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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: September 15, 1998
PENNCORP FINANCIAL GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
1-11422 13-3543540
(Commission File Number) (I.R.S. Employer Identification No.)
590 Madison Avenue, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
(212) 896-2700
(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
On September 15, 1998, the Registrant issued the press release filed
herewith as Exhibit 99.1 relating to the amendment to the Credit Agreement,
dated as of March 12, 1997, filed herewith as Exhibit 99.2.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(C) Exhibits.
99.1 Press release dated September 15, 1998.
99.2 Amendment No. 3 to Credit Agreement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PENNCORP FINANCIAL GROUP, INC.
Date: September 15, 1998 By /s/ SCOTT D. SILVERMAN
------------------------------------------
Scott D. Silverman
Executive Vice-President,
Chief Administrative Officer, General
Counsel and Secretary
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99.1 Press Release dated September 15, 1998.
99.2 Amendment No. 3 to Credit Agreement.
<PAGE> 1
EXHIBIT 99.1
PENNCORP FINANCIAL GROUP NEWS
- --------------------------------------------------------------------------------
Contact:
Joseph Kist
Broadgate Consultants, Inc.
(212) 232-2222
FOR IMMEDIATE RELEASE
- ---------------------
PennCorp Financial Group Amends Credit Agreement
- --------------------------------------------------------------------------------
NEW YORK, September 15, 1998 - PennCorp Financial Group, Inc. (NYSE: PFG)
announced today that as part of its continuing strategy to improve its financial
flexibility, it has reached an agreement with its bank syndicate to amend its
senior credit facility.
PennCorp said that the amended credit agreement will support the
Company's strategic plan to enhance liquidity and reduce debt through the sale
of assets.
The amended credit agreement provides for, among other things: the
permanent reduction of bank debt with proceeds from asset sales; the Company's
ability to retain, at any given point in time, up to $25 million in cash for
parent company liquidity which may in turn be used to pay interest expense,
ordinary holding company expenses, defined restructuring charges and to make
capital infusions to subsidiaries if necessary; certain restrictions on the
ability of the Company to repurchase or redeem subordinated indebtedness and
capital stock and to pay dividends on capital stock; requires the Company to
enter into one or more definitive agreements by December 31, 1998 for the sale
of assets which would result in the paydown of bank debt of at least $100
million; a maximum leverage ratio of 46% through March 31, 1999, and 35%
thereafter; and an interest coverage ratio of 1.4 to 1.0 through March 31, 1999,
and 2.0 to 1.0 thereafter. The Company's leverage ratio as calculated under the
terms of the credit agreement as of June 30, 1998 was 45.25%. Further, the
amendment requires the consent of the bank lenders for the sale of the Penn
Union companies if the total purchase price would be less than $225 million of
which less than $175 million is in cash. The Company has agreed to
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an increase in the borrowing spread and other fees paid to the banks under the
facility. Additionally, pursuant to the terms of the original bank agreement,
the Company has pledged the capital stock of certain of its subsidiaries and
surplus notes held by the Company and its non-insurance subsidiaries to
collateralize the loan obligations.
PennCorp Financial Group, Inc. is an insurance holding company. Through
its subsidiaries, the Company underwrites and markets life insurance and
accident and sickness insurance to the middle market through the United States
and Canada.
Cautionary Statement for purposes of the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995: All statements, trend analyses
and other information contained in this report or teleconferences relative to
markets for PennCorp's products and trends in PennCorp's operations or financial
results, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend" and other similar expressions,
constitute forward-looking statements under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to known and
unknown risks, uncertainties and other factors contemplated by the
forward-looking statements. Such factors include, among other things: (1)
general economic conditions and other factors, including prevailing interest
rate levels and stock market performance, which may affect the ability of
PennCorp to sell its products, the market value of PennCorp's investments and
the lapse rate and profitability of policies; (2) PennCorp's ability to achieve
anticipated levels of operational efficiencies and cost-saving initiatives; (3)
customer response to new products, distribution channels and marketing
initiatives; (4) mortality, morbidity and other factors which may affect the
profitability of PennCorp's insurance products; (5) changes in the Federal
income tax laws and regulations which may affect the relative tax advantages of
some of PennCorp's products; (6) increasing competition in the sale of insurance
and annuities; (7) regulatory changes or actions, including those relating to
regulation of insurance products and of insurance companies; (8) ratings
assigned to PennCorp's insurance subsidiaries by independent rating
organizations such as A. M. Best Company ("A.M. Best"), which the
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Company believes are particularly important to he sale of annuity and other
accumulation products; (9) PennCorp's ability to successfully complete its year
2000 remediation efforts; and (10) unanticipated litigation. There can be no
assurance that other factors not currently anticipated by management will not
also materially and adversely affect the Company's results of operations.
