Exhibit 10.1
$125,000,000
CREDIT AGREEMENT
AMONG
OHIO CASUALTY CORPORATION
as Borrower,
THE LENDERS NAMED HEREIN,
LASALLE BANK NATIONAL ASSOCIATION,
as Agent,
LASALLE BANK NATIONAL ASSOCIATION,
as Sole Bookrunner,
LASALLE BANK NATIONAL ASSOCIATION and
BANC OF AMERICA SECURITIES LLC
as Joint Lead Arrangers,
and
BANK OF AMERICA, N.A.,
as Syndication Agent
DATED AS OF
February 16, 2006
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND RELATED MATTERS 1
1.1. DEFINITIONS 1
1.2. MISCELLANEOUS PROVISIONS 15
ARTICLE II THE CREDITS 15
2.1. COMMITMENT 15
2.2. REQUIRED PAYMENTS; TERMINATION 16
2.3. RATABLE LOANS 17
2.4. TYPES OF ADVANCES 17
2.5. NON-USE FEE; REDUCTIONS IN AGGREGATE COMMITMENT 17
2.6. MINIMUM AMOUNT OF EACH ADVANCE 17
2.7. OPTIONAL PRINCIPAL PAYMENTS 17
2.8. [INTENTIONALLY OMITTED.] 17
2.9. METHOD OF SELECTING TYPES AND INTEREST PERIODS
FOR NEW ADVANCES 17
2.10. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES 18
2.11. INTEREST RATES AND CHANGES IN RATES, ETC 18
2.12. RATES APPLICABLE AFTER DEFAULT 19
2.13. METHOD OF PAYMENT 19
2.14. EVIDENCE OF INDEBTEDNESS. 19
2.15. TELEPHONIC NOTICES 20
2.16. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS 20
2.17. NOTIFICATION OF ADVANCES, INTEREST RATES,
PREPAYMENTS AND COMMITMENT REDUCTIONS 20
2.18. LENDING INSTALLATIONS 21
2.19. NON-RECEIPT OF FUNDS BY THE AGENT 21
2.20. LETTER OF CREDIT PROCEDURES 21
ARTICLE III YIELD PROTECTION AND TAXES 26
3.1. YIELD PROTECTION 26
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS 27
3.3. AVAILABILITY OF TYPES OF ADVANCES 27
3.4. FUNDING INDEMNIFICATION 27
3.5. TAXES 28
3.6. LENDER STATEMENTS; SURVIVAL OF INDEMNITY 29
3.7. SUBSTITUTION OF LENDER 30
ARTICLE IV CONDITIONS PRECEDENT 30
4.1. EFFECTIVENESS 30
4.2. EACH ADVANCE 32
ARTICLE V REPRESENTATIONS AND WARRANTIES 33
5.1. EXISTENCE AND STANDING 33
5.2. AUTHORIZATION AND VALIDITY 33
5.3. NO CONFLICT; GOVERNMENT CONSENT 33
5.4. FINANCIAL STATEMENTS 33
5.5. MATERIAL ADVERSE CHANGE 34
5.6. TAXES 34
5.7. LITIGATION AND CONTINGENT OBLIGATIONS 34
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5.8. SUBSIDIARIES 34
5.9. ERISA 35
5.10. ACCURACY OF INFORMATION 35
5.11. FEDERAL RESERVE REGULATIONS 35
5.12. MATERIAL AGREEMENTS 35
5.13. COMPLIANCE WITH LAWS 35
5.14. [INTENTIONALLY OMITTED] 35
5.15. PLAN ASSETS; PROHIBITED TRANSACTIONS 35
5.16. ENVIRONMENTAL MATTERS 36
5.17. INVESTMENT COMPANY ACT 36
5.18. PUBLIC UTILITY HOLDING COMPANY ACT 36
5.19. INSURANCE 36
5.20. [INTENTIONALLY OMITTED] 36
5.21. INSURANCE LICENSES 36
5.22. REINSURANCE 36
5.23. RESERVES 37
5.24. OCIC CAPITAL AND SURPLUS 37
5.25. DEFAULTS 37
5.26. CERTAIN FEES 37
5.27. INDEBTEDNESS 37
5.28. DIVIDENDS 37
ARTICLE VI COVENANTS 38
6.1. FINANCIAL REPORTING 38
6.2. USE OF PROCEEDS 40
6.3. NOTICE OF DEFAULT 40
6.4. CONDUCT OF BUSINESS 40
6.5. TAXES 41
6.6. INSURANCE 41
6.7. COMPLIANCE WITH LAWS 41
6.8. MAINTENANCE OF PROPERTIES 41
6.9. INSPECTION 41
6.10. DIVIDENDS, ETC. 42
6.11. INDEBTEDNESS 42
6.12. MERGER 43
6.13. [INTENTIONALLY OMITTED]. 43
6.14. INVESTMENTS 43
6.15. ACQUISITIONS 43
6.16. LIENS 44
6.17. AFFILIATES 46
6.18. OTHER INDEBTEDNESS 46
6.19. CONTINGENT OBLIGATIONS 47
6.20. FINANCIAL COVENANTS. 47
6.21. REINSURANCE 47
6.22. ERISA COMPLIANCE 47
6.23. ENVIRONMENTAL MATTERS 48
6.24. CHANGE IN CORPORATE STRUCTURE; FISCAL YEAR 48
6.25. INCONSISTENT AGREEMENTS 48
ARTICLE VII DEFAULTS 48
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 50
8.1. ACCELERATION 50
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8.2. AMENDMENTS 51
8.3. PRESERVATION OF RIGHTS 52
ARTICLE IX GENERAL PROVISIONS 52
9.1. SURVIVAL OF REPRESENTATIONS 52
9.2. GOVERNMENTAL REGULATION 53
9.3. HEADINGS 53
9.4. ENTIRE AGREEMENT 53
9.5. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT 53
9.6. EXPENSES; INDEMNIFICATION 53
9.7. NUMBER OF DOCUMENTS 54
9.8. ACCOUNTING 54
9.9. SEVERABILITY OF PROVISIONS 54
9.10. NONLIABILITY OF LENDERS 54
9.11. CONFIDENTIALITY 55
9.12. NONRELIANCE 56
9.13. DISCLOSURE 56
9.14. CUSTOMER IDENTIFICATION - USA PATRIOT ACT NOTICE 56
ARTICLE X THE AGENT 56
10.1. APPOINTMENT; NATURE OF RELATIONSHIP 56
10.2. POWERS 57
10.3. GENERAL IMMUNITY 57
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC 57
10.5. ACTION ON INSTRUCTIONS OF LENDERS 57
10.6. EMPLOYMENT OF AGENTS AND COUNSEL 58
10.7. RELIANCE ON DOCUMENTS; COUNSEL 58
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION 58
10.9. NOTICE OF DEFAULT 58
10.10. RIGHTS AS A LENDER 58
10.11. LENDER CREDIT DECISION 59
10.12. SUCCESSOR AGENT 59
10.13. AGENT'S FEE 60
10.14. DELEGATION TO AFFILIATES 60
10.15. ISSUING LENDER 60
ARTICLE XI SETOFF; RATABLE PAYMENTS 60
11.1. SETOFF 60
11.2. RATABLE PAYMENTS 60
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 61
12.1. SUCCESSORS AND ASSIGNS 61
12.2. PARTICIPATIONS. 61
12.3. ASSIGNMENTS. 62
12.4. DISSEMINATION OF INFORMATION 63
12.5. TAX TREATMENT 63
ARTICLE XIII NOTICES 63
13.1. NOTICES 63
13.2. CHANGE OF ADDRESS 64
ARTICLE XIV COUNTERPARTS 64
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ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL 64
15.1. CHOICE OF LAW 64
15.2. FORUM SELECTION AND CONSENT TO JURISDICTION 64
15.3. WAIVER OF JURY TRIAL 65
EXHIBITS
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EXHIBIT A - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT B - FORM OF ASSIGNMENT AGREEMENT
EXHIBIT C - FORM OF REVOLVING NOTE
EXHIBIT D - FORM OF L/C APPLICATION
SCHEDULES
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SCHEDULE 2.15 - LIST OF AUTHORIZED PERSONS
SCHEDULE 5.3 - CONSENTS
SCHEDULE 5.7 - LITIGATION
SCHEDULE 5.8 - SUBSIDIARIES
SCHEDULE 5.21 - INSURANCE LICENSES
SCHEDULE 5.22 - REINSURANCE
SCHEDULE 5.23 - RESERVES
SCHEDULE 5.27 - INDEBTEDNESS
SCHEDULE 6.16 - LIENS
SCHEDULE 6.17 - AFFILIATES
SCHEDULE 6.19 - CONTINGENT OBLIGATIONS
CREDIT AGREEMENT
This Credit Agreement, dated as of February 16, 2006, is among Ohio
Casualty Corporation, an Ohio corporation ("Borrower"), the Lenders,
LaSalle Bank National Association ("LaSalle"), as Agent, Joint Lead
Arranger and Sole Bookrunner, Banc of America Securities LLC, as Joint Lead
Arranger and Bank of America, N.A. as Syndication Agent.
R E C I T A L S:
WHEREAS, the Lenders have agreed to make available to Borrower a
revolving credit facility, all upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RELATED MATTERS
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1.1. Definitions. As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Borrower or any of its Subsidiaries (a) acquires any going business or all
or substantially all of the assets of any firm, corporation or limited
liability company, or division thereof, whether through the purchase of
assets, merger or otherwise or (b) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions)
at least a majority (in number of votes) of the securities of a corporation
which have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the
outstanding ownership interests of a partnership or limited liability
company.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Revolving Loans
made on the same Borrowing Date (or date of conversion or continuation) by
the Lenders to Borrower of the same Type and, in the case of LIBOR
Advances, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the
controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly
or indirectly, the power to direct or cause the direction of the management
or policies of the controlled Person, whether through ownership of stock,
by contract or otherwise. Notwithstanding anything to the contrary
contained herein, "Affiliate" when used in connection with Borrower or its
Subsidiaries shall not include any regulatory Person.
"Affected Lender" is defined in Section 3.7.
"Agent" means LaSalle in its capacity as contractual representative of
the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this Credit Agreement, as it may be amended, amended
and restated, supplemented or otherwise modified and in effect from time to
time.
"Annual Statement" means the annual statutory financial statement of
any Insurance Subsidiary required to be filed with the insurance
commissioner (or similar authority) of its jurisdiction of incorporation,
which statement shall be in the form required by such Insurance
Subsidiary's jurisdiction of incorporation or, if no specific form is so
required, in the form of financial statements permitted by such insurance
commissioner (or such similar authority) to be used for filing annual
statutory financial statements and shall contain the type of information
permitted by such insurance commissioner (or such similar authority) to be
disclosed therein, together with all exhibits or schedules filed therewith.
"Applicable Margin" means, for any day, the percentage per annum set
forth below opposite the level (the "Level") then in effect based on
Borrower's then applicable Senior Unsecured Debt Rating, it being
understood that the Applicable Margin for (i) LIBOR Loans shall be the
percentage set forth under the column "LIBOR Margin," (ii) the Non-Use Fee
Rate shall be the percentage set forth under the column "Non-Use Fee Rate"
and (iii) the L/C Fee Rate shall be the percentage set forth under the
column "L/C Fee Rate":
LIBOR Non-Use L/C Fee
Level Senior Unsecured Debt Rating Margin Fee Rate Rate
----- ---------------------------- ------ -------- ----
I > A- or A3 0.450% .080% 0.450%
II BBB+ or Baa1 0.500% .100% 0.500%
III BBB or Baa2 0.625% .125% 0.625%
IV BBB- or Baa3 0.750% .150% 0.750%
V Below BBB- or Baa3 1.000% .175% 1.000%
For purposes of the foregoing, (a) if none of the Ratings Agencies shall
have in effect a Senior Unsecured Debt Rating, the Applicable Margin will
be set in accordance with Level V; (b) if only one of the Ratings Agencies
shall have in effect a Senior Unsecured Debt Rating, the Applicable Margin
shall be determined by reference to the available rating; (c) if only two
of the Ratings Agencies shall have in effect a Senior Unsecured Debt Rating
and such ratings fall within different levels, the Applicable Margin shall
be based upon the higher rating unless such ratings differ by two or more
levels, in which case the applicable level will be deemed to be one level
below the higher of such levels; (d) if the ratings established by the
Ratings Agencies shall fall within three different levels, then the
Applicable Margin shall be determined by reference to the middle level of
such three different levels; (e) if the ratings established by the Ratings
Agencies shall fall within different levels and two of the ratings fall
within the same level (the "Majority Level"), and the third rating is in a
different level, then
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the Applicable Margin shall be determined by reference to the Majority
Level; and (f) if any rating established by the Ratings Agencies shall be
changed, such change shall be effective as of the date on which such change
is first announced publicly by the rating agency making such change.
"Article" means an article of this Agreement unless another document
is specifically referenced.
"Authorized Officer" of a Person means the president, any executive
vice president or senior vice president or the chief financial officer or
treasurer or controller of such Person, acting singly.
"Base Rate" means at any time the greater of (a) the Federal Funds
Rate plus 0.5% or (b) the Prime Rate.
"Base Rate Advance" means an Advance which bears interest at the Base
Rate.
"Base Rate Loan" means any Loan which bears interest at or by
reference to the Base Rate.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.9.
"Business Day" means (a) with respect to any borrowing, payment or
rate selection of LIBOR Advances, a day (other than a Saturday or Sunday)
on which banks generally are open in Chicago or New York for the conduct of
their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally
are open in Chicago for the conduct of their commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as
a liability on a balance sheet of such Person prepared in accordance with
GAAP.
"Cash Collateralize" means to deliver cash collateral to the Agent, to
be held as cash collateral for outstanding Letters of Credit, pursuant to
documentation satisfactory to the Agent. Derivatives of such term have
corresponding meanings.
"Change" is defined in Section 3.2.
"Change in Control" means, with respect to Borrower, the acquisition
of ownership, directly or indirectly, beneficially or of record, by any
Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission
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thereunder as in effect from time to time) of shares of capital stock
representing more than 50% of the aggregate ordinary voting power for the
election of directors of the issued and outstanding capital stock of Borrower.
"Closing Transactions" is defined Section 4.1(d).
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans (including the issuance of Letters of Credit hereunder and the
purchase of participations in Letters of Credit hereunder) not exceeding
the amount set forth opposite its signature below or as set forth in any
Notice of Assignment relating to any assignment that has become effective
pursuant to Section 12.3.2, as such amount may be modified from time to
time pursuant to the terms hereof.
"Consolidated Indebtedness" means, at any time, the Indebtedness of
Borrower and its Subsidiaries, calculated on a consolidated basis as of
such time, that consists of Indebtedness for borrowed money to any Lender
or any other financial institution including, without limitation, all
Indebtedness shown as "Notes Payable" on the consolidated financial
statements of Borrower and its Subsidiaries delivered pursuant to
Section 6.1(a) or (b).
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Worth" means, at any time, the consolidated
stockholders' equity of Borrower and its Subsidiaries calculated on a
consolidated basis as of such time in accordance with GAAP, after
appropriate deduction for any minority interests in Subsidiaries, excluding
changes in unrealized gain/loss on investment assets held for sale after
December 31, 2004 pursuant to Statement of Financial Accounting Standards
("SFAS") No. 115 and changes in other accumulated comprehensive income
after December 31, 2004 pursuant to SFAS No. 133.
"Consolidated Person" means, for the taxable year of reference, each
Person which is a member of the affiliated group of Borrower if
consolidated returns are or shall be filed for such affiliated group for
federal income tax purposes or any combined or unitary group of which
Borrower is a member for state income tax purposes.
"Consolidated Total Capitalization" means, at any time, the sum of
Consolidated Indebtedness and Consolidated Net Worth, each calculated at
such time.
"Contingent Obligation" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person so as to enable another Person to incur or
otherwise pay any indebtedness or other obligations, or agrees to maintain
the net worth or working capital or other financial condition of any other
Person, or otherwise assures any creditor of such other Person against
loss, but excluding Contingent Obligations in respect of (a) insurance and
reinsurance
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policies and guarantees in respect thereof issued in the ordinary
course of business, (b) licensing guarantees and (c) endorsement for
collection or deposit in the ordinary course of business.
"Conversion/Continuation Notice" is defined in Section 2.10.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses
(whether or not incorporated) under common control which, together with
Borrower or any of its Subsidiaries, are treated as a single employer under
Section 414 of the Code.
"Default" means an event described in Article VII.
"Default Rate" has the meaning set forth in Section 2.12.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, and all other liquidation, conservatorship, bankruptcy, assignment
for the benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws of the United
States of America (including any Federal, state or local equivalents) or
other applicable jurisdictions from time to time in effect and affecting
the rights of creditors generally.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and other governmental
restrictions relating to (a) the protection of the environment, (b) the
effect of the environment on human health, (c) emissions, discharges or
releases of pollutants, contaminants, hazardous substances or wastes into
surface water, ground water or land, or (d) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, hazardous substances or wastes or the clean-up or
other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Excluded Taxes" means, in the case of each Lender or applicable
Lending Installation, the Agent, or any other recipient of any payment to
be made by or on account of any obligation of Borrower hereunder (a) taxes
imposed on its overall net income, and franchise taxes imposed on it by any
relevant Governmental Authority in a jurisdiction in which such Lender or
applicable Lending Installation, the Agent, or any other such recipient is
subject to tax as a result of a present or former connection between such
Person and the jurisdiction imposing such tax or any political subdivision
or taxing authority thereof or therein (other than any such connection
arising solely from such Person having executed, delivered or performed its
obligations or received a payment under, or enforced its rights under, this
Agreement or any other Loan Document), (b) any branch profit taxes imposed
by the United States of America or similar tax imposed by any other
jurisdiction in which Borrower is located, (c) any withholding tax that is
imposed on amounts payable to such Person at the time such Person becomes a
party to this Agreement (or designates a new Lending Installation pursuant
to Section 2.18), except to the extent that such Person (or its assignor,
if any) was entitled, at the time of designation of a new
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Lending Installation (or assignment), to receive additional amounts from
Borrower with respect to such withholding tax pursuant to Sections 3.5(a)
or (b) and (d) is attributable to such Person's failure to comply with
Sections 3.5(d) or (e) or any Taxes imposed as a result of such Person's
gross negligence or willful misconduct.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"Existing Facility" means that certain Credit Agreement, dated as of
July 31, 2002, among Borrower, LaSalle and the other lenders a party
thereto, as amended February 25, 2005.
"Existing Reinsurance Agreements" is defined in Section 5.22.
"Facility Termination Date" means March 16, 2011.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
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 which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal funds brokers
of recognized standing selected by the Agent. The Agent's determination of
such rate shall be binding and conclusive absent manifest error.
"Fee Letter" means, collectively, (a) the fee letter agreement
referred to in Section 10.13 between Borrower and the Agent, for its own
account, and, (b) one or more fee letter agreements between Borrower and
the Agent, for the account of the Lenders, covering fees agreed to between
Borrower and the Agent.
