UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 8-K
___________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities and Exchange Act of 1934
June 18, 1997
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Date of Report (Date of earliest event reported)
Everest Reinsurance Holdings, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-13816
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(Commission File Number)
22-3263609
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(IRS Employer Identification Number)
Westgate Corporate Center
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938-0830
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(Address of principal executive officer)
(908) 604-3000
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(Registrant's telephone number)
3 Gateway Center
Newark, New Jersey 07102
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(Former name or former address, if changed since last report)
Page 1 of 3 (plus attachment)
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ITEM 5. OTHER EVENTS
(a) On June 16, 1997, the registrant finalized a 364 day revolving credit
facility from First Union National Bank (the "Credit Facility"). The Credit
Facility, which will be used for liquidity and general corporate purposes,
provides for the borrowing of up to $50 million with interest at a rate selected
by the registrant equal to either (i) the Base Rate (as defined below), (ii) an
adjusted London InterBank Offered Rate ("LIBOR") plus a margin (the "Margin") or
(iii) a Money Market Rate, which is a daily uncommitted advised rate. The Base
Rate is the higher of the rate of interest established by the bank from time to
time as its reference rate in making loans or the Federal Funds rate plus 0.5%
per annum. The amount of the Margin and the commitment fee payable to the bank
for the Credit Facility depend upon the insurance strength or claims paying
ability ratings of Everest Reinsurance Company, a subsidiary of the registrant.
The Credit Facility agreement requires that Everest Reinsurance Company
maintain statutory surplus of not less than $575 million and that the registrant
not allow its ratio of certain debt to capital to be greater than a specified
amount. A copy of the Credit Facility agreement is filed herewith as Exhibit
10.19 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
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Exhibit No. Description
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10.19 Credit Agreement between Everest
Reinsurance Holdings, Inc. and First
Union National Bank dated June 16,
1997 providing for a $50 million
revolving credit facility.
SIGNATURE
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EVEREST REINSURANCE HOLDINGS, INC.
/s/ JANET BURAK MELCHIONE
--------------------------
Janet Burak Melchione
Senior Vice President, General Counsel
and Secretary
Dated: June 18, 1997
Page 2 of 3 (plus attachment)
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EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
10.19 Credit Agreement between Everest Filed herewith
Reinsurance Holdings, Inc. and First
Union National Bank dated June 16,
1997 providing for a $50 million
revolving credit facility.
Page 3 of 3 (plus attachment)
_____________________________________________
CREDIT AGREEMENT
between
EVEREST REINSURANCE HOLDINGS, INC.
and
FIRST UNION NATIONAL BANK
$50,000,000 Revolving Credit Facility
Dated as of June 16, 1997
_____________________________________________
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TABLE OF CONTENTS
Page
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RECITALS......................................................................1
ARTICLE I
DEFINITIONS
1.1. Defined Terms...........................................................1
1.2. Accounting Terms.......................................................14
1.3. Other Terms; Construction..............................................15
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. Commitments; Loans.....................................................15
2.2. Borrowings.............................................................15
2.3. Note...................................................................17
2.4. Termination and Reduction of Commitment................................17
2.5. Mandatory and Voluntary Payments and Prepayments.......................17
2.6. Interest...............................................................18
2.7. Fees...................................................................19
2.8. Interest Periods.......................................................20
2.9. Conversions and Continuations..........................................21
2.10. Method of Payments; Computations......................................22
2.11. Recovery of Payments..................................................22
2.12. Use of Proceeds.......................................................23
2.13. Increased Costs; Change in Circumstances;
Illegality; etc.....................................................23
2.14. Taxes.................................................................25
2.15. Compensation..........................................................26
ARTICLE III
CONDITIONS OF BORROWING
3.1. Conditions of Initial Loan.............................................27
3.2. Conditions to All Loans................................................29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Corporate Organization and Power.......................................30
4.2. Authorization; Enforceability..........................................30
4.3. No Violation...........................................................30
4.4. Governmental Authorization; Permits....................................31
4.5. Litigation.............................................................31
4.6. Taxes..................................................................32
4.7. Subsidiaries...........................................................32
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4.8. Full Disclosure........................................................32
4.9. Margin Regulations.....................................................33
4.10. No Material Adverse Change............................................33
4.11. Financial Matters.....................................................33
4.12. Ownership of Properties...............................................34
4.13. ERISA.................................................................35
4.14. Environmental Matters.................................................35
4.15. Compliance With Laws..................................................36
4.16. Regulated Industries..................................................36
4.17. Insurance.............................................................36
ARTICLE V
AFFIRMATIVE COVENANTS
5.1. GAAP Financial Statements..............................................37
5.2. Statutory Financial Statements.........................................38
5.3. Other Business and Financial Information...............................39
5.4. Corporate Existence; Franchises; Maintenance
of Properties........................................................41
5.5. Compliance with Laws...................................................42
5.6. Payment of Obligations.................................................42
5.7. Insurance..............................................................42
5.8. Maintenance of Books and Records; Inspection...........................42
5.9. Dividends..............................................................43
5.10. Further Assurances....................................................43
ARTICLE VI
FINANCIAL COVENANTS
6.1. Capitalization Ratio...................................................43
6.2. Statutory Surplus......................................................43
ARTICLE VII
NEGATIVE COVENANTS
7.1. Fundamental Changes....................................................44
7.2. Indebtedness...........................................................44
7.3. Liens..................................................................44
7.4. Disposition of Assets..................................................46
7.5. Transactions with Affiliates...........................................47
7.6. Lines of Business......................................................48
7.7. Fiscal Year............................................................48
7.8. Accounting Changes.....................................................48
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ARTICLE VIII
EVENTS OF DEFAULT
Page
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8.1. Events of Default......................................................48
8.2. Remedies; Termination of Commitments,
Acceleration, etc....................................................51
8.3. Remedies; Set-Off......................................................52
ARTICLE IX
MISCELLANEOUS
9.1. Fees and Expenses......................................................52
9.2. Indemnification........................................................53
9.3. GOVERNING LAW..........................................................53
9.4. WAIVER OF TRIAL BY JURY................................................53
9.5. Notices................................................................53
9.6. Amendments Waivers, etc................................................54
9.7. Assignments, Participations............................................54
9.8. No Waiver..............................................................56
9.9. Successors and Assigns.................................................56
9.10. Survival..............................................................56
9.11. Severability..........................................................56
9.12. Construction..........................................................57
9.13. Confidentiality.......................................................57
9.14. Counterparts..........................................................57
9.15. ENTIRE AGREEMENT......................................................57
EXHIBITS
Exhibit A Form of Note
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Conversion/Continuation
Exhibit C Form of Request for Extension of Maturity Date
Exhibit D Form of Compliance Certificate
Exhibit E Form of Opinion
SCHEDULES
Schedule 4.4 Licenses
Schedule 4.7 Subsidiaries
Schedule 7.3 Liens
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 16th day of June, 1997 (this
Agreement"), is made between EVEREST REINSURANCE HOLDINGS, INC., a Delaware
corporation with its principal offices in Liberty Corner, New Jersey (the
"Borrower") and FIRST UNION NATIONAL BANK (the "Lender").
RECITALS
A. The Borrower has requested that the Lender make available to the
Borrower a revolving credit facility in the aggregate principal amount of
$50,000,000. The Borrower will use the proceeds of this facility for liquidity
and general corporate purposes and to pay or reimburse certain fees and expenses
in connection herewith, all as more fully described herein.
B. The Lender is willing to make available to the Borrower the revolving
credit facility described above subject to and on the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants and
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Agreement, in addition to the
terms defined elsewhere herein, the following terms shall have the meanings set
forth below (such meanings to be equally applicable to the singular and plural
forms thereof):
"Account Designation Letter" shall mean a letter from the Borrower to the
Lender, duly completed and signed by an Authorized Officer of the Borrower and
in form and substance satisfactory to the Lender, listing any one or more
accounts to which the Borrower may from time to time request the Lender to
forward the proceeds of any Loans made hereunder.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time
adjusted for reserves and other regulatory requirements plus the applicable
Margin Percentage as in effect at such time.
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"Adjusted Tangible Net Worth" shall mean, at any time, the consolidated
stockholder's equity of the Borrower and its Subsidiaries at such time,
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles but (i) excluding any preferred stock or other class of
equity securities that, by its stated terms (or by the terms of any class of
equity securities issuable upon conversion thereof or in exchange therefor), or
upon the occurrence of any event, matures or is mandatorily redeemable, or is
redeemable at the option of the holders thereof, in whole or in part, at any
time prior to one (1) year after the Maturity Date, (ii) excluding Intangibles,
and (iii) without regard to any unrealized losses and any unrealized gains (in
each case to the extent reflected in the determination of such consolidated
stockholders' equity) related, directly or indirectly, to securities available
for sale, as determined in accordance with Statement of Financial Accounting
Standards No. 115 of the Financial Accounting Standards Board. For purposes of
this definition, "Intangibles" means, without duplication, the amount (to the
extent reflected, net of any related deferred tax liability to the extent such
deferred tax liability is separately disclosed in the footnotes of the
Borrower's most recent consolidated financial statements prepared in accordance
with Generally Accepted Accounting Principles in the determination of such
consolidated stockholders' equity) of (i) all write-ups (other than write-ups
resulting from foreign currency translations) in the book value of any asset
owned by the Borrower or any of its Subsidiaries, and (ii) all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, anticipated future benefit of tax loss
carry-forwards, copyrights, organization or developmental expenses and other
intangible assets, designated as such as contemplated by Section 1.2 (but
nothing in the foregoing shall be deemed to include deferred acquisition cost or
deferred tax assets other than anticipated future benefits of tax loss
carry-forwards).
"Affiliate" shall mean, as to any Person, each other Person that directly,
or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person "control" shall mean (i) the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 10% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.
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"Aggregate Unutilized Commitment" shall mean, at any time, (i) the
Commitment at such time less (ii) the aggregate principal amount of Loans
outstanding at such time.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Annual Statement" shall mean, with respect to any Insurance Subsidiary for
any fiscal year, the annual financial statements of such Insurance Subsidiary as
required to be filed with the Insurance Regulatory Authority of its jurisdiction
of domicile and in accordance with the laws of such jurisdiction, together with
all exhibits, schedules, certificates and actuarial opinions required to be
filed or delivered therewith.
"Assignee" shall have the meaning given to such term in Section 9.7(a).
"Authorized Officer" shall mean any officer of the Borrower authorized by
resolution of the board of directors of the Borrower to take the action
specified herein with respect to such officer and whose signature and incumbency
shall have been certified to the Lender by the secretary or an assistant
secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C. ss 101 et seq., as amended from time
to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the rate of interest established
by the Lender, from time to time, as its reference rate in making loans (which
does not necessarily reflect the rate of interest charged to any particular
borrower or class of borrowers), as adjusted to conform to changes as of the
opening of business on the date of any such change in such reference rate, or
(ii) 0.5% per annum plus the Federal Funds Rate, as adjusted to conform to
changes as of the opening of business on the date of any such change in the
Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest at
such time at the Base Rate.
"Business Day" shall mean (i) any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capitalization Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Funded Debt as of such date to (ii) the sum of Funded
Debt and Adjusted Tangible Net Worth, each as of such date.
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"Closing Date" shall mean the date upon which the initial extension of
credit is made pursuant to this Agreement.
"Commitment" shall mean, initially $50,000,000, subject to reduction as
provided in Section 2.4.
"Commitment Letter" shall mean the letter from the Lender to the Borrower,
dated January 8, 1997, relating to the transactions contemplated by this
Agreement, as amended, modified or supplemented from time to time.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of Exhibit D.
"Contingent Obligation" shall mean, with respect to any Person, any direct
or indirect liability of such Person with respect to any Indebtedness, liability
or other obligation (the "primary obligation") of another Person (the "primary
obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to the Borrower and its
Subsidiaries, the term Contingent Obligation shall not include (y) endorsements
for collection or deposit in the ordinary course of business or (z) obligations
entered into by an Insurance Subsidiary in the ordinary course of its insurance
or reinsurance business under insurance policies, surety bonds or contracts
issued by it or to which it is a party, including reinsurance agreements (and
security posted by any such Insurance Subsidiary in the ordinary course of its
business to secure obligations thereunder).
"Covenant Compliance Worksheet" shall mean, a fully completed worksheet in
the form of Schedule 1 to Exhibit D.
"Credit Documents" shall mean, this Agreement, the Note, the Commitment
Letter, and all other agreements, instruments, documents and certificates now or
hereafter executed and delivered to the Lender by or on behalf of the Borrower
or any of its Subsidiaries with respect to this Agreement and the transactions
contemplated hereby, in each case as amended, modified, supplemented or restated
from time to time.
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"Default" shall mean, any event or condition that, with the passage of time
or giving of notice, or both, would constitute an Event of Default.
"Dollars" or "$" shall mean, dollars of the United States of America.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or business,
whether or not incorporated) that would be deemed to be under "common control"
with, or a member of the same "controlled group" as, the Borrower or any of its
Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA, (iii) the distribution
by the Borrower or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a
notice of intent to terminate any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the Borrower or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of the Borrower or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by the Borrower or any ERISA Affiliate, (viii) a violation
of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Internal Revenue Code
by any fiduciary of any Plan for which the Borrower or any of
its ERISA Affiliates may be directly or indirectly liable or (ix) the
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adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the
Internal Revenue Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if the Borrower or
an ERISA Affiliate fails to timely provide security to such Plan in accordance
with the provisions of such sections.
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the ordinary course of its business and not in response to any
third party action or request of any kind) or proceedings relating in any way to
any Environmental Law or any permit issued, or any approval given, under any
such Environmental Law (collectively, "Claims"), including, without limitation,
(i) any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human health or the environment.
"Environmental Laws" shall mean any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations, rules of common law and orders of courts or Governmental
Authorities, relating to the protection of human health or occupational safety
or the environment, now or hereafter in effect and in each case as amended from
time to time, including, without limitation, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Substances.
"Event of Default" shall have the meaning given to such term in Section
8.1.
"Everest National" shall mean Everest National Insurance Company, an
Arizona insurance corporation and subsidiary of the Borrower.
"Everest Re" shall mean Everest Reinsurance Company, a Delaware insurance
corporation and the Borrower's primary insurance subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.
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"Federal Funds Rate" shall mean, for any period, a fluctuating per annum
interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three federal funds brokers of
recognized standing selected by the Lender.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or any successor thereto.
