EXHIBIT 99(u)
SUBORDINATED NOTE DUE 2002
THE SECURITY REPRESENTED BY THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THIS SECURITY CANNOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THIS SECURITY IS REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
COMPANY IS FURNISHED WITH AN ACCEPTABLE OPINION OF COUNSEL THAT AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
THIS NOTE IS SUBJECT TO THE PROVISIONS OF A NOTE PURCHASE OPTION AGREEMENT DATED
AS OF JUNE 1, 2001 AMONG WHITE MOUNTAINS INSURANCE GROUP, LTD., THE HOLDER OF
THIS NOTE AND OTHERS (THE "NOTE PURCHASE OPTION AGREEMENT"). A COPY OF THE NOTE
PURCHASE OPTION AGREEMENT MAY BE OBTAINED FROM THE COMPANY UPON REQUEST.
Subordinated Note Due 2002
$260,000,000 June 1, 2001
SECTION 1. GENERAL.
(a) TACK Holding Corp., a Delaware corporation (the "Company"), for value
received, hereby promises to pay, subject to the further provisions hereof
(including, without limitation, the subordination provisions set forth herein),
to CGU International Insurance plc (the "Payee"), or its registered assigns, the
aggregate principal amount of TWO HUNDRED SIXTY MILLION DOLLARS ($260,000,000),
on November 29, 2002 (such date being the "Payment Date"), in such coin or
currency of the United States of America as at the time of payment shall be
legal tender therein for the payment of public and private debts.
(b) The Company further agrees to pay, subject to the subordination
provisions set forth herein, interest on the unpaid principal amount hereof from
time to time from the date hereof at the Interest Rate, payable on the Payment
Date. Interest shall be calculated on the basis of the actual number of days
elapsed over a year of 360 days.
(c) All payments of principal and interest on this Note shall be made on
the Payment Date by wire transfer of immediately available funds to an account
designated in writing by the holder of this Note or in such other manner or at
such other place as may be mutually agreed by the Company and the holder of this
Note.
(d) If all or a portion of the principal of or interest on this Note shall
not be paid when due (whether at its stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest from and including the due
date to but excluding the date such amount is paid in full at the Interest Rate
plus 2.00% per annum.
(e) Any and all payments by the Company on this Note shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto. The Payee (and/or registered assigns) shall in good faith cooperate
with the Company in claiming or
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securing the right to any reduction in withholding tax or otherwise pursuant to
any applicable tax treaty including, but not limited to, providing the Company
with any form(s) or other documentation required to support such reduction.
SECTION 2. THE NOTE.
This Note is one of the duly authorized issue of subordinated promissory
notes of the Company (the "Notes") referred to in the Stock Purchase Agreement,
dated as of September 24, 2000, as amended by Amendment No. 1 thereto, dated as
of October 15, 2000, and by Amendment No. 2 thereto, dated as of February 20,
2001, by and among the Company and the parties thereto, as the same may be
further amended or modified (the "SPA"). Reference herein to the term "Note"
also refers to any Note executed and delivered by the Company in replacement
hereof pursuant to Section 5 hereof. Unless the context otherwise requires, the
term "holder" is used herein to mean the person in whose name this Note is at
the time registered in the register maintained by the Company pursuant to
Section 9(a) hereof.
SECTION 3. PREPAYMENTS.
The Company may, at its sole option, at any time prepay this Note, without
penalty, in whole or in part, on three (3) days' prior written notice to the
holder hereof, at a prepayment price equal to the principal amount so to be
prepaid together with interest on the principal amount so prepaid to the date of
such prepayment. Any prepayment of the Notes shall be made pro rata to all
holders of the Notes in proportion to the outstanding principal amount of the
Notes held by them.
SECTION 4. SUBORDINATION.
(a) AGREEMENT TO SUBORDINATE. The Company agrees, and the holder of this
Note by accepting this Note agrees, that the indebtedness and other obligations
evidenced by this Note are subordinated in right of payment, to the extent and
in the manner provided in this Section 4, to the prior payment in full of all
Senior Debt and that the subordination is for the benefit of and enforceable by
the holders of such Senior Debt (the "Senior Debtholders").
