec-31-1995
<PERIOD-END> Mar-31-1996 Jun-30-1996 Sep-30-1996 Dec-31-1995
<CASH> 14,711 14,538 22,680 16,306
<SECURITIES> 4,005 3,895 3,984 3,473
<RECEIVABLES> 30,458 27,977 26,673 32,024
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 51,579 49,364 54,776 53,619
<PP&E> 12,650 18,366 15,309 11,336
<DEPRECIATION> 3,584 9,689 6,993 3,074
<TOTAL-ASSETS> 353,946 356,902 357,937 365,619
<CURRENT-LIABILITIES> 24,065 23,351 18,309 32,670
<BONDS> 0 0 0 0
0 0 0 0
78,057 78,320 78,512 78,029
<COMMON> 436 437 440 436
<OTHER-SE> 184,573 189,179 194,818 181,054
<TOTAL-LIABILITY-AND-EQUITY> 353,946 356,902 357,937 365,619
<SALES> 0 0 0 0
<TOTAL-REVENUES> 44,461 40,345 37,315 113,178
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> 31,124 30,596 25,995 84,056
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 2 (73) (66) 750
<INCOME-PRETAX> 13,335 9,822 11,386 28,372
<INCOME-TAX> 6,222 3,230 5,056 12,682
<INCOME-CONTINUING> 7,113 6,592 6,330 15,690
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 7,113 6,592 6,330 15,690
<EPS-PRIMARY> .14 .12 .12 .51
<EPS-DILUTED> .14 .12 .12 .40
</TABLE>