# # #
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EXHIBIT 99.2
AMENDMENT NO. 3
Dated as of September 11, 1998
to
CREDIT AGREEMENT
Dated as of March 12, 1997
PENNCORP FINANCIAL GROUP, INC., a Delaware corporation
(the "Company"), the lenders signatory to the Credit Agreement referred to below
(the "Banks"), the Managing Agents and the Co-Agents named therein (the
"Agents") and THE BANK OF NEW YORK, as administrative agent for the Banks (the
"Administrative Agent"), hereby agree as follows:
1. Credit Agreement. Reference is hereby made to the Credit
Agreement, dated as of March 12, 1997, among the Company, the Banks, the Agents
and the Administrative Agent (as amended, modified or waived prior to the date
hereof, the "Credit Agreement"). Terms used in this Amendment (this "Amendment")
that are defined in the Credit Agreement and are not otherwise defined herein
are used herein with the meanings therein ascribed to them. The Credit Agreement
as modified by this Amendment is and shall continue to be in full force and
effect and is hereby in all respects confirmed, approved and ratified.
2. Amendment. (a) (i) The definition of "Applicable Margin"
set forth in Section 1.01 of the Credit Agreement is hereby amended in its
entirety to read as follows.
"`Applicable Margin' shall mean, for any day, the
percentage set forth below based on (i) the Tier with the highest
debt rating applicable on such day and (ii) the Leverage Ratio as of
such day, as follows:
<TABLE>
<CAPTION>
-------------------------- ---------------------------- ------------------------------ ------------------
Applicable Margin/ Applicable Margin/ Leverage Applicable Margin/
Leverage Ratio is less Ratio is greater than or Leverage Ratio is
TIER than 35% equal to 35% but less than greater than 40%
---- or equal to 40%
<S> <C> <C> <C>
Tier I 0.375% 0.500% 0.625%
Tier II 0.500% 0.625% 0.750%
Tier III 0.750% 0.875% 1.000%
Tier IV 1.000% 1.125% 1.250%
Tier V 1.625% 1.750% 1.875%
Tier VI 1.875% 2.000% 2.125%
Tier VII 2.125% 2.250% 2.375%
-------------------------- ---------------------------- ------------------------------ ------------------
</TABLE>
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provided, that if two Tiers would be applicable on any day as a
result of the debt ratings applicable on such day and (i) such Tiers
are more than one Tier apart or (ii) Tier VII is one of the
applicable Tiers as a result of the Company's Indebtedness not being
rated by one of D & P and S & P, the Applicable Margin for such day
shall be the applicable percentage set forth above for the Tier that
is one Tier below the higher of such two Tiers (it being understood
that Tier I is the highest Tier); and provided, further, that, on
March 31, 1999, each of the percentages set forth in each of the
columns above shall be increased by 0.50% unless, on or prior to
March 31, 1999, the Company delivers to the Administrative Agent, in
form and substance satisfactory to the Majority Banks, a valuation of
the business of the Company and its Subsidiaries, taken as a whole,
that takes into account any appraisals received by the Company and
generally accepted and recognized valuation methods based on the most
recent financial and operating information of the Company and its
Subsidiaries, indicating that the net value of such business as a
going concern is an amount equal to at least 200% of the aggregate
amount of the Commitments as of March 31, 1999 ."
(ii) The definition of "Change of Control" set forth in Section
1.01 of the Credit Agreement is hereby amended by deleting clause (i) therein in
its entirety and redesignating each reference to "(ii)" and "(iii)" contained
therein to "(i) and "(ii)", respectively.
(iii) The definitions of "Tier I", "Tier II", "Tier III", "Tier
IV", "Tier V" and "Tier VI" set forth in Section 1.01 of the Credit Agreement
are hereby amended and restated in their entirety, and a new definition of "Tier
VII" is hereby included in Section 1.01 of the Credit Agreement, in each case to
read as follows:
"'Tier I' shall apply for so long as the Company's S & P Senior Debt
Rating is BBB- or better or the Company's D & P Senior Debt Rating is
BBB- or better.
