UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities and Exchange Act of 1934
December 28, 1999
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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)
Page 1 of 3 (plus attachment)
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ITEM 5. OTHER EVENTS
(a) On December 21, 1999, the registrant entered into a
three-year senior revolving credit facility with a syndicate of lenders (the
"Credit Facility"). First Union National Bank is the administrative agent for
the Credit Facility. The Credit Facility will be used for liquidity and general
corporate purposes and to refinance existing debt under the registrant's prior
credit facility, which has been terminated. The Credit Facility provides for the
borrowing of up to $150 million with interest at a rate selected by the
registrant equal to either (i) the Base Rate (as defined below) or (ii) an
adjusted London InterBank Offered Rate ("LIBOR") plus a margin. The Base Rate is
the higher of the rate of interest established by First Union National Bank from
time to time as its prime rate or the Federal Funds rate plus 0.5% per annum.
The amount of the margin and the fees payable for the Credit Facility depend
upon the registrant's senior unsecured debt rating or, if such is not available,
on the financial strength rating of the registrant's subsidiary, Everest
Reinsurance Company.
The Credit Facility agreement requires the registrant to
maintain specified debt to capital and interest coverage ratios and to maintain
Everest Reinsurance Company's statutory surplus at $850 million plus 25% of
future aggregate net income and 25% of future aggregate capital contributions.
The Credit Facility agreement also provides that if the proposed corporate
restructuring occurs and the registrant becomes a subsidiary of Everest Re
Group, Ltd., that Everest Re Group, Ltd. will guarantee the registrant's
obligations under the Credit Facility. A copy of the Credit Facility agreement
is filed herewith as Exhibit 10.30 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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10.30 Credit Agreement between Everest
Reinsurance Holdings, Inc., the
Lenders Named therein and First
Union National Bank dated
December 21, 1999 providing for
a $150 million senior revolving
credit facility.
Page 2 of 3
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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 J. BURAK
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Janet J. Burak
Senior Vice President, General Counsel
and Secretary
Dated: December 28, 1999
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
10.30 Credit Agreement between Everest Filed herewith
Reinsurance Holdings, Inc., the
Lenders Named therein and First
Union National Bank dated December
21, 1999 providing for a $150
million revolving credit facility.
Page 3 of 3 (plus attachment)
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Exhibit 10.30
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CREDIT AGREEMENT
between
EVEREST REINSURANCE HOLDINGS, INC.,
THE LENDERS NAMED HEREIN,
and
FIRST UNION NATIONAL BANK
as Administrative Agent
$150,000,000 Senior Revolving Credit Facility
Lead Arranger and Sole Book-Runner:
FIRST UNION SECURITIES, INC.
Dated as of December 21, 1999
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TABLE OF CONTENTS
Page
RECITALS ......................................................................1
ARTICLE I
DEFINITIONS
1.1 Defined Terms.........................................................1
1.2 Accounting Terms.....................................................18
1.3 Other Terms; Construction............................................18
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments..........................................................18
2.2 Borrowings...........................................................19
2.3 Disbursements; Funding Reliance; Domicile of Loans...................19
2.4 Notes................................................................20
2.5 Termination and Reduction of Commitment..............................21
2.6 Mandatory and Voluntary Payments and Prepayments.....................21
2.7 Interest.............................................................22
2.8 Fees.................................................................23
2.9 Interest Periods.....................................................23
2.10 Conversions and Continuations........................................24
2.11 Method of Payments; Computations.....................................25
2.12 Recovery of Payments.................................................26
2.13 Use of Proceeds......................................................26
2.14 Pro Rata Treatment...................................................27
2.15 Increased Costs; Change in Circumstances; Illegality; etc............28
2.16 Taxes................................................................30
2.17 Compensation.........................................................32
2.18 Extension of Maturity Date...........................................33
2.19 Replacement Lenders..................................................33
ARTICLE III
CONDITIONS OF BORROWING AND RESTRUCTURING
3.1 Conditions of Initial Borrowing......................................34
3.2 Conditions to All Loans..............................................36
3.3 Conditions of Approval of and Borrowings after the Restructuring.....37
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Organization and Power.....................................38
4.2 Authorization; Enforceability........................................38
4.3 No Violation.........................................................38
4.4 Governmental Authorization; Permits..................................38
4.5 Litigation...........................................................39
4.6 Taxes................................................................39
4.7 Subsidiaries.........................................................40
4.8 Full Disclosure......................................................40
4.9 Margin Regulations...................................................40
4.10 No Material Adverse Change...........................................40
4.11 Financial Matters....................................................40
4.12 ERISA................................................................42
4.13 Environmental Matters................................................42
4.14 Compliance With Laws.................................................43
4.15 Regulated Industries.................................................43
4.16 Insurance............................................................43
4.17 Year 2000 Compatibility..............................................43
4.18 Material Contracts...................................................43
4.19 Reinsurance Agreements...............................................44
4.20 Pari Passu Debt......................................................44
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 GAAP Financial Statements............................................44
5.2 Statutory Financial Statements.......................................45
5.3 Other Business and Financial Information.............................46
5.4 Corporate Existence; Franchises; Maintenance of Properties...........49
5.5 Compliance with Laws.................................................49
5.6 Payment of Obligations...............................................49
5.7 Insurance............................................................50
5.8 Maintenance of Books and Records; Inspection.........................50
5.9 Dividends............................................................50
5.10 Further Assurances...................................................50
5.11 Cross-Reference to Parent Guaranty...................................50
ARTICLE VI
FINANCIAL COVENANTS
6.1 Maximum Consolidated Indebtedness to Total Capitalization............51
6.2 Minimum Statutory Surplus............................................51
6.3 Minimum Interest Coverage Ratio......................................51
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ARTICLE VII
NEGATIVE COVENANTS
7.1 Fundamental Changes..................................................51
7.2 Indebtedness.........................................................51
7.3 Liens................................................................52
7.4 Disposition of Assets................................................54
7.5 Transactions with Affiliates.........................................54
7.6 Restricted Payments..................................................55
7.7 Lines of Business....................................................55
7.8 Fiscal Year..........................................................55
7.9 Ratings..............................................................55
7.10 Accounting Changes...................................................55
7.11 Limitation on Certain Restrictions...................................55
7.12 Investments..........................................................56
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default....................................................56
8.2 Remedies; Termination of Commitments, Acceleration, Etc..............59
8.3 Remedies; Set-Off....................................................59
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.1 Appointment..........................................................60
9.2 Nature of Duties.....................................................60
9.3 Exculpatory Provisions...............................................60
9.4 Reliance by Administrative Agent.....................................60
9.5 Non-Reliance on Administrative Agent and Other Lenders...............61
9.6 Notice of Default....................................................62
9.7 Indemnification......................................................62
9.8 The Administrative Agent in its Individual Capacity..................62
9.9 Successor Agent......................................................63
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses....................................................63
10.2 Indemnification......................................................64
10.3 Governing Law; Consent to Jurisdiction...............................64
10.4 Waiver of Trial by Jury..............................................65
10.5 Notices..............................................................65
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10.6 Amendments Waivers, Etc..............................................66
10.7 Assignments, Participations..........................................67
10.8 No Waiver............................................................69
10.9 Successors and Assigns...............................................69
10.10 Survival.............................................................69
10.11 Severability.........................................................70
10.12 Construction.........................................................70
10.13 Confidentiality......................................................70
10.14 Counterparts; Effectiveness..........................................70
10.15 Disclosure of Information............................................70
10.16 Entire Agreement.....................................................71
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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-1 Form of GAAP Compliance Certificate
Exhibit C-2 Form of SAP Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E-1 Form of Opinion for Mayer, Brown & Platt
Exhibit E-2 Form of In-House Counsel Opinion
Exhibit E-3 Form of Restructuring Opinion for Mayer, Brown & Platt
Exhibit E-4 Form of Restructuring Opinion for In-House Counsel
Exhibit E-5 Form of Restructuring Opinion for Conyers, Dill & Pearman
Exhibit F Form of Parent Guaranty
Exhibit G Request for Extension of Maturity Date
SCHEDULES
Schedule 4.4 Licenses
Schedule 4.7 Subsidiaries
Schedule 4.18 Material Contracts
Schedule 7.3 Liens
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 21st day of December 1999, is made
among EVEREST REINSURANCE HOLDINGS, INC., a Delaware corporation with its
principal offices in Liberty Corner, New Jersey (the "Borrower"), the banks and
financial institutions listed on the signature pages hereto or that become
parties hereto after the date hereof (collectively, the "Lenders"), and FIRST
UNION NATIONAL BANK ("First Union"), as administrative agent for the Lenders.
RECITALS
A. The Borrower has requested that the Lenders make available to the
Borrower a revolving credit facility in the aggregate principal amount of
$150,000,000. The Borrower will use the proceeds of this facility (i) to acquire
outstanding shares of the Borrower's Capital Stock or shares of the Guarantor's
Capital Stock after the effectiveness of the Restructuring (as defined herein),
(ii) to refinance certain existing indebtedness (including the $75,000,000
credit facility currently in effect with First Union), (iii) to pay certain
transaction fees and expenses in connection herewith and therewith, and (iv) for
liquidity and general corporate purposes, all as more fully described herein.
B. The Lenders are 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.
C. The Borrower has proposed a Restructuring to occur some time after the
date hereof. After the effectiveness of the Restructuring, the Guarantor shall
own directly 100% of the issued and outstanding stock of the Borrower and the
Borrower shall own directly 100% of the issued and outstanding stock of Everest
Re. The Lenders are willing to approve the Restructuring and continue to make
available to the Borrower the credit facilities described herein 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 Administrative Agent, duly completed and signed by an
Authorized Officer of the Borrower and in form and substance
satisfactory to the Administrative Agent, listing any one or more accounts
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to which the Borrower may from time to time request the Administrative Agent 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 plus
the applicable Margin Percentage as in effect at such time.
"Administrative Agent" shall mean First Union, in its capacity as
Administrative Agent appointed under ARTICLE IX, and its successors and
permitted assigns in such capacity.
"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.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Annual Statement" shall mean, with respect to any Insurance Subsidiary for
any fiscal year, the annual financial statements of such Insurance Subsidiary as
required to be filed with the Insurance Regulatory Authority of its jurisdiction
of domicile and in accordance with the laws of such jurisdiction, together with
all exhibits, schedules, certificates and actuarial opinions required to be
filed or delivered therewith.
"Applicable Margin Percentage" shall mean, at any time from and after the
Closing Date, the applicable percentage (a) to be added to the LIBOR Rate
pursuant to SECTION 2.7 for purposes of determining the Adjusted LIBOR Rate, (b)
to be used in calculating the commitment fee payable pursuant to SECTION 2.8(B),
and (c) to be used in calculating the utilization fee payable pursuant to
SECTION 2.8(D), in each case as determined under the following matrix with
reference to the Borrower's senior unsecured debt rating by Moody's or Standard
& Poor's (in each case based upon the higher of the two ratings), when
available, or, if not available, then with reference to three rating levels
below the higher of the financial strength ratings (individual company or pool
rating, if applicable) assigned to Everest Re by Standard & Poor's and Moody's
(the "Financial Strength Rating"):
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Standard & Poor's/ Applicable Margin
Moody's Percentage for Utilization Fee
Level Rating Commitment Fee LIBOR Loans Usage > 50%
----- ------ -------------- ----------- -----------
I A+/A1 or above 0.125% 0.525% 0.10%
II A/A2 0.150% 0.650% 0.10%
III A-/A3 0.175% 0.750% 0.125%
IV BBB+/Baa1 0.250% 0.875% 0.125%
V BBB/Baa2 0.350% 1.00% 0.125%
VI Less than
BBB/Baa2 0.500% 1.55% 0.20%
Notwithstanding anything set forth herein to the contrary, if at any time the
difference between the senior unsecured debt ratings by Moody's and Standard &
Poor's is more than one rating grade, then for purposes of determining the
applicable level set forth above, the rating one level above the lower rating
will apply.
On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Loans and the commitment fee and utilization fee payable
pursuant to SECTION 2.8(B) and (D) respectively shall be adjusted effective as
of such date in accordance with the above matrix; provided, however, that,
notwithstanding the foregoing or anything else herein to the contrary, if at any
time an Event of Default described in SECTION 8.1(A) shall have occurred and be
continuing, at all times from and including the date on which such Event of
Default occurred to the date on which such Event of Default shall have been
cured or waived, each Applicable Margin Percentage shall be determined in
accordance with Level VI of the above matrix (notwithstanding the actual level).
For purposes of this definition, "Adjustment Date" shall mean the tenth (10th)
Business Day after the announcement by either Moody's or Standard & Poor's of
any change in its rating with respect to the Borrower's senior unsecured debt or
the Financial Strength Rating if the Borrower does not have a senior unsecured
debt rating. Until the first Adjustment Date, each Applicable Margin Percentage
shall be determined in accordance with Level III of the above matrix. In the
event Borrower does not obtain a senior unsecured debt rating from either
Standard & Poor's or Moody's within one year of the Closing Date, then Borrower
shall obtain Standard & Poor's bank loan rating, an issue-specific rating
comparable to a senior unsecured debt rating which then will be used to apply
the appropriate rating level.
"Assignee" shall have the meaning given to such term in SECTION 10.7(A).
"Assignment and Acceptance" shall mean an Assignment and Acceptance entered
into between a Lender and an Assignee and accepted by the Administrative Agent
and the Borrower, in substantially the form of EXHIBIT D.
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"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 Administrative Agent by the secretary or an
assistant secretary of the Borrower.
"Available Dividend Amount" shall mean, with respect to Everest Re for any
period of four consecutive fiscal quarters, the aggregate maximum amount of
dividends that is or, if such period were a fiscal year, would be permitted by
the Insurance Regulatory Authority of its jurisdiction of domicile, under all
applicable Requirements of Law (without the necessity of any consent, approval
or other action of such Insurance Regulatory Authority involving the granting of
permission or the exercise of discretion by such Insurance Regulatory
Authority), to be paid by Everest Re to the Borrower in respect of such
four-quarter period as if such period were a fiscal year (whether or not any
such dividends are actually paid).
"Bankruptcy Code" shall mean 11 U.S.C. ss.ss.101 et seq., as amended from
time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime rate (which may not necessarily be its best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds Rate plus
0.5% per annum, as adjusted to conform to changes as of the opening of business
on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest at
such time at the Base Rate.
"Borrower Margin Stock" shall mean shares of Capital Stock of the Borrower
or, for the period on or after the Restructuring Date, the Guarantor, that are
held by the Borrower or the Guarantor or any of their Subsidiaries and that
constitute Margin Stock.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Loans pursuant to SECTION
2.10) on a single date of a group of Loans of a single Type and, in the case of
LIBOR Loans, as to which a single Interest Period is in effect.
"Borrowing Date" shall mean, with respect to any Borrowing, the date upon
which such Borrowing is made.
"Business Day" shall mean (i) any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Charlotte, North Carolina or
New York, New York are authorized by law or proclamation to be closed and (ii)
in respect of any determination relevant to a LIBOR Loan, any such day that is
also a day on which tradings are conducted in the London interbank Eurodollar
market.
"Capital Stock" shall mean (i) with respect to any Person that is
a corporation, any and all shares, interests or equivalents in capital
stock (whether voting or nonvoting, and whether common or preferred)
of such corporation, and (ii) with respect to any Person that is not a
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corporation, any and all partnership, membership, limited liability company or
other equity interests of such Person; and in each case, any and all warrants,
rights or options to purchase any of the foregoing.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within ninety (90) days from the date of acquisition, (ii) commercial
paper issued by any Person organized under the laws of the United States of
America, maturing within ninety (90) days from the date of acquisition and, at
the time of acquisition, having a rating of at least A-1 or the equivalent
thereof by Standard & Poor's Ratings Services or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc., (iii) time deposits and certificates
of deposit maturing within ninety (90) days from the date of issuance and issued
by a bank or trust company organized under the laws of the United States of
America or any state thereof that has combined capital and surplus of at least
$500,000,000 and that has (or is a subsidiary of a bank holding company that
has) a long-term unsecured debt rating of at least A or the equivalent thereof
by Standard & Poor's Ratings Services or at least A2 or the equivalent thereof
by Moody's Investors Service, Inc., (iv) repurchase obligations with a term not
exceeding seven (7) days with respect to underlying securities of the types
described in clause (i) above entered into with any bank or trust company
meeting the qualifications specified in clause (iii) above, and (v) money market
funds at least 95% of the assets of which are continuously invested in
securities of the type described in clauses (i) through (iv) above.
"Closing Date" shall mean the date upon which the initial extension of
credit is made pursuant to this Agreement.
"Combined Net Cash Flow" shall mean, for any period prior to the
Restructuring Date and without duplication, the aggregate Net Cash Flow of the
Borrower's non-Insurance Subsidiaries for such period and for any period on or
after the Restructuring Date and without duplication, the aggregate Net Cash
Flow of the Guarantor's non-Insurance Subsidiaries for such period. For purposes
of this definition, "non-Insurance Subsidiaries" shall not include any
Subsidiary of an Insurance Subsidiary.
"Commitment" shall mean, with respect to any Lender at any time, the amount
set forth opposite such Lender's name on its signature page hereto under the
caption "Commitment" or, if such Lender has entered into one or more Assignment
and Acceptances, the amount set forth for such Lender at such time in the
Register maintained by the Administrative Agent pursuant to SECTION 10.7(B) as
such Lender's "Commitment," as such amount may be reduced at or prior to such
time pursuant to the terms hereof.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of EXHIBIT C-1 or Exhibit C-2, each together with a
Covenant Compliance Worksheet.
"Consolidated Indebtedness" shall mean, as of the last day of any
fiscal quarter, the aggregate (without duplication) of all Indebtedness
(whether or not reflected on the Guarantor's or the Borrower's or any
Subsidiary's balance sheet) of the Borrower and its Subsidiaries for
all such dates prior to the Restructuring Date, and the Guarantor and its
Subsidiaries for all such dates on or after the Restructuring
Date, determined on a consolidated basis in accordance with
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GAAP, excluding reimbursement obligations in respect of letters of credit issued
for the benefit of any Insurance Subsidiary or the Borrower or the Guarantor
after the effectiveness of the Restructuring in the ordinary course of its
business to support the payment of obligations arising under insurance and
reinsurance contracts and weather and similar swap agreements, but only in each
case to the extent such letters of credit (i) are not drawn upon and (ii) are
collateralized by cash or Cash Equivalents; provided that the aggregate
redemption value of all Trust Preferred Securities shall be included in or added
to, as the case may be and without duplication, Consolidated Indebtedness to the
extent such aggregate redemption value exceeds fifteen percent (15%) of Total
Capitalization.
"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total interest expense of Borrower and its
Subsidiaries for such period in respect of Consolidated Indebtedness of Borrower
and its Subsidiaries (including, without limitation, all such interest expense
accrued or capitalized during such period, whether or not actually paid during
such period), determined on a consolidated basis in accordance with GAAP, (ii)
all net amounts payable under or in respect of Hedge Agreements, to the extent
paid or accrued by Borrower and its Subsidiaries during such period, and (iii)
all commitment fees and other ongoing fees in respect of Consolidated
Indebtedness (including the fees provided for under SECTIONS 2.8(B) and (D))
paid, accrued or capitalized by Borrower and its Subsidiaries during such
period; provided that, for any period on or after the Restructuring Date, this
definition shall read as if "Guarantor" were substituted for "Borrower."
"Consolidated Net Income" shall mean, for any period, net income (or loss)
for the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date of determination, the
net worth of the Borrower and its Subsidiaries as of such date prior to the
Restructuring Date, and the Guarantor and its Subsidiaries as of such date on or
after the Restructuring Date, determined on a consolidated basis in accordance
with GAAP, but (i) excluding any Disqualified Capital Stock and (ii) without
regard to the requirements of Statement of Financial Accounting Standards No.
115 issued by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants.
"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
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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); provided that, for any period on or after the Restructuring Date,
this definition shall read as if "Guarantor" were substituted for "Borrower."
"Covenant Compliance Worksheet" shall mean a fully completed worksheet in
the form of Attachment A to EXHIBIT C-1 or EXHIBIT C-2.
"Credit Documents" shall mean, this Agreement, the Notes, the Fee Letter,
the Parent Guaranty and all other agreements, instruments, documents and
certificates now or hereafter executed and delivered to the Administrative Agent
or any Lender by or on behalf of the Borrower, the Guarantor or any of the
Borrower's Subsidiaries with respect to this Agreement and the transactions
contemplated hereby, in each case as amended, modified, supplemented or restated
from time to time.
"Default" shall mean, any event or condition that, with the passage of time
or giving of notice, or both, would constitute an Event of Default.
"Disqualified Capital Stock" shall mean, with respect to any Person, any
Capital Stock of such Person that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event or otherwise, (i) matures or is mandatorily redeemable or
subject to any mandatory repurchase requirement, pursuant to a sinking fund
obligation or otherwise, (ii) is redeemable or subject to any mandatory
repurchase requirement at the sole option of the holder thereof, or (iii) is
convertible into or exchangeable for (whether at the option of the issuer or the
holder thereof) (a) debt securities or (b) any Capital Stock referred to in (i)
or (ii) above, in each case under (i), (ii) or (iii) above at any time on or
prior to the first anniversary of the Maturity Date; provided, however, that
only the portion of Capital Stock that so matures or is mandatorily redeemable,
is so redeemable at the option of the holder thereof, or is so convertible or
exchangeable on or prior to such date shall be deemed to be Disqualified Capital
Stock.
"Dollars" or "$" shall mean dollars of the United States of America.
"Eligible Assignee" shall mean (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of
any other country that is a member of the Organization for Economic
Cooperation and Development or any successor thereto (the "OECD") or a political
subdivision of any such country and having total assets in excess of
$1,000,000,000, provided that such bank or other financial institution is
acting through a branch or agency located in the United States, in the
country under the laws of which it is organized or in another country that is
also a member of the OECD, (iii) the central bank of any country that is a
member of the OECD, (iv) a finance company, insurance company or other financial
institution or fund that is engaged in making, purchasing or otherwise
investing in loans in the ordinary course of its business and having
total assets in excess of $500,000,000, (v) any Affiliate of an
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existing Lender or (vi) any other Person approved by the Required Lenders, which
approval shall not be unreasonably withheld.
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, 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.
"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
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of any liability under Title IV of ERISA, other than for PBGC premiums due but
not delinquent under Section 4007 of ERISA, or the imposition or threatened
imposition of any Lien upon any assets of the Borrower or any ERISA Affiliate as
a result of any alleged failure to comply with the Internal Revenue Code or
ERISA in respect of any Plan, (vii) the engaging in or otherwise becoming liable
for a nonexempt Prohibited Transaction by the Borrower or any ERISA Affiliate,
(viii) a violation of the applicable requirements of Section 404 or 405 of ERISA
or the exclusive benefit rule under Section 401(a) of the Internal Revenue Code
by any fiduciary of any Plan for which the Borrower or any of its ERISA
Affiliates may be directly or indirectly liable or (ix) the adoption of an
amendment to any Plan that, pursuant to Section 401(a)(29) of the Internal
Revenue Code or Section 307 of ERISA, would result in the loss of tax-exempt
status of the trust of which such Plan is a part if the Borrower or an ERISA
Affiliate fails to timely provide security to such Plan in accordance with the
provisions of such sections.
"Event of Default" shall have the meaning given to such term in SECTION
8.1.
"Everest Bermuda" shall mean Everest Reinsurance (Bermuda), Ltd., a
corporation to be organized under the laws of Bermuda as a Wholly-Owned
Subsidiary of Guarantor.
"Everest Indemnity" shall mean Everest Indemnity Insurance Company, a
Delaware corporation and subsidiary of Everest Re.
"Everest National" shall mean Everest National Insurance Company, an
Arizona insurance corporation and subsidiary of Everest Re.
"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.
"Existing Credit Agreement" shall mean the Credit Agreement, dated June 16,
1997, between the Borrower and First Union, as amended.
"FASB 5" shall mean the Financial Accounting Standards Board Opinion No. 5.
"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 Administrative Agent from three federal funds
brokers of recognized standing selected by the Administrative Agent.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or any successor thereto.
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"Fee Letter" shall mean the letter from First Union to the Borrower, dated
November 22, 1999, relating to certain fees payable by the Borrower in respect
of the transactions contemplated by this Agreement, as amended, modified or
supplemented from time to time.
"Financial Officer" shall mean, with respect to the Borrower or the
Guarantor, the chief financial officer, vice president finance, principal
accounting officer or treasurer of the Borrower or the Guarantor.
"GAAP" shall mean generally accepted accounting principles, as set forth in
the statements, opinions and pronouncements of the Accounting Principles Board,
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained, as in effect
from time to time (subject to the provisions of SECTION 1.2).
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantor" shall mean Everest Re Group, Ltd., a corporation organized
under the laws of Bermuda.
"Hazardous Substances" shall mean any substances or materials (i) that are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance or (vi) that
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" shall mean any interest or foreign currency rate swap,
cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Historical Statutory Statements" shall have the meaning given to such term
in SECTION 4.11(D).
"Holding Company Expenses" shall mean, for any period, the aggregate of all
operating costs and expenses incurred or paid by the Borrower and the Guarantor
during such period, including without limitation rent, utilities, professional
fees, taxes (without duplication for taxes included in the determination of Net
Tax Sharing Payments) and payroll expenses.
"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
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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 GAAP, 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.
"Insurance Code" shall mean, with respect to any Insurance Subsidiary, the
insurance code of any state where such Insurance Subsidiary is domiciled or
conducting business, as amended from time to time, and any successor statute,
together with all rules and regulations from time to time promulgated
thereunder.
"Insurance Regulatory Authority" shall mean, with respect to any Insurance
Subsidiary, the insurance department or similar Governmental Authority charged
with regulating insurance companies or insurance holding companies, in its
jurisdiction of domicile and, to the extent that it has regulatory authority
over such Insurance Subsidiary, in each other jurisdiction in which such
Insurance Subsidiary conducts business or is licensed to conduct business.
"Insurance Subsidiary" shall mean Everest Re, Everest Bermuda, 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 jurisdiction of domicile.
"Interest Coverage Ratio" shall mean, as of the last day of any period of
four consecutive fiscal quarters (the "Measurement Period"), the ratio of:
(i) the sum (without duplication) of (A) the Available
Dividend Amount for the Measurement Period for Everest Re, plus (B) the
Net Tax Sharing Payments with respect to the Measurement Period, plus
(C) the Combined Net Cash Flow (whether positive or negative) for the
Measurement Period, plus (D) other Net Cash Flow to the Borrower
(whether positive or negative) and on or after the Restructuring Date,
to the Guarantor and the Borrower, during the Measurement Period, minus
Holding Company Expenses accrued during such Measurement Period, to
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(ii) the sum (without duplication) of (A) Consolidated
Interest Expense and (B) dividends to be paid on Trust Preferred
Securities, each as projected for the four consecutive fiscal quarters
immediately following the date of determination.
"Interest Period" shall have the meaning given to such term in SECTION 2.9.
"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.
"Lending Office" shall mean, with respect to any Lender, the office of such
Lender designated as its "Lending Office" on its signature page hereto or in an
Assignment and Acceptance, or such other office as may be otherwise designated
in writing from time to time by such Lender to the Borrower and the
Administrative Agent. A Lender may designate separate Lending Offices as
provided in the foregoing sentence for the purposes of making or maintaining
different Types of Loans, and, with respect to LIBOR Loans, such office may be a
domestic or foreign branch or Affiliate of such Lender.
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at such
time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising part of
the same Borrowing for any Interest Period, an interest rate per annum obtained
by dividing (i)(y) the rate of interest (rounded upward, if necessary, to the
nearest 1/16 of one percentage point) appearing on Telerate Page 3750 (or any
successor page) or (z) if no such rate is available, the rate of interest
determined by the Administrative Agent to be the rate or the arithmetic mean of
rates (rounded upward, if necessary, to the nearest 1/16 of one percentage
point) at which Dollar deposits in immediately available funds are offered by
First Union to first-tier banks in the London interbank Eurodollar market, in
each case under (y) and (z) above at approximately 11:00 a.m., London time, two
(2) Business Days prior to the first day of such Interest Period for a period
substantially equal to such Interest Period and in an amount substantially equal
to the amount of First Union's LIBOR Loan comprising part of such Borrowing, by
(ii) the amount equal to 1.00 minus the Reserve Requirement (expressed as a
decimal) for such Interest Period.
"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 or LIBOR Loans. For purposes of greater clarity, the
conversion of one Type of Loan to the other Type or the continuation of a LIBOR
Loan into a different Interest Period shall not constitute the making of a Loan
hereunder.
"Margin Stock" shall have the meaning given to such term in Regulation U.