"Financial Contract" of a Person means (a) any exchange-traded or over-
the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics, or (b) any agreements, devices or
arrangements providing for payments related to fluctuations of interest
rates, exchange rates or forward rates, including, but not limited to,
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency or
interest rate options.
"Fiscal Quarter" means one of the four three-month accounting periods
comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period ending
December 31 of each year.
"Fitch" means Fitch Ratings and any successor thereto that is a
nationally recognized ratings agency.
"GAAP" shall mean generally accepted accounting principles in the
United States of America.
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"Governmental Authority" means any government (foreign or domestic) or
any state or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including, without limitation,
any board of insurance, insurance department or insurance commission and
any taxing authority or political subdivision) or any instrumentality or
officer thereof (including, without limitation, any court or tribunal)
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation, partnership
or other entity directly or indirectly owned or controlled by or subject to
the control of any of the foregoing.
"Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the trade),
(c) obligations, whether or not assumed, secured by Liens, (d) obligations
which are evidenced by notes, acceptances, or other instruments, (e)
Capitalized Lease Obligations, (f) Contingent Obligations, (g) obligations
for which such Person is obligated pursuant to or in respect of a Letter of
Credit, (h) Off-Balance Sheet Liabilities (excluding Operating Leases) and
(i) Net Xxxx-to-Market Exposure of Rate Hedging Agreements and other
Financial Contracts; all of which obligations in subsections (a) through
(i) hereof are in accordance with GAAP or SAP, as applicable, and all of
which obligations in subsections (a) through (g) and (i) hereof would be
required to be shown as a liability on the consolidated balance sheet of
such Person. Indebtedness shall not include trade payables or accrued
expenses incurred in the ordinary course of business or obligations with
respect to Policies, including payables under insurance contracts and
reinsurance payables.
"Initial Closing Date" means February 16, 2006.
"Insurance Subsidiary" means any Subsidiary which is a regulated
insurance company.
"Interest Period" means, with respect to a LIBOR Advance, a period of
one, two, three or six months commencing on a Business Day selected by
Borrower pursuant to this Agreement. Such Interest Period shall end on the
day which corresponds numerically to such date one, two, three or six
months thereafter; provided, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month,
such Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day; provided, that if said next
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"Interest Rate" means either the LIBOR Rate or the Base Rate.
"Investment" of a Person means (a) any loan, advance (other than
commission, travel and similar advances to officers and employees made in
the ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in
the trade) or contribution of capital by such Person; (b) any capital
stocks, bonds, mutual funds, partnership interests, notes, debentures or
other securities owned by such Person; (c) any deposit accounts and
certificates of deposit owned by such Person; (d) any structured
7
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person; and (e) any other investments permitted
under the Insurance Subsidiary's domiciliary state's investment code.
"ISP" means the International Standby Practices issued by the
Institute for International Banking Law & Practice, Inc.
"Issuing Lender" means LaSalle, in its capacity as the issuer of
Letters of Credit hereunder, or any Affiliate of LaSalle that may from time
to time issue Letters of Credit hereunder, and their successors and assigns
in such capacity.
"L/C Application" means, with respect to any request for the issuance
of a Letter of Credit hereunder, a letter of credit application
substantially in the form attached hereto as Exhibit D attached hereto.
"L/C Fee Rate" - see the definition of "Applicable Margin".
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent,
the office, branch, subsidiary or affiliate of such Lender or the Agent
listed on the signature pages hereof or on a Schedule or otherwise selected
by such Lender or the Agent pursuant to Section 2.18.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon
which such Person is an account party or for which such Person is in any
way liable.
"Leverage Ratio" means, as of any date of calculation, the ratio of
(a) Consolidated Indebtedness outstanding on such date to (b) Consolidated
Total Capitalization on such date.
"LIBOR Advance" means an Advance which bears interest at the
applicable LIBOR Rate.
"LIBOR Base Rate" means a rate of interest equal to (a) the per annum
rate of interest at which United States dollar deposits in an amount
comparable to the amount of the relevant LIBOR Loan and for a period equal
to the relevant Interest Period are offered in the London Interbank
Eurodollar market at 11:00 A.M. (London time) two (2) Business Days prior
to the commencement of such Interest Period (or three (3) Business Days
prior to the commencement of such Interest Period if banks in London,
England were not open and dealing in offshore United States dollars on such
second preceding Business Day), as displayed in the Bloomberg Financial
Markets system (or other authoritative source selected by the Agent in its
sole discretion) or, if the Bloomberg Financial Markets system or another
authoritative source is not available, as the LIBOR Rate is otherwise
determined by the Agent in its sole and absolute discretion, divided by (b)
a number determined by subtracting from 1.00 the then stated maximum
reserve percentage for determining reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency funding or liabilities
as defined in Regulation D (or
8
any successor category of liabilities under Regulation D), such rate to
remain fixed for such Interest Period. The Agent's determination of
the LIBOR Rate shall be conclusive, absent manifest error.
"LIBOR Loan" means a Loan which bears interest at the applicable LIBOR
Rate.
"LIBOR Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the sum of (a) LIBOR Base Rate applicable to such Interest
Period, plus (b) the Applicable Margin.
"License" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental
Authority in connection with the operation, ownership or transaction of
insurance business.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, deposit arrangement, encumbrance, priority or other security
agreement of any kind or nature whatsoever (including, without limitation,
the interest of a vendor or lessor under any conditional sale, Capitalized
Lease or other title retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan made
pursuant to Article II (or any conversion or continuation thereof) in the
form of a Revolving Loan.
"Loans" mean the Revolving Loans.
"Loan Documents" means this Agreement, any Notes issued pursuant to
Section 2.14, any Fee Letter and any other documents and agreements
contemplated by Letters of Credit issued hereunder which are executed by
Borrower in favor of the Issuing Lender.
"Margin Stock" means the term "margin stock" as defined in Regulation
U (12 CFR 221).
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or otherwise) or operations of
Borrower and its Subsidiaries taken as a whole, (b) the ability of Borrower
to perform its material obligations under the Loan Documents to which it is
a party, or (c) the validity or enforceability of any of the Loan Documents
or the rights or remedies of the Agent or the Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
"Material Insurance Subsidiary" means OCIC and any future Insurance
Subsidiary that is not owned by OCIC with a Statutory Capital and Surplus
of greater than $200,000,000.
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor
thereto that is a nationally recognized rating agency.
9
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which Borrower or any
member of the Controlled Group is a party to which more than one employer
is obligated to make contributions.
"NAIC" means the National Association of Insurance Commissioners or
any successor thereto.
"Net Xxxx-to-Market Exposure" of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all
unrealized profits of such Person arising from Rate Hedging Agreements and
other Financial Contracts. "Unrealized losses" means the fair market value
of the cost to such Person of replacing such Rate Hedging Agreement or
Financial Contract as of the date of determination (assuming the Rate
Hedging Agreement or Financial Contract were to be terminated as of that
date), and "unrealized profits" means the fair market value of the gain to
such Person of replacing such Rate Hedging Agreement or Financial Contract
as of the date of determination (assuming such Rate Hedging Agreement or
Financial Contract were to be terminated as of that date).
"Non-U.S. Lender" is defined in Section 3.5(d).
"Non-Use Fee Rate" - see the definition of Applicable Margin.
"Notes" mean, collectively, the Revolving Notes issued pursuant to
Section 2.14(d).
"Notice of Assignment" is defined in Section 12.3.1.
"Obligations" mean all unpaid principal of and accrued and unpaid
interest on the Loans, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other amounts payable by Borrower to the
Lenders or to any Lender, the Agent or any indemnified party arising under
the Loan Documents, including, without limitation, all reimbursement
obligations with respect to any Letters of Credit issued hereunder, and any
Rate Hedging Obligations or foreign exchange contracts of Borrower owing to
the Agent or any Lender executed to hedge the interest rate obligations of
Borrower under this Agreement.
"OCIC" means The Ohio Casualty Insurance Company, an Ohio corporation.
"Off-Balance Sheet Liability" of a Person means (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) any liability under any financing lease
or so-called "synthetic lease" transaction entered into by such Person, or
(c) any obligation arising with respect to any other transaction which is
the functional equivalent of or takes the place of borrowing but which does
not constitute a liability on the balance sheet of such Person, but
excluding, in each case, Operating Leases and Sale and Leaseback
Transactions.
"Operating Lease" means any lease or other agreement conveying the
right to use of any Property by Borrower or any Subsidiary, as lessee,
other than any Capitalized Lease.
"Other Taxes" is defined in Section 3.5(b).
10
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each calendar month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Liens" means Liens described in Section 6.16.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or
other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code as to which Borrower or any member of the
Controlled Group may have any liability.
"Policies" means all insurance and reinsurance policies, annuity
contracts, guaranteed interest contracts and funding agreements (including
riders to any such policies or contacts, certificates issued with respect
to group life insurance or annuity contracts and any contracts issued in
connection with retirement plans or arrangements) and assumption
certificates issued or to be issued (or filed pending current review by
applicable Governmental Authorities) by an Insurance Company and any
coinsurance agreements entered into or to be entered into by an Insurance
Company.
"Prime Rate" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by the Agent as its prime
rate (whether or not such rate is actually charged by the Agent), which is
not intended to be the Agent's lowest or most favorable rate of interest at
any one time. Any change in the Prime Rate announced by the Agent shall
take effect at the opening of business on the day specified in the public
announcement of such change; provided that the Agent shall not be obligated
to give notice of any change in the Prime Rate.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Pro Rata Share" means, as to any Lender, (a) at any time at which the
Aggregate Commitment remains outstanding, the percentage equivalent
(expressed as a decimal rounded to the ninth decimal place) at such time of
such Lender's Commitment divided by the Aggregate Commitment, and (b) after
the termination of the Aggregate Commitment, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) at such time
of the principal amount of such Lender's Revolving Outstandings divided by
the aggregate principal amount of the Revolving Outstandings of all of the
Lenders.
"Purchasers" is defined in Section 12.3.1.
"Quarterly Statement" means the quarterly statutory financial
statement of any Insurance Subsidiary required to be filed with the
insurance commissioner (or similar authority) of its jurisdiction of
incorporation or, if no specific form is so required, in the form of
financial
11
statements permitted by such insurance commissioner (or such similar
authority) to be used for filing quarterly statutory financial
statements and shall contain the type of financial information permitted by
such insurance commissioner (or such similar authority) to be disclosed
therein, together with all exhibits or schedules filed therewith.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts
and warrants.
"Rate Hedging Obligations" of a Person means any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor), under (a) any and
all Rate Hedging Agreements, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Hedging Agreement.
"Ratings Agencies" shall mean each of Fitch, Moody's and S&P.
"RBC Ratio" means the ratio of (a) Total Adjusted Capital (as defined
in the Risk Based Capital Act or in the rules and procedures prescribed
from time to time by the NAIC with respect thereto) to (b) the Company
Action Level RBC (as defined in the Risk Based Capital Act or in the rules
and procedures prescribed from time to time by the NAIC with respect
thereto).
"Register" is defined in Section 2.14(b).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of such Board of
Governors relating to the extension of credit by securities brokers and
dealers for the purpose of purchasing or carrying margin stocks applicable
to such Persons.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing
or carrying margin stocks applicable to member banks of the Federal Reserve
System.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the
12
specified lenders for the purpose of purchasing or carrying margin
stocks applicable to such Persons.
"Replacement Lender" is defined in Section 3.7.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC has by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event; provided, that a
failure to meet the minimum funding standard of Section 412 of the Code and
of Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Reports" is defined in Section 9.6(a).
"Required Lenders" means, at any time, Lenders in the aggregate
holding at least fifty-one percent (51%) of the aggregate unpaid principal
amount of Revolving Outstandings and all unused Commitments.
"Revolving Loan" is defined in Section 2.1(a).
"Revolving Note" is defined in Section 2.14(d).
"Revolving Outstandings" means, at any time, the sum of (a) the
aggregate principal amount of all outstanding Loans, plus (b) the Stated
Amount of all Letters of Credit.
"Risk Based Capital Act" means the Risk-Based Capital for Insurers
Model Act (RBC), as adopted by an Insurance Subsidiary's domiciliary state,
and regulations promulgated thereunder, as amended from time to time.
"Risk Based Capital Guidelines" is defined in Section 3.2.
"S&P" means Standard and Poor's Ratings Service, a division of The
McGraw Hill Companies, Inc. and any successor thereto that is a nationally
recognized rating agency.
"Sale and Leaseback Transaction" means any sale of Property by any
Person with the intent to lease such Property as lessee.
"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner
(or other similar authority) in the jurisdiction of such Person for the
preparation of annual statements and other financial reports by insurance
companies of the same type as such Person in effect from time to time.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
13
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Unsecured Debt Rating" means the senior unsecured debt rating
that has been most recently announced by any of Fitch, Moody's or S&P, as
the case may be, for senior unsecured debt issued by Borrower.
"Single Employer Plan" means a Plan maintained by Borrower or any
member of the Controlled Group for employees of Borrower or any member of
the Controlled Group.
"Stated Amount" means, with respect to any Letter of Credit issued
hereunder at any date of determination, (a) the maximum aggregate amount
available for drawing thereunder plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.
"Statutory Capital and Surplus" means, with respect to any Insurance
Subsidiary at any time, the surplus as regards policyholders of such
Insurance Subsidiary at such time, as determined in accordance with SAP
("Liabilities, Surplus and Other Funds" statement, Page 3, Column 1,
Line 32 of the 2004 Annual Statement).
"Subordinated Indebtedness" shall mean unsecured Indebtedness of
Borrower or any of its Subsidiaries with covenants and events of default
that, when taken as a whole, are no more restrictive than the covenants and
events of default contained in this Agreement (as determined in the good
faith business judgment of an authorized officer of Borrower) and that is
subordinated in right of payment to the Obligations.
"Subsidiary" of a Person means (a) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or
by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (b) any partnership, limited liability company,
association, joint venture or similar business organization more than 50%
of the ownership interests having ordinary voting power of which shall at
the time be so owned or controlled. Unless otherwise expressly provided,
all references herein to a "Subsidiary" shall mean a Subsidiary of
Borrower.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities
with respect to the foregoing, but excluding Excluded Taxes.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Base Rate
Advance or a LIBOR Advance.
"UCC" means the Uniform Commercial Code as in effect in the State of
Illinois.
"UCP" means the International Chamber of Commerce.
14
"Unfunded Liabilities" means the amount (if any) by which the present
value of all accumulated plan benefits, as measured under FAS 35, exceeds
the fair market value of all such Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such Plan.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, (b) any partnership, limited
liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary voting power
of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Wholly-Owned Subsidiary"
shall mean a Wholly-Owned Subsidiary of Borrower and (c) Ohio Casualty of
New Jersey, Inc. so long as Borrower owns not less than 99% of the
outstanding voting securities of such entity.
1.2. Miscellaneous Provisions.
(a) The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms. References herein
to particular columns, lines or sections of any Person's Annual Statement
shall be deemed, where appropriate, to be references to the corresponding
column, line or section of such Person's Quarterly Statement, or if no such
corresponding column, line or section exists or if any report form changes,
then to the corresponding item referenced thereby. References herein to
the Risk Based Capital Act shall be deemed to be references to such act as
in effect on the date of this Agreement; provided, that the Agent, the
Lenders and Borrower agree to make mutually acceptable modifications hereto
upon any modification to such act so as to equitably reflect such
modifications in order that the criteria for evaluating the Insurance
Subsidiaries will be the same after such modifications as if such
modifications had not occurred. Each accounting term used herein which is
not otherwise defined herein shall be defined in accordance with GAAP
unless otherwise specified.
(b) In the event that any change in GAAP, SAP and/or any law or regulation
occurs after the date of this Agreement and such change results in a
material variation in the method of calculation of financial covenants or
other terms of this Agreement, then Borrower, the Agent and the Lenders
agree to amend such provisions of this Agreement so as to equitably reflect
such changes in order that the criteria for evaluating Borrower's financial
condition will be the same after such changes as if such changes had not
occurred.
ARTICLE II
THE CREDITS
-----------
2.1. Commitment.
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(a) From and including the date of this Agreement and prior to the
Facility Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans (each such Loan, a
"Revolving Loan") to Borrower from time to time in amounts which shall not
exceed in the aggregate at any one time outstanding the amount of its
Commitment. Subject to the terms of this Agreement, Borrower may borrow,
repay and reborrow Revolving Loans at any time prior to the Facility
Termination Date. The Commitments to lend hereunder shall expire on the
Facility Termination Date.
(b) Borrower hereby agrees that if at any time, as a result of reductions
in the Aggregate Commitment, the Revolving Outstandings exceed the
Aggregate Commitment, Borrower shall repay immediately its then outstanding
Loans in such amount as may be necessary to eliminate such excess.
(c) At Borrower's option, so long as no Default exists, the Aggregate
Commitment may be increased by an amount not to exceed $50,000,000, subject
to LaSalle's ability, on a best efforts basis, to fully syndicate such
requested increase. Any Lender's participation in any such increase shall
be at such Lender's sole and absolute discretion and shall be subject, in
each case, to such additional documentation as Agent and each Lender
participating in any such increase shall reasonably request; provided, that
no Lender shall be obligated to participate in any increase unless such
Lender consents in writing to such increase; and, provided, further, that
Borrower, LaSalle and Agent may invite additional Persons to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to Agent
and Borrower. Each Lender shall notify the Agent within the time period
requested by Agent or LaSalle whether or not it agrees to increase its
Commitment, and, if so, whether by an amount equal to, greater than, or
less than its Pro Rata Share of such requested increase. Any Lender not
responding within such requested time period shall be deemed to have
declined to increase its Commitment and no further consent of such
declining Lender shall be required with respect to the increase
contemplated by this Section 2.1(c). Any arrangement fees to be paid in
connection with any such increase shall be mutually acceptable to Agent,
LaSalle and Borrower.
(d) Subject to Section 2.20, the Issuing Lender agrees to issue
Letters of Credit at the request of and for the account of Borrower
(including, upon the making of all necessary filings with the
appropriate Governmental Authority, or any subdivision thereof, and the
receipt of all necessary approvals, consents or authorizations of the
appropriate Governmental Authority, or any subdivision thereof, Letters of
Credit for the benefit of its Subsidiaries) from time to time before the
Facility Termination Date and, as more fully set forth in Section 2.20,
each Lender agrees to purchase a participation in each such Letter of
Credit; provided, that the Revolving Outstandings shall not at any
time exceed the Aggregate Commitment. Notwithstanding anything to the
contrary contained in any Loan Document, it is agreed that, to the extent
that a Letter of Credit is used for reinsurance purposes, such Letter of
Credit will be required to comply with the requirements and/or guidelines
set forth by the applicable insurance Governmental Authority in the
domiciliary state of the account party for Letters of Credit used for
reinsurance purposes.
2.2. Required Payments; Termination.
Any outstanding Advances and all other unpaid Obligations shall be paid
in full by Borrower on the Facility Termination Date.
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2.3. Ratable Loans.
Each Advance hereunder shall consist of Revolving Loans made from the
several Lenders ratably in proportion to their respective Pro Rata
Share of the Aggregate Commitment.
2.4. Types of Advances.
The Advances may be Base Rate Advances or LIBOR Advances, or a
combination thereof, selected by Borrower in accordance with Sections 2.9
and 2.10.