"Funded Debt" shall mean, with respect to the Borrower and its consolidated
Subsidiaries, at any date of determination, all items of Indebtedness for money
borrowed, reimbursement obligations in respect of bonds, letters of credit
(other than undrawn letters of credit) and acceptances, obligations to pay the
deferred purchase price of property or services, obligations secured by a lien
on property, capital lease obligations, conditional sale obligations,
obligations to redeem, defease or otherwise make payments in respect of capital
stock, and Contingent Obligations in respect of indebtedness for money borrowed
of others (excluding guaranties issued by an Insurance Subsidiary in the
ordinary course of its reinsurance business to support reinsurance
arrangements).
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles, as set forth in the statements, opinions and
pronouncements of the Accounting Principles Board, the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board (or,
to the extent not so set forth in such statements, opinions and pronouncements,
as generally followed by entities similar in size to the Borrower and engaged in
generally similar lines of business), consistently applied and maintained and in
conformity with those used in the preparation of the most recent financial
statements of the Borrower referred to in Section 4.11(a).
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Substances" shall mean any substances or
materials (i) that are or become defined as hazardous
wastes, hazardous substances, pollutants, contaminants or toxic
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<PAGE>
substances under any Environmental Law, (ii) that are defined by any
Environmental Law as toxic, explosive, corrosive, ignitable, infectious,
radioactive, mutagenic or otherwise hazardous, (iii) the presence of which
require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance or (vi) that
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" shall mean any interest or foreign currency rate swap,
cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Historical Statutory Statements" shall have the meaning given to such term
in Section 4.11(b).
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness of such Person for borrowed money or in
respect of loans or advances, (ii) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments, (iii) all reimbursement
obligations of such Person with respect to surety bonds, letters of credit and
bankers' acceptances (in each case, whether or not drawn or matured and in the
stated amount thereof), (iv) all obligations of such Person to pay the deferred
purchase price of property or services, (v) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person, (vi) all obligations of such Person as lessee
under leases that are or should be, in accordance with Generally Accepted
Accounting Principles, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of
any capital stock or other equity securities that, by their stated terms (or by
the terms of any equity securities issuable upon conversion thereof or in
exchange therefor), or upon the occurrence of any event, mature or are
mandatorily redeemable, or are redeemable at the option of the holder thereof,
in whole or in part, at any time prior to the Maturity Date, (viii) the net
termination obligations of such Person under any Hedge Agreements, calculated as
of any date as if such agreement or arrangement were terminated as of such date,
(ix) all Contingent Obligations of such Person and (x) all indebtedness referred
to in clauses (i) through (ix) above secured by any Lien on any property or
asset owned or held by such Person regardless of whether the indebtedness
secured thereby shall have been assumed by such Person or is nonrecourse to the
credit of such Person.
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"Insurance Regulatory Authority" shall mean, with respect to any Insurance
Subsidiary, the insurance department or similar Governmental Authority charged
with regulating insurance companies or insurance holding companies, in its state
of domicile and, to the extent that it has regulatory authority over such
Insurance Subsidiary, in each other jurisdiction in which such Insurance
Subsidiary conducts business or is licensed to conduct business.
"Insurance Subsidiary" shall mean Everest Re, Everest National and any
other Subsidiary of the Borrower the ability of which to pay dividends is
regulated by an Insurance Regulatory Authority or that is otherwise required to
be regulated thereby in accordance with the applicable Requirements of Law of
its state of domicile.
"Interest Period" shall have the meaning given to such term in Section 2.8.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at such
time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan for any Interest
Period, an interest rate per annum obtained by dividing (i)(y) the rate of
interest appearing on Telerate Page 3750 (or any successor page) or (z) if no
such rate is available, or at the option of the Lender in any event, the rate of
interest determined by the Lender to be the rate or the arithmetic mean of rates
(rounded upward, if necessary, to the nearest 1/16 of one percentage point) at
which Dollar deposits in immediately available funds are offered by the Lender
to first-tier banks in the London interbank Eurodollar market, in each case
under (y) and (z) above at approximately 11:00 a.m., London time, two (2)
Business Days prior to the first day of such Interest Period for a period
substantially equal to such Interest Period and in an amount substantially equal
to the amount of such LIBOR Loan, by (ii) the amount equal to 1.00 minus the
Reserve Requirement (expressed as a decimal) for such Interest Period.
"Lending Office" shall mean, the office of the Lender specified as its
address for notices in Section 9.5 or such other office as may be otherwise
designated in writing from time to time as such by the Lender to the Borrower.
The Lender may designate separate Lending Offices as provided in the foregoing
sentence for the purposes of making or maintaining different Types of Loans,
and, with respect to LIBOR Loans, such office may be a domestic or foreign
branch or Affiliate of the Lender.
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"Licenses" shall have the meaning given to such term in Section 4.4(c).
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, security
interest, lien (statutory or otherwise), preference, priority, charge or other
encumbrance of any nature, whether voluntary or involuntary, including, without
limitation, the interest of any vendor or lessor under any conditional sale
agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.
"Loans" shall have the meaning given to such term in Section 2.1 and may
consist of Base Rate Loans, LIBOR Loans or Money Market Loans.
"Margin Percentage" shall mean, at any time, the applicable percentage (a)
to be added to the LIBOR Rate pursuant to Section 2.6 for purposes of
determining the Adjusted LIBOR Rate and (b) to be used in calculating the
facility fee payable pursuant to Section 2.7, in each case as determined under
the following matrix with reference to the ratings given to Everest Re's claims
paying ability and insurance strength rating:
Applicable Margin Applicable Margin
Percentage for Percentage for
Rating Status LIBOR Loans Facility Fee
------------- ----------------- -----------------
Tier I Status 0.175% 0.065%
Tier II Status 0.21% 0.075%
Tier III Status 0.425% 0.15%
For purposes of determining any Margin Percentage at any date:
(i) "Tier I Status" exists at such date if, as of such
date, Everest Re's claims paying ability or insurance strength
rating is (y) AA3 or better by Moody's or (z) AA- or better by
Standard & Poor's;
(ii) "Tier II Status" exists at such date if, as of such
date, Tier 1 Status does not exist and Everest Re's claims
paying ability or insurance strength rating is (y) lower
than AA3 but A3 or better by Moody's or (z) lower than AA-
but A- or better by Standard & Poor's; and
(iii) "Tier III Status" exists at such date if, as of
such date and even if Tier I or Tier II status would
otherwise exist, Everest Re's claims paying ability or
insurance strength rating is (y) lower than A3 by
Moody's or (z) lower than A- by Standard & Poor's
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or if Everest Re is not rated by both Moody's and Standard &
Poor's.
provided, however, that if Standard & Poor's or Moody's changes its rating
system after the date hereof, the new rating of such rating agency that most
closely corresponds to the level specified above for such rating agency shall be
substituted for such level; provided, further, however, that if at any time the
difference between the Moody's and Standard & Poor's ratings at such time is
more than one (l) "Rating Grade," then for purposes of determining the Margin
Percentages at such time, the higher of such two ratings shall be reduced to the
rating that is the median between the higher rating and the lower rating (or its
equivalent); or, if the median is not mathematically determinable, then the
higher of such two ratings shall be reduced to the rating that would have been
the median if the higher of such two ratings were actually one Rating Grade
higher. For purposes of the foregoing sentence, the term "Rating Grade" shall
mean and refer to the different debt ratings (for example, Al, A2, A3 for
Moody's and A+, A and A- for Standard & Poor's) within any particular debt
rating category (in the foregoing example, the rating category of "A" for both
Moody's and Standard & Poor's). Any adjustment required in the Margin
Percentages as a result of a change in ratings as provided hereinabove shall be
effective as of the tenth (10th) Business Day after the effective date of such
change.
"Margin Stock" shall have the meaning given to such term in Regulation U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, business, properties or
financial prospects of the Borrower or the Borrower and its Subsidiaries, taken
as a whole.
"Material Adverse Effect" shall mean a material adverse effect upon (i) the
condition (financial or otherwise), operations, business, properties or
financial prospects of the Borrower or the Borrower and its Subsidiaries, taken
as a whole, (ii) the ability of the Borrower to perform its obligations under
this Agreement or any of the other Credit Documents or (iii) the legality,
validity or enforceability of this Agreement or any of the other Credit
Documents or the rights and remedies of the Lender hereunder and thereunder.
"Maturity Date" shall mean the date which is 364 days after the date hereof
or such later date to which the Maturity Date may be extended pursuant to
Section 2.16.
"Money Market Loan" shall mean, at any time, any Loan that bears interest
at such time at the Money Market Rate for such Loan.
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"Money Market Rate" for a Loan shall mean a daily fluctuating uncommitted
advised rate for the Interest Period for such Loan offered by the Lender and
accepted by the Borrower.
"Moody's" shall mean Moody's Investors Service, Inc., its successors and
assigns.
"Multiemployer Plan" shall mean any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
makes, is making or is obligated to make contributions or has made or been
obligated to make contributions.
"NAIC" shall mean the National Association of Insurance Commissioners and
any successor thereto.
"Note" shall mean the promissory note of the Borrower in substantially the
form of Exhibit A, together with any amendments, modifications and supplements
thereto, substitutions therefor and restatements thereof.
"Notice of Borrowing" shall have the meaning given to such term in Section
2.2(c).
"Notice of Conversion/Continuation" shall have the meaning given to such
term in Section 2.9(b).
"Obligations" shall mean all principal of and interest (including, to the
greatest extent permitted by law, post-petition interest) on the Loans and all
fees, expenses, indemnities and other obligations owing, due or payable at any
time by the Borrower to the Lender or any other Person entitled thereto, under
this Agreement or any of the other Credit Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Participant" shall have the meaning given to such term in Section 9.7(c).
"Permitted Liens" shall have the meaning given to such term in Section 7.3.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Plan" shall mean any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA that is subject to the provisions of Title IV of ERISA
(other than a Multiemployer Plan) and to which the Borrower or any ERISA
Affiliate may have any liability.
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"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975 (c)(2) or 4975(d) of the Internal Revenue Code.
"Quarterly Statement" shall mean, with respect to any Insurance Subsidiary
for any fiscal quarter, the quarterly financial statements of such Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority of
its jurisdiction of domicile, together with all exhibits, schedules,
certificates and actuarial opinions required to be filed or delivered therewith.
"Regulations D, G, T, U and X" shall mean Regulations D, G, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reportable Event" shall mean (i) any "reportable event" within the meaning
of Section 4043(c) of ERISA for which the 30-day notice under Section 4043(a) of
ERISA has not been waived by the PBGC (including any failure to meet the minimum
funding standard of, or timely make any required installment under, Section 412
of the Internal Revenue Code or Section 302 of ERISA, regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal Revenue Code),
(ii) any such "reportable event" subject to advance notice to the PBGC under
Section 4043(b)(3) of ERISA, (iii) any application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Internal
Revenue Code, and (iv) a cessation of operations described in Section 4062(e) of
ERISA.
"Requirement of Law" shall mean, with respect to any Person, the charter,
articles or certificate of organization or incorporation and bylaws or other
organizational or governing documents of such Person, and any statute, law,
treaty, rule, regulation, order, decree, writ, injunction or determination of
any arbitrator or court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject or otherwise pertaining to any or all of the
transactions contemplated by this Agreement and the other Credit Documents.
"Reserve Requirement" shall mean, with respect to any Interest
Period, the reserve percentage (expressed as a decimal) in effect from
time to time during such Interest Period, as provided by the Federal
Reserve Board, applied for determining the maximum reserve requirements
(including, without limitation, basic, supplemental, marginal and emergency
reserves) applicable to the Lender under Regulation D with respect to
"Eurocurrency liabilities" within the meaning of Regulation D, or under any
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similar or successor regulation with respect to Eurocurrency liabilities or
Eurocurrency funding.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a division
of The McGraw Hill Companies, and its successors and assigns.
"Statutory Surplus" shall mean, as to Everest Re, at any time, the amount
shown on line 25, page 3, column 1 of its Annual Statement, or the amount
determined in a consistent manner for any date other than a date as of which its
Annual Statement is prepared.
"Statutory Accounting Principles" shall mean, with respect to any Insurance
Subsidiary, the statutory accounting practices prescribed or permitted by the
relevant Insurance Regulatory Authority of its state of domicile, consistently
applied and maintained and in conformity with those used in the preparation of
the most recent Historical Statutory Statements.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors, in the case of a corporation, or of the ownership or beneficial
interests, in the case of a Person not a corporation, is at the time, directly
or indirectly, owned or controlled by such Person and one or more of its other
Subsidiaries or a combination thereof (irrespective of whether, at the time,
securities of any other class or classes of any such corporation or other Person
shall or might have voting power by reason of the happening of any contingency).
When used without reference to a parent entity, the term "Subsidiary" shall be
deemed to refer to a Subsidiary of the Borrower; provided, however, that the
term "Subsidiary" (and, as a result, the term "Insurance Subsidiary") shall not
include Everest Reinsurance Limited (UK) so long as such entity is not actively
engaged in any business.
"Termination Date" shall mean the Maturity Date or such earlier date of
termination of the Commitment pursuant to Section 2.4 or Section 8.2.
"Type" shall have the meaning given to such term in Section 2.2(a).
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Wholly Owned" shall mean, with respect to any Subsidiary
of any Person, that 100% of the outstanding capital
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stock or other ownership interests of such Subsidiary is owned, directly or
indirectly, by such Person.
1.2. Accounting Terms. Except as specifically provided otherwise in this
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them, and all financial computations
hereunder shall be made, in accordance with Generally Accepted Accounting
Principles (or, to the extent that such terms apply solely to any Insurance
Subsidiary or if otherwise expressly required, Statutory Accounting Principles).
Notwithstanding the foregoing, in the event that any changes in Generally
Accepted Accounting Principles or Statutory Accounting Principles after the date
hereof are required to be applied to the transactions described herein and would
affect the computation of the financial covenants contained in Sections 6.1
through 6.2, as applicable, such changes shall be followed only from and after
the date this Agreement shall have been amended to take into account any such
changes. References to amounts on particular exhibits, schedules, lines, pages
and columns of any Annual Statement or Quarterly Statement are based on the
format promulgated by the NAIC for the 1996 Annual Statements and 1997 Quarterly
Statements. In the event such format is changed in future years so that
different information is contained in such items or they no longer exist, or if
the Annual Statement or Quarterly Statement is replaced by the NAIC or by any
Insurance Regulatory Authority after the date hereof such that different forms
of financial statements are required to be furnished by the Insurance
Subsidiaries in lieu thereof, such references shall be to information consistent
with that reported in the referenced item in the 1996 Annual Statements or 1997
Quarterly Statements, as the case may be.