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"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, business, or properties of the
Guarantor and its Subsidiaries, taken as a whole, or 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, or properties of (A)
the Borrower, (B) the Borrower and its Subsidiaries, taken as a whole, (C) the
Guarantor or (D) the Guarantor and its Subsidiaries, taken as a whole, (ii) the
ability of the Borrower or the Guarantor 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 Administrative Agent and the Lenders hereunder and
thereunder.
"Material Insurance Subsidiary" shall mean any Insurance Subsidiary that is
a Material Subsidiary.
"Material Subsidiary" shall mean each of (i) Everest Re, and (ii) at the
relevant time of determination, any Subsidiary having (after the elimination of
intercompany accounts) (y) in the case of a non-Insurance Subsidiary, (A) assets
constituting at least ten percent (10%) of the total assets of Borrower and its
Subsidiaries on a consolidated basis, (B) revenues for the four quarters most
recently ended constituting at least ten percent (10%) of the total revenues of
Borrower and its Subsidiaries on a consolidated basis, or (C) Net Income for the
four quarters most recently ended constituting at least ten percent (10%) of the
Consolidated Net Income of Borrower and its Subsidiaries, in each case
determined in accordance with GAAP as of the date of the GAAP financial
statements of 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)), or (z) in the case of an Insurance Subsidiary, (A) assets constituting
at least ten percent (10%) of the aggregate assets of all the Borrower's
Insurance Subsidiaries, or (B) Gross Written Premiums for the four quarters most
recently ended constituting at least ten percent (10%) of the aggregate Gross
Written Premiums (without duplication) of all the Borrower's Insurance
Subsidiaries, in each case determined in accordance with SAP as of the date of
the statutory financial statements most recently delivered under SECTION 5.2
prior to such time (or, with regard to determinations at any time prior to the
initial delivery of financial statements under SECTION 5.2, as of the date of
the most recent financial statements referred to in SECTION 4.11(A)) and (vi)
any Subsidiary that has one of the foregoing as a Subsidiary.
"Maturity Date" shall mean the third anniversary of the Closing Date or
such later date to which the Maturity Date may be extended pursuant to SECTION
2.18.
"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.
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"NAIC" shall mean the National Association of Insurance Commissioners and
any successor thereto.
"Net Cash Flow" shall mean, for any Person (other than an Insurance
Subsidiary or a Subsidiary of an Insurance Subsidiary) for any period, (i) the
aggregate Net Income of such Person for such period, plus (ii) the sum of
depreciation expense, amortization (whether positive or negative) of intangible
assets and other non-cash expenses, losses and charges reducing income, in each
case to the extent taken into account in the calculation of such Net Income for
such period, minus (iii) the sum of capital expenditures and all non-cash gains
and other non-cash items taken into account in determining such Net Income for
such period, plus (iv) any increase during such period in deferred taxes, minus
(v) any decrease during such period in deferred taxes; provided that with
respect to the Guarantor, Net Cash Flow shall include any cash dividends
actually paid by Everest Bermuda to Guarantor during such period
"Net Income" shall mean, with respect to any Person for any period, the net
income (or loss), after extraordinary items, taxes and all other items of
expense and income of such Person for such period, determined in accordance with
GAAP.
"Net Tax Sharing Payments" shall mean, for any period, (i) the aggregate
(without duplication) of all payments made or to be made to the Borrower by its
Subsidiaries pursuant to tax sharing or tax allocation agreements or
arrangements or otherwise in respect of taxable income realized during such
period, minus (ii) the aggregate (without duplication) of all foreign, federal,
state or local income, franchise and other tax payments made or to be made by
the Borrower in respect of taxable income realized during such period and any
payments made or to be made by the Borrower during such period pursuant to such
tax sharing or tax allocation agreement or arrangement. For purposes of the
Interest Coverage Ratio, if the amount in clause (ii) exceeds the amount in
clause (i) hereof, the result shall be expressed as a negative amount.
"Notes" shall mean the promissory notes of the Borrower in substantially
the form of EXHIBIT A, together with any amendments, modifications and
supplements thereto, substitutions therefor and restatements thereof.
"Notice of Borrowing" shall have the meaning given to such term in SECTION
2.2(B).
"Notice of Conversion/Continuation" shall have the meaning given to such
term in SECTION 2.10(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 Administrative Agent 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.
"Parent Guaranty" shall mean a guaranty agreement made by the Guarantor in
favor of the Administrative Agent and the Lenders, in substantially the form of
EXHIBIT F, as amended, modified or supplemented from time to time.
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"Participant" shall have the meaning given to such term in SECTION 10.7(D).
"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.
"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.
"Pro Forma Balance Sheet" shall have the meaning given to such term in
SECTION 4.11(B).
"Projections" shall have the meaning given to such term in SECTION 4.11(C).
"Quarterly Statement" shall mean, with respect to any Insurance Subsidiary
for any fiscal quarter, the quarterly financial statements of such Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority of
its jurisdiction of domicile, together with all exhibits, schedules,
certificates and actuarial opinions required to be filed or delivered therewith.
"Register" shall have the meaning given to such term in SECTION 10.7(B).
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reinsurance Agreement" shall mean any agreement, contract, treaty,
certificate or other arrangement whereby any Insurance Subsidiary agrees to
transfer, cede or retrocede to another insurer or reinsurer all or part of the
liability assumed or assets held by such Insurance Subsidiary under a policy or
policies of insurance issued by such Insurance Subsidiary or under a reinsurance
agreement assumed by such Insurance Subsidiary.
"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.
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"Required Lenders" shall mean the Lenders holding outstanding Loans and
Unutilized Commitments (or, after the termination of the Commitments,
outstanding Loans) representing more than fifty percent (50%) of the aggregate
at such time of all outstanding Loans and Unutilized Commitments (or, after the
termination of the Commitments, the aggregate at such time of all outstanding
Loans).
"Requirement of Law" shall mean, with respect to any Person, the charter,
articles or certificate of organization or incorporation and bylaws or other
organizational or governing documents of such Person, and any statute, law,
treaty, rule, regulation, order, decree, writ, injunction or determination of
any arbitrator or court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject or otherwise pertaining to any or all of the
transactions contemplated by this Agreement and the other Credit Documents.
"Reserve Requirement" shall mean, with respect to any Interest Period, the
reserve percentage (expressed as a decimal) in effect from time to time during
such Interest Period, as provided by the Federal Reserve Board, applied for
determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean the president, chief executive officer,
chief financial officer, or any other Financial Officer of the Borrower or the
Guarantor, and any executive officer, other officer or similar official thereof
responsible for the administration of the obligations of the Borrower or the
Guarantor, as the case may be, in respect of this Agreement.
"Restructuring" shall mean the following transaction to be undertaken by
Borrower pursuant to the Guarantor's Form S-4 Registration Statement previously
delivered to the Administrative Agent and the Lenders: Everest Re Merger
Corporation, a Delaware company ("MergerCo"), will be merged with and into the
Borrower with the Borrower as the surviving company and pursuant to which (A)
each share of common stock of the Borrower shall automatically convert into one
share of common stock of the Guarantor, and (B) each share of common stock of
MergerCo will be converted into one share of the Borrower. After the
effectiveness of the Restructuring, the Guarantor shall own directly 100% of the
issued and outstanding stock of the Borrower.
"Restructuring Date" shall mean the date upon which the Restructuring is
effective and all conditions set forth in SECTION 3.3 have been satisfied or
waived in accordance herewith.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc. and its successors and assigns.
"Statutory Surplus" shall mean, as to Everest Re, at any time, the amount
shown on line 27, page 3, column I 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.
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"SAP" shall mean, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the relevant Insurance
Regulatory Authority of its jurisdiction 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.
"Terminating Senior Indebtedness" shall mean all Indebtedness of the
Borrower under the Existing Credit Agreement.
"Termination Date" shall mean the Maturity Date or any earlier date of
termination of the Commitments pursuant to SECTION 2.5 or SECTION 8.2.
"Total Capitalization" shall mean, as of any date of determination,
Consolidated Net Worth as of such date plus Consolidated Indebtedness as of such
date plus the aggregate redemption value of Trust Preferred Securities.
"Trust Preferred Securities" shall mean the preferred securities to be
issued by Everest Re Capital Trust and any other preferred securities offered by
a Delaware statutory business trust of which the Guarantor, Borrower or any of
their respective Subsidiaries is the grantor, the proceeds of which securities
are or have been used principally to purchase debentures issued by the Borrower
or Guarantor or an Affiliate of the Guarantor or Borrower or any such Subsidiary
of the Guarantor or Borrower.
"Type" shall have the meaning given to such term in SECTION 2.2(A).
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Unutilized Commitment" shall mean, with respect to any Lender at any time,
such Lender's Commitment at such time less the aggregate principal amount of all
Loans made by such Lender that are outstanding at such time.
"Wholly Owned" shall mean, with respect to any Subsidiary of any Person,
that 100% of the outstanding Capital Stock or other ownership interests of such
Subsidiary is owned, directly or indirectly, by such Person.
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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 GAAP (or, to the extent that such
terms apply solely to any Insurance Subsidiary or if otherwise expressly
required, SAP). All accounting determinations and computations under this
Agreement that refer to Guarantor or to Guarantor and its Subsidiaries shall,
with respect to any dates or periods occurring prior to the Restructuring Date,
be deemed to mean the Borrower or the Borrower and its Subsidiaries, as the case
may be. Notwithstanding the foregoing, in the event that any changes in GAAP or
SAP 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 ARTICLE VI 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 1998 Annual Statements and
1999 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 1998 Annual
Statements or 1999 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. Each Lender severally agrees, subject to and on the terms
and conditions of this Agreement, to make loans (each, a "Loan," and
collectively, the "Loans") to the Borrower, from time to time on any Business
Day during the period from and including the Closing Date to but not including
the Termination Date, in an aggregate principal amount at any time outstanding
not greater than its Commitment at such time, provided that no Borrowing of
Loans shall be made if, immediately after giving effect thereto, the aggregate
principal amount of Loans outstanding at such time would exceed the aggregate
Commitments at such time. Subject to and on the terms and conditions of this
Agreement, the Borrower may borrow, repay and reborrow Loans.
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2.2 BORROWINGS.
(a) The Loans shall, at the option of the Borrower and subject to the terms
and conditions of this Agreement, be either Base Rate Loans or LIBOR Loans
(each, a "Type" of Loan).
(b) In order to make a Borrowing of Base Rate Loans or LIBOR Loans (other
than Borrowings involving continuations or conversions of outstanding Base Rate
or LIBOR Loans , which shall be made pursuant to SECTION 2.10), the Borrower
will give the Administrative Agent written notice not later than 11:00 a.m.,
Charlotte time, three (3) Business Days prior to a Borrowing of LIBOR Loans and
not later than 10:00 a.m., Charlotte time, on the same Business Day of a
Borrowing of Base Rate Loans; provided, however, that a request for a Borrowing
of Base Rate Loans to be made on the Closing Date may, at the discretion of the
Administrative Agent, 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, the initial Interest Period to be applicable thereto, and (c) the
requested Borrowing Date, which shall be a Business Day. Upon its receipt of a
Notice of Borrowing, the Administrative Agent will promptly notify each Lender
of the proposed Borrowing. 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 aggregate Unutilized Commitments).
(c) Upon fulfillment of the applicable conditions in ARTICLE III, each
Lender will make available to the Administrative Agent at its office referred to
in SECTION 10.5 (or at such other location as the Administrative Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the Loan to be made by such Lender. To the extent the Lenders have
made such amounts available to the Administrative Agent as provided hereinabove,
the Administrative Agent will make the aggregate of such amounts available to
the Borrower in accordance with SECTION 2.3(A) and in like funds as received by
the Administrative Agent.
2.3 DISBURSEMENTS; FUNDING RELIANCE; DOMICILE OF LOANS.
(a) The Borrower hereby authorizes the Administrative Agent to disburse the
proceeds of each Borrowing in accordance with the terms of any written
instructions from any of the Authorized Officers, provided that the
Administrative Agent shall not be obligated under any circumstances to forward
amounts to any account not listed in an Account Designation Letter.
(b) Unless the Administrative Agent has received, prior to 1:00 p.m.,
Charlotte time, on the relevant Borrowing Date, written notice from a Lender
that such Lender will not make available to the Administrative Agent such
Lender's ratable portion of the relevant Borrowing, the Administrative Agent
may assume that such Lender has made such portion available to the
Administrative Agent in immediately available funds on such Borrowing Date
in accordance with the applicable provisions of SECTION 2.2, and the
Administrative Agent may, in reliance upon such assumption, but shall
not be obligated to, make a corresponding amount available to
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the Borrower on such Borrowing Date. If and to the extent that such Lender shall
not have made such portion available to the Administrative Agent, and the
Administrative Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, (i) in the case of such Lender, at the
Federal Funds Rate, and (ii) in the case of the Borrower, at the rate of
interest applicable at such time to the Type of Loans comprising such Borrowing,
as determined under the provisions of SECTION 2.7. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement. The
failure of any Lender to make any Loan required to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan as part of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender as part of any Borrowing.
(c) Each Lender may, at its option, make and maintain any Loan at, to or
for the account of any of its Lending Offices, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
(d) The Borrower may at any time deliver to the Administrative Agent an
Account Designation Letter listing any additional accounts or deleting any
accounts listed in a previous Account Designation Letter.
2.4 NOTES.
(a) The Loans made by each Lender shall be evidenced by a Note
appropriately completed in substantially the form of EXHIBIT A.
(b) Each Note issued to a Lender shall (i) be executed by the Borrower,
(ii) be payable to the order of such Lender, (iii) be dated the Closing Date
(or, in the case of a Note issued after the Closing Date, dated the effective
date of the applicable Assignment and Acceptance), (iv) be in a stated principal
amount equal to such Lender's Commitment, (v) bear interest in accordance with
the provisions of SECTION 2.7, as the same may be applicable from time to time
to the Loans made by such Lender, and (vi) be entitled to all of the benefits of
this Agreement and the other Credit Documents and subject to the provisions
hereof and thereof.
(c) Each Lender will record on its internal records the amount and Type of
each Loan made by it and each payment received by it in respect thereof and
will, in the event of any transfer of its Note, either endorse on the reverse
side thereof or on a schedule attached thereto (or any continuation thereof) the
outstanding principal amount and Type of the Loans evidenced thereby as of the
date of transfer or provide such information on a schedule to the Assignment and
Acceptance relating to such transfer; provided, however, that the failure of any
Lender to make any such recordation or provide any such information, or any
error therein, shall not affect the Borrower's obligations under this Agreement
or the Notes.
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2.5 TERMINATION AND REDUCTION OF COMMITMENT.
(a) The Commitments shall be automatically and permanently terminated on
the Termination Date (or on January 18, 2000, but only if the Closing Date shall
not have occurred on or prior to such date).
(b) At any time and from time to time after the date hereof, upon not less
than five (5) Business Days' prior written notice to the Administrative Agent,
the Borrower may terminate in whole or reduce in part the aggregate Unutilized
Commitments, provided that any such partial reduction shall be in an aggregate
amount of not less than $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.
(c) Each reduction of the Commitments pursuant to this Section shall be
applied ratably among the Lenders according to their respective Commitments
2.6 MANDATORY AND VOLUNTARY PAYMENTS AND PREPAYMENTS.
(a) Except to the extent due or paid sooner pursuant to the provisions of
this Agreement, the Borrower will repay the aggregate outstanding principal
amount of 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 aggregate Commitments at such time
(after giving effect to any concurrent termination or reduction thereof), the
Borrower will immediately prepay the outstanding principal amount of the Loans
in the amount of such excess.
(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 Administrative Agent given not later than
11:00 a.m., Charlotte time, three (3) Business Days prior to each intended
prepayment of LIBOR Loans and one (1) Business Day prior to each intended
prepayment of Base Rate Loans, provided that (i) each partial prepayment shall
be in an aggregate principal amount of not less than $1,000,000 or, if greater,
an integral multiple of $500,000 in excess thereof, (ii) no partial prepayment
of LIBOR Loans shall reduce the aggregate outstanding principal amount of the
Borrowing of which such LIBOR Loans are a part 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 2.17 to be
paid as a consequence of such prepayment, a prepayment of LIBOR Loans 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 Loans to be prepaid 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.
(d) Each payment or prepayment of LIBOR Loans made pursuant to the
provisions of this Section on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
SECTION 2.17 to be paid as a consequence thereof.
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(e) Each prepayment of the Loans made pursuant to this Section shall be
applied ratably among the Lenders holding the Loans being prepaid, in proportion
to the principal amount held by each.
2.7 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, and (ii) at the
Adjusted LIBOR Rate, as in effect from time to time during such periods as such
Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of an Event of Default
as the result of failure by the Borrower to pay any principal of or interest on
any Loan, any fees or other amount hereunder when due (whether at maturity,
pursuant to acceleration or otherwise), all outstanding principal amounts of the
Loans and, to the greatest extent permitted by law, all interest accrued on the
Loans and all other accrued and outstanding fees and other amounts hereunder,
shall bear interest at a rate per annum equal to the interest rate applicable
from time to time thereafter to such Loans (whether the Base 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 2.6) in arrears on the last Business Day of each calendar quarter,
beginning with the first such day to occur after the Closing Date;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan or
portion thereof paid or prepaid pursuant to the provisions of SECTION 2.6)
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; provided,
that in the event all LIBOR Loans made pursuant to a single Borrowing are
repaid or prepaid in full, then accrued interest in respect of such
LIBOR Loans shall be payable together with such repayment or prepayment
on the date thereof; and
(iii) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Credit Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
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In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
2.8 FEES. THE BORROWER AGREES TO PAY:
(a) To First Union Securities, Inc., for its own account, on the date of
execution of this Agreement, the fees described in paragraph (1) of the Fee
Letter, in the amounts set forth therein as due and payable on such date and to
the extent not theretofore paid to it;
(b) To the Administrative Agent, for the account of each Lender, a
commitment fee for each calendar quarter (or portion thereof) for the period
from the date of this Agreement to the Termination Date, at a per annum rate
equal to the Applicable Margin Percentage in effect for such fee from time to
time during such quarter, on such Lender's ratable share (based on the
proportion that its Commitment bears to the aggregate Commitments) of the
average daily aggregate Unutilized Commitments, payable in arrears (i) on the
last Business Day of each calendar quarter, beginning with the first such day to
occur after the Closing Date, and (ii) on the Termination Date;
(c) To the Administrative Agent, for its own account, the annual
administrative fee described in paragraph (2) of the Fee Letter, on the terms,
in the amount and at the times set forth therein; and
(d) To the Administrative Agent, for the account of each Lender, a
utilization fee in respect of the unpaid principal amount of each Loan, at a per
annum rate equal to the Applicable Margin Percentage in effect for such fee from
time to time payable during such periods in which the Borrower's outstanding
Loans exceed 50% of the aggregate Commitments payable in accordance with SECTION
2.7(C).
2.9 INTEREST PERIODS. Concurrently with the giving of a Notice of Borrowing
of 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 LIBOR Loan, which
Interest Period shall, at the option of the Borrower, be, 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 LIBOR Loan shall commence
on the date of the borrowing of such LIBOR Loan (including the date of
any continuation of, or conversion into, such LIBOR Loan), and each
successive Interest Period applicable to such LIBOR Loan shall commence
on the day on which the next preceding Interest Period applicable
thereto expires;
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(ii) LIBOR Loans may not be outstanding under more than seven (7)
separate Interest Periods at any one time (for which purpose Interest
Periods shall be deemed to be separate even if they are coterminous);
(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 expires
after the Maturity Date; and
(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 such Interest Period would otherwise expire, such Interest
Period shall expire on the last Business Day of such calendar month.
2.10 CONVERSIONS AND CONTINUATIONS.
(a) The Borrower shall have the right, on any Business Day, to elect (i) to
convert all or a portion of the outstanding principal amount of any Base Rate
Loans into LIBOR Loans, or to convert any LIBOR Loans into Base Rate Loans, or
(ii) to continue all or a portion of the outstanding principal amount of any
LIBOR Loans for an additional Interest Period, provided that (x) any such
conversion of LIBOR Loans of the same Borrowing into Base Rate Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; any such conversion
of Base Rate Loans of the same Borrowing into, or continuation of LIBOR Loans
shall involve an aggregate principal amount of not less than $3,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof; and no partial
conversion of LIBOR Loans of the same Borrowing shall reduce the outstanding
principal amount of such LIBOR Loans to less than $3,000,000 or to any greater
amount not an integral multiple of $1,000,000 in excess thereof, (y) except as
otherwise provided in SECTION 2.15(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 2.17 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 Administrative
Agent written notice not later than 11:00 a.m., Charlotte time, three (3)
Business Days prior to the intended effective date of any conversion of Base
Rate Loans into, or continuation of, LIBOR Loans and one (1) Business Day
prior to the intended effective date of any conversion of LIBOR Loans into
Base Rate Loans. Each such notice (each, a "Notice of Conversion/ Continuation")
shall be irrevocable, shall be given in the form of EXHIBIT B-2 and shall
specify (x) the date of such conversion or continuation (which shall be a
Business Day), (y) in the case of a conversion into, or a continuation of,
LIBOR Loans, the Interest Period to be applicable thereto, and (z) the
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aggregate amount and Type of the Loans being converted or continued. Upon the
receipt of a Notice of Conversion/Continuation, the Administrative Agent will
promptly notify each Lender of the proposed conversion or continuation. In the
event that the Borrower shall fail to deliver a Notice of
Conversion/Continuation as provided herein with respect to any outstanding LIBOR
Loan, such LIBOR Loan shall automatically be converted to a LIBOR Loan having an
Interest Period of one (1) month; provided that if Borrower is not otherwise
entitled to convert into or continue a LIBOR Loan, then such LIBOR Loan shall
automatically be converted to a Base Rate Loan, in each case upon the expiration
of the then current Interest Period applicable thereto (unless repaid pursuant
to the terms hereof).
2.11 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 Administrative Agent, for the account of the Lenders entitled to such
payment (except as otherwise expressly provided herein as to payments required
to be made directly to the Lenders) at its office referred to in SECTION 10.5,
prior to 12:00 noon, Charlotte time, on the date payment is due. Any payment
made as required hereinabove, but after 12:00 noon, Charlotte time, shall be
deemed to have been made on the next succeeding Business Day. If any payment
falls due on a day that is not a Business Day, then such due date shall be
extended to the next succeeding Business Day (except that in the case of LIBOR
Loans to which the provisions of clause (iii) in SECTION 2.9 are applicable,
such due date shall be the next preceding Business Day), and such extension of
time shall then be included in the computation of payment of interest, fees or
other applicable amounts.
(b) The Administrative Agent will distribute to the Lenders like amounts
relating to payments made to the Administrative Agent for the account of the
Lenders as follows: (i) if the payment is received by 12:00 noon, Charlotte
time, in immediately available funds, the Administrative Agent will make
available to each relevant Lender on the same date, by wire transfer of
immediately available funds, such Lender's ratable share of such payment (based
on the percentage that the amount of the relevant payment owing to such Lender
bears to the total amount of such payment owing to all of the relevant Lenders),
and (ii) if such payment is received after 12:00 noon, Charlotte time, or in
other than immediately available funds, the Administrative Agent will make
available to each such Lender its ratable share of such payment by wire transfer
of immediately available funds on the next succeeding Business Day (or in the
case of uncollected funds, as soon as practicable after collected). If the
Administrative Agent shall not have made a required distribution to the
appropriate Lenders as required hereinabove after receiving a payment for the
account of such Lenders, the Administrative Agent will pay to each such Lender,
on demand, its ratable share of such payment with interest thereon at the
Federal Funds Rate for each day from the date such amount was required to be
disbursed by the Administrative Agent until the date repaid to such Lender.
(c) Unless the Administrative Agent shall have received written notice from
the Borrower prior to the date on which any payment is due to any Lender
hereunder that such payment will not be made in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date, and the Administrative Agent may, in reliance on
such assumption, but shall not be obligated to, cause to be distributed
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to such Lender on such due date an amount equal to the amount then due to such
Lender. If and to the extent the Borrower shall not have so made such payment in
full to the Administrative Agent, and without limiting the obligation of the
Borrower to make such payment in accordance with the terms hereof, such Lender
shall repay to the Administrative Agent forthwith on demand such amount so
distributed to such Lender, together with interest thereon for each day from the
date such amount is so distributed to such Lender until the date repaid to the
Administrative Agent, at the Federal Funds Rate.
(d) 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 Administrative Agent 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 2.17 to be paid as a consequence thereof, a prepayment of 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 Administrative Agent shall make such
designation in its sole discretion subject to the foregoing and to the other
provisions of this Agreement.
(e) 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.
2.12 RECOVERY OF PAYMENTS.
(a) The Borrower agrees that to the extent the Borrower makes a payment or
payments to or for the account of the Administrative Agent or any 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.
If any amounts distributed by the Administrative Agent to any Lender are
subsequently returned or repaid by the Administrative Agent to the Borrower or
its representative or successor in interest, whether by court order or by
settlement approved by the Lender in question, such Lender will, promptly upon
receipt of notice thereof from the Administrative Agent, pay the Administrative
Agent such amount. If any such amounts are recovered by the Administrative Agent
from the Borrower or its representative or successor in interest, the
Administrative Agent will redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.
2.13 USE OF PROCEEDS. The proceeds of the Loans shall be used solely
(i) to acquire outstanding shares of the Borrower's Capital Stock or
shares of the Guarantor after the Restructuring, (ii) to refinance
certain existing debt (including the Existing Credit Agreement),
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(iii) to pay certain transaction fees and expenses in connection with the
closing of the transactions contemplated hereby and the Restructuring in amounts
acceptable to the Administrative Agent, and (iv) to provide for the working
capital, liquidity needs and general corporate requirements of the Borrower and
its Subsidiaries.
2.14 PRO RATA TREATMENT.
(a) All fundings, continuations and conversions of Loans shall be made by
the Lenders pro rata on the basis of their respective Commitments (in the case
of the funding of Loans pursuant to SECTION 2.2) or on the basis of their
respective outstanding Loans (in the case of continuations and conversions of
Loans pursuant to SECTION 2.10, and additionally in all cases in the event the
Commitments have expired or have been terminated), as the case may be from time
to time. All payments on account of principal of or interest on any Loans, fees
or any other Obligations owing to or for the account of any one or more Lenders
shall be apportioned ratably among such Lenders in proportion to the amounts of
such principal, interest, fees or other Obligations owed to them respectively.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise, other
than pursuant to SECTION 2.15, 2.16, 2.17 OR 10.7) applicable to the payment of
any of the Obligations that exceeds its ratable share (according to the
proportion of (i) the amount of such Obligations due and payable to such Lender
at such time to (ii) the aggregate amount of such Obligations due and payable to
all Lenders at such time) of payments on account of such Obligations then or
therewith obtained by all the Lenders to which such payments are required to
have been made, such Lender shall forthwith purchase from the other Lenders such
participations in such Obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each such other Lender shall be rescinded and each such other Lender shall repay
to the purchasing Lender the purchase price to the extent of such recovery,
together with an amount equal to such other Lender's ratable share (according to
the proportion of (i) the amount of such other Lender's required repayment to
(ii) the total amount so recovered from the purchasing Lender) of any interest
or other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to the provisions of this subsection
may, to the fullest extent permitted by law, exercise any and all rights of
payment (including, without limitation, setoff, banker's lien or counterclaim)
with respect to such participation as fully as if such participant were a direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or similar law, any Lender receives a secured
claim in lieu of a setoff to which this subsection applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled under this
subsection to share in the benefits of any recovery on such secured claim.
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2.15 INCREASED COSTS; CHANGE IN CIRCUMSTANCES; ILLEGALITY; ETC.
(a) If, at any time after the date hereof and from time to time, the
introduction of or any change in any applicable law, rule or regulation or in
the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Lender with any guideline or request from any such Governmental Authority
(whether or not having the force of law), shall (i) subject such Lender to any
tax or other charge, or change the basis of taxation of payments to such Lender,
in respect of any of its LIBOR Loans or any other amounts payable hereunder or
its obligation to make, fund or maintain any LIBOR Loans (other than any change
in the rate or basis of tax on the overall net income of such Lender or its
applicable Lending Office), (ii) impose, modify or deem applicable any reserve,
special deposit or similar requirement (but excluding any reserves to the extent
actually included within the Reserve Requirement in the calculation of the LIBOR
Rate) against assets of, deposits with or for the account of, or credit extended
by, such Lender or its applicable Lending Office, or (iii) impose on such Lender
or its applicable Lending Office any other condition, and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBOR Loans or to reduce the amount of any sum received or
receivable by such Lender hereunder, the Borrower will, promptly upon demand
therefor by such Lender, pay to such Lender such additional amounts as shall
compensate such Lender for such increase in costs or reduction in return;
provided that the Borrower shall not be obligated to pay any such amount or
amounts (i) unless such Lender shall have first notified the Borrower in writing
that it intends to seek compensation pursuant to this Section and (ii) which are
attributable to any period of time occurring more than 90 days prior to the date
of receipt by the Borrower of the notice provided for in the preceding clause
(i); provided further that if the event or circumstance requiring such
compensation is retroactive, then the 90-day period referred to above shall be
extended to include the period of retroactive effect thereof.