(b) LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment or distribution
of the assets of the Company to creditors upon a total or partial liquidation or
a total or partial dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(i) the Senior Debtholders shall be entitled to receive payment in
full of the Senior Debt before the holder of this Note shall be entitled to
receive any payment of principal of or interest on this Note; and
(ii) until the Senior Debt of the Company is paid in full, any payment
or distribution to which the holder of this Note would be entitled but for
this Section 4 shall be made to the Senior Debtholders as their interests
may appear, except that the holder of this Note may receive equity
securities and any debt securities that are subordinated to the Senior Debt
to at least the same extent as this Note.
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(c) DEFAULT ON SENIOR DEBT. The Company may not pay the principal of,
premium (if any) or interest on this Note and may not repurchase, redeem or
otherwise retire this Note (collectively, "pay the Note") if (i) any Senior Debt
is not paid when due or (ii) any other default on Senior Debt occurs and the
maturity of such Senior Debt is accelerated in accordance with its terms unless,
in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Senior Debt has been paid in full;
PROVIDED, HOWEVER, that the Company may pay the Note without regard to the
foregoing if the Company receives written notice approving such payment from the
representative of such Senior Debt with respect to which either of the events
set forth in clause (i) or (ii) has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the preceding sentence) with respect to any Designated Senior Debt pursuant
to which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Company may not pay the Note
for a period (a "Payment Blockage Period") commencing upon the receipt by the
Company of written notice (a "Blockage Notice") (a copy of which notice the
Company shall promptly forward to the holder of this Note) of such default from
the representative of such Designated Senior Debt or from the holders of such
Designated Senior Debt specifying an election to effect a Payment Blockage
Period and ending 179 days thereafter (or earlier if such Payment Blockage
Period is terminated (i) by written notice to the Company from the Person or
Persons who gave such Blockage Notice, (ii) because the default giving rise to
such Blockage Notice is no longer continuing or (iii) because such Designated
Senior Debt has been repaid in full). Notwithstanding the provisions described
in the immediately preceding sentence (but subject to the provisions contained
in the first sentence of this clause (c)), unless the holders of such Designated
Senior Debt or the representative of such holders shall have accelerated the
maturity of such Designated Senior Debt, the Company may resume payments on the
Note after termination of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Debt during such
period.
(d) WHEN DISTRIBUTION MUST BE PAID OVER. In the event that any payment by,
or on behalf of, or distribution of the assets of, the Company of any kind or
character, whether in cash, property or securities, and whether directly, by
purchase, redemption or otherwise (but not including any payment or distribution
that may be deemed to be made as a result of any waiver of principal or interest
on this Note pursuant to the final sentence of Section 8.1(a) of the SPA), shall
be received by or on behalf of the holder of this Note at a time when such
payment is prohibited by the provisions of this Section 4, such payment or
distribution shall be held by the holder of this Note in trust (segregated from
other property of the holder of this Note) for the benefit of the Senior
Debtholders, and shall forthwith be paid over directly to the Senior Debtholders
or their representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any such Senior Debt may
have been issued, ratably according to the aggregate amounts remaining unpaid on
account of the Senior Debt or represented by each of such instruments, to the
extent necessary to make payment in full of all Senior Debt remaining unpaid
after giving effect to any concurrent payment or distribution (or provision
therefor) by the Company or any guarantor of the Senior Debt or any other Person
to or for the Senior Debtholders.
(e) PROOF OF CLAIMS. If the Company is subject to any proceeding under any
Bankruptcy Law and the holder of this Note has not filed any proof of claim
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permitted to be filed in such proceeding with respect to this Note, then any
representative of any Senior Debt may file such proof of claim no earlier than
30 days preceding the last day permitted to file such claim.
(f) SUBROGATION; RELATIVE RIGHTS. After all Senior Debt is paid in full and
until the Notes are paid in full, the holder of this Note shall be subrogated to
the rights of holders of Senior Debt to receive payments or distributions
applicable to Senior Debt. No payments or distributions to the Senior
Debtholders of any cash, property or securities to which the holder of this Note
would be entitled except for the provisions of this Section 4 shall, as between
the Company, its creditors, other than the Senior Debtholders, and the holder of
this Note, be deemed to be a payment by the Company to or on account of the
Senior Debt. The subordination provisions of this Note are intended solely for
the purpose of defining the relative rights of the holder of this Note, on the
one hand, and the Senior Debtholders, on the other hand. Nothing contained
herein shall impair, as between the Company and the holder of this Note, the
obligation of the Company, which is unconditional, to pay to the holder of this
Note the principal hereof and interest hereon as and when the same shall become
due and payable in accordance with the terms hereof, or prevent the holder of
this Note from exercising all rights, powers and remedies otherwise permitted by
applicable law or pursuant to the terms hereof upon an Event of Default
hereunder, all subject to the rights of the Senior Debtholders as set forth
herein to receive cash, securities or other property otherwise payable or
deliverable to the holder of this Note.