1.3. Other Terms; Construction. Unless otherwise specified or unless the
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. Commitments; Loans. The Lender agrees, subject to and on the terms
and conditions of this Agreement, to make loans (each, a "Loan," and
collectively, the "Loans") to the Borrower, from time to time on any Business
Day during the period from and including the Closing Date to but not
including the Termination Date, in an aggregate principal amount
at any time outstanding not exceeding its Commitment at such time. Subject
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to and on the terms and conditions of this Agreement, the Borrower may borrow,
repay and reborrow Loans.
2.2. Borrowings. (a) The Loans shall, at the option of the Borrower and
subject to the terms and conditions of this Agreement, be either Base Rate
Loans, LIBOR Loans or Money Market Loans (each, a "Type" of Loan), provided that
notwithstanding any other provision of this Agreement, all Loans made prior to
the third (3rd) Business Day after the Closing Date shall be made initially as
Base Rate Loans.
(b) The Borrower may request that the Lender make one or more Loans at a
Money Market Rate. If the Lender, in its sole discretion, offers the Borrower a
Money Market Rate and if the Lender and Borrower agree upon a Money Market Rate,
the Loan or Loans requested shall bear interest at the Money Market Rate for the
Interest Period or Interest Periods applicable thereto. The Borrower expressly
agrees that: (i) the Lender shall have no obligation to make Loans available to
the Borrower at a Money Market Rate, (ii) the determination whether to offer a
Money Market Rate to the Borrower and to make a Loan bearing interest at a Money
Market Rate is in the sole discretion of the Lender, and (iii) the Lender shall
have no liability if it shall decide for any reason, not to offer a Money Market
Rate to the Borrower or if the Lender and the Borrower do not agree to a Money
Market Rate.
(c) In order to make a borrowing of a Base Rate Loan, LIBOR Loan or Money
Market Loan (other than borrowings involving continuations or conversions of
outstanding Base Rate or LIBOR Loans, which shall be made pursuant to Section
2.9), the Borrower will give the Lender written notice not later than 11:00
a.m., Charlotte time, three (3) Business Days prior to a borrowing of a LIBOR
Loan and not later than 10:00 a.m., Charlotte time, on the same Business Day of
a borrowing of a Base Rate Loan or Money Market Loan; provided, however, that a
request for a borrowing of a Base Rate Loan to be made on the Closing Date may,
at the discretion of the Lender, be given later than the time specified therefor
as set forth hereinabove. Each such notice (each, a "Notice of Borrowing") shall
be irrevocable, shall be given in the form of Exhibit B-1 and shall specify (a)
the aggregate principal amount and initial Type of the Loan, (b) in the case of
a LIBOR Loan or a Money Market Loan, the initial Interest Period to be
applicable thereto, and (c) the requested borrowing date, which shall be a
Business Day. Notwithstanding anything to the contrary contained herein, the
aggregate principal amount of each borrowing shall not be less than $3,000,000
or, if greater, an integral multiple of $1,000,000 in excess thereof (or, if
less, in the amount of the unutilized Commitment).
(d ) Upon fulfillment of the applicable conditions in Article
III, the Lender, not later than 2:00 p.m., Charlotte time, on
the requested borrowing date, will make available to the
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Borrower an amount, in Dollars and in immediately available funds, equal to
the amount of the Loan to be made by the Lender.
(e) The Borrower hereby authorizes the Lender to disburse the proceeds of
each borrowing in accordance with the terms of any written instructions from any
of the Authorized Officers, provided that the Lender shall not be obligated
under any circumstances to forward amounts to any account not listed in an
Account Designation Letter. The Borrower may at any time deliver to the Lender
an Account Designation Letter listing any additional accounts or deleting any
accounts listed in a previous Account Designation Letter.
(f) The Lender may, at its option, make and maintain any Loan at, to or for
the account of any of its Lending Offices, provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan to or
for the account of the Lender in accordance with the terms of this Agreement.
2.3. Note. (a) The Loans made by the Lender shall be evidenced by a Note
appropriately completed in substantially the form of Exhibit A.
(b) The Note issued to the Lender shall (i) be executed by the Borrower,
(ii) be payable to the order of the Lender, (iii) be dated as of the Closing
Date, (iv) be in a stated principal amount equal to the Commitment, (v) bear
interest in accordance with the provisions of Section 2.6, as the same may be
applicable to the Loans made by the Lender from time to time, and (vi) be
entitled to all of the benefits of this Agreement and the other Credit Documents
and subject to the provisions hereof and thereof.
(c) The Lender will record on its internal records the amount of each Loan
made by it and each payment received by it in respect thereof and will, in the
event of any transfer of any of its Notes, either endorse on the reverse side
thereof or on a schedule attached thereto (or any continuation thereof) the
outstanding principal amount of the Loans evidenced thereby as of the date of
transfer; provided, however, that the failure of the Lender to make any such
recordation or provide any such information, or any error therein, shall not
affect the Borrower's obligations under this Agreement or the Notes.
2.4. Termination and Reduction of Commitment. (a) The Commitment shall be
automatically and permanently terminated on the Maturity Date unless sooner
terminated pursuant to subsection (b) below or Section 8.2.
(b) At any time and from time to time after the date
hereof, upon not less than three (3) Business Days' prior written
notice to the Lender, the Borrower may terminate in whole or
reduce in part the unutilized Commitment, provided that any such
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partial reduction shall be in an aggregate amount of not less than $5,000,000
or, if greater, an integral multiple thereof. The amount of any termination or
reduction made under this subsection (b) may not thereafter be reinstated.
2.5. Mandatory and Voluntary Payments and Prepayments. (a) Except to the
extent due or made sooner pursuant to the provisions of this Agreement, the
Borrower will repay the aggregate outstanding principal amount of (i) each Money
Market Loan on the last day of the Interest Period therefor and (ii) all the
Loans in full on the Maturity Date.
(b) In the event that, at any time, the aggregate principal amount of Loans
outstanding at such time shall exceed the Commitment at such time (after giving
effect to any concurrent termination or reduction thereof), the Borrower will
immediately prepay the outstanding principal amount of the Loans in the amount
of such excess.
(c) At any time and from time to time, the Borrower shall have the right to
prepay any Loan, in whole or in part, together with accrued interest to the date
of prepayment, without premium or penalty (except as provided in clause (iii)
below), upon written notice to the Lender given not later than 11:00 a.m.,
Charlotte time, three (3) Business Days prior to each intended prepayment of a
LIBOR Loan or Money Market Loan and one (1) Business Day prior to each intended
prepayment of a Base Rate Loan, provided that (i) each partial prepayment shall
be in an aggregate principal amount of not less than $1,000,000 or, if greater,
an integral multiple of $500,000 in excess thereof, (ii) no partial prepayment
of a LIBOR Loan shall reduce the aggregate outstanding principal amount to less
than $3,000,000 or to any greater amount not an integral multiple of $1,000,000
in excess thereof, and (iii) unless made together with all amounts required
under Section 2.15 to be paid as a consequence of such prepayment, a prepayment
of a LIBOR Loan or a Money Market Loan may be made only on the last day of the
Interest Period applicable thereto. Each such notice shall specify the proposed
date of such prepayment and the aggregate principal amount of the Loan and shall
be irrevocable and shall bind the Borrower to make such prepayment on the terms
specified therein. Amounts prepaid pursuant to this subsection (c) may be
reborrowed, subject to the terms and conditions of this Agreement.
2.6. Interest. (a) The Borrower will pay interest in respect of the unpaid
principal amount of each Loan, from the date of Borrowing thereof until such
principal amount shall be paid in full, (i) at the Base Rate, as in effect from
time to time during such periods as such Loan is a Base Rate Loan,(ii) at the
Adjusted LIBOR Rate, as in effect from time to time during such periods as such
Loan is a LIBOR Loan, and (iii) at the Money Market Rate for such Loan offered
by the Lender and accepted by the Borrower as in effect from time to time during
the Interest Period therefor.
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(b) Any principal amounts of the Loans not paid when due and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other fees and amounts hereunder not paid when due (whether at maturity,
pursuant to acceleration or otherwise), shall bear interest at a rate per annum
equal to the interest rate applicable from time to time thereafter to such Loans
(whether the Base Rate, the Money Market Rate or the Adjusted LIBOR Rate) plus
2% (or, in the case of fees and other amounts, at the Base Rate plus 2%), and,
in each case, such default interest shall be payable on demand. To the greatest
extent permitted by law, interest shall continue to accrue after the filing by
or against the Borrower of any petition seeking any relief in bankruptcy or
under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as follows:
(i) in respect of each Base Rate Loan (including any
Base Rate Loan or portion thereof paid or prepaid pursuant
to the provisions of Section 2.5) in arrears on the last
Business Day of each calendar month, beginning with the first
such day to occur after the Closing Date;
(ii) in respect of each LIBOR Loan or Money Market Loan
(including any LIBOR Loan or Money Market Loan or portion
thereof paid or prepaid pursuant to the provisions of Section
2.5)in arrears on the last Business Day of the Interest Period
applicable thereto and, if such Interest Period is in excess
of three months, the day three months after the commencement
of such Interest Period; and
(iii) in respect of any Loan, at maturity (whether
pursuant to acceleration or otherwise) and, after maturity, on
demand.
(d) Nothing contained in this Agreement or in any other Credit
Document shall be deemed to establish or require the payment of interest to the
Lender at a rate in excess of the maximum rate permitted by applicable law. If
the amount of interest payable to the Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged
by the Lender, the amount of interest payable to the Lender on such interest
payment date shall be automatically reduced to such maximum permissible
amount. In the event of any such reduction affecting the Lender, if from time
to time thereafter the amount of interest payable to the Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by the Lender, then the amount of interest payable
to the Lender on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
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aggregate amount by which interest paid to the Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid to
the Lender has theretofore been reduced pursuant to the previous sentence.
2.7. Fees. The Borrower agrees to pay to the Lender, a facility fee for
the period from the date of this Agreement to the Termination Date, at a per
annum rate equal to the applicable Margin Percentage on the average daily
Commitment (whether or not used), payable in arrears (i) on the last Business
Day of each calendar quarter, beginning with the first such day to occur after
the Closing Date, and (ii) on the Termination Date.
2.8. Interest Periods. Concurrently with the giving of a Notice of
Borrowing of a Money Market Loan or a LIBOR Loan or of a Notice of
Conversion/Continuation of any LIBOR Loan, the Borrower shall have the right to
elect, pursuant to such notice, the interest period (each, an "Interest Period")
to be applicable to such Money Market Loan or LIBOR Loan, which Interest Period
shall, at the option of the Borrower, be, in the case of a Money Market Loan
overnight to a ninety (90) day period and in the case of a LIBOR Loan, a one,
two, three or six-month period; provided, however, that:
(i) the initial Interest Period for any Money Market
Loan or LIBOR Loan shall commence on the date of the borrowing
of such Money Market Loan or LIBOR Loan (including the date
of any continuation of, or conversion into, such LIBOR Loan),
and each successive Interest Period applicable to such LIBOR
Loan shall commence on the day on which the next preceding
Interest Period applicable thereto expires;
(ii) LIBOR Loans and Money Market Loans may not be
outstanding under more than five (5) separate Interest Periods
at any one time (for which purpose interest Periods shall be
deemed to be separate even if they are coterminous);
(iii) if any Interest Period otherwise would expire on a
day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day unless such next
succeeding Business Day falls in another calendar month, in
which case such Interest Period shall expire on the next
preceding Business Day;
(iv) the Borrower may not select any Interest Period that
begins prior to the Closing Date or that expires after the
Maturity Date;
(v) if any Interest Period for a LIBOR Loan
begins on a day for which there is no numerically
corresponding day in the calendar month during which
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such Interest Period would otherwise expire, such Interest
Period shall expire on the last Business Day of such calendar
month; and
(vi) if, upon the expiration of any Interest Period
applicable to a LIBOR Loan, the Borrower shall have failed to
elect a new Interest Period to be applicable to such LIBOR
Loan, then the Borrower shall be deemed to have elected to
convert such LIBOR Loan into a Base Rate Loan as of the
expiration of the then current Interest Period applicable
thereto.
2.9. Conversions and Continuations. (a) The Borrower shall have the right,
on any Business Day occurring on or after the third (3rd) Business Day after the
Closing Date, to elect (i) to convert all or a portion of the outstanding
principal amount of any Base Rate Loan into a LIBOR Loan, or to convert any
LIBOR Loan into a Base Rate Loan, or (ii) to continue all or a portion of the
outstanding principal amount of any LIBOR Loan for an additional Interest
Period, provided that (x) any such conversion of a LIBOR Loan into a Base Rate
Loan shall involve an aggregate principal amount of not less than $1,000,000 or,
if greater, an integral multiple of $500,000 in excess thereof; any such
conversion of Base Rate Loans into, or continuation of a LIBOR Loan shall
involve an aggregate principal amount of not less than $3,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof; and no partial
conversion of a LIBOR Loan shall reduce the outstanding principal amount of such
LIBOR Loan to less than $3,000,000 or to any greater amount not an integral
multiple of $1,000,000 in excess thereof, (y) except as otherwise provided in
Section 2.13(d), a LIBOR Loan may be converted into a Base Rate Loan only on the
last day of the Interest Period applicable thereto (and, in any event, if a
LIBOR Loan is converted into a Base Rate Loan on any day other than the last day
of the Interest Period applicable thereto, the Borrower will pay, upon such
conversion, all amounts required under Section 2.15 to be paid as a consequence
thereof) and (z) no conversion of Base Rate Loans into LIBOR Loans or
continuation of LIBOR Loans shall be permitted during the continuance of a
Default or Event of Default.