(b) If, at any time after the date hereof and from time to time, any Lender
shall have reasonably determined that the introduction of or any change in any
applicable law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law), has or would have the effect, as a consequence of
such Lender's Commitment or Loans hereunder, of reducing the rate of return on
the capital of such Lender or any Person controlling such Lender to a level
below that which such Lender or controlling Person could have achieved but for
such introduction, change or compliance (taking into account such Lender's or
controlling Person's policies with respect to capital adequacy), the Borrower
will, promptly upon demand therefor by such Lender therefor, pay to such Lender
such additional amounts as will compensate such Lender or controlling Person for
such reduction in return; provided that the Borrower shall not be obligated to
pay any such amount or amounts (i) unless such Lender shall have first notified
the Borrower in writing that it intends to seek compensation pursuant to this
Section and (ii) which are attributable to any period of time occurring more
than 90 days prior to the date of receipt by the Borrower of the notice provided
for in the preceding clause (i); provided further that if the event or
circumstance requiring such compensation is retroactive, then the 90-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
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(c) If, on or prior to the first day of any Interest Period, (y) the
Administrative Agent shall have determined that adequate and reasonable means do
not exist for ascertaining the applicable LIBOR Rate for such Interest Period or
(z) the Administrative Agent shall have received written notice from the
Required Lenders of their determination that the rate of interest referred to in
the definition of "LIBOR Rate" upon the basis of which the Adjusted LIBOR Rate
for LIBOR Loans for such Interest Period is to be determined will not adequately
and fairly reflect the cost to such Lenders of making or maintaining LIBOR Loans
during such Interest Period, the Administrative Agent will forthwith so notify
the Borrower and the Lenders. Upon such notice, (i) all then outstanding LIBOR
Loans shall automatically, on the expiration date of the respective Interest
Periods applicable thereto (unless then repaid in full), be converted into Base
Rate Loans, (ii) the obligation of the Lenders to make, to convert Base Rate
Loans into, or to continue, LIBOR Loans shall be suspended (including pursuant
to the Borrowing to which such Interest Period applies), and (iii) any Notice of
Borrowing or Notice of Conversion/Continuation given at any time thereafter with
respect to LIBOR Loans shall be deemed to be a request for Base Rate Loans, in
each case until the Administrative Agent or the Required Lenders, as the case
may be, shall have determined that the circumstances giving rise to such
suspension no longer exist (and the Required Lenders, if making such
determination, shall have so notified the Administrative Agent), and the
Administrative Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any time
after the date hereof and from time to time, any Lender shall have determined in
good faith that the introduction of or any change in any applicable law, rule or
regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance with any guideline or request from any such Governmental
Authority (whether or not having the force of law), has or would have the effect
of making it unlawful for such Lender to make or to continue to make or maintain
LIBOR Loans, such Lender will forthwith so notify the Administrative Agent and
the Borrower. Upon such notice, (i) each of such Lender's then outstanding LIBOR
Loans shall automatically, on the expiration date of the respective Interest
Period applicable thereto (or, to the extent any such LIBOR Loan may not
lawfully be maintained as a LIBOR Loan until such expiration date, upon such
notice), be converted into a Base Rate Loan, (ii) the obligation of such Lender
to make, to convert Base Rate Loans into, or to continue, LIBOR Loans shall be
suspended (including pursuant to any Borrowing for which the Administrative
Agent has received a Notice of Borrowing but for which the Borrowing Date has
not arrived), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall, as to such Lender, be deemed to be a request for a Base Rate Loan, in
each case until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the
Administrative Agent, and the Administrative Agent shall have so notified the
Borrower.
Determinations by the Administrative Agent or any Lender for purposes
of this Section of any increased costs, reduction in return, market
contingencies, illegality or any other matter shall, absent manifest error,
be conclusive, PROVIDED that such determinations are made in good faith.
No failure by the Administrative Agent or any Lender at any time to demand
payment of any amounts payable under this Section shall constitute a
waiver of its right to demand payment of any additional amounts arising
at any subsequent time. Nothing in this Section shall require
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or be construed to require the Borrower to pay any interest, fees, costs or
other amounts in excess of that permitted by applicable law.
2.16 TAXES.
(a) Subject to SECTION 2.16(E), 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, excluding taxes imposed on, or measured by,
the overall net income (or franchise taxes imposed in lieu thereof) of the
Administrative Agent or any Lender by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or the Administrative
Agent, as the case may be, is organized or maintains a Lending Office (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 Administrative Agent or any Lender, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section), the Administrative Agent or such Lender, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower will make such deductions, (iii) the
Borrower will pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the Borrower will
deliver to the Administrative Agent or such Lender, as the case may be, evidence
of such payment.
(b) Subject to SECTION 2.16(E), the Borrower will indemnify the
Administrative Agent and each Lender for the full amount of Taxes (including,
without limitation, any Taxes imposed by any jurisdiction on amounts payable
under this Section) paid by the Administrative Agent or such Lender, as the case
may be, and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date the Administrative Agent or such Lender, as the case may be, makes written
demand therefor.
(c) Each of the Administrative Agent and the Lenders 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 Administrative Agent
or such Lender, as the case may be, shall reimburse the Borrower to the extent
of the amount of any such recovery or permanent net tax benefit (but only to the
extent of indemnity payments made, or additional amounts paid, by or on behalf
of the Borrower under this Section with respect to the Taxes giving rise to such
recovery or tax benefit); PROVIDED, HOWEVER, that the Borrower, upon the request
of the Administrative Agent or such Lender, agrees to repay to the
Administrative Agent or such Lender, as the case may be, the amount paid over to
the Borrower (together with any penalties, interest or other charges), in
the event the Administrative Agent or such Lender is required to repay
such amount to the relevant taxing authority or other Governmental
Authority. The determination by the Administrative Agent or any Lender of the
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amount of any such recovery or permanent net tax benefit shall, in the absence
of manifest error, be conclusive and binding.
(d) If any Lender is not a "United States person" as defined in Section
7701(a)(30) of the Internal Revenue Code (a "Non-U.S. Lender"), such Non-U.S.
Lender will deliver to each of the Administrative Agent and the Borrower, on or
prior to the Closing Date (or, in the case of a Non-U.S. Lender that becomes a
party to this Agreement as a result of an assignment after the Closing Date, on
the effective date of such assignment), (i) in the case of a Non-U.S. Lender
that is a "bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue
Code, two properly completed copies of Internal Revenue Service Form 4224, 1001,
W-8BEN, W-8ECI or W-8 EXP, as applicable (or successor forms), certifying that
such Non-U.S. Lender is entitled to an exemption from or a reduction of
withholding or deduction for or on account of United States federal income taxes
in connection with payments under this Agreement or any of the Notes, together
with a properly completed Internal Revenue Service Form W-8 or W-9, as
applicable (or successor forms), and (ii) in the case of a Non-U.S. Lender that
is not a "bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue
Code, a certificate in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower and to the effect that (x) such Non-U.S.
Lender is not a "bank" for purposes of Section 881(c)(3)(A) of the Internal
Revenue Code, is not subject to regulatory or other legal requirements as a bank
in any jurisdiction, and has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any governmental authority,
any application made to a rating agency or qualification for any exemption from
any tax, securities law or other legal requirements, (y) is not a 10-percent
shareholder for purposes of Section 881(c)(3)(B) of the Internal Revenue Code
and (z) is not a controlled foreign corporation receiving interest from a
related person for purposes of Section 881(c)(3)(C) of the Internal Revenue
Code, together with two properly completed copies of Internal Revenue Service
Form 1001 or W-8 BEN (as applicable), or successor forms and a properly
completed Internal Revenue Service Form W-8 or W-9, as applicable (or successor
forms). Each such Non-U.S. Lender further agrees to deliver to each of the
Administrative Agent and the Borrower an additional copy of each such relevant
form on or before the date that such form expires or becomes obsolete or after
the occurrence of any event (including a change in its applicable Lending
Office) requiring a change in the most recent forms so delivered by it, in each
case certifying that such Non-U.S. Lender is entitled to an exemption from or a
reduction of withholding or deduction for or on account of United States federal
income taxes in connection with payments under this Agreement or any of the
Notes, unless an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required, which event renders all such forms inapplicable or the
exemption to which such forms relate unavailable and such Non-U.S. Lender
notifies the Administrative Agent and the Borrower that it is not entitled to
receive payments without deduction or withholding of United States federal
income taxes. Each such Non-U.S. Lender will promptly notify the Administrative
Agent and the Borrower of any changes in circumstances that would modify or
render invalid any claimed exemption or reduction. If any Lender is a United
States person, if requested by the Borrower, it agrees to complete and deliver
to the Borrower a statement signed by an authorized signatory of such Lender to
the effect that such Lender is a United States person together with a duly
completed and executed copy of Internal Revenue Service Form W-9 or a successor
form establishing that such Lender is not subject to U.S. backup withholding
tax.
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(e) If any Lender is entitled to a reduction in (and not a complete
exemption from) the applicable withholding tax, the Borrower and the
Administrative Agent shall withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. The Borrower shall not be obligated to gross up any payments to
any Lender pursuant to SECTION 2.16(A),or to indemnify any Lender pursuant to
SECTION 2.16(B), in respect of United States federal withholding taxes to the
extent imposed as a result of (i) the failure of such Lender to deliver to the
Borrower the form or forms and/or documentation, as applicable to such Lender,
pursuant to SECTION 2.16(D), (ii) such form or forms and/or documentation
required not establishing an exemption from U.S. federal withholding tax or the
information or certifications made therein by the Lender being untrue or
inaccurate on the date delivered in any material respect, or (iii) the Lender
designating a successor Lending Office at which it maintains its Loans which has
the effect of causing such Lender to become obligated for tax payments in excess
of those in effect immediately prior to such designation; PROVIDED, HOWEVER,
that the Borrower shall be obligated to gross up any payments to any such Lender
pursuant to SECTION 2.16(A)(I), and to indemnify any such Lender pursuant to
SECTION 2.16(B), in respect of United States federal withholding taxes if (A)
any such failure to deliver a form or forms or the failure of such form or forms
to establish a complete exemption from U.S. federal withholding tax or
inaccuracy or untruth contained therein resulted from a change in any applicable
statute, treaty, regulation or other applicable law or any interpretation of any
of the foregoing occurring after the date hereof (or, with respect to any Lender
becoming a party hereto after the date hereof, after the date such Lender became
a party hereto), which change rendered such Lender no longer legally entitled to
deliver such form or forms or otherwise ineligible for a complete exemption from
U.S. federal withholding tax, or rendered the information or certifications made
in such form or forms untrue or inaccurate in a material respect or (B) the
redesignation of the Lender's Lending Office was made at the request of the
Borrower.
2.17 COMPENSATION. The Borrower will compensate each Lender upon demand for
all losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Lender to fund or maintain LIBOR Loans)
that such Lender may incur or sustain (i) if for any reason (other than a
default by such Lender) a Borrowing or continuation of, or conversion into, a
LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation or a conversion of a LIBOR Loan does not
occur in the event no Notice of Conversion/Continuation has been delivered by
Borrower as specified in SECTION 2.10(B), (ii) if any repayment, prepayment or
conversion of any LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of acceleration
of the maturity of the Loans pursuant to SECTION 8.2), (iii) if any prepayment
of any LIBOR Loan is not made on any date specified in a notice of prepayment
given by the Borrower or (iv) as a consequence of any other failure by the
Borrower to make any payments with respect to any LIBOR Loan when due hereunder.
Calculation of all amounts payable to a Lender under this Section shall be made
as though such Lender had actually funded its relevant LIBOR Loan through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an amount
equal to the amount of such LIBOR Loan, having a maturity comparable to the
relevant Interest Period; PROVIDED, HOWEVER, that each Lender may fund its LIBOR
Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this Section.
Determinations by any Lender for purposes of this Section of any such losses,
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expenses or liabilities shall, absent manifest error, be conclusive, provided
that such determinations are made in good faith.
2.18 EXTENSION OF MATURITY DATE. The Borrower, may, by written notice to
the Administrative Agent substantially in the form set forth in EXHIBIT G,
request up to two (2) one-year extensions of the Maturity Date, each such
request to be given not less than 90 nor more than 120 days prior to the
Maturity Date (or one year after the initial Maturity Date in the case of the
second one-year extension request). The Lenders, as provided in SECTION 10.6(A),
in their sole and absolute discretion may grant each request for an one-year
extension and shall notify the Borrower of their decision within 60 days after
the Borrower's request.
2.19 REPLACEMENT LENDERS. The Borrower may, at any time and so long as no
Default or Event of Default has then occurred and is continuing, replace any
Lender (i) that has requested compensation from the Borrower under SECTION 2.15
or 2.16, (ii) the obligation of which to make or maintain LIBOR Loans has been
suspended under SECTION 2.15(D) or (iii) that shall refuse to fund, or otherwise
default in the funding, of its ratable share of any Borrowing requested and
permitted to be made hereunder and such refusal has not been withdrawn or such
default has not been cured within three (3) Business Days after the Borrower has
given such Lender written notice thereof, in any case under clauses (i) through
(iii) above by written notice to such Lender and the Administrative Agent
identifying one or more Persons each of which shall be an Eligible Assignee and
reasonably acceptable to the Administrative Agent (each, a "Replacement Lender,"
and collectively, the "Replacement Lenders") to replace such Lender (the
"Replaced Lender"), PROVIDED that (a) the notice from the Borrower to the
Replaced Lender and the Administrative Agent provided for hereinabove shall
specify an effective date for such replacement (the "REPLACEMENT EFFECTIVE
DATE"), which shall be at least five (5) Business Days after such notice is
given, (b) as of the relevant Replacement Effective Date, each Replacement
Lender shall enter into an Assignment and Acceptance with the Replaced Lender
pursuant to SECTION 10.7, pursuant to which such Replacement Lenders
collectively shall acquire, in such proportion among them as they may agree with
the Borrower and the Administrative Agent, all (but not less than all) of the
Commitment and outstanding Loans of the Replaced Lender, and, in connection
therewith, shall pay (x) to the Replaced Lender, as the purchase price in
respect thereof, an amount equal to the sum as of the Replacement Effective Date
(without duplication) of (1) the unpaid principal amount of, and all accrued but
unpaid interest on, all outstanding Loans of the Replaced Lender and (2) all
accrued but unpaid fees owing to the Replaced Lender under SECTION 2.8(B), (y)
to the Administrative Agent, for its own account, any amounts owing to the
Administrative Agent by the Replaced Lender under SECTION 2.3(B), and (c) all
other obligations of the Borrower owing to the Replaced Lender (other than those
specifically described in clause (b) above in respect of which the assignment
purchase price has been, or is concurrently being, paid), including, without
limitation, amounts payable under SECTION 2.15(A) and (B) which give rise to the
replacement of such Replaced Lender and amounts payable under SECTION 2.17 as a
result of the actions required to be taken under this SECTION 2.19, shall be
paid in full by the Borrower to the Replaced Lender on or prior to the
Replacement Effective Date.
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ARTICLE III
CONDITIONS OF BORROWING AND RESTRUCTURING
3.1 CONDITIONS OF INITIAL BORROWING. The obligation of each Lender to make
Loans in connection with the initial Borrowing hereunder is subject to the
satisfaction of the following conditions precedent:
(a) the Administrative Agent shall have received the following, each dated
the Closing Date (unless otherwise specified) and, except for the Notes, in
sufficient copies for each Lender:
(i) A Note for each Lender that is a party hereto as of the Closing
Date, in the amount of such Lender's Commitment, each duly completed
in accordance with the relevant provisions of SECTION 2.4 and executed by
the Borrower;
(ii) a certificate, signed by the president, chief financial officer,
treasurer or comptroller of the Borrower, in form and substance
satisfactory to the Administrative Agent, certifying that (A) all
representations and warranties of the Borrower contained in this Agreement
and the other Credit Documents are true and correct in all material
respects as of the Closing Date (except representations and warranties
which relate solely to a specific earlier date, which shall have been true
and correct in all material respects as of such earlier date), both
immediately before and after giving effect to the making of the initial
Loans 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 Loans 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 reasonably possible (as
defined under FASB 5) to be 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, 1998 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 Administrative
Agent, certifying (A) that attached thereto is a true and complete
copy of the certificate of incorporation and all amendments 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
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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 (i) Mayer Brown & Platt, special counsel
to the Guarantor, in substantially the form of EXHIBIT E-1, and (ii)
Janet Burak, General Counsel of the Borrower, in substantially the form
of EXHIBIT E-2, in each case addressed to the Administrative Agent and the
Lenders, and addressing such other matters as the Administrative Agent
or any Lender may reasonably request;
(b) The Administrative Agent shall have received a certificate as of a
recent date of the good standing of each of (i) the Borrower, (ii) Everest Re,
(iii) Everest Indemnity and (iv) Everest National, under the laws of their
respective jurisdictions of organization, from the Secretary of State or
Insurance Regulatory Authorities (or comparable Governmental Authority) of such
jurisdiction;
(c) All legal matters, documentation and corporate or other proceedings
incident to the transactions contemplated hereby shall be reasonably acceptable
to the Administrative Agent; all approvals, permits and consents of any
Governmental Authorities (including, without limitation, all relevant Insurance
Regulatory Authorities) or other Persons required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been obtained (without the
imposition of conditions that are not reasonably acceptable to the
Administrative Agent), and all related filings, if any, shall have been made,
and all such approvals, permits, consents and filings shall be in full force and
effect and the Administrative Agent shall have received such copies thereof as
it shall have requested; all applicable waiting periods shall have expired
without any adverse action being taken by any Governmental Authority having
jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental Authority, in each case to enjoin, restrain or prohibit, to obtain
substantial damages in respect of, or that is otherwise related to or arises out
of, this Agreement, any of the other Credit Documents or the consummation of the
transactions contemplated hereby, or that, in the opinion of the Administrative
Agent, would otherwise be reasonably likely to have a Material Adverse Effect;
(d) Since December 31, 1998, 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 (i) to First Union Securities, Inc., the
unpaid balance of the fees described in paragraph (1) of the Fee Letter, (ii) to
the Administrative Agent, the initial payment of the annual administrative fee
described in paragraph (2) of the Fee Letter, and (iii) all other fees and
expenses of the Administrative Agent and the Lenders required hereunder or under
any other Credit Document to be paid on or prior to the Closing Date (including
fees and expenses of counsel) in connection with this Agreement and the
transactions contemplated hereby;
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(f) The Administrative Agent shall have received a Covenant Compliance
Worksheet, duly completed and certified by the chief financial officer or
treasurer of Borrower and in form and substance satisfactory to the
Administrative Agent, demonstrating Borrower's compliance with the financial
covenants set forth in SECTIONS 6.1 through 6.3, determined on a pro forma basis
as of September 30, 1999;
(g) The Lenders shall have received the Pro Forma Balance Sheet and the
Projections as described in SECTIONS 4.11(B) and 4.11(c), all of which shall be
in form and substance satisfactory to the Administrative Agent;
(h) The Administrative Agent shall have received evidence satisfactory to
it that concurrently with the making of the initial Loans hereunder, (x) all
principal, interest and other amounts outstanding with respect to the
Terminating Senior Indebtedness shall be repaid and satisfied in full and (y)
all commitments to extend credit under the agreements and instruments relating
thereto shall be terminated;
(i) The Administrative Agent shall have received (A) satisfactory
confirmation from A.M. Best Company that the current rating of each Material
Insurance Subsidiary is "A-" or better and (B) satisfactory confirmation of the
Moody's and Standard & Poor's Financial Strength Rating of Everest Re;
(j) The Administrative Agent shall have received (i) 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 and (ii) a LIBOR borrowing
indemnity letter; and
(k) The Administrative Agent 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 each Lender to make any Loan
hereunder, including its initial Loan, is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date:
(a) The Administrative Agent shall have received a Notice of Borrowing in
accordance with SECTION 2.2(B);
(b) Each of the representations and warranties contained in ARTICLE IV and
in the other Credit Documents shall be true and correct in all material respects
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
(except those found at SECTIONS 4.18 and 4.19), with the same effect as if made
on and as of such date, both immediately before and after giving effect to the
Loans to be made on such date (except to the extent any such representation or
warranty is expressly stated to have been made as of a specific date, in which
case such representation or warranty shall be true and correct in all material
respects as of such date); and
(c) No Default or Event of Default shall have occurred and be continuing on
such date, both immediately before and after giving effect to, the Loans to be
made on such date.
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Each giving of a Notice of Borrowing, and the consummation of each
Borrowing, shall be deemed to constitute a representation and warranty 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.
3.3 CONDITIONS OF APPROVAL OF AND BORROWINGS AFTER THE RESTRUCTURING
The approval of the Restructuring by the Lenders, and the obligation of
each Lender to make Loans after the effectiveness of the Restructuring, are
subject to the satisfaction, or waiver in accordance with SECTION 11.6 hereof,
of the conditions precedent of SECTION 3.2 and the following conditions
precedent:
(a) The Guarantor shall execute and deliver an unconditional and
irrevocable Parent Guaranty of the obligations of the Borrower under the Credit
Agreement substantially in the form of EXHIBIT F;
(b) The Administrative Agent shall have received a Compliance Certificate,
duly completed and certified by the chief financial officer or treasurer of the
Guarantor and in form and substance satisfactory to the Administrative Agent,
demonstrating Guarantor's compliance with the financial covenants set forth in
SECTIONS 6.1 through 6.3, determined on a pro forma basis as of the end of the
most recent fiscal quarter, after giving effect to the effectiveness of the
Restructuring;
(c) The Administrative Agent shall have received (i) opinions of Mayer
Brown & Platt, special counsel to the Borrower, in substantially the form of
EXHIBIT E-3, of Janet Burak, General Counsel of the Borrower, in substantially
the form of EXHIBIT E-4, and of Conyers, Dill & Pearman, Bermuda counsel to the
Guarantor, in substantially the form of EXHIBIT E-5, in each case addressed to
the Administrative Agent and the Lenders and dated the Restructuring Date, and
each addressing such other matters as the Administrative Agent or any Lender may
reasonably request; (ii) the articles of merger relating to the Restructuring;
and (iii) the Certificate of Merger giving effect to the Restructuring;
(d) The Restructuring (i) shall have been consummated pursuant to the Form
S-4 Registration Statement and its definition herein except for any modification
in the Restructuring or waiver of a default approved by the Required Lenders and
(ii) would not result in a Default under this Agreement;
(e) Before giving effect to the Restructuring, no Default or Event of
Default shall have occurred and be continuing under this Agreement, and after
giving effect to the Restructuring, no Default or Event of Default shall occur
under this Agreement;
(f) No Material Adverse Change shall have occurred since December 31, 1998,
and there shall exist no event, condition or state of facts that could
reasonably be expected to result in a Material Adverse Change; and
(g) The Restructuring shall have been consummated prior to December 31,
2000.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to induce the Lenders to extend the credit contemplated hereby,
the Borrower represents and warrants to the Administrative Agent and the Lenders
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, except when the failure to be so qualified would not be
reasonably likely to have a Material Adverse Effect.
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 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 repay Indebtedness owed to the Borrower or any other
Subsidiary, to make loans or advances to the Borrower or any other Subsidiary,
or to transfer any of its assets or properties to the Borrower or any other
Subsidiary, in each case other than such restrictions or encumbrances existing
under or by reason of the Credit Documents or applicable Requirements of Law.
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
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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 1998 Form 10-K and as
supplemented in written disclosure to the Administrative Agent delivered prior
to execution of this Agreement, 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 reasonably possible (as defined under FASB 5) to be
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 GAAP. 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
GAAP. Except in connection with the consolidated federal income tax
returns for periods prior to October 1995, neither the Borrower
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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 (other than financial
projections and forecasts) heretofore or contemporaneously furnished to the
Administrative Agent or any Lender in writing by or on behalf of the Borrower or
any of its Subsidiaries for purposes of or in connection with this Agreement and
the transactions contemplated hereby is, and all other such factual information
(other than financial projections and forecasts) hereafter furnished to the
Administrative Agent or any Lender in writing by or on behalf of the Borrower or
any of its Subsidiaries will be, true and accurate in all material respects on
the date as of which such information is dated or certified (or, if such
information has been amended or supplemented, on the date as of which any such
amendment or supplement is dated or certified) and 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 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, 1998, 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 Administrative Agent
copies of (i) the audited consolidated balance sheets of the Borrower and its
Subsidiaries as of December 31, 1998, 1997 and 1996 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
September 30, 1999, and the related statements of income, stockholders'
equity and cash flows for the nine-month period then ended. Such financial
statements have been prepared in accordance with GAAP (subject, with
respect to the unaudited financial statements, to the absence of notes
required by GAAP and to normal year-end 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
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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 unaudited pro forma balance sheet of the Borrower as of September
30, 1999, a copy of which has heretofore been delivered to the Administrative
Agent, gives pro forma effect to the consummation of the initial extensions of
credit made under this Agreement, and the payment of transaction fees and
expenses related to the foregoing, all as if such events had occurred on such
date (the "Pro Forma Balance Sheet"). The Pro Forma Balance Sheet has been
prepared in accordance with GAAP (subject to the absence of footnotes required
by GAAP and subject to normal year-end adjustments) and, subject to stated
assumptions made in good faith and having a reasonable basis set forth therein,
presents fairly the financial condition of the Borrower on an unaudited pro
forma basis as of the date set forth therein after giving effect to the
consummation of the transactions described above.
(c) The Borrower has prepared, and has heretofore furnished to the
Administrative Agent a copy of, annual projected balance sheets and statements
of income of the Borrower for the three-year period beginning with the year
ending December 31, 1999, giving effect to the initial extensions of credit made
under this Agreement, and the payment of transaction fees and expenses related
to the foregoing (the "Projections"). In the opinion of management of the
Borrower, the assumptions used in the preparation of the Projections were fair,
complete and reasonable when made and continue to be fair, complete and
reasonable as of the date hereof. The Projections have been prepared in good
faith by the executive and financial personnel of the Borrower, are complete and
represent a reasonable estimate of the future performance and financial
condition of the Borrower, subject to the uncertainties and approximations
inherent in any projections.
(d) The Borrower has heretofore furnished to the Administrative Agent
copies of (i) the Annual Statements of each of Everest Re, Everest Indemnity and
Everest National as of December 31, 1998, 1997 and 1996 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
September 30, 1999, and for the nine-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 SAP (except as may
be reflected in the notes thereto and subject, with respect to the
Quarterly Statements, to the absence of notes required by SAP and to normal
year-end adjustments), were in 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
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material liabilities or obligations of any nature whatsoever (whether absolute,
contingent or otherwise and whether or not due) that, in accordance with SAP,
would have been required to have been disclosed or provided for in such
Historical Statutory Statements. All books of account of each Insurance
Subsidiary fully and fairly disclose all of its material transactions,
properties, assets, investments, liabilities and obligations, are in its
possession and are true, correct and complete in all material respects.
4.12 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.
4.13 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 1998 Form 10-K, (i)
all activities and operations of the Borrower and its Subsidiaries are
in compliance with the requirements of all applicable Environmental Laws,
except to the extent the 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
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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.
4.14 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.
4.15 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.
4.16 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.
4.17 YEAR 2000 COMPATIBILITY. Any reprogramming required to permit the
proper functioning, before, on and after January 1, 2000, of (i) the Borrower's
and its Subsidiaries' computer-based systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrower's or any of its Subsidiaries' systems interface), and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by December 31, 1999. The cost to the Borrower and its Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of the
year 2000 to the Borrower and its Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower and its Subsidiaries
are and, with ordinary course upgrading and maintenance will continue for the
term of this Agreement to be, sufficient to permit the Borrower and its
Subsidiaries to conduct their respective businesses without a Material Adverse
Effect.
4.18 MATERIAL CONTRACTS. SCHEDULE 4.18 lists, as of the
Closing Date, each "material contract" (within the meaning
of Item 601(b)(10) of Regulation S-K under the Exchange Act)
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(other than Reinsurance Agreements) to which the Borrower or any of its
Subsidiaries is a party, by which any of them or their respective properties is
bound or to which any of them is subject (collectively, "Material Contracts"),
other than Material Contracts disclosed in the Borrower's quarterly or annual
statement most recently filed with the Securities and Exchange Commission, and
also indicates the parties, subject matter and term thereof. As of the Closing
Date, (i) each Material Contract is in full force and effect and, to Borrower's
knowledge, is enforceable by the Borrower or the Subsidiary that is a party
thereto in accordance with its terms, subject to the effects of bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and to the effect of principles of equity and (ii) neither the
Borrower nor any of its Subsidiaries (nor, to the knowledge of the Borrower, any
other party thereto) is in breach of or default under any Material Contract in
any material respect or has given notice of termination or cancellation of any
Material Contract.