2.5. Non-Use Fee; Reductions in Aggregate Commitment.
Borrower agrees to pay to the Agent for the account of each Lender
a non-use fee at a per annum rate equal to the Non-Use Fee Rate times such
Lender's Pro Rata Share (as adjusted from time to time) of the daily
average of the unused amount of the Aggregate Commitment from the date
hereof to and including the Facility Termination Date, payable in arrears
on the last day of each calendar quarter and on the Facility Termination
Date. For purposes of calculating usage hereunder for any particular day,
the Aggregate Commitment shall be deemed used to the extent of the
aggregate principal amount of all outstanding Revolving Loans and Letters
of Credits issued hereunder on such day. Borrower may permanently reduce
the Aggregate Commitment in whole, or in part ratably among the Lenders, in
a minimum amount of $1,000,000 (and in multiples of $500,000 if in excess
thereof) upon at least three (3) Business Days' written notice to the
Agent, which notice shall specify the amount of any such reduction;
provided, that the amount of the Aggregate Commitment may not be reduced
below the aggregate principal amount of the outstanding Advances. All
accrued non-use fees shall be payable on the effective date of any
termination or reduction of the obligations of the Lenders to make Loans
hereunder.
2.6. Minimum Amount of Each Advance.
Each Advance shall be in the minimum amount of $1,000,000 (and in
multiples of $500,000 if in excess thereof); provided, that any Base Rate
Advance may be in the amount of the unused Aggregate Commitment.
2.7. Optional Principal Payments.
Borrower may from time to time pay, without penalty or premium, all
outstanding Advances or, in a minimum aggregate amount of $1,000,000 or any
integral multiple of $500,000 in excess thereof, (i) any portion of the
outstanding Advances constituting LIBOR Advances (a) at the end of the then
applicable Interest Period upon three (3) Business Days' prior notice to
the Agent, or (b) in the case of any date which is not the last day of the
applicable Interest Period, any portion of the outstanding Advances
constituting LIBOR Advances upon three (3) Business Days' prior notice to
the Agent, subject to the payment of any funding indemnification amounts
required by Section 3.4 but otherwise without penalty or premium, and (b)
any portion of any outstanding Advances constituting Base Rate Advances
upon prior notice to the Agent not later than 10:00 a.m. (Chicago time) on
the date of such payment.
2.8. [Intentionally Omitted.]
2.9. Method of Selecting Types and Interest Periods for New Advances.
Borrower shall select the Type of Advance and, in the case of each
LIBOR Advance, the Interest Period applicable thereto from time to time.
Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not
later than 10:00 a.m. (Chicago time) on the Borrowing Date of each
17
Base Rate Advance and three (3) Business Days before the Borrowing Date for
each LIBOR Advance, specifying:
(a) the Borrowing Date, which shall be a Business Day, of such Advance,
(b) the aggregate amount of such Advance,
(c) the Type of Advance selected, and
(d) in the case of each LIBOR Advance, the Interest Period applicable
thereto, which shall end on or prior to the Facility Termination Date.
Not later than 1:00 p.m. (Chicago time) on each Borrowing Date, each Lender
shall make available its Revolving Loan or Loans in funds immediately
available in Chicago to the Agent at its address specified pursuant to
Article XIII. The Agent will make the funds so received from the Lenders
available to Borrower at the Agent's aforesaid address.
2.10. Conversion and Continuation of Outstanding Advances.
Base Rate Advances shall continue as Base Rate Advances unless and
until such Base Rate Advances are converted into LIBOR Advances pursuant to
this Section 2.10 or are repaid in accordance with Section 2.7. Each LIBOR
Advance shall continue as a LIBOR Advance until the end of the then
applicable Interest Period therefor, at which time such LIBOR Advance shall
be automatically converted into a Base Rate Advance unless (x) such LIBOR
Advance is or was repaid in accordance with Section 2.7 or (y) Borrower
shall have given the Agent a Conversion/Continuation Notice (as defined
below) requesting that, at the end of such Interest Period, such LIBOR
Advance continue as a LIBOR Advance for the same or another Interest
Period. Subject to the terms of Section 2.6, Borrower may elect from time
to time to convert all or any part of a Base Rate Advance into a LIBOR
Advance. Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Base Rate Advance
into a LIBOR Advance or continuation of a LIBOR Advance not later than
10:00 a.m. (Chicago time) at least three (3) Business Days prior to the
date of the requested conversion or continuation, specifying:
(a) the requested date of such conversion or continuation, which shall
be a Business Day,
(b) the aggregate amount and Type of the Advance which is to be converted
or continued, and
(c) the amount of such Advance which is to be converted into or continued
as a LIBOR Advance and the duration of the Interest Period applicable
thereto.
2.11. Interest Rates and Changes in Rates, etc.
Each Base Rate Advance shall bear interest on the outstanding
principal amount thereof, for each day from and including the date such
Advance is made or is automatically converted from a LIBOR Advance into a
Base Rate Advance pursuant to Section 2.10, to but excluding the date it is
paid or is converted into a LIBOR Advance pursuant to Section 2.10 hereof,
at a rate per annum equal to the Base Rate for
18
such day. Changes in the rate of interest on that portion of any Advance
maintained as a Base Rate Advance will take effect simultaneously with each
change in the Prime Rate. Each LIBOR Advance shall bear interest on the
outstanding principal amount thereof from and including the first day of the
Interest Period applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined by the Agent as applicable
to such LIBOR Advance based upon Borrower's selections under Section 2.9 and
2.10 and otherwise in accordance with the terms hereof. No Interest Period
may end after the Facility Termination Date.
2.12. Rates Applicable After Default.
Notwithstanding anything to the contrary contained in Section 2.9
or 2.10, during the continuance of a Default, the Required Lenders may, at
their option, by notice to Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that no Advance may be made as, converted into or continued as a
LIBOR Advance. During the continuance of a Default the Required Lenders
may, at their option, by notice to Borrower (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision of
Section 8.2 requiring unanimous consent of the Lenders to changes in
interest rates), declare that each Loan shall bear interest at a higher
rate which is two percentage points (2.00%) per annum above the Interest
Rate then in effect hereunder (the "Default Rate"); provided, that during
the continuance of a Default under Section 7.6 or 7.7, the higher rate set
forth above shall be applicable to all Loans without any election or action
on the part of the Agent or any Lender.
2.13. Method of Payment.
All payments of the Obligations hereunder shall be made, without
setoff, deduction, or counterclaim, in immediately available funds to the
Agent at the Agent's address specified pursuant to Article XIII, or at any
other Lending Installation of the Agent specified in writing by the Agent
to Borrower, by noon (local time) on the date when due and shall be applied
ratably by the Agent among the Lenders. Each payment delivered to the
Agent for the account of any Lender shall be delivered promptly by the
Agent to such Lender in the same type of funds that the Agent received at
its address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Agent from such Lender.
The Agent is hereby authorized to charge the account of Borrower maintained
with Agent for each payment of principal, interest and fees payable thereby
as it becomes due hereunder.
2.14. Evidence of Indebtedness.
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the Obligations of Borrower to
such Lender resulting from each Loan made by such Lender from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time hereunder.
(b) The Agent shall also maintain accounts in which it will record
(i) the names and addresses of the Lenders and the amount of each Loan made
hereunder, the Type thereof and the Interest Period with respect thereto,
(ii) the amount of any principal or interest due and payable or to become
due and payable from Borrower to each Lender hereunder and
19
(iii) the amount of any sum received by the Agent hereunder from Borrower and
each Lender's share thereof (the "Register").
(c) The entries maintained in the accounts maintained pursuant to
paragraphs (a) and (b) above shall be prima facie evidence of the existence
and amounts of the Obligations therein recorded; provided, that the failure
of the Agent or any Lender to maintain such accounts or any error therein
shall not in any manner affect the obligation of Borrower to repay the
Obligations in accordance with their terms.
(d) In addition to the foregoing, each Lender's Commitment for
Revolving Loans shall, at the request of such Lender, be evidenced by a
promissory note (a "Revolving Note") substantially in the form of Exhibit C
hereto.
2.15. Telephonic Notices.
Borrower hereby authorizes the Lenders and the Agent to extend,
convert or continue Advances, effect selections of Types of Advances and to
transfer funds based in each case on telephonic notices made by any person
or persons the Agent or any Lender in good faith believes to be a person
identified on the List of Authorized Persons set forth on Schedule 2.15
hereto, as the same may be amended in writing from time to time, who is
acting on behalf of Borrower. Borrower agrees to deliver promptly to the
Agent a written confirmation, if such confirmation is requested by the
Agent or any Lender, of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect from
the action taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern absent manifest error.
2.16. Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each Base Rate Loan shall be payable in arrears
on each Payment Date, commencing with the first such date to occur after
the date hereof and at maturity. Interest accrued on each LIBOR Loan shall
be payable on the last day of its applicable Interest Period, on any date
on which the LIBOR Loan is prepaid, whether by acceleration or otherwise,
and at maturity. Interest accrued on each LIBOR Loan having an Interest
Period longer than three months shall also be payable on the last day of
each three-month interval during such Interest Period. Interest and non-
use fees shall be calculated for actual days elapsed on the basis of a
360-day year; provided, that Interest on any Base Rate Loans shall be
calculated on the basis of a 365/366-day year. Interest shall be payable
for the day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to noon (local time) at the place
of payment. If any payment of principal of or interest on an Advance shall
become due on a day which is not a Business Day, such payment shall be made
on the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest in
connection with such payment.
2.17. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions.
Promptly after receipt thereof, the Agent will notify each Lender
(and, to the extent applicable, Borrower) of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice, Conversion/Continuation
Notice, and repayment notice received by it hereunder. The Agent will
notify each Lender of the interest rate applicable to each LIBOR
20
Advance promptly upon determination of such interest rate and will give each
Lender prompt notice of each change in the Prime Rate.
2.18. Lending Installations.
Each Lender may book its Loans at any Lending Installation selected
by such Lender and may change its Lending Installation from time to time.
All terms of this Agreement shall apply to any such Lending Installation
and the Loans and any Notes issued hereunder shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender may, by
written notice to the Agent and Borrower in accordance with Article XIII,
designate replacement or additional Lending Installations through which
Loans will be made by it and for whose account Loan payments are to be
made.
2.19. Non-Receipt of Funds by the Agent.
Unless Borrower or a Lender, as the case may be, notifies the Agent
prior to the date on which it is scheduled to make payment to the Agent of
(a) in the case of a Lender, the proceeds of a Loan or (b) in the case of
Borrower, a payment of principal, interest or fees to the Agent for the
account of the Lenders, that it does not intend to make such payment, the
Agent may assume that such payment has been made. Each Lender's obligation
to make Revolving Loans and to purchase participation interests in
accordance with this Agreement shall be absolute and unconditional and
shall not be affected by (i) any setoff, counterclaim, recoupment, defense
or other right that such Lender may have against Borrower, Agent or any
other Person for any reason whatsoever; (ii) the occurrence or continuance
of any Unmatured Default or Default; (iii) any inability of Borrower to
satisfy the conditions precedent to borrowing set forth in this Agreement
at any time or (iv) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. The Agent may, but shall
not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If such Lender or
Borrower, as the case may be, has not in fact made such payment to the
Agent, the recipient of such payment shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount
was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender,
the Federal Funds Rate for such day or (y) in the case of payment by
Borrower, the Interest Rate applicable to the relevant Loan.
2.20. Letter of Credit Procedures.
(a) L/C Applications. Borrower shall give notice to the Agent
and the Issuing Lender of the proposed issuance of each Letter of Credit on
a Business Day which is at least three (3) Business Days (or such lesser
number of days as the Agent and the Issuing Lender shall agree in any
particular instance in their sole discretion) prior to the proposed date of
issuance of such Letter of Credit. Each such notice shall be accompanied
by an L/C Application, duly executed by Borrower and in all respects
reasonably satisfactory to the Agent and the Issuing Lender, together with
such other documentation as the Agent or the Issuing Lender may request in
support thereof, it being understood that each L/C Application shall
specify, among other things, the date on which the proposed Letter of
Credit is to be issued, the expiration date of such Letter of Credit (which
shall not be later than the Facility Termination Date) and whether such
Letter of Credit is to be transferable in whole or in part. Borrower
authorizes the Issuing Lender to set forth the terms of each L/C
Application in the Letter of Credit corresponding to such L/C Application
(and in any amendment thereto) in such language as the Issuing Lender deems
appropriate, with such variations from such terms as the Issuing
21
Lender may in its reasonable discretion determine to be necessary (which
determination shall be conclusive) and not materially inconsistent
with such L/C Application. Borrower accepts the risk that a Letter of
Credit will be interpreted or applied other than as intended by
Borrower or its Subsidiaries, as the case may be, to the extent such
Letter of Credit (1) permits presentation at a place other than the
place of issuance, (2) permits application of laws or practice rules
with which Borrower or its Subsidiaries, as the case may be, are
unfamiliar, (3) includes ambiguous, inconsistent or impossible
requirements, (4) requires termination or reduction against a
presentation made by Borrower or its Subsidiaries, as the case may be,
rather than the beneficiary or (5) fails to incorporate appropriate
letter of credit practices rules. So long as the Issuing Lender
has not received written notice that the conditions precedent set forth in
Section 4.2 with respect to the issuance of such Letter of Credit have not
been satisfied, the Issuing Lender shall issue such Letter of Credit on the
requested issuance date. The Issuing Lender shall promptly advise the
Agent of the issuance of each Letter of Credit and of any amendment
thereto, extension thereof or event or circumstance changing the amount
available for drawing thereunder. In the event of any inconsistency
between the terms of any L/C Application and the terms of this Agreement,
the terms of this Agreement shall control.
(b) Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Lender shall be deemed to have
sold and transferred to each Lender with a Commitment, and each such Lender
shall be deemed irrevocably and unconditionally to have purchased and
received from the Issuing Lender, without recourse or warranty, an
undivided interest and participation, to the extent of such Lender's Pro
Rata Share, in such Letter of Credit and Borrower's reimbursement
obligations with respect thereto. If Borrower does not pay any
reimbursement obligation when due, Borrower shall be deemed to have
immediately requested that the Lenders make a Loan which is a Base Rate
Loan in a principal amount equal to such reimbursement obligations. The
Agent shall promptly notify such Lenders of such deemed request and, such
Lender shall make available to the Agent its Pro Rata Share of such Loan.
The proceeds of such Loan shall be paid over by the Agent to the Issuing
Lender for the account of Borrower in satisfaction of such reimbursement
obligations. For the purposes of this Agreement, the unparticipated
portion of each Letter of Credit shall be deemed to be the Issuing Lender's
"participation" therein. The Issuing Lender hereby agrees, upon request of
the Agent or any Lender, to deliver to the Agent or such Lender a list of
all outstanding Letters of Credit issued by the Issuing Lender, together
with such information related thereto as the Agent or such Lender may
reasonably request.
(c) Reimbursement Obligations. Borrower hereby unconditionally
and irrevocably agrees to reimburse the Issuing Lender for each payment or
disbursement made by the Issuing Lender under any Letter of Credit honoring
any demand for payment made by the beneficiary thereunder, in each case on
the date that such payment or disbursement is made. Any amount not
reimbursed on the date of such payment or disbursement shall bear interest
from the date of such payment or disbursement to the date that the Issuing
Lender is reimbursed by Borrower therefor, payable on demand, at a rate per
annum equal to the Base Rate from time to time in effect plus the
Applicable Margin, if any, from time to time in effect. The Issuing Lender
shall notify Borrower and the Agent whenever any demand for payment is made
under any Letter of Credit by the beneficiary thereunder; provided that the
failure of the Issuing Lender to so notify Borrower or the Agent shall not
affect the rights of the Issuing Lender or the Lenders in
22
any manner whatsoever. Borrower's reimbursement obligations hereunder shall
be irrevocable and unconditional under all circumstances, including (a) any
lack of validity or enforceability of any Letter of Credit, this Agreement
or any other Loan Document, (b) the existence of any claim, set-off,
defense or other right which Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, the Issuing Lender, any Lender or any other Person, whether in
connection with any Letter of Credit, this Agreement, any other Loan
Document, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between Borrower and the
beneficiary named in any Letter of Credit), (c) the validity, sufficiency
or genuineness of any document which the Issuing Lender has determined
complies on its face with the terms of the applicable Letter of Credit,
even if such document should later prove to have been forged, fraudulent,
invalid or insufficient in any respect or any statement therein shall have
been untrue or inaccurate in any respect, or (d) the surrender or
impairment of any security for the performance or observance of any of the
terms hereof. Without limiting the foregoing, no action or omission
whatsoever by the Agent or any Lender (excluding any Lender in its capacity
as the Issuing Lender) under or in connection with any Letter of Credit or
any related matters shall result in any liability of the Agent or any
Lender to Borrower, or relieve Borrower of any of its obligations hereunder
to any such Person, unless such liability is a result of such Person's
gross negligence or willful misconduct.
(d) Letter of Credit Fees. Borrower agrees to pay to the Agent
for the account of each Lender a letter of credit fee for each Letter of
Credit equal to the L/C Fee Rate in effect from time to time of such Lender's
Pro Rata Share (as adjusted from time to time) of the undrawn amount of such
Letter of Credit (computed for the actual number of days elapsed on the
basis of a year of 360 days). Such letter of credit fee shall be payable
in arrears on the first day of each calendar quarter and on the Facility
Termination Date (or such later date on which such Letter of Credit expires
or is terminated) for the period from the date of the issuance of each
Letter of Credit (or the last day on which the letter of credit fee was
paid with respect thereto) to the date such payment is due or, if earlier,
the date on which such Letter of Credit expired or was terminated. In
addition, with respect to each Letter of Credit, Borrower agrees to pay to
the Issuing Lender, for its own account, (i) such fees and expenses as the
Issuing Lender customarily requires in connection with the issuance,
negotiation, processing and/or administration of letters of credit in
similar situations and (ii) a letter of credit fronting fee in the amount
and at the times agreed to in writing by Borrower and the Issuing Lender.
If the Issuing Lender makes any payment or disbursement under any Letter of
Credit and (a) Borrower has not reimbursed the Issuing Lender in full for
such payment or disbursement by 11:00 A.M., Chicago time, on the date of
such payment or disbursement, (b) a Loan may not be made in accordance with
Section 2.20(b) or (c) any reimbursement received by the Issuing Lender
from Borrower is or must be returned or rescinded upon or during any
bankruptcy or reorganization of Borrower or otherwise, each other Lender
with a Commitment shall be obligated to pay to the Agent for the account of
the Issuing Lender, in full or partial payment of the purchase price of its
participation in such Letter of Credit, its Pro Rata Share of such payment
or disbursement (but no such payment shall diminish the obligations of
Borrower under Section 2.20(c)), and, upon notice from the Issuing Lender,
the Agent shall promptly notify each other Lender thereof. Each other
Lender irrevocably and unconditionally agrees to so pay to the Agent in
immediately available funds for the Issuing Lender's account the amount of
such other Lender's Pro Rata Share of such payment
23
or disbursement. If and to the extent any Lender shall not have made such
amount available to the Agent by 2:00 P.M., Chicago time, on the Business
Day on which such Lender receives notice from the Agent of such payment or
disbursement (it being understood that any such notice received after noon,
Chicago time, on any Business Day shall be deemed to have been received
on the next following Business Day), such Lender agrees to pay interest on
such amount to the Agent for the Issuing Lender's account forthwith on
demand, for each day from the date such amount was to have been delivered
to the Agent to the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from
time to time in effect and (b) thereafter, the Base Rate from time to
time in effect. Any Lender's failure to make available to the Agent its
Pro Rata Share of any such payment or disbursement shall not relieve any
other Lender of its obligation hereunder to make available to the Agent such
other Lender's Pro Rata Share of such payment, but no Lender shall be
responsible for the failure of any other Lender to make available to the
Agent such other Lender's Pro Rata Share of any such payment or disbursement.
(e) Additional Matters Concerning Letters of Credit.
(i) Discrepancies: Borrower agrees that it will (or cause its
Subsidiary to) promptly examine any and all instruments and documents
delivered to it from time to time in connection with any Letter of Credit,
and if it has any claim of non-compliance with its instructions or of
discrepancies or other irregularity, it will immediately (and in any event
within three (3) Business Days of its receipt of such instruments or
documents) notify the Issuing Lender thereof in writing, and Borrower (or
its Subsidiary, as the case may be) shall be deemed to have waived any
claim against the Issuing Lender unless such notice is given within such
time period. Without limiting the foregoing, if the Issuing Lender makes
a payment or disbursement under a Letter of Credit and neither Borrower
nor its Subsidiary, as the case may be, send a notice to the Issuing
Lender within three (3) Business Days of receipt of notice of such
payment or disbursement objecting thereto and specifying in reasonable
details the discrepancy or irregularity which is the basis for such
objection, then it shall be precluded from making any objection to the
Issuing Lender's honor of the presentation with respect to which such
payment or disbursement was made (but shall not be precluded from
asserting any objection to any different presentation under the same or
a different Letter of Credit). Acceptance or retention by Borrower or its
Subsidiaries of any documents presented under or in connection with a
Letter of Credit (including originals of copies of documents sent
directly to Borrower or its Subsidiaries, as the case may be) or of
any property for which payment is supported by a Letter of Credit shall
ratify the Issuing Lender's honor of the documents.
(ii) Documents. Unless specified to the contrary in the relevant
L/C Application, the Issuing Lender and its correspondents: (A) may accept
as complying with the applicable Letter of Credit any item drawn, issued or
presented under such Letter of Credit which is issued or purportedly issued
by an agent, executor, trustee in bankruptcy, receiver or other
representative of the party identified in the Letter of Credit as the party
permitted to draw, issue or present such item; and (B) may in its or their
discretion, but shall not be obligated to, accept or honor (1) any item
which substantially
24
complies with the terms of the applicable Letter of Credit, (2) any items
which substantially complies under the laws, rules, regulations and
general banking or trade customs and usages of the place of
presentation, negotiation or payment, (3) drafts which fail to bear any or
adequate reference to the applicable Letter of Credit, (4) any item
presented to the Issuing Lender after the stated expiration date of a
Letter of Credit but within any applicable time period during which such
Letter of Credit may be honored in accordance with the Uniform Customs and
Practice for Documentary Credits issued by the UCP, the UCC and/or the ISP,
as applicable (and, in any event, any item presented to the Issuing Lender
on the Business Day immediately following the stated expiration date of any
Letter of Credit, if such stated expiration date falls on a date which is
not a Business Day), or (5) any item which substantially complies with the
requirements of the UCP, the UCC and/or the ISP, as applicable. In
determining whether to pay under any Letter of Credit, the Issuing Lender
shall have no obligation to Borrower or any other Person except to confirm
that the items required to be delivered under such Letter of Credit appear
to have been delivered and appear on their face to substantially comply
with the requirements of such Letter of Credit.
(iii) Exculpation; Risks. In addition to the exculpatory
provisions contained in the UCP, the UCC and/or the ISP, as applicable, the
Issuing Lender and its correspondents shall not be responsible for (A)
compliance with any law, custom or regulation in effect on the country of
issuance, presentation, negotiation or payment of the Letter of Credit, (B)
any refusal by the Issuing Lender to honor any item because of an
applicable law, regulation or ruling of any Governmental Authority,
whether now or hereafter in effect, (C) any action or inaction required
or permitted under the UCP, UCC, the ISP or the United Nations Convention
on Independent Guarantees and Stand-by Letters of Credit, as applicable or
(D) any act or the failure to act of any agent or correspondence of the
Issuing Lender. Borrower and/or its Subsidiaries assume all risk of the
acts or omissions of any beneficiary or transferee of any Letter of
Credit (it being understood that such assumption is not intended to, and
shall not, preclude Borrower from pursuing any right or remedy it may have
against any such beneficiary or transferee). Borrower further agrees that
any action or omission by the Issuing Lender under or in connection with
any Letter of Credit or any related item, document or property shall,
unless in breach of good faith, be binding on Borrower and shall not put
Issuing Lender under any resulting liability to Borrower, unless due to
the gross negligence or willful misconduct of Issuing Lender. Without
limiting the foregoing, Borrower agrees that in no event shall the Issuing
Lender be liable for incidental, consequential, punitive, exemplary or
special damages. Notwithstanding anything to the contrary contained
herein, the Issuing Lender may be held liable for any of the foregoing to
the extent such liability is the result of the Issuing Lender's gross
negligence or willful misconduct.
(iv) Automatic Renewal of Letters of Credit. IF ANY LETTER
OF CREDIT CONTAINS ANY PROVISION FOR AUTOMATIC RENEWAL, THE ISSUING
LENDER IS UNDER NO OBLIGATION TO ALLOW SUCH RENEWAL TO OCCUR AND ANY
SUCH RENEWAL SHALL REMAIN WITHIN THE SOLE AND ABSOLUTE DISCRETION OF
THE ISSUING LENDER (WITH A MATURITY
25
DATE NOT LATER THAN THE FACILITY TERMINATION DATE). BORROWER FOR
ITSELF AND EACH OF ITS SUBSIDIARIES FOR WHICH A LETTER OF CREDIT MAY
BE ISSUED IRREVOCABLY CONSENTS TO THE AUTOMATIC RENEWAL OF EACH SUCH
LETTER OF CREDIT IN ACCORDANCE WITH ITS TERMS IF THE ISSUING LENDER
ALLOWS SUCH AUTOMATIC RENEWAL TO OCCUR; PROVIDED, THAT BORROWER ON
BEHALF OF ITSELF AND/OR ITS SUBSIDIARIES SHALL HAVE THE RIGHT TO
REQUEST THE ISSUING LENDER TO DISALLOW ANY SUCH RENEWAL ON THE
CONDITION THAT BORROWER AND/OR ITS SUBSIDIARIES SHALL GIVE THE ISSUING
LENDER PRIOR WRITTEN NOTICE OF SUCH REQUEST NOT LESS THAN THIRTY
(30) DAYS PRIOR TO THE DEADLINE IMPOSED UPON THE ISSUING LENDER
FOR NOTIFICATION TO THE BENEFICIARY OF NON-RENEWAL OF ANY SUCH
LETTER OF CREDIT.
ARTICLE III
YIELD PROTECTION AND TAXES
3.1. Yield Protection.
If, on or after the Initial Closing Date, any Lender determines
that the adoption of or change in any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any change in the
interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any
Lender or applicable Lending Installation with any request or directive
(whether or not having the force of law) of any such authority, central
bank or comparable agency:
(a) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending Installation (other than
reserves and assessments taken into account in determining the
interest rate applicable to LIBOR Advances), or
(b) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of agreeing to
make or making, funding or maintaining its LIBOR Loans or reduces any
amount receivable by any Lender or any applicable Lending Installation in
connection with its LIBOR Loans, or requires any Lender or any applicable
Lending Installation to make any payment calculated by reference to the
amount of LIBOR Loans held or interest received by it, by an amount deemed
material by such Lender,
and the result of any of the foregoing is to increase the cost to such
Lender or applicable Lending Installation of making, funding or maintaining
its LIBOR Loans or Commitment or to reduce the return received by such
Lender or applicable Lending Installation in connection with such LIBOR
Loans or Commitment, then, within 30 days of demand by such Lender,
Borrower shall
26
pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction in amount
received. Notwithstanding the foregoing, (a) if any such Lender fails to
notify Borrower within 180 days of such change, then such Lender shall only
be entitled to payment for additional amounts incurred from and after the
date which is 180 days prior to the date that such Lender gives such notice
and (b) Borrower shall have no obligation under this Section 3.1 with
respect to any additional cost or reduction suffered in connection with any
Taxes (which shall be governed exclusively by the provisions of Section
3.5).
3.2. Changes in Capital Adequacy Regulations
If a Lender determines the amount of capital required or expected
to be maintained by such Lender, any Lending Installation of such Lender or
any corporation controlling such Lender is increased as a result of a
Change, then, within 30 days of demand by such Lender, Borrower shall pay
such Lender the amount necessary to compensate for any shortfall in the
rate of return on the portion of such increased capital which such Lender
determines is attributable to this Agreement, its Loans or its Commitment
to make Loans hereunder (after taking into account such Lender's policies
as to capital adequacy); provided, that if any Lender fails to notify
Borrower within 180 days after it obtains actual knowledge of any event
giving rise to the payment of additional amounts under this Section 3.2,
then such Lender shall only be entitled to payment for additional amounts
incurred from and after the date which is 180 days prior to the date that
such Lender gives such notice. "Change" means (a) any change after the
Initial Closing Date in or change in the interpretation of the Risk-Based
Capital Guidelines or (b) any adoption of or change in or change in the
interpretation of any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or
any Lending Installation or any corporation controlling any Lender.
"Risk-Based Capital Guidelines" means (x) the risk-based capital guidelines
in effect in the United States on the date of this Agreement, including
transition rules, and (y) the corresponding capital regulations promulgated
by regulatory authorities outside the United States implementing the July
1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3. Availability of Types of Advances.
If any Lender determines that maintenance of its LIBOR Loans at a
suitable Lending Installation would violate any applicable law, rule,
regulation, or directive, whether or not having the force of law, or if the
Required Lenders reasonably determine that (a) deposits of a type and
maturity appropriate to match fund LIBOR Advances are not available or
(b) the interest rate applicable to a Type of Advance does not accurately
reflect the cost of making or maintaining such Advance, then the Agent
shall suspend the availability of the affected Type of Advance and require
any affected LIBOR Advances to be repaid or converted to Base Rate
Advances, subject to the payment of any funding indemnification amounts
required by Section 3.4.
3.4. Funding Indemnification
If any payment of a LIBOR Advance occurs on a date which is not the
last day of the applicable Interest Period, whether because of
acceleration, prepayment or otherwise, or a LIBOR Advance is not made on
the date specified by Borrower
27
for any reason other than default by the Lenders, Borrower will indemnify
each Lender for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain such LIBOR Advance.
3.5. Taxes.
(a) Subject to Section 3.5(e), all payments by Borrower to or for the
account of any Lender or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all Taxes. If
Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Lender or the Agent, (i) the sum payable
shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 3.5) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions,
(iii) Borrower shall pay the full amount deducted to the relevant authority
in accordance with applicable law and (iv) Borrower shall furnish to the
Agent the original copy of a receipt evidencing payment thereof within 30
days after such payment is made. Any amounts paid by Borrower hereunder
which are subsequently determined to be overpayments shall be refunded to
Borrower within 30 days of such determination.
(b) In addition, Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made pursuant to this Agreement
or under any Note or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note ("Other Taxes").
(c) Borrower hereby agrees to indemnify the Agent and each Lender for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed on amounts payable under this Section 3.5)
paid by the Agent or such Lender in respect of this Agreement or any Note
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, in each case whether or not such Taxes
or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. Payments due under this indemnification
shall be made within 30 days of the date the Agent or such Lender makes
demand therefor pursuant to Section 3.6.
(d) (i) To the extent permitted by applicable law, each Lender that is
not a United States person within the meaning of Code Section 7701(a)(30) (a
"Non-U.S. Lender") shall deliver to Borrower and the Agent on or prior to
the Closing Date (or in the case of a Lender that is an Assignee, on the
date of such assignment to such Lender) two accurate and complete original
signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or
other applicable form prescribed by the IRS) certifying to such Lender's
entitlement to a complete exemption from, or a reduced rate in, United
States withholding tax on interest payments to be made hereunder or any
Loan. If a Lender that is a Non-U.S. Lender is claiming a complete
exemption from withholding on interest pursuant to Code Sections 871(h) or
881(c) with respect to payments of "portfolio interest", the Lender shall
deliver (along with two accurate and complete original signed copies of IRS
Form W-8BEN) a certificate in form and substance reasonably acceptable to
the Agent representing that such Non-U.S. Lender is not a
28
bank for purposes of Code Section 881(c), is not a 10-percent shareholder
(within the meaning of Code Section 871(h)(3)(B)) of Borrower and is not
a controlled foreign corporation described in Code Section 881(c)(3)(C),
properly completed and duly executed by such Non-U.S. Lender (any such
certificate, a "Withholding Certificate"). In addition, each Lender that
is a Non-U.S. Lender agrees that from time to time after the Closing Date,
(or in the case of a Lender that is an Assignee, after the date of the
assignment to such Lender), when a lapse in time (or change in
circumstances occurs) renders the prior certificates hereunder obsolete
or inaccurate in any material respect, such Lender shall, to the extent
permitted under applicable law, deliver to Borrower and the Agent two
new and accurate and complete original signed copies of an IRS Form W-8BEN,
W-8ECI, or W-8IMY (or any successor or other applicable forms prescribed
by the IRS), and if applicable, a new Withholding Certificate, to
confirm or establish the entitlement of such Lender or the Agent to an
exemption from, or reduction in, United States withholding tax on interest
payments to be made hereunder or any Loan.
(ii) Each Lender that is not a Non-U.S. Lender (other than any such
Lender which is taxed as a corporation for U.S. federal income tax
purposes) shall provide two properly completed and duly executed copies of
IRS Form W-9 (or any successor or other applicable form) to Borrower and
the Agent certifying that such Lender is exempt from United States backup
withholding tax. To the extent that a form provided pursuant hereto and is
rendered obsolete or inaccurate in any material respects as result of
change in circumstances with respect to the status of a Lender, such Lender
shall, to the extent permitted by applicable law, deliver to Borrower and
the Agent revised forms necessary to confirm or establish the entitlement
to such Lender's or Agent's exemption from United States backup withholding
tax.
(e) For any period during which a Non-U.S. Lender has failed to
provide Borrower with an appropriate form pursuant to clause (d) above (unless
such failure is due to a change in treaty, law or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to
be provided), such Non-U.S. Lender shall not be entitled to indemnification
under this Section 3.5 with respect to Taxes imposed by the United States;
provided, that, should a Non-U.S. Lender which is otherwise exempt from or
subject to a reduced rate of withholding tax become subject to Taxes
because of its failure to deliver a form required under clause (d) above,
Borrower shall take such steps as such Non-U.S. Lender shall reasonably
request to assist such Non-U.S. Lender to recover such Taxes.
(f) Any Lender that is entitled to an exemption from or reduction
of withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall
deliver to Borrower (with a copy to the Agent), at the time or times
prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to
be made without withholding or at a reduced rate.
3.6. Lender Statements; Survival of Indemnit.
To the extent reasonably possible, each Lender agrees that, upon
the occurrence of any event giving rise to the obligation of Borrower to
pay any greater amount under this Article III, with respect to such Lender,
it will, if requested by Borrower, use reasonable efforts (subject to such
Lender's overall policy
29
considerations) to designate another Lending Installation for Loans, including
designating an alternate Lending Installation with respect to its LIBOR Loans
to reduce any liability of Borrower to such Lender under Sections 3.1, 3.2
and 3.5 or to avoid the unavailability of LIBOR Advances under Section
3.3, so long as such designation is not, in the reasonable judgment of
such Lender, materially adverse to the interests of such Lender. Each
Lender shall deliver a written statement of such Lender to Borrower (with
a copy to the Agent) as to the amount due, if any, under Sections 3.1, 3.2
or 3.5. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be
final, conclusive and binding on Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
LIBOR Loan shall be calculated as though each Lender funded its LIBOR Loan
through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the LIBOR Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender
shall be payable on demand after receipt by Borrower of such written
statement. The obligations of Borrower under Sections 3.1, 3.2, 3.4 and 3.5
shall survive payment of the Obligations and termination of this Agreement.
3.7. Substitution of Lender.
Upon the receipt by Borrower from any Lender (an "Affected Lender")
of a claim for compensation under Section 3.1, 3.2 or 3.5 or a notice in
accordance with Section 3.3 regarding the unavailability of a Type of
Advance, Borrower may: (a) request the Affected Lender to use commercially
reasonable efforts to obtain a replacement bank or other entity
satisfactory to Borrower to acquire and assume all or a ratable part of all
of such Affected Lender's Loans and Commitment at the face amount thereof
(a "Replacement Lender"); (b) request one or more of the other Lenders to
acquire and assume all or part of such Affected Lender's Loans and
Commitment (which request each such other Lender may decline or agree to in
its sole discretion); or (c) designate a Replacement Lender. Any such
designation of a Replacement Lender under clause (a) or (c) shall be
subject to the prior written consent of the Agent (which consent shall not
unreasonably be withheld or delayed). Any transfer of Loans or Commitment
pursuant to this Section shall be made in accordance with Section 12.3 and
Section 3.4, if applicable.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Effectiveness
This Agreement shall not be effective unless Borrower shall have
furnished to the Agent with sufficient copies for the Lenders:
(a) Good Standing Certificates. Good Standing Certificate (or
equivalent certificates) for Borrower and OCIC certified by the
appropriate governmental officer in its jurisdiction of incorporation.
(b) Corporate Documents. Copies, certified by the Secretary
or Assistant Secretary of Borrower, of its Articles of Incorporation and
By-laws and its Board of Directors' resolutions authorizing the transactions
described herein and the entry into the Loan Documents to which Borrower is
a party and identifying by name and title the Authorized Officers of
30
Borrower authorized to sign the Loan Documents to which Borrower is a party,
and to make borrowings hereunder.
(c) Secretary's Certificate. Incumbency certificate, executed by
the Secretary or Assistant Secretary of Borrower, which shall identify by
name and title and bear the specimen signatures of the Authorized Officers
identified in the resolutions of Borrower upon which certificate the Agent
and the Lenders shall be entitled to rely until informed of any change in
writing by Borrower.
(d) Officer's Certificate. A certificate, dated the date of this
Agreement, signed by an Authorized Officer of Borrower, in form and
substance reasonably satisfactory to the Agent, to the effect that: (i) on
such date (after giving effect to the making of the Loans hereunder and the
consummation of the other transactions contemplated hereby on the Initial
Closing Date and by the other Loan Documents (collectively, the "Closing
Transactions")) no Default or Unmatured Default has occurred and is
continuing; (ii) all orders, consents, approvals, licenses, authorizations
or validations of, or filings, recordings or registrations with, or
exemptions by, any governmental or public body or authority, or any
subdivision thereof, required to make or consummate the Closing
Transactions have been or, prior to the time required, will have been,
obtained, given, filed or taken and are or will be in full force and effect
(or Borrower has obtained effective relief with respect to the application
thereof) and all applicable waiting periods have expired; and (iii) each of
the representations and warranties set forth in Article V of this Agreement
is true and correct on and as of such date (except for such representations
and warranties limited by their terms to a specific date).
(e) Consolidated Net Worth. Evidence that as of the Initial Closing
Date Borrower has Consolidated Net Worth of not less than $1,000,000,000.
(f) Financial Statements. (i) The SAP financial statements for the
Material Insurance Subsidiaries required to deliver financial statements
pursuant to Section 6.1 for the fiscal years ending 2003 and 2004 and (ii)
the interim consolidated financial statements for such Material Insurance
Subsidiaries for each fiscal quarterly period ended after the latest fiscal
year referenced in clause (i) above.
(g) Legal Opinion. A written opinion of Borrower's general counsel,
addressed to the Agent and the Lenders in form and substance reasonably
acceptable to the Agent and its counsel.
(h) Letters of Direction. Written money transfer instructions with
respect to the Loans in form and substance reasonably acceptable to the
Agent and its counsel addressed to the Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations as
the Agent may have reasonably requested.
(i) Credit Agreement. Executed originals of this Agreement in form
and substance satisfactory to the Lenders.
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(j) Notes. Executed originals of such Notes as may be requested by a
Lender payable to the order of each such requesting Lender.
(k) Other Loan Documents. Executed originals of such other Loan
Documents in form and substance satisfactory to the Lenders, together with all
schedules, exhibits, certificates, instruments, opinions, documents and
financial statements required to be delivered pursuant hereto and thereto,
also in form and substance reasonably satisfactory to the Lenders.
(l) Payment of Fees and Expenses. All costs, fees and expenses
(including, without limitation, reasonable legal fees and expenses provided
in writing), and all other compensation contemplated by this Agreement or
the other Loan Documents, due to the Agent shall have been paid to the
extent due.
(m) No Material Adverse Change. The Agent shall be satisfied that,
since December 31, 2004, there has been no material adverse change in the
business, assets, Property, condition (financial or otherwise) or
operations of Borrower and its Subsidiaries, taken as a whole.
(n) Termination of Existing Facility. Evidence reasonably
satisfactory to the Agent that the Existing Facility and all commitments
thereunder shall have terminated or will be terminated substantially
simultaneously with the closing of the transactions hereunder.
(o) Other. Such other documents, agreements, certificates or
opinions as the Agent, any Lender or their counsel may have reasonably
requested.
4.2. Each Advance.
The Lenders shall not be required to make any Advance (other than
an Advance that, after giving effect thereto and to the application of the
proceeds thereof, does not increase the aggregate amount of outstanding
Advances) unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default.
(b) The representations and warranties contained in Article V
below are true and correct in all material respects as of
such Borrowing Date except to the extent any such
representation or warranty is stated to relate solely to
an earlier date, in which case such representation or
warranty shall have been true and correct on and as of
such earlier date.
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by Borrower that the conditions contained in
Section 4.2(a) and (b) have been satisfied or waived in writing by Agent.
32
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Lenders that, after giving
effect to the Closing Transactions:
5.1. Existence and Standing.
Each of Borrower and its Subsidiaries is a corporation, partnership
or limited liability company duly and properly incorporated or organized,
as the case may be, validly existing and (to the extent such concept
applies to such entity) in good standing under the laws of its jurisdiction
of incorporation or organization and has all requisite authority to conduct
its business in each jurisdiction in which its business is conducted,
except where the failure to be so qualified, licensed or authorized could
not reasonably be expected to have a Material Adverse Effect.
5.2. Authorization and Validity.
Borrower has the power and authority to execute and deliver the
Loan Documents to which it is a party and to perform its obligations
thereunder. The execution and delivery by Borrower of the Loan Documents
to which it is a party and the performance of its obligations thereunder
have been duly authorized by proper corporate proceedings, and the Loan
Documents to which Borrower is a party constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with
their terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally.
5.3. No Conflict; Government Consent.
None of the execution and delivery by Borrower of the Loan
Documents to which it is a party, the consummation of the Closing
Transactions or compliance with the provisions of the Loan Documents will,
or at the relevant time did, violate (a) any law, rule, regulation
(including Regulations T, U and X), order, writ, judgment, injunction,
decree or award binding on Borrower, (b) Borrower's articles or certificate
of incorporation, or (c) the provisions of any indenture, instrument or
agreement to which Borrower is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default
thereunder, or result in, or require, the creation or imposition of any
Lien in, of or on the Property of Borrower pursuant to the terms of any
such indenture, instrument or agreement, except for any violation of any
such law, rule, regulation, order, writ, judgment, injunction, decree,
award, indenture, instrument, agreement, default or Lien that could not
reasonably be expected to have a Material Adverse Effect. Except as set
forth in Schedule 5.3 hereto, no order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
Governmental Authority, or any subdivision thereof, or any other Person
(including, without limitation, the stockholders of any Person) is required
to be obtained by Borrower in connection with the execution and delivery of
the Loan Documents, the borrowings under this Agreement, the payment and
performance by Borrower of the Obligations or the consummation of any of
the Closing Transactions.
5.4. Financial Statements.
Borrower has heretofore furnished to the Agent and each of the
Lenders (a) the December 31, 2004 audited consolidated financial statements
of Borrower and its
33
Subsidiaries, (b) the unaudited consolidated financial statements of
Borrower and its Subsidiaries through September 30, 2005, (c) the
December 31, 2004 audited Annual Statement of each Material
Insurance Subsidiary and (d) the September 30, 2005 Quarterly Statement of
each Material Insurance Subsidiary (collectively, the "Financial
Statements"). Each of the Financial Statements was prepared in accordance
with GAAP or SAP, as applicable, and (in the case of the Financial
Statements prepared in accordance with GAAP) fairly presents, in all
material respects, the consolidated financial condition and operations of
Borrower and its Subsidiaries at such dates and the consolidated results of
their operations for the respective periods then ended (except, in the case
of such unaudited statements, for normal year-end audit adjustments).
5.5. Material Adverse Change.
Since December 31, 2004, there has been no change in the business,
Property, condition (financial or otherwise) or operations of Borrower and
its Subsidiaries, taken as a whole, which could reasonably be expected to
have a Material Adverse Effect.
5.6. Taxes.
Borrower and each of its Subsidiaries have filed all United States
federal tax returns and all other material tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by Borrower or any such Subsidiary,
except such taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided in accordance with GAAP or SAP,
as applicable, or where the failure to so could not reasonably be expected
to have a Material Adverse Effect. No tax liens have been filed and no
claims are being asserted with respect to any such taxes, except such tax
liens filed in connection with taxes being contested in good faith and as
to which adequate reserves have been provided in accordance with GAAP or
SAP, as applicable, and for such tax liens filed and claims asserted that
could not reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of Borrower and its
Subsidiaries in respect of any taxes or other governmental charges are in
all material respects in accordance with GAAP or SAP, as applicable.
5.7. Litigation and Contingent Obligations.
Except as set forth on Schedule 5.7, there is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or,
to the knowledge of any of their officers, threatened in writing against
Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 5.7, other
than (i) any liability incident to any litigation, arbitration or
proceeding that could not reasonably be expected to have a Material Adverse
Effect or (ii) any insurance payment liabilities or liabilities arising in
the ordinary course of business of Borrower or any Subsidiaries business as
an insurance or reinsurance company, none of Borrower or any of its
Subsidiaries has any material contingent obligations not provided for or
disclosed in the Financial Statements or disclosed pursuant to this
Agreement or any other Loan Document.
5.8. Subsidiaries.
Schedule 5.8 contains an accurate list of all Subsidiaries of
Borrower as of the date of this Agreement, setting forth their respective
jurisdictions of organization and the percentage of their respective
capital stock or other ownership interests owned by Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock or
other ownership interests of such Subsidiaries have been (to the extent
such concepts are
34
relevant with respect to such ownership interests) duly authorized and
issued and are fully paid and non-assessable.
5.9. ERISA.
Borrower and each of its Subsidiaries are in compliance in all
material respects with all applicable provisions of ERISA, except where
such failure could not reasonably be expected to have a Material Adverse
Effect. Each Plan complies in all material respects with all applicable
requirements of law and regulations and no Reportable Event has occurred
with respect to any Plan, except where such failure could not reasonably be
expected to have a Material Adverse Effect.
5.10. Accuracy of Information.
No information, exhibit or report furnished by Borrower or any of
its Subsidiaries in writing to the Agent or to any Lender in connection
with the negotiation of, or compliance with, the Loan Documents, when taken
as a whole, contained any material misstatement of fact or omitted to state
a material fact or any fact necessary to make the statements contained
therein not misleading, in light of the circumstances under which they were
made, the Lenders acknowledging that as to any projections or other
"forward-looking information" furnished to Agent or Lenders, Borrower only
represents that the same were prepared on the basis of information and
estimates Borrower believed to be reasonable.
5.11. Federal Reserve Regulations.
Neither Borrower nor any of its Subsidiaries is engaged, directly
or indirectly, principally in the business of extending, or arranging for
the extension of, credit for the purpose of purchasing or carrying Margin
Stock. Neither the making of any Loan hereunder nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation T, Regulation U or Regulation X. Following the application of
the proceeds of the Loans, less than 25% of the value (as determined by any
reasonable method) of the assets of Borrower and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder
taken as a whole will be represented by Margin Stock.
5.12. Material Agreements.
Neither Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in (a) any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse Effect or
(b) any agreement or instrument evidencing or governing any Material
Indebtedness.
5.13. Compliance With Laws.
Borrower and its Subsidiaries have complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or
foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the
ownership of their respective Property except for any failure to comply
with any of the foregoing which could not reasonably be expected to have a
Material Adverse Effect.
5.14. [Intentionally Omitted].
5.15. Plan Assets; Prohibited Transactions.
Borrower is not an entity deemed to hold "plan assets" within the
meaning of 29 C.F.R. 2510.3-101 of an employee benefit plan (as defined
in Section 3(3) of ERISA) which is subject to Title I or IV of ERISA or any
plan (within
35
the meaning of Section 4975 of the Code), and neither the execution of
this Agreement nor the making of Loans hereunder gives rise to a prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of
the Code.
5.16. Environmental Matters.
Neither Borrower nor any of its Subsidiaries has received any
notice to the effect that its operations are not in material compliance
with any of the requirements of applicable Environmental Laws or are the
subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial
action could reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act.
Neither Borrower nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
5.18. Public Utility Holding Company Act.
Neither Borrower nor any Subsidiary is a "holding company" or 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.
5.19. Insurance.
Borrower and its Subsidiaries maintain insurance on their Property
with such companies, in such amounts and covering such risks as is, in each
case, consistent with sound business practice and which may include self-
insurance.
5.20. [Intentionally Omitted].
5.21. Insurance Licenses.
Schedule 5.21 hereto lists the jurisdiction of domicile of each
Material Insurance Subsidiary, the line or lines of insurance in which each
Material Insurance Subsidiary is engaged and the jurisdictions in which
each Material Insurance Subsidiary holds a License and is authorized to
transact insurance business, in each case as of the date of this Agreement.
No License, the loss of which could reasonably be expected to have a
Material Adverse Effect, is the subject of a proceeding for suspension or
revocation. To Borrower's knowledge, there is no sustainable basis for
such suspension or revocation, and no such suspension or revocation has
been threatened by any Governmental Authority. To Borrower's knowledge, no
Material Insurance Subsidiary has received written notice from any
Governmental Authority that it is deemed to be "commercially domiciled" for
insurance regulatory purposes in any jurisdiction other than that indicated
on Schedule 5.21.
5.22. Reinsurance.
Schedule 5.22 lists all ceded or assumed reinsurance agreements to
which any Material Insurance Subsidiary is, as of the date of this
Agreement, a party, which are currently in force, and under which there is
liability by either party to the agreement (collectively, the "Existing
Reinsurance Agreements"). Each of the Existing Reinsurance Agreements is
in full force and effect, is valid and binding in all material respects in
accordance with its terms, and, as of the date hereof, no Material
Insurance Subsidiary has, to Borrower's knowledge, received notice (other
than provisional notices of cancellation received in the ordinary course of
business) that any other party to an in-force Existing Reinsurance
Agreement
36
will cancel or not renew such agreement, which cancellation or
nonrenewal could reasonably be expected to have a Material Adverse Effect.
Borrower has no knowledge as of the date hereof that any material amount
recoverable by any Material Insurance Subsidiary pursuant to any Existing
Reinsurance Agreement is not fully collectible in due course, except for
any amounts for which an adequate reserve has been established. To the
knowledge of Borrower, no Material Insurance Subsidiary is in default in
any material respect as to any Existing Reinsurance Agreement. Except as
disclosed in Schedule 5.22, each Material Insurance Subsidiary is entitled
to take full credit in its statutory financial statements for ceded
reinsurance under the Existing Reinsurance Agreements pursuant to
applicable insurance laws. Except as disclosed in Schedule 5.22, there is
no claim under any Existing Reinsurance Agreement in excess of $1,000,000
which is disputed by any other party to such agreement.
5.23. Reserves.
Except as set forth on Schedule 5.23, each loss and loss adjustment
expense reserve and other material liability amount in respect of the
insurance business, including, without limitation, material reserve and
other material liability amounts in respect of insurance policies of each
Material Insurance Subsidiary was determined in accordance with generally
accepted actuarial standards consistently applied, was fairly stated in
accordance with sound actuarial principles and was in compliance with the
requirements of the insurance laws, rules and regulations of its state of
domicile as of the date thereof. Each Material Insurance Subsidiary owns
assets that qualify as admitted assets under applicable law in an amount at
least equal to the sum of all such reserves and liability amounts and its
minimum capital and surplus as required by the insurance laws, rules and
regulations of its state of domicile.
5.24. OCIC Capital and Surplus.
As of the date of this Agreement, OCIC has a Statutory Capital and
Surplus of at least $850,000,000.
5.25. Defaults.
No Default or Unmatured Default has occurred and is continuing.
5.26. Certain Fees.
No broker's, finder's or similar fee or commission was, is or will
be payable by Borrower or any Subsidiary with respect to any of the
transactions contemplated by this Agreement or any other Closing
Transaction.
5.27. Indebtedness.
Attached hereto as Schedule 5.27 is a complete and correct list of
all Indebtedness of Borrower and its Subsidiaries outstanding on the date
of this Agreement (other than (x) Indebtedness in a principal amount not
exceeding $2,500,000 for a single item of Indebtedness and $5,000,000 in
the aggregate for all such Indebtedness listed and (y) Indebtedness of
Borrower to any Subsidiary and of any Subsidiary to Borrower or another
Subsidiary), showing the aggregate principal amount of Indebtedness
outstanding on such date after giving effect to the Closing Transactions.
5.28. Dividends.
No Insurance Subsidiary is subject to any regulatory prohibition
regarding the declaration or payment of dividends that is not generally
applicable to all insurance companies which are domiciled in the same
jurisdiction and are engaged in the same line of business as such Insurance
Subsidiary.
37
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting.
Borrower will maintain, for itself and each Material Insurance
Subsidiary, a system of accounting established and administered in
accordance with GAAP and/or SAP, consistently applied, and furnish to the
Lenders (it being understood that delivery to the Agent (or posting by the
Agent of each of the following items on an electronic website) shall
constitute delivery to each Lender by Borrower and the Agent hereby agrees
to post on an electronic website or otherwise distribute to the Lenders any
such item delivered by Borrower to the Agent):
(a) As soon as practicable and in any event within 90 days after
the close of each of its Fiscal Years, the financial statements of Borrower
and its Material Insurance Subsidiaries prepared in accordance with GAAP
on a consolidated basis, including balance sheets as of the end of such period
and related statements of income, shareholders' equity and cash flows,
accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that
such financial statements fairly present, in all material respects, the
financial position of the Borrower and its Material Insurance Subsidiaries
being reported upon, that such financial statements have been prepared in
accordance with GAAP and that the examination by such accountants in
connection with such financial statements has been made in accordance with
GAAP.
(b) As soon as practicable and in any event within 60 days after
the close of each of the first three Fiscal Quarters of each fiscal year,
consolidated unaudited balance sheets of Borrower as of the close of each
such period and consolidated statements of income, shareholders' equity and
cash flows for the period from the beginning of such fiscal year to the end
of such quarter, all prepared in accordance with GAAP and certified by its
chief financial officer or its controller if such controller is an officer
of Borrower.
(c) As soon as practicable and in any event within 90 days after
the close of each Fiscal Year of each Material Insurance Subsidiary, copies of
the unaudited Annual Statement of such Material Insurance Subsidiary, all such
statements to be prepared in accordance with SAP consistently applied
throughout the periods reflected therein.
(d) No later than each June 30 of each Fiscal Year, copies of the
audited statement entitled "The Ohio Casualty Insurance Company and its
Affiliated Fire and Casualty Insurers Audited Combined Financial Statements
(Statutory Basis)" for the prior Fiscal Year, prepared in accordance with SAP,
audited and certified by independent certified public accountants of recognized
national standing.
(e) As soon as practicable and in any event within 60 days after the
close of each of the first three Fiscal Quarters of each Material Insurance
Subsidiary, copies of the
38
Quarterly Statement of each of the Material Insurance Subsidiaries, all such
statements to be prepared in accordance with SAP consistently applied through
the period reflected herein.
(f) As soon as available and in any event not later than June 30 of
each iscal Year, a "Statement of Actuarial Opinion" including review of year-
end loss reserves for each Material Insurance Subsidiary (prepared in
accordance with SAP) for such Fiscal Year by the actuary engaged by
Borrower (which may include Borrower's certified public accountants) as
filed with the applicable regulatory insurance authority in compliance with
the requirements thereof (or a report containing equivalent information for
any Material Insurance Subsidiary not so required to file the foregoing
with the applicable regulatory insurance authority).
(g) As soon as available, and in any event by March 31 of each
Fiscal Year, copies showing the Risk Based Capital Ratio calculations and IRIS
(Insurance Regulatory Information System) ratio calculations provided by
NAIC for the previous Fiscal Year for each Material Insurance Subsidiary.
(h) Copies of any other externally prepared actuarial reserve
reports, if any, prepared with respect to any Material Insurance Subsidiary,
promptly after the receipt thereof.
(i) Together with the financial statements required by clauses (a)
and (b) above, a compliance certificate in substantially the form of Exhibit A
signed by its chief financial officer or its treasurer showing the
calculations necessary to determine compliance with Sections 6.11, 6.15 and
6.20 and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status thereof.
(j) As soon as possible and in any event within 10 days after
Borrower knows that any Reportable Event has occurred with respect to any
Plan, a statement, signed by the chief financial officer, the treasurer or
controller of Borrower, describing said Reportable Event and the action
proposed to be taken with respect thereto, and as soon as possible and in
any event within ten (10) days after learning thereof, notification of any
Lien imposed by the PBGC or the IRS on the assets of any member of the
Controlled Group in respect of any Plan maintained by any such member (or
any other employee pension benefit plan as to which any such member may be
liable) which, together with all such Liens, relates to liabilities in
excess of ten percent of the net worth (determined according to GAAP and
without reduction for any reserve for such liabilities) of Borrower and its
Subsidiaries.
(k) Promptly and in any event within ten (10) days after learning
thereof, notification of (i) any tax assessment, notice of proposed deficiency
or notice of deficiency received by Borrower or any other Consolidated Person
or (ii) the filing of any tax Lien or commencement of any judicial
proceeding by or against any such Consolidated Person, if any such
assessment, notice, Lien or judicial proceeding (or all such assessments,
demands, notices, Liens and judicial proceedings, in the aggregate) relates
to tax liabilities in excess of ten percent (10%) of Consolidated Net
Worth.
(l) As soon as practicable and in any event within 60 days after the
close of each Fiscal Quarter, either copies of or a summary report of any
material modifications or
39
amendments to material reinsurance contracts which were entered into by any
Insurance Subsidiary during such Fiscal Quarter.
(m) Such other information as the Agent on behalf of any Lender may
from time to time reasonably request.
6.2. Use of Proceeds.
Borrower will, and will cause each Subsidiary to, use the proceeds
of the Loans to repay in full all outstanding obligations and liabilities
under the Existing Facility and to meet general corporate purposes of
Borrower and its Subsidiaries, including, but not limited to, working
capital, acquisitions financing, and share repurchases.
6.3. Notice of Default.
Borrower will, and will cause each Insurance Subsidiary to, give
prompt notice in writing to the Agent of (a) the occurrence of any Default
or Unmatured Default, (b) the occurrence of any other development,
financial or otherwise, relating specifically to Borrower or any of its
Subsidiaries (and not of a general economic or political nature) which
could reasonably be expected to have a Material Adverse Effect, (c) the
receipt of any notice from any Governmental Authority of the expiration
without renewal, revocation or suspension of, or the institution of any
proceedings to revoke or suspend, any License now or hereafter held by any
Insurance Subsidiary which is required to conduct insurance business in
compliance with all applicable laws and regulations and the expiration,
revocation or suspension of which could reasonably be expected to have a
Material Adverse Effect, (d) the receipt of any notice from any
Governmental Authority of the institution of any disciplinary proceedings
against or in respect of any Insurance Subsidiary, or the issuance of any
order, the taking of any action or any request for an extraordinary audit
for cause by any Governmental Authority which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect, (e) any
judicial or administrative order limiting or controlling the insurance
business of any Insurance Subsidiary (and not the insurance industry
generally) which has been issued or adopted and which has had, or could
reasonably be expected to have, a Material Adverse Effect, or (f) the
commencement of any litigation against Borrower or any of its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect.
Each such notice pursuant to this Section 6.3 shall be accompanied by
a written statement of an Authorized Officer of Borrower setting forth the
nature and status of the occurrence and what action is being taken by
Borrower with respect thereto.
6.4. Conduct of Business.
Borrower will, and will cause each Material Insurance Subsidiary
to, (a) carry on and conduct its business in substantially the same manner
and in substantially the same fields of enterprise as it is presently
conducted, (b) subject to Section 6.15, engage in insurance-related
businesses, (c) unless failure to do so could not reasonably be expected to
have a Material Adverse Effect, do all things reasonably necessary to
remain duly incorporated, validly existing and in good standing in its
jurisdiction of incorporation and its jurisdiction of domicile and maintain
all requisite authority to conduct its business in each other jurisdiction
in which its business is conducted, and (d) do all things reasonably
necessary to renew, extend and continue in effect all Licenses which may at
any time and from time to time be necessary for any such Material Insurance
Subsidiary to operate its insurance business in compliance with all
applicable laws and regulations; provided, that an Material Insurance
40
Subsidiary may withdraw from one or more states (other than its state of
domicile) as an admitted insurer if such withdrawal could not reasonably be
expected to have a Material Adverse Effect. Each Material Insurance
Subsidiary in existence as of the date of this Agreement shall continue to
be a Wholly-Owned Subsidiary; provided, that any Material Insurance
Subsidiary may be merged into Borrower or into any Wholly-Owned Subsidiary
if permitted by appropriate regulatory authorities. Notwithstanding the
foregoing, Borrower or any Material Insurance Subsidiary may engage in
other non-insurance related businesses so long as the revenues from such
activities do not at any time constitute more than twenty-five percent
(25%) of the total GAAP revenues of Borrower and its Subsidiaries on a
consolidated basis.
6.5. Taxes.
Borrower will, and will cause each Subsidiary to, timely file
complete and correct material United States federal and applicable foreign,
state and local tax returns required by law and pay when due all material
taxes, assessments and governmental charges and levies upon it or its
income, profits or Property, except (i) those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside in accordance with GAAP and (ii) where the
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.6. Insurance.
Borrower will, and will cause each Subsidiary to, maintain with
financially sound and reputable insurance companies insurance, including
self insurance, on all their Property in such amounts and covering such
risks as is consistent with sound business practice.
6.7. Compliance with Laws.
Borrower will, and will cause each Subsidiary to, comply with all
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject (including, without limitation, all
Environmental Laws), the failure to comply with which could reasonably be
expected to have a Material Adverse Effect.
6.8. Maintenance of Properties.
Except as could not reasonably be expected to have a Material
Adverse Effect, Borrower will, and will cause each Subsidiary to, do all
things necessary to maintain, preserve, protect and keep its Property
(other than Property that is immaterial or not essential to the conduct of
Borrower's or any Subsidiary's business taken as a whole) that are used in
the conduct of its business in good repair, working order and condition
(subject to normal wear and tear) and make all necessary and proper
repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9. Inspection.
Borrower will, and will cause each Subsidiary to, permit the Agent,
by their respective representatives and agents, to inspect any of the
Property, books and financial records of Borrower and its Subsidiaries, to
examine and make copies of the books of accounts and other financial
records of Borrower and its Subsidiaries, and to discuss the affairs,
finances and accounts of Borrower and its Subsidiaries with, and to be
advised as to the same by, their respective officers at such reasonable
times and intervals as the Agent may designate; provided, that so long as
no Default or Unmatured Default has occurred and is continuing, (i) the
Agent shall provide at least five (5) Business Days' advance notice of any
inspection or examination and (ii) such inspection or examination shall be
limited to not more than once per calendar year.
41
Borrower will keep or cause to be kept, and cause each Subsidiary to keep or
cause to be kept, appropriate records and books of account in which complete
entries are to be made reflecting its and their business and financial
transactions, such entries to be made in accordance with GAAP or SAP,
as applicable, consistently applied.
6.10. Dividends, Etc.
If a Default has occurred and is continuing, Borrower will not, nor
will it permit any Subsidiary to, declare or pay any dividends or make any
distributions on its capital stock (other than dividends payable in its own
capital stock) or redeem, repurchase or otherwise acquire or retire any of
its capital stock at any time outstanding; provided, that (i) any
Subsidiary may declare and pay dividends to a Subsidiary or to Borrower,
and (ii) Borrower may redeem, repurchase or otherwise acquire or retire any
capital stock in Borrower pursuant to and in accordance with stock option
plans or other benefit plans for management or employees of Borrower or a
Subsidiary. For the avoidance of doubt, Borrower may pay any declared
dividends or other declared distributions on its capital stock, after the
occurrence and during the continuation of an Unmatured Default, to the
extent that such declared dividends or other declared distributions (1)
were approved by all necessary corporate action on the part of Borrower and
its board of directors prior to the occurrence of such Unmatured Default
and (2) do not at any time exceed $10,000,000 in the aggregate.
6.11. Indebtedness
Borrower will not, nor will it permit any Subsidiary to, create,
incur or suffer to exist any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness existing on the Initial Closing Date and described
in Schedule 5.27 and refinancings thereof or amendments or modifications
thereto which do not have the effect of increasing the principal amount
thereof and which are otherwise, in the good faith business judgment of the
authorized officer of Borrower or such Subsidiary making such
determination, on terms and conditions, taken as a whole, no less favorable
to Borrower or any Subsidiary than the terms of the Indebtedness being
refinanced, amended or modified;
(c) Indebtedness arising under Rate Hedging Agreements related to
the Loans;
(d) Contingent Obligations permitted pursuant to Section 6.19;
(e) Indebtedness owing by Borrower to any Subsidiary or by any
Subsidiary to Borrower or any other Subsidiary;
(f) additional Indebtedness so long as immediately after giving
effect thereto Borrower is in pro forma compliance with the Leverage Ratio set
forth in Section 6.20.1, which additional Indebtedness shall include
secured Indebtedness in an aggregate amount not to exceed the limits
permitted by Section 6.16;
(g) Subordinated Indebtedness;
(h) purchase money debt; and
42
(i) Indebtedness of Borrower or any Subsidiary in connection with
securities lending arrangements with financial institutions.
6.12. Merger.
Borrower will not, nor will it permit any Subsidiary to, merge or
consolidate with or into any other Person, except that (a) a Subsidiary may
merge into Borrower or a Subsidiary (provided that if any such transaction
shall be between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-
Owned Subsidiary shall be the surviving entity), (b) a Subsidiary may merge
into or consolidate with any other Person or permit any other Person to
merge into or consolidate with it in connection with any sale, lease or
other disposition of its Property, (c) in connection with any Acquisition
permitted under Section 6.15, any Subsidiary may merger into Borrower or
any Subsidiary and (d) Borrower may merge or consolidate with another
Person so long as (i) (1) Borrower is the surviving entity or (2) the
surviving or successor corporation is organized under the laws of any state
of the United States and assumes the Obligations by written instrument
reasonably acceptable in form and substance to the Agent and (ii) no
Default or Unmatured Default has occurred and is continuing or would occur
after giving effect thereto (determined with respect to the covenants set
forth in Section 6.20 on a pro forma basis).
6.13. [Intentionally Omitted].
6.14. Investments.
Borrower will not permit any Insurance Subsidiary to, make or
suffer to exist any Investments which are not permitted under the
investment provisions of applicable insurance laws of such Insurance
Subsidiary's domiciliary state. Notwithstanding the foregoing, Borrower
may, and may permit its Subsidiaries to make and maintain Investments in
Subsidiaries of Borrower.
6.15. Acquisitions.
So long as no Default or Unmatured Default has occurred and is
continuing, Borrower and its Subsidiaries may make the following
Acquisitions:
(a) Acquisitions which are in similar or related lines of business as
Borrower and its Subsidiaries; and
(b) Acquisitions of non-insurance related businesses or entities in
an amount not to exceed 25% of Consolidated Net Worth in the aggregate at any
time; and
(c) Acquisitions of blocks of any insurance business through
assumptive reinsurance, coinsurance or indemnity reinsurance.
Notwithstanding the foregoing, prior to and after giving affect to any such
Acquisition, Borrower shall be in pro forma compliance with each of the
financial covenants set forth in Section 6.20, and each such Acquisition
shall be effected in such a manner so that the acquired capital stock or
assets are owned either by Borrower or a Subsidiary of Borrower and, if
effected by merger or consolidation involving Borrower, Borrower shall be
the continuing or surviving Person; provided, that Borrower or its
Subsidiaries may make acquisitions of capital stock or assets
43
which are held by minority owned Subsidiaries or joint ventures holding less
than 50% of the voting power and control so long as such acquisitions do not
exceed 15% of Consolidated Net Worth in the aggregate at any time.
6.16. Liens.
Borrower will not, nor will it permit any Subsidiary to, create,
incur, or suffer to exist any lien or encumbrance in, of or on the Property
of Borrower or any of its Subsidiaries, except the following Permitted
Liens:
(a) Liens for taxes, assessments or governmental charges or levies
on its Property to the extent permitted and not required to be paid under
Section 6.5;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation;
(d) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do
not in any material way affect the marketability of the same or interfere
with the use thereof in the business of Borrower or its Subsidiaries;
(e) deposits made by any Insurance Subsidiary with the insurance
regulatory authority in its jurisdiction of domicile or other statutory
Liens or Liens or claims imposed or required by applicable insurance law or
regulation against the assets of any Insurance Subsidiary, in each case in
favor of all policy holders of such Insurance Subsidiary and in the
ordinary course of such Insurance Subsidiary's business;
(f) Liens existing on the Initial Closing Date and described in
Schedule 6.16;
(g) Liens to secure the performance of bids, trade contracts
(including covered call transactions), leases, statutory obligations (including
those in respect of insurance compliance qualification requirements), surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(h) Liens securing the Indebtedness described in Section 6.11(c),
Section 6.11(e) and Section 6.11(i);
(i) Liens on Property of any corporation which becomes a Subsidiary
of Borrower or which is acquired, merged into or consolidated with Borrower or
a Subsidiary after the date of this Agreement in an aggregate amount not to
exceed 5% of Consolidated Net Worth at any time outstanding, provided that
such Liens are in existence at the time such corporation becomes a
Subsidiary of Borrower or was merged into or consolidated with Borrower or
a Subsidiary and were not created in anticipation thereof;
44
(j) Liens upon real and/or tangible personal Property acquired after
the date hereof (by purchase, construction or otherwise) by Borrower or any of
its Subsidiaries each of which Liens either (a) existed on such Property
before the time of its acquisition and was not created in anticipation
thereof or (b) was created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost
(including the cost of construction) of such Property; provided, that no
such Lien shall extend to cover any Property of Borrower or any Subsidiary
other than the Property so acquired and improvements thereon;
(k) Liens on marketable direct obligations issued or unconditionally
guaranteed or insured by the United States of America or any agency or
instrumentality thereof and backed by the full faith and credit of the
United States of America sold by Borrower or any of its Subsidiaries under
a repurchase agreement with a bank or a primary dealer of United States
government securities, provided, that the terms of such agreement complies
with the guidelines set forth in the Federal Financial Institutions
Examination Council Supervisory Policy - Repurchase Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by
the Comptroller of the Currency on October 31, 1985 (or any successor
guidelines);
(l) any extension, renewal or replacement of the foregoing;
provided, however, that the Liens permitted hereunder shall not be spread to
cover any additional Indebtedness or Property (other than a substitution of
like Property);
(m) Liens securing judgments for payment of money not constituting a
Default under Section 7.9 or securing a performance bond or other surety
bond related to such judgments;
(n) Liens on cash deposits in the nature of a right of setoff,
banker's lien, counterclaim on netting of cash amounts owed arising in the
ordinary course of business on deposit accounts, commodity accounts or
securities accounts;
(o) financing statements filed on a precautionary basis in respect
of Operating Leases to the extent such lease is otherwise permitted under the
terms of this Agreement; provided, that no such financing statement extends
to or refers to collateral, Property or assets which are not subject to
such Operating Lease;
(p) rights of first refusal, options or other contractual rights or
obligations to sell, assign or otherwise dispose of any property or asset
or interest therein;
(q) Liens arising in the ordinary course of business on operating
accounts (including any related securities accounts) maintained by Borrower or
its Subsidiaries;
(r) Liens granted as cash or cash equivalents to defease
Indebtedness permitted under Section 6.11 that could be prepaid without
violating Section 6.18;
(s) Liens securing Indebtedness of the kind permitted under
Section 6.11(h);
(t) Liens granted in respect of cash and securities of Borrower or
its Subsidiaries incurred in connection with the management of any investment
portfolio;
45
(u) Liens securing obligations owed by Borrower to any of its
Subsidiaries or owed by any Subsidiary to Borrower or any other
Subsidiary, in each case, solely to the extent such Liens are
required by an applicable Governmental Authority for such Person to
maintain such obligations;
(v) Liens arising in connection with securities lending
arrangements with financial institutions as may arise in the ordinary course
of business;
(w) Liens in favor of the Agent for the benefit of the Lenders or
the Issuing Lender arising in connection with any of the Loan Documents;
(x) Liens securing repurchase agreements and reverse-repurchase
agreements constituting a borrowing of funds by Borrower or any
Subsidiary for liquidity purposes and in no event for a period exceeding 90
days in each case; provided, that such Liens are limited to the securities
that are the subject of such repurchase agreements or cash collateral
deposited in connection therewith; and
(y) other Liens securing Indebtedness or obligations in an
aggregate principal amount not to exceed 10% of Consolidated Net Worth
in the aggregate at any one time outstanding.
6.17. Affiliates.
Borrower will not, nor will it permit any Subsidiary to, enter into
any transaction (including, without limitation, the purchase or sale of any
Property or service) with, or make any payment or transfer to, any
Affiliate that is not a Subsidiary except in the ordinary course of
business and pursuant to the reasonable requirements of Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable
to Borrower or such Subsidiary than Borrower or such Subsidiary would
obtain in a comparable arms-length transaction.
Notwithstanding anything to the contrary contained in this Section
6.17, Borrower and its Subsidiaries shall be permitted to (a) make payments
with respect to salaries, bonuses, employee stock options and other
compensation and employment arrangements with directors or employees in the
ordinary course of business; (b) make loans or advances to directors or
employees in the ordinary course of business in an aggregate amount not to
at any time exceed $15,000,000; (c) repurchase or otherwise acquire shares
of and options to purchase shares of Borrower's capital stock and stock
from employees, former employees, directors and former directors of
Borrower or any of its Subsidiaries; or (d) enter into transactions set
forth in Schedule 6.17.
6.18. Other Indebtedness.
Borrower will not, nor will it permit any Subsidiary to, directly
or indirectly voluntarily prepay, defease or in substance defease,
purchase, redeem, retire or otherwise acquire, any Indebtedness prior to
the date due (other than the Loans) while a Default or Unmatured Default
has occurred and is continuing or would occur after giving effect thereto
(determined, in respect of the covenants set forth in Section 6.20, on a
pro forma basis as of the last day of the most recent Fiscal Quarter for
which financial statements are available).
46
6.19. Contingent Obligations.
Borrower will not, nor will it permit any Subsidiary to, make or
suffer to exist any Contingent Obligation, except (a) the Contingent
Obligations described on Schedule 6.19, (b) Contingent Obligations in
respect of insurance contracts or policies issued in the ordinary course of
business, (c) Contingent Obligations in respect of the endorsement of
instruments for deposit or collection in the ordinary course of business,
(d) Contingent Obligations in respect of the obligations of a Subsidiary
(i) concerning which all necessary governmental and regulatory approvals
have been obtained, or (ii) if no such approvals are required, which are
incurred in the ordinary course of business, (e) Contingent Obligations in
an aggregate amount not to at any time exceed $50,000,000, (f) other
Contingent Obligations in an amount not to exceed the difference between
(A) thirty-five percent (35%) of Consolidated Total Capitalization and (B)
Consolidated Indebtedness, in each case, as reflected in Borrower's most
recent consolidated financial statements most recently delivered to the
Agent and (g) Contingent Obligations in respect of obligations of Borrower
or any Subsidiary in connection with securities lending arrangements,
repurchase agreements and reverse-repurchase agreements as may arise in the
ordinary course of business.
6.20. Financial Covenants.
6.20.1 Leverage Ratio. Borrower will not permit its Leverage
Ratio, determined as of the end of each Fiscal Quarter, to be greater than
0.35 to 1.0.
6.20.2 Consolidated Net Worth. Borrower will not permit its
Consolidated Net Worth to be less than $1,000,000,000, determined as of the
end of each Fiscal Quarter.
6.20.3 Risk Based Capital. As of the end of each Fiscal Year,
Borrower will cause OCIC to maintain an RBC Ratio of at least 175%.
6.21. Reinsurance.
Borrower will not permit any Insurance Subsidiary to enter into any
reinsurance arrangements (or renew, extend or materially modify any
existing reinsurance arrangements) which could reasonably be expected to
have a Material Adverse Effect.
6.22. ERISA Compliance.
With respect to any Plan, neither Borrower nor any Subsidiary
shall:
(a) engage in any "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) for which a
civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant to
Section 4975 of the Code could reasonably be expected to be imposed
and which could reasonably be expected to have a Material Adverse Effect;
(b) permit an "accumulated funding deficiency" (as such term
is defined in Section 302 of ERISA) to be incurred whether or not waived, or
permit any Unfunded Liability, which, in either instance, could reasonably be
expected to have a Material Adverse Effect;
(c) permit the occurrence of any Reportable Event which could
reasonably be expected to result in liability to Borrower or any Subsidiary in
an amount which could reasonably be expected to have a Material Adverse
Effect;
47
(d) fail to make any contribution or payment to any Multiemployer
Plan which may be required to be made under any agreement relating to such
Multiemployer Plan or any law pertaining thereto which results in or could
result in a liability of Borrower or any Subsidiary which could reasonably
be expected to have a Material Adverse Effect; or
(e) permit the establishment or amendment of any Plan or cause or
permit any Plan to fail to comply with the applicable provisions of ERISA and
the Code, which establishment, amendment or failure could reasonably be
expected to result in liability to Borrower or any Subsidiary which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
6.23. Environmental Matters.
Borrower shall, and shall cause each of its Subsidiaries to, (a) at
all times comply in all material respects with all applicable Environmental
Laws and (b) promptly take any and all necessary remedial actions in
response to the presence, storage, use, disposal, transportation or release
of any hazardous or toxic materials on, under or about any real property
owned, leased or operated by Borrower or any of its Subsidiaries, in each
instance in which the failure to do so, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
6.24. Change in Corporate Structure; Fiscal Year.
Borrower shall not, nor shall it permit any Subsidiary to, permit
any amendment or modification to be made to its certificate or articles of
incorporation or by-laws which is materially adverse to the interests of
the Lenders.
6.25. Inconsistent Agreements.
Borrower shall not, nor shall it permit any Subsidiary to, enter
into any indenture, agreement, instrument or other arrangement which,
directly or indirectly, would have a Material Adverse Effect on the payment
or performance by Borrower of any of its Obligations under this Agreement
or any other Loan Document.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of Borrower or any of its Subsidiaries to the Lenders or the Agent under or in
connection with this Agreement, any Loan, or any certificate or information
delivered in connection with this Agreement or any other Loan Document
shall be materially false on the date as of which made, except to the
extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall have been
materially false on and as of such earlier date.
7.2. Nonpayment of principal of any Loan when due, or nonpayment of
interest upon any Loan or of any non-use fee or other Obligations under any
of the Loan Documents within five (5) Business Days of when due.
7.3. The breach by Borrower (i) of any of the terms or provisions of
Section 6.20, or (ii) of any of the terms of provisions of Section 6.1,
Section 6.2, Section 6.4 or Sections 6.10
48
through 6.25 (excluding Section 6.20) which is not remedied within thirty
(30) Business Days after the earlier of (a) the receipt by Borrower of notice
thereof from Agent or any Lender or (b) having obtained knowledge thereof.
7.4. The breach by Borrower (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms or
provisions of any Loan Document which is not remedied within thirty (30)
days after the earlier of (a) the receipt by Borrower of notice thereof
from Agent or any Lender or (b) having obtained knowledge thereof.
7.5. The default by Borrower or any of its Subsidiaries for failure to
make any payment when due beyond all applicable grace or cure periods with
respect thereto, if any, (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) in respect of any
Indebtedness aggregating in excess of $15,000,000 ("Material
Indebtedness"); or any Material Indebtedness of Borrower or any of its
Subsidiaries shall be declared to be due and payable or required to be
prepaid or repurchased (other than by a regularly scheduled payment) prior
to the stated maturity thereof; provided, that this Section 7.5 shall not
apply to Indebtedness permitted under Section 6.11 that becomes due as a
result of the voluntary sale or transfer of the Property or assets securing
such Indebtedness.
7.6. Borrower or any of its Subsidiaries shall (a) have an order for
relief entered with respect to it under any Debtor Relief Laws as now or
hereafter in effect, (b) make an assignment for the benefit of creditors,
(c) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for
it or any substantial portion of its Property, (d) institute (or consent to
the institution of) any proceeding seeking an order for relief under any Debtor
Relief Laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (e) take any
corporate or partnership action to authorize or effect any of the foregoing
actions set forth in this Section 7.6, (f) fail to contest in good faith
any appointment or proceeding described in Section 7.7, or (g) become
unable, or admit in writing its inability or fail generally to pay its
debts as they become due.
7.7. Without the application, approval or consent of Borrower or any of
its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official
shall be appointed for Borrower or any of its Subsidiaries or any
substantial portion of its Property, or a proceeding described in
Section 7.6(a) shall be instituted against Borrower or any of its
Subsidiaries and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of sixty (60) consecutive
days.
7.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of
the Property of Borrower or any of its Subsidiaries, which, when taken
together with all other Property of Borrower and its Subsidiaries so
condemned, seized, appropriated, or taken custody or control of, during the
49
twelve-month period ending with the month in which any such action occurs
which would reasonably be expected to have a Material Adverse Effect.
7.9. Borrower or any of its Subsidiaries shall fail within sixty (60) days
to pay, bond or otherwise discharge any judgment or order for the payment
of money in an aggregate amount of $15,000,000 or more in excess of
insurance proceeds, which is not stayed on appeal or otherwise being
appropriately contested in good faith and as to which no enforcement
actions have been commenced.
7.10. Any Change in Control shall occur.
7.11. Any License of any Material Insurance Subsidiary issued in its
state of domicile or in a state in which its earned premiums in the prior
Fiscal Year constituted 10% or more of net earned premiums, on a
consolidated basis, in such period (a) shall be revoked by the Governmental
Authority which issued such License, or any formal action (administrative
or judicial) to revoke such License shall have been commenced against such
Material Insurance Subsidiary and shall not have been dismissed within
thirty (30) days after the commencement thereof, (b) shall be suspended by
such Governmental Authority for a period in excess of 30 days or (c) shall
not be reissued or renewed by such Governmental Authority upon the
expiration thereof following application for such reissuance or renewal of
such Material Insurance Subsidiary.
7.12. Any Material Insurance Subsidiary shall be the subject of a final
order imposing a fine in an amount in excess of $15,000,000 in any single
instance or other such orders imposing fines in excess of 20,000,000 in the
aggregate after the date of this Agreement in any Fiscal Year by or at the
request of any state insurance regulatory agency as a result of the
violation by such Material Insurance Subsidiary of such state's applicable
insurance laws or the regulations promulgated in connection therewith.
7.13. Any Material Insurance Subsidiary shall become subject to (a) any
conservation or liquidation order, directive or mandate issued by any
Governmental Authority or (b) any other directive or mandate issued by any
Governmental Authority which could reasonably be expected to have a
Material Adverse Effect, which in either case is not stayed within thirty
(30) days.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration.
If any Default described in Section 7.6 or 7.7 occurs with respect
to Borrower, the obligations of the Lenders to make Loans hereunder shall
automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of the Agent or any
Lender. If any other Default occurs, the Required Lenders (or the Agent
with the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
other notice of any kind, all of which Borrower hereby expressly waives.
The
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Agent shall use commercially reasonable efforts to provide notice of
the termination or suspension of the obligations or any other matters set
forth in this Section 8.1; provided, that the failure of the Agent to
provide such notice shall in no way affect the obligations and liabilities
of Borrower under this Agreement and any other Loan Documents or the rights
and remedies of the Agent or any of the Lenders under this Agreement or any
of the Loan Documents.
If, within ten (10) Business Days after acceleration of the maturity
of the Obligations or termination of the obligations of the Lenders to make
Loans hereunder as a result of any Default (other than any Default as
described in Section 7.6 or 7.7 with respect to Borrower) and before any
judgment or decree for the payment of the Obligations due shall have been
obtained or entered, the Required Lenders (in their sole discretion) shall
so direct, the Agent shall, by notice to Borrower, rescind and annul such
acceleration and/or termination.
In addition to the foregoing, on demand by Agent at any time after the
occurrence and during the continuance of any Default, Borrower will
immediately Cash Collateralize all or any outstanding Letters of Credit
until the earlier of (i) payment and performance in full of all Obligations
and termination of this Agreement or (ii) such time as such Default no
longer exists (as determined by Agent in its reasonable sole discretion);
provided, that in the event an outstanding Letter of Credit terminates or
expires, Agent shall immediately release and return the amount of Cash
Collateral, if any, which collateralized such outstanding Letter of Credit.
8.2. Amendments.
(a) Subject to the provisions of this Article VIII, the Required
Lenders (or the Agent with the consent in writing of the Required Lenders)
and Borrower may enter into agreements supplemental hereto for the purpose
of adding or modifying any provisions to the Loan Documents or changing in
any manner the rights of the Lenders or Borrower hereunder or waiving any
Default hereunder; provided, that no such supplemental agreement shall,
without the consent of all of the Lenders directly affected thereby:
(i) Extend the Facility Termination Date or the final maturity of
any Loan;
(ii) Reduce the amount or extend the payment date for the
principal amount of any Loan or the rate of interest thereon or time of
payment of interest or fees thereon or any fees payable hereunder (except
for periodic adjustments of interest rates and fees resulting from a change
in the Applicable Margin as provided for in this Agreement);
(iii) Increase the amount or extend the expiry date of the
Commitment of any Lender hereunder; or
(iv) Amend this Section 8.2.
Notwithstanding the foregoing, no amendment of any provision or
supplemental agreement shall be effective without the consent of 100% of
the Lenders for any change in the definition of Required Lenders. No
amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive
payment of the fee required under Section 12.3.1 without obtaining the
consent of any other party to this Agreement. No amendment, waiver or
consent relating to any Lender shall be effective without the written
consent of the Required Lenders. No provision of this Agreement relating
51
to the rights or duties of the Issuing Lender in its capacity as such shall be
amended, modified or waived without the consent of the Issuing Lender.
(b) Notwithstanding anything to the contrary contained herein, so
long as no Default has occurred and is continuing, if in connection with
any proposed amendment, modification, termination, waiver or consent with
respect to any of the provisions hereof as contemplated by Section 8.2(a),
the consent of the Required Lenders shall have been obtained but for the
consent of one or more other non-consenting Lenders (each a "Non-Consenting
Lender") whose consent is required, then, with respect to each such Non-
Consenting Lender (the "Terminated Lender"), Borrower may, upon prior
written notice to Agent and any Terminated Lender, elect to cause such
Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to
assign its Pro Rata Share of all Revolving Outstandings and its
Commitments, if any, in full to a Purchaser (a "Replacement Lender") in
accordance with the provisions of Section 12.3.1, and Terminated Lender
shall pay any fees payable thereunder in connection with such assignment;
provided, on the date of such assignment, the Replacement Lender shall pay
to Terminated Lender an amount equal to the sum of the Terminated Lender's
Pro Rata Share of (A) the outstanding principal balance of, and all accrued
and unpaid interest on, all outstanding Loans, (B) all unreimbursed
drawings under any Letter of Credit, together with all then unpaid interest
with respect thereto as of such date, (C) all accrued and unpaid fees owing
to such Terminated Lender pursuant to Section 2.5. Each Replacement Lender
shall consent, at the time of such assignment, to each matter in respect of
which such Terminated Lender was a Non-Consenting Lender; provided,
Borrower may not make such election under this Section 8.2(b) with respect
to any Terminated Lender that is also an Issuing Lender unless, prior to
the effectiveness of such election, Borrower shall have caused each
outstanding Letter of Credit issued thereby to be cancelled. Upon the
payment of foregoing amounts owing to any Terminated Lender and the
termination of any such Terminated Lender's Commitments, if any, such
Terminated Lender shall not longer constitute a "Lender" for purposes of
this Agreement; provided, any rights of such Terminated Lender to
indemnification under this Agreement or any other Loan Document shall
survive as to such Terminated Lender.
8.3. Preservation of Rights.
No delay or omission of the Lenders or the Agent to exercise any
right under the Loan Documents shall impair such right or be construed to
be a waiver of any Default or an acquiescence therein, and the making of a
Loan notwithstanding the existence of a Default or the inability of
Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of
any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of
the terms, conditions or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders required pursuant to
Section 8.2, and then only to the extent in such writing specifically set
forth. All remedies contained in the Loan Documents or by law afforded
shall be cumulative and all shall be available to the Agent and the Lenders
until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations.
All representations and warranties of Borrower contained in this
Agreement shall survive the making of the Loans herein contemplated.
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9.2. Governmental Regulation.
Anything contained in this Agreement to the contrary
notwithstanding, no Lender shall be obligated to extend credit to Borrower
in violation of any limitation or prohibition provided by any applicable
statute or regulation.
9.3. Headings.
Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.4. Entire Agreement.
The Loan Documents embody the entire agreement and understanding
among Borrower, the Agent and the Lenders and supersede all prior
agreements and understandings among Borrower, the Agent and the Lenders
relating to the subject matter thereof other than the fee letter described
in Section 10.13.
9.5. Several Obligations; Benefits of this Agreement.
The respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any other (except
to the extent to which the Agent is authorized to act as such). The
failure of any Lender to perform any of its obligations hereunder shall not
relieve any other Lender from any of its obligations hereunder. This
Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement and their respective
successors and assigns.
9.6. Expenses; Indemnification.
(a) Borrower shall reimburse the Agent for all reasonable costs
associated with the closing of the transactions contemplated by this
Agreement including, but not limited to, all of Agent's out-of-pocket
expenses in an amount not to exceed $3,500, and all reasonable attorneys'
fees and expenses of attorneys engaged by the Agent. Borrower also agrees
to reimburse the Agent and the Lenders for any costs, internal charges and
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent and the Lenders) paid or incurred
by the Agent or any Lender in connection with the collection and
enforcement of the Loan Documents. Expenses being reimbursed by Borrower
under this Section include, without limitation, costs and expenses incurred
in connection with the Reports described in the following sentence.
Borrower acknowledges that from time to time Agent may prepare and may
distribute to the Lenders (but shall have no obligation or duty to prepare
or to distribute to the Lenders) certain audit reports (the "Reports")
pertaining to Borrower's assets for internal use by Agent from information
furnished to it by or on behalf of Borrower, after Agent has exercised its
rights of inspection pursuant to this Agreement.
(b) IN CONSIDERATION OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT
BY THE AGENT AND THE LENDERS AND THE AGREEMENT TO EXTEND THE COMMITMENTS
PROVIDED HEREUNDER, BORROWER HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD
THE AGENT, EACH LENDER AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES,
AFFILIATES AND AGENTS OF THE AGENT AND EACH LENDER (EACH A "LENDER PARTY")
FREE AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION,
SUITS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES, INCLUDING REASONABLE
ATTORNEY COSTS (COLLECTIVELY, THE "INDEMNIFIED
53
LIABILITIES"), INCURRED BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT
OF, OR ARISING OUT OF, OR RELATING TO (A) ANY TRANSACTION FINANCED OR
PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH
THE PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION,
DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY BORROWER, (C) ANY VIOLATION
OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED
OR LEASED BY BORROWER OR THE OPERATIONS CONDUCTED THEREON, (D) THE
INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH
BORROWER OR ITS RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY
OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION,
DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING FROM ANY LENDER PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS DETERMINED BY A FINAL JUDGMENT BY A COURT OF COMPETENT
JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY
BE UNENFORCEABLE FOR ANY REASON, BORROWER HEREBY AGREES TO MAKE THE MAXIMUM
CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED
LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS
PROVIDED FOR IN THIS SECTION 9.6 SHALL SURVIVE REPAYMENT OF THE LOANS,
CANCELLATION OF THE NOTES, EXPIRATION OR TERMINATION OF THE LETTERS OF CREDIT
AND TERMINATION OF THIS AGREEMENT.
9.7. Number of Documents.
All statements, notices, closing documents, and requests hereunder
shall be furnished to the Agent with sufficient counterparts so that the
Agent may furnish one to each of the Lenders.
9.8. Accounting.
Except as provided to the contrary herein, all accounting terms
used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with GAAP or SAP, as the case may be.
9.9. Severability of Provisions.
Any provision in any Loan Document that is held to be inoperative,
unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting
the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction,
and to this end the provisions of all Loan Documents are declared to be
severable.
9.10. Nonliability of Lenders.
The relationship between Borrower on the one hand and the Lenders
and the Agent on the other hand shall be solely that of borrower and
lender. Neither the Agent nor any Lender has any fiduciary relationship
with or duty to Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
Borrower, on the one hand, and the Agent and the Lenders, on the other
hand, in connection herewith or therewith is solely that of debtor and
creditor. Neither the Agent nor any Lender undertakes any responsibility
to Borrower to review or inform Borrower of any matter in
54
connection with any phase of Borrower's business or operations.
Borrower agrees that neither the Agent nor any Lender shall have liability
to Borrower (whether sounding in tort, contract or otherwise) for losses
suffered by Borrower in connection with, arising out of, or in any way
related to the transactions contemplated and the relationship established
by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable
judgment by a court of competent jurisdiction that such losses resulted
from (a) the gross negligence or willful misconduct of the party from
which recovery is sought or (b) the failure of the party from which
recovery is sought to honor its commitment hereunder. NO LENDER PARTY SHALL
BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY
INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER
SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT,
NOR SHALL ANY LENDER PARTY HAVE ANY LIABILITY WITH RESPECT TO, AND BORROWER
HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX FOR ANY SPECIAL, PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION
HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE). Borrower
acknowledges that it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents to
which it is a party. No joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among Borrower and the Lenders.
Notwithstanding any to the contrary contained herein, each
Lender and Borrower shall be bound by the terms of Section 9.11.
9.11. Confidentiality.
As required by federal law and Agent's policies and practices,
Agent may need to obtain, verify, and record certain customer
identification information and documentation in connection with opening or
maintaining accounts, or establishing or continuing to provide services.
Agent and each Lender agree to use commercially reasonable efforts
(equivalent to the efforts Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as
confidential all information provided to them by Borrower and designated as
confidential, except that Agent and each Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender in
evaluating, approving, structuring or administering the Loans and the
Commitments (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such information and
instructed to keep such information confidential in accordance with the
Agent and each Lender's standard practice and procedures); (b) to any
assignee or participant or potential assignee or participant that has
agreed to comply with the covenant contained in this Section 9.11 (and any
such assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as
described in clause (a) above); (c) as required or requested by any federal
or state regulatory authority or examiner, or any insurance Governmental
Authority, any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent's or such Lender's counsel, is
required by law; (e) in connection with the exercise of any right or remedy
under the Loan Documents or in connection with any litigation relating to
this Agreement or any other Loan Document to which Agent or such Lender is
a party; (f) to any Affiliate of Agent, the Issuing Lender or any other
Lender who may provide bank products to Borrower; or (g) that ceases to be
confidential
55
through no fault of Agent or any Lender; provided, Agent and
each Lender will use reasonable efforts to provide notice to Borrower of
the requested disclosure and give Borrower a reasonable opportunity to seek
a protective order prior to delivering such confidential information unless
doing so would be prohibited by law or subject Agent or such Lender to
potential liability, sanctions or other adverse consequences. Neither
Agent nor any Lender shall make any public announcement, advertisement,
statement or communication regarding Borrower, its Affiliates (insofar as
such announcement, advertisement, statement or communication relates to
Borrower or the transactions contemplated hereby) or this Agreement of the
transactions contemplated hereby without the prior written consent of
Borrower, which consent shall not be unreasonably withheld, conditioned or
delayed; provided, that notwithstanding the foregoing, Borrower consents to
the publication by Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by
this Agreement, and Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league
table measurements.
9.12. Nonreliance
Each Lender hereby represents that it is not relying on or looking
to any margin stock (as defined in Regulation U of the Board of Governors
of the Federal Reserve System) for the repayment of the Loans provided for
herein.
9.13. Disclosure
Borrower and each Lender hereby (a) acknowledge and agree that
Agent and/or its Affiliates from time to time may make other loans to or
have other relationships with Borrower, and (b) waive any liability of
Agent or such Affiliate to Borrower or any Lender, respectively, arising
out of or resulting from such loans or relationships other than liabilities
arising out of the gross negligence or willful misconduct of Agent or its
Affiliates.
9.14. Customer Identification - USA Patriot Act Notice
Each Lender and LaSalle (for itself and not on behalf of any other
party) hereby notifies Borrower that, pursuant to the requirements of the
USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26,
2004 (the "Act"), it is required to obtain, verify and record information
that identifies Borrower, which information includes the name and address
of Borrower and other information that will allow such Lender or LaSalle,
as applicable, to identify Borrower in accordance with the Act.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship
LaSalle is hereby appointed by each of the Lenders as its
contractual representative (herein referred to as the "Agent") hereunder
and under each other Loan Document, and each of the Lenders irrevocably
authorizes the Agent to act as the contractual representative of such
Lender with the rights and duties expressly set forth herein and in the
other Loan Documents. The Agent agrees to act as such contractual
representative upon the express conditions contained in this Article X.
Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other
Loan Document and that the Agent is merely acting as the contractual
representative of the Lenders with only those duties as are expressly set
forth in this Agreement and the other Loan Documents. In its capacity as
the
56
Lenders' contractual representative, the Agent (a) does not hereby
assume any fiduciary duties to any of the Lenders, and (b) is acting as an
independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents. Each
of the Lenders hereby agrees to assert no claim against the Agent on any
agency theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender hereby waives.
10.2. Powers
The Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to
the Lenders to take any action thereunder, except any action specifically
provided by the Loan Documents to be taken by the Agent.
10.3. General Immunity
Neither the Agent nor any of its directors, officers, agents or
employees shall be liable to Borrower, the Lenders or any Lender for any
action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except to the
extent such action or inaction is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.
10.4. No Responsibility for Loans, Recitals, etc
Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire
into, or verify (a) any statement, warranty or representation made in
connection with any Loan Document or any borrowing hereunder; (b) the
performance or observance of any of the covenants or agreements of any
obligor under any Loan Document, including, without limitation, any
agreement by an obligor to furnish information directly to each Lender;
(c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to the Agent; (d) the
existence or possible existence of any Default or Unmatured Default;
(e) the validity, enforceability, effectiveness, sufficiency or genuineness
of any Loan Document or any other instrument or writing furnished in
connection therewith; (f) the value, sufficiency, creation, perfection or
priority of any Lien in any collateral security; or (g) the financial
condition of Borrower or of any of Borrower's Subsidiaries. The Agent
shall have no duty to disclose to the Lenders information that is not
required to be furnished by Borrower to the Agent at such time, but is
voluntarily furnished by Borrower to the Agent (either in its capacity as
Agent or in its individual capacity as a Lender).
10.5. Action on Instructions of Lenders
The Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and under any other Loan Document in
accordance with written instructions signed by the Required Lenders, and
such instructions and any action taken or failure to act pursuant thereto
shall be binding on all of the Lenders. The Lenders hereby acknowledge
that the Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement or
any other Loan Document unless it shall be requested in writing to do so by
the Required Lenders. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro
rata
57
against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel
The Agent may execute any of its duties as Agent hereunder and
under any other Loan Document by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders, except as to
money or securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. The Agent shall be entitled to advice of counsel
concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any
other Loan Document.
10.7. Reliance on Documents; Counsel
The Agent shall be entitled to rely upon any note, notice, consent,
certificate, affidavit, letter, telegram, statement, paper or document
believed by it to be genuine and correct and to have been signed or sent by
the proper person or persons, and, in respect to legal matters, upon the
opinion of counsel selected by the Agent, which counsel may be employees of
the Agent.
10.8. Agent's Reimbursement and Indemnification
The Lenders agree to reimburse and indemnify the Agent ratably in
proportion to their respective Commitments (or, if the Commitments have
been terminated, in proportion to their Commitments immediately prior to
such termination) (a) for any amounts not reimbursed by Borrower for which
the Agent is entitled to reimbursement by Borrower under the Loan
Documents, (b) for any other expenses incurred by the Agent on behalf of
the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including, without
limitation, for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of the
Lenders) and (c) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the
Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby (including, without limitation, for
any such amounts incurred by or asserted against the Agent in connection
with any dispute between the Agent and any Lender or between two or more of
the Lenders), or the enforcement of any of the terms of the Loan Documents
or of any such other documents; provided, that no Lender shall be liable
for any of the foregoing to the extent any of the foregoing is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Agent. The
obligations of the Lenders under this Section 10.8 shall survive payment of
the Obligations and termination of this Agreement.
10.9. Notice of Default
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Unmatured Default hereunder unless the Agent
has received written notice from a Lender or Borrower referring to this
Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives
such a notice, the Agent shall give prompt notice thereof to the Lenders.
10.10. Rights as a Lender
In the event the Agent is a Lender, the Agent shall have the same
rights and powers hereunder and under any other Loan Document with respect
to its
58
Commitment and its Loans as any Lender and may exercise the same as
though it were not the Agent, and the term "Lender" or "Lenders" shall, at
any time when the Agent is a Lender, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with Borrower or
any Subsidiary in which Borrower or such Subsidiary is not restricted
hereby from engaging with any other Person. The Agent, in its individual
capacity, is not obligated to remain a Lender.
10.11. Lender Credit Decision
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on the financial
statements prepared by Borrower and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon the
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
decisions in taking or not taking action under this Agreement and the other
Loan Documents.
10.12. Successor Agent
The Agent may resign at any time by giving written notice thereof
to the Lenders and Borrower, such resignation to be effective upon the
appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five (45) days after the retiring Agent gives notice of
its intention to resign. The Agent may be removed at any time with or
without cause by written notice received by the Agent from the Required
Lenders, such removal to be effective on the date specified by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint, with the consent of Borrower (which consent
shall not be unreasonably withheld), on behalf of Borrower and the Lenders,
a successor Agent. If no successor Agent shall have been so appointed by
the Required Lenders within thirty (30) days after the resigning Agent
giving notice of its intention to resign, then the resigning Agent may
appoint, on behalf of Borrower and the Lenders, a successor Agent.
Notwithstanding the previous sentence, the Agent may at any time without
the consent of Borrower or any Lender, appoint any of its Affiliates which
is a commercial bank as a successor Agent hereunder. If the Agent has
resigned or been removed and no successor Agent has been appointed, the
Lenders may perform all the duties of the Agent hereunder and Borrower
shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent
shall be a commercial bank having capital and retained earnings of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning or removed Agent. Upon the effectiveness of the resignation or
removal of the Agent, the resigning or removed Agent shall be discharged
from its duties and obligations hereunder and under the Loan Documents.
After the effectiveness of the resignation or removal of an Agent, the
provisions of this Article X shall continue in effect for the benefit of
such Agent in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the Agent by merger,
or the Agent assigns its duties and obligations to an Affiliate
59
pursuant to this Section 10.12, then the term "Prime Rate" as used in this
Agreement shall mean the prime rate, base rate or other analogous rate of
the new Agent.
10.13. Agent's Fee
Borrower agrees to pay to the Agent, for its own account, the fees
agreed to by Borrower and the Agent pursuant to that certain fee letter
agreement dated as of even date herewith, or as otherwise agreed from time
to time.
10.14. Delegation to Affiliates
Borrower and the Lenders agree that the Agent may delegate any of
its duties under this Agreement to any of its Affiliates. Any such
Affiliate (and such Affiliate's directors, officers, agents and employees)
which performs duties in connection with this Agreement shall be entitled
to the same benefits of the indemnification, waiver and other protective
provisions to which the Agent is entitled under Articles IX and X.
10.15. Issuing Lender
The Issuing Lender shall act on behalf of the Lenders (according to
their Pro Rata Shares) with respect to any Letters of Credit issued by it
and the documents associated therewith. The Issuing Lender shall have all
of the benefits and immunities (a) provided to the Agent in this Article X
with respect to any acts taken or omissions suffered by the Issuing Lender
in connection with Letters of Credit issued by it or proposed to be issued
by it and the applications and agreements for letters of credit pertaining
to such Letters of Credit as fully as if the term "Agent", as used in this
Article X, included the Issuing Lender with respect to such acts or
omissions and (b) as additionally provided in this Agreement with respect
to the Issuing Lender.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff
In addition to, and without limitation of, any rights of the
Lenders under applicable law, if Borrower becomes insolvent, however
evidenced, or any Default occurs and is continuing, any and all deposits
(including all account balances, whether provisional or final and whether
or not collected or available) and any other Indebtedness at any time held
or owing by any Lender or any Affiliate of any Lender to or for the credit
or account of Borrower may, to the fullest extent permitted by law, be
offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part thereof, shall then be
due. Notwithstanding the above, this right of setoff shall not apply to
any deposits held by Borrower or a Subsidiary in a fiduciary or custodial
capacity. Agent and each Lender shall use reasonable efforts to notify
Borrower of any such set-off and application; provided, that failure to do
so shall not affect the validity of such set-off and application or the
rights of Agent or any Lender with respect thereto.
11.2. Ratable Payments
If any Lender, whether by setoff or otherwise, has payment made to
it upon its Loans (other than payments received pursuant to Section 3.1,
3.2, 3.4 or 3.5) in a greater proportion than that received by any other
Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans or, in the alternative, to submit
such overpayment received by such Lender to Agent for application by Agent
to the other
60
Lenders such that each Lender will hold its ratable proportion
of Loans. If any Lender, whether in connection with setoff or amounts
which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject to
setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments
shall be made. If an amount to be setoff is to be applied to the
Obligations of Borrower to a Lender other than Indebtedness comprised of
Loans made by such Lender, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness comprised of the Loans.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns
The terms and provisions of the Loan Documents shall be binding
upon and inure to the benefit of Borrower and the Lenders and their
respective successors and assigns, except that (a) Borrower shall not have
the right to assign its rights or obligations under the Loan Documents and
(b) any assignment by any Lender must be made in compliance with
Section 12.3. Notwithstanding clause (b) of this Section, any Lender may
at any time, without the consent of Borrower or the Agent, assign all or
any portion of its rights under this Agreement and any Note to a Federal
Reserve Bank; provided, that no such assignment to a Federal Reserve Bank
shall release the transferor Lender from its obligations hereunder. The
Agent may treat the Person which made any Loan or which holds any Note as
the owner thereof for all purposes hereof unless and until such Person
complies with Section 12.3 in the case of an assignment thereof or, in the
case of any other transfer, a written notice of the transfer is filed with
the Agent. Any assignee or transferee of the rights to any Loan or any
Note agrees by acceptance of such transfer or assignment to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving
such authority or consent is the owner of the rights to any Loan (whether
or not a Note has been issued in evidence thereof), shall be conclusive and
binding on any subsequent holder, transferee or assignee of the rights to
such Loan.
12.2. Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender,
any Commitment of such Lender or any other interest, right and/or
obligation of such Lender under the Loan Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such
Lender's obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the owner of its
Loans and the holder of any Note issued to it in evidence thereof for all
purposes under the Loan Documents, all amounts payable by Borrower under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under the Loan Documents.
61
12.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the Interest Rate or fees payable
with respect to any such Loan or Commitment, extends the Facility
Termination Date or postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any such Loan or
Commitment.
12.2.3 Benefit of Setoff. Borrower agrees that each Participant shall
be deemed to have the right of setoff provided in Section 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each Participant.
The Lenders agree to share with each Participant, and each Participant, by
exercising the right of setoff provided in Section 11.1, agrees to share
with each Lender, any amount received pursuant to the exercise of its right
of setoff, such amounts to be shared in accordance with Section 11.2 as if
each Participant were a Lender.
12.3. Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time a
ssign to one or more banks or other Persons ("Purchasers") all or any
portion of such Lender's Loans and Commitments, with the prior written consent
of the Agent, the Issuing Lender, as applicable, and, so long as no Default
exists and is continuing, Borrower (which consents shall not be
unreasonably withheld or delayed and shall not be required for an assignment
by a Lender to a Lender or an Affiliate of a Lender). Borrower and the Agent
shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned until the Agent
shall have received and accepted an effective assignment agreement in
substantially the form of Exhibit B hereto (a "Notice of Assignment") executed,
delivered and fully completed by the applicable parties thereto and a
processing fee of $3,500. Each such assignment shall (unless (x) each of
Borrower and the Agent otherwise consents or (y) the proposed Purchaser is
already a Lender) be in an amount not less than the lesser of (a)
$5,000,000 or (b) the remaining amount of the assigning Lender's Loans and
Commitments (calculated as at the date of such assignment). No assignment may
be made to any Person if at the time of such assignment Borrower would be
obligated to pay any greater amount under Section 3.5 to the Purchaser than
Borrower is then obligated to pay to the assigning Lender under such Section
(and if any assignment is made in violation of the foregoing, Borrower will not
be required to pay such greater amounts). Any attempted assignment not made
in accordance with this Section 12.3.1 shall be treated as the sale of a
participation under Section 12.2.1. Borrower shall be deemed to have
granted its consent to any assignment requiring its consent hereunder
unless Borrower has expressly objected to such assignment within ten (10)
Business Days after notice thereof.
12.3.2 Effect; Effective Date. Upon (a) delivery to the Agent of a
Notice of Assignment, together with any consents required by Section
12.3.1, such assignment shall become effective on the effective date
specified in such Notice of Assignment. The Notice of
62
Assignment shall contain a representation by the Purchaser to the effect
that none of the consideration used to make the purchase of the Commitment
and Loans under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the Purchaser in
and under the Loan Documents will not be "plan assets" under ERISA. On and
after the effective date of such assignment, such Purchaser shall for all
purposes be a Lender party to this Agreement and any other Loan Document
executed by or on behalf of the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as
if it were an original party hereto, and no further consent or action by
Borrower, the Lenders or the Agent shall be required to release the
transfer or Lender with respect to the percentage of the Aggregate
Commitment and Loans assigned to such Purchaser. Upon the consummation
of any assignment to a Purchaser pursuant to this Section 12.3.2,
the transferor Lender, the Agent and Borrower shall, if the
transferor Lender or the Purchaser desires that
its Loans be evidenced by Notes, make appropriate arrangements so that new
Notes or, as appropriate, replacement Notes are issued to such transferor
Lender and new Notes or, as appropriate, replacement Notes, are issued to
such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.
12.3.3 [Intentionally Omitted].
12.4. Dissemination of Information
Borrower authorizes each Lender to disclose to any Participant or
Purchaser or any other Person acquiring an interest in the Loan Documents
by operation of law (each a "Transferee") and any prospective Transferee
any and all information in such Lender's possession concerning the
creditworthiness of Borrower and its Subsidiaries, including without
limitation any information contained in any Reports; provided, that each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of
this Agreement.
12.5. Tax Treatment
If any interest in any Loan Document is transferred to any
Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to
comply with the provisions of Section 3.5(d). The loans extended under
this Agreement (including the principal amount and interest) are registered
obligations and the right, title and interest of any Lender or its
assignees in and to such loans shall be transferable only upon notation of
such transfer in the Register. This Section 12 shall be construed so that
such loans and obligation thereunder are at all times maintained in
"registered form" within the meaning of Sections 163(f) of the Code and any
related regulations (or any relevant or successor provisions of the Code or
such regulations).
ARTICLE XIII
NOTICES
13.1. Notices
Except as otherwise permitted by Section 2.15 with respect to
telephonic Borrowing Notices, all notices, requests and other
communications to any party hereunder shall be in writing (including
electronic transmission (which shall include e-mail), facsimile
transmission or similar writing) and shall be given to such party: (x) at
its address or facsimile number set forth on the signature pages hereof, or
(y) at such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Agent and Borrower in
63
accordance with the provisions of this Section 13.1. Each such notice,
request or other communication shall be effective (a) if given by
facsimile transmission, when transmitted to the facsimile number specified
in this Section and confirmation of receipt is received, (b) if given by
mail, 48 hours after such communication is deposited in the mail with first
class postage prepaid, addressed as aforesaid, or (c) if given by any
other means, when delivered at the address specified in this Section; provided,
that notices to the Agent under Article II shall not be effective until
received.
13.2. Change of Address
Borrower, the Agent and any Lender may each change the address for
service of notice upon it by a notice in writing to the other parties
hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of original counterparts, all
of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such original
counterpart. This Agreement may also be executed in any number of e-mailed
counterparts, all of which taken together shall constitute one agreement,
even if printed separately from different print servers, and any of the
parties hereto may execute this Agreement by signing any such e-mailed
counterpart. This Agreement shall be effective when it has been executed
by Borrower, the Agent and the Lenders and each party has notified the
Agent by facsimile transmission or telephone that it has taken such action.
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE A CONTRACT
MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN 735 ILCS 105/5-5).
15.2. FORUM SELECTION AND CONSENT TO JURISDICTION
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, MAY BE BROUGHT
AND MAINTAINED IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. THE
PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE PARTIES HERETO FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR
BY
64
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE
AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
15.3. WAIVER OF JURY TRIAL
EACH OF BORROWER, THE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
BORROWER:
OHIO CASUALTY CORPORATION
By:
-------------------------------
Name: A. Xxxxx Xxxx
Title: Vice President and Treasurer
Address: 0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention: A. Xxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Commitments
$32,500,000 LASALLE BANK NATIONAL ASSOCIATION,
as a Lender and as Agent
By:
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Address: 000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$32,500,000 BANK OF AMERICA, N.A., as a Lender
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Address: 000 Xxxx Xxxxxx, 00xx Xxxxx
x Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
66
$15,000,000 FIRST FINANCIAL BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: First Vice President
Address: 000 Xxxx Xxxxxx, X.X. Xxx 000
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$22,500,000 XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as a Lender
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$22,500,000 U.S. BANK, N.A., as a Lender
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
____________
$125,000,000 Aggregate Commitment
67