(g) PAYMENT OVER. The holder of this Note agrees that, in the event that
all or any part of any payment made on account of the Senior Debt is recovered
from the Senior Debtholders as a preference or similar payment under any
bankruptcy, insolvency or similar law, any payment or distribution received by
the holder of this Note on account of this Note at any time after the date of
the payment so recovered, including payments received pursuant to a right of
subrogation, shall be deemed to have been received by the holder of this Note in
trust as the property of the Senior Debtholders, and the holder of this Note
shall forthwith deliver the same to any representative on behalf of the Senior
Debtholders for the equal and ratable benefit of the Senior Debtholders for
application to payment of all Senior Debt in full.
(h) CHANGES IN SENIOR DEBT NOT TO AFFECT SUBORDINATION. No right of any
holder of Senior Debt to enforce the subordination provisions of this Note shall
be impaired by any extension, renewal, modification, waiver or amendment to the
terms of such Senior Debt or by the exercise by any such holder of its rights
under the terms of any such Senior Debt.
(i) No present or future Senior Debtholder shall be prejudiced in its right
to enforce the subordination provisions contained herein in accordance with the
terms hereof by any act or failure to act on the part of the Company or the
holder of this Note. The subordination provisions contained herein are for the
benefit of the Senior Debtholders from time to time and, so long as any Senior
Debt is outstanding under any agreement, or any commitment to extend Senior Debt
is in effect, may not be rescinded, canceled or modified in any way without the
prior written consent thereto of all Senior Debtholders.
(j) The subordination and other provisions of this Section 4 shall be
binding upon any holder of this Note and upon the successors and assigns of any
holder
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of this Note; and all references herein to the holders of this Note shall be
deemed to include any successor or successors or assigns, whether immediate or
remote, to the holder of this Note.
(k) The failure to make a payment pursuant to this Note by reason of any
provision in this Section 4 shall not in any way be construed as preventing the
occurrence of an Event of Default. Nothing in this Section 4 shall have any
effect on the right of the holder of this Note to accelerate the maturity of
this Note.
(l) The Company agrees, and each holder of this Note by accepting this Note
agrees, that the obligations of the Company evidenced by this Note shall rank
PARI PASSU with the obligations of the Company evidenced by (i) each other Note
issued by the Company as contemplated by the SPA and (ii) each other Note issued
by the Company in replacement or upon transfer of any Note described in clause
(i) above.
SECTION 5. REPLACEMENT OF NOTE.
At the request of the holder hereof upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note
and, in case of loss, theft or destruction, of indemnity reasonably satisfactory
to it, or, in the case of mutilation, upon surrender and cancellation of this
Note, and in all cases upon reimbursement to the Company of all reasonable
expenses incidental thereto, the Company shall make and deliver a new Note of
like tenor in lieu of this Note. Any Note made and delivered in accordance with
the provisions of this Section 5 shall be dated as of the date through which
interest has been paid on this Note.
SECTION 6. AMENDMENTS AND WAIVERS.
(a) With the written consent of the holder of this Note, any covenant,
agreement or condition contained in this Note may be waived (either generally or
in a particular instance and either retroactively or prospectively), or such
holder and the Company may from time to time enter into written agreements for
the purpose of amending any covenant, agreement or condition of this Note or
changing in any manner the rights of the holder of this Note; PROVIDED, HOWEVER,
that neither the provisions of Section 4 nor the provisions of this Section 6 of
this Note may be amended or modified without the prior written consent of all
the Senior Debtholders. Any such amendment or waiver shall be binding upon each
future holder of this Note and upon the Company. Upon the request of the
Company, the holder hereof shall submit this Note to the Company so that this
Note be marked to indicate such amendment or waiver, and any Note issued
thereafter shall bear a similar notation referring to any such amendment or
continuing waiver.