4.19 REINSURANCE AGREEMENTS. As of the Closing Date, except as set forth on
Schedule F to the Annual Statements for the Insurance Subsidiaries for the
fiscal year ending December 31, 1998 or as provided for or disclosed on the
interim GAAP financial statements dated as of September 30, 1999, there are no
material liabilities outstanding as of the Closing Date under any Reinsurance
Agreement to which any Insurance Subsidiary is the ceding party. Each
Reinsurance Agreement to which an Insurance Subsidiary is the ceding party and
which is in effect on the Closing Date is in full force and effect on the
Closing Date. Each Reinsurance Agreement to which an Insurance Subsidiary is the
ceding party and which is in effect on the Closing Date is qualified as of the
Closing Date under all applicable Requirements of Law to receive the statutory
credit assigned to such Reinsurance Agreement in the relevant Annual Statement
or Quarterly Statement at the time prepared.
4.20 PARI PASSU DEBT. The Loans rank at least pari passu in right of
payment with all other debt of the Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans together with all other amounts then due and owing hereunder:
5.1 GAAP FINANCIAL STATEMENTS. The Borrower will deliver to each 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 March 31, 2000, 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
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accordance with GAAP (subject to the absence of notes required by GAAP 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, 1999, (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, together with (y) a report thereon by such
accountants that is not qualified as to going concern or scope of audit and to
the effect that such financial statements present fairly the consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated in accordance with
GAAP applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
year, and (z) a report by such accountants to the effect that, based on and in
connection with their examination of the financial statements of the Borrower
and its Subsidiaries, they obtained no knowledge of the occurrence or existence
of any Default or Event of Default relating to accounting or financial reporting
matters, or a statement specifying the nature and period of existence of any
such Default or Event of Default disclosed by their audit; provided, however,
that such accountants shall not be liable by reason of the failure to obtain
knowledge of any Default or Event of Default that would not be disclosed or
revealed in the course of their audit examination, 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 each
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 and Everest Bermuda, within
fifteen (15) days after the required filing date), beginning with the fiscal
quarter ending March 31, 2000, a Quarterly Statement of each of its Insurance
Subsidiaries as of the end of such fiscal quarter and for that portion of the
fiscal year then ended, in the form filed with the relevant Insurance Regulatory
Authority, prepared in accordance with SAP 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;
(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 and Everest Bermuda, within fifteen (15) days after the
required filing date), beginning with the fiscal year ending December 31, 1999,
an Annual Statement of each of its Insurance Subsidiaries as of the
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end of such fiscal year and for the fiscal year then ended, in the form filed
with the relevant Insurance Regulatory Authority, prepared in accordance with
SAP 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, 1999, 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, stockholders'
equity and cash flows for the Borrower and its Insurance Subsidiaries (other
than Everest Reinsurance Company of Canada) 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 SAP 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, 1999 (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 SAP 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
each Lender:
(a) Concurrently with each delivery of the financial statements described
in SECTIONS 5.1 and 5.2, a Compliance Certificate in the form of EXHIBIT C-1 (in
the case of the financial statements described in SECTION 5.1) or EXHIBIT C-2
(in the case of the financial statements described in SECTION 5.2) with respect
to the period covered by the financial statements then being delivered, executed
by the chief financial officer, comptroller or treasurer of the Borrower,
together with a Covenant Compliance Worksheet reflecting the computation of the
respective financial covenants set forth in such Covenant Compliance Worksheet
as of the last day of the period covered by such financial statements;
(b) As soon as available and in any event prior to the end of each fiscal
year, beginning with the fiscal year ending December 31, 2000, (i) a complete
set of projections for the Borrower and its Subsidiaries prior to the
Restructuring Date and Guarantor and its Subsidiaries on or after the
Restructuring Date for the next fiscal year consisting of consolidated
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balance sheets and income statements prepared based on GAAP principles, and (ii)
consolidated projections of Everest Re prepared based on SAP principles;
(c) 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, 1999, 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 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;
(d) Promptly upon the sending, filing or receipt thereof, copies of (i) all
financial statements, reports, notices and proxy statements that the Borrower
(or, if applicable, the Guarantor) or any of the Borrower's 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, if applicable, the Guarantor)
or any of the Borrower's 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 any successor form) 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;
(e) As soon as available, the business plan approved by the applicable
Insurance Regulatory Authority for Everest Bermuda;
(f) As soon as available, the investment policy for Guarantor and Everest
Bermuda.
(g) Promptly upon (and in any event within five (5) Business Days after)
any Responsible Officer of the Borrower obtaining knowledge thereof, written
notice of any of the following:
(i) the occurrence of any Default or Event of Default, together
with a written statement of a Responsible Officer of the Borrower
specifying the nature of such Default or Event of Default, the period of
existence thereof and the action that the Borrower has taken and proposes
to take with respect thereto;
(ii) the institution or threatened institution of any action,
suit, investigation or proceeding against or affecting the Borrower
or any of its Subsidiaries, including any such investigation or
proceeding by any Insurance Regulatory Authority or other
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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(G)(II);
(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 a Responsible Officer of the Borrower specifying
the details of such ERISA Event and the action that the Borrower has taken
and proposes to take with respect thereto, (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;
(vi) the occurrence of any actual changes in any insurance statute
or regulation governing the investment or dividend practices of any
Material Insurance Subsidiary that would be reasonably likely to have a
Material Adverse Effect; and
(vii) any other matter or event that has, or would have, a Material
Adverse Effect, together with a written statement of a Responsible Officer
of the Borrower setting forth the nature and period of existence thereof
and the action that the Borrower has taken and proposes to take with
respect thereto;
(h) Promptly, notice of (i) the occurrence of any material amendment or
modification (other than expiration) to any Reinsurance Agreement (whether
entered into before or after the Closing Date), including any such agreements
that are in a runoff mode on the date hereof, which amendment or modification
would be reasonably likely to have a Material Adverse Effect, or (ii) the
receipt by the Borrower or any of its Subsidiaries of any written notice of any
denial of coverage or claim, litigation or arbitration with respect to any
Reinsurance Agreement to which it is a ceding party which would be reasonably
likely to have a Material Adverse Effect;
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(i) Promptly following the request from the Administrative Agent or the
Required Lenders (which request may only be made when an Event of Default has
occurred and is continuing), a report prepared by an independent actuarial
consulting firm of recognized professional standing reasonably satisfactory to
the Administrative Agent or the Required Lenders, as the case may be, reviewing
the adequacy of reserves of each Insurance Subsidiary determined in accordance
with SAP, which firm shall be provided access to or copies of all reserve
analyses and valuations relating to the insurance business of each Insurance
Subsidiary in the possession of or available to the Borrower or any of its
Subsidiaries.
(j) Any material change to the investment policy for the Insurance
Subsidiaries, the Borrower or the Guarantor including copies of such changes.
(k) 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 Administrative Agent or any Lender
may from time to time reasonably request.
5.4 CORPORATE EXISTENCE; FRANCHISES; MAINTENANCE OF PROPERTIES. The
Borrower will, and will cause each of the Borrower's Subsidiaries to, (i)
subject to SECTION 7.1 maintain and preserve in full force and effect its
corporate existence, (ii) obtain, maintain and preserve in full force and effect
all other rights, franchises, licenses, permits, certifications, approvals and
authorizations required by Governmental Authorities and necessary to the
ownership, occupation or use of its properties or the conduct of its business,
except to the extent the failure to do so would not be reasonably likely to have
a Material Adverse Effect, (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 the
Borrower's 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 the
Borrower's 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 GAAP.
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5.7 INSURANCE. The Borrower will, and will cause each of the Borrower's
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 the Borrower's Subsidiaries to, (i) maintain adequate books,
accounts and records, in which full, true and correct entries shall be made of
all financial transactions in relation to its business and properties, and
prepare all financial statements required under this Agreement, in each case in
accordance with GAAP or SAP, as applicable, and in compliance with the
requirements of any Governmental Authority having jurisdiction over it, and (ii)
permit employees or agents of the Administrative Agent or any Lender to inspect
its properties and examine or audit its books, records, working papers and
accounts and make copies and memoranda of them, and to discuss its affairs,
finances and accounts with its officers and employees and, upon notice to the
Borrower, the independent public accountants of the Borrower (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 Administrative Agent or
the Required Lenders to effect, confirm or further assure or protect and
preserve the interests, rights and remedies of the Administrative Agent and the
Lenders under this Agreement and the other Credit Documents.
5.11 CROSS-REFERENCE TO PARENT GUARANTY. It is understood that after the
Restructuring Date the Guarantor will be subject to those covenants contained in
the form of Parent Guaranty attached hereto as EXHIBIT F by virtue of having
executed and delivered such Parent Guaranty.
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ARTICLE VI
FINANCIAL COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans together with all other amounts then due and owing hereunder:
6.1 MAXIMUM CONSOLIDATED INDEBTEDNESS TO TOTAL CAPITALIZATION. The ratio of
Consolidated Indebtedness to Total Capitalization as of the last day of any
fiscal quarter beginning with the fiscal quarter ending December 31, 1999 shall
not be greater than 0.35 to 1.0.
6.2 MINIMUM STATUTORY SURPLUS. The Statutory Surplus of Everest Re, at any
time beginning with the fiscal quarter ending December 31, 1999, shall not be
less than $850,000,000 plus 25% of the aggregate Net Income of Everest Re for
the period beginning after December 31, 1999 and ending on the date of
calculation, as determined in each case in accordance with SAP (provided that
Net Income for any period shall be taken into account for purposes of this
calculation only if positive), plus 25% of the aggregate capital contributions
made to Everest Re after December 31, 1999.
6.3 MINIMUM INTEREST COVERAGE RATIO. The Interest Coverage Ratio as of the
last day of any fiscal quarter, beginning with the fiscal quarter ending
December 31, 1999, shall not be less than 2.5 to 1.0.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the payment in full of all principal and interest with respect
to the Loans together with all other amounts then due and owing hereunder:
7.1 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 (other than the Restructuring provided that the conditions of SECTION
3.3 are satisfied); 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 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, and will not permit or cause any
of its Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness other than:
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(i) Indebtedness incurred by the Borrower, provided that any
such Indebtedness shall either rank pari passu in right of payment to the
Obligations or be subordinated in right and time of payment to the
Obligations;
(ii) indorsements of negotiable instruments in the ordinary course of
business;
(iii) accrued expenses (including salaries, accrued vacation and
other compensation), current trade or other accounts payable and other
current liabilities arising in the ordinary course of business and not
incurred through the borrowing of money, provided that the same shall
be paid when due except to the extent being contested in good faith and
by appropriate proceedings;
(iv) loans and advances by the Borrower or any Subsidiary to any
other Subsidiary or the Guarantor after the Restructuring Date or by
any Subsidiary to the Borrower, or after the Restructuring Date, the
Guarantor; and
(v) Indebtedness in connection with Permitted Liens.
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 (other than the Credit
Documents) 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 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 GAAP;
(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
workers' 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 GAAP;
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(v) Liens in connection with pledges and deposits made pursuant
to statutory and regulatory requirements 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 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 GAAP 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 GAAP;
(ix) With respect to any real property occupied by the Borrower or
any of its Subsidiaries, all easements, rights of way, licenses and
similar encumbrances on title that do not materially impair the use of
such property for its intended purposes;
(x) Liens on Borrower Margin Stock, to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of
the Borrower and its Subsidiaries (including Borrower Margin Stock); and
(xi) 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.
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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 in the ordinary course of business;
(ii) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such equipment
is exchanged for, 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 other disposition by the Borrower and its
Subsidiaries of any Borrower Margin Stock to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of the
Borrower and its Subsidiaries (including Borrower Margin Stock), provided
that fair value is received in exchange therefor; and
(v) 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
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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:
(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 RESTRICTED PAYMENTS. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, directly or indirectly, declare or make any
dividend payment, or make any other distribution of cash, property or assets, in
respect of any of its Capital Stock or any warrants, rights or options to
acquire its Capital Stock or set aside funds for any of the foregoing, in the
event that immediately before the payment thereof, or after giving effect to the
payment thereof, a Default or Event of Default has occurred and is continuing.
7.7 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 (including the life reinsurance business)
and other businesses engaged in by the Borrower and its Subsidiaries on the date
hereof or a business reasonably related thereto.
7.8 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 Administrative
Agent 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.
7.9 RATINGS. The Borrowers will not permit or cause the rating of Everest
Re by A.M. Best Company to be lower than "A-" at any time.
7.10 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 GAAP or SAP, as applicable.
7.11 LIMITATION ON CERTAIN RESTRICTIONS. The Borrower will not, and
will not permit or cause any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any
restriction or encumbrance on the ability of any Subsidiary of the
Borrower to make any dividend payments or other distributions in
respect of its Capital Stock, to repay Indebtedness owed to the
Borrower or any other Subsidiary, to make loans or advances to
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the Borrower or any other Subsidiary, or to transfer any of its assets or
properties to the Borrower or any other Subsidiary, in each case other than such
restrictions or encumbrances existing under or by reason of the Credit Documents
or applicable Requirements of Law.
7.12 INVESTMENTS. The Borrower will not, and the Borrower will not permit
or cause any of its Subsidiaries to, directly or indirectly, purchase, own,
invest in or otherwise acquire any Capital Stock, evidence of indebtedness or
other obligation or security or any interest whatsoever in any other Person, or
make or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or purchase
or otherwise acquire (whether in one or a series of related transactions) any
portion of the assets, business or properties of another Person (including
pursuant to an acquisition), or create or acquire any Subsidiary, or become a
partner or joint venturer in any partnership or joint venture (collectively,
"Investments"), or make a commitment or otherwise agree to do any of the
foregoing, other than Investments by the Borrower and its Subsidiaries to the
extent permitted under applicable Requirements of Law and in compliance at all
times with (i) the Insurance Code, if applicable, (ii) all applicable insurance
laws and regulations of any other relevant jurisdictions relating to investments
by an Insurance Subsidiary, and (iii) the limitations set forth in the
investment policy.
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 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 (or after the Restructuring Date, the Guarantor with
respect to ARTICLE VI) shall fail or fail to cause its Subsidiaries to observe,
perform or comply with any condition, covenant or agreement contained in any of
SECTIONS 2.13, 5.3(G)(I) or 5.4(I), ARTICLE VI, SECTIONS 7.1 through 7.4,
inclusive, and SECTIONS 7.6, 7.7, 7.9, 7.10, 7.11 or 7.12;
(c) The Borrower, or any of the Borrower's Subsidiaries or the Guarantor
shall fail to observe, perform or comply with any condition, covenant or
agreement contained in this Agreement or any of the other Credit Documents other
than those enumerated in subsections (a) and (b) above, and such failure (i) is
deemed by the terms of the relevant Credit Document to constitute an Event of
Default or (ii) shall continue unremedied for any grace period specifically
applicable thereto or, if no such grace period is applicable, for a period of
thirty (30) days after the earlier of (y) the date on which a Responsible
Officer of either the Borrower or the Guarantor acquires knowledge thereof and
(z) the date on which written notice thereof is delivered by the Administrative
Agent or any Lender to the Borrower;
(d) Any representation or warranty made or deemed made by
or on behalf of the Borrower or any of its Subsidiaries or
the Guarantor in this Agreement, any of the other Credit
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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 the Borrower's Material Subsidiaries or, after
the Restructuring Date, the Guarantor 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 its equivalent
in any other currency); 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 the Borrower's Material Insurance Subsidiaries
or, after the Restructuring Date, the Guarantor shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in subsection (g) below, (iii) apply for
or consent to the appointment of or taking possession by a custodian, trustee,
receiver or similar official for or of itself or all or a substantial part of
its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;
(g) Any involuntary petition or case shall be filed or commenced against
the Borrower, or any of the Borrower's Material Insurance Subsidiaries or, after
the Restructuring Date, the Guarantor 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 (or its equivalent in any other currency) 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
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all of the Lenders, 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
such Subsidiary pursuant thereto, or (iii) any action shall be legally taken by
a judgment creditor to levy upon assets of the Borrower or any such 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 Material Insurance Subsidiary;
(k) Any one or more licenses, permits, accreditations or authorizations of
the Borrower or any of its Subsidiaries shall be suspended, limited or
terminated or shall not be renewed, or any other action shall be taken, by any
Governmental Authority in response to any alleged failure by the Borrower or any
of its Subsidiaries to be in compliance with applicable Requirements of Law, and
such action, individually or in the aggregate, 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 or, after the Restructuring Date, the Guarantor representing 20%
or more of the combined voting power of the then outstanding securities of the
Borrower or, after the Restructuring Date, Guarantor ordinarily (and apart from
rights accruing under special circumstances) having the right to vote in the
election of directors, other than the Guarantor becoming the direct owner of not
less than 100% of the issued and outstanding stock of the Borrower pursuant to
the Restructuring and in satisfaction of the conditions thereto; (ii) prior to
the Restructuring Date, the Board of Directors of the Borrower shall cease to
consist of a majority of the individuals who constituted the Board of Directors
as of the date hereof or who shall have become a member thereof subsequent to
the date hereof after having been nominated, or otherwise approved in writing,
other than pursuant to an agreement involving the merger or sale of such Person
or its securities, by at least a majority of individuals who constituted the
Board of Directors of the Borrower as of the Closing Date (or their replacements
approved as herein required); (iii) on or after the Restructuring Date, the
Board of Directors of the Guarantor shall cease to consist of a majority of the
individuals who constituted the Board of Directors of the Borrower or the
Guarantor 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, other than pursuant to an agreement involving the merger or sale of
such Person or its securities, by at least a majority of individuals who
constituted the Board of Directors of the Borrower or the Guarantor as of the
Closing Date (or their replacements approved as herein required); (iv) the
Borrower shall cease to own directly 100% of the issued and outstanding capital
stock of Everest Re; or (v) on or after the Restructuring Date, the
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Guarantor shall cease to own directly 100% of the issued and outstanding capital
stock of the Borrower.
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 Administrative Agent shall at the direction, or may with the
consent, of the Required Lenders, take any or all of the following actions at
the same or different times:
(a) Declare the Commitments to be terminated, whereupon the same shall
terminate (provided that, upon the occurrence of an Event of Default pursuant to
SECTION 8.1(F), SECTION 8.1(G) or SECTION 8.1(J), the Commitments shall
automatically be terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to SECTION 8.1(F), 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 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, each Lender may, and each is hereby authorized by the Borrower, at any
such time and from time to time, to the fullest extent permitted by applicable
law, without presentment, demand, protest or other notice of any kind, all of
which are hereby knowingly and expressly waived by the Borrower, to set off and
to apply any and all deposits (general or special, time or demand, provisional
or final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
such Lender to or for the credit or the account of the Borrower against any or
all of the Obligations to such Lender now or hereafter existing, whether or not
such Obligations may be contingent or unmatured, the Borrower hereby granting to
each Lender a continuing security interest in and Lien upon all such deposits
and other property as security for such Obligations. Each Lender agrees promptly
to notify the Borrower and the Administrative Agent after any such set-off and
application; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application.
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ARTICLE IX
THE ADMINISTRATIVE AGENT
9.1 APPOINTMENT. Subject to SECTION 9.9, each Lender hereby irrevocably
appoints and authorizes First Union to act as Administrative Agent hereunder and
under the other Credit Documents and to take such actions as agent on its behalf
hereunder and under the other Credit Documents, and to exercise such powers and
to perform such duties, as are specifically delegated to the Administrative
Agent by the terms hereof or thereof, together with such other powers and duties
as are reasonably incidental thereto.
9.2 NATURE OF DUTIES.. The Administrative Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Credit Documents. The Administrative Agent shall not have, by reason of
this Agreement or any other Credit Document, a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any other Credit Document,
express or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent any obligations or liabilities in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein. The Administrative Agent may execute any of its duties under this
Agreement or any other Credit Document by or through agents or attorneys-in-fact
and shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact that it selects with reasonable care. The Administrative Agent
shall be entitled to consult with legal counsel, independent public accountants
and other experts selected by it with respect to all matters pertaining to this
Agreement and the other Credit Documents and its duties hereunder and thereunder
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts. The Lenders hereby acknowledge that the Administrative Agent shall not
be under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Credit Document unless
it shall be requested in writing to do so by the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders).
9.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable to any Lender for any action taken or omitted to be taken by it or
such Person under or in connection with the Credit Documents, except for its or
such Person's own gross negligence or willful misconduct, (ii) responsible in
any manner to any Lender for any recitals, statements, information,
representations or warranties herein or in any other Credit Document or in any
document, instrument, certificate, report or other writing delivered in
connection herewith or therewith, for the execution, effectiveness, genuineness,
validity, enforceability or sufficiency of this Agreement or any other Credit
Document, or for the financial condition of the Borrower, its Subsidiaries or
any other Person, or (iii) required to ascertain or make any inquiry concerning
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any other Credit Document or the existence or possible
existence of any Default or Event of Default, or to inspect the properties,
books or records of the Borrower or any of its Subsidiaries.
9.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected
in relying, upon any notice, statement, consent or other
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communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Administrative Agent may deem and treat each Lender as the owner of
its interest hereunder for all purposes hereof unless and until a written notice
of the assignment, negotiation or transfer thereof shall have been given to the
Administrative Agent in accordance with the provisions of this Agreement. The
Administrative Agent shall be entitled to refrain from taking or omitting to
take any action in connection with this Agreement or any other Credit Document
(i) if such action or omission would, in the reasonable opinion of the
Administrative Agent, violate any applicable law or any provision of this
Agreement or any other Credit Document or (ii) unless and until it shall have
received such advice or concurrence of the Required Lenders (or, where a higher
percentage of the Lenders is expressly required hereunder, such Lenders) as it
deems appropriate or it shall first have been indemnified to its satisfaction by
the Lenders against any and all liability and expense (other than liability and
expense arising from its own gross negligence or willful misconduct) that may be
incurred by it by reason of taking, continuing to take or omitting to take any
such action. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Administrative Agent as a result of the
Administrative Agent's acting or refraining from acting hereunder or under any
other Credit Document in accordance with the instructions of the Required
Lenders (or, where a higher percentage of the Lenders is expressly required
hereunder, such Lenders), and such instructions and any action taken or failure
to act pursuant thereto shall be binding upon all of the Lenders (including all
subsequent Lenders).
9.5 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representation or warranty to it and that no act by the Administrative Agent
or any such Person hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries, shall be deemed to constitute any representation
or warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that (i) it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries
and made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder, and (ii) it will, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action
hereunder and under the other Credit Documents and to make such investigation as
it deems necessary to inform itself as to the business, prospects, operations,
properties, financial and other condition and creditworthiness of the Borrower
and its Subsidiaries. Except as expressly provided in this Agreement and the
other Credit Documents, the Administrative Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information concerning the business, prospects,
operations, properties, financial or other condition or creditworthiness of the
Borrower, its Subsidiaries or any other Person that may at any time come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
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9.6 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Administrative Agent shall have received written notice from the Borrower or
a Lender referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative Agent receives such a notice, the Administrative Agent will
give notice thereof to the Lenders as soon as reasonably practicable; provided,
however, that if any such notice has also been furnished to the Lenders, the
Administrative Agent shall have no obligation to notify the Lenders with respect
thereto. The Administrative Agent shall (subject to SECTIONS 9.4 and 10.6) take
such action with respect to such Default or Event of Default as shall reasonably
be directed by the Required Lenders; provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders except to the extent that
this Agreement expressly requires that such action be taken, or not be taken,
only with the consent or upon the authorization of the Required Lenders or all
of the Lenders.
9.7 INDEMNIFICATION. To the extent the Administrative Agent is not
reimbursed by or on behalf of the Borrower, and without limiting the obligation
of the Borrower to do so, the Lenders agree (i) to indemnify the Administrative
Agent and its officers, directors, employees, agents, attorneys-in-fact and
Affiliates, ratably in proportion to their respective percentages as used in
determining the Required Lenders as of the date of determination, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
reasonable attorneys' fees and expenses) or disbursements of any kind or nature
whatsoever that may at any time (including, without limitation, at any time
following the repayment in full of the Loans and the termination of the
Commitments) be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of this Agreement or any other
Credit Document or any documents contemplated by or referred to herein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under or in connection with any of the foregoing, and
(ii) to reimburse the Administrative Agent upon demand, ratably in proportion to
their respective percentages as used in determining the Required Lenders as of
the date of determination, for any expenses incurred by the Administrative Agent
in connection with the preparation, negotiation, execution, delivery,
administration, amendment, modification, waiver or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any of the other Credit
Documents (including, without limitation, reasonable attorneys' fees and
expenses and compensation of agents and employees paid for services rendered on
behalf of the Lenders); provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the gross negligence or willful misconduct of the party to be
indemnified.
9.8 THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to
its Commitment, the Loans made by it and the Note or Notes issued to it, the
Administrative Agent in its individual capacity and not as Administrative Agent
shall have the same rights and powers under the Credit Documents as any other
Lender and may exercise the same as though it were not performing the agency
duties specified herein; and the terms "Lenders," "Required Lenders,"
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"holders of Notes" and any similar terms shall, unless the context clearly
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent and its Affiliates may accept deposits from,
lend money to, make investments in, and generally engage in any kind of banking,
trust, financial advisory or other business with the Borrower, any of its
Subsidiaries or any of their respective Affiliates as if the Administrative
Agent were not performing the agency duties specified herein, and may accept
fees and other consideration from any of them for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
9.9 SUCCESSOR AGENT. The Administrative Agent may resign at any time by
giving ten (10) days' prior written notice to the Borrower and the Lenders. Upon
any such notice of resignation, the Required Lenders will, with the prior
written consent of the Borrower (which consent shall not be unreasonably
withheld), appoint from among the Lenders a successor to the Administrative
Agent (PROVIDED that the Borrower's consent shall not be required in the event
an Event of Default shall have occurred and be continuing). If no successor to
the Administrative Agent shall have been so appointed by the Required Lenders
and shall have accepted such appointment within such ten-day period, then the
retiring Administrative Agent may, on behalf of the Lenders and after consulting
with the Lenders and the Borrower, appoint a successor Administrative Agent from
among the Lenders. Upon the acceptance of any appointment as Administrative
Agent by a successor Administrative Agent, such successor Administrative Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Credit Documents. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent. If no successor to the
Administrative Agent has accepted appointment as Administrative Agent by the
thirtieth (30th) day following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective, and the Lenders shall thereafter perform all of the
duties of the Administrative Agent hereunder and under the other Credit
Documents until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided for hereinabove.
ARTICLE X
MISCELLANEOUS
10.1 FEES AND EXPENSES. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable and documented out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable and
documented fees and expenses of counsel to the Administrative Agent) 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 and
documented out-of pocket costs and expenses of the Administrative Agent
and each Lender (including, without limitation, the reasonable and
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documented fees and expenses of counsel) 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 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 Administrative Agent and each 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 Administrative
Agent or any Lender), that may be payable in connection with the transactions
contemplated by this Agreement and the other Credit Documents.
10.2 INDEMNIFICATION. The Borrower agrees, whether or not the transactions
contemplated by this Agreement shall be consummated, to indemnify and hold
harmless the Administrative Agent and each 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.
10.3 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS
(EXCLUDING NEW YORK GENERAL OBLIGATIONS LAW SS.5-1401). THE PARTIES HERETO
HEREBY DECLARE THAT IT IS THEIR INTENTION THAT THIS AGREEMENT SHALL BE REGARDED
AS MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND THAT THE LAWS OF SAID
STATE SHALL BE APPLIED IN INTERPRETING ITS PROVISIONS IN ALL CASES WHERE LEGAL
INTERPRETATION SHALL BE REQUIRED. EACH OF THE PARTIES HERETO AGREES (A)
THAT THIS AGREEMENT I NVOLVES AT LEAST $250,000; AND (B) THAT THIS
AGREEMENT HAS BEEN ENTERED INTO BY THE PARTIES HERETO IN EXPRESS
RELIANCE UPON NEW YORK GENERAL OBLIGATIONS LAW SS. 5-1401. NOTWITHSTANDING
THE FOREGOING CHOICE OF LAW, THE BORROWER HEREBY CONSENTS TO
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THE NONEXCLUSIVE JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY,
NORTH CAROLINA OR NEW YORK COUNTY, NEW YORK OR ANY FEDERAL COURT LOCATED
WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA OR THE SOUTHERN
DISTRICT OF THE STATE OF NEW YORK FOR ANY PROCEEDING INSTITUTED HEREUNDER OR
UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH
THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE BORROWER IS A PARTY. INCLUDING ANY
ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER OR THE BORROWER. THE BORROWER IRREVOCABLY
AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT
RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY
HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO
THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER CONSENTS THAT ALL SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS
SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER
TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER IN THE COURTS OF ANY
OTHER JURISDICTION.
10.4 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 OTHER 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 HEREWITH OR THEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
10.5 NOTICES. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered to the party to be notified at the following addresses:
(a) if to the Borrower, Everest Reinsurance Holdings,
Inc., Westgate Corporate Center, 477 Martinville Road, P.O.
Box 830, Liberty Corner, NJ 07938-0830, Attention:
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Stephen L. Limauro, Telecopy No.: (908) 604-3412, Telephone No.: (908)
604-3150 (with a copy to Janet J. Burak, Telecopy No.: (908) 604-3450, Telephone
No.: (908) 604-3170);
(b) if to the Administrative Agent, to it at One First Union Center, TW-10,
301 South College Street, Charlotte NC 28288-0608, Attention: Syndication Agency
Services, Telecopy No.: (704) 383-0288; and
(c) if to any Lender, to it at the address set forth on its signature page
hereto (or if to any Lender not a party hereto as of the date hereof, at the
address set forth in its Assignment and Acceptance);
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery; provided that notices and communications to
the Administrative Agent shall not be effective until received by the
Administrative Agent.
10.6 AMENDMENTS WAIVERS, ETC. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the Borrower from,
any provision of this Agreement or any other Credit Document, shall be effective
unless in a writing signed by the Required Lenders (or by the Administrative
Agent at the direction or with the consent of the Required Lenders), and then
the same shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment,
modification, waiver, discharge, termination or consent shall:
(a) unless agreed to by each Lender directly affected thereby, (i) reduce
or forgive the principal amount of any Loan, reduce the rate of or forgive any
interest thereon, or reduce or forgive any fees or other Obligations (other than
fees payable to the Administrative Agent for its own account), or (ii) extend
the Maturity Date as set forth in SECTION 2.18 or otherwise or any other date
fixed for the payment of any principal of or interest on any Loan (other than
interest payable under SECTION 2.7(B)), any fees (other than fees payable to the
Administrative Agent for its own account) or any other Obligations;
(b) unless agreed to by all of the Lenders, (i) increase or extend any
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase), (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Administrative Agent to take, any action hereunder
(including as set forth in the definition of "Required Lenders"), or (iii)
change any provision of SECTION 2.14 or this Section;
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and PROVIDED FURTHER that the Fee Letter may be amended or modified, and
any rights thereunder waived, in a writing signed by the parties thereto.
10.7 ASSIGNMENTS, PARTICIPATIONS.
(a) Each Lender may assign to one or more other Eligible Assignees (each,
an "Assignee") all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the outstanding Loans made by it, the Note or Notes held by it); provided,
however, that (i) any such assignment (other than an assignment to a Lender or
an Affiliate of a Lender) shall not be made without the prior written consent of
the Administrative Agent and the Borrower (to be evidenced by their
counterexecution of the relevant Assignment and Acceptance), which consent shall
not be unreasonably withheld (provided that the Borrower's consent shall not be
required in the event an Event of Default shall have occurred and be
continuing), (ii) each such assignment shall be of a uniform, and not varying,
percentage of all of the assigning Lender's rights and obligations under this
Agreement, (iii) unless otherwise waived by the Borrower and the Administrative
Agent, except in the case of an assignment to a Lender or an Affiliate of a
Lender, no such assignment shall be in an aggregate principal amount (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
less than $10,000,000, determined by combining the amount of the assigning
Lender's outstanding Loans and Unutilized Commitment being assigned pursuant to
such assignment (or, if less, the entire Commitment and Loans of the assigning
Lender); provided, however, the limitation on assignment in this clause (iii)
shall be no less than the aggregate principal amount of $5,000,000 (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
if an Event of Default shall have occurred and be continuing; and (iv) the
parties to each such assignment will execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such assignment, and will
pay a nonrefundable processing fee of $3,000 to the Administrative Agent for its
own account. Upon such execution, delivery, acceptance and recording of the
Assignment and Acceptance, from and after the effective date specified therein,
which effective date shall be at least five Business Days after the execution
thereof (unless the Administrative Agent shall otherwise agree), (A) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have (in addition to any rights and obligations theretofore
held by it) the rights and obligations of the assigning Lender hereunder with
respect thereto and (B) the assigning Lender shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights (other than rights under the provisions of
this Agreement and the other Credit Documents relating to indemnification or
payment of fees, costs and expenses, to the extent such rights relate to the
time prior to the effective date of such Assignment and Acceptance) and
be released from its obligations under this Agreement (and, in the case
of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto). The covenants, agreements
and obligations of each Lender set forth in each Assignment and Acceptance
shall be deemed made to and for the benefit of the Administrative Agent
and the other parties hereto as if set forth at length herein. Unless
otherwise waived by the Borrower, each Assignee which was not previously
a Lender hereunder and which is not a "United State person" as defined
in Section 7701(a)(30) of the Internal Revenue Code shall,
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within three Business Days of becoming a party hereto, deliver the forms
required by SECTION 2.16(D).
(b) The Administrative Agent will maintain at its address for notices
referred to herein a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitments of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent demonstrable error, and
the Borrower, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower
and each Lender at any reasonable time and from time to time upon reasonable
prior notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an Assignee and, if required, counterexecuted by the
Borrower, together with the Note or Notes subject to such assignment and the
processing fee referred to in subsection (a) above, the Administrative Agent
will (i) accept such Assignment and Acceptance, (ii) on the effective date
thereof, record the information contained therein in the Register and (iii) give
notice thereof to the Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, will execute
and deliver to the Administrative Agent, in exchange for the surrendered Note or
Notes, a new Note or Notes to the order of the Assignee (and, if the assigning
Lender has retained any portion of its rights and obligations hereunder, to the
order of the assigning Lender), prepared in accordance with the provisions of
SECTION 2.4 as necessary to reflect, after giving effect to the assignment, the
Commitments of the Assignee and (to the extent of any retained interests) the
assigning Lender, dated the date of the replaced Note or Notes and otherwise in
substantially the form of EXHIBIT A. The Administrative Agent will return
canceled Notes to the Borrower.
(d) Each Lender may, without the consent of the Borrower, the
Administrative Agent or any other Lender, sell to one or more other Persons
(each, a "Participant") participations in any portion comprising less than all
of its rights and obligations under this Agreement (including, without
limitation, a portion of its Commitment, the outstanding Loans made by it, and
the Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged and such Lender shall
remain solely responsible for the performance of such obligations, (ii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and no Lender shall permit any Participant to
have any voting rights or any right to control the vote of such Lender
with respect to any amendment, modification, waiver, consent or other
action hereunder or under any other Credit Document (except as to actions
that would (x) reduce or forgive the principal amount of any Loan, reduce
the rate of or forgive any interest thereon, or reduce or forgive any
fees or other Obligations, (y) extend the Maturity Date or any other
date fixed for the payment of any principal of or interest on any Loan,
any fees or any other Obligations, or (z) increase or extend any Commitment
of any Lender), and (iiiii) no Participant shall have any rights under this
Agreement or any of the other Credit Documents, each Participant's rights
against the granting Lender in respect of any participation to be those
set forth in the participation agreement, and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not
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granted such participation. Notwithstanding the foregoing, each Participant
shall have the rights of a Lender for purposes of SECTIONS 2.15(A), 2.15(B),
2.16, 2.17 and 8.3, and shall be entitled to the benefits thereto, to the extent
that the Lender granting such participation would be entitled to such benefits
if the participation had not been made, provided that no Participant shall be
entitled to receive any greater amount pursuant to any of such Sections than the
Lender granting such participation would have been entitled to receive in
respect of the amount of the participation made by such Lender to such
Participant had such participation not been made.
(e) Nothing in this Agreement shall be construed to prohibit any Lender
from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release a Lender from any of its obligations hereunder.
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section, disclose to the
Assignee or Participant or proposed Assignee or Participant any information
relating to the Borrower and its Subsidiaries furnished to it by or on behalf of
any other party hereto, provided that such Assignee or Participant or proposed
Assignee or Participant agrees in writing to keep such information confidential
to the same extent required of the Lenders under SECTION 10.13.
10.8 NO WAIVER. The rights and remedies of the Administrative Agent and
each 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 Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude 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, the Guarantor, Administrative Agent or Lenders 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 or any Guarantor in any case shall entitle the Borrower or any
Guarantor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Administrative Agent or
any Lender to exercise any right or remedy or take any other or further action
in any circumstances without notice or demand.
10.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, and all references herein to any party shall be deemed to
include its successors and assigns; provided, however, that (i) the Borrower
shall not sell, assign or transfer any of its rights, interests, duties or
obligations under this Agreement or any other Credit Document without the prior
written consent of all of the Lenders and (ii) any Assignees and Participants
shall have such rights and obligations with respect to this Agreement and the
other Credit Documents as are provided for under and pursuant to the provisions
of SECTION 10.7.
10.10 SURVIVAL. All representations, warranties and agreements made
by or on behalf of the Borrower or any of its Subsidiaries
in this Agreement and in the other Credit Documents
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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 2.15(A),
2.15(B), 2.16, 2.17, 9.7, 10.1 and 10.2, shall survive the payment in full of
the Loans, the termination of the Commitments and any termination of this
Agreement or any of the other Credit Documents.
10.11 SEVERABILITY. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
10.12 CONSTRUCTION. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
10.13 CONFIDENTIALITY. Each Lender agrees to keep confidential, pursuant to
its customary procedures for handling confidential information of a similar
nature and in accordance with safe and sound banking practices, all nonpublic
information provided to it by or on behalf of the Borrower or any of its
Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that any Lender may disclose such information (i) to its
affiliates, 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 Administrative Agent or any other
Lender, (v) to the extent the same has become publicly available other than as a
result of a breach of this Agreement and (vi) pursuant to and in accordance with
the provisions of SECTION 10.7(F).
10.14 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. This Agreement
shall become effective upon the execution of a counterpart hereof by each of the
parties hereto and receipt by the Administrative Agent and the Borrower of
written or telephonic notification of such execution and authorization of
delivery thereof.
10.15 DISCLOSURE OF INFORMATION. The Borrower agrees and consents
to the Administrative Agent's disclosure of information
relating to this transaction to Gold Sheets and
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other similar bank trade publications. Such information will consist of deal
terms and other information customarily found in such publications; provided
that as to any disclosure of information not made publicly available by the
Borrower, the Borrower shall have the right to consent to such disclosure.
10.16 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (B) SUPERSEDE ANY AND ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF, INCLUDING, WITHOUT LIMITATION, THE COMMITMENT
LETTER FROM FIRST UNION TO THE BORROWER DATED NOVEMBER 22, 1999, 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: Stephen L. Limauro
Title: Senior Vice President, Chief
Financial Officer and Comptroller
(signatures continued)
S-1
<PAGE>
FIRST UNION NATIONAL BANK, as Administrative Agent
and as a Lender
By: ________________________________
Commitment: Name: Thomas L. Stitchberry
$40,000,000 Title: Senior Vice President
Instructions for wire transfers to the
Administrative Agent:
First Union National Bank
ABA Routing No.
Charlotte, North Carolina
Account Number:
Account Name:
Attention:
Address for notices as a Lender:
First Union National Bank
1339 Chestnut Street, 3rd Floor
Philadelphia, Pennsylvania 19107
Attention: Joseph DiFrancesco
Telephone: (215) 973-2944
Telecopy: (215) 786-4114
Lending Office:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Syndication Agency Services
Telephone: (704) 374-2698
Telecopy: (704) 383-0288
(signatures continued)
S-2
<PAGE>
BANK ONE, NA, as a Lender
By: ________________________________
Commitment: Name: Timothy J. Stambaugh
$30,000,000 Title: Senior Vice President
Address for notices:
Bank One, NA
153 West 51st Street
New York, New York 10019
Attention: Timothy J. Stambaugh
Telephone: (212) 373-1124
Telecopy: (212) 373-1439
with a copy to:
Bank One, NA
1 Bank One Plaza
Chicago, Illinois 60670
Attention: Stephen Maenhout
Telephone: (312) 732-8956
Telecopy: (312) 732-4033
Lending Office:
Bank One, NA
1 Bank One Plaza
Chicago, Illinois 60670
Attention: Stephen Maenhout
Telephone: (212) 373-1124
Telecopy: (212) 373-1439
(signatures continued)
S-3
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES, as a Lender
By: ________________________________
Commitment: Name: Gary Overton
$30,000,000 Title: Director
By: ________________________________
Name: John S. McGill
Title: Director
Address for notices:
Deutsche Bank AG
New York Branch
31 West 52nd Street
New York, New York 10019
Attention: Gary Overton
Telephone: (212) 469-8671
Telecopy: (212) 469-8366
Domestic and Money Market Lending Office:
Deutsche Bank AG
New York Branch
31 West 52nd Street
New York, New York 10019
Attention: CFS, Cheryl Mandelbaum
Telephone: (212) 469-4092
Telecopy: (212) 469-4139
Eurodollar Office:
Deutsche Bank AG
Cayman Island Branch
31 West 52nd Street
New York, New York 10019
Attention: CFS, Cheryl Mandelbaum
Telephone: (212) 469-4092
Telecopy: (212) 469-4139
(signatures continued)
S-4
<PAGE>
ROYAL BANK OF CANADA, as a Lender
By: ________________________________
Commitment: Name: Yvonne J. Bernard
$30,000,000 Title: Manager
Address for notices:
Royal Bank of Canada
New York Branch
One Liberty Plaza, 4th Floor
New York, New York 10006-1404
Attention: Linda Joannou
Telephone: (212) 428-6212
Telecopy: (212) 428-2372
with a copy to:
Royal Bank of Canada
One Liberty Plaza, 4th Floor
New York, New York 10006-1404
Attention: Yvonne Bernard
Telephone: (212) 428-6278
Telecopy: (212) 428-6201
Lending Office:
Royal Bank of Canada
New York Branch
One Liberty Plaza
New York, New York 10006-1404
(signatures continued)
S-5
<PAGE>
THE CHASE MANHATTAN BANK, as a Lender
By: ________________________________
Commitment: Name: Donald Rands
$20,000,000 Title: Vice President
Address for notices:
The Chase Manhattan Bank
Financial Institutions Group
270 Park Avenue, 20th Floor
New York, New York 10017
Attention: Donald Rands
Telephone: (212) 270-5528
Telecopy: (212) 270-1001
with a copy to:
The Chase Manhattan Bank
Chase Manhattan Loan Services Group
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Maxeen Pinnock
Telephone: (212) 552-7923
Telecopy: (212) 552-7490
Lending Office:
The Chase Manhattan Bank
Chase Manhattan Loan Services Group
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Maxeen Pinnock
Telephone: (212) 552-7923
Telecopy: (212) 552-7490
S-6
<PAGE>
EXHIBIT A
Borrower's Taxpayer Identification No. _____________
FORM OF NOTE
$___________ December ___, 1999
Charlotte, North Carolina
FOR VALUE RECEIVED, EVEREST REINSURANCE HOLDINGS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
______________________________ (the "Lender"), at the offices of First
Union National Bank (the "Administrative Agent") located at One First Union
Center, 301 South College Street, Charlotte, North Carolina (or at such other
place or places as the Administrative Agent may designate), at the times and in
the manner provided in the Credit Agreement, dated as of December ___, 1999 (as
amended, modified or supplemented from time to time, the "Credit Agreement"),
among the Borrower, the Lenders from time to time parties thereto, and First
Union National Bank, as Administrative Agent, the principal sum of
__________________________ DOLLARS ($___________), or such lesser
amount as may constitute the unpaid principal amount of the Loans made by the
Lender, under the terms and conditions of this promissory note (this "Note") and
the Credit Agreement. The defined terms in the Credit Agreement are used herein
with the same meaning. The Borrower also unconditionally promises to pay
interest on the aggregate unpaid principal amount of this Note at the rates
applicable thereto from time to time and on the dates as provided in the Credit
Agreement.
This Note is one of the Notes referred to in the Credit Agreement and
is issued to evidence the Loans made by the Lender pursuant to the Credit
Agreement. All of the terms, conditions and covenants of the Credit Agreement
are expressly made a part of this Note by reference in the same manner and with
the same effect as if set forth herein at length, and any holder of this Note is
entitled to the benefits of and remedies provided in the Credit Agreement and
the other Credit Documents. Reference is made to the Credit Agreement for
provisions relating to the interest rate, maturity, payment, prepayment and
acceleration of this Note.
In the event of an acceleration of the maturity of this Note, this Note
shall become immediately due and payable, without presentation, demand, protest
or notice of any kind, all of which are hereby waived by the Borrower.
<PAGE>
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
This Note shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflict of laws
(excluding New York General Obligations Law ss.5-1401). The Borrower hereby
submits to the nonexclusive jurisdiction and venue of the federal and state
court located in Mecklenburg County, North Carolina or New York County, New
York, although the Lender shall not be limited to bringing an action in such
courts.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
under seal by its duly authorized corporate officer as of the day and year first
above written.
EVEREST REINSURANCE HOLDINGS, INC.
By: ________________________________
Title: ________________________________
<PAGE>
EXHIBIT B-1
FORM OF
NOTICE OF BORROWING
[Date]
First Union National Bank, as Administrative Agent
One First Union Center, DC-4
301 South College Street
Charlotte, North Carolina 28288-0680
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, EVEREST REINSURANCE HOLDINGS, INC. (the "Borrower"),
refers to the Credit Agreement, dated as of December 21, 1999, among the
Borrower, certain banks and other financial institutions from time to time
parties thereto (the "Lenders"), and you, as Administrative Agent for the
Lenders (as amended, modified or supplemented from time to time, the "Credit
Agreement," the terms defined therein being used herein as therein defined),
and, pursuant to SECTION 2.2(B) of the Credit Agreement, hereby gives you, as
Administrative Agent, irrevocable notice that the Borrower requests a Borrowing
of Loans under the Credit Agreement, and to that end sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
SECTION 2.2(B) of the Credit Agreement:
(i) The aggregate principal amount of the Proposed Borrowing
is $_______________.1
(ii) The Loans comprising the Proposed Borrowing shall be
initially made as [Base Rate Loans] [LIBOR Loans].2
[(iii) The initial Interest Period for the LIBOR Loans comprising
the Proposed Borrowing shall be [one/two/three/six months].]3
- ------------------------
1. Amount of Proposed Borrowing must comply with Section 2.2(b) of the
Credit Agreement.
2. Select the applicable Type of Loans.
3. Include this clause in the case of a Proposed Borrowing comprised of
LIBOR Loans, and select the applicable Interest Period.
<PAGE>
(iii) The Proposed Borrowing is requested to be made on ________
(the "Borrowing Date").4
The Borrower hereby certifies that the following statements are true on
and as of the date hereof and will be true on and as of the Borrowing Date:
A. Each of the representations and warranties contained in
the Credit Agreement [(except for the representations and warranties
contained in Sections 4.18 and 4.19 of the Credit Agreement)]5 and
in the other Credit Documents is and will be true and correct in
all material respects on and as of each such date (except for
representations and warranties which relate to a specific earlier date,
which were true and correct in all material respects as of such earlier
date), with the same effect as if made on and as of each such date,
both immediately before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom;
B. No Default or Event of Default has occurred and is continuing
or would result from the Proposed Borrowing or from the application
of the proceeds therefrom; and
C. After giving effect to the Proposed Borrowing, the aggregate
principal amount of Loans outstanding will not exceed the aggregate
Commitments.
Very truly yours,
EVEREST REINSURANCE HOLDINGS, INC.
By: _________________________________
Title: _________________________________
- ------------------------
4. Shall be at least three Business Days after the date hereof (in the
case of LIBOR Loans) or no later than 10:00 a.m. on the same Business
Day as the date hereof (in case of Base Rate Loans).
5. Borrower is required to make the representations and warranties
contained in SECTION 4.18 and 4.19 only upon the initial Borrowing.
2
<PAGE>
EXHIBIT B-2
FORM OF
NOTICE OF CONVERSION/CONTINUATION
[Date]
First Union National Bank, as Administrative Agent
One First Union Center, DC-4
301 South College Street
Charlotte, North Carolina 28288-0680
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, EVEREST REINSURANCE HOLDINGS, INC. (the "Borrower"),
refers to the Credit Agreement, dated as of December 21, 1999, among the
Borrower, certain banks and other financial institutions from time to time
parties thereto (the "Lenders"), and you, as Administrative Agent for the
Lenders (as amended, modified or supplemented from time to time, the "Credit
Agreement," the terms defined therein being used herein as therein defined),
and, pursuant to SECTION 2.10(B) of the Credit Agreement, hereby gives you, as
Administrative Agent, irrevocable notice that the Borrower requests a
[conversion] [continuation]1 of Loans under the Credit Agreement, and to that
end sets forth below the information relating to such [conversion]
[continuation] (the "Proposed [Conversion] [Continuation]") as required by
SECTION 2.10(B) of the Credit Agreement:
(i) The Proposed [Conversion] [Continuation] is requested to
be made on _______________.2
(ii) The Proposed [Conversion] [Continuation] involves $_______
3 in aggregate principal amount of Loans made pursuant to a Borrowing
on _________,4 which Loans are presently maintained as [Base Rate]
[LIBOR] Loans and are proposed hereby to be [converted into Base Rate
Loans] [converted into LIBOR Loans] [continued as LIBOR Loans].5
- ------------------------
1. Insert "conversion" or "continuation" throughout the notice, as
applicable.
2. Shall be a Business Day at least three Business Days after the date
hereof, and additionally, in the case of any conversion of LIBOR Loans
into Base Rate Loans, or continuation of LIBOR Loans, shall be the last
day of the Interest Period applicable to such LIBOR Loans.
3. Amount of Proposed Conversion or Continuation must comply with Section
2.10(b) of the Credit Agreement.
4. Insert the applicable Borrowing Date for the Loans being converted or
continued.
5. Complete with the applicable bracketed language.
<PAGE>
[(iii) The initial Interest Period for the Loans being
[converted into] [continued as] LIBOR Loans pursuant to the
Proposed [Conversion] [Continuation] shall be [one/two/three/six
months].]6
The Borrower hereby certifies that the following statement is true both
on and as of the date hereof and on and as of the effective date of the Proposed
[Conversion] [Continuation]: no Event of Default has or will have occurred and
is continuing or would result from the Proposed [Conversion] [Continuation].
Very truly yours,
EVEREST REINSURANCE HOLDINGS, INC.
By: _________________________________
Title: _________________________________
- ------------------------
6. Include this clause in the case of a Proposed Conversion or
Continuation involving a conversion of Base Rate Loans into, or
continuation of, LIBOR Loans, and select the applicable Interest
Period.
2
<PAGE>
EXHIBIT C-1
FORM OF
GAAP COMPLIANCE CERTIFICATE
THIS CERTIFICATE is given pursuant to SECTION 5.3(A) of the Credit
Agreement, dated as of December 21, 1999 (as amended, modified or supplemented
from time to time, the "Credit Agreement," the terms defined therein being used
herein as therein defined), among EVEREST REINSURANCE HOLDINGS, INC. (the
"Borrower"), certain banks and other financial institutions from time to time
parties thereto (the "Lenders"), and First Union National Bank, as
Administrative Agent for the Lenders. Capitalized terms used herein without
definition shall have the meanings given to them in the Credit Agreement.
The undersigned hereby certifies that:
1. He is the [CHIEF FINANCIAL OFFICER][TREASURER][COMPTROLLER] of the
[BORROWER][GUARANTOR].
2. Enclosed with this Certificate are copies of the financial
statements of the [Borrower and its Subsidiaries][Guarantor and its
Subsidiaries] as of _____________, and for the [________-month period] [year]
then ended, required to be delivered under [Section [5.1(a)][5.1(b)] of the
Credit Agreement][Section 5(a)(vii) of the Parent Guaranty]. Such financial
statements have been prepared in accordance with GAAP [(subject to the absence
of notes required by GAAP and subject to normal year-end adjustments)]1 and
fairly present in all material respects the financial condition of the [Borrower
and its Subsidiaries][Guarantor and its Subsidiaries] on a consolidated basis as
of the date indicated and the results of operation of the [Borrower and its
Subsidiaries][Guarantor and its Subsidiaries] on a consolidated basis for the
period covered thereby.
3. The undersigned has reviewed the terms of the Credit Agreement and
has made, or caused to be made under the supervision of the undersigned, a
review in reasonable detail of the transactions and condition of the [Borrower
and its Subsidiaries][Guarantor and its Subsidiaries] during the accounting
period covered by such financial statements.
4. The examination described in paragraph 3 above did not disclose, and
the undersigned has no knowledge of the existence of, any Default or Event of
Default during or at the end of the accounting period covered by such financial
statements or as of the date of this Certificate [, except as set forth below.
- ------------------------
1. Insert in the case of quarterly financial statements.
<PAGE>
Describe here or in a separate attachment any exceptions to paragraph 4 above by
listing, in reasonable detail, the nature of the Default or Event of Default,
the period during which it existed and the action that the Borrower has taken or
proposes to take with respect thereto].
5. Attached to this Certificate as Attachment A is a covenant
compliance worksheet reflecting the computation of the financial covenants
subject in whole or in part to GAAP set forth in ARTICLE VI of the Credit
Agreement as of the last day of the period covered by the financial statements
enclosed herewith.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the _______ day of __________, ____.
[EVEREST REINSURANCE HOLDINGS, INC.]
[EVEREST REINSURANCE GROUP, LTD.]
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
2
<PAGE>
ATTACHMENT A
GAAP COVENANT COMPLIANCE WORKSHEET
A. CONSOLIDATED INDEBTEDNESS TO TOTAL CAPITALIZATION (SECTION 6.1 OF THE
CREDIT AGREEMENT)
(1) Consolidated Indebtedness as of the date of
determination1 $________
(2) Total Capitalization of the Borrower as of
such date
(a) Consolidated Indebtedness (without
giving effect to the proviso to the
definition thereof) of such date $________
(from Line 1 above)
(b) Consolidated Net Worth as of
such date (exclusive of Disqualified
Capital Stock and without regard
to FAS 115) $________
(c) Aggregate redemption value of Trust
Preferred Securities as of such date $________
(d) Sum of Line 2(a), Line 2(b) and
Line 2(c) $________
(3) Trust Preferred Securities exclusion:
Multiply Line 2(d) by 15% $________
(4) Adjustment for Trust Preferred Securities:
Subtract line (3) from Line 2(c)
(if not a positive number, enter 0) $________
(5) Consolidated Indebtedness plus Trust
Preferred Securities adjustment:
Add Line 1 and Line 4 $________
(6) Consolidated Indebtedness (as adjusted)
to Total Capitalization as of the date
of determination:
Divide Line 5 by Line 2(d) ________
- ------------------------
1. Excluding reimbursement obligations in respect of letters of credit
issued for the benefit of any Insurance Subsidiary or the Borrower or
the Guarantor after the effectiveness of the Restructuring in the
ordinary course of its business to support the payment of obligations
arising under insurance and reinsurance contracts and weather and
similar swap agreements, but only in each case to the extent such
letters of credit (i) are not drawn upon and (ii) are collateralized by
cash or Cash Equivalents
<PAGE>
(7) Maximum Consolidated Indebtedness to Total
Capitalization Ratio as of the date of determination 0.35 : 1.0
<PAGE>
B. INTEREST COVERAGE RATIO (SECTION 6.3 OF THE CREDIT AGREEMENT)
(1) Available income as of the date of determination
(a) Available Dividend Amount for Everest
Re for the period of four consecutive
fiscal quarters then ending (the
"Measurement Period")
(b) Net Tax Sharing Payments for the
Measurement Period. The term
"Taxes" refers to payments made
in respect of tax sharing or tax
allocation agreements between the
Borrower and Borrower's Subsidiaries.
(i) Taxes paid by Subsidiaries to
Borrower $_______
(ii) Taxes to be paid by Subsidiaries
to Borrower $_______
(iii) Tax payments made by Borrower $_______
(iv) Taxes to be paid by Borrower $_______
(v) Subtotal of Lines 1(b)(i) plus
1(b)(ii) minus the sum of Lines
1(b)(iii) and 1(b)(iv) $_______
(c) Combined Net Cash Flow1 for the
Measurement Period $_______
(d) Other Net Cash Flow to the Borrower2
during the Measurement Period Identify: $_______
------------------------------------
------------------------------------
(e) Holding Company Expenses accrued during
the Measurement Period $(______)
(f) Total (sum of Lines 1(a)-1(d) minus Line
1(e))) $______
- ------------------------
1. Attach worksheet showing calculation per definition for each non-Insurance
Subsidiary. For purposes of this calculation, use the Guarantor's non-
Insurance Subsidiaries on or after the Restructuring Date. Non-Insurance
Subsidiaries shall not include any Subsidiary of an Insurance Subsidiary for
purposes of this calculation.
2. Calculate other Net Cash Flow to the Guarantor and the Borrower on or after
the Restructuring Date.
<PAGE>
(2) Interest and Dividend Expenses
(a) Consolidated Interest Expense during
the period of four consecutive fiscal
quarters immediately following the
Measurement Period (the "Pro Forma
Period")3 $_______
(b) Dividends to be paid on Trust
Preferred Securities during the
Pro Forma Period4 $_______
(c) Total (sum of Lines 2(a) and 2(b)) _________
(3) Interest Coverage Ratio:
Divide Line 1(f) by Line 2(c) _________
(4) Minimum Interest Coverage Ratio as of
the date of determination 2.5 : 1.0
- ------------------------
3. For purposes of this calculation, read as if "Guarantor" were substituted
for "Borrower" for any period on or after the Restructuring Date.
4. Based upon the most recent quarterly dividend rate.
<PAGE>
EXHIBIT C-2
FORM OF
SAP COMPLIANCE CERTIFICATE
THIS CERTIFICATE is given pursuant to SECTION 5.3(A) of the Credit
Agreement, dated as of December 21, 1999 (as amended, modified or supplemented
from time to time, the "Credit Agreement," the terms defined therein being used
herein as therein defined), among EVEREST REINSURANCE HOLDINGS, INC. (the
"Borrower"), certain banks and other financial institutions from time to time
parties thereto (the "Lenders") and First Union National Bank, as Administrative
Agent for the Lenders. Capitalized terms used herein without definition shall
have the meanings given to them in the Credit Agreement.
The undersigned hereby certifies that:
1. He is the [Chief Financial Officer][Treasurer][Comptroller] of
the Borrower.
2. Enclosed with this Certificate are copies of the statutory financial
statements of each Insurance Subsidiary of the Borrower as of ______________,
and for the [_________________-month period] [year] then ended, required to be
delivered under SECTION [5.2(A)] [5.2(B)] [5.2(C)] of the Credit Agreement. Such
statutory financial statements have been prepared in accordance with SAP and
fairly present in all material respects the financial condition of each such
Insurance Subsidiary as of the date indicated and the results of operations,
changes in capital and surplus and cash flow of each Insurance Subsidiary for
the period covered thereby.
3. The undersigned has reviewed the terms of the Credit Agreement and
has made, or caused to be made under the supervision of the undersigned, a
review in reasonable detail of the transactions and condition of the Borrower
and its Subsidiaries during the accounting period covered by such financial
statements.
4. The examination described in paragraph 3 above did not disclose, and
the undersigned has no knowledge of the existence of, any Default or Event of
Default during or at the end of the accounting period covered by such financial
statements or as of the date of this Certificate [, except as set forth below.
Describe here or in a separate attachment any exceptions to paragraph 4
above by listing, in reasonable detail, the nature of the Default or Event of
Default, the period during which it existed and the action that the Borrower has
taken or proposes to take with respect thereto].
5. Attached to this Certificate as Attachment A is a Covenant
Compliance Worksheet reflecting the computation of the financial covenants
subject solely to SAP set forth in SECTION 6.2 (Minimum Statutory Surplus) of
the Credit Agreement as of the last day of the period covered by the financial
statements enclosed herewith.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the ______ day of ____________, ____.
EVEREST REINSURANCE HOLDINGS, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
<PAGE>
ATTACHMENT A
SAP COVENANT COMPLIANCE WORKSHEET
A. MINIMUM STATUTORY SURPLUS (SECTION 6.2 OF THE CREDIT AGREEMENT)1
(1) Combined Statutory Surplus as of the
date of determination $___________
(2) Minimum Statutory Surplus
(a) $850,000,000 $850,000,000
------------
(b) Adjusted aggregate Net Income
of Everest Re
(i) Positive Net Income of
Everest Re occurring
after December 31, 1999 $___________
(ii) Adjustment:
Multiply Line 2(b)(i)
by 25% $___________
(c) Adjusted aggregate capital
contributions made to Everest
Re since December 31,1999
(i) Aggregate capital
contributions made to
Everest Re since December
31,1999 $___________
(ii) Adjustment:
Multiply Line 2(c)(i)
by 25% $___________
(d) Sum of Line 2(a), Line 2(b)(ii)
and Line 2(c)(ii) $____________
- ------------------------
1. Measured as of the last day of the fiscal year.
<PAGE>
EXHIBIT D
FORM OF
ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE (this "Assignment and Acceptance") is
made this _____ day of ____________, ____, by and between
_________________________ (the "Assignor") and ________________________ (the
"Assignee"). Reference is made to the Credit Agreement, dated as of December 21,
1999 (as amended, modified or supplemented from time to time, the "Credit
Agreement"), among EVEREST REINSURANCE HOLDINGS, INC. (the "Borrower"), certain
banks and other financial institutions from time to time parties thereto (the
"Lenders"), and First Union National Bank, as Administrative Agent for the
Lenders (the "Administrative Agent"). Unless otherwise defined herein,
capitalized terms used herein without definition shall have the meanings given
to them in the Credit Agreement.
The Assignor and the Assignee hereby agree as follows:
1. ASSIGNMENT AND ASSUMPTION. Subject to the terms and conditions
hereof, the Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, without recourse to the Assignor
and, except as expressly provided herein, without representation or warranty by
the Assignor, the interest as of the Effective Date (as hereinafter defined) in
and to all of the Assignor's rights and obligations under the Credit Agreement
and the other Credit Documents (in its capacity as a Lender thereunder)
represented by the percentage interest specified under the heading "Assigned
Share" in Item 4 of Annex I (such assigned interest, the "Assigned Share"),
including, without limitation, the Assigned Share of all rights and obligations
of the Assignor with respect to its Commitment, Note and Loans.
2. THE ASSIGNOR. The Assignor (i) represents and warrants that it is
the legal and beneficial owner of the interest being assigned by it hereunder,
that such interest is free and clear of any adverse claim, and that as of the
date hereof the amount of its Commitment and outstanding Loans is as set forth
in Item 4 of Annex I, (ii) except as set forth in clause (i) above, makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement, any other Credit Document or any other instrument or document
furnished pursuant thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Credit
Document or any other instrument or document furnished pursuant thereto, and
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any of its Subsidiaries or
the Guarantor or the performance or observance by the Borrower or any of its
Subsidiaries or the Guarantor of any of their respective obligations under the
Credit Agreement, any other Credit Document or any other instrument or document
furnished pursuant thereto.
<PAGE>
3. THE ASSIGNEE. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance, (ii) confirms
that it has received a copy of the Credit Agreement, together with copies of the
financial statements most recently required to have been delivered under
SECTIONS 5.1 and 5.2 of the Credit Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance, (iii) agrees that it
will, independently and without reliance upon the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement, (iv) confirms that it is
an Eligible Assignee, (v) appoints and authorizes the Administrative Agent to
take such actions as Administrative Agent on its behalf under the Credit
Agreement and the other Credit Documents, and to exercise such powers and to
perform such duties, as are specifically delegated to the Administrative Agent
by the terms thereof, together with such other powers and duties as are
reasonably incidental thereto, and (vi) agrees that it will perform in
accordance with their respective terms all of the obligations that by the terms
of the Credit Agreement are required to be performed by it as a Lender. [To the
extent legally entitled to do so, the Assignee will deliver to the
Administrative Agent, as and when required to be delivered under the Credit
Agreement, duly completed and executed originals of the applicable tax
withholding forms described in SECTION 2.16(D) of the Credit Agreement].1
4. EFFECTIVE DATE. Following the execution of this Assignment and
Acceptance by the Assignor and the Assignee, an executed original hereof,
together with all attachments hereto, shall be delivered to each of the
Administrative Agent and the Borrower (and also to the Administrative Agent, the
processing fee referred to in SECTION 10.7(A) of the Credit Agreement). The
effective date of this Assignment and Acceptance (the "Effective Date") shall be
the earlier of (i) the date of acceptance hereof by the Administrative Agent and
the Borrower or (ii) the date, if any, designated as the Effective Date in Item
5 of Annex I (which date shall be not less than five (5) Business Days after the
date of execution hereof by the Assignor and the Assignee unless the
Administrative Agent otherwise agrees). As of the Effective Date, (y) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, shall have (in addition to any such rights and
obligations theretofore held by it) the rights and obligations of a Lender
thereunder and under the other Credit Documents, and (z) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish its rights
(other than rights under the provisions of the Credit 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) and be released from its obligations under the Credit Agreement and the
other Credit Documents.
5. PAYMENTS; SETTLEMENT. On or prior to the Effective Date, in
consideration of the sale and assignment provided for herein and as a
condition to the effectiveness of this Assignment and Acceptance, the
Assignee will pay to the Assignor an amount (to be confirmed
- ------------------------
1. Insert if the Assignee is organized under the laws of a jurisdiction outside
the United States.
<PAGE>
between the Assignor and the Assignee) that represents the Assigned Share of the
principal amount of the Loans made by the Assignor and outstanding on the
Effective Date (together, if and to the extent the Assignor and the Assignee so
elect, with the Assigned Share of any related accrued but unpaid interest, fees
and other amounts). From and after the Effective Date, the Administrative Agent
will make all payments required to be made by it under the Credit Agreement in
respect of the interest assigned hereunder (including, without limitation, all
payments of principal, interest and fees in respect of the Assigned Share of the
Assignor's Commitment and Loans assigned hereunder) directly to the Assignee.
The Assignor and the Assignee shall be responsible for making between themselves
all appropriate adjustments in payments due under the Credit Agreement in
respect of the period prior to the Effective Date. All payments required to be
made hereunder or in connection herewith shall be made in Dollars by wire
transfer of immediately available funds to the appropriate party at its address
for payments designated in Annex I.
6. GOVERNING LAW. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the internal laws of the State of New York,
without regard to principles of conflict of laws (excluding New York General
Obligations Law ss.5-1401).
7. ENTIRE AGREEMENT. This Assignment and Acceptance, together with the
Credit Agreement and the other Credit Documents, embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings of the parties, verbal or written, relating to the subject matter
hereof.
8. SUCCESSORS AND ASSIGNS. This Assignment and Acceptance shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.
9. COUNTERPARTS. This Assignment and Acceptance 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.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment and
Acceptance to be executed by their duly authorized officers as of the date first
above written.
ASSIGNOR:
--------------------------------
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
ASSIGNEE:
--------------------------------
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
Accepted this _______ day of
_____________, ____:
FIRST UNION NATIONAL BANK, as Administrative Agent
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
<PAGE>
[Consented and agreed to:
EVEREST REINSURANCE HOLDINGS, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________]2
- ------------------------
<PAGE>
ANNEX I
1. Borrower: Everest Reinsurance Holdings, Inc.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of December ___, 1999, among Everest
Reinsurance Holdings, Inc., certain Lenders from time to time parties
thereto, and First Union National Bank, as Administrative Agent.
3. Date of Assignment and Acceptance: ________________, ___.
4. Amounts:
Aggregate
Amount of for Assignor
Aggregate Assigned Assigned (after
for Assignor Share3 Share assignment)
------------ -------- --------- ------------
(a) Commitment $__________ _____% $________ $___________
(b) Loans4 $__________ _____% $________ $___________
5. Effective Date: ___________________, ___.5
6. Addresses for Payments:
Assignor: _________________________________
_________________________________
_________________________________
Attention: _____________________
Telephone: _____________________
Telecopy: _____________________
Reference: _____________________
- ------------------------
3. Percentage taken to up to ten decimal places, if necessary.
4. Insert amounts outstanding as of the date of the Assignment and Acceptance.
5. Shall be a date not less than five (5) Business Days after the date of the
Assignment and Acceptance unless the Administrative Agent otherwise agrees.
<PAGE>
Assignee: _________________________________
_________________________________
_________________________________
Attention: _____________________
Telephone: _____________________
Telecopy: _____________________
Reference: _____________________
7. Addresses for Notices of Assignee:
_________________________________
_________________________________
_________________________________
Attention: _____________________
Telephone: _____________________
Telecopy: _____________________
8. Lending Office of Assignee:
_________________________________
_________________________________
_________________________________
Attention: ____________________
Telephone: ____________________
Telecopy: ____________________
<PAGE>
EXHIBIT E-1
December 21, 1999
First Union National Bank, as Administrative Agent
and the Lenders party to the Credit Agreement
referred to below
Re: Everest Reinsurance Holdings, Inc.
----------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Everest Reinsurance Holdings,
Inc., a Delaware corporation (the "BORROWER"), in connection with the Credit
Agreement dated as of December 21, 1999 (the "CREDIT AGREEMENT") among the
Borrower, the financial institutions party thereto (the "LENDERS") and First
Union National Bank, as Administrative Agent (the "ADMINISTRATIVE AGENT"). This
opinion is furnished to you pursuant to Section 3.1 of the Credit Agreement.
In connection with delivering this opinion to you, we have examined
originals or copies, certified or otherwise identified to our satisfaction as
being true copies, of (i) the Credit Agreement and (ii) the Notes. The items
referred to in clauses (i) and (ii) above are called the "DOCUMENTS".
Capitalized terms used but not otherwise expressly defined herein shall have the
same meanings as set forth in the Credit Agreement.
For purposes of this opinion, "APPLICABLE LAW" means the General
Corporation Law of the State of Delaware, and those laws and regulations of the
United States of America and the State of New York that, in our experience,
would normally be applicable to general business corporations which are not
engaged in regulated business activities and to transactions of the type
contemplated by the Documents (but without our having made any special
investigation as to any other law), but excluding (A) all laws of the type
described in paragraph (D)(6) below and (B) any law, rule, regulation,
ordinance, code or similar provision of law of any county, municipality or
similar political subdivision or any agency or instrumentality thereof; PROVIDED
that we express no opinion as to any law the violation of which would not have a
material adverse effect on the ability of the Borrower to perform its
obligations under the Documents.
We also have examined originals, or copies certified or otherwise
identified to our satisfaction as being true copies, of such agreements,
corporate records, certificates of public officials and other documents as we
have deemed necessary as a basis for the opinions hereinafter expressed. As to
questions of fact material to such opinions, we have, when such facts were not
independently established by us, relied upon certificates of the Borrower or its
officers or of public officials. Whenever this opinion refers to matters within
our "knowledge" or "known to us", such reference is limited to (1) facts within
our actual knowledge after an inquiry of the attorneys of this firm who have
represented the Borrower in connection with the Documents and (2) facts
represented to us in certificates of officers of the Borrower. Except as
expressly set forth herein, we have not undertaken any independent investigation
to determine the existence or absence of such facts and no inference as to our
knowledge concerning such facts should be drawn from the fact that such
representation has been undertaken by us.
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the conformity
to the originals of all such documents submitted to us as copies, the
genuineness of all signatures, and the legal capacity and power of, and due
authorization, execution and delivery of the Documents by, all parties other
than the Borrower. Further, we have assumed that the Documents constitute the
legal, valid and binding obligation of all parties thereto other than the
Borrower. We have also assumed the truth of all representations and warranties
of the Borrower in the Credit Agreement.
<PAGE>
In expressing the opinions set forth below, we have assumed that (a) the
Borrower is a corporation validly existing under the laws of the State of
Delaware, (b) the Borrower has the corporate power and authority to execute,
deliver and perform its obligations under the Documents, (c) the execution and
delivery by the Borrower of the Documents, and the performance by the Borrower
of its obligations thereunder, have been duly authorized by all necessary
corporate action in the part of the Borrower and (d) the Borrower has duly
executed and delivered the Documents.
On the basis of, and in reliance upon, the foregoing, and subject to the
qualifications contained herein, we are of the opinion that:
1. The execution and delivery by the Borrower of, and the performance
by the Borrower of its obligations under, the Documents do not violate any
Applicable Law.
2. The Documents constitute the legal, valid and binding obligations
of the Borrower, enforceable against it in accordance with their terms.
3. No consent, approval, authorization or other action by, notice to,
or registration or filing with, any New York or Delaware Governmental
Authority under Applicable Law is required as a condition to or otherwise
in connection with the execution and delivery by the Borrower of the
Documents or the borrowings by the Borrower in accordance therewith.
4. Assuming that the Borrower will comply with the provisions of the
Credit Agreement relating to the use of proceeds, the execution and
delivery of the Documents by the Borrower and the making of the Loans will
not violate Regulation T, U or X.
The opinions set forth above are subject to the following qualifications
and limitations:
(A) Our opinions are subject to the effect of any applicable
bankruptcy, insolvency, fraudulent conveyance, equitable subordination,
reorganization, readjustment of debt, moratorium or similar laws affecting
creditors' rights generally.
(B) Our opinions are subject to the effect of general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether
considered in a proceeding in equity or at law) and by limitations on the
availability of specific performance, injunctive relief or other equitable
remedies.
(C) We express no opinion as to the enforceability, under certain
circumstances, of provisions imposing penalties or forfeitures, late
payment charges or an increase in interest rate upon delinquency in payment
or the occurrence of a default.
(D) We express no opinion as to:
(1) the existence of any Person's ownership rights in or title
to any property;
(2) the validity, perfection, enforceability or priority of
any Lien on any property;
(3) any agreement by the Borrower to submit to the jurisdiction
of a particular court, waive jury trial or appoint an agent for
acceptance of service of process;
(4) any provision of the Documents purporting to waive any
objection to the laying of venue or any claim that an action or
proceeding has been brought in an inconvenient forum;
<PAGE>
(5) any provision of the Documents which authorizes or permits
any purchaser of a participation interest from any party to set off or
apply any deposit or property or any indebtedness with respect to any
participation interest;
(6) compliance with, or any governmental or regulatory filing,
approval, authorization, license, consent or notice, registration or
filing required by or under, any (i) Federal or state environmental
law, (ii) Federal or state antitrust law, (iii) Federal or state
taxation law, (iv) Federal or state worker health or safety, zoning or
permitting or land use matter, (v) Federal or state patent, trademark
or copyright statute, rule or regulation, (vi) statutory or other
requirement relating to the disposition of hazardous waste or
environmental protection, (vii) Federal or state receivership or
conservatorship law, (viii) securities registration or antifraud
provisions under any Federal or state securities law, (ix) Federal or
state labor or employment law, (x) Federal or state employee benefits
or pension law or (xi) insurance law;
(7) the effect of the law of any jurisdiction (other than New
York) wherein the Administrative Agent or any Lender may be located or
wherein the enforcement of any Document may be sought that limits the
rates of interest legally chargeable or collectible; and
(8) any provision of the Documents (i) restricting access to
legal or equitable remedies, (ii) purporting to establish evidentiary
standards, (iii) purporting to appoint any Person as the attorney-in-
fact of any other Person, (iv) which provides that the Documents may
only be amended, modified or waived in writing or (v) stating that all
rights or remedies of any party are cumulative and may be enforced in
addition to any other righ or remedy and that the election of a
particular remedy does not preclude recourse to one or more remedies.
(E) We note that the enforceability of the Documents may be limited or
rendered ineffective if the Administrative Agent or the Lenders fail to act
in good faith and in a commercially reasonable manner in seeking to
exercise their rights and remedies thereunder. Without limiting the
generality of the foregoing, we note that a court might hold that a
technical and nonmaterial default under the Documents does not give rise to
a right of the Administrative Agent or the Lenders to exercise certain
remedies including, without limitation, acceleration.
(F) We express no opinion as to the enforceability of the
indemnification provisions of the Documents insofar as said provisions
contravene public policy or might require indemnification or payments to
any Person with respect to any litigation determined adversely to such
Person, or any loss, cost or expense arising out of the gross negligence or
willful misconduct of such Person or any violation by such Person of
statutory duties, general principles of equity or public policy.
(G) No opinion is rendered herein as to the effect of any law relating
to the legal or regulatory status of the Administrative Agent or any
Lender.
(H) We express no opinion as to the enforceability of any choice of
law provisions to the extent such provisions are to be enforced by courts
other than New York State courts or federal courts located in the State of
New York sitting with jurisdiction based on diversity of citizenship.
Members of our firm are members of the State Bar of New York. This opinion
is limited to the law of the State of New York, the federal laws of the United
States, and the General Corporation Law of the State of Delaware. The opinions
expressed herein are limited in all respects to the law existing on the
<PAGE>
date hereof. In rendering this opinion, we do not undertake to advise you of any
change in law or fact that may occur after the date hereof.
This opinion is furnished by us to you solely for your benefit and solely
with respect to the Documents upon the understanding that we are not hereby
assuming any professional responsibility to any other Person. This opinion may
not be relied upon by you for any other purpose and may not be relied upon by
any other Person for any purpose, in each case without our prior written
consent; notwithstanding the foregoing, assignees of Lenders who become Lenders
under the Credit Agreement may rely on this opinion as if it had been addressed
to them. The opinions expressed in this letter are limited to the matters set
forth herein, and no other opinion should be inferred beyond the matters
expressly stated herein.
Very truly yours,
MAYER, BROWN & PLATT
JFL:CSR:TNB:JPF
<PAGE>
EXHIBIT E-2
December __, 1999
First Union National Bank, as Administrative Agent
and the Lenders party to the
Credit Agreement referred to below
Re: Everest Reinsurance Holdings, Inc.
----------------------------------
Ladies and Gentlemen:
I am General Counsel for Everest Reinsurance Holdings, Inc., a Delaware
corporation (the "Borrower"), and have represented the Borrower in connection
with the Credit Agreement dated as of December __, 1999 (the "Credit Agreement")
among the Borrower, the financial institutions party thereto (the "Lenders") and
First Union National Bank, as administrative agent for the Lenders (the
"Administrative Agent"). Capitalized terms used herein and not defined have the
meanings assigned in the Credit Agreement. This opinion is furnished to you
pursuant to Section 3.1 of the Credit Agreement.
In that connection I have examined the Credit Agreement and the Notes
(the "Credit Documents") and the other documents furnished pursuant to Section
3.1 of the Credit Agreement, as well as such other documents as I have deemed
necessary for purposes of rendering the opinions herein. In my examination of
such documents, I have assumed the authenticity of all such documents submitted
to me as originals, the genuiness of all signatures (other than those of the
Borrower on the Credit Documents), and the conformity to the originals of such
documents submitted to me as copies.
Based upon the foregoing, it is my opinion that:
1. Each of the Borrower and its Subsidiaries (i) is a corporation
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has full corporate power and authority to execute, deliver
and perform the Credit Documents to which it is a party, to own and hold its
property and to engage in its business as currently 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, except for such jurisdictions in
which the failure to be so qualified would not be reasonably likely to have a
Material Adverse Effect.
2. The Borrower has taken all necessary corporate action to execute,
deliver and perform each of the Credit Documents and has validly executed and
delivered each of the Credit Documents.
3. The execution, delivery and performance by the Borrower
of the Credit Agreement and the Notes and compliance by
it with the terms thereof do not (i) violate
<PAGE>
any provision of its certificate of incorporation or by-laws or any Requirement
of Law applicable to it, (ii) to my knowledge, result in a breach of or
constitute (with notice, lapse of time or both) a default under any material
indenture, agreement or other instrument to which it is a party, by which it or
any of its properties is bound or to which it is subject or (iii) result in or
require the creation or imposition of any Lien upon any of its properties or
assets. No Subsidiary is 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 and except for applicable
Requirements of Law.
4. (a) No consent, approval, authorization or other action by, notice
to, or registration or filing with, any Governmental Authority or other Person
is required as a condition to or otherwise in connection with the execution,
delivery and performance by the Borrower of the Credit Agreement and the Notes.
(b) Each of the Borrower and its Subsidiaries has, and is in good
standing with respect to, all governmental approvals, licenses (including,
without limitation, insurance licenses), permits and authorizations necessary to
conduct its business as currently 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 to the Credit Agreement 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 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) to my
knowledge, there is no sustainable basis for such a suspension, revocation or
limitation, and (iii) to my knowledge, 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. To my knowledge, no Insurance
Subsidiary transacts any insurance business, directly or indirectly, in any
jurisdiction, other than those listed on said Schedule 4.4, where such business
requires any license, permit or other authorization of an Insurance Regulatory
Authority of such jurisdiction.
5. Except as disclosed in the Borrower's 1998 Form 10-K and
as supplemented in written disclosure to the Administrative Agent
delivered prior to execution of the Credit Agreement by the
Borrower, there are no actions, investigations, suits or proceedings
pending or, to my knowledge threatened, at law, in equity or in
<PAGE>
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, if reasonably possible (within the meaning of FASB
5) to be adversely determined, would have a Material Adverse Effect, or (ii)
that questions the validity of the Credit Documents.
6. All of the issued and outstanding shares of Capital Stock of Everest
Re are directly owned and held by the Borrower.
7. Neither the Borrower nor any of its Subsidiaries is (i) an
"investment company," a company "controlled" by an "investment company," or an
"investment advisors," 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.
8. If, notwithstanding the express selection of New York law as the
governing law of the Credit Documents, a New Jersey court or a federal court
sitting in New Jersey were to apply New Jersey law to the Credit Documents, each
Credit Document constitutes the legal, valid and binding obligation of the
Borrower, enforceable against it in accordance with its terms.
The opinions set forth above are subject to the following
qualifications and limitations:
(A) My opinions are subject to the effect of any applicable
bankruptcy, insolvency, fraudulent conveyance, equitable subordination,
reorganization, readjustment of debt, moratorium or similar laws
affecting creditors' rights generally.
(B) My opinions are subject to the effect of general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law) and by
limitations on the availability of specific performance, injunctive
relief or other equitable remedies.
(C) I express no opinion as to the enforceability, under
certain circumstances, of provisions imposing penalties or forfeitures,
late payment charges or an increase in interest rate upon delinquency
in payment or the occurrence of a default.
(D) I express no opinion as to:
(1) the existence of any Person's ownership rights in
or title to any property (other than as expressly opined in
paragraph 6);
<PAGE>
(2) the validity, perfection, enforceability or
priority of any Lien on any property;
(3) any agreement by the Borrower to submit to the
jurisdiction of a particular court, waive jury trial or
appoint an agent for acceptance of service of process;
(4) any provision of the Credit Documents purporting
to waive any objection to the laying of venue or any claim
that an action or proceeding has been brought in an
inconvenient forum;
(5) any provision of the Credit Documents which
authorizes or permits any purchaser of a participation
interest from any party to set off or apply any deposit or
property or any indebtedness with respect to any participation
interest;
(6) the effect of the law of any jurisdiction (other
than New Jersey) wherein the Administrative Agent or any
Lender may be located or wherein the enforcement of any Credit
Document may be sought that limits the rates of interest
legally chargeable or collectible; and
(7) any provision of the Credit Documents (i)
restricting access to legal or equitable remedies, (ii)
purporting to establish evidentiary standards, (iii)
purporting to appoint any Person as the attorney-in-fact of
any other Person, (iv) which provides that the Credit
Documents may only be amended, modified or waived in writing
or (v) stating that all rights or remedies of any party are
cumulative and may be enforced in addition to any other right
or remedy and that the election of a particular remedy does
not preclude recourse to one or more remedies.
(E) I note that the enforceability of the Credit Documents may
be limited or rendered ineffective if the Administrative Agent or the
Lenders fail to act in good faith and in a commercially reasonable
manner in seeking to exercise their rights and remedies thereunder.
Without limiting the generality of the foregoing, I note that a court
might hold that a technical and nonmaterial default under the Credit
Documents does not give rise to a right of the Administrative Agent or
the Lenders to exercise certain remedies including, without limitation,
acceleration.
(F) I express no opinion as to the enforceability of the
indemnification provisions of the Credit Documents insofar as said
provisions contravene public policy or might require indemnification or
payments to any Person with respect to any litigation determined
adversely to such Person, or any loss, cost or expense arising out of
the gross negligence or willful misconduct of such Person or any
<PAGE>
violation by such Person of statutory duties, general principles of
equity or public policy.
(G) No opinion is rendered herein as to the effect of any law
relating to the legal or regulatory status of the Administrative Agent
or any Lender.
This opinion is limited to the laws of the State of New Jersey, the
federal laws of the United States and the General Corporation Law and insurance
laws of the State of Delaware.
This opinion may not be used or relied upon by or published or
communicated to any Person other than the addressees hereof and permitted
Assignees for any purpose whatsoever, without my prior written consent in each
instance.
Very truly yours,
Janet J. Burak
<PAGE>
EXHIBIT E-3
_____________ __, 2000
First Union National Bank, as Administrative Agent
and the Lenders party to the Credit Agreement
referred to below
Re: Everest Reinsurance Holdings, Inc.
----------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Everest Re Group, Ltd., a
Bermuda corporation (the "GUARANTOR"), in connection with the Parent Guaranty
dated as of ___________, 2000 (the "GUARANTY") made by the Guarantor in favor of
First Union National Bank, as administrative agent (the "ADMINISTRATIVE AGENT")
under the Credit Agreement dated as of December __, 1999 (the "CREDIT
AGREEMENT") among Everest Reinsurance Holdings, Inc., a Delaware corporation
(the "BORROWER"), the financial institutions party thereto (the "LENDERS") and
First Union National Bank, as Administrative Agent (the "ADMINISTRATIVE AGENT").
This opinion is furnished to you pursuant to Section 3.3 of the Credit
Agreement.
In connection with delivering this opinion to you, we have examined an
original or copy, certified or otherwise identified to our satisfaction as being
a true copy, of the Guaranty. Capitalized terms used but not otherwise expressly
defined herein shall have the same meanings as set forth in the Credit
Agreement.
For purposes of this opinion, "APPLICABLE LAW" means the General
Corporation Law of the State of Delaware, and those laws and regulations of the
United States of America and the State of New York that, in our experience,
would normally be applicable to general business corporations which are not
engaged in regulated business activities and to transactions of the type
contemplated by the Guaranty (but without our having made any special
investigation as to any other law), but excluding (A) all laws of the type
described in paragraph (D)(6) below and (B) any law, rule, regulation,
ordinance, code or similar provision of law of any county, municipality or
similar political subdivision or any agency or instrumentality thereof; PROVIDED
that we express no opinion as to any law the violation of which would not have a
material adverse effect on the ability of the Guarantor to perform its
obligations under the Guaranty.
We also have examined originals, or copies certified or otherwise
identified to our satisfaction as being true copies, of such agreements,
corporate records, certificates of public officials and other documents as we
have deemed necessary as a basis for the opinions hereinafter expressed. As to
questions of fact material to such opinions, we have, when such facts were not
independently established by us, relied upon certificates of the Borrower or the
Guarantor or their respective officers or of public officials. Whenever this
opinion refers to matters within our "knowledge" or "known to us", such
<PAGE>
reference is limited to (1) facts within our actual knowledge after an inquiry
of the attorneys of this firm who have represented the Borrower and the
Guarantor in connection with the Credit Agreement and the Guaranty and (2) facts
represented to us in certificates of officers of the Borrower and the Guarantor.
Except as expressly set forth herein, we have not undertaken any independent
investigation to determine the existence or absence of such facts and no
inference as to our knowledge concerning such facts should be drawn from the
fact that such representation has been undertaken by us.
In our examination of the documents referred to above, we have assumed
the authenticity of all such documents submitted to us as originals, the
conformity to the originals of all such documents submitted to us as copies, the
genuineness of all signatures, and the legal capacity and power of, and due
authorization, execution and delivery of the Guaranty by, all parties other than
the Guarantor. Further, we have assumed that the Guaranty constitutes the legal,
valid and binding obligation of all parties thereto other than the Guarantor. We
have also assumed the truth of all representations and warranties of the
Borrower in the Credit Agreement.
In expressing the opinions set forth below, we have assumed that (a)
the Guarantor is a corporation validly existing under the laws of Bermuda, (b)
the Guarantor has the corporate power and authority to execute, deliver and
perform its obligations under the Guaranty, (c) the execution and delivery by
the Guarantor of the Guaranty, and the performance by the Guarantor of its
obligations thereunder, have been duly authorized by all necessary corporate
action in the part of the Guarantor and (d) the Guarantor has duly executed and
delivered the Guaranty.
On the basis of, and in reliance upon, the foregoing, and subject to
the qualifications contained herein, we are of the opinion that:
1. The merger of Everest Re Merger Corporation, a Delaware
corporation, with and into the Borrower has become effective in
accordance with the terms of the Delaware General Corporation Law.
2. The execution and delivery by the Guarantor of, and the
performance by the Guarantor of its obligations under, the Guaranty do
not violate any Applicable Law.
3. The Guaranty constitutes the legal, valid and binding
obligation of the Guarantor, enforceable against it in accordance with
their terms.
4. No consent, approval, authorization or other action by,
notice to, or registration or filing with, any New York or Delaware
Governmental Authority under Applicable Law is required as a condition
to or otherwise in connection with the execution and delivery by the
Guarantor of the Guaranty.
<PAGE>
5. Assuming that the Borrower will comply with the provisions
of the Credit Agreement relating to the use of proceeds, the making of
the Loans will not violate Regulation T, U or X.
The opinions set forth above are subject to the following
qualifications and limitations:
(A) Our opinions are subject to the effect of any applicable
bankruptcy, insolvency, fraudulent conveyance, equitable subordination,
reorganization, readjustment of debt, moratorium or similar laws
affecting creditors' rights generally.
(B) Our opinions are subject to the effect of general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law) and by
limitations on the availability of specific performance, injunctive
relief or other equitable remedies.
(C) We express no opinion as to the enforceability, under
certain circumstances, of provisions imposing penalties or forfeitures,
late payment charges or an increase in interest rate upon delinquency
in payment or the occurrence of a default.
(D) We express no opinion as to:
(1) the existence of any Person's ownership rights in
or title to any property;
(2) the validity, perfection, enforceability or
priority of any Lien on any property;
(3) any agreement by the Guarantor to submit to the
jurisdiction of a particular court, waive jury trial or
appoint an agent for acceptance of service of process;
(4) any provision of the Guaranty purporting to waive
any objection to the laying of venue or any claim that an
action or proceeding has been brought in an inconvenient
forum;
(5) any provision of the Guaranty which authorizes or
permits any purchaser of a participation interest from any
party to set off or apply any deposit or property or any
indebtedness with respect to any participation interest;
(6) compliance with, or any governmental
or regulatory filing, approval, authorization,
license, consent or notice, registration or filing
<PAGE>
required by or under, any (i) Federal or state environmental
law, (ii) Federal or state antitrust law, (iii) Federal or
state taxation law, (iv) Federal or state worker health or
safety, zoning or permitting or land use matter, (v) Federal
or state patent, trademark or copyright statute, rule or
regulation, (vi) statutory or other requirement relating to
the disposition of hazardous waste or environmental
protection, (vii) Federal or state receivership or
conservatorship law, (viii) securities registration or
antifraud provisions under any Federal or state securities
law, (ix) Federal or state labor or employment law, (x)
Federal or state employee benefits or pension law or (xi)
insurance law;
(7) the effect of the law of any jurisdiction (other
than New York) wherein the Administrative Agent or any Lender
may be located or wherein the enforcement of the Guaranty may
be sought that limits the rates of interest legally chargeable
or collectible; and
(8) any provision of the Guaranty (i) restricting
access to legal or equitable remedies, (ii) purporting to
establish evidentiary standards, (iii) purporting to appoint
any Person as the attorney-in-fact of any other Person, (iv)
which provides that the Guaranty may only be amended, modified
or waived in writing or (v) stating that all rights or
remedies of any party are cumulative and may be enforced in
addition to any other right or remedy and that the election of
a particular remedy does not preclude recourse to one or more
remedies.
(E) We note that the enforceability of the Guaranty may be
limited or rendered ineffective if the Administrative Agent or the
Lenders fail to act in good faith and in a commercially reasonable
manner in seeking to exercise their rights and remedies thereunder.
Without limiting the generality of the foregoing, we note that a court
might hold that a technical and nonmaterial default under the Credit
Agreement or the Guaranty does not give rise to a right of the
Administrative Agent or the Lenders to exercise certain remedies
including, without limitation, acceleration.
(F) We express no opinion as to the enforceability of the
indemnification provisions of the Guaranty insofar as said provisions
contravene public policy or might require indemnification or payments
to any Person with respect to any litigation determined adversely to
such Person, or any loss, cost or expense arising out of the gross
negligence or willful misconduct of such Person or any violation by
such Person of statutory duties, general principles of equity or public
policy.
(G) No opinion is rendered herein as to the effect of any law
relating to the legal or regulatory status of the Administrative Agent
or any Lender.
<PAGE>
(H) We express no opinion as to the enforceability of any
choice of law provisions to the extent such provisions are to be
enforced by courts other than New York State courts or federal courts
located in the State of New York sitting with jurisdiction based on
diversity of citizenship.
Members of our firm are members of the State Bar of New York. This
opinion is limited to the law of the State of New York, the federal laws of the
United States, and the General Corporation Law of the State of Delaware. The
opinions expressed herein are limited in all respects to the law existing on the
date hereof. In rendering this opinion, we do not undertake to advise you of any
change in law or fact that may occur after the date hereof.
This opinion is furnished by us to you solely for your benefit and
solely with respect to the Guaranty upon the understanding that we are not
hereby assuming any professional responsibility to any other Person. This
opinion may not be relied upon by you for any other purpose and may not be
relied upon by any other Person for any purpose, in each case without our prior
written consent; notwithstanding the foregoing, assignees of Lenders who become
Lenders under the Credit Agreement may rely on this opinion as if it had been
addressed to them. The opinions expressed in this letter are limited to the
matters set forth herein, and no other opinion should be inferred beyond the
matters expressly stated herein.
Very truly yours,
MAYER, BROWN & PLATT
JFL:CSR:TNB:JPF
<PAGE>
EXHIBIT E-4
___________ __, 2000
First Union National Bank, as Administrative Agent
and the Lenders party to the
Credit Agreement referred to below
Re: Everest Reinsurance Holdings, Inc.
----------------------------------
Ladies and Gentlemen:
I am General Counsel for Everest Reinsurance Holdings, Inc., a Delaware
corporation (the "Borrower"), and have represented the Borrower and Everest Re
Group, Ltd., a Bermuda corporation (the "Guarantor"), in connection with the
Parent Guaranty dated as of ________, 2000 (the "Guaranty") made by the
Guarantor in favor of First Union National Bank, as administrative agent (the
"Administrative Agent") under the Credit Agreement dated as of December __, 1999
(as in effect on the date hereof, the "Credit Agreement") among the Borrower,
various financial institutions parties thereto as Lenders and the Administrative
Agent. Capitalized terms used herein and not defined have the meanings assigned
in the Credit Agreement. This opinion is furnished to you pursuant to Section
3.3 of the Credit Agreement.
In that connection I have examined the Guaranty as well as such other
documents as I have deemed necessary for purposes of rendering the opinions
herein. In my examination of such documents, I have assumed the authenticity of
all such documents submitted to me as originals, the genuineness of all
signatures (other than those of the Guarantor on the Guaranty), and the
conformity to the originals of such documents submitted to me as copies.
Based upon the foregoing, it is my opinion that:
1. The Borrower is a corporation validly existing and in good standing
under the laws of the jurisdiction of its incorporation.
2. The execution, delivery and performance by the Guarantor of the
Guaranty and compliance by it with the terms thereof do not (i) to my knowledge,
result in a breach of or constitute (with notice, lapse of time or both) a
default under any material indenture, agreement or other instrument to which it
is a party, by which it or any of its properties is bound or to which it is
subject, (ii) result in or require the creation or imposition of any Lien upon
any of its properties or assets or (iii) violate any applicable law, rule or
regulation of the State of New Jersey.
3. No consent, approval, authorization or other action
by, notice to, or registration or filing with, any
Governmental Authority or other Person is required as a
<PAGE>
condition to or otherwise in connection with the execution, delivery and
performance by the Guarantor of the Guaranty.
4. Except as disclosed in the Borrower's 1998 Form 10-K and as
supplemented in written disclosure to the Administrative Agent delivered prior
to execution of the Credit Agreement by the Borrower, there are no actions,
investigations, suits or proceedings pending or, to my knowledge threatened, at
law, in equity or in arbitration, before any court, other Governmental Authority
or other Person, (i) against or affecting the Guarantor or any of its
Subsidiaries or any of their respective properties that would, if reasonably
possible (within the meaning of FASB 5) to be adversely determined, have a
Material Adverse Effect, or (ii) that questions the validity of the Guaranty.
5. Neither the Guarantor nor any of its Subsidiaries is (i) an
"investment company," a company "controlled" by an "investment company," or an
"investment advisors," 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.
6. The Guarantor owns 100% of the Capital Stock of the Borrower.
This opinion is limited to the laws of the State of New Jersey, the
federal laws of the United States and the General Corporation Law and insurance
laws of the State of Delaware.
This opinion may not be used or relied upon by or published or
communicated to any person or entity other than the addressees hereof and
permitted Assignees for any purpose whatsoever, without my prior written consent
in each instance.
Very truly yours,
Janet J. Burak
<PAGE>
EXHIBIT E-5
_________,2000
[TO FIRST UNION NATIONAL BANK/ADMINISTRATIVE AGENT & LENDERS]
Dear Sirs
EVEREST RE GROUP, LTD. (THE "COMPANY") AND EVEREST REINSURANCE (BERMUDA, LTD.
("EVEREST BERMUDA")
We have acted as special legal counsel in Bermuda to the Company in connection
with the formation of the Company and Everest Bermuda. We have also acted as
special Bermuda counsel to the Company in connection with the exchange of shares
between the Company and certain shareholders in Everest Reinsurance Holdings,
Inc. (the "Borrower") whereby the Company issued shares to such shareholders in
exchange for their shares in the Borrower (the "Restructuring").
For the purposes of giving this opinion, we have examined the following
documents:
(i) a facsimile copy of the executed Credit Agreement (the "Credit
Agreement" which term does not include any other instrument
or agreement whether or not specifically referred to therein
or attached as an exhibit or schedule thereto) dated as
of [20] December 1999 and made among the Borrower, First
Union National Bank, as administrative agent for the
Lenders (as defined below) (the "Administrative Agent")
<PAGE>
-2-
and those banks and financial institutions listed on the
Schedule attached hereto (the "Lenders"); and
(ii) a facsimile copy of the executed Parent Guaranty (the
"Guaranty" which term does not include any other instrument or
agreement whether or not specifically referred to therein or
attached as an exhibit or schedule thereto) dated as of [ ]
2000 and made by the Company in favour of the Lenders and the
Administrative Agent.
The Credit Agreement and the Guaranty are herein sometimes collectively referred
to as the "Documents".
We have also reviewed and have relied upon copies of the memorandum of
association and the bye-laws of each of the Company and Everest Bermuda, each
copy certified by the [Secretary] of the Company on [ ] 2000; copies of minutes
of meetings of the Company's board of directors and members, each copy each
certified by the [Secretary] of the Company on [ ] 2000 (the "Minutes");
correspondence with the Bermuda Monetary Authority; filings with the Registrar
of Companies under section 26 of the Companies Act 1981 and such other documents
and made such enquiries as to questions of Bermuda law as we have deemed
necessary in order to render the opinions set forth below.
<PAGE>
-3-
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies (whether or not certified) examined by
us and the authenticity and completeness of the originals from which such copies
were taken, (b) that where a document has been examined by us in draft form, it
will be or has been executed in the form of that draft, and where a number of
drafts of a document have been examined by us all changes thereto have been
marked or otherwise drawn to our attention, (c) the capacity, power and
authority of each of the parties to the Documents, other than the Company, to
enter into and perform its respective obligations under the Documents, (d) the
due execution and delivery of the Documents by each of the parties thereto, (e)
the accuracy and completeness of the recitals and all factual representations
made in the Documents and other documents reviewed by us, (f) that the
resolutions contained in the Minutes remain in full force and effect and have
not been rescinded or amended, (g) that the Company is entering into the
Documents pursuant to its business of group holding company, (h) that there is
no provision of the law of any jurisdiction, other than Bermuda, which would
have any implication in relation to the opinions expressed herein, (i) the
validity and binding effect and enforceability under the laws of the State of
New York in the United States of America (the "Foreign Laws") of the Documents
which are expressed to be governed by such Foreign Laws in accordance with their
respective terms, (j) the validity and binding effect and enforceability under
the Foreign Laws of the choice of the Foreign Laws as the governing laws of the
Documents and of the submission by the Company pursuant to the Guaranty to the
jurisdiction of the courts sitting in the State of New York in the United States
of America (the "Foreign Courts"), and (k) in connection with the requirements
of the Bermuda Monetary Authority in granting the permissions necessary for
<PAGE>
-4-
the issue of shares in the Company, the Company's shares are listed on the New
York Stock Exchange.
We have further assumed that the Company is at all material times in compliance
with the provisions of section 39A(2A) of the Companies Act 1981.
The obligations of the Company under the Guaranty (a) will be subject to the
laws from time to time in effect relating to bankruptcy, insolvency,
liquidation, possessory liens, rights of set off, reorganisation, amalgamation,
moratorium or any other laws or legal procedures, whether of a similar nature or
otherwise, generally affecting the rights of creditors, (b) will be subject to
statutory limitation of the time within which proceedings may be brought, (c)
will be subject to general principles of equity and, as such, specific
performance and injunctive relief, being equitable remedies, may not be
available, (d) may not be given effect to by a Bermuda court, whether or not it
was applying the Foreign Laws, if and to the extent they constitute the payment
of an amount which is in the nature of a penalty and not in the nature of
liquidated damages. Notwithstanding any contractual submission to the
jurisdiction of specific courts, a Bermuda court has inherent discretion to stay
or allow proceedings in the Bermuda courts.
We express no opinion as to the enforceability of any provision of the Guaranty
which provides for the payment of a specified rate of interest on the amount of
a judgment after the date of judgment or which purports to fetter the statutory
powers of the Company.
<PAGE>
-5-
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda. This opinion is issued
solely for your benefit and is not to be relied upon by any other person, firm
or entity or in respect of any other matter, except Messrs Mayer, Brown & Platt
who may rely on this opinion for matters of Bermuda law when issuing their
opinion required under Section 3.3 of the Credit Agreement.
On the basis of and subject to the foregoing, we are of the opinion that:
1. Each of the Company and Everest Bermuda is duly incorporated, is
existing and is in good standing (meaning that it has not failed to
make any filing with any Bermuda governmental authority or to pay any
Bermuda government fee or tax which might make it liable to be struck
off the Register of Companies and thereby cease to exist under the laws
of Bermuda) under the laws of Bermuda.
2. The Company has the necessary corporate power and authority to enter
into and perform its obligations under the Guaranty. The execution and
delivery of the Guaranty by the Company and the performance by the
Company of its obligations thereunder will not violate the memorandum
of association or bye-laws of the Company nor any applicable law,
<PAGE>
-6-
regulation, order or decree in Bermuda.
3. The Company has taken all corporate action required to authorise its
execution, delivery and performance of the Guaranty. The Guaranty has
been duly executed on behalf of the Company if it has been signed by
[...]. The Guaranty constitutes the valid and binding obligations
of the Company enforceable in accordance with the terms thereof.
4. No order, consent, approval, licence, authorisation or validation of or
exemption by any government or public body or authority of Bermuda or
any sub-division thereof is required to authorise or is required in
connection with the execution, delivery, performance and enforcement of
the Guaranty.
5. It is not necessary or desirable to ensure the enforceability in
Bermuda of the Guaranty that it be registered in any register kept
by, or filed with, any governmental authority or regulatory body in
Bermuda. However, to the extent that section 6(f) or other provision
of the Guaranty create a charge over assets of the Company, it may be
desirable to ensure the priority in Bermuda of the charge that it
be registered in the Register of Charges in accordance with Section
55 of the Companies Act 1981. On registration, to the extent that
Bermuda law governs the priority of a charge, such charge will have
priority in Bermuda over any unregistered charges, and over any
subsequently registered charges, in respect of the assets which are
the subject of the charge. A registration fee of BD$425 will be
payable in respect of the registration.
<PAGE>
-7-
While there is no exhaustive definition of a charge under Bermuda
law, a charge normally has the following characteristics:
(i) it is a proprietary interest granted by way of security which
entitles the chargee to resort to the charged property only
for the purposes of satisfying some liability due to the
chargee (whether from the chargor or a third party); and
(ii) the chargor retains an equity of redemption to have the
property restored to him when the liability has been
discharged.
However, as the Guaranty is expressed to be governed by the Foreign
Laws, the question of whether it would possess these particular
characteristics would be determined under the Foreign Laws.
6. Based solely on a search of the Register of Charges maintained by the
Registrar of Companies pursuant to Section 55 of the Companies Act 1981
conducted at [ am/pm] on [ ] 2000 (which would not reveal details of
matters which have been lodged for registration but not actually
registered at the time of our search), there are [no] charges
registered on the assets of the Company.
7. Based solely upon a search of the Cause Book of the Supreme
Court of Bermuda conducted at [ am/pm] on [ ] 2000 (which would
not reveal details of proceedings which have been filed but not
actually entered in the Cause Book at the time of our search),
<PAGE>
-8-
there are no judgments against the Company, nor any legal or
governmental proceedings pending in Bermuda to which the Company is a
party.
8. Based solely on a search of the public records in respect of the
Company maintained at the offices of the Registrar of Companies at [ ]
on [ ] 2000 (which would not reveal details of matters which have
not been lodged for registration or have been lodged for registration
but not actually registered at the time of our search) and a search
of the Cause Book of the Supreme Court of Bermuda conducted at [am/pm]
on [ ] 2000 (which would not reveal details of proceedings which have
been filed but not actually entered in the Cause Book at the time
of our search), no steps have been, or are being, taken in Bermuda
for the appointment of a receiver or liquidator to, or for the
winding-up, dissolution, reconstruction or reorganisation of, the
Company, though it should be noted that the public files maintained
by the Registrar of Companies do not reveal whether a winding-up
petition or application to the Court for the appointment of a receiver
has been presented and entries in the Cause Book may not specify the
nature of the relevant proceedings.
9. The Guaranty will not be subject to ad valorem stamp duty or other
documentary tax in Bermuda in connection with its execution. There may
be filing and other fees payable in connection with enforcement
proceedings before a Bermuda court based on the Guaranty.
<PAGE>
-9-
10. The choice of the Foreign Laws as the governing law of the Guaranty is
a valid choice of law and would be recognised and given effect to in
any action brought before a court of competent jurisdiction in Bermuda,
except for those laws (i) which such court considers to be procedural
in nature, (ii) which are revenue or penal laws or (iii) the
application of which would be inconsistent with public policy, as such
term is interpreted under the laws of Bermuda. The submission in the
Guaranty to the jurisdiction of the Foreign Courts is valid and binding
upon the Company.
11. The courts of Bermuda would recognise as a valid judgment, a final
and conclusive judgment in personam obtained in the Foreign Courts
against the Company based upon the Guaranty under which a sum of money
is payable (other than a sum of money payable in respect of multiple
damages, taxes or other charges of a like nature or in respect of a
fine or other penalty) and would give a judgment based thereon
provided that (a) such courts had proper jurisdiction over the parties
subject to such judgment, (b) such courts did not contravene the rules
of natural justice of Bermuda, (c) such judgment was not obtained by
fraud, (d) the enforcement of the judgment would not be contrary to
the public policy of Bermuda, (e) no new admissible evidence relevant
to the action is submitted prior to the rendering of the judgment by
the courts of Bermuda and (f) there is due compliance with the correct
procedures under the laws of Bermuda.
12. There is no income or other tax of Bermuda
imposed by withholding or otherwise on any
<PAGE>
-10-
payment to be made by the Company pursuant to the Guaranty.
13. The Lenders and the Administrative Agent will not be deemed to be
resident, domiciled or carrying on business in Bermuda by reason only
of the execution, performance and/or enforcement of the Guaranty by the
Lenders and the Administrative Agent.
14. The Lenders and the Administrative Agent have standing to bring an
action or proceedings before the appropriate courts in Bermuda for the
enforcement of the Guaranty. It is not necessary or advisable in order
for the Lenders and the Administrative Agent to enforce their rights
under the Guaranty, including the exercise of remedies thereunder, that
they be licensed, qualified or otherwise entitled to carry on business
in Bermuda.
15. The Company is not entitled to any immunity under the laws of Bermuda,
whether characterised as sovereign immunity or otherwise, from any
legal proceedings to enforce the Guaranty in respect of itself or its
property.
16. The obligations of the Company under the Guaranty will rank at least
pari passu in priority of payment with all other unsecured
unsubordinated indebtedness of the Company, other than indebtedness
which is preferred by virtue of any provision of the laws of Bermuda of
general application.
<PAGE>
-11-
17. The Company has been designated as non-resident of Bermuda for the
purposes of the Exchange Control Act, 1972 and, as such, is free to
acquire, hold and sell foreign currency and securities without
restriction.
18. The Company has the necessary corporate power and authority to issue
the shares in connection with the Restructuring. The Company has taken
all corporate action required to authorise such issue of shares. No
order, consent, approval, licence, authorisation or validation of or
exemption by any government or public body or authority of Bermuda or
any sub-division thereof is required to authorise or is required
in connection with the said issue of shares except such as have been
duly obtained in accordance with Bermuda law or such filings as
have been duly made by the Company in accordance with Bermuda law.
The Company is required under Bermuda law to enter the said issue of
shares in its Register of Members or branch register thereof but
failure to so register will not invalidate the said issue.
Yours faithfully
Conyers Dill & Pearman
SCHEDULE
Names and Addresses of Lenders
[ ]
<PAGE>
EXHIBIT F
FORM OF
PARENT GUARANTY
THIS PARENT GUARANTY, dated as of the _____ day of ______________, 2000
(this "Guaranty"), is made by EVEREST RE GROUP, LTD., a Bermuda corporation (the
"Guarantor"), in favor of the Guaranteed Parties (as hereinafter defined).
Capitalized terms used herein without definition shall have the meanings given
to them in the Credit Agreement referred to below.
RECITALS
A. Everest Reinsurance Holdings, Inc., a Delaware corporation (the
"Borrower"), certain banks and other financial institutions (collectively, the
"Lenders"), and First Union National Bank, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), are parties to a Credit
Agreement, dated as of December 21, 1999 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), providing for the availability of
certain credit facilities to the Borrower upon the terms and conditions set
forth therein. The Guarantor owns all of the issued and outstanding capital
stock of the Borrower. Unless otherwise defined herein, capitalized terms used
herein without definition shall have the meaning given to them in the Credit
Agreement.
B. It is a condition to the approval by the Lenders of the Restructuring,
and the application of certain exceptions to restrictive covenants applicable to
the Borrower and its Subsidiaries set forth in the Credit Agreement, that the
Guarantor shall have agreed, by executing and delivering this Guaranty, to
guarantee to the Guaranteed Parties the payment in full of the Guaranteed
Obligations (as hereinafter defined). The Guaranteed Parties are relying on this
Guaranty in their decision to approve the Restructuring, permit the
aforementioned exceptions, and thereby continue the extension of credit to the
Borrower under the terms of the Credit Agreement, and would not continue and
maintain the credit facility under the terms of the Credit Agreement upon the
terms as presented without this Guaranty.
C. The Guarantor will obtain benefits as a result of the extension of
credit to the Borrower under the Credit Agreement, which benefits are hereby
acknowledged, and, accordingly, desires to execute and deliver this Guaranty.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, to induce the
<PAGE>
Guaranteed Parties to continue the extension of credit to the Borrower under the
terms of the Credit Agreement, the Guarantor hereby agrees as follows:
1. GUARANTY. (a) The Guarantor hereby irrevocably, absolutely and
unconditionally:
(i) guarantees (a) to the Lenders and the Administrative Agent
(collectively, the "Guaranteed Parties") the full and prompt payment, at
any time and from time to time as and when due (whether at the stated
maturity, by acceleration or otherwise), of all Obligations of the Borrower
under the Credit Agreement and the other Credit Documents, including,
without limitation, all principal of and interest on the Loans, all fees,
expenses, indemnities and other amounts payable by the Borrower under the
Credit Agreement or any other Credit Document (including interest accruing
after the filing of a petition or commencement of a case by or with respect
to the Borrower seeking relief under any applicable federal and state laws
pertaining to bankruptcy, reorganization, arrangement, moratorium,
readjustment of debts, dissolution, liquidation or other debtor relief,
specifically including, without limitation, the Bankruptcy Code and any
fraudulent transfer and fraudulent conveyance laws (collectively,
"Insolvency Laws"), whether or not the claim for such interest is allowed
in such proceeding), and all Obligations that, but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, would become
due, and (b) to each applicable Lender in its capacity as a counterparty to
any Hedge Agreement with the Borrower required or permitted under the
Credit Agreement, all obligations of the Borrower under such Hedge
Agreement, in each case under (a) and (b) whether now existing or hereafter
created or arising and whether direct or indirect, absolute or contingent,
due or to become due (all liabilities and obligations described in this
clause (i), collectively, the "Guaranteed Obligations"); and
(ii) agrees to pay or reimburse upon demand all reasonable and
documented costs and expenses (including, without limitation, reasonable
and documented attorneys' fees and expenses) incurred or paid by (y) any
Guaranteed Party in connection with any suit, action or proceeding to
enforce or protect any rights of the Guaranteed Parties hereunder and (z)
the Administrative Agent in connection with any amendment, modification or
waiver hereof or consent pursuant hereto, and to indemnify and hold each
Guaranteed Party and its directors, officers, employees, agents and
Affiliates harmless from and against any and all claims, losses, damages,
obligations, liabilities, penalties, costs and expenses (including, without
limitation, reasonable and documented attorneys' fees and expenses) of any
kind or nature whatsoever, whether direct, indirect or consequential, that
may at any time be imposed on, incurred by or asserted against any such
indemnified party as a result of, arising from or in any way relating to
this Guaranty or the collection or enforcement of the Guaranteed
Obligations; PROVIDED, HOWEVER, that no indemnified party shall have the
right to be indemnified hereunder for any such claims, losses, costs and
expenses to the extent resulting from the gross negligence or willful
misconduct of such indemnified party (all liabilities and obligations
described in this clause (ii), collectively, the "Other Obligations"; and
the Other Obligations, together with the Guaranteed Obligations, the "Total
Obligations").
2
<PAGE>
(b) The guaranty of the Guarantor set forth in this Section is a guaranty
of payment as a primary obligor, and not a guaranty of collection.
2. GUARANTY ABSOLUTE. The Guarantor agrees that its obligations hereunder
are irrevocable, absolute and unconditional, are independent of the Guaranteed
Obligations and other security therefor or other guaranty or liability in
respect thereof, whether given by the Guarantor or any other Person, and shall
not be discharged, limited or otherwise affected by reason of any of the
following, whether or not the Guarantor has notice or knowledge thereof:
(i) any change in the time, manner or place of payment of, or in any
other term of, any Guaranteed Obligations or any guaranty or other
liability in respect thereof, or any amendment, modification or supplement
to, restatement of, or consent to any rescission or waiver of or departure
from, any provisions of the Credit Agreement, any other Credit Document
or any agreement or instrument delivered pursuant to any of the
foregoing;
(ii) the invalidity or unenforceability of any Guaranteed Obligations,
any guaranty or other liability in respect thereof or any provisions of the
Credit Agreement, any other Credit Document or any agreement or
instrument delivered pursuant to any of the foregoing;
(iii) the taking, acceptance or release of other guarantees of any
Guaranteed Obligations or other security for any Guaranteed Obligations or
for any guaranty or other liability in respect thereof;
(iv) any discharge, modification, settlement, compromise or other
action in respect of any Guaranteed Obligations or any guaranty or
other liability in respect thereof, including any acceptance or refusal
of any offer or performance with respect to the same or the subordination
of the same to the payment of any other obligations;
(v) any agreement not to pursue or enforce or any failure to pursue
or enforce (whether voluntarily or involuntarily as a result of operation
of law, court order or otherwise) any right or remedy in respect of any
Guaranteed Obligations, any guaranty or other liability in respect
thereof or any other security for any of the foregoing; or any sale,
exchange, release, substitution, compromise or other action in respect of
any other security;
(vi) any bankruptcy, reorganization, arrangement, liquidation,
insolvency, dissolution, termination, reorganization or like change
in the corporate structure or existence of the Borrower or any other
Person directly or indirectly liable for any Guaranteed Obligations;
vii) any manner of application of any payments by or amounts
received or collected from any Person, by whomsoever paid and
howsoever realized, whether in reduction of any Guaranteed
Obligations or any other obligations of the Borrower or any
3
<PAGE>
other Person directly or indirectly liable for any Guaranteed Obligations,
regardless of what Guaranteed Obligations may remain unpaid after any such
application; or
(viii) any other circumstance that might otherwise constitute a legal
or equitable discharge of, or a defense, set-off or counterclaim available
to, the Borrower, the Guarantor or a surety or guarantor generally,
other than the occurrence of all of the following: (x) the payment in
full of the Total Obligations, (y) the termination of the Commitments
under the Credit Agreement, and (z) the termination of, and settlement
of all obligations of the Borrower under, each Hedge Agreement to which
the Borrower and any Lender are parties (the events in clauses (x), (y)
and (z) above, collectively, the "Termination Requirements").
3. CERTAIN WAIVERS. The Guarantor hereby knowingly, voluntarily and
expressly waives:
(i) presentment, demand for payment, demand for performance, protest
and notice of any other kind, including, without limitation, notice of
nonpayment or other nonperformance (including notice of default under
any Credit Document with respect to any Guaranteed Obligations),
protest, dishonor, acceptance hereof, extension of additional credit to
the Borrower and of any of the matters referred to in Section 2 and of
any rights to consent thereto;
(ii) any right to require the Guaranteed Parties or any of them, as a
condition of payment or performance by the Guarantor hereunder, to proceed
against, or to exhaust or have resort to any security from or any deposit
balance or other credit in favor of, the Borrower or any other Person
directly or indirectly liable for any Guaranteed Obligations, or to pursue
any other remedy or enforce any other right; and any other defense based on
an election of remedies with respect to any security for any Guaranteed
Obligations or for any guaranty or other liability in respect thereof,
notwithstanding that any such election (including any failure to pursue or
enforce any rights or remedies) may impair or extinguish any right of
indemnification, contribution, reimbursement or subrogation or other right
or remedy of the Guarantor against the Borrower or any other Person
directly or indirectly liable for any Guaranteed Obligations or any such
Collateral or other security; and, without limiting the generality of the
foregoing, the Guarantor hereby specifically waives the benefits of
Sections 26-7 through 26-9, inclusive, of the General Statutes of North
Carolina, as amended from time to time, and any similar statute or law of
any other jurisdiction, as the same may be amended from time to time;
(iii) any right or defense based on or arising by reason of any right
or defense of the Borrower or any other Person, including, without
limitation, any defense based on or arising from a lack of authority or
other disability of the Borrower or any other Person, the invalidity or
unenforceability of any Guaranteed Obligations, or any Credit Document
or other agreement or instrument delivered pursuant thereto, or the
cessation of the liability of the Borrower for any reason other than
the satisfaction of the Termination Requirements;
4
<PAGE>
(iv) any defense based on any Guaranteed Party's acts or omissions in
the administration of the Guaranteed Obligations, and any guaranty or other
liability in respect thereof;
(v) any right to assert against any Guaranteed Party, as a defense,
counterclaim, crossclaim or set-off, any defense, counterclaim, claim,
right of recoupment or set-off that it may at any time have against any
Guaranteed Party (including, without limitation, failure of consideration,
statute of limitations, payment, accord and satisfaction and usury), other
than compulsory counterclaims; and
(vi) any defense based on or afforded by any applicable law that limits
the liability of or exonerates guarantors or sureties or that may in any
other way conflict with the terms of this Guaranty.
4. STANDSTILL ON SUBROGATION; SUBORDINATION. Notwithstanding any payment or
payments made by the Guarantor hereunder, or any set-off or application of funds
of the Guarantor by the Administrative Agent or any Lender, the Guarantor shall
not be entitled to be subrogated to any of the rights of the Administrative
Agent or any Lender against the Borrower or against any collateral or other
security or guarantee or right of offset held by the Administrative Agent or any
Lender for the payment of the Guaranteed Obligations, nor shall the Guarantor
seek or be entitled to seek any contribution or reimbursement from the Borrower
in respect of payments made by the Guarantor hereunder, until all amounts owing
to the Administrative Agent and the Lenders by the Borrower on account of the
Guaranteed Obligations are paid in full and the Commitments have been
terminated. The Guarantor agrees that all indebtedness and other obligations,
whether now or hereafter existing, of the Borrower or any Subsidiary of the
Borrower to the Guarantor, including, without limitation, any such indebtedness
in any proceeding under the Bankruptcy Code and any intercompany receivables,
together with any interest thereon, shall be, and hereby are, subordinated and
made junior in right of payment to the Total Obligations. The Guarantor further
agrees that if any amount shall be paid to or any distribution received by the
Guarantor (i) on account of any such indebtedness at any time after the
occurrence and during the continuance of an Event of Default, or (ii) on account
of any such rights of subrogation, indemnity, contribution or reimbursement at
any time prior to the satisfaction of the Termination Requirements, such amount
or distribution shall be deemed to have been received and to be held in trust
for the benefit of the Guaranteed Parties, and shall forthwith be delivered to
the Administrative Agent in the form received (with any necessary endorsements
in the case of written instruments), to be applied against the Guaranteed
Obligations, whether or not matured, in accordance with the terms of the
applicable Credit Documents and without in any way discharging, limiting or
otherwise affecting the liability of the Guarantor under any other provision of
this Guaranty.
5. COVENANTS. The Guarantor covenants and agrees that, until the
termination of the Commitments, and the payment in full of all principal and
interest with respect to the Loans together with all other amounts then due and
owing under the Credit Agreement:
(a) The Guarantor will deliver (or will cause to be delivered) to each
Lender:
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(i) 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 March 31, 2000, unaudited
consolidated and, to the extent otherwise prepared for external
distribution, consolidating balance sheets of the Guarantor 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 Guarantor 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 GAAP (subject to the absence of notes
required by GAAP 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;
(ii) As soon as available and in any event within 120 days after the
end of each fiscal year, beginning with the fiscal year ending December 31,
2000, (i) an audited consolidated balance sheet of the Guarantor and its
Subsidiaries as of the end of such fiscal year and audited consolidated
statements of income, stockholders' equity and cash flows for the Guarantor
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 Guarantor or
another independent certified public accounting firm of recognized national
standing, 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 Guarantor and its Subsidiaries
as of the dates and for the periods indicated in accordance with GAAP
applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the financial condition or results of
operations of any change in the application of accounting principles and
practices during such year, and (z) a report by such accountants to the
effect that, based on and in connection with their examination of the
financial statements of the Guarantor 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
Guarantor and its Subsidiaries as of the end of such fiscal year and
unaudited consolidating statements of income, stockholders' equity and cash
flows for the Guarantor and its Subsidiaries for the fiscal year then
ended, all in reasonable detail;
(iii) 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
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Insurance Company of Canada and Everest Bermuda, within fifteen (15) days
after the required filing date), beginning with the fiscal quarter ending
March 31, 2000, a Quarterly Statement of each of its Insurance Subsidiaries
as of the end of such fiscal quarter and for that portion of the fiscal
year then ended, in the form filed with the relevant Insurance Regulatory
Authority, prepared in accordance with SAP 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;
(iv) 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 and Everest Bermuda, within fifteen (15) days
after the required filing date), beginning with the fiscal year ending
December 31, 2000, an Annual Statement of each of its Insurance
Subsidiaries as of the end of such fiscal year and for the fiscal year then
ended, in the form filed with the relevant Insurance Regulatory Authority,
prepared in accordance with SAP 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;
(v) 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,
2000, an unaudited consolidated balance sheet of the Guarantor and its
Insurance Subsidiaries (excluding Everest Insurance Company of Canada and
Everest Bermuda) as of the end of such fiscal year and unaudited
consolidated statements of income, stockholders' equity and cash flows for
the Guarantor and its 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 SAP 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;
(vi) 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,
2000 (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 clause (ii) 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 SAP 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;
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(vii) Concurrently with each delivery of the financial statements
described in clauses (i) through (iv), a Compliance Certificate in the
form of Exhibit C-1 to the Credit Agreement with respect to the period
covered by the financial statements then being delivered, executed by the
chief financial officer, comptroller or treasurer of the Guarantor,
together with a Covenant Compliance Worksheet reflecting the computation
of the financial covenants set forth in such Covenant Compliance Worksheet
as of the last day of the period covered by such financial statements;
(viii) As soon as available and in any event prior to the end of each
fiscal year, beginning with the fiscal year ending December 31, 2000, a
complete set of projections for Guarantor and its Subsidiaries for each
of the succeeding fiscal years remaining through the Maturity Date,
consisting of consolidated balance sheets and income statements
prepared based on GAAP principles, and
(ix) Promptly upon the sending, filing or receipt thereof, copies of
(i) all financial statements, reports, notices and proxy statements that
the Guarantor 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 Guarantor 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 any successor form) 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 Guarantor or any of its Subsidiaries, including, without limitation,
filings seeking approval of transactions with Affiliates.
(b) The Guarantor will (i) maintain and preserve in full force and effect
its corporate existence and (ii) obtain, maintain and preserve in full force and
effect all other rights, franchises, licenses, permits, certifications,
approvals and authorizations required by Governmental Authorities and necessary
to the ownership, occupation or use of its properties or the conduct of its
business, except to the extent the failure to do so would not be reasonably
likely to have a Material Adverse Effect.
(c) The Guarantor will 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.
(d) The Guarantor will 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
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become a Lien upon any of the properties of the Guarantor; provided, however,
that the Guarantor shall not 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 Guarantor is maintaining adequate reserves with
respect thereto in accordance with GAAP.
(e) The Guarantor will (i) maintain adequate books, accounts and records,
in which full, true and correct entries shall be made of all financial
transactions in relation to its business and properties, and prepare all
financial statements required under this Guaranty, in each case in accordance
with GAAP or SAP, as applicable, and in compliance with the requirements of any
Governmental Authority having jurisdiction over it, and (ii) permit employees or
agents of the Administrative Agent or any Lender to inspect its properties and
examine or audit its books, records, working papers and accounts and make copies
and memoranda of them, and to discuss its affairs, finances and accounts with
its officers and employees and, upon notice to the Guarantor, the independent
public accountants of the Guarantor (and by this provision the Guarantor
authorizes such accountants to discuss the finances and affairs of the Guarantor
and its Subsidiaries), all at such times and from time to time, upon reasonable
notice and during business hours, as may be reasonably requested.
(f) The Guarantor will not liquidate, wind up or dissolve, or enter into
any consolidation, merger or other combination, or agree to do any of the
foregoing (other than the Restructuring provided that the conditions of Section
3.3. of the Credit Agreement are satisfied); provided, however, that the
Guarantor may merge into or consolidate with any other Person so long as (y) the
surviving corporation shall be the Guarantor unless the surviving corporation
expressly assumes the obligations of this Guaranty, and (z) immediately after
giving effect thereto, no Default or Event of Default would exist.
(g) The Guarantor will not create, incur, assume or suffer to exist any
Indebtedness other than:
(i) Indebtedness incurred by the Guarantor, provided that any such
Indebtedness shall rank either pari passu in right of payment to the
Guaranteed Obligations or be subordinated in right and time of payment
to the Guaranteed Obligations;
(ii) indorsements of negotiable instruments in the ordinary course of
business;
(iii) accrued expenses (including salaries, accrued vacation and
other compensation), current trade or other accounts payable and other
current liabilities arising in the ordinary course of business and not
incurred through the borrowing of money, provided that the same shall
be paid when due except to the extent being contested in good faith and
by appropriate proceedings;
(iv) loans and advances by the Guarantor to any Subsidiary of the
Guarantor; and
(v) Indebtedness in connection with Permitted Liens.
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(h) The Guarantor will not directly or indirectly, make, create, incur,
assume or suffer to exist, or enter into or suffer to exist any agreement (other
than the Credit Documents) 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:
(i) Liens imposed by law, such as Liens of carriers, warehousemen,
mechanics, materialmen and landlords, and other similar Liens incurred
in the ordinary course of business for sums not constituting borrowed
money that are not overdue for a period of more than thirty (30) days
or that are being contested in good faith by appropriate proceedings
and for which adequate reserves have been established in accordance
with GAAP;
(ii) Liens (other than any Lien imposed by ERISA, the creation or
incurrence of which would result in an Event of Default under the
Credit Agreement) incurred in the ordinary course of business in connection
with workers' 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;
(iii) Liens for taxes, assessments or other governmental charges or
statutory obligations that are not delinquent or remain payable without
any penalty or that are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in
accordance with GAAP;
(iv) Liens in connection with pledges and deposits made pursuant to
statutory and regulatory requirements 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;
(v) Liens upon cash and United States government and agency securities
of the Guarantor 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 Guarantor in size and lines
of business and that are entered into by the Guarantor and its
Subsidiaries in the ordinary course of business;
(vi) Purchase money Liens upon real or personal property used by the
Guarantor 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 such Liens does not exceed an amount equal to 5% of the
value of the total assets of the Guarantor and its Subsidiaries at
such time, determined on a consolidated basis in accordance with
GAAP as of the date of the financial statements of
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the Guarantor and its Subsidiaries most recently delivered under SECTION
5(A)(I) or (II) prior to such time, 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 Guarantor, (ii) shall not exceed the
lesser of (y) the fair market value of such property or (z) the cost
thereof to the Guarantor, and (iii) shall not encumber any other property
of the Guarantor;
(vii) Any attachment or judgment Lien not constituting an Event of
Default under the Credit Agreement that is being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP;
(viii) With respect to any real property occupied by the Guarantor 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;
(ix) Liens on Borrower Margin Stock, to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of the
Borrower and its Subsidiaries (including Borrower Margin Stock); and
(x) Liens in favor of the trustee or agent under any agreement or
indenture relating to Indebtedness of the Guarantor and its Subsidiaries
permitted under this Agreement, covering sums required to be deposited
with such trustee or agent thereunder.
(i) The Guarantor 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 GAAP or SAP,
as applicable;
(j) The Guarantor will not cease to own directly 100% of the issued and
outstanding capital stock of the Borrower.
6. PAYMENTS; APPLICATION; SET-OFF.
(a) The Guarantor agrees that, upon the failure of the Borrower to pay any
Guaranteed Obligations when and as the same shall become due (whether at the
stated maturity, by acceleration or otherwise), and without limitation of any
other right or remedy that any Guaranteed Party may have at law, in equity or
otherwise against the Guarantor, the Guarantor will forthwith pay or cause to be
paid to the Administrative Agent, for the benefit of the Guaranteed Parties, an
amount equal to the amount of the Guaranteed Obligations then due and owing as
aforesaid.
(b) All payments made by the Guarantor hereunder will be made in Dollars to
the Administrative Agent, without set-off, counterclaim or other defense and, in
accordance with and to the extent provided in Section 2.16 of the Credit
Agreement, free and clear of and without deduction for any Taxes, the
Guarantor hereby agreeing to comply with and be bound by the provisions of
Section 2.16 of the Credit Agreement in respect of all payments made by it
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hereunder and the provisions of which Section are hereby incorporated into and
made a part of this Guaranty by this reference as if set forth herein at length.
(c) All payments made hereunder shall be applied upon receipt as follows:
(i) first, to the payment of all Other Obligations owing to the
Administrative Agent;
(ii) second, after payment in full of the amounts specified in clause
(i) above, to the ratable payment of all other Total Obligations owing to
the Guaranteed Parties; and
(iii) third, after payment in full of the amounts specified in clauses
(i) and (ii) above, and following the termination of this Guaranty, to the
Guarantor or any other Person lawfully entitled to receive such
surplus.
(d) For purposes of applying amounts in accordance with this Section, the
Administrative Agent shall be entitled to rely upon any Guaranteed Party that
has entered into a Hedge Agreement with the Borrower for a determination (which
such Guaranteed Party agrees to provide or cause to be provided upon request of
the Administrative Agent) of the outstanding Guaranteed Obligations owed to such
Guaranteed Party under any such Hedge Agreement. Unless it has actual knowledge
(including by way of written notice from any such Guaranteed Party) to the
contrary, the Administrative Agent, in acting hereunder, shall be entitled to
assume that no Hedge Agreements or Obligations in respect thereof are in
existence between any Guaranteed Party and the Borrower.
(e) The Guarantor shall remain liable to the extent of any deficiency
between the amount of all payments made hereunder and the aggregate amount of
the sums referred to in clauses (i) and (ii) of subsection (c) above.
(f) In addition to all other rights and remedies available under the Credit
Documents or applicable law or otherwise, upon and at any time after the
occurrence and during the continuance of any Event of Default, each Guaranteed
Party may, and is hereby authorized by the Guarantor, 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 Guarantor, to set off and to apply
any and all deposits (general or special, time or demand, provisional or final)
and any other property at any time held (including at any branches or agencies,
wherever located), and any other indebtedness at any time owing, by such
Guaranteed Party to or for the credit or the account of the Guarantor against
any or all of the obligations of the Guarantor to such Guaranteed Party
hereunder now or hereafter existing, whether or not such obligations may be
contingent or unmatured, the Guarantor hereby granting to each Guaranteed Party
a continuing security interest in and Lien upon all such deposits and other
property as security for such obligations. Each Guaranteed Party agrees to
notify the Guarantor 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.
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7. NO WAIVER. The rights and remedies of the Guaranteed Parties expressly
set forth in this Guaranty 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 any Guaranteed
Party 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 any of the Guarantor and the
Guaranteed Parties or their agents or employees shall be effective to amend,
modify or discharge any provision of this Guaranty or any other Credit Document
or to constitute a waiver of any Default or Event of Default. No notice to or
demand upon the Guarantor in any case shall entitle the Guarantor to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the right of any Guaranteed Party to exercise any right or remedy or
take any other or further action in any circumstances without notice or demand.
8. ENFORCEMENT. The Guaranteed Parties agree that, except as provided in
SECTION 6(F), this Guaranty may be enforced only by the Administrative Agent,
acting upon the instructions or with the consent of the Required Lenders as
provided for in the Credit Agreement, and that no Guaranteed Party shall have
any right individually to enforce or seek to enforce this Guaranty or to realize
upon any collateral or other security given to secure the payment and
performance of the Guarantor's obligations hereunder. The obligations of the
Guarantor hereunder are independent of the Guaranteed Obligations, and a
separate action or actions may be brought against the Guarantor whether or not
action is brought against the Borrower and whether or not the Borrower is joined
in any such action. The Guarantor agrees that to the extent all or part of any
payment of the Guaranteed Obligations made by any Person is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid by or on behalf of any Guaranteed Party to a trustee, receiver or any
other party under any Insolvency Laws (the amount of any such payment, a
"Reclaimed Amount"), then, to the extent of such Reclaimed Amount, this Guaranty
shall continue in full force and effect or be revived and reinstated, as the
case may be, as to the Guaranteed Obligations intended to be satisfied as if
such payment had not been received; and the Guarantor acknowledges that the term
"Guaranteed Obligations" includes all Reclaimed Amounts that may arise from time
to time.
9. AMENDMENTS, WAIVERS, ETC. No amendment, modification, waiver, discharge
or termination of, or consent to any departure by the Guarantor from, any
provision of this Guaranty, shall be effective unless in a writing signed by the
Administrative Agent and such of the Lenders as may be required under the
provisions of the Credit Agreement to concur in the action then being taken, and
then the same shall be effective only in the specific instance and for the
specific purpose for which given.
10. CONTINUING GUARANTY; TERM; SUCCESSORS AND ASSIGNS; ASSIGNMENT;
SURVIVAL. This Guaranty is a continuing guaranty and covers all of the
Guaranteed Obligations as the same may arise and be outstanding at any
time and from time to time from and after the date hereof, and shall
(i) remain in full force and effect until satisfaction of all of the
Termination Requirements (provided that the provisions of clause (ii)
of SECTION 1(A) shall survive any termination of this
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Guaranty), (ii) be binding upon and enforceable against the Guarantor and its
successors and assigns (provided, however, that the Guarantor may not sell,
assign or transfer any of its rights, interests, duties or obligations hereunder
without the prior written consent of the Lenders) and (iii) inure to the benefit
of and be enforceable to the extent provided in SECTION 8 by each Guaranteed
Party and its successors and assigns. Without limiting the generality of clause
(iii) above, any Guaranteed Party may, in accordance with the provisions of the
Credit Agreement, assign all or a portion of the Guaranteed Obligations held by
it (including by the sale of participations), whereupon each Person that becomes
the holder of any such Guaranteed Obligations shall (except as may be otherwise
agreed between such Guaranteed Party and such Person) have and may exercise all
of the rights and benefits in respect thereof granted to such Guaranteed Party
under this Guaranty or otherwise. The Guarantor hereby irrevocably waives notice
of and consents in advance to the assignment as provided above from time to time
by any Guaranteed Party of all or any portion of the Guaranteed Obligations held
by it and of the corresponding rights and interests of such Guaranteed Party
hereunder in connection therewith. All representations, warranties, covenants
and agreements herein shall survive the execution and delivery of this Guaranty.
11. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS (EXCLUDING NEW YORK GENERAL OBLIGATIONS
LAW SS.5-1401). THE PARTIES HERETO HEREBY DECLARE THAT IT IS THEIR INTENTION
THAT THIS GUARANTY SHALL BE REGARDED AS MADE UNDER THE LAWS OF THE STATE OF NEW
YORK AND THAT THE LAWS OF SAID STATE SHALL BE APPLIED IN INTERPRETING ITS
PROVISIONS IN ALL CASES WHERE LEGAL INTERPRETATION SHALL BE REQUIRED. EACH OF
THE PARTIES HERETO AGREES (A) THAT THIS GUARANTY INVOLVES AT LEAST $250,000; AND
(B) THAT THIS GUARANTY HAS BEEN ENTERED INTO BY THE PARTIES HERETO IN EXPRESS
RELIANCE UPON NEW YORK GENERAL OBLIGATIONS LAW SS. 5-1401. NOTWITHSTANDING THE
FOREGOING CHOICE OF LAW, THE GUARANTOR HEREBY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF ANY STATE COURT WITHIN NEW YORK COUNTY, NEW YORK OR MECKLENBURG
COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT
OF THE STATE OF NORTH CAROLINA OR THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK
FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT
DOCUMENTS, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION
WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY GUARANTEED PARTY OR THE GUARANTOR. THE GUARANTOR
IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY
JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION
THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. NOTHING IN THIS SECTION
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SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF ANY GUARANTEED PARTY TO BRING ANY ACTION OR
PROCEEDING AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
12. WAIVER OF JURY TRIAL. THE GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, EACH GUARANTEED PARTY, HEREBY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER
CREDIT DOCUMENTS, OR ANY RELATED PROCEEDING TO WHICH ANY GUARANTEED PARTY OR THE
GUARANTOR IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN
CONNECTION WITH ANY RELATED COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY GUARANTEED PARTY OR THE GUARANTOR.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Guarantor and, by its acceptance of the benefits hereof, each Guaranteed Party,
(i) acknowledges that this waiver is a material inducement to enter into a
business relationship, that it has relied on this waiver in entering into this
Guaranty or accepting the benefits hereof, as the case may be, and that it will
continue to rely on this waiver in its related future dealings with the other
parties hereto, and (ii) further warrants and represents that it has reviewed
this waiver with its legal counsel and that, based upon such review, it
knowingly and voluntarily waives its jury trial rights to the extent permitted
by applicable law. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, MODIFICATIONS OR SUPPLEMENTS TO OR RESTATEMENTS OF THIS
GUARANTY OR ANY OF THE OTHER CREDIT DOCUMENTS. IN THE EVENT OF LITIGATION, THIS
GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
13. 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 (a) if to the Guarantor, at c/o ABG Financial and Management Services
Inc., Parker House, Wildey Road, St. Michael, Barbados, Attention: [NEED NAME],
Telecopy No. [NEED NUMBER], and (b) if to any Guaranteed Party, at its address
for notices set forth in the Credit Agreement; or to such other address as any
of the Persons listed above may designate for itself by like notice to the other
Persons listed above; and in each case, with copies to such other Persons as may
be specified under the provisions of the Credit Agreement. 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
15
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company, respectively, or (iii) if delivered by hand, upon delivery; provided
that notices and communications to the Administrative Agent shall not be
effective until received by the Administrative Agent.
14. SEVERABILITY. To the extent any provision of this Guaranty 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
Guaranty in any jurisdiction.
15. CONSTRUCTION. The headings of the various sections and subsections of
this Guaranty have been inserted for convenience only and shall not in any way
affect the meaning or construction of any of the provisions hereof. Unless the
context otherwise requires, words in the singular include the plural and words
in the plural include the singular.
16. COUNTERPARTS; EFFECTIVENESS. This Guaranty 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.
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officers as of the date first above written.
EVEREST RE GROUP, LTD.
By: _________________________________
Title: _________________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK, as
Administrative Agent
By: _________________________________
Title: _________________________________
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<PAGE>
EXHIBIT G
FORM OF
REQUEST FOR EXTENSION OF MATURITY DATE
[Date]
First Union National Bank, as Administrative Agent
One First Union Center, DC-4
301 South College Street
Charlotte, North Carolina 28288-0680
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, EVEREST REINSURANCE HOLDINGS, INC. (the "Borrower"),
refers to the Credit Agreement, dated as of December 21, 1999, among the
Borrower, certain banks and other financial institutions from time to time
parties thereto (the "Lenders"), and you, as Administrative Agent for the
Lenders (as amended, modified or supplemented from time to time, the "Credit
Agreement," the terms defined therein being used herein as therein defined),
and, pursuant to SECTION 2.18 of the Credit Agreement, hereby gives you, as
Administrative Agent, irrevocable notice that the Borrower requests an extension
of the Maturity Date for an additional one-year period. The Borrower hereby
requests the Administrative Agent to extend the Maturity Date to ___________,
____.
The Borrower hereby certifies that the following statements are true on
and as of the date hereof and will be true on and as of the Maturity Date:
A. Each of the representations and warranties contained in the
Credit Agreement and in the other Credit Documents is and will be true
and correct in all material respects on and as of each such date, with
the same effect as if made on and as of each such date, both
immediately before and after giving effect to the extension of the
Maturity Date (except to the extent any such representation or warranty
is expressly stated to have been made as of a specific date, in which
case such representation or warranty shall be true and correct in all
material respects as of such date); and
B. No Default or Event of Default has occurred and is continuing
or would result from the extension of the Maturity Date.
<PAGE>
If the Lenders, in their sole and absolute discretion, grant this
request for an one-year extension, please acknowledge such agreement by signing
and returning a copy of this request to the Borrower within 60 days.
Date: _____________
Very truly yours,
EVEREST REINSURANCE HOLDINGS, INC.
By: _________________________________
Title: _________________________________
Accepted and Agreed:
FIRST UNION NATIONAL BANK, as Administrative Agent
By: _________________________________
Title: _________________________________