(b) The Borrower shall make each such election by giving the Lender written
notice not later than 11:00 a.m., Charlotte time, three (3) Business Days prior
to the intended effective date of any conversion of a Base Rate Loan into, or
continuation of, a LIBOR Loan and one (1) Business Day prior to the intended
effective date of any conversion of a LIBOR Loan into a Base Rate Loan. Each
such notice (each, a "Notice of Conversion/ Continuation") shall be irrevocable,
shall be given in the form of Exhibit B-2 and shall specify (x) the date
of such conversion or continuation (which shall be a Business Day), (y) in
the case of a conversion into, or a continuation of, a LIBOR Loan, the
Interest Period to be applicable thereto, and (z) the aggregate
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amount and Type of the Loan being converted or continued. In the event that the
Borrower shall fail to deliver a Notice of Conversion/Continuation as provided
herein with respect to any outstanding LIBOR Loan, such LIBOR Loan shall
automatically be converted to a Base Rate Loan upon the expiration of the then
current Interest Period applicable thereto (unless repaid pursuant to the terms
hereof).
2.10. Method of Payments; Computations. (a) All payments by the Borrower
hereunder shall be made without setoff, counterclaim or other defense, in
Dollars and in immediately available funds to the Lender at its office referred
to in Section 9.5, prior to 12:00 noon, Charlotte time, on the date payment is
due. Any payment made as required hereinabove, but after 12:00 noon, Charlotte
time, shall be deemed to have been made on the next succeeding Business Day. If
any payment falls due on a day that is not a Business Day, then such due date
shall be extended to the next succeeding Business Day, and such extension of
time shall then be included in the computation of payment of interest, fees or
other applicable amounts.
(b) The Lender may, but shall not be obligated to, debit the amount of any
payment to be made hereunder not made as and when required hereunder to any
ordinary deposit account of the Borrower with the Lender other than, prior to
the occurrence and continuance of a Default or Event of Default, Account No.
2030275655423, (with prompt notice to the Borrower); provided, however, that the
failure to give such notice shall not affect the validity of such debit by the
Lender.
(c) With respect to each payment hereunder, except as specifically provided
otherwise herein or in any of the other Credit Documents, the Borrower may
designate by written notice to the Lender prior to or concurrently with such
payment the specific Loans or other Obligations that are to be paid, repaid or
prepaid, provided that unless made together with all amounts required under
Section 2.15 to be paid as a consequence thereof, a prepayment of a Money Market
Loan or a LIBOR Loan may be made only on the last day of the Interest Period
applicable thereto. In the absence of any such designation by the Borrower, or
if an Event of Default has occurred and is continuing, the Lender shall make
such designation in its sole discretion subject to the foregoing and to the
other provisions of this Agreement.
(d) All computations of interest and fees hereunder (including computations
of the Reserve Requirement), excluding the computation of interest with respect
to Base Rate Loans, shall be made on the basis of a year consisting of 360 days
and the actual number of days (including the first day, but excluding the last
day) elapsed. Interest on Base Rate Loans shall be computed on the basis of a
year of 365 or 366 days, as the case may be, and the actual number of days
(including the first day, but excluding the last day) elapsed.
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2.11. Recovery of Payments. The Borrower agrees that to the extent the
Borrower makes a payment or payments to the Lender, which payment or payments or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy, insolvency or similar state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
the Obligation intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been received.
2.12. Use of Proceeds. The proceeds of the Loans shall be used solely (i)
to pay or reimburse reasonable transaction fees and expenses in connection with
consummation of the transactions contemplated hereby, and (ii) for liquidity and
general corporate purposes.
2.13. Increased Costs; Change in Circumstances; Illegality; etc. (a) If,
at any time after the date hereof and from time to time, the introduction of or
any change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Lender with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), shall (i) subject the Lender to any tax or other charge, or
change the basis of taxation of payments to the Lender, in respect of any of its
LIBOR Loans or any other amounts payable hereunder or its obligation to make,
fund or maintain any LIBOR Loans (other than any change in the rate or basis of
tax on the overall net income of the Lender or its applicable Lending Office),
(ii) impose, modify or deem applicable any reserve, special deposit or similar
requirement (other than as a result of any change in the Reserve Requirement)
against assets of, deposits with or for the account of, or credit extended by,
the Lender or its applicable Lending Office, with respect to LIBOR Loans or
(iii) impose on the Lender or its applicable Lending Office any other condition
affecting its LIBOR Loans, and the result of any of the foregoing shall be to
increase the cost to the Lender of making or maintaining any LIBOR Loans or to
reduce the amount of any sum received or receivable by the Lender hereunder, the
Borrower will, promptly upon demand therefor by the Lender, pay to the Lender
such additional amounts as shall compensate the Lender for such increase in
costs or reduction in return.
(b) If, at any time after the date hereof and from time to time,
the Lender shall have reasonably determined that the introduction of or any
change in any applicable law, rule or regulation regarding capital
adequacy or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Lender with any guideline or request from
any such Governmental Authority (whether or not having the force of law),
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has or would have the effect, as a consequence of the Lender's Commitment or
Loans hereunder, of reducing the rate of return on the capital of the Lender or
any Person controlling the Lender to a level below that which the Lender or
controlling Person could have achieved but for such introduction, change or
compliance (taking into account the Lender's or controlling Person's policies
with respect to capital adequacy), the Borrower will, promptly upon demand
therefor by the Lender therefor, pay to the Lender such additional amounts as
will compensate the Lender or controlling Person for such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (y) the Lender
shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period or (z) the
Lender shall have determined that the rate of interest referred to in the
definition of "LIBOR Rate" upon the basis of which the Adjusted LIBOR Rate for
LIBOR Loans for such Interest Period is to be determined will not adequately and
fairly reflect the cost to the Lender of making or maintaining LIBOR Loans
during such Interest Period, the Lender will forthwith so notify the Borrower.
Upon such notice, (i) all then outstanding LIBOR Loans shall automatically, on
the expiration date of the respective Interest Periods applicable thereto
(unless then repaid in full), be converted into Base Rate Loans, (ii) the
obligation of the Lender to make, to convert Base Rate Loans into, or to
continue, LIBOR Loans shall be suspended (including pursuant to the Borrowing to
which such Interest Period applies), and (iii) any Notice of Borrowing or Notice
of Conversion/Continuation given at any time thereafter with respect to LIBOR
Loans shall be deemed to be a request for Base Rate Loans, in each case until
the Lender shall have determined that the circumstances giving rise to such
suspension no longer exist and the Lender shall have so notified the Borrower.
(d) Notwithstanding any other provision in this Agreement, if, at any time
after the date hereof and from time to time, the Lender shall have determined in
good faith that the introduction of or any change in any applicable law, rule or
regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance with any guideline or request from any such Governmental
Authority (whether or not having the force of law), has or would have the effect
of making it unlawful for the Lender to make or to continue to make or maintain
LIBOR Loans, the Lender will forthwith so notify the Borrower. Upon such notice,
(i) each of The Lender's then outstanding LIBOR Loans shall automatically, on
the expiration date of the respective Interest Period applicable thereto (or, to
the extent any such LIBOR Loan may not lawfully be maintained as a LIBOR Loan
until such expiration date, upon such notice), be converted into a Base Rate
Loan, (ii) the obligation of the Lender to make, to convert Base Rate Loans
into, or to continue, LIBOR Loans shall be suspended (including pursuant to any
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Borrowing for which the Lender has received a Notice of Borrowing but for which
the Borrowing Date has not arrived), and (iii) any Notice of Borrowing or Notice
of Conversion/ Continuation given at any time thereafter with respect to LIBOR
Loans shall be deemed to be a request for a Base Rate Loan, in each case until
the Lender shall have determined that the circumstances giving rise to such
suspension no longer exist and shall have so notified the Borrower.
(e) Determinations by the Lender for purposes of this Section 2.13 of any
increased costs, reduction in return, market contingencies, illegality or any
other matter shall, absent manifest error, be conclusive, provided that such
determinations are made in good faith. No failure by the Lender at any time to
demand payment of any amounts payable under this Section 2.13 shall constitute a
waiver of its right to demand payment of any additional amounts arising at any
subsequent time. Nothing in this Section 2.13 shall require or be construed to
require the Borrower to pay any interest, fees, costs or other amounts in excess
of that permitted by applicable law.
2.14. Taxes. (a) Any and all payments by the Borrower hereunder or under
any Note shall be made, in accordance with the terms hereof and thereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, other than net income and franchise taxes imposed on the Lender
by the United States or by the jurisdiction under the laws of which the Lender's
applicable Lending Office is located, or any political subdivision or taxing
authority thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Note to the Lender, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.14), the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower will make such
deductions, (iii) the Borrower will pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and (iv)
the Borrower will deliver to the Lender evidence of such payment.
(b) The Borrower will indemnify the Lender for the full amount of Taxes
(including, without limitation, any Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Lender makes
written demand therefor.
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(c) The Lender agrees that if it subsequently recovers, or receives a
permanent net tax benefit with respect to, any amount of Taxes (i) previously
paid by it and as to which it has been indemnified by or on behalf of the
Borrower or (ii) previously deducted by the Borrower (including, without
limitation, any Taxes deducted from any additional sums payable under clause (i)
of subsection (a) above), the Lender shall reimburse the Borrower to the extent
of the amount of any such recovery or permanent net tax benefit (but only to the
extent of indemnity payments made, or additional amounts paid, by or on behalf
of the Borrower under this Section 2.14 with respect to the Taxes giving rise to
such recovery or tax benefit); provided, however, that the Borrower, upon the
request of the Lender, agrees to repay to the Lender the amount paid over to the
Borrower (together with any penalties, interest or other charges), in the event
the Lender is required to repay such amount to the relevant taxing authority or
other Governmental Authority. The determination by the Lender of the amount of
any such recovery or permanent net tax benefit shall, in the absence of manifest
error, be conclusive and binding.
2.15. Compensation. The Borrower will compensate the Lender upon demand
for all losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by the Lender to fund or maintain Money
Market Loans or LIBOR Loans) that the Lender may incur or sustain (i) if for any
reason (other than a default by the Lender) a borrowing or continuation of, or
conversion into, a Money Market Loan or LIBOR Loan does not occur on a date
specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation, (ii) if any repayment, prepayment or conversion of any
Money Market Loan or LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of acceleration
of the maturity of the Loans pursuant to Section 8.2), (iii) if any prepayment
of any Money Market Loan or LIBOR Loan is not made on any date specified in a
notice of prepayment given by the Borrower or (iv) as a consequence of any other
failure by the Borrower to make any payments with respect to any Money Market
Loan or LIBOR Loan when due hereunder. Calculation of all amounts payable to the
Lender under this Section 2.15 shall be made, in the case of LIBOR Loans, as
though the Lender had actually funded its relevant LIBOR Loan through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an amount
equal to the amount of such LIBOR Loan, having a maturity comparable to the
relevant Interest Period; provided, however, that the Lender may fund its LIBOR
Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section 2.15.
Determinations by the Lender for purposes of this Section 2.15 of any such
losses, expenses or liabilities shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith.
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2.16 Extension of Maturity Date. The Borrower, may, by written notice to
the Lender, substantially in the form set forth in Exhibit C, given not less
than 90 nor more than 120 days prior to the initial Maturity Date, advise the
Bank that it requests an extension of the initial Maturity Date by not more than
364 calendar days, effective as of the initial Maturity Date. The Lender in its
sole and absolute discretion may grant such extension and shall notify the
Borrower of its decision within 60 days after the Borrower's request.
ARTICLE III
CONDITIONS OF BORROWING
3.1. Conditions of Initial Loan. The obligation of the Lender to make the
initial Loan hereunder is subject to the satisfaction of the following
conditions precedent:
(a) the Lender shall have received the following, each dated as of the
Closing Date (unless otherwise specified)
(i) the Note duly completed and executed by the Borrower;
(ii) a certificate, signed by the president, chief
financial officer, treasurer or comptroller of the Borrower,
in form and substance satisfactory to the Lender, certifying
that (a) all representations and warranties of the Borrower
contained in this Agreement and the other Credit Documents are
true and correct as of the Closing Date, both immediately
before and after giving effect to the initial Loan hereunder
and the application of the proceeds thereof, (B) no Default or
Event of Default has occurred and is continuing, both
immediately before and after giving effect to the initial Loan
hereunder and the application of the proceeds thereof, (C)
there are no insurance regulatory proceedings pending or, to
such individual's knowledge, threatened against any Insurance
Subsidiary in any jurisdiction that, if adversely determined,
would be reasonably likely to have a Material Adverse Effect,
and (D) both immediately before and after giving effect to the
consummation of the transactions contemplated by this
Agreement, no Material Adverse Change has occurred since
December 31, 1996 and there exists no event, condition or
state of facts that could reasonably be expected to result in
a Material Adverse Change;
(iii) a certificate of the secretary or an assistant
secretary of the Borrower, in form and substance
satisfactory to the Lender, certifying (A) that
attached thereto is a true and complete copy of the
certificate of incorporation and all amendments
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thereto of the Borrower, certified as of a recent
date by the Secretary of State of Delaware and that the same
has not been amended since the date of such certification, (B)
that attached thereto is a true and complete copy of the
bylaws of the Borrower, as then in effect and as in effect at
all times from the date on which the resolutions referred to
in clause (C) below were adopted to and including the date of
such certificate, and (C) that attached thereto is a true and
complete copy of resolutions adopted by the board of directors
of the Borrower authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents
to which it is a party, and as to the incumbency and
genuineness of the signature of each officer of the Borrower
executing this Agreement or any of the other Credit Documents,
and attaching all such copies of the documents described
above; and
(iv) a favorable opinion of Janet Burak Melchione, General
Counsel of the Borrower, addressed to the Lender, in
substantially the form of Exhibit E and addressing such other
matters as the Lender may reasonably request.
(b) The Lender shall have received (i) a certificate as of a recent date of
the good standing of each of the Borrower and its Subsidiaries under the laws of
its jurisdiction of organization, from the Secretary of State or Insurance
Regulatory Authorities (or comparable Governmental Authority) of such
jurisdiction, (ii) a certificate as of a recent date of the qualification of the
Borrower to conduct business as a foreign corporation, from the Secretary of
State of New Jersey, (iii) as to each Insurance Subsidiary, a certificate of
compliance as of a recent date, issued by the Insurance Regulatory Authority of
its jurisdiction of domicile, and (iv) to the extent not covered under clause
(iii) above, and to the extent applicable to each Insurance Subsidiary,
certificates of compliance as of a recent date, issued by the insurance
Regulatory Authorities of the States of Connecticut, Michigan, New Jersey, New
York and Pennsylvania.