(b) No failure or delay by the holder of this Note in exercising any power
or right under this Note shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the holder of this Note are cumulative and are not exclusive of
any rights or remedies which it would otherwise have. No waiver of any provision
of this Note or consent to any departure by the Company therefrom shall in any
event be effective unless permitted in accordance with clause (a) above, and
then such waiver or consent shall be effective only in the specific
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instance and for the purpose for which given. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances.
SECTION 7. EVENTS OF DEFAULT.
(a) An "Event of Default" occurs if:
(i) default shall be made in the payment of the principal of or
interest on this Note, when and as the same shall become due and payable,
whether at the due date thereof or by acceleration thereof or otherwise,
and whether or not such payment is prohibited by Section 4;
(ii)(A) the Company or any of its subsidiaries shall commence any
case, proceeding or other action (x) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors ("Bankruptcy Laws"), seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (y) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all
or any substantial part of its assets, or the Company or any of its
subsidiaries shall make a general assignment for the benefit of its
creditors; or (B) there shall be commenced against the Company or any of
its subsidiaries any case, proceeding or other action of a nature referred
to in clause (A) above that (x) results in the entry of an order for relief
or any such adjudication or appointment or (y) remains undismissed,
undischarged or unbonded for a period of 60 days; or (C) there shall be
commenced against the Company or any of its subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part
of its assets that results in the entry of an order for any such relief
that shall not have been vacated, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or (D) the Company or any of
its subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (A), (B), or (C) above; or (E) the Company or any of its
subsidiaries generally shall not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(iii) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity, PROVIDED that
this clause (iii) shall not apply to secured Indebtedness that becomes due
as a result of a sale or transfer of the property or assets securing such
Indebtedness which does not constitute a default under such Indebtedness.
(b) If an Event of Default (other than with respect to an Event of Default
specified in clause (a)(ii) above) occurs, then the holder of this Note may, by
written notice to the Company, declare this Note to be forthwith due and
payable, whereupon this Note shall, subject to the provisions of Section 4
hereof, become forthwith due and payable, both as to principal and interest,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company. If any Event of Default specified in
clause (a)(ii) above occurs, the principal of and accrued
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interest on this Note shall automatically forthwith become due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by the Company. If payment of this Note is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Designated Senior Debt (if any) of the acceleration. If any Designated Senior
Debt is outstanding, the Company may not pay this Note until five days after
such notice is received and, thereafter, may pay this Note only if Section 4
otherwise permits the payment at that time.
(c) If any Event of Default occurs and is continuing, the holder of this
Note may pursue any available remedy to collect the payment of principal of or
interest on this Note or to enforce the performance of any provision of this
Note. If an Event of Default occurs and is continuing, the holder of this Note
may proceed to protect and enforce its rights by an action at law, suit in
equity or other appropriate proceeding. No course of dealing and no delay on the
part of the holder of this Note in exercising any right, power or remedy shall
operate as a waiver thereof or otherwise prejudice such holder's rights, powers
or remedies. No right, power or remedy conferred by this Note upon the holder
hereof shall be exclusive of any other right, power or remedy referred to herein
or now or hereafter available at law, in equity, by statute or otherwise.
SECTION 8. EXTENSION OF MATURITY.
Should the principal of and interest on this Note become due and payable on
other than a Business Day, the maturity hereof shall be extended to the next
succeeding Business Day, and interest shall be payable at the rate per annum
herein specified during such extension.
SECTION 9. TRANSFER AND EXCHANGE; SUCCESSORS AND ASSIGNS.
(a) The Company will keep at its principal office a register in which the
Company will provide for the registration of the Notes and the registration of
transfers of the Notes. The holder of this Note shall have the right to inspect
such register during normal business hours upon reasonable prior notice to the
Company and shall have the right to made copies of and take extracts from such
register during any such inspection. The Company may treat the person in whose
name any Note is registered as the owner thereof for the purpose of receiving
payment of the principal of and interest on such Note and for all the other
purposes, whether or not such Note shall be overdue, and the Company shall not
be affected by any notice to the contrary.