'Tier II' shall apply for so long as the Company's S & P Senior Debt
Rating is BB+ or the Company's D & P Senior Debt Rating is BB+.
'Tier III' shall apply for so long as the Company's S & P Senior Debt
Rating is BB or the Company's D & P Senior Debt Rating is BB.
'Tier IV shall apply for so long as the Company's S & P Senior Debt
Rating is BB- or the Company's D & P Senior Debt Rating is BB-.
'Tier V shall apply for so long as the Company's S & P Senior Debt
Rating is B+ or the Company's D & P Senior Debt Rating is B+.
'Tier VI shall apply for so long as the Company's S & P Senior Debt
Rating is B or the Company's D & P Senior Debt Rating is B.
'Tier VII shall apply for so long as the Company's S & P Senior Debt
Rating is less than B and the Company's D & P Senior Debt Rating is
less than B and for so long as the Company's Indebtedness is not
rated by either or both of S & P and D & P."
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(iv) The definition of "Incumbent Directors" set forth in Section
1.01 of the Credit Agreement is hereby amended by deleting the phrase "the
Agreement Date" each time it appears therein and inserting in lieu thereof the
date "September 11, 1998".
(v) The definition of "Maturity Date" set forth in Section 1.01 of
the Credit Agreement is hereby amended by deleting the word "fifth" contained
therein and inserting in lieu thereof the word "fourth".
(b) (i) Section 1.01 of the Credit Agreement is hereby
amended to include the following definitions:
"'Additional Assets' means KIVEX, Inc. and the capital
stock of ACO Brokerage Holdings Corporation."
"'Collateral Account' shall have the meaning ascribed
thereto in the Penncorp Security Agreement."
"'Penncorp Security Agreement' means the Security
Agreement dated as of September 4, 1998 between the Company and The
Bank of New York, as Collateral Agent.
"'PennUnion Companies' means Pennsylvania Life Insurance
Company, Union Bankers Insurance Company, Constitution Life
Insurance Company, Peninsular Life Insurance Company, and Marquette
National Life Insurance Company, collectively."
"'Prepayment Account' has the meaning ascribed thereto in
Section 3.03(c) herein."
"'Sale Period' means the time from the date hereof through
March 31, 1999."
"'Senior Cash Flow Leverage Ratio' means, at any time, the
ratio of (a) the aggregate amount of the Commitments of the Banks
at such time to (b) an amount equal to the sum of "A" and "B" (as
such letters are defined in the definition of "Interest Coverage
Ratio") as of such time.
(ii) Section 1.01 of the Credit Agreement is
amended to insert the following at the end of the definition of Leverage Ratio:
"For purposes hereof, the aggregate Indebtedness of the
Company at any time shall be reduced by the aggregate amount
of funds held by the Administrative Agent in the Prepayment
Account at such time."
(c) Section 2.04 of the Credit Agreement is hereby amended
by inserting "(a)" immediately following the heading and by inserting the
following in a new paragraph:
"(b)(i) On any day, unless each of the circumstances set forth
in sub-clauses (w), (x), (y) and (z) of clause (ii) below
exist on such date, then, on each date upon which the
aggregate amount in the Collateral Account is equal to or
greater than $26,000,000, the Commitments shall be permanently
reduced by an amount
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equal to (x) the aggregate amount in the Collateral Account on
such day minus (y) $25,000,000;
(ii) so long as (w) the aggregate Commitments are equal to
or less than $200,000,000 (x) the Leverage Ratio is equal to
or less than 35%, (y) the Senior Cash Flow Leverage Ratio is
equal to or less than 3.5 to 1.0 and (z) both an S&P Senior
Debt Rating and a D&P Senior Debt Rating is in effect, the
Company's S&P Senior Debt Rating is BBB or better or the
Company's D&P Senior Debt Rating is BBB or better and neither
the Company's S&P Senior Debt Rating nor the Company's D&P
Senior Debt Rating is lower than BBB-, then, on each date upon
which the aggregate amount in the Collateral Account is equal
to or greater than $26,500,000, the Commitments shall be
permanently reduced by two-thirds of an amount equal to (x)
the aggregate amount in the Collateral Account on such day
minus (y) $25,000,000; and
(iii) on March 31, 1999, the aggregate Commitments shall
be permanently reduced in an amount equal to the aggregate
amount of the Commitments on such day (prior to giving effect
to this clause (iii) but after giving effect to any reductions
required by clause (i) or (ii) above) minus the aggregate
amount of outstanding Loans on such date (after giving effect
to any prepayments required pursuant to Section 3.03(c)).
