EXHIBIT 10.11
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AMENDED AND RESTATED
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
dated as of April 3, 2001
among
MAX RE LTD.
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
FLEET NATIONAL BANK
and
CITIBANK, NA
as Co-Agents,
and
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Fronting Bank and as Administrative Agent,
and LC Administrator for the Lenders
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS......................................................2
SECTION 1.1 Definitions.........................................2
SECTION 1.2 Other Interpretive Provisions......................17
SECTION 1.3 Accounting Principles..............................17
ARTICLE II. AMOUNT AND TERMS OF COMMITMENT.................................18
SECTION 2.1 Letter of Credit Commitment........................18
SECTION 2.2 Issuance, Amendment and Renewal of Letters of
Credit.....................................19
SECTION 2.3 Drawings and Reimbursements........................21
SECTION 2.4 Repayment of LC Advances...........................23
SECTION 2.5 Role of the Lenders................................24
SECTION 2.6 Obligations Absolute...............................25
SECTION 2.7 Existing Letters of Credit.........................26
SECTION 2.8 Applicability of ISP98.............................26
SECTION 2.9 Interest...........................................26
SECTION 2.10 Payments by the Borrower...........................27
SECTION 2.11 Warranty...........................................27
SECTION 2.12 Termination or Reduction of Commitments............27
SECTION 2.13 Mandatory Reduction/Cash Collateralization of
Letters of Credit..........................28
SECTION 2.14 Fees...............................................28
SECTION 2.15 Computation of Fees and Interest...................30
SECTION 2.16 Sharing of Payments, Etc...........................30
SECTION 2.17 Commitment Termination Date Extension..............30
SECTION 2.18 Optional Increase in LC Commitments................32
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY........................33
SECTION 3.1 Taxes..............................................33
SECTION 3.2 Illegality.........................................34
SECTION 3.3 Increased Costs and Reduction of Return............35
SECTION 3.4 Certificates of Lenders............................35
SECTION 3.5 Substitution of Lenders............................36
SECTION 3.6 Survival...........................................36
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES.................................36
SECTION 4.1 Due Organization, Authorization, etc...............36
SECTION 4.2 Litigation and Contingent Liabilities..............37
SECTION 4.3 Employee Benefit Plans.............................37
SECTION 4.4 Regulated Entities.................................37
SECTION 4.5 Regulations U and X................................37
SECTION 4.6 Proceeds...........................................37
SECTION 4.7 Business Locations.................................37
SECTION 4.8 Accuracy of Information............................38
SECTION 4.9 Subsidiaries.......................................38
SECTION 4.10 Insurance Licenses.................................38
SECTION 4.11 Taxes..............................................38
SECTION 4.12 Securities Laws....................................39
SECTION 4.13 Compliance with Laws...............................39
SECTION 4.14 Financial Condition................................39
ARTICLE V. AFFIRMATIVE COVENANTS...........................................39
SECTION 5.1 Reports, Certificates and Other Information........40
SECTION 5.2 Corporate Existence; Foreign Qualification.........43
SECTION 5.3 Books, Records and Inspections.....................43
SECTION 5.4 Insurance..........................................43
SECTION 5.5 Taxes and Liabilities..............................44
SECTION 5.6 Compliance with Laws...............................44
SECTION 5.7 Maintenance of Permits.............................44
SECTION 5.8 Conduct of Business................................44
SECTION 5.9 Use of Letters of Credit...........................44
SECTION 5.10 Further Assurances.................................44
ARTICLE VI. NEGATIVE COVENANTS..............................................44
SECTION 6.1 Net Worth. .......................................44
SECTION 6.2 Unencumbered Reserve Requirement...................45
SECTION 6.3 Debt...............................................45
SECTION 6.5 Other Agreements...................................45
SECTION 6.6 Transactions with Affiliates.......................45
SECTION 6.7 Liens..............................................45
SECTION 6.8 Restrictions On Negative Pledge Agreements.........46
SECTION 6.9 Dividends, Etc.....................................46
SECTION 6.10 Eligible Investments. ............................47
ARTICLE VII. EVENTS OF DEFAULT AND THEIR EFFECT.............................47
SECTION 7.1 Events of Default..................................47
SECTION 7.2 Effect of Event of Default.........................49
SECTION 7.3 LC Collateral Account..............................49
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ARTICLE VIII. CONDITIONS....................................................50
SECTION 8.1 Conditions to Occurrence of the
Amendment Effective Date....................50
SECTION 8.2 Conditions to All Credit Extensions................51
ARTICLE IX. THE ADMINISTRATIVE AGENT.......................................52
SECTION 9.1 Appointment and Authorization......................52
SECTION 9.2 Delegation of Duties...............................52
SECTION 9.3 Liability of Administrative Agent..................53
SECTION 9.4 Reliance by Administrative Agent...................53
SECTION 9.5 Notice of Default..................................54
SECTION 9.6 Credit Decision....................................54
SECTION 9.7 Indemnification....................................54
SECTION 9.8 Administrative Agent in Individual Capacity........55
SECTION 9.9 Successor Administrative Agent.....................55
SECTION 9.10 Withholding Tax....................................56
ARTICLE X. MISCELLANEOUS...................................................57
SECTION 10.2 Notices...........................................58
SECTION 10.3 No Waiver; Cumulative Remedies....................59
SECTION 10.4 Costs and Expenses................................59
SECTION 10.5 Indemnity.........................................59
SECTION 10.6 Payments Set Aside................................60
SECTION 10.7 Successors and Assigns............................60
SECTION 10.8 Assignments, Participations, etc..................60
SECTION 10.9 Confidentiality...................................62
SECTION 10.10 Set-off...........................................62
SECTION 10.11 Notification of Addresses, Lending Offices, Etc...63
SECTION 10.12 Counterparts......................................63
SECTION 10.13 Severability......................................63
SECTION 10.14 No Third Parties Benefitted.......................63
SECTION 10.15 Governing Law and Jurisdiction....................63
SECTION 10.16 Waiver of Jury Trial..............................64
SECTION 10.17 Currency Indemnity................................64
SECTION 10.18 Service of Process................................65
SECTION 10.19 Entire Agreement..................................65
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SCHEDULES AND EXHIBITS
SCHEDULE 1.1 Concentration Limits
SCHEDULE 2.1 Commitments
SCHEDULE 4.1 Jurisdictions
SCHEDULE 4.2 Litigation
SCHEDULE 4.7 Locations
SCHEDULE 4.9 Subsidiaries
SCHEDULE 4.10 Insurance Licenses
SCHEDULE 6.7 Liens
SCHEDULE 10.2 Addresses
EXHIBIT A Form of Compliance Certificate
EXHIBIT B Form of Borrowing Base Certificate
EXHIBIT C Form of Assignment and Acceptance
EXHIBIT D Form of Security Agreement
EXHIBIT E Form of Letter of Credit
EXHIBIT F Form of Commitment Increase Request
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AMENDED AND RESTATED
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
THIS AMENDED AND RESTATED LETTER OF CREDIT REIMBURSEMENT AGREEMENT,
dated as of April 3, 2001, is entered into by and among Max Re Ltd., a Bermuda
company (the "Borrower"), various financial institutions which are parties
hereto (the "Lenders"), Bank of America, National Association, as fronting bank
(in such capacity, the "Fronting Bank"), Bank of America, National Association,
as letter of credit administrator (in such capacity, the "LC Administrator") and
Bank of America, National Association, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, Bank of America, National Association, as LC
Issuer and Administrative Agent, and various financial institutions party
thereto (the "Original Lenders") entered into that certain Letter of Credit
Reimbursement Agreement dated as of February 25, 2000 (as amended or modified at
and in effect immediately prior to the Amendment Effective Date, the "Existing
Credit Agreement") whereby Bank of America, National Association issued (and the
Original Lenders participated in) letters of credit to counterparties to support
the Borrower's obligations under Reinsurance Agreements;
WHEREAS, the Borrower has requested the Lenders to amend and restate
the Existing Credit Agreement on the terms and conditions set forth in this
Agreement, to set forth, among other things, the terms and conditions under
which the Lenders hereafter will make credit extensions to the Borrower; it
being the intention of the Borrower, the Lenders, the Administrative Agent and
the LC Administrator that this Agreement and the Credit Documents executed in
connection herewith shall not effect the novation of the obligations of the
Borrower under the Existing Credit Agreement but be merely a restatement and,
where applicable, an amendment of and substitution for the terms governing such
obligations hereafter; and
WHEREAS, the Credit Extensions outstanding immediately prior to the
Amendment Effective Date pursuant to the Existing Credit Agreement shall deem to
be issued and outstanding hereunder for all purposes hereof and of the Credit
Documents after giving effect to the Amendment Effective Date;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
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ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions. When used herein the following terms shall have the
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following meanings:
ABS means any fixed-income instrument which is rated AAA/Aaa by S&P or
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▇▇▇▇▇'▇ or the equivalent rating from another nationally recognized rating
agency that entitles the holder of, or beneficial owner under, the instrument to
the whole or any part of the rights or entitlements of a holder of a receivable
or other asset and any other rights or entitlements in respect of a pool of
receivables or other assets or any money payable by obligors under those
receivables or other assets (whether or not the money is payable to the holder
of, or beneficial owner under, the instrument on the same terms and conditions
as under the receivables or other assets) in relation to receivables or other
assets; provided however, such receivables or assets shall be limited to
automobile loans, credit card receivables and home equity loans and such other
ABS assets as may be acceptable to the Administrative Agent.
Administrative Agent means (a) BofA, in its capacity as administrative
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agent for the Lenders, and (b) each other Person as shall have subsequently been
appointed as the successor Administrative Agent pursuant to Section 9.9.
Adjusted Fair Market Value means, with respect to any Eligible
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Investments, an amount equal to the product of the Fair Market Value of such
Eligible Investments and the applicable percentage with respect to such Eligible
Investment as set forth on Schedule 1.2.
Affiliate of any Person means any other Person which, directly or
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indirectly, controls or is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be:
(a) "controlled by" any other Person if such other Person possesses,
directly or indirectly, power:
(i) to vote 20% or more of the securities having at the time of
any determination hereunder voting power for the election of directors
of such Person; or
(ii) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise; or
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(b) "controlled by" or "under common control with" such other Person
if such other Person is the executor, administrator, or other personal
representative of such Person.
Agent-Related Persons means the Fronting Bank, the Administrative
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Agent, the LC Administrator (and any successor administrative agent or letter of
credit administrator arising under Section 9.9), together with its Affiliates,
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and the officers, directors, employees, agents and attorneys-in-fact of such
Person and Affiliates.
Agent's Payment Office means the address for payments set forth on
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Schedule 10.2 in relation to the Administrative Agent, or such other address as
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the Administrative Agent may from time to time specify.
Agreement means this Amended and Restated Letter of Credit
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Reimbursement Agreement.
Amendment Effective Date means the date on which the conditions
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precedent for the effectiveness of this Agreement specified in Section 8.1 shall
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be met.
Annual Statement means, as to any Person, the annual financial
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statement of such Person as required to be filed with the Minister (or similar
Governmental Authority) of such Person's domicile, together with all exhibits or
schedules filed therewith, prepared in conformity with SAP.
Assignee is defined in Section 10.8(a).
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Assignment and Acceptance is defined in Section 10.8(a).
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Attorney Costs means and includes all fees and disbursements of any
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law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
Authorized Officers means those officers of the Borrower whose
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signatures and incumbency shall have been certified to the Administrative Agent
pursuant to Section 8.1(d).
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Base Rate means, for any day, the higher of: (a) 0.50% per annum above
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the latest Federal Funds Rate; and (b) the rate of interest in effect for such
day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement of such
change.
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Beneficiary means each Person for whose benefit a Letter of Credit has
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been issued hereunder.
BofA means Bank of America, National Association, a national banking
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association.
Borrower is defined in the Preamble.
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Borrowing Base Certificate means a certificate substantially in the
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form of Exhibit B with such changes therein as the Administrative Agent may
request from time to time.
Business Day means any day other than a Saturday, Sunday or other day
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on which commercial banks in New York City, Chicago, or ▇▇▇▇▇▇▇▇, Bermuda are
authorized or required by law to close.
Capital Adequacy Regulation means any guideline, request or directive
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of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
Capital Stock means, as to any Person, any and all shares, interests,
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partnership interest, participations, rights in or other equivalents (however
designated) of such Person's equity interest (however designated).
Capitalized Lease means, as to any Person, any lease which is or
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should be capitalized on the balance sheet in accordance with GAAP, together
with any other lease which is in substance a financing lease, including, without
limitation, any lease under which (a) such Person has or will have an option to
purchase the property subject thereto at a nominal amount or an amount less than
a reasonable estimate of the fair market value of such property as of the date
the lease is entered into or (b) the term of the lease approximates or exceeds
the expected useful life of the property leased thereunder.
Cash shall mean Dollars held by the Borrower in the Custody Account.
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Cash Equivalents means, at any time:
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(a) Government Debt, maturing not more than one year after such time;
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(b) commercial paper, maturing not more than one year from the date of
issue, which is issued by
(i) a corporation (except an Affiliate of the Borrower) rated at
least A-1 by S&P or P-1 by ▇▇▇▇▇'▇ or the equivalent rating from
another nationally recognized agency, or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers' acceptance or eurodollar
time deposit, maturing not more than one year after the date of issue,
which is issued by either
(i) a financial institution which is rated at least BBB- by S&P
or Baa3 by ▇▇▇▇▇'▇ or 2 or above by the National Association of
Insurance Commissioners, or
(ii) any Lender; or
(d) any repurchase agreement with a term of one year or less which
(i) is entered into with
(A) any Lender, or
(B) any other commercial banking institution of the stature
referred to in clause (c)(i), and
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(ii) is secured by a fully perfected Lien in any obligation of
the type described in any of clauses (a) through (c) that has a market
value at the time such repurchase agreement is entered into of not
less than 100% of the repurchase obligation of such Lender (or other
commercial banking institution) thereunder;
(e) investments in money market funds that invest solely in Cash
Equivalents described in clauses (a) through (d); and
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(f) investments in short-term asset management accounts offered by any
Lender for the purpose of investing in loans to any corporation (other than
an Affiliate of the Borrower) organized under the laws of any state of the
United States or of the District of Columbia and rated at least A-1 by S&P
or P-1 by ▇▇▇▇▇'▇.
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Change in Control shall be deemed to have occurred if (a) any sale,
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lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of Parent or the
Borrower occurs; (b) any "person" as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
is or becomes, directly or indirectly, the "beneficial owner," as defined in
Rule 13d-3 under the Exchange Act, of securities of Parent that represent 51% or
more of the combined voting power of Parent's then outstanding securities other
than ▇▇▇▇▇ Holdings and Capital Z Partners, (c) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Borrower (together with any new directors whose
election by the Board of Directors or whose nomination by the stockholders of
Parent was approved by a vote of the directors of Parent then still in office
who are either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of Parent's Board of Directors then in office; or (d)
Parent ceases to own, directly or indirectly, 100% of the Capital Stock of and
beneficial interest in the Borrower entitled to vote upon general matters
submitted to shareholders including election of the board of directors.
Code means the Iternal Revenue Code of 1986, as amended and any
----
successor statute of similar import, together with the regulations thereunder,
as amended, reformed or otherwise modified and in effect from time to time.
References to sections of the Code shall be construed to also refer to successor
sections.
Collateral means all property and assets that are from time to time
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subject to the Security Agreement.
Commitment means the Tranche A Commitments and the Tranche B
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Commitments.
Commitment Termination Date means the earliest to occur of (a) April
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5, 2002 as such date may be extended pursuant to Section 2.17 or (b) the date on
which any Commitment Termination Event occurs.
Commitment Termination Event means (a) the occurrence of a Default
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described in Section 7.1(e) or (b) the occurrence and continuance of any other
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Event of Default and either (i) the Obligations are declared to be due and
payable pursuant to Section 7.2, or (ii) in the absence of such declaration, the
Administrative Agent, acting at the direction of the Required Lenders, gives
notice to the Borrower that the Commitments have been terminated.
Compliance Certificate means a certificate substantially in the form
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of Exhibit A but with such changes as the Administrative Agent may from time to
time request for purposes of monitoring the Borrower's compliance herewith.
Concentration Limits means the limitations on issuers and other
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investment parameters set forth on Schedule 1.1.
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6
Contingent Liability means any agreement, undertaking or arrangement
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by which any Person (outside the ordinary course of business) guarantees,
endorses, acts as surety for or otherwise becomes or is contingently liable for
(by direct or indirect agreement, contingent or otherwise, to provide funds for
payment by, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the Debt, obligation or other
liability of any other Person (other than by endorsements of instruments in the
course of collection), or for the payment of dividends or other distributions
upon the shares of any other Person or undertakes or agrees (contingently or
otherwise) to purchase, repurchase, or otherwise acquire or become responsible
for any Debt, obligation or liability or any security therefor, or to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition of any other
Person, or to make payment or transfer property to any other Person other than
for fair value received; provided, however, that obligations of the Borrower and
its Subsidiaries under Reinsurance Agreements which are entered into in the
ordinary course of business shall not be deemed to be Contingent Liabilities for
the purposes of this Agreement. The amount of any Person's obligation under any
Contingent Liability shall (subject to any limitation set forth therein) be
deemed to be the outstanding principal amount (or maximum permitted principal
amount, if larger) of the Debt, obligation or other liability guaranteed or
supported thereby.
Contractual Obligation means, relative to any Person, any obligation,
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commitment or undertaking under any agreement or other instrument to which such
Person is a party or by which it or any of its property is bound or subject.
Corporate/Municipal Securities means publicly traded securities (other
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than preferred stock) issued by a corporation organized in the United States or
by any state or municipality located in the United States.
Credit Documents means this Agreement, each LC Application, each LC
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Amendment Application, the Security Agreement and all other agreements,
instruments, certificates, documents, schedules or other written indicia
delivered by the Borrower in connection with any of the foregoing.
Credit Extension means the issuance of any Letter of Credit or the
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amendment or extension of the stated expiry date of any existing Letter of
Credit.
Custody Account means account no. MRLF0010302 at Mellon Bank N.A. as
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to which Mellon Bank N.A. and the Administrative Agent have entered into that
certain Control Agreement dated as of February 25, 2000.
