AMENDMENT NO. 2
and
WAIVER
Dated as of April __, 2000
to
CASH COLLATERAL AGREEMENT
Dated as of February 8, 2000
and
FORBEARANCE AGREEMENT
Dated as of February 4, 2000
PENNCORP FINANCIAL GROUP, INC., a Delaware corporation (the "Company"),
the Pledgors (as defined below), certain of the lenders signatory to the Cash
Collateral Agreement referred to below (the "Banks"), the Managing Agents and
the Co-Agents named therein (the "Agents") and THE BANK OF NEW YORK, as
administrative agent for the Banks (the "Administrative Agent"), hereby agree as
follows:
1. Cash Collateral Agreement.
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(a) Reference is hereby made to the Cash Collateral Agreement, dated
as of February 8, 2000, among the Company, the Banks, the Agents and the
Administrative Agent, as amended by Amendment No. 1 dated February 10, 2000 (the
"Cash Collateral Agreement").
(b) The Cash Collateral Agreement as further amended herein is and
shall continue to be in full force and effect and is hereby in all respects
confirmed, approved and ratified.
2. Forbearance Agreement.
---------------------
(a) Reference is also made to the Forbearance Agreement, dated as of
February 4, 2000, among the Pledgors, the Banks signatory thereto, the Agents,
the Administrative Agent, and the Collateral Agent (in each case as defined
therein)(the "Forbearance Agreement").
(b) The Forbearance Agreement as further amended herein is and shall
continue to be in full force and effect and is hereby in all respects confirmed,
approved and ratified.
3. Definitions.
-----------
(a) All terms defined in the Cash Collateral Agreement or the
Forbearance Agreement are used in this Amendment No. 2 and Waiver (this
"Amendment and Waiver") with the meanings therein ascribed to them.
(b) For purposes of this Amendment and Waiver:
"Amendment No. 2 and Waiver Effective Date" shall have the
meaning ascribed to that term in paragraph 8 of this Amendment and Waiver.
"Bankruptcy Court Order" means an order of the Bankruptcy
Court approving the execution, delivery and performance by the Company of this
Amendment and Waiver.
"Reinsurance Agreement" shall mean the reinsurance agreement
between Southwestern Life Insurance Company, Security Life and Trust Insurance
Company and RGA Reinsurance Company, dated as of _________, 2000, in the form
attached hereto as Exhibit A, as such form may be amended or modified from time
to time after the Amendment No. 2 and Waiver Effective Date; provided, that any
such amendment or modification that is material and adverse to the Company shall
have been approved by the Majority Banks; provided further, that any amendment
or modification of Article VI, Paragraph 6 shall be deemed to be material and
adverse to the Company and shall require approval by the Majority Banks.
4. Representations and Warranties.
------------------------------
In order to induce the Banks to execute and deliver this Amendment
and Waiver, the Company hereby represents and warrants as follows:
(a) (i) The Company has the power, and has taken all necessary
action (including any necessary stockholder action) to authorize it, to execute,
deliver and perform in accordance with their respective terms, this Amendment
and Waiver and the Cash Collateral Agreement, as further amended by this
Amendment and Waiver. This Amendment and Waiver has been duly executed and
delivered by the duly authorized officers of the Company, and the Cash
Collateral Agreement, as further amended by this Amendment and Waiver is, the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally, whether at law or in equity
(including principles of good faith and fair dealing). The execution, delivery
and performance in accordance with their respective terms by the Company of this
Amendment and Waiver and the Cash Collateral Agreement, as further amended by
this Amendment and Waiver do not and (absent any change in any Applicable Law or
applicable Contract) will not (A) require any Governmental Approval or any other
consent or approval, including any consent or approval of the stockholders of
the Company or of any Subsidiary, to have been obtained, or any Governmental
Registration to have been made, other than the Bankruptcy Court Order, which is
a Final Order and is in full force and effect, or (B) violate, conflict with,
result in a breach of, constitute a default under, or result in or require the
creation of any Lien (other than the Security Interest) upon any assets of the
Company or any Subsidiary under (1) any Contract to which the Company, or any
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Subsidiary is a party or by which the Company, or any Subsidiary or any of their
respective properties may be bound, or (2) any Applicable Law. As used herein,
"Governmental Approval" shall mean any authority, consent, approval, license (or
the like) or exemption (or the like) of any governmental unit; "Governmental
Registration" shall mean any registration or filing (or the like) with, or
report or notice (or the like) to, any governmental unit.
(ii) Each of the Pledgors has the power, and has taken all necessary
action (including any necessary stockholder action) to authorize it, to execute,
deliver and perform in accordance with their respective terms, this Amendment
and Waiver and the Forbearance Agreement, as further amended by this Amendment
and Waiver. This Amendment and Waiver has been duly executed and delivered by
the duly authorized officers of each Pledgor, and the Forbearance Agreement, as
further amended by this Amendment and Waiver is, the legal, valid and binding
obligation of such Pledgor enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, whether at law or in equity (including principles
of good faith and fair dealing). The execution, delivery and performance in
accordance with their respective terms by each Pledgor of this Amendment and
Waiver and the Forbearance Agreement, as further amended by this Amendment and
Waiver do not and (absent any change in any Applicable Law or applicable
Contract) will not (A) require any Governmental Approval or any other consent or
approval, including any consent or approval of the stockholders of such Pledgor
or of any of its Subsidiaries, to have been obtained, or any Governmental
Registration to have been made, other than the Bankruptcy Court Order, which is
a Final Order and is in full force and effect, or (B) violate, conflict with,
result in a breach of, constitute a default under, or result in or require the
creation of any Lien (other than the Security Interest) upon any assets of such
Pledgor or any Subsidiary under (1) any Contract to which such Pledgor, or any
Subsidiary is a party or by which such Pledgor, or any Subsidiary or any of
their respective properties may be bound, or (2) any Applicable Law. As used
herein, "Governmental Approval" shall mean any authority, consent, approval,
license (or the like) or exemption (or the like) of any governmental unit;
"Governmental Registration" shall mean any registration or filing (or the like)
with, or report or notice (or the like) to, any governmental unit.
(b) (i) The copy of the Reinsurance Agreement attached hereto as
Exhibit A is the current draft as of the Amendment No. 2 and Waiver Effective
Date.
(ii) The copy of the Bankruptcy Court Order attached hereto as
Exhibit B is a true and correct copy of such order.
(c) Each of the foregoing representations and warranties shall
constitute representations and warranties subject to Section 9(b) of the Cash
Collateral Agreement and shall be made at and as of the Amendment No. 2 and
Waiver Effective Date.
5. Amendments to the Cash Collateral Agreement.
-------------------------------------------
(a) Effective upon the satisfaction of the condition specified in
paragraph 8(a) hereof, the Cash Collateral Agreement shall be amended as
follows:
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(i) by amending nunc pro tunc, the existing definition of
Company Operating Budget to read in its entirety as follows:
"Company Operating Budget" shall mean the operating budget of the
Company as identified in Schedule 1.01(A) to this Agreement as approved by
the Bankruptcy Court on February 28, 2000.
(ii) by adding, in alphabetical order, the following new
definition:
""Subscription Bank Account" shall mean the Bank Account established
by the Company for, and only for, the deposit of cash received in escrow
for the payment for shares pursuant to the subscription agreement under
the preferred shareholder's recapitalization plan."
(iii) by amending Section 8.16 to add the following proviso
at the end thereof:
"provided further that this Section 8.16 shall not apply to the
Subscription Bank Account".
(b) Upon and after the Amendment No. 2 and Waiver Effective Date,
the Cash Collateral Agreement is hereby further amended as follows:
(i) by amending Section 2.01(c) by deleting the proviso to the
first sentence, and substituting therefore, the following:
"provided, that no withdrawal in respect of Operating Expenses shall be
made if, after giving effect thereto, and to all other withdrawals then
requested to be made from the Collateral Account, the remaining aggregate
balance in the Collateral Account and the Custody Account collectively would be
less than $3,500,000."
(ii) by amending Section 8.01 by adding thereto the following
new section (o):
"(o) provide the Agent with any information reasonably requested by
the Agent concerning the status of the plan of reorganization of the Company
dated April 5, 2000 or any other plan of reorganization for the Company or other
disposition of the Company's assets."
(iii) (A) by amending Section 8.06(a) by adding at the end of
the first sentence the following proviso:
"provided that, within two Business Days after any dissolution or
wind down permitted under this Section, the Company shall comply with its
obligations under Section 4.03 of the Company Security Agreement." and
(B) by adding to Schedule 8.06(a) a new final sentence
reading as follows:
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"The liquidation or dissolution of Southwestern Financial
Corporation, AMH Holdings Corporation, or PennCorp Financial Services,
Inc.."
6. Certain Other Amendments.
------------------------
(a) Upon and after the Amendment No. 2 and Waiver Effective Date,
Section 10 of the Forbearance Agreement shall be amended by amending the
existing definition of Termination Date to read as follows:
"Termination Date" shall mean the earlier to occur of (a) the
dismissal of the Chapter 11 Case, (b) the conversion of the Chapter 11
Case to a case under Chapter 7 of the Bankruptcy Code, and (c) June 30,
2000.
(b) Effective upon the satisfaction of the condition specified in
paragraph 8(a) hereof, Section 3 of the Company Security Agreement is hereby
amended by adding at the end of the existing proviso thereof the following
proviso:
"; and provided further that Collateral shall not include the
Subscription Bank Account."
7. Waiver.
------
Upon and after the Amendment No. 2 and Waiver Effective Date, the
Majority Banks hereby waive application of and the Company's obligation to
comply with Section 8.15 of the Cash Collateral Agreement to the extent, and
only to the extent, that any non-compliance results solely from the consummation
of the Reinsurance Agreement; provided that the waiver granted in this paragraph
7 shall cease to be effective, and Section 8.15 shall thereupon again be
effective, if the Terminal Accounting and Settlement contemplated by paragraph 6
of Article VI of the Reinsurance Agreement shall not be completed within the ten
calendar day period contemplated by that paragraph, should that paragraph become
applicable.
8. Conditions to Effectiveness: Amendment No. 2 and Waiver Effective
-----------------------------------------------------------------
Date.
----
(a) This Amendment and Waiver (i) shall be effective as of February
28, 2000 with respect to the amendment described in paragraph 5(a)(i) and (ii)
shall be effective as of the date first written above with respect to the
amendments in paragraphs 5(a)(ii) and (iii) and 6(b), but no such amendments
shall become effective as of such dates until such time as this Amendment and
Waiver has been executed and delivered by the Company, the Majority Banks and
the Administrative Agent.
(b) This Amendment and Waiver shall become effective as of the date
first written above with respect to paragraph 5(b), paragraph 6(a) and paragraph
7, but shall not become effective as of such date until the time (such time, the
"Amendment No. 2 and Waiver Effective Date") as:
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(i) this Amendment and Waiver has been executed and delivered
by the Company, the Majority Banks and the Administrative Agent;
(ii) all amounts payable pursuant to Section 11.03 of the Cash
Collateral Agreement for which invoices have been delivered to the Company on or
prior to such date, have been paid in full;
(iii) the Banks, after April 1, 2000, shall have received a
prepayment pursuant to Section 3.05(a) of the Cash Collateral Agreement from the
Company in the principal amount not less than $5,000,000 together with interest
accrued through the date of prepayment; and
(iv) the Bankruptcy Court Order shall have become a Final
Order.
provided, however that if the above conditions are not met on or
before May [ ], 2000, this Amendment and Waiver will terminate with respect to
the amendments referred to in this paragraph 8(b) on such date.
9. Governing Law.
-------------
The rights and duties of the Company, the Agent and the Banks under
this Amendment and Waiver shall, pursuant to New York General Obligations Law
Section 5-1401, be governed by the law of the State of New York.
10. Counterparts.
------------
This Amendment and Waiver may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.
11. Headings.
--------
Section headings in this Amendment and Waiver are included herein
for convenience and reference only and shall not constitute a part of this
Amendment and Waiver for any other purpose.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed as of the day and year first above written.
PENNCORP FINANCIAL GROUP, INC.
By: /S/ XXXXX X. XXXXXXXXX
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Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
AMH HOLDINGS CORPORATION
By: /S/ XXXXX X. XXXXXXXXX
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Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
SOUTHWESTERN FINANCIAL CORPORATION
By: /S/ XXXXX X. XXXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
SOUTHWESTERN FINANCIAL SERVICES
CORPORATION
By: /S/ XXXXX X. XXXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Secretary
KB MANAGEMENT L.L.C.
By: /S/ XXXXX X. XXXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Authorized Manager
KB INVESTMENT L.L.C.
By: /S/ XXXXX X. XXXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Authorized Manager
PENNCORP OCCIDENTAL CORP.
By: /S/ XXXXX X. XXXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President and Secretary
THE BANK OF NEW YORK, as
Administrative Agent, Collateral Agent
and as a Bank
By: /S/ XXXXX X. XXXX
----------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
THE CHASE MANHATTAN BANK, as a
Managing Agent and as a Bank
By: /S/ XXXXX X. XXXXX
----------------------------------
Name: Xxxxx X. Xxxxx
Title: M.D.
BANK OF AMERICA, N.A., formerly known as
Nations Bank, N.A., as a Managing
Agent and as a Bank
By: /S/ XXXXXXX X. LUWUPSTHE, IV
----------------------------------
Name: Xxxxxxx X. Luwupsthe, IV
Title: Managing Director
FLEET NATIONAL BANK, as a
Co-Agent and as a Bank
By: /S/ XXXXXX X. XXXXXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: SVP
MELLON BANK, N.A., as a Co-Agent
and as a Bank
By: /S/ XXXX X. XXXX
----------------------------------
Name: Xxxx X. Xxxx
Title: First Vice President
CIBC INC., as a Co-Agent and as a Bank
By: /S/ XXXXXX XXXXXXX
----------------------------------
Name: Xxxxxx Xxxxxxx
Title: Executive Director
CIBC World Markets Corp.,
as Agent
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, as a Co-
Agent and as a Bank
By: /S/ XXXXXX X. XXXXXXXX, XX
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Name: Xxxxxx X. Xxxxxxxx, XX
Title: Assistant Vice President
By: /S/ XXXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By: /S/ XXXXXX X. XXXXXXXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President
BEAR XXXXXXX & CO., INC.
By:/S/ XXXXXXX X. HARLEY
----------------------------------
Name: Xxxxxxx X. Harley
Title: Senior Managing Director
DK ACQUISITION PARTNERS, L.P.
By:
----------------------------------
Name:
Title:
ING (U.S.) CAPITAL CORPORATION
By: /S/ XXXX XXXXXXXX
----------------------------------
Name: Xxxx Xxxxxxxx
Title: Senior Associate