(d) Section 2.05 of the Credit Agreement is hereby amended
by deleting the tiers and percentages listed under the heading "Tier" and
"Facility Fee", respectively, contained therein and inserting in lieu thereof
the following:
<TABLE>
<CAPTION>
Tier Facility Fee
---- ------------
<S> <C>
Tier I 0.250%
Tier II 0.375%
Tier III 0.375%
Tier IV 0.500%
Tier V 0.500%
Tier VI 0.625%
Tier VII 0.750%
</TABLE>
(e) Section 3.03 of the Credit Agreement is hereby amended
to include the following:
"(c) Mandatory Prepayments. On each date upon which the
Commitments are reduced pursuant to Section 2.04(b)(i) or
(ii), the Company shall prepay the Loans in an amount equal to
the amount of such Commitment reduction provided that, if the
aggregate amount of the prepayment required pursuant to this
Section 3.03(c) exceeds the aggregate amount of the principal
and interest due on all Base Rate Loans, Bid Rate Loans and
Eurodollar Loans with Interest Periods ending on the date such
prepayment is required to be made, the
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Company may deposit such excess amount in an interest bearing
account at and in the name of the Administrative Agent (the
"Prepayment Account"). Funds deposited in the Prepayment
Account, together with all interest earned thereon, shall be
held by the Administrative Agent for the benefit of the Banks
and shall be applied by the Administrative Agent to prepayment
of Eurodollar Loans and Bid Rate Loans upon the expiration of
the Interest Periods for each such Eurodollar or Bid Rate
Loan, provided however, that (i) at the Company's request the
Administrative Agent shall or (ii) upon the occurrence and
continuance of an Event of Default the Administrative Agent
may, apply such funds to the prepayment of Eurodollar Loans or
Bid Rate Loans prior to the end of the applicable Interest
Rate Periods for such Loans provided that the Company shall be
liable for any amounts owing pursuant to Section 5.05 of the
Credit Agreement as a result of such prepayment. The Company
shall have no right, title or interest in the Prepayment
Account or any funds therein, or interest earned thereon, and
shall have no right of withdrawal of any such funds.
(f) Section 8.01 of the Credit Agreement is hereby amended
to include the following:
"(n) as soon as available and in any event no later than
November 30, 1998, copies of actuarial appraisals of each
Significant Subsidiary, (except for the PennUnion Companies),
provided that each such actuarial appraisal shall be completed
by an independent third party nationally recognized appraisal
firm and such actuarial appraisals shall be completed for each
Significant Subsidiary (except for the Penn Union Companies)
in time for delivery no later than November 30, 1998, provided
further that the Company shall also deliver to the
Administrative Agent and the Banks any actuarial appraisals
completed with respect to any other Subsidiary."
(g) Section 8.06(b) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"the Company or any Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon
voluntary liquidation or otherwise and whether through
Reinsurance Agreements or otherwise) to any other Person
solely to the extent that the fair market value of the
Property so disposed of (other than the PennUnion Companies
sold in accordance with the following proviso and other than
the ACO Brokerage Holdings Corporation), together with the
aggregate fair market value of all other Property (other than
the PennUnion Companies sold in accordance with the following
proviso and other than the ACO Brokerage Holdings Corporation)
of the Company or any Subsidiary disposed of within the
previous 12 months (or, if shorter, the period from the
Agreement Date to the date of such disposition), shall not
exceed $50,000,000, provided that, notwithstanding the
foregoing, and without constituting a disposition for purposes
of complying with the limitation set forth above in this
Section 8.06(b), the Company may sell (i) the PennUnion
Companies in a single transaction
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provided further that the aggregate net consideration received
by the Company for the sale of the PennUnion Companies shall
not be less than $225,000,000 and provided further that the
net cash proceeds received by the Company in connection with
such sale shall be at least $175,000,000 and that (a) any
non-cash consideration received by the Company in connection
with such sale shall be valued by a nationally recognized
investment banking firm as having at the time of such sale a
current cash value (the "Cash Value") of not less than an
amount equal to $225,000,000 less the net cash proceeds
received in connection with such sale and (b) the Company
sells such non-cash consideration and receives cash for the
same in an amount equal to or greater than the Cash Value
within one hundred and eighty (180) days following the closing
of the sale of the PennUnion Companies and (ii) the Additional
Assets; provided further that the Company shall notify the
Administrative Agent and the Banks prior to the Company's
entry into any definitive agreement for any single sale of
Property (excluding the sale of ACO Brokerage Holdings
Corporation) for an amount greater than or equal to
$20,000,000."