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Debt means, with respect to any Person, at any date, without
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duplication, (a) all obligations of such Person for borrowed money or in respect
of loans or advances; (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (c) all obligations in respect
of letters of credit which have been drawn but not reimbursed by the Person for
whose account such letter of credit was issued, and bankers' acceptances issued
for the account of such Person; (d) all obligations in respect of Capitalized
Leases of such Person; (e) all net Hedging Obligations of such Person; (f)
whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of property or
services; (g) Debt of such Person secured by a Lien on property owned or being
purchased by such Person (including Debt arising under conditional sales or
other title retention agreements) whether or not such Debt is limited in
recourse; (h) any Debt of another Person secured by a Lien on any assets of such
first Person, whether or not such Debt is assumed by such first Person (it being
understood that if such Person has not assumed or otherwise become personally
liable for any such Debt, the amount of the Debt of such person in connection
therewith shall be limited to the lesser of the face amount of such Debt and the
fair market value of all property of such Person securing such Debt); (i) any
Debt of a partnership in which such Person is a general partner unless such Debt
is nonrecourse to such Person; and (j) all Contingent Liabilities of such Person
whether or not in connection with the foregoing; provided that, notwithstanding
anything to contrary contained herein, Debt shall not include (x) contingent
liabilities arising out of endorsements of checks and other negotiable
instruments for deposit or collection in the ordinary course of business or, (y)
unsecured current liabilities incurred in the ordinary course of business and
paid within 90 days after the due date (unless contested diligently in good
faith by appropriate proceedings and, if requested by the Administrative Agent,
reserved against in conformity with GAAP) other than liabilities that are for
money borrowed or are evidenced by bonds, debentures, notes or other similar
instruments (except as described in clause (x) above) or (z) any obligations of
such Person under any Reinsurance Agreement.
Default means any condition or event, which, after notice or lapse of
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time or both, would constitute an Event of Default.
Department is defined in Section 4.2.
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Dollar(s) and the sign "$" means lawful money of the United States of
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America.
Drawing Request is defined in Section 2.3(a).
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Drawing Request Date is defined in Section 2.3(a).
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Eligible Assignee means a Person who is(a) a commercial bank organized
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under the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $250,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$250,000,000, provided that such bank is acting through a branch or agency
located in the United States; (c) a Person that is primarily engaged in the
business of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary; or (d) mutual funds, pension funds and other
institutional investors (except an Affiliate of the Borrower) regularly engaged
in the making of commercial loans.
Eligible Investments means Cash, Cash Equivalents, MBS Investments,
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ABSs, Corporate/Municipal Securities, Government Securities and G7 Securities
which (a) have the required rating as set forth on Schedule 1.2, (b) are capable
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of being marked to market on a daily basis and (c) are held in the Custody
Account.
Equity Proceeds means the proceeds of any issuance or sale of stock of
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the Borrower net of attorneys' fees, accountants' fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
ERISA means the Employee Retirement Income Security Act of 1974, as
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amended, and any successor statute of similar import, together with the
regulations promulgated thereunder and under the Code, in each case as in effect
from time to time. References to sections of ERISA also refer to successor
sections.
Event of Default means any of the events described in Section 7.1.
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Executive Officer means, as to any Person, the president, the chief
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financial officer or the chief executive officer.
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Fair Market Value shall mean (a) with respect to any publicly-traded
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security (other than those set forth in clause (b)) the closing price for such
security on the largest exchange on which such security is traded (or if not
traded on an exchange, then the average of the closing bid and ask prices quoted
over-the-counter) on the date of the determination (as such prices are reported
in The Wall Street Journal (Midwest Edition) or if not so reported, in any
nationally recognized financial journal or newspaper), (b) with respect to Cash
and Cash Equivalents, the amounts thereof, (c) with respect to any Private Fund
Investment, on any date of calculation, the amount that would be received with
respect thereto if the entire amount of the applicable capital or other similar
account relating thereto were withdrawn on such date (regardless of whether a
contractual right exists to make any withdrawal on such date) and (d) with
respect to any Investment (other than those set forth in clauses (a), (b) and
(c)), the price for such Investment on the date of calculation obtained from a
generally recognized source approved by the Administrative Agent or the most
recent bid quotation from such approved source (or, if no generally recognized
source exists as to a particular Investment, any other source specified by the
Borrower to which the Administrative Agent does not reasonably object).
Federal Funds Rate means, for any day, the rate set forth in the
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weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Administrative Agent.
Fee Letter is defined in Section 2.14.
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Final Maturity Date means the first anniversary of the Commitment
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Termination Date set forth in clause (a) of the definition thereof as extended
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from time to time pursuant to Section 2.17.
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Fiscal Quarter means any quarter of a Fiscal Year.
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Fiscal Year means any period of twelve consecutive calendar months
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ending on the last day of December.
FRB means the Board of Governors of the Federal Reserve System, and
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any Governmental Authority succeeding to any of its principal functions.
Fronting Bank means BofA in its capacity as an issuer of Letters of
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Credit in which the Lenders have a Risk Participation.
G7 Government Securities means any evidence of Debt, maturing not more
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than five years after such time, issued or guaranteed by any country which is a
member of the G7 other than the United States.
GAAP means generally accepted accounting principles set forth from
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time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
10
Governmental Authority means 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.
Government Debt means evidence of Debt issued or guaranteed by the
----------------
United States Government or any agency thereof.
Hedging Obligations means, with respect to any Person, the net
--------------------
liability of such Person under any futures contract or options contract
(including property catastrophe futures and options), interest rate swap
agreements and interest rate collar agreements and all other agreements or
arrangements designed to protect such Person against catastrophic events,
fluctuations in interest rates or currency exchange rates.
Indemnified Liabilities is defined in Section 10.5.
-----------------------
Indemnified Person is defined in Section 10.5.
------------------ ------------
Insurance Code means, with respect to the Borrower and its
----------------
Subsidiaries, the insurance regulation of such Person's domicile and any
successor statute of similar import, together with the regulations thereunder,
as amended or otherwise modified and in effect from time to time. References to
sections of the Insurance Code shall be construed to also refer to successor
sections.
Insurance Policies means policies purchased from insurance companies
------------------
by the Borrower or any of its Subsidiaries for its own account to insure against
its own liability and property loss (including, without limitation, casualty,
liability and workers' compensation insurance).
Investment means, as to any Person, any investment of any Person,
----------
whether by means of security purchase, capital contribution, loan, time deposit
or otherwise, and shall include without limitation Cash and Cash Equivalents.
Investment Grade Assets means Cash Equivalents, Government Debt, MBS
-----------------------
Investments, ABSs, Corporate/Municipal Securities and G7 Securities which are
rated at least BBB- by S&P or Baa3 by Moody's.
IRS means the U.S. Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
Issue means, with respect to any Letter of Credit, to issue, to amend
-----
or to extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "Issued", "Issuing" and "Issuance" have corresponding
meanings.
11
Issuer means, with respect to any Letter of Credit, the Person or
------
Persons who have issued such Letter of Credit.
LC Administrator means BofA's Letter of Credit Operations located at
----------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as letter of credit
administrator for the Lenders, together with any replacement LC Administrator
arising under Section 9.9.
LC Advance means each Lender's participation in any LC Borrowing in
----------
accordance with its Percentage.
LC Advance Date is defined in Section 2.3(c).
--------------- --------------
LC Amendment Application means an application form for amendment of an
------------------------
outstanding letter of credit as shall at any time be in use by the LC
Administrator.
LC Application means an application form for issuances of a letter of
--------------
credit as shall at any time be in use by the LC Administrator.
LC Borrowing means an extension of credit resulting from a drawing
------------
under any Letter of Credit (and, with respect to the Existing Letters of Credit,
each Lender's participation interest therein) which shall not have been
reimbursed by the Borrower on the date when made.
LC Collateral Account is defined in Section 2.13.
--------------------- ------------
LC Obligations means, at any time, the sum, without duplication, of
--------------
the Tranche A LC Obligations and the Tranche B LC Obligations.
LC Related Documents means the Letters of Credit, the LC Applications
--------------------
and any other document relating to any Letter of Credit, including any of the LC
Administrator's standard form documents for Letter of Credit issuances or
amendments.
Lenders is defined in the Preamble.
------- --------
Lending Office means, as to any Lender, the office or offices of such
--------------
Lender specified as its "Lending Office" on Schedule 10.2, or such other office
-------------
or offices as such Lender may from time to time notify the Borrower and the
Administrative Agent.
Letter of Credit means a standby letter of credit having terms and
----------------
provisions which are permitted by this Agreement and which otherwise are
reasonably satisfactory to the LC Administrator issued pursuant to Section 2.2.
-----------
12
License(s) is defined in Section 4.10.
---------- ------------
Lien means, when used with respect to any Person, any interest in any
----
real or personal property, asset or other right held, owned or being purchased
or acquired by such Person for its own use, consumption or enjoyment which
secures payment or performance of any obligation and shall include any mortgage,
lien, pledge, encumbrance, charge, retained title of a conditional vendor or
lessor, or other security agreement, mortgage, deed of trust, chattel mortgage,
assignment, pledge, retention of title, financing or similar statement or
notice, or other encumbrance arising as a matter of law, judicial process or
otherwise.
Margin Stock means "margin stock" as such term is defined in
-------------
Regulation U or X of the FRB.
Material Adverse Effect means, the occurrence of an event (including
------------------------
any adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), which has or could reasonably be expected to have
a materially adverse effect on:
(a) the assets, business, financial condition, operation or prospects
of the Borrower; or
(b) the ability of the Borrower to perform any of its payment or other
material obligations under any of the Credit Documents; or
(c) the legality, validity, binding effect or enforceability against
the Borrower of any Credit Document that by its terms purports to bind the
Borrower.
MBS (Agency Pass-Throughs) means any instrument, issued by the Federal
--------------------------
National Mortgage Association, the Government National Mortgage Association or
the Federal Home Loan Mortgage Corporation, that entitles the holder of, or
beneficial owner under, the instrument to the whole or any part of the rights or
entitlements of a mortgagee and any other rights or entitlements in respect of a
pool of mortgages or any money payable by mortgagors under those mortgages in
relation to real estate mortgages, and the money payable to the holder of, or
beneficiary owner under, the instrument is based on actual or scheduled payments
on the underlying mortgages.
MBS (Agency CMOs) means collateralized mortgage obligations or real
-----------------
estate mortgage investment conduit pass through securities, in any case issued
by the Federal National Mortgage Association, the Government National Mortgage
Association or the Federal Home Loan Mortgage Corporation.
13
MBS Investments means MBS (Agency CMOs) and MBS (Non-Agency CMOs)
----------------
which constitute TACs, PACs and Sequentials (as such terms are defined by
Bloomberg Inc.) and shall not include Support Tranches (as such term is defined
by Bloomberg Inc.) and MBS (Agency Pass-Throughs). The weighted average duration
of such MBS Investments shall be less than or equal to seven years. The maximum
weighted average life of any single MBS Investment shall not exceed 12 years. To
the extent MBS Investments included within Eligible Investments violate the
restrictions set forth herein, the Fair Market Value of such MBS Investments
shall be excluded from the Borrowing Base; provided, however, that only those
MBS Investments having the lowest aggregate Fair Market Value whose exclusions
will result in compliance shall be excluded from the Borrowing Base.
MBS (Non-Agency CMOs) means collateralized commercial mortgage
-----------------------
obligations or commercial real estate mortgage investment conduit pass through
securities, not issued by the Federal National Mortgage Association, the
Government National Mortgage Association or the Federal Home Loan Mortgage
Corporation.
Minister means the Minister of Finance of Bermuda or similar
--------
Governmental Authority in the applicable jurisdiction.
Moody's means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
Net Worth means, for any Person, shareholders equity calculated in
---------
accordance with GAAP.
Obligations means all obligations and liabilities of the Borrower to
-----------
the Administrative Agent, the LC Administrator, the Fronting Bank or any of the
Lenders, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, primary or secondary, joint or several, recourse or
nonrecourse or now or hereafter existing or due or to become due, whether for LC
Advances, interest, fees, expenses, claims, indemnities or otherwise, under or
in connection with this Agreement, or any other Credit Document.
Ordinary Course Litigation is defined in Section 4.4.
-------------------------- -----------
Organization Documents means, for any corporation, the certificate or
----------------------
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.
Other Taxes means any present or future stamp or documentary taxes or
-----------
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Credit Documents.
Parent means MaxRe Capital Ltd., a Bermuda company (f/k/a Maximus
------
Capital Holdings, Ltd.).
14
Participants is defined in Section 10.8(d).
------------ ---------------
PBGC means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions.
Percentage means as to any Lender at any time, the percentage
----------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender's Commitment divided by the combined Commitments of all
Lenders.
Person means any natural person, corporation, partnership, firm,
------
trust, association, government, governmental agency or other entity, whether
acting in an individual, fiduciary or other capacity.
Plan means any "employee pension benefit plan" or "employee welfare
----
benefit plan" as such terms are defined in ERISA, and as to which the Borrower
has or may have any liability, including any liability by reason of having been
a substantial employer within the meaning of section 4063 of ERISA for any time
within the preceding five years or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
Private Investment Fund means any Person who (a) is an investment
-------------------------
vehicle which is not required to be registered as an investment company under
the Investment Company Act of 1940, (b) permits equity withdrawals not less
frequently than quarterly, (c) has ▇▇▇▇▇ Capital Management Inc. as either its
manager or investment advisor, (d) not less than 85% of such Person's
investments are capable of being marked to market daily and (e) are held in a
Custody Account.
Purchase Money Debt means and includes (a) Debt (other than the
---------------------
Obligations) for the payment of all or any part of the purchase price of any
fixed assets, (b) any Debt (other than the Obligations) incurred at the time of
or within ten (10) days prior to or after the acquisition of any fixed assets
for the purpose of financing all or any part of the purchase price thereof, and
(c) any renewals, extensions, or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at such time, but excluding, for
purposes of this definition, any such Debt constituting a Capitalized Lease.
Purchase Money Lien means a Lien upon fixed assets which secures
---------------------
Purchase Money Debt, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Debt secured by such Lien.
15
Reinsurance Agreements means any agreement, contract, treaty,
------------------------
certificate or other arrangement whereby the Borrower or any of its Subsidiaries
agrees to assume from or reinsure another insurer or reinsurer all or part of
the liability of such insurer or reinsurer under a policy or policies of
insurance issued by such insurer or reinsurer.
Required Lenders means, at any time, Lenders then having at least 60%
----------------
of the aggregate amount of the Commitments or, if the Commitments have been
terminated, Lenders then holding at least 60% of the then aggregate outstanding
Credit Extensions.
Requirement of Law for any Person means the Organization Documents of
------------------
such Person, and any law, treaty, rule, ordinance 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 to which
such Person or any of its property is subject.
Risk Participation is defined in Section 2.5.
------------------ -----------
SAP means the statutory accounting practices prescribed or permitted
---
by the Minister (or other similar authority) in the Borrower's or such
Subsidiary's domicile for the preparation of Annual Statements and other
financial reports by insurance corporations of the same type as the Borrower or
such Subsidiary as the case may be.
Security Agreement means the Security Agreement dated as of February
-------------------
25, 2000 between the Borrower and the Administrative Agent, as such Security
Agreement may be amended, modified or supplemented from time to time.
S&P means Standard & Poor's Ratings Services, a division of The
---
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
Statutory Financial Statements is defined in Section 4.2(a).
------------------------------ --------------
Subsidiary means a corporation of which the indicated Person and/or
----------
its other Subsidiaries, individually or in the aggregate, own, directly or
indirectly, such number of outstanding shares as have at the time of any
determination hereunder more than 50% of the ordinary voting power. Unless
otherwise specified, "Subsidiary" shall mean a Subsidiary of the Borrower.
Taxes means any and all present or future taxes, levies, imposts,
-----
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Administrative Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Administrative Agent, as the
case may be, is organized or maintains a lending office.
16
Tranche A Borrowing Base means, on any date, an amount equal to the
-------------------------
sum of the Adjusted Fair Market Value of all Eligible Investments.
Tranche A Commitment means, as to any Lender, the commitment of such
--------------------
Lender to issue Tranche A Letters of Credit for the account of the Company
pursuant to Section 2.1. The initial amount of the Tranche A Commitment of each
-----------
Lender is set forth on Schedule 1.1.
------------
Tranche A LC Obligations means, at any time, the sum, without
--------------------------
duplication, of (a) the aggregate undrawn stated amount of all outstanding
Tranche A Letters of Credit plus (b) the aggregate unpaid amount of all LC
Advances with respect to Tranche A Letters of Credit.
Tranche A Letter of Credit means a Letter of Credit issued pursuant to
--------------------------
the Tranche A Commitment.
Tranche B Borrowing Base means, the sum of (a) 50% of the Fair Market
------------------------
Value of all Private Investment Funds plus (b) an amount equal to the difference
between the Tranche A Borrowing Base and the Tranche A LC Obligations.
Tranche B Commitment means, as to any Lender, the commitment of such
--------------------
Lender to issue Tranche B Letters of Credit for the account of the Company
pursuant to Section 2.1. The initial amount of the Tranche B Commitment of each
-----------
Lender is set forth on Schedule 1.1.
------------
Tranche B LC Obligations means, at any time, the sum, without
--------------------------
duplication, of (a) the aggregate undrawn stated amount of all outstanding
Tranche B Letters of Credit plus (b) the aggregate unpaid amount of all LC
Advances with respect to Tranche B Letters of Credit.
Tranche B Letter of Credit means any Letter of Credit issued under the
--------------------------
Tranche B Commitment.
Unencumbered Asset Reserve Requirement is defined in Section 6.2.
----------------------------------------- ------------
Unencumbered Assets means Investment Grade Assets of the Borrower
--------------------
which are not subject to any Liens.
SECTION 1.2 Other Interpretive Provisions.
-----------------------------
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
17
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Credit Document, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Credit Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
(g) This Agreement and the other Credit Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Borrower and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Lenders or
the Administrative Agent merely because of the Administrative Agent's or
Lenders' involvement in their preparation.
SECTION 1.2 Accounting Principles. Unless otherwise defined or the context
----------------------
otherwise requires, all financial and accounting terms used herein or in any of
the Credit Documents or any certificate or other document made or delivered
pursuant hereto shall be defined in accordance with GAAP or SAP, as the context
may require. When used in this Agreement, the term "financial statements" shall
include the notes and schedules thereto. In addition, when used herein, the
terms "best knowledge of" or "to the best knowledge of" any Person shall mean
matters within the actual knowledge of such Person (or an Executive Officer of
such Person) or which should have been known by such Person after reasonable
inquiry.
18
ARTICLE II.
AMOUNT AND TERMS OF COMMITMENT
SECTION 2.1 Letter of Credit Commitment.
---------------------------
(a) Upon and subject to the terms and conditions hereof, (i) the
Fronting Bank hereby agrees to issue Letters of Credit at the request of
and for the account of the Borrower from time to time before the Commitment
Termination Date and (ii) each Lender hereby agrees to issue Letters of
Credit at the request of and for the account of the Borrower from time to
time before the Commitment Termination Date in such Lender's Percentage of
such aggregate stated amounts of Letters of Credit as the Borrower may from
time to time request and to purchase Risk Participations in the obligations
of the Fronting Bank under Letters of Credit Issued by the Fronting Bank
provided that no Issuer shall be obligated to issue any Letter of Credit if
as of the date of issuance of such Letter of Credit (A) in the case of a
Tranche A Letter of Credit, the Tranche A LC Obligations outstanding shall
exceed the lesser of (x) the combined Tranche A Commitments and (y) the
Tranche A Borrowing Base or (B) with respect to any Tranche B Letter of
Credit, the aggregate amount of LC Obligations outstanding shall exceed the
lesser of (x) the combined Tranche B Commitments and (y) the Tranche B
Borrowing Base.
(b) No Issuer shall be under any obligation to Issue any Letter of
Credit if:
(i) such issuance would be prohibited under Section 3.2;
-----------
(ii) the Administrative Agent or LC Administrator has received
written notice from the Fronting Bank or the Required Lenders, as the
case may be, or the Borrower, on or prior to the Business Day prior to
the requested date of Issuance of such Letter of Credit, that one or
more of the applicable conditions contained in Section 8.2 is not then
-----------
satisfied;
(iii) the expiry date of such Letter of Credit is less than five
Business Days prior to the Final Maturity Date, unless all of the
Lenders have approved such expiry date in writing;
(iv) in the case of Letters of Credit issued by the Lenders, such
Letter of Credit is not substantially in the form of Exhibit E hereto,
---------
or is not otherwise in form and substance reasonably acceptable to the
Administrative Agent, the LC Administrator and the Fronting Bank;
provided that the Administrative Agent and the LC Administrator can
and will, agree to reasonable changes to such form, not adverse to the
interests of the Lenders, requested by applicable insurance
regulators; or
19
(v) such Letter of Credit is denominated in a currency other than
Dollars.
(c) The Letters of Credit Issued by and the Risk Participations of
each Lender and the reimbursement obligations with respect thereto shall be
evidenced by one or more accounts or records maintained by such Lender in
the ordinary course of business. The accounts or records maintained by the
Administrative Agent shall be conclusive (absent manifest error) as to the
amount of the LC Advances made to the Borrower and the Letters of Credit
Issued for the account of the Borrower, and the amounts of principal,
interest and fees owing hereunder. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the obligation of
the Borrower hereunder to pay any amount owing with respect to any LC
Advance or any Letter of Credit.
SECTION 2.2 Issuance, Amendment and Renewal of Letters of Credit. Each Letter
----------------------------------------------------
of Credit shall be Issued upon the irrevocable written request of the Borrower
received by the LC Administrator at least 5 Business Days (or such shorter time
as the Administrative Agent, the LC Administrator and the Issuer may agree in a
particular instance in their sole discretion) prior to the proposed date of
issuance. The LC Administrator shall promptly advise the Administrative Agent of
any such request. Each such request for issuance of a Letter of Credit shall be
by facsimile, confirmed immediately in an original writing, in the form of an LC
Application, and shall specify in form and detail satisfactory to the LC
Administrator: (i) the proposed date of issuance of the Letter of Credit (which
shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii)
the expiry date of the Letter of Credit; (iv) the name and address of the
Beneficiary thereof; (v) the documents to be presented by the Beneficiary of the
Letter of Credit in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by the Beneficiary in case of any drawing
thereunder; (vii) whether such Letter of Credit is to be issued by the Fronting
Bank or by the Lenders (it being agreed that in the event a Lender advises the
LC Administrator that such Lender is unable (due to regulatory restrictions or
other legal impediments) to Issue a Letter of Credit because of its relationship
to the Beneficiary, such Letter of Credit will be issued by the Fronting Bank);
(viii) whether such Letter of Credit is to be a Tranche A Letter of Credit or a
Tranche B Letter of Credit; and (ix) such other matters as the LC Administrator
may require. The LC Administrator is hereby authorized to execute and deliver
each Letter of Credit to be Issued by the Lenders on behalf of the Lenders
provided, that at the request of the Borrower, such Letter of Credit will be
executed by each of the Lenders. In the event of a conflict between the
provisions of this Agreement and the provisions of an LC Application, this
Agreement shall govern. The LC Administrator shall use each Lender's Percentage
as its "Commitment Share" under each Letter of Credit Issued by the Lenders. The
LC Administrator shall not amend any Letter of Credit Issued by the Lenders to
change the "Commitment Shares" or add or delete a Lender liable thereunder
unless such amendment is done in connection with an assignment pursuant to
Section 10.8 or in connection with the addition of a Lender pursuant to Section
------------ -------
2.18.
----
20
(a) From time to time while a Letter of Credit is outstanding and
prior to the Commitment Termination Date, the Issuer will, upon the written
request of the Borrower received by the LC Administrator at least 5
Business Days (or such shorter time as the Administrative Agent, the LC
Administrator and the Issuer may agree in a particular instance in their
sole discretion) prior to the proposed date of amendment, amend any Letter
of Credit Issued by them. The LC Administrator shall promptly advise the
Administrative Agent of any such request. Each such request for amendment
of a Letter of Credit shall be made by facsimile, confirmed immediately in
an original writing, made in the form of an LC Amendment Application and
shall specify in form and detail satisfactory to the LC Administrator: (i)
the Letter of Credit to be amended; (ii) the proposed date of amendment of
such Letter of Credit (which shall be a Business Day); (iii) the nature of
the proposed amendment; and (iv) such other matters as the LC Administrator
may require. No Issuer shall have any obligation to amend any Letter of
Credit if: (A) such Issuer would have not been obligated at such time to
Issue or participate in such Letter of Credit in its amended form under the
terms of this Agreement; or (B) the Beneficiary of such Letter of Credit
does not accept the proposed amendment to such Letter of Credit. The
Lenders and the Fronting Bank agree, upon the request of the Borrower and
as long as no Event of Default or Default shall have occurred and be
continuing, to amend any Letter of Credit to extend the expiry date thereof
to a date not later than the Final Maturity Date. The LC Administrator is
hereby authorized to execute and deliver each amendment to a Letter of
Credit Issued by the Lenders on behalf of the Lenders provided that, upon
request of the Borrower, such amendment will be executed by each Lender.
(b) The Administrative Agent shall promptly notify each Lender of the
receipt of a written request from the Borrower for the issuance of or an
amendment to a Letter of Credit and, with respect to the issuance of or
Risk Participation in a Letter of Credit, the amount of such Lender's share
of such Letter of Credit which shall equal its Percentage thereof. In
addition, at least two Business Days prior to the issuance or amendment of
any Letter of Credit, the Administrative Agent will confirm to the Lenders
(by telephone or in writing) that the Administrative Agent has received a
copy of the LC Application or LC Amendment Application from the Borrower.
(c) With respect to a request to Issue a Letter of Credit, unless the
Administrative Agent has received, on or before the Business Day
immediately preceding the date on which such Letter of Credit will be
Issued, (A) notice from the Fronting Bank or the Required Lenders, as the
case may be, or the Borrower directing the Administrative Agent not to
permit the issuance of such Letter of Credit because such issuance is not
then permitted under Section 2.1(a) as a result of the limitations set
---------------
forth therein or (B) a notice described in Section 2.1(b)(ii), then,
-------------------
subject to the terms and conditions hereof, the LC Administrator shall, on
the requested date, cause a Letter of Credit to be Issued by the Fronting
Bank or by the Lenders in accordance with their Percentages, as the case
may be, for the account of the Borrower in accordance with the LC
Administrator's usual and customary business practices. (1)
21
(d) The LC Administrator may, at its election (or at the direction of
the Administrative Agent, the Fronting Bank or the Required Lenders, as the
case may be), deliver any notices of termination or other communications to
any Beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the
expiry date of such Letter of Credit to be a date not later than the five
Business Days prior to the Final Maturity Date.
(e) This Agreement shall control in the event of any conflict with any
LC Related Document (other than any Letter of Credit).
(f) The LC Administrator, concurrently or promptly following the
delivery of a Letter of Credit, or amendment to or renewal of a Letter of
Credit, to a Beneficiary, shall send to the Administrative Agent and the
Lenders a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit. After giving effect to the Issuance of
any Letter of Credit, there shall be no more than 25 Letters of Credit
outstanding.
SECTION 2.3 Drawings and Reimbursements.
---------------------------
(a) With respect to each Letter of Credit for which the LC
Administrator receives a request for a drawing which is in form and
substance reasonably satisfactory to the LC Administrator (a "Drawing
-------
Request"), if such Drawing Request is received prior to 10:00 a.m (Chicago
-------
time) on any Business Day, such Business Day shall be the "Drawing Request
----------------
Date" and if such Drawing Request is received after 10:00 a.m (Chicago
time) on any Business Day, the following Business Day shall be the "Drawing
-------
Request Date." Upon receiving a Drawing Request, the LC Administrator shall
------------
promptly notify the Borrower of such Drawing Request (which notice may be
oral if immediately confirmed in writing (including by facsimile)) and upon
receipt of such notification, the Borrower shall promptly reimburse the
Administrative Agent on behalf of the Issuer for the amount of such drawing
by delivering to the LC Administrator in immediately available funds the
amount of the Drawing Request. Nothing herein stated shall be deemed a
waiver by the Lenders of the obligation of the Borrower to make such prompt
reimbursement. To the extent that funds are received by the LC
Administrator prior to 3:00 p.m. (Chicago time) on the first Business Day
after the Drawing Request Date, the LC Administrator shall promptly, on
behalf of the Issuer, make an equivalent amount available to the
Beneficiary of the related Letter of Credit on such first Business Day
after the Drawing Request Date and shall reimburse itself for such amount
with the funds provided by the Borrower.
22
(b) With respect to any Drawing Request, if immediately available
funds are not received by the LC Administrator from the Borrower prior to
3:00 p.m. (Chicago time) on the first Business Day after the Drawing
Request Date in the amount of such Drawing Request, the LC Administrator
shall promptly notify the Administrative Agent and the Administrative Agent
shall notify each Lender on the first Business Day after the Drawing
Request Date of such Drawing Request and such Lender's share of such
Drawing Request (which shall be an amount equal to (i) such Lender's
Percentage multiplied by the lesser of (ii)(A) the maximum amount available
to be drawn under such Letter of Credit and (B) the amount of such drawing
which was not reimbursed by the Borrower pursuant to Section 2.3(a)) and
---------------
the Borrower shall be deemed to have requested an LC Borrowing in an amount
equal to the amount of such drawing which was not reimbursed by the
Borrower pursuant to Section.3(a). Any notice given by the Administrative
Agent to the Lenders pursuant to this Section 2.3(b) may be oral if
---------------
immediately confirmed in writing (including by facsimile); provided that
(i) the failure of the Administrative Agent to give any such notice in
sufficient time to enable any Lender to effect such payment at the time
required under Section 2.3(c) or (ii) the failure of the Administrative
---------------
Agent to deliver an immediate confirmation of such notice shall not affect
the conclusiveness or binding effect of such notice or relieve any Lender
from its obligations under this Section 2.3.
-----------
(c) Upon receiving a Drawing Request, each Lender shall make available
to the Administrative Agent for the account of LC Administrator at the
Administrative Agent's Payment Office by 3:00 p.m. (Chicago time) in
immediately available funds on the second Business Day after the Drawing
Request Date (such date, an "LC Advance Date") its share of such request;
----------------
provided that in the case of a Letter of Credit issued by the Fronting
Bank, if a Lender shall fail to make such funds so available, the Fronting
Bank shall make such funds available. Upon delivering such funds to the
Administrative Agent pursuant to this Section 2.3(c), such Lender (or the
--------------
Fronting Bank, if the Fronting Bank has made such funds available after the
failure of such Lender to do so) shall be deemed to have made an LC Advance
to the Borrower in such amount. To the extent that immediately available
funds are received by the Administrative Agent from the Lenders prior to
3:00 p.m. (Chicago time) on any LC Advance Date, the Administrative Agent
shall notify the LC Administrator and the LC Administrator shall promptly
make such funds available to the Beneficiary of the related Letter of
Credit on such date. To the extent that the LC Administrator has not
delivered funds to any Beneficiary on behalf of a Lender pursuant to the
first sentence of Section 2.3(d) and that immediately available funds are
-------------
received by the Administrative Agent from such Lender: (i) after 3:00 p.m.
on any LC Advance Date, the LC Administrator shall make such funds
available to such Beneficiary on the next Business Day following such LC
Advance Date; (ii) prior to 3:00 p.m. on any Business Day after the LC
Advance Date, the LC Administrator shall make those funds available to such
Beneficiary on such Business Day; and (iii) after 3:00 p.m. on any Business
Day after the LC Advance Date, the LC Administrator shall make those funds
available to such Beneficiary on the next Business Day following such
Business Day.
23
(d) Unless the Administrative Agent or LC Administrator receives
notice from a Lender prior to any LC Advance Date that such Lender will not
make available as and when required hereunder to the Administrative Agent
for the account of the Borrower the amount of such Lender's LC Advance on
such LC Advance Date, the Administrative Agent and the LC Administrator may
assume that such Lender has made such amount available to the
Administrative Agent in immediately available funds on the LC Advance Date
and the LC Administrator may (but shall not be required), in reliance upon
such assumption, make available to the Beneficiary of the related Letter of
Credit on such date such Lender's LC Advance. If and to the extent (i) any
Lender shall not have made its full amount available to the Administrative
Agent in immediately available funds and (ii) the LC Administrator in such
circumstances has made available to the Beneficiary such amount, then such
Lender shall, on the Business Day following such LC Advance Date, make such
amount available to the Administrative Agent, together with interest
thereon until the date made available (i) at the Federal Funds Rate for the
period ending two Business Days after such LC Advance Date and (ii) at the
Base Rate plus 2.00% thereafter; provided, however, that if a Lender has
failed to make such an amount available with respect to a Letter of Credit
issued by the Fronting Bank, the Fronting Bank shall make such amount
available. If the Fronting Bank shall fail to make such amount available,
it shall pay such interest to the LC Administrator and if a Lender fails to
make such amount available, it shall pay such interest to the Fronting
Bank. A notice of the Administrative Agent submitted to a Lender with
respect to amounts owing under Section 2.3(b) shall be conclusive, absent
--------------
manifest error. If such amount is so made available, together with interest
thereon, such payment to the Administrative Agent shall constitute such
Lender's LC Advance on the LC Advance Date for all purposes of this
Agreement. If such amount, together with interest thereon, is not made
available to the Administrative Agent on the Business Day following the LC
Advance Date, the Administrative Agent will notify the Borrower of such
failure to fund and, upon demand by the Administrative Agent, the Borrower
shall pay such amount to the Administrative Agent for the LC
Administrator's account, together with interest thereon for each day
elapsed since the date of such LC Borrowing, at a rate per annum equal the
Base Rate plus 2.00%.
(e) The failure of any Lender to make any LC Advance on any LC Advance
Date shall not relieve any other Lender of any obligation hereunder to make
an LC Advance on such LC Advance Date, and neither the Administrative
Agent, the LC Administrator nor any Lender shall be responsible for the
failure of any other Lender to make any LC Advance on any LC Advance Date.
Each Lender's obligation in accordance with this Agreement to make LC
Advances, as contemplated by this Section 2.3, as a result of a drawing
-----------
under a Letter of Credit, shall be absolute and unconditional and without
recourse to the Administrative Agent, the Fronting Bank or the LC
Administrator and shall not be affected by any circumstance, including (i)
any set-off, counterclaim, recoupment, defense or other right which such
Lender may have against the Administrative Agent, the LC Administrator, the
Fronting Bank, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of an Event of Default, an Default or a
Material Adverse Effect; or (iii) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; provided
--------
the LC Administrator shall exercise the same care in examining documents
and determining whether or not to honor a Drawing Request as it would
exercise if the LC Administrator had Issued such Letter of Credit for its
own account. Nothing contained in this Agreement, and no actions taken by
the Lenders, the LC Administrator, the Fronting Bank or the Administrative
Agent pursuant hereto or in connection with a Letter of Credit shall be
deemed to constitute the Lenders, together or with the Administrative
Agent, the Fronting Bank and the LC Administrator, a partnership,
association, joint venture or other entity.
24
SECTION 2.4 Repayment of LC Advances. Upon (and only upon) receipt by the
--------------------------
Administrative Agent of immediately available funds from the Borrower in
repayment of any LC Advances, the Administrative Agent (i) shall deduct and
retain from such repayment an amount not to exceed the aggregate unreimbursed
payments, if any, which were made by the LC Administrator pursuant to the first
sentence of Section 2.3(d), and then (ii) shall pay to each Lender, in the same
--------------
funds as those received by the Administrative Agent, such Lender's Percentage of
any funds remaining after giving effect to clause (i) above; provided, that if
the Fronting Bank has advanced funds on behalf of a Lender, the Fronting Bank
shall be repaid out of such funds in full before any payment shall be made to
such Lender. The Borrower shall repay any LC Advances on the date such LC
Advances were made.
SECTION 2.5 Role of the Lenders. Each Lender and the Borrower agree that, in
-------------------
paying any drawing under a Letter of Credit, neither the LC Administrator nor
any Issuer shall have any responsibility to obtain any document (other than any
sight draft and certificate expressly required by such Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document; provided that
the LC Administrator and the Issuers shall exercise that standard of care
customarily exercised by them in the review and processing of drawings under
letters of credit issued by them..
(a) No Agent-Related Person nor any of their respective
correspondents, participants or assignees shall be liable to any Lender
for: (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders (including the Required Lenders, as
applicable); (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any LC Related Document.
(b) The Borrower hereby assumes all risks of the acts or omissions of
any Beneficiary or transferee with respect to its use of any Letter of
Credit; provided that this assumption is not intended to, and shall not,
--------
preclude the Borrower's pursuing such rights and remedies as it may have
against the Beneficiary or transferee at law or under any other agreement.
Neither any Agent-Related Person, any Issuer nor any of their respective
correspondents, participants or assignees shall be liable or responsible
for any of the matters described in clauses (i) through (vii) of Section
----------- ---- -------
2.6; provided that, anything in such clauses to the contrary
--- --------
notwithstanding, the Borrower may have a claim against the Administrative
Agent or LC Administrator, and the Administrative Agent or LC Administrator
may be liable to the Borrower, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by
the Borrower which the Borrower, in a final judgment of a court of
competent jurisdiction, proves were caused primarily by the Administrative
Agent's or LC Administrator's willful misconduct or gross negligence or the
LC Administrator's willful failure to pay under any Letter of Credit after
the presentation to it by the Beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of such
Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the LC Administrator may accept documents that appear on their face to
be in order, without responsibility for further investigation; and (ii)
neither the LC Administrator nor any Issuer shall be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
25
(c) Concurrently with the issuance by the Fronting Bank of any Letter
of Credit and any amendment thereto, the Fronting Bank shall be deemed to
have sold and transferred to each other Lender, and each other Lender shall
be deemed irrevocably and unconditionally to have purchased and received
from the Fronting Bank, without recourse or warranty, an undivided interest
and participation (a "Risk Participation"), to the extent of such Lender's
Percentage, in such Letter of Credit and the Borrower's reimbursement
obligations with respect thereto.
SECTION 2.6 Obligations Absolute. The obligations of the Borrower under this
--------------------
Agreement and any LC Related Document to reimburse the Administrative Agent, the
LC Administrator, the Fronting Bank and the Lenders for a drawing under a Letter
of Credit and to repay any LC Borrowing shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement and
each such other L/C-Related Document under all circumstances, including the
following:
(i) any lack of validity or enforceability of this Agreement or
any LC Related Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Borrower in
respect of any Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the LC Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any Beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
Beneficiary or any such transferee may be acting), the Administrative
Agent, the LC Administrator, the Fronting Bank, any Lender or any
other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the LC Related Documents or any
unrelated transaction;
26
(iv) any draft, demand, certificate or 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; or any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under
any Letter of Credit;
(v) any payment by the Issuers under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply
with the terms of such Letter of Credit; or any payment made by the
Issuers under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit
of creditors, liquidator, receiver or other representative of or
successor to any Beneficiary or any transferee of any Letter of
Credit, including any arising in connection with any Insolvency
Proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any guarantee, for all or any of the obligations of the Borrower in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, the Borrower or a guarantor.
SECTION 2.7 Existing Letters of Credit. On an after the Amendment Effective
--------------------------
Date, the Existing Letters of Credit shall be deemed for all purposes, including
for purposes of the fees to be collected pursuant to Section 2.14 and
reimbursement of costs and expenses to the extent provided herein, Tranche A
Letters of Credit Issued by the Fronting Bank outstanding under this Agreement
and entitled to the benefits of this Agreement and the other Credit Documents,
and shall be governed by the applications and agreements pertaining thereto and
by this Agreement. Each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Fronting Bank on the Amendment
Effective Date, without recourse or warranty, an undivided Risk Participation in
each such Existing Letter of Credit and the Borrower's reimbursement obligation
with respect thereto in an amount equal to such Lender's Percentage.
SECTION 2.8 Applicability of ISP98. Unless otherwise agreed by the Issuer and
----------------------
the Borrower when a Letter of Credit is issued and subject to applicable laws,
the rules of the "International Standby Practices 1998" (ISP98) or such later
revision as may be published by the International Chamber of Commerce shall
apply to each Letter of Credit; provided, that with respect to the Existing
Letters of Credit, such Letters of Credit shall be governed by the rules of the
International Chamber of Commerce set forth therein.
SECTION 2.9 Interest. LC Advances shall bear interest (after as well as
--------
before entry of judgment thereon to the extent permitted by law) on the
outstanding principal amount thereof from the applicable LC Advance Date at a
rate per annum equal to the Base Rate plus 2.00% and shall be immediately due
and payable. To the extent that any LC Advances are made on an LC Advance Date
pursuant to Section 2.3(c) and such LC Advances are repaid with immediately
---------------
available funds by the Borrower on the LC Advance Date prior to 1:00 p.m.
(Chicago time), no interest shall be payable on such LC Advances.
27
(a) Anything herein to the contrary notwithstanding, the obligations
of the Borrower to any Lender hereunder shall be subject to the limitation
that payments of interest shall not be required for any period for which
interest is computed hereunder to the extent (but only to the extent) that
contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest
rate of interest that may be lawfully contracted for, charged or received
by such Lender, and in such event the Borrower shall pay such Lender
interest at the highest rate permitted by applicable law. (1)
SECTION 2.10 Payments by the Borrower.
------------------------
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Administrative
Agent for the account of the Lenders at the Administrative Agent's Payment
Office, and shall be made in dollars and in immediately available funds, no
later than 1:00 p.m. (Chicago time) on the date specified herein. Except as
otherwise expressly provided herein, the Administrative Agent will promptly
distribute, in like funds as received, to each Lender its Percentage of any
portion of such payment. Any payment received by the Administrative Agent
later than 1:00 p.m. (Chicago time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) Whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day (unless such
following Business Day is the first Business Day of a calendar month, in
which case such payment shall be made on the preceding Business Day), and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the Borrower
prior to the date on which any payment is due to the Lenders that the
Borrower will not make such payment in full as and when required, the
Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date in immediately available
funds and the Administrative Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date
an amount equal to the amount then due such Lender. If and to the extent
the Borrower has not made such payment in full to the Administrative Agent,
each Lender shall repay to the Administrative Agent on demand such amount
distributed to such Lender, together with interest thereon until the date
repaid (i) at the Federal Funds Rate for period commencing on the date such
amount is distributed to such Lender and ending two days after demand by
the Administrative Agent for such amount and (ii) at the Base Rate plus
2.00% thereafter.
28
SECTION 2.11 Warranty. The delivery of each Letter of Credit Application
--------
pursuant to Section 2.3 and each request for amendment or extension of an
-----------
existing Letter of Credit shall automatically constitute a warranty by the
Borrower to the Administrative Agent and each Lender to the effect that on the
date of such requested Credit Extension that the conditions of Section 8.2 have
-----------
been satisfied.
SECTION 2.12 Termination or Reduction of Commitments. The Borrower may, upon
----------------------------------------
not less than five Business Days' prior notice to the Administrative Agent,
terminate the Commitments, or permanently reduce the Commitments by an aggregate
minimum amount of $5,000,000 or any multiple of $500,000 in excess thereof;
unless, after giving effect thereto and to any prepayments or cash
collateralization of LC Obligations to be made on the effective date thereof,
the then-outstanding LC Obligations would exceed the amount of the combined
Commitments then in effect. Once reduced in accordance with this Section, the
Commitments may not be increased. Any reduction of the Commitments shall be
applied to each Lender according to its Percentage; provided that the Tranche A
Commitment may not be reduced to an amount less than five times the Tranche B
Commitment.
SECTION 2.13 Mandatory Reduction/Cash Collateralization of Letters of Credit.
---------------------------------------------------------------
(a) If on any day (i) the Tranche A LC Obligations exceed the combined
Tranche A Commitments on such day or the Tranche A LC Obligations exceed
the Tranche A Borrowing Base on such day, the Borrower shall immediately
deposit into the Custody Account Eligible Investments or reduce the Tranche
A LC Obligations, or a combination of the foregoing, in an amount
sufficient to eliminate such excess or (ii) the Tranche B LC Obligations
exceed the combined Tranche B Commitments on such day or the Tranche B LC
Obligations exceed the Tranche B Borrowing Base on such day, the Borrower
shall immediately deposit into the Custody Account Private Fund Investments
or reduce the Tranche B LC Obligations, or a combination of the foregoing,
in an amount sufficient to eliminate such excess.
(b) On the Final Maturity Date or, if earlier, the date the
Obligations are accelerated pursuant to Section 7.2, and until the final
-----------
expiration date of any Letter of Credit and thereafter so long as any
Obligations are payable hereunder, the Borrower shall immediately cash
collateralize such Letters of Credit with Cash and Cash Equivalents in an
amount equal to 102% of the outstanding LC Obligations and such collateral
shall be placed in a special collateral account pursuant to arrangements
satisfactory to the Administrative Agent (the "LC Collateral Account") at
----------------------
the Administrative Agent's office in the name of the Borrower but under the
sole dominion and control of the Administrative Agent, for the benefit of
the LC Administrator and the Lenders and the Borrower shall have no
interest therein except as set forth in Section 7.3. The Borrower hereby
-----------
pledges, assigns and grants to the Administrative Agent, for the benefit of
the LC Administrator and the Lenders, a security interest in all of the
Borrower's right, title and interest in and to the LC Collateral Account,
all funds and Cash Equivalents which may from time to time be on deposit in
the LC Collateral Account to secure the prompt and complete payment and
performance of the Obligations. The Administrative Agent may invest any
funds on deposit from time to time in the LC Collateral Account in Cash
Equivalents having a maturity not exceeding 30 days. Funds earned on such
Cash Equivalents shall be deposited into the LC Collateral Account.
29
SECTION 2.14 Fees.
----
(a) Agency Fees. The Borrower shall pay fees to the Administrative
------------
Agent for the Administrative Agent's own account, as required by the letter
agreement ("Fee Letter") between the Borrower and the Administrative Agent
dated March 28, 2001 and as the Borrower and the Administrative Agent may
agree from time to time.
(b) Non-Use Fees. The Borrower shall pay to the Administrative Agent
------------
for the account of each Lender a non-use fee on the actual daily unused
portion of such Lender's Commitment, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon the
daily utilization for that quarter as calculated by the Administrative
Agent, equal to (i) 0.15% per annum in the case of the Tranche A Commitment
and (ii) 0.30% per annum in the case of the Tranche B Commitment. Such
non-use fee shall accrue from the Amendment Effective Date to the
Commitment Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and
December commencing on June 30, 2001 through the Commitment Termination
Date, with the final payment to be made on the Commitment Termination Date.
The non-use fees provided in this Section shall accrue at all times after
the above-mentioned commencement date, including at any time during which
one or more conditions in Article VIII are not met.
(c) Letter of Credit Fees.
---------------------
(i) The Borrower shall pay to the Administrative Agent for the
account of each Lender a letter of credit fee for each Letter of
Credit requested by the Borrower in an amount per annum of the average
maximum stated amount of such Letter of Credit during such period
(less any LC Advance with respect thereto) equal to (x) 0.45% per
annum with respect to Tranche A Letters of Credit and (y) 0.90% per
annum with respect to Tranche B Letters of Credit. Such letter of
credit fees shall be computed on a quarterly basis in arrears on the
last Business Day of each calendar quarter, and shall be due and
payable quarterly in arrears on the last Business Day of each March,
June, September and December commencing on June 30, 2001 through the
Final Maturity Date with the final payment to be made on the Final
Maturity Date.
30
(ii) In addition, with respect to each Letter of Credit issued by
the Fronting Bank, the Borrower shall pay to the Fronting Bank a
fronting fee in an amount per annum on the average maximum stated
amount of such Letter of Credit during such period (less any LC
Advance with respect thereto) equal to 0.125% per annum. Such fronting
fees shall be computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter and shall be due and payable
quarterly in arrears on the last Business Day of each March, June,
September and December commencing on June 30, 2001 through the Final
Maturity Date with the final payment to be made on the Final Maturity
Date.
(iii) In addition, with respect to each Letter of Credit
requested by the Borrower or any amendment or extension thereof, the
Borrower agrees to pay to the LC Administrator such fees and expenses
as the LC Administrator customarily requires in connection with the
issuance, amendment, transfer, negotiation, processing and/or
administration of letters of credit.
(d) Upfront Fees. On the Amendment Effective Date, the Borrower shall
------------
pay to each Lender such upfront fees as may have been agreed to by the
Borrower and such Lender. (1)
SECTION 2.15 Computation of Fees and Interest.
--------------------------------
(a) All computations of fees shall be made on the basis of a 360-day
year and actual days elapsed. Interest on LC Advances shall be computed on
the basis of a 365/366-day year and actual days elapsed. Interest and fees
shall accrue during each period during which interest or such fees are
computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative Agent
shall be conclusive and binding on the Borrower and the Lenders in the
absence of manifest error.
(c) Anything herein to the contrary notwithstanding, the obligations
of the Borrower to any Lender hereunder shall be subject to the limitation
that payments of interest shall not be required for any period for which
interest is computed hereunder, to the extent (but only to the extent) that
contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest
rate of interest that may be lawfully contracted for, charged or received
by such Lender, and in such event the Borrower shall pay such Lender
interest at the highest rate permitted by applicable law.
SECTION 2.16 Sharing of Payments, Etc. If, other than as expressly provided
-------------------------
elsewhere herein, any Lender shall obtain on account of the LC Obligations any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Percentage, such Lender shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Lenders such participations in the Obligations held by them as
shall be necessary to cause such purchasing Lender to share the excess payment
pro rata with each of them; provided, however, that if all or any portion of
-------- -------
such excess payment is thereafter recovered from the purchasing Lender, such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the proportion of (i)
the amount of such paying Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section 10.10) with
--------------
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify the Lenders following any such purchases or repayments.
31
SECTION 2.17 Commitment Termination Date Extension.
--------------------------------------
(a) The Borrower may, by notice to the Administrative Agent given not
more than 60 days and not less than 45 days prior to the then scheduled
Commitment Termination Date, request that the Lenders extend the Commitment
Termination Date for 364 days after the then scheduled Commitment
Termination Date and extend the Final Maturity Date for one year after the
then scheduled Final Maturity Date. The Administrative Agent shall notify
the Lenders of its receipt of any notice (the "Extension Request
-------------------
Date")given pursuant to this Section 2.17(a) within two Business Days after
----
the Administrative Agent's receipt thereof. Each Lender (a "Consenting
----------
Lender") may, by irrevocable notice to the Borrower and the Administrative
------
Agent delivered to the Borrower and the Administrative Agent not later than
45 days after the Extension Request Date (the "Consent Period"), consent to
--------------
such extension of the Commitment Termination Date and the Final Maturity
Date, which consent may be given or withheld by each Lender in its absolute
and sole discretion. Subject to Section 2.17(c), any such extensions shall
---------------
take effect on and as of the then scheduled Commitment Termination Date.
(b) Withdrawing Lenders. No extension pursuant to Section 2.17(a)
-------------------- ----------------
shall be effective with respect to a Lender tha-t either (i) by a notice (a
"Withdrawal Notice") delivered to the Borrower and the Administrative
------------------
Agent, declines to consent to such extension or (ii) has failed to respond
to the Borrower and the Administrative Agent within the Consent Period
(each such Lender giving a Withdrawal Notice or failing to respond in a
timely manner being "Withdrawing Lender").
------------------
(c) Replacement of Withdrawing Lender. The Borrower shall have the
-----------------------------------
right during the 60 day period following the end of the Consent Period to
replace the Withdrawing Lender with an existing Lender or a new Lender who
consents to the extension of the Commitment Termination Date (a
"Replacement Lender"). In the event the Borrower has not replaced the
-------------------
Withdrawing Lender within said 60 day period, the Borrower may request the
Consenting Lenders to reduce the Commitments by the amount of the
Withdrawing Lender's Commitment and extend the Commitment Termination Date
and the Final Maturity Date which consent may be given or withheld by each
Consenting Lender in its sole discretion. In the event all of the
Consenting Lenders agree to such reduction and extension then, subject to
compliance with Section 2.2, on and as of the then scheduled Commitment
-----------
Termination Date (x) the Commitment shall be reduced by an amount equal to
the Commitment of the unreplaced Withdrawing Lender, (y) such Withdrawing
Lender shall cease to be a Lender under this Agreement and (z) the
Commitment Termination Date and the Final Maturity Date shall be extended.
In the event the Withdrawing Lender has not been replaced or all of the
Consenting Lenders have not consented to reduction of the Commitment
pursuant to this Section 2.17(c), the Commitment Termination Date and the
---------------
Final Maturity Date shall not be extended.
32
(d) Assignment by Withdrawing Lender. A Withdrawing Lender shall be
obliged, at the request of the Borrower and subject to the Withdrawing
Lender receiving payment in full of all amounts owing to it under this
Agreement concurrently with the effectiveness of an assignment, to assign,
without recourse or warranty and by an Assignment and Acceptance, all of
its rights and obligations hereunder to any Replacement Lender nominated by
the Borrower and willing to accept such assignment; provided that such
--------
assignee satisfies all the requirements of this Agreement and such
assignment is consented to by the Administrative Agent, which consent shall
not be withheld or delayed unreasonably.
(e) Scheduled Commitment Termination Date. If the scheduled Commitment
-------------------------------------
Termination Date and the Final Maturity Date shall have been extended in
respect of Consenting Lenders and any Replacement Lender in accordance with
Section 2.17(a), all references herein to the "Commitment Termination Date"
---------------
and the "Final Maturity Date" shall refer to the Commitment Termination
Date or the Final Maturity Date as so extended.
SECTION 2.18 Optional Increase in LC Commitments. The Borrower may at any
-------------------------------------
time, by means of a letter to the Administrative Agent and each Lender
substantially in the form of Exhibit F, request that the Lenders increase the
---------
combined Commitments by $10,000,000 or an even multiple thereof; provided that
--------
(i) such letter shall be accompanied by a certificate of the Secretary or an
Assistant Secretary of the Borrower as to resolutions of the board of directors
of the Borrower approving such increase, (ii) in no event shall the aggregate
amount of the combined Commitments exceed $500,000,000 (or such lesser amount as
determined pursuant Section 2.12) to without the written consent of all Lenders
------------
and (iii) such increase shall either be an increase of the Tranche A Commitments
or shall be a pro rata increase of the Tranche A Commitments and the Tranche B
Commitments. Each Lender shall have the option (in its sole and complete
discretion) to subscribe for its proportionate share (or more or less than its
proportionate share) of such increase, according to its then-existing
Percentage. Each Lender shall respond to the Borrower's request within 20
Business Days by submitting a response in the form of Attachment 1 to Exhibit F
---------
to the Administrative Agent (and any Lender not responding within such period
shall be deemed to have declined such request). At the option of the Borrower,
any part of the proposed increase not proportionately subscribed may be assumed,
within 10 Business Days after all Lenders have responded to (or, by not
responding, are deemed to have declined) such request, by one or more existing
Lenders and/or by one or more Persons meeting the qualifications of an Eligible
Assignee, in amounts which are acceptable to the Borrower; it being understood
that any assumption by a Person which is not an existing Lender shall be subject
to consent of the Administrative Agent (which consent shall not be unreasonably
withheld or delayed) provided that after giving effect to any such increase,
each Lender shall have the same percentage under the Tranche A Commitments and
the Tranche B Commitments. Any increase in the combined Commitments pursuant to
this Section 2.18 shall become effective on the earliest to occur of (a) the
-------------
date on which the proposed increase has been fully subscribed and (b) the date,
which shall not be earlier than the date on which all Lenders have responded to
(or are deemed to have declined) the Borrower's request for an increase, on
which the Borrower notifies the Administrative Agent that the Borrower accepts
an increase in the combined Commitments which is less than the full amount of
the requested increase. The Administrative Agent shall promptly notify the
Borrower and the Lenders of any increase in the amount of the combined
Commitments pursuant to this Section 2.18 and of the Commitment and Percentage
------------
of each Lender after giving effect thereto.
33
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
SECTION 3.1 Taxes.
-----
(a) Any and all payments by the Borrower to each Lender, the Fronting
Bank or the Administrative Agent under this Agreement and any other Credit
Document shall be made free and clear of, and without deduction or
withholding for any Taxes except as required by law. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless the LC
Administrator, the Fronting Bank, each Lender and the Administrative Agent
for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section)
paid by the Lenders, the Fronting Bank or the Administrative Agent and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date such Lender,
the Fronting Bank or the Administrative Agent makes written demand
therefor.
(c) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender, the Fronting Bank or the Administrative Agent, provided that such
Person has provided the forms required in Section 9.10, then:
------------
34
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this
Section) such Lender, the Fronting Bank or the Administrative Agent,
as the case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay, without duplication, each
Lender, the Fronting Bank or the Administrative Agent for the account
of such Person, at the time interest is paid, all additional amounts
which such Person specifies as reasonably necessary to preserve the
after-tax yield such Person would have received if such Taxes or Other
Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Administrative Agent
the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Administrative Agent.
(e) If the Borrower is required to pay additional amounts to any
Lender, the Fronting Bank or the Administrative Agent pursuant to Section
3.1(c), then such Person shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of its
Lending Office so as to eliminate any such additional payment by the
Borrower which may thereafter accrue, if such change in the judgment of
such Person is not otherwise disadvantageous to such Person or inconsistent
with such Person's internal policies.
(f) If the Administrative Agent, the Fronting Bank or any Lender
receives a refund in respect of Taxes or Other Taxes paid by the Borrower
pursuant to this Section 3.1, which in the good faith judgment of such
Person is allocable to such payment, it shall promptly pay such refund to
the Borrower, net of all out-of-pocket expenses of such Person incurred in
obtaining such refund, provided, however, that the Borrower agrees to
promptly return such refund to the applicable Person if it receives notice
from such Person that such Person is required to repay such refund. Nothing
contained herein shall require the Administrative Agent or any Lender to
make its tax returns (or any other information relating to its taxes which
it deems confidential) available to the Borrower.
35
SECTION 3.2 Illegality.
----------
(a) If the Fronting Bank or any Lender determines that the
introduction of any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any Requirement of Law,
in each case after the date hereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is
unlawful, for the Fronting Bank or any Lender or its applicable Lending
Office to make or participate in any Credit Extensions, then, on notice
thereof by the Fronting Bank or such Lender to the Borrower through the
Administrative Agent, the obligation of all Lenders to make or participate
in Credit Extensions shall be suspended until the Fronting Bank or such
Lender notifies the Administrative Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) Before giving any notice to the Administrative Agent under this
Section, the Fronting Bank or the affected Lender shall designate a
different Lending Office with respect to its Credit Extensions if such
designation will avoid the need for giving such notice or making such
demand and will not, in the judgment of such Person, be illegal or
otherwise disadvantageous to such Person or inconsistent with such Person's
internal policies.
SECTION 3.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If the Fronting Bank or any Lender determines that, due to either
(i) the introduction of or any change in or in the interpretation of any
law or regulation, in each case after the date hereof, or (ii) the
compliance by the Fronting Bank or Lender with any guideline or request
from any central bank or other Governmental Authority (whether or not
having the force of law) after the date hereof, there shall be any increase
in the cost to the Fronting Bank or such Lender of agreeing to make or
making, funding or maintaining any Credit Extensions, then the Borrower
shall be liable for, and shall from time to time, upon demand (with a copy
of such demand to be sent to the Administrative Agent), pay to the
Administrative Agent for the account of the Fronting Bank or such Lender,
additional amounts as are sufficient to compensate such Lender for such
increased costs; provided that, to the extent such increased costs are not
specifically related to the Obligations, the Fronting Bank or such Lender
is charging such amounts to its customers on a non-discriminatory basis,
provided further that the Borrower shall not be obligated to pay any
additional amounts which were incurred by the Fronting Bank or such Lender
more than 90 days prior to the date of such request.
(b) If the Fronting Bank or any Lender shall have determined that (i)
the introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or
other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Fronting Bank or such
Lender (or its Lending Office) or any corporation controlling the Fronting
Bank or such Lender with any Capital Adequacy Regulation, in each case
after the date hereof, affects or would affect the amount of capital
required or expected to be maintained by the Fronting Bank or such Lender
or any corporation controlling the Fronting Bank or such Lender and (taking
into consideration the Fronting Bank's or such Lender's or such
corporation's policies with respect to capital adequacy and the Fronting
Bank's or such Lender's desired return on capital) determines that the
amount of such capital is increased or its rate of return is decreased as a
consequence of its Commitment, Credit Extensions, or obligations under this
Agreement, then, upon demand of the Fronting Bank or such Lender to the
Borrower through the Administrative Agent, the Borrower shall pay to the
Fronting Bank or such Lender, from time to time as specified by the
Fronting Bank or such Lender, additional amounts sufficient to compensate
the Fronting Bank or such Lender for such increase; provided that to the
extent such increased costs are not specifically related to the
Obligations, the Fronting Bank or such Lender is charging such amounts to
its customers on a non-discriminatory basis, provided further that the
Borrower shall not be obligated to pay any additional amounts which were
incurred by the Fronting Bank or such Lender more than 90 days prior to the
date of such request.
36
SECTION 3.4 Certificates of Lenders. Any Person claiming reimbursement or
-------------------------
compensation under this Article III shall deliver to the Borrower (with a copy
-----------
to the Administrative Agent) a certificate setting forth in reasonable detail
the amount payable to such Person hereunder and such certificate shall be
conclusive and binding on the Borrower in the absence of manifest error.
SECTION 3.5 Substitution of Lenders. Upon the receipt by the Borrower from
------------------------
the Fronting Bank or any Lender (an "Affected Lender") of a claim for
compensation under Section 3.1, 3.2 or 3.3 the Borrower may: (a) request the
Affected Lender to use its reasonable efforts to obtain a replacement bank or
financial institution satisfactory to the Borrower to acquire and assume all or
a ratable part of all of such Affected Lender's Credit Extensions and Commitment
(a "Substitute Lender"); (b) request one more of the other Lenders to acquire
and assume all or part of such Affected Lender's Credit Extensions and
Commitment; or (c) designate a Substitute Lender. Any such designation of a
Substitute Lender under clause (a) or (b) shall be subject to the prior written
consent of the Administrative Agent (which consent shall not be unreasonably
withheld).
SECTION 3.6 Survival. The agreements and obligations of the Borrower in this
--------
Article III shall survive the payment of all other Obligations.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make Credit
Extensions hereunder, the Borrower represents and warrants to each Lender that:
37
SECTION 4.1 Due Organization, Authorization, etc. The Borrower and each of
---------------------------------------
its Subsidiaries (a) is a company duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) is duly
qualified to do business and in good standing in each jurisdiction where,
because of the nature of its activities or properties, such qualification is
required except where the failure to qualify would not have a Material Adverse
Effect, which jurisdictions are set forth with respect to the Borrower and each
of its Subsidiaries on Schedule 4.1 as revised from time to time by the Borrower
------------
pursuant to Section 5.1(m), (c) has the requisite company power and authority
---------------
and the right to own and operate its properties, to lease the property it
operates under lease, and to conduct its business as now and proposed to be
conducted, and (d) has obtained all material licenses, permits, consents or
approvals from or by, and has made all filings with, and given all notices to,
all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct (including, without limitation, the
consummation of the transactions contemplated by this Agreement) as to each of
the foregoing, except where the failure to do so would not have a Material
Adverse Effect. The execution, delivery and performance by the Borrower of this
Agreement and the consummation of the transactions contemplated hereby and
thereby are within its corporate powers and have been duly authorized by all
necessary corporate action (including, without limitation, shareholder approval,
if required). The Borrower has received all other material consents and
approvals (if any shall be required) necessary for such execution, delivery and
performance, and such execution, delivery and performance do not and will not
contravene or conflict with, or create a Lien (other than pursuant to the Loan
Documents) or right of termination or acceleration under, any Requirement of Law
or Contractual Obligation binding upon the Borrower. This Agreement and each of
the Credit Documents is (or when executed and delivered will be) the legal,
valid, and binding obligation of the Borrower enforceable against the Borrower
in accordance with its respective terms subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and general equity
principles.
SECTION 4.2 Litigation and Contingent Liabilities. (a) Except as set forth
---------------------------------------
(including estimates of the dollar amounts involved) in Schedule 4.2 hereto and
(b) except for claims which are covered by Insurance Policies, coverage for
which has not been denied in writing, or which relate to Reinsurance Agreements
issued by the Borrower or its Subsidiaries or to which it is a party entered
into by the Borrower or its Subsidiaries in the ordinary course of business
(referred to herein as "Ordinary Course Litigation"), no claim, litigation
----------------------------
(including, without limitation, derivative actions), arbitration, governmental
investigation or proceeding or inquiry is pending or, to the knowledge of the
Borrower, threatened against the Borrower or its Subsidiaries (i) which would,
if adversely determined, have a Material Adverse Effect or (ii) which relates to
any of the transactions contemplated hereby. Other than any liability incident
to such claims, litigation or proceedings, the Borrower and its Subsidiaries
have no material Contingent Liabilities.
38
SECTION 4.3 Employee Benefit Plans. The Borrower has no Plans.
----------------------
SECTION 4.4 Regulated Entities. Neither Parent nor the Borrower is an
-------------------
"investment company" or a company "controlled by an investment company," for the
purpose of the Investment Company Act of 1940, as amended. The Borrower is not
subject to regulation under the Public Utility Holding Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any public utilities code, or any other
Requirement of Law limiting its ability to incur Debt.
SECTION 4.5 Regulations U and X. The Borrower is not engaged principally, or
-------------------
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock. None of the Borrower, any
Affiliate or any Person acting on its behalf has taken or will take action to
cause the execution, delivery or performance of this Agreement, the making or
existence of the Credit Extensions or the use of proceeds of the Credit
Extensions to violate Regulations U or X of the FRB.
SECTION 4.6 Proceeds. Letters of Credit issued hereunder will be used solely
--------
to secure the Borrower's obligations under Reinsurance Agreements. None of the
proceeds of such Letters of Credit will be used in violation of applicable law,
and none of such proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any margin
stock as defined in Regulation U of the FRB.
SECTION 4.7 Business Locations. Schedule 4.7 as revised from time to time by
------------------
the Borrower pursuant to Section 5.1(m) lists each of the locations where the
------
Borrower and its Subsidiaries maintain an office, a place of business.
SECTION 4.8 Accuracy of Information. All factual written information
-------------------------
furnished heretofore or contemporaneously herewith by or on behalf of the
Borrower or Parent to the Administrative Agent or the Lenders for purposes of or
in connection with this Agreement or any of the transactions contemplated
hereby, as supplemented to the date hereof, is and all other such factual
written information hereafter furnished by or on behalf of the Borrower or
Parent to the Administrative Agent or the Lenders will be, true and accurate in
every material respect on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading under the circumstances in which given.
SECTION 4.9 Subsidiaries. The Borrower has no Subsidiaries other than those
------------
specified on Schedule 4.9.
SECTION 4.10 Insurance Licenses. Schedule 4.10 as revised from time to time by
------------------
the Borrower pursuant to Section 5.1(m) lists all of the jurisdictions in which
--------------
38
the Borrower and its Subsidiaries hold licenses (including, without limitation,
licenses or certificates of authority from applicable insurance departments),
permits or authorizations to transact insurance and reinsurance business
(collectively, the "Licenses"). Except as set forth on Schedule 4.10, to the
-------- --------------
best of the Borrower's knowledge, no such License is the subject of a proceeding
for suspension or revocation or any similar proceedings, there is no sustainable
basis for such a suspension or revocation, and no such suspension or revocation
is threatened by the Department. Schedule 4.10 as revised from time to time by
the Borrower pursuant to Section 5.1(m) indicates the line or lines of insurance
--------------
which the Borrower and its Subsidiaries is permitted to be engaged in with
respect to each License therein listed. Neither the Borrower nor any of its
Subsidiaries transact any insurance business, directly or indirectly, in any
jurisdiction other than those enumerated on Schedule 4.10 as revised from time
-------------
to time by the Borrower pursuant to Section 5.1(m) hereto, where such business
--------------
requires that the Borrower or any of its Subsidiaries obtain any license,
permit, governmental approval, consent or other authorization.
SECTION 4.11 Taxes. The Borrower and its Subsidiaries have filed by the
-----
required filing date all tax returns that are required to be filed by it, and
has paid or provided adequate reserves for the payment of all material taxes,
including, without limitation, all payroll taxes and federal and state
withholding taxes, and all assessments payable by it that have become due, other
than (a) those that are not yet delinquent and are being contested in good faith
by appropriate proceedings and with respect to which reserves have been
established, and are being maintained, in accordance with GAAP or (b) those
which the failure to file or pay would not have a Material Adverse Effect. On
the Amendment Effective Date there is no ongoing audit by a taxing authority or,
to the Borrower's knowledge, other governmental investigation of the tax
liability of the Borrower and there is no unresolved claim by a taxing authority
concerning the Borrower's tax liability, for any period for which returns have
been filed or were due. As used in this Section 4.11, the term "taxes" includes
------------
all taxes of any nature whatsoever and however denominated, including, without
limitation, excise, import, governmental fees, duties and all other charges, as
well as additions to tax, penalties and interest thereon, imposed by any
government or instrumentality, whether federal, state, local, foreign or other.
SECTION 4.12 Securities Laws. Neither the Borrower nor any Affiliate, nor to
---------------
the Borrower's knowledge anyone acting on behalf of any such Person, has
directly or indirectly offered any interest in the Credit Extensions or any
other Obligation for sale to, or solicited any offer to acquire any such
interest from, or has sold any such interest to any Person that would cause the
issuance or sale of the Credit Extensions to be required to be registered under
the Securities Act of 1933, as amended.
SECTION 4.13 Compliance with Laws. Neither the Borrower nor any of its
----------------------
Subsidiaries is in violation of any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any Governmental Authority, where the
effect of such violation could reasonably be expected to have a Material Adverse
Effect on the Borrower and, to the best of the Borrower's knowledge, no such
violation has been alleged and the Borrower and each of its Subsidiaries (i) has
filed in a timely manner all reports, documents and other materials required to
be filed by it with any Governmental Authority, if such failure to so file could
reasonably be expected to have a Material Adverse Effect; and the information
contained in each of such filings is true, correct and complete in all material
respects and (ii) has retained all records and documents required to be retained
by it pursuant to any law, ordinance, rule, regulation, order, policy, guideline
or other requirement of any Governmental Authority, if the failure to so retain
such records and documents could reasonably be expected to have a Material
Adverse Effect.
40
SECTION 4.14 Financial Condition. The audited consolidated financial
---------------------
statements of the Borrower as at December 31, 2000, copies of which have been
delivered to the Lenders, are true and correct in all material respects, have
been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as disclosed therein) and present fairly the
consolidated financial condition of the Borrower and its Subsidiaries at such
date and the result of its operations for the periods then ended.
SECTION 4.15 Insurance Act. The Borrower has not received any direction or
--------------
other notification by the Minister pursuant to Section 32 of Insurance Act, 1978
of Bermuda.
SECTION 4.16 First Priority Security Interest. The Administrative Agent, for
--------------------------------
the benefit of the Lenders, has a first priority perfected security interest in
the collateral pledged by the Borrower pursuant to the Security Agreement.
ARTICLE V.
AFFIRMATIVE COVENANTS
Until the LC Obligations and all other Obligations are paid in full,
and until the Final Maturity Date, the Borrower agrees that, unless at any time
the Required Lenders shall otherwise expressly consent in writing, it will:
SECTION 5.1 Reports, Certificates and Other Information. Furnish or cause to
-------------------------------------------
be furnished to the Administrative Agent and the Lenders:
(a) GAAP Financial Statements:
-------------------------
(i) Within 45 days after the close of each of the first three
Fiscal Quarters of each Fiscal Year (A) of the Borrower, a copy of the
unaudited consolidated balance sheets of the Borrower and its
Subsidiaries, as of the close of such quarter and the related
statements of income and cash flows for that portion of the Fiscal
Year ending as of the close of such Fiscal Quarter, all prepared in
accordance with GAAP (subject to normal year-end adjustments) and
accompanied by the certification of an Executive Officer of the
Borrower that all such financial statements are complete and correct
and present fairly in accordance with GAAP (subject to normal year-end
adjustments) the consolidated results of operations and cash flows of
the Borrower and its Subsidiaries as at the end of such Fiscal Quarter
and for the period then ended and (B) of the Parent, a copy of the
unaudited consolidated and consolidating balance sheets of the Parent,
as of the close of such quarter and the related consolidated and
consolidating statements of income and cash flows for that portion of
the Fiscal Year ending as of the close of such Fiscal Quarter, all
prepared in accordance with GAAP (subject to normal year-end
adjustments) and accompanied by the certification of an Executive
Officer of the Parent that all such financial statements are complete
and correct and present fairly in accordance with GAAP (subject to
normal year-end adjustments) the consolidated results of operations
and cash flows of the Parent as at the end of such Fiscal Quarter and
for the period then ended.
45
(ii) Within 90 days after the close of each Fiscal Year (A) of
the Borrower, a copy of the annual audited consolidated financial
statements of the Borrower and its Subsidiaries consisting of balance
sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case the figures for the
previous Fiscal Year, which financial statements shall be prepared in
accordance with GAAP, certified without material qualification by KPMG
Peat Marwick or any other firm of independent certified public
accountants of recognized national standing selected by the Borrower
and reasonably acceptable to the Required Lenders that all such
financial statements are complete and correct and present fairly in
accordance with GAAP the financial position and the results of
operations and cash flows of the Borrower and its Subsidiaries as at
the end of such year and for the period then ended and (B) of the
Parent, a copy of the annual audited financial statements of the
Parent consisting of consolidated and consolidating balance sheets and
consolidated and consolidating statements of income and retained
earnings and cash flows, setting forth in comparative form in each
case the figures for the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP, certified
without material qualification by KPMG Peat Marwick or any other firm
of independent certified public accountants of recognized national
standing selected by the Parent and reasonably acceptable to the
Required Lenders that all such financial statements are complete and
correct and present fairly in accordance with GAAP the financial
position and the results of operations and cash flows of the Parent as
at the end of such year and for the period then ended.
(b) Tax Returns. If requested by the Administrative Agent, copies of
-----------
all federal, state, local and foreign tax returns and reports in respect of
income, franchise or other taxes on or measured by income (excluding sales,
use or like taxes) filed by the Borrower and its Subsidiaries.
(c) SAP Financial Statements. Within 5 days after the date filed with
-------------------------
the Minister for each of its Fiscal Years, but in any event within 120 days
after the end of each Fiscal Year of the Borrower a copy of the Annual
Statement of the Borrower and each of its Subsidiaries for such Fiscal Year
prepared in accordance with SAP and accompanied by the certification of an
Executive Officer of the Borrower that such financial statement is complete
and correct and presents fairly in accordance with SAP the financial
position of the Borrower or such Subsidiary for the period then ended.
42
(d) Monthly Report and Borrowing Base Certificate. As soon as
--------------------------------------------------
available, but in any event within 10 days after the end of each calendar
month of each Fiscal Year, (i) a report listing each of the Borrower's
Eligible Investments and Private Fund Investments, (ii) a report listing
each of Borrower's Unencumbered Assets and calculating the Unencumbered
Asset Reserve Requirement and (iii) a Borrowing Base Certificate executed
by an Executive Officer. For purposes of such report and of completing the
Borrowing Base Certificate, each Eligible Investment and Private Fund
Investment shall be valued based on its Fair Market Value as at the last
Business Day of the calendar month for which such report or Borrowing Base
Certificate is being delivered.
(e) Projections. As soon as available, but not later than March 31 of
------------
each year, commencing with the year 2001, a three-year pr ojection of the
Borrower's results covering the then-current Fiscal Year and each of the
next two Fiscal Years.
(f) Reports to Shareholders. Promptly upon the filing or making
-------------------------
thereof copies of (i) all financial statements and reports that Parent or
the Borrower sends to its shareholders or its other holders of Debt; (ii)
copies of all financial statements and regular, periodic or special reports
that Parent or the Borrower may make to, or file with, any Government
Authority.
(g) Additional Borrowing Base Certificates. Promptly, at the request
--------------------------------------
of the Administrative Agent, a Borrowing Base Certificate for any given
Business Day executed by an Executive Officer of the Borrower.
(h) Notice of Default, etc. Immediately after an Executive Officer of
-----------------------
the Borrower knows or has reason to know of the existence of any Default,
or any development or other information which would have a Material Adverse
Effect, telephonic or telegraphic notice specifying the nature of such
Default or development or information, including the anticipated effect
thereof, which notice shall be promptly confirmed in writing within two (2)
Business Days.
(i) Other Information. The following certificates and other
-------------------
information related to the Borrower:
(i) Within five (5) Business Days of receipt, a copy of any
financial examination reports by a Governmental Authority with respect
to the Borrower or any of its Subsidiaries relating to the insurance
business of the Borrower (when, and if, prepared); provided, the
Borrower shall only be required to deliver any interim report
hereunder at such time as Borrower has knowledge that a final report
will not be issued and delivered to the Administrative Agent within 90
days of any such interim report.
43
(ii) Copies of all filings (other than nonmaterial filings) with
Governmental Authorities by the Borrower or any of its Subsidiaries
not later than five (5) Business Days after such filings are made,
including, without limitation, filings which seek approval of
Governmental Authorities with respect to transactions between the
Borrower or any of its Subsidiaries and its Affiliates.
(iii) Within five (5) Business Days of such notice, notice of
proposed or actual suspension, termination or revocation of any
material License of the Borrower or any of its Subsidiaries by any
Governmental Authority or of receipt of notice from any Governmental
Authority notifying the Borrower or any of its Subsidiaries of a
hearing relating to such a suspension, termination or revocation,
including any request by a Governmental Authority which commits the
Borrower or any of its Subsidiaries to take, or refrain from taking,
any action or which otherwise materially and adversely affects the
authority of the Borrower or any of its Subsidiaries to conduct its
business.
(iv) Within five (5) Business Days of such notice, notice of any
pending or threatened investigation or regulatory proceeding (other
than routine periodic investigations or reviews) by any Governmental
Authority concerning the business, practices or operations of the
Borrower or any of its Subsidiaries.
(v) Promptly, notice of any actual or, to the best of the
Borrower's knowledge, proposed material changes in the Insurance Code
governing the investment or dividend practices of the Borrower.
(vi) Promptly, such additional financial and other information as
the Administrative Agent may from time to time reasonably request.
(j) Compliance Certificates. Concurrently with the delivery to the
------------------------
Administrative Agent of the GAAP financial statements under Sections
--------
5.1(a)(i) and 5.1(a)(ii), for each Fiscal Quarter and Fiscal Year of the
-------------------------
Borrower, and at any other time no later than ten (10) Business Days
following a written request of the Administrative Agent, a duly completed
Compliance Certificate, signed by the chief financial officer, treasurer or
controller of the Borrower.
(k) Notice of Litigation, License, etc. Promptly upon learning of the
------------------------------------
occurrence of any of the following, written notice thereof, describing the
same and the steps being taken by the Borrower with respect thereto: (i)
the institution of, or any adverse determination in, any litigation,
arbitration proceeding or governmental proceeding which could, if adversely
determined, be reasonably expected to have a Material Adverse Effect and
which is not Ordinary Course Litigation,(ii) the commencement of any
dispute which might lead to the modification, transfer, revocation,
suspension or termination of this Agreement or any Credit Document or (iii)
any event which could be reasonably expected to have a Material Adverse
Effect.
44
(l) Insurance Reports. Within five (5) Business Days of receipt of
------------------
such notice by the Borrower, written notice of any cancellation or material
adverse change in any material Insurance Policy carried by the Borrower.
(m) Updated Schedules. From time to time, and in any event
-------------------
concurrently with delivery of the financial statements under Section
-------
5.1(a)(i) and (ii), revised Schedules 4.1, 4.7, and 4.10, if applicable,
--------- ---- -------- -----
showing changes from the Schedules previously delivered.
---------
(n) Other Information. From time to time such other information
------------------
concerning the Borrower as the Administrative Agent or any Lender through
the Administrative Agent may reasonably request.
SECTION 5.2 Corporate Existence; Foreign Qualification. Do and cause to be
--------------------------------------------
done at all times all things necessary to (a) maintain and preserve the
corporate existence of the Borrower and each of its Subsidiaries, (b) be, and
ensure that the Borrower and each of its Subsidiaries is, duly qualified to do
business and be in good standing as a foreign corporation in each jurisdiction
where the nature of its business makes such qualification necessary unless the
failure to be so qualified would not have a Material Adverse Effect, and (c) do
or cause to be done all things necessary to preserve and keep in full force and
effect the Borrower's corporate existence.
SECTION 5.3 Books, Records and Inspections. (a) Maintain, and cause its
---------------------------------
Subsidiaries to maintain materially complete and accurate books and records in
accordance with GAAP and SAP, (b) permit access at reasonable times by the
Administrative Agent to its books and records, (c) permit the Administrative
Agent or its designated representative to inspect at reasonable times its
properties and operations, and (d) permit the Administrative Agent to discuss
its business, operations and financial condition with its officers and its
independent accountants.
SECTION 5.4 Insurance. Maintain Insurance Policies to such extent and against
---------
such hazards and liabilities as is required by law.
SECTION 5.5 Taxes and Liabilities. Pay, and cause each Subsidiary to pay,
----------------------
when due all material taxes, assessments and other material liabilities except
as contested in good faith and by appropriate proceedings with respect to which
reserves have been established, and are being maintained, in accordance with
GAAP if and so long as such contest could not reasonably be expected to have a
Material Adverse Effect.
45
SECTION 5.6 Compliance with Laws. Comply, and cause each Subsidiary to comply
--------------------
(a) with all federal and local laws, rules and regulations related to its
businesses (including, without limitation, the establishment of all insurance
reserves required to be established under SAP and applicable laws restricting
the investments of the Borrower and its Subsidiaries), and (b) with all
Contractual Obligations binding upon it, except where failure to so comply would
not in the aggregate have a Material Adverse Effect on the Borrower.
SECTION 5.7 Maintenance of Permits. Maintain, and cause each Subsidiary to
----------------------
maintain, all permits, licenses and consents as may be required for the conduct
of its business by any 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 5.8 Conduct of Business. Engage, and cause each Subsidiary to engage,
-------------------
primarily in the same business or businesses described in the Borrower's 2000
Annual Report.
SECTION 5.9 Use of Letters of Credit. The Borrower shall request letters of
------------------------
credit only to support its obligations under Reinsurance Agreements.
SECTION 5.10 Further Assurances. Promptly upon the request of the
--------------------
Administrative Agent, the Borrower shall execute, acknowledge, deliver and
record and do any and all such further acts and deeds as the Administrative
Agent may reasonably request from time to time in order to insure that the
obligations of the Borrower hereunder are secured by a first priority perfected
interest in the assets of the Borrower stated to be pledged pursuant to the
Security Agreement and to perfect and maintain the validity, effectiveness and
priority of the Security Agreement and the Liens intended to be created thereby.
ARTICLE VI.
NEGATIVE COVENANTS
Until the LC Obligations and all other Obligations are paid in full
and until the Final Maturity Date, the Borrower agrees that, unless at any time
the Required Lenders shall otherwise expressly consent in writing, it will:
SECTION 6.1 Net Worth. Not permit the Net Worth of (a) the Borrower to be
---------
less than $400,000,000 and (b) the Parent to be less than $325,000,000.
SECTION 6.2 Unencumbered Reserve Requirement. Not permit the Fair Market
----------------------------------
Value of the Unencumbered Assets to be less than the greater of (x) $30,000,000
and (y) an amount equal to the amount which would represent the impact of a 150
basis point increase in the interest rates on the Borrower's Investments.
46
SECTION 6.3 Debt. Not, and not permit any Subsidiary to, incur any Debt
----
other than (a) Debt under this Agreement; (b) Purchase Money Debt provided the
aggregate principal amount outstanding at any time does not exceed $500,000; (c)
Debt pursuant to Capitalized Leases provided such Leases do not cover any
property other than property acquired in connection therewith and the aggregate
principal amount of all such Debt outstanding at any time does not exceed
$1,500,000; (d) Hedging Obligations entered into in the ordinary course of
business in order to hedge currency, commodity or interest rate risks, and not
for purposes of speculation; (e) Debt for issued, but undrawn, letters of credit
which have been issued to reinsurance cedents in the ordinary course of
business; and (f) Debt not included in paragraphs (a) through (e) which does not
exceed at any time, in the aggregate, $1,000,000.
SECTION 6.4 Mergers, Consolidations and Sales. Not, and not permit any
------------------------------------
Subsidiary to, (a) merge or consolidate, (b) purchase or otherwise acquire all
or substantially all of the assets or stock of any class of, or any partnership
or joint venture interest in, any other Person provided that the Borrower may
make any such purchase or acquisition provided (i) no Default or Event of
Default has occurred and is continuing or would result from such purchase or
acquisition, (ii) the Borrower provides the Lenders with a pro forma Compliance
Certificate giving effect to such purchase or acquisition and (iii) the
aggregate purchase price of all such purchases and acquisitions after the date
hereof does not exceed $75,000,000, or (c) sell, transfer, convey or lease all
or any substantial part of its assets, other than (i) any sale, transfer,
conveyance or lease in the ordinary course of business, (ii) any sale or
assignment of receivables or (iii) any sale, transfer, conveyance or lease not
in the ordinary course of business provided the aggregate fair market value of
all such sales, transfers, conveyances or leases after the date hereof does not
exceed $75,000,000.
SECTION 6.5 Other Agreements. Not enter into any agreement containing any
-----------------
provision which would be violated or breached by the performance of obligations
hereunder or under any instrument or document delivered or to be delivered by it
hereunder or in connection herewith.
SECTION 6.6 Transactions with Affiliates. Not, and not permit any Subsidiary
----------------------------
to, enter into, or cause, suffer or permit to exist, directly or indirectly, any
arrangement, transaction or contract with any of its Affiliates unless such
arrangement, transaction or contract is on an arm's length basis.
47
SECTION 6.7 Liens. Not create or permit to exist, nor allow any of its
-----
Subsidiaries to create or permit to exist, any Lien with respect to any assets
now or hereafter existing or acquired, except the following: (i) Liens for
current taxes not delinquent or for taxes being contested in good faith and by
appropriate proceedings and with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP, (ii) easements,
party wall agreements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary course of the business of such Person; (iii) Liens
incurred in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other forms of governmental insurance or
benefits and Liens pursuant to letters of credit or other security arrangements
in connection with such insurance or benefits, (iv) mechanics', workers',
materialmen's, landlord liens and other like Liens arising in the ordinary
course of business in respect of obligations which are not delinquent or which
are being contested in good faith and by appropriate proceedings and with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP, (v) Liens listed on Schedule 6.7 in effect
------------
on the date hereof; (vi) attachments, judgments and other similar Liens for sums
not exceeding $5,000,000 (excluding any portion thereof which is covered by
insurance so long as the insurer is reasonably likely to be able to pay and has
accepted a tender of defense and indemnification without reservation of rights);
(vii) attachments, judgments and other similar Liens for sums of $5,000,000 or
more (excluding any portion thereof which is covered by insurance so long as the
insurer is reasonably likely to be able to pay and has accepted a tender of
defense and indemnification without reservation of rights) provided the
execution or other enforcement of such Liens is effectively stayed and claims
secured thereby are being actively contested in good faith and by appropriate
proceedings and have been bonded off; (viii) Liens on cash and Investments
(other than Collateral) pursuant to trusts or other security arrangements in
connection with Reinsurance Agreements and Liens securing Debt permitted under
Section 6.3(e); (ix) Liens in favor of the Administrative Agent for the benefit
--------------
of the Lenders; (x) Purchase Money Liens securing Purchase Money Debt permitted
under Section 6.3(b); (xi) any interest or title of a lessor in assets subject
---------------
to any Capitalized Lease or operating lease which is permitted under this
Agreement; and (xii) Liens not permitted by any other clause of this Section 6.7
-----------
securing Debt in an aggregate amount not to exceed $250,000, provided any Liens
granted (other than Liens pursuant to Section 6.7(ix)) do not extend to any
----------------
Collateral and after giving effect to all Liens under clauses (viii) through
---------------
(xii), there are Unencumbered Assets sufficient to ensure compliance with
-----
Section 6.2.
-----------
SECTION 6.8 Restrictions On Negative Pledge Agreements. Not create, incur or
------------------------------------------
assume any agreement to which it is a signatory, other than this Agreement which
places any restrictions upon the right of the Borrower to sell, pledge or
otherwise dispose of any material portion of its properties now owned or
hereafter acquired (other than with respect to property secured by Liens
permitted under Section 6.7) except for such restrictions imposed under this
Agreement or by federal or state laws upon the right of the Borrower to sell,
pledge or otherwise dispose of securities owned by it.
SECTION 6.9 Dividends, Etc. Not (a) declare or pay any dividends on any of
---------------
its Capital Stock, (b) purchase or redeem any Capital Stock of Parent or any of
its Subsidiaries or any warrants, options or other rights in respect of such
stock, or (c) set aside funds for any of the foregoing, except that the Borrower
may declare or pay dividends on any of its Capital Stock provided no Default or
Event of Default has occurred and is continuing on the date of or would result
from such declaration or payment.
48
SECTION 6.10 Eligible Investments. The Borrower shall not permit:
--------------------
(a) the minimum weighted average credit quality rating of the Eligible
Investments to be less than AA/Aa2 or the equivalent; or
(b) the Eligible Investments to exceed the Concentration Limits;
provided, however, that the Borrower shall not be in violation of this Section
6.10 if such violation occurs as a result of a change in the Fair Market Value
or ratings of such Eligible Investments (as opposed to a change in the makeup of
such Eligible Investments) unless such deficiency exists for thirty days.
ARTICLE VII.
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 7.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default under this Agreement:
(a) Non-Payment of Credit Extension. Default in the payment when due
--------------------------------
of any Reimbursement Obligation.
(b) Non-Payment of Interest, Fees, etc. Default, and continuance
-------------------------------------
thereof for three (3) Business Days, in the payment when due of fees or of
any other amount payable hereunder or under the Credit Documents.
(c) Non-Payment of Other Debt. (i) Default in the payment when due
--------------------------
(subject to any applicable grace period), whether by acceleration or
otherwise, of any other Debt of, or guaranteed by, the Borrower if the
aggregate amount of Debt of the Borrower which is accelerated or due and
payable, or which (subject to any applicable grace period) may be
accelerated or otherwise become due and payable, by reason of such default
or defaults is $5,000,000 or more, or (ii) default in the performance or
observance of any obligation or condition with respect to any such other
Debt of, or guaranteed by, the Borrower if the effect of such default or
defaults is to accelerate the maturity (subject to any applicable grace
period) of any such Debt of $5,000,000 or more in the aggregate or to
permit the holder or holders of such Debt of $5,000,000 or more in the
aggregate, or any trustee or agent for such holders, to cause such Debt to
become due and payable prior to its expressed maturity.
(d) Other Material Obligations. Except for obligations covered under
---------------------------
other provisions of this Article VII, default in the payment when due, or
-----------
in the performance or observance of, any material obligation of, or
material condition agreed to by, the Borrower with respect to any material
purchase or lease obligation of $5,000,000 or more (unless the existence of
any such default is being contested by the Borrower in good faith and by
appropriate proceedings and the Borrower has established, and is
maintaining, adequate reserves therefor in accordance with GAAP) which
default continues for a period of 30 days.
49
(e) Bankruptcy, Insolvency, etc. (i) Parent or the Borrower becomes
------------------------------
insolvent or generally fails to pay, or admits in writing its inability to
pay, debts as they become due; (ii) there shall be commenced by or against
any of such Persons any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, supervision, conservatorship, liquidation,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, rehabilitation, conservation,
supervision, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, obligations or
liabilities, or (B) seeking appointment of a receiver, trustee, custodian,
rehabilitator, conservator, supervisor, liquidator or other similar
official for it or for all or any substantial part of its assets, in each
case which (1) results in the entry of an order for relief or any such
adjudication or appointment or (2) if filed against such Person, remains
undismissed, undischarged or unstayed for a period of 60 days; or (iii)
there shall be commenced against any of such Persons 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 which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) any of such Persons 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(ii) or (iii)
--------- -----
above; or (v) any Governmental Authority shall issue any order of
conservation, supervision or any other order of like effect relating to any
of such Persons.
(f) Financial Statements. Failure by the Borrower to comply with its
----------------------
covenants set forth in Section 5.1 and continuance of such failure for five
Business Days after notice thereof from the Administrative Agent.
(g) Specific Defaults. Failure by the Borrower to comply with its
-----------------
covenants set forth in Sections 5.9, 6.1, 6.3, 6.4, 6.6, 6.7(viii),
------------- --- --- --- --- ---------
6.7(ix), 6.7(x), 6.7(xi), 6.7 (xii), 6.8 or 6.9.
------- ------ ------- -------- --- ---
(h) Non-compliance With Other Provisions. Failure by the Borrower to
-------------------------------------
comply with or to perform any provision of this Agreement or the other
Credit Documents (and not constituting an Event of Default under any of the
other provisions of this Article VII) and continuance of such failure for
30 days after notice thereof from the Administrative Agent to the Borrower.
(i) Warranties and Representations. Any warranty or representation
--------------------------------
made by or on behalf of the Borrower herein or in any Credit Document is
inaccurate or incorrect or is breached or false or misleading in any
material respect as of the date such warranty or representation is made; or
any schedule, certificate, financial statement, report, notice, or other
instrument furnished by or on behalf of Borrower to the Administrative
Agent or the Lenders is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified.
50
(j) Employee Benefit Plans. The Borrower establishes any Plan.
------------------------
(k) Credit Documents. The Security Agreement or any other Credit
-----------------
Document shall cease to be in full force and effect with respect to the
Borrower, the Borrower shall fail (subject to any applicable grace period)
to comply with or to perform any applicable provision of the Security
Agreement, any action shall be taken by or on behalf of the Borrower or any
Affiliate thereof to discontinue any of the Credit Documents or to contest
the validity, binding nature or enforceability of any thereof or the
Administrative Agent shall fail to have a first priority perfected Lien on
any collateral granted under the Security Agreement.
(l) Change in Control. A Change in Control occurs.
-----------------
(m) Judgments. A final judgment or judgments which exceed an aggregate
---------
of $5,000,000 (excluding any portion thereof which is covered by insurance
so long as the insurer is reasonably likely to be able to pay and has
accepted a tender of defense and indemnification without reservation of
rights) shall be rendered against the Borrower and shall not have been
discharged or vacated or had execution thereof stayed pending appeal within
60 days after entry or filing of such judgment(s).
SECTION 7.2 Effect of Event of Default. If any Event of Default described in
--------------------------
Section 7.1(e) shall occur, all Obligations shall become immediately due and
--------------
payable, and the Borrower shall become immediately obligated to deliver to the
Administrative Agent cash collateral in an amount equal to the outstanding LC
Obligations all without notice of any kind; and, in the case of any other Event
of Default, the Administrative Agent may, and upon the written request of the
Required Lenders shall, terminate the Commitments hereunder and declare all or
any portion of the Obligations to be due and payable, and/or demand that the
Borrower immediately deliver to the Administrative Agent Cash and Cash
Equivalents in an amount equal to 102% of the outstanding LC Obligations
whereupon the Commitments shall terminate and all or such portion of the
Obligations shall become immediately due and payable, and/or demand that the
Borrower immediately deliver to the Administrative Agent Cash and Cash
Equivalents in an amount equal to the outstanding LC Obligations all without
further notice of any kind. The Administrative Agent shall promptly advise the
Borrower of any such declaration but failure to do so shall not impair the
effect of such declaration. Notwithstanding the foregoing, the effect as an
Event of Default of any event described in Section 7.1(a) may not be waived
---------------
except by consent of all of the Lenders and acknowledged by the Administrative
Agent in writing.
51
SECTION 7.3 LC Collateral Account.
---------------------
(a) If at any time after the Borrower has been required to deposit
amounts in the LC Collateral Account pursuant to Section 2.13, the
Administrative Agent determines that the amount on deposit in the LC
Collateral Account is less than the amount of the outstanding LC
Obligations at such time, the Administrative Agent may demand the Borrower
to deposit, and the Borrower shall, upon such demand and without any
further notice, pay to the Administrative Agent for deposit in the LC
Collateral Account, funds necessary to cure any shortfall.
(b) The Administrative Agent may, at any time or from time to time,
after funds are deposited in the LC Collateral Account apply such funds to
the payment of the Obligations then due and payable by the Borrower to the
Fronting Bank, the Lenders or the Administrative Agent under the Credit
Documents.
(c) Neither the Borrower nor any Person claiming on behalf of or
through the Borrower shall have any right to withdraw any of the funds held
in the LC Collateral Account until all of the Obligations have been
indefeasibly paid in full, the Commitments have been terminated and all
Letters of Credit have been terminated or expired, at which time any funds
remaining in the LC Collateral Account shall be returned by the
Administrative Agent to the Borrower.
ARTICLE VIII.
CONDITIONS
SECTION 8.1 Conditions to Occurrence of the Amendment Effective Date. The
-----------------------------------------------------------
occurrence of the Amendment Effective Date shall be subject to receipt by the
Administrative Agent of all of the following, each duly executed and dated the
Amendment Effective Date (or such earlier date as shall be satisfactory to the
Administrative Agent), each in form and substance satisfactory to the
Administrative Agent (with sufficient copies for each Lender):
(a) This Agreement. This Agreement executed by each party thereto.
--------------
(b) [Intentionally Omitted]
(c) Organization Documents, Resolutions. Certified copies of the
-------------------------------------
Organization Documents of the Borrower (or a statement that such
Organization Documents have not been amended since February 25, 2000) and
resolutions of the Board of Directors of the Borrower authorizing the
execution, delivery and performance, respectively, of those documents and
matters required of it with respect to this Agreement or the other Credit
Documents.
52
(d) Incumbency and Signatures. A certificate of an Authorized Officer
-------------------------
certifying the names of the individual or individuals authorized to sign
this Agreement and the other Credit Documents, together with a sample of
the true signature of each such individual. (The Lenders may conclusively
rely on each such certificate until formally advised by a like certificate
of any changes therein.)
(e) Opinion of Counsel. An opinion of counsel of the Borrower,
-------------------
addressed to the Administrative Agent, the Fronting Bank, the LC
Administrator and the Lenders from each of (i) Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇, L.L.P., New York counsel to the Borrower and (ii) ▇▇▇▇▇▇▇, ▇▇▇▇ and
▇▇▇▇▇▇▇, Bermuda counsel to the Borrower, each in form and substance
satisfactory to the Administrative Agent.
(f) Certificate. Certificate of an Executive Officer dated as of the
-----------
Amendment Effective Date stating that: (i) that there are no material
insurance regulatory proceedings pending or threatened against the Borrower
in any jurisdiction; (ii) no Default or Event of Default exists or will
result from the initial Credit Extension; and (iii) there has occurred
since December 31, 2000, no event or circumstance that has resulted or in
the judgement of such Executive Officer could reasonably be expected to
result in a Material Adverse Effect.
(g) Other. Such other documents as the Administrative Agent may
-----
reasonably request.
SECTION 8.2 Conditions to All Credit Extensions. The obligation of the
---------------------------------------
Lenders to make all Credit Extensions shall be subject to the prior or
concurrent satisfaction (in form and substance satisfactory to the
Administrative Agent) of each of the conditions precedent set forth below:
(a) LC Application/Borrowing Base Certificate. The Borrower shall have
-----------------------------------------
delivered a LC Application and a Borrowing Base Certificate calculated for
both Tranche A and Tranche B as of the most recent Business Day.
(b) No Default. No Default shall have occurred and be continuing or
----------
will result from the making of the Credit Extensions and no Default shall
have occurred and be continuing under the Credit Documents or will result
from the making of the Credit Extensions.
(c) Warranties and Representations. (i) All warranties and
----------------------------------
representations contained in this Agreement (other than Section 4.2 except
-----------
in the case of the initial Credit Extension) shall be true and correct in
all material respects as of the date of any Credit Extension, with the same
effect as though made on the date of and concurrently with the making of
such Credit Extension (except where such representation speaks as of
specified date) and (ii) all covenants contained herein and in such
documents to be performed by each of the parties thereto (other than the
Administrative Agent or the Lenders) prior to the date of any Credit
Extension shall have been performed.
53
(d) Litigation. (i) No litigation (including, without limitation,
----------
derivative actions), arbitration, governmental investigation or proceeding
or inquiry shall be, on the date of any Credit Extension, pending, or to
the knowledge of the Borrower, threatened which seeks to enjoin or
otherwise prevent the consummation of, or to recover any damages or to
obtain material relief as a result of, the transactions contemplated
hereunder or, in the reasonable opinion of the Required Lenders, could be
reasonably expected to be materially adverse to any of the parties to this
Agreement and which is not Ordinary Course Litigation, and (ii) in the
reasonable opinion of the Required Lenders, no material adverse development
shall have occurred in any litigation (including, without limitation,
derivative actions), arbitration, government investigation or proceeding or
inquiry disclosed in Schedule 4.2 which is likely to have a Material
-------------
Adverse Effect.
(e) Fees. The fees referred to in Section 2.14 which are due and
---- -------------
payable on or prior to the Amendment Effective Date or the date of any
Credit Extension shall have been paid to the Administrative Agent, where
applicable, for the benefit of the Lenders.
(f) Material Adverse Effect. There shall not have occurred any event
------------------------
which, in the reasonable judgment of the Required Lenders, constitutes a
Material Adverse Effect.
ARTICLE IX.
THE ADMINISTRATIVE AGENT
SECTION 9.1 Appointment and Authorization.
-----------------------------
(a) Each Lender hereby irrevocably (subject to Section 9.9) appoints,
-----------
designates and authorizes the Administrative Agent to take such action on
its behalf under the provisions of this Agreement and each other Credit
Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other
Credit Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere
in this Agreement or in any other Credit Document, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have
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.
54
(b) The LC Administrator shall act on behalf of the Lenders with
respect to any Letters of Credit issued by the Lenders and the documents
associated therewith and shall have all of the benefit and immunities
provided to the Agent in this Article IX with respect to any acts taken or
omissions suffered by such LC Administrator in connection with Letters of
Credit issued by the Lenders or proposed to be issued by the Lenders and
the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Administrative Agent", as used
in this Article IX, included the LC Administrator with respect to such acts
or omissions.
SECTION 9.2 Delegation of Duties. The Administrative Agent may execute any of
--------------------
its duties under this Agreement or any other Credit Document by or through
agents, employees 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 agent or
attorney-in-fact that it selects with reasonable care.
SECTION 9.3 Liability of Administrative Agent. None of the Agent-Related
------------------------------------
Persons shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Credit Document
or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (b) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Borrower or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Credit Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Credit Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Credit Document, or for any failure of the Borrower
or any other party to any Credit Document to perform its obligations hereunder
or thereunder. No Administrative Agent-Related Person shall 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 or any of the Borrower's Affiliates.
SECTION 9.4 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement 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 counsel to the Borrower), independent accountants and other
experts selected by 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 (and all the Lenders if
required pursuant to Section 10.1) as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which 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 or any other Credit Document in
accordance with a request or consent of the Required Lenders and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
55
(b) For purposes of determining compliance with the conditions
specified in Section 8.1, each Lender that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the
Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to the Lender.
SECTION 9.5 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, except with respect to defaults in the payment of LC Advances, interest
and fees required to be paid to the Administrative Agent for the account of the
LC Administrator, the Fronting Bank or the Lenders, unless the Administrative
Agent shall have received written 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". The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Article VII; provided, however, that
----------- -------- -------
unless and until the Administrative Agent has received any such request, 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 or in the best interest of the Lenders.
SECTION 9.6 Credit Decision. Each Lender acknowledges that none of the
----------------
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of the Borrower, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower hereunder. Each
Lender also represents that it will, independently and without reliance upon any
Agent-Related Person 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 investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly herein required to be furnished
to the Lenders by the Administrative Agent, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons.
56
SECTION 9.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Credit
Document, or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of the
Administrative Agent.
SECTION 9.8 Administrative Agent in Individual Capacity. BofA and its
-----------------------------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Borrower and its Affiliates as though BofA were not the Administrative Agent or
the LC Administrator hereunder and without notice to or consent of the Lenders.
The Lenders acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Borrower or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Borrower) and acknowledge that the Administrative Agent shall be
under no obligation to provide such information to them. With respect to its
Credit Extensions, BofA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Administrative Agent or the LC Administrator, and the terms "Lender" and
"Lenders" include BofA in its individual capacity.
SECTION 9.9 Successor Administrative Agent. The Administrative Agent may, and
------------------------------
at the request of the Required Lenders shall, resign as Administrative Agent
upon 30 days' notice to the Lenders. If the Administrative Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders which successor agent shall be approved by the
Borrower. If no successor agent is appointed prior to the Amendment Effective
Date of the resignation of the Administrative Agent, the Administrative Agent
may appoint, after consulting with the Lenders and the Borrower, a successor
agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Administrative Agent and the term
"Administrative Agent" shall mean such successor agent and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article IX and
-----------
Sections 10.4 and 10.5 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. If no successor agent has accepted appointment as Administrative
Agent by the date which is 30 days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
Notwithstanding the foregoing, however, BofA may not be removed as the
Administrative Agent unless BofA shall also simultaneously be replaced as "LC
Administrator" hereunder pursuant to documentation in form and substance
reasonably satisfactory to BofA.
57
SECTION 9.10 Withholding Tax. Each of the Lenders and the Administrative Agent
---------------
(i) represents and warrants that on the date hereof (or, if later, the date it
becomes a party to this Agreement) that under applicable law and treaties no
U.S. withholding tax will be required to be withheld with respect to any
payments to be made by the Borrower hereunder, (ii) agrees to furnish to the
Administrative Agent and the Borrower on or before the first scheduled payment
date after the Amendment Effective Date, a United States Internal Revenue
Service Form W-8BEN and W-9 or Form W-8ECI and W-8, as appropriate (or successor
forms) properly completed and executed and (iii) agrees to comply with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption.
(a) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Administrative Agent of the percentage amount in which
it is no longer the beneficial owner of Obligations of the Borrower to such
Lender. To the extent of such percentage amount, the Administrative Agent
will treat such Lender's IRS Form 1001 as no longer valid.
(b) If any Lender claiming exemption from United States withholding
tax by filing IRS Form W-8EC1 with the Administrative Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Borrower to such Lender, such Lender agrees to undertake
sole responsibility for complying with the withholding tax requirements
imposed by Sections 1441 and 1442 of the Code.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest
payment to such Lender an amount equivalent to the applicable withholding
tax after taking into account such reduction. If the forms or other
documentation required by Section (a) of this Section are not delivered to
the Administrative Agent, then the Administrative Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
58
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent
did not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the
Administrative Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Administrative Agent fully
for all amounts paid, directly or indirectly, by the Administrative Agent
as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders under
this Section shall survive the payment of all Obligations and the
resignation or replacement of the Administrative Agent.
SECTION 9.11 Co-Agents. None of the Lenders identified on the facing page or
---------
signature pages of this Agreement as a "co-agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none of
the Lenders so identified as a "co-agent" shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendments and Waivers. No amendment or waiver of any provision
------------------------
of this Agreement or any other Credit Document, and no consent with respect to
any departure by the Borrower therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or by the Administrative
Agent at the written request of the Required Lenders) and the Borrower and
acknowledged by the Administrative Agent, and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or consent
-------- -------
shall, unless in writing and signed by all the Lenders and the Borrower and
acknowledged by the Administrative Agent, do any of the following:
59
(a) increase or extend the Commitment to issue Letters of Credit or
the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 7.2) or extend the expiry date of any Letter of Credit
to a date after the Final Maturity Date;
(b) postpone or delay any date fixed by this Agreement or any other
Credit Document for any payment of LC Advances, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other
Credit Document;
(c) reduce the amount of, or the rate of interest specified herein on,
any Reimbursement Obligation, or any fees or other amounts payable
hereunder or under any other Credit Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the LC Obligations which is required for the
Lenders or any of them to take any action hereunder;
(e) release the Security Agreement or release all or a substantial
part of the Collateral granted thereunder except in accordance with the
terms thereof; or
(f) amend this Section, or any provision herein providing for consent
or other action by all Lenders;
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Required
Lenders or all the Lenders, as the case may be, affect the rights or duties of
the Administrative Agent under this Agreement or any other Credit Document and
no amendment of any provision relating to the LC Administrator shall be
effective without the written consent of the LC Administrator. Notwithstanding
the foregoing the Fee Letter may be amended, or rights of privileges thereunder
waived, in writing, executed by the parties thereto.
SECTION 10.2 Notices. All notices, requests and other communications shall be
-------
in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter
transmitted by the Borrower by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number
specified on Schedule 10.2, and (ii) shall be followed promptly
-------------
by delivery of a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for
notices on Schedule 10.2; or, as directed to the Borrower or the
--------------
Administrative Agent, to such other address as shall be
designated by such party in a written notice to the other
parties, and as directed to any other party, at such other
address as shall be designated by such party in a written notice
to the Borrower and the Administrative Agent.
60
(a) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next-day) delivery, or transmitted in legible form by
facsimile machine, respectively, or, if delivered, upon delivery, except
that notices pursuant to Article II or IX shall not be effective until
actually received by the Administrative Agent and/or the LC Administrator,
as applicable.
(b) Any agreement of the Administrative Agent, the LC Administrator
and the Lenders herein to receive certain notices by telephone or facsimile
is solely for the convenience and at the request of the Borrower. The
Administrative Agent, the LC Administrator and the Lenders shall be
entitled to rely on the authority of any Person purporting to be a Person
authorized by the Borrower to give such notice and the Administrative
Agent, the LC Administrator and the Lenders shall not have any liability to
the Borrower or other Person on account of any action taken or not taken by
the Administrative Agent, the LC Administrator or the Lenders in reliance
upon such telephonic or facsimile notice. The obligation of the Borrower to
repay the Obligations shall not be affected in any way or to any extent by
any failure by the Administrative Agent, the LC Administrator and the
Lenders to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Administrative Agent, the LC Administrator and
the Lenders of a confirmation which is at variance with the terms
understood by the Administrative Agent, the LC Administrator and the
Lenders to be contained in the telephonic or facsimile notice.
SECTION 10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
--------------------------------
delay in exercising, on the part of the Administrative Agent, the
LC Administrator or any Lender, any right, remedy, power or
privilege hereunder, 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.
SECTION 10.4 Costs and Expenses. The Borrower shall:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as
Administrative Agent and LC Administrator) within ten Business Days after
demand for all costs and expenses incurred by BofA (including in its
capacity as Administrative Agent and LC Administrator), in connection with
the negotiation, preparation, delivery, syndication, administration and
execution of, and any amendment, supplement, waiver or modification to (in
each case, whether or not consummated), this Agreement, any Credit Document
and any other documents prepared in connection herewith or therewith, and
the consummation of the transactions contemplated hereby and thereby,
including reasonable Attorney Costs incurred by BofA (including in its
capacity as Administrative Agent) with respect thereto; and
(b) pay or reimburse the Administrative Agent, the Lenders and the LC
Administrator within ten Business Days after demand for all costs and
expenses (including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Credit Document during the
existence of an Event of Default or after acceleration of the Obligations
(including in connection with any "workout" or restructuring regarding the
Obligations, and including in any insolvency proceeding or appellate
proceeding) provided that the parties shall to the extent of common
interests use a single counsel.
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SECTION 10.5 Indemnity. Whether or not the transactions contemplated hereby
---------
are consummated, the Borrower shall indemnify and hold the Agent-Related Persons
and each Lender and each of its respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless
------------------
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Obligations and the
termination, resignation or replacement of the Administrative Agent or
replacement of any Lender) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with any of the foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or the Credit Extensions
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
-----------------------
provided, that the Borrower shall have no obligation hereunder to any
--------
Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
SECTION 10.6 Payments Set Aside. To the extent that the Borrower makes a
-------------------
payment to the Administrative Agent, the Fronting Bank or the Lenders, or the
Administrative Agent, the Fronting Bank or the Lenders exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Administrative Agent, the Fronting Bank or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Lender severally agrees to pay to
the Administrative Agent upon demand its Percentage of any amount so recovered
from or repaid by the Administrative Agent.
62
SECTION 10.7 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted 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 the Administrative Agent, the Fronting Bank and each
Lender.
SECTION 10.8 Assignments, Participations, etc.
(a) Any Lender may, with the written consent of the Borrower (at all
times other than during the existence of an Event of Default) and the
Administrative Agent, which consents shall not be unreasonably withheld,
and the Fronting Bank, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Borrower or the
Administrative Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Assignee that is an Affiliate of
such Lender) (each an "Assignee") all, or any ratable part of all, of the
--------
LC Obligations, the Commitments and the other rights and obligations of
such Lender hereunder, provided, however, that (w) the aggregate principal
-----------------
amount of the Commitment assigned by any Lender to someone other than
another Lender shall be in a minimum amount of $5,000,000 (or if less, the
entire Commitment then held by such Lender), (x) after giving effect to any
such assignment by a Lender, the aggregate amount of the Commitments and/or
LC Obligations held by such assigning Lender is at least $5,000,000 (unless
such Lender has assigned the entire Commitment and LC Obligations then held
by it), (y) after giving effect to any such assignment by a Lender, the
Assignee Percentage under the Tranche A Commitment and Tranche B Commitment
is the same and the Percentage of the assignor Lender under the Tranche A
Commitment and the Tranche B Commitment is the same, and (z) the Assignee
provides the Administrative Agent and the Borrower with the form specified
in Section 9.10. The Borrower and the Administrative Agent may continue to
deal solely and directly with such Lender in connection with the interest
so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrower and the
Administrative Agent by such Lender and the Assignee; (ii) such Lender and
its Assignee shall have delivered to the Borrower and the Administrative
Agent an Assignment and Acceptance in the form of Exhibit C ("Assignment
---------- ----------
and Acceptance") and (iii) the assignor Lender or Assignee has paid to the
--------------
Administrative Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Administrative Agent notifies the
assignor Lender that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Credit Documents, and (ii)
the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Credit Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Documents.
63
(c) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce
such Commitments of the assigning Lender pro tanto.
--- -----
(d) Any Lender may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower (a "Participant")
-----------
participating interests in any LC Obligations, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
-------------------
hereunder and under the other Credit Documents; provided, however, that (i)
the originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for
the performance of such obligations, (iii) the Borrower and the
Administrative Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Credit Documents, and (iv)
no Lender shall transfer or grant any participating interest under which
the Participant has rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Credit Document, except
to the extent such amendment, consent or waiver would require unanimous
consent of the Lenders as described in the first proviso to Section 10.1.
----- ------- -------------
In the case of any such participation, the Participant shall be entitled to
the benefit of Sections 3.1, 3.3 and 10.5 to the extent the Lender selling
------------- --- ----
such participation would be so entitled as though it were also a Lender
hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of set-off 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. All participations shall be pro rata among such
Lender's Tranche A Commitment and Tranche B Commitment.
(e) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any LC
Obligation held by it in favor of any Federal Reserve Lender in accordance
with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR ss.203.14,
and such Federal Reserve Bank may enforce such pledge or security interest
in any manner permitted under applicable law.
64
SECTION 10.9 Confidentiality. Each Lender agrees to take and to cause its
---------------
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Borrower and provided to it by the Borrower, or by the
Administrative Agent on such Borrower's behalf, under this Agreement or any
other Credit Document, and neither it nor any of its Affiliates shall use any
such information other than in connection with or in enforcement of this
Agreement and the other Credit Documents or in connection with other business
now or hereafter existing or contemplated with the Borrower; except to the
extent such information (a) was or becomes generally available to the public
other than as a result of disclosure by the Lender, or (b) was or becomes
available on a non-confidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Lender; provided, however, that any Lender may disclose
such information (i) at the request or pursuant to any requirement of any
Governmental Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (ii) pursuant to subpoena or
other court process; (iii) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (iv) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent, any Lender or their respective Affiliates may be party;
(v) to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Credit Document; (vi) to such Lender's
independent auditors and other professional advisors; (vii) to any Participant
or Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Lenders
hereunder; (viii) as to any Lender or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Borrower is party or is deemed party with such Lender or such
Affiliate; and (ix) to its Affiliates which are either such Lender's parent or
it or its parent's wholly owned Subsidiary or, with the prior written consent of
the Borrower which shall not be unreasonably withheld, its other Affiliates.
SECTION 10.10 Set-off. In addition to any rights and remedies of the Lenders
-------
provided by law, if an Event of Default exists or the Obligations have been
accelerated, the Fronting Bank and each Lender is authorized at any time and
from time to time, without prior notice to the Borrower, any such notice being
waived by the Borrower to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by, the
Fronting Bank and such Lender to or for the credit or the account of the
Borrower against any and all Obligations owing to the Fronting Bank and such
Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent the Fronting Bank and such Lender shall have made demand
under this Agreement or any Credit Document and although such Obligations may be
contingent or unmatured. The Fronting Bank and each Lender agree promptly to
notify the Borrower and the Administrative Agent after any such set-off and
application made by such Person; provided, however, that the failure to give
-------- -------
such notice shall not affect the validity of such set-off and application.
SECTION 10.11 Notification of Addresses, Lending Offices, Etc. Each Lender
-----------------------------------------------------
shall notify the Administrative Agent in writing of any changes in the address
to which notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
65
SECTION 10.12 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
SECTION 10.13 Severability. The illegality or unenforceability of any provision
------------
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
SECTION 10.14 No Third Parties Benefitted. This Agreement is made and entered
----------------------------
into for the sole protection and legal benefit of the Borrower, the LC
Administrator, the Fronting Bank, the Lenders, the Administrative Agent and the
Agent-Related Persons, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Credit Documents.
SECTION 10.15 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK PROVIDED THAT THE ADMINISTRATIVE
AGENT, THE LC ADMINISTRATOR AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT, THE FRONTING BANK, THE LC ADMINISTRATOR AND THE
LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT, THE FRONTING BANK, THE LC ADMINISTRATOR AND THE
LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
---------------------
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. THE BORROWER, THE ADMINISTRATIVE AGENT, THE FRONTING BANK, THE LC
ADMINISTRATOR AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS AND IRREVOCABLY CONSENT TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID OR BY ANY OTHER MEANS PERMITTED
BY NEW YORK OR FEDERAL LAW.
66
SECTION 10.16 Waiver of Jury Trial. THE BORROWER, THE LC ADMINISTRATOR, THE
--------------------
FRONTING BANK, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE LC
ADMINISTRATOR, THE FRONTING BANK, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
CREDIT DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
SECTION 10.17 Currency Indemnity. If, for the purposes of obtaining judgment in
------------------
any court in any jurisdiction with respect to any Credit Document, it becomes
necessary to convert into the currency of such jurisdiction (the "Judgment
--------
Currency") any amount due under any Credit Document in any currency other than
--------
the Judgment Currency (the "Currency Due"), then conversion shall be made at the
------------
rate of exchange prevailing on the Business Day before the day on which judgment
is given. For this purpose, "rate of exchange" means the rate at which the
Administrative Agent is able, on the relevant date, to purchase the Currency Due
with the Judgment Currency in accordance with its normal practice at its main
branch in San Francisco, California. In the event that there is a change in the
rate of exchange prevailing between the Business Day before the day on which the
judgment is given and the date of payment of the amount due, the Borrower will,
on the day of payment, pay such additional amount, if any, or be entitled to
receive reimbursement of such amount, if any, as may be necessary to ensure that
the amount paid on such date is the amount in the Judgment Currency which when
converted at the rate of exchange prevailing on the date of payment is the
amount then due under any Credit Document in the Currency Due. If the amount of
the Currency Due which the Administrative Agent is so able to purchase is less
than the amount of the Currency Due originally due to it, the Borrower shall
indemnify and save the Administrative Agent harmless from and against loss or
damage arising as a result of such deficiency. This indemnity shall constitute
an obligation separate and independent from the other obligations contained in
any Credit Document, shall give rise to a separate and independent cause of
action, shall apply irrespective of any indulgence granted by the Administrative
Agent from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due under any Credit Document or under any judgment or order.
67
SECTION 10.18 Service of Process. On or prior to the Amendment Effective Date,
------------------
the Borrower shall appoint CT Corporation System (the "Process Agent"), with an
office on the date hereof at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, as its agent to receive on its behalf and its property service of copies
of the summons and complaints and any other process which may be served in any
such action or proceeding, provided that a copy of such process is also mailed
by registered or certified mail, postage prepaid, to the Borrower at its address
specified pursuant to Section 10.2. Such service may be made by mailing or
-------------
delivering a copy of such process to the Borrower in care of the Process Agent
at the Process Agent's above address, and the Borrower hereby irrevocably
authorizes and directs the Process Agent to accept such service on its behalf.
The Borrower agrees to indemnify the Process Agent in connection with all
matters relating to its appointment as agent of the Borrower for such purposes,
to enter into any agreement relating to such appointment which such Process
Agent may customarily require, and to pay such Process Agent's customary fees
upon demand. As an alternative method of service, the Borrower also irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to the Borrower at its address
specified pursuant to Section 10.2. Nothing in this Section 10.18 shall affect
------------- -------------
the right of the Administrative Agent or any Lender to serve legal process in
any other manner permitted by law or affect the right of the Administrative
Agent or any Lender to bring any action or proceeding against the Borrower, or
any of its properties in the courts of any other jurisdiction.
SECTION 10.19 Entire Agreement. This Agreement, together with the other Credit
----------------
Documents, embodies the entire agreement and understanding among the Borrower,
the LC Administrator, the Fronting Bank, the Lenders and the Administrative
Agent, and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof.
68
MAX RE LTD.
By:
----------------------------------------------------------
Title:
----------------------------------------------------------
S-1
BANK OF AMERICA, NATIONAL
ASSOCIATION, as
Administrative Agent, LC
Administrator, Fronting
Bank and Lender
By:
--------------------------------------------------------
Title:
-----------------------------------------------------
S-2
FLEET NATIONAL BANK
By:
-------------------------------------------------------
Title:
-----------------------------------------------------
S-3
CITIBANK, N.A.
By:
--------------------------------------------------------
Title:
-----------------------------------------------------
S-4
SCHEDULE 1.1
CONCENTRATION LIMITS
Limitation per Limitation per
Issue (as Percentage Issuer (as Percentage
of all such of all such
Eligible Investments Eligible Investments) Eligible Investments)
-------------------- --------------------- ---------------------
ABS 7.5% N/A
Corporate/Municipal N/A 7.5%
Securities
MBS (Non Agency CMOs) 5% 7.5%
G7 Securities N/A 7.5%
SCHEDULE 1.2
BORROWING BASE CALCULATION
Eligible Investments Applicable Percentage of Fair Market Value
-------------------- ------------------------------------------
Cash and Cash Equivalents 98%
Government Debt with maturities 98%
of more than one year but less
than five year
Government Debt with maturities 95%
of five years or more
MBS (Agency Pass-Throughs) rated 90%
AA- by S&P or Aa3 by Moody's or
better
MBS (Agency CMOs) rated AA- by 90%
S&P or Aa3 by Moody's or better
MBS (Non-Agency CMOs) rated AAA 90%
by S&P or Aaa by Moody's
MBS (Non-Agency CMOs) rated AA- 87.5%
by S&P or Aa3 by Moody's or better
ABS 95%
G7 Securities issued by the Governments 95%
of Germany or the United Kingdom
G7 Securities issued by the Governments 93%
of France, Japan or Canada
G7 Securities issued by the Government 92%
of Italy
Corporate/Municipal Securities rated 94%
AAA by S&P or Aaa by Moody's
Corporate/Municipal Securities rated at 93%
least AA- by S&P or Aa3 by Moody's
Corporate/Municipal Securities rated at 92%
A- by S&P or A3 by Moody's
SCHEDULE 2.1
COMMITMENTS
Tranche A Tranche B
Lender Commitment Commitment Percentage
------ ---------- ---------- ----------
Bank of America, $ 90,000,000 $10,000,000 33.333333334%
National Association
Fleet National Bank $ 90,000,000 $10,000,000 33.333333333%
Citibank, NA $ 90,000,000 $10,000,000 33.333333333%
------------ ----------- -------------
TOTAL $270,000,000 $30,000,000 100.000000000%
SCHEDULE 4.1
JURISDICTIONS
Max Re Ltd
----------
Bermuda
Max Re Europe Limited
---------------------
Ireland
SCHEDULE 4.2
------------
LITIGATION
None
SCHEDULE 4.7
------------
LOCATIONS
Ascot House
Hamilton, Bermuda
Max Re Europe Limited
Commerzbank House
Guild St 1 FFC
Dublin, 1
Ireland
SCHEDULE 4.9
SUBSIDIARIES
Max Re Europe Limited
SCHEDULE 4.10
INSURANCE LICENSES
Bermuda licence for General Business Insurance
Borrower is licensed as a Class IV, General and long-term Insurer in Bermuda,
which allows writing of all property, casualty, life, and health lines.
Max Re Europe Limited has applied for a reinsurance license in Ireland and such
application is currently awaiting approval.
SCHEDULE 6.7
LIENS
None
SCHEDULE 10.2
ADDRESSES
LENDING OFFICES,
----------------
ADDRESSES FOR NOTICES
---------------------
BANK OF AMERICA, NATIONAL ASSOCIATION,
-------------------------------------
as Administrative Agent, Fronting Bank,
LC Administrator and Lender
Lending Letter of Credit Office:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Letter of Credit Operations/#1580
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager - Standby Letter of Credit Unit
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices (other than notices of Credit Extensions):
Bank of America, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
FLEET NATIONAL BANK
-------------------
Notices:
Fleet National Bank
Mail Code CT MO 0250
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CITIBANK, N.A.
--------------
Notices:
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
MAX RE LTD.
----------
Notices:
Max Re Ltd.
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