(c) All legal matters, documentation and corporate or other proceedings
incident to the transactions contemplated hereby shall be reasonably acceptable
to the Lender; all approvals, permits and consents of any Governmental
Authorities (including, without limitation, all relevant Insurance Regulatory
Authorities) or other Persons required in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been obtained (without the imposition of
conditions that are not reasonably acceptable to the Lender), and all
related filings, if any, shall have been made, and all such approvals, permits,
consents and filings shall be in full force and effect and the Lender
shall have received such copies thereof as it shall have requested; all
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applicable waiting periods shall have expired without any adverse action being
taken by any Governmental Authority having jurisdiction; and no action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before, and no order, injunction or decree shall have
been entered by, any court or other Governmental Authority, in each case to
enjoin, restrain or prohibit, to obtain substantial damages in respect of, or
that is otherwise related to or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or that, in the opinion of
the Lender, would otherwise be reasonably likely to have a Material Adverse
Effect.
(d) Since December 31, 1996, both immediately before and after giving
effect to the consummation of the transactions contemplated by this Agreement,
there shall not have occurred any Material Adverse Change or any event,
condition or state of facts that could reasonably be expected to result in a
Material Adverse Change.
(e) The Borrower shall have paid to the Lender, all fees and expenses of
the Lender required hereunder or under any other Credit Document to be paid on
or prior to the Closing Date (including fees and expenses of counsel) in
connection with this Agreement and the transactions contemplated hereby.
(f) The Lender shall have received an Account Designation Letter, together
with written instructions from an Authorized Officer of the Borrower, including
wire transfer information, directing the payment of the proceeds of the initial
Loans to be made hereunder.
(g) The Lender shall have received such other documents, certificates,
opinions and instruments as it shall have reasonably requested.
3.2. Conditions to All Loans. The obligation of the Lender to make any
Loans hereunder, including the initial Loan, is subject to the satisfaction of
the following conditions precedent on the relevant borrowing date:
(a) The Lender shall have received a Notice of Borrowing in accordance with
Section 2.2(c);
(b) Each of the representations and warranties contained in Article IV and
in the other Credit Documents shall be true and correct on and as of the Closing
Date (in the case of the initial Loan made hereunder) and as of any such later
borrowing date (in the case of all subsequent Loans) with the same effect as if
made on and as of such date, both immediately before and after giving effect to
the Loans to be made on such date (except to the extent any such representation
or warranty is expressly stated to have been made as of a specific date, in
which case such representation or warranty shall be true and correct as of such
date); and
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(c) No Default or Event of Default shall have occurred and be continuing on
such date, both immediately before and after giving effect to the Loans to be
made on such date.
Each giving of a Notice of Borrowing, and the consummation of each
borrowing, shall be deemed to constitute a representation by the Borrower that
the statements contained in subsections (b) and (c) above are true, both as of
the date of such notice or request and as of the relevant borrowing date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to extend the credit
contemplated hereby, the Borrower represents and warrants to the Lender as
follows:
4.1. Corporate Organization and Power. Each of the Borrower and its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
full corporate power and authority to execute, deliver and perform the Credit
Documents to which it is or will be a party, to own and hold its property and to
engage in its business as presently conducted, and (iii) is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the nature of its business or the ownership of its properties requires it
to be so qualified.
4.2. Authorization; Enforceability. The Borrower has taken all necessary
corporate action to execute, deliver and perform each of the Credit Documents to
which it is or will be a party, and has, or on the Closing Date (or any later
date of execution and delivery) will have, validly executed and delivered each
of the Credit Documents to which it is or will be a party. This Agreement
constitutes, and each of the other Credit Documents upon execution and delivery
by the Borrower will constitute, the legal, valid and binding obligation of the
Borrower, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general equitable principles.
4.3. No Violation. The execution, delivery and performance by the Borrower
of this Agreement and each of the other Credit Documents, and compliance
by it with the terms hereof and thereof, do not and will not (i) violate
any provision of its certificate of incorporation or bylaws or
contravene any other Requirement of Law applicable to it, (ii) conflict
with, result in a breach of or constitute (with notice, lapse of
time or both) a default under any material indenture, agreement or
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other instrument to which it is a party, by which it or any of its properties is
bound or to which it is subject, or (iii) result in or require the creation or
imposition of any Lien upon any of its properties or assets. No Subsidiary is
subject to any restriction or encumbrance on its ability to make dividend
payments or other distributions in respect of its capital stock, to make loans
or advances to the Borrower or any other Subsidiary, or to transfer any of its
assets or properties to the Borrower or any other Subsidiary, in each case other
than such restrictions or encumbrances existing under or by reason of the Credit
Documents or applicable Requirements of Law.
4.4. Governmental Authorization; Permits. (a) No consent, approval,
authorization or other action by, notice to, or registration or filing with, any
Governmental Authority or other Person is or will be required as a condition to
or otherwise in connection with the due execution, delivery and performance by
the Borrower of this Agreement or any of the other Credit Documents or the
legality, validity or enforceability hereof or thereof.
(b) Each of the Borrower and its Subsidiaries has, and is in good standing
with respect to, all governmental approvals, licenses, permits and
authorizations necessary to conduct its business as presently conducted and to
own or lease and operate its properties, except for those the failure to obtain
which would not individually or in the aggregate, have a Material Adverse
Effect.
(c) Schedule 4.4 lists with respect to each Insurance Subsidiary, as of the
Closing Date, all of the jurisdictions in which such Insurance Subsidiary holds
licenses (including, without limitation, licenses or certificates of authority
from relevant Insurance Regulatory Authorities), permits or authorizations to
transact insurance and reinsurance business (collectively, the "Licenses"), and
indicates the type or types of insurance in which each such Insurance Subsidiary
is permitted to be engaged with respect to each License therein listed. (i) No
such License is the subject of a proceeding for suspension, revocation or
limitation or any similar proceedings, (ii) there is no sustainable basis for
such a suspension, revocation or limitation, and (iii) no such suspension,
revocation or limitation is threatened by any relevant Insurance Regulatory
Authority, that, in each instance under (i), (ii) and (iii) above, would
individually or in the aggregate, have a Material Adverse Effect. No Insurance
Subsidiary transacts any insurance business, directly or indirectly, in any
jurisdiction other than those listed on Schedule 4.4, where such business
requires any license, permit or other authorization of an Insurance Regulatory
Authority of such jurisdiction.
4.5. Litigation. Except as disclosed in the Borrower's
1996 Form 10-K and as supplemented in written disclosure
to the Lender delivered prior to execution of this
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Agreement by the Lender, there are no actions, investigations, suits or
proceedings pending or threatened, at law, in equity or in arbitration, before
any court, other Governmental Authority or other Person, (i) against or
affecting the Borrower, any of its Subsidiaries or any of their respective
properties that would, if adversely determined, have a Material Adverse Effect,
or (ii) with respect to this Agreement or any of the other Credit Documents.
4.6. Taxes. Each of the Borrower and its Subsidiaries has timely filed all
federal, state and local tax returns and reports required to be filed by it and
has paid all taxes, assessments, fees and other charges levied upon it or upon
its properties that are shown thereon as due and payable, other than those that
are being contested in good faith and by proper proceedings and for which
adequate reserves have been established in accordance with Generally Accepted
Accounting Principles. Such returns are true, correct and complete in all
material respects. There is no ongoing audit or examination or other
investigation by any Governmental Authority of the tax liability of the Borrower
or any of its Subsidiaries, and there is no unresolved claim by any Governmental
Authority concerning the tax liability of the Borrower or any of its
Subsidiaries for any period for which tax returns have been or were required to
have been filed, other than (i) the ongoing audit of the former parent of the
Borrower, Prudential Insurance Company of America, in connection with the
consolidated federal income tax returns for periods prior to October 1995 and
(ii) claims for which adequate reserves have been established in accordance with
Generally Accepted Accounting Principles. Except in connection with the
consolidated federal income tax returns for periods prior to October 1995,
neither the Borrower nor any of its Subsidiaries has waived or extended or has
been requested to waive or extend the statute of limitations relating to the
payment of any taxes.
4.7. Subsidiaries. Schedule 4.7 sets forth a list, as of the Closing Date,
of all of the Subsidiaries of the Borrower and, as to each such Subsidiary, the
percentage ownership (direct and indirect) of the Borrower in each class of its
capital stock and each direct owner thereof. All of the issued and outstanding
shares of capital stock of Everest Re are directly owned and held by the
Borrower.
4.8. Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Lender in writing by or on behalf of the
Borrower or any of its Subsidiaries for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all other such
factual information hereafter furnished to the Lender in writing by or on behalf
of the Borrower or any of its Subsidiaries will be, true and accurate in all
material respects on the date as of which such information is dated or
certified (or, if such information has been amended or supplemented, on the
date as of which any such amendment or supplement is dated or certified) and
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not made incomplete by omitting to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which such
information was provided, not misleading.
4.9. Margin Regulations. Neither the Borrower nor any of its Subsidiaries
is engaged principally or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock. No
proceeds of the Loans will be used, directly or indirectly, for any purpose that
would violate or be inconsistent with Regulations G, T, U or X or any provision
of the Exchange Act. Following the application of the proceeds of the Loan, less
than 25% of the value (as determined by any reasonable method) of the assets of
the Borrower and its Subsidiaries will be represented by Margin Stock.
4.10. No Material Adverse Change. There has been no Material Adverse
Change since December 31, 1996, and there exists no event, condition or state of
facts that could reasonably be expected to result in a Material Adverse Change.
4.11. Financial Matters. (a) The Borrower has heretofore furnished to the
Lender copies of (i) the audited consolidated balance sheets of the Borrower and
its Subsidiaries as of December 31, 1996, 1995 and 1994 and the related
statements of income, stockholders' equity and cash flows for the fiscal years
then ended, together with each opinion of the independent certified public
accounting firm retained by the borrower thereon, and (ii) the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as of March 31,
1997, and the related statements of income, stockholders' equity and cash flows
for the three-month period then ended. Such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles (subject,
with respect to the unaudited financial statements, to the absence of notes
required by Generally Accepted Accounting Principles and to normal year-end
audit adjustments) and present fairly the financial condition of the Borrower
and its Subsidiaries on a consolidated basis as of the respective dates thereof
and the consolidated results of operations of the Borrower and its Subsidiaries
for the respective periods then ended. Except as fully reflected in the most
recent financial statements referred to above and the notes thereto, there are
no material liabilities or obligations with respect to the Borrower or any of
its Subsidiaries of any nature whatsoever (whether absolute, contingent or
otherwise and whether or not due).
(b) The Borrower has heretofore furnished to the Lender copies of (i) the
Annual Statements of each of Everest Re and Everest National as of December 31,
1996, 1995 and 1994 and for the fiscal years then ended, each as filed
with the relevant Insurance Regulatory Authority, and (ii) the Quarterly
Statements of each of Everest Re and Everest National as of March 31, 1997,
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and for the three-month period then ended, each as filed with the relevant
Insurance Regulatory Authority (collectively, the "Historical Statutory
Statements"). The Historical Statutory Statements (including, without
limitation, the provisions made therein for investments and the valuation
thereof, reserves, policy and contract claims and statutory liabilities) have
been prepared, in all material respects, in accordance with Statutory Accounting
Principles (except as may be reflected in the notes thereto and subject, with
respect to the Quarterly Statements, to the absence of notes required by
Statutory Accounting Principles and to normal year-end adjustments), were ,in
all material respects, in compliance with applicable Requirements of Law when
filed and present fairly the financial condition of the respective Insurance
Subsidiaries covered thereby as of the respective dates thereof and the results
of operations, changes in capital and surplus and cash flow of the respective
Insurance Subsidiaries covered thereby for the respective periods then ended.
Except for liabilities and obligations disclosed or provided for in the
Historical Statutory Statements (including, without limitation, reserves, policy
and contract claims and statutory liabilities), no Insurance Subsidiary had, as
of the date of its respective Historical Statutory Statements, any material
liabilities or obligations of any nature whatsoever (whether absolute,
contingent or otherwise and whether or not due) that, in accordance with
Statutory Accounting Principles, would have been required to have been disclosed
or provided for in such Historical Statutory Statements. All books of account of
each Insurance Subsidiary fully and fairly disclose all of its material
transactions, properties, assets, investments, liabilities and obligations, are
in its possession and are true, correct and complete in all material respects.
(c) Each of the Borrower and its Subsidiaries, after giving effect to the
consummation of the transactions contemplated hereby, (i) will have capital
sufficient to carry on its businesses as conducted and as proposed to be
conducted, (ii) will have assets with a fair saleable value, determined on a
going concern basis, (y) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (z)
greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) will not intend to, and will not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.
4.12. Ownership of Properties. Each of the Borrower and its Subsidiaries
(i) has good and marketable title to all real property owned by it,
(ii) holds interests as lessee under valid leases in full force and effect
with respect to all material leased real and personal property used in
connection with its business, and (iii) has good title to all of its
other properties and assets reflected in the most recent financial
statements referred to in Section 4.11(a) (except as sold or
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otherwise disposed of since the date thereof in the ordinary course of
business), in each case under (i), (ii) and (iii) above free and clear of all
Liens other than Permitted Liens.
4.13. ERISA. Each Plan is and has been administered in compliance in all
material respects with all applicable Requirements of Law, including, without
limitation, the applicable provisions of ERISA and the Internal Revenue Code. No
ERISA Event has occurred and is continuing or, to the knowledge of the Borrower,
is reasonably expected to occur with respect to any Plan, in either case that
would individually or in the aggregate, have a Material Adverse Effect. No Plan
has any Unfunded Pension Liability, and neither the Borrower nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA, in either instance where the same would individually or in the
aggregate have a Material Adverse Effect. Neither the Borrower nor any ERISA
Affiliate is required to contribute to or has, or has at any time had, any
liability to a Multiemployer Plan.
4.14. Environmental Matters. (a) No Hazardous Substances are or have been
generated, used, located, released, treated, disposed of or stored by the
Borrower or any of its Subsidiaries or, to the knowledge of the Borrower, by any
other Person or otherwise, in, on or under any portion of any real property,
leased or owned, of the Borrower or any of its Subsidiaries, except in
compliance with all applicable Environmental Laws, and no portion of any such
real property or, to the knowledge of the Borrower, any other real property at
any time leased, owned or operated by the Borrower or any of its Subsidiaries,
has been contaminated by any Hazardous Substance; and no portion of any real
property, leased or owned, of the Borrower or any of its Subsidiaries has been
or, to the knowledge of the Borrower, is presently the subject of an
environmental audit, assessment or remedial action.