(b) Subject to the provisions of this Section 9, the holder of this Note
(or any portion hereof) or any securities (or portion thereof) issued in respect
of this Note may, prior to maturity or prepayment hereof or thereof, surrender
this Note or such securities at the principal office of the Company for transfer
or exchange. Within five Business Days after surrender of this Note to the
Company and without expense (other than transfer taxes, if any) to such holder,
and provided that the holder of this Note and the transferee, concurrently with
or prior to the consummation of such transfer, shall have complied with the
provisions of Section 4.2 of the Note Purchase Option Agreement, the Company
shall, subject to this Section 9, issue in exchange therefor another Note or
Notes, in such denominations as requested by the holder, for the same aggregate
principal amount, as of the date of such issuance, as the unpaid principal
amount of the Note or Notes so surrendered and having the same maturity and rate
of interest, containing the same provisions and subject to the same terms and
conditions as the Note or Notes so
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surrendered. Each new Note shall be made payable to such Person or Persons, or
assigns, as the holder of such surrendered Note or Notes may designate, and such
transfer or exchange shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom.
(c) By its acceptance of this Note, the holder of this Note agrees and
acknowledges that the Company has informed such holder that:
(i) this Note has not been registered under the Securities Act and
this Note, and any securities issued in respect of this Note, must be held
indefinitely unless they are subsequently registered under the Securities
Act or such sale is permitted pursuant to an available exemption from such
registration requirement;
(ii) the offering and sale of this Note is intended to be exempt from
registration under the Securities Act by virtue of the provisions of
Section 4(2) of the Securities Act; and
(iii) there is no existing public or other market for this Note and
there can be no assurance that any holder will be able to sell or dispose
of this Note.
(d) By its acceptance of this Note, the holder of this Note represents and
warrants to the Company that:
(i) this Note is being acquired for its own account not as a nominee
or agent for any other person and without a view to the distribution
thereof or any interest therein in violation of the Securities Act;
(ii) the holder is an "Accredited Investor" as such term is defined in
Regulation D under the Securities Act and has such knowledge and experience
in financial and business matters so as to be capable of evaluating the
merits and risks of its investment in the Notes, and such holder is capable
of bearing the economic risks of such investment; and
(iii) the holder has been provided, to its satisfaction, the
opportunity to ask questions concerning the terms and conditions of the
offering and sale of this Note, has had all such questions answered to its
satisfaction and has been supplied all additional information deemed
necessary by it to verify the accuracy of the information furnished to it.
(e) The holder of this Note agrees and acknowledges that the Company will
not issue or transfer this Note (or any portion hereof) or any securities (or
portion thereof) issued in respect of this Note unless the person or entity to
whom they are being issued or transferred shall first agree in a writing
deposited with the Secretary of the Company to be bound by the provisions of
this Section 9.
(f) The provisions of this Note shall be binding upon and inure to the
benefit of the Company and its successors and permitted assigns and the holder
of this Note and its successors and permitted assigns.
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SECTION 10. RESTRICTION ON MERGERS.
(a) The Company shall not consolidate with or merge with or into any other
Person or convey, lease, transfer or otherwise dispose of its properties and
assets substantially as an entirety to any Person, unless:
(i) either (A) in the case of a merger, the Company shall be the
continuing corporation or (B) the Person formed by such consolidation or
into which the Company is merged or the Person that acquires by conveyance,
lease, transfer or other disposition the properties and assets of the
Company substantially as an entirety shall be a corporation organized and
existing under the laws of the United States of America, any State thereof
or the District of Columbia, and shall expressly assume, by an instrument
in writing satisfactory to the holder of this Note, the due and punctual
payment of the principal of and interest on all the Notes then outstanding
and the performance of all other obligations contained herein to be
observed or performed on the part of the Company; and
(ii) immediately after giving effect to such transaction no Event of
Default, and no event which, after the giving of notice or the lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing.
(b) Upon any consolidation of the Company with or merger by the Company
into any other Person or any conveyance, lease, transfer or other disposition of
properties and assets of the Company substantially as an entirety in accordance
with clause (a) of this Section 10, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease, transfer or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Note with the same effect as if such successor Person had been named as the
Company herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations under this Note.
SECTION 11. NOTICES TO EQUITY SECURITY HOLDERS. So long as any principal of
or interest on this Note is outstanding, the Company shall provide to the holder
of this Note copies of all notices, financial statements and other documents
that White Mountains Insurance Group, Ltd. provides to any holder of its equity
securities, concurrently with the provision of such notices, financial
statements or documents to such equity security holders.
SECTION 12. DEFINED TERMS.