(h) Section 8.09 of the Credit Agreement is hereby
amended by inserting "(a)" immediately following the heading and inserting the
following new paragraph:
"(b) In addition to the payments made as required by
subsection (a) of this Section 8.09, the Company shall, with
regard to the net proceeds received by any Subsidiary in
connection with any sale of assets by such Subsidiary or
material reinsurance of existing business of such Subsidiary,
use its best efforts to cause each such Subsidiary to declare
and pay dividends on such Subsidiary's capital stock or make
payments under its Surplus Notes, if any, in an aggregate
amount equal to (x) the aggregate amount of such net proceeds
less (y) the aggregate amount of such net proceeds reasonably
expected to be utilized in the business of such Subsidiary
within the next twelve months or, in the case of any Insurance
Company, necessary or required, in the reasonable judgment of
the Company or by any Applicable Insurance Regulatory
Authority, to be retained by such Insurance Company as
additional capital or otherwise."
(i) Section 8.10 of the Credit Agreement is hereby
amended by deleting it in its entirety and inserting in lieu thereof the
following:
"Leverage Ratio. The Company will not permit the Leverage
Ratio to exceed (i) 46% during the Sale Period, and (ii)
thereafter, 35%.
(j) Section 8.11 of the Credit Agreement is hereby
amended by deleting it in its entirety and inserting in lieu thereof the
following:
"Interest Coverage Ratio. The Company will not permit the
Interest Coverage Ratio to be less than (a) (i) 1.40 to 1.0,
during the Sale Period, and (ii) 2.0:1.0 after expiration of
the Sale Period, where component "A" of the definition of
Interest Coverage Ratio is determined before adjustment for
capital gains or losses as set forth in such definition
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and (b) 1.0 to 1.0, where component "A" of the definition of
Interest Coverage Ratio is determined after adjustment for
capital gains or losses as set forth in such definition.
(k) Section 8.13 of the Credit Agreement is hereby
amended by (i) deleting the figure "650,000,000" and replacing it with
"625,000,000" wherever it appears in such section and (ii) by deleting the
figure "75%" and replacing it with "50%" in sub-section (b)(ii) of Section 8.13.
(l) Section 8.16 of the Credit Agreement is hereby
amended by inserting the following at the end of the first sentence:
"provided that (x) during the Sale Period and (x) at any time
that the Senior Cash Flow Leverage Ratio exceeds 3.5 to 1.0,
the proceeds of the Loans may only be applied towards (i)
Interest Expenses of the Company, (ii) ordinary course
operating expenses of the Company, (iii) unpaid restructuring
charges of the Company principally connected to the Company's
closing of its Maryland and New York offices in an amount not
to exceed $12,000,000 and (iv) making capital contributions to
any Insurance Company Subsidiary to the extent such additional
capital is required by the Applicable Insurance Regulatory
Authority in respect of such Insurance Company Subsidiary."
(m) Section 8.19 of the Credit Agreement is hereby
amended by deleting it in its entirety and inserting in lieu thereof the
following:
"Security. (a) On or prior to September 4, 1998, the Company
shall, and shall cause each holder of a Surplus Note (the
Company and each such holder being collectively referred to as
the "Securing Parties") to, execute and deliver one or more
security agreements, in form and substance satisfactory to the
Majority Banks (collectively, the "Security Agreements"),
together with such other instruments and other documents as
the Majority Banks may request, the possession of which is
necessary or appropriate in the determination of the Majority
Banks to create or perfect a first priority security interest
in favor of the Banks, effective as of such date, in the
Collateral under Applicable Law, including but not limited to
the certificates representing the Pledged Securities, together
with undated stock powers for such certificates duly executed
in blank and duly executed UCC-1 financing statements, and the
Company shall thereafter take all such action to ensure that
the Banks have a perfected first priority security interest in
the Collateral.
(b) The Company shall deposit any and all cash held or
received by the Company into the Collateral Account and shall
be entitled to withdraw funds therefrom solely for (i)
prepaying the Loans (including as required pursuant to Section
3.03), (ii) paying (x) Interest Expenses of the Company, (y)
ordinary course operating expenses of the Company, and (z)
unpaid restructuring charges of the Company principally
connected to the Company's closing of its Maryland and New
York offices in an amount not to exceed $12,000,000 and (iii)
making capital contributions to any Insurance Company
Subsidiary to the extent such additional capital is required
by the Applicable Insurance Regulatory Authority
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in respect of such Insurance Company Subsidiary, provided,
that so long as (w) the aggregate Commitments are equal to or
less than $200,000,000, (x) the Leverage Ratio is equal to or
less than 35%, (y) the Senior Cash Flow Leverage Ratio is
equal to or less than 3.5 to 1.0 and (z) both an S&P Senior
Debt Rating and a D&P Senior Debt Rating is in effect, the
Company's S&P Senior Debt Rating is BBB or better or the
Company's D&P Senior Debt Rating is BBB or better and neither
the Company's S&P Senior Debt Rating nor the Company's D&P
Senior Debt Rating is lower than BBB-, then, on each date upon
which the Company is required to prepay Loans pursuant to
Section 3.03, and after giving effect to such prepayment, the
Company may, on such day, withdraw from the Collateral Account
for any general corporate purpose an amount equal to (x) the
aggregate amount in the Collateral Account on such day minus
(y) $25,000,000. Any withdrawal by the Company from the
Collateral Account shall be deemed a representation and
warranty by the Company that such withdrawal is in accordance
with this Section 8.19(b) and that the funds so withdrawn
shall be used by the Company only for the purposes specified
in this Section 8.19(b)."
(n) The Credit Agreement is hereby amended by
inserting therein a new Section 8.21 to read in its entirety as follows:
"Restricted Payments. The Company shall not make, or permit
any Subsidiary to make, any payment (a "Restricted Payment")
on account of any purchase, redemption, retirement, exchange,
conversion of or dividend on (i) any share of capital stock of
the Company or any security convertible into, or any option,
warrant or other right to acquire, any share of capital stock
of the Company or (ii) the Subordinated Notes or any other
subordinated Indebtedness of the Company; provided that after
expiration of the Sale Period and so long as (x) the Senior
Cash Flow Leverage Ratio is equal to or less than 3.5 to 1.0
and (y) no Default has occurred or would occur after giving
effect thereto, the Company may (i) make Restricted Payments
other than in respect of common stock of the Company, and (ii)
make Restricted Payments in respect of common stock of the
Company so long as, after giving effect thereto, (w) the
Leverage Ratio is less than 25% (x) the Interest Coverage
Ratio is 2.5:1.0 or better, (y) the Senior Cash Flow Leverage
Ratio is equal to or less than 2.0 to 1.0 and (z) both an S&P
Senior Debt Rating and a D&P Senior Debt Rating is in effect,
the Company's S&P Senior Debt Rating is BBB or better or the
Company's D&P Senior Debt Rating is BBB or better and neither
the Company's S&P Senior Debt Rating nor the Company's D&P
Senior Debt Rating is lower than BBB-."
(o) Section 9 of the Credit Agreement is hereby
amended by (i) adding the word "or" after the semi-colon at the end of
subsection (n) thereof and (ii) adding a new subsection "(o)" thereto to read as
follows:
"The Company shall fail, by December 31, 1998, to close one
or more transactions, or enter into one or more definitive
agreements in form and substance reasonably satisfactory to
at least three out of the four Persons constituting the Agent
and the Managing Agents (provided that should any of the four
Persons withdraw from making such a determination, the Bank
with the next largest outstanding Commitment shall
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participate in such determination, provided further that
should two or more Banks each have the next largest
outstanding Commitment, then each such Bank shall participate
in such determination and, further, in such case the
definitive agreements must be satisfactory to at least sixty
percent of the Persons described above) which would result in
the receipt by the Company of net cash proceeds in an amount
which would, pursuant to Section 2.04, result in a mandatory
reduction of the Commitments by at least $100,000,000;"
3. Fees. The Company agrees to pay, on September 11, 1998, a fee to
each Bank, such fee to be in an amount for each such Bank equal to 0.25% of such
Bank's Commitment on September 11, 1998. Such fees, once paid, shall not be
refundable in whole or in part.
4. Effective Date. The amendments provided for herein shall be
effective as of the date first written above, but shall not become effective as
of such date until (i) this Amendment has been executed by the Company, the
Majority Banks and the Administrative Agent, (ii) the Company shall, and shall
have caused each holder of a Surplus Note (the Company and each such holder
being collectively referred to as the "Securing Parties") to, execute and
deliver one or more security agreements, in form and substance satisfactory to
the Majority Banks (collectively, the "Security Agreements"), together with such
other instruments and other documents as the Majority Banks may request, the
possession of which is necessary or appropriate in the determination of the
Majority Banks to create or perfect a security interest in favor of the Banks,
effective as of the date hereof, in the Collateral under Applicable Law,
including but not limited to the certificates representing the Pledged
Securities, together with undated stock powers for such certificates duly
executed in blank, duly executed UCC-1 financing statements, and (iii) opinions
of counsel for the Company and the Securing Parties in form and substance
satisfactory to the Majority Banks .
5. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the law of the State of New York.
6. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing
any such counterpart.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above written.
PENNCORP FINANCIAL GROUP, INC.
By: /s/ SCOTT D. SILVERMAN
----------------------------------
Name: Scott D. Silverman
Title: Executive Vice President
THE BANK OF NEW YORK, as
Administrative Agent and as a Bank
By: /s/ J. DAVID PARKER, JR.
----------------------------------
Name: J. David Parker, Jr.
Title: Vice President
THE CHASE MANHATTAN BANK, as a
Managing Agent and as a Bank
By: /s/ GLEN R. MEYER
----------------------------------
Name: Glen R. Meyer
Title: Managing Director
THE FIRST NATIONAL BANK OF CHICAGO,
as a Managing Agent and as a Bank
By: /s/ BRUCE E. COX
----------------------------------
Name: Bruce E. Cox
Title: Vice President
<PAGE> 11
NATIONSBANK, N.A., as a Managing Agent
and as a Bank
By: /s/ JIM V. MILLER
----------------------------------
Name: Jim V. Miller
Title: Senior Vice President
FLEET NATIONAL BANK, as a Co-Agent
and as a Bank
By: /s/ WILLIAM A. BAGBY
----------------------------------
Name: William A. Bagby
Title: Senior Vice President
MELLON BANK, N.A., as a Co-Agent
and as a Bank
By: /s/ GARY A. SAUL
----------------------------------
Name: Gary A. Saul
Title: Vice President
BANK OF MONTREAL, as a Co-Agent
and as a Bank
By: /s/ THOMAS E. MCGRAW
----------------------------------
Name: Thomas E. McGraw
Title: Director
CIBC INC., as a Co-Agent and as a Bank
By: /s/ EDWARD NEU
----------------------------------
Name: Edward Neu
Title: Executive Director
CIBC Oppenheimer Corp.,
As Agent
<PAGE> 12
DRESDNER BANK AG, NEW YORK BRANCH &
GRAND CAYMAN BRANCH, as a Co-Agent
and as a Bank
By: /s/ LLOYD C. STEVENS
----------------------------------
Name: Lloyd C. Stevens
Title: Vice President
By: /s/ ROBERT P. DONAHUE
----------------------------------
Name: Robert P. Donahue
Title: Vice President
SUNTRUST BANK, CENTRAL FLORIDA
NATIONAL ASSOCIATION
By: /s/ DARRYL J. WEAVER
----------------------------------
Name: Darryl J. Weaver
Title: First Vice President
BANK ONE, TEXAS N.A.
By: /s/ ROBERT HUMPHREYS
----------------------------------
Name: Robert Humphreys
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ KIMBERLY SHAFFER
----------------------------------
Name: Kimberly Shaffer
Title: Vice President
LTCB TRUST COMPANY
By: /s/ JUN EBIHARA
----------------------------------
Name: Jun Ebihara
Title: SVP
<PAGE> 13
ING (U.S.) CAPITAL CORPORATION
By: /s/ T.D. Prangley
----------------------------------
Name: T.D. Prangley
Title: Vice Presdient