(b) To the knowledge of the Borrower, (i) no portion of any real property,
leased or owned, of the Borrower or any of its Subsidiaries has been used as or
for a mine, a landfill, a dump or other disposal facility, a gasoline service
station, or (other than for petroleum substances stored in the ordinary course
of business) a petroleum products storage facility, (ii) no portion of such real
property or any other real property at any time leased, owned or operated by the
Borrower or any of its Subsidiaries has, pursuant to any Environmental Law, been
placed on the "National Priorities List" or "CERCLIS List" (or any similar
federal, state or local list) of sites subject to possible environmental
problems, and (iii) there are not and have never been any underground storage
tanks situated on any real property, leased or owned, of the Borrower or any of
its Subsidiaries.
(c) Except as disclosed in the Borrower's 1996 Form 10-K,
(i) all activities and operations of the Borrower and its
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Subsidiaries are in compliance with the requirements of all applicable
Environmental Laws, except to the extent the failure so to comply, individually
or in the aggregate, would not have a Material Adverse Effect; (ii) neither the
Borrower nor any of its Subsidiaries is involved in any suit, action or
proceeding, or has received any notice, complaint or other request for
information from any Governmental Authority or other Person, with respect to any
actual or alleged Environmental Claims that, if adversely determined, would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect; and (iii) to the knowledge of the Borrower, there are no threatened
actions, suits, proceedings or investigations with respect to any such
Environmental Claims, nor any basis therefor.
4.15. Compliance With Laws. Each of the Borrower and its Subsidiaries has
timely filed all material reports, documents and other materials required to be
filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and operation of its properties, except for such
Requirements of Law the failure to comply with which, individually or in the
aggregate, would not have a Material Adverse Effect.
4.16. Regulated Industries. Neither the Borrower nor any of its
Subsidiaries is (i) an "investment company," a company "controlled" by an
"investment company, " or an "investment advisor," within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a "holding company," a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.17. Insurance. The assets, properties and business of the Borrower and
its Subsidiaries are insured against such hazards and liabilities, under such
coverages and in such amounts, as are customarily maintained by prudent
companies similarly situated and under policies issued by insurers of recognized
responsibility. No notice of any pending or threatened cancellation or material
premium increase has been received by the Borrower or any of its Subsidiaries
with respect to any such policies, and the Borrower and each of its Subsidiaries
are in substantial compliance with all conditions contained therein.
ARTICLE V
AFFIRMATIVE COVENANTS
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The Borrower covenants and agrees that, until the termination of the
Commitment and the payment in full of all principal and interest with respect to
the Loans together with all other amounts then due and owing hereunder:
5.1. GAAP Financial Statements. The Borrower will deliver to the Lender:
(a) As soon as available and in any event within fifty-five (55) days after
the end of each of the first three fiscal quarters of each fiscal year,
beginning with the fiscal quarter ending June 30, 1997, unaudited consolidated
and, to the extent otherwise prepared for external distribution, consolidating
balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal
quarter and unaudited consolidated and, to the extent otherwise prepared for
external distribution, consolidating statements of income, stockholders equity
and cash flows for the Borrower and its Subsidiaries for the fiscal quarter then
ended and for that portion of the fiscal year then ended, in each case setting
forth comparative consolidated or consolidating figures as of the end of and for
the corresponding period in the preceding fiscal year, all prepared in
accordance with Generally Accepted Accounting Principles (subject to the absence
of notes required by Generally Accepted Accounting Principles and subject to
normal year-end audit adjustments) applied on a basis consistent with that of
the preceding quarter or containing disclosure of the effect on the financial
condition or results of operations of any change in the application of
accounting principles and practices during such quarter; and
(b) As soon as available and in any event within 105 days after the end of
each fiscal year, beginning with the fiscal year ending December 31, 1997, (i)
an audited consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such fiscal year and audited consolidated statements of income,
stockholders' equity and cash flows for the Borrower and its Subsidiaries for
the fiscal year then ended, including the applicable notes, in each case setting
forth comparative figures as of the end of and for the preceding fiscal year,
certified by the independent certified public accounting firm regularly retained
by the Borrower or another independent certified public accounting firm of
recognized national standing reasonably acceptable to the Lender, together with
(y) a report thereon by such accountants that is not qualified as to going
concern or scope of audit and to the effect that such financial
statements present fairly the consolidated financial condition and results
of operations of the Borrower and its Subsidiaries as of the dates and for
the periods indicated in accordance with Generally Accepted Accounting
Principles applied on a basis consistent with that of the preceding
year or containing disclosure of the effect on the financial position or
results of operations of any change in the application of accounting principles
and practices during such year, and (z) a report by such accountants to the
effect that, based on and in connection with their examination of the
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financial statements of the Borrower and its Subsidiaries, they obtained no
knowledge of the occurrence or existence of any Default or Event of Default
relating to accounting or financial reporting matters, or a statement specifying
the nature and period of existence of any such Default or Event of Default
disclosed by their audit; provided, however, that such accountants shall not be
liable by reason of the failure to obtain knowledge of any Default or Event of
Default that would not be disclosed or revealed in the course of their audit
examination, and (ii) to the extent otherwise prepared, an unaudited
consolidating balance sheet of the Borrower and its Subsidiaries as of the end
of such fiscal year and unaudited consolidating statements of income,
stockholders' equity and cash flows for the Borrower and its Subsidiaries for
the fiscal year then ended, all in reasonable detail.
5.2. Statutory Financial Statements. The Borrower will deliver to the
Lender:
(a) As soon as available and in any event within fifty-five (55) days after
the end of each of the first three fiscal quarters of each fiscal year (or, in
the case of Everest Insurance Company of Canada, within fifteen (15) days after
the required filing date), beginning with the fiscal quarter ending June 30,
1997, a Quarterly Statement of each Insurance Subsidiary as of the end of such
fiscal quarter and for that portion of the fiscal year then ended, in the form
filed with the relevant Insurance Regulatory Authority, prepared in accordance
with Statutory Accounting Principles applied on a basis consistent with that of
the preceding quarter or containing disclosure of the effect on the financial
condition or results of operations of any change in the application of
accounting principles and practices during such quarter; and
(b) As soon as available and in any event within seventy-five (75) days
after the end of each fiscal year (or, in the case of Everest Insurance Company
of Canada, within fifteen (15) days after the required filing date), beginning
with the fiscal year ending December 31, 1997, an Annual Statement of each
Insurance Subsidiary as of the end of such fiscal year and for the fiscal year
then ended, in the form filed with the relevant Insurance Regulatory Authority,
prepared in accordance with Statutory Accounting Principles applied on a basis
consistent with that of the preceding year or containing disclosure of the
effect on the financial condition or results of operations of any change in the
application of accounting principles and practices during such year;
(c) As soon as available and in any event within 135 days after the end of
each fiscal year, beginning with the fiscal year ending December 31,
1997, an unaudited consolidated balance sheet of the Borrower and its
Insurance Subsidiaries (other than Everest Insurance Company of Canada) as
of the end of such fiscal year and unaudited consolidated statements of income,
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stockholders' equity and cash flows for the Borrower and such Insurance
Subsidiaries for the fiscal year then ended, in each case setting forth
comparative consolidated figures as of the end of and for the preceding fiscal
year, all prepared in accordance with Statutory Accounting Principles applied on
a basis consistent with that of the preceding year or containing disclosure of
the effect on the financial condition or results of operations of any change in
the application of accounting principles and practices during such year; and
(d) As soon as available and in any event within 165 days after the end of
each fiscal year, beginning with the fiscal year ending December 31, 1996 (but
only if and to the extent required by the applicable Insurance Regulatory
Authority with regard to any Insurance Subsidiary), a certification by the
independent certified public accounting firm referred to in Section 5.1(b) as to
the Annual Statement of each such Insurance Subsidiary as of the end of such
fiscal year and for the fiscal year then ended, together with a report thereon
by such accountants that is not qualified as to going concern or scope of audit
and to the effect that such financial statements present fairly the consolidated
financial condition and results of operations of such Insurance Subsidiary as of
the date and for the period indicated in accordance with Statutory Accounting
Principles applied on a basis consistent with that of the preceding year or
containing disclosure of the effect on the financial position or results of
operations of any change in the application of accounting principles and
practices during such year.
5.3. Other Business and Financial Information. The Borrower will deliver to
the Lender:
(a) Concurrently with each delivery of the financial statements described
in Section 5.1, a Compliance Certificate in the form of Exhibit D with respect
to the period covered by the financial statements then being delivered, executed
by the chief financial officer, comptroller or treasurer of the Borrower,
together, with a Covenant Compliance Worksheet reflecting the computation of the
financial covenants set forth in Section 6.1 and Section 6.2, as of the last day
of the period covered by such financial statements;
(b) Promptly upon filing with the relevant Insurance Regulatory Authority
and in any event within 105 days after the end of each fiscal year (or, in the
case of Everest Insurance Company of Canada, within fifteen (15) days of the
required filing date), beginning with the fiscal year ended December 31, 1997, a
copy of each Insurance Subsidiary's "Statement of Actuarial Opinion"
(or equivalent information should the relevant Insurance Regulatory Authority
not require such a statement) as to the adequacy of such Insurance Subsidiary's
loss reserves for such fiscal year, together with a copy of its management
discussion and analysis in connection therewith (but only if and
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to the extent required by the applicable Insurance Regulatory Authority with
regard to such Insurance Subsidiary), each in the format prescribed by the
applicable insurance laws of such Insurance Subsidiary's jurisdiction of
domicile;
(c) Promptly upon the sending, filing or receipt thereof, copies of (i) all
financial statements, reports, notices and proxy statements that the Borrower or
any of its Subsidiaries shall send or make available generally to its
shareholders, (ii) all reports (other than earnings press releases) on Form
10-Q, Form 10-K or Form 8-K (or their successor forms) or registration
statements and prospectuses (other than on Form S-8 or its successor form) that
the Borrower or any of its Subsidiaries shall render to or file with the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc. or any national securities exchange, (iii) all reports on Form A
or Form B (or their successor forms) that any Insurance Subsidiary shall file
with any Insurance Regulatory Authority, (iv) all material reports on
examination or similar material reports, financial examination reports or market
conduct examination reports by the NAIC or any Insurance Regulatory Authority or
other Governmental Authority with respect to any Insurance Subsidiary's
insurance business, and (v) all material filings made under applicable state
insurance holding company acts by the Borrower or any of its Subsidiaries,
including, without limitation, filings seeking approval of transactions with
Affiliates;
(d) Promptly upon (and in any event within five (5) Business Days after)
obtaining knowledge thereof, written notice of any of the following:
(i) the occurrence of any Default or Event of Default,
together with a written statement of the chief executive
officer, chief financial officer or treasurer of the Borrower
specifying the nature of such Default or Event of Default, the
period of existence thereof and the action that the Borrower
has taken and proposes to take with respect thereto;
(ii) the institution or threatened institution of any
action, suit, investigation or proceeding against or affecting
the Borrower or any of its Subsidiaries, including any such
investigation or proceeding by any Insurance Regulatory
Authority or other Governmental Authority (other than routine
periodic inquiries, investigations or reviews), that would, if
adversely determined, individually or in the aggregate, have,
or be reasonably likely to have, a Material Adverse Effect,
and any material development in any litigation or other
proceeding previously reported pursuant to Section 4.5 or this
Section 5.3(d)(ii);
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(iii) the receipt by the Borrower or any of its
Subsidiaries from any Insurance Regulatory Authority or other
Governmental Authority of (i) any notice asserting any failure
by the Borrower or any of its Subsidiaries to be in compliance
with applicable Requirements of Law or that threatens the
taking of any action against the Borrower or such Subsidiary
or sets forth circumstances that, if taken or adversely
determined, would have, or be reasonably likely to have, a
Material Adverse Effect, or (ii) any notice of any actual or
threatened suspension, limitation or revocation of, failure to
renew, or imposition of any restraining order, escrow or
impoundment of funds in connection with, any license, permit,
accreditation or authorization of the Borrower or any of its
Subsidiaries, where such action would have, or be reasonably
likely to have, a Material Adverse Effect;
(iv) the occurrence of any ERISA Event, together with (i)
a written statement of the chief executive officer, chief
financial officer, comptroller or treasurer of the Borrower
specifying the details of such ERISA Event and the action that
the Borrower has taken and proposes to take with respect
thereto, (ii) a copy of any notice with respect to such ERISA
Event that may be required to be filed with the PBGC and (iii)
a copy of any notice delivered by the PBGC to the Borrower or
such ERISA Affiliate with respect to such ERISA Event;
(v) the occurrence of any decrease in (y) the rating
given by either Standard & Poor's or Moody's with respect to
Everest Re's claims paying ability or insurance strength
rating or (z) the rating given to any Insurance Subsidiary by
A.M. Best & Company; and
(vi) any other matter or event that has, or would have, a
Material Adverse Effect, together with a written statement
of the chief executive officer, chief financial officer,
comptroller or treasurer of the Borrower setting forth the
nature and period of existence thereof and the action that
the Borrower has taken and proposes to take with respect
thereto; and
(e) As promptly as reasonably possible, such other information about the
business, condition (financial or otherwise), operations or properties of the
Borrower or any of its Subsidiaries as the Lender may from time to time
reasonably request.
5.4. Corporate Existence; Franchises; Maintenance of Properties.
The Borrower will, and will cause each of its Subsidiaries
to, (i) maintain and preserve in full force and
effect its corporate existence, (ii) obtain, maintain and
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preserve in full force and effect all other rights, franchises, licenses,
permits, certifications, approvals and authorizations required by Governmental
Authorities and necessary to the ownership, occupation or use of its properties
or the conduct of its business, except to the extent the failure to do so would
not be reasonably likely to have a Material Adverse Effect, (iii) continue to
conduct and operate its businesses substantially as conducted and operated
during the present and preceding fiscal years and (iv) keep all material
properties in good working order and condition (normal wear and tear excepted)
and from time to time make all necessary repairs to and renewals and
replacements of such properties, except to the extent that any of such
properties are obsolete or are being replaced.
5.5. Compliance with Laws. The Borrower will, and will cause each of its
Subsidiaries to, comply in all respects with all Requirements of Law applicable
in respect of the conduct of its business and the ownership and operation of its
properties, except to the extent the failure so to comply would not have, or be
reasonably likely to have, a Material Adverse Effect.
5.6. Payment of Obligations. The Borrower will, and will cause each of its
Subsidiaries to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not have, or be reasonably likely to have, a Material
Adverse Effect, and (ii) pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it, upon its income or profits or
upon any of its properties, prior to the date on which penalties would attach
thereto, and all lawful claims that, if unpaid, might become a Lien upon any of
the properties of the Borrower or any of its Subsidiaries; provided, however,
that neither the Borrower nor any of its Subsidiaries shall be required to pay
any such tax, assessment, charge, levy or claim that is being contested in good
faith and by proper proceedings and as to which the Borrower or such Subsidiary
is maintaining adequate reserves with respect thereto in accordance with
Generally Accepted Accounting Principles.
5.7. Insurance. The Borrower will, and will cause each of its Subsidiaries
to, maintain with financially sound and reputable insurance companies insurance
with respect to its assets, properties and business, against such hazards and
liabilities, of such types and in such amounts, as is customarily maintained by
companies in the same or similar businesses similarly situated; provided that
the Borrower and its Subsidiaries may self-insure against risks consistent with
customary industry practices for companies in the same or similar businesses, of
similar size and with similar risk parameters.
5.8. Maintenance of Books and Records; Inspection. The Borrower will,
and will cause each of its Subsidiaries to, (i) maintain
adequate books, accounts and records, in which full,
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true and correct entries shall be made of all financial transactions in relation
to its business and properties, and prepare all financial statements required
under this Agreement, in each case in accordance with Generally Accepted
Accounting Principles or Statutory Accounting Principles, as applicable, and in
compliance with the requirements of any Governmental Authority having
jurisdiction over it, and (ii) permit employees or agents of the Lender to
inspect its properties and examine or audit its books, records, working papers
and accounts and make copies and memoranda of them, and to discuss its affairs,
finances and accounts with its officers and employees and, upon notice to the
Borrower, the independent public accountants of the Borrower and its
Subsidiaries (and by this provision the Borrower authorizes such accountants to
discuss the finances and affairs of the Borrower and its Subsidiaries), all at
such times and from time to time, upon reasonable notice and during business
hours, as may be reasonably requested.
5.9. Dividends. The Borrower will take all action necessary to cause its
Subsidiaries to make such dividends, distributions or other payments to the
Borrower as shall be necessary for the Borrower to make payments of the
principal of and interest on the Loans in accordance with the terms of this
Agreement. In the event the approval of any Governmental Authority or other
Person is required in order for any such Subsidiary to make any such dividends,
distributions or other payments to the Borrower, or for the Borrower to make any
such principal or interest payments, the Borrower will forthwith exercise its
best efforts and take all actions permitted by law and necessary to obtain such
approval.
5.10. Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Lender to effect,
confirm or further assure or protect and preserve the interests, rights and
remedies of the Lender under this Agreement and the other Credit Documents.
ARTICLE VI
FINANCIAL COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitment and the payment in full of all principal and interest with respect to
the Loans together with all other amounts then due and owing hereunder:
6.1. Capitalization Ratio. The Borrower will not permit the
Capitalization Ratio to be greater than 0.35 to 1.0
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as of the last day of any fiscal quarter, beginning with the fiscal quarter
ending June 30, 1997.
6.2. Statutory Surplus. The Borrower will not permit the Statutory Surplus
of Everest Re to be less than $575,000,000 at any time.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitment and the payment in full of all principal and interest with respect to
the Loans together with all other amounts then due and owing hereunder:
7.1. Fundamental Changes. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, liquidate, wind up or dissolve, or enter into
any consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that the Borrower or any Subsidiary may merge into
or consolidate with any other Person so long as (y) the surviving corporation is
the Borrower or a Wholly Owned Subsidiary of the Borrower (and in any event, if
the Borrower is a party to such merger or consolidation, the surviving
corporation shall be the Borrower), and (z) immediately after giving effect
thereto, no Default or Event of Default would exist.
7.2. Indebtedness. The Borrower will not create, incur, assume or suffer to
exist, and will not permit or cause any of its Subsidiaries to create, incur, or
knowingly assume or suffer to exist, any Indebtedness that ranks senior in any
respect to the Indebtedness under this Agreement (or any portion thereof) as to
payment or performance or as to dividends or distributions upon bankruptcy,
insolvency, liquidation or winding-up.
7.3. Liens. The Borrower will not, and will not permit or cause any of
its Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist, or enter into or suffer to exist any agreement or restriction
that prohibits or conditions the creation, incurrence or assumption of, any Lien
upon or with respect to any part of its property or assets, whether now owned or
hereafter acquired, or agree to do any of the foregoing, other than the
following (collectively, "Permitted Liens"):
(i) Liens in existence on the Closing Date and set forth
on Schedule 7.3;
(ii) Liens imposed by law, such as Liens
of carriers, warehousemen, mechanics, materialmen and
landlords, and other similar Liens incurred in the
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ordinary course of business for sums not constituting
borrowed money that are not overdue for a period of more
than thirty (30) days or that are being contested in good
faith by appropriate proceedings and for which adequate
reserves have been established in accordance with Generally
Accepted Accounting Principles;
(iii) Liens (other than any Lien imposed by ERISA, the
creation or incurrence of which would result in an Event of
Default under Section 8.1(i)) incurred in the ordinary
course of business in connection with worker's compensation,
unemployment insurance or other forms of governmental
insurance or benefits, or to secure the performance of letters
of credit, bids, tenders, statutory obligations, surety and
appeal bonds, leases, government contracts and other similar
obligations (other than obligations for borrowed money)
entered into in the ordinary course of business;
(iv) Liens for taxes, assessments or other governmental
charges or statutory obligations that are not delinquent or
remain payable without any penalty or that are being contested
in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with
Generally Accepted Accounting Principles;
(v) Liens in connection with pledges and deposits made
pursuant to statutory and regulatory requirements of
of Insurance Regulatory Authorities by an Insurance Subsidiary
in the ordinary course of its business, for the purpose of
securing regulatory capital or satisfying other financial
responsibility requirements;
(vi) Liens upon cash and United States government and
agency securities of the Borrower and its Subsidiaries,
securing obligations incurred in connection with reverse
repurchase transactions and other similar investment
management transactions of such types and in such amounts as
are customary for companies similar to the Borrower in size
and lines of business and that are entered into by the
Borrower and its Subsidiaries in the ordinary course of
business;
(vii) Purchase money Liens upon real or personal
property used by the Borrower or any of its Subsidiaries in
the ordinary course of its business, securing Indebtedness
incurred solely to pay all or a portion of the purchase price
thereof (including in connection with capital leases, and
including mortgages or deeds of trust upon real property and
improvements thereon), provided that the aggregate principal
amount at any time outstanding of all indebtedness secured by
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such Liens does not exceed an amount equal to 5% of the value
of the total assets of the Borrower and its Subsidiaries at
such time, determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles as of the date
of the financial statements of the Borrower and its
Subsidiaries most recently delivered under Section 5.1 prior
to such time (or, with regard to determinations at any time
prior to the initial delivery of financial statements under
Section 5.1, as of the date of the most recent financial
statements referred to in Section 4.11(a)), and provided
further that any such Lien (i) shall attach to such property
concurrently with or within ten (10) days after the
acquisition thereof by the Borrower or such Subsidiary, (ii)
shall not exceed the lesser of (y) the fair market value of
such property or (z) the cost thereof to the Borrower or such
Subsidiary and (iii) shall not encumber any other property of
the Borrower or any of its Subsidiaries;
(viii) Any attachment or judgment Lien not constituting an
Event of Default under Section 8.1(h) that is being contested
in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with
Generally Accepted Accounting Principles;
(ix) With respect to any real property occupied by the
Borrower or any of its Subsidiaries, all easements, rights
of way, licenses and similar encumbrances on title that do not
materially impair the use of such property for its intended
purposes; and
(x) Liens in favor of the trustee or agent under any
agreement or indenture relating to Indebtedness of the
Borrower and its Subsidiaries permitted under this Agreement,
covering sums required to be deposited with such trustee or
agent thereunder.
7.4. Disposition of Assets. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one or a series of transactions) all or any
portion of its assets, business or properties, or enter into any arrangement
with any Person providing for the lease by the Borrower or any Subsidiary as
lessee of any asset that has been sold or transferred by the Borrower or such
Subsidiary to such Person, or agree to do any of the foregoing, except for:
(i) sales of investments by the Insurance Subsidiaries in
the ordinary course of business;
(ii) the sale or exchange of used or obsolete
equipment to the extent (y) the proceeds of such sale
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are applied towards, or such equipment is exchanged for,
similar replacement equipment or (z) such equipment is no
longer necessary for the operations of the Borrower or its
applicable Subsidiary in the ordinary course of business;
(iii) the sale, lease or other disposition of assets
by a Subsidiary of the Borrower to the Borrower or to another
Wholly Owned Subsidiary, to the extent permitted by
applicable Requirements of Law and each relevant Insurance
Regulatory Authority, provided that (x) immediately after
giving effect thereto, no Default or Event of Default would
exist, (y) in no event shall the Borrower contribute, sell or
otherwise transfer, or permit Everest Re to issue or sell, any
of the capital stock of Everest Re to any other Subsidiary,
and (z) such sale or disposition would not adversely affect
the ability of any Insurance Subsidiary party thereto to pay
dividends or otherwise make distributions to its parent;
(iv) the sale or disposition of assets outside the
ordinary course of business, provided that (w) the net
proceeds from any such sale or disposition do not exceed an
amount equal to the least of the following: (1)10% of the
total assets of the Borrower and its Subsidiaries on a
consolidated basis, (2) 10% of the total revenues of the
Borrower and its Subsidiaries on a consolidated basis, and
(3)10% of the total net earnings of the Borrower and its
Subsidiaries on a consolidated basis, in each case as
determined as of the date of the financial statements of the
Borrower and its Subsidiaries most recently delivered under
Section 5.1 prior to such time (or, with regard to
determinations at any time prior to the initial delivery of
financial statements under Section 5.1, as of the date of the
most recent financial statements referred to in Section
4.11(a)), (x) immediately after giving effect thereto, no
Default or Event of Default would exist, and (y) in no event
shall the Borrower or any of its Subsidiaries sell or
otherwise dispose of any of the capital stock or other
ownership interests of Everest Re or any other Subsidiary.
7.5. Transactions with Affiliates. The Borrower will not, and will not
permit or cause any of its Subsidiaries to, enter into any transaction with any
officer, director, stockholder or other Affiliate of the Borrower or any
Subsidiary, except in the ordinary course of its business and upon fair and
reasonable terms that are no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person other than an Affiliate of the
Borrower or such Subsidiary; provided, however, that nothing contained in this
Section shall prohibit:
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(i) transactions between and among the Borrower and its
Wholly Owned Subsidiaries or between and among Wholly Owned
Subsidiaries of the Borrower; provided, however, that such
transactions are made upon fair and equitable terms;
(ii) transactions under incentive compensation plans,
stock option plans and other employee benefit plans,
and loans and advances from the Borrower or any of its
Subsidiaries to its officers, in each case that have been
approved by the board of directors, or a committee thereof, of
the Borrower or any of its Subsidiaries; and
(iii) the payment by the Borrower of reasonable and
customary fees to members of its board of directors.
7.6. Lines of Business. The Borrower will not, and will not permit or cause
any of its Subsidiaries to, engage to any substantial degree in any business
other than the reinsurance business and other businesses engaged in by the
Borrower and its Subsidiaries on the date hereof or a business reasonably
related thereto.
7.7. Fiscal Year. The Borrower will not, and will not permit or cause any
of its Subsidiaries to, change the ending date of its fiscal year to a date
other than December 31 unless (i) the Borrower shall have given the Lender
written notice of its intention to change such ending date at least sixty (60)
days prior to the effective date thereof and (ii) prior to such effective date
this Agreement shall have been amended to make any changes in the financial
covenants and other terms and conditions to the extent necessary, in the
reasonable determination of the Lender, to reflect the new fiscal year ending
date.