The following terms, as used herein, have the following
respective meanings:
"Affiliate" shall have the meaning set forth in the SPA.
"Applicable Margin", "Eurodollar Loans", "Revolving Credit Loans", "Tranche
A Term Loans" and "Tranche B Term Loans" each shall have the meaning set forth
in the Credit Agreement as in effect as of June 1, 2001, without regard to any
subsequent amendment or modification thereof, and the Applicable Margin for
Revolving Credit Loans and Tranche A Term Loans that are Eurodollar Loans and
Applicable
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Margin for Tranche B Term Loans that are Eurodollar Loans each shall be
determined as set forth in the Credit Agreement as of such date.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which banking institutions are not required by law or regulation to be open in
the State of New York or in Bermuda.
"Credit Agreement" means the Credit Agreement dated as of March 16, 2001,
among the Company, TACK Acquisition Corp., White Mountains Insurance Group,
Ltd., ▇▇▇▇▇▇ Brothers Inc., as Arranger, and the several lenders from time to
time party thereto, together with the related documents thereto (including the
term loans and revolving loans thereunder, any guarantees and security
documents), as amended, extended, renewed, restated, supplemented or otherwise
modified (in whole or in part, including as to amount, terms, conditions,
covenants and other provisions) from time to time, and any agreement (and
related document) governing Senior Debt incurred to refund or refinance, in
whole or in part, the borrowings and commitments then outstanding or permitted
to be outstanding under such Credit Agreement or a successor Credit Agreement,
whether by the same or any other lender or group of lenders.
"Designated Senior Debt" means (i) the Credit Agreement and (ii) any other
Senior Debt issued at one time or under a common agreement and in an aggregate
outstanding principal amount of at least $25 million.
"Indebtedness" of any person means, without duplication, whether now
existing or hereafter created, (a) all obligations of such person for borrowed
money, (b) all obligations of such person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such person upon which interest
charges are customarily paid, (d) all obligations of such person under
conditional sale or other title retention agreements relating to property
acquired by such person, (e) all obligations of such person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien on property owned or
acquired by such person, whether or not the Indebtedness secured thereby has
been assumed, (g) all guarantees by such person of Indebtedness of others, (h)
all capital lease obligations of such Person, (i) all obligations, contingent or
otherwise, of such person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such person in respect of bankers' acceptances.
"Interest Rate" means a rate per annum equal to (i) during the period from
and including June 1, 2001 to but excluding November 30, 2001, the sum of the
LIBO Rate and the Note Margin in respect of such period, (ii) during the period
from and including November 30, 2001 to but excluding May 31, 2002, the sum of
the LIBO Rate and the Note Margin in respect of such period, and (iii) during
the period from and including May 31, 2002 to but excluding the Payment Date,
the sum of the LIBO Rate and the Note Margin in respect of such period;
PROVIDED, that if principal and interest on this Note are not paid in full in
accordance with the terms of this Note on or prior to the Payment Date, the
Interest Rate shall reset in the foregoing manner on each November 30 and May
31, commencing November 30, 2002, with respect to each succeeding six- month
period until such principal and interest are paid in full.
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"LIBO Rate" means, in respect of each of the periods described in clauses
(i), (ii) and (iii) of the definition of "Interest Rate" (and in any subsequent
period described in the proviso to such definition), the rate appearing on Page
3750 of the Telerate Service (or any successor or substitute page of such
Service providing rate quotations comparable to those currently provided on such
page of such Service as may be reasonably agreed upon by the Company and the
holder of this Note) as of 11:00 a.m., London time, on the day that is two
Business Days (which, solely for this purpose, shall have the meaning set forth
in the Credit Agreement as in effect as of June 1, 2001, without regard to any
subsequent amendment or other modification thereof) prior to the first day of
such period, as the rate for U.S. dollar deposits with a maturity of six months.
"Material Indebtedness" means Indebtedness of the Company or any of its
subsidiaries in an aggregate principal amount exceeding $25,000,000.
"Note Margin" means, in respect of each of the periods described in clauses
(i), (ii) and (iii) of the definition of "Interest Rate" (and in any subsequent
period described in the proviso to such definition), the sum of (i) 0.5% and
(ii) the weighted average, on the first day of the applicable period, of (x) the
Applicable Margin for Revolving Credit Loans and Tranche A Term Loans that are
Eurodollar Loans and (y) the Applicable Margin for Tranche B Term Loans that are
Eurodollar Loans. The "weighted average" of (x) and (y) with respect to any
period described in the preceding sentence shall be determined based on the
relative outstanding principal balances of Revolving Credit Loans and Tranche A
Term Loans on the one hand and Tranche B Term Loans on the other hand on the
first day of such period (in each case, whether or not such loans are Eurodollar
Loans). If, as of such first day, (i) only Revolving Credit Loans and/or Tranche
A Term Loans are outstanding, "Note Margin" shall mean the Applicable Margin for
Revolving Credit Loans and Tranche A Term Loans that are Eurodollar Loans as of
such day plus 0.5%, (ii) only Tranche B Term Loans are outstanding, "Note
Margin" shall mean the Applicable Margin for Tranche B Term Loans that are
Eurodollar Loans as of such day plus 0.5%, or (iii) no Revolving Credit Loans,
Tranche A Term Loans or Tranche B Term Loans are outstanding "Note Margin" shall
mean the simple unweighted average of (x) and (y) above calculated as of such
day plus 0.5%.
"Person" shall mean any individual, limited liability company, corporation,
general partnership, limited partnership, limited liability partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Senior Debt" means the principal of, premium (if any) and accrued and
unpaid interest on (including interest accruing at rates set forth in the
instrument governing such indebtedness on or after the filing of any petition in
bankruptcy or for reorganization of the Company regardless of whether or not a
claim for post-filing interest is allowed in such proceedings), and fees and
other amounts owing in respect of, indebtedness of the Company, or guarantees by
the Company of indebtedness of other Persons, for money borrowed, in each case
whether outstanding on the date hereof or thereafter incurred, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such obligations are subordinated or PARI PASSU
in right of payment to this Note; PROVIDED, HOWEVER, that "Senior Debt" of the
Company shall not include (i) trade debt of the Company, which shall rank PARI
PASSU with this Note, (ii) any liability for Federal, state, local or other
Taxes owed or owing by the Company, (iii) any Indebtedness incurred in violation
of the instruments or
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agreements governing the Senior Debt or (iv) any obligations of the Company to
White Mountains Insurance Group, Ltd. or any direct or indirect subsidiary of
White Mountains Insurance Group, Ltd.
"Taxes" means any and all taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any governmental authority.
SECTION 13. GOVERNING LAW.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 14. NOTICES.
All notices, requests, claims, demands and other communications under this
Note shall be in writing and shall be delivered personally, by facsimile (which
is confirmed as provided below) or by overnight courier (providing proof of
delivery). Notice given by personal delivery or overnight courier shall be
effective upon actual receipt. Notice given by facsimile shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day if not received during the recipient's normal
business hours. All notices by facsimile shall be confirmed promptly after
transmission in writing by personal delivery or overnight courier.
If to the Company:
TACK Holding Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
If to the holder of this Note, to it at its address on the register for the
Notes maintained by the Company in accordance with Section 9(a).
The Company or the holder of this Note may from time to time change its
address for communications under this Section 14(a) by giving at least 5 days'
notice of such changed address to the other.
SECTION 15. INTEREST RATE LIMITATION. Notwithstanding anything in this Note
to the contrary, if at any time the applicable interest rate, together with all
fees and charges which are treated as interest under applicable law, as provided
for in this Note shall exceed the maximum lawful rate (the "Maximum Rate") which
may be received by the holder of this Note in accordance with applicable law,
the rate of interest payable under this Note shall be limited to the Maximum
Rate.
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SECTION 16. HEADINGS. Section headings used in this Note are for
convenience of reference only, are not part of this Note and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Note.
SECTION 17. SEVERABILITY. If any provision of this Note is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the provisions of this Note shall remain in full force and effect. The Company
and the Holder shall endeavor in good faith to replace any invalid, illegal or
unenforceable provisions with a valid, legal and enforceable provision, the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provision.
SECTION 18. NO RIGHT OF SET-OFF. The obligations of the Company hereunder
to pay the Note shall not be subject to or affected by any set-off, claim,
defense to payment or other right that the Company may have at any time against
the holder of this Note or any prior holder.
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IN WITNESS WHEREOF, the Company has duly executed and delivered this Note
as of the date first written above.
TACK HOLDING CORP.,
By:_________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer