Exhibit
10.10


 




 





 


CREDIT AGREEMENT


 


among


 


BRW ACQUISITION, INC.,


 


 


The Several Lenders


 


from Time to Time Parties Hereto,


 


 


THE CHASE MANHATTAN BANK,


 


as Administrative Agent


 


 


and


 


 


THE BANK OF NEW YORK,


 


as Syndication Agent


 


 


Dated as of July 10, 1998


 


 




 


 





CHASE SECURITIES INC.,


as Arranger


 

















 


CREDIT AGREEMENT dated as of July 10, 1998, among
BRW ACQUISITION, INC., a Delaware corporation (the “Borrower”), the
lending institutions from time to time parties hereto (each a “Lender”
and, collectively, the “Lenders”), THE CHASE MANHATTAN BANK, as
Administrative Agent and THE BANK OF NEW YORK, as Syndication Agent (such term
and each other capitalized term used but not defined in this introductory
statement having the meaning provided in Section 1).


 


The Borrower has entered into a Stock and Asset
Purchase Agreement dated as of February 19, 1998 (such Stock and Asset
Purchase Agreement, as amended as of July 10, 1998, and as the same may be
amended, supplemented or otherwise modified from time to time, being referred
to herein as the “Acquisition Agreement”), by and among the Borrower,
David N. Rosner, Richard A. Simon and the other signatories thereto, pursuant
to which the Borrower will purchase (a) all of the issued and outstanding
shares of capital stock of the Acquired Companies and (b) all of the assets
from the Asset Companies (the “Acquisition”).


 


The Borrower has requested the Lenders to extend
credit in the form of (a) Term Loans, in an aggregate principal amount not
in excess of $110,000,000, and (b) Revolving Credit Loans at any time and
from time to time prior to the Revolving Credit Maturity Date, in an aggregate
principal amount at any time outstanding not in excess of $55,000,000 less the
sum of (i) the aggregate Letter of Credit Outstandings at such time and
(ii) the aggregate principal amount of all Swingline Loans then
outstanding.  The Borrower has requested
the Letter of Credit Issuer to issue Letters of Credit at any time and from
time to time prior to the L/C Maturity Date, in an aggregate face amount at any
time outstanding not in excess of $15,000,000. 
The Borrower has requested Chase to extend credit in the form of
Swingline Loans at any time and from time to time prior to the Swingline
Maturity Date, in an aggregate principal amount at any time outstanding not in
excess of $10,000,000.


 


The proceeds of the Term Loans and up to $5,000,000 of
the proceeds of Revolving Credit Loans will be used by the Borrower, together
with the proceeds of the Equity Contribution, solely (a) to finance the Acquisition,
(b) to make the Surplus Infusion and (c) to pay the Transaction
Expenses.  Proceeds of other Revolving
Credit Loans and proceeds of Swingline Loans may be used by the Borrower for
working capital requirements and other general corporate purposes (including
Permitted Acquisitions), and Letters of Credit will be used by the Borrower for
general corporate purposes.


 


The parties hereto hereby agree as follows:


 


SECTION 1. 
Definitions.  As used
herein, the following terms shall have the meanings specified in this
Section 1 unless the context otherwise requires (it being understood that
defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular):


 


“A
Repayment Amount” shall have the meaning provided in Section 2.5(b).


 


“A
Repayment Date” shall have the meaning provided in Section 2.5(b).


 


“A
Term Loan” shall have the meaning provided in Section 2.1(a).


 

















 


“A
Term Loan Commitment” shall mean, (a) in the case of each Lender that
is a Lender on the date hereof, the amount set forth opposite such Lender’s
name on Schedule 1.1 as such Lender’s “A Term Loan Commitment” and
(b) in the case of any Lender that becomes a Lender after the date hereof,
the amount specified as such Lender’s “A Term Loan Commitment” in the
Assignment and Acceptance pursuant to which such Lender assumed a portion of
the Total A Term Loan Commitment, in each case as the same may be changed from
time to time pursuant to the terms hereof.


 


“A
Term Loan Maturity Date” shall mean the seventh anniversary of the Closing
Date, or, if such date is not a Business Day, the next preceding Business Day.


 


“ABR”
shall mean, for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect
on such day, and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%.  Any change in the
ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.


 


“ABR
Loan” shall mean each Loan bearing interest at the rate provided in
Section 2.8(a) and, in any event, shall include all Swingline Loans.


 


“ABR
Revolving Credit Loan” shall mean any Revolving Credit Loan bearing
interest at a rate determined by reference to the ABR.


 


“Acquired
Cash Flow” shall mean, with respect to any Acquired Entity or Business or
any Converted Restricted Subsidiary (any of the foregoing, a “Pro Forma
Entity”), for any Test Period, the Cash Flow of such Pro Form Entity for
such Test Period (determined as if such Pro Forma Entity was a Regulated
Insurance Company or an Unregulated Subsidiary for such entire Test Period).


 


“Acquired
Companies” shall mean those companies set forth on Schedule F to the
Acquisition Agreement.


 


“Acquired
Entity or Business” shall have the meaning provided in the definition of
the term “Cash Flow”.


 


“Acquisition”
shall have the meaning provided in the first paragraph of this Agreement.


 


“Acquisition
Agreement” shall have the meaning provided in the first paragraph of this
Agreement.


 


“Adjusted
Total Revolving Credit Commitment” shall mean at any time the Total
Revolving Credit Commitment less the aggregate Revolving Credit Commitments of
all Defaulting Lenders.


 


“Administrative
Agent” shall mean Chase, together with its affiliates, as the arranger of
the Commitments and as the administrative agent for the Lenders under this


 


2

















 


Agreement and the other Credit
Documents, or any successor appointed pursuant to Section 12.9.


 


“Administrative
Agent’s Office” shall mean the office of the Administrative Agent located
at 270 Park Avenue, New York, New York 10017, or such other office in New York
City as the Administrative Agent may hereafter designate in writing as such to
the other parties hereto.


 


“Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with
such Person.  A Person shall be deemed
to control a corporation if such Person possesses, directly or indirectly, the
power (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (b) to direct
or cause the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or otherwise.


 


“Aggregate
Revolving Credit Outstandings” shall have the meaning provided in
Section 5.2(b).


 


“Agreement”
shall mean this Credit Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.


 


“Applicable
ABR Margin” shall mean, with respect to each ABR Loan at any date, the
applicable percentage per annum set forth below based upon (a) whether
such loan is a Revolving Credit Loan, a Swingline Loan, an A Term Loan, a B
Term Loan or a C Term Loan and (b) the Status in effect on such date:


 


	
  Loan

  	
   

  	
  Status

  	
   

  	
  Applicable
  ABR

  Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolving
  Credit Loans and Swingline Loans

  	
   

  	
  Level I Status

  	
   

  	
  1.000

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  0.750

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  0.375

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  0.125

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  0.000

  	
  %

  
	
   

  	
   

  	
  Level VI Status

  	
   

  	
  0.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A
  Term Loans

  	
   

  	
  Level I Status

  	
   

  	
  1.000

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  0.750

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  0.375

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  0.125

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  0.000

  	
  %

  
	
   

  	
   

  	
  Level VI Status

  	
   

  	
  0.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B
  Term Loans

  	
   

  	
  Level I Status

  	
   

  	
  1.250

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  1.000

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  0.750

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  0.500

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  0.250

  	
  %

  



 


3

















 


	
   

  	
   

  	
  Level VI Status

  	
   

  	
  0.250

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C
  Term Loans

  	
   

  	
  Level I Status

  	
   

  	
  1.500

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  1.250

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  1.000

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  0.750

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  0.500

  	
  %

  
	
   

  	
   

  	
  Level VI Status

  	
   

  	
  0.500

  	
  %

  



 


“Applicable
Eurodollar Margin” shall mean, with respect to each Eurodollar Term Loan
and Eurodollar Revolving Credit Loan at any date, the applicable percentage per
annum set forth below based upon (a) whether such loan is a Revolving
Credit Loan, an A Term Loan, a B Term Loan or a C Term Loan and (b) the
Status in effect on such date:


 


	
  Loan

  	
   

  	
  Status

  	
   

  	
  Applicable
  Eurodollar

  Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolving
  Credit Loans

  	
   

  	
  Level I Status

  	
   

  	
  2.250  

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  2.000

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  1.625

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  1.375

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  1.125

  	
  %

  
	
   

  	
   

  	
  Level VI Status

  	
   

  	
  1.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A
  Term Loans

  	
   

  	
  Level I Status

  	
   

  	
  2.250

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  2.000

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  1.625

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  1.375

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  1.125

  	
  %

  
	
   

  	
   

  	
  Level VI Status

  	
   

  	
  1.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B
  Term Loans

  	
   

  	
  Level I Status

  	
   

  	
  2.500

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  2.250

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  2.000

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  1.750

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  1.500

  	
  %

  
	
   

  	
   

  	
  Level VI Status

  	
   

  	
  1.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C
  Term Loans

  	
   

  	
  Level I Status

  	
   

  	
  2.750

  	
  %

  
	
   

  	
   

  	
  Level II Status

  	
   

  	
  2.500

  	
  %

  
	
   

  	
   

  	
  Level III Status

  	
   

  	
  2.250

  	
  %

  
	
   

  	
   

  	
  Level IV Status

  	
   

  	
  2.000

  	
  %

  
	
   

  	
   

  	
  Level V Status

  	
   

  	
  1.750

  	
  %

  
	
   

  	
   

  	
  Level VI Status

  	
   

  	
  1.750

  	
  %

  



 


“Applicable
Insurance Regulatory Authority” shall mean, when used with respect to any
Regulated Insurance Company, the insurance department or similar administrative


 


4

















 


authority
or agency located in (a) each state in which such Regulated Insurance Company
is domiciled or (b) to the extent asserting regulatory jurisdiction over such
Regulated Insurance Company, the insurance department, authority or agency in
each state in which such Regulated Insurance Company is licensed, and shall
include any Federal insurance regulatory department, authority or agency that
may be created and that asserts regulatory jurisdiction over such Regulated
Insurance Company.


 


“Approved
Fund” shall mean, with respect to any Lender that is a fund that invests in
commercial loans, the investment advisor thereof or any other fund that invests
in commercial loans and that is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.


 


“Asset
Companies” shall mean those companies set forth on Schedule G to the
Acquisition Agreement.


 


“Asset
Sale Prepayment Event” shall mean any sale, transfer or other disposition
of any business units, assets or other properties of the Borrower or any of the
Restricted Subsidiaries not in the ordinary course of business.  Notwithstanding the foregoing, the term
“Asset Sale Prepayment Event” shall not include any transaction permitted by
Section 10.4 (other than Section 10.4(b)).


 


“Authorized
Control Level” shall mean “Authorized Control Level Risk-Based Capital” as
defined by the NAIC as of December 31, 1994 and as applied in the context
of the Risk-Based Capital Guidelines promulgated by the NAIC.


 


“Authorized
Officer” shall mean the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer or any other senior officer of the Borrower
designated as such in writing to the Administrative Agent by the Borrower.


 


“Available
Amount” shall mean, on any date (the “Reference Date”), an amount
equal to (a) the sum of (i) $10,000,000, (ii) an amount equal to
(x) the cumulative amount of Excess Cash Flow for all fiscal years
completed prior to the Reference Date minus (y) the portion of such
Excess Cash Flow that has been on or prior to the Reference Date (or will be)
applied to the prepayment of Loans in accordance with Section 5.2(a)(ii), minus
(z) the aggregate amount of all optional prepayments of Loans made on or prior
to the Reference Date which have reduced the Borrower’s obligation to make
mandatory prepayments from Excess Cash Flow pursuant to Section 5.2(a)(ii)(y),
(iii) the amount of any common or preferred capital contributions (other
than the Equity Contribution and any equity contribution made in accordance
with Section 10.5(c)(i)) made in cash to the Borrower from and including
the Business Day immediately following the Closing Date through and including
the Reference Date, (iv) an amount equal to the Net Cash Proceeds received
by the Borrower on or prior to the Reference Date from any issuance of common
or preferred equity securities by the Borrower, (v) the aggregate amount
of all cash dividends and other cash distributions received by the Borrower or
any Guarantor from any Minority Investments or Unrestricted Subsidiaries on or
prior to the Reference Date (other than the portion of any such dividends and other
distributions that is used by the Borrower or any Guarantor to pay taxes),
(vi) the aggregate amount of all cash 


 


5

















 


repayments
of principal received by the Borrower or any Guarantor from any Minority
Investments or Unrestricted Subsidiaries on or prior to the Reference Date in
respect of loans made by the Borrower or any Guarantor to such Minority
Investments or Unrestricted Subsidiaries and (vii) the aggregate amount of
all net cash proceeds received by the Borrower or any Guarantor in connection
with the sale, transfer or other disposition of its ownership interest in any
Minority Investment or Unrestricted Subsidiary on or prior to the Reference
Date minus (b) the sum of (i) the aggregate amount of any investments
(including loans) made by the Borrower or any Restricted Subsidiary pursuant to
Section 10.5(l)(ii) on or prior to the Reference Date, (ii) cash dividends
paid on Permitted Preferred Stock on or prior to the Reference Date (to the extent
that the proceeds of such Permitted Preferred Stock were used to make an
investment in an Unrestricted Subsidiary pursuant to Section 10.5(l)(ii)),
(iii) the aggregate price paid by the Borrower in connection with any
prepayment, repurchase or redemption of Contingent Payment Securities pursuant
to Section 10.7(a)(i) on or prior to the Reference Date and (iv) the
aggregate amount of Capital Expenditures made by the Borrower and its
Restricted Subsidiaries in any fiscal year pursuant to Section 10.12 in
excess of  the sum of (x) $5,000,000 and
(y) the amount carried forward pursuant to the proviso therein.


 


“Available
Commitment” shall mean an amount equal to the excess, if any, of
(a) the amount of the Total Revolving Credit Commitment over (b) the
sum of (i) the aggregate principal amount of all Revolving Credit Loans
(but not Swingline Loans) then outstanding and (ii) the aggregate Letter
of Credit Outstandings at such time.


 


“B
Repayment Amount” shall have the meaning provided in Section 2.5(c).


 


“B
Repayment Date” shall have the meaning provided in Section 2.5(c).


 


“B
Term Loan” shall have the meaning provided in Section 2.1(b).


 


“B
Term Loan Commitment” shall mean, (a) in the case of each Lender that
is a Lender on the date hereof, the amount set forth opposite such Lender’s
name on Schedule 1.1 as such Lender’s “B Term Loan Commitment” and
(b) in the case of any Lender that becomes a Lender after the date hereof,
the amount specified as such Lender’s “B Term Loan Commitment” in the
Assignment and Acceptance pursuant to which such Lender assumed a portion of
the Total B Term Loan Commitment, in each case as the same may be changed from
time to time pursuant to the terms hereof.


 


“B
Term Loan Maturity Date” shall mean the eighth anniversary of the Closing
Date, or, if such Date is not a Business Day, the next preceding Business Day.


 


“Bankruptcy
Code” shall have the meaning provided in Section 11.5.


 


“Board”
shall mean the Board of Governors of the Federal Reserve System of the United
States (or any successor).


 


“Borrower”
shall have the meaning provided in the preamble to this Agreement.


 


6

















 


“Borrower
Common Stock” shall mean any class of outstanding common stock of the
Borrower after the Transaction.


 


“Borrowing”
shall mean and include (a) the incurrence of Swingline Loans from Chase on a
given date, (b) the incurrence of one Type of Term Loan of a single
Facility on the Closing Date (or resulting from conversions on a given date
after the Closing Date) having, in the case of Eurodollar Term Loans, the same
Interest Period (provided that ABR Loans incurred pursuant to
Section 2.10(b) shall be considered part of any related Borrowing of
Eurodollar Term Loans) and (c) the incurrence of one Type of Revolving
Credit Loan on a given date (or resulting from conversions on a given date)
having, in the case of Eurodollar Revolving Credit Loans, the same Interest
Period (provided that ABR Loans incurred pursuant to
Section 2.10(b) shall be considered part of any related Borrowing of
Eurodollar Revolving Credit Loans).


 


“Business
Day” shall mean (a) for all purposes other than as covered by clause (b)
below, any day excluding Saturday, Sunday and any day that shall be in The City
of New York a legal holiday or a day on which banking institutions are
authorized by law or other governmental actions to close and (b) with respect
to all notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day that is a Business Day described in
clause (a) and which is also a day for trading by and between banks in
Dollar deposits in the relevant interbank Eurodollar market.


 


“C
Repayment Amount” shall have the meaning provided in Section 2.5(d).


 


“C
Repayment Date” shall have the meaning provided in Section 2.5(d).


 


“C
Term Loan” shall have the meaning provided in Section 2.1(c).


 


“C
Term Loan Commitment” shall mean, (a) in the case of each Lender that
is a Lender on the date hereof, the amount set forth opposite such Lender’s
name on Schedule 1.1 as such Lender’s “C Term Loan Commitment” and
(b) in the case of any Lender that becomes a Lender after the date hereof,
the amount specified as such Lender’s “C Term Loan Commitment” in the
Assignment and Acceptance pursuant to which such Lender assumed a portion of
the Total C Term Loan Commitment, in each case as the same may be changed from
time to time pursuant to the terms hereof.


 


“C
Term Loan Maturity Date” shall mean the ninth anniversary of the Closing
Date, or if such Date is not a Business Day, the next preceding Business Day.


 


“Capital
Expenditures” shall mean, for any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities and including in all events all
amounts expended or capitalized under Capital Leases, but excluding any amount
representing capitalized interest) by the Borrower and the Restricted
Subsidiaries during such period that, in conformity with GAAP, are or are
required to be included as additions during such period to property, plant or
equipment reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, provided that the term “Capital Expenditures” shall not
include (a) expenditures made in connection with the replacement,
substitution or restoration of assets (i) to the extent financed from
insurance


 


7

















 


proceeds
paid on account of the loss of or damage to the assets being replaced or
restored or (ii) with awards of compensation arising from the taking by
eminent domain or condemnation of the assets being replaced, (b) the
purchase price of equipment that is purchased simultaneously with the trade-in
of existing equipment to the extent that the gross amount of such purchase
price is reduced by the credit granted by the seller of such equipment for the
equipment being traded in at such time or (c) the purchase of plant,
property or equipment made within one year of the sale of any asset to the
extent purchased with the proceeds of such sale.


 


“Capitalized
Lease Obligations” shall mean, as applied to any Person, all obligations
under Capital Leases of such Person or any of its Subsidiaries, in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.


 


“Capital
Lease”, as applied to any Person, shall mean any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person.


 


“Cash
Flow” shall mean, for any Test Period, (a) the sum, without duplication, of
(i) Combined Statutory Pre-Tax Earnings for all Regulated Insurance Companies
for such Test Period, plus (ii) consolidated net income from continuing
operations before income taxes and extraordinary items of the Borrower
and its Restricted Subsidiaries (excluding net income (or loss) before taxes
and extraordinary items of the Regulated Insurance Subsidiaries), all
determined in accordance with GAAP, plus (b) to the extent deducted in
determining such Statutory Pre-Tax Earnings or net income pursuant to clause
(a) above, and without duplication, the sum of the amounts for such period of
(i) interest expense, (ii) depreciation expense, (iii) amortization expense,
including amortization of deferred financing fees, (iv) non-recurring charges,
(v) non-cash charges, (vi) losses on asset sales, (vii) restructuring charges,
(viii) Transaction Expenses, (ix) any expenses or charges incurred in
connection with any issuance of debt or equity securities, (x) any fees and
expenses related to Permitted Acquisitions and (xi) any deduction for minority
interest expense, less (c) to the extent included in determining such
Statutory Pre-Tax Earnings or net income pursuant to clause (a) above, and
without duplication, the sum of the amounts for such period of (i)
non-recurring gains, (ii) non-cash gains and (iii) gains on asset sales, all as
determined on a Combined basis for the Regulated Insurance Companies in
accordance with SAP, in the case of amounts deducted or included in determining
the amount for such period pursuant to clause (a)(i) above, or on a
consolidated basis for the Borrower and the Unregulated Subsidiaries in
accordance with GAAP, in the case of amounts deducted or included in
determining the amount for such period pursuant to clause (a)(ii) above, provided
that (i) except as provided in clause (ii) below, there shall be excluded from
the amounts determined pursuant to clause (a) above for any period the earnings
or net income of all Unrestricted Subsidiaries for such period to the extent
otherwise included in such amount, except to the extent actually received in
cash by the Borrower or its Restricted Subsidiaries during such period through
dividends or other distributions, and (ii) there shall be included in determining
Cash Flow for any period (x) the Acquired Cash Flow of any Person, property,
business or asset (other than an Unrestricted Subsidiary) acquired to the
extent not subsequently sold, transferred or


 


8

















 


otherwise
disposed of (but not including the Acquired Cash Flow of any related Person,
property, business or assets to the extent not so acquired) by the Borrower or
any Restricted Subsidiary during such period (each such Person, property,
business or asset acquired and not subsequently so disposed of, an “Acquired
Entity or Business”), and the Acquired Cash Flow of an Unrestricted
Subsidiary that is converted into a Restricted Subsidiary during such period
(each a “Converted Restricted Subsidiary”), in each case based on the actual
Acquired Cash Flow of such Acquired Entity or Business or Converted Restricted
Subsidiary for such period (including the portion thereof occurring prior to
such acquisition or conversion) and (y) an adjustment with respect of each
Acquired Entity or Business equal to the amount of the Pro Forma Adjustment
with respect to such Acquired Entity or Business for such period (including the
portion thereof occurring prior to such acquisition or conversion) as specified
in the Pro Forma Adjustment Certificate delivered to the Lenders and the
Administrative Agent.


 


“Cash
Flow to Consolidated Interest Expense Ratio” shall mean, for any Test
Period, the ratio of (a) Cash Flow for such Test Period to
(b) Consolidated Interest Expense for such Test Period.


 


“Change
of Control” shall mean and be deemed to have occurred if
(a) (i) KKR, its Affiliates and the Management Group shall at any
time not own, in the aggregate, directly or indirectly, beneficially and of
record, at least 35% of the outstanding Voting Stock of the Borrower (other
than as the result of one or more widely distributed offerings of Borrower
Common Stock, in each case whether by the Borrower or by KKR, its Affiliates or
the Management Group) and/or (ii) any person, entity or “group” (within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended) shall at any time have acquired direct or indirect beneficial
ownership of a percentage of the outstanding Voting Stock of the Borrower that
exceeds the percentage of such Voting Stock then beneficially owned, in the
aggregate, by KKR, its Affiliates and the Management Group, unless, in the case
of either clause (i) or (ii) above, KKR, its Affiliates and the Management
Group have, at such time, the right or the ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of the Borrower; and/or (b) at any time Continuing Directors
shall not constitute a majority of the Board of Directors of the Borrower.


 


“Chase”
shall mean The Chase Manhattan Bank, a New York banking corporation, and any
successor thereto by merger, consolidation or otherwise.


 


“Closing
Date” shall mean the date of the initial Borrowing hereunder.


 


“Coast”
shall mean Coast National Insurance Company.


 


“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.  Section references to the Code are to
the Code, as in effect at the date of this Agreement, and any subsequent
provisions of the Code, amendatory thereof, supplemental thereto or substituted
therefor.


 


“Collateral”
shall have the meaning provided in the Pledge Agreement.


 


9

















 


“Combined”
shall mean, when used with reference to any amount or financial statement, such
amount as determined, or financial statement as prepared, on a combined basis
for all of the specified entities and their respective Subsidiaries; provided
that any such amount or financial statement determined or prepared for any
specified entity and its Subsidiaries separately shall be determined or
prepared on a consolidated basis in accordance with SAP or GAAP, as applicable.


 


“Combined
Risk-Based Capital” shall mean the ratio (expressed as a percentage), at
any time, of (i) the sum, without duplication, of the Total Adjusted Capital of
each Regulated Insurance Company to (ii) the sum, without duplication, of the
Authorized Control Level of each Regulated Insurance Company.


 


“Commitment
Fee Rate” shall mean, with respect to the Available Commitment on any day,
the rate per annum set forth below opposite the Status in effect on such day:


 


	
  Status

  	
   

  	
  Commitment

  Fee Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Level
  I Status

  	
   

  	
  0.425

  	
  %

  
	
  Level
  II Status

  	
   

  	
  0.400

  	
  %

  
	
  Level
  III Status

  	
   

  	
  0.375

  	
  %

  
	
  Level
  IV Status

  	
   

  	
  0.350

  	
  %

  
	
  Level
  V Status

  	
   

  	
  0.300

  	
  %

  
	
  Level
  VI Status

  	
   

  	
  0.250

  	
  %

  



 


“Commitments”
shall mean, with respect to each Lender, such Lender’s A Term Loan Commitment,
B Term Loan Commitment, C Term Loan Commitment and Revolving Credit Commitment.


 


“Confidential
Information” shall have the meaning provided in Section 13.16.


 


“Consolidated
Interest Expense” shall mean, for any period, the sum of (i) cash
interest expense (including that attributable to Capital Leases in accordance
with GAAP), net of cash interest income, of the Borrower and the Restricted
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and the Restricted Subsidiaries, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers’ acceptance financing and net
costs under Hedge Agreements (other than currency swap agreements, currency
future or option contracts and other similar agreements), but excluding,
however, amortization of deferred financing costs and any other amounts of
non-cash interest, all as calculated on a consolidated basis in accordance with
GAAP, and (ii) cash dividends paid on Permitted Preferred Stock during such
period; provided that (a) except as provided in clause (b) below, there
shall be excluded from Consolidated Interest Expense for any period the cash
interest expense (or income) of all Unrestricted Subsidiaries for such period
to the extent otherwise included in Consolidated Interest Expense and (b) for
purposes of the definition of the term “Permitted Acquisition” and
Sections 10.3 and 10.9, there shall be included in determining
Consolidated Interest


 


10

















 


Expense
for any period the cash interest expense (or income) of any Acquired Entity or
Business acquired during such period and of any Converted Restricted Subsidiary
converted during such period, in each case based on the cash interest expense
(or income) of such Acquired Entity or Business or Converted Restricted
Subsidiary for such period (including the portion thereof occurring prior to
such acquisition or conversion) assuming any Indebtedness incurred or repaid in
connection with any such acquisition or conversion had been incurred or prepaid
on the first day of such period.


 


“Consolidated
Net Income” shall mean, for any period, the consolidated net income (or
loss) of the Borrower and the Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP.


 


“Consolidated
Net Worth” shall mean the Net Worth of the Borrower and its Restricted
Subsidiaries determined on a consolidated basis.


 


“Consolidated
Total Capitalization” shall mean, as of any date of determination, the sum
of (i) Consolidated Total Debt and (ii) Consolidated Net Worth.


 


“Consolidated
Total Debt” shall mean, as of any date of determination, (a) the sum of
(i) all Indebtedness of the Borrower and the Restricted Subsidiaries for
borrowed money outstanding on such date, (ii) all net liabilities of the
Borrower and the Restricted Subsidiaries under Financial Reinsurance Agreements
and (iii) all Capitalized Lease Obligations of the Borrower and the
Restricted Subsidiaries outstanding on such date, all calculated on a
consolidated basis in accordance with GAAP minus (b) the aggregate
amount of cash included in the cash account on the balance sheet of the
Borrower, to the extent held by or for the account of the Borrower and
deposited with the Administrative Agent or any Lender domiciled in the United States
as at such date and to the extent that the use thereof for application to
payment of Indebtedness is not prohibited by law or any contract to which the
Borrower is a party.


 


“Consolidated
Total Debt to Consolidated Total Capitalization Ratio” shall mean, as of
any date of determination, the ratio of (a) Consolidated Total Debt to
(b) Consolidated Total Capitalization.


 


“Consolidated
Working Capital” shall mean, at any date, the excess of (a) the sum of all
amounts (other than cash, cash equivalents and bank overdrafts) that would, in
conformity with GAAP, be set forth opposite the caption “total current assets”
(or any like caption) on a consolidated balance sheet of the Borrower and the
Restricted Subsidiaries at such date over (b) the sum of all amounts that
would, in conformity with GAAP, be set forth opposite the caption “total
current liabilities” (or any like caption) on a consolidated balance sheet of
the Borrower and the Restricted Subsidiaries on such date, but excluding (i)
the current portion of any funded Indebtedness, (ii) without duplication of
clause (i) above, all Indebtedness consisting of Loans and Letter of Credit
Exposure to the extent otherwise included therein and (iii) the current
portion of deferred income taxes.


 


11

















 


“Contingent
Payment Securities” shall mean subordinated notes to be issued by the
Borrower on or after the fifth anniversary of the Closing Date in accordance
with the terms and conditions of the Acquisition Agreement, the terms and
conditions of which notes shall be reasonably satisfactory to the
Administrative Agent.


 


“Continuing
Director” shall mean, at any date, an individual (a) who is a member
of the Board of Directors of the Borrower on the date hereof, (b) who, as
at such date, has been a member of such Board of Directors for at least the 12
preceding months, (c) who has been nominated to be a member of such Board
of Directors, directly or indirectly, by KKR or Persons nominated by KKR or
(d) who has been nominated to be a member of such Board of Directors by a
majority of the other Continuing Directors then in office.


 


“Converted
Restricted Subsidiary” shall have the meaning provided in the definition of
the term “Cash Flow”.


 


“Credit
Documents” shall mean this Agreement, the Guarantee, the Pledge Agreement
and any promissory notes issued by the Borrower hereunder.


 


“Credit
Event” shall mean and include the making (but not the conversion or
continuation) of a Loan and the issuance of a Letter of Credit.


 


“Credit
Party” shall mean each of the Borrower and the Guarantors.


 


“Cumulative
Consolidated Net Income Available to Common Stockholders” shall mean, as of
any date of determination, Consolidated Net Income less cash dividends paid
with respect to preferred stock for the period (taken as one accounting period)
commencing on the Closing Date and ending on the last day of the most recent
fiscal quarter for which Section 9.1 Financials have been delivered to the
Lenders under Section 9.1, plus, to the extent deducted in
determining such Consolidated Net Income, amortization of goodwill for such
period.


 


“Debt
Incurrence Prepayment Event” shall mean any issuance or incurrence by the
Borrower or any of the Restricted Subsidiaries of any Indebtedness (excluding
any Indebtedness permitted to be issued or incurred under Section 10.1).