7.8. Accounting Changes. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, make or permit any material change in its
accounting policies or reporting practices, except as may be required or
permitted by Generally Accepted Accounting Principles or Statutory Accounting
Principles, as applicable.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay any principal of or interest
on any Loan, any fee or any other Obligation, under this
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Agreement when due, however with respect to interest on any Loan and any fees
the Borrower shall have a grace period of three (3) Business Days;
(b) The Borrower shall fail or fail to cause its Subsidiaries to observe,
perform or comply with any condition, covenant or agreement contained in any of
Sections 2.12, 5.3(d)(i) or 5.4(i), Article VI, or Sections 7.1 through 7.4,
inclusive;
(c) The Borrower or any of its Subsidiaries shall fail to observe, perform
or comply with any condition, covenant or agreement contained in this Agreement
or any of the other Credit Documents other than those enumerated in subsections
(a) and (b) above, and such failure shall continue unremedied for any grace
period specifically applicable thereto or, if no such grace period is
applicable, for a period of thirty (30) days after the Borrower acquires
knowledge thereof;
(d) Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries in this Agreement, any of the other
Credit Documents or in any certificate, instrument, report or other document
furnished in connection herewith or therewith or in connection with the
transactions contemplated hereby or thereby shall prove to have been false or
misleading in any material respect as of the time made, deemed made or
furnished;
(e) The Borrower or any of its Subsidiaries shall (i) fail to pay when due
(whether by scheduled maturity, acceleration or otherwise and after giving
effect to any applicable grace period) any principal of or interest on any
material Indebtedness (other than the Indebtedness incurred pursuant to this
Agreement) having an aggregate principal amount of at least $5,000,000; or (ii)
fail to observe, perform or comply with any condition, covenant or agreement
contained in any agreement or instrument evidencing or relating to any such
material Indebtedness, or any other event shall occur or condition exist in
respect thereof, and the effect of such failure, event or condition is to cause,
or permit the holder or holders of such material Indebtedness (or a trustee or
agent on its or their behalf) to cause (with the giving of notice, lapse of
time, or both), such material Indebtedness to become due, or to be prepaid,
redeemed, purchased or defeased, prior to its stated maturity;
(f) The Borrower or any of its Subsidiaries shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to controvert in a timely
and appropriate manner, any petition or case of the type
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described in subsection (g) below, (iii) apply for or consent to the appointment
of or taking possession by a custodian, trustee, receiver or similar official
for or of itself or all or a substantial part of its properties or assets, (iv)
fail generally, or admit in writing its inability, to pay its debts generally as
they become due, (v) make a general assignment for the benefit of creditors or
(vi) take any corporate action to authorize or approve any of the foregoing;
(g) Any involuntary petition or case shall be filed or commenced against
the Borrower or any of its Subsidiaries seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such
proceeding;
(h) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$5,000,000 shall be entered or filed against the Borrower or any of its
Subsidiaries or any of their respective properties, and (i) the same is not
dismissed, stayed or discharged within sixty (60) days or is not otherwise being
appropriately contested in good faith and in a manner reasonably satisfactory to
the Lender, or (ii) the same is not dismissed, stayed or discharged within five
(5) days prior to any proposed sale of assets of the Borrower or any Subsidiary
pursuant thereto, or (iii) any action shall be legally taken by a judgment
creditor to levy upon assets of the Borrower or any Subsidiary to enforce the
same;
(i) Any ERISA Event shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result thereof, together with all other ERISA
Events then existing, there shall exist a reasonable likelihood of liability to
any one or more Plans or Multiemployer Plans or to the PBGC (or to any
combination thereof) in excess of $5,000,000 with respect to the Borrower or any
ERISA Affiliate;
(j) Any Insurance Regulatory Authority or other Governmental Authority
having jurisdiction shall issue any order of conservation, supervision,
rehabilitation or liquidation or any other order of similar effect in respect of
any Insurance Subsidiary;
(k) Any one or more licenses, permits, accreditations or
authorizations of the Borrower or any of its Subsidiaries
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shall be suspended, limited or terminated or shall not be renewed, or any other
action shall be taken, by any Governmental Authority in response to any alleged
failure by the Borrower or any of its Subsidiaries to be in compliance with
applicable Requirements of Law, and such action, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect; or
(l) Any of the following shall occur: (i) any Person or group of Persons
acting in concert as a partnership or other group shall, as a result of a tender
or exchange offer, open market purchases, privately negotiated purchases or
otherwise, have become, after the date hereof, the "beneficial owner" (within
the meaning of such term under Rule 13d-3 under the Exchange Act) of securities
of the Borrower representing 20% or more of the combined voting power of the
then outstanding securities of the Borrower ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors; (ii) the Board of Directors of the Borrower shall cease to consist
of a majority of the individuals who constituted the Board of Directors of the
Borrower as of the date hereof or who shall have become a member thereof
subsequent to the date hereof after having been nominated, or otherwise approved
in writing, by at least a majority of individuals who constituted the Board of
Directors of the Borrower as of the date hereof (or their replacements approved
as herein required); or (iii) the Borrower shall cease to own directly 100% of
the issued and outstanding capital stock of Everest Re.
8.2. Remedies; Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Lender shall take any or all of the following actions at the same
or different times:
(a) Declare the Commitment to be terminated, whereupon the same shall
terminate (provided that, upon the occurrence of an Event of Default pursuant to
Section 8.1(f), Section 8.1(g) or Section 8.1(j), the Commitment shall
automatically be terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to Section 8.1(f), Section 8.1(g) or Section 8.1(j),
all of the outstanding principal amount of the Loans and all
other amounts described in this subsection (b) shall automatically
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become immediately due and payable without presentment, demand, protest, notice
of intent to accelerate or other notice or legal process of any kind, all of
which are hereby knowingly and expressly waived by the Borrower); and
(c) Exercise all rights and remedies available to it under this Agreement,
the other Credit Documents and applicable law.
8.3. Remedies; Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law or otherwise, upon and at
any time after the occurrence and during the continuance of any Event of
Default, the Lender may, and is hereby authorized by the Borrower, at any such
time and from time to time, to the fullest extent permitted by applicable law,
without presentment, demand, protest or other notice of any kind, all of which
are hereby knowingly and expressly waived by the Borrower, to set off and to
apply any and all deposits (general or special, time or demand, provisional or
final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
the Lender to or for the credit or the account of the Borrower against any or
all of the Obligations to the Lender now or hereafter existing, whether or not
such Obligations may be contingent or unmatured, and the Borrower hereby grants
to the Lender a continuing security interest in and Lien upon all such deposits
and other property as security for such Obligations. The Lender agrees to notify
the Borrower promptly after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.
ARTICLE IX
MISCELLANEOUS
9.1. Fees and Expenses. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Lender (including,
without limitation, the reasonable fees and expenses of counsel to the Lender)
in connection with the preparation, negotiation, interpretation, administration,
execution, and delivery of this Agreement and the other Credit Documents, and
any amendment, modification or waiver hereof or thereof or consent with respect
hereto or thereto, (ii) to pay upon demand all reasonable out-of-pocket costs
and expenses of the Lender (including, without limitation, the reasonable fees
and expenses of counsel to the Lender) in connection with (y) any
refinancing or restructuring of the credit arrangement provided under this
Agreement, whether in the nature of a "work-out," in any insolvency
or bankruptcy proceeding or otherwise and whether or not consummated,
and (z) the enforcement, attempted enforcement or preservation of any
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rights or remedies under this Agreement or any of the other Credit Documents,
whether in any action, suit or proceeding (including any bankruptcy or
insolvency proceeding) or otherwise, and (iii) to pay and hold harmless the
Lender from and against all liability for any intangibles, documentary, stamp or
other similar taxes, fees and excises, if any, including any interest and
penalties, and any finder's or brokerage fees, commissions and expenses (other
than any fees, commissions or expenses of finders or brokers engaged by the
Lender), that may be payable in connection with the transactions contemplated by
this Agreement and the other Credit Documents.
9.2. Indemnification. The Borrower agrees, whether or not the transactions
contemplated by this Agreement shall be consummated, to indemnify and hold
harmless the Lender and each of its respective directors, officers, employees,
agents and Affiliates (each, an "Indemnified Person") from and against any and
all claims, losses, damages, obligations, liabilities, penalties, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) of any kind or nature whatsoever, whether direct, indirect or
consequential (collectively, "Indemnified Costs"), that may at any time be
imposed on, incurred by or asserted against any such Indemnified Person as a
result of, arising from or in any way relating to the preparation, execution,
performance or enforcement of this Agreement or any of the other Credit
Documents, any of the transactions contemplated herein or therein or any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loans, or any action, suit or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, related to any of the foregoing, and in any case whether or not such
Indemnified Person is a party to any such action, proceeding or suit or a
subject of any such inquiry or investigation; provided, however, that no
Indemnified Person shall have the right to be Indemnified hereunder for any
Indemnified Costs to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Person. All of the foregoing Indemnified Costs of
any Indemnified Person shall be paid or reimbursed by the Borrower, as and when
incurred and upon demand.
9.3. GOVERNING LAW. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW JERSEY (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF).
9.4. WAIVER OF TRIAL BY JURY. EACH PARTY HEREBY EXPRESSLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OF THE CREDIT DOCUMENTS
TO WHICH IT IS A PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT OR ANY CREDIT DOCUMENT, AND AGREES THAT ANY SUCH ACTION
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OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
9.5. Notices. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered to the party to be notified at the following addresses:
(a) if to the Borrower, Everest Reinsurance Holdings,
Inc., Westgate Corporate Center, 477 Martinville Road, P.O.
Box 830, Liberty Corner, NJ 07938-0830, Attention: Stephen L.
Limauro, Telecopy No.: (908) 604-3412, Telephone No.: (908)
604-3150 (with a copy to Janet Melchione, Telecopy No.: (908)
604-3450, Telephone No.: (908) 604-3170);
(b) if to the Lender, to it at One First Union Center,
TW-10, 301 South College Street, Charlotte NC 28288-0608,
Attention: Lisa Monery, Telecopy No.: (704) 383-7611,
Telephone No.: (704) 383-0558;
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery.
9.6. Amendments Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the Borrower from,
any provision of this Agreement or any other Credit Document, shall be effective
unless in a writing signed by the Lender and then the same shall be effective
only in the specific instance and for the specific purpose for which given.
9.7. Assignments, Participations. (a) The Lender may, with the consent of
the Borrower, which shall not be unreasonably withheld (except during the
continuance of a Default, in which case no such consent shall be required),
assign to one or more other assignees (each, an "Assignee") all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the outstanding Loans made
by it and the Note or Notes held by it) and from and after the
effective date of such assignment (a) the Assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
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been assigned to it, shall have the rights and obligations of the Lender
hereunder with respect thereto and (B) the Lender shall, to the extent that
rights and obligations hereunder have been assigned by it, relinquish its rights
(other than rights under the provisions of this Agreement and the other Credit
Documents relating to indemnification or payment of fees, costs and expenses, to
the extent such rights relate to the time prior to the effective date of such
assignment) and be released from its obligations under this Agreement (and, in
the case of an assignment covering all or the remaining portion of the Lender's
rights and obligations under this Agreement, the Lender shall cease to be a
party hereto).
(b) Upon its receipt of the Note, the Borrower will execute and deliver to
such Assignee in exchange for the surrendered Note a new Note to the order of
such Assignee in an aggregate principal amount equal to the principal amount of
the Commitment (or, if the Commitments have been terminated, the principal
amount of the Loans) assumed by it pursuant to such assignment and, to the
extent the Lender has retained its Loans and/or Commitment hereunder, a new Note
to the order of the Lender in an aggregate principal amount equal to the
principal amount of the Commitment (or, if the Commitment has been terminated,
the principal amount of the Loans) retained by it hereunder. Such new Note shall
be dated the date of the replaced Note and shall otherwise be in substantially
the form of Exhibit A. The Lender will return the cancelled Note to the
Borrower.
(c) The Lender may, without the consent of the Borrower sell to one or more
other Persons (each, a " Participant") participations in any portion comprising
less than all of its rights and obligations under this Agreement (including,
without limitation, a portion of its Commitment, the outstanding Loans made by
it and the Note or Notes held by it); provided, however, that the Lender's
obligations under this Agreement shall remain unchanged and the Lender shall
remain solely responsible for the performance of such obligations.
(d) Nothing in this Agreement shall be construed to prohibit the Lender
from pledging or assigning all or any portion of its rights and interest
hereunder or under the Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release the Lender from any of its obligations hereunder.
(e) The Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section, disclose to the
Assignee or Participant or proposed Assignee or Participant any information
relating to the Borrower and its Subsidiaries furnished to it by or on behalf of
any other party hereto, provided that such Assignee or Participant or proposed
Assignee or Participant agrees in writing to keep such information confidential
to the same extent required of the Lender under Section 9.13.
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(f) In connection with any assignment hereunder to an Assignee that is not
incorporated under the laws of the United States, such Assignee will be required
to deliver to the Borrower a duly completed copy of United States Internal
Revenue Service Form 1001 or 4224, certifying that such Assignee is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes.
9.8. No Waiver. The rights and remedies of the Lender expressly set forth
in this Agreement and the other Credit Documents are cumulative and in addition
to, and not exclusive of, all other rights and remedies available at law, in
equity or otherwise. No failure or delay on the part of the Lender in exercising
any right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege or be construed to be a waiver of any Default or Event of Default. No
course of dealing between the Borrower and the Lender or their agents or
employees shall be effective to amend, modify or discharge any provision of this
Agreement or any other Credit Document or to constitute a waiver of any Default
or Event of Default. No notice to or demand upon the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the right of the Lender to
exercise any right or remedy or take any other or further action in any
circumstances without notice or demand.
9.9. Successors and Assigns. This Agreement shall be binding upon, inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, and all references herein to any party shall be deemed to
include its successors and assigns; provided, however, that (i) the Borrower
shall not sell, assign or transfer any of its rights, interests, duties or
obligations under this Agreement or any other Credit Document without the prior
written consent of the Lender and (ii) any Assignees shall have such rights and
obligations with respect to this Agreement and the other Credit Documents as are
provided for under and pursuant to the provisions of Section 9.7.
9.10. Survival. All representations, warranties and agreements made by or
on behalf of the Borrower or any of its Subsidiaries in this Agreement and in
the other Credit Documents shall survive the execution and delivery hereof or
thereof and the making and repayment of the Loans. In addition, notwithstanding
anything herein or under applicable law to the contrary, the provisions of this
Agreement and the other Credit Documents relating to indemnification or payment
of fees, costs and expenses, including, without limitation, the provisions of
Sections 2.13(a), 2.13(b), 2.14, 2.15, 9.1 and 9.2, shall survive the payment in
full of the Loans, the termination of the Commitment and any termination of this
Agreement or any of the other Credit Documents.
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9.11. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
9.12. Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
9.13. Confidentiality. The Lender agrees to keep confidential, pursuant to
its customary procedures for handling confidential information of a similar
nature and in accordance with safe and sound banking practices, all nonpublic
information provided to it by or on behalf of the Borrower or any of its
Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that the Lender may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors (provided such persons are informed of the confidential
nature of such nonpublic information and are instructed by the Lender to keep
such nonpublic information confidential to the same extent required hereunder),
(ii) at the demand or request of any bank regulatory authority, court or other
Governmental Authority having or asserting jurisdiction over the Lender, as may
be required pursuant to subpoena or other legal process, or otherwise in order
to comply with any applicable Requirement of Law, (iii) in connection with any
proceeding to enforce its rights hereunder or under any other Credit Document or
any other litigation or proceeding related hereto or to which it is a party,(iv)
to the extent the same has become publicly available other than as a result of a
breach of this Agreement and (vi) pursuant to and in accordance with the
provisions of Section 9.7(e).
9.14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. This Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto.
9.15. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
DOCUMENTS AND INSTRUMENTS EXECUTED AND D ELIVERED IN CONNECTION
HEREWITH (a) EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING
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BETWEEN THE PARTIES HERETO AND THERETO RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF, (B)SUPERSEDE ANY AND ALL PRIOR AGREEMENTS AND UNDERSTANDINGS OF SUCH
PERSONS, ORAL OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF,
INCLUDING, WITHOUT LIMITATION, THE COMMITMENT LETTER FROM THE LENDER TO THE
BORROWER DATED JANUARY 8, 1997, AND (C) MAY NOT BE AMENDED, SUPPLEMENTED,
CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
EVEREST REINSURANCE
HOLDINGS, INC.
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By: ______________________________
Name:
Title:
