EXHIBIT 10.1
CREDIT AGREEMENT
among
TRENWICK GROUP INC.,
VARIOUS LENDING INSTITUTIONS,
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK,
AS SYNDICATION AGENT
and
FLEET NATIONAL BANK,
AS DOCUMENTATION AGENT
-----------------------------
Dated as of November 24, 1999
-----------------------------
$400,000,000
CHASE SECURITIES INC.,
AS LEAD ARRANGER AND BOOK MANAGER
TABLE OF CONTENTS
Page
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SECTION 1. Revolving Credit Facility....................................... 1
1.01 Commitments........................................................... 1
1.02 Minimum Amount of Each Borrowing; Maximum Number of Borrowings........ 2
1.03 Notice of Borrowing of Revolving Loans................................ 2
1.04 Disbursement of Funds................................................. 2
1.05 Register.............................................................. 3
1.06 Conversions........................................................... 3
1.07 Pro Rata Borrowings................................................... 4
1.08 Interest.............................................................. 4
1.09 Interest Periods...................................................... 5
1.10 Increased Costs, Illegality, etc...................................... 6
1.11 Compensation.......................................................... 8
1.12 Change of Lending Office.............................................. 8
1.13 Replacement of Banks.................................................. 9
SECTION 2. Letter of Credit Facility....................................... 9
2.01 Letters of Credit..................................................... 9
2.02 Letter of Credit Request; Notices of Issuance......................... 11
2.03 Agreement to Repay Letter of Credit Payments.......................... 11
2.04 Increased Costs....................................................... 12
2.05 Letter of Credit Expiration Extensions................................ 12
2.06 Changes to Stated Amount.............................................. 13
2.07 Representations and Warranties of L/C Banks........................... 13
SECTION 3. Fees; Commitments............................................... 13
3.01 Fees.................................................................. 13
3.02 Voluntary Reduction of Commitments.................................... 14
3.03 Mandatory Reductions of Commitments................................... 14
SECTION 4. Payments........................................................ 15
4.01 Voluntary Prepayments................................................. 15
4.02 Mandatory Repayments and Prepayments.................................. 15
4.03 Method and Place of Payment........................................... 18
4.04 Net Payments.......................................................... 19
SECTION 5. Conditions Precedent............................................ 20
5.01 Execution of Agreement................................................ 20
5.02 No Default; Representations and Warranties............................ 20
5.03 Officer's Certificate................................................. 21
5.04 Opinions of Counsel................................................... 21
5.05 Corporate Proceedings................................................. 21
5.06 Adverse Change, etc................................................... 21
5.07 Litigation............................................................ 22
5.08 Subsidiary Guaranty................................................... 22
5.09 Consummation of the Refinancing....................................... 22
5.10 Chartwell Senior Notes................................................ 22
5.11 Financial Statements; Projections..................................... 22
5.12 Approvals, etc........................................................ 23
5.13 Indebtedness.......................................................... 24
5.14 Payment of Fees....................................................... 24
5.15 Letter of Credit Request; Notice of Borrowing......................... 24
5.16 Capital Structure..................................................... 24
5.17 Solvency Certificate.................................................. 24
5.18 A.M. Best Rating...................................................... 24
SECTION 6. Representations, Warranties and Agreements...................... 24
6.01 Corporate Status...................................................... 25
6.02 Corporate Power and Authority; Enforceability......................... 25
6.03 No Contravention of Laws, Agreements or Organizational Documents...... 25
6.04 Litigation and Contingent Liabilities................................. 25
6.05 Use of Proceeds; Margin Regulations................................... 26
6.06 Approvals............................................................. 26
6.07 Investment Company Act................................................ 26
6.08 Public Utility Holding Company Act.................................... 27
6.09 True and Complete Disclosure; Projections and Assumptions............. 27
6.10 Consummation of Transaction........................................... 27
6.11 Financial Condition; Financial Statements............................. 27
6.12 Tax Returns and Payments.............................................. 28
6.13 Compliance with ERISA................................................. 28
6.14 Subsidiaries.......................................................... 30
6.15 Intellectual Property, etc............................................ 30
6.16 Pollution and Other Regulations....................................... 30
6.17 Labor Relations; Collective Bargaining Agreements..................... 30
6.18 Capitalization........................................................ 31
6.19 Indebtedness.......................................................... 31
6.20 Compliance with Statutes, etc......................................... 31
6.21 Insurance Licenses.................................................... 31
6.22 Year 2000 Compliance.................................................. 31
SECTION 7. Affirmative Covenants........................................... 32
7.01 Information Covenants................................................. 32
7.02 Books, Records and Inspections........................................ 35
7.03 Insurance............................................................. 35
7.04 Payment of Taxes...................................................... 36
7.05 Corporate Franchises.................................................. 36
7.06 Compliance with Statutes, etc......................................... 36
7.07 ERISA................................................................. 36
7.08 Performance of Obligations............................................ 37
7.09 Good Repair........................................................... 38
7.10 End of Fiscal Years; Fiscal Quarters.................................. 38
7.11 Maintenance of Licenses and Permits................................... 38
7.12 Chartwell Senior Notes................................................ 38
7.13 Subsidiary Guaranties................................................. 38
SECTION 8. Negative Covenants.............................................. 38
8.01 Changes in Business................................................... 38
8.02 Fundamental Changes; Acquisitions..................................... 38
8.03 Liens................................................................. 39
8.04 Indebtedness.......................................................... 41
8.05 Advances, Investments and Loans....................................... 42
8.06 Dividends, etc........................................................ 44
8.07 Transactions with Affiliates.......................................... 45
8.08 Issuance of Stock..................................................... 45
8.09 Creation of Subsidiaries.............................................. 45
8.10 Partnership Agreements................................................ 45
8.11 Prepayments of Indebtedness, Modifications of Agreements, etc......... 45
8.12 Leverage Ratio........................................................ 46
8.13 Interest Coverage Ratio............................................... 46
8.14 Minimum Risk Based Capital............................................ 46
8.15 Minimum Combined Statutory Surplus.................................... 46
8.16 Minimum Consolidated Tangible Net Worth............................... 46
SECTION 9. Events of Default............................................... 46
9.01 Payments.............................................................. 46
9.02 Representations, etc.................................................. 47
9.03 Covenants............................................................. 47
9.04 Default Under Other Agreements........................................ 47
9.05 Bankruptcy, etc....................................................... 47
9.06 ERISA................................................................. 48
9.07 Subsidiary Guaranty................................................... 48
9.08 Judgments............................................................. 49
9.09 Change of Control..................................................... 49
9.10 Senior Unsecured Debt Ratings......................................... 49
9.11 A.M. Best Ratings..................................................... 49
SECTION 10. Definitions.................................................... 50
SECTION 11. The Administrative Agent....................................... 72
11.01 Appointment.......................................................... 72
11.02 Delegation of Duties................................................. 72
11.03 Exculpatory Provisions............................................... 72
11.04 Reliance by Administrative Agent..................................... 73
11.05 Notice of Default.................................................... 73
11.06 Non-Reliance......................................................... 73
11.07 Indemnification...................................................... 74
11.08 The Administrative Agent in its Individual Capacity.................. 74
11.09 Successor Administrative Agent....................................... 75
11.10 Other Agents......................................................... 75
SECTION 12. Miscellaneous.................................................. 76
12.01 Payment of Expenses, etc............................................. 76
12.02 Right of Setoff...................................................... 76
12.03 Notices.............................................................. 77
12.04 Benefit of Agreement................................................. 77
12.05 No Waiver; Remedies Cumulative....................................... 79
12.06 Payments Pro Rata.................................................... 79
12.07 Calculations; Computations........................................... 80
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE..................... 81
12.09 Counterparts......................................................... 82
12.10 Effectiveness........................................................ 82
12.11 Headings Descriptive................................................. 82
12.12 Amendment or Waiver.................................................. 82
12.13 Survival............................................................. 82
12.14 Domicile of Loans.................................................... 82
12.15 Confidentiality...................................................... 83
12.16 WAIVER OF JURY TRIAL................................................. 83
12.17 Judgment Currency.................................................... 83
12.18 Euro................................................................. 84
ANNEX I -- List of Banks and Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Existing Indebtedness
ANNEX IV -- Pension Plans
ANNEX V -- Subsidiaries
ANNEX VI -- Collective Bargaining Agreements
ANNEX VII -- Existing Liens
ANNEX VIII -- Existing Investments
ANNEX IX -- Capitalization
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B -- Form of Letter of Credit
EXHIBIT C-1 -- Form of Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
EXHIBIT C-2 -- Form of Opinion of the General Counsel of Trenwick Group Inc.
EXHIBIT C-3 -- Form of Opinion of White & Case LLP
EXHIBIT D -- Form of Officer's Certificate
EXHIBIT E -- Form of Section 4.04(b)(ii) Certificate
EXHIBIT F -- Form of Subsidiary Guaranty
EXHIBIT G -- Form of Solvency Certificate
EXHIBIT H -- Form of Assignment and Assumption Agreement
CREDIT AGREEMENT, dated as of November 24, 1999, among TRENWICK GROUP INC., a
Delaware corporation (the "Borrower"), the lending institutions listed from
time to time on Annex I hereto (each a "Bank" and, collectively, the "Banks"),
FIRST UNION NATIONAL BANK, as Syndication Agent (the "Syndication Agent"), FLEET
NATIONAL BANK, as Documentation Agent (the "Documentation Agent") and THE CHASE
MANHATTAN BANK, as Administrative Agent (the "Administrative Agent"). Unless
otherwise defined herein, all capitalized terms used herein and defined in
Section 10 are used herein as so defined.
W I T N E S S E T H:
WHEREAS, subject to and upon the terms and conditions set forth herein,
the Banks are willing to make available to the Borrower the credit facilities
provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Revolving Credit Facility.
1.01 Commitments. (a) Subject to and upon the terms and conditions herein
set forth, each Bank severally agrees at any time and from time to time on and
after the Effective Date and prior to the Conversion Date, to make a revolving
loan or revolving loans (each a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower, which Revolving Loans (i) may be made and
maintained in such Approved Currency as is requested by the Borrower (except
that Base Rate Loans may only be denominated in Dollars) and (ii) shall, at the
option of the Borrower, be Base Rate Loans or Eurodollar Loans, provided that
all Revolving Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type, (iii)
may be repaid and reborrowed in accordance with the provisions hereof, (iv)
shall not exceed for any Bank at any time outstanding that aggregate Principal
Amount which equals the Revolving Loan Commitment of such Bank at such time and
(v) shall not exceed for all Banks at any time outstanding that aggregate
Principal Amount which equals the Available Total Revolving Loan Commitment at
such time.
(b) Subject to and upon the terms and conditions set forth herein, the
Borrower and each Bank which has Revolving Loans outstanding at such time agree
that at 9:00 A.M. (New York time) on the Conversion Date, the aggregate
principal amount of Revolving Loans owing to such Bank and outstanding at such
time shall (unless such Revolving Loans have been declared (or have become) due
and payable pursuant to this Agreement), without any notice or action by any
party, automatically convert to and thereafter constitute Term Loans owing to
such Bank hereunder. The Term Loans of each Bank (i) shall be made and
thereafter maintained in the same currencies in which the related Revolving
Loans were denominated as of the Conversion Date, (ii) shall, at the option of
the Borrower, be Base Rate Loans or Eurodollar Loans, provided that (A) Base
Rate Loans may only be denominated in Dollars and (B) all Term Loans comprising
the same Borrowing shall, unless otherwise specifically provided herein, consist
of Term Loans of the same Type and (iii) shall not exceed in initial Principal
Amount for such Bank an amount which equals the total Principal Amount of
Revolving Loans owed to such Bank and outstanding immediately prior to the
Conversion Date. Once repaid, Term Loans may not be reborrowed.
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1.02 Minimum Amount of Each Borrowing; Maximum Number of Borrowings.
The aggregate Principal Amount of each Borrowing hereunder shall not be less
than the Minimum Borrowing Amount. More than one Borrowing may be incurred on
any day; provided that at no time shall there be outstanding more than five
Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing of Revolving Loans. (a) Whenever the Borrower
desires to incur Revolving Loans, it shall give the Administrative Agent at its
Notice Office, (x) prior to 11:00 A.M. (New York time), at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of each Borrowing of Eurodollar Loans in Dollars, (y) prior to 1:00 P.M. (New
York time) at least four Business Days' prior written of notice (or telephonic
notice promptly confirmed in writing) of each Borrowing of Eurodollar Loans
constituting Alternate Currency Loans and (z) prior to 11:00 A.M. (New York
time) at least one Business Day's prior written notice (or telephone notice
promptly confirmed in writing) each Borrowing of Base Rate Loans. Each such
notice (each, a "Notice of Borrowing") shall be in the form of Exhibit A-1 and
shall be irrevocable and shall specify (i) in the case of Alternate Currency
Loans, the Approved Currency for such Loans, (ii) the aggregate principal amount
of the Revolving Loans to be made pursuant to such Borrowing (stated in the
applicable Approved Currency), (iii) the date of Borrowing (which shall be a
Business Day) and (iv) whether the respective Borrowing shall consist of Base
Rate Loans or Eurodollar Loans. The Administrative Agent shall promptly give
each Bank written notice (or telephonic notice promptly confirmed in writing) of
each proposed Borrowing, of the portion thereof to be funded by such Bank and of
the other matters covered by the Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrower to confirm
in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by it in good faith
to be from an Authorized Officer of the Borrower. In each such case, the
Borrower hereby waives the right to dispute the Administrative Agent's record of
the terms of such telephonic notice absent manifest error.
1.04 Disbursement of Funds. (a) No later than 11:00 A.M. (New York time)
on the date specified in each Notice of Borrowing, each Bank will make available
its pro rata share, if any, of such Borrowing requested to be made on such date.
All such amounts shall be made available to the Administrative Agent in the
relevant Approved Currency and immediately available funds at the Payment Office
and the Administrative Agent will make available to the Borrower by depositing
to the account designated by the Borrower, which account shall be at an
institution in the same city as the respective Payment Office, the aggregate of
the amounts so made available in the type of funds received. Unless the
Administrative Agent shall have been notified by any Bank participating in a
Borrowing prior to the date of such Borrowing that such Bank does not intend to
make available to the Administrative Agent its portion of the Borrowing or
Borrowings to be made on such date, the Administrative Agent may assume that
such Bank has made such amount available to the Administrative Agent on such
date of Borrowing, and the Administrative Agent, in reliance upon such
assumption, may (in its sole discretion and without any obligation to do so)
make available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Administrative Agent by such Bank
and the Administrative Agent has made available same to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount from
such Bank. If such Bank does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the Borrower in writing or by telephone (promptly confirmed in
writing), and the Borrower shall immediately pay such corresponding amount to
the Administrative Agent. The Administrative Agent shall also be entitled to
recover on demand from such Bank or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Bank, the
overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the then
applicable rate of interest, calculated in accordance with Section 1.08, for the
type of respective Loans which were required to be repaid.
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(b) Nothing herein shall be deemed to relieve any Bank from its obligation
to fulfill its commitments hereunder or to prejudice rights which the Borrower
may have against any Bank as a result of any default by such Bank hereunder.
1.05 Register. (a) The Administrative Agent shall maintain a register for
the recordation of the Revolving Loan Commitments and the L/C Commitments of the
Banks from time to time and, after the Conversion Date has occurred, the
principal amount of the Term Loans owing to each Bank (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error. The Register shall be available for inspection by the Borrower
or any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(b) The Borrower hereby agrees to provide a Note, promptly upon the request
of any Bank, to the extent such Bank has requested such Note in connection with
any pledge or assignment by such Bank of any or all of its Loans hereunder to a
Federal Reserve Bank.
1.06 Conversions. The Borrower shall have the option to convert on any
Business Day all or a portion at least equal to the applicable Minimum Borrowing
Amount of its outstanding Loans denominated in a single Approved Currency and
constituting Base Rate Loans or Eurodollar Loans into a Borrowing or Borrowings
of Loans denominated in such Approved Currency and constituting Eurodollar Loans
or Base Rate Loans, respectively, provided that (i) Eurodollar Loans denominated
in a currency other than Dollars may not be converted into Base Rate Loans, (ii)
no partial conversion shall reduce the outstanding principal amount of the
Eurodollar Loans made pursuant to a Borrowing to less than the Minimum Borrowing
Amount applicable thereto, (iii) Base Rate Loans may not be converted into
Eurodollar Loans when a Default or Event of Default is then in existence if the
Administrative Agent or the Required Banks shall have determined in its or their
sole discretion not to permit such conversion and (iv) Borrowings of Eurodollar
Loans resulting from this Section 1.06 shall be limited in number as provided in
Section 1.02. Each such conversion shall be effected by the Borrower giving the
Administrative Agent at the Notice Office, prior to 11:00 A.M. (New York time),
at least three Business Days' (or one Business Day in the case of a conversion
into Base Rate Loans) prior written notice (or telephonic notice promptly
confirmed in writing) (each, a "Notice of Conversion") specifying the Loans to
be so converted, the Type of Loans (as to interest option) to be converted into
and, if to be converted into a Borrowing of Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Administrative Agent shall give
each Bank prompt notice of any such proposed conversion affecting any of its
Loans.
3
1.07 Pro Rata Borrowings. All Revolving Loans under this Agreement shall be
made by the Banks pro rata on the basis of their Revolving Loan Commitments. It
is understood that no Bank shall be responsible for any default by any other
Bank in its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to fulfill its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate Loan shall
bear interest from the date of the Borrowing thereof until the earlier of (i)
the maturity (whether by acceleration or otherwise) of such Base Rate Loan and
(ii) the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to
Section 1.06, at a rate per annum which shall at all times be equal to the
Applicable Margin then in effect for Base Rate Loans plus the Base Rate in
effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear interest
from the date of the Borrowing thereof until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Eurodollar Loan or (ii) the
conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06,
at a rate per annum which shall at all times be equal to the Applicable Margin
then in effect for Eurodollar Loans plus the relevant LIBOR for the Interest
Period applicable to such Eurodollar Loan.
(c) Overdue principal and, to the extent permitted by law, overdue interest
in respect of each Loan and any other overdue amount payable hereunder shall
bear interest at a rate per annum equal to the Base Rate in effect from time to
time plus the sum of (i) 2% and (ii) the Applicable Margin then in effect for
Base Rate Loans; provided that Eurodollar Loans shall bear interest after
maturity (whether by acceleration or otherwise) until the end of the applicable
Interest Period at a rate per annum equal to 2% in excess of the rate of
interest then applicable thereto.
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day of
each calendar quarter, (ii) in respect of each Eurodollar Loan, on the last day
of each Interest Period applicable thereto and, in the case of an Interest
Period of six months, on the date occurring three months after the first day of
such Interest Period and (iii) in respect of each Loan, on any conversion or
prepayment (on the amount so converted or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance
with Section 12.07(b) and (c).
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Borrower and the Banks thereof.
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1.09 Interest Periods. At the time the Borrower gives a Notice of Borrowing
or Notice of Conversion in respect of the making of, or conversion into, a
Borrowing of Eurodollar Loans (in the case of the initial Interest Period
applicable thereto) or prior to 11:00 A.M. (New York time) on the third Business
Day prior to the expiration of an Interest Period applicable to a Borrowing of
Eurodollar Loans, it shall have the right to elect by giving the Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period to be applicable to such Borrowing, which Interest Period shall,
at the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day on
which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such calendar
month;
(iii) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day, provided that if any Interest Period would otherwise expire on a day which
is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(iv) no Interest Period may be elected at any time when a Default or Event
of Default is then in existence if the Administrative Agent or the Required
Banks shall have determined in its or their sole discretion not to permit such
Interest Period;
(v) no Interest Period shall extend beyond the Term Loan Maturity Date;
and
(vi) no Interest Period with respect to any Borrowing of Term Loans may be
elected that would extend beyond any date upon which a mandatory repayment of
Term Loans is required to be made under Section 4.02(i)(a) if, after giving
effect to the selection of such Interest Period, the aggregate principal amount
of Term Loans maintained as Eurodollar Loans with Interest Periods ending after
such date would exceed the aggregate principal amount of Term Loans permitted to
be outstanding after such mandatory repayment.
If upon the expiration of any Interest Period, the Borrower has failed, or is
not permitted, to elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period;
provided that if such Eurodollar Loans are denominated in a currency other than
Dollars, then such Eurodollar Loans shall not convert to Base Rate Loans but
shall instead be prepaid by the Borrower on the last day of such Interest
Period.
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1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in the
case of clause (i) or (iv) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Bank shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto, provided that such determination has been made in good
faith):
(i) on any date for determining any LIBOR for any Interest Period, that,
by reason of any changes arising after the Effective Date affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of the respective LIBOR; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to any
Eurodollar Loans (other than any increased cost or reduction in the amount
received or receivable resulting from the imposition of or a change in the rate
of taxes or similar charges) because of (x) any change since the Effective Date
in any applicable law, governmental rule, regulation, guideline, order or
request (whether or not having the force of law), or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline, order or request (such as, for
example, but not limited to, a change in official reserve requirements, but, in
all events, excluding reserves required under Regulation D to the extent
included in the computation of the respective LIBOR) and/or (y) other
circumstances materially affecting the interbank Eurodollar market generally;
(iii) at any time, that the making or continuance of any Eurodollar Loan
has become unlawful due to the compliance by such Bank in good faith with any
change since the Effective Date in any law, governmental rule, regulation,
guideline or order, or the interpretation or application thereof, or would
conflict with any thereof not having the force of law but with which such Bank
customarily complies, or has become impracticable as a result of a contingency
occurring after the Effective Date which materially adversely affects the
interbank Eurodollar market; or
(iv) at any time that any Alternate Currency is not available in
sufficient amounts, as determined in good faith by the Administrative Agent, to
fund any Borrowing of Loans denominated in such Alternate Currency;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) or (iv) above) shall (x) on such date and (y) within 10 Business
Days of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and, except in the case of clauses (i) and
(iv) above, to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (w) in the case of clause (i) above, Eurodollar Loans, priced in
respect of the affected LIBOR, shall no longer be available until such time as
the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred shall be
deemed rescinded by the Borrower or, in the case of a Notice of Borrowing,
shall, at the option of the Borrower, be deemed converted into a Notice of
Borrowing for Base Rate Loans to be made on the date of Borrowing contained in
such Notice of Borrowing, (x) in the case of clause (ii) above, the Borrower
shall pay to such Bank, within 10 days of its receipt of written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank shall
determine) as shall be required to compensate such Bank for such increased
costs or reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, which basis shall be reasonable and consistently applied, submitted to
the Borrower by such Bank shall, absent manifest error, be final and conclusive
and binding upon all parties hereto), (y) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by applicable law
and (z) in the case of clause (iv) above, Loans in the affected Alternate
Currency shall no longer be available until such time as the Administrative
Agent notifies the Borrower and the Banks that the circumstances giving rise to
such notice by the Administrative Agent no longer exist in accordance with
clause (y) of the preceding sentence, and any Notice of Borrowing or Notice of
Conversion given by a Borrower with respect to such Alternate Currency Loans
which have not yet been incurred shall be deemed rescinded by the Borrower.
6
(b) At any time that any Eurodollar Loan is affected by the circumstances
described in Section 1.10(a)(ii) or (iii), the Borrower may (and in the case of
a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the Borrower shall)
either (i) if the affected Eurodollar Loan is then being made pursuant to a
Borrowing, by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified in
writing by a Bank pursuant to Section 1.10(a)(ii) or (iii), cancel said
Borrowing, convert the related Notice of Borrowing into one requesting a
Borrowing of Base Rate Loans or require the affected Bank to make its requested
Loan as a Base Rate Loan, or (ii) if the affected Eurodollar Loan is then
outstanding, upon at least three Business Days' notice to the Administrative
Agent, (A) in the case of a Eurodollar Loan denominated in Dollars, require the
affected Bank to convert each such Eurodollar Loan into a Base Rate Loan, and
(B) in the case of a Eurodollar Loan denominated in an Alternate Currency, repay
all such Eurodollar Loans in full, provided that if more than one Bank is
affected at any time, then all affected Banks must be treated in the same manner
pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Effective Date the
adoption or effectiveness of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by such Bank or its parent corporation with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, in each case made
subsequent to the Effective Date, has or would have the effect of reducing the
rate of return on such Bank's or its parent corporation's capital or assets as a
consequence of such Bank's commitments or obligations hereunder to a level below
that which such Bank or its parent corporation could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Bank's or its parent corporation's policies with respect to capital adequacy),
then from time to time, the Borrower shall within 10 days of its receipt of
written demand by such Bank (with a copy to the Administrative Agent), pay to
such Bank such additional amount or amounts as will compensate such Bank or its
parent corporation for such reduction. Each Bank, upon determining in good
faith that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower, which notice
shall set forth in reasonable detail the basis of the calculation of such
additional amounts, which basis must be reasonable and consistently applied,
although the failure to give any such notice shall not release or diminish any
of the Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.
7
1.11 Compensation. The Borrower shall compensate each Bank, upon its
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit with
respect to such Loans) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank or the Administrative Agent) a Borrowing of
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment, prepayment
or conversion of any of its Eurodollar Loans occurs on a date which is not the
last day of an Interest Period applicable thereto; (iii) if any prepayment of
any of its Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
failure by the Borrower to repay its Loans when required by the terms of this
Agreement or (y) an election made pursuant to Section 1.10(b). Calculation of
all amounts payable to a Bank under this Section 1.11 shall be made as though
that Bank had actually funded its relevant Eurodollar Loan through the purchase
of a Eurodollar deposit bearing interest at the relevant LIBOR in an amount
equal to the amount of that Loan, having a maturity comparable to the relevant
Interest Period and through the transfer of such Eurodollar deposit from an
offshore office of that Bank or other bank to a domestic office of that Bank in
the United States of America; provided, however, that each Bank may fund each of
its Eurodollar Loans in any manner it sees fit and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that, upon the occurrence
of any event giving rise to the operation of Section 1.10(a)(ii) or (iii) or
Section 4.04 with respect to such Bank, it will, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such Bank)
to designate another lending office for any Loans affected by such event;
provided that such designation is made on such terms that, in the opinion of
such Bank, such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such Section. Nothing in this Section
1.12 shall affect or postpone any of the obligations of the Borrower or the
right of any Bank provided in Section 1.10 or 4.04.
8
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting Bank or (y)
upon the occurrence of any event giving rise to the operation of Section
1.10(a)(ii) or (iii), Section 1.10(c) or Section 4.04 with respect to any Bank
which results in such Bank charging to the Borrower increased costs in excess of
those being generally charged by the other Banks, the Borrower shall have the
right, if no Default or Event of Default then exists, to replace such Bank (the
"Replaced Bank") with one or more other banks or financial institutions, none of
whom shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank") reasonably acceptable to the
Administrative Agent, provided that (i) at the time of any replacement pursuant
to this Section 1.13, the Replacement Bank shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 12.04(b) (and with all
fees payable pursuant to said Section 12.04(b) to be paid by the Replacement
Bank) pursuant to which the Replacement Bank shall acquire all of the Revolving
Loan Commitments (if prior to the Conversion Date) and all of the L/C
Commitments and all of the outstanding Loans of the Replaced Bank and, in
connection therewith, shall pay to the Replaced Bank in respect thereof an
amount equal to (A) the principal of, and all accrued interest on, all
outstanding Loans of the Replaced Bank plus (B) all accrued, but theretofore
unpaid, Fees owing to the Replaced Bank pursuant to Section 3.01, and (ii) all
obligations (including, without limitation, all such amounts, if any, due and
owing under Section 1.11) of the Borrower due and owing to the Replaced Bank
(other than those specifically described in clause (i) above in respect of which
the assignment purchase price has been, or is concurrently being, paid) shall
be paid in full to such Replaced Bank concurrently with such replacement. Upon
the execution of the respective Assignment and Assumption Agreement, the payment
of amounts referred to in clauses (i) and (ii) above, the Replacement Bank shall
become a Bank hereunder and the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 4.04, 11.07 and
12.01), which shall survive as to such Replaced Bank.
SECTION 2. Letter of Credit Facility.
2.01 Letters of Credit. (a) Subject to and upon the terms and conditions
herein set forth, the Borrower may request the Issuing Agent at any time and
from time to time on or after the Effective Date and on or prior to the L/C
Issuance Expiration Date to issue, for the benefit of Lloyds and in support of,
on a standby basis, L/C Supportable Obligations, and subject to and upon the
terms and conditions herein set forth the Issuing Agent agrees to issue at any
time and from time to time on or after the Effective Date and on or prior to the
L/C Issuance Expiration Date, one or more irrevocable standby letters of credit
in the form of Exhibit B (each such letter of credit, a "Letter of Credit" and,
collectively, the "Letters of Credit"). Notwithstanding the foregoing, the
Issuing Agent shall be under no obligation to issue any Letter of Credit if at
the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing Agent or
any L/C Bank from issuing such Letter of Credit or any requirement of law
applicable to the Issuing Agent or any L/C Bank or any request or directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over the Issuing Agent or any L/C Bank shall prohibit, or request
that the Issuing Agent or any L/C Bank refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose upon the
Issuing Agent or any L/C Bank with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which the Issuing Agent or
any L/C Bank is not otherwise compensated) not in effect on the date hereof, or
any unreimbursed loss, cost or expense which was not applicable, in effect or
known to the Issuing Agent or any L/C Bank as of the date hereof and which the
Issuing Agent or any L/C Bank in good ▇▇▇▇▇ ▇▇▇▇▇ material to it; or
(ii) the conditions precedent set forth in Section 5 are not satisfied at
that time.
9
(b) Each Letter of Credit will be issued by the Issuing Agent on behalf
of the L/C Banks, and each L/C Bank will participate in each Letter of Credit
pro rata in accordance with its L/C Percentage. The obligations of each L/C Bank
under and in respect of each Letter of Credit are several, and the failure by
any L/C Bank to perform its obligations hereunder or under any Letter of Credit
shall not affect the obligations of the Borrower toward any other party hereto
nor shall any other such party be liable for the failure by such L/C Bank to
perform its obligations hereunder or under any Letter of Credit.
(c) Notwithstanding the foregoing, (i) the aggregate Stated Amount of
each Letter of Credit shall not exceed an amount which, when added to the Letter
of Credit Outstandings at the time of issuance thereof, equals the Total L/C
Commitment at the time of issuance thereof; (ii) no L/C Bank's L/C Exposure
shall exceed such L/C Bank's L/C Commitment at the time of issuance of any
Letter of Credit (and after giving effect to such issuance); (iii) each Letter
of Credit (x) issued after the Effective Date and prior to the Lloyds Coming in
Line Date occurring in November, 2000 shall have an initial expiration date of
December 31, 2004 and (y) issued thereafter but prior to the Lloyds Coming in
Line Date occurring in November, 2001 (to the extent permitted to be issued
hereunder) shall have an initial expiration date of December 31, 2005; (iv) each
Letter of Credit may be denominated in any Approved Currency as determined by
the Borrower at the time of issuance, and payable on a sight basis; and (v) the
Issuing Agent will not issue any Letter of Credit after it has received notice
from the Borrower or the Required Banks stating that any condition precedent set
forth in Section 5 is not satisfied at that time until the Issuing Agent shall
have received a written notice of (x) rescission of such notice from the party
or parties originally delivering the same or (y) a waiver of such condition
precedent by the Required Banks.
(d) Subject to and on the terms and conditions set forth herein, the
Issuing Agent is hereby authorized by the Borrower and the L/C Banks to arrange
for the issuance of any Letter of Credit pursuant to Section 2.01(a) and the
amendment of any Letter of Credit pursuant to Section 2.06 and/or 12.04(b) by:
(i) completing the commencement date and the expiry date of such Letter
of Credit;
(ii) (in the case of an amendment increasing or reducing the amount
thereof) amending such Letter of Credit in such manner as Lloyd's may agree;
(iii) completing Schedule 1 to such Letter of Credit with the
participation of each L/C Bank as allocated pursuant to the terms hereof; and
(iv) executing such Letter of Credit on behalf of each L/C Bank and
following such execution delivering such Letter of Credit to Lloyd's.
(e) Each L/C Bank hereby makes, constitute and appoints the Issuing Agent
its true and lawful attorney-in-fact, in its name, place and stead, giving the
Issuing Agent full power to issue, amend and take other action with respect to
each Letter of Credit as contemplated by this Agreement.
10
2.02 Letter of Credit Request; Notices of Issuance. (a) Whenever it desires
a Letter of Credit to be issued, the Borrower shall give the Issuing Agent
written notice that it desires such Letter of Credit to be issued, which written
notice shall be in the form of Exhibit A-2 (the "Letter of Credit Request"). The
Letter of Credit Request shall include any other documents as the Administrative
Agent customarily requires in connection therewith.
(b) Upon its issuance of or amendment to any Letter of Credit, the Issuing
Agent shall promptly notify the Borrower and the L/C Banks of such issuance or
amendment, which notice shall include a summary description of the Letter of
Credit actually issued and any amendments thereto.
2.03 Agreement to Repay Letter of Credit Payments. (a) The Borrower hereby
agrees to reimburse each L/C Bank, by making payment directly to each L/C Bank
in immediately available funds, for any payment or disbursement made by such L/C
Bank under any Letter of Credit (each such amount so paid or disbursed until
reimbursed, an "Unpaid Drawing") no later than one Business Day following the
date that the Borrower receives notice in writing or by telephone (promptly
confirmed in writing) from the Issuing Agent of such payment or disbursement,
with interest on the amount so paid or disbursed by such L/C Bank to the extent
not reimbursed prior to 1:00 P.M. (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but not
including the date that such L/C Bank is reimbursed therefor at a rate per annum
which shall be the Applicable Margin plus the Base Rate as in effect from time
to time (plus an additional 2% per annum if not reimbursed by the third Business
Day after the date the Borrower receives notice from such L/C Bank of such
payment or disbursement), such interest also to be payable on demand, provided
that if a Default or an Event of Default under Section 9.05 shall have occurred
and be continuing, such Unpaid Drawings shall be due and payable immediately
without presentment, demand, protest or notice of any kind (all of which are
hereby waived by the Borrower) and shall bear interest at a rate per annum which
shall be the Base Rate plus the Applicable Margin (plus an additional 2% on and
after the third Business Day following the respective drawing).
(b) The Borrower's obligation under this Section 2.03 to reimburse each L/C
Bank with respect to Unpaid Drawings (including, in each case, interest thereon)
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against such L/C Bank or the Issuing Agent,
including, without limitation, any defense based upon the failure of any drawing
under any Letter of Credit to substantially conform to the terms of such Letter
of Credit or any non-application or misapplication by the beneficiary of the
proceeds of such drawing; provided, however, that the Borrower shall not be
obligated to reimburse any L/C Bank for any wrongful payment made by such L/C
Bank under a Letter of Credit issued by it as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such L/C
Bank.
11
2.04 Increased Costs. If after the Effective Date, the adoption or
effectiveness of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any L/C Bank with any
request or directive (whether or not having the force of law) by any such
Governmental Authority, central bank or comparable agency shall either (i)
impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against letters of credit issued by or participated in by
such L/C Bank, or (ii) impose on such L/C Bank any other conditions affecting
this Agreement or any Letter of Credit and the result of any of the foregoing is
to increase the cost to such L/C Bank, or to reduce the amount of any sum
received or receivable by such L/C Bank, then from time to time, the Borrower
shall within 10 days of its receipt of written demand by such L/C Bank (with a
copy to the Administrative Agent) pay to such L/C Bank such additional amounts
as will compensate such L/C Bank for such cost or reduction. Each L/C Bank, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 2.04, will give prompt written notice thereof to the Borrower,
which notice shall set forth in reasonable detail the basis of the calculation
of such additional amounts, which basis must be reasonable and consistently
applied, although the failure to deliver any such notice shall not release or
diminish the Borrower's obligations to pay additional amounts pursuant to this
Section 2.04 upon subsequent receipt of such notice.
2.05 Letter of Credit Expiration Extensions. (a) Each L/C Bank acknowledges
that in accordance with the terms of each Letter of Credit the expiration date
of such Letter of Credit will be automatically extended for an additional year,
without written amendment, unless, at least 30 days prior to December 31 of each
year (commencing with December 31, 2000), notice is given by the Issuing Agent
in accordance with the terms of the respective Letter of Credit (a "Notice of
Non-Extension") that the Letter of Credit will not be extended beyond its
current expiration date.
(b) In connection with the first possible extension of Letters of
Credit (occurring in the year 2000), the Issuing Agent shall not give a Notice
of Non-Extension in respect of any Letter of Credit unless a Default or Event of
Default exists at such time, in which case the Issuing Agent may, and if
requested by the Required Banks will, give a Notice of Non-Extension to Lloyd's
in respect of each Letter of Credit no later than December 1, 2000. In
connection with any subsequent possible extension of the Letters of Credit, the
Issuing Agent may, and if requested by any L/C Bank (which request any L/C Bank
may make in its sole discretion) the Issuing Agent will, give a Notice of
Non-Extension to Lloyd's in respect of each Letter of Credit no later than
December 1st of such year.
(c) Each L/C Bank agrees that on or prior to the date occurring 90 days
prior to the Lloyds Coming in Line Date occurring in November, 2001, such L/C
Bank will notify the Borrower as to whether such L/C Bank intends to request the
Issuing Agent to deliver Notices of Non-Extension in respect of then outstanding
Letters of Credit in accordance with the last sentence of Section 2.05(b) above,
provided that the failure of any L/C Bank to give such notice to the Borrower
shall not preclude such L/C Bank from subsequently delivering such request to
the Issuing Agent or the Issuing Agent from giving any such Notices of
Non-Extension to Lloyds.
12
2.06 Changes to Stated Amount. At any time when any Letter of Credit
is outstanding, at the request of the Borrower, the Issuing Agent will enter
into an amendment increasing or reducing the Stated Amount of such Letter of
Credit, provided that (i) in no event shall the Stated Amount of such Letter of
Credit be increased to an amount which, when added to the Letter of Credit
Outstandings at such time, exceeds the Total L/C Commitment at such time, (ii)
the Stated Amount of a Letter of Credit may not be increased at any time if the
conditions precedent set forth in Section 5.02 are not satisfied at such time,
and (iii) the Stated Amount of a Letter of Credit may not be increased at any
time after the L/C Issuance Expiration Date.
2.07 Representations and Warranties of L/C Banks. Each L/C Bank represents
and warrants that each Letter of Credit constitutes a legal, valid and binding
obligation of such L/C Bank enforceable in accordance with its terms.
SECTION 3. Fees; Commitments.
3.01 Fees. (a) The Borrower shall pay a commitment fee (the "RL Commitment
Fee") to the Administrative Agent for distribution to each Non-Defaulting Bank
for the period from the Effective Date to but not including the earlier of (A)
the date the Total Revolving Loan Commitment has been terminated and (B) the
Conversion Date, computed at a rate per annum for each day equal to the
Applicable Commitment Fee Percentage then in effect on the daily Unutilized
Revolving Loan Commitment of such Bank. Accrued RL Commitment Fees shall be due
and payable quarterly in arrears on the last Business Day of each calendar
quarter and the earlier of the date the Total Revolving Loan Commitment has been
terminated and the Conversion Date.
(b) The Borrower shall pay a commitment fee (the "L/C Commitment Fee")
to the Administrative Agent for distribution to each Non-Defaulting Bank for the
period from the Effective Date to but not including the date that such Bank's
L/C Commitment has been terminated, computed at a rate per annum for each day
equal to the Applicable Commitment Fee Percentage then in effect on the daily
Unutilized L/C Commitment of such Bank. Accrued L/C Commitment Fees shall be due
and payable quarterly in arrears on the last Business Day of each calendar
quarter and the date the Total L/C Commitment has been terminated.
(c) The Borrower shall pay a letter of credit fee (the "Letter of Credit
Fee") to the Administrative Agent for distribution to each Non-Defaulting Bank
with an L/C Commitment for the period from the date of issuance of the initial
Letter of Credit to but not including the date that such Bank's L/C Commitment
has been terminated, computed at a rate for each day equal to the Applicable
Margin then in effect for Eurodollar Loans on the daily L/C Exposure of such
Bank (provided that for purposes of this Section 3.01(c) only, each L/C Bank's
L/C Exposure shall be no less than such L/C Bank's L/C Percentage of
$150,000,000). Accrued Letter of Credit Fees shall be due and payable quarterly
in arrears on the last Business Day of each calendar quarter and the date the
Total L/C Commitment has been terminated.
(d) The Borrower hereby agrees to pay to the Issuing Agent upon each
issuance of, payment under, and/or amendment of, any Letter of Credit such
amount as shall at the time of such issuance, payment or amendment be the
administrative charge which the Issuing Agent is customarily charging for
issuances of, payments under or amendments of, letters of credit issued by it.
(e) The Borrower shall pay to the Administrative Agent, for its own
account, such fees as may be agreed to from time to time in writing between the
Borrower and the Administrative Agent, when and as due.
(f) All computations of Fees shall be made in accordance with Section 12.07
(b).
13
3.02 Voluntary Reduction of Commitments. (a) At any time prior to the
Conversion Date, upon at least three Business Days' prior written notice to the
Administrative Agent at the Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks), the Borrower shall have the
right, at any time or from time to time, without premium or penalty, to
terminate or reduce the Total Unutilized Revolving Loan Commitment, in whole or
in part, pursuant to this Section 3.02(a), in an integral multiple of
$5,000,000, in the case of partial reductions to the Total Unutilized Revolving
Loan Commitment, provided that each such reduction shall apply proportionately
to permanently reduce the Revolving Loan Commitment of each Bank.
(b) At any time, upon at least three Business Days' prior written notice to
the Administrative Agent at the Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall have the
right, at any time or from time to time, without premium or penalty, to
terminate or reduce the Total Unutilized L/C Commitment, in whole or in part,
pursuant to this Section 3.02(b), in an integral multiple of $5,000,000, in the
case of partial reductions to the Total Unutilized L/C Commitment, provided that
each such reduction shall apply proportionately to permanently reduce the L/C
Commitment of each Bank.
3.03 Mandatory Reductions of Commitments. (a) The Total Revolving
Loan Commitment (and the Revolving Loan Commitment of each Bank) shall terminate
in its entirety at 9:00 a.m. (New York time) on the Conversion Date (after
giving effect to the conversion of outstanding Revolving Loans into Term Loans
at such time).
(b) The Total L/C Commitment (and the L/C Commitment of each Bank)
shall terminate on the later of (i) the L/C Maturity Date and (ii) the date on
which no Letters of Credit are outstanding and no Unpaid Drawings exist.
(c) On each date upon which a mandatory repayment of Revolving Loans
pursuant to Section 4.02(i)(c) or (d) is required or would be required if (x) an
unlimited amount of Revolving Loans were then outstanding and (y) the conditions
precedent to borrowing set forth in Section 5.02 are not satisfied at such time,
the Total Revolving Loan Commitment shall be permanently reduced by the amount
required to be applied pursuant to said Section (determined as if an unlimited
amount of Revolving Loans were actually outstanding); provided, that except to
the extent resulting from a mandatory prepayment of Revolving Loans pursuant to
Section 4.02(i)(d) with the portion of net cash proceeds of Indebtedness
incurred under Section 8.04(h) exceeding $150,000,000 (i) no mandatory reduction
of the Total Revolving Loan Commitment shall be required pursuant to this
Section 3.03(c) at any time if the Borrower's senior unsecured debt rating from
S&P is BBB+ or greater at such time, and (ii) in no event shall the Total
Revolving Loan Commitment be reduced below $100,000,000 as a result of the
operation of this Section 3.03(c).
(d) Each reduction or adjustmen of the Total Revolving Loan Commitment
pursuant to this Section 3.03 shall apply proportionately to the Revolving Loan
Commitment of each Bank with such a Commitment.
14
SECTION 4. Payments.
4.01 Voluntary Prepayments. The Borrower shall have the right to pre-pay
Loans, without premium or penalty (except for amounts payable pursuant to
Section 1.11), in whole or in part, from time to time on the following terms and
conditions: (i) the Borrower shall give the Administrative Agent at its Notice
Office written notice (or telephonic notice promptly confirmed in writing) of
its intent to prepay the Loans, whether such Loans are Term Loans or Revolving
Loans, the amount of such prepayment and (in the case of Eurodollar Loans) the
specific Borrowing(s) pursuant to which such prepayment is made, which notice
shall be received by the Administrative Agent (x) in the case of Base Rate
Loans, no later than 11:00 A.M. (New York time) one Business Day prior to the
date of such prepayment, or (y) in the case of Eurodollar Loans, three Business
Days prior to the date of such prepayment, which notice shall promptly be
transmitted by the Administrative Agent to each of the Banks; (ii) each partial
pre-payment of any Borrowing shall be in an aggregate Principal Amount of at
least $1,000,000, provided that no partial prepayment of Eurodollar Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans
outstanding pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount; (iii) each prepayment in respect of any Loans made pursuant to
a Borrowing shall be applied pro rata among such Loans; and (iv) each prepayment
of Term Loans pursuant to this Section 4.01 shall reduce the then remaining
Scheduled Repayments on a pro rata basis (based upon the then remaining
principal amount of each such Scheduled Repayment).
4.02 Mandatory Repayments and Prepayments.
(i) Requirements:
(a) In addition to any other mandatory repayments pursuant this Section
4.02, on each date set forth below, the Borrower shall be required to repay the
principal amount of Term Loans in an amount equal to the product of (x) the
aggregate Principal Amount of Revolving Loans converted to Term Loans on the
Conversion Date pursuant to Section 1.01(b) hereof multiplied by (y) the
percentage set forth below opposite such date (each such repayment, as the same
may be reduced pursuant to Sections 4.01 and/or 4.02(ii)(a), a "Scheduled
Repayment"):
Scheduled Repayment Date Percentage
November 30, 2001 10.0%
May 31, 2002 12.5%
November 30, 2002 12.5%
May 31, 2003 15.0%
November 30, 2003 15.0%
May 31, 2004 17.5%
Term Loan Maturity Date 17.5%
(b) In addition to any other mandatory repayments pursuant to this Section
4.02, not later than the third Business Day following the date of the receipt
thereof by the Borrower and/or any of its Subsidiaries, an amount equal to 100%
of the cash proceeds (net of underwriting discounts and commissions and other
reasonable fees and costs associated therewith) of the sale or issuance of
equity by, or cash capital contributions to, the Borrower or any Subsidiary of
the Borrower (other than (i) any issuance of common stock or options to purchase
common stock by the Borrower to the extent issued to the employees or agents of
the Borrower or its Subsidiaries, (ii) issuances of common stock pursuant to
warrants outstanding on the Effective Date and (iii) issuances of stock by
Subsidiaries of the Borrower to the Borrower or to Wholly-Owned Subsidiaries of
the Borrower, and capital contributions by the Borrower to its Subsidiaries)
shall be applied (i) if prior to the Conversion Date, to repay the aggregate
Principal Amount of Revolving Loans, and (ii) if the Conversion Date has
occurred, to repay the aggregate Principal Amount of the Term Loans.
15
(c) In addition to any other mandatory repayments pursuant to this Section
4.02, not later than the fifth Business Day following the date of receipt
thereof by the Borrower and/or any of its Subsidiaries of the proceeds of any
Asset Sale, an amount equal to 100% of the Net Available Proceeds of such Asset
Sale shall be applied (i) if prior to the Conversion Date (but only to the
extent that the conditions precedent to borrowing set forth in Section 5.02 are
not satisfied at such time), to repay the Principal Amount of Revolving Loans
and (ii) if the Conversion Date has occurred, to repay the aggregate Principal
Amount of the Term Loans; provided that (A) if the Net Available Proceeds of any
such Asset Sale are less than $5,000,000, such Net Available Proceeds shall not
be required to be so applied until such time as such Net Available Proceeds,
when combined with the Net Available Proceeds from additional subsequent Asset
Sales, exceed $5,000,000, at which time all such Net Available Proceeds shall be
required to be applied pursuant to this Section 4.02(i)(c), and (B) the Net
Available Proceeds from Asset Sales shall not be required to be so applied on
such date (i) to the extent that no Default or Event of Default then exists and
the Borrower delivers a certificate to the Administrative Agent on or prior to
such date stating that such Net Available Proceeds shall within 180 days
following the date of such Asset Sale be used to purchase assets used, or to be
used, in the business described in Section 8.01 (including, without limitation,
the equity interest of a Person engaged in any such business), which certificate
shall set forth the estimate of the proceeds to be so expended, it being
understood that (1) if all or any portion of such Net Available Proceeds not so
applied are not so used (or contractually committed to be used) within such 180
day period, such remaining portion shall be applied on the last day of such
period as provided above in this Section 4.02(i)(c) (without regard to the
proviso herein) and (2) if all or any portion of such Net Available Proceeds are
not required to be applied on the 180th day referred to in clause (1) above
because such amount is contractually committed to be used and subsequent to such
date such contract is terminated or expires without such portion being so used,
then such remaining portion shall be applied on the date of such termination or
expiration as provided in this Section 4.02(i)(c) (without regard to the proviso
herein).
(d) In addition to any other mandatory repayments pursuant to this Section
4.02, not later than the third Business Day following the date of the receipt
thereof by the Borrower and/or any of its Subsidiaries, an amount equal to 100%
of the cash proceeds (net of underwriting discounts and commissions and other
reasonable fees and costs associated therewith) of the incurrence of
Indebtedness for borrowed money or evidenced by bonds, notes, debentures or
similar instruments by the Borrower and/or any of its Subsidiaries (other than
Indebtedness permitted by Section 8.04 as such Section 8.04 is in effect on the
Effective Date, provided that notwithstanding the foregoing the net cash
proceeds of Indebtedness incurred under Section 8.04(h) shall be required to be
applied pursuant to this Section 4.02(i)(d)) shall be applied (i) if prior to
the Conversion Date (but only to the extent that the conditions precedent to
borrowing set forth in Section 5.02 are not satisfied at such time), to repay
the aggregate Principal Amount of Revolving Loans and (ii) if the Conversion
Date has occurred, to repay the aggregate Principal Amount of the Term Loans.
(e) If on any date the aggregate outstanding Principal Amount of Revolving
Loans (after giving effect to all other repayments thereof on such date) exceeds
the Available Total Revolving Loan Commitment as then in effect (including,
without limitation, as a result of the determination of Dollar Equivalents
pursuant to Section 12.07(d)), the Borrower shall repay on such date the
principal of the Revolving Loans in an amount equal to such excess.
16
(f) If on any date the Letter of Credit Outstandings exceed the Total L/C
Commitment (including, without limitation, as a result of the determination of
Dollar Equivalents pursuant to Section 12.07(d)), the Borrower agrees to pay to
the Administrative Agent an amount in cash and/or Cash Equivalents equal to such
excess and the Administrative Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance reasonably satisfactory to the
Administrative Agent (which shall permit certain investments in Cash Equivalents
satisfactory to the Administrative Agent until the proceeds are applied to the
secured obligations).
(g) Notwithstanding anything to the contrary contained in this Agreement
or in any other Credit Document, all then outstanding Term Loans shall be repaid
in full on the Term Loan Maturity Date.
(ii) Application:
(a) Each mandatory prepayment of Term Loans pursuant to Section 4.02(i)(b),
(c) or (d) shall be applied to reduce the then remaining Scheduled Repayments on
a pro rata basis (based upon the then remaining principal amount of each such
Scheduled Repayment).
(b) With respect to each prepayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which made; provided that (i) the Borrower
shall first so designate all Base Rate Loans and Eurodollar Loans with Interest
Periods ending on the date of repayment prior to designating any other
Eurodollar Loans; (ii) if any prepayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount, such Borrowing
shall be immediately converted into Base Rate Loans; and (iii) each prepayment
of any Loans made pursuant to a Borrowing shall be applied pro rata among such
Loans. In the absence of a designation by the Borrower as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under Section 1.11. Notwithstanding the foregoing
provisions of this Section 4.02, if at any time the mandatory prepayment of
Loans pursuant to Section 4.02(i)(b), (c) or (d) would result, after giving
effect to the first sentence of this clause (b), in the Borrower incurring
breakage costs under Section 1.11 as a result of Eurodollar Loans being repaid
other than on the last day of an Interest Period applicable thereto (the
"Affected Eurodollar Loans"), then the Borrower may, if it so elects by notice
to the Administrative Agent, deposit a portion (up to 100%) of the amounts that
otherwise would have been paid in respect of the Affected Eurodollar Loans with
the Administrative Agent to be held pursuant to an escrow agreement to be
entered into in form and substance satisfactory to the Administrative Agent,
with such escrowed amounts to be released from such escrow (and applied to repay
the principal amount of such Loans) upon each occurrence thereafter of the last
day of an Interest Period applicable to the relevant Eurodollar Loans (or such
earlier date or dates as shall be requested by the Borrower), with the amount to
be so released and applied on the last day of each Interest Period to be the
amount of the Loans to which such Interest Period applies (or, if less, the
amount remaining in such escrow account).
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4.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable account of the Banks entitled thereto, not
later than 12:00 Noon (New York time) on the date when due and shall be made in
immediately available funds at the Payment Office in (x) Dollars, if such
payment is made in respect of any obligation of the Borrower under this
Agreement except as provided in the immediately succeeding clause (y), and (y)
the appropriate Alternate Currency, if such payment is made in respect of
principal of or interest on Alternate Currency Loans or if such payment is made
in respect of any Unpaid Drawing (or interest thereon) with respect to an
Alternate Currency Letter of Credit, it being understood that written or
facsimile notice by the Borrower to the Administrative Agent to make a payment
from the funds in the Borrower's account at the Payment Office shall constitute
the making of such payment to the extent of such funds held in such account. Any
payments under this Agreement which are made later than 12:00 Noon (New York
time) shall be deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable during such extension period at the applicable rate in effect
immediately prior to such extension.
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4.04 Net Payments. (a) All payments made by the Borrower hereunder or under
any Note will be made without setoff, counterclaim or other defense. Except as
provided in Section 4.04(b), all such payments will be made free and clear of,
and without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax imposed on or
measured by the net income or net profits of a Bank pursuant to the laws of the
jurisdiction in which it is organized or the jurisdiction in which the principal
office or applicable lending office of such Bank is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with
respect to such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If any
Taxes are so levied or imposed, the Borrower agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or net profits of such Bank pursuant to the laws
of the jurisdiction in which such Bank is organized or in which the principal
office or applicable lending office of such Bank is located or under the laws of
any political subdivision or taxing authority of any such jurisdiction in which
such Bank is organized or in which the principal office or applicable lending
office of such Bank is located and for any withholding of taxes as such Bank
shall determine are payable by, or withheld from, such Bank, in respect of such
amounts so paid to or on behalf of such Bank pursuant to the preceding sentence
and in respect of any amounts paid to or on behalf of such Bank pursuant to this
sentence. The Borrower will furnish to the Administrative Agent within 45 days
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts, evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Bank, and reimburse such
Bank upon its written request, for the amount of any Taxes so levied or imposed
and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the case of a Bank that is an assignee or transferee
of an interest under this Agreement pursuant to Section 12.04(b) (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Bank, (i) two accurate and complete original signed copies of Internal Revenue
Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption under
an income tax treaty) (or successor forms) certifying to such Bank's entitlement
as of such date to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Note, or (ii)
if the Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form W-8ECI or Form
W-8BEN (with respect to a complete exemption under an income tax treaty)
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit E (any such certificate, a "Section 4.04(b)(ii) Certificate") and (y)
two accurate and complete original signed copies of Internal Revenue Service
Form W-8BEN (with respect to the portfolio interest exemption) (or successor
form) certifying to such Bank's entitlement as of such date to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Note. In addition, each
Bank agrees that from time to time after the Effective Date, when a lapse in
time or change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
19
Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete
exemption under an income tax treaty), or Form W-8BEN (with respect to the
portfolio interest exemption) and a Section 4.04(b)(ii) Certificate, as the case
may be, and such other forms as may be required in order to confirm or establish
the entitlement of such Bank to a continued exemption from or reduction in
United States withholding tax with respect to payments under this Agreement and
any Note, or it shall immediately notify the Borrower and the Administrative
Agent of its inability to deliver any such Form or Certificate, in which case
such Bank shall not be required to deliver any such Form or Certificate pursuant
to this Section 4.04(b). Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political sub-division or taxing authority thereof or therein)
from interest, Fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 4.04(a) hereof to
gross-up payments to be made to a Bank in respect of income or similar taxes
imposed by the United States if (I) such Bank has not provided to the Borrower
the Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 4.04(b) or (II) in the case of a payment, other than
interest, to a Bank described in clause (ii) above, to the extent that such
Forms do not establish a complete exemption from withholding of such taxes.
SECTION 5. Conditions Precedent. The obligation of each Bank to make
Revolving Loans to the Borrower hereunder and the obligation of the Issuing
Agent to issue or increase the Stated Amount of any Letter of Credit hereunder,
is subject, at the time of each such Credit Event (except as otherwise
hereinafter indicated), to the satisfaction of each of the following conditions:
5.01 Execution of Agreement. The Effective Date shall have occurred as
provided in Section 12.10.
5.02 No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties of each
Credit Party contained herein or in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
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5.03 Officer's Certificate. On the Initial Credit Event Date, the
Administrative Agent shall have received an officer's certificate dated such
date, signed by an Authorized Officer of the Borrower, stating that all of the
applicable conditions set forth in Sections 5.02, 5.06, 5.07, 5.09 and 5.13
exist as of such date.
5.04 Opinions of Counsel. On the Initial Credit Event Date, the
Administrative Agent shall have received an opinion, in form and substance
reasonably satisfactory to the Administrative Agent, addressed to each of the
Banks and dated the Initial Credit Event Date, from (i) ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel to the Borrower, which opinion shall cover the matters contained in
Exhibit C-1, (ii) ▇▇▇▇ ▇. Del Col, General Counsel of the Borrower, which
opinion shall cover the matters contained in Exhibit C-2 and (iii) White & Case
LLP, counsel to the Administrative Agent, which opinion shall cover the matters
contained in Exhibit C-3.
5.05 Corporate Proceedings. (a) On the Initial Credit Event Date, the
Banks shall have received from each Credit Party an officer's certificate, dated
the Initial Credit Event Date, signed by the President or any Vice President of
such Credit Party, and attested to by the Secretary or any Assistant Secretary
of such Credit Party, in the form of Exhibit D hereto with appropriate
insertions, together with (x) copies of the Certificate of Incorporation and
By-Laws of such Credit Party and (y) the resolutions of such Credit Party and
the other documents referred to in such certificate, and the foregoing shall be
reasonably satisfactory to the Administrative Agent.
(b) All corporate, tax and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement,
the other Credit Documents and the Transaction Documents shall be reasonably
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received all information and copies of all
certificates, documents and papers, including good standing certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Administrative Agent reasonably may have requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate
or governmental authorities.
5.06 Adverse Change, etc. On the Initial Credit Event Date, the
Administrative Agent shall not have become aware of any facts or conditions not
previously known or disclosed, whether occurring prior to or after the Initial
Credit Event Date, and since December 31, 1998 nothing shall have occurred, in
either case which, when taken as a whole, the Administrative Agent shall
reasonably determine (i) has, or is reasonably likely to have, a material
adverse effect on the rights or remedies of the Banks or the Administrative
Agent under this Agreement or any other Credit Document, or on the ability of
any Credit Party to perform its obligations hereunder or thereunder, or (ii) has
or is reasonably likely to have a Material Adverse Effect.
21
5.07 Litigation. On the Initial Credit Event Date, no actions, suits
or proceedings shall be pending or, to the knowledge of the Borrower, threatened
(i) with respect to this Agreement or any other Credit Document, the Transaction
Documents or the transactions contemplated hereby or thereby (including the
Acquisition) or (ii) which either the Administrative Agent or the Required Banks
shall reasonably determine has, or is reasonably likely to have, (x) a Material
Adverse Effect or (y) a material adverse effect on the rights or remedies of the
Banks or the Administrative Agent hereunder or under any other Credit Document
or on the ability of any Credit Party to perform its obligations hereunder or
thereunder.
5.08 Subsidiary Guaranty. On the Initial Credit Event Date, each
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Subsidiary Guaranty in the form of Exhibit F (as modified, amended or
supplemented from time to time in accordance with the terms hereof and thereof,
the "Subsidiary Guaranty"), and the Subsidiary Guaranty shall be in full force
and effect.
5.09 Consummation of the Refinancing. On or before the Initial Credit
Event Date, the Refinancing shall have been consummated in accordance with the
Refinancing Documents, which Refinancing Documents shall be in form and
substance reasonably satisfactory to the Administrative Agent, and all Legal
Requirements, each of the conditions precedent to the consummation of the
Refinancing shall have been satisfied in all material respects and not waived,
except with the reasonable consent of the Administrative Agent, to the
reasonable satisfaction of the Administrative Agent, all commitments in
connection with the existing Indebtedness for borrowed money of the Borrower and
Chartwell and their respective Subsidiaries shall have been terminated and all
Liens securing the Indebtedness refinanced pursuant to the Refinancing shall
have been terminated and released to the reasonable satisfaction of the
Administrative Agent.
5.10 Chartwell Senior Notes. On or before the Initial Credit Event Date,
Chartwell Re Holdings shall have given an irrevocable call notice for the
redemption of the Chartwell Senior Notes on or before March 1, 2000, it being
understood that the Chartwell Senior Notes are not required to be prepaid as of
the Initial Credit Event Date.
5.11 Financial Statements; Projections. Prior to the Initial Credit Event
Date, the Borrower shall have delivered or caused to be delivered to the
Administrative Agent with copies for each Bank:
(a) the audited Annual Statement of each Regulated Insurance Company which
is a Material Subsidiary for the fiscal year ended December 31, 1998, prepared
in accordance with SAP and as filed with the respective Applicable Insurance
Regulatory Authority, which Annual Statements shall be satisfactory in form and
substance to the Administrative Agent;
(b) the unaudited Quarterly Statement of each Regulated Insurance Company
which is a Material Subsidiary for the fiscal quarter ended June 30, 1999,
prepared in accordance with SAP and as filed with the respective Applicable
Insurance Regulatory Authority, which Quarterly Statements shall be satisfactory
in form and substance to the Administrative Agent;
22
(c) the audited balance sheet of (i) the Borrower and its Subsidiaries
(on a consolidated basis) and (ii) Chartwell and its Subsidiaries (on a
consolidated basis), in each case for the fiscal year ended December 31, 1998,
and the related statements of income, of stockholders' equity and of cash flows,
in each case prepared in accordance with GAAP;
(d) the unaudited balance sheet of (i) the Borrower and its Subsidiaries
(on a consolidated basis) and (ii) Chartwell and its Subsidiaries (on a
consolidated basis), in each case for the fiscal quarter ended June 30, 1999,
and the related unaudited statements of income, of stockholders' equity and of
cash flows, in each case prepared in accordance with GAAP;
(e) projected financial statements for the Borrower and its Subsidiaries
reflecting the projected financial condition, income and expenses of the
Borrower and its Subsidiaries after giving effect to the Transaction and the
other transactions contemplated hereby, which projected financial statements
shall be reasonably satisfactory in form and substance to the Administrative
Agent; and
(f) a pro forma balance sheet of Borrower, as of September 30, 1999, after
giving effect to the Transaction (as if the Transaction had occurred prior to
such date) and the other transactions contemplated hereby.
5.12 Approvals, etc. On the Initial Credit Event Date the following
approvals shall have been obtained to the satisfaction of the Administrative
Agent:
(i) all necessary and material governmental and third party approvals,
permits and licenses (including without limitation the approval of the
respective Insurance Departments of the States of Minnesota, New York and North
Dakota) in connection with the Transaction and this Agreement and the
transactions contemplated by the Transaction Documents and otherwise referred
to herein or therein (including without limitation the Acquisition), to the
extent such approvals, consents, permits and licenses are required to be
obtained or made prior to the Initial Credit Event Date, shall have been
obtained and remain in full force and effect, and all applicable waiting
periods shall have expired, in each case without any action being taken by any
competent authority (including any court having jurisdiction) which restrains,
prevents or imposes, in the reasonable judgment of the Required Banks or the
Administrative Agent, materially adverse conditions upon the consummation of
the Transaction or any such agreement or transaction;
(ii) the Form A filed by the Borrower with the respective Insurance
Departments of the States of Minnesota, New York and North Dakota, together with
the approval of such Insurance Department, or other Applicable Insurance
Regulatory Authority, of such Form A or equivalent form (and all stipulations or
conditions relating to such approval), which approvals (and stipulations and
conditions, if any) shall be reasonably satisfactory to the Administrative
Agent; and
(iii) all necessary shareholder approvals in connection with the
Transaction shall have been obtained and remain in full force and effect.
23
5.13 Indebtedness. On the Initial Credit Event Date and after giving
effect to the consummation of the Transaction, the only Indebtedness for
borrowed money of the Borrower and its Subsidiaries, other than Indebtedness
permitted under Sections 8.04(b) - (i), shall consist of the Indebtedness
incurred pursuant to the Credit Documents.
5.14 Payment of Fees. On the Initial Credit Event Date, all costs, fees
and expenses (including, without limitation, legal fees and expenses), and all
other compensation contemplated by this Agreement or the other Credit Documents,
due to the Administrative Agent or any Banks shall have been paid to the extent
due.
5.15 Letter of Credit Request; Notice of Borrowing. Prior to the issuance
of the Letter of Credit, the Administrative Agent shall have received a Letter
of Credit Request satisfying the requirements of Section 2.02; and prior to the
incurrence of any Revolving Loans, the Administrative Agent shall have received
a Notice of Borrowing satisfying the requirements of Section 1.03.
5.16 Capital Structure. On or prior to the Initial Credit Event Date,
the corporate and capital structure (and all agreements related thereto) of the
Borrower and its Subsidiaries and all organizational documents of the Borrower
and its Subsidiaries shall be reasonably satisfactory to the Administrative
Agent.
5.17 Solvency Certificate. On the Initial Credit Event Date, the Borrower
shall have delivered to the Administrative Agent a solvency certificate from the
Chief Financial Officer of the Borrower in the form of Exhibit G.
5.18 A.M. Best Rating. On the Initial Credit Event Date, each Rated
Ongoing Regulated Subsidiary of the Borrower shall have an A.M. Best claims
paying rating of at least A-.
The acceptance of the benefits of each Credit Event occurring on the
Initial Credit Event Date shall constitute a representation and warranty by the
Borrower to each of the Banks that all of the applicable conditions specified in
this Section 5 exist or have been satisfied as of such date. The acceptance of
the benefits of each Credit Event occurring after the Initial Credit Event Date
shall constitute a representation and warranty by the Borrower to each of the
Banks that all of the applicable conditions specified in Sections 5.02 and 5.15
exist or have been satisfied as of such date. All of the certificates, legal
opinions and other documents and papers referred to in this Section 5, unless
otherwise specified, shall be delivered to the Administrative Agent at its
Notice Office for the account of each of the Banks.
SECTION 6. Representations, Warranties and Agreements. In order to induce
the Administrative Agent and the Banks to enter into this Agreement and to make
the Loans and issue the Letters of Credit as provided herein, the Borrower makes
the following representations and warranties to, and agreements with, the Banks,
all of which shall survive the execution and delivery of this Agreement and the
making of the Loans and the issuance of the Letters of Credit (with the
occurrence of the Effective Date and the occurrence of each Credit Event being
deemed to constitute a representation and warranty that the matters specified in
this Section 6 are true and correct in all material respects on and as of the
Effective Date and on the date of each such Credit Event (after giving effect to
the consummation of the Transaction) unless such representation and warranty
expressly indicates that it is being made as of any other specific date in which
case such representation and warranty shall be true and correct in all material
respects as of such other specified date):
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6.01 Corporate Status. The Borrower and each of its Subsidiaries (i) is a
duly organized and validly existing corporation in good standing (where
applicable) under the laws of the jurisdiction of its organization and has the
corporate or other organizational power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (ii) has been duly qualified and is authorized to do
business and is in good standing (where applicable) in all jurisdictions where
it is required to be so qualified, except where the failure to be so qualified
is not reasonably likely to have a Material Adverse Effect.
6.02 Corporate Power and Authority; Enforceability. Each Credit Party has
the corporate power and authority to execute, deliver and carry out the terms
and provisions of the Transaction Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance of the Transaction Documents to which it is a party. Each Credit
Party and each of its Subsidiaries has duly executed and delivered each
Transaction Document to which it is a party and each such Transaction Document
constitutes the legal, valid and binding obligation of such Credit Party
enforceable against such Credit Party in accordance with its terms, except to
the extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally and
general principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law.
6.03 No Contravention of Laws, Agreements or Organizational Documents.
Neither the execution, delivery and performance by any Credit Party of the
Transaction Documents to which it is a party nor compliance with the terms and
provisions thereof, nor the consummation of the transactions contemplated
therein (i) will contravene any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any Governmental Authority,
(ii) will conflict or be inconsistent with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust,
loan agreement, credit agreement or any other material instrument to which the
Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Certificate of Incorporation or By-Laws of the Borrower or
any of its Subsidiaries; except in the case of clauses (i) and (ii) above (other
than with respect to the Credit Documents), such contraventions, conflicts,
inconsistencies, breaches, defaults or Liens which are not reasonably likely to
have a Material Adverse Effect.
6.04 Litigation and Contingent Liabilities. (a) There are no actions,
suits or proceedings pending or, to the knowledge of the Borrower, threatened in
writing involving the Borrower or any of its Subsidiaries (including, without
limitation, with respect to the Transaction, this Agreement or any documentation
executed in connection therewith or herewith) (i) which has or is reasonably
likely to have a Material Adverse Effect or (ii) that is reasonably likely to
have a material adverse effect on the rights or remedies of the Banks or on the
ability of any Credit Party to perform its respective obligations to the Banks
hereunder and under the other Credit Documents to which it is, or will be, a
party. Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the making of any Loan
or the issuance of the Letter of Credit hereunder.
25
(b) Except as fully reflected in the financial statements described in
Section 6.11(b) (including the footnotes thereto), the Indebtedness incurred
under this Agreement and in connection with the Transaction and all obligations
incurred in the ordinary course of business since the date of the financial
statements described in Section 6.11(b), there were as of the Effective Date
(and after giving effect to the Loans made on such date), no liabilities or
obligations with respect to the Borrower or any of its Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due), and the Borrower does not know of any basis for the
assertion against the Borrower or any of its Subsidiaries of any such liability
or obligation, which, in the case of any of the foregoing referred to in this
clause (b), either individually or in the aggregate, are or are reasonably
likely to have a Material Adverse Effect.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all Loans
shall be utilized for general corporate and working capital purposes of the
Borrower and its Subsidiaries (including, without limitation, for mergers and
acquisitions permitted hereunder).
(b) The Letters of Credit shall only be issued for the benefit of Lloyds
and in support of L/C Supportable Obligations.
(c) Neither the making of any Loan hereunder, the issuance of the Letter
of Credit, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation T, U or X of the Board of Governors of the
Federal Reserve System and no part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock.
6.06 Approvals. Except for filings and approvals made or obtained on or
prior to the Effective Date and for which the failure to make or be obtained is
not reasonably likely to result in a Material Adverse Effect (other than with
respect to the Credit Documents), no order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic Governmental Authority is required to
authorize or is required in connection with (i) the execution, delivery and
performance of any Transaction Document or (ii) the legality, validity, binding
effect or enforceability of any Transaction Document.
6.07 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
26
6.08 Public Utility Holding Company Act. Neither the Borrower nor any
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.09 True and Complete Disclosure; Projections and Assumptions. All
factual information (taken as a whole) heretofore or contemporaneously furnished
in writing by or on behalf of the Borrower or any of its Subsidiaries to the
Administrative Agent or any Bank (including, without limitation, all information
contained in the Transaction Documents and in the Confidential Bank Memorandum,
but excluding the Projections and any other projections) for purposes of or in
connection with this Agreement or any transaction contemplated herein is, and
all other factual information (taken as a whole) hereafter furnished by or on
behalf of any such Persons in writing to the Administrative Agent will be, true
and accurate in all material respects on the date as of which such information
is dated and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time in light of
the circumstances under which such information was provided. The Projections are
based on good faith estimates and assumptions believed by the Borrower to be
reasonable and attainable at the time made, it being recognized by the Banks
that such Projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such Projections may
differ from the projected results.
6.10 Consummation of Transaction. On or before the Initial Credit Event
Date, the Transaction has been consummated in accordance with the terms and
conditions of the Transaction Documents and all Legal Requirements. All consents
and approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to consummate the Transaction in accordance with the terms and
conditions of the Transaction Documents and all Legal Requirements have been, or
prior to the time required, will have been, obtained, given, filed or taken,
except in the case of any Acquisition Documents and Refinancing Documents where
the failure to consummate the Acquisition and Refinancing in accordance with the
terms and conditions thereof and to obtain such consents, approvals, filings and
registrations is not reasonably likely to have a Material Adverse Effect.
6.11 Financial Condition; Financial Statements. (a) On and as of the
Initial Credit Event Date, on a pro forma basis after giving effect to the
Transaction and all Indebtedness incurred, and to be incurred, on or prior to
the Initial Credit Event Date, and Liens created, and to be created, on or prior
to the Initial Credit Event Date, in connection with this Agreement, with
respect to each of the Borrower (on a stand-alone basis) and the Borrower and
its Subsidiaries (on a consolidated basis) (x) the sum of the assets, at a fair
valuation, of each of the Borrower (on a stand-alone basis) and the Borrower and
its Subsidiaries (on a consolidated basis) will exceed their debts, (y) the
Borrower (on a stand-alone basis) and the Borrower and its Subsidiaries (on a
consolidated basis) will not have incurred or intended to, or believe that they
will, incur debts beyond their ability to pay such debts as such debts mature
and (z) the Borrower (on a stand-alone basis) and the Borrower and its
Subsidiaries (on a consolidated basis) will have sufficient capital with which
to conduct its or their business. For purposes of this Section 6.11(a), "debt"
means any liability on a claim, and "claim" means (i) right to payment whether
or not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
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(b) The financial statements and pro forma balance sheet (after giving
effect to the Transaction and the other transactions contemplated hereby)
delivered to the Administrative Agent pursuant to Section 5.11 present fairly in
all material respects the financial position of the respective Persons referred
to in such Section at the dates of said statements and the results of operations
for the periods covered thereby (or, in the case of the pro forma balance sheet,
present a good faith estimate of the consolidated pro forma financial condition
of the Borrower and its Subsidiaries as of the date thereof). All such financial
statements have been prepared in accordance with SAP or GAAP, as indicated in
Section 5.11, consistently applied except to the extent provided in the notes to
said financial statements.
(c) Since December 31, 1998, nothing has occurred which, individually or
when taken as a whole with other occurrences, has or is reasonably likely to
have a Material Adverse Effect.
6.12 Tax Returns and Payments. The Borrower and each of its Subsidiaries
has filed all federal income tax returns and all other material tax returns,
domestic and foreign, required to be filed by it and has paid all material taxes
and assessments payable by it which have become due, except for those contested
in good faith and adequately disclosed and fully provided for in the financial
statements of the Borrower and each of its Subsidiaries in accordance with GAAP
or SAP, as the case may be. The Borrower and each of its Subsidiaries have paid,
or have provided adequate reserves (in the good faith judgment of the management
of such Person) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to date.
There is no material action, suit, proceeding, investigation, audit or claim now
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened by any authority regarding any taxes relating to the Borrower or any
of its Subsidiaries. Neither the Borrower nor any of its Subsidiaries has
entered into an agreement or waiver or been requested to enter into an agreement
or waiver extending any statute of limitations relating to the payment or
collection of taxes of the Borrower or any of its Subsidiaries, or is aware of
any circumstances that would cause the taxable years or other taxable periods of
the Borrower or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations.
6.13 Compliance with ERISA. (a) Annex IV sets forth each Plan and
each Multiemployer Plan as of the Effective Date; each Plan (and each related
trust, insurance contract or fund) is in substantial compliance with its terms
and with all applicable laws, including without limitation ERISA and the Code,
except to the extent that any such non-compliance could not result in a material
liability; each Plan (and each related trust, if any) which is intended to be
qualified under Section 401(a) of the Code has received a determination letter
from the Internal Revenue Service to the effect that it meets the requirements
of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred; no
Multi-employer Plan is insolvent or in reorganization; no Plan has an Unfunded
Current Liability; no Plan which is subject to Section 412 of the Code or
Section 302 of ERISA has an accumulated funding deficiency, within the meaning
of such sections of the Code or ERISA, or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period,
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
except as would not result in any material liability, all contributions required
to be made with respect to a Plan and each Multiemployer Plan have been timely
made; neither the Borrower nor any Subsidiary of the Borrower nor any ERISA
Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(1), 4062, 4063, 4064, or 4069 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or to or on account of a Multiemployer Plan
pursuant to Section 515, 4201, 4204 or 4212 of ERISA or reasonably expects to
incur any of such liability under any of the foregoing sections with respect to
any Plan or Multiemployer Plan; to the Borrower's knowledge no condition exists
which presents a material risk to the Borrower or any Subsidiary of the Borrower
or any ERISA Affiliate of incurring a material liability to or on account of a
Plan or Multiemployer Plan pursuant to the foregoing provisions of ERISA and the
Code; no proceedings have been instituted to terminate or appoint a trustee to
administer any Plan which is subject to Title IV of ERISA; except as would not
result in any material liability, no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Plan (other than routine claims for benefits) is pending,
reasonably expected or to the Borrower's knowledge threatened; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
28
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to each Multiemployer Plan in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal year
of each such Multiemployer Plan ended prior to the date of the most recent
Credit Event, would not exceed $10,000,000; each group health plan (as defined
in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) other than a
multiemployer plan described in Section 3(37) of ERISA maintained or contributed
to by the Borrower, a Subsidiary of the Borrower or an ERISA Affiliate which
covers or has covered employees or former employees of the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate has at all times been operated
in compliance with the provisions of Part 6 of sub-title B of Title I of ERISA
and Section 4980B of the Code except as would not result in any material
liability; no lien imposed under the Code or ERISA on the assets of the Borrower
or any Subsidiary of the Borrower or any ERISA Affiliate exists or, to the
Borrower's knowledge, is likely to arise on account of any Plan or Multiemployer
Plan; and the Borrower and its Subsidiaries do not maintain or contribute to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan obligations with respect to which
could reasonably be expected to have a material adverse effect on the ability of
the Borrower to perform its obligations under this Agreement.
(b) Except as would not result in a material liability, each Foreign
Pension Plan has been maintained in substantial compliance with its terms and
with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory authorities. Except as would not result in a material
liability, all contributions required to be made with respect to a Foreign
Pension Plan have been timely made. Neither the Borrower nor any of its
Subsidiaries has incurred any material obligation in connection with the
termination of or withdrawal from any Foreign Pension Plan. Except as set forth
in Annex IV, the present value of the accrued benefit liabilities (whether or
not vested) under each Foreign Pension Plan, determined as of the end of the
Borrower's most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities.
29
6.14 Subsidiaries. (a) Annex V hereto lists each Subsidiary of the Borrower
(and the direct and indirect ownership interest of the Borrower therein) and
also identifies the owner thereof in each case existing on the Effective Date
(after giving effect to the Transaction). Except as set forth on Annex V, all
such Subsidiaries are direct or indirect Wholly-Owned Subsidiaries of the
Borrower.
(b) There are no restrictions on the Borrower or any of its Subsidiaries
which prohibit or otherwise restrict the transfer of cash or other assets from
any Subsidiary of the Borrower to the Borrower, other than prohibitions or
restrictions existing under or by reason of (i) this Agreement, the other Credit
Documents, the Chartwell Senior Notes or the Trenwick Senior Notes, (ii) Legal
Requirements, (iii) customary non-assignment provisions in contracts entered
into in the ordinary course of business and consistent with past practices, and
(iv) purchase money obligations for property acquired in the ordinary course of
business, so long as such obligations are permitted under this Agreement.
6.15 Intellectual Property, etc. The Borrower and each of its Subsidiaries
own or possess the right to use all material patents, trademarks, servicemarks,
trade names, copyrights, licenses and other rights, free from burdensome
restrictions, that are necessary for the operation of their respective
businesses as presently conducted and as proposed to be conducted.
6.16 Pollution and Other Regulations. The Borrower and each of its
Subsidiaries are in compliance with all laws and regulations relating to
pollution and environmental control, equal employment opportunity and employee
safety in all domestic and foreign jurisdictions in which the Borrower and each
of its Subsidiaries is presently doing business, and the Borrower will comply
and cause each of its Subsidiaries to comply with all such laws and regulations
which may be imposed in the future in jurisdictions in which the Borrower or
such Subsidiary may then be doing business; in each case other than those the
non-compliance with which is not reasonably likely to have a Material Adverse
Effect.
6.17 Labor Relations; Collective Bargaining Agreements. (a) Set forth on
Annex VI is a list and description (including dates of termination) of all
collective bargaining and similar agreements between or applicable to the
Borrower or any of its Subsidiaries and any union, labor organization or other
bargaining agent in respect of the employees of the Borrower and/or any
Subsidiary on the Effective Date.
(b) Neither the Borrower nor any of its Subsidiaries is engaged in any
unfair labor practice that is reasonably likely to have a Material Adverse
Effect. (i) There is no significant unfair labor practice complaint pending
against the Borrower or any of its Subsidiaries or threatened in writing against
any of them, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is now pending against the Borrower or any of
its Subsidiaries or threatened in writing against any of them, (ii) there is no
significant strike, labor dispute, slowdown or stoppage pending against the
Borrower or any of its Subsidiaries or threatened in writing against the
Borrower or any of its Subsidiaries and (iii) to the best knowledge of the
Borrower, no union representation question exists with respect to the employees
of the Borrower or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a Material Adverse
Effect.
30
6.18 Capitalization. On the Effective Date, and after giving effect to
the Transaction and the other transactions contemplated hereby, the authorized
capital stock of the Borrower consists of (i) 30,000,000 shares of common stock,
$.10 par value per share, 17,747,808 shares of which shall be issued and
outstanding and (ii) 2,000,000 shares of preferred stock, $.10 par value per
share, of which none shall be issued and outstanding. As of the Effective Date,
all such outstanding shares of the Borrower have been duly and validly issued
and are fully paid and nonassessable. On the Effective Date and after giving
effect to the Transaction and the other transactions contemplated hereby, the
Borrower does not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock, except for options, warrants
and grants outstanding in the aggregate amounts set forth on Annex IX.
6.19 Indebtedness. Annex III sets forth a true and complete list of all
Indebtedness outstanding under Sections 8.04(c) and (i) of the Borrower and its
Subsidiaries as of the Effective Date (after giving effect to the Transaction),
in each case showing the aggregate principal amount thereof, the name of the
lender in respect thereof and the name of the respective borrower and any other
entity which has directly or indirectly guaranteed such Indebtedness.
6.20 Compliance with Statutes, etc. The Borrower and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all Governmental
Authorities in respect of the conduct of its business and the ownership of its
property (including compliance with all applicable environmental laws), except
those the noncompliance with which, in the aggregate, is not reasonably likely
to have a Material Adverse Effect.
6.21 Insurance Licenses. Each Regulated Insurance Company has obtained
and maintains in full force and effect all licenses and permits from all
regulatory authorities necessary to operate in the jurisdictions in which such
Regulated Insurance Company operates, in each case other than such licenses and
permits the failure of which to obtain or maintain, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect.
6.22 Year 2000 Compliance. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Borrower's and
its Subsidiaries' computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others and used by the
Borrower and one or more of its Subsidiaries or with which Borrower's or its
Subsidiaries' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, have been completed. The cost to the Borrower and
its Subsidiaries of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Borrower and its Subsidiaries
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or a Material Adverse Effect.
Except for such of the reprogramming referred to in the preceding sentence as
may be necessary, the computer and management information systems of the
Borrower and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit the Borrower to conduct its business without a Material Adverse Effect.
31
SECTION 7. Affirmative Covenants. The Borrower hereby covenants and agrees
that on the Effective Date and thereafter, for so long as this Agreement is in
effect and until the Total Commitment and the Letter of Credit are terminated
and all the Loans and Unpaid Drawings, together with interest, Fees and all
other Obligations incurred hereunder, are paid in full:
7.01 Information Covenants. The Borrower will furnish or cause to be
furnished to each Bank:
(a) Annual Financial Statements. (i) As soon as available and in any
event within 90 days after the close of each fiscal year of the Borrower, (x)
the consolidated balance sheet of the Borrower and its Subsidiaries, in each
case, as at the end of such fiscal year and the related consolidated statements
of income, of stockholders' equity and of cash flows for such fiscal year and
(y) the consolidating balance sheet of the Borrower and each of its Subsidiaries
as at the end of the fiscal year and the related consolidating statements of
income, of stockholders' equity and of cash flows for such fiscal year; in each
case prepared in accordance with GAAP and setting forth comparative figures for
the preceding fiscal year, and, in the case of such consolidated statements,
examined by independent certified public accountants of recognized national
standing whose opinion shall not be qualified as to the scope of audit or as to
the status of the Borrower and its Subsidiaries as a going concern, together
with a certificate of such accounting firm stating that in the course of its
regular audit of the business of the Borrower and its Subsidiaries, which audit
was conducted in accordance with GAAP, such accounting firm has obtained no
knowledge of any Default or Event of Default which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature thereof.
(ii) As soon as available and in any event within 90 days after the close
of each fiscal year of each Regulated Insurance Company which is a Material
Subsidiary, the Annual Statement (prepared in accordance with SAP) for such
fiscal year of such Regulated Insurance Company, as filed with the Applicable
Insurance Regulatory Authority in compliance with the requirements thereof (or a
report containing equivalent information for any Regulated Insurance Company not
so required to file the foregoing with the Applicable Insurance Regulatory
Authority) together with the opinion thereon of the Chief Financial Officer or
other Authorized Officer of such Regulated Insurance Company stating that such
Annual Statement presents fairly in all material respects the financial
condition and results of operations of such Regulated Insurance Company in
accordance with SAP.
(iii) As soon as available and in any event within 90 days after the close
of each fiscal year of the Borrower, a copy of the "Statement of Actuarial
Opinion" and "Management Discussion and Analysis" for each Regulated Insurance
Company which is a Material Subsidiary and Domestic Subsidiary (prepared in
accordance with SAP) for such fiscal year and as filed with the Applicable
Regulatory Insurance Authority in compliance with the requirements thereof (or a
report containing equivalent information for any Regulated Insurance Company not
so required to file the foregoing with the Applicable Regulatory Insurance
Authority).
32
(b) Quarterly Financial Statements. (i) As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower, (x) the consolidated
balance sheet of the Borrower and its Subsidiaries at the end of such fiscal
quarter and the related consolidated statements of income, of stockholders'
equity and of cash flows for such quarterly period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly period and (y) the
consolidating balance sheet of the Borrower and each of its Subsidiaries as at
the end of such fiscal quarter and the related consolidating statements of
income, of stockholders' equity and of cash flows for such quarterly period and
for the elapsed portion of the fiscal year ended with the last day of such
quarterly period; in each case setting forth comparative figures for the related
periods in the prior fiscal year, and all of which shall be prepared in
accordance with GAAP and certified by the Chief Financial Officer or other
Authorized Officer of the Borrower, as the case may be, subject to changes
resulting from normal year-end audit adjustments.
(ii) As soon as available and in any event within 45 days after the close
of each of the first three quarterly accounting periods in each fiscal year of
each Regulated Insurance Company which is a Material Subsidiary, quarterly
financial statements (prepared in accordance with SAP) for such fiscal period of
such Regulated Insurance Company, as filed with the Applicable Insurance
Regulatory Authority, together with the opinion thereon of the Chief Financial
Officer or other Authorized Officer of such Regulated Insurance Company stating
that such financial statements present fairly in all material respects the
financial condition and results of operations of such Regulated Insurance
Company in accordance with SAP.
(c) Financial Plans, etc. No later than 45 days following the first day of
each fiscal year of the Borrower, copies of the annual financial plan or budget
for such fiscal year prepared by management of the Borrower for its internal use
and distributed to the Board of Directors of the Borrower. Together with each
delivery of financial statements pursuant to Section 7.01(a)(ii) and (b)(ii), a
comparison of the current year to date financial results (other than in respect
of the balance sheets included therein) against the plans required to be
submitted pursuant to this clause (c) shall be presented.
(d) Officer's Certificates. At the time of the delivery of the financial
statements provided for in Sections 7.01(a)(i) and (ii) and (b)(i) and (ii), a
certificate of the Chief Financial Officer or other Authorized Officer of the
Borrower to the effect that no Default or Event of Default exists or, if any
Default or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall set forth the calculations required to
establish whether the Borrower and its Subsidiaries were in compliance with the
provisions of Sections 8.12 through 8.16, inclusive, as at the end of such
fiscal year or quarter, as the case may be.
(e) Notice of Default or Litigation. Promptly, and in any event within
five Business Days after the Borrower or any of its Subsidiaries obtains
knowledge thereof, (x) notice of the occurrence of any event which constitutes a
Default or Event of Default, which notice shall specify the nature thereof, the
period of existence thereof and what action the Borrower proposes to take with
respect thereto and (y) promptly after the Borrower or any of its Subsidiaries
obtains knowledge thereof, notice of any outstanding litigation or governmental
or regulatory proceeding pending against the Borrower or any of its Subsidiaries
which is reasonably likely to have a Material Adverse Effect, or a material
adverse effect on the ability of any Credit Party to perform its respective
obligations hereunder or under any other Credit Document.
33
(f) Reserve Reports. Promptly upon receipt thereof, a copy of each
report submitted to the Borrower or any of its Subsidiaries by any independent
actuary with respect to reserve adequacy.
(g) Reserve Adequacy Report. Promptly following a request from the
Administrative Agent or the Required Banks (which request may only be made when
an Event of Default has occurred and is continuing), a report prepared by an
independent actuarial consulting firm of recognized professional standing
reasonably satisfactory to the Administrative Agent or the Required Banks, as
the case may be, reviewing the adequacy of reserves of each Regulated Insurance
Company determined in accordance with SAP, which firm shall be provided access
to or copies of all reserve analyses and valuations relating to the insurance
business of each Regulated Insurance Company in the possession of or available
to the Borrower or its Subsidiaries.
(h) Annual Report for Managed Syndicate. As soon as the same becomes
available, but in any event within 90 days after the end of each year of account
of the Managed Syndicate, the annual report in respect thereof.
(i) Business Plan and Realistic Disaster Scenarios for Managed Syndicate.
As soon as the same becomes available, the business plan prepared in relation to
the Managed Syndicate and (if separate) the Realistic Disaster Scenarios
relating thereto.
(j) Syndicate Quarterly Report. As soon as the same becomes available,
the Syndicate Quarterly Report for the Managed Syndicate.
(k) Other Regulatory Statements and Reports. Promptly (A) after receipt
thereof, copies of all triennial examinations and risk adjusted capital reports
of any Regulated Insurance Company, delivered to such Person by any Applicable
Insurance Regulatory Authority, insurance commission or similar regulatory
authority, (B) after receipt thereof, written notice of any assertion by any
Applicable Insurance Regulatory Authority or any governmental agency or agencies
substituted therefor, as to a violation of any Legal Requirement by any
Regulated Insurance Company which is reasonably likely to have a Material
Adverse Effect, (C) after receipt thereof, a copy of the final report to each
Regulated Insurance Company from the NAIC for each fiscal year, as to such
Regulated Insurance Company's compliance or noncompliance with each of the NAIC
Tests, (D) after receipt thereof, a copy of any notice of termination,
cancellation or recapture of any Reinsurance Agreement or Retrocession Agreement
to which a Regulated Insurance Company is a party to the extent such termination
or cancellation is reasonably likely to have a Material Adverse Effect, (E) and
in any event within ten Business Days after receipt thereof, copies of any
notice of actual suspension, termination or revocation of any license of any
Regulated Insurance Company by any Applicable Insurance Regulatory Authority,
including any request by an Applicable Insurance Regulatory Authority which
commits a Regulated Insurance Company to take or refrain from taking any action
or which otherwise affects the authority of such Regulated Insurance Company to
conduct its business, except where such suspension, termination or revocation is
not reasonably likely to have a Material Adverse Effect, and (F) in any event
within ten Business Days after the Borrower or any of its Subsidiaries obtains
knowledge thereof, notice of any actual changes in the insurance laws enacted in
any state in which any Regulated Insurance Company is domiciled which is
reasonably likely to have a Material Adverse Effect.
34
(l) Other Information. Promptly upon filing thereof with the SEC or
transmission thereof, as the case may be, copies of any final registrations and
documents, and other reports specified in Section 13 and 15(d) of the Exchange
Act filed by the Borrower or any of its Subsidiaries (other than any
registration statement on Form S-8) and copies of all financial statements and
proxy statements, and material notices and reports, as the Borrower or any of
its Subsidiaries shall send to analysts generally or the holders of their
capital stock in their capacity as such holders (in each case to the extent not
theretofore delivered to the Banks pursuant to this Agreement) and, with
reasonable promptness, such other information or existing documents (financial
or otherwise) as the Administrative Agent or any Bank may reasonably request
from time to time.
7.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, permit officers and designated representatives of
the Administrative Agent or any Bank to visit and inspect any of the properties
or assets of the Borrower and any of its Subsidiaries in whomsoever's possession
(but only to the extent the Borrower or such Subsidiary has the right to do so
to the extent in the possession of another Person), and to examine the books of
account of the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of the Borrower and of any of its Subsidiaries with, and
be advised as to the same by, its and their officers and independent accountants
and independent actuaries, if any, all at such reasonable intervals and during
business hours, upon reasonable prior notice and to such reasonable extent as
the Administrative Agent or any Bank may request. All such visits shall be at
the expense of the Administrative Agent or the respective Bank unless and until
a Default or Event of Default exists.
7.03 Insurance. The Borrower will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance in such amounts,
covering such risks and liabilities and with such deductibles or self-insured
retentions as are in accordance with normal industry practice.
35
7.04 Payment of Taxes. The Borrower will pay and discharge, and will cause
each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims for sums that have become due and payable which,
if unpaid, might become a Lien not otherwise permitted under Section 8.03(a);
provided that neither the Borrower nor any Subsidiary shall be required to pay
any such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings if it has maintained adequate reserves with
respect thereto in accordance with GAAP.
7.05 Corporate Franchises. The Borrower will do, and will cause each
Subsidiary to do, or cause to be done, all things reasonably necessary to
preserve and keep in full force and effect its corporate existence, rights and
authority, except where the failure to do so is not reasonably likely to have a
Material Adverse Effect; provided that any transaction permitted by Section 8.02
will not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. The Borrower will, and will cause
each Subsidiary to, comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all Government Authorities, in
respect of the conduct of its business and the ownership of its property
(including applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls) other than those the non-compliance with
which is not reasonably likely to have a Material Adverse Effect.
7.07 ERISA. As soon as possible and, in any event, within 15 days after
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth the full details as to such occurrence and the action, if
any, that the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given or
filed by such Borrower, such Subsidiary, the Plan administrator or such ERISA
Affiliate, to or with the PBGC or any other government agency, or a Plan or
Multiemployer Plan participant and any notices received by such Borrower, such
Subsidiary or ERISA Affiliate from the PBGC or any other government agency, or a
Plan or Multiemployer Plan participant with respect thereto: that a Reportable
Event has occurred (except to the extent that the Borrower has previously
delivered to the Banks a certificate and notices (if any) concerning such event
pursuant to the next clause hereof); that a contributing sponsor (as defined in
Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject
to the advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof), and an event described in subsection
.62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is
reasonably expected to occur with respect to such Plan within the following 30
days; that an accumulated funding deficiency, within the meaning of Section 412
of the Code or Section 302 of ERISA, has been incurred or an application may
reasonably expected to be or has been made for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA with respect to a Plan; except as would not result in a
material liability that any contribution required to be made with respect to a
Plan, Multiemployer Plan or Foreign Pension Plan has not been timely made; that
a Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
36
Liability; that proceedings are reasonably expected to be or have been
instituted to terminate or appoint a trustee to administer a Plan which is
subject to Title IV of ERISA; that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a Multiemployer
Plan; that the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
will or are reasonably expected to incur any material liability (including any
indirect, contingent, or secondary liability) to or on account of the
termination of a Plan under Section 4062, 4063, 4064, or 4069 of ERISA or with
respect to the withdrawal from a Multiemployer Plan under Section 4201, 4204 or
4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971, 4975 or
4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or with respect to a
group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the Code) under Section 4980B of the Code; or that the Borrower or any
Subsidiary of the Borrower may incur any material liability pursuant to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan or any Foreign Pension Plan. The
Borrower will deliver to each of the Banks copies of any records, documents or
other information that must be furnished to the PBGC with respect to any Plan
pursuant to Section 4010 of ERISA. The Borrower will also deliver to each of the
Banks a complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to the Banks pursuant to the first sentence hereof, copies of annual reports and
any records, documents or other information required to be furnished to the PBGC
or any other government agency, and any material notices received by the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from any
relevant government agency with respect to any Plan or any Foreign Pension Plan
or received from any government agency or plan administrator or sponsor or
trustee with respect to any Multiemployer Plan shall be delivered to the Banks
no later than 15 days after the date such annual report has been filed with the
Internal Revenue Service or such records, documents and/or information has been
furnished to the PBGC or any other government agency or such notice has been
received by the Borrower, the Subsidiary or the ERISA Affiliate, as applicable.
The Borrower and each of its applicable Subsidiaries shall ensure that all
Foreign Pension Plans administered by it or into which it makes payments obtains
or retains (as applicable) registered status under and as required by applicable
law and is administered in a timely manner in all respects in compliance with
all applicable laws except where the failure to do any of the foregoing would
not be reasonably likely to result in a material adverse effect upon the
business, operations, condition (financial or otherwise) or prospects of the
Borrower or any Subsidiary of the Borrower.
7.08 Performance of Obligations. The Borrower will, and will cause each
of its Subsidiaries to, perform in all material respects all of its obligations
under the terms of each mortgage, indenture, security agreement, other debt
instrument and material contract by which it is bound or to which it is a party;
provided, that the failure to pay any Indebtedness shall not constitute a breach
of this Section 7.08 unless it shall give rise to an Event of Default under
Section 9.04.
37
7.09 Good Repair. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business in whomsoever's possession they may be, are kept in good
repair, working order and condition, normal wear and tear excepted, and that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto, to the extent and in the manner customary for
companies in similar businesses.
7.10 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its Domestic
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Domestic Subsidiaries', fiscal quarters to end on March 31,
June 30, September 30 and December 31 of each year.
7.11 Maintenance of Licenses and Permits. The Borrower will, and will cause
each of its Subsidiaries to, maintain all permits, licenses and consents as may
be required for the conduct of its business by any state, federal or local
government agency or instrumentality except where failure to maintain the same
is not reasonably likely to have a Material Adverse Effect.
7.12 Chartwell Senior Notes. The Borrower will cause Chartwell Re Holdings
to repay all principal of and interest and premium (if any) on the Chartwell
Senior Notes in full no later than March 1, 2000.
7.13 Subsidiary Guaranties. Promptly, and in any event within ten Business
Days, following the repayment of the Chartwell Senior Notes in accordance with
Section 7.12, the Borrower will cause Chartwell Re Holdings and each of its
Domestic Subsidiaries which is a Material Subsidiary and a Non-Regulated Company
to (i) become party to the Subsidiary Guaranty as a Subsidiary Guarantor
pursuant to documentation in form and substance satisfactory to the
Administrative Agent and (ii) deliver all legal opinions, officers' certificates
and corporate documentation as would have been required pursuant to Sections
5.04 and 5.05 if such Persons had been Credit Parties on the Initial Credit
Event Date.
SECTION 8. Negative Covenants. The Borrower hereby covenants and agrees
that on the Effective Date and thereafter, for so long as this Agreement is in
effect and until the Total Commitment and the Letter of Credit are terminated
and all Loans and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder, are paid in full:
8.01 Changes in Business. The Borrower and its Subsidiaries will not engage
in any business other than the property and casualty insurance and reinsurance
business and any other businesses engaged in by the Borrower and its
Subsidiaries as of the Effective Date (after giving effect to the Transaction)
and activities related, ancillary or complimentary thereto.
8.02 Fundamental Changes; Acquisitions. (a) The Borrower will not, and
will not permit any of its Material Subsidiaries to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
or sell or otherwise dispose of all or substantially all of its assets to any
other Person, provided that (x) the Borrower may merge with another Person if
(i) the Borrower is the corporation surviving such merger and (ii) immediately
after giving effect to such merger, no Default or Event of Default shall have
occurred and is continuing; (y) Subsidiaries of the Borrower may merge with one
another, provided that the Borrower's ownership percentage of the surviving
entity is at least equal to the Borrower's ownership percentage of the
Subsidiary party to such merger in which the Borrower owns the greater
percentage equity interest prior to such merger; and (z) the Transaction shall
be permitted.
38
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, lease or otherwise acquire (in one transaction or a series of
related transactions) all or any part of the property or assets of any Person
(excluding any purchases, leases or other acquisitions of property or assets in,
and for use in, the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(i) The investments, acquisitions and transfers or dispositions of
property permitted pursuant to Section 8.05;
(ii) Any Regulated Insurance Company may enter into any Insurance
Contract, Reinsurance Agreement or Retrocession Agreement in the ordinary course
of business in accordance with its normal underwriting, indemnity and retention
policies, provided that no Regulated Insurance Company shall enter into any
Financial Reinsurance Agreements unless the Indebtedness arising under such
Financial Reinsurance Agreements is permitted under Section 8.04(i); and
(iii) so long as no Default or Event of Default then exists or would result
therefrom, the Borrower and its Subsidiaries may acquire assets or the capital
stock of any Person (any such acquisitions permitted by this clause (iii), a
"Permitted Acquisition"), provided, that (A) such Person (or the assets so
acquired) was, immediately prior to such acquisition, engaged (or used)
primarily in the businesses permitted pursuant to Section 8.01, (B) each such
acquisition shall be for an amount not greater than the fair market value
thereof (as determined in good faith by the Board of Directors of the Borrower),
(C) the aggregate amount (both cash and non-cash, including capital stock of the
Borrower) expended by the Borrower and its Subsidiaries for Permitted
Acquisitions after the Effective Date shall not exceed $400,000,000, (D) on a
pro forma basis determined as if such acquisition had been consummated on the
date occurring twelve months prior to the last day of the most recently ended
fiscal quarter of the Borrower, the Borrower and its Subsidiaries would have
been in compliance with Sections 8.12 through 8.16 of this Agreement as of, or
for the relevant period ended on, the last day of such fiscal quarter, and (E)
on a pro forma basis determined as if such acquisition had been consummated, the
covenants contained in Sections 8.12 through 8.16 will continue to be met for
the twelve-month period following the last day of the fiscal quarter ended after
the date of the consummation of such acquisition.
8.03 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute relating to
any such property, except:
(a) Liens for taxes and other assessments not yet due or being contested in
good faith and by appropriate proceedings for which adequate reserves (in the
good faith judgment of the management of the Borrower) have been established;
(b) Liens in respect of property or assets imposed by law which were
incurred in the ordinary course of business, such as carriers', warehousemen's
and mechanics' Liens and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the
operation of the business of the Borrower or any Subsidiary or (y) which are
being contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or asset subject
to such Lien;
39
(c) Cash collateral requirements in respect of outstanding Letters of
Credit pursuant to this Agreement and the other Credit Documents;
(d) Liens in existence on the Effective Date which are listed, and the
property subject thereto on the Effective Date described, in Annex VII, together
with any extensions or renewals thereof so long as the obligations secured and
assets encumbered by such Liens are not increased in connection with such
extension or renewal by more than $5,000,000 (provided that the securities
subject to any such Lien may be replaced by other securities of no greater
principal amount);
(e) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 9.08;
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money
bonds, Reinsurance Agreements, Retrocession Agreements and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money);
(g) Leases or subleases granted to others not interfering in any material
respect with the business of the Borrower or any of its Subsidiaries and any
interest or title of a lessor under any lease not in violation of this
Agreement;
(h) Easements, rights-of-way, restrictions, minor defects or irregularities
in title and other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of the Borrower or
any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases not in
violation of this Agreement;
(j) Liens on pledges or deposits of cash or securities made by any
Regulated Insurance Company as a condition to obtaining or maintaining any
licenses issued to it by any Applicable Insurance Regulatory Authority;
(k) Liens arising pursuant to purchase money mortgages, Capital Leases
or security interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective purchase) of
assets acquired after the Initial Credit Event Date, provided that (i) any such
Liens attach only to the assets so purchased, (ii) the Indebtedness secured by
any such Lien does not exceed 100%, nor is less than 80%, of the lesser of the
fair market value or the purchase price of the property being purchased at the
time of the incurrence of such Indebtedness and (iii) the Indebtedness secured
thereby is permitted to be incurred pursuant to Section 8.04(b);
(l) Liens on property or assets acquired pursuant to an acquisition,
or on property or assets of a Subsidiary of the Borrower in existence at the
time such Subsidiary is acquired pursuant to an acquisition, provided that (i)
any Indebtedness that is secured by such Liens is permitted to exist under
Section 8.04(f) and (ii) such Liens are not incurred in connection with or in
contemplation or anticipation of such acquisition and do not attach to any other
asset of the Borrower or any of its Subsidiaries; and
(m) Liens consisting of customary set-off rights or bankers' liens on
amounts on deposit and securing reimbursement obligations in respect of letters
of credit issued for the account of the Borrower or any of its Subsidiaries,
whether arising by contract or operation of law, to the extent incurred in the
ordinary course of business.
40
8.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other Credit
Documents;
(b) Capitalized Lease Obligations and Indebtedness of the Borrower and
its Subsidiaries incurred pursuant to purchase money Liens permitted under
Section 8.03(k);
(c) Indebtedness in existence on the Effective Date which is listed in
Annex III, together with extension, renewal or refinancing thereof so long as
the principal amount of any such Indebtedness is not increased as a result of
any such extension, renewal or refinancing;
(d) Obligations of any Regulated Insurance Company with respect to (i)
letters of credit securing obligations (A) under Reinsurance Agreements and (B)
required by Lloyds entered into in the ordinary course of business of any such
Regulated Insurance Company, (ii) letters of credit issued in lieu of deposits
to satisfy Legal Requirements or (iii) letters of credit or surety bonds issued
in lieu of depositing securities with any Applicable Insurance Regulatory
Authority to satisfy regulatory requirements; in any case to the extent such
letters of credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than 10 days following receipt by the Borrower or
such Subsidiary of notice of payment on such letter of credit;
(e) Indebtedness under Interest Rate Agreements or Other Hedging Agreements
entered into in respect of the Obligations or otherwise in the conduct of its
business and not for speculative purposes;
(f) Indebtedness of the Borrower or a Wholly-Owned Subsidiary of the
Borrower acquired pursuant to an acquisition (or Indebtedness assumed at the
time of a permitted acquisition of an asset securing such Indebtedness), and any
refinancing of such Indebtedness so long as the principal amount thereof is not
increased, provided that (i) such Indebtedness was not incurred in connection
with or in contemplation of such acquisition, (ii) such Indebtedness does not
constitute Indebtedness for borrowed money, it being understood and agreed that
Capitalized Lease Obligations and purchase money Indebtedness shall not
constitute Indebtedness for borrowed money for purposes of this clause (i), and
(iii) at the time of such acquisition, such Indebtedness does not exceed 10% of
the total value of the assets of the Subsidiary so acquired, or of the assets so
acquired, as the case may be;
(g) Indebtedness constituting a loan from the Borrower or any Wholly-
Owned Subsidiary to the Borrower or any Wholly-Owned Subsidiary;
41
(h) Indebtedness consisting of senior notes issued by the Borrower
in an aggregate outstanding principal amount not to exceed $200,000,000, so long
as the maturity date of any such senior notes is no earlier than March 31, 2005;
and
(i) Other Indebtedness of the Borrower and its Subsidiaries in an aggregate
outstanding principal amount not to exceed $50,000,000 at any time.
8.05 Advances, Investments and Loans. The Borrower will not, and will not
permit any of its Subsidiaries to, lend money or credit or make advances to any
Person, or purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any Person, except:
(a) The Transaction shall be permitted;
(b) The Borrower and its Subsidiaries may make investments (i) in
accordance with the Borrower's and Subsidiaries' investment guidelines as in
effect on the Effective Date (in the form delivered to the Banks on or prior to
such date) or (ii) in accordance with modified investment guidelines from time
to time so long as such modified guidelines are not materially less restrictive
on the Borrower and its Subsidiaries than those referred to in clause (i) above;
(c) The Borrower and its Subsidiaries may acquire and hold receivables
owing to them in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;
(d) Loans and advances to employees for business-related travel expenses,
moving expenses and other similar expenses, in each case incurred in the
ordinary course of business;
(e) The transactions described in Section 8.02 shall be permitted;
(f) Any Regulated Insurance Company may make investments in companies which
are Wholly-Owned Subsidiaries of such Person (or any other Subsidiary of such
Person created or acquired in accordance with Section 8.09) but only to the
extent that any such investment, at the time made, does not reduce Statutory
Surplus of such Regulated Insurance Company;
(g) Investments pursuant to commitments in effect as of the Effective Date
and described (as to matter and amount) on Annex VIII;
42
(h) Investments acquired by the Borrower or any of its Subsidiaries
(x) in exchange for any other investment held by the Borrower or any such
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other investment, (y)
as a result of a foreclosure by the Borrower or any of its Subsidiaries with
respect to any secured investment or other transfer of title with respect to any
secured investment in default or (z) in settlement of delinquent obligations of,
and other disputes with, customers and suppliers arising in the ordinary course
of business;
(i) Investments existing on the Effective Date which are identified on
Annex VIII;
(j) the Borrower may acquire and hold obligations of one or more officers
or employees of the Borrower or its Subsidiaries in connection with such
officers' or employees' acquisition of shares of capital stock of the Borrower
or options to purchase shares of capital stock of the Borrower so long as no
cash is paid by the Borrower or any of its Subsidiaries in connection with the
acquisition of any such obligations and such obligations;
(k) Investments consisting of intercompany loans to the extent permitted
under Section 8.04(g);
(l) Investments by the Borrower in Wholly-Owned Subsidiaries, and
investments by Wholly-Owned Subsidiaries in other Wholly-Owned Subsidiaries;
(m) Investments consisting of prepaid expenses;
(n) Investments consisting of non-cash consideration received in connection
with a sale of assets permitted under Section 8.02 (it being understood and
agreed that the consideration received in respect of any such asset sale shall
be at least 75% cash); and
(o) additional investments (including such additional investments
identified pursuant to this Section 8.05(o) in Annex VIII) in an aggregate
outstanding amount not to exceed, at the time any such investment is made, an
amount equal to 5% of the invested assets of the Borrower and its Subsidiaries
at such time.
43
8.06 Dividends, etc. (a) The Borrower will not, and will not permit any
of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in common stock of such Person) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
or options or stock appreciation rights in respect of any of such shares), or
set aside any funds for any of the foregoing purposes, or purchase or otherwise
acquire or permit any of its Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock of the Borrower or
any of its Subsidiaries, as the case may be, now or hereafter outstanding (or
any options or warrants or stock appreciation rights issued by such Person with
respect to its capital stock) (all of the foregoing "Dividends"), except that:
(i) Any Subsidiary of the Borrower may pay cash dividends to its parent
if such parent is the Borrower or a Wholly-Owned Subsidiary of the Borrower;
(ii) The Borrower may redeem or purchase its capital stock at any time so
long as no Default or Event of Default exists at such time or would exist
immediately after giving effect to such redemption or purchase; and
(iii) The Borrower may pay cash dividends on its capital stock in any
fiscal quarter, provided that the aggregate amount of dividends paid in any
fiscal quarter shall not exceed an amount equal to the greater of (A) $0.26
multiplied by the number of shares of the Borrower's common stock outstanding as
of the record date declared by the Borrower's Board of Directors for such fiscal
quarter; provided that to the extent there is more than one record date for such
fiscal quarter, the first record date for such fiscal quarter shall be used in
determining the numbers of shares of the Borrower's common stock outstanding for
such period and (B) an amount, if positive, equal to 50% of the Borrower's
Consolidated Net Income for the four most recently completed consecutive fiscal
quarters of the Borrower ending on the last day of such fiscal quarter (taken as
one accounting period) divided by four; provided that no dividends may be paid
pursuant to this Section 8.06(a)(iii) if any Default or Event of Default exists
at the time of the payment of such cash dividends or would exist immediately
after giving effect thereto.
44
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, create or otherwise cause or suffer to exist any encumbrance or restriction
which prohibits or otherwise restricts (i) the ability of any Subsidiary to (A)
pay dividends or make other distributions or pay any Indebtedness owed to the
Borrower or any of its Subsidiaries, as applicable, (B) make loans or advances
to the Borrower or any Subsidiary, as applicable, (C) transfer any of its
properties or assets to the Borrower or any Subsidiary, as applicable, or (D)
guarantee the Obligations or (ii) the ability of the Borrower or any Subsidiary
of the Borrower to create, incur, assume or suffer to exist any Lien upon its
property or assets to secure the Obligations, other than prohibitions or
restrictions existing under or by reason of (I) this Agreement and the other
Credit Documents, (II) the Chartwell Senior Notes, (III) the Trenwick Senior
Notes and (IV) Legal Requirements.
8.07 Transactions with Affiliates. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate (excluding the Borrower or any Wholly-Owned Subsidiary of the
Borrower) other than on terms and conditions substantially as favorable to the
Borrower or such Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate.
8.08 Issuance of Stock. (a) The Borrower will not directly or indirectly
issue, sell, assign, pledge, or otherwise encumber or dispose of any shares of
its capital stock or other equity securities (or warrants, rights or options to
acquire shares or other equity securities), except (i) the issuance of common
stock (and warrants, options and other rights to acquire common stock), so long
as no Event of Default occurs under Section 9.09, and (ii) the issuance of
preferred stock, so long as (x) no part of such preferred stock is mandatorily
redeemable (whether on a scheduled basis or as a result of the occurrence of any
event or circumstance) and (y) any dividends associated with such preferred
stock are solely payable in kind.
(b) The Borrower will not permit any of its Subsidiaries directly or
indirectly to issue, sell, assign, pledge, or otherwise encumber or dispose of
any shares of its capital stock or other equity securities (or warrants, rights
or options to acquire shares or other equity securities) of such Subsidiary,
except (i) to the Borrower or to a Wholly-Owned Subsidiary of the Borrower, and
(ii) to qualify directors if required by applicable law.
8.09 Creation of Subsidiaries. The Borrower shall not create or acquire
any Subsidiary other than (i) Regulated Insurance Companies which are direct or
indirect Wholly-Owned Subsidiaries of the Borrower; and (ii) Non-Regulated
Companies which are not Subsidiaries of any Regulated Insurance Company, so long
as such new Subsidiary executes a counterpart of the Subsidiary Guaranty (to the
extent such Subsidiary is a Domestic Subsidiary and a Material Subsidiary). In
addition, at the request of the Administrative Agent, each new Subsidiary that
is required to execute any Credit Document shall execute and deliver, or cause
to be executed and delivered, all other relevant documentation of the type
described in Section 5 as such new Subsidiary would have had to deliver if such
new Subsidiary were a Credit Party on the Initial Credit Event Date.
8.10 Partnership Agreements. The Borrower will not enter into any
partnership agreement as a general partner.
8.11 Prepayments of Indebtedness, Modifications of Agreements, etc. The
Borrower will not, and will not permit any of its Subsidiaries to:
45
(a) make (or give any notice in respect thereof) any voluntary or optional
payment or prepayment or redemption or acquisition for value of (including,
without limitation, by way of depositing with the trustee with respect thereto
money or securities before due for the purpose of payment when due) or exchange
of, any Contingent Interest Notes or Trust Preferred Notes; and/or
(b) amend or modify (or permit the amendment or modification of) any of the
terms or provisions of the documents or agreements evidencing or governing the
Contingent Interest Notes or the Trust Preferred Notes.
8.12 Leverage Ratio. The Borrower will not permit the ratio of (i)
Consolidated Indebtedness of the Borrower to (ii) Consolidated Total Capital of
the Borrower at any time to be greater than 0.325:1.00.
8.13 Interest Coverage Ratio. The Borrowe will not permit the Interest
Coverage Ratio for any Test Period ending during a period set forth below to be
less than the ratio set forth opposite such period below:
Period Ratio
------ -----
Fiscal Year ending 12/31/00 2.25:1.00
Fiscal Year ending 12/31/01 2.50:1.00
Fiscal Year ending 12/31/02 2.75:1.00
Thereafter 3.00:1.00
8.14 Minimum Risk Based Capital. (a) The Borrower will not permit the Risk
Based Capital Ratio for Trenwick America Reinsurance Corporation to be less than
325%.
(b) The Borrower will not permit the Risk Based Capital Ratio for any
Regulated Insurance Company which is a Domestic Subsidiary (other than Trenwick
America Reinsurance Corporation) to be less than 275%.
8.15 Minimum Combined Statutory Surplus. The Borrower will not permit
the Regulated Insurance Companies, collectively, on a Combined basis, to have
Statutory Surplus at any time of less than $400,000,000.
8.16 Minimum Consolidated Tangible Net Worth. The Borrower will not permit
its Consolidated Tangible Net Worth to be less than $325,000,000 at any time.
SECTION 9. Events of Default. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when due of
any principal of the Loans or any Unpaid Drawing, (ii) default, and such default
shall continue for three or more Business Days, in the payment when due of any
interest on the Loans or any Fees or (iii) default, and such default shall
continue for five or more Business Days in the payment of any other amounts
owing hereunder or under any other Credit Document; or
46
9.02 Representations, etc. Any representation, warranty or statement made
or deemed made by the Borrower or any other Credit Party herein or in any other
Credit Document or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
9.03 Covenants. Any Credit Party shall (a) default in the due performance
or observance by it of any term, covenant or agreement contained in Section 7.10
or 8 (except for Sections 8.01, 8.07 and 8.09), or (b) default in the due
performance or observance by it of any term, covenant or agreement (other than
those referred to in Section 9.01 or clause (a) of this Section 9.03) contained
in this Agreement and such default shall continue unremedied for a period of at
least 30 days; or
9.04 Default Under Other Agreements. (a) The Borrower or any of its
Subsidiaries shall (i) default in any payment with respect to Indebtedness
(other than the Obligations), in excess of $10,000,000 individually or in the
aggregate, for the Borrower and its Subsidiaries (collectively, "Material
Indebtedness"), beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (ii) default in the
observance or performance of any agreement or condition relating to any such
Material Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Material Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause any such Material
Indebtedness to become due prior to its stated maturity; or (b) any such
Material Indebtedness of the Borrower or any of its Subsidiaries shall be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment or as a mandatory prepayment (unless
such required pre-payment or mandatory prepayment results from a default
thereunder or an event of the type that constitutes an Event of Default), prior
to the stated maturity thereof; or
9.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the Borrower or any of
its Subsidiaries; or the Borrower or any of its Subsidiaries commences
(including by way of applying for or consenting to the appointment of, or the
taking of possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "conservator") of itself or all or
any substantial portion of its property) any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency, liquidation, rehabilitation, conservatorship or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries; or any such proceeding is commenced against the Borrower or
any of its Subsidiaries and remains undismissed for a period of 60 days; or the
Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or (a) any Regulated Insurance Company which is engaged in the business of
underwriting insurance and/or reinsurance in the United States suffers any
appointment of any conservator or the like for it or any substantial part of its
property, or (b) the Borrower or any of its Subsidiaries (other than any
Regulated Insurance Company described in the immediately preceding clause (a))
suffers any appointment of any conservator or the like for it or any substantial
part of its property which continues undischarged or unstayed for a period of 60
days; or the Borrower or any of its Subsidiaries makes a general assignment for
the benefit of creditors; or any corporate action is taken by the Borrower or
any of its Subsidiaries for the purpose of effecting any of the foregoing; or
47
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed by the PBGC to administer such Plan, any Plan or Multiemployer Plan
which is subject to Title IV of ERISA is, shall have been or is likely to be
terminated or to be the subject of termination proceedings under ERISA, any Plan
shall have an Unfunded Current Liability, a contribution required to be made
with respect to a Plan, Multiemployer Plan or Foreign Pension Plan has not been
timely made, the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate has incurred or is likely to incur any liability to or on account of a
Plan or Multiemployer Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of
the Code or on account of a group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code, or
the Borrower or any Subsidiary of the Borrower has incurred or is likely to
incur liabilities pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) that provide benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) or Plans
or Foreign Pension Plans, a "default," within the meaning of Section 4219(c)(5)
of ERISA, shall occur with respect to any Multiemployer Plan; any applicable
law, rule or regulation is adopted, changed or interpreted, or the
interpretation or administration thereof is changed, in each case after the date
hereof, by any governmental authority or agency or by any court (a "Change in
Law"), or, as a result of a Change in Law, an event occurs following a Change in
Law, with respect to or otherwise affecting any Plan or Multiemployer Plan; (b)
there shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; and (c) such lien, security interest or liability, individually
and/or in the aggregate, in the opinion of the Required Banks has had, or could
reasonably be expected to have, a Material Adverse Effect; or
9.07 Subsidiary Guaranty. The Subsidiary Guaranty or any provision thereof
shall cease to be in full force and effect, or any Subsidiary Guarantor or any
Person acting by or on behalf of such Subsidiary Guarantor shall deny or
disaffirm such Subsidiary Guarantor's obligations under the Subsidiary Guaranty
or any Subsidiary Guarantor shall default in the due performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to the Subsidiary Guaranty; or
48
9.08 Judgments. One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving a liability, net of undisputed
reinsurance, of $10,000,000 or more in the case of any one such judgment or
decree or in the aggregate for all such judgments and decrees for the Borrower
and its Subsidiaries and any such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or
9.09 Change of Control. A Change of Control shall occur; or
9.10 Senior Unsecured Debt Ratings. By the 90th day following the Effective
Date, the Borrower shall not have received a confirmed S&P Credit Rating (taking
into account the Acquisition) of at least BBB- and a confirmed ▇▇▇▇▇'▇ Credit
Rating (taking into account the Acquisition) of at least Baa3; or
9.11 A.M. Best Ratings. Any Rated Ongoing Regulated Subsidiary shall fail
to have an A.M. Best claims paying rating of at least A-;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Bank to enforce its claims against the Borrower or
any other Credit Party, except as otherwise specifically provided for in this
Agreement (provided that if an Event of Default specified in Section 9.05 shall
occur with respect to the Borrower, the result which would occur upon the giving
of written notice by the Administrative Agent as specified in clauses (i), (ii),
(iii) and (v) below shall occur automatically without the giving of any such
notice): (i) declare the Total Revolving Loan Commitment terminated, whereupon
the Revolving Loan Commitment of each Bank shall forthwith terminate
immediately, (ii) declare the Total Unutilized L/C Commitment terminated,
whereupon the Unutilized L/C Commitment of each Bank shall forthwith terminate
immediately, (iii) declare the principal of and any accrued interest in respect
of all Loans and all other Obligations owing hereunder and under the other
Credit Documents to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower, (iv) terminate any Letter of Credit if
permitted in accordance with its terms, and (v) direct the Borrower to pay (and
the Borrower hereby agrees upon receipt of such notice, or upon the occurrence
of any Event of Default specified in Section 9.05, to pay) to the Administrative
Agent at the Payment Office an amount of cash to be held as security for the
Borrower's reimbursement obligations in respect of all Letters of Credit then
outstanding, equal to the aggregate Stated Amount of all Letters of Credit at
such time.
49
SECTION 10. Definitions. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural the singular:
"Acquisition" shall mean the merger of Chartwell with and into the Borrower
on October 27, 1999 pursuant to the Acquisition Agreement.
"Acquisition Agreement" shall mean the Agreement of Merger dated June 21,
1999 between the Borrower and Chartwell.
"Acquisition Documents" shall mean the Acquisition Agreement and the Stock
Option Agreement dated June 21, 1999 between the Borrower and Chartwell,
including the Annexes and Exhibits thereto, as the same may be amended or
modified pursuant to the terms thereof.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.09.
"Affected Eurodollar Loans" shall have the meaning provided in Section
4.02(ii)(b).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as the same may be from time
to time modified, amended and/or supplemented.
"Alternate Currency" shall mean each Primary Alternate Currency and each
Other Alternate Currency.
"Alternate Currency Letter of Credit" shall mean the Letter of Credit to
the extent denominated in an Alternate Currency.
"Alternate Currency Loan" shall mean any Revolving Loan denominated in an
Alternate Currency.
"Annual Statement" shall mean the annual financial statement required to be
filed by any Regulated Insurance Company with the Applicable Insurance
Regulatory Authority.
50
"Applicable Commitment Fee Percentage" shall mean, for any day, the
percentage set forth below opposite the Applicable Period then in effect:
Applicable Period Applicable Commitment Fee Percentage
----------------- ------------------------------------
Category A Period 0.200%
Category B Period 0.250%
Category C Period 0.300%
Category D Period 0.375%
Category E Period 0.500%
"Applicable Credit Rating" shall mean (i) the Moody's Credit Rating and the
S&P Credit Rating, if the same; (ii) if the Moody's Credit Rating and the S&P
Credit Rating differ by one rating level, the higher of such Ratings; and (iii)
if the Moody's Credit Rating and the S&P Credit Rating differ by two or more
rating levels, the Applicable Credit Rating shall be one rating level below the
higher of such Ratings. If only one Rating Agency rates the senior unsecured
debt of the Borrower, such rating shall be the Applicable Credit Rating unless
the other Rating Agency ceased rating such senior unsecured debt at the request
of the Borrower, in which case the Applicable Credit Rating shall be deemed to
be below BBB-/Baa3.
"Applicable Insurance Regulatory Authority" shall mean, when used with
respect to any Regulated Insurance Company, (x) the insurance department or
similar administrative authority or agency located in each state or other
jurisdiction (foreign or domestic) in which such Regulated Insurance Company is
domiciled, (y) the insurance department, authority or agency in each state or
other jurisdiction (foreign or domestic) in which such Regulated Insurance
Company is licensed, to the extent it has regulatory jurisdiction over such
Regulated Insurance Company, and (z) any Federal or national insurance
regulatory department, authority or agency that may be created and that has
regulatory jurisdiction over such Regulated Insurance Company.
"Applicable Lloyds Coming in Line Date" shall mean the Lloyds Coming in
Line Date occurring in November, 2000; provided that if in any year in which the
Applicable Lloyds Coming in Line Date is scheduled to occur, the expiration date
of any Letter of Credit is extended in accordance with the terms thereof as
provided in Section 2.05(a), then the Applicable Lloyds Coming in Line Date
shall be extended to the Lloyds Coming in Line Date occurring in the immediately
succeeding year (e.g., if in 2000, the expiration date of any Letter of Credit
is extended from December 31, 2004 to December 31, 2005 as provided in Section
2.05(a), the Applicable Lloyds Coming in Line Date shall be extended from the
Lloyds Coming in Line Date occurring in November, 2000 to the Lloyds Coming in
Line Date occurring in November, 2001).
"Applicable Margin" shall mean, for any day, the rate per annum set forth
below opposite the Applicable Period then in effect:
Applicable Margin
-----------------
Applicable Period Eurodollar Loans Base Rate Loans
----------------- ---------------- -----------------
Category A Period 1.10% 0.00%
Category B Period 1.30% 0.05%
Category C Period 1.50% 0.25%
Category D Period 1.75% 0.50%
Category E Period 2.00% 0.75%
"Applicable Period" shall mean, at any time, the period set forth below
then in effect:
Applicable Period Criteria
----------------- --------
Category A Period The Applicable Credit Rating is A-/A3 or above.
Category B Period The Applicable Credit Rating is BBB+/Baa1.
Category C Period The Applicable Credit Rating is BBB/Baa2.
Category D Period The Applicable Credit Rating is BBB-/Baa3.
Category E Period None of a Category A Period, a Category B
Period a Category C Period nor a Category D
Period is in effect at such time.
Notwithstanding anything to the contrary set forth above, (i) at all times
during the first three months following the Initial Credit Event Date, the
Applicable Period shall be a Category C Period, and (ii) if neither Rating
Agency rates the unsecured senior debt of the Borrower, then the Applicable
Period shall be a Category E Period.
51
"Approved Bank" shall have the meaning provided in the definition of "Cash
Equivalents."
"Approved Company" shall have the meaning provided in the definition of
"Cash Equivalents."
"Approved Credit Institution" shall mean a credit institution within the
meaning of the First Council Directive on the coordination of laws, regulations
and administrative provisions relating to the taking up and pursuit of the
business of credit institutions (No. 77/780/EEC) which has been approved by the
Council of Lloyd's for the purpose of providing guarantees and issuing or
confirming letters of credit comprising a Member's Funds at Lloyd's.
"Approved Currency" shall mean each of Dollars, each Primary Alternate
Currency and each Other Alternate Currency.
"Asset Sale" shall mean any sale, transfer or other disposition effected on
or after the Effective Date by the Borrower or any of its Subsidiaries of (i)
any capital stock or equity securities of a Subsidiary of the Borrower or (ii)
any other asset, in each case to any Person other than the Borrower or any of
its Wholly-Owned Subsidiaries (other than (a) sales, transfers or other
dispositions in the ordinary course of business, (b) sales, transfers or other
dispositions of investments made or maintained pursuant to Section 8.05(b), (g),
(i) and (o), and (c) other sales, transfers and dispositions the Net Available
Proceeds from which do not exceed $1,000,000).
"Assignment and Assumption Agreement" shall have the meaning provided in
Section 12.04(b).
"Associated Cost Rate" shall mean, with respect to each Interest Period for
Pounds Sterling-denominated Loans, the costs (expressed as a percentage rounded
up to the nearest four decimal places and as determined on the first day of such
Interest Period and any three month anniversary thereof by the Administrative
Agent) of compliance with then existing requirements of the Bank of England in
respect of Loans denominated in Pounds Sterling.
"Authorized Control Level" shall mean "Authorized Control Level" as defined
by the NAIC from time to time and as applied in the context of the Risk Based
Capital Guidelines promulgated by the NAIC (or any term substituted therefor by
the NAIC).
"Authorized Officer" shall mean, as to any Person, any senior officer of
such Person designated as such in writing by such Person to, and found
acceptable by, the Administrative Agent.
"Available Total Revolving Loan Commitment" shall mean (i) prior to the
date on which all principal of and accrued interest and premium (if any) on the
Chartwell Senior Notes have been paid in full, an amount equal to the Total
Revolving Loan Commitment at such time minus $48,750,000, and (ii) on and after
the date on which all principal of and accrued interest and premium (if any) on
the Chartwell Senior Notes have been paid in full, the Total Revolving Loan
Commitment at such time.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been retracted) of
a Bank to make available its portion of any Borrowing or any Letter of Credit
drawing or (ii) a Bank having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with its obligations under this
Agreement with respect to its Revolving Loan Commitment or L/C Commitment, in
the case of either clause (i) or (ii) above, as a result of the appointment of a
receiver or conservator with respect to such Bank at the direction or request of
any regulatory agency or authority.
52
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (x) the rate which is 1/2
of 1% in excess of the Federal Funds Effective Rate as in effect at such time
and (y) the Prime Lending Rate as in effect at such time.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Benchmark Statement" shall mean, as of any date, an annual financial
statement of the Regulated Insurance Companies as would be prepared as of such
date utilizing the identical format utilized by Trenwick America Reinsurance
Corporation in preparing its December 31, 1998 Annual Statement filed with the
Insurance Department of the State of Connecticut, with each page, line item and
column of a Benchmark Statement to contain the same type of information,
computed in the same manner, as contained in the identically numbered page, line
item and column of such Annual Statement.
"Borrower" shall have the meaning provided in the first paragraph of this
Agreement.
"Borrower Cash Flow" shall mean, for any period, the sum of (i) dividends
paid by direct Subsidiaries of the Borrower to the Borrower (determined as if,
during such period, each direct and indirect Subsidiary of the Borrower paid a
dividend to its parent corporation in an amount equal to (x) for each Regulated
Insurance Company which is a Domestic Subsidiary, the aggregate amount of
dividends which such Regulated Insurance Company could pay to its parent
corporation under Legal Requirements during such period (without obtaining
extraordinary dividend approval from any Applicable Insurance Regulatory
Authority), in each case whether or not such dividends are actually paid and (y)
for each Regulated Insurance Company which is a Foreign Subsidiary and each
Non-Regulated Company, the net income of such Company for such period, (ii) tax
sharing payments made by Regulated Insurance Companies directly to the Borrower
during such period (less cash taxes paid by the Borrower during such period),
and (iii) payments during such period of principal and interest on surplus notes
issued by Regulated Insurance Companies to the Borrower.
"Borrowing" shall mean the incurrence by the Borrower of one Type of Loan
(A) denominated in Dollars that are Base Rate Loans on a pro rata basis from all
of the Banks and (B) of a single Approved Currency that are Eurodollar Loans on
a pro rata basis from all of the Banks on a given date (or resulting from
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day, excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close, and
(ii) with respect to all notices and determinations in connection with, and
payments of principal, interest on Unpaid Drawings and other amounts, Eurodollar
Loans and Alternate Currency Letters of Credit, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in the London interbank market and with respect to any notices or determinations
in respect of Euros, which is customarily a "Business Day" for such notices and
determinations.
53
"Capital Lease" as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under Capital
Leases of the Borrower or any of its Subsidiaries in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers acceptances of (x) any FDIC
insured bank, in amounts up to the FDIC insured limit, (y) any Bank having
capital and surplus in excess of $500,000,000 or the U.S. dollar equivalent
thereof or (z) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from ▇▇▇▇▇'▇ is at least P-1 or the
equivalent thereof (any such bank, an "Approved Bank"), in each case with
maturities of not more than one year from the date of acquisition, (iii)
commercial paper issued by any Bank or Approved Bank or by the parent company of
any Bank or Approved Bank and commercial paper issued by, or guaranteed by, any
industrial or financial company with a short-term commercial paper rating of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's (any such company, an "Approved Company"), or guaranteed by
any industrial company with a long term unsecured debt rating of at least A or
A2, or the equivalent of each thereof, from S&P or Moody's, as the case may be,
and in each case maturing within six months after the date of acquisition, (iv)
commercial paper of any United States municipal, state or local government rated
at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's and maturing within one year after the date of acquisition,
(v) any fund or funds investing solely in investments of the type described in
clauses (i) through (iv) above, and (vi) agreements to sell and repurchase
direct obligations of, or obligations that are fully guaranteed as to principal
and interest by, the U.S. Treasury, such agreements to be with primary treasury
dealers, to be evidenced by standard industry forms and to have maturities of
not more than six months from the date of commencement of the repurchase
transaction.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the aggregate
cash payments (including any cash received by way of deferred payment pursuant
to a note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when
received) received by the Borrower and/or any Subsidiary from such Asset Sale,
provided that any such proceeds received in currency other than Dollars shall be
converted into Dollars at the spot exchange rate for the currency in question on
the date of receipt by the Borrower and/or its Subsidiaries of such proceeds.
"Change in Law" shall have the meaning provided in Section 9.06.
"Change of Control" shall mean (i) any Person or "group" (within the
meaning of Rule 13d-5 of the Securities Exchange Act of 1934, as in effect on
the date hereof), shall (A) have acquired beneficial ownership of 30% or more on
a fully diluted basis of the economic and voting interest in the Borrower's
capital stock or (B) have obtained the power (whether or not exercised) to elect
a majority of the Borrower's directors or (ii) the Board of Directors of the
Borrower shall not consist of a majority of Continuing Directors.
"Chartwell" shall mean Chartwell Re Corporation, a Delaware corporation.
"Chartwell Re Holdings" shall mean Chartwell Re Holdings Corporation,
a Delaware corporation.
"Chartwell Senior Notes" shall mean the 10-1/4% Senior Notes Due 2004
originally issued by Chartwell and subsequently assumed by Chartwell Re
Holdings.
"Chase" shall mean The Chase Manhattan Bank, together with its successors
by merger.
54
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Combined" shall mean, when used with reference to any amount or financial
statement, such amount as determined, or financial statement as prepared, on a
combined basis for all of the specified Persons and their respective
Subsidiaries; provided that any such amount or financial statement determined or
prepared for any specified Person and its Subsidiaries separately shall be
determined or prepared on a consolidated basis in accordance with GAAP or SAP,
as the case may be.
"Commitment" shall mean, with respect to each Bank, such Bank's Revolving
Loan Commitment (if any) and such Bank's L/C Commitment (if any).
"Confidential Bank Memorandum" shall mean the Confidential Bank Memorandum,
dated October, 1999, distributed to Banks and prospective Banks in connection
with this Agreement.
"Confidential Information" shall have the meaning provided in Section
12.15.
"Consolidated Indebtedness" shall mean, at any time, the aggregate
outstanding principal amount of all Indebtedness of the Borrower and its
Subsidiaries at such time determined on a consolidated basis in accordance with
GAAP, but excluding therefrom (i) the Contingent Interest Notes, (ii) the Trust
Preferred Securities (but including therein the portion, if any, of the Trust
Preferred Securities which exceeds 15% of Consolidated Total Capital) and (iii)
the Letter of Credit and all letters of credit issued under Section 8.04(d) (so
long as no drawing has occurred thereunder) .
"Consolidated Interest Expense" shall mean, for any period and as to any
Person, the sum, without duplication, of (i) total cash interest expense
(including interest paid in connection with the Trust Preferred Securities and
the interest component in respect of Capital Lease Obligations in accordance
with GAAP) of such Person and its Subsidiaries during such period determined on
a consolidated basis in accordance with GAAP, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Interest Rate
Agreements, but excluding however, any amortization of deferred financing costs
plus (ii) all dividends on preferred stock paid by such Person during such
period.
"Consolidated Net Income" shall mean, for any period, the consolidated net
after tax income (or loss) of the Borrower and its Subsidiaries determined in
accordance with GAAP.
"Consolidated Net Worth" shall mean, with respect to any Person, the Net
Worth of such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP after appropriate deduction for any minority interests in
Subsidiaries.
55
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, Consolidated Net Worth of the Borrower at such time less
the amount of all intangible items, including, without limitation, goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, brand names, write-ups of assets and any unallocated excess costs of
investments in Subsidiaries over equity in underlying net assets at dates of
acquisition.
"Consolidated Total Capital" shall mean, at any time, the sum of (i)
Consolidated Indebtedness (determined without giving effect to the enumerated
exclusions set forth in clauses (i) and (ii) therein) at such time and (ii)
Consolidated Net Worth of the Borrower at such time.
"Contingent Interest Notes" shall mean the Contingent Interest Notes Due
2006 originally issued by Piedmont Management Company Inc. and in respect of
which the Borrower is the obligor as of the Effective Date.
"Contingent Obligations" shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof; provided, however, that
the term Contingent Obligation shall not include (x) endorsements of instruments
for deposit or collection in the ordinary course of business or (y) any
obligations of any Regulated Insurance Company under Insurance Contracts,
Reinsurance Agreements or Retrocession Agreements (including any Liens with
respect thereto). The amount of any Contingent Obligation shall be deemed to be
an amount equal to the stated or determinable amount of the primary obligation
in respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Continuing Directors" shall mean the directors of the Borrower on the
Initial Credit Event Date and each other director if such director's nomination
for the election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors.
"Conversion Date" shall mean the 364th day following the Effective Date.
"Credit Documents" shall mean this Agreement, the Notes and the Subsidiary
Guaranty.
"Credit Event" shall mean the making of any Revolving Loan, the issuance of
any Letter of Credit or an increase in the Stated Amount of any Letter of
Credit.
56
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank Default
is in effect.
"Dividends" shall have the meaning provided in Section 8.06.
"Documentation Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Dollar Equivalent" shall mean, at any time for the determination thereof,
the amount of Dollars which could be purchased with the amount of the relevant
Alternate Currency involved in such computation at the spot exchange rate
therefor as quoted by the Administrative Agent as of 11:00 A.M. (London time) on
the date three Business Days prior to the date of any determination thereof for
purchase on such date.
"Dollars" and the "$" shall mean freely transferable lawful money of the
United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower which is
not a Foreign Subsidiary.
"Effective Date" shall have the meaning provided in Section 12.10.
"EMU Legislation" shall mean the legislative measures of the European
Council for the introduction of, changeover to or operation of a single or
unified European currency.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of Section 414(b) or (c)
of the Code, and for the purpose of Section 302 of ERISA and/or Section 412,
4971, 4977 and/or each "applicable section" under Section 414(t)(z) of the code,
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Euro Equivalent" shall mean, at any time for the determination thereof,
the amount of Euros which could be purchased with the amount of Dollars involved
in such computation at the spot exchange rate therefor as quoted by the
Administrative Agent as of 11:00 A.M. (London time) on the date three Business
Days prior to the date of any determination thereof for purchase on such date.
▇▇
"▇▇▇▇ ▇▇▇▇▇" shall mean, for each Interest Period applicable to any Loan
denominated in Euros, the rate per annum that appears on page 3750 (or other
appropriate page if such currency does not appear on such page) of the Dow ▇▇▇▇▇
Telerate Screen (or any successor page) for Euro deposits with maturities
comparable to such Interest Period as of 11:00 A.M. (London time) on the date
which is three Business Days prior to the commencement of such Interest Period
or, if such a rate does not appear on the Dow ▇▇▇▇▇ Telerate Screen (or any
successor page), the offered quotations to first-class banks in the London
interbank market by Chase for Euro deposits of amounts in same day funds
comparable to the outstanding principal amount of such Loan with maturities
comparable to such Interest Period determined as of 11:00 A.M. (London time) on
the date which is three Business Days prior to the commencement of such Interest
Period.
"Eurodollar Loan" shall mean each Loan that at the election of any Borrower
is bearing interest at the rate provided in Section 1.08(b).
"Euros" shall mean the single currency of participating member states of
the European Union.
"Event of Default" shall have the meaning provided in Section 8.
"Federal Funds Effective Rate" shall mean for any period, a fluctuating per
annum interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Financial Reinsurance Agreement" shall mean a reinsurance agreement
covering any transaction in which any Regulated Insurance Company cedes business
that does not meet the conditions for reinsurance accounting as provided by the
Financial Accounting Standards Board in Statement of Financial Accounting
Standards No. 113, as the same may be revised, replaced, or supplemented from
time to time.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program, other than social
security or social insurance, established or maintained outside the United
States of America by the Borrower or any one or more of its Subsidiaries
primarily for the benefit of employees of the Borrower or such Subsidiaries
residing outside the United States of America, which plan, fund or other similar
program provides, or results in, retirement income, a deferral of income in
contemplation of retirement or severance or termination payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower that is
incorporated under the laws of any jurisdiction other than the United States of
America, any State thereof or any territory thereof.
58
"Funds at Lloyds" shall have the meaning provided in paragraph 4 of the
Membership Byelaw (No. 17 of 1993).
"GAAP" shall mean generally accepted accounting principles in the United
States of America; it being understood and agreed that determinations in
accordance with GAAP for purposes of Section 8, including defined terms as used
therein, are subject (to the extent provided therein) to Section 12.07(a).
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Indebtedness" of any Person shall mean (without duplication) (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such Indebtedness has been assumed, (v) the principal portion of all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) the net
termination obligations of such Person under Interest Rate Agreements and Other
Hedging Agreements, calculated as of any date as if such agreement were
terminated as of such date, (viii) all obligations of such Person under
Financial Reinsurance Agreements and (ix) all Contingent Obligations of such
Person; provided that Indebtedness shall not include trade payables (including
obligations under insurance contracts and reinsurance payables) and accrued
expenses, in each case arising in the ordinary course of business.
"Initial Credit Event Date" shall mean the date of the occurrence of the
initial Credit Event.
"Insurance Business" shall mean one or more aspects of the business of
selling, issuing or underwriting insurance or reinsurance.
"Insurance Contract" shall mean any insurance contract or policy issued by
a Regulated Insurance Company but shall not include any Reinsurance Agreement or
Retrocession Agreement.
"Interest Coverage Ratio" shall mean, for any Test Period, the ratio of (a)
Borrower Cash Flow for such Test Period to (b) Consolidated Interest Expense for
such Test Period; provided that (i) for the Test Period ending on or about March
31, 2000, Consolidated Interest Expense and the portion of Borrower Cash Flow
determined by reference to net income shall be the actual such amounts
calculated for such Test Period multiplied by 4.00 (other than the portion of
Consolidated Interest Expense for such Test Period incurred in connection with
the Trust Preferred Securities and Chartwell Senior Notes which shall be
multiplied by 2.00), (ii) for the Test Period ending on or about June 30, 2000,
Consolidated Interest Expense and the portion of Borrower Cash Flow determined
by reference to net income shall be the actual such amounts calculated for such
Test Period multiplied by 2.00 and (iii) for the Test Period ending on or about
September 30, 2000, Consolidated Interest Expense and the portion of Borrower
Cash Flow determined by reference to net income shall be the actual such amounts
calculated for such Test Period multiplied by 1.33 (other than the portion of
Consolidated Interest Expense for such Test Period incurred in connection with
the Trust Preferred Securities and Chartwell Senior Notes which shall be the
actual such amounts for such Test Period).
59
"Interest Period" shall mean, with respect to any Eurodollar Loan, the
interest period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
"Issuing Agent" shall mean Chase Manhattan International Limited.
"Issuing Country" shall have the meaning provided in Section 12.18.
"Judgment Currency" shall have the meaning provided in Section 12.17(a).
"Judgment Currency Conversion Date" shall have the meaning provided in
Section 12.17(a).
"L/C Bank" shall mean each Bank with an L/C Commitment.
"L/C Commitment" shall mean, with respect to each Bank, the amount set
forth opposite such Bank's name on Annex I directly below the column entitled
"L/C Commitment," as the same may be reduced from time to time or terminated
pursuant to Sections 3.02, 3.03 and/or 9.
"L/C Commitment Fee" shall have the meaning provided in Section 3.01(b).
"L/C Exposure" of any L/C Bank at any time shall mean such L/C Bank's L/C
Percentage of the aggregate Stated Amount of all outstanding Letters of Credit
at such time.
"L/C Issuance Expiration Date" shall mean the earlier of (i) the Applicable
Lloyds Coming in Line Date and (ii) the first date on which a Notice of
Non-Extension is delivered to Lloyds in accordance with Section 2.05(a).
"L/C Maturity Date" shall mean, at any time, the later of (i) December 31,
2004 and (ii) the latest expiration date of any Letter of Credit issued in
accordance with the terms of this Agreement.
"L/C Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage) the numerator of which is the L/C Commitment of such Bank at
such time and the denominator of which is the Total L/C Commitment at such time,
provided that if the L/C Percentage of any Bank is to be determined after the
Total L/C Commitment has been terminated, then the L/C Percentages of the Banks
shall be determined immediately prior (and without giving effect) to such
termination.
"L/C Supportable Obligations" shall mean the obligations of the Borrower or
its Subsidiaries to Lloyds.
60
"Legal Requirements" shall mean all applicable laws, rules and regulations
made by any governmental body or regulatory authority (including, without
limitation, any Applicable Insurance Regulatory Authority) having jurisdiction
over the Borrower or a Subsidiary of the Borrower.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section 3.01(c).
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"LIBOR" shall mean (i) with respect to any Borrowing of Loans denominated
in Dollars or a Primary Alternate Currency, the relevant interest rate, i.e.,
U.S. LIBOR, Pounds Sterling LIBOR or Euro LIBOR and (ii) with respect to any
Borrowing of Loans denominated in an Other Alternate Currency, such rate per
annum as shall be agreed upon at the time such Other Alternate Currency is
approved.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"Lloyds" shall mean the Society incorporated by Lloyd's ▇▇▇ ▇▇▇▇ by the
name of Lloyd's.
"Lloyds Coming in Line Date" shall mean, for any year, the Lloyds coming in
line date for such year (which date shall occur between November 20 and November
30 of each year, and for purposes of this Agreement shall be deemed to occur on
November 30 of any year if it has not otherwise occurred by such date).
"Loan" shall mean (i) prior to the Conversion Date, Revolving Loans, and
(ii) on or after the Conversion Date, Term Loans.
"Managed Syndicate" shall mean each underwriting syndicate at Lloyds in
which either (i) any Subsidiary of the Borrower is acting as the managing agent
for such syndicate or (ii) the Borrower and its Subsidiaries collectively
provide 50% or more of the underwriting capital for such syndicate.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole after giving effect to the
Transaction.
61
"Material Subsidiary" shall mean any Subsidiary of the Borrower whose total
assets or total revenues exceed 1% of the total assets or gross revenues,
respectively, of the Borrower and its Subsidiaries on a consolidated basis as of
the most recent fiscal quarter end and for the most recent four quarter period,
respectively, determined in accordance with GAAP.
"Member" shall mean an underwriting member of Lloyd's.
"Minimum Borrowing Amount" shall mean (i) for any Loans that are Dollar
denominated, $5,000,000, and if in excess thereof, shall be in an integral
Dollar denominated multiple of $1,000,000, and (ii) for any Revolving Loans that
are Alternate Currency Loans, an amount in the respective Approved Currency
having a Dollar Equivalent (determined at the time a Notice of Borrowing is
received or a prepayment made) of $5,000,000, and if in excess thereof, shall be
in a Dollar Equivalent multiple of $1,000,000 in the respective Approved
Currency.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"Moody's Credit Rating" shall mean the rating level (it being understood
that a rating level shall include numerical modifiers and (+) and (-) modifiers)
assigned by Moody's to the senior unsecured long-term debt of the Borrower. If
the foregoing rating shall be changed by Moody's, such change shall be effective
for purposes of this definition on the Business Day following the day on which
Moody's announces such change.
"Multiemployer Plan" shall mean any multiemployer plan as defined in
Section 4001(a)(3) of ERISA, which is a pension plan as defined in Section 3(2)
of ERISA and which the Borrower, a Subsidiary of the Borrower or an ERISA
Affiliate maintains, contributes to or has an obligation to contribute (or
maintained, contributed to or had an obligation to contribute to in the last
five years).
"NAIC" shall mean the National Association of Insurance Commissioners or
any successor organization thereto.
"NAIC Tests" shall mean the ratios and other financial measurements
developed by the NAIC under its Insurance Regulatory Information System, as in
effect from time to time.
"Net Available Proceeds" shall mean (i) with respect to any Asset Sale
consummated by a Regulated Insurance Company, the Surplus Increase with respect
to such Regulated Insurance Company as a result of such Asset Sale, (ii) with
respect to any Asset Sale consummated by the Borrower or any Non-Regulated
Company which is not a Subsidiary of a Regulated Insurance Company, the Net Cash
Proceeds resulting therefrom and (iii) with respect to any Asset Sale
consummated by a Non-Regulated Company which is a Subsidiary of a Regulated
Insurance Company, an amount equal to the dividend that such Regulated Insurance
Company would be permitted to pay in accordance with the Legal Requirements
applicable to it as a result of the receipt by such Regulated Insurance Company
of a dividend from such Non-Regulated Insurance Company in an amount equal to
the Net Cash Proceeds resulting from such Asset Sale; in each case as determined
in good faith by the Borrower and certified in writing by the Borrower to the
Administrative Agent (showing the calculation thereof and supporting
assumptions) on or prior to the date on which the Borrower or any Subsidiary is
to receive the initial proceeds from such Asset Sale.
62
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the Cash
Proceeds resulting therefrom net of (a) cash expenses of sale (including payment
of principal, premium and interest on Indebtedness other than the Loans required
to be repaid as a result of such Asset Sale), (b) incremental taxes paid or
payable as a result thereof and (c) amounts provided as a reserve, in accordance
with GAAP, against any liabilities under any indemnification obligations,
purchase price adjustments or similar items associated with such Asset Sale, in
each case as determined in good faith by the Borrower and certified in writing
by the Borrower to the Administrative Agent (showing the calculation thereof and
supporting assumptions) on or prior to the date on which the Borrower or any
Subsidiary is to receive the initial proceeds from such Asset Sale.
"Net Worth" shall mean, as to any Person, the sum of its capital stock
(including, without limitation, its preferred stock), capital in excess of par
or stated value of shares of its capital stock (including, without limitation,
its preferred stock), retained earnings and any other account which, in
accordance with GAAP, constitutes stockholders equity, but excluding (i) any
treasury stock and (ii) the effects of Financial Accounting Statement No. 115.
"Non-Defaulting Bank" shall mean any Bank other than a Defaulting Bank.
"Non-Regulated Company" shall mean each Subsidiary of the Borrower which is
not a Regulated Insurance Company.
"Note" shall mean and include each promissory note, in the form agreed by
the Borrower and the Administrative Agent prior to the Effective Date, to the
extent issued pursuant to Section 1.05(b) hereof.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice of Non-Extension" shall have the meaning provided in Section 2.05.
"Notice Office" shall mean the office of the Administrative Agent at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇,
Telephone (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or such other office as the
Administrative Agent may designate to the Borrower and the Banks from time to
time.
"Obligation Currency" shall have the meaning provided in Section 12.17(a).
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Administrative Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
"Other Alternate Currency" shall mean any freely transferable currency
other than any Primary Alternate Currency, to the extent such currency is
approved by the Administrative Agent and each Bank.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
63
"Payment Office" shall mean the office of the Administrative Agent c/o The
Loan and Agency Services Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇ or such other office as the Administrative Agent may
designate to the Borrower and the Banks from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in Section 8.02(c).
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political sub-division or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of ERISA
other than a Foreign Pension Plan or a Multiemployer Plan, which is maintained
or contributed to by (or to which there is an obligation to contribute of) the
Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such
plan for the five year period immediately following the latest date on which the
Borrower, or a Subsidiary of the Borrower or an ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
"Pounds Sterling" shall mean freely transferable lawful money of the United
Kingdom.
"Pounds Sterling Equivalent" shall mean, at any time for the determination
thereof, the amount of Pounds Sterling which could be purchased with the amount
of Dollars involved in such computation at the spot exchange rate therefor as
quoted by Chase as of 11:00 A.M. (London time) on the date three Business Days
prior to the date of any determination thereof for purchase on such date.
"Pounds Sterling LIBOR" shall mean, with respect to each Interest Period
for any Loan denominated in Pounds Sterling, (I) the rate per annum that appears
on page 3750 (or other appropriate page if such currency does not appear on such
page) of the Dow ▇▇▇▇▇ Telerate Screen (or any successive page) with maturities
comparable to such Interest Period as of 11:00 A.M. (London time) on the date
which is the commencement date of such Interest Period or, if such a rate does
not appear on page 3750 (or such other appropriate page) of the Dow ▇▇▇▇▇
Telerate Screen (or any successor page) the offered quotations to first-class
banks in the London interbank EuroDollar market by Chase for Pounds Sterling
deposits of amounts in same day funds comparable to the outstanding principal
amount of such Loans with maturities comparable to such Interest Period
determined as of 11:00 A.M. (London time) on the date which is the commencement
of such Interest Period plus (II) the Associated Cost Rate for such Loans for
such Interest Period.
"Primary Alternate Currency" shall mean each of Pounds Sterling and Euros.
"Prime Lending Rate" shall mean the rate of interest per annum which Chase
announces from time to time as its prime commercial lending rate in effect at
its principal office in New York City, the Prime Lending Rate to change when and
as such prime commercial lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Chase may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.
"Principal Amount" shall mean (i) the stated principal amount of each Loan
denominated in Dollars and/or (ii) the Dollar Equivalent of the stated principal
amount of each Alternate Currency Loan, as the context may require.
"Projections" shall mean the financial projections contained in the
Confidential Bank Memorandum.
64
"Quarterly Statement" shall mean the quarterly financial statement required
to be filed by any Regulated Insurance Company with the Applicable Regulatory
Insurance Authority.
"Rated Ongoing Regulated Subsidiary" shall mean each Regulated Insurance
Company which has an A.M. Best claims paying rating (including, without
limitation, Trenwick America Reinsurance Corporation, Trenwick International
Limited, The Insurance Corporation of New York, Dakota Specialty Insurance
Company and Chartwell Reinsurance Company, but excluding any Regulated Insurance
Company (including any of the aforementioned companies) if such Company is not
being employed in the writing of new insurance or reinsurance business following
the consummation of the Acquisition).
"Rating Agency" shall mean S&P or Moody's as the case may be.
"Realistic Disaster Scenario" shall mean any realistic disaster scenario
presented in a business plan prepared in relation to the Managed Syndicate under
paragraph 57A(a) of the Underwriting Agents Bylaw (No. 4 of 1984) which shows
the potential impact upon the Managed Syndicate of a catastrophic event.
"Refinancing" shall mean the refinancing of not less than $50,000,000 of
existing Indebtedness for borrowed money of Chartwell and its Subsidiaries.
"Refinancing Documents" shall mean the documents related to the
Refinancing.
"Register" shall have the meaning provided in Section 1.05.
"Regulated Insurance Company" shall mean any Subsidiary of the Borrower
(including, without limitation, Subsidiaries acquired or created in connection
with the Acquisition), whether now owned or hereafter acquired, that is
authorized or admitted to carry on or transact Insurance Business in any
jurisdiction (domestic or foreign) and is regulated by any Applicable Insurance
Regulatory Authority.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.
65
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.
"Reinsurance Agreement" shall mean any agreement, contract, treaty or other
arrangement whereby one or more insurers, as reinsurers, assume liabilities
under insurance policies or agreements issued by another insurance or
reinsurance company or companies.
"Relevant Currency Equivalent" shall mean the Dollar Equivalent, the Euro
Equivalent or the Pounds Sterling Equivalent.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27, or .28 of PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose Revolving
Loan Commitment (or, after the Total Revolving Loan Commitment has been
terminated, outstanding Revolving Loans or Term Loans) and L/C Commitment (or,
after the Total L/C Commitment has been terminated, the amount of any Unpaid
Drawings owing to such Non-Defaulting Banks) constitute a majority of the sum of
(i) the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of Defaulting Banks, if any, or, after the Total Revolving Loan
Commitment has been terminated, the total outstanding Revolving Loans or Term
Loans of Non-Defaulting Banks) and (ii) the Total L/C Commitment or, after the
Total L/C Commitment has been terminated, the aggregate Unpaid Drawings.
"Retrocession Agreement" shall mean any agreement, contract, treaty or
other arrangement whereby one or more insurers or reinsurers, as
retrocessionaires, assume liabilities of reinsurers under a Reinsurance
Agreement or other retrocessionaires under another Retrocession Agreement.
"Revolving Loan" shall have the meaning provided in Section 1.01(a).
"Revolving Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled "Revolving Loan Commitment," as the same may be reduced from time to
time or terminated pursuant to Sections 3.02, 3.03 and/or 9.
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"Risk Based Capital Ratio" shall mean, for any Regulated Insurance Company,
the ratio (expressed as a percentage), at any time, of the Total Adjusted
Capital of such Regulated Insurance Company to the Authorized Control Level of
such Regulated Insurance Company.
"RL Commitment Fee" shall have the meaning provided in Section 3.01(a).
"RL Percentage" of any Bank at any time shall mean a fraction (expressed as
a percentage) the numerator of which is the Revolving Loan Commitment of such
Bank at such time and the denominator of which is the Total Revolving Loan
Commitment at such time, provided that if the RL Percentage of any Bank is to be
determined after the Total Revolving Loan Commitment has been terminated, then
the RL Percentages of the Banks shall be determined immediately prior (and
without giving effect) to such termination.
"S&P" shall mean Standard & Poor's Ratings Group and its successors.
"S&P Credit Rating" shall mean the rating level (it being understood that a
rating level shall include numerical modifiers and (+) and (-) modifiers)
assigned by S&P to the senior unsecured long-term debt of the Borrower. If the
foregoing rating shall be changed by S&P, such change shall be effective for
purposes of this definition on the Business Day following the day on which S&P
announces such change.
"SAP" shall mean, with respect to any Regulated Insurance Company, the
accounting procedures and practices prescribed or permitted by the Applicable
Insurance Regulatory Authority of the state or other jurisdiction (domestic or
foreign) in which such Regulated Insurance Company is domiciled; it being
understood and agreed that determinations in accordance with SAP for purposes of
Section 8, including defined terms as used therein, are subject (to the extent
provided therein) to Section 12.07(a).
"Scheduled Repayments" shall have the meaning provided in Section
4.02(i)(a).
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Stated Amount" shall mean, at any time, (i) if the Letter of Credit is
denominated in Dollars, the maximum amount available to be drawn under the
Letter of Credit (regardless of whether any conditions for drawing could then be
met) and (ii) if the Letter of Credit is an Alternative Currency Letter of
Credit, the Dollar Equivalent of the maximum amount available to be drawn under
the Letter of Credit (regardless of whether any conditions for drawing could
then be met).
"Statutory Surplus" shall mean, at any date for any Regulated Insurance
Company, (a) the total amount as would be shown on line 27, page 3, column 1 of
a Benchmark Statement for such Regulated Insurance Company prepared as of such
date.
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"Subsidiary" of any Person shall mean and include (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, limited
liability company, joint venture or other entity in which such Person directly
or indirectly through Subsidiaries has more than a 50% equity or voting interest
at the time. Unless otherwise expressly provided, all references herein to
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary of the Borrower
which is a Non-Regulated Company and a Material Subsidiary; provided that
Chartwell Re Holdings and its Domestic Subsidiaries which are Non-Regulated
Companies shall not be required to become Subsidiary Guarantors until such time
as the Chartwell Senior Notes are paid in full.
"Subsidiary Guaranty" shall have the meaning provided in Section 5.08.
"Surplus Increase" shall mean, with respect to each Asset Sale effected by a
Regulated Insurance Company, the increase in Statutory Surplus of such Regulated
Insurance Company as a result of such Asset Sale.
"Syndication Agent" shall have the meaning provided in the first paragraph
of this Agreement.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan" shall mean each Revolving Loan that is converted into a term
loan on the Conversion Date pursuant to 1.01(b).
"Term Loan Maturity Date" shall mean the fifth anniversary of the Effective
Date.
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"Test Period" shall mean (i) for any determination made on and prior to
September 30, 2000, the period from January 1, 2000 to the last day of the
fiscal quarter of the Borrower then last ended, provided that the first Test
Period shall end on March 31, 2000, and (ii) for any determination made
thereafter, the four consecutive fiscal quarters of the Borrower ended on the
last day of the most recently ended fiscal quarter of the Borrower (taken as one
accounting period).
"Total Adjusted Capital" shall mean "Total Adjusted Capital" as defined by
the NAIC as of December 31, 1997 and as applied in the context of the Risk Based
Capital Guidelines promulgated by the NAIC.
"Total Commitment" shall mean the sum of the Total Revolving Loan
Commitment and Total L/C Commitment.
"Total L/C Commitment" shall mean the sum of the L/C Commitments of each of
the L/C Banks.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving Loan
Commitments of each of the Banks.
"Total Unutilized L/C Commitment" shall mean, at any time, the sum of the
Unutilized L/C Commitments of the L/C Banks at such time.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time, (i)
the Total Revolving Loan Commitment at such time less (ii) the sum of the
aggregate Principal Amount of all Revolving Loans outstanding at such time.
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"Trenwick Senior Notes" shall mean the 6.70% Senior Notes due April 1, 2003
issued by the Borrower.
"Trust Preferred Securities" shall mean the 8.82% Junior Subordinated
Deferrable Interest Debentures issued by the Borrower pursuant to the Indenture,
dated as of January 31, 1997, between the Borrower and The Chase Manhattan Bank,
as Trustee, and all securities issued by Trenwick Capital Trust I pursuant to
the Amended and Restated Declaration of Trust, dated as of January 31, 1997.
"Type" shall mean any type of Loan determined with respect to currency and
the interest option applicable thereto.
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by
which the value of the accumulated plan benefits under the Plan determined on a
plan termination basis in accordance with actuarial assumptions at such time
consistent with those prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds the fair market value of all plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions).
"Unpaid Drawing" shall have the meaning provided in Section 2.03(a).
"Unutilized L/C Commitment" with respect to any Bank at any time shall mean
such Bank's L/C Commitment at such time less such Bank's L/C Exposure at such
time.
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"Unutilized Revolving Loan Commitment" with respect to any Bank at any time
shall mean such Bank's Revolving Loan Commitment at such time less the aggregate
outstanding Principal Amount of all Revolving Loans made by such Bank at such
time.
"U.S. LIBOR" shall mean for each Interest Period applicable to a Loan
denominated in Dollars (other than a Base Rate Loan), the rate per annum that
appears on page 3750 of the Dow ▇▇▇▇▇ Telerate Screen (or any successor page)
for Dollar deposits with maturities comparable to such Interest Period as of
11:00 A.M. (London time) on the date which is two Business Days prior to the
commencement of such Interest Period or, if such a rate does not appear on page
3750 of the Dow ▇▇▇▇▇ Telerate Screen (or any successor page), the offered
quotations to first-class banks in the London interbank market by Chase for
Dollar deposits of amounts in same day funds comparable to the outstanding
principal amount of such Dollar denominated Loan with maturities comparable to
such Interest Period determined as of 11:00 A.M. (London time) on the date which
is two Business Days prior to the commencement of such Interest Period.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors' or nominees' qualifying shares, is owned
directly or indirectly by such Person.
"Written" or "in writing" shall mean any form of written communication or a
communication by means of telex, facsimile device, telegraph or cable.
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SECTION 11. The Administrative Agent.
11.01 Appointment. Each Bank hereby irrevocably designates and appoints
Chase as Administrative Agent (such term as used in this Section 11 to include
Chase Manhattan International Limited, acting as the Issuing Agent under this
Agreement and the Letters of Credit) to act as specified herein and in the other
Credit Documents, and each such Bank hereby irrevocably authorizes Chase, as the
Administrative Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement and the other Credit Documents and to exercise such
powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other Credit Documents, together
with such other powers as are reasonably incidental thereto. The Administrative
Agent agrees to act as such upon the express conditions contained in this
Section 11. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Credit
Documents, nor any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this Section 11 are solely for the benefit of the
Administrative Agent and the Banks, and no Credit Party shall have any rights as
a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement, the Administrative Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for the Credit
Party.
11.02 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Credit Document by or through its
affiliates, agents or attorneys- in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by Section 11.03.
11.03 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Banks for any recitals, statements, representations or
warranties made by the Borrower or any Subsidiary or any of their respective
officers contained in this Agreement, 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 for any failure of the Borrower or any
of its Subsidiaries or any of their respective officers to perform its
obligations here-under or thereunder. The Administrative Agent shall not be
under any obligation to any Bank to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries. The Administrative Agent shall not be responsible to any
Bank for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Credit Document or for
any representations, warranties, recitals or statements made herein or therein
or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished or made by the Administrative Agent
to the Banks or by or on behalf of the Borrower to the Administrative Agent or
any Bank or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of Default.
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11.04 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent 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 Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks 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 and the other Credit Documents in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Banks.
11.05 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Bank or any
Credit Party referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Banks. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks, provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Banks.
11.06 Non-Reliance. Each Bank expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Bank. Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, assets,
operations, property, financial and other conditions, prospects and
credit-worthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans hereunder, participate in the Letter of Credit issued
hereunder and enter into this Agreement. Each Bank also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Bank, 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 to make such
investigation as it deems necessary to inform itself as to the business, assets,
operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries. The Administrative Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, operations, assets, property,
financial and other conditions, prospects or creditworthiness of the Borrower or
any Subsidiary which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys- in-fact or
affiliates.
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11.07 Indemnification. Each Bank agrees to indemnify the Administrative
Agent in its capacity as such ratably according to such Bank's percentage used
in determining Required Banks from time to time, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Agreement or any other Credit Document, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Administrative Agent under or in
connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by the Borrower or any of its Subsidiaries, provided that
no Bank shall be liable to the Administrative Agent for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. If any indemnity
furnished to the Administrative Agent for any purpose shall, in the opinion of
the Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section 11.07 shall survive the payment of all Obligations.
11.08 The Administrative Agent in its Individual Capacity. Chase and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower and its Subsidiaries as though Chase were not
acting as Administrative Agent hereunder. With respect to the Loans made by it
and all Obligations owing to it, Chase shall have the same rights and powers
under this Agreement as any Bank and may exercise the same as though it were not
the Administrative Agent, and the terms "Bank" and "Banks" shall include the
Administrative Agent in its individual capacity.
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11.09 Successor Administrative Agent. The Administrative Agent may resign
as the Administrative Agent upon 20 days' notice to the Banks and the Borrower.
Upon such resignation, the Required Banks shall, with the consent of the
Borrower (such consent not to be unreasonably withheld), appoint from among the
Banks a successor Administrative Agent for the Banks, whereupon such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent, and the term "Administrative Agent" shall include such successor agent
effective upon its appointment, and the resigning Administrative Agent's rights,
powers and duties as the Administrative Agent shall be terminated, without any
other or further act or deed on the part of such former Administrative Agent or
any of the parties to this Agreement. After the retiring Administrative Agent's
resignation hereunder as the Administrative Agent, the provisions of this
Section 11 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.
11.10 Other Agents. Nothing in this Agreement or any other Credit Document
shall impose on the Documentation Agent or the Syndication Agent, in each case
in such capacity, any duties or obligations.
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SECTION 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Borrower hereby agree to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the negotiation, preparation, syndication, execution and delivery of the Credit
Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of White & Case LLP); (ii) pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent and each
of the Banks in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Administrative Agent
and for each of the Banks); (iii) pay and hold each of the Banks harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay such taxes; and (iv) indemnify the Administrative Agent and each
Bank, and their respective officers, directors, employees, representatives and
agents (each, an "indemnified person") from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses
(collectively, "Claims") incurred by any of them as a result of, or arising out
of, or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not the Administrative Agent or any Bank is a party
thereto) related to the entering into and/or performance of any Credit Document
or any other Transaction Document or the use of the proceeds of any Loans or the
Letter of Credit here-under or the Transaction or the consummation of any other
transactions contemplated in any Credit Document, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). No Bank shall be liable for any damages arising from the use by
others of information or other materials obtained through electronic,
telecommunications or other information transmission systems.
12.02 Right of Setoff. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence and continuance of an Event of Default, each Bank is
hereby authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Bank (including, without limitation, by branches
and agencies of such Bank wherever located) to or for the credit or the account
of such Credit Party against and on account of the Obligations and liabilities
of such Credit Party to such Bank or any other Bank under this Agreement or
under any of the other Credit Documents, including, without limitation, all
interests in Obligations of such Credit Party purchased by such Bank or any
other Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured. Each Bank is hereby designated the agent of
all other Banks for purposes of effecting set off pursuant to this Section 12.02
and each Credit Party hereby grants to each Bank for such Bank's own benefit and
as agent for all other Banks a continuing security interest in any and all
deposits, accounts or moneys of such Credit Party maintained from time to time
with such Bank.
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12.03 Notices. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
facsimile communication) and mailed, telecopied or delivered, if to any Credit
Party, at the address specified opposite its signature below; if to any Bank, at
its address specified for such Bank on Annex II hereto; or, at such other
address as shall be designated by any party in a written notice to the other
parties hereto. All such notices and communications shall be mailed, telecopied,
sent by overnight courier or delivered by hand and shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier or sent
by telecopy, or the date that is five Business Days after being deposited in the
mail, postage prepaid, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 12.03 or in accordance with
the last unrevoked notice from such party given in accordance with this Section
12.03; provided that notices and communications to the Administrative Agent
shall be effective when received by the Administrative Agent.
12.04 Benefit of Agreement. (a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of its Notes to any bank or other financial
institution; provided that in the case of any such participation, (i) such
Bank's obligations under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations (iii) the participant shall agree to be bound by the
confidentiality provisions contained in Section 12.15 and (iv) the participant
shall not have any rights under this Agreement or any of the other Credit
Documents, including rights of consent, approval or waiver (the participant's
rights against such Bank in respect of such participation to be those set forth
in the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be determined
as if such Bank had not sold such participation, except that the participant
shall be entitled to receive the additional amounts under Sections 1.10, 1.11
and 4.04 of this Agreement to, and only to, the extent that, and in no greater
amount than, such Bank would be entitled to such benefits if the participation
had not been entered into or sold; and provided further, that no Bank shall
transfer, grant or assign any participation under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (i) extend
any Scheduled Repayment or the final scheduled maturity of any Loan, Note or
Letter of Credit in which such participant is participating (it being understood
that any waiver of the application of any prepayment or the method of
application of any prepayment to the amortization of, the Loans shall not
constitute an extension of a Scheduled Repayment or the final scheduled maturity
date), or reduce the rate or extend the time of payment of interest thereon or
Fees, or reduce the principal amount thereof, or increase such participant's
participating interest in any Commitment, Loan or Letter of Credit over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Commitment or of a
mandatory repayment or prepayment shall not constitute a change in the terms of
any Commitment and that an increase in any Commitment shall be permitted without
the consent of any participant if such participant's participation is not
increased as a result thereof), or (ii) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement or any
other Credit Document except in accordance with the terms hereof and thereof.
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(b) Notwithstanding the foregoing, any Bank may assign all or a portion of
its rights and obligations hereunder to a bank or other financial institution
with the prior written consent of the Administrative Agent and the Borrower,
which consents shall not be unreasonably withheld or delayed (provided that (i)
no such consents shall be required in connection with an assignment to a Person
which is already a Bank hereunder and (ii) the consent of the Borrower shall not
be required at any time when a Default or Event of Default exists). No
assignment of less than all of a Bank's rights and obligations hereunder
pursuant to the immediately preceding sentence shall, to the extent such
transaction represents an assignment to an institution other than one or more
Banks hereunder, be in an aggregate amount less than the minimum of $5,000,000
unless otherwise agreed to by the Administrative Agent and the Borrower in
writing. No assignment of all or any portion of a Bank's L/C Commitment shall be
made to an institution which is not an Approved Credit Institution, and no such
assignment shall be effective until all then outstanding Letters of Credit are
returned by Lloyds to the Issuing Agent for cancellation in exchange for new or
amended Letters of Credit having a Schedule 1 thereto which gives effect to such
assignment. If any Bank so sells or assigns all or a part of its rights
hereunder or under the Notes, any reference in this Agreement or the Notes to
such assigning Bank shall thereafter refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights, obligations and benefits as it would if it were such
assigning Bank. Each assignment pursuant to this Section 12.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment and
Assumption Agreement substantially in the form of Exhibit H (appropriately
completed) (the "Assignment and Assumption Agreement"). At the time of any such
assignment, (i) Annex I shall be deemed to be amended to reflect the
Commitments, if any, and outstanding Loans of the respective assignee (which
shall result in a direct reduction to the Commitments, if any, and outstanding
Loans of the assigning Bank) and of the other Banks, (ii) if any such assignment
occurs after the Initial Credit Event Date, at the request of the assignor or
the assignee the Borrower will issue new Notes to the respective assignee and to
the assigning Bank in conformity with the requirements of Section 1.05, (iii)
the Administrative Agent shall receive from the assigning Bank and/or the
assignee Bank or financial institution at the time of each assignment the
payment of a nonrefundable assignment fee of $3,500, (iv) the Administrative
Agent shall receive from the assignee Bank the Administrative Agent's
administrative questionnaire completed by such assignee Bank and (v) if any such
assignment is of all or a portion of the assigning Bank's L/C Commitment, all
then outstanding Letters of Credit shall be amended or returned to the Issuing
Agent for cancellation and reissued to reflect such assignment. At the time of
each assignment pursuant to this Section 12.04(b) to a Person which is not
already a Bank hereunder and which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes,
the respective assignee Bank shall provide to the Borrower and the
Administrative Agent the appropriate Internal Revenue Service forms (and, if
applicable a Section 4.04(b)(ii) Certificate) described in Section 4.04(b). Each
Bank and the Borrower agrees to execute such documents (including, without
limitation, amendments to this Agreement and the other Credit Documents) as
shall be necessary to effect the foregoing. Promptly following any assignment
pursuant to this Section 12.04(b), the assigning Bank shall promptly notify the
Borrower and the Administrative Agent thereof. Nothing in this Section 12.04
shall prevent or prohibit any Bank from pledging its Loans or Notes hereunder to
a Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 12.04, no transfer
or assignment of the interests or obligations of any Bank hereunder or any grant
of participations therein shall be permitted if such transfer, assignment or
grant would require the Borrower to file a registration statement with the SEC
or to qualify the Loans under the "Blue Sky" laws of any state.
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(d) Each Bank initially party to this Agreement hereby represents, and each
Person that becomes a Bank pursuant to an assignment permitted by clause (b)
above will upon its becoming party to this Agreement represent, that it is a
commercial lender, other financial institution or other "accredited investor"
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business or is acquiring the Loans without a view to distribution of the Loans
within the meaning of the federal securities laws, and that it will make or
acquire Loans for its own account in the ordinary course of such business,
provided that, subject to the preceding clauses (a) through (c), the disposition
of any promissory notes or other evidences of or interests in Indebtedness held
by such Bank shall at all times be within its exclusive control.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Administrative Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and the Administrative Agent or any Bank shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Bank would otherwise have. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Banks to any other or further action in any
circumstances without notice or demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees that promptly
after its receipt of each payment from or on behalf of the Borrower in respect
of any Obligations of the Borrower, it shall distribute such payment to the
Banks (other than any Bank that has consented in writing to waive its pro rata
share of such payment) pro rata based upon their respective shares, if any, of
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the Borrower to such Banks in such amount as shall result in a proportional
participation by all of the Banks in such amount, provided that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
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12.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP or SAP, as the case may be, consistently applied throughout the
periods involved (except as set forth in the notes thereto or as otherwise
disclosed in writing by the Borrower to the Banks). In addition, except as
otherwise specifically provided herein, all computations determining compliance
with Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect from time to time; provided that (i) if any
such accounting principle or policy (whether GAAP or SAP or both) shall change
after the Effective Date, the Borrower shall give reasonable notice thereof to
the Administrative Agent and each of the Banks and if within 30 days following
such notice the Borrower, the Administrative Agent or the Required Banks shall
elect by giving written notice of such election to the other parties hereto,
such computations shall not give effect to such change unless and until this
Agreement shall be amended pursuant to Section 12.12 to give effect to such
change, and (ii) if at any time the computations determining compliance with
Section 8 utilize accounting principles different from those utilized in the
financial statements then being furnished to the Banks pursuant to Section 7.01,
such financial statements shall be accompanied by reconciliation work-sheets.
(b) All computations of interest on Eurodollar Loans and Fees hereunder
shall be made on the actual number of days elapsed over a year of 360 days.
(c) All computations of interest on Base Rate Loans hereunder shall be made
on the actual number of days elapsed over a year of 365/366 days.
(d) For purposes of this Agreement, the Dollar Equivalent of each Loan that
is an Alternate Currency Loan and the Dollar Equivalent of the stated amount of
each Letter of Credit that is an Alternate Currency Letter of Credit shall be
calculated on the date when any such Loan is made or such Letter of Credit is
issued, on the first Business Day of each month and at such other times as
designated by the Administrative Agent at any time when a Default or an Event of
Default exists. Such Dollar Equivalent shall remain in effect until the same is
recalculated by the Administrative Agent as provided above and notice of such
recalculation is received by the Borrower, it being understood that until such
notice is received, the Dollar Equivalent shall be that Dollar Equivalent as
last reported to the Borrower by the Administrative Agent. The Administrative
Agent shall promptly notify the Borrower and the Banks of each such
determination of the Dollar Equivalent.
80
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) THIS AGREEMENT
AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. 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 CREDIT PARTY HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH
CREDIT PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS
LACK JURISDICTION OVER SUCH CREDIT PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH COURT
LACKS JURISDICTION OVER SUCH CREDIT PARTY. EACH CREDIT PARTY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFORE-MENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH CREDIT PARTY AT ITS ADDRESS FOR NOTICES
PURSUANT TO SECTION 12.03, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT
THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY BANK TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(b) EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
81
12.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on the date (the
"Effective Date") on which the Borrower and each of the Banks shall have signed
a copy hereof (whether the same or different copies) and shall have delivered
the same to the Administrative Agent at the Administrative Agent's Notice Office
or, in the case of the Banks, shall have given to the Administrative Agent
telephonic (confirmed in writing), written, telex or telecopy notice (actually
received) at such office that the same has been signed and mailed to it. The
Administrative Agent will give the Borrower and each Bank prompt written notice
of the occurrence of the Effective Date.
12.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and the Required Banks,
provided that no such change, waiver, discharge or termination shall, without
the consent of each Bank affected thereby (other than a Defaulting Bank), (i)
extend any Scheduled Repayment or the scheduled final maturity of any Loan,
Letter of Credit or Note (it being understood that any waiver of the application
of any prepayment or the method of application of any prepayment to the
amortization of the Loans shall not constitute an extension of any Scheduled
Repayment or the scheduled final maturity thereof), or reduce the rate, or
extend the time of payment, of interest thereon or Fees or reduce the principal
amount thereof, (ii) increase the Commitments of any Bank over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default or of a mandatory reduction in the Total Commitment or
mandatory repayment or prepayment shall not constitute a change in the terms of
any Commitment of any Bank), (iii) amend, modify or waive any provision of this
Section 12.12, (iv) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks or (v) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement. No provision
of Section 11 or any other provision relating to the rights and/or obligations
of the Administrative Agent may be amended without the consent of the
Administrative Agent.
12.13 Survival. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 4.04, 11.07 or 12.01 shall survive the
execution and delivery of this Agreement and the making of the Loans, the
repayment of the Obligations and the termination of the Total Commitment.
12.14 Domicile of Loans. Subject to Section 12.04, each Bank may transfer
and carry its Loans at, to or for the account of any branch office, subsidiary
or affiliate of such Bank, provided that the Borrower shall not be responsible
for costs arising under Section 1.10 or 4.04 resulting from any such transfer to
the extent not otherwise applicable to such Bank prior to such transfer.
82
12.15 Confidentiality. The Administrative Agent and each Bank shall hold
all non-public information furnished by or on behalf of the Borrower in
connection with such Bank's evaluation of whether to become a Bank hereunder or
obtained by such Bank pursuant to the requirements of this Agreement
("Confidential Information") in accordance with its customary procedure for
handling confidential information of this nature and in accordance with safe and
sound banking or lending practices; provided that any Bank and/or its affiliates
may disclose any such Confidential Information (a) to their respective
affiliates, directors, officers, employees, auditors or counsel for purposes
related to the Credit Documents and the transactions contemplated thereby,
provided that the Bank disclosing such confidential information pursuant to this
clause (a) shall remain liable for any non-permitted disclosure of such
information by any such employee, director, agent, attorney, accountant or
professional advisor, (b) as has become generally available to the public other
than as a result of disclosure in violation of this Section 12.15, (c) as has
become available to such Bank or any such affiliate on a non-confidential basis
from a source other than the Borrower and its affiliates, provided that the
source is not known by such Bank to be prohibited from transmitting such
information to such Bank by a contractual, legal or fiduciary obligation, (d) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank and/or its affiliates, (e) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation or other judicial process (it being understood that, to the extent
reasonably practicable and legally permitted under the circumstances, the
Borrower shall be given prior notice and an opportunity to contest any proposed
disclosure pursuant to this clause (e)), (f) in order to comply with any law,
order, regulation or ruling applicable to such Bank and/or its affiliates, and
(g) to any permitted prospective or actual syndicate member or participant in
the Loans, provided that such prospective or actual syndicate member or
participant agrees with the respective assigning Bank to be bound by the
provisions of this Section 12.15. The provisions of this Section 12.15 shall
survive any termination of this Agreement.
12.16 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE CREDIT DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.17 Judgment Currency. (a) The Borrowers' Obligations hereunder and under
the other Credit Documents to make payments in the applicable Approved Currency
(the "Obligation Currency") shall not be discharged or satisfied by any tender
or recovery pursuant to any judgment expressed in or converted into any currency
other than the Obligation Currency, except to the extent that such tender or
recovery results in the effective receipt by the Administrative Agent or the
respective Bank of the full amount of the Obligation Currency expressed to be
payable to the Administrative Agent or such Bank under this Agreement or the
other Credit Documents. If, for the purpose of obtaining or enforcing judgment
against the Borrower in any court or in any jurisdiction, it becomes necessary
to convert into or from any currency other than the Obligation Currency (such
other currency being hereinafter referred to as the "Judgment Currency") an
amount due in the Obligation Currency, the conversion shall be made at the
Relevant Currency Equivalent, and, in the case of other currencies, the rate of
exchange (as quoted by the Administrative Agent or if the Administrative Agent
does not quote a rate of exchange on such currency, by a known dealer in such
currency designated by the Administrative Agent) determined, in each case, as of
the Business Day immediately preceding the day on which the judgment is given
(such Business Day being hereinafter referred to as the "Judgment Currency
Conversion Date").
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(b) If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, the Borrowers covenant and agree to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.
(c) For purposes of determining the Relevant Currency Equivalent or any
other rate of exchange for this Section, such amounts shall include any premium
and costs payable in connection with the purchase of the Obligation Currency.
12.18 Euro. (a) If at any time that an Alternate Currency Loan or an
Alternate Currency Letter of Credit is outstanding, the relevant Alternate
Currency is fully replaced as the lawful currency of the country that issued
such Alternate Currency (the "Issuing Country") by the Euro so that all payments
are to be made in the Issuing Country in Euros and not in the Alternate Currency
previously the lawful currency of such country, then such Alternate Currency
Loan or Alternate Currency Letter of Credit shall be automatically converted
into a Loan or Letter of Credit denominated in Euros in a principal amount or
stated amount equal to the amount of Euros into which the principal amount or
stated amount of such Alternate Currency Loan or Letter of Credit would be
converted pursuant to the EMU Legislation and thereafter no further Loans will
be available in such Alternate Currency, with the basis of accrual of interest,
notices requirements and payment offices with respect to such converted Loans or
Letters of Credit to be that consistent with the convention and practices in the
London interbank market for Euro denominated Loans or Letters of Credit.
(b) The Borrower shall from time to time, at the request of any Bank, pay
to such Bank the amount of any losses, damages, liabilities, claims, reduction
in yield, additional expense, increased cost, reduction in any amount payable,
reduction in the effective return of its capital, the decrease or delay in the
payment of interest or any other return forgone by such Bank or its affiliates
as a result of the tax or currency exchange resulting from the introduction,
changeover to or operation of the Euro in any applicable nation or Eurocurrency
market.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.
Address:
Trenwick Group Inc. TRENWICK GROUP INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
& Chief Financial Officer
THE CHASE MANHATTAN BANK,
Individually and as Administrative
Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Title: Vice President
CHASE MANHATTAN INTERNATIONAL
LIMITED, as Issuing Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Vice President
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: Second Vice President
FIRST UNION NATIONAL BANK,
Individually and as Syndication Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Title: Senior Vice President
FLEET NATIONAL BANK, Individually
and as Documentation Agent
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Vice President
DRESDNER BANK AG, New York
and Grand Cayman Branches
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: Senior Vice President
NATIONAL WESTMINSTER BANK PLC
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Head of Lloyd's Insurance Team
STATE STREET BANK AND TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Relationship Manager
THE FUJI BANK, LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Vice President & Manager