 


“Default”
shall mean any event, act or condition that with notice or lapse of time, or
both, would constitute an Event of Default.


 


“Defaulting
Lender” shall mean any Lender with respect to which a Lender Default is in
effect.


 


“Dividends”
shall have the meaning provided in Section 10.6.


 


“Dollars”
and “$” shall mean dollars in lawful currency of the United States of
America.


 


12

















 


“Domestic
Subsidiary” shall mean each Subsidiary of the Borrower that is organized
under the laws of the United States, any state or territory thereof, or
the District of Columbia.


 


“Drawing”
shall have the meaning provided in Section 3.4(b).


 


“Environmental
Claims” shall mean any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports
prepared by the Borrower or any of its Subsidiaries (a) in the ordinary course
of such Person’s business or (b) as required in connection with a financing
transaction or an acquisition or disposition of real estate) or proceedings
relating in any way to any Environmental Law or any permit issued, or any
approval given, under any such Environmental Law (hereinafter, “Claims”),
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and
(ii) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.


 


“Environmental
Law” shall mean any applicable Federal, state, foreign or local statute,
law, rule, regulation, ordinance, code and rule of common law now or hereafter
in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the environment,
human health or safety or Hazardous Materials.


 


“Equity
Contribution” shall mean the equity contribution to the Borrower by KKR,
its Affiliates and certain other investors of an aggregate amount of not less
than $90,000,000 (it being understood that a portion of such Equity
Contribution may be in the form of an equity rollover by existing owners of the
Acquired Companies and the Asset Companies but at least $75,000,000 of such
Equity Contribution must be in the form of cash contributed by KKR and its
Affiliates).


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time.  Section references
to ERISA are to ERISA as in effect at the date of this Agreement and any
subsequent provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.


 


“ERISA
Affiliate” shall mean each person (as defined in Section 3(9) of
ERISA) that together with the Borrower or a Subsidiary would be deemed to be a
“single employer” within the meaning of Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.


 


“Eurodollar
Loan” shall mean any Eurodollar Term Loan or Eurodollar Revolving Credit
Loan.


 


13

















 


“Eurodollar
Rate” shall mean, in the case of any Eurodollar Term Loan or Eurodollar
Revolving Credit Loan, with respect to each day during each Interest Period
pertaining to such Eurodollar Loan, the rate of interest determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period.  In the event that such rate does not appear on Page 3750 of the
Telerate Service (or otherwise on such service), the “Eurodollar Rate” for the
purposes of this paragraph shall be determined by reference to such other
publicly available service for displaying eurodollar rates as may be agreed
upon by the Administrative Agent and the Borrower or, in the absence of such
agreement, the “Eurodollar Rate” for the purposes of this paragraph shall
instead be the rate per annum notified to the Administrative Agent by the
Reference Lender as the rate at which the Reference Lender is offered Dollar
deposits at or about 10:00 A.M., New York time, two Business Days prior to the
beginning of such Interest Period, in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations in respect of its
Eurodollar Loans are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of its Eurodollar Term Loan or Eurodollar Revolving Credit
Loan, as the case may be, to be outstanding during such Interest Period.


 


“Eurodollar
Revolving Credit Loan” shall mean any Revolving Credit Loan bearing
interest at a rate determined by reference to the Eurodollar Rate.


 


“Eurodollar
Term Loan” shall mean any Term Loan bearing interest at a rate determined
by reference to the Eurodollar Rate.


 


“Event
of Default” shall have the meaning provided in Section 11.


 


“Excess Cash Flow” shall mean, for any period,
an amount equal to the excess of (a) the sum, without duplication, of (i)
dividends actually paid to the Borrower by Regulated Insurance Companies during
such period, (ii) the portion of the aggregate amount of cash tax allocation
payments made during such period by the Regulated Insurance Companies to the
Borrower or its Unregulated Restricted Subsidiaries that is not treated as
intercompany obligations under the applicable tax allocation agreements, (iii)
consolidated net income before taxes from continuing operations of the Borrower
and its Restricted Subsidiaries (excluding net income (or loss) before taxes of
the Regulated Insurance Companies), all determined in accordance with GAAP (“Unregulated
Earnings”), (iv) an amount equal to the amount of all non-cash charges to
the extent deducted in arriving at such Unregulated Earnings, (v) decreases in
Consolidated Working Capital of the Borrower and its Restricted Subsidiaries
(excluding Regulated Insurance Companies) for such period and (vi) an amount
equal to the aggregate net non-cash loss on the sale, lease, transfer or other
disposition of assets by the Borrower and the Restricted Subsidiaries during
such period (other than sales in the ordinary course of business) to the extent
deducted in arriving at such Unregulated Earnings over (b) the sum, without
duplication, of (i) cash taxes paid or payable in respect of the income of the
Borrower and its Restricted Subsidiaries for or during such


 


14

















 


period (excluding such taxes that are separately
assessed on the income of and paid directly by any Regulated Insurance
Company), (ii) an amount equal to the amount of all non-cash credits included
in arriving at such Unregulated Earnings, (iii) the aggregate amount actually
paid by the Borrower and the Unregulated Subsidiaries in cash during such
period on account of Capital Expenditures to the extent not deducted in
determining such Unregulated Earnings (excluding the principal amount of
Indebtedness incurred in connection with such Capital Expenditures, whether
incurred in such period or in a subsequent period), (iv) the aggregate amount
of all scheduled principal payments of Indebtedness of the Borrower or the
Unregulated Subsidiaries (including, without limitation, any Term Loans and the
principal component of payments in respect of Capitalized Lease Obligations but
excluding Revolving Credit Loans and Swingline Loans) made during such period
(other than in respect of any revolving credit facility to the extent there is
not an equivalent permanent reduction in commitments thereunder), (v) an amount
equal to the aggregate net non-cash gain on the sale, lease, transfer or other
disposition of assets (other than sales in the ordinary course of business) by
the Borrower and the Unregulated Subsidiaries during such period to the extent
included in arriving at such Unregulated Earnings, (vi) increases in
Consolidated Working Capital of the Borrower and its Restricted Subsidiaries
(excluding Regulated Insurance Subsidiaries) for such period, (vii) payments by
the Borrower and the Unregulated Subsidiaries during such period in respect of
long-term liabilities of the Borrower and the Restricted Subsidiaries other
than Indebtedness, (viii) the amount of investments, loans and advances made
during such period pursuant to Sections 10.5(a), (c), (i), (j) and (k) to the
extent that such investments were financed with internally generated cash flow
of the Borrower and the Unregulated Subsidiaries and/or dividends by Regulated
Insurance Companies included in clause (a)(i) above, (ix) the amount of
dividends paid during such period pursuant to clause (b) of the proviso to
Section 10.6, (x) the aggregate amount of expenditures actually made by
the Borrower and the Unregulated Subsidiaries in cash during such period
(including, without limitation, expenditures for the payment of financing fees)
to the extent that such expenditures are not expensed during such period, (xi)
the aggregate amount of any premium, make-whole or penalty payments actually
paid in cash by the Borrower and the Unregulated Subsidiaries during such
period that are required to be made in connection with any prepayment of
Indebtedness and that are accounted for as extraordinary items, (xii) cash tax
allocation payments made during such period by the Borrower or any Unregulated
Restricted Subsidiary to any Regulated Insurance Company, (xiii) payments in
respect of the Contingent Payment Amount or Early Payment Amount (each as
defined in the Acquisition Agreement) during such period other than any such
payments financed with Indebtedness and (xiv) payments applied during such
period in respect of reserves (to the extent not included in Consolidated
Working Capital for such period) created by the Borrower or any Unregulated
Restricted Subsidiary in a period prior to such period.


 


“Facility”
shall mean any of the credit facilities established under this Agreement, i.e.,
the credit facilities providing for A Term Loans, B Term Loans, C Term Loans or
Revolving Credit Loans.


 


“Federal
Funds Effective Rate” shall mean, for any day, the weighted average of the
per annum rates on overnight federal funds transactions with members of the
Federal


 


15

















 


Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.


 


“Fees”
shall mean all amounts payable pursuant to, or referred to in,
Section 4.1.


 


“Final
Date” shall mean the date on which the Revolving Credit Commitments shall
have terminated, no Revolving Credit Loans shall be outstanding and the Letter
of Credit Outstandings shall have been reduced to zero.


 


“Financial
Reinsurance Agreement” shall mean a reinsurance agreement covering any
transaction in which any Regulated Insurance Company cedes business that does
not meet the conditions for reinsurance accounting as provided by the Financial
Accounting Standards Board in Statement of Financial Accounting Standards No.
113, as the same may be revised, replaced, or supplemented from time to time.


 


“Foreign
Subsidiary” shall mean each Subsidiary of the Borrower that is not a
Domestic Subsidiary.


 


“Form
A” shall mean the Form A Statement Regarding the Acquisition of Control of
Domestic Insurers filed in respect of Coast and SNIC with the Insurance
Department of the States of California and Florida, respectively, together with
all amendments, modifications and supplements thereto.


 


“Fronting
Fee” shall have the meaning provided in Section 4.1(c).


 


“GAAP”
shall mean generally accepted accounting principles in the United States of
America as in effect from time to time; provided, however, that
if there occurs after the date hereof any change in GAAP that affects in any
respect the calculation of any covenant contained in Section 10, the
Lenders and the Borrower shall negotiate in good faith amendments to the
provisions of this Agreement that relate to the calculation of such covenant
with the intent of having the respective positions of the Lenders and the
Borrower after such change in GAAP conform as nearly as possible to their respective
positions as of the date of this Agreement and, until any such amendments have
been agreed upon, the covenants in Section 10 shall be calculated as if no
such change in GAAP has occurred.


 


“Governmental
Authority” shall mean any nation or government, any state or other
political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including, without limitation, any Applicable Insurance
Regulatory Authority).


 


“Guarantee”
shall mean and include the Guarantee, made by each Guarantor in favor of the
Administrative Agent for the benefit of the Lenders, substantially in the form
of Exhibit A, as the same may be amended, supplemented or otherwise modified from
time to time.


 


16

















 


“Guarantee
Obligations” shall mean, as to any Person, any obligation of such Person
guaranteeing or intended to guarantee any Indebtedness of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such Indebtedness or any property constituting
direct or indirect security therefor, (b) to advance or supply funds (i) for
the purchase or payment of any such Indebtedness or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property, securities
or services primarily for the purpose of assuring the owner of any such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness or (d) otherwise to assure or hold harmless the owner of such
Indebtedness against loss in respect thereof; provided, however,
that the term “Guarantee Obligations” shall not include (x) endorsements of
instruments for deposit or collection in the ordinary course of business or (y)
obligations of Regulated Insurance Companies under Insurance Contracts,
Reinsurance Agreements or Retrocession Agreements.  The amount of any Guarantee Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the Indebtedness in
respect of which such Guarantee Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.


 


“Guarantor”
shall mean each Domestic Subsidiary of the Borrower that is a Restricted
Subsidiary (excluding any Regulated Insurance Company) and that is or becomes a
party to the Guarantee.


 


“Hazardous
Materials” shall mean (a) any petroleum or petroleum products, radioactive
materials, friable asbestos, urea formaldehyde foam insulation, transformers or
other equipment that contain dielectric fluid containing regulated levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of “hazardous substances”,
“hazardous waste”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, “toxic substances”, “toxic pollutants”,
“contaminants”, or “pollutants”, or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority.


 


“Hedge
Agreements” shall mean interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements entered into by the
Borrower in order to protect the Borrower or any of the Restricted Subsidiaries
against fluctuations in interest rates or currency exchange rates or against
other risks to which the Borrower and its Restricted Subsidiaries may be
subject in the ordinary course of business.


 


“Indebtedness”
of any Person shall mean (a) all indebtedness of such Person for borrowed
money, (b) the deferred purchase price of assets or services that in accordance
with GAAP would be shown on the liability side of the balance sheet of such
Person, (c) the face amount of all letters of credit issued for the account of
such Person and, without


 


17

















 


duplication,
all drafts drawn thereunder, (d) all Indebtedness of a second Person secured by
any Lien on any property owned by such first Person, whether or not such
Indebtedness has been assumed, (e) all Capitalized Lease Obligations of such
Person, (f) all net liabilities of such Person under interest rate swap,
cap or collar agreements, interest rate future or option contracts, currency
swap agreements, currency future or option contracts, credit derivative
contracts and other similar agreements, (g) all obligations of such Person
under Financial Reinsurance Agreements and (h) without duplication, all
Guarantee Obligations of such Person, provided that Indebtedness shall
not include (i) trade payables and accrued expenses, in each case arising in
the ordinary course of business, (ii) prior to the issuance thereof, any
Contingent Payment Securities to the extent recorded as a liability under GAAP
at such time or (iii) any obligation in respect of the Contingent Payment
Amount to the extent recorded as a liability under GAAP at such time.


 


“Insurance
Business” shall mean one or more aspects of the business of selling,
issuing or underwriting insurance or reinsurance.


 


“Insurance
Contract” shall mean any insurance contract or policy issued by a Regulated
Insurance Company but shall not include any Reinsurance Agreement or
Retrocession Agreement.


 


“Interest
Period” shall mean, with respect to any Term Loan or Revolving Credit Loan,
the interest period applicable thereto, as determined pursuant to
Section 2.9.


 


“KKR”
shall mean each of Kohlberg Kravis Roberts & Co., L.P. and KKR
Associates, L.P.


 


“L/C
Maturity Date” shall mean the date that is five Business Days prior to the
Revolving Credit Maturity Date.


 


“L/C
Participant” shall have the meaning provided in Section 3.3(a).


 


“L/C
Participation” shall have the meaning provided in Section 3.3(a).


 


“Lender”
shall have the meaning provided in the preamble to this Agreement.


 


“Lender
Default” shall mean (a) the failure (which has not been cured) of a Lender
to make available its portion of any Borrowing or to fund its portion of any
unreimbursed payment under Section 3.3 or (b) a Lender having notified the
Administrative Agent and/or the Borrower that it does not intend to comply with
the obligations under Section 2.1(d), 2.1(f) or 3.3, in the case of either
clause (a) or clause (b) above, as a result of the appointment of a
receiver or conservator with respect to such Lender at the direction or request
of any regulatory agency or authority.


 


“Letter
of Credit” shall mean each standby letter of credit issued pursuant to
Section 3.1.


 


18

















 


“Letter
of Credit Commitment” shall mean $15,000,000, as the same may be reduced
from time to time pursuant to Section 3.1.


 


“Letter
of Credit Exposure” shall mean, with respect to any Lender, such Lender’s
Revolving Credit Commitment Percentage of the Letter of Credit Outstandings.


 


“Letter
of Credit Fee” shall have the meaning provided in Section 4.1(b).


 


“Letter
of Credit Issuer” shall mean Chase, any of its Affiliates or any successor
pursuant to Section 3.6.


 


“Letter
of Credit Outstandings” shall mean, at any time, the sum of, without
duplication, (a) the aggregate Stated Amount of all outstanding Letters of
Credit and (b) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.


 


“Letter
of Credit Request” shall have the meaning provided in Section 3.2.


 


“Level
I Status” shall mean, on any date, the then applicable Consolidated Total
Debt to Consolidated Total Capitalization Ratio is greater than 0.525:1.00.


 


“Level
II Status” shall mean, on any date, the circumstance that Level I
Status does not exist and the then applicable Consolidated Total Debt to
Consolidated Total Capitalization Ratio is greater than 0.50:1.00.


 


“Level
III Status” shall mean, on any date, the circumstance that neither
Level I Status nor Level II Status exists and the then applicable
Consolidated Total Debt to Consolidated Total Capitalization Ratio is greater
than 0.45:1.00.


 


“Level
IV Status” shall mean, on any date, the circumstance that none of
Level I Status, Level II Status or Level III Status exists and
the then applicable Consolidated Total Debt to Consolidated Total
Capitalization Ratio is greater than 0.40:1.00.


 


“Level
V Status” shall mean, on any date, the circumstance that none of
Level I Status, Level II Status, Level III Status or
Level IV Status exists and the then applicable Consolidated Total Debt to
Consolidated Total Capitalization Ratio is greater than 0.35:1.00.


 


“Level
VI Status” shall mean, on any date, the circumstance that the then
applicable Consolidated Total Debt to Consolidated Total Capitalization Ratio
is equal to or less than 0.35:1.00.


 


“Lien”
shall mean any mortgage, pledge, security interest, hypothecation, assignment,
lien (statutory or other) or similar encumbrance (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof).


 


“Loan”
shall mean any Revolving Credit Loan, Swingline Loan or Term Loan made by any
Lender hereunder.


 


19

















 


“Management
Group” shall mean, at any time, the Chairman of the Board, the President,
any Executive Vice President or Vice President, the Treasurer and the Secretary
of the Borrower at such time and Jeffrey Rosner, Leslie Schlesinger, Donald
Simon, Randy Sutton and any officers of the Borrower from time to time holding
offices corresponding to those of the foregoing individuals as of the Closing
Date.


 


“Mandatory
Borrowing” shall have the meaning provided in Section 2.1(f).


 


“Margin
Stock” shall have the meaning provided in Regulation U.


 


“Material
Adverse Change” shall mean any material adverse change in the business,
operations, property or financial condition of the Borrower and its
Subsidiaries taken as a whole.


 


“Material
Adverse Effect” shall mean any material adverse effect on the business,
operations, property or financial condition of the Borrower and its
Subsidiaries taken as a whole.


 


“Material
Subsidiary” shall mean, at any date of determination, any Restricted
Subsidiary of the Borrower (a) whose total assets at the last day of the
Test Period ending on the last day of the most recent fiscal period for which
Section 9.1 Financials have been delivered were equal to or greater than
5% of the consolidated total assets of the Borrower and the Restricted
Subsidiaries at such date, (b) whose gross revenues for such Test Period
were equal to or greater than 5% of the consolidated gross revenues of the
Borrower and the Restricted Subsidiaries for such period, or (c) whose Cash
Flow for such Test Period was equal to or greater than 5% of the Cash Flow of
Borrower and the Restricted Subsidiaries for such period, in each case
determined in accordance with GAAP.


 


“Maturity
Date” shall mean the A Term Loan Maturity Date, the B Term Loan Maturity
Date, the C Term Loan Maturity Date or the Revolving Credit Maturity Date.


 


“Minimum
Borrowing Amount” shall mean (a) with respect to a Borrowing of Term Loans
or Revolving Credit Loans, $1,000,000 and (b) with respect to a Borrowing of
Swingline Loans, $100,000.


 


“Minority
Investment” shall mean any Person (other than a Subsidiary) in which the
Borrower or any Restricted Subsidiary owns capital stock or other equity
interests.


 


“Moody’s”
shall mean Moody’s Investors Service, Inc. or any successor by merger or
consolidation to its business.


 


“NAIC”
shall mean the National Association of Insurance Commissioners or any successor
organization thereto.


 


“NAIC
Tests” shall mean the ratios and other financial measurements developed by
the NAIC under its Insurance Regulatory Information System, as in effect from
time to time.


 


20

















 


“Net
Cash Proceeds” shall mean, with respect to any Prepayment Event or any
issuance by the Borrower of equity securities, (a) the gross cash proceeds
(including payments from time to time in respect of installment obligations, if
applicable) received by or on behalf of the Borrower or any of the Restricted
Subsidiaries in respect of such Prepayment Event or issuance, as the case may
be, less (b) the sum of:


 


(i)
 in the case of any Prepayment Event, the amount, if any, of all taxes
paid or estimated to be payable by the Borrower or any of the Restricted
Subsidiaries in connection with such Prepayment Event,


 


(ii)
 in the case of any Prepayment Event, the amount of any reasonable reserve
established in accordance with GAAP against any liabilities (other than any
taxes deducted pursuant to clause (i) above) (A) associated with the
assets that are the subject of such Prepayment Event and (B) retained by
the Borrower or any of the Restricted Subsidiaries, provided that the
amount of any subsequent reduction of such reserve (other than in connection
with a payment in respect of any such liability) shall be deemed to be Net Cash
Proceeds of such a Prepayment Event occurring on the date of such reduction,


 


(iii)
 in the case of any Prepayment Event, the amount of any Indebtedness
secured by a Lien on the assets that are the subject of such Prepayment Event
to the extent that the instrument creating or evidencing such Indebtedness
requires that such Indebtedness be repaid upon consummation of such Prepayment
Event,


 


(iv)
 in the case of any Asset Sale Prepayment Event, the amount of any
proceeds of such Asset Sale Prepayment Event that the Borrower has reinvested
(or intends to reinvest within one year of the date of such Asset Sale
Prepayment Event) in the business (including by contribution to or retention as
surplus of any Regulated Insurance Company) of the Borrower or any of the
Restricted Subsidiaries (subject to Section 9.14), provided that
any portion of such proceeds that has not been so reinvested within such
one-year period shall (x) be deemed to be Net Cash Proceeds of an Asset
Sale Prepayment Event occurring on the last day of such one-year period and
(y) be applied to the repayment of Term Loans in accordance with
Section 5.2(a)(i), and


 


(v)
 in the case of any Prepayment Event or any issuance by the Borrower of
equity securities, reasonable and customary fees, commissions, expenses,
issuance costs, discounts and other costs paid by the Borrower or any of the
Restricted Subsidiaries in connection with such Prepayment Event or issuance, as
the case may be (other than those payable to the Borrower or any Subsidiary of
the Borrower), in each case only to the extent not already deducted in arriving
at the amount referred to in clause (a) above.


 


“Net
Premiums Written” shall mean, for any Test Period, the net premiums written
for such Test Period of all Regulated Insurance Companies determined on a
Combined basis in accordance with SAP; provided that (i) for the Test
Period ending September 30, 1998, the Net Premiums Written shall be the
actual Net Premiums Written 


 


21

















 


for such
Test Period multiplied by 4, (ii) for the Test Period ending December 31,
1998, the Net Premiums Written shall be the actual Net Premiums Written for
such Test Period multiplied by 2, and (iii) for the Test Period ending
March 31, 1999, the Net Premiums Written shall be the actual Net Premiums
Written for such Test Period multiplied by 4/3.


 


“Net
Worth” shall mean, as to any Person, the sum of its capital stock
(including, without limitation, Permitted Preferred Stock), capital in excess
of par or stated value of shares of its capital stock, retained earnings and
any other account which, in accordance with GAAP, constitutes stockholders
equity, excluding any treasury stock.


 


“Non-Defaulting
Lender” shall mean and include each Lender other than a Defaulting Lender.


 


“Non-Excluded
Taxes” shall have the meaning provided in Section 5.4(a).


 


“Notice
of Borrowing” shall have the meaning provided in Section 2.3.


 


“Notice
of Conversion or Continuation” shall have the meaning provided in
Section 2.6.


 


“Obligations”
shall mean all monetary amounts of every type or description at any time owing
to the Administrative Agent, any Lender or, in the case of Hedge Agreements,
any affiliate of a Lender pursuant to the terms of this Agreement, any other
Credit Document or any Hedge Agreement.


 


“Participant”
shall have the meaning provided in Section 13.6(a)(ii).


 


“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002
of ERISA, or any successor thereto.


 


“Permitted
Acquisition” shall mean the acquisition, by merger or otherwise, by the
Borrower or any of the Restricted Subsidiaries of assets or capital stock or
other equity interests, so long as (a) such acquisition and all
transactions related thereto shall be consummated in accordance with applicable
law; (b) such acquisition shall, in the case of the acquisition of capital
stock or other equity interests by the Borrower or any Restricted Subsidiary, result
in the issuer of such capital stock or other equity interests becoming a
Restricted Domestic Subsidiary and a direct Restricted Domestic Subsidiary in
the case of such an acquisition by the Borrower; (c) after giving effect
to such acquisition, no Default or Event of Default shall have occurred and be
continuing; and (d) the Borrower shall be in compliance, on a pro forma
basis after giving effect to such acquisition (including any Indebtedness
assumed or permitted to exist or incurred pursuant to Sections 10.1(j) and
10.1(k), respectively, and any related Pro Forma Adjustment), with the
covenants set forth in Sections 10.8, 10.9, 10.10 and 10.11, as such covenants
are recomputed as at the last day of the most recently ended Test Period under
such Sections as if such acquisition had occurred on the first day of such Test
Period.


 


“Permitted
Investments” shall mean (a) securities issued or unconditionally guaranteed
by the United States government or any agency or instrumentality thereof, in 


 


22

















 


each
case having maturities of not more than 24 months from the date of acquisition
thereof; (b) securities issued by any state of the United States of America or
any political subdivision of any such state or any public instrumentality
thereof or any political subdivision of any such state or any public
instrumentality thereof having maturities of not more than 24 months from the
date of acquisition thereof and, at the time of acquisition, having an
investment grade rating generally obtainable from either S&P or Moody’s
(or, if at any time neither S&P nor Moody’s shall be rating such
obligations, then from another nationally recognized rating service); (c)
commercial paper issued by any Lender or any bank holding company owning any
Lender; (d) commercial paper maturing no more than 12 months after
the date of creation thereof and, at the time of acquisition, having a rating
of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time
neither S&P nor Moody’s shall be rating such obligations, an equivalent
rating from another nationally recognized rating service); (e) domestic and
eurodollar certificates of deposit or bankers’ acceptances maturing no more
than two years after the date of acquisition thereof issued by any Lender or
any other bank having combined capital and surplus of not less than
$250,000,000 in the case of domestic banks and $100,000,000 (or the dollar
equivalent thereof) in the case of foreign banks; (f) repurchase agreements
with a term of not more than 30 days for underlying securities of the type
described in clauses (a), (b) and (e) above entered into with any bank meeting
the qualifications specified in clause (e) above or securities dealers of
recognized national standing; (g) shares of investment companies that are
registered under the Investment Company Act of 1940 and invest solely in one or
more of the types of securities described in clauses (a) through (f) above; and
(h) in the case of investments by any Restricted Foreign Subsidiary, other
customarily utilized high-quality investments in the country where such
Restricted Foreign Subsidiary is located.


 


“Permitted
Liens” shall mean (a) Liens for taxes, assessments or governmental charges
or claims not yet due or which are being contested in good faith and by
appropriate proceedings for which appropriate reserves have been established in
accordance with GAAP; (b) Liens in respect of property or assets of the
Borrower or any of its Subsidiaries imposed by law, such as carriers’,
warehousemen’s and mechanics’ Liens and other similar Liens arising in the
ordinary course of business, in each case so long as such Liens arise in the
ordinary course of business and do not individually or in the aggregate have a
Material Adverse Effect; (c) Liens arising from judgments or decrees in
circumstances not constituting an Event of Default under Section 11.9; (d)
Liens incurred or deposits made in connection with workers’ compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business; (e) ground
leases in respect of real property on which facilities owned or leased by the
Borrower or any of its Subsidiaries are located; (f) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with the
business of the Borrower and its Subsidiaries taken as a whole; (g) any
interest or title of a lessor or secured by a lessor’s interest under any lease
permitted by this Agreement; (h) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (i) Liens on goods the


 


23

















 


purchase
price of which is financed by a documentary letter of credit issued for the
account of the Borrower or any of its Subsidiaries, provided that such
Lien secures only the obligations of the Borrower or such Subsidiaries in
respect of such letter of credit to the extent permitted under
Section 10.1; (j) leases or subleases granted to others not
interfering in any material respect with the business of the Borrower and its
Subsidiaries, taken as a whole; and (k) any assignment or transfer permitted by
the other applicable terms of this Agreement.


 


“Permitted
Preferred Stock” shall mean any preferred stock of the Borrower which is
not subject to any mandatory redemption, put, repayment, sinking fund or
similar requirement (other than customary change of control put rights, provided
that such requirement states that payments in respect thereof may not be made
to the extent that such payments would constitute a Default or Event of
Default) prior to the twelfth anniversary of the Closing Date.


 


“Person”
shall mean any individual, partnership, joint venture, firm, corporation,
limited liability company, association, trust or other enterprise or any
Governmental Authority.


 


“Plan”
shall mean any multiemployer or single-employer plan, as defined in
Section 4001 of ERISA and subject to Title IV of ERISA, that is or was
within any of the preceding five plan years maintained or contributed to by (or
to which there is or was an obligation to contribute or to make payments of)
the Borrower, a Subsidiary or an ERISA Affiliate.


 


“Pledge
Agreement” shall mean and include the Pledge Agreement entered into by the
Borrower, the other pledgors party thereto and the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit B, as the
same may be amended, supplemented or otherwise modified from time to time.


 


“Prepayment
Event” shall mean any Asset Sale Prepayment Event or Debt Incurrence
Prepayment Event.


 


“Prime
Rate” shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its reference rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by Chase in connection with extensions of
credit to debtors).


 


“Pro
Forma Adjustment” shall mean, for any test period that includes any of the
four fiscal quarters first following any Permitted Acquisition, with respect to
the Acquired Cash Flow of the applicable Acquired Entity or Business, the pro
forma increase or decrease in such Acquired Cash Flow projected by the Borrower
in good faith as a result of reasonably identifiable and supportable net cost
savings or additional net costs, as the case may be, realizable during such
period by combining the operations of such Acquired Entity or Business with the
operations of the Borrower and its Subsidiaries, provided that so long
as such net cost savings or additional net costs will be realizable at any time
during such period, it may be assumed, for purposes of projecting


 


24

















 


such
pro forma increase or decrease to such Acquired Cash Flow, that such net
cost savings or additional net costs will be realizable during the entire such
period, provided further that any such pro forma increase or
decrease to such Acquired Cash Flow shall be without duplication for net cost
savings or additional net costs actually realized during such period and
already included in such Acquired Cash Flow.


 


“Pro
Forma Adjustment Certificate” shall mean any certificate of an Authorized
Officer of the Borrower delivered pursuant to Section 9.1(g) or setting
forth the information described in clause (iii) to Section 9.1(d).


 


“Reference
Lender” shall mean Chase.


 


“Register”
shall have the meaning provided in Section 13.6(c).


 


“Regulated
Insurance Company” shall mean any Subsidiary of the Borrower, whether now
owned or hereafter acquired, that is authorized or admitted to carry on or
transact Insurance Business in any jurisdiction and is regulated by the
insurance department or similar regulatory authority of such jurisdiction.


 


“Regulation D”
shall mean Regulation D of the Board as from time to time in effect and
any successor to all or a portion thereof establishing reserve requirements.


 


“Regulation T”
shall mean Regulation T of the Board as from time to time in effect and
any successor to all or a portion thereof establishing margin requirements.


 


“Regulation U”
shall mean Regulation U of the Board as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.


 


“Regulation X”
shall mean Regulation X of the Board as from time to time in effect and
any successor to all or a portion thereof establishing margin requirements.


 


“Reinsurance
Agreement” shall mean any agreement, contract, treaty or other arrangement
whereby one or more insurers, as reinsurers, assume liabilities under insurance
policies or agreements issued by another insurance or reinsurance company or
companies.


 


“Repayment
Amounts” shall mean, collectively, (a) the A Repayment Amounts, (b) the B
Repayment Amounts and (c) the C Repayment Amounts.


 


“Repayment
Date” shall mean, collectively, (a) each A Repayment Date, (b) each B
Repayment Date and (c) each C Repayment Date.


 


“Reportable
Event” shall mean an event described in Section 4043 of ERISA and the
regulations thereunder.


 


“Required
A Term Loan Lenders” shall mean, at any date, Non-Defaulting Lenders having
or holding a majority of the outstanding principal amount of the A Term


 


25

















 


Loans
(excluding the A Term Loans held by Defaulting Lenders) in the aggregate at
such date.


 


“Required
A Term/Revolving Credit Lenders” shall mean, at any date, Non-Defaulting
Lenders having or holding 66-2/3% or more of the sum of (a) the outstanding
principal amount of the A Terms Loans (excluding the A Term Loans held by
Defaulting Lenders) in the aggregate at such date and (b)(i) the Adjusted Total
Revolving Credit Commitment at such date or (ii) if the Total Revolving Credit
Commitment has been terminated, the outstanding principal amount of the
Revolving Credit Loans and Letter of Credit Exposures (excluding the Loans and
Letter of Credit Exposures of Defaulting Lenders) in the aggregate on such
date.


 


“Required
B Term Loan Lenders” shall mean, at any date, Non-Defaulting Lenders having
or holding a majority of the outstanding principal amount of the B Term Loans
(excluding the B Term Loans held by Defaulting Lenders) in the aggregate at
such date.


 


“Required
B/C Term Loan Lenders” shall mean, at any date, Non-Defaulting Lenders
having or holding 66-2/3% or more of the sum of the outstanding principal
amount of (a) the B Term Loans (excluding the B Term Loans held by Defaulting
Lenders) in the aggregate at such date and (b) the C Term Loans (excluding the
C Term Loans held by Defaulting Lenders) in the aggregate at such date.


 


“Required
C Term Loan Lenders” shall mean, at any date, Non-Defaulting Lenders having
or holding a majority of the outstanding principal amount of the C Term Loans
(excluding the C Term Loans held by Defaulting Lenders) in the aggregate at
such date.


 


“Required
Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or
holding a majority of the sum of (i) the Adjusted Total Revolving Credit
Commitment at such date and (ii) the outstanding principal amount of the Term
Loans (excluding the Term Loans held by Defaulting Lenders) at such date or
(b) if the Total Revolving Credit Commitment has been terminated or for
the purposes of acceleration pursuant to Section 11, the holders
(excluding Defaulting Lenders) of a majority of the outstanding principal
amount of the Loans and Letter of Credit Exposures (excluding the Loans and
Letter of Credit Exposures of Defaulting Lenders) in the aggregate at such
date.


 


“Required
Revolving Credit Lenders” shall mean, at any date, (a) Non-Defaulting
Lenders having or holding a majority of the Adjusted Total Revolving
Credit Commitment at such date or (b) if the Total Revolving Credit
Commitment has been terminated, the holders (excluding Defaulting Lenders) of a
majority of the outstanding principal amount of the Revolving Credit Loans and
Letter of Credit Exposures (excluding the Loans and Letter of Credit Exposures
of Defaulting Lenders) in the aggregate at such date.


 


“Requirement
of Law” shall mean, as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such


 


26

















 


Person,
and any law, treaty, rule or regulation or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or assets or to which such Person or
any of its property or assets is subject.


 


“Restricted
Domestic Subsidiary” shall mean each Restricted Subsidiary that is also a
Domestic Subsidiary.


 


“Restricted
Foreign Subsidiary” shall mean each Foreign Subsidiary that is also a
Restricted Subsidiary.


 


“Restricted
Subsidiary” shall mean any Subsidiary of the Borrower other than an
Unrestricted Subsidiary.


 


“Retrocession
Agreement” shall mean any agreement, contract, treaty or other arrangement
whereby one or more insurers or reinsurers, as retrocessionaires, assume
liabilities of reinsurers under a Reinsurance Agreement or other
retrocessionaires under another Retrocession Agreement.


 


“Revolving
Credit Commitment” shall mean, (a) with respect to each Lender that is
a Lender on the date hereof, the amount set forth opposite such Lender’s name
on Schedule 1.1 as such Lender’s “Revolving Credit Commitment” and (b) in
the case of any Lender that becomes a Lender after the date hereof, the amount
specified as such Lender’s “Revolving Credit Commitment” in the Assignment and
Acceptance pursuant to which such Lender assumed a portion of the Total
Revolving Credit Commitment, in each case as the same may be changed from time
to time pursuant to the terms hereof.


 


“Revolving
Credit Commitment Percentage” shall mean at any time, for each Lender, the
percentage obtained by dividing such Lender’s Revolving Credit Commitment by
the Total Revolving Credit Commitment, provided that at any time when
the Total Revolving Credit Commitment shall have been terminated, each Lender’s
Revolving Credit Commitment Percentage shall be its Revolving Credit Commitment
Percentage as in effect immediately prior to such termination.


 


“Revolving
Credit Loan” shall have the meaning provided in Section 2.1(d).


 


“Revolving
Credit Maturity Date” shall mean the seventh anniversary of the Closing
Date, or, if such date is not a Business Day, the next preceding Business Day.


 


“Risk-Based
Capital” shall mean, for any Regulated Insurance Company, the ratio
(expressed as a percentage), at any time, of the Total Adjusted Capital of such
Regulated Insurance Company to the Authorized Control Level of such Regulated
Insurance Company.


 


“SAP”
shall mean, with respect to any Regulated Insurance Company, the accounting
procedures and practices prescribed or permitted by the Applicable Insurance
Regulatory Authority of the state in which such Regulated Insurance Company is
domiciled.


 


27

















 


“S&P”
shall mean Standard & Poor’s Ratings Service or any successor by
merger or consolidation to its business.


 


“SEC”
shall mean the Securities and Exchange Commission or any successor thereto.


 


“Section 9.1
Financials” shall mean the GAAP financial statements delivered, or required
to be delivered, pursuant to Section 9.1(a)(i) or (b)(i) together with the
accompanying officer’s certificate delivered, or required to be delivered,
pursuant to Section 9.1(d).


 


“SNIC”
shall mean Security National Insurance Company.


 


“Specified
Subsidiary” shall mean, at any date of determination, (a) any Material
Subsidiary; and (b) any Unrestricted Subsidiary (i) whose total
assets at the last day of the Test Period ending on the last day of the most
recent fiscal period for which Section 9.1 Financials have been delivered
were equal to or greater than 15% of the consolidated total assets of the
Borrower and its Subsidiaries at such date or (ii) whose gross revenues
for such Test Period were equal to or greater than 15% of the consolidated
gross revenues of the Borrower and its Subsidiaries for such period, in each
case determined in accordance with GAAP.


 


“Stated
Amount” of any Letter of Credit shall mean the maximum amount from time to
time available to be drawn thereunder, determined without regard to whether any
conditions to drawing could then be met.


 


“Status”
shall mean, as to the Borrower as of any date, the existence of  Level I Status, Level II Status, Level
III Status, Level IV Status, Level V Status or Level VI Status,
as the case may be, on such date. 
Changes in Status shall be determined based on the Consolidated Total
Debt to Consolidated Total Capitalization Ratio as of the last day of each
fiscal quarter and shall be effective on the date on which
(a) Section 9.1 Financials are delivered to the Lenders under
Section 9.1 in respect of such fiscal quarter and (b) an officer’s
certificate is delivered by the Borrower to the Lenders setting forth, with
respect to such Section 9.1 Financials, the then-applicable Status, and
shall remain in effect until the next change to be effected pursuant to this
definition, provided that (i) if the Borrower fails to deliver
Section 9.1 Financials when required under Section 9.1, then until
such Section 9.1 Financials are so delivered, the Status of the Borrower
for the purposes of this Agreement shall be Level I Status and
(ii) notwithstanding the foregoing, for the period from and including the
Closing Date to but excluding the day that is 180 days following the
Closing Date, the Status of the Borrower for the purposes of this Agreement
shall be Level I Status.


 


“Statutory
Pre-Tax Earnings” shall mean, for any period, for any Regulated Insurance
Company, net income determined in accordance with SAP plus, to the extent
deducted in arriving at such net income, provision for taxes (including,
without limitation, payments under tax sharing agreements), adjusted to reflect
on a pro forma


 


28

















 


basis
termination of the Acquired Companies’ existing quota share reinsurance on a
cut-off basis, as if such termination had occurred prior to such period.


 


“Subsidiary”
of any Person shall mean and include (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly through
Subsidiaries and (b) any partnership, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries has
more than a 50% equity interest at the time. 
Unless otherwise expressly provided, all references herein to a
“Subsidiary” shall mean a Subsidiary of the Borrower.


 


“Surplus”
shall mean, as of any date of determination, the surplus of all Regulated
Insurance Companies as of such date determined on a Combined basis in
accordance with SAP.


 


“Surplus
Infusion” shall mean the surplus infusion on or about the Closing Date by
the Borrower of an aggregate amount of not less than $62,000,000 to the surplus
of Coast and SNIC in the form of common equity investments.


 


“Swingline
Commitment” shall mean $10,000,000.


 


“Swingline
Loans” shall have the meaning provided in Section 2.1(e).


 


“Swingline
Maturity Date” shall mean, with respect to any Swingline Loan, the date
that is five Business Days prior to the Revolving Credit Maturity Date.


 


“Syndication
Agent” shall mean The Bank of New York, together with its affiliates, as
the syndication agent for the Lenders under this Agreement and the other Credit
Documents.


 


“Term
Loans” shall mean, collectively, (a) the A Term Loans, (b) the B Term Loans
and (c) the C Term Loans.


 


“Test
Period” shall mean (i) for any determination made prior to
September 30, 1999, the period from the Closing Date to the last day of
the fiscal quarter of the Borrower then last ended and (ii) for any
determination made thereafter, the four consecutive fiscal quarters of the
Borrower then last ended.


 


“Total
A Term Loan Commitment” shall mean the sum of the A Term Loan Commitments
of all the Lenders.


 


“Total
Adjusted Capital” shall mean “Total Adjusted Capital” as defined by the
NAIC as of December 31, 1994 and as applied in the context of the
Risk-Based Capital Guidelines promulgated by the NAIC.


 


29

















 


“Total
B Term Loan Commitment” shall mean the sum of the B Term Loan Commitments
of all the Lenders.


 


“Total
C Term Loan Commitment” shall mean the sum of the C Term Loan Commitments
of all the Lenders.


 


“Total
Commitment” shall mean the sum of the Total Term Loan Commitment and the
Total Revolving Credit Commitment.


 


“Total
Credit Exposure” shall mean, at any date, the sum of (a) the Total
Revolving Credit Commitment at such date, (b) the Total Term Loan
Commitment at such date and (c) the outstanding principal amount of all
Term Loans at such date.


 


“Total
Revolving Credit Commitment” shall mean the sum of the Revolving Credit
Commitments of all the Lenders.


 


“Total
Term Loan Commitment” shall mean the sum of the A Term Loan Commitments,
the B Term Loan Commitments and the C Term Loan Commitments of all Lenders.


 


“Transaction”
shall mean, collectively, (a) the Acquisition and (b) the entering into of the
Credit Documents and the incurrence of Loans on the Closing Date.


 


“Transaction
Expense” shall mean any fees or expenses incurred or paid by the Borrower
or any of its Subsidiaries in connection with the Transaction, the financing
therefor and the other transactions contemplated hereby and thereby.


 


“Transferee”
shall have the meaning provided in Section 13.6(e).


 


“Type”
shall mean (a) as to any Term Loan, its nature as an ABR Loan or a
Eurodollar Term Loan and (b) as to any Revolving Credit Loan, its nature
as an ABR Loan or a Eurodollar Revolving Credit Loan.


 


“Unfunded
Current Liability” of any Plan shall mean the amount, if any, by which the
present value of the accrued benefits under the Plan as of the close of its
most recent plan year, determined in accordance with Statement of Financial
Accounting Standards No. 87 as in effect on the date hereof, based upon the
actuarial assumptions that would be used by the Plan’s actuary in a termination
of the Plan, exceeds the fair market value of the assets allocable thereto.


 


“Unpaid
Drawing” shall have the meaning provided in Section 3.4(a).


 


“Unregulated
Restricted Subsidiary” shall mean any Restricted Subsidiary that is also an
Unregulated Subsidiary.


 


“Unregulated
Subsidiary” shall mean any Subsidiary of the Borrower, whether now owned or
hereafter acquired, other than a Regulated Insurance Company.


 


30

















 


“Unrestricted
Subsidiary” shall mean (a) any Subsidiary of the Borrower that is
formed or acquired after the Closing Date, provided that at such time
(or promptly thereafter) the Borrower designates such Subsidiary an
Unrestricted Subsidiary in a written notice to the Administrative Agent,
(b) any Restricted Subsidiary on the Closing Date subsequently
re-designated as an Unrestricted Subsidiary by the Borrower in a written notice
to the Administrative Agent, provided that such re-designation shall be
deemed to be an investment on the date of such re-designation in an
Unrestricted Subsidiary in an amount equal to the sum of (i) the net worth
of such re-designated Restricted Subsidiary immediately prior to such
re-designation (such net worth to be calculated without regard to any Guarantee
provided by such re-designated Restricted Subsidiary) and (ii) the
aggregate principal amount of any Indebtedness owed by such re-designated
Restricted Subsidiary to the Borrower or any other Restricted Subsidiary
immediately prior to such re-designation, all calculated, except as set forth
in the parenthetical to clause (i), on a consolidated basis in accordance with
GAAP, and (c) each Subsidiary of an Unrestricted Subsidiary; provided,
however, that (i) at the time of any written re-designation by the
Borrower to the Administrative Agent of any Unrestricted Subsidiary as a
Restricted Subsidiary, the Unrestricted Subsidiary so re-designated shall no
longer constitute an Unrestricted Subsidiary, (ii) no Unrestricted
Subsidiary may be re-designated as a Restricted Subsidiary if a Default or
Event of Default would result from such re-designation and (iii) no
Restricted Subsidiary may be re-designated as an Unrestricted Subsidiary if a
Default or Event of Default would result from such re-designation.  On or promptly after the date of its
formation, acquisition or re-designation, as applicable, each Unrestricted
Subsidiary shall have entered into a tax sharing agreement containing terms
that, in the reasonable judgment of the Administrative Agent, provide for an
appropriate allocation of tax liabilities and benefits.


 


“Voting
Stock” shall mean, with respect to any Person, shares of such Person’s
capital stock having the right to vote for the election of directors of such
Person under ordinary circumstances.


 


SECTION 2. 
Amount and Terms of Credit.


 


2.1           Commitments.  i)  Subject to and upon the terms
and conditions herein set forth, each Lender having an A Term Loan Commitment severally
agrees to make a loan or loans (each an “A Term Loan” and, collectively,
the “A Term Loans”) to the Borrower, which A Term Loans (i) shall
be made on the Closing Date, (ii) may, at the option of the Borrower, be
incurred and maintained as, and/or converted into, ABR Loans or Eurodollar Term
Loans, provided that all A Term Loans made by each of the Lenders
pursuant to the same Borrowing shall, unless otherwise specifically provided
herein, consist entirely of A Term Loans of the same Type, (iii) may be
repaid in accordance with the provisions hereof, but once repaid, may not be
reborrowed, (iv) shall not exceed for any such Lender the A Term Loan
Commitment of such Lender and (v) shall not exceed in the aggregate the
Total A Term Loan Commitment.  On the A
Term Loan Maturity Date, all A Term Loans shall be repaid in full.


 


(b)  Subject to and upon the terms and
conditions herein set forth, each Lender having a B Term Loan Commitment
severally agrees to make a loan or loans (each a “B Term Loan” and, collectively,
the “B Term Loans”) to the Borrower, which B Term Loans (i) shall
be


 


31

















 


made on the Closing Date,
(ii) may, at the option of the Borrower, be incurred and maintained as,
and/or converted into, ABR Loans or Eurodollar Term Loans, provided that
all B Term Loans made by each of the Lenders pursuant to the same Borrowing
shall, unless otherwise specifically provided herein, consist entirely of B
Term Loans of the same Type, (iii) may be repaid in accordance with the
provisions hereof, but once repaid, may not be reborrowed, (iv) shall not
exceed for any such Lender the B Term Loan Commitment of such Lender and
(v) shall not exceed in the aggregate the Total B Term Loan Commitment.  On the B Term Loan Maturity Date, all B Term
Loans shall be repaid in full.


 


(c)  Subject to and upon the terms and
conditions herein set forth, each Lender having a C Term Loan Commitment
severally agrees to make a loan or loans (each a “C Term Loan” and,
collectively, the “C Term Loans”) to the Borrower, which C Term Loans
(i) shall be made on the Closing Date, (ii) may, at the option of the
Borrower, be incurred and maintained as, and/or converted into, ABR Loans or
Eurodollar Term Loans, provided that all C Term Loans made by each of
the Lenders pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of C Term Loans of the same Type,
(iii) may be repaid in accordance with the provisions hereof, but once
repaid, may not be reborrowed, (iv) shall not exceed for any such Lender the C
Term Loan Commitment of such Lender and (v) shall not exceed in the
aggregate the Total C Term Loan Commitment. 
On the C Term Loan Maturity Date, all C Term Loans shall be repaid in
full.


 


(d)  Subject to and upon the terms and
conditions herein set forth, each Lender having a Revolving Credit Commitment
severally agrees to make a loan or loans (each a “Revolving Credit Loan”
and, collectively, the “Revolving Credit Loans”) to the Borrower, which
Revolving Credit Loans (i) shall be made at any time and from time to time
on and after the Closing Date and prior to the Revolving Credit Maturity Date, provided
that no more than $5,000,000 in the aggregate of Revolving Credit Loans and
Swingline Loans may be incurred on the Closing Date, (ii) may, at the
option of the Borrower, be incurred and maintained as, and/or converted into,
ABR Loans or Eurodollar Revolving Credit Loans, provided that all
Revolving Credit Loans made by each of the Lenders pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Revolving Credit Loans of the same Type, (iii) may be repaid and
reborrowed in accordance with the provisions hereof, (iv) shall not exceed for
any such Lender at any time outstanding that aggregate principal amount which,
when added to the product of (x) such Lender’s Revolving Credit Commitment
Percentage and (y) the sum of (I) the aggregate Letter of Credit Outstandings
at such time and (II) the aggregate principal amount of all Swingline
Loans then outstanding, equals the Revolving Credit Commitment of such Lender
at such time and (v) shall not, after giving effect thereto and to the
application of the proceeds thereof, exceed for all Lenders at any time outstanding
the aggregate principal amount that, when added to the sum of (x) the Letter of
Credit Outstandings at such time and (y) the aggregate principal amount of all
Swingline Loans then outstanding, equals the Total Revolving Credit Commitment
then in effect.  On the Revolving Credit
Maturity Date, all Revolving Credit Loans shall be repaid in full.


 


(e)  Subject to
and upon the terms and conditions herein set forth, Chase in its individual
capacity agrees, at any time and from time to time on and after the Closing
Date and prior to the Swingline Maturity Date, to make a loan or loans (each a
“Swingline Loan” and, collectively, the “Swingline Loans”) to the
Borrower, which Swingline Loans (i) shall be ABR


 


32

















 


Loans, (ii) shall
have the benefit of the provisions of Section 2.1(f), (iii) shall not
exceed at any time outstanding the Swingline Commitment, (iv) shall not,
after giving effect thereto and to the application of the proceeds thereof,
exceed in the aggregate at any time outstanding the principal amount that, when
added to the aggregate principal amount of all Revolving Credit Loans then
outstanding and all Letter of Credit Outstandings at such time, equals the
Total Revolving Credit Commitment then in effect and (v) may be repaid and
reborrowed in accordance with the provisions hereof.  No more than $5,000,000 in the aggregate of Swingline Loans and
Revolving Credit Loans may be incurred on the Closing Date.  On the Swingline Maturity Date, each
outstanding Swingline Loan shall be repaid in full.  Chase shall not make any Swingline Loan after receiving a written
notice from the Borrower or any Lender stating that a Default or Event of
Default exists and is continuing until such time as Chase shall have received
written notice of (i) rescission of all such notices from the party or
parties originally delivering such notice or (ii) the waiver of such
Default or Event of Default in accordance with the provisions of
Section 13.1.


 


(f)  On any
Business Day, Chase may, in its sole discretion, give notice to the Lenders
that all then-outstanding Swingline Loans shall be funded with a Borrowing of
Revolving Credit Loans, in which case a Borrowing of Revolving Credit Loans
constituting ABR Loans (each such Borrowing, a “Mandatory Borrowing”)
shall be made on the immediately succeeding Business Day by all Lenders pro
rata based on each Lender’s Revolving Credit Commitment Percentage, and
the proceeds thereof shall be applied directly to Chase to repay Chase for such
outstanding Swingline Loans.  Each
Lender hereby irrevocably agrees to make such Revolving Credit Loans upon one
Business Day’s notice pursuant to each Mandatory Borrowing in the amount and in
the manner specified in the preceding sentence and on the date specified to it
in writing by Chase notwithstanding (i) that the amount of the Mandatory
Borrowing may not comply with the minimum amount for each Borrowing specified
in Section 2.2, (ii) whether any conditions specified in Section 7
are then satisfied, (iii) whether a Default or an Event of Default has occurred
and is continuing, (iv) the date of such Mandatory Borrowing or (v) any
reduction in the Total Commitment after any such Swingline Loans were
made.  In the event that, in the sole
judgment of Chase, any Mandatory Borrowing cannot for any reason be made on the
date otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code in respect of the
Borrower), each Lender hereby agrees that it shall forthwith purchase from
Chase (without recourse or warranty) such participation of the outstanding
Swingline Loans as shall be necessary to cause the Lenders to share in such
Swingline Loans ratably based upon their respective Revolving Credit Commitment
Percentages, provided that all principal and interest payable on such
Swingline Loans shall be for the account of Chase until the date the respective
participation is purchased and, to the extent attributable to the purchased
participation, shall be payable to the Lender purchasing same from and after
such date of purchase.


 


2.2           Minimum
Amount of Each Borrowing; Maximum Number of Borrowings. The aggregate
principal amount of each Borrowing of Term Loans, Revolving Credit Loans or
Swingline Loans shall be in a multiple of $100,000 and shall not be less than
the Minimum Borrowing Amount with respect thereto (except that Mandatory
Borrowings shall be made in the amounts required by Section 2.1(f)).  More than one Borrowing may be incurred on
any date, provided that at no time shall there be outstanding more than
20 Borrowings of Eurodollar Loans under this Agreement.


 


33

















 


2.3           Notice
of Borrowing.  ii)  The
Borrower shall give the Administrative Agent at the Administrative Agent’s
Office (i) prior to 12:00 Noon (New York time) at least three Business
Days’ prior written notice (or telephonic notice promptly confirmed in writing)
of the Borrowing of Term Loans if all or any of such Term Loans are to be initially
Eurodollar Loans and (ii) prior written notice (or telephonic notice
promptly confirmed in writing) prior to 10:00 A.M. (New York time) on the
date of the Borrowing of Term Loans if all such Term Loans are to be ABR Loans.  Such notice (together with each notice of a
Borrowing of Revolving Credit Loans pursuant to Section 2.3(b) and each
notice of a Borrowing of Swingline Loans pursuant to Section 2.3(c), a “Notice
of Borrowing”) shall be irrevocable and shall specify (i) the
aggregate principal amount of the Term Loans to be made and the Facilities
pursuant to which such Term Loans are to be made, (ii) the date of the
borrowing (which shall be a Business Day and, in the case of the initial
borrowing, shall be the Closing Date) and (iii) whether the Term Loans of
each Facility shall consist of ABR Loans and/or Eurodollar Term Loans and, if
the Term Loans of any Facility are to include Eurodollar Term Loans, the
Interest Period to be initially applicable thereto.  The Administrative Agent shall promptly give each Lender written
notice (or telephonic notice promptly confirmed in writing) of each proposed
Borrowing of Term Loans, of such Lender’s proportionate share thereof and of
the other matters covered by the related Notice of Borrowing.


 


(b)  Whenever the Borrower desires to incur
Revolving Credit Loans hereunder (other than Mandatory Borrowings or borrowings
to repay Unpaid Drawings), it shall give the Administrative Agent at the
Administrative Agent’s Office (i) prior to 12:00 Noon (New York time) at least
three Business Days’ prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Eurodollar Revolving Credit Loans
and (ii) prior to 12:00 Noon (New York time) at least one Business Day’s
prior written notice (or telephonic notice promptly confirmed in writing) of
each Borrowing of ABR Loans.  Each such
Notice of Borrowing, except as otherwise expressly provided in
Section 2.10, shall be irrevocable and shall specify (i) the aggregate
principal amount of the Revolving Credit Loans to be made pursuant to such
Borrowing, (ii) the date of Borrowing (which shall be a Business Day) and (iii)
whether the respective Borrowing shall consist of ABR Loans or Eurodollar
Revolving Credit Loans and, if Eurodollar Revolving Credit Loans, the Interest
Period to be initially applicable thereto. 
The Administrative Agent shall promptly give each Lender written notice
(or telephonic notice promptly confirmed in writing) of each proposed Borrowing
of Revolving Credit Loans, of such Lender’s proportionate share thereof and of
the other matters covered by the related Notice of Borrowing.


 


(c)  Whenever the Borrower desires to incur
Swingline Loans hereunder, it shall give the Administrative Agent written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing
of Swingline Loans prior to 1:00 P.M. (New York time) on the date of such
Borrowing.  Each such notice shall be
irrevocable and shall specify (i) the aggregate principal amount of the
Swingline Loans to be made pursuant to such Borrowing and (ii) the date of
Borrowing (which shall be a Business Day). 
The Administrative Agent shall promptly give Chase written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing of
Swingline Loans and of the other matters covered by the related Notice of
Borrowing.


 


34

















 


(d)  Mandatory Borrowings shall be made upon
the notice specified in Section 2.1(f), with the Borrower irrevocably
agreeing, by its incurrence of any Swingline Loan, to the making of Mandatory
Borrowings as set forth in such Section.


 


(e)  Borrowings to reimburse Unpaid Drawings
shall be made upon the notice specified in Section 3.4(c).


 


(f)  Without in any way limiting the
obligation of the Borrower to confirm in writing any notice it may give
hereunder by telephone, the Administrative Agent may act prior to receipt of
written confirmation without liability upon the basis of such telephonic notice
believed by the Administrative Agent in good faith to be from an Authorized
Officer of the Borrower.  In each such
case the Borrower hereby waives the right to dispute the Administrative Agent’s
record of the terms of any such telephonic notice.


 


2.4           Disbursement
of Funds.  iii)  No later than 12:00 Noon (New York time) on
the date specified in each Notice of Borrowing (including Mandatory
Borrowings), each Lender will make available its pro  rata
portion, if any, of each Borrowing requested to be made on such date in the
manner provided below, provided that all Swingline Loans shall be made
available in the full amount thereof by Chase no later than 2:00 P.M. (New York
time) on the date requested.


 


(b)  Each Lender shall make available all
amounts it is to fund under any Borrowing in Dollars and immediately available
funds to the Administrative Agent at the Administrative Agent’s Office and the
Administrative Agent will (except in the case of Mandatory Borrowings and
Borrowings to repay Unpaid Drawings) make available to the Borrower by
depositing to the Borrower’s account at the Administrative Agent’s Office the
aggregate of the amounts so made available in Dollars and the type of funds
received.  Unless the Administrative
Agent shall have been notified by any Lender prior to the date of any such
Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower
a corresponding amount.  If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender and the Administrative Agent has made available same to the
Borrower, the Administrative Agent shall be entitled to recover such
corresponding amount from such Lender. 
If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent shall promptly
notify the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent.  The
Administrative Agent shall also be entitled to recover from such Lender or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (i) if paid
by such Lender, the Federal Funds Effective Rate or (ii) if paid by the
Borrower, the then-applicable rate of interest, calculated in accordance with
Section 2.8, for the respective Loans.


 


35

















 


(c)  Nothing in this Section 2.4 shall
be deemed to relieve any Lender from its obligation to fulfill its commitments
hereunder or to prejudice any rights that the Borrower may have against any
Lender as a result of any default by such Lender hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to fulfill its commitments hereunder).


 


2.5           Repayment
of Loans; Evidence of Debt. 
iv)  The Borrower shall repay to the Administrative Agent, for
the benefit of the Lenders, (i) on the A Term Loan Maturity Date, the
then-unpaid A Term Loans, (ii) on the B Term Loan Maturity Date, the then-unpaid
B Term Loans, (iii) on the C Term Loan Maturity Date, the then-unpaid C Term
Loans and (iv) on the Revolving Credit Maturity Date, the then-unpaid
Revolving Credit Loans.  The Borrower
shall repay to the Administrative Agent, for the account of Chase, on the
Swingline Maturity Date, the then-unpaid Swingline Loans.


 


(b)  The Borrower shall repay to the
Administrative Agent, for the benefit of the Lenders of A Term Loans, on each
date set forth below (each an “A Repayment Date”), the principal amount
of the A Term Loans set forth below opposite such A Repayment Date (each an “A
Repayment Amount”):


 


	
  A Repayment Date

  	
   

  	
  A
  Repayment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2001

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  December 31, 2001

  	
   

  	
  2,500,000

  	
   

  
	
  June 30, 2002

  	
   

  	
  2,500,000

  	
   

  
	
  December 31, 2002

  	
   

  	
  3,500,000

  	
   

  
	
  June 30, 2003

  	
   

  	
  3,500,000

  	
   

  
	
  December 31, 2003

  	
   

  	
  5,000,000

  	
   

  
	
  June 30, 2004

  	
   

  	
  5,000,000

  	
   

  
	
  December 31, 2004

  	
   

  	
  7,500,000

  	
   

  
	
  A
  Term Loan Maturity Date

  	
   

  	
  7,500,000

  	
   

  
					



 


(c)  The Borrower shall repay to the
Administrative Agent, for the benefit of the Lenders of B Term Loans, on each
date set forth below (each a “B Repayment Date”), the principal amount
of the B Term Loans set forth below opposite such B Repayment Date (each a “B
Repayment Amount”):


 


	
  B Repayment Date

  	
   

  	
  B
  Repayment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 1999

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  June 30, 2000

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2001

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2002

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2003

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2004

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  350,000

  	
   

  
	
  B
  Term Loan Maturity Date

  	
   

  	
  32,550,000

  	
   

  
					



 


36

















 


(d)  The Borrower shall repay to the
Administrative Agent, for the benefit of the Lenders of C Term Loans, on each
date set forth below (each a “C Repayment Date”), the principal amount
of the C Term Loans set forth below opposite such C Repayment Date (each a “C
Repayment Amount”):


 


	
  C Repayment Date

  	
   

  	
  C
  Repayment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 1999

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  June 30, 2000

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2001

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2002

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2003

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2004

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  350,000

  	
   

  
	
  June 30, 2006

  	
   

  	
  350,000

  	
   

  
	
  C
  Term Loan Maturity Date

  	
   

  	
  32,200,000

  	
   

  
					



 


(e)  Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to the appropriate lending office of such Lender
resulting from each Loan made by such lending office of such Lender from time
to time, including the amounts of principal and interest payable and paid to
such lending office of such Lender from time to time under this Agreement.


 


(f)  The Administrative Agent shall maintain
the Register pursuant to Section 13.6, and a subaccount for each Lender,
in which Register and subaccounts (taken together) shall be recorded (i) the
amount of each Loan made hereunder, whether such Loan is an A Term Loan, a B
Term Loan, a C Term Loan, a Revolving Credit Loan or a Swingline Loan, the Type
of each Loan made and the Interest Period applicable thereto, (ii) the amount
of any principal or interest due and payable or to become due and payable from
the Borrower to each Lender or Chase hereunder and (iii) the amount of any sum
received by the Agent hereunder from the Borrower and each Lender’s share
thereof.


 


(g)  The entries made in the Register and
accounts and subaccounts maintained pursuant to paragraphs (e) and (f) of this
Section 2.5 shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such account, such Register or
such subaccount, as applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Loans made to the Borrower by such Lender in accordance with the terms of this
Agreement.


 


2.6           Conversions
and Continuations. 
v)  The Borrower shall have the option on any Business Day to
convert all or a portion equal to at least the Minimum Borrowing Amount of the
outstanding principal amount of Loans pursuant to a single Facility of one Type
into a Borrowing or Borrowings of another Type under such Facility or to
continue the outstanding principal amount of any Eurodollar Term Loans or
Eurodollar Revolving Credit Loans as Eurodollar Term Loans or Eurodollar
Revolving Credit Loans, as the case may be, for an additional Interest Period, provided
that (i) no partial conversion of Eurodollar Term Loans or 


 


37

















 


Eurodollar Revolving
Credit Loans shall reduce the outstanding principal amount of Eurodollar Term
Loans or Eurodollar Revolving Credit Loans made pursuant to a single Borrowing
to less than the Minimum Borrowing Amount, (ii) ABR Loans may not be converted
into Eurodollar Term Loans or Eurodollar Revolving Credit Loans if a Default or
Event of Default is in existence on the date of the conversion and the
Administrative Agent has or the Required Lenders have determined in its or
their sole discretion not to permit such conversion, (iii) Eurodollar
Loans may not be continued as Eurodollar Term Loans or Eurodollar Revolving
Credit Loans for an additional Interest Period if a Default or Event of Default
is in existence on the date of the proposed continuation and the Administrative
Agent has or the Required Lenders have determined in its or their sole
discretion not to permit such continuation and (iv) Borrowings resulting
from conversions pursuant to this Section 2.6 shall be limited in number
as provided in Section 2.2.  Each such
conversion or continuation shall be effected by the Borrower by giving the
Administrative Agent at the Administrative Agent’s Office prior to 12:00 Noon
(New York time) at least three Business Days’ (or one Business Day’s notice in
the case of a conversion into ABR Loans) prior written notice (or telephonic
notice promptly confirmed in writing) (each a “Notice of Conversion or
Continuation”) specifying the A Term Loans, B Term Loans, C Term Loans or
Revolving Credit Loans to be so converted or continued, the Type of Term Loans
or Revolving Credit Loans to be converted or continued into and, if such Term
Loans or Revolving Credit Loans are to be converted into or continued as
Eurodollar Term Loans or Eurodollar Revolving Credit Loans, the Interest Period
to be initially applicable thereto.  The
Administrative Agent shall give each Lender notice as promptly as practicable
of any such proposed conversion or continuation affecting any of its Term Loans
or Revolving Credit Loans.


 


(b)  If any Default or Event of Default is
in existence at the time of any proposed continuation of any Eurodollar Term
Loans or Eurodollar Revolving Credit Loans and the Administrative Agent has or
the Required Lenders have determined in its or their sole discretion not to
permit such continuation, such Eurodollar Term Loans or Eurodollar Revolving
Credit Loans shall be automatically converted on the last day of the current
Interest Period into ABR Loans.  If upon
the expiration of any Interest Period in respect of Eurodollar Term Loans or
Eurodollar Revolving Credit Loans, the Borrower has failed to elect a new
Interest Period to be applicable thereto as provided in paragraph (a)
above, the Borrower shall be deemed to have elected to convert such Borrowing
of Eurodollar Term Loans or Eurodollar Revolving Credit Loans, as the case may
be, into a Borrowing of ABR Loans effective as of the expiration date of such
current Interest Period.


 


2.7           Pro
Rata Borrowings.  Each Borrowing of
A Term Loans, B Term Loans, C Term Loans or Revolving Credit Loans under this
Agreement shall be granted by the Lenders pro  rata on the basis
of their then-applicable Commitments. 
It is understood that no Lender shall be responsible for any default by
any other Lender in its obligation to make Loans hereunder and that each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fulfill its commitments
hereunder.


 


2.8           Interest.  vi) 
The unpaid principal amount of each ABR Loan shall bear interest from
the date of the Borrowing thereof until maturity (whether by acceleration or
otherwise) at a rate per annum that shall at all times be the Applicable ABR
Margin plus the ABR in effect from time to time.


 


38

















 


(b)  The unpaid principal amount of each Eurodollar
Term Loan or Eurodollar Revolving Credit Loan shall bear interest from the date
of the Borrowing thereof until maturity thereof (whether by acceleration or
otherwise) at a rate per annum that shall at all times be the Applicable
Eurodollar Margin in effect from time to time plus the relevant Eurodollar
Rate.


 


(c)  If all or a portion of (i) the
principal amount of any Loan or (ii) any interest payable thereon shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum that is
(x) in the case of overdue principal, the rate that would otherwise be
applicable thereto plus 2% or (y) in the case of any overdue
interest, to the extent permitted by applicable law, the rate described in
Section 2.8(a) plus 2% from and including the date of such
non-payment to but excluding the date on which such amount is paid in full
(after as well as before judgment).


 


(d)  Interest on each Loan shall accrue from
and including the date of any Borrowing to but excluding the date of any
repayment thereof and shall be payable (i) in respect of each ABR Loan,
quarterly in arrears on the last day of each March, June, September and
December, (ii) in respect of each Eurodollar Term Loan or Eurodollar Revolving
Credit Loan, on the last day of each Interest Period applicable thereto and, in
the case of an Interest Period in excess of three months, on each date
occurring at three-month intervals after the first day of such Interest Period,
(iii) in respect of each Loan (except, in the case of prepayments, any ABR
Loan), on any prepayment (on the amount prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.


 


(e)  All computations of interest hereunder
shall be made in accordance with Section 5.5.


 


(f)  The Administrative Agent, upon
determining the interest rate for any Borrowing of Eurodollar Loans, shall
promptly notify the Borrower and the relevant Lenders thereof.  Each such determination shall, absent
clearly demonstrable error, be final and conclusive and binding on all parties
hereto.


 


2.9           Interest
Periods.  At the time the Borrower
gives a Notice of Borrowing or Notice of Conversion or Continuation in respect
of the making of, or conversion into or continuation as, a Borrowing of
Eurodollar Term Loans or Eurodollar Revolving Credit Loans (in the case of the
initial Interest Period applicable thereto) or prior to 10:00 A.M. (New York
time) on the third Business Day prior to the expiration of an Interest Period
applicable to a Borrowing of Eurodollar Term Loans or Eurodollar Revolving
Credit Loans, the Borrower shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower, be a one, two, three, six or (if
available to all the Lenders making such loans as determined by such Lenders in
good faith based on prevailing market conditions) a nine or twelve month
period.  Notwithstanding anything to the
contrary contained above:


 


(a)  the initial Interest Period for any
Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans shall
commence on the date of such Borrowing (including the date of any conversion
from a Borrowing of ABR Loans) and each Interest


 


39

















 


Period
occurring thereafter in respect of such Borrowing shall commence on the day on
which the next preceding Interest Period expires;


 


(b)  if any Interest Period relating to a
Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans begins
on the last Business Day of a calendar month or begins on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of the
calendar month at the end of such Interest Period;


 


(c)  if any Interest Period would otherwise
expire on a day that is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day, provided that if any Interest
Period in respect of a Eurodollar Term Loan or Eurodollar Revolving Credit Loan
would otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business Day; and


 


(d)  the Borrower shall not be entitled to elect
any Interest Period in respect of any Eurodollar Term Loan or Eurodollar
Revolving Credit Loan if such Interest Period would extend beyond the
applicable Maturity Date of such Loan;


 


2.10         Increased
Costs, Illegality, etc. 
vii)  In the event that (x) in the case of
clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have reasonably determined
(which determination shall, absent clearly demonstrable error, be final and
conclusive and binding upon all parties hereto):


 


(i)  on any date for determining the Eurodollar
Rate for any Interest Period that, by reason of any changes arising on or after
the Closing Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Eurodollar Rate; or


 


(ii)  at any time, that such Lender shall incur
increased costs or reductions in the amounts received or receivable hereunder
with respect to any Eurodollar Loans (other than any such increase or reduction
attributable to taxes) because of (x) any change since the date hereof in any
applicable law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof and including the introduction of any
new law or governmental rule, regulation, guideline or order), such as, for
example, but not limited to, a change in official reserve requirements, and/or
(y) other circumstances affecting the interbank Eurodollar market or the
position of such Lender in such market; or


 


(iii)  at any time, that the making or continuance
of any Eurodollar Loan has become unlawful by compliance by such Lender in good
faith with any law, governmental rule, regulation, guideline or order (or would
conflict with any such governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not
be unlawful), or has become impracticable as a result of a contingency
occurring after the date hereof that materially and adversely affects the
interbank Eurodollar market;


 


40

















 


then, and in any such
event, such Lender (or the Administrative Agent, in the case of clause (i)
above) shall within a reasonable time thereafter give notice (if by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders).  Thereafter
(x) in the case of clause (i) above, Eurodollar Term Loans and Eurodollar
Revolving Credit Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist (which notice the Administrative Agent agrees to give at such time when
such circumstances no longer exist), and any Notice of Borrowing or Notice of
Conversion given by the Borrower with respect to Eurodollar Term Loans or
Eurodollar Revolving Credit Loans that have not yet been incurred shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii)
above, the Borrower shall pay to such Lender, promptly after receipt of written
demand therefor, such additional amounts (in the form of an increased rate of,
or a different method of calculating, interest or otherwise as such Lender in
its reasonable discretion shall determine) as shall be required to compensate
such Lender for such increased costs or reductions in amounts receivable
hereunder (it being agreed that a written notice as to the additional amounts
owed to such Lender, showing in reasonable detail the basis for the calculation
thereof, submitted to the Borrower by such Lender shall, absent clearly
demonstrable error, be final and conclusive and binding upon all parties
hereto) and (z) in the case of clause (iii) above, the Borrower shall
take one of the actions specified in Section 2.10(b) as promptly as
possible and, in any event, within the time period required by law.


 


(b)  At any
time that any Eurodollar Loan is affected by the circumstances described in
Section 2.10(a)(ii) or (iii), the Borrower may (and in the case of a
Eurodollar Loan affected pursuant to Section 2.10(a)(iii) shall) either
(i) if the affected Eurodollar Loan is then being made pursuant to a Borrowing,
cancel said Borrowing by giving the Administrative Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that the Borrower was
notified by a Lender pursuant to Section 2.10(a)(ii) or (iii) or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least
three Business Days’ notice to the Administrative Agent, require the affected
Lender to convert each such Eurodollar Revolving Credit Loan and Eurodollar
Term Loan into an ABR Loan, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated in the same
manner pursuant to this Section 2.10(b).


 


(c)  If, after
the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, the
National Association of Insurance Commissioners, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by a Lender or its parent with any request or directive made or adopted after
the date hereof regarding capital adequacy (whether or not having the force of
law) of any such authority, association, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender’s or its
parent’s capital or assets as a consequence of such Lender’s commitments or
obligations hereunder to a level below that which such Lender or its parent
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender’s or its parent’s policies with respect
to capital adequacy), then from time to time, promptly after demand by such
Lender (with a copy to the Administrative Agent), the Borrower shall pay to
such Lender such additional amount or


 


41

















 


amounts as will
compensate such Lender or its parent for such reduction, it being understood
and agreed, however, that a Lender shall not be entitled to such compensation
as a result of such Lender’s compliance with, or pursuant to any request or
directive to comply with, any such law, rule or regulation as in effect on the
date hereof.  Each Lender, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 2.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth in reasonable detail the basis of the
calculation of such additional amounts, although the failure to give any such
notice shall not, subject to Section 2.13, release or diminish any of the
Borrower’s obligations to pay additional amounts pursuant to this
Section 2.10(c) upon receipt of such notice.


 


2.11         Compensation.  If (a) any payment of principal of any
Eurodollar Term Loan or Eurodollar Revolving Credit Loan is made by the
Borrower to or for the account of a Lender other than on the last day of the
Interest Period for such Eurodollar Loan as a result of a payment or conversion
pursuant to Section 2.5, 2.6, 2.10, 5.1, 5.2 or 13.7, as a result of
acceleration of the maturity of the Loans pursuant to Section 11 or for
any other reason, (b)  any Borrowing of Eurodollar Term Loans or
Eurodollar Revolving Credit Loans is not made as a result of a withdrawn Notice
of Borrowing, (c)  any ABR Loan is not converted into a Eurodollar Term
Loan or Eurodollar Revolving Credit Loan as a result of a withdrawn Notice of
Conversion or Continuation, (d)  any Eurodollar Loan is not continued as a
Eurodollar Term Loan or Eurodollar Revolving Credit Loan as a result of a
withdrawn Notice of Conversion or Continuation or (e) any prepayment of
principal of any Eurodollar Term Loan or Eurodollar Revolving Credit Loan is
not made as a result of a withdrawn notice of prepayment pursuant to
Section 5.1 or 5.2, the Borrower shall, after receipt of a written request
by such Lender (which request shall set forth in reasonable detail the basis
for requesting such amount), pay to the Administrative Agent for the account of
such Lender any amounts required to compensate such Lender for any additional
losses, costs or expenses that such Lender may reasonably incur as a result of
such payment, failure to convert, failure to continue or failure to prepay,
including, without limitation, any loss, cost or expense (excluding loss of
anticipated profits) actually incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Eurodollar Loan.


 


2.12         Change
of Lending Office.  Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.10(a)(ii), 2.10(a)(iii), 2.10(b), 3.5 or 5.4 with respect to
such Lender, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
lending office for any Loans affected by such event, provided that such
designation is made on such terms that such Lender and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
Section. Nothing in this Section 2.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in
Section 2.10, 3.5 or 5.4.


 


2.13         Notice
of Certain Costs.  Notwithstanding
anything in this Agreement to the contrary, to the extent any notice required
by Section 2.10, 2.11, 3.5 or 5.4 is given by any Lender more than
180 days after such Lender has knowledge (or should have had knowledge) of
the occurrence of the event giving rise to the additional cost, reduction in
amounts, loss, tax or other additional amounts described in such Sections, such
Lender shall not be entitled to


 


42

















 


compensation under
Section 2.10, 2.11, 3.5 or 5.4, as the case may be, for any such amounts
incurred or accruing prior to the giving of such notice to the Borrower.


 


SECTION 3. 
Letters of Credit.


 


3.1           Letters
of Credit.  viii)  Subject to and upon the terms and conditions
herein set forth, the Borrower, at any time and from time to time on or after
the Closing Date and prior to the L/C Maturity Date, may request that the
Letter of Credit Issuer issue, for the account of the Borrower, a standby
letter of credit or letters of credit in such form as may be approved by the
Letter of Credit Issuer in its reasonable discretion.


 


(b) 
Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed the Letter of Credit Commitment then in
effect; (ii) no Letter of Credit shall be issued the Stated Amount of
which, when added to the sum of (x) the Letter of Credit Outstandings at
such time and (y) the aggregate principal of all Revolving Credit Loans
and Swingline Loans then outstanding, would exceed the Total Revolving Credit
Commitment then in effect; (iii) each Letter of Credit shall have an expiration
date occurring no later than one year after the date of issuance thereof,
unless otherwise agreed upon by the Administrative Agent and the Letter of
Credit Issuer, provided that in no event shall such expiration date
occur later than the L/C Maturity Date; (iv) each Letter of Credit shall
be denominated in Dollars; and (v) no Letter of Credit shall be issued by the
Letter of Credit Issuer after it has received a written notice from the
Borrower or any Lender stating that a Default or Event of Default has occurred
and is continuing until such time as the Letter of Credit Issuer shall have
received a written notice of (x) rescission of such notice from the party or
parties originally delivering such notice or (y) the waiver of such Default or
Event of Default in accordance with the provisions of Section 13.1.


 


(c)  Upon at
least one Business Day’s prior written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent and the Letter of Credit
Issuer (which notice the Administrative Agent shall promptly transmit to each
of the Lenders), the Borrower shall have the right, on any day, permanently to
terminate or reduce the Letter of Credit Commitment in whole or in part, provided
that, after giving effect to such termination or reduction, the Letter of
Credit Outstandings shall not exceed the Letter of Credit Commitment.


 


3.2           Letter
of Credit Requests.  ix)  Whenever the Borrower desires that a Letter
of Credit be issued for its account, it shall give the Administrative Agent and
the Letter of Credit Issuer at least five (or such lesser number as may be
agreed upon by the Administrative Agent and the Letter of Credit Issuer)
Business Days’ written notice thereof. 
Each notice shall be executed by the Borrower and shall be in the form
of Exhibit D (each a “Letter of Credit Request”). The Administrative
Agent shall promptly transmit copies of each Letter of Credit Request to each
Lender.


 


(b)  The making
of each Letter of Credit Request shall be deemed to be a representation and
warranty by the Borrower that the Letter of Credit may be issued in accordance
with, and will not violate the requirements of, Section 3.1(b).


 


43

















 


3.3           Letter
of Credit Participations.  x)  Immediately upon the issuance by the Letter
of Credit Issuer of any Letter of Credit, the Letter of Credit Issuer shall be
deemed to have sold and transferred to each other Lender that has a Revolving
Credit Commitment (each such other Lender, in its capacity under this
Section 3.3, an “L/C Participant”), and each such L/C Participant shall
be deemed irrevocably and unconditionally to have purchased and received from
the Letter of Credit Issuer, without recourse or warranty, an undivided
interest and participation (each an “L/C Participation”), to the extent
of such L/C Participant’s Revolving Credit Commitment Percentage, in such
Letter of Credit, each substitute letter of credit, each drawing made
thereunder and the obligations of the Borrower under this Agreement with
respect thereto, and any security therefor or guaranty pertaining thereto
(although Letter of Credit Fees will be paid directly to the Administrative
Agent for the ratable account of the L/C Participants as provided in
Section 4.1(b) and the L/C Participants shall have no right to receive any
portion of any Fronting Fees).


 


(b)  In
determining whether to pay under any Letter of Credit, the Letter of Credit
Issuer shall have no obligation relative to the L/C Participants other than to
confirm that any documents required to be delivered under such Letter of Credit
have been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit. 
Any action taken or omitted to be taken by the Letter of Credit Issuer
under or in connection with any Letter of Credit issued by it, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for the Letter of Credit Issuer any resulting liability.


 


(c)           In
the event that the Letter of Credit Issuer makes any payment under any Letter
of Credit issued by it and the Borrower shall not have repaid such amount in
full to the Letter of Credit Issuer pursuant to Section 3.4(a), the Letter
of Credit Issuer shall promptly notify the Administrative Agent and each L/C
Participant of such failure, and each L/C Participant shall promptly and
unconditionally pay to the Administrative Agent, for the account of the Letter
of Credit Issuer, the amount of such L/C Participant’s Revolving Credit
Commitment Percentage of such unreimbursed payment in Dollars and in same day
funds; provided, however, that no L/C Participant shall be
obligated to pay to the Administrative Agent for the account of the Letter of
Credit Issuer its Revolving Credit Commitment Percentage of such unreimbursed
amount arising from any wrongful payment made by the Letter of Credit Issuer
under a Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Letter of Credit Issuer.  If the Letter of Credit Issuer so notifies,
prior to 11:00 A.M. (New York time) on any Business Day, any L/C Participant
required to fund a payment under a Letter of Credit, such L/C Participant shall
make available to the Administrative Agent for the account of the Letter of
Credit Issuer such L/C Participant’s Revolving Credit Commitment Percentage of
the amount of such payment on such Business Day in same day funds.  If and to the extent such L/C Participant
shall not have so made its Revolving Credit Commitment Percentage of the amount
of such payment available to the Administrative Agent for the account of the
Letter of Credit Issuer, such L/C Participant agrees to pay to the
Administrative Agent for the account of the Letter of Credit Issuer, forthwith
on demand, such amount, together with interest thereon for each day from such
date until the date such amount is paid to the Administrative Agent for the
account of the Letter of Credit Issuer at the Federal Funds Effective
Rate.  The failure of any L/C
Participant to make available to the Administrative Agent for the account of
the Letter of Credit Issuer its Revolving Credit Commitment Percentage of any
payment under any Letter of Credit shall not relieve any other L/C Participant
of its obligation hereunder to make available to the 


 


44

















 


Administrative Agent for
the account of the Letter of Credit Issuer its Revolving Credit Commitment
Percentage of any payment under such Letter of Credit on the date required, as
specified above, but no L/C Participant shall be responsible for the failure of
any other L/C Participant to make available to the Administrative Agent such
other L/C Participant’s Revolving Credit Commitment Percentage of any such
payment.


 


(d)           Whenever
the Letter of Credit Issuer receives a payment in respect of an unpaid reimbursement
obligation as to which the Administrative Agent has received for the account of
the Letter of Credit Issuer any payments from the L/C Participants pursuant to
paragraph (c) above, the Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
L/C Participant that has paid its Revolving Credit Commitment Percentage of
such reimbursement obligation, in Dollars and in same day funds, an amount
equal to such L/C Participant’s share (based upon the proportionate aggregate
amount originally funded by such L/C Participant to the aggregate amount funded
by all L/C Participants) of the principal amount of such reimbursement
obligation and interest thereon accruing after the purchase of the respective
L/C Participations.


 


(e)           The
obligations of the L/C Participants to make payments to the Administrative
Agent for the account of the Letter of Credit Issuer with respect to Letters of
Credit shall be irrevocable and not subject to counterclaim, set-off or other
defense or any other qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:


 


(i)            any lack of validity or
enforceability of this Agreement or any of the other Credit Documents;


 


(ii)           the existence of any claim, set-off,
defense or other right that the 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 Administrative
Agent, the Letter of Credit Issuer, any Lender or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transaction
between the Borrower and the beneficiary named in any such Letter of Credit);


 


(iii)          any draft, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;


 


(iv)          the surrender or impairment of any
security for the performance or observance of any of the terms of any of the
Credit Documents; or


 


(v)           the occurrence of any Default or
Event of Default;


 


provided,
however, that no L/C Participant shall be obligated to pay to the
Administrative Agent for the account of the Letter of Credit Issuer its
Revolving Credit Commitment Percentage of any unreimbursed amount arising from
any wrongful payment made by the Letter of Credit Issuer


 


45

















 


under a Letter of Credit
as a result of acts or omissions constituting willful misconduct or gross negligence
on the part of the Letter of Credit Issuer.


 


3.4           Agreement
to Repay Letter of Credit Drawings. 
xi)  The Borrower hereby agrees to reimburse the Letter of
Credit Issuer, by making payment to the Administrative Agent in Dollars in
immediately available funds at the Administrative Agent’s Office, for any
payment or disbursement made by the Letter of Credit Issuer under any Letter of
Credit (each such amount so paid until reimbursed, an “Unpaid Drawing”)
immediately after, and in any event on the date of, such payment, with interest
on the amount so paid or disbursed by the Letter of Credit Issuer, to the
extent not reimbursed prior to 5:00 P.M. (New York time) on the date of
such payment or disbursement, from and including the date paid or disbursed to
but excluding the date the Letter of Credit Issuer is reimbursed therefor, at a
rate per annum that shall at all times be the Applicable ABR Margin plus the
ABR as in effect from time to time, provided that, notwithstanding
anything contained in this Agreement to the contrary, (i) unless the
Borrower shall have notified the Administrative Agent and the Letter of Credit
Issuer prior to 10:00 A.M. on the date of such drawing that the Borrower
intends to reimburse the Letter of Credit Issuer for the amount of such drawing
with funds other than the proceeds of Loans, the Borrower shall be deemed to
have given a Notice of Borrowing to the Administrative Agent requesting that
the Lenders make Revolving Credit Loans (which shall initially be ABR Loans) on
the date on which such drawing is honored in an amount equal to the amount of
such drawing and (ii) each Lender shall, on such date, make Revolving
Credit Loans in an amount equal to such Lender’s pro rata portion of such
Borrowing in accordance with the provisions of Section 2.4.


 


(b)           The
Borrower’s obligations under this Section 3.4 to reimburse the Letter of
Credit Issuer with respect to Unpaid Drawings (including, in each case,
interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment that the Borrower or any other Person may have or have had against the
Letter of Credit Issuer, the Administrative Agent or any Lender (including in
its capacity as an L/C Participant), including, without limitation, any defense
based upon the failure of any drawing under a Letter of Credit (each a “Drawing”)
to conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such Drawing, provided
that the Borrower shall not be obligated to reimburse the Letter of Credit
Issuer for any wrongful payment made by the Letter of Credit Issuer under the
Letter of Credit issued by it as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of the Letter of Credit
Issuer.


 


(c)           Each
payment by the Letter of Credit Issuer under any Letter of Credit shall
constitute a request by the Borrower for an ABR Revolving Credit Loan in the
amount of the Unpaid Drawing in respect of such Letter of Credit.  The Letter of Credit Issuer shall notify the
Borrower and the Administrative Agent, by 10:00 A.M. (New York time) on
any Business Day on which the Letter of Credit Issuer intends to honor a
drawing under a Letter of Credit, of (i) the Letter of Credit Issuer’s
intention to honor such drawing and (ii)  the amount of such drawing.  Unless otherwise instructed by the Borrower
by 10:30 A.M. (New York time) on such Business Day, the Administrative
Agent shall promptly notify each Lender of such drawing and the amount of its
Revolving Credit Loan to be made in respect thereof, and each Lender shall be
irrevocably obligated to make an ABR Revolving Credit Loan to the Borrower in
the amount of its Revolving Credit Commitment Percentage of the applicable
Unpaid Drawing by 12:00 noon


 


46

















 


(New York time) on such
Business Day by making the amount of such Revolving Credit Loan available to
the Administrative Agent at the Administrative Agent’s Office.  Such Revolving Credit Loans shall be made
without regard to the Minimum Borrowing Amount.  The Administrative Agent shall use the proceeds of such Revolving
Credit Loans solely for purpose of reimbursing the Letter of Credit Issuer for
the related Unpaid Drawing.


 


3.5           Increased
Costs.  If after the date hereof,
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or actual compliance by the Letter of
Credit Issuer or any L/C Participant with any request or directive made or
adopted after the date hereof (whether or not having the force of law), by any
such authority, central bank or comparable agency shall either (a) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against letters of credit issued by the Letter of Credit Issuer, or
any L/C Participant’s L/C Participation therein, or (b) impose on the Letter of
Credit Issuer or any L/C Participant any other conditions affecting its
obligations under this Agreement in respect of Letters of Credit or L/C
Participations therein or any Letter of Credit or such L/C Participant’s L/C
Participation therein; and the result of any of the foregoing is to increase
the cost to the Letter of Credit Issuer or such L/C Participant of issuing,
maintaining or participating in any Letter of Credit, or to reduce the amount
of any sum received or receivable by the Letter of Credit Issuer or such L/C
Participant hereunder (other than any such increase or reduction attributable
to taxes) in respect of Letters of Credit or L/C Participations therein, then,
promptly after receipt of written demand to the Borrower by the Letter of
Credit Issuer or such L/C Participant, as the case may be (a copy of which
notice shall be sent by the Letter of Credit Issuer or such L/C Participant to
the Administrative Agent), the Borrower shall pay to the Letter of Credit
Issuer or such L/C Participant such additional amount or amounts as will
compensate the Letter of Credit Issuer or such L/C Participant for such
increased cost or reduction, it being understood and agreed, however, that the
Letter of Credit Issuer or a L/C Participant shall not be entitled to such
compensation as a result of such Person’s compliance with, or pursuant to any
request or directive to comply with, any such law, rule or regulation as in
effect on the date hereof.  A
certificate submitted to the Borrower by the Letter of Credit Issuer or a
L/C Participant, as the case may be (a copy of which certificate shall be
sent by the Letter of Credit Issuer or such L/C Participant to the
Administrative Agent), setting forth in reasonable detail the basis for the
determination of such additional amount or amounts necessary to compensate the
Letter of Credit Issuer or such L/C Participant as aforesaid shall be
conclusive and binding on the Borrower absent clearly demonstrable error.


 


3.6           Successor
Letter of Credit Issuer.  The Letter
of Credit Issuer may resign as Letter of Credit Issuer upon 60 days’ prior
written notice to the Administrative Agent, the Lenders and the Borrower.  If the Letter of Credit Issuer shall resign
as Letter of Credit Issuer under this Agreement, then the Borrower shall
appoint from among the Lenders with Revolving Credit Commitments a successor
issuer of Letters of Credit, whereupon such successor issuer shall succeed to
the rights, powers and duties of the Letter of Credit Issuer, and the term
“Letter of Credit Issuer” shall mean such successor issuer effective upon such
appointment.  At the time such
resignation shall become effective, the Borrower shall pay to the resigning
Letter of Credit Issuer all accrued and unpaid fees pursuant to
Sections 4.1(c) and (d).  The
acceptance of any appointment as the Letter of Credit Issuer hereunder by a
successor Lender shall be evidenced by


 


47

















 


an agreement entered into
by such successor, in a form satisfactory to the Borrower and the
Administrative Agent and, from and after the effective date of such agreement,
such successor Lender shall have all the rights and obligations of the previous
Letter of Credit Issuer under this Agreement and the other Credit
Documents.  After the resignation of the
Letter of Credit Issuer hereunder, the resigning Letter of Credit Issuer shall
remain a party hereto and shall continue to have all the rights and obligations
of a Letter of Credit Issuer under this Agreement and the other Loan Documents
with respect to Letters of Credit issued by it prior to such resignation, but
shall not be required to issue additional Letters of Credit.  After any retiring Letter of Credit Issuer’s
resignation as Letter of Credit Issuer, the provisions of this Agreement
relating to the Letter of Credit Issuer shall inure to its benefit as to any
actions taken or omitted to be taken by it (a) while it was Letter of Credit
Issuer under this Agreement or (b) at any time with respect to Letters of
Credit issued by such Letter of Credit Issuer.


 


SECTION 4. 
Fees; Commitments.


 


4.1           Fees.  xii) 
The Borrower agrees to pay to the Administrative Agent, for the account
of each Lender having a Revolving Credit Commitment (pro rata according to the
respective Revolving Credit Commitments of all such Lenders), a commitment fee
for each day from and including the Closing Date to but excluding the Final
Date.  Such commitment fee shall be
payable in arrears (i) on September 30, 1998 (for the period ended on
such day), (ii) on the last day of each March, June, September and
December (for the three-month period (or portion thereof) ended on the
such day for which no payment has been received pursuant to clause (i) above)
and (iii) on the Final Date (for the period ended on such date for which
no payment has been received pursuant to clause (ii) above), and
shall be computed for each day during such period at a rate per annum equal to
the Commitment Fee Rate in effect on such day on the Available Commitments in
effect on such day. Notwithstanding the foregoing, the Borrower shall not be
obligated to pay any amounts to any Defaulting Lender pursuant to this
Section 4.1.


 


(b)  The
Borrower agrees to pay to the Administrative Agent for the account of the
Lenders pro  rata on the basis of their respective Letter of
Credit Exposure, a fee in respect of each Letter of Credit (the “Letter of
Credit Fee”), for the period from and including the date of issuance of
such Letter of Credit to but not including the termination date of such Letter
of Credit computed at the per annum rate for each day equal to the Applicable
Eurodollar Margin for Revolving Credit Loans minus 0.125% per annum on the
average daily Stated Amount of such Letter of Credit.  Such Letter of Credit Fees shall be due and payable quarterly in
arrears on the last day of each March, June, September and
December and on the date upon which the Total Revolving Credit Commitment
terminates and the Letter of Credit Outstandings shall have been reduced to
zero.


 


(c)  The
Borrower agrees to pay to the Administrative Agent for the account of the
Letter of Credit Issuer a fee in respect of each Letter of Credit issued by it
(the “Fronting Fee”), for the period from and including the date of
issuance of such Letter of Credit to but not including the termination date of
such Letter of Credit, computed at the rate for each day equal to 0.125% per
annum on the average daily Stated Amount of such Letter of Credit.  Such Fronting Fees shall be due and payable
quarterly in arrears on the last day of each March, June, September and
December and on the date upon which the Total Revolving Credit Commitment
terminates and the Letter of Credit Outstandings shall have been reduced to
zero.


 


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(d)  The
Borrower agrees to pay directly to the Letter of Credit Issuer upon each
issuance of, drawing under, and/or amendment of, a Letter of Credit issued by
it such amount as the Letter of Credit Issuer and the Borrower shall have
agreed upon for issuances of, drawings under or amendments of, letters of
credit issued by it.


 


(e)  The
Borrower agrees to pay to the Administrative Agent, on the Closing Date, the
fees in the amounts and on the dates previously agreed to in writing by the
Borrower and the Administrative Agent. 
The Administrative Agent agrees to pay to each Lender, for its own
account on the Closing Date, the fees in the amounts and on the dates previously
agreed to in writing by the Administrative Agent and such Lender.


 


4.2           Voluntary
Reduction of Revolving Credit Commitments. 
Upon at least one Business Day’s prior written notice (or telephonic
notice promptly confirmed in writing) to the Administrative Agent at the
Administrative Agent’s Office (which notice the Administrative Agent shall
promptly transmit to each of the Lenders), the Borrower shall have the right,
without premium or penalty, on any day, permanently to terminate or reduce the
Revolving Credit Commitments in whole or in part, provided that (a) any
such reduction shall apply proportionately and permanently to reduce the
Revolving Credit Commitment of each of the Lenders, (b) any partial
reduction pursuant to this Section 4.2 shall be in the amount of at least
$1,000,000 and (c) after giving effect to such termination or reduction
and to any prepayments of the Loans made on the date thereof in accordance with
this Agreement, the sum of (i) the aggregate outstanding principal amount
of the Revolving Credit Loans and the Swingline Loans and (ii) the Letter
of Credit Outstandings shall not exceed the Total Revolving Credit Commitment.


 


4.3           Mandatory
Termination of Commitments. 
xiii)  The Total Term Loan Commitment shall terminate at
5:00 P.M. (New York time) on the Closing Date.


 


(b)  The Total
Revolving Credit Commitment shall terminate at 5:00 P.M. (New York
time) on the Revolving Credit Maturity Date.


 


(c)  The
Swingline Commitment shall terminate at 5:00 P.M. (New York time) on the
Swingline Maturity Date.


 


SECTION 5. 
Payments.


 


5.1           Voluntary
Prepayments.  The Borrower shall
have the right to prepay Term Loans, Revolving Credit Loans and Swingline
Loans, without premium or penalty, in whole or in part from time to time on the
following terms and conditions: (a) the Borrower shall give the Administrative
Agent at the Administrative Agent’s Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to make such prepayment, the
amount of such prepayment, whether such prepayment shall be applied to A Term
Loans, B Term Loans, C Term Loans, Revolving Credit Loans or Swingline Loans,
and (in the case of Eurodollar Term Loans and Eurodollar Revolving Credit
Loans) the specific Borrowing(s) pursuant to which made, which notice shall be
given by the Borrower no later than (i) in the case of Term Loans or Revolving
Credit Loans, 10:00 A.M. (New York time) one Business Day prior to, or
(ii) in the case of Swingline Loans, 10:00 A.M. (New York time) on, the date of
such prepayment and shall


 


49

















 


promptly be transmitted
by the Administrative Agent to each of the Lenders or Chase, as the case may
be; (b) each partial prepayment of any Borrowing of Term Loans or Revolving
Credit Loans shall be in a multiple of $100,000 and in an aggregate principal
amount of at least $1,000,000 and each partial prepayment of Swingline Loans
shall be in a multiple of $100,000 and in an aggregate principal amount of at
least $100,000, provided that no partial prepayment of Eurodollar Term Loans
or Eurodollar Revolving Credit Loans made pursuant to a single Borrowing shall
reduce the outstanding Eurodollar Term Loans or Eurodollar Revolving Credit
Loans made pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount for Eurodollar Term Loans or Eurodollar Revolving Credit
Loans; and (c) any prepayment of Eurodollar Term Loans or Eurodollar Revolving
Credit Loans pursuant to this Section 5.1 on any day other than the last
day of an Interest Period applicable thereto shall be subject to compliance by
the Borrower with the applicable provisions of Section 2.11.  Each prepayment of Term Loans of a Facility
pursuant to this Section 5.1 shall be applied to reduce the Repayment Amounts
of such Facility in such order as the Borrower may determine.  At the Borrower’s election in connection
with any prepayment pursuant to this Section 5.1, such prepayment shall
not be applied to any Term Loan or Revolving Credit Loan of a Defaulting
Lender.


 


5.2           Mandatory
Prepayments.  xiv)  Term
Loan Prepayments.  (1)  On each occasion that a
Prepayment Event occurs, the Borrower shall, within five Business Days after
the occurrence of such Prepayment Event, offer to prepay, in accordance with
paragraph (c) below, the principal amount of Term Loans in an amount equal
to 100% of the Net Cash Proceeds from such Prepayment Event.


 


(ii)  Not later than the date that is 120
days after the last day of any fiscal year on the last day of which the
Consolidated Total Debt to Consolidated Total Capitalization Ratio is greater
than 0.40:1.00 (commencing with the fiscal year ending December 31, 1998),
the Borrower shall offer to prepay, in accordance with paragraph (c)
below, the principal of Term Loans in an amount equal to (x) 50% of Excess Cash
Flow for such fiscal year (or, in the case of the fiscal year ending
December 31, 1998, for the period from and including the Closing Date to
and including December 31, 1998) minus (y) the aggregate amount of any
optional prepayments of Term Loans, and, to the extent such prepayments
permanently reduced the Revolving Credit Commitments, the aggregate amount of
any optional prepayments of Revolving Credit Loans or Swingline Loans made
during such fiscal year.


 


(b)  Aggregate Revolving Credit
Outstandings.  If on any date the sum
of the outstanding principal amount of the Revolving Credit Loans and Swingline
Loans and the aggregate amount of Letter of Credit Outstandings (all the
foregoing, collectively, the “Aggregate Revolving Credit Outstandings”)
exceeds the Total Revolving Credit Commitment as then in effect, the Borrower
shall forthwith repay on such date the principal amount of Swingline Loans and,
after all Swingline Loans have been paid in full, Revolving Credit Loans, in an
amount equal to such excess.  If, after
giving effect to the prepayment of all outstanding Swingline Loans and
Revolving Credit Loans, the Aggregate Revolving Credit Outstandings exceed the
Total Revolving Credit Commitment then in effect, the Borrower shall pay to the
Administrative Agent an amount in cash equal to such excess and the
Administrative Agent shall hold such payment for the benefit of the Lenders as
security for the obligations of the Borrower hereunder (including, without
limitation, obligations in respect of Letter of Credit Outstandings)


 


50

















 


pursuant to a cash
collateral agreement to be entered into in form and substance satisfactory to
the Administrative Agent (which shall permit certain investments in Permitted
Investments satisfactory to the Administrative Agent, until the proceeds are
applied to the secured obligations).


 


(c)  Application to Term Loan Facilities
and Repayment Amounts.  Each
prepayment of Term Loans required by Section 5.2(a)(i) shall be applied
pro rata to the then unpaid A Term Loans, B Term Loans and C Term Loans (based
on the then outstanding principal amount of the Term Loans pursuant to each
such Facility), and shall be applied to reduce the future Repayment Amounts of
each such Facility first to reduce the next two unpaid scheduled
Repayment Amounts, in the case of the B Term Loans and the C Term Loans, and to
reduce the next four unpaid scheduled Repayment Amounts, in the case of the A
Term Loans, and second, to reduce the remaining Repayment Amounts on a
pro rata basis (based on the remaining amount of each such Repayment Amount at
such time).  Each prepayment of Term
Loans required by Section 5.2(a)(ii) shall be applied to the respective
Term Loan Facilities (and to reduce the Repayment Amounts of each such selected
Term Loan Facility) as the Borrower may determine.  With respect to each such prepayment, (i) the Borrower will,
not later than the date specified in Section 5.2(a) for offering to make
such prepayment, give the Administrative Agent telephonic notice (promptly
confirmed in writing) requesting that the Administrative Agent provide notice
of such prepayment to each Term Loan Lender which is to receive a portion of
such prepayment, (ii) each holder of B Term Loans and each holder of C
Term Loans will have the right to refuse any such prepayment of such Term Loans
by giving written notice of such refusal to the Borrower within 15 Business
Days after such Lender’s receipt of notice from the Administrative Agent of
such prepayment (and the Borrower shall not prepay any such Term Loans until
the date that is specified in the immediately following clause), (iii) the
Borrower will make all such prepayments not so refused upon the earlier of
(x) such fifteenth Business Day and (y) such time as the Borrower has
received notice from each B Term Loan Lender and C Term Loan Lender that it
consents to or refuses such prepayment and (iv) 50% of any prepayment so
refused shall be applied to the repayment of outstanding A Term Loans (and to
reduce the future A Repayment Amounts on a pro rata basis if such prepayment is
made pursuant to Section 5.2(a)(i), or as the Borrower shall determine if
such prepayment is made pursuant to Section 5.2(a)(ii)), and the Borrower
may retain the remaining 50% of such refused prepayments.


 


(d)  Application to Term Loans.  With
respect to each prepayment of Term Loans of a Facility required by
Section 5.2(a), the Borrower may designate the Types of Loans that are to
be prepaid and the specific Borrowing(s) pursuant to which made, provided
that (i) Eurodollar Term Loans of a Facility may be designated for
prepayment pursuant to this Section 5.2 only on the last day of an
Interest Period applicable thereto unless all Eurodollar Term Loans of such
Facility with Interest Periods ending on such date of required prepayment and
all ABR Term Loans of such Facility have been paid in full; and (ii) if
any prepayment of Eurodollar Term Loans made pursuant to a single Borrowing
shall reduce the outstanding Term Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount for Eurodollar Term Loans, such
Borrowing shall immediately be converted into ABR Loans.  In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its reasonable discretion
with a view, but no obligation, to minimize breakage costs owing under
Section 2.11.


 


51

















 


(e)  Application to Revolving Credit
Loans.  With respect to each
prepayment of Revolving Credit Loans required by Section 5.2(b), the
Borrower may designate the Types of Loans that are to be prepaid and the
specific Borrowing(s) pursuant to which made, provided that (i)
Eurodollar Revolving Credit Loans may be designated for prepayment pursuant to
this Section 5.2 only on the last day of an Interest Period applicable
thereto unless all Eurodollar Revolving Credit Loans with Interest Periods
ending on such date of required prepayment and all ABR Loans have been paid in
full; (ii) if any prepayment of Eurodollar Revolving Credit Loans made pursuant
to a single Borrowing shall reduce the outstanding Revolving Credit Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
for Eurodollar Revolving Credit Loans, such Borrowing shall immediately be
converted into ABR Loans; (iii) each prepayment of any Loans made pursuant to a
Borrowing shall be applied pro  rata among such Loans; and
(iv) notwithstanding the provisions of the preceding clause (iii), no
prepayment made pursuant to Section 5.2(b) of Revolving Credit Loans shall
be applied to the Revolving Credit Loans of any Defaulting Lender.  In the absence of a designation by the Borrower
as described in the preceding sentence, the Administrative Agent shall, subject
to the above, make such designation in its reasonable discretion with a view,
but no obligation, to minimize breakage costs owing under Section 2.11.


 


(f)  Eurodollar Interest Periods.  In lieu of making any payment pursuant to
this Section 5.2 in respect of any Eurodollar Loan other than on the last
day of the Interest Period therefor, so long as no Default or Event of Default
shall have occurred and be continuing, the Borrower at its option may deposit
with the Administrative Agent an amount equal to the amount of the Eurodollar
Loan to be prepaid and such Eurodollar Loan shall be repaid on the last day of
the Interest Period therefor in the required amount.  Such deposit shall be held by the Administrative Agent in a
corporate time deposit account established on terms reasonably satisfactory to
the Administrative Agent, earning interest at the then-customary rate for
accounts of such type.  Such deposit
shall constitute cash collateral for the Obligations, provided that the
Borrower may at any time direct that such deposit be applied to make the
applicable payment required pursuant to this Section 5.2.


 


(g)  Minimum Amount. No prepayment
shall be required pursuant to Section 5.2(a)(i) unless and until the
amount at any time of Net Cash Proceeds from Prepayment Events required to be
applied at or prior to such time pursuant to such Section and not yet
applied at or prior to such time to prepay Term Loans pursuant to such
Section exceeds $5,000,000 in the aggregate.


 


(h)  Regulatory
Approval.  Notwithstanding anything
to the contrary contained above in this Section 5.2, to the extent that
(i) funds for any prepayment otherwise required to be made pursuant to the
terms of Section 5.2(a)(i) (as a result of an Asset Sale Prepayment Event)
are only available to the Borrower through dividend payments to the Borrower
from one or more Regulated Insurance Companies, (ii) such dividend payments
cannot be made at such time within the ordinary dividend-paying capacity of
such Regulated Insurance Company or Companies and, accordingly, require
specific affirmative regulatory approval for the payment of extraordinary
dividends and (iii) after due written application or request, such approval for
the payment of extraordinary dividends is not obtained by such Regulated
Insurance Company, upon certification by the Borrower to the Administrative
Agent (which shall promptly deliver a copy of such certification to the
Lenders) to such effect (together with, in the case of an application or


 


52

















 


request for regulatory
approval, copies of all documents submitted, and all written responses
received, in connection therewith), the Borrower shall not, to such extent, be
required to make such prepayment for so long as such dividend payments may not,
for such reasons, be made.


 


5.3           Method
and Place of Payment.  xv)  Except as otherwise specifically provided
herein, all payments under this Agreement shall be made, without set-off,
counterclaim or deduction of any kind, to the Administrative Agent for the
ratable account of the Lenders entitled thereto, the Letter of Credit Issuer or
Chase, as the case may be, not later than 12:00 Noon (New York time) on
the date when due and shall be made in immediately available funds and in
lawful money of the United States of America at the Administrative Agent’s
Office, it being understood that written or facsimile notice by the Borrower to
the Administrative Agent to make a payment from the funds in the Borrower’s account
at the Administrative Agent’s Office shall constitute the making of such
payment to the extent of such funds held in such account.  The Administrative Agent will thereafter
cause to be distributed on the same day (if payment was actually received by the
Administrative Agent prior to 2:00 P.M. (New York time) on such day) like funds
relating to the payment of principal or interest or Fees ratably to the Lenders
entitled thereto.


 


(b)  Any
payments under this Agreement that are made later than 2:00 P.M. (New York
time) shall be deemed to have been made on the next succeeding Business
Day.  Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.


 


5.4           Net
Payments.  xvi)  All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any current or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding (i) net income taxes and franchise taxes (imposed in
lieu of net income taxes) imposed on the Administrative Agent or any Lender and
(ii) any taxes imposed on the Administrative Agent or any Lender as a
result of a current or former connection between the Administrative Agent or
such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement). 
If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings (“Non-Excluded Taxes”) are required to be
withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement; provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
Section 5.4.  Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own 


 


53

















 


account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof.  If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest, costs or penalties that may
become payable by the Administrative Agent or any Lender as a result of any
such failure.  The agreements in this
Section 5.4(a) shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.


 


(b)  Each
Lender that is not incorporated or organized under the laws of the United
States of America or a state thereof shall:


 


  (1) 
deliver to the Borrower and the Administrative Agent two copies of
either United States Internal Revenue Service Form 1001 or Form 4224
or, in the case of Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a
bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of
the Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or reduced rate of, U.S. Federal withholding tax on payments by the Borrower
under this Agreement;


 


 (ii) 
deliver to the Borrower and the Administrative Agent two further copies
of any such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower; and


 


(iii)  obtain such extensions of time for filing
and complete such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent;


 


unless in any such case
any change in treaty, law or regulation has occurred prior to the date on which
any such delivery would otherwise be required that renders any such form
inapplicable or would prevent such Lender from duly completing and delivering
any such form with respect to it and such Lender so advises the Borrower and
the Administrative Agent.  Each Person
that shall become a Participant pursuant to Section 13.6 or a Lender
pursuant to Section 13.6 shall, upon the effectiveness of the related
transfer, be required to provide all the forms and statements required pursuant
to this Section 5.4(b), provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.


 


(c)  The
Borrower shall not be required to indemnify any Non-U.S. Lender, or to pay any
additional amounts to any Non-U.S. Lender, in respect of U.S. Federal
withholding tax


 


54

















 


pursuant to
paragraph (a) above to the extent that (i) the obligation to withhold
amounts with respect to U.S. Federal withholding tax existed on the date such
Non-U.S. Lender became a party to this Agreement (or, in the case of a Non-U.S.
Participant, on the date such Participant became a Participant hereunder); provided,
however, that this clause (i) shall not apply to the extent that
(x) the indemnity payments or additional amounts any Lender (or
Participant) would be entitled to receive (without regard to this
clause (i)) do not exceed the indemnity payment or additional amounts that
the person making the assignment, participation or transfer to such Lender (or
Participant) would have been entitled to receive in the absence of such assignment,
participation or transfer, or (y) such assignment, participation or
transfer had been requested by the Borrower, (ii) the obligation to pay
such additional amounts would not have arisen but for a failure by such
Non-U.S. Lender or Non-U.S. Participant to comply with the provisions of
paragraph (b) above or (iii) any of the representations or
certifications made by a Non-U.S. Lender or Non-U.S. Participant pursuant to
paragraph (b) above are incorrect at the time a payment hereunder is made,
other than by reason of any change in treaty, law or regulation having effect
after the date such representations or certifications were made.


 


(d)  If the
Borrower determines in good faith that a reasonable basis exists for contesting
any taxes for which indemnification has been demanded hereunder, the relevant
Lender or the Administrative Agent, as applicable, shall cooperate with the
Borrower in challenging such taxes at the Borrower’s expense if so requested by
the Borrower.  If any Lender or the
Administrative Agent, as applicable, receives a refund of a tax for which a
payment has been made by the Borrower pursuant to this Agreement, which refund
in the good faith judgment of such Lender or Administrative Agent, as the case
may be, is attributable to such payment made by the Borrower, then the Lender
or the Administrative Agent, as the case may be, shall reimburse the Borrower
for such amount as the Lender or Administrative Agent, as the case may be,
determines to be the proportion of the refund as will leave it, after such
reimbursement, in no better or worse position than it would have been in if the
payment had not been required.  A Lender
or Administrative Agent shall claim any refund that it determines is available
to it, unless it concludes in its reasonable discretion that it would be
adversely affected by making such a claim. 
Neither the Lender nor the Administrative Agent shall be obliged to
disclose any information regarding its tax affairs or computations to the
Borrower in connection with this paragraph (d) or any other provision of
this Section 5.4.


 


(e)  Each
Lender represents and agrees that, on the date hereof and at all times during
the term of this Agreement, it is not and will not be a conduit entity
participating in a conduit financing arrangement (as defined in
Section 7701(1) of the Code and the regulations thereunder) with respect
to the Borrowings hereunder unless the Borrower has consented to such
arrangement prior thereto.


 


5.5           Computations
of Interest and Fees. 
xvii)  Interest on Eurodollar Loans and, except as provided in
the next succeeding sentence, ABR Loans shall be calculated on the basis of a
360-day year for the actual days elapsed. 
Interest on ABR Loans in respect of which the rate of interest is
calculated on the basis of the Prime Rate and interest on overdue interest
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed.


 


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(b)  Fees and Letter of Credit Outstandings
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed.


 


SECTION 6. 
Conditions Precedent to Initial Borrowing.


 


The initial Borrowing under this Agreement is subject
to the satisfaction of the following conditions precedent:


 


6.1           Credit
Documents.  The Administrative Agent
shall have received (a) this Agreement, executed and delivered by a duly
authorized officer of the Borrower and each Lender, (b) the Guarantee, executed
and delivered by a duly authorized officer of each Guarantor, (c) the Pledge
Agreement, executed and delivered by each pledgor party thereto and
(d) all certificates representing securities pledged under the Pledge
Agreement, accompanied by instruments of transfer and undated stock powers
endorsed in blank.


 


6.2           Closing
Certificate.  The Administrative
Agent shall have received a certificate of each Credit Party, dated the Closing
Date, substantially in the form of Exhibit G, with appropriate insertions,
executed by the President or any Vice President and the Secretary or any
Assistant Secretary of such Credit Party, and attaching the documents referred
to in Sections 6.3 and 6.4.


 


6.3           Corporate
Proceedings of Each Credit Party. 
The Administrative Agent shall have received a copy of the resolutions,
in form and substance satisfactory to the Administrative Agent, of the Board of
Directors of each Credit Party (or a duly authorized committee thereof)
authorizing (a) the execution, delivery and performance of the Credit Documents
and the Acquisition Agreement (and any agreements relating thereto) to which it
is a party and (b) in the case of the Borrower, the extensions of credit
contemplated hereunder.


 


6.4           Corporate
Documents.  The Administrative Agent
shall have received true and complete copies of the certificate of
incorporation and by-laws of each Credit Party.


 


6.5           No
Material Adverse Change.  There
shall have been no material adverse change in the business, assets, operations,
properties, financial condition or prospects of the Acquired Companies, the
Asset Companies and their respective Subsidiaries (taken as a whole) since
December 31, 1997.


 


6.6           Fees.  The Administrative Agent shall have received
the fees referred to in Section 4.1(e) to be received on the Closing Date.


 


6.7           Equity
Contribution.  The Borrower shall
have received the gross proceeds from the Equity Contribution.


 


6.8           Transaction.   The Transaction shall have been
consummated, or shall be consummated simultaneously with the making of the
initial Loans, in accordance with applicable law and the Acquisition
Agreement.  The Acquisition Agreement
shall not have been amended since July 10, 1998, in any material respect
that is, in the reasonable judgment of the Administrative Agent, adverse to the
interests of the Lenders.


 


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6.9           Other
Indebtedness.  After giving effect
to the Transaction and the other transactions contemplated hereby, the Borrower
and its Subsidiaries shall have outstanding no Indebtedness other than
(a) the extensions of credit under this Agreement and
(b) Indebtedness permitted under Section 10.1, other than under
clauses (i), (j), (k) and (l) thereof.


 


6.10         Closing
Date Balance Sheet.  The Lenders
shall have received a pro  forma consolidated closing balance sheet
of the Borrower giving effect to the Transaction, the financing therefor and
the other transactions contemplated hereby and thereby, dated as of
March 31, 1998.


 


6.11         Solvency
Certificate.  The Lenders shall have
received a certificate from the Chief Financial Officer of the Borrower or
other executive officer of the Borrower with the responsibility for financial
matters, in the form of Exhibit H, as to the solvency of the Borrower and of
the Borrower and its Subsidiaries on a consolidated basis after giving effect
to the Transaction, the making of the initial Loans and the consummation of the
other transactions contemplated hereby.


 


6.12         Required
Approvals.  xviii)  All
requisite material Governmental Authorities and third parties shall have
approved or consented to the Transaction and the other transactions
contemplated hereby to the extent required, all applicable appeal periods shall
have expired and there shall be no governmental or judicial action, actual or
threatened, that has or could have a reasonable likelihood of restraining,
preventing or imposing materially burdensome conditions on the Transaction, the
financing therefor or the other transactions contemplated hereby or thereby.


 


(b)  The Administrative Agent shall have
received the Form A filed by the Borrower or its Subsidiaries with the
Insurance Department of the States of California and Florida (together with all
exhibits to and attachments thereto), together with the approval of such
Insurance Department of such Form A (and all stipulations or conditions
relating to such approval, which stipulations and conditions, if any, shall be
reasonably satisfactory to the Administrative Agent in all material respects).


 


6.13         Legal
Opinions.  The Administrative Agent
shall have received, with a counterpart for each Lender, the executed legal
opinions of (a) Simpson Thacher & Bartlett, special New York counsel
to the Borrower, substantially in the form of Exhibit E-1,
(b) LeBoeuf, Lamb, Greene & MacRae (California), counsel to the
Borrower, substantially in the form of Exhibit E-2, (c) LeBoeuf, Lamb,
Greene & MacRae (Florida), counsel to the Borrower, substantially in the
form of Exhibit E-3, (d) Barger & Wolen LLP, counsel to the Borrower,
substantially in the form of Exhibit E-4, (e) Maida, Galloway & Neal,
counsel to the Borrower, substantially in the form of Exhibit E-5 and (f)
Leverty & Associates (Nevada), counsel to the Borrower, substantially in
the form of Exhibit E-6, and the Borrower hereby instructs such counsel to
deliver such legal opinions.


 


6.14         Surplus
Infusion.  The Borrower shall have
made the Surplus Infusion.


 


SECTION 7. 
Conditions Precedent to All Credit Events.  The agreement of each Lender to make any
Loan requested to be made by it on any date (including, without limitation, its
initial Loan,  but excluding Mandatory
Borrowings) and the obligation of the Letter of Credit 


 


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Issuer to issue Letters
of Credit on any date is subject to the satisfaction of the following
conditions precedent:


 


7.1           No
Default; Representations and Warranties. 
At the time of each Credit Event and also after giving effect thereto
(a) there shall exist no Default or Event of Default and (b) all
representations and warranties made by any Credit Party contained herein or in
the other Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on and as of the date of such Credit Event (except where such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall have been true and correct in
all material respects as of such earlier date).


 


7.2           Notice
of Borrowing; Letter of Credit Request. 
xix)  Prior to the making of each
Term Loan, each Revolving Credit Loan (other than any Revolving Credit Loan
made pursuant to Section 3.4(a)) and each Swingline Loan, the
Administrative Agent shall have received a Notice of Borrowing (whether in
writing or by telephone) meeting the requirements of Section 2.3.


 


(b)  Prior to the issuance of each Letter of
Credit, the Administrative Agent and the Letter of Credit Issuer shall have
received a Letter of Credit Request meeting the requirements of
Section 3.2(a).


 


The acceptance of the
benefits of each Credit Event shall constitute a representation and warranty by
each Credit Party to each of the Lenders that all the applicable conditions
specified above exist as of that time.


 


SECTION 8. 
Representations, Warranties and Agreements.  In order to induce the Lenders to enter into
this Agreement, to make the Loans and issue or participate in Letters of Credit
as provided for herein, the Borrower makes the following representations and
warranties to, and agreements with, the Lenders, all of which shall survive the
execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit:


 


8.1           Corporate
Status.  The Borrower and each
Material Subsidiary (a) is a duly organized and validly existing corporation or
other entity in good standing under the laws of the jurisdiction of its
organization and has the corporate or other organizational power and authority
to own its property and assets and to transact the business in which it is
engaged and (b) has duly qualified and is authorized to do business and is in
good standing in all jurisdictions where it is required to be so qualified,
except where the failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect.


 


8.2           Corporate
Power and Authority.  Each Credit
Party has the corporate power and authority to execute, deliver and carry out
the terms and provisions of the Credit Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party.  Each Credit Party has duly executed and
delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid and binding obligation of such Credit
Party enforceable in accordance with its terms, except as the enforceability
thereof may be limited by


 


58

















 


bankruptcy, insolvency or
similar laws affecting creditors’ rights generally and subject to general
principles of equity.


 


8.3           No
Violation.  Neither the execution,
delivery and performance by any Credit Party of the Credit Documents to which
it is a party nor compliance with the terms and provisions thereof nor the
consummation of the Transaction and the other transactions contemplated therein
will (a) contravene any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality, (b)  result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Borrower or any of the Restricted Subsidiaries pursuant to, the terms of
any material indenture, loan agreement, lease agreement, mortgage, deed of
trust or other material agreement or instrument to which the Borrower or any of
the Restricted Subsidiaries is a party or by which it or any of its property or
assets is bound or (c) violate any provision of the certificate of
incorporation or By-Laws of the Borrower or any of the Restricted Subsidiaries.


 


8.4           Litigation.
There are no actions, suits or proceedings (including, without limitation,
Environmental Claims) pending or, to the knowledge of the Borrower, threatened
with respect to the Borrower or any of its Subsidiaries that could reasonably
be expected to result in a Material Adverse Effect.


 


8.5           Margin
Regulations.  Neither the making of
any Loan hereunder nor the use of the proceeds thereof will violate the
provisions of Regulation T, U or X of the Board.


 


8.6           Governmental
Approvals.  No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any Governmental Authority is required to
authorize or is required in connection with (a) the execution, delivery and
performance of any Credit Document or (b) the legality, validity, binding
effect or enforceability of any Credit Document, except (i) the filings and
approvals referred to in Section 6.12(b), which have been made and
obtained, and (ii) any of the foregoing the failure to obtain or make could not
reasonably be expected to have a Material Adverse Effect.


 


8.7           Investment
Company Act.  The Borrower is not an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.


 


8.8           True
and Complete Disclosure.  xx)  All factual information and data (taken as a
whole) heretofore or contemporaneously furnished by the Borrower, any of its
Subsidiaries or any of their respective authorized representatives in writing
to the Administrative Agent and/or any Lender on or before the Closing Date
(including, without limitation, all information contained in the Credit
Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein was true and complete in all material respects
on the date as of which such information or data is dated or certified and was
not incomplete by omitting to state any material fact necessary to make such
information and data (taken as a whole) not misleading at such time in light of
the circumstances under which such information or data was furnished, it being
understood and agreed that for purposes of this Section 8.8(a), such
factual information and data shall not include projections and pro forma
financial information.


 


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(b)  The
projections and pro forma financial information contained in the information
and data referred to in paragraph (a) above were based on good faith
estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results.


 


8.9           Financial
Condition; Financial Statements.  xxi) (i) The Combined
balance sheet of the Acquired Companies and the Asset Companies at
December 31, 1997, and the related Combined statements of operations,
stockholders’ equity and cash flows for the fiscal year ended as of such date,
which statements have been audited by Blackman, Kallick Bartelstein, LLP, independent
certified public accountants, who delivered an unqualified opinion with respect
thereto, and (ii) the unaudited Combined balance sheet of the Acquired
Companies and the Asset Companies at March 31, 1998, and the related
Combined statements of operations, stockholders’ equity and cash flows for the
fiscal quarter ended as of such date, in each case present fairly in all
material respects the Combined financial position of the Acquired Companies and
the Asset Companies at the respective dates of said statements and the results
of operations for the respective periods covered thereby.  All such financial statements have been
prepared in accordance with GAAP consistently applied except to the extent
provided in the notes to said financial statements and, in the case of said
financial statements referred to in clause (ii), subject to normal
year-end audit adjustments.


 


(b)  The Annual
Statement of Coast and its Subsidiaries at December 31, 1997, which Annual
Statement has been audited by Blackman Kallick Bartelstein, LLP, independent
certified public accountants, who delivered an unqualified opinion with respect
thereto, presents fairly the financial position of Coast and its Subsidiaries
at the date of said statement and the results for the fiscal year covered
thereby.  Such financial statement has
been prepared in accordance with SAP consistently applied except to the extent
provided in the notes to said financial statement.


 


(c)  The Annual
Statement of SNIC and its Subsidiaries at December 31, 1997, which Annual
Statement has been audited by Blackman Kallick Bartelstein, LLP, independent
certified public accountants, who delivered an unqualified opinion with respect
thereto, presents fairly the financial position of SNIC and its Subsidiaries at
the date of said statement and the results for the fiscal year covered
thereby.  Such financial statement has
been prepared in accordance with SAP consistently applied except to the extent
provided in the notes to said financial statement.


 


(d)  There has
been no Material Adverse Change since December 31, 1997, other than solely
as a result of changes in general economic conditions.


 


8.10         Tax
Returns and Payments. Each of the Borrower and its Subsidiaries has filed
all federal income tax returns and all other material tax returns, domestic and
foreign, required to be filed by it and has paid all material taxes and
assessments payable by it that have become due, other than those not yet
delinquent or contested in good faith. 
The Borrower and each of its Subsidiaries have paid, or have provided
adequate reserves (in the good faith judgment of the management of the
Borrower) in accordance with GAAP for the payment of, all


 


60

















 


material federal, state
and foreign income taxes applicable for all prior fiscal years and for the
current fiscal year to the Closing Date.


 


8.11         Compliance
with ERISA.  Each Plan is in
compliance with ERISA, the Code and any applicable Requirement of Law; no
Reportable Event has occurred (or is reasonably likely to occur) with respect
to any Plan; no Plan is insolvent or in reorganization (or is reasonably likely
to be insolvent or in reorganization), and no written notice of any such
insolvency or reorganization has been given to the Borrower, any Subsidiary or
any ERISA Affiliate; no Plan (other than a multiemployer plan) has an
accumulated or waived funding deficiency (or is reasonably likely to have such
a deficiency); neither the Borrower nor any Subsidiary nor any ERISA Affiliate
has incurred (or is reasonably likely to incur) any liability to or on account
of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code or has
been notified in writing that it will incur any liability under any of the
foregoing Sections with respect to any Plan; no proceedings have been
instituted (or are reasonably likely to be instituted) to terminate or to
reorganize any Plan or to appoint a trustee to administer any Plan, and no
written notice of any such proceedings has been given to the Borrower, any
Subsidiary or any ERISA Affiliate; and no lien imposed under the Code or ERISA
on the assets of the Borrower or any Subsidiary or any ERISA Affiliate exists
(or is reasonably likely to exist) nor has the Borrower, any Subsidiary or any
ERISA Affiliate been notified in writing that such a lien will be imposed on
the assets of the Borrower, any Subsidiary or any ERISA Affiliate on account of
any Plan, except to the extent that a breach of any of the foregoing
representations, warranties or agreements in this Section 8.11 would not
result, individually or in the aggregate, in an amount of liability that would
be reasonably likely to have a Material Adverse Effect.  No Plan (other than a multiemployer plan)
has an Unfunded Current Liability that would, individually or when taken
together with any other liabilities referenced in this Section 8.11, be
reasonably likely to have a Material Adverse Effect.  With respect to Plans that are multiemployer plans (as defined in
Section 3(37) of ERISA), the representations and warranties in this
Section 8.11, other than any made with respect to (a) liability under
Section 4201 or 4204 of ERISA or (b) liability for termination or
reorganization of such Plans under ERISA, are made to the best knowledge of the
Borrower.


 


8.12         Subsidiaries.  xxii)  Schedule 8.12 lists
each Subsidiary of the Borrower (and the direct and indirect ownership interest
of the Borrower therein), in each case existing on the Closing Date.  To the knowledge of the Borrower, each
Material Subsidiary as of the Closing Date has been so designated on
Schedule 8.12.


 


(b)  As of the Closing Date, there are no
restrictions on any Regulated Insurance Company which prohibit or otherwise
restrict the ability of any Regulated Insurance Company to (i) pay dividends or
make other distributions or pay any Indebtedness owed to the Borrower or any
Subsidiary, (ii) make loans or advances to the Borrower or any Subsidiary,
(iii) transfer any of its properties or assets to the Borrower or any
Subsidiary or (iv) guarantee the Obligations, other than prohibitions or
restrictions existing under or by reason of (A) this Agreement or the other
Credit Documents, (B) Requirements of Law, (C) customary non-assignment
provisions entered into in the ordinary course of business and consistent with
past practices and (D) purchase money obligations for property acquired in the
ordinary course of business, so long as such obligations are permitted under
this Agreement.


 


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8.13         Intellectual
Property, etc.  The Borrower and
each of the Restricted Subsidiaries have obtained all patents, trademarks,
servicemarks, trade names, copyrights, licenses and other rights, free from
burdensome restrictions, that are necessary for the operation of their
respective businesses as currently conducted and as proposed to be conducted,
except where the failure to obtain any such rights could not reasonably be
expected to have a Material Adverse Effect.


 


8.14         Environmental
Laws.  xxiii)  Other than
instances of noncompliance that could not reasonably be expected to have a
Material Adverse Effect: (i) the Borrower and each of its Subsidiaries are in
compliance with all Environmental Laws in all jurisdictions in which the
Borrower and each of its Subsidiaries are currently doing business (including,
without limitation, having obtained all material permits required under
Environmental Laws) and (ii) the Borrower will comply and cause each of its
Subsidiaries to comply with all such Environmental Laws (including, without
limitation, all permits required under Environmental Laws).


 


(b)  Neither the Borrower nor any of its
Subsidiaries has treated, stored, transported or disposed of Hazardous
Materials at or from any currently or formerly owned Real Estate (as defined in
Section 9.1(f)) or facility relating to its business in a manner that
could reasonably be expected to have a Material Adverse Effect.


 


8.15         Properties.  The Borrower and each of the Restricted Subsidiaries
have good title to or leasehold interest in all properties that are necessary
for the operation of their respective businesses as currently conducted and as
proposed to be conducted, free and clear of all Liens (other than any Liens
permitted by this Agreement) and except where the failure to have such good
title could not reasonably be expected to have a Material Adverse Effect.


 


8.16         Year
2000.  Any reprogramming required to
permit the proper functioning, in and following the year 2000, of (i) the
Borrower’s computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others) and the testing of all
such systems and equipment, as so reprogrammed, will be completed by
July 1, 1999 except to the extent that the failure to complete such
reprogramming and testing by such date could not reasonably be expected to have
a Material Adverse Effect.  The cost to
the Borrower of  such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the failure
of others’ systems or equipment) is not reasonably likely to have a Material
Adverse Effect.


 


SECTION 9. 
Affirmative Covenants. 
The Borrower hereby covenants and agrees that on the Closing Date and
thereafter, for so long as this Agreement is in effect and until the
Commitments, the Swingline Commitment and each Letter of Credit have terminated
and the Loans and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder, are paid in full:


 


9.1           Information
Covenants.  The Borrower will
furnish to each Lender and the Administrative Agent:


 


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(a)  Annual Financial Statements.  As soon as available and in any event within
120 days after the close of each fiscal year of the Borrower, (1) the
consolidated (and consolidating in the case of the Borrower, Coast and SNIC at
a minimum) balance sheet of (x) the Borrower and the Restricted Subsidiaries
and (y) the Borrower and its Subsidiaries, in each case as at the end of such
fiscal year and the related consolidated (and consolidating in the case of the
Borrower, Coast and SNIC at a minimum) statement of operations, stockholders’
equity and cash flows for such fiscal year, setting forth comparative
consolidated (and consolidating in the case of the Borrower, Coast and SNIC at
a minimum) figures for the preceding fiscal year, and certified (in the case of
the foregoing consolidated statements) by independent certified public
accountants of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of the Borrower or any
of the Material Subsidiaries as a going concern, together in any event with a
certificate of such accounting firm stating that in the course of its regular
audit of the business of the Borrower and the Material Subsidiaries, which
audit was conducted in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge of any Default or Event of
Default relating to Sections 10.8, 10.9, 10.10 and 10.11 that has occurred
and is continuing or, if in the opinion of such accounting firm such a Default
or Event of Default has occurred and is continuing, a statement as to the
nature thereof and (ii) management’s discussion and analysis of the most
important operational and financial developments during such fiscal year.


 


(ii)  As soon as available and in any event within
120 days after the close of each fiscal year of each Regulated Insurance
Company, the Annual Statement of such Regulated Insurance Company (prepared in
accordance with SAP) for such fiscal year and as filed with the Insurance
Department of the state in which such Regulated Insurance Company is domiciled
(together with any certifications or statements of such Regulated Insurance
Company relating to such Annual Statement which are required by such Insurance
Department).


 


(b)  Quarterly Financial Statements.  (2) 
As soon as available and in any event within 60 days after the close of
each of the first three quarterly accounting periods in each fiscal year of the
Borrower, the consolidated (and consolidating in the case of the Borrower,
Coast and SNIC at a minimum) balance sheet of (x) the Borrower and the
Restricted Subsidiaries and (y) the Borrower and its Subsidiaries, in each case
as at the end of such quarterly period and the related consolidated (and
consolidating in the case of the Borrower, Coast and SNIC at a minimum)
statement of operations and stockholders’ equity for such quarterly accounting
period and for the elapsed portion of the fiscal year ended with the last day
of such quarterly period, and the related consolidated (and consolidating in
the case of the Borrower, Coast and SNIC at a minimum) statement of cash flows
for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, and setting forth comparative consolidated (and consolidating
in the case of the Borrower, Coast and SNIC at a minimum) figures for the
related periods in the prior fiscal year or, in the case of such consolidated
(and consolidating in the case of the Borrower, Coast and SNIC at a minimum)
balance sheet, for the last day of the prior fiscal year, all of which shall be
certified by an Authorized Officer of the Borrower, subject to changes
resulting from audit and normal year-end audit adjustments.


 


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(ii)  As soon as available and in any event within
60 days after the close of each of the first three quarterly accounting periods
in each fiscal year of each Regulated Insurance Company, quarterly financial
statements of such Regulated Insurance Company (prepared in accordance with
SAP) for such quarterly accounting period as filed with the Insurance
Department of the state in which such Regulated Insurance Company is domiciled
(together with any certifications or statements of such Regulated Insurance
Company relating to such quarterly financial statements which are required by such
Insurance Department).


 


(c)  Budgets.  Within 60 days after the commencement of each fiscal year of
the Borrower, budgets of the Borrower in reasonable detail for the fiscal year
as customarily prepared by management of the Borrower for its internal use,
setting forth the principal assumptions upon which such budgets are based.


 


(d)  Officer’s Certificates.  At the time of the delivery of the financial
statements provided for in Sections 9.1(a) and (b), a certificate of an
Authorized Officer of the Borrower to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying
the nature and extent thereof, which certificate shall set forth (i) the
calculations required to establish whether the Borrower and its Subsidiaries
were in compliance with the provisions of Sections 10.8, 10.9, 10.10,
10.11 and 10.12 as at the end of such fiscal year or period, as the case may
be, (ii) a specification of any change in the identity of the Restricted
Subsidiaries or Unrestricted Subsidiaries as at the end of such fiscal
year  or period, as the case may be,
from the Restricted Subsidiaries or Unrestricted Subsidiaries, respectively,
provided to the Lenders on the Closing Date or the most recent fiscal year or
period, as the case may be, (iii) the then applicable Status and (iv) the
amount of any Pro Forma Adjustment not previously set forth in a Pro  Forma
Adjustment Certificate or any change in the amount of a Pro Forma Adjustment
set forth in any Pro  Forma Adjustment Certificate previously
provided and, in either case, in reasonable detail, the calculations and basis
therefor; and at the time of the delivery of the financial statements provided
for in Section 9.1(a), a certificate of an Authorized Officer of the Borrower
setting forth in reasonable detail the Available Amount as at the end of the
fiscal year to which such financial statements relate.


 


(e)  Notice of Default or Litigation.  Promptly after an Authorized Officer of the
Borrower or any of its Subsidiaries obtains knowledge thereof, notice of (i)
the occurrence of any event that constitutes a Default or Event of Default,
which notice shall specify the nature thereof, the period of existence thereof
and what action the Borrower proposes to take with respect thereto, and (ii)
any litigation or governmental proceeding pending against the Borrower or any
of its Subsidiaries that could reasonably be expected to result in a Material
Adverse Effect.


 


(f)  Environmental Matters.  The Borrower will promptly advise the Lenders
in writing after obtaining knowledge of any one or more of the following
environmental matters, unless such environmental matters would not,
individually or when aggregated with all other such matters, be reasonably
expected to result in a Material Adverse Effect:


 


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  (3) 
Any pending or threatened Environmental Claim against the Borrower or
any of its Subsidiaries or any Real Estate (as defined below);


 


 (ii) 
Any condition or occurrence on any Real Estate that (x) results in
noncompliance by the Borrower or any of its Subsidiaries with any applicable
Environmental Law or (y) could reasonably be anticipated to form the basis of
an Environmental Claim against the Borrower or any of its Subsidiaries or any
Real Estate;


 


(iii)  Any condition or occurrence on any Real
Estate that could reasonably be anticipated to cause such Real Estate to be
subject to any restrictions on the ownership, occupancy, use or transferability
of such Real Estate under any Environmental Law; and


 


(iv)  The taking of any removal or remedial action
in response to the actual or alleged presence of any Hazardous Material on any
Real Estate.


 


All such
notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower’s response thereto.  The term “Real
Estate” shall mean land, buildings and improvements owned or leased by the
Borrower or any of its Subsidiaries, but excluding all operating fixtures and equipment,
whether or not incorporated into improvements.


 


(g)  Pro Forma Adjustment Certificate.  Not later than the consummation of the
acquisition of any Acquired Entity or Business by the Borrower or any
Restricted Subsidiary for which there shall be a Pro Forma Adjustment, a
certificate of an Authorized Officer of the Borrower setting forth the amount
of such Pro Forma Adjustment and, in reasonable detail, the calculations and
basis therefor.


 


(h)  Reserve
Adequacy Report.  As promptly as
reasonably practicable following the request of the Administrative Agent or the
Required Banks, a report prepared by an independent actuarial consulting firm
of recognized professional standing reasonably satisfactory to the
Administrative Agent and the Required Banks reviewing the adequacy of reserves
of each Regulated Insurance Company determined in accordance with SAP, which
firm shall be provided access to or copies of all reserve analyses and
valuations relating to the insurance business of each Regulated Insurance
Company in the possession of or available to the Borrower or its Subsidiaries; provided
that no request may be made pursuant to this clause (h) unless there shall have
occurred and be continuing an Event of Default under Section 11.1 or an
Event of Default under Section 11.3(a) (to the extent resulting from a
breach of the requirements of Section 10.8, 10.9, 10.10 or 10.11).


 


(i)  Other Regulatory Statements and Reports.  Promptly (i) after receipt thereof, copies
of all regular and periodic reports of examinations  (including, without limitation, triennial examinations and annual
risk adjusted capital reports) of any Regulated Insurance Company, delivered to
such Person  by any Applicable Insurance
Regulatory Authority, insurance commission or similar regulatory authority,
(ii) after receipt thereof,


 


65

















 


written
notice of any assertion by any Applicable Insurance Regulatory Authority or any
governmental agency or agencies substituted therefor, as to a violation of any
Requirement of Law by any Regulated Insurance Company which is likely to have a
Material Adverse Effect, (iii) after receipt thereof, a copy of any notice of
termination, cancellation or recapture of any Reinsurance Agreement or
Retrocession Agreement to which a Regulated Insurance Company is a party to the
extent such termination or cancellation is likely to have a Material Adverse
Effect and (iv) after receipt thereof, copies of any notice of actual
suspension, termination or revocation of any material license of any Regulated
Insurance Company by any Applicable Insurance Regulatory Authority, including
any request by an Applicable Insurance Regulatory Authority which commits a
Regulated Insurance Company to take or refrain from taking any action or which
otherwise affects the authority of such Regulated Insurance Company to conduct
its business.


 


(j)  Other Information.  Promptly upon filing thereof, copies of any
filings on Form 10-K, 10-Q or 8-K or registration statements with, and
reports to, the SEC by the Borrower or any of its Subsidiaries (other than
amendments to any registration statement (to the extent such registration
statement, in the form it becomes effective, is delivered to the Lenders),
exhibits to any registration statement and any registration statements on Form
S-8) and copies of all financial statements, proxy statements, notices and
reports that the Borrower or any of its Subsidiaries shall send to the holders
of any publicly issued debt of the Borrower and/or any of its Subsidiaries in
their capacity as such holders (in each case to the extent not theretofore
delivered to the Lenders pursuant to this Agreement) and, with reasonable
promptness, such other information (financial or otherwise) as the
Administrative Agent on its own behalf or on behalf of any Lender may
reasonably request in writing from time to time.


 


9.2           Books,
Records and Inspections.  The
Borrower will, and will cause each of the Specified Subsidiaries to, permit
officers and designated representatives of the Administrative Agent or the
Required Lenders to visit and inspect any of the properties or assets of the
Borrower and any such Specified Subsidiary in whomsoever’s possession to the
extent that it is within the Borrower’s or such Specified Subsidiary’s control
to permit such inspection, and to examine the books of account of the Borrower
and any such Specified Subsidiary and discuss the affairs, finances and
accounts of the Borrower and of any such Specified Subsidiary with, and be
advised as to the same by, its and their officers and independent accountants,
all at such reasonable times and intervals and to such reasonable extent as the
Administrative Agent or the Required Lenders may desire.


 


9.3           Maintenance
of Insurance.  The Borrower will,
and will cause each of the Material Subsidiaries to, at all times maintain in
full force and effect, with insurance companies that the Borrower believes (in
the good faith judgment of the management of the Borrower) are financially
sound and responsible at the time the relevant coverage is placed or renewed,
insurance in at least such amounts and against at least such risks (and with
such risk retentions) as are usually insured against in the same general area
by companies engaged in the same or a similar business; and will furnish to the
Lenders, upon written request from the Administrative Agent, information
presented in reasonable detail as to the insurance so carried.


 


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9.4           Payment
of Taxes.  The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits, or upon any properties belonging to it, prior to
the date on which material penalties attach thereto, and all lawful material
claims that, if unpaid, could reasonably be expected to become a material Lien
upon any properties of the Borrower or any of the Restricted Subsidiaries, provided
that neither the Borrower nor any of its Subsidiaries shall be required to pay
any such tax, assessment, charge, levy or claim that is being contested in good
faith and by proper proceedings if it has maintained adequate reserves (in the
good faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP.


 


9.5           Consolidated
Corporate Franchises.  The Borrower
will do, and will cause each Material Subsidiary to do, or cause to be done,
all things necessary to preserve and keep in full force and effect its existence,
corporate rights and authority, except to the extent that the failure to do so
could not reasonably be expected to have a Material Adverse Effect; provided,
however, that the Borrower and its Subsidiaries may consummate any
transaction permitted under Section 10.3 or 10.4.


 


9.6           Compliance
with Statutes, etc.  The Borrower
will, and will cause each Subsidiary to, comply with all applicable laws,
rules, regulations and orders, except to the extent the failure to do so could
not reasonably be expected to have a Material Adverse Effect.


 


9.7           ERISA.  Promptly after the Borrower or any
Subsidiary or any ERISA Affiliate knows or has reason to know of the occurrence
of any of the following events that, individually or in the aggregate
(including in the aggregate such events previously disclosed or exempt from
disclosure hereunder, to the extent the liability therefor remains
outstanding), would be reasonably likely to have a Material Adverse Effect, the
Borrower will deliver to each of the Lenders a certificate of an Authorized
Officer or any other senior officer of the Borrower setting forth details as to
such occurrence and the action, if any, that the Borrower, such Subsidiary or
such ERISA Affiliate is required or proposes to take, together with any notices
(required, proposed or otherwise) given to or filed with or by the Borrower,
such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant (other than
notices relating to an individual participant’s benefits) or the Plan
administrator with respect thereto: that a Reportable Event has occurred; that
an accumulated funding deficiency has been incurred or an application is to be
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with
respect to a Plan; that a Plan having an Unfunded Current Liability has been or
is to be terminated, reorganized, partitioned or declared insolvent under Title
IV of ERISA (including the giving of written notice thereof); that a Plan has
an Unfunded Current Liability that has or will result in a lien under ERISA or
the Code; that proceedings will be or have been instituted to terminate a Plan
having an Unfunded Current Liability (including the giving of written notice
thereof); that a proceeding has been instituted against the Borrower, a
Subsidiary or an ERISA Affiliate pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Plan; that the PBGC has notified the
Borrower, any Subsidiary or any ERISA Affiliate of its intention to appoint a
trustee to administer any Plan; that the Borrower, any Subsidiary or any ERISA
Affiliate has failed to make a required installment or other payment pursuant to
Section 412 of the Code with respect to a Plan; or that


 


67

















 


the Borrower, any
Subsidiary or any ERISA Affiliate has incurred or will incur (or has been
notified in writing that it will incur) any liability (including any contingent
or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 of the Code.


 


9.8           Good
Repair.  The Borrower will, and will
cause each of the Restricted Subsidiaries to, ensure that its properties and
equipment used or useful in its business in whomsoever’s possession they may be
to the extent that it is within the Borrower’s or such Restricted Subsidiary’s
control to cause same, are kept in good repair, working order and condition,
normal wear and tear excepted, and that from time to time there are made in
such properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to
the extent and in the manner customary for companies in similar businesses and
consistent with third party leases, except in each case to the extent the
failure to do so could not be reasonably expected to have a Material Adverse Effect.


 


9.9           Transactions
with Affiliates.  The Borrower will
conduct, and cause each of the Restricted Subsidiaries to conduct, all
transactions with any of its Affiliates (other than the Borrower or any
Restricted Subsidiary) on terms that are substantially as favorable to the
Borrower or such Restricted Subsidiary as it would obtain in a comparable
arm’s-length transaction with a Person that is not an Affiliate, provided
that the foregoing restrictions shall not apply to (a) the payment of
customary annual fees to KKR and its Affiliates for management, consulting and
financial services rendered to the Borrower and its Subsidiaries, and
investment banking fees paid to KKR and its Affiliates for services rendered to
the Borrower and its Subsidiaries in connection with divestitures,
acquisitions, financings and other transactions, (b) customary fees paid
to members of the Board of Directors of the Borrower and its Subsidiaries,
(c) transactions permitted by Section 10.6 and (d) transactions described
on Schedule 9.9.


 


9.10         End
of Fiscal Years; Fiscal Quarters. 
The Borrower will, for financial reporting purposes, cause (a) each of
its, and each of its Subsidiaries’, fiscal years to end on December 31 of
each year and (b) each of its, and each of its Subsidiaries’, fiscal quarters
to end on dates consistent with such fiscal year-end; provided, however,
that the Borrower may, upon written notice to the Administrative Agent, change
the financial reporting convention specified above to any other financial
reporting convention reasonably acceptable to the Administrative Agent, in
which case the Borrower and the Administrative Agent will, and are hereby
authorized by the Lenders to, make any adjustments to this Agreement that are
necessary in order to reflect such change in financial reporting.


 


9.11         Additional
Guarantors.  Except as provided in
Section 10.1(j) and (k), the Borrower will cause (a) any direct or
indirect Domestic Subsidiary (other than any Unrestricted Subsidiary or any
Regulated Insurance Company) formed or otherwise purchased or acquired after
the date hereof and (b) any Subsidiary (other than any Unrestricted
Subsidiary or any Regulated Insurance Company) that is not a Domestic
Subsidiary on the date hereof but subsequently becomes a Domestic Subsidiary
(other than any Unrestricted Subsidiary or any Regulated Insurance Company), in
each case to execute a supplement to the Guarantee, in form and substance
reasonably satisfactory to the Administrative Agent, in order to become a
Guarantor.


 


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9.12         Pledges
of Additional Stock and Evidence of Indebtedness.  Except as provided in Section 10.1(j) and (k), the Borrower
will pledge, and, in the case of clause (c), will cause each direct Domestic
Subsidiary to pledge, to the Administrative Agent, for the benefit of the
Lenders, (a) all the capital stock of each direct Domestic Subsidiary (other
than any Unrestricted Subsidiary) and 65% of all the capital stock of each
direct Foreign Subsidiary (other than any Unrestricted Subsidiary), in each
case, formed or otherwise purchased or acquired after the date hereof, in each
case pursuant to a supplement to the Pledge Agreement in form and substance
reasonably satisfactory to the Administrative Agent, (b) all the capital stock
of any direct Domestic Subsidiary (other than any Unrestricted Subsidiary) and
65% of all the capital stock of each direct Foreign Subsidiary (other than any
Unrestricted Subsidiary), in each case that is not a direct Subsidiary on the
date hereof but subsequently becomes a direct Subsidiary (other than an
Unrestricted Subsidiary), in each case pursuant to a supplement to the Pledge
Agreement in form and substance reasonably satisfactory to the Administrative
Agent, and (c) all evidences of Indebtedness in excess of $5,000,000
received by the Borrower or any of the direct Domestic Subsidiaries (other than
any Unrestricted Subsidiary) in connection with any disposition of assets
pursuant to Section 10.4(b), in each case pursuant to a supplement to the Pledge
Agreement in form and substance reasonably satisfactory to the Administrative
Agent.


 


9.13         Use
of Proceeds.  The Borrower will use
the Letters of Credit and the proceeds of all Loans for the purposes set forth
in the introductory statement to this Agreement.


 


9.14         Changes
in Business.  The Borrower will, and
will cause its Material Subsidiaries to, taken as a whole, engage primarily in
(a) the lines of business carried on by the Borrower and its Restricted
Subsidiaries on the Closing Date, (b) any other insurance or insurance related
business and/or (c) businesses or activities incidental or related thereto.


 


9.15         Maintenance
of License and Permits.  The
Borrower will, and will cause each of its Subsidiaries to, maintain all
permits, licenses and consents as may be required for the conduct of its
business by any state, federal or local government agency or instrumentality
except where failure to maintain the same could not reasonably be expected to
have a Material Adverse Effect.


 


SECTION 10. 
Negative Covenants.  The
Borrower hereby covenants and agrees that on the Closing Date and thereafter,
for so long as this Agreement is in effect and until the Commitments, the
Swingline Commitment and each Letter of Credit have terminated and the Loans
and Unpaid Drawings, together with interest, Fees and all other Obligations
incurred hereunder, are paid in full:


 


10.1         Limitation
on Indebtedness.  The Borrower will
not, and will not permit any of the Restricted Subsidiaries to, create, incur,
assume or suffer to exist any Indebtedness, except:


 


(a)
 Indebtedness arising under the Credit Documents;


 


(b)
 Indebtedness of (i) the Borrower to any Restricted Subsidiary of the
Borrower and (ii) any Restricted Subsidiary to the Borrower or any other
Restricted Subsidiary of the Borrower;


 


69

















 


(c)
 Indebtedness in respect of any bankers’ acceptance, letter of credit,
warehouse receipt or similar facilities entered into in the ordinary course of
business;


 


(d)  except
as provided in clauses (j) and (k) below, Guarantee Obligations incurred by
(i) Restricted Subsidiaries in respect of Indebtedness of the Borrower or
other Restricted Subsidiaries that is permitted to be incurred under this
Agreement and (ii) the Borrower in respect of Indebtedness of the
Restricted Subsidiaries that is permitted to be incurred under this Agreement;


 


(e)  Guarantee
Obligations incurred in the ordinary course of business in respect of
obligations of suppliers, customers, lessors and licensees;


 


(f)
 (i) Indebtedness (including Indebtedness arising under Capital Leases)
incurred within 270 days of the acquisition, construction or improvement
of fixed or capital assets to finance the acquisition, construction or
improvement of such fixed or capital assets or otherwise incurred in respect of
Capital Expenditures permitted by Section 10.12, (ii) Indebtedness
arising under Capital Leases, other than Capital Leases in effect on the date
hereof and Capital Leases entered into pursuant to subclauses (i) above, provided
that the aggregate amount of Indebtedness incurred pursuant to this
subclause (ii) shall not exceed $5,000,000 at any time outstanding, and
(iii) any refinancing, refunding, renewal or extension of any Indebtedness
specified in subclause (i) or (ii) above, provided that
the principal amount thereof is not increased above the principal amount
thereof outstanding immediately prior to such refinancing, refunding, renewal
or extension;


 


(g)  Indebtedness
outstanding on the date hereof and listed on Schedule 10.1 and any
refinancing, refunding, renewal or extension thereof, provided that
(i) the principal amount thereof is not increased above the principal
amount thereof outstanding immediately prior to such refinancing, refunding,
renewal or extension, except to the extent otherwise permitted hereunder, and
(ii) the direct and contingent obligors with respect to such Indebtedness
are not changed;


 


(h)  Indebtedness
in respect of Hedge Agreements;


 


(i)  Indebtedness
in respect of the Contingent Payment Securities;


 


(j)  (i) Indebtedness
of a Person or Indebtedness attaching to assets of a Person that, in either
case, becomes a Restricted Subsidiary or Indebtedness attaching to assets that
are acquired by the Borrower or any Restricted Subsidiary, in each case after
the Closing Date as the result of a Permitted Acquisition, provided that
(w) such Indebtedness existed at the time such Person became a Restricted
Subsidiary or at the time such assets were acquired and, in each case, was not
created in anticipation thereof, (x) such Indebtedness is not guaranteed
in any respect by the Borrower or any Restricted Subsidiary (other than any
such person that so becomes a Restricted Subsidiary), and (y)(A) the
Borrower pledges the capital stock of such Person to the Administrative Agent
to the extent required under Section 9.12, (B) such Person executes a
supplement to the Guarantee to the extent required under Section 9.11 and
(C) if any such Indebtedness is


 


70

















 


secured,
(1) the Guarantee referred to in the preceding subclause (B) is
equally and ratably secured or (2) in the case of assets acquired by the
Borrower or any Restricted Subsidiary, the Borrower’s obligations hereunder or
such Restricted Subsidiary’s Guarantee, as the case may be, are equally and
ratably secured, provided that the requirements of this
subclause (y) shall not apply to an aggregate amount at any time
outstanding of up to (and including) $20,000,000 of the aggregate of
(1) such Indebtedness and (2) all Indebtedness as to which the
proviso to clause (k)(i)(y) below then applies, and (z) the aggregate
amount of such Indebtedness and all Indebtedness incurred under clause (k)
below, when taken together, does not exceed $40,000,000 in the aggregate at any
time outstanding, (ii) any refinancing, refunding, renewal or extension of
any Indebtedness specified in subclause (i) above, provided that,
except to the extent otherwise permitted hereunder, (x) the principal
amount of any such Indebtedness is not increased above the principal amount
thereof outstanding immediately prior to such refinancing, refunding, renewal
or extension and (y) the direct and contingent obligors with respect to
such Indebtedness are not changed;


 


(k)  (i) Indebtedness
of the Borrower or any Restricted Subsidiary incurred to finance a Permitted
Acquisition, provided that (x) such Indebtedness is not guaranteed
in any respect by any Restricted Subsidiary (other than any Person acquired
(the “acquired Person”) as a result of such Permitted Acquisition or the
Restricted Subsidiary so incurring such Indebtedness) or, in the case of
Indebtedness of any Restricted Subsidiary, by the Borrower, (y)(A) the
Borrower pledges the capital stock of such acquired Person to the Administrative
Agent to the extent required under Section 9.12, (B) such acquired
Person executes a supplement to the Guarantee to the extent required under
Section 9.11 and (C) if a guarantee by such acquired Person of any
such Indebtedness is secured by assets of such acquired Person, the Guarantee
referred to in the preceding subclause (B) is equally and ratably secured,
provided that the requirements of this subclause (y) shall not
apply to an aggregate amount at any time outstanding of up to (and including)
$20,000,000 of the aggregate of (1) such Indebtedness and (2) all
Indebtedness as to which the proviso to clause (j)(i)(y) above then
applies, and (z) the aggregate amount of such Indebtedness and all Indebtedness
assumed or permitted to exist under clause (j) above, when taken together,
does not exceed $40,000,000 in the aggregate at any time outstanding, and
(ii) any refinancing, refunding, renewal or extension of any Indebtedness
specified in subclause (i) above, provided that (x) the principal
amount of any such Indebtedness is not increased above the principal amount
thereof outstanding immediately prior to such refinancing, refunding, renewal
or extension and (y) the direct and contingent obligors with respect to
such Indebtedness are not changed, except to the extent otherwise permitted
hereunder; and


 


(l)  (i) additional
Indebtedness, provided that the aggregate amount of Indebtedness
incurred and remaining outstanding pursuant to this clause (l) shall not
at any time exceed $30,000,000 and (ii) any refinancing, refunding,
renewal or extension of any Indebtedness specified in subclause (i) above.


 


10.2         Limitation
on Liens.  The Borrower will not,
and will not permit any of the Restricted Subsidiaries to, create, incur,
assume or suffer to exist any Lien upon any property


 


71

















 


or assets of any kind
(real or personal, tangible or intangible) of the Borrower or any Restricted
Subsidiary, whether now owned or hereafter acquired, except:


 


(a)  Liens
arising under the Credit Documents;


 


(b)  Permitted
Liens;


 


(c)  Liens
securing Indebtedness permitted pursuant to Section 10.1(f), provided
that such Liens attach at all times only to the assets so financed;


 


(d)  Liens
existing on the date hereof and listed on Schedule 10.2;


 


(e)  Liens
existing on the assets of any Person that becomes a Restricted Subsidiary, or
existing on assets acquired, pursuant to a Permitted Acquisition to the extent
the Liens on such assets secure Indebtedness permitted by Section 10.1(j),
provided that such Liens attach at all times only to the same assets
that such Liens attached to, and secure only the same Indebtedness that such
Liens secured, immediately prior to such Permitted Acquisition;


 


(f)  Liens
placed upon the capital stock of any Restricted Subsidiary acquired pursuant to
a Permitted Acquisition to secure Indebtedness of the Borrower or any
other  Restricted Subsidiary incurred
pursuant to Section 10.1(k) in connection with such Permitted Acquisition
and (ii) Liens placed upon the assets of such Restricted Subsidiary to secure a
guarantee by such Restricted Subsidiary of any such Indebtedness of the
Borrower or any other Restricted Subsidiary;


 


(g)  the
replacement, extension or renewal of any Lien permitted by clauses (a) through
(f) above upon or in the same assets theretofore subject to such Lien or the
replacement, extension or renewal (without increase in the amount or change in
any direct or contingent obligor) of the Indebtedness secured thereby; and


 


(h)  additional
Liens so long as the aggregate principal amount of the obligations so secured
does not exceed $10,000,000 at any time outstanding.


 


10.3         Limitation
on Fundamental Changes.  Except as
expressly permitted by Section 10.4 or 10.5, the Borrower will not, and
will not permit any of the Restricted Subsidiaries to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all its business units,
assets or other properties, except that:


 


(a)  any
Subsidiary of the Borrower or any other Person may be merged or consolidated
with or into the Borrower, provided that (i) the Borrower shall be
the continuing or surviving corporation or the Person formed by or surviving
any such merger or consolidation (if other than the Borrower) shall be a
corporation organized or existing under the laws of the United States, any
state thereof, the District of Columbia or any territory thereof (the Borrower
or such Person, as the case may be, being herein referred to as the “Successor
Borrower”), (ii) the Successor Borrower (if other than the


 


72

















 


Borrower)
shall expressly assume all the obligations of the Borrower under this Agreement
and the other Credit Documents pursuant to a supplement hereto or thereto in
form reasonably satisfactory to the Administrative Agent, (iii) no Default
or Event of Default would result from the consummation of such merger or
consolidation, (iv) the Successor Borrower shall be in compliance, on a
pro forma basis after giving effect to such merger or consolidation, with the
covenants set forth in Sections 10.8, 10.9, 10.10 and 10.11, as such
covenants are recomputed as at the last day of the most recently ended Test
Period under such Section as if such merger or consolidation had occurred
on the first day of such Test Period, (v) each Guarantor, unless it is the
other party to such merger or consolidation, shall have by a supplement to the
Guarantee confirmed that its Guarantee shall apply to the Successor Borrower’s
obligations under this Agreement and (vi) the Borrower shall have delivered to
the Administrative Agent an officer’s certificate and an opinion of counsel,
each stating that such merger or consolidation and such supplement to this
Agreement or any Guarantee comply with this Agreement, provided further
that if the foregoing are satisfied, the Successor Borrower (if other than the
Borrower) will succeed to, and be substituted for, the Borrower under this
Agreement;


 


(b)  any
Subsidiary of the Borrower or any other Person may be merged or consolidated
with or into any one or more Subsidiaries of the Borrower, provided that
(i) in the case of any merger or consolidation involving one or more Restricted
Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving
corporation or (B) the Borrower shall take all steps necessary to cause the
Person formed by or surviving any such merger or consolidation (if other than a
Restricted Subsidiary) to become a Restricted Subsidiary, (ii) in the case of
any merger or consolidation involving one or more Guarantors, a Guarantor shall
be the continuing or surviving corporation or the Person formed by or surviving
any such merger or consolidation (if other than a Guarantor) shall execute a
supplement to the Guarantee in form and substance reasonably satisfactory to
the Administrative Agent in order to become a Guarantor, (iii) no Default
or Event of Default would result from the consummation of such merger or
consolidation, (iv) the Borrower shall be in compliance, on a pro forma
basis after giving effect to such merger or consolidation, with the covenants
set forth in Sections 10.8, 10.9, 10.10 and 10.11, as such covenants are
recomputed as at the last day of the most recently ended Test Period under such
Section as if such merger or consolidation had occurred on the first day
of such Test Period, and (v) the Borrower shall have delivered to the
Administrative Agent an Officers’ Certificate stating that such merger or
consolidation and such supplement to any Guarantee comply with this Agreement;


 


(c)  any
Restricted Subsidiary that is not a Guarantor may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower, a Guarantor or any other Restricted Subsidiary of
the Borrower; and


 


(d)  any
Guarantor may sell, lease, transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower, any
Guarantor, any wholly-owned Regulated Insurance Company or any other Regulated
Insurance Company (to the extent that the equity interests of such Regulated
Insurance Company which are owned directly or indirectly by the Borrower are
pledged to the Administrative Agent for the benefit of the Lenders).


 


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10.4         Limitation
on Sale of Assets.  The Borrower
will not, and will not permit any of the Restricted Subsidiaries to,
(i) convey, sell, lease, assign, transfer or otherwise dispose of any of
its property, business or assets (including, without limitation, receivables
and leasehold interests), whether now owned or hereafter acquired (other than
any such sale, transfer, assignment or other disposition resulting from any
casualty or condemnation, of any assets of the Borrower or the Restricted
Subsidiaries) or (ii) sell any shares owned by it of any Restricted
Subsidiary’s capital stock to any Person other than the Borrower or a
Guarantor, except that:


 


(a)  the
Borrower and the Restricted Subsidiaries may sell, transfer or otherwise
dispose of used or surplus equipment, vehicles and other assets in the ordinary
course of business;


 


(b)  the
Borrower and the Restricted Subsidiaries may sell, transfer or otherwise
dispose of other assets for fair value, provided that (i) the
aggregate amount of such sales, transfers and disposals by the Borrower and the
Restricted Subsidiaries taken as a whole pursuant to this clause (b) shall
not exceed in the aggregate $50,000,000 during the term of this Agreement,
(ii) any consideration in excess of $5,000,000 received by the Borrower or
any Guarantor in connection with such sales, transfers and other dispositions
of assets pursuant to this clause (b) that is in the form of Indebtedness
shall be pledged to the Administrative Agent pursuant to Section 9.12,
(iii) with respect to any such sale, transfer or disposition (or series of
related sales, transfers or dispositions) in an aggregate amount in excess of
$5,000,000, the Borrower shall be in compliance, on a pro forma basis after
giving effect to such sale, transfer or disposition, with the covenants set
forth in Sections 10.8, 10.9, 10.10 and 10.11, as such covenants are
recomputed as at the last day of the most recently ended Test Period under such
Sections as if such sale, transfer or disposition had occurred on the first day
of such Test Period, and (iv) after giving effect to any such sale,
transfer or disposition, no Default or Event of Default shall have occurred and
be continuing;


 


(c)  the
Borrower and the Restricted Subsidiaries may make sales of assets to the
Borrower or to any Restricted Subsidiary, provided that any such sales
to Foreign Subsidiaries must be for fair value;


 


(d)  any
Restricted Subsidiary may effect any transaction permitted by
Section 10.3, 10.5 or 10.6;


 


(e)  in
addition to selling or transferring accounts receivable pursuant to the other
provisions hereof, the Borrower and the Restricted Subsidiaries may sell or discount
without recourse accounts receivable arising in the ordinary course of business
in connection with the compromise or collection thereof;


 


(f)  any
Regulated Insurance Company may (x) enter into any Insurance Contract,
Reinsurance Agreement or Retrocession Agreement in the ordinary course of
business in accordance with its normal underwriting, indemnity and retention
policies, provided that any counterparty to any such Reinsurance
Agreement or Retrocession Agreement shall have an A.M. Best financial strength
rating of A- (or equivalent rating level if A.M. Best changes its ratings
methodology or designations) or better, unless such counterparty’s


 


74

















 


obligations
under such Reinsurance Agreement or Retrocession Agreement are collateralized
by irrevocable letters of credit and/or a trust or similar arrangement
containing cash and/or marketable securities with an average quality rating of
A (or its equivalent) or better of which the applicable Regulated Insurance
Company is the beneficiary, and (y) dispose of any assets in its investment
portfolio; and


 


(g)  the
Borrower and its Restricted Subsidiaries may dispose of the real property
listed on Schedule 10.4.


 


10.5         Limitation
on Investments.  The Borrower will
not, and will not permit any of the Restricted Subsidiaries to, make any
advance, loan, extensions of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets of, or
make any other investment in, any Person, except:


 


(a)  extensions
of trade credit and asset purchases in the ordinary course of business;


 


(b)  (i)
Permitted Investments by the Borrower and Restricted Subsidiaries (other than
Regulated Insurance Companies) and (ii) investments by Regulated Insurance
Companies to the extent permitted under applicable Requirements of Law;


 


(c)  loans
and advances to officers, directors and employees of the Borrower or any of its
Restricted Subsidiaries (i) to finance the purchase of capital stock of
the Borrower from the Borrower and (ii) for additional purposes not
contemplated by subclause (i) above in an aggregate principal amount at
any time outstanding with respect to this clause (ii) not exceeding
$3,000,000;


 


(d)  investments
existing on the date hereof and any extensions, renewals or reinvestments
thereof, so long as the aggregate amount of all investments pursuant to this
clause (d) is not increased at any time above the amount of such
investments existing on the date hereof;


 


(e)  investments
in Hedge Agreements permitted by Section 10.1(h);


 


(f)  investments
received in connection with the bankruptcy or reorganization of suppliers or
customers and in settlement of delinquent obligations of, and other disputes
with, customers arising in the ordinary course of business;


 


(g)  investments
to the extent that payment for such investments is made with capital stock of
the Borrower;


 


(h)  investments
constituting non-cash proceeds of sales, transfers and other dispositions of
assets to the extent permitted by Section 10.4;


 


(i)  investments
in any Guarantor, in any wholly-owned Regulated Insurance Company or in any
other Regulated Insurance Company (to the extent that the equity interests of
such Regulated Insurance Company which are owned directly or indirectly by the
Borrower are pledged to the Administrative Agent for the benefit of the
Lenders);


 


75

















 


(j)  investments
constituting Permitted Acquisitions;


 


(k)  loans
and advances permitted under Section 10.1(b); and


 


(l)  additional
investments (including investments in Minority Investments and Unrestricted
Subsidiaries) in an aggregate amount at the time of such investment not in
excess of the sum of (i) $25,000,000 (minus the portion, if any, of such
$25,000,000 previously applied to make investments pursuant to this clause (l)
and not returned by means of redemption, capital distribution or other return
of capital to the Borrower at or prior to such time) and (ii) the Available
Amount at such time (provided that the aggregate amount invested in
Unrestricted Subsidiaries pursuant to this clause (l) with the portion (if any)
of the Available Amount added thereto pursuant to clause (a)(iii) and/or
(a)(iv) of the definition thereof as a result of a preferred capital
contribution or a preferred equity issuance shall not exceed $20,000,000).


 


10.6         Limitation
on Dividends.  The Borrower will not
declare or pay any dividends (other than dividends payable solely in its
capital stock or rights, warrants or options to purchase its capital stock) or
return any capital to its stockholders or make any other distribution, payment
or delivery of property or cash to its stockholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for consideration, any
shares of any class of its capital stock or the capital stock of any direct or
indirect parent of the Borrower now or hereafter outstanding (or any warrants
for or options or stock appreciation rights in respect of any of such shares), or
set aside any funds for any of the foregoing purposes, or permit any of the
Restricted Subsidiaries to purchase or otherwise acquire for consideration
(other than in connection with an investment permitted by Section 10.5)
any shares of any class of the capital stock of the Borrower, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing “Dividends”),
provided that, so long as no Default or Event of Default exists or would
exist after giving effect thereto, (a) the Borrower may pay regularly scheduled
dividends on Permitted Preferred Stock, (b) the Borrower may redeem in
whole or in part any capital stock of the Borrower for another class of capital
stock or rights to acquire capital stock of the Borrower or with proceeds from
substantially concurrent equity contributions or issuances of new shares of
capital stock, provided that such other class of capital stock contains
terms and provisions at least as advantageous to the Lenders as those contained
in the capital stock redeemed thereby, (c) the Borrower may repurchase
shares of its capital stock (and/or options or warrants in respect thereof)
held by its officers, directors and employees so long as such repurchase is
pursuant to, and in accordance with the terms of, management and/or employee
stock plans, stock subscription agreements or shareholder agreements,
(d) the Borrower may make investments permitted by Section 10.5 and
(e) the Borrower may declare and pay dividends on its capital stock, provided
that (i) the aggregate amount of dividends paid pursuant to this
clause (e) shall not at any time exceed 50% of Cumulative Consolidated Net
Income Available to Common Stockholders at such time and (ii) at the time
of the payment of any such dividends and after giving effect thereto, the
Consolidated Total Debt to Consolidated Total Capitalization Ratio on the date
of such payment of such dividends shall be less than 0.35:1.00.


 


10.7         Limitations
on Debt Payments and Amendments; Early Payment Amount.  xxiv) 
The Borrower will not optionally prepay, repurchase or redeem or
otherwise defease any


 


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Contingent Payment
Securities, provided that the Borrower may, at any time after the issuance of
the Contingent Payment Securities, prepay, repurchase, redeem or otherwise
defease Contingent Payment Securities (i) in an aggregate amount at such not to
exceed the Available Amount at such time, provided that no Event of
Default exists at such time or would result therefrom, or (ii) with the
proceeds of, or in exchange for, securities having terms not materially less
advantageous to the interests of the Lenders than the corresponding terms of
the Contingent Payment Securities..


 


(b)  Except as
provided under Section 10.7(a), the Borrower will not waive, amend,
modify, terminate or release the Contingent Payment Securities to the extent
that any such waiver, amendment, supplement, modification, termination or
release would be adverse to the Lenders in any material respect.


 


(c)  The
Borrower will not pay all or any portion of the Early Payment Amount (as
defined in the Acquisition Agreement) unless (i) no Default or Event of Default
exists or would result therefrom and (ii) the Consolidated Total Debt to
Consolidated Total Capitalization Ratio as of the last day of the fiscal
quarter of the Borrower most recently ended prior to the time of any such
payment, after giving effect to such payment on a pro forma basis as if such
payment had been made on such last day of such fiscal quarter, is not greater
than 0.525:1.00, and the Borrower has delivered to the Administrative Agent a
certificate of an Authorized Officer of the Borrower to such effect
demonstrating satisfaction of such pro forma ratio in reasonable detail.  For avoidance of doubt, it is understood
that the payment of the Contingent Payment Amount (as defined in the
Acquisition Agreement) is not subject to the restrictions of this
subsection or otherwise prohibited by the terms of this Agreement.


 


10.8         Consolidated
Total Debt to Consolidated Total Capitalization Ratio.  The Borrower will not permit the
Consolidated Total Debt to Consolidated Total Capitalization Ratio at any time
during any fiscal year set forth below to be greater than the ratio set forth
below opposite such fiscal year:


 


	
  Fiscal Year Ending

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  December 31, 1998

  	
   

  	
  0.600:1.00

  
	
  December 31, 1999

  	
   

  	
  0.600:1.00

  
	
  December 31, 2000

  	
   

  	
  0.575:1.00

  
	
  December 31, 2001

  	
   

  	
  0.550:1.00

  
	
  December 31, 2002

  	
   

  	
  0.500:1.00

  
	
  December 31, 2003

  	
   

  	
  0.450:1.00

  
	
  Thereafter

  	
   

  	
  0.400:1.00

  



 


10.9         Cash
Flow to Consolidated Interest Expense Ratio.  The Borrower will not permit the Cash Flow to Consolidated
Interest Expense Ratio for any Test Period ending on a date set forth below to
be less than the ratio set forth below opposite such date:


 


	
  Test Period Ending

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  September 30, 1998

  	
   

  	
  2.00:1.00

  



 


77

















 


	
  December 31, 1998

  	
   

  	
  2.00:1.00

  
	
  March 31, 1999

  	
   

  	
  2.00:1.00

  
	
  June 30, 1999

  	
   

  	
  2.00:1.00

  
	
  September 30, 1999

  	
   

  	
  2.00:1.00

  
	
  December 31, 1999

  	
   

  	
  2.00:1.00

  
	
  March 31, 2000

  	
   

  	
  2.25:1.00

  
	
  June 30, 2000

  	
   

  	
  2.50:1.00

  
	
  September 30, 2000

  	
   

  	
  2.75:1.00

  
	
  December 31, 2000

  	
   

  	
  2.75:1.00

  
	
  March 31, 2001

  	
   

  	
  3.00:1.00

  
	
  June 30, 2001

  	
   

  	
  3.00:1.00

  
	
  September 30, 2001

  	
   

  	
  3.25:1.00

  
	
  December 31, 2001

  	
   

  	
  3.25:1.00

  
	
  March 31, 2002

  	
   

  	
  3.50:1.00

  
	
  June 30, 2002

  	
   

  	
  3.50:1.00

  
	
  September 30, 2002

  	
   

  	
  3.75:1.00

  
	
  December 31, 2002

  	
   

  	
  3.75:1.00

  
	
  Thereafter

  	
   

  	
  4.00:1.00

  



 


10.10       Minimum
Risk-Based Capital.  The Borrower
will not permit the Risk-Based Capital for any Regulated Insurance Company
determined on an individual basis calculated as of the last day of any fiscal
year to be less than 250%, provided that if any such Person fails to
maintain such Risk-Based Capital as of the last day of any fiscal year the
Borrower shall nevertheless be deemed to be in compliance with this
Section 10.10, and no Default or Event of Default shall exist, so long as
(i) the Combined Risk-Based Capital for all Regulated Insurance Companies as of
the last day of such fiscal year is at least 275% and (ii) the Risk-Based
Capital of each Regulated Insurance Company determined on an individual basis
as of the last day of such fiscal year is at least 210%.


 


10.11       Net
Premiums Written to Surplus Ratio. 
The Borrower will not permit the ratio of Net Premiums Written for any
Test Period to Surplus as of the last day of such Test Period to exceed
3.5:1.0.


 


10.12       Capital
Expenditures.  The Borrower will
not, and will not permit any of its Restricted Subsidiaries to, make any
Capital Expenditures (other than Permitted Acquisitions that constitute Capital
Expenditures) in any fiscal year, in excess of an amount equal to $5,000,000
plus the Available Amount at the time of the making of any such Capital
Expenditures, provided that any amount not so expended in any fiscal
year may be carried forward and utilized in one or more future years.


 


SECTION 11. 
Events of Default.  Upon
the occurrence of any of the following specified events (each an “Event of
Default”):


 


11.1         Payments.  The Borrower shall (a) default in the
payment when due of any principal of the Loans or (b) default, and such default
shall continue for five or more days, in the payment when due of any interest
on the Loans or any Fees or any Unpaid Drawings or of any other amounts owing
hereunder or under any other Credit Document; or


 


78

















 


11.2         Representations,
etc.  Any representation, warranty
or statement made or deemed made by any Credit Party herein or in the
Guarantee, the Pledge Agreement or any certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or


 


11.3         Covenants.  Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 9.1(e) or Section 10 or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 11.1 or 11.2 or clause (a) of this Section 11.3)
contained in this Agreement, the Guarantee or the Pledge Agreement and such
default shall continue unremedied for a period of at least 30 days after
receipt of written notice by the Borrower from the Administrative Agent or the
Required Lenders; or


 


11.4         Default
Under Other Agreements. (a) The Borrower or any of Restricted Subsidiaries
shall (i) default in any payment with respect to any Indebtedness (other than
the Obligations) in excess of $7,000,000 in the aggregate, for the Borrower and
such Subsidiaries, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or
(ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or (except in the case of
Indebtedness consisting of any Hedge Agreement) any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, any such Indebtedness to
become due prior to its stated maturity; or (b) without limiting the
provisions of clause (a) above, any such Indebtedness (other than
Indebtedness consisting of any Hedge Agreement) shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment or as a mandatory prepayment, prior to the stated maturity thereof;
or


 


11.5         Bankruptcy,
etc.  The Borrower or any Specified
Subsidiary shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or
any successor thereto (the “Bankruptcy Code”); or an involuntary case is
commenced against the Borrower or any Specified Subsidiary and the petition is
not controverted within 10 days after commencement of the case; or an
involuntary case is commenced against the Borrower or any Specified Subsidiary
and the petition is not dismissed within 60 days after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the Borrower or
any Specified Subsidiary; or the Borrower or any Specified Subsidiary commences
(including by way of applying for or consenting to the appointment of, or
taking of possession by, a rehabilitation, receiver, custodian, trustee, conservator
or liquidation (collectively, a “conservator”) of itself or all or any
substantial portion of its property) any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency, liquidation, rehabilitation, conservatorship or
similar law of any jurisdiction whether now or hereafter in effect relating to
the Borrower or any Specified Subsidiary; or there is commenced against the
Borrower or any Specified Subsidiary any such proceeding that remains
undismissed for a period of 60 days; or the Borrower or any Specified
Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower
or any Specified Subsidiary suffers any


 


79

















 


appointment of any
conservator or the like for it or any substantial part of its property, which
appointment shall continue undischarged or unstayed for a period of 60 days; or
the Borrower or any Specified Subsidiary makes a general assignment for the
benefit of creditors; or any corporate action is taken by the Borrower or any
Specified Subsidiary for the purpose of effecting any of the foregoing; or


 


11.6         ERISA.  (a) Any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part thereof or a waiver
of such standard or extension of any amortization period is sought or granted
under Section 412 of the Code; any Plan is or shall have been terminated
or is the subject of termination proceedings under ERISA (including the giving
of written notice thereof); an event shall have occurred or a condition shall
exist in either case entitling the PBGC to terminate any Plan or to appoint a
trustee to administer any Plan (including the giving of written notice
thereof); any Plan shall have an accumulated funding deficiency (whether or not
waived); the Borrower or any Subsidiary or any ERISA Affiliate has incurred or
is likely to incur a liability to or on account of a Plan under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 of the Code (including the giving of written
notice thereof); (b) there could result from any event or events set forth in
clause (a) of this Section 11.6 the imposition of a lien, the granting of
a security interest, or a liability, or the reasonable likelihood of incurring
a lien, security interest or liability; and (c) such lien, security interest or
liability will or would be reasonably likely to have a Material Adverse Effect;
or


 


11.7         Guarantee.  The Guarantee or any material provision
thereof shall cease to be in full force or effect or any Guarantor thereunder
or any Credit Party shall deny or disaffirm in writing such Guarantor’s
obligations under the Guarantee; or


 


11.8         Pledge
Agreement.  The Pledge Agreement or
any material provision thereof shall cease to be in full force or effect (other
than pursuant to the terms hereof or thereof or as a result of acts or
omissions of the Administrative Agent or any Lender) or any Pledgor thereunder
or any Credit Party shall deny or disaffirm in writing such Pledgor’s
obligations under the Pledge Agreement; or


 


11.9         Judgments.  One or more judgments or decrees shall be
entered against the Borrower or any of the Restricted Subsidiaries involving a
liability of $7,000,000 or more in the aggregate for all such judgments and
decrees for the Borrower and the Restricted Subsidiaries (to the extent not
paid or fully covered by insurance or reinsurance provided by a carrier not
disputing coverage) and any such judgments or decrees shall not have been
satisfied, vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof; or


 


11.10       Change
of Control.  A Change of Control
shall occur;


 


then, and in any such
event, and at any time thereafter, if any Event of Default shall then be
continuing, the Administrative Agent shall, upon the written request of the
Required Lenders, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Administrative Agent
or any Lender to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (provided that, if an Event
of Default specified in Section 11.5 shall occur with respect to the
Borrower, the result that would


 


80

















 


occur upon the giving of
written notice by the Administrative Agent as specified in clauses (i), (ii)
and (iv) below shall occur automatically without the giving of any such
notice):  (i) declare the Total
Revolving Credit Commitment terminated, whereupon the Revolving Credit
Commitments and Swingline Commitment, if any, of each Lender or Chase, as the
case may be, shall forthwith terminate immediately and any Fees theretofore
accrued shall forthwith become due and payable without any other notice of any
kind; (ii) declare the principal of and any accrued interest in respect of
all Loans and all Obligations owing hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; (iii) terminate any Letter of Credit that may be terminated in
accordance with its terms; and/or (iv) direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the occurrence of an
Event of Default specified in Section 11.5 with respect to the Borrower,
it will pay) to the Administrative Agent at the Administrative Agent’s Office
such additional amounts of cash, to be held as security for the Borrower’s
reimbursement obligations for Drawings that may subsequently occur thereunder,
equal to the aggregate Stated Amount of all Letters of Credit issued and then
outstanding.


 


SECTION 12. 
The Administrative Agent.


 


12.1         Appointment.  Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Credit Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto.  Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Credit Document or otherwise
exist against the Administrative Agent. 
The Syndication Agent shall not have any obligations, duties or
responsibilities under this Agreement.


 


12.2         Delegation
of Duties.  The Administrative Agent
may execute any of its duties under this Agreement and the other Credit
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys in-fact selected by
it with reasonable care.


 


12.3         Exculpatory
Provisions.  Neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Credit Document (except for its or such Person’s
own gross negligence or willful misconduct) or (b) responsible in any manner to
any of the Lenders for any recitals, statements, representations or warranties
made by the Borrower or any Guarantor or any officer thereof contained in this
Agreement or any other Credit Document or in any certificate, report, statement
or other document referred to or provided for in, or received by the
Administrative


 


81

















 


Agent under or in
connection with, this Agreement or any other Credit Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Credit Document or for any failure of the Borrower or
any Guarantor to perform its obligations hereunder or thereunder.  The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Credit Document, or to inspect the properties, books or
records of the Borrower.


 


12.4         Reliance
by Administrative Agent.  The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Administrative
Agent.  The Administrative Agent may
deem and treat the Lender specified in the Register with respect to any amount
owing hereunder as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such
action.  The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Credit Documents in accordance with a request of
the Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders
of the Loans.


 


12.5         Notice
of Default.  The Administrative
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
“notice of default”.  In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders.  The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders, provided
that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable in the best interests of the
Lenders (except to the extent that this Agreement requires that such action be
taken only with the approval of the Required Lenders or each of the Lenders, as
applicable).


 


12.6         Non-Reliance
on Administrative Agent and Other Lenders. 
Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower or any Guarantor, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender.  Each Lender represents to the Administrative
Agent


 


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that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and any Guarantor and made its own decision to make its Loans hereunder
and enter into this Agreement.  Each
Lender also represents that it will, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Credit Documents, and to make such investigation
as it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower and any
Guarantor.  Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, assets, operations, properties, financial
condition, prospects or creditworthiness of the Borrower or any Guarantor that
may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.


 


12.7         Indemnification.  The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective portions of the Total Credit Exposure in
effect on the date on which indemnification is sought (or, if indemnification
is sought after the date upon which the Commitments shall have terminated and
the Loans shall have been paid in full, ratably in accordance with their
respective portions of the Total Credit Exposure in effect immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Credit Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing, provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent’s gross negligence or willful misconduct.  The agreements in this Section 12.7 shall survive the
payment of the Loans and all other amounts payable hereunder.


 


12.8         Administrative
Agent in Its Individual Capacity. 
The Administrative Agent and its Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower
and any Guarantor as though the Administrative Agent were not the
Administrative Agent hereunder and under the other Credit Documents.  With respect to the Loans made by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Credit Documents as any Lender and may exercise the same as
though it were not the Administrative Agent, and the terms “Lender” and
“Lenders” shall include the Administrative Agent in its individual capacity.


 


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12.9         Successor
Agent.  The Administrative Agent may
resign as Administrative Agent upon 20 days’ prior written notice to the
Lenders and the Borrower.  If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Credit Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which successor agent
shall be approved by the Borrower (which approval shall not be unreasonably
withheld), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent’s rights, powers and duties as Administrative
Agent shall be terminated, without any other or further act or deed on the part
of such former Administrative Agent or any of the parties to this Agreement or
any holders of the Loans.  After any
retiring Administrative Agent’s resignation as Administrative Agent, the
provisions of this Section 12 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Credit Documents.


 


SECTION 13. 
Miscellaneous.


 


13.1         Amendments
and Waivers.  Neither this Agreement
nor any other Credit Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 13.1. The Required Lenders may, or, with the written consent of
the Required Lenders, the Administrative Agent may, from time to time, (a)
enter into with the relevant Credit Party or Credit Parties written amendments,
supplements or modifications hereto and to the other Credit Documents for the
purpose of adding any provisions to this Agreement or the other Credit
Documents or changing in any manner the rights of the Lenders or of the
Borrower hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Credit Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment,
supplement or modification shall directly (i) forgive any portion of any Loan
or extend the final scheduled maturity date of any Loan (including, without
limitation, the A Term Loan Maturity Date, the B Term Loan Maturity Date and
the C Term Maturity Date notwithstanding anything contained in clauses (vii),
(viii) and (ix) below) or reduce the stated rate, or forgive any portion, or
extend the date for the payment, of any interest or fee payable hereunder
(other than as a result of waiving the applicability of any post-default
increase in interest rates) or extend the final expiration date of any Lender’s
Commitment or extend the final expiration date of any Letter of Credit beyond
the L/C Maturity Date or increase the aggregate amount of the Commitments of
any Lender, in each case without the written consent of each Lender directly
and adversely affected thereby, or (ii) amend, modify or waive any
provision of this Section 13.1 or reduce the percentages specified in the
definitions of the terms “Required Lenders”, “Required Revolving Credit
Lenders”, “Required A Term Loan Lenders”, “Required B Term Loan Lenders”,
“Required B/C Term Loan Lenders”, “Required C Term Loan Lenders”, and “Required
A Term/Revolving Credit Lenders”, or consent to the assignment or transfer by the
Borrower of its rights and obligations under any Credit Document to which it is
a party (except as permitted pursuant to Section 10.3), in each case
without the written consent of each Lender directly and adversely affected
thereby, or (iii) amend, modify or waive any provision of Section 12
without the written consent of the then-current Administrative Agent, or (iv)
amend, modify or waive any provision of Section 3 without the written
consent of the Letter of Credit


 


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Issuer, or
(v) amend, modify or waive any provisions hereof relating to Swingline
Loans without the written consent of Chase, or (vi) change any Revolving Credit
Commitment to any Term Loan Commitment without the prior written consent of each
Lender directly and adversely affected thereby, or (vii) decrease any A
Repayment Amount or extend any scheduled A Repayment Date, in each case without
the written consent of the Required A Term Loan Lenders, or
(viii) decrease any B Repayment Amount or extend any scheduled B Repayment
Date, in each case without the written consent of the Required B Term Loan
Lenders, or (ix) decrease any C Repayment Amount or extend any scheduled C
Repayment Date, in each case without the written consent of the Required C Term
Loan Lenders, or (x) except to the extent permitted under the applicable Credit
Document, release all or substantially all the Collateral under the Pledge
Agreement or release all or substantially all the Guarantors under the
Guarantee, in each case without the written consent of (x) the Required A
Term/Revolving Credit Lenders and (y) the Required B/C Term Loan Lenders
and provided further, that at any time that no Default or Event of
Default has occurred and is continuing, the Revolving Credit Commitment of any
Lender may be increased to finance a Permitted Acquisition, with the consent of
such Lender, the Borrower and the Administrative Agent (which consent, in the
case of the Administrative Agent, shall not be unreasonably withheld) and without
the consent of the Required Lenders, so long as (i) the Increased
Commitment Amount (as defined below) at such time, when added to the amount of
Indebtedness incurred pursuant to Sections 10.1(k) and (l) and outstanding
at such time, does not exceed the limits set forth therein, (ii) the
Borrower shall pledge the Capital Stock of any person acquired pursuant thereto
to the Administrative Agent for the benefit of the Lenders to the extent
required under Section 9.12 and (iii) to the extent determined by the
Administrative Agent to be necessary to ensure pro rata borrowings commencing
with the initial borrowing after giving effect to such increase, the Borrower
shall prepay any Eurodollar Loans outstanding immediately prior to such initial
borrowing; as used herein, the “Increased Commitment Amount” means, at any
time, aggregate amount of all increases pursuant to this proviso made at or
prior to such time less the aggregate amount of all voluntary reductions of the
Revolving Credit Commitments made prior to such time.  Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the affected Lenders and shall be
binding upon the Borrower, such Lenders, the Administrative Agent and all
future holders of the affected Loans.  In
the case of any waiver, the Borrower, the Lenders and the Administrative Agent
shall be restored to their former positions and rights hereunder and under the
other Credit Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing, it being understood that no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.


 


13.2         Notices.  All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth on Schedule 1.1 in the case of the
other parties hereto, or to such other address as may be hereafter notified by
the respective parties hereto:


 


	
  The Borrower:

  	
   

  	
  BRW Acquisition, Inc.

  
	
   

  	
   

  	
  In care of Kohlberg
  Kravis Roberts & Co., L.P.

  



 


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  9 West 57th Street

  
	
   

  	
   

  	
  New York, NY  10019

  
	
   

  	
   

  	
  Attention:  Perry Golkin

  
	
   

  	
   

  	
  Fax:  (212) 750-0003

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Simpson Thacher &
  Bartlett

  
	
   

  	
   

  	
  425 Lexington Avenue,
  22nd floor

  
	
   

  	
   

  	
  New York, New York  10017

  
	
   

  	
   

  	
  Attention:  Gary Horowitz, Esq.

  
	
   

  	
   

  	
  Fax:  (212) 455-2502

  
	
   

  	
   

  	
   

  
	
  The Administrative
  Agent:

  	
   

  	
  The Chase Manhattan Bank

  
	
   

  	
   

  	
  c/o Loan and Agency
  Services Group

  
	
   

  	
   

  	
  One Chase Manhattan
  Plaza, Eighth Floor

  
	
   

  	
   

  	
  New York, NY  10081

  
	
   

  	
   

  	
  Attention:  Laura Rebecca

  
	
   

  	
   

  	
  Fax:  (212) 552-7490

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Chase Manhattan
  Bank

  
	
   

  	
   

  	
  270 Park Avenue

  
	
   

  	
   

  	
  New York, NY 10017

  
	
   

  	
   

  	
  Attention:  Helen L. Newcomb

  
	
   

  	
   

  	
  Fax:  (212) 270-1001

  



 


provided
that any notice, request or demand to or upon the Administrative Agent or the
Lenders pursuant to Sections 2.3, 2.6, 2.9, 4.2 and 5.1 shall not be effective
until received.


 


13.3         No
Waiver; Cumulative Remedies.  No
failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Credit Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.


 


13.4         Survival
of Representations and Warranties. 
All representations and warranties made hereunder, in the other Credit
Documents and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the making of the Loans hereunder.


 


13.5         Payment
of Expenses and Taxes.  The Borrower
agrees (a) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Credit Documents and any other


 


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documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees, disbursements and other charges of counsel to
the Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable and documented costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Credit Documents and any such other documents,
including, without limitation, the reasonable fees, disbursements and other
charges of counsel to each Lender and of counsel to the Administrative Agent,
(c) to pay, indemnify, and hold harmless each Lender and the Administrative
Agent from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any, that may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Credit Documents and any such other documents, and
(d) to pay, indemnify, and hold harmless each Lender and the Administrative
Agent and their respective directors, officers, employees, trustees and agents
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever, including, without limitation, reasonable and
documented fees, disbursements and other charges of counsel, with respect to
the execution, delivery, enforcement, performance and administration of this
Agreement, the other Credit Documents and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower, any of its Subsidiaries or any of the Properties
(all the foregoing in this clause (d), collectively, the “indemnified
liabilities”), provided that the Borrower shall have no obligation
hereunder to the Administrative Agent or any Lender nor any of their respective
directors, officers, employees, trustees and agents with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of
the party to be indemnified or (ii) disputes among the Administrative
Agent, the Lenders and/or their transferees. 
The agreements in this Section 13.5 shall survive repayment of the
Loans and all other amounts payable hereunder.


 


13.6         Successors
and Assigns; Participations and Assignments.  xxv)  (1)  This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.


 


(ii)  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 Commitment of
such Lender or any other interest of such Lender hereunder and under the other
Credit Documents (including to loan derivative counterparties in respect of
swaps or similar arrangements having the practical or economic effect
thereof).  In the event of any such sale
by a Lender of a participating interest to a Participant, such Lender’s obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Loan for all purposes
under this Agreement and the other Credit Documents, and the Borrower and the
Administrative


 


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Agent shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement and the other Credit Documents.  In no event shall any Participant under any
such participation have any right to approve any amendment or waiver of any
provision of any Credit Document, or any consent to any departure by any Credit
Party therefrom, except to the extent that such amendment, waiver or consent
would directly forgive any principal of any Loan or reduce the stated rate, or
forgive any portion, or postpone the date for the payment, of any interest or
fee payable hereunder (other than as a result of waiving the applicability of
any post-default increase in interest rates), or increase the aggregate amount
of the Commitments of any Lender or postpone the date of the final scheduled
maturity of any Loan, in each case to the extent subject to such participation.
The Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to
have agreed to share with the Lenders the proceeds thereof as provided in
Section 13.8 as fully as if it were a Lender hereunder.  The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 2.10 and 2.11 with respect
to its participation in the Commitments and the Loans outstanding from time to
time as if it were a Lender, provided that no Participant shall be
entitled to receive any greater amount pursuant to any such Section than
the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.


 


(iii)          Any
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time and from time to time assign to any Lender, any
Affiliate or any Approved Fund (with the consent of the Borrower if any
increased costs would result therefrom) thereof or, with the consent of the
Borrower and the Administrative Agent (which in each case shall not be
unreasonably withheld, it being understood that, without limitation, the
Borrower shall have the right to withhold its consent to any assignment if, in
order for such assignment to comply with applicable law, the Borrower would be
required to obtain the consent of, or make any filing or registration with, any
Governmental Authority), to an additional bank or fund that is regularly
engaged in making, purchasing or investing in loans or securities or financial
institution (an “Assignee”) all or any part of its rights and
obligations under this Agreement and the other Credit Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit F, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender, an Affiliate or an Approved Fund thereof, by the Borrower
and the Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register, provided that, except in the
case of an assignment of all of a Lender’s interests under this Agreement,
unless otherwise agreed to by the Borrower and the Administrative Agent, no
such assignment to an Assignee (other than any Lender, any Affiliate or any
Approved Fund thereof) shall be in an aggregate principal amount of less than
$5,000,000.  Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set


 


88

















 


forth therein and (y) the
assigning Lender thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such
assigning Lender shall cease to be a party hereto).  Notwithstanding any provision of this Agreement to the contrary,
the consent of the Borrower shall not be required for any assignment that
occurs at any time when any of the events described in Section 11.5 shall
have occurred and be continuing with respect to the Borrower.


 


(b)  Nothing
herein shall prohibit any Lender from pledging or assigning all or any portion
of its Loans to any Federal Reserve Bank in accordance with applicable
law.  In order to facilitate such pledge
or assignment, the Borrower hereby agrees that, upon request of any Lender at
any time and from time to time after the Borrower has made its initial
borrowing hereunder, the Borrower shall provide to such Lender, at the
Borrower’s own expense, a promissory note, substantially in the form of Exhibit
C-1, C-2, C-3 or C-4, as the case may be, evidencing the A Term Loans, B Term
Loans, C Term Loans and Revolving Credit Loans, respectively, owing to such
Lender.


 


(c)  The
Administrative Agent, on behalf of the Borrower, shall maintain at the address
of the Administrative Agent referred to in Section 13.2 a copy of each
Assignment and Acceptance delivered to it and a register (the “Register”)
for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from
time to time.  The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement
and the other Credit Documents, notwithstanding any notice to the
contrary.  Any assignment of any Loan or
other obligation hereunder shall be effective only upon appropriate entries
with respect thereto being made in the Register.  The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.


 


(d)  (i) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Assignee (and, in the case of
an Assignee that is not then a Lender, an Affiliate or an Approved Fund
thereof, by the Borrower and the Administrative Agent) together with payment to
the Administrative Agent of a registration and processing fee of $3,500, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower; provided  however,
that no such fee shall be payable in the case of an assignment by a Lender that
invests in commercial loans to any other fund that invests in commercial loans
and that is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor; and provided  further
that, in the case of contemporaneous assignments by a Lender to more than one
fund managed by the same investment advisor (and, to the extent such Lender is
a fund, which funds are not managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor), only a single $3,500
such fee shall be payable for all such contemporaneous assignments.


 


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(e)  Subject to
Section 13.16, the Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a “Transferee”) and any prospective
Transferee any and all financial information in such Lender’s possession
concerning the Borrower and its Affiliates that has been delivered to such
Lender by or on behalf of the Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Borrower in connection
with such Lender’s credit evaluation of the Borrower and its Affiliates prior
to becoming a party to this Agreement, provided that neither the
Administrative Agent nor any Lender shall provide to any Transferee or
prospective Transferee any of the Confidential Information unless such person
shall have previously executed a Confidentiality Agreement in the form of
Exhibit I.


 


13.7         Replacements
of Lenders under Certain Circumstances. 
The Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.10, 2.12, 3.5 or
5.4, (b) is affected in the manner described in Section 2.10(a)(iii) and
as a result thereof any of the actions described in such Section is
required to be taken or (c) becomes a Defaulting Lender, with a replacement
bank or other financial institution, provided that (i) such replacement
does not conflict with any Requirement of Law, (ii) no Event of Default shall
have occurred and be continuing at the time of such replacement, (iii) the
Borrower shall repay (or the replacement bank or institution shall purchase, at
par) all Loans and other amounts (other than any disputed amounts), pursuant to
Section 2.10, 2.11, 2.12, 3.5 or 5.4, as the case may be) owing to such
replaced Lender prior to the date of replacement, (iv) the replacement bank or
institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent, (v)
the replaced Lender shall be obligated to make such replacement in accordance
with the provisions of Section 13.6 (provided that the Borrower shall be
obligated to pay the registration and processing fee referred to therein) and
(vi) any such replacement shall not be deemed to be a waiver of any rights
that the Borrower, the Administrative Agent or any other Lender shall have against
the replaced Lender.


 


13.8         Adjustments;
Set-off.  xxvi)  If any Lender (a “benefited Lender”)
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 11.5, or otherwise), in a greater proportion than
any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender’s Loans, or interest thereon, such benefited
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender’s Loans, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefited Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.


 


(b)  After the
occurrence and during the continuance of an Event of Default, in addition to
any rights and remedies of the Lenders provided by law, each Lender shall have
the right, without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law, upon
any amount becoming due and payable by the Borrower hereunder (whether at the
stated maturity, by acceleration or otherwise) to


 


90

















 


set-off and appropriate
and apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of the Borrower.  Each
Lender agrees promptly to notify the Borrower and the Administrative Agent
after any such set-off and application made by such Lender, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.


 


13.9         Counterparts.  This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.  A set of the copies of this Agreement signed
by all the parties shall be lodged with the Borrower and the Administrative
Agent.


 


13.10       Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


13.11       Integration.  This Agreement and the other Credit
Documents represent the agreement of the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth
or referred to herein or in the other Credit Documents.


 


13.12      GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


13.13       Submission
to Jurisdiction; Waivers.  The
Borrower hereby irrevocably and unconditionally:


 


(a)  submits for itself and its property in any
legal action or proceeding relating to this Agreement and the other Credit
Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York and appellate courts from
any thereof;


 


(b)  consents that any such action or proceeding
may be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;


 


(c)  agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially


 


91

















 


similar
form of mail), postage prepaid, to the Borrower at its address set forth in
Section 13.2 or at such other address of which the Administrative Agent
shall have been notified pursuant thereto;


 


(d)  agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and


 


(e)  waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal action or
proceeding referred to in this Section 13.13 any special, exemplary,
punitive or consequential damages.


 


13.14       Acknowledgments.  The Borrower hereby acknowledges that:


 


(a)  it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents;


 


(b)  neither the Administrative Agent nor any
Lender has any fiduciary relationship with or duty to the Borrower arising out
of or in connection with this Agreement or any of the other Credit Documents,
and the relationship between Administrative Agent and Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and


 


(c)  no joint venture is created hereby or by the
other Credit Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the Lenders.


 


13.15      WAIVERS OF JURY TRIAL. THE
BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.


 


13.16       Confidentiality.  The Administrative Agent and each Lender
shall hold all non-public information furnished by or on behalf of the Borrower
in connection with such Lender’s evaluation of whether to become a Lender
hereunder or obtained by such Lender or the Administrative Agent pursuant to
the requirements of this Agreement (“Confidential Information”), in
accordance with its customary procedure for handling confidential information
of this nature and (in the case of a Lender that is a bank) in accordance with
safe and sound banking practices and in any event may make disclosure as
required or requested by any governmental agency or representative thereof or
pursuant to legal process or to such Lender’s or the Administrative Agent’s
attorneys, professional advisors or independent auditors or Affiliates or
Approved Funds, provided that unless specifically prohibited by
applicable law or court order, each Lender and the Administrative Agent shall
notify the Borrower of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information, and
provided further that in no event shall any Lender or the Administrative
Agent be obligated or


 


92

















 


required to return any
materials furnished by the Borrower or any Subsidiary of the Borrower.  Each Lender and the Administrative Agent
agrees that it will not provide to prospective Transferees or to prospective
direct or indirect contractual counterparties in swap agreements to be entered
into in connection with Loans made hereunder any of the Confidential
Information unless such Person shall have previously executed a Confidentiality
Agreement in the form of Exhibit I.


 


*     *    
*


 


93

















 


IN WITNESS WHEREOF, each of the parties hereto has
caused a counterpart of this Agreement to be duly executed and delivered as of
the date first above written.


 


	
   

  	
  BRW ACQUISITION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Todd Fisher

  
	
   

  	
   

  	
  Name: Todd
  Fisher

  
	
   

  	
   

  	
  Title: Secretary

  



 

















 


	
   

  	
  THE CHASE MANHATTAN
  BANK, as

  
	
   

  	
  Administrative
  Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Heather
  Lindstrom

  
	
   

  	
   

  	
  Name: Heather
  Lindstron

  
	
   

  	
   

  	
  Title: Vice
  President

  



 


 

















 


	
   

  	
  THE BANK OF NEW YORK,
  as

  
	
   

  	
  Syndication
  Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Donald
  Jordan

  
	
   

  	
   

  	
  Name: Donald
  Jordan

  
	
   

  	
   

  	
  Title: Vice
  President

  



 

















 


	
   

  	
  DRESDNER BANK
  AG,

  
	
   

  	
  NEW YORK BRANCH AND

  
	
   

  	
  GRAND CAYMAN BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony Valencourt

  
	
   

  	
   

  	
  Name: Anthony
  Valencourt

  
	
   

  	
   

  	
  Title: Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Jonathan Wallin

  
	
   

  	
   

  	
  Name: Jonathan
  Wallin

  
	
   

  	
   

  	
  Title: Vice
  President

  



 

















 


	
   

  	
  BANKBOSTON, N.A.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Elise Brenneman

  
	
   

  	
   

  	
  Name: Elise
  Brenneman

  
	
   

  	
   

  	
  Title: Managing
  Director

  



 

















 


	
   

  	
  CREDIT LYONNAIS
  NEW YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Attila Koc

  
	
   

  	
   

  	
  Name: Attila Koc

  
	
   

  	
   

  	
  Title: First
  Vice President

  



 

















 


	
   

  	
  FIRST UNION
  NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Gail Golightly

  
	
   

  	
   

  	
  Name: Gail
  Golightly

  
	
   

  	
   

  	
  Title: Senior
  Vice President

  



 

















 


	
   

  	
  FLEET NATIONAL
  BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leonard
  Lapolice

  
	
   

  	
   

  	
  Name: Leonard
  Lapolice

  
	
   

  	
   

  	
  Title: Assistant
  Vice President

  



 

















 


	
   

  	
  COMMERZBANK
  AKTIENGESELLSCHAFT

  
	
   

  	
  NEW YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph J.
  Hayes

  
	
   

  	
   

  	
  Name: Joseph J.
  Hayes

  
	
   

  	
   

  	
  Title: Assistant
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  McCarthy

  
	
   

  	
   

  	
  Name: Michael
  McCarthy

  
	
   

  	
   

  	
  Title: Assistant
  Vice President

  



 

















 


	
   

  	
  THE FIRST NATIONAL BANK
  OF

  CHICAGO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cynthia
  Priest

  
	
   

  	
   

  	
  Name: Cynthia
  Priest

  
	
   

  	
   

  	
  Title: Vice
  President

  



 

















 


	
   

  	
  CREDIT SUISSE FIRST
  BOSTON

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joel
  Glodowski

  
	
   

  	
   

  	
  Name: Joel
  Glodowski

  
	
   

  	
   

  	
  Title: Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Hetu

  
	
   

  	
   

  	
  Name: Robert
  Hetu

  
	
   

  	
   

  	
  Title: Associate

  



 

















 


	
   

  	
  MELLON BANK,
  N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan
  Whitewood

  
	
   

  	
   

  	
  Name: Susan
  Whitewood

  
	
   

  	
   

  	
  Title: Vice
  President

  



 

















 


	
   

  	
  VAN KAMPEN AMERICAN
  CAPITAL

  PRIME INCOME TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey
  Maillett

  
	
   

  	
   

  	
  Name: Jeffrey
  Maillett

  
	
   

  	
   

  	
  Title: Senior
  Vice President & Director

  



 

















 


	
   

  	
  MERRILL LYNCH SENIOR
  FLOATING

  
	
   

  	
   

  	
  RATE FUND

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Johnson

  
	
   

  	
   

  	
  Name: John
  Johnson

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  



 

















 


	
   

  	
  MORGAN STANLEY DEAN
  WITTER

  PRIME INCOME TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter
  Gerwirtz

  
	
   

  	
   

  	
  Name: Peter
  Gerwirtz

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  



 

















 


 


	
  SCHEDULES

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1

  	
   

  	
  Commitments and Addresses
  of Lenders

  
	
  Schedule 8.12

  	
   

  	
  Subsidiaries

  
	
  Schedule 9.9

  	
   

  	
  Affiliate Transactions

  
	
  Schedule 10.1

  	
   

  	
  Other Indebtedness

  
	
  Schedule 10.2

  	
   

  	
  Other Liens

  
	
  Schedule 10.4

  	
   

  	
  Real Property Sales

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Guarantee

  
	
  Exhibit B

  	
   

  	
  Form of Pledge
  Agreement

  
	
  Exhibit C-1

  	
   

  	
  Form of Promissory Note
  (A Term Loans)

  
	
  Exhibit C-2

  	
   

  	
  Form of Promissory Note
  (B Term Loans)

  
	
  Exhibit C-3

  	
   

  	
  Form of Promissory Note
  (C Term Loans)

  
	
  Exhibit C-4

  	
   

  	
  Form of Promissory Note
  (Revolving Credit and Swingline Loans)

  
	
  Exhibit D

  	
   

  	
  Form of Letter of
  Credit Request

  
	
  Exhibit E-1

  	
   

  	
  Form of Legal Opinion
  of Simpson Thacher & Bartlett

  
	
  Exhibit E-2

  	
   

  	
  Form of Legal Opinion
  of LeBoeuf, Lamb, Greene & MacRae (California)

  
	
  Exhibit E-3

  	
   

  	
  Form of Legal Opinion
  of LeBoeuf, Lamb, Greene & MacRae (Florida)

  
	
  Exhibit E-4

  	
   

  	
  Form of Legal Opinion
  of Barger & Wolen LLP

  
	
  Exhibit E-5

  	
   

  	
  Form of Legal Opinion
  of Maida, Galloway & Neal

  
	
  Exhibit E-6

  	
   

  	
  Form of Legal Opinion
  of Leverty & Associates (Nevada)

  
	
  Exhibit F

  	
   

  	
  Form of Assignment and
  Acceptance

  
	
  Exhibit G

  	
   

  	
  Form of Closing
  Certificate

  
	
  Exhibit H

  	
   

  	
  Form of Solvency
  Certificate

  
	
  Exhibit I

  	
   

  	
  Form of Confidentiality
  Agreement