Exhibit 10.11
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CONFORMED
AMENDED AND RESTATED
LETTER OF CREDIT REIMBURSEMENT AGREEMENT/1/
dated as of April 3, 2001
among
MAX RE LTD.
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
FLEET NATIONAL BANK
and
CITIBANK, NA
as Co-Agents,
and
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Fronting Bank and as Administrative Agent,
and LC Administrator for the Lenders
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/1/ Conformed copy incorporating First Amendment (May 11, 2001), Second
Amendment (December 21, 2001) and letter re: Section 6.6 (January 7, 2002).
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS......................................................1
SECTION 1.1 Definitions...............................................1
SECTION 1.2 Other Interpretive Provisions............................15
SECTION 1.3 Accounting Principles....................................16
ARTICLE II. AMOUNT AND TERMS OF COMMITMENT..................................16
SECTION 2.1 Letter of Credit Commitment..............................16
SECTION 2.2 Issuance, Amendment and Renewal of Letters of Credit.....17
SECTION 2.3 Drawings and Reimbursements..............................19
SECTION 2.4 Repayment of LC Advances.................................22
SECTION 2.5 Role of the Lenders......................................22
SECTION 2.6 Obligations Absolute.....................................23
SECTION 2.7 Existing Letters of Credit...............................24
SECTION 2.8 Applicability of ISP98...................................24
SECTION 2.9 Interest.................................................24
SECTION 2.10 Payments by the Borrower.................................25
SECTION 2.11 Warranty.................................................25
SECTION 2.12 Termination or Reduction of Commitments..................25
SECTION 2.13 Mandatory Reduction/Cash Collateralization of
Letters of Credit........................................26
SECTION 2.14 Fees.....................................................26
SECTION 2.15 Computation of Fees and Interest.........................28
SECTION 2.16 Sharing of Payments, Etc.................................28
SECTION 2.17 Commitment Termination Date Extension....................28
SECTION 2.18 Optional Increase in LC Commitments......................30
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY..........................30
SECTION 3.1 Taxes....................................................30
SECTION 3.2 Illegality...............................................32
SECTION 3.3 Increased Costs and Reduction of Return..................32
SECTION 3.4 Certificates of Lenders..................................33
SECTION 3.5 Substitution of Lenders..................................33
SECTION 3.6 Survival.................................................33
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES..................................33
SECTION 4.1 Due Organization, Authorization, etc.....................33
SECTION 4.2 Litigation and Contingent Liabilities....................34
SECTION 4.3 Employee Benefit Plans...................................34
SECTION 4.4 Regulated Entities.......................................34
SECTION 4.5 Regulations U and X......................................34
SECTION 4.6 Proceeds.................................................35
SECTION 4.7 Business Locations.......................................35
SECTION 4.8 Accuracy of Information..................................35
SECTION 4.9 Subsidiaries.............................................35
SECTION 4.10 Insurance Licenses.......................................35
SECTION 4.11 Taxes....................................................35
SECTION 4.12 Securities Laws..........................................36
SECTION 4.13 Compliance with Laws.....................................36
SECTION 4.14 Financial Condition......................................36
SECTION 4.15 Insurance Act............................................36
SECTION 4.16 First Priority Security Interest.........................36
ARTICLE V. AFFIRMATIVE COVENANTS...........................................37
SECTION 5.1 Reports, Certificates and Other Information..............37
SECTION 5.2 Corporate Existence; Foreign Qualification...............40
SECTION 5.3 Books, Records and Inspections...........................40
SECTION 5.4 Insurance................................................40
SECTION 5.5 Taxes and Liabilities....................................40
SECTION 5.6 Compliance with Laws.....................................41
SECTION 5.7 Maintenance of Permits...................................41
SECTION 5.8 Conduct of Business......................................41
SECTION 5.9 Use of Letters of Credit.................................41
SECTION 5.10 Further Assurances.......................................41
ARTICLE VI. NEGATIVE COVENANTS..............................................41
SECTION 6.1 Net Worth................................................41
SECTION 6.2 Unencumbered Reserve Requirement.........................41
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SECTION 6.3 Debt.....................................................41
SECTION 6.4 Mergers, Consolidations and Sales........................42
SECTION 6.5 Other Agreements.........................................42
SECTION 6.6 Transactions with Affiliates.............................42
SECTION 6.7 Liens....................................................42
SECTION 6.8 Restrictions On Negative Pledge Agreements...............43
SECTION 6.9 Dividends, Etc...........................................43
SECTION 6.10 Eligible Investments.....................................43
ARTICLE VII. EVENTS OF DEFAULT AND THEIR EFFECT..............................44
SECTION 7.1 Events of Default........................................44
SECTION 7.2 Effect of Event of Default...............................46
SECTION 7.3 LC Collateral Account....................................46
ARTICLE VIII. CONDITIONS......................................................47
SECTION 8.1 Conditions to Occurrence of the Amendment Effective Date.47
SECTION 8.2 Conditions to All Credit Extensions......................47
ARTICLE IX. THE ADMINISTRATIVE AGENT........................................49
SECTION 9.1 Appointment and Authorization............................49
SECTION 9.2 Delegation of Duties.....................................49
SECTION 9.3 Liability of Administrative Agent........................49
SECTION 9.4 Reliance by Administrative Agent.........................50
SECTION 9.5 Notice of Default........................................50
SECTION 9.6 Credit Decision..........................................50
SECTION 9.7 Indemnification..........................................51
SECTION 9.8 Administrative Agent in Individual Capacity..............51
SECTION 9.9 Successor Administrative Agent...........................51
SECTION 9.10 Withholding Tax..........................................52
SECTION 9.11 Co-Agents................................................53
ARTICLE X. MISCELLANEOUS...................................................53
SECTION 10.1 Amendments and Waivers...................................53
SECTION 10.2 Notices..................................................54
SECTION 10.3 No Waiver; Cumulative Remedies...........................55
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SECTION 10.4 Costs and Expenses.......................................55
SECTION 10.5 Indemnity................................................55
SECTION 10.6 Payments Set Aside.......................................56
SECTION 10.7 Successors and Assigns...................................56
SECTION 10.8 Assignments, Participations, etc.........................56
SECTION 10.9 Confidentiality..........................................58
SECTION 10.10 Set-off..................................................58
SECTION 10.11 Notification of Addresses, Lending Offices, Etc..........59
SECTION 10.12 Counterparts.............................................59
SECTION 10.13 Severability.............................................59
SECTION 10.14 No Third Parties Benefitted..............................59
SECTION 10.15 Governing Law and Jurisdiction...........................59
SECTION 10.16 Waiver of Jury Trial.....................................60
SECTION 10.17 Currency Indemnity.......................................60
SECTION 10.18 Service of Process.......................................61
SECTION 10.19 Entire Agreement.........................................61
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TABLE OF CONTENTS
Page
SCHEDULE 1.1 Concentration Limits
SCHEDULE 2.1 Commitments
SCHEDULE 4.1 Jurisdictions
SCHEDULE 4.2 Litigation
SCHEDULE 4.7 Locations
SCHEDULE 4.9 Subsidiaries
SCHEDULE 4.10 Insurance Licenses
SCHEDULE 6.7 Liens
SCHEDULE 10.2 Addresses
EXHIBIT A Form of Compliance Certificate
EXHIBIT B Form of Borrowing Base Certificate
EXHIBIT C Form of Assignment and Acceptance
EXHIBIT D Form of Security Agreement
EXHIBIT E Form of Letter of Credit
EXHIBIT F Form of Commitment Increase Request
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AMENDED AND RESTATED
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
THIS AMENDED AND RESTATED LETTER OF CREDIT REIMBURSEMENT AGREEMENT,
dated as of April 3, 2001, is entered into by and among Max Re Ltd., a Bermuda
company (the "Borrower"), various financial institutions which are parties
hereto (the "Lenders"), Bank of America, National Association, as fronting bank
(in such capacity, the "Fronting Bank"), Bank of America, National Association,
as letter of credit administrator (in such capacity, the "LC Administrator") and
Bank of America, National Association, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent").
W I T N E S S E T H:
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WHEREAS, the Borrower, Bank of America, National Association, as LC
Issuer and Administrative Agent, and various financial institutions party
thereto (the "Original Lenders") entered into that certain Letter of Credit
Reimbursement Agreement dated as of February 25, 2000 (as amended or modified at
and in effect immediately prior to the Amendment Effective Date, the "Existing
Credit Agreement") whereby Bank of America, National Association issued (and the
Original Lenders participated in) letters of credit to counterparties to support
the Borrower's obligations under Reinsurance Agreements;
WHEREAS, the Borrower has requested the Lenders to amend and restate
the Existing Credit Agreement on the terms and conditions set forth in this
Agreement, to set forth, among other things, the terms and conditions under
which the Lenders hereafter will make credit extensions to the Borrower; it
being the intention of the Borrower, the Lenders, the Administrative Agent and
the LC Administrator that this Agreement and the Credit Documents executed in
connection herewith shall not effect the novation of the obligations of the
Borrower under the Existing Credit Agreement but be merely a restatement and,
where applicable, an amendment of and substitution for the terms governing such
obligations hereafter; and
WHEREAS, the Credit Extensions outstanding immediately prior to the
Amendment Effective Date pursuant to the Existing Credit Agreement shall deem to
be issued and outstanding hereunder for all purposes hereof and of the Credit
Documents after giving effect to the Amendment Effective Date;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions. When used herein the following terms shall
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have the following meanings:
ABS means any fixed-income instrument which is rated AAA/Aaa by S&P or
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▇▇▇▇▇'▇ or the equivalent rating from another nationally recognized rating
agency that entitles the holder
of, or beneficial owner under, the instrument to the whole or any part of the
rights or entitlements of a holder of a receivable or other asset and any other
rights or entitlements in respect of a pool of receivables or other assets or
any money payable by obligors under those receivables or other assets (whether
or not the money is payable to the holder of, or beneficial owner under, the
instrument on the same terms and conditions as under the receivables or other
assets) in relation to receivables or other assets; provided however, such
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receivables or assets shall be limited to automobile loans, credit card
receivables and home equity loans and such other ABS assets as may be
acceptable to the Administrative Agent.
Administrative Agent means (a) BofA, in its capacity as administrative
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agent for the Lenders, and (b) each other Person as shall have subsequently been
appointed as the successor Administrative Agent pursuant to Section 9.9.
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Adjusted Fair Market Value means, with respect to any Eligible
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Investments, an amount equal to the product of the Fair Market Value of such
Eligible Investments and the applicable percentage with respect to such Eligible
Investment as set forth on Schedule 1.2.
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Affiliate of any Person means any other Person which, directly or
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indirectly, controls or is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be:
(a) "controlled by" any other Person if such other Person possesses,
directly or indirectly, power:
(i) to vote 20% or more of the securities having at the
time of any determination hereunder voting power for the election of
directors of such Person; or
(ii) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise; or
(b) "controlled by" or "under common control with" such other Person if
such other Person is the executor, administrator, or other personal
representative of such Person.
Agent-Related Persons means the Fronting Bank, the Administrative
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Agent, the LC Administrator (and any successor administrative agent or letter of
credit administrator arising under Section 9.9), together with its Affiliates,
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and the officers, directors, employees, agents and attorneys-in-fact of such
Person and Affiliates.
Agent's Payment Office means the address for payments set forth on
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Schedule 10.2 in relation to the Administrative Agent, or such other address as
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the Administrative Agent may from time to time specify.
Agreement means this Amended and Restated Letter of Credit
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Reimbursement Agreement.
Amendment Effective Date means the date on which the conditions
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precedent for the effectiveness of this Agreement specified in Section 8.1 shall
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be met.
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Annual Statement means, as to any Person, the annual financial
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statement of such Person as required to be filed with the Minister (or similar
Governmental Authority) of such Person's domicile, together with all exhibits or
schedules filed therewith, prepared in conformity with SAP.
Assignee is defined in Section 10.8(a).
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Assignment and Acceptance is defined in Section 10.8(a).
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Attorney Costs means and includes all fees and disbursements of any law
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firm or other external counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
Authorized Officers means those officers of the Borrower whose
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signatures and incumbency shall have been certified to the Administrative Agent
pursuant to Section 8.1(d).
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Base Rate means, for any day, the higher of: (a) 0.50% per annum above
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the latest Federal Funds Rate; and (b) the rate of interest in effect for such
day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement of such
change.
Beneficiary means each Person for whose benefit a Letter of Credit has
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been issued hereunder.
BofA means Bank of America, National Association, a national banking
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association.
Borrower is defined in the Preamble.
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Borrowing Base Certificate means a certificate substantially in the
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form of Exhibit B with such changes therein as the Administrative Agent may
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request from time to time.
Business Day means any day other than a Saturday, Sunday or other day
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on which commercial banks in New York City, Chicago, or ▇▇▇▇▇▇▇▇, Bermuda are
authorized or required by law to close.
Capital Adequacy Regulation means any guideline, request or directive
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of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
Capital Stock means, as to any Person, any and all shares, interests,
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partnership interest, participations, rights in or other equivalents (however
designated) of such Person's equity interest (however designated).
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Capitalized Lease means, as to any Person, any lease which is or should
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be capitalized on the balance sheet in accordance with GAAP, together with any
other lease which is in substance a financing lease, including, without
limitation, any lease under which (a) such Person has or will have an option to
purchase the property subject thereto at a nominal amount or an amount less than
a reasonable estimate of the fair market value of such property as of the date
the lease is entered into or (b) the term of the lease approximates or exceeds
the expected useful life of the property leased thereunder.
Cash shall mean Dollars held by the Borrower in the Custody Account.
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Cash Equivalents means, at any time:
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(a) Government Debt, maturing not more than one year after such time;
(b) commercial paper, maturing not more than one year from the date of
issue, which is issued by
(i) a corporation (except an Affiliate of the Borrower)
rated at least A-1 by S&P or P-1 by ▇▇▇▇▇'▇ or the equivalent rating
from another nationally recognized agency, or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers' acceptance or eurodollar
time deposit, maturing not more than one year after the date of issue, which is
issued by either
(i) a financial institution which is rated at least BBB-
by S&P or Baa3 by ▇▇▇▇▇'▇ or 2 or above by the National Association of
Insurance Commissioners, or
(ii) any Lender; or
(d) any repurchase agreement with a term of one year or less which
(i) is entered into with
(A) any Lender, or
(B) any other commercial banking institution of
the stature referred to in clause (c)(i), and
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(ii) is secured by a fully perfected Lien in any obligation
of the type described in any of clauses (a) through (c) that has a
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market value at the time such repurchase agreement is entered into of
not less than 100% of the repurchase obligation of such Lender (or
other commercial banking institution) thereunder;
(e) investments in money market funds that invest solely in Cash
Equivalents described in clauses (a) through (d); and
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(f) investments in short-term asset management accounts offered by any
Lender for the purpose of investing in loans to any corporation (other than an
Affiliate of the Borrower) organized under the laws of any state of the United
States or of the District of Columbia and rated at least A-1 by S&P or P-1 by
▇▇▇▇▇'▇.
Change in Control shall be deemed to have occurred if (a) any sale,
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lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of Parent or the
Borrower occurs; (b) any "person" as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
is or becomes, directly or indirectly, the "beneficial owner," as defined in
Rule 13d-3 under the Exchange Act, of securities of Parent that represent 51% or
more of the combined voting power of Parent's then outstanding securities other
than ▇▇▇▇▇ Holdings and Capital Z Partners, (c) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Borrower (together with any new directors whose
election by the Board of Directors or whose nomination by the stockholders of
Parent was approved by a vote of the directors of Parent then still in office
who are either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of Parent's Board of Directors then in office; or (d)
Parent ceases to own, directly or indirectly, 100% of the Capital Stock of and
beneficial interest in the Borrower entitled to vote upon general matters
submitted to shareholders including election of the board of directors.
Code means the Internal Revenue Code of 1986, as amended and any
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successor statute of similar import, together with the regulations thereunder,
as amended, reformed or otherwise modified and in effect from time to time.
References to sections of the Code shall be construed to also refer to successor
sections.
Collateral means all property and assets that are from time to time
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subject to the Security Agreement.
Commitment means the Tranche A Commitments and the Tranche B
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Commitments.
Commitment Termination Date means the earliest to occur of (a) April 5,
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2002 as such date may be extended pursuant to Section 2.17 or (b) the date on
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which any Commitment Termination Event occurs.
Commitment Termination Event means (a) the occurrence of a Default
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described in Section 7.1(e) or (b) the occurrence and continuance of any other
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Event of Default and either (i) the Obligations are declared to be due and
payable pursuant to Section 7.2, or (ii) in the absence of such declaration, the
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Administrative Agent, acting at the direction of the Required Lenders, gives
notice to the Borrower that the Commitments have been terminated.
Compliance Certificate means a certificate substantially in the form of
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Exhibit A but with such changes as the Administrative Agent may from time to
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time request for purposes of monitoring the Borrower's compliance herewith.
5
Concentration Limits means the limitations on issuers and other
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investment parameters set forth on Schedule 1.1.
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Contingent Liability means any agreement, undertaking or arrangement by
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which any Person (outside the ordinary course of business) guarantees, endorses,
acts as surety for or otherwise becomes or is contingently liable for (by direct
or indirect agreement, contingent or otherwise, to provide funds for payment by,
to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure
a creditor against loss) the Debt, obligation or other liability of any other
Person (other than by endorsements of instruments in the course of collection),
or for the payment of dividends or other distributions upon the shares of any
other Person or undertakes or agrees (contingently or otherwise) to purchase,
repurchase, or otherwise acquire or become responsible for any Debt, obligation
or liability or any security therefor, or to provide funds for the payment or
discharge thereof (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, or other financial condition of any other Person, or to make payment or
transfer property to any other Person other than for fair value received;
provided, however, that obligations of the Borrower and its Subsidiaries under
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Reinsurance Agreements which are entered into in the ordinary course of business
shall not be deemed to be Contingent Liabilities for the purposes of this
Agreement. The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum permitted principal amount, if larger)
of the Debt, obligation or other liability guaranteed or supported thereby.
Contractual Obligation means, relative to any Person, any obligation,
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commitment or undertaking under any agreement or other instrument to which such
Person is a party or by which it or any of its property is bound or subject.
Corporate/Municipal Securities means publicly traded securities (other
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than preferred stock) issued by a corporation organized in the United States or
by any state or municipality located in the United States.
Credit Documents means this Agreement, each LC Application, each LC
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Amendment Application, the Security Agreement and all other agreements,
instruments, certificates, documents, schedules or other written indicia
delivered by the Borrower in connection with any of the foregoing.
Credit Extension means the issuance of any Letter of Credit or the
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amendment or extension of the stated expiry date of any existing Letter of
Credit.
Custody Account means account no. MRLF0010302 at Mellon Bank N.A. as to
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which Mellon Bank N.A. and the Administrative Agent have entered into that
certain Control Agreement dated as of February 25, 2000.
Debt means, with respect to any Person, at any date, without
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duplication, (a) all obligations of such Person for borrowed money or in respect
of loans or advances; (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (c) all obligations in respect
of letters of credit which have been drawn but not reimbursed by the
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Person for whose account such letter of credit was issued, and bankers'
acceptances issued for the account of such Person; (d) all obligations in
respect of Capitalized Leases of such Person; (e) all net Hedging Obligations
of such Person; (f) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase price of
property or services; (g) Debt of such Person secured by a Lien on property
owned or being purchased by such Person (including Debt arising under
conditional sales or other title retention agreements) whether or not such Debt
is limited in recourse; (h) any Debt of another Person secured by a Lien on any
assets of such first Person, whether or not such Debt is assumed by such first
Person (it being understood that if such Person has not assumed or otherwise
become personally liable for any such Debt, the amount of the Debt of such
person in connection therewith shall be limited to the lesser of the face
amount of such Debt and the fair market value of all property of such Person
securing such Debt); (i) any Debt of a partnership in which such Person is a
general partner unless such Debt is nonrecourse to such Person; and (j) all
Contingent Liabilities of such Person whether or not in connection with the
foregoing; provided that, notwithstanding anything to contrary contained
herein, Debt shall not include (x) contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business or, (y) unsecured current
liabilities incurred in the ordinary course of business and paid within 90 days
after the due date (unless contested diligently in good faith by appropriate
proceedings and, if requested by the Administrative Agent, reserved against in
conformity with GAAP) other than liabilities that are for money borrowed or are
evidenced by bonds, debentures, notes or other similar instruments (except as
described in clause (x) above) or (z) any obligations of such Person under any
Reinsurance Agreement.
Default means any condition or event, which, after notice or lapse of
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time or both, would constitute an Event of Default.
Department is defined in Section 4.2.
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Dollar(s) and the sign "$" means lawful money of the United States of
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America.
Drawing Request is defined in Section 2.3(a).
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Drawing Request Date is defined in Section 2.3(a).
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Eligible Assignee means a Person who is(a) a commercial bank organized
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under the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $250,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$250,000,000, provided that such bank is acting through a branch or agency
located in the United States; (c) a Person that is primarily engaged in the
business of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary; or (d) mutual funds, pension funds and other
institutional investors (except an Affiliate of the Borrower) regularly engaged
in the making of commercial loans.
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Eligible Investments means Cash, Cash Equivalents, MBS Investments,
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ABSs, Corporate/Municipal Securities, Government Securities and G7 Securities
which (a) have the required rating as set forth on Schedule 1.2, (b) are capable
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of being marked to market on a daily basis and (c) are held in the Custody
Account.
Equity Proceeds means the proceeds of any issuance or sale of stock of
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the Borrower net of attorneys' fees, accountants' fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
ERISA means the Employee Retirement Income Security Act of 1974, as
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amended, and any successor statute of similar import, together with the
regulations promulgated thereunder and under the Code, in each case as in effect
from time to time. References to sections of ERISA also refer to successor
sections.
Event of Default means any of the events described in Section 7.1.
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Executive Officer means, as to any Person, the president, the chief
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financial officer or the chief executive officer.
Fair Market Value shall mean (a) with respect to any publicly-traded
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security (other than those set forth in clause (b)) the closing price for such
security on the largest exchange on which such security is traded (or if not
traded on an exchange, then the average of the closing bid and ask prices quoted
over-the-counter) on the date of the determination (as such prices are reported
in The Wall Street Journal (Midwest Edition) or if not so reported, in any
nationally recognized financial journal or newspaper), (b) with respect to Cash
and Cash Equivalents, the amounts thereof, (c) with respect to any Private Fund
Investment, on any date of calculation, the amount that would be received with
respect thereto if the entire amount of the applicable capital or other similar
account relating thereto were withdrawn on such date (regardless of whether a
contractual right exists to make any withdrawal on such date) and (d) with
respect to any Investment (other than those set forth in clauses (a), (b) and
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(c)), the price for such Investment on the date of calculation obtained from a
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generally recognized source approved by the Administrative Agent or the most
recent bid quotation from such approved source (or, if no generally recognized
source exists as to a particular Investment, any other source specified by the
Borrower to which the Administrative Agent does not reasonably object).
Federal Funds Rate means, for any day, the rate set forth in the weekly
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statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Administrative Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Administrative Agent.
Fee Letter is defined in Section 2.14.
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Final Maturity Date means the first anniversary of the Commitment
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Termination Date set forth in clause (a) of the definition thereof as extended
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from time to time pursuant to Section 2.17.
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Fiscal Quarter means any quarter of a Fiscal Year.
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Fiscal Year means any period of twelve consecutive calendar months
-----------
ending on the last day of December.
FRB means the Board of Governors of the Federal Reserve System, and any
---
Governmental Authority succeeding to any of its principal functions.
Fronting Bank means BofA in its capacity as an issuer of Letters of
-------------
Credit in which the Lenders have a Risk Participation.
G7 Government Securities means any evidence of Debt, maturing not more
------------------------
than five years after such time, issued or guaranteed by any country which is a
member of the G7 other than the United States.
GAAP means generally accepted accounting principles set forth from time
----
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Governmental Authority means any nation or government, any state or
----------------------
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Government Debt means evidence of Debt issued or guaranteed by the
---------------
United States Government or any agency thereof.
Hedging Obligations means, with respect to any Person, the net
-------------------
liability of such Person under any futures contract or options contract
(including property catastrophe futures and options), interest rate swap
agreements and interest rate collar agreements and all other agreements or
arrangements designed to protect such Person against catastrophic events,
fluctuations in interest rates or currency exchange rates.
Indemnified Liabilities is defined in Section 10.5.
----------------------- ------------
Indemnified Person is defined in Section 10.5.
------------------ ------------
Insurance Code means, with respect to the Borrower and its
--------------
Subsidiaries, the insurance regulation of such Person's domicile and any
successor statute of similar import, together with the regulations thereunder,
as amended or otherwise modified and in effect from time to time. References to
sections of the Insurance Code shall be construed to also refer to successor
sections.
9
Insurance Policies means policies purchased from insurance companies by
------------------
the Borrower or any of its Subsidiaries for its own account to insure against
its own liability and property loss (including, without limitation, casualty,
liability and workers' compensation insurance).
Investment means, as to any Person, any investment of any Person,
----------
whether by means of security purchase, capital contribution, loan, time deposit
or otherwise, and shall include without limitation Cash and Cash Equivalents.
Investment Grade Assets means Cash Equivalents, Government Debt, MBS
-----------------------
Investments, ABSs, Corporate/Municipal Securities and G7 Securities which are
rated at least BBB- by S&P or Baa3 by Moody's.
IRS means the U.S. Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
Issue means, with respect to any Letter of Credit, to issue, to amend
-----
or to extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "Issued", "Issuing" and "Issuance" have corresponding
meanings.
Issuer means, with respect to any Letter of Credit, the Person or
------
Persons who have issued such Letter of Credit.
LC Administrator means BofA's Letter of Credit Operations located at
----------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as letter of credit
administrator for the Lenders, together with any replacement LC Administrator
arising under Section 9.9.
-----------
LC Advance means each Lender's participation in any LC Borrowing in
----------
accordance with its Percentage.
LC Advance Date is defined in Section 2.3(c).
--------------- --------------
LC Amendment Application means an application form for amendment of an
------------------------
outstanding letter of credit as shall at any time be in use by the LC
Administrator.
LC Application means an application form for issuances of a letter of
--------------
credit as shall at any time be in use by the LC Administrator.
LC Borrowing means an extension of credit resulting from a drawing
------------
under any Letter of Credit (and, with respect to the Existing Letters of Credit,
each Lender's participation interest therein) which shall not have been
reimbursed by the Borrower on the date when made.
LC Collateral Account is defined in Section 2.13.
--------------------- ------------
LC Obligations means, at any time, the sum, without duplication, of the
--------------
Tranche A LC Obligations and the Tranche B LC Obligations.
10
LC Related Documents means the Letters of Credit, the LC Applications
--------------------
and any other document relating to any Letter of Credit, including any of the LC
Administrator's standard form documents for Letter of Credit issuances or
amendments.
Lenders is defined in the Preamble.
------- --------
Lending Office means, as to any Lender, the office or offices of such
--------------
Lender specified as its "Lending Office" on Schedule 10.2, or such other office
-------------
or offices as such Lender may from time to time notify the Borrower and the
Administrative Agent.
Letter of Credit means a standby letter of credit having terms and
----------------
provisions which are permitted by this Agreement and which otherwise are
reasonably satisfactory to the LC Administrator issued pursuant to Section 2.2.
-----------
License(s) is defined in Section 4.10.
---------- ------------
Lien means, when used with respect to any Person, any interest in any
----
real or personal property, asset or other right held, owned or being purchased
or acquired by such Person for its own use, consumption or enjoyment which
secures payment or performance of any obligation and shall include any mortgage,
lien, pledge, encumbrance, charge, retained title of a conditional vendor or
lessor, or other security agreement, mortgage, deed of trust, chattel mortgage,
assignment, pledge, retention of title, financing or similar statement or
notice, or other encumbrance arising as a matter of law, judicial process or
otherwise.
Margin Stock means "margin stock" as such term is defined in Regulation
------------
U or X of the FRB.
Material Adverse Effect means, the occurrence of an event (including
-------- ------
any adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), which has or could reasonably be expected to have
a materially adverse effect on:
(a) the assets, business, financial condition, operation or prospects
of the Borrower; or
(b) the ability of the Borrower to perform any of its payment or other
material obligations under any of the Credit Documents; or
(c) the legality, validity, binding effect or enforceability against
the Borrower of any Credit Document that by its terms purports to bind the
Borrower.
MBS (Agency Pass-Throughs) means any instrument, issued by the Federal
--------------------------
National Mortgage Association, the Government National Mortgage Association or
the Federal Home Loan Mortgage Corporation, that entitles the holder of, or
beneficial owner under, the instrument to the whole or any part of the rights or
entitlements of a mortgagee and any other rights or entitlements in respect of a
pool of mortgages or any money payable by mortgagors under those mortgages in
relation to real estate mortgages, and the money payable to the holder of, or
beneficiary owner under, the instrument is based on actual or scheduled payments
on the underlying mortgages.
11
MBS (Agency CMOs) means collateralized mortgage obligations or real
-----------------
estate mortgage investment conduit pass through securities, in any case issued
by the Federal National Mortgage Association, the Government National Mortgage
Association or the Federal Home Loan Mortgage Corporation.
MBS Investments means MBS (Agency CMOs) and MBS (Non-Agency CMOs) which
---------------
constitute TACs, PACs and Sequentials (as such terms are defined by Bloomberg
Inc.) and shall not include Support Tranches (as such term is defined by
Bloomberg Inc.) and MBS (Agency Pass-Throughs). The weighted average duration of
such MBS Investments shall be less than or equal to seven years. The maximum
weighted average life of any single MBS Investment shall not exceed 12 years. To
the extent MBS Investments included within Eligible Investments violate the
restrictions set forth herein, the Fair Market Value of such MBS Investments
shall be excluded from the Borrowing Base; provided, however, that only those
MBS Investments having the lowest aggregate Fair Market Value whose exclusions
will result in compliance shall be excluded from the Borrowing Base.
MBS (Non-Agency CMOs) means collateralized commercial mortgage
---------------------
obligations or commercial real estate mortgage investment conduit pass through
securities, not issued by the Federal National Mortgage Association, the
Government National Mortgage Association or the Federal Home Loan Mortgage
Corporation.
Minister means the Minister of Finance of Bermuda or similar
--------
Governmental Authority in the applicable jurisdiction.
Moody's means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
Net Worth means, for any Person, shareholders equity calculated in
---------
accordance with GAAP.
Obligations means all obligations and liabilities of the Borrower to
-----------
the Administrative Agent, the LC Administrator, the Fronting Bank or any of the
Lenders, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, primary or secondary, joint or several, recourse or
nonrecourse or now or hereafter existing or due or to become due, whether for LC
Advances, interest, fees, expenses, claims, indemnities or otherwise, under or
in connection with this Agreement, or any other Credit Document.
Ordinary Course Litigation is defined in Section 4.4.
-------------------------- -----------
Organization Documents means, for any corporation, the certificate or
----------------------
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.
Other Taxes means any present or future stamp or documentary taxes or
-----------
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Credit Documents.
12
Parent means MaxRe Capital Ltd., a Bermuda company (f/k/a Maximus
------
Capital Holdings, Ltd.).
Participating Bank means ING Bank N.V., London Branch and each other
------------------
Lender as the Fronting Bank may from time to time agree may become a
Participating Bank.
Participants is defined in Section 10.8(d).
------------ ---------------
PBGC means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions.
Percentage means as to any Lender at any time, the percentage
----------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender's Commitment divided by the combined Commitments of all
Lenders.
Person means any natural person, corporation, partnership, firm, trust,
------
association, government, governmental agency or other entity, whether acting in
an individual, fiduciary or other capacity.
Plan means any "employee pension benefit plan" or "employee welfare
----
benefit plan" as such terms are defined in ERISA, and as to which the Borrower
has or may have any liability, including any liability by reason of having been
a substantial employer within the meaning of section 4063 of ERISA for any time
within the preceding five years or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
Private Investment Fund means any Person who (a) is an investment
-----------------------
vehicle which is not required to be registered as an investment company under
the Investment Company Act of 1940, (b) permits equity withdrawals not less
frequently than quarterly, (c) has ▇▇▇▇▇ Capital Management Inc. as either its
manager or investment advisor, (d) not less than 85% of such Person's
investments are capable of being marked to market daily and (e) are held in a
Custody Account.
Purchase Money Debt means and includes (a) Debt (other than the
-------------------
Obligations) for the payment of all or any part of the purchase price of any
fixed assets, (b) any Debt (other than the Obligations) incurred at the time of
or within ten (10) days prior to or after the acquisition of any fixed assets
for the purpose of financing all or any part of the purchase price thereof, and
(c) any renewals, extensions, or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at such time, but excluding, for
purposes of this definition, any such Debt constituting a Capitalized Lease.
Purchase Money Lien means a Lien upon fixed assets which secures
-------------------
Purchase Money Debt, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Debt secured by such Lien.
Reinsurance Agreements means any agreement, contract, treaty,
----------------------
certificate or other arrangement whereby the Borrower or any of its Subsidiaries
agrees to assume from or reinsure
13
another insurer or reinsurer all or part of the liability of such insurer or
reinsurer under a policy or policies of insurance issued by such insurer or
reinsurer.
Required Lenders means, at any time, Lenders then having at least 60%
----------------
of the aggregate amount of the Commitments or, if the Commitments have been
terminated, Lenders then holding at least 60% of the then aggregate outstanding
Credit Extensions.
Requirement of Law for any Person means the Organization Documents of
------------------
such Person, and any law, treaty, rule, ordinance or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
Risk Participation is defined in Section 2.5.
------------------ -----------
SAP means the statutory accounting practices prescribed or permitted by
---
the Minister (or other similar authority) in the Borrower's or such Subsidiary's
domicile for the preparation of Annual Statements and other financial reports by
insurance corporations of the same type as the Borrower or such Subsidiary as
the case may be.
Security Agreement means the Security Agreement dated as of February
------------------
25, 2000 between the Borrower and the Administrative Agent, as such Security
Agreement may be amended, modified or supplemented from time to time.
S&P means Standard & Poor's Ratings Services, a division of The
---
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
Statutory Financial Statements is defined in Section 4.2(a).
---------- ----------- --------------
Subsidiary means a corporation of which the indicated Person and/or its
----------
other Subsidiaries, individually or in the aggregate, own, directly or
indirectly, such number of outstanding shares as have at the time of any
determination hereunder more than 50% of the ordinary voting power. Unless
otherwise specified, "Subsidiary" shall mean a Subsidiary of the Borrower.
Taxes means any and all present or future taxes, levies, imposts,
-----
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Administrative Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Administrative Agent, as the
case may be, is organized or maintains a lending office.
Tranche A Borrowing Base means, on any date, an amount equal to the sum
------------------------
of the Adjusted Fair Market Value of all Eligible Investments.
Tranche A Commitment means, as to any Lender, the commitment of such
--------------------
Lender to issue Tranche A Letters of Credit for the account of the Company
pursuant to Section 2.1. The initial amount of the Tranche A Commitment of each
-----------
Lender is set forth on Schedule 1.1.
------------
14
Tranche A LC Obligations means, at any time, the sum, without
------------------------
duplication, of (a) the aggregate undrawn stated amount of all outstanding
Tranche A Letters of Credit plus (b) the aggregate unpaid amount of all LC
Advances with respect to Tranche A Letters of Credit.
Tranche A Letter of Credit means a Letter of Credit issued pursuant to
--------------------------
the Tranche A Commitment.
Tranche B Borrowing Base means, the sum of (a) 50% of the Fair Market
------------------------
Value of all Private Investment Funds plus (b) an amount equal to the difference
between the Tranche A Borrowing Base and the Tranche A LC Obligations.
Tranche B Commitment means, as to any Lender, the commitment of such
--------------------
Lender to issue Tranche B Letters of Credit for the account of the Company
pursuant to Section 2.1. The initial amount of the Tranche B Commitment of each
-----------
Lender is set forth on Schedule 1.1.
------------
Tranche B LC Obligations means, at any time, the sum, without
------------------------
duplication, of (a) the aggregate undrawn stated amount of all outstanding
Tranche B Letters of Credit plus (b) the aggregate unpaid amount of all LC
Advances with respect to Tranche B Letters of Credit.
Tranche B Letter of Credit means any Letter of Credit issued under the
--------------------
Tranche B Commitment.
Unencumbered Asset Reserve Requirement is defined in Section 6.2.
------------------- ------------ -----------
Unencumbered Assets means Investment Grade Assets of the Borrower which
-------------------
are not subject to any Liens.
SECTION 1.2 Other Interpretive Provisions.
-----------------------------
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent
15
amendments and other modifications thereto, but only to the extent such
amendments and other modifications are not prohibited by the terms of any
Credit Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Credit Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Credit Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the
Administrative Agent merely because of the Administrative Agent's or Lenders'
involvement in their preparation.
SECTION 1.3 Accounting Principles. Unless otherwise defined or the
---------------------
context otherwise requires, all financial and accounting terms used herein or
in any of the Credit Documents or any certificate or other document made or
delivered pursuant hereto shall be defined in accordance with GAAP or SAP, as
the context may require. When used in this Agreement, the term "financial
statements" shall include the notes and schedules thereto. In addition, when
used herein, the terms "best knowledge of" or "to the best knowledge of" any
Person shall mean matters within the actual knowledge of such Person (or an
Executive Officer of such Person) or which should have been known by such
Person after reasonable inquiry.
ARTICLE II.
AMOUNT AND TERMS OF COMMITMENT
SECTION 2.1 Letter of Credit Commitment.
---------------------------
(a) Upon and subject to the terms and conditions hereof, (i) the
Fronting Bank hereby agrees to issue Letters of Credit at the request of and
for the account of the Borrower from time to time before the Commitment
Termination Date, (ii) each Issuer hereby agrees to issue Letters of Credit at
the request of and for the account of the Borrower from time to time before the
Commitment Termination Date in such Issuer's Percentage of such aggregate
stated amounts of Letters of Credit as the Borrower may from time to time
request, (iii) each Lender hereby agrees to purchase Risk Participations in the
obligations of the Fronting Bank under Letters of Credit Issued by the Fronting
Bank, and (iv) with respect to Letters of Credit Issued by the Issuers
severally based on their respective Percentages, the Fronting Bank shall be
severally (and not jointly) liable for an amount equal to its Percentage plus
each Participating Bank's Percentage and each Participating Bank hereby agrees
to purchase Risk Participations in the obligations of the Fronting Bank under
any such Letter of Credit in an amount equal to such Participating Bank's
Percentage; provided that no Issuer shall be obligated to issue (and no
Participating Bank shall be obligated to participate in) any Letter of Credit
if as of the date of issuance of such
16
Letter of Credit (A) in the case of a Tranche A Letter of Credit, the Tranche A
LC Obligations outstanding shall exceed the lesser of (x) the combined Tranche
A Commitments and (y) the Tranche A Borrowing Base or (B) with respect to any
Tranche B Letter of Credit, the aggregate amount of LC Obligations outstanding
shall exceed the lesser of (x) the combined Tranche B Commitments and (y) the
Tranche B Borrowing Base.
(b) No Issuer shall be under any obligation to Issue any Letter of
Credit and no Participating Bank shall have any obligation to participate in any
Letter of Credit if:
(i) such issuance would be prohibited under Section 3.2;
(ii) the Administrative Agent or LC Administrator has received
written notice from the Fronting Bank or the Required Lenders, as the
case may be, or the Borrower, on or prior to the Business Day prior to
the requested date of Issuance of such Letter of Credit, that one or
more of the applicable conditions contained in Section 8.2 is not then
satisfied;
(iii) the expiry date of such Letter of Credit is less than
five Business Days prior to the Final Maturity Date, unless all of the
Lenders have approved such expiry date in writing;
(iv) in the case of Letters of Credit issued by the Lenders
(other than a Participating Bank), such Letter of Credit is not
substantially in the form of Exhibit E hereto, or is not otherwise in
form and substance reasonably acceptable to the Administrative Agent,
the LC Administrator and the Fronting Bank; provided that the
Administrative Agent and the LC Administrator can and will, agree to
reasonable changes to such form, not adverse to the interests of the
Lenders, requested by applicable insurance regulators; or
(v) such Letter of Credit is denominated in a currency other
than Dollars.
(c) The Letters of Credit Issued by and the Risk Participations of each
Lender and the reimbursement obligations with respect thereto shall be
evidenced by one or more accounts or records maintained by such Lender in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent shall be conclusive (absent manifest error) as to the
amount of the LC Advances made to the Borrower and the Letters of Credit Issued
for the account of the Borrower, and the amounts of principal, interest and
fees owing hereunder. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to any LC Advance or any Letter
of Credit.
SECTION 2.2 Issuance, Amendment and Renewal of Letters of Credit
----------------------------------------------------
(a) Each Letter of Credit shall be Issued upon the irrevocable written
request of the Borrower received by the LC Administrator at least 5 Business
Days (or such shorter time as the Administrative Agent, the LC Administrator
and the Issuer may agree in a particular instance in their sole discretion)
prior to the proposed date of issuance. The LC Administrator shall promptly
advise the Administrative Agent of any such request. Each such request for
issuance of
17
a Letter of Credit shall be by facsimile, confirmed immediately in an original
writing, in the form of an LC Application, and shall specify in form and detail
satisfactory to the LC Administrator: (i) the proposed date of issuance of the
Letter of Credit (which shall be a Business Day); (ii) the face amount of the
Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name
and address of the Beneficiary thereof; (v) the documents to be presented by
the Beneficiary of the Letter of Credit in case of any drawing thereunder; (vi)
the full text of any certificate to be presented by the Beneficiary in case of
any drawing thereunder; (vii) whether such Letter of Credit is to be issued by
the Fronting Bank or by the Issuers (it being agreed that in the event an
Issuer advises the LC Administrator that such Issuer is unable (due to
regulatory restrictions or other legal impediments) to Issue a Letter of Credit
because of its relationship to the Beneficiary, such Letter of Credit will be
issued by the Fronting Bank); (viii) whether such Letter of Credit is to be a
Tranche A Letter of Credit or a Tranche B Letter of Credit; and (ix) such other
matters as the LC Administrator may require. The LC Administrator is hereby
authorized to execute and deliver each Letter of Credit to be Issued by the
Issuers on behalf of the Issuers provided, that at the request of the Borrower,
such Letter of Credit will be executed by each of the Issuers. In the event of
a conflict between the provisions of this Agreement and the provisions of an LC
Application, this Agreement shall govern. The LC Administrator shall use each
Issuer's Percentage as its "Commitment Share" under each Letter of Credit
Issued by the Issuers provided that the Fronting Bank shall be severally (and
not jointly) liable for an amount equal to its Percentage plus the Percentage
of each Participating Bank. The LC Administrator shall not amend any Letter of
Credit Issued by the Issuers to change the "Commitment Shares" or add or delete
an Issuer liable thereunder unless such amendment is done in connection with an
assignment pursuant to Section 10.8 or in connection with the addition of an
Issuer or a Participating Bank pursuant to Section 2.18.
(b) From time to time while a Letter of Credit is outstanding and prior to
the Commitment Termination Date, the Issuer will, upon the written request of
the Borrower received by the LC Administrator at least 5 Business Days (or such
shorter time as the Administrative Agent, the LC Administrator and the Issuer
may agree in a particular instance in their sole discretion) prior to the
proposed date of amendment, amend any Letter of Credit Issued by them. The LC
Administrator shall promptly advise the Administrative Agent of any such
request. Each such request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the form of an
LC Amendment Application and shall specify in form and detail satisfactory to
the LC Administrator: (i) the Letter of Credit to be amended; (ii) the proposed
date of amendment of such Letter of Credit (which shall be a Business Day);
(iii) the nature of the proposed amendment; and (iv) such other matters as the
LC Administrator may require. No Issuer shall have any obligation to amend any
Letter of Credit if: (A) such Issuer would have not been obligated at such time
to Issue or participate in such Letter of Credit in its amended form under the
terms of this Agreement; or (B) the Beneficiary of such Letter of Credit does
not accept the proposed amendment to such Letter of Credit. The Issuers and the
Fronting Bank agree, upon the request of the Borrower and as long as no Event
of Default or Default shall have occurred and be continuing, to amend any
Letter of Credit to extend the expiry date thereof to a date not later than the
Final Maturity Date. The LC Administrator is hereby authorized to execute and
deliver each amendment to a Letter of Credit Issued by the Issuers on behalf of
the Issuers provided that, upon request of the Borrower, such amendment will be
executed by each Issuers.
18
(c) The Administrative Agent shall promptly notify each Lender of the
receipt of a written request from the Borrower for the issuance of or an
amendment to a Letter of Credit and, with respect to the issuance of or Risk
Participation in a Letter of Credit, the amount of such Lender's share of such
Letter of Credit which shall equal its Percentage thereof. In addition, at
least two Business Days prior to the issuance or amendment of any Letter of
Credit, the Administrative Agent will confirm to the Lenders (by telephone or
in writing) that the Administrative Agent has received a copy of the LC
Application or LC Amendment Application from the Borrower.
(d) With respect to a request to Issue a Letter of Credit, unless the
Administrative Agent has received, on or before the Business Day immediately
preceding the date on which such Letter of Credit will be Issued, (A) notice
from the Fronting Bank or the Required Lenders, as the case may be, or the
Borrower directing the Administrative Agent not to permit the issuance of such
Letter of Credit because such issuance is not then permitted under Section
2.1(a) as a result of the limitations set forth therein or (B) a notice
described in Section 2.1(b)(ii), then, subject to the terms and conditions
hereof, the LC Administrator shall, on the requested date, cause a Letter of
Credit to be Issued by the Fronting Bank or by the Issuers in accordance with
their Percentages (provided that the Fronting Bank shall be severally (and not
jointly) liable for an amount equal to its Percentage plus the Percentage of
each Participating Bank), as the case may be, for the account of the Borrower
in accordance with the LC Administrator's usual and customary business
practices.
(e) The LC Administrator may, at its election (or at the direction of the
Administrative Agent, the Fronting Bank or the Required Lenders, as the case
may be), deliver any notices of termination or other communications to any
Beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the five Business
Days prior to the Final Maturity Date.
(f) This Agreement shall control in the event of any conflict with any LC
Related Document (other than any Letter of Credit).
(g) The LC Administrator, concurrently or promptly following the delivery
of a Letter of Credit, or amendment to or renewal of a Letter of Credit, to a
Beneficiary, shall send to the Administrative Agent and the Lenders a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit. After giving effect to the Issuance of any Letter of Credit,
there shall be no more than 25 Letters of Credit outstanding.
SECTION 2.3 Drawings and Reimbursements.
---------------------------
(a) With respect to each Letter of Credit for which the LC Administrator
receives a request for a drawing which is in form and substance reasonably
satisfactory to the LC Administrator (a "Drawing Request"), if such Drawing
Request is received prior to 10:00 a.m (Chicago time) on any Business Day, such
Business Day shall be the "Drawing Request Date" and if such Drawing Request is
received after 10:00 a.m (Chicago time) on any Business Day, the following
Business Day shall be the "Drawing Request Date." Upon receiving a Drawing
Request, the LC Administrator shall promptly notify the Borrower of such
Drawing Request
19
(which notice may be oral if immediately confirmed in writing (including by
facsimile)) and upon receipt of such notification, the Borrower shall promptly
reimburse the Administrative Agent on behalf of the Issuer for the amount of
such drawing by delivering to the LC Administrator in immediately available
funds the amount of the Drawing Request. Nothing herein stated shall be deemed
a waiver by the Lenders of the obligation of the Borrower to make such prompt
reimbursement. To the extent that funds are received by the LC Administrator
prior to 3:00 p.m. (Chicago time) on the first Business Day after the Drawing
Request Date, the LC Administrator shall promptly, on behalf of the Issuer,
make an equivalent amount available to the Beneficiary of the related Letter of
Credit on such first Business Day after the Drawing Request Date and shall
reimburse itself for such amount with the funds provided by the Borrower.
(b) With respect to any Drawing Request, if immediately available funds
are not received by the LC Administrator from the Borrower prior to 3:00 p.m.
(Chicago time) on the first Business Day after the Drawing Request Date in the
amount of such Drawing Request, the LC Administrator shall promptly notify the
Administrative Agent and the Administrative Agent shall notify each Lender on
the first Business Day after the Drawing Request Date of such Drawing Request
and such Lender's share of such Drawing Request (which shall be an amount equal
to (i) such Lender's Percentage multiplied by the lesser of (ii)(A) the maximum
amount available to be drawn under such Letter of Credit and (B) the amount of
such drawing which was not reimbursed by the Borrower pursuant to Section
2.3(a)) and the Borrower shall be deemed to have requested an LC Borrowing in
an amount equal to the amount of such drawing which was not reimbursed by the
Borrower pursuant to Section.3(a). Any notice given by the Administrative Agent
to the Lenders pursuant to this Section 2.3(b) may be oral if immediately
confirmed in writing (including by facsimile); provided that (i) the failure of
the Administrative Agent to give any such notice in sufficient time to enable
any Lender to effect such payment at the time required under Section 2.3(c) or
(ii) the failure of the Administrative Agent to deliver an immediate
confirmation of such notice shall not affect the conclusiveness or binding
effect of such notice or relieve any Lender from its obligations under this
Section 2.3.
(c) Upon receiving a Drawing Request, each Lender shall make available to
the Administrative Agent for the account of LC Administrator at the
Administrative Agent's Payment Office by 3:00 p.m. (Chicago time) in
immediately available funds on the second Business Day after the Drawing
Request Date (such date, an "LC Advance Date") its share of such request;
provided that in the case of a Letter of Credit issued by the Fronting Bank, if
a Lender shall fail to make such funds so available, the Fronting Bank shall
make such funds available and provided further that if a Participating Bank
shall fail to make such funds so available, the Fronting Bank shall make such
funds available. Upon delivering such funds to the Administrative Agent
pursuant to this Section 2.3(c), such Lender (or the Fronting Bank, if the
Fronting Bank has made such funds available after the failure of such Lender to
do so) shall be deemed to have made an LC Advance to the Borrower in such
amount. To the extent that immediately available funds are received by the
Administrative Agent from the Lenders prior to 3:00 p.m. (Chicago time) on any
LC Advance Date, the Administrative Agent shall notify the LC Administrator and
the LC Administrator shall promptly make such funds available to the
Beneficiary of the related Letter of Credit on such date. To the extent that
the LC Administrator has not delivered funds to any Beneficiary on behalf of a
Lender pursuant to the first sentence of Section 2.3(d) and that immediately
available funds are received by the Administrative Agent from such Lender: (i)
after 3:00 p.m. on any LC Advance Date, the LC Administrator shall make
20
such funds available to such Beneficiary on the next Business Day following
such LC Advance Date; (ii) prior to 3:00 p.m. on any Business Day after the LC
Advance Date, the LC Administrator shall make those funds available to such
Beneficiary on such Business Day; and (iii) after 3:00 p.m. on any Business Day
after the LC Advance Date, the LC Administrator shall make those funds
available to such Beneficiary on the next Business Day following such Business
Day.
(d) Unless the Administrative Agent or LC Administrator receives notice
from a Lender prior to any LC Advance Date that such Lender will not make
available as and when required hereunder to the Administrative Agent for the
account of the Borrower the amount of such Lender's LC Advance on such LC
Advance Date, the Administrative Agent and the LC Administrator may assume that
such Lender has made such amount available to the Administrative Agent in
immediately available funds on the LC Advance Date and the LC Administrator may
(but shall not be required), in reliance upon such assumption, make available
to the Beneficiary of the related Letter of Credit on such date such Lender's
LC Advance. If and to the extent (i) any Lender shall not have made its full
amount available to the Administrative Agent in immediately available funds and
(ii) the LC Administrator in such circumstances has made available to the
Beneficiary such amount, then such Lender shall, on the Business Day following
such LC Advance Date, make such amount available to the Administrative Agent,
together with interest thereon until the date made available (i) at the Federal
Funds Rate for the period ending two Business Days after such LC Advance Date
and (ii) at the Base Rate plus 2.00% thereafter; provided, however, that if a
Lender has failed to make such an amount available with respect to a Letter of
Credit issued by the Fronting Bank, the Fronting Bank shall make such amount
available and provided further that if a Participating Bank has failed to make
such an amount available with respect to a Letter of Credit, the Fronting Bank
shall make such amount available. If a Participating Bank fails to make such
amount available, it shall pay interest to the Fronting Bank. If the Fronting
Bank shall fail to make such amount available, it shall pay such interest to
the LC Administrator and if a Lender fails to make such amount available, it
shall pay such interest to the Fronting Bank. A notice of the Administrative
Agent submitted to a Lender with respect to amounts owing under Section 2.3(b)
shall be conclusive, absent manifest error. If such amount is so made
available, together with interest thereon, such payment to the Administrative
Agent shall constitute such Lender's LC Advance on the LC Advance Date for all
purposes of this Agreement. If such amount, together with interest thereon, is
not made available to the Administrative Agent on the Business Day following
the LC Advance Date, the Administrative Agent will notify the Borrower of such
failure to fund and, upon demand by the Administrative Agent, the Borrower
shall pay such amount to the Administrative Agent for the LC Administrator's
account, together with interest thereon for each day elapsed since the date of
such LC Borrowing, at a rate per annum equal the Base Rate plus 2.00%.
(e) The failure of any Lender to make any LC Advance on any LC Advance
Date shall not relieve any other Lender of any obligation hereunder to make an
LC Advance on such LC Advance Date, and neither the Administrative Agent, the
LC Administrator nor any Lender shall be responsible for the failure of any
other Lender to make any LC Advance on any LC Advance Date. Each Lender's
obligation in accordance with this Agreement to make LC Advances, as
contemplated by this Section 2.3, as a result of a drawing under a Letter of
Credit, shall be absolute and unconditional and without recourse to the
Administrative Agent, the Fronting Bank
21
or the LC Administrator and shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Administrative Agent, the LC
Administrator, the Fronting Bank, the Borrower or any other Person for any
reason whatsoever; (ii) the occurrence or continuance of an Event of Default,
an Default or a Material Adverse Effect; or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing;
provided the LC Administrator shall exercise the same care in examining
documents and determining whether or not to honor a Drawing Request as it would
exercise if the LC Administrator had Issued such Letter of Credit for its own
account. Nothing contained in this Agreement, and no actions taken by the
Lenders, the LC Administrator, the Fronting Bank or the Administrative Agent
pursuant hereto or in connection with a Letter of Credit shall be deemed to
constitute the Lenders, together or with the Administrative Agent, the Fronting
Bank and the LC Administrator, a partnership, association, joint venture or
other entity.
SECTION 2.4 Repayment of LC Advances. Upon (and only upon) receipt by the
------------------------
Administrative Agent of immediately available funds from the Borrower in
repayment of any LC Advances, the Administrative Agent (i) shall deduct and
retain from such repayment an amount not to exceed the aggregate unreimbursed
payments, if any, which were made by the LC Administrator pursuant to the first
sentence of Section 2.3(d), and then (ii) shall pay to each Lender, in the same
--------------
funds as those received by the Administrative Agent, such Lender's Percentage of
any funds remaining after giving effect to clause (i) above; provided, that if
----------
the Fronting Bank has advanced funds on behalf of a Lender, the Fronting Bank
shall be repaid out of such funds in full before any payment shall be made to
such Lender. The Borrower shall repay any LC Advances on the date such LC
Advances were made.
SECTION 2.5 Role of the Lenders. Each Lender and the Borrower agree that,
-------------------
in paying any drawing under a Letter of Credit, neither the LC Administrator nor
any Issuer shall have any responsibility to obtain any document (other than any
sight draft and certificate expressly required by such Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document; provided that
the LC Administrator and the Issuers shall exercise that standard of care
customarily exercised by them in the review and processing of drawings under
letters of credit issued by them..
(a) No Agent-Related Person nor any of their respective correspondents,
participants or assignees shall be liable to any Lender for: (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Lenders (including the Required Lenders, as applicable); (ii) any action
taken or omitted in the absence of gross negligence or willful misconduct; or
(iii) the due execution, effectiveness, validity or enforceability of any LC
Related Document.
(b) The Borrower hereby assumes all risks of the acts or omissions of any
Beneficiary or transferee with respect to its use of any Letter of Credit;
provided that this assumption is not intended to, and shall not, preclude the
--------
Borrower's pursuing such rights and remedies as it may have against the
Beneficiary or transferee at law or under any other agreement. Neither any
Agent-Related Person, any Issuer nor any of their respective correspondents,
participants or assignees shall be liable or responsible for any of the matters
described in clauses (i) through
-----------
22
(vii) of Section 2.6; provided that, anything in such clauses to the contrary
---- ----------- --------
notwithstanding, the Borrower may have a claim against the Administrative Agent
or LC Administrator, and the Administrative Agent or LC Administrator may be
liable to the Borrower, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the Borrower
which the Borrower, in a final judgment of a court of competent jurisdiction,
proves were caused primarily by the Administrative Agent's or LC Administrator's
willful misconduct or gross negligence or the LC Administrator's willful
failure to pay under any Letter of Credit after the presentation to it by the
Beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of such Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) the LC Administrator may accept documents that
appear on their face to be in order, without responsibility for further
investigation; and (ii) neither the LC Administrator nor any Issuer shall be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
(c) Concurrently with the issuance by the Fronting Bank of any Letter of
Credit and any amendment thereto, the Fronting Bank shall be deemed to have
sold and transferred to each other Lender, and each other Lender shall be
deemed irrevocably and unconditionally to have purchased and received from the
Fronting Bank, without recourse or warranty, an undivided interest and
participation (a "Risk Participation"), to the extent of such Lender's
Percentage, in such Letter of Credit and the Borrower's reimbursement
obligations with respect thereto.
SECTION 2.6 Obligations Absolute. The obligations of the Borrower under
--------------------
this Agreement and any LC Related Document to reimburse the Administrative
Agent, the LC Administrator, the Fronting Bank and the Lenders for a drawing
under a Letter of Credit and to repay any LC Borrowing shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement or any
LC Related Document;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Borrower in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the LC Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that Borrower may have at any time against any Beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
Beneficiary or any such transferee may be acting), the Administrative
Agent, the LC Administrator, the Fronting Bank, any Lender or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the LC Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any
23
statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit;
(v) any payment by the Issuers under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit; or any payment made by the Issuers
under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
Beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the obligations of the Borrower in respect of
any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrower or a guarantor.
SECTION 2.7 Existing Letters of Credit. On an after the Amendment
--------------------------
Effective Date, the Existing Letters of Credit shall be deemed for all
purposes, including for purposes of the fees to be collected pursuant to
Section 2.14 and reimbursement of costs and expenses to the extent provided
herein, Tranche A Letters of Credit Issued by the Fronting Bank outstanding
under this Agreement and entitled to the benefits of this Agreement and the
other Credit Documents, and shall be governed by the applications and
agreements pertaining thereto and by this Agreement. Each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Fronting Bank on the Amendment Effective Date, without recourse or
warranty, an undivided Risk Participation in each such Existing Letter of
Credit and the Borrower's reimbursement obligation with respect thereto in an
amount equal to such Lender's Percentage.
SECTION 2.8 Applicability of ISP98. Unless otherwise agreed by the Issuer
----------------------
and the Borrower when a Letter of Credit is issued and subject to applicable
laws, the rules of the "International Standby Practices 1998" (ISP98) or such
later revision as may be published by the International Chamber of Commerce
shall apply to each Letter of Credit; provided, that with respect to the
Existing Letters of Credit, such Letters of Credit shall be governed by the
rules of the International Chamber of Commerce set forth therein.
SECTION 2.9 Interest. LC Advances shall bear interest (after as well as
--------
before entry of judgment thereon to the extent permitted by law) on the
outstanding principal amount thereof from the applicable LC Advance Date at a
rate per annum equal to the Base Rate plus 2.00% and shall be immediately due
----
and payable. To the extent that any LC Advances are made on an LC Advance Date
pursuant to Section 2.3(c) and such LC Advances are repaid with immediately
--------------
available funds by the Borrower on the LC Advance Date prior to 1:00 p.m.
(Chicago time), no interest shall be payable on such LC Advances.
24
(a) Anything herein to the contrary notwithstanding, the obligations of
the Borrower to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that
may be lawfully contracted for, charged or received by such Lender, and in such
event the Borrower shall pay such Lender interest at the highest rate permitted
by applicable law.
SECTION 2.10 Payments by the Borrower.
------------------------
(a) All payments to be made by the Borrower shall be made without set-off,
recoupment or counterclaim. Except as otherwise expressly provided herein, all
payments by the Borrower shall be made to the Administrative Agent for the
account of the Lenders at the Administrative Agent's Payment Office, and shall
be made in dollars and in immediately available funds, no later than 1:00 p.m.
(Chicago time) on the date specified herein. Except as otherwise expressly
provided herein, the Administrative Agent will promptly distribute, in like
funds as received, to each Lender its Percentage of any portion of such
payment. Any payment received by the Administrative Agent later than 1:00 p.m.
(Chicago time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment is due on a day other than a Business Day, such
payment shall be made on the following Business Day (unless such following
Business Day is the first Business Day of a calendar month, in which case such
payment shall be made on the preceding Business Day), and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Administrative Agent receives notice from the Borrower
prior to the date on which any payment is due to the Lenders that the Borrower
will not make such payment in full as and when required, the Administrative
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not made
such payment in full to the Administrative Agent, each Lender shall repay to
the Administrative Agent on demand such amount distributed to such Lender,
together with interest thereon until the date repaid (i) at the Federal Funds
Rate for period commencing on the date such amount is distributed to such
Lender and ending two days after demand by the Administrative Agent for such
amount and (ii) at the Base Rate plus 2.00% thereafter.
SECTION 2.11 Warranty. The delivery of each Letter of Credit Application
--------
pursuant to Section 2.3 and each request for amendment or extension of an
-----------
existing Letter of Credit shall automatically constitute a warranty by the
Borrower to the Administrative Agent and each Lender to the effect that on the
date of such requested Credit Extension that the conditions of Section 8.2 have
-----------
been satisfied.
SECTION 2.12 Termination or Reduction of Commitments. The Borrower may,
---------------------------------------
upon not less than five Business Days' prior notice to the Administrative
Agent, terminate the
25
Commitments, or permanently reduce the Commitments by an aggregate minimum
amount of $5,000,000 or any multiple of $500,000 in excess thereof; unless,
------
after giving effect thereto and to any prepayments or cash collateralization of
LC Obligations to be made on the effective date thereof, the then-outstanding
LC Obligations would exceed the amount of the combined Commitments then in
effect. Once reduced in accordance with this Section, the Commitments may not
be increased. Any reduction of the Commitments shall be applied to each Lender
according to its Percentage; provided that the Tranche A Commitment may not be
reduced to an amount less than five times the Tranche B Commitment.
SECTION 2.13 Mandatory Reduction/Cash Collateralization of Letters of
--------------------------------------------------------
Credit.
------
(a) If on any day (i) the Tranche A LC Obligations exceed the combined
Tranche A Commitments on such day or the Tranche A LC Obligations exceed the
Tranche A Borrowing Base on such day, the Borrower shall immediately deposit
into the Custody Account Eligible Investments or reduce the Tranche A LC
Obligations, or a combination of the foregoing, in an amount sufficient to
eliminate such excess or (ii) the Tranche B LC Obligations exceed the combined
Tranche B Commitments on such day or the Tranche B LC Obligations exceed the
Tranche B Borrowing Base on such day, the Borrower shall immediately deposit
into the Custody Account Private Fund Investments or reduce the Tranche B LC
Obligations, or a combination of the foregoing, in an amount sufficient to
eliminate such excess.
(b) On the Final Maturity Date or, if earlier, the date the Obligations
are accelerated pursuant to Section 7.2, and until the final expiration date of
-----------
any Letter of Credit and thereafter so long as any Obligations are payable
hereunder, the Borrower shall immediately cash collateralize such Letters of
Credit with Cash and Cash Equivalents in an amount equal to 102% of the
outstanding LC Obligations and such collateral shall be placed in a special
collateral account pursuant to arrangements satisfactory to the Administrative
Agent (the "LC Collateral Account") at the Administrative Agent's office in the
---------------------
name of the Borrower but under the sole dominion and control of the
Administrative Agent, for the benefit of the LC Administrator and the Lenders
and the Borrower shall have no interest therein except as set forth in Section
-------
7.3. The Borrower hereby pledges, assigns and grants to the Administrative
---
Agent, for the benefit of the LC Administrator and the Lenders, a security
interest in all of the Borrower's right, title and interest in and to the LC
Collateral Account, all funds and Cash Equivalents which may from time to time
be on deposit in the LC Collateral Account to secure the prompt and complete
payment and performance of the Obligations. The Administrative Agent may invest
any funds on deposit from time to time in the LC Collateral Account in Cash
Equivalents having a maturity not exceeding 30 days. Funds earned on such Cash
Equivalents shall be deposited into the LC Collateral Account.
SECTION 2.14 Fees.
----
(a) Agency Fees. The Borrower shall pay fees to the Administrative Agent
-----------
for the Administrative Agent's own account, as required by the letter agreement
("Fee Letter") between the Borrower and the Administrative Agent dated March
----------
28, 2001 and as the Borrower and the Administrative Agent may agree from time
to time; provided that a portion of the letter of credit fee equal to 0.125%
per annum otherwise payable to each Participating Bank shall be payable to
26
the Fronting Bank with respect to Letters of Credit for which a fee is not
paid to the Fronting Bank pursuant to Section 2.14(c)(ii).
(b) Non-Use Fees. The Borrower shall pay to the Administrative Agent for
------------
the account of each Lender a non-use fee on the actual daily unused portion of
such Lender's Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Administrative Agent, equal to (i) 0.15% per annum
in the case of the Tranche A Commitment and (ii) 0.30% per annum in the case of
the Tranche B Commitment. Such non-use fee shall accrue from the Amendment
Effective Date to the Commitment Termination Date and shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September
and December commencing on June 30, 2001 through the Commitment Termination
Date, with the final payment to be made on the Commitment Termination Date. The
non-use fees provided in this Section shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article VIII are not met.
------------
(c) Letter of Credit Fees.
---------------------
(i) The Borrower shall pay to the Administrative Agent for the
account of each Lender a letter of credit fee for each Letter of Credit
requested by the Borrower in an amount per annum of the average maximum
stated amount of such Letter of Credit during such period (less any LC
Advance with respect thereto) equal to (x) 0.45% per annum with respect to
Tranche A Letters of Credit and (y) 0.90% per annum with respect to
Tranche B Letters of Credit. Such letter of credit fees shall be computed
on a quarterly basis in arrears on the last Business Day of each calendar
quarter, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December commencing on
June 30, 2001 through the Final Maturity Date with the final payment to be
made on the Final Maturity Date.
(ii) In addition, with respect to each Letter of Credit issued by the
Fronting Bank, the Borrower shall pay to the Fronting Bank a fronting fee
in an amount per annum on the average maximum stated amount of such Letter
of Credit during such period (less any LC Advance with respect thereto)
equal to 0.125% per annum. Such fronting fees shall be computed on a
quarterly basis in arrears on the last Business Day of each calendar
quarter and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December commencing on
June 30, 2001 through the Final Maturity Date with the final payment to be
made on the Final Maturity Date.
(iii) In addition, with respect to each Letter of Credit requested by
the Borrower or any amendment or extension thereof, the Borrower agrees to
pay to the LC Administrator such fees and expenses as the LC Administrator
customarily requires in connection with the issuance, amendment, transfer,
negotiation, processing and/or administration of letters of credit.
(d) Upfront Fees. On the Amendment Effective Date, the Borrower shall pay
------------
to each Lender such upfront fees as may have been agreed to by the Borrower and
such Lender.
27
SECTION 2.15 Computation of Fees and Interest.
--------------------------------
(a) All computations of fees shall be made on the basis of a 360-day year
and actual days elapsed. Interest on LC Advances shall be computed on the basis
of a 365/366-day year and actual days elapsed. Interest and fees shall accrue
during each period during which interest or such fees are computed from the
first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative Agent
shall be conclusive and binding on the Borrower and the Lenders in the absence
of manifest error.
(c) Anything herein to the contrary notwithstanding, the obligations of
the Borrower to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that
may be lawfully contracted for, charged or received by such Lender, and in such
event the Borrower shall pay such Lender interest at the highest rate permitted
by applicable law.
SECTION 2.16 Sharing of Payments, Etc. If, other than as expressly
------------------------
provided elsewhere herein, any Lender shall obtain on account of the LC
Obligations any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in excess of its Percentage, such Lender
shall immediately (a) notify the Administrative Agent of such fact, and (b)
purchase from the other Lenders such participations in the Obligations held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment pro rata with each of them; provided, however, that if all or any
-------- -------
portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase shall to that extent be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price paid therefor, together
with an amount equal to such paying Lender's ratable share (according to the
proportion of (i) the amount of such paying Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 10.10) with respect to such participation as fully as if such Lender
-------------
were the direct creditor of the Borrower in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under
this Section and will in each case notify the Lenders following any such
purchases or repayments.
SECTION 2.17 Commitment Termination Date Extension.
-------------------------------------
(a) The Borrower may, by notice to the Administrative Agent given not more
than 60 days and not less than 45 days prior to the then scheduled Commitment
Termination Date, request that the Lenders extend the Commitment Termination
Date for 364 days after the then scheduled Commitment Termination Date and
extend the Final Maturity Date for one year after the then scheduled Final
Maturity Date. The Administrative Agent shall notify the Lenders of its receipt
of any notice (the "Extension Request Date")given pursuant to this Section
---------------------- -------
2.17(a) within two Business Days after the Administrative Agent's receipt
-------
thereof. Each Lender (a "Consenting
----------
28
Lender") may, by irrevocable notice to the Borrower and the Administrative
------
Agent delivered to the Borrower and the Administrative Agent not later than 45
days after the Extension Request Date (the "Consent Period"), consent to such
--------------
extension of the Commitment Termination Date and the Final Maturity Date, which
consent may be given or withheld by each Lender in its absolute and sole
discretion. Subject to Section 2.17(c), any such extensions shall take effect
---------------
on and as of the then scheduled Commitment Termination Date.
(b) Withdrawing Lenders. No extension pursuant to Section 2.17(a) shall be
------------------- ---------------
effective with respect to a Lender that either (i) by a notice (a "Withdrawal
----------
Notice") delivered to the Borrower and the Administrative Agent, declines to
------
consent to such extension or (ii) has failed to respond to the Borrower and the
Administrative Agent within the Consent Period (each such Lender giving a
Withdrawal Notice or failing to respond in a timely manner being "Withdrawing
-----------
Lender").
------
(c) Replacement of Withdrawing Lender. The Borrower shall have the right
---------------------------------
during the 60 day period following the end of the Consent Period to replace the
Withdrawing Lender with an existing Lender or a new Lender who consents to the
extension of the Commitment Termination Date (a "Replacement Lender"). In the
------------------
event the Borrower has not replaced the Withdrawing Lender within said 60 day
period, the Borrower may request the Consenting Lenders to reduce the
Commitments by the amount of the Withdrawing Lender's Commitment and extend the
Commitment Termination Date and the Final Maturity Date which consent may be
given or withheld by each Consenting Lender in its sole discretion. In the
event all of the Consenting Lenders agree to such reduction and extension then,
subject to compliance with Section 2.2, on and as of the then scheduled
-----------
Commitment Termination Date (x) the Commitment shall be reduced by an amount
equal to the Commitment of the unreplaced Withdrawing Lender, (y) such
Withdrawing Lender shall cease to be a Lender under this Agreement and (z) the
Commitment Termination Date and the Final Maturity Date shall be extended. In
the event the Withdrawing Lender has not been replaced or all of the Consenting
Lenders have not consented to reduction of the Commitment pursuant to this
Section 2.17(c), the Commitment Termination Date and the Final Maturity Date
---------------
shall not be extended.
(d) Assignment by Withdrawing Lender. A Withdrawing Lender shall be
--------------------------------
obliged, at the request of the Borrower and subject to the Withdrawing Lender
receiving payment in full of all amounts owing to it under this Agreement
concurrently with the effectiveness of an assignment, to assign, without
recourse or warranty and by an Assignment and Acceptance, all of its rights and
obligations hereunder to any Replacement Lender nominated by the Borrower and
willing to accept such assignment; provided that such assignee satisfies all
--------
the requirements of this Agreement and such assignment is consented to by the
Administrative Agent, which consent shall not be withheld or delayed
unreasonably.
(e) Scheduled Commitment Termination Date. If the scheduled Commitment
-------------------------------------
Termination Date and the Final Maturity Date shall have been extended in respect
of Consenting Lenders and any Replacement Lender in accordance with Section
-------
2.17(a), all references herein to the "Commitment Termination Date" and the
-------
"Final Maturity Date" shall refer to the Commitment Termination Date or the
Final Maturity Date as so extended.
29
SECTION 2.18 Optional Increase in LC Commitments. The Borrower may at any
-----------------------------------
time, by means of a letter to the Administrative Agent and each Lender
substantially in the form of Exhibit F, request that the Lenders increase the
---------
combined Commitments by $10,000,000 or an even multiple thereof; provided that
--------
(i) such letter shall be accompanied by a certificate of the Secretary or an
Assistant Secretary of the Borrower as to resolutions of the board of directors
of the Borrower approving such increase, (ii) in no event shall the aggregate
amount of the combined Commitments exceed $500,000,000 (or such lesser amount
as determined pursuant Section 2.12) to without the written consent of all
------------
Lenders and (iii) such increase shall either be an increase of the Tranche A
Commitments or shall be a pro rata increase of the Tranche A Commitments and
the Tranche B Commitments. Each Lender shall have the option (in its sole and
complete discretion) to subscribe for its proportionate share (or more or less
than its proportionate share) of such increase, according to its then-existing
Percentage. Each Lender shall respond to the Borrower's request within 20
Business Days by submitting a response in the form of Attachment 1 to Exhibit F
---------
to the Administrative Agent (and any Lender not responding within such period
shall be deemed to have declined such request). At the option of the Borrower,
any part of the proposed increase not proportionately subscribed may be
assumed, within 10 Business Days after all Lenders have responded to (or, by
not responding, are deemed to have declined) such request, by one or more
existing Lenders and/or by one or more Persons meeting the qualifications of an
Eligible Assignee, in amounts which are acceptable to the Borrower; it being
understood that any assumption by a Person which is not an existing Lender
shall be subject to consent of the Administrative Agent (which consent shall
not be unreasonably withheld or delayed) provided that after giving effect to
any such increase, each Lender shall have the same percentage under the Tranche
A Commitments and the Tranche B Commitments. Any increase in the combined
Commitments pursuant to this Section 2.18 shall become effective on the
------------
earliest to occur of (a) the date on which the proposed increase has been fully
subscribed and (b) the date, which shall not be earlier than the date on which
all Lenders have responded to (or are deemed to have declined) the Borrower's
request for an increase, on which the Borrower notifies the Administrative
Agent that the Borrower accepts an increase in the combined Commitments which
is less than the full amount of the requested increase. The Administrative
Agent shall promptly notify the Borrower and the Lenders of any increase in the
amount of the combined Commitments pursuant to this Section 2.18 and of the
------------
Commitment and Percentage of each Lender after giving effect thereto.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
SECTION 3.1 Taxes.
-----
(a) Any and all payments by the Borrower to each Lender, the Fronting Bank
or the Administrative Agent under this Agreement and any other Credit Document
shall be made free and clear of, and without deduction or withholding for any
Taxes except as required by law. In addition, the Borrower shall pay all Other
Taxes.
(b) The Borrower agrees to indemnify and hold harmless the LC
Administrator, the Fronting Bank, each Lender and the Administrative Agent for
the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable
30
under this Section) paid by the Lenders, the Fronting Bank or the
Administrative Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after the date
such Lender, the Fronting Bank or the Administrative Agent makes written demand
therefor.
(c) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender, the Fronting Bank or the Administrative Agent, provided that such
--------
Person has provided the forms required in Section 9.10, then:
------------
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section)
such Lender, the Fronting Bank or the Administrative Agent, as the case
may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay, without duplication, each Lender,
the Fronting Bank or the Administrative Agent for the account of such
Person, at the time interest is paid, all additional amounts which such
Person specifies as reasonably necessary to preserve the after-tax yield
such Person would have received if such Taxes or Other Taxes had not been
imposed.
(d) Within 30 days after the date of any payment by the Borrower of Taxes
or Other Taxes, the Borrower shall furnish the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Administrative Agent.
(e) If the Borrower is required to pay additional amounts to any Lender,
the Fronting Bank or the Administrative Agent pursuant to Section 3.1(c), then
--------------
such Person shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Person is not otherwise
disadvantageous to such Person or inconsistent with such Person's internal
policies.
(f) If the Administrative Agent, the Fronting Bank or any Lender receives
a refund in respect of Taxes or Other Taxes paid by the Borrower pursuant to
this Section 3.1, which in the good faith judgment of such Person is allocable
to such payment, it shall promptly pay such refund to the Borrower, net of all
out-of-pocket expenses of such Person incurred in obtaining such refund,
provided, however, that the Borrower agrees to promptly return such refund to
the applicable Person if it receives notice from such Person that such Person
is required to repay such refund. Nothing contained herein shall require the
Administrative Agent or any Lender to
31
make its tax returns (or any other information relating to its taxes which it
deems confidential) available to the Borrower.
SECTION 3.2 Illegality.
----------
(a) If the Fronting Bank or any Lender determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, in each case after
the date hereof, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for the Fronting Bank
or any Lender or its applicable Lending Office to make or participate in any
Credit Extensions, then, on notice thereof by the Fronting Bank or such Lender
to the Borrower through the Administrative Agent, the obligation of all Lenders
to make or participate in Credit Extensions shall be suspended until the
Fronting Bank or such Lender notifies the Administrative Agent and the Borrower
that the circumstances giving rise to such determination no longer exist.
(b) Before giving any notice to the Administrative Agent under this
Section, the Fronting Bank or the affected Lender shall designate a different
Lending Office with respect to its Credit Extensions if such designation will
avoid the need for giving such notice or making such demand and will not, in
the judgment of such Person, be illegal or otherwise disadvantageous to such
Person or inconsistent with such Person's internal policies.
SECTION 3.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If the Fronting Bank or any Lender determines that, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation, in each case after the date hereof, or (ii) the compliance by the
Fronting Bank or Lender with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law) after the
date hereof, there shall be any increase in the cost to the Fronting Bank or
such Lender of agreeing to make or making, funding or maintaining any Credit
Extensions, then the Borrower shall be liable for, and shall from time to time,
upon demand (with a copy of such demand to be sent to the Administrative
Agent), pay to the Administrative Agent for the account of the Fronting Bank or
such Lender, additional amounts as are sufficient to compensate such Lender for
such increased costs; provided that, to the extent such increased costs are not
specifically related to the Obligations, the Fronting Bank or such Lender is
charging such amounts to its customers on a non-discriminatory basis, provided
further that the Borrower shall not be obligated to pay any additional amounts
which were incurred by the Fronting Bank or such Lender more than 90 days prior
to the date of such request.
(b) If the Fronting Bank or any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Fronting Bank or such Lender (or its Lending Office) or any
corporation controlling the Fronting Bank or such Lender with any Capital
Adequacy Regulation, in each case after the date hereof, affects or would
affect the amount of capital required or expected to be maintained by the
Fronting Bank or such Lender or any corporation
32
controlling the Fronting Bank or such Lender and (taking into consideration the
Fronting Bank's or such Lender's or such corporation's policies with respect to
capital adequacy and the Fronting Bank's or such Lender's desired return on
capital) determines that the amount of such capital is increased or its rate of
return is decreased as a consequence of its Commitment, Credit Extensions, or
obligations under this Agreement, then, upon demand of the Fronting Bank or
such Lender to the Borrower through the Administrative Agent, the Borrower
shall pay to the Fronting Bank or such Lender, from time to time as specified
by the Fronting Bank or such Lender, additional amounts sufficient to
compensate the Fronting Bank or such Lender for such increase; provided that to
the extent such increased costs are not specifically related to the
Obligations, the Fronting Bank or such Lender is charging such amounts to its
customers on a non-discriminatory basis, provided further that the Borrower
shall not be obligated to pay any additional amounts which were incurred by the
Fronting Bank or such Lender more than 90 days prior to the date of such
request.
SECTION 3.4 Certificates of Lenders. Any Person claiming reimbursement or
-----------------------
compensation under this Article III shall deliver to the Borrower (with a copy
-----------
to the Administrative Agent) a certificate setting forth in reasonable detail
the amount payable to such Person hereunder and such certificate shall be
conclusive and binding on the Borrower in the absence of manifest error.
SECTION 3.5 Substitution of Lenders. Upon the receipt by the Borrower from
-----------------------
the Fronting Bank or any Lender (an "Affected Lender") of a claim for
---------------
compensation under Section 3.1, 3.2 or 3.3 the Borrower may: (a) request the
------- --- --- ---
Affected Lender to use its reasonable efforts to obtain a replacement bank or
financial institution satisfactory to the Borrower to acquire and assume all or
a ratable part of all of such Affected Lender's Credit Extensions and
Commitment (a "Substitute Lender"); (b) request one more of the other Lenders
-----------------
to acquire and assume all or part of such Affected Lender's Credit Extensions
and Commitment; or (c) designate a Substitute Lender. Any such designation of a
Substitute Lender under clause (a) or (b) shall be subject to the prior written
---------- ---
consent of the Administrative Agent (which consent shall not be unreasonably
withheld).
SECTION 3.6 Survival. The agreements and obligations of the Borrower in
--------
this Article III shall survive the payment of all other Obligations.
-----------
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make Credit
Extensions hereunder, the Borrower represents and warrants to each Lender that:
SECTION 4.1 Due Organization, Authorization, etc. The Borrower and each of
------------------------------------
its Subsidiaries (a) is a company duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) is duly
qualified to do business and in good standing in each jurisdiction where,
because of the nature of its activities or properties, such qualification is
required except where the failure to qualify would not have a Material Adverse
Effect, which jurisdictions are set forth with respect to the Borrower and each
of its Subsidiaries on Schedule
--------
33
4.1 as revised from time to time by the Borrower pursuant to Section 5.1(m),
--- --------------
(c) has the requisite company power and authority and the right to own and
operate its properties, to lease the property it operates under lease, and to
conduct its business as now and proposed to be conducted, and (d) has obtained
all material licenses, permits, consents or approvals from or by, and has made
all filings with, and given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct
(including, without limitation, the consummation of the transactions
contemplated by this Agreement) as to each of the foregoing, except where the
failure to do so would not have a Material Adverse Effect. The execution,
delivery and performance by the Borrower of this Agreement and the consummation
of the transactions contemplated hereby and thereby are within its corporate
powers and have been duly authorized by all necessary corporate action
(including, without limitation, shareholder approval, if required). The
Borrower has received all other material consents and approvals (if any shall
be required) necessary for such execution, delivery and performance, and such
execution, delivery and performance do not and will not contravene or conflict
with, or create a Lien (other than pursuant to the Loan Documents) or right of
termination or acceleration under, any Requirement of Law or Contractual
Obligation binding upon the Borrower. This Agreement and each of the Credit
Documents is (or when executed and delivered will be) the legal, valid, and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its respective terms subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and general equity
principles.
SECTION 4.2 Litigation and Contingent Liabilities. (a) Except as set forth
-------------------------------------
(including estimates of the dollar amounts involved) in Schedule 4.2 hereto and
------------
(b) except for claims which are covered by Insurance Policies, coverage for
which has not been denied in writing, or which relate to Reinsurance Agreements
issued by the Borrower or its Subsidiaries or to which it is a party entered
into by the Borrower or its Subsidiaries in the ordinary course of business
(referred to herein as "Ordinary Course Litigation"), no claim, litigation
--------------------------
(including, without limitation, derivative actions), arbitration, governmental
investigation or proceeding or inquiry is pending or, to the knowledge of the
Borrower, threatened against the Borrower or its Subsidiaries (i) which would,
if adversely determined, have a Material Adverse Effect or (ii) which relates
to any of the transactions contemplated hereby. Other than any liability
incident to such claims, litigation or proceedings, the Borrower and its
Subsidiaries have no material Contingent Liabilities.
SECTION 4.3 Employee Benefit Plans. The Borrower has no Plans.
----------------------
SECTION 4.4 Regulated Entities. Neither Parent nor the Borrower is an
------------------
"investment company" or a company "controlled by an investment company," for
the purpose of the Investment Company Act of 1940, as amended. The Borrower is
not subject to regulation under the Public Utility Holding Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any public utilities code, or
any other Requirement of Law limiting its ability to incur Debt.
SECTION 4.5 Regulations U and X. The Borrower is not engaged principally,
-------------------
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying margin stock. None of the Borrower, any
Affiliate or any Person acting on its behalf has taken or will take action to
cause the execution, delivery or performance of this Agreement,
34
the making or existence of the Credit Extensions or the use of proceeds of the
Credit Extensions to violate Regulations U or X of the FRB.
SECTION 4.6 Proceeds. Letters of Credit issued hereunder will be used
--------
solely to secure the Borrower's obligations under Reinsurance Agreements. None
of the proceeds of such Letters of Credit will be used in violation of
applicable law, and none of such proceeds will be used, directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying any margin stock as defined in Regulation U of the FRB.
SECTION 4.7 Business Locations. Schedule 4.7 as revised from time to time
------------------ ------------
by the Borrower pursuant to Section 5.1(m) lists each of the locations where
-------------
the Borrower and its Subsidiaries maintain an office, a place of business.
SECTION 4.8 Accuracy of Information. All factual written information
-----------------------
furnished heretofore or contemporaneously herewith by or on behalf of the
Borrower or Parent to the Administrative Agent or the Lenders for purposes of
or in connection with this Agreement or any of the transactions contemplated
hereby, as supplemented to the date hereof, is and all other such factual
written information hereafter furnished by or on behalf of the Borrower or
Parent to the Administrative Agent or the Lenders will be, true and accurate in
every material respect on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary
to make such information not misleading under the circumstances in which given.
SECTION 4.9 Subsidiaries. The Borrower has no Subsidiaries other than
------------
those specified on Schedule 4.9..
------------
SECTION 4.10 Insurance Licenses. Schedule 4.10 as revised from time to
---------------------------------
time by the Borrower pursuant to Section 5.1(m) lists all of the jurisdictions
--------------
in which the Borrower and its Subsidiaries hold licenses (including, without
limitation, licenses or certificates of authority from applicable insurance
departments), permits or authorizations to transact insurance and reinsurance
business (collectively, the "Licenses"). Except as set forth on Schedule 4.10,
-------- -------------
to the best of the Borrower's knowledge, no such License is the subject of a
proceeding for suspension or revocation or any similar proceedings, there is no
sustainable basis for such a suspension or revocation, and no such suspension
or revocation is threatened by the Department. Schedule 4.10 as revised from
-------------
time to time by the Borrower pursuant to Section 5.1(m) indicates the line or
--------------
lines of insurance which the Borrower and its Subsidiaries is permitted to be
engaged in with respect to each License therein listed. Neither the Borrower
nor any of its Subsidiaries transact any insurance business, directly or
indirectly, in any jurisdiction other than those enumerated on Schedule 4.10 as
-------------
revised from time to time by the Borrower pursuant to Section 5.1(m) hereto,
--------------
where such business requires that the Borrower or any of its Subsidiaries
obtain any license, permit, governmental approval, consent or other
authorization.
SECTION 4.11 Taxes. The Borrower and its Subsidiaries have filed by the
-----
required filing date all tax returns that are required to be filed by it, and
has paid or provided adequate reserves for the payment of all material taxes,
including, without limitation, all payroll taxes and federal and state
withholding taxes, and all assessments payable by it that have become due,
other than (a) those that are not yet delinquent and are being contested in
good faith by
35
appropriate proceedings and with respect to which reserves have been
established, and are being maintained, in accordance with GAAP or (b) those
which the failure to file or pay would not have a Material Adverse Effect. On
the Amendment Effective Date there is no ongoing audit by a taxing authority
or, to the Borrower's knowledge, other governmental investigation of the tax
liability of the Borrower and there is no unresolved claim by a taxing
authority concerning the Borrower's tax liability, for any period for which
returns have been filed or were due. As used in this Section 4.11, the term
------------
"taxes" includes all taxes of any nature whatsoever and however denominated,
including, without limitation, excise, import, governmental fees, duties and
all other charges, as well as additions to tax, penalties and interest thereon,
imposed by any government or instrumentality, whether federal, state, local,
foreign or other.
SECTION 4.12 Securities Laws. Neither the Borrower nor any Affiliate, nor
---------------
to the Borrower's knowledge anyone acting on behalf of any such Person, has
directly or indirectly offered any interest in the Credit Extensions or any
other Obligation for sale to, or solicited any offer to acquire any such
interest from, or has sold any such interest to any Person that would cause the
issuance or sale of the Credit Extensions to be required to be registered under
the Securities Act of 1933, as amended.
SECTION 4.13 Compliance with Laws. Neither the Borrower nor any of its
--------------------
Subsidiaries is in violation of any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any Governmental Authority, where the
effect of such violation could reasonably be expected to have a Material
Adverse Effect on the Borrower and, to the best of the Borrower's knowledge, no
such violation has been alleged and the Borrower and each of its Subsidiaries
(i) has filed in a timely manner all reports, documents and other materials
required to be filed by it with any Governmental Authority, if such failure to
so file could reasonably be expected to have a Material Adverse Effect; and the
information contained in each of such filings is true, correct and complete in
all material respects and (ii) has retained all records and documents required
to be retained by it pursuant to any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any Governmental Authority, if the
failure to so retain such records and documents could reasonably be expected to
have a Material Adverse Effect.
SECTION 4.14 Financial Condition. The audited consolidated financial
-------------------
statements of the Borrower as at December 31, 2000, copies of which have been
delivered to the Lenders, are true and correct in all material respects, have
been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as disclosed therein) and present fairly the
consolidated financial condition of the Borrower and its Subsidiaries at such
date and the result of its operations for the periods then ended.
SECTION 4.15 Insurance Act. The Borrower has not received any direction or
-------------
other notification by the Minister pursuant to Section 32 of Insurance Act,
1978 of Bermuda.
SECTION 4.16 First Priority Security Interest. The Administrative Agent,
--------------------------------
for the benefit of the Lenders, has a first priority perfected security
interest in the collateral pledged by the Borrower pursuant to the Security
Agreement.
36
ARTICLE V.
AFFIRMATIVE COVENANTS
Until the LC Obligations and all other Obligations are paid in full, and
until the Final Maturity Date, the Borrower agrees that, unless at any time the
Required Lenders shall otherwise expressly consent in writing, it will:
SECTION 5.1 Reports, Certificates and Other Information. Furnish or
-------------------------------------------
cause to be furnished to the Administrative Agent and the Lenders:
(a) GAAP Financial Statements:
-------------------------
(i) Within 45 days after the close of each of the first three
Fiscal Quarters of each Fiscal Year (A) of the Borrower, a copy of the
unaudited consolidated balance sheets of the Borrower and its
Subsidiaries, as of the close of such quarter and the related statements
of income and cash flows for that portion of the Fiscal Year ending as of
the close of such Fiscal Quarter, all prepared in accordance with GAAP
(subject to normal year-end adjustments) and accompanied by the
certification of an Executive Officer of the Borrower that all such
financial statements are complete and correct and present fairly in
accordance with GAAP (subject to normal year-end adjustments) the
consolidated results of operations and cash flows of the Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and for the period then
ended and (B) of the Parent, a copy of the unaudited consolidated and
consolidating balance sheets of the Parent, as of the close of such
quarter and the related consolidated and consolidating statements of
income and cash flows for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter, all prepared in accordance with GAAP
(subject to normal year-end adjustments) and accompanied by the
certification of an Executive Officer of the Parent that all such
financial statements are complete and correct and present fairly in
accordance with GAAP (subject to normal year-end adjustments) the
consolidated results of operations and cash flows of the Parent as at the
end of such Fiscal Quarter and for the period then ended.
(ii) Within 90 days after the close of each Fiscal Year (A) of the
Borrower, a copy of the annual audited consolidated financial statements
of the Borrower and its Subsidiaries consisting of balance sheets and
statements of income and retained earnings and cash flows, setting forth
in comparative form in each case the figures for the previous Fiscal Year,
which financial statements shall be prepared in accordance with GAAP,
certified without material qualification by KPMG Peat Marwick or any other
firm of independent certified public accountants of recognized national
standing selected by the Borrower and reasonably acceptable to the
Required Lenders that all such financial statements are complete and
correct and present fairly in accordance with GAAP the financial position
and the results of operations and cash flows of the Borrower and its
Subsidiaries as at the end of such year and for the period then ended and
(B) of the Parent, a copy of the annual audited financial statements of
the Parent consisting of consolidated and consolidating balance sheets and
consolidated and consolidating statements of income and retained earnings
and cash flows, setting forth in comparative
37
form in each case the figures for the previous Fiscal Year,
which financial statements shall be prepared in accordance with
GAAP, certified without material qualification by KPMG Peat Marwick
or any other firm of independent certified public accountants of
recognized national standing selected by the Parent and reasonably
acceptable to the Required Lenders that all such financial statements
are complete and correct and present fairly in accordance with GAAP
the financial position and the results of operations and cash flows of
the Parent as at the end of such year and for the period then ended.
(b) Tax Returns. If requested by the Administrative Agent, copies of
-----------
all federal, state, local and foreign tax returns and reports in respect of
income, franchise or other taxes on or measured by income (excluding sales, use
or like taxes) filed by the Borrower and its Subsidiaries.
(c) SAP Financial Statements. Within 5 days after the date filed with
------------------------
the Minister for each of its Fiscal Years, but in any event within 120 days
after the end of each Fiscal Year of the Borrower a copy of the Annual
Statement of the Borrower and each of its Subsidiaries for such Fiscal Year
prepared in accordance with SAP and accompanied by the certification of an
Executive Officer of the Borrower that such financial statement is complete and
correct and presents fairly in accordance with SAP the financial position of
the Borrower or such Subsidiary for the period then ended.
(d) Monthly Report and Borrowing Base Certificate. As soon as
---------------------------------------------
available, but in any event within 10 days after the end of each calendar month
of each Fiscal Year, (i) a report listing each of the Borrower's Eligible
Investments and Private Fund Investments, (ii) a report listing each of
Borrower's Unencumbered Assets and calculating the Unencumbered Asset Reserve
Requirement and (iii) a Borrowing Base Certificate executed by an Executive
Officer. For purposes of such report and of completing the Borrowing Base
Certificate, each Eligible Investment and Private Fund Investment shall be
valued based on its Fair Market Value as at the last Business Day of the
calendar month for which such report or Borrowing Base Certificate is being
delivered.
(e) Projections. As soon as available, but not later than March 31 of
-----------
each year, commencing with the year 2001, a three-year projection of the
Borrower's results covering the then-current Fiscal Year and each of the next
two Fiscal Years.
(f) Reports to Shareholders. Promptly upon the filing or making
-----------------------
thereof copies of (i) all financial statements and reports that Parent or the
Borrower sends to its shareholders or its other holders of Debt; (ii) copies of
all financial statements and regular, periodic or special reports that Parent
or the Borrower may make to, or file with, any Government Authority.
(g) Additional Borrowing Base Certificates. Promptly, at the request
--------------------------------------
of the Administrative Agent, a Borrowing Base Certificate for any given
Business Day executed by an Executive Officer of the Borrower.
(h) Notice of Default, etc. Immediately after an Executive Officer of
----------------------
the Borrower knows or has reason to know of the existence of any Default, or
any development or other information which would have a Material Adverse
Effect, telephonic or telegraphic notice
38
specifying the nature of such Default or development or information, including
the anticipated effect thereof, which notice shall be promptly confirmed in
writing within two (2) Business Days.
(i) Other Information. The following certificates and other
-----------------
information related to the Borrower:
(i) Within five (5) Business Days of receipt, a copy of any
financial examination reports by a Governmental Authority with respect
to the Borrower or any of its Subsidiaries relating to the insurance
business of the Borrower (when, and if, prepared); provided, the
--------
Borrower shall only be required to deliver any interim report hereunder
at such time as Borrower has knowledge that a final report will not be
issued and delivered to the Administrative Agent within 90 days of any
such interim report.
(ii) Copies of all filings (other than nonmaterial filings) with
Governmental Authorities by the Borrower or any of its Subsidiaries not
later than five (5) Business Days after such filings are made,
including, without limitation, filings which seek approval of
Governmental Authorities with respect to transactions between the
Borrower or any of its Subsidiaries and its Affiliates.
(iii) Within five (5) Business Days of such notice, notice of
proposed or actual suspension, termination or revocation of any
material License of the Borrower or any of its Subsidiaries by any
Governmental Authority or of receipt of notice from any Governmental
Authority notifying the Borrower or any of its Subsidiaries of a
hearing relating to such a suspension, termination or revocation,
including any request by a Governmental Authority which commits the
Borrower or any of its Subsidiaries to take, or refrain from taking,
any action or which otherwise materially and adversely affects the
authority of the Borrower or any of its Subsidiaries to conduct its
business.
(iv) Within five (5) Business Days of such notice, notice of any
pending or threatened investigation or regulatory proceeding (other
than routine periodic investigations or reviews) by any Governmental
Authority concerning the business, practices or operations of the
Borrower or any of its Subsidiaries.
(v) Promptly, notice of any actual or, to the best of the
Borrower's knowledge, proposed material changes in the Insurance Code
governing the investment or dividend practices of the Borrower.
(vi) Promptly, such additional financial and other information
as the Administrative Agent may from time to time reasonably request.
(j) Compliance Certificates. Concurrently with the delivery to the
------------------------
Administrative Agent of the GAAP financial statements under Sections 5.1(a)(i)
------------------
and 5.1(a)(ii), for each Fiscal Quarter and Fiscal Year of the Borrower, and at
---------
any other time no later than ten (10) Business Days following a written request
of the Administrative Agent, a duly completed Compliance Certificate, signed by
the chief financial officer, treasurer or controller of the Borrower.
39
(k) Notice of Litigation, License, etc. Promptly upon learning of the
----------------------------------
occurrence of any of the following, written notice thereof, describing the same
and the steps being taken by the Borrower with respect thereto: (i) the
institution of, or any adverse determination in, any litigation, arbitration
proceeding or governmental proceeding which could, if adversely determined, be
reasonably expected to have a Material Adverse Effect and which is not Ordinary
Course Litigation,(ii) the commencement of any dispute which might lead to the
modification, transfer, revocation, suspension or termination of this Agreement
or any Credit Document or (iii) any event which could be reasonably expected to
have a Material Adverse Effect.
(l) Insurance Reports. Within five (5) Business Days of receipt of
-----------------
such notice by the Borrower, written notice of any cancellation or material
adverse change in any material Insurance Policy carried by the Borrower.
(m) Updated Schedules. From time to time, and in any event
-----------------
concurrently with delivery of the financial statements under Section 5.1(a)(i)
-----------------
and (ii), revised Schedules 4.1, 4.7, and 4.10, if applicable, showing changes
---- --- --- ----
from the Schedules previously delivered.
---------
(n) Other Information. From time to time such other information
-----------------
concerning the Borrower as the Administrative Agent or any Lender through the
Administrative Agent may reasonably request.
SECTION 5.2 Corporate Existence; Foreign Qualification. Do and cause
------------------------------------------
to be done at all times all things necessary to (a) maintain and preserve the
corporate existence of the Borrower and each of its Subsidiaries, (b) be, and
ensure that the Borrower and each of its Subsidiaries is, duly qualified to do
business and be in good standing as a foreign corporation in each jurisdiction
where the nature of its business makes such qualification necessary unless the
failure to be so qualified would not have a Material Adverse Effect, and (c) do
or cause to be done all things necessary to preserve and keep in full force and
effect the Borrower's corporate existence.
SECTION 5.3 Books, Records and Inspections. (a) Maintain, and cause
------------------------------
its Subsidiaries to maintain materially complete and accurate books and records
in accordance with GAAP and SAP, (b) permit access at reasonable times by the
Administrative Agent to its books and records, (c) permit the Administrative
Agent or its designated representative to inspect at reasonable times its
properties and operations, and (d) permit the Administrative Agent to discuss
its business, operations and financial condition with its officers and its
independent accountants.
SECTION 5.4 Insurance. Maintain Insurance Policies to such extent and
---------
against such hazards and liabilities as is required by law.
SECTION 5.5 Taxes and Liabilities. Pay, and cause each Subsidiary to
---------------------
pay, when due all material taxes, assessments and other material liabilities
except as contested in good faith and by appropriate proceedings with respect
to which reserves have been established, and are being maintained, in
accordance with GAAP if and so long as such contest could not reasonably be
expected to have a Material Adverse Effect.
40
SECTION 5.6 Compliance with Laws. Comply, and cause each Subsidiary to
--------------------
comply (a) with all federal and local laws, rules and regulations related to
its businesses (including, without limitation, the establishment of all
insurance reserves required to be established under SAP and applicable laws
restricting the investments of the Borrower and its Subsidiaries), and (b) with
all Contractual Obligations binding upon it, except where failure to so comply
would not in the aggregate have a Material Adverse Effect on the Borrower.
SECTION 5.7 Maintenance of Permits. Maintain, and cause each
----------------------
Subsidiary to maintain, all permits, licenses and consents as may be required
for the conduct of its business by any federal or local government agency or
instrumentality except where failure to maintain the same could not reasonably
be expected to have a Material Adverse Effect.
SECTION 5.8 Conduct of Business. Engage, and cause each Subsidiary to
-------------------
engage, primarily in the same business or businesses described in the
Borrower's 2000 Annual Report.
SECTION 5.9 Use of Letters of Credit. The Borrower shall request
------------------------
letters of credit only to support its obligations under Reinsurance Agreements.
SECTION 5.10 Further Assurances. Promptly upon the request of the
------------------
Administrative Agent, the Borrower shall execute, acknowledge, deliver and
record and do any and all such further acts and deeds as the Administrative
Agent may reasonably request from time to time in order to insure that the
obligations of the Borrower hereunder are secured by a first priority perfected
interest in the assets of the Borrower stated to be pledged pursuant to the
Security Agreement and to perfect and maintain the validity, effectiveness and
priority of the Security Agreement and the Liens intended to be created thereby.
ARTICLE VI.
NEGATIVE COVENANTS
Until the LC Obligations and all other Obligations are paid in full
and until the Final Maturity Date, the Borrower agrees that, unless at any time
the Required Lenders shall otherwise expressly consent in writing, it will:
SECTION 6.1 Net Worth. Not permit the Net Worth of (a) the Borrower to
---------
be less than $400,000,000 and (b) the Parent to be less than $325,000,000.
SECTION 6.2 Unencumbered Reserve Requirement. Not permit the Fair
--------------------------------
Market Value of the Unencumbered Assets to be less than the greater of (x)
$30,000,000 and (y) an amount equal to the amount which would represent the
impact of a 150 basis point increase in the interest rates on the Borrower's
Investments.
SECTION 6.3 Debt. Not, and not permit any Subsidiary to, incur any
----
Debt other than (a) Debt under this Agreement; (b) Purchase Money Debt provided
the aggregate principal amount outstanding at any time does not exceed
$500,000; (c) Debt pursuant to Capitalized Leases provided such Leases do not
cover any property other than property acquired in connection therewith and the
aggregate principal amount of all such Debt outstanding at any time does not
exceed $1,500,000; (d) Hedging Obligations entered into in the ordinary course
of
41
business in order to hedge currency, commodity or interest rate risks, and not
for purposes of speculation; (e) Debt for standby letters of credit which have
been, or may be from time to time in the future, issued to insurance or
reinsurance cedents in the ordinary course of business; and (f) Debt not
included in paragraphs (a) through (e) which does not exceed at any time, in
the aggregate, $1,000,000.
SECTION 6.4 Mergers, Consolidations and Sales. Not, and not permit any
---------------------------------
Subsidiary to, (a) merge or consolidate, (b) purchase or otherwise acquire all
or substantially all of the assets or stock of any class of, or any partnership
or joint venture interest in, any other Person provided that the Borrower may
make any such purchase or acquisition provided (i) no Default or Event of
Default has occurred and is continuing or would result from such purchase or
acquisition, (ii) the Borrower provides the Lenders with a pro forma Compliance
Certificate giving effect to such purchase or acquisition and (iii) the
aggregate purchase price of all such purchases and acquisitions after the date
hereof does not exceed $75,000,000, or (c) sell, transfer, convey or lease all
or any substantial part of its assets, other than (i) any sale, transfer,
conveyance or lease in the ordinary course of business, (ii) any sale or
assignment of receivables or (iii) any sale, transfer, conveyance or lease not
in the ordinary course of business provided the aggregate fair market value of
all such sales, transfers, conveyances or leases after the date hereof does not
exceed $75,000,000.
SECTION 6.5 Other Agreements. Not enter into any agreement containing
----------------
any provision which would be violated or breached by the performance of
obligations hereunder or under any instrument or document delivered or to be
delivered by it hereunder or in connection herewith.
SECTION 6.6 Transactions with Affiliates. Not, and not permit any
----------------------------
Subsidiary to, enter into, or cause, suffer or permit to exist, directly or
indirectly, any arrangement, transaction or contract with any of its Affiliates
unless such arrangement, transaction or contract is on an arm's length basis./1/
SECTION 6.7 Liens. Not create or permit to exist, nor allow any of its
-----
Subsidiaries to create or permit to exist, any Lien with respect to any assets
now or hereafter existing or acquired, except the following: (i) Liens for
current taxes not delinquent or for taxes being contested in good faith and by
appropriate proceedings and with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP, (ii) easements,
party wall agreements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary course of the business of such Person; (iii) Liens
incurred in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other forms of governmental insurance
or benefits and Liens pursuant to letters of credit or other security
arrangements in connection with such insurance or benefits, (iv) mechanics',
workers', materialmen's, landlord liens and other like Liens arising in the
ordinary course of business in respect of obligations which are not delinquent
or which are being contested in good faith and by appropriate proceedings and
with
------------------------
/1/ Pursuant to letter agreement dated January 7, 2000, Lenders acknowledge
that pledge of collateral and limited guaranty by Max Re Diversified
Strategies, Ltd. of Max Re/Hypo and Vereinsbank letter of credit facility
doesn't violate Section 6.6.
42
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP, (v) Liens listed on Schedule 6.7 in effect
------------
on the date hereof; (vi) attachments, judgments and other similar Liens for
sums not exceeding $5,000,000 (excluding any portion thereof which is covered
by insurance so long as the insurer is reasonably likely to be able to pay and
has accepted a tender of defense and indemnification without reservation of
rights); (vii) attachments, judgments and other similar Liens for sums of
$5,000,000 or more (excluding any portion thereof which is covered by insurance
so long as the insurer is reasonably likely to be able to pay and has accepted
a tender of defense and indemnification without reservation of rights) provided
the execution or other enforcement of such Liens is effectively stayed and
claims secured thereby are being actively contested in good faith and by
appropriate proceedings and have been bonded off; (viii) Liens on cash and
Investments (other than Collateral) pursuant to trusts or other security
arrangements in connection with Reinsurance Agreements and Liens securing Debt
permitted under Section 6.3(e); (ix) Liens in favor of the Administrative Agent
-------------
for the benefit of the Lenders; (x) Purchase Money Liens securing Purchase
Money Debt permitted under Section 6.3(b); (xi) any interest or title of a
-------------
lessor in assets subject to any Capitalized Lease or operating lease which is
permitted under this Agreement; and (xii) Liens not permitted by any other
clause of this Section 6.7 securing Debt in an aggregate amount not to exceed
-----------
$250,000, provided any Liens granted (other than Liens pursuant to Section
-------
6.7(ix)) do not extend to any Collateral and after giving effect to all Liens
-------
under clauses (viii) through (xii), there are Unencumbered Assets sufficient to
------------- -----
ensure compliance with Section 6.2.
------------
SECTION 6.8 Restrictions On Negative Pledge Agreements. Not create,
------------------------------------------
incur or assume any agreement to which it is a signatory, other than this
Agreement which places any restrictions upon the right of the Borrower to sell,
pledge or otherwise dispose of any material portion of its properties now owned
or hereafter acquired (other than with respect to property secured by Liens
permitted under Section 6.7) except for such restrictions imposed under this
-----------
Agreement or by federal or state laws upon the right of the Borrower to sell,
pledge or otherwise dispose of securities owned by it.
SECTION 6.9 Dividends, Etc. Not (a) declare or pay any dividends on
--------------
any of its Capital Stock, (b) purchase or redeem any Capital Stock of Parent or
any of its Subsidiaries or any warrants, options or other rights in respect of
such stock, or (c) set aside funds for any of the foregoing, except that the
Borrower may declare or pay dividends on any of its Capital Stock provided no
Default or Event of Default has occurred and is continuing on the date of or
would result from such declaration or payment.
SECTION 6.10 Eligible Investments. The Borrower shall not permit:
--------------------
(a) the minimum weighted average credit quality rating of the Eligible
Investments to be less than AA/Aa2 or the equivalent; or
(b) the Eligible Investments to exceed the Concentration Limits;
provided, however, that the Borrower shall not be in violation of this Section
-------
6.10 if such violation occurs as a result of a change in the Fair Market Value
----
or ratings of such Eligible
43
Investments (as opposed to a change in the makeup of such Eligible Investments)
unless such deficiency exists for thirty days.
ARTICLE VII.
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 7.1 Events of Default. Each of the following shall constitute
-----------------
an Event of Default under this Agreement:
(a) Non-Payment of Credit Extension. Default in the payment when due
-------------------------------
of any Reimbursement Obligation.
(b) Non-Payment of Interest, Fees, etc. Default, and continuance
----------------------------------
thereof for three (3) Business Days, in the payment when due of fees or of any
other amount payable hereunder or under the Credit Documents.
(c) Non-Payment of Other Debt. (i) Default in the payment when due
-------------------------
(subject to any applicable grace period), whether by acceleration or otherwise,
of any other Debt of, or guaranteed by, the Borrower if the aggregate amount of
Debt of the Borrower which is accelerated or due and payable, or which (subject
to any applicable grace period) may be accelerated or otherwise become due and
payable, by reason of such default or defaults is $5,000,000 or more, or (ii)
default in the performance or observance of any obligation or condition with
respect to any such other Debt of, or guaranteed by, the Borrower if the effect
of such default or defaults is to accelerate the maturity (subject to any
applicable grace period) of any such Debt of $5,000,000 or more in the
aggregate or to permit the holder or holders of such Debt of $5,000,000 or more
in the aggregate, or any trustee or agent for such holders, to cause such Debt
to become due and payable prior to its expressed maturity.
(d) Other Material Obligations. Except for obligations covered under
--------------------------
other provisions of this Article VII, default in the payment when due, or in
-----------
the performance or observance of, any material obligation of, or material
condition agreed to by, the Borrower with respect to any material purchase or
lease obligation of $5,000,000 or more (unless the existence of any such
default is being contested by the Borrower in good faith and by appropriate
proceedings and the Borrower has established, and is maintaining, adequate
reserves therefor in accordance with GAAP) which default continues for a period
of 30 days.
(e) Bankruptcy, Insolvency, etc. (i) Parent or the Borrower becomes
---------------------------
insolvent or generally fails to pay, or admits in writing its inability to pay,
debts as they become due; (ii) there shall be commenced by or against any of
such Persons any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, supervision, conservatorship, liquidation, reorganization or relief
of debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
rehabilitation, conservation, supervision, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, obligations or liabilities, or (B) seeking appointment of a receiver,
trustee, custodian, rehabilitator, conservator, supervisor, liquidator or other
similar official for it
44
or for all or any substantial part of its assets, in each case which (1)
results in the entry of an order for relief or any such adjudication or
appointment or (2) if filed against such Person, remains undismissed,
undischarged or unstayed for a period of 60 days; or (iii) there shall be
commenced against any of such Persons any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any of such Persons shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause(ii) or (iii) above; or (v) any Governmental Authority shall
--------- ----
issue any order of conservation, supervision or any other order of like effect
relating to any of such Persons.
(f) Financial Statements. Failure by the Borrower to comply with its
--------------------
covenants set forth in Section 5.1 and continuance of such failure for five
-----------
Business Days after notice thereof from the Administrative Agent.
(g) Specific Defaults. Failure by the Borrower to comply with its
-----------------
covenants set forth in Sections 5.9, 6.1, 6.3, 6.4, 6.6, 6.7(viii), 6.7(ix),
------------ --- --- ---- --- --------- --------
6.7(x), 6.7(xi), 6.7 (xii), 6.8 or 6.9.
----- ------- --------- --- ---
(h) Non-compliance With Other Provisions. Failure by the Borrower to
------------------------------------
comply with or to perform any provision of this Agreement or the other Credit
Documents (and not constituting an Event of Default under any of the other
provisions of this Article VII) and continuance of such failure for 30 days
-----------
after notice thereof from the Administrative Agent to the Borrower.
(i) Warranties and Representations. Any warranty or representation
------------------------------
made by or on behalf of the Borrower herein or in any Credit Document is
inaccurate or incorrect or is breached or false or misleading in any material
respect as of the date such warranty or representation is made; or any
schedule, certificate, financial statement, report, notice, or other instrument
furnished by or on behalf of Borrower to the Administrative Agent or the
Lenders is false or misleading in any material respect on the date as of which
the facts therein set forth are stated or certified.
(j) Employee Benefit Plans. The Borrower establishes any Plan.
----------------------
(k) Credit Documents. The Security Agreement or any other Credit
----------------
Document shall cease to be in full force and effect with respect to the
Borrower, the Borrower shall fail (subject to any applicable grace period) to
comply with or to perform any applicable provision of the Security Agreement,
any action shall be taken by or on behalf of the Borrower or any Affiliate
thereof to discontinue any of the Credit Documents or to contest the validity,
binding nature or enforceability of any thereof or the Administrative Agent
shall fail to have a first priority perfected Lien on any collateral granted
under the Security Agreement.
(l) Change in Control. A Change in Control occurs.
-----------------
(m) Judgments. A final judgment or judgments which exceed an aggregate
---------
of $5,000,000 (excluding any portion thereof which is covered by insurance so
long as the insurer is reasonably likely to be able to pay and has accepted a
tender of defense and indemnification
45
without reservation of rights) shall be rendered against the Borrower and
shall not have been discharged or vacated or had execution thereof stayed
pending appeal within 60 days after entry or filing of such judgment(s).
SECTION 7.2 Effect of Event of Default. If any Event of Default
--------------------------
described in Section 7.1(e) shall occur, all Obligations shall become
-------------
immediately due and payable, and the Borrower shall become immediately
obligated to deliver to the Administrative Agent cash collateral in an amount
equal to the outstanding LC Obligations all without notice of any kind; and, in
the case of any other Event of Default, the Administrative Agent may, and upon
the written request of the Required Lenders shall, terminate the Commitments
hereunder and declare all or any portion of the Obligations to be due and
payable, and/or demand that the Borrower immediately deliver to the
Administrative Agent Cash and Cash Equivalents in an amount equal to 102% of
the outstanding LC Obligations whereupon the Commitments shall terminate and
all or such portion of the Obligations shall become immediately due and
payable, and/or demand that the Borrower immediately deliver to the
Administrative Agent Cash and Cash Equivalents in an amount equal to the
outstanding LC Obligations all without further notice of any kind. The
Administrative Agent shall promptly advise the Borrower of any such declaration
but failure to do so shall not impair the effect of such declaration.
Notwithstanding the foregoing, the effect as an Event of Default of any event
described in Section 7.1(a) may not be waived except by consent of all of the
-------------
Lenders and acknowledged by the Administrative Agent in writing.
SECTION 7.3 LC Collateral Account.
---------------------
(a) If at any time after the Borrower has been required to deposit
amounts in the LC Collateral Account pursuant to Section 2.13, the
------------
Administrative Agent determines that the amount on deposit in the LC Collateral
Account is less than the amount of the outstanding LC Obligations at such time,
the Administrative Agent may demand the Borrower to deposit, and the Borrower
shall, upon such demand and without any further notice, pay to the
Administrative Agent for deposit in the LC Collateral Account, funds necessary
to cure any shortfall.
(b) The Administrative Agent may, at any time or from time to time,
after funds are deposited in the LC Collateral Account apply such funds to the
payment of the Obligations then due and payable by the Borrower to the Fronting
Bank, the Lenders or the Administrative Agent under the Credit Documents.
(c) Neither the Borrower nor any Person claiming on behalf of or
through the Borrower shall have any right to withdraw any of the funds held in
the LC Collateral Account until all of the Obligations have been indefeasibly
paid in full, the Commitments have been terminated and all Letters of Credit
have been terminated or expired, at which time any funds remaining in the LC
Collateral Account shall be returned by the Administrative Agent to the
Borrower.
46
ARTICLE VIII.
CONDITIONS
SECTION 8.1 Conditions to Occurrence of the Amendment Effective Date.
--------------------------------------------------------
The occurrence of the Amendment Effective Date shall be subject to receipt by
the Administrative Agent of all of the following, each duly executed and dated
the Amendment Effective Date (or such earlier date as shall be satisfactory to
the Administrative Agent), each in form and substance satisfactory to the
Administrative Agent (with sufficient copies for each Lender):
(a) This Agreement. This Agreement executed by each party thereto.
--------------
(b) [INTENTIONALLY OMITTED]
(c) Organization Documents, Resolutions. Certified copies of the
----------------------------------
Organization Documents of the Borrower (or a statement that such Organization
Documents have not been amended since February 25, 2000) and resolutions of the
Board of Directors of the Borrower authorizing the execution, delivery and
performance, respectively, of those documents and matters required of it with
respect to this Agreement or the other Credit Documents.
(d) Incumbency and Signatures. A certificate of an Authorized Officer
-------------------------
certifying the names of the individual or individuals authorized to sign this
Agreement and the other Credit Documents, together with a sample of the true
signature of each such individual. (The Lenders may conclusively rely on each
such certificate until formally advised by a like certificate of any changes
therein.)
(e) Opinion of Counsel. An opinion of counsel of the Borrower,
------------------
addressed to the Administrative Agent, the Fronting Bank, the LC Administrator
and the Lenders from each of (i) Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., New
York counsel to the Borrower and (ii) ▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇, Bermuda
counsel to the Borrower, each in form and substance satisfactory to the
Administrative Agent.
(f) Certificate. Certificate of an Executive Officer dated as of the
-----------
Amendment Effective Date stating that: (i) that there are no material insurance
regulatory proceedings pending or threatened against the Borrower in any
jurisdiction; (ii) no Default or Event of Default exists or will result from
the initial Credit Extension; and (iii) there has occurred since December 31,
2000, no event or circumstance that has resulted or in the judgement of such
Executive Officer could reasonably be expected to result in a Material Adverse
Effect.
(g) Other. Such other documents as the Administrative Agent may
-----
reasonably request.
SECTION 8.2 Conditions to All Credit Extensions. The obligation of the
-----------------------------------
Lenders to make all Credit Extensions shall be subject to the prior or
concurrent satisfaction (in form and substance satisfactory to the
Administrative Agent) of each of the conditions precedent set forth below:
47
(a) LC Application/Borrowing Base Certificate. The Borrower shall have
-----------------------------------------
delivered a LC Application and a Borrowing Base Certificate calculated for both
Tranche A and Tranche B as of the most recent Business Day.
(b) No Default. No Default shall have occurred and be continuing or
----------
will result from the making of the Credit Extensions and no Default shall have
occurred and be continuing under the Credit Documents or will result from the
making of the Credit Extensions.
(c) Warranties and Representations. (i) All warranties and
------------------------------
representations contained in this Agreement (other than Section 4.2 except in
-----------
the case of the initial Credit Extension) shall be true and correct in all
material respects as of the date of any Credit Extension, with the same effect
as though made on the date of and concurrently with the making of such Credit
Extension (except where such representation speaks as of specified date) and
(ii) all covenants contained herein and in such documents to be performed by
each of the parties thereto (other than the Administrative Agent or the
Lenders) prior to the date of any Credit Extension shall have been performed.
(d) Litigation. (i) No litigation (including, without limitation,
----------
derivative actions), arbitration, governmental investigation or proceeding or
inquiry shall be, on the date of any Credit Extension, pending, or to the
knowledge of the Borrower, threatened which seeks to enjoin or otherwise
prevent the consummation of, or to recover any damages or to obtain material
relief as a result of, the transactions contemplated hereunder or, in the
reasonable opinion of the Required Lenders, could be reasonably expected to be
materially adverse to any of the parties to this Agreement and which is not
Ordinary Course Litigation, and (ii) in the reasonable opinion of the Required
Lenders, no material adverse development shall have occurred in any litigation
(including, without limitation, derivative actions), arbitration, government
investigation or proceeding or inquiry disclosed in Schedule 4.2 which is
------------
likely to have a Material Adverse Effect.
(e) Fees. The fees referred to in Section 2.14 which are due and
---- ------------
payable on or prior to the Amendment Effective Date or the date of any Credit
Extension shall have been paid to the Administrative Agent, where applicable,
for the benefit of the Lenders.
(f) Material Adverse Effect. There shall not have occurred any event
-----------------------
which, in the reasonable judgment of the Required Lenders, constitutes a
Material Adverse Effect.
48
ARTICLE IX.
THE ADMINISTRATIVE AGENT
SECTION 9.1 Appointment and Authorization.
-----------------------------
(a) Each Lender hereby irrevocably (subject to Section 9.9) appoints,
-----------
designates and authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Credit Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Credit Document, together
with such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Credit Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other
Credit Document or otherwise exist against the Administrative Agent.
(b) The LC Administrator shall act on behalf of the Lenders with
respect to any Letters of Credit issued by the Lenders and the documents
associated therewith and shall have all of the benefit and immunities provided
to the Agent in this Article IX with respect to any acts taken or omissions
----------
suffered by such LC Administrator in connection with Letters of Credit issued
by the Lenders or proposed to be issued by the Lenders and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully
as if the term "Administrative Agent", as used in this Article IX, included the
----------
LC Administrator with respect to such acts or omissions.
SECTION 9.2 Delegation of Duties. The Administrative Agent may execute
--------------------
any of its duties under this Agreement or any other Credit Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
SECTION 9.3 Liability of Administrative Agent. None of the
---------------------------------
Agent-Related Persons shall (a) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Credit Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct), or (b) be responsible in any manner to
any of the Lenders for any recital, statement, representation or warranty made
by the Borrower or Affiliate of the Borrower, or any officer thereof, contained
in this Agreement or in any other Credit Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Credit Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Credit Document,
or for any failure of the Borrower or any other party to any Credit Document to
perform its obligations hereunder or thereunder. No Administrative
Agent-Related Person shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Credit Document, or
to inspect the properties, books or records of the Borrower or any of the
Borrower's Affiliates.
49
SECTION 9.4 Reliance by Administrative Agent.
--------------------------------
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Lenders (and all the Lenders if required pursuant to Section 10.1) as
it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Credit
Document in accordance with a request or consent of the Required Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 8.1, each Lender that has executed this Agreement shall be
-----------
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lender.
SECTION 9.5 Notice of Default. The Administrative Agent shall not be
-----------------
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of LC Advances,
interest and fees required to be paid to the Administrative Agent for the
account of the LC Administrator, the Fronting Bank or the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Required Lenders in accordance with
Article VII; provided, however, that unless and until the Administrative Agent
----------- -------- -------
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of the Lenders.
SECTION 9.6 Credit Decision. Each Lender acknowledges that none of the
---------------
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Administrative Agent hereinafter taken, including any review of
the affairs of the Borrower, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents
to the Administrative Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower, and all applicable bank regulatory laws
relating to the transactions contemplated
50
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Credit Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons.
SECTION 9.7 Indemnification. Whether or not the transactions
---------------
contemplated hereby are consummated, the Lenders shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
-------- -------
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Credit Document, or any document contemplated by or referred to herein,
to the extent that the Administrative Agent is not reimbursed for such expenses
by or on behalf of the Borrower. The undertaking in this Section shall survive
the payment of all Obligations hereunder and the resignation or replacement of
the Administrative Agent.
SECTION 9.8 Administrative Agent in Individual Capacity. BofA and its
-------------------------------------------
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Borrower and its Affiliates as though BofA were not the Administrative
Agent or the LC Administrator hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Borrower or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Borrower) and acknowledge that the Administrative Agent shall be
under no obligation to provide such information to them. With respect to its
Credit Extensions, BofA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Administrative Agent or the LC Administrator, and the terms "Lender" and
"Lenders" include BofA in its individual capacity.
SECTION 9.9 Successor Administrative Agent. The Administrative Agent
------------------------------
may, and at the request of the Required Lenders shall, resign as Administrative
Agent upon 30 days' notice to the Lenders. If the Administrative Agent resigns
under this Agreement, the Required Lenders
51
shall appoint from among the Lenders a successor agent for the Lenders which
successor agent shall be approved by the Borrower. If no successor agent is
appointed prior to the Amendment Effective Date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term "Administrative Agent" shall mean
such successor agent and the retiring Administrative Agent's appointment,
powers and duties as Administrative Agent shall be terminated. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its
---------- ------------- ----
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. Notwithstanding the foregoing, however,
BofA may not be removed as the Administrative Agent unless BofA shall also
simultaneously be replaced as "LC Administrator" hereunder pursuant to
documentation in form and substance reasonably satisfactory to BofA.
SECTION 9.10 Withholding Tax. Each of the Lenders and the
---------------
Administrative Agent (i) represents and warrants that on the date hereof (or,
if later, the date it becomes a party to this Agreement) that under applicable
law and treaties no U.S. withholding tax will be required to be withheld with
respect to any payments to be made by the Borrower hereunder, (ii) agrees to
furnish to the Administrative Agent and the Borrower on or before the first
scheduled payment date after the Amendment Effective Date, a United States
Internal Revenue Service Form W-8BEN and W-9 or Form W-8ECI and W-8, as
appropriate (or successor forms) properly completed and executed and (iii)
agrees to comply with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.
(a) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of the Borrower to such Lender, such Lender agrees to
notify the Administrative Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrower to such Lender. To
the extent of such percentage amount, the Administrative Agent will treat such
Lender's IRS Form 1001 as no longer valid.
(b) If any Lender claiming exemption from United States withholding
tax by filing IRS Form W-8EC1 with the Administrative Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Borrower to such Lender, such Lender agrees to undertake
sole responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest
payment to such Lender an amount equivalent to the applicable withholding tax
after taking into account such reduction. If the
52
forms or other documentation required by Section (a) of this Section are not
delivered to the Administrative Agent, then the Administrative Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this Section
shall survive the payment of all Obligations and the resignation or replacement
of the Administrative Agent.
SECTION 9.11 Co-Agents. None of the Lenders identified on the facing
---------
page or signature pages of this Agreement as a "co-agent" shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders as such. Without limiting the foregoing,
none of the Lenders so identified as a "co-agent" shall have or be deemed to
have any fiduciary relationship with any Lender. Each Lender acknowledges that
it has not relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendments and Waivers. No amendment or waiver of any
----------------------
provision of this Agreement or any other Credit Document, and no consent with
respect to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by the
Administrative Agent at the written request of the Required Lenders) and the
Borrower and acknowledged by the Administrative Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
-------- -------
amendment, or consent shall, unless in writing and signed by all the Lenders
and the Borrower and acknowledged by the Administrative Agent, do any of the
following:
(a) increase or extend the Commitment to issue Letters of Credit or
the Commitment of any Lender (or reinstate any Commitment terminated pursuant
to Section 7.2) or extend the expiry date of any Letter of Credit to a date
after the Final Maturity Date;
(b) postpone or delay any date fixed by this Agreement or any other
Credit Document for any payment of LC Advances, interest, fees or other amounts
due to the Lenders (or any of them) hereunder or under any other Credit
Document;
53
(c) reduce the amount of, or the rate of interest specified herein on,
any Reimbursement Obligation, or any fees or other amounts payable hereunder or
under any other Credit Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the LC Obligations which is required for the Lenders
or any of them to take any action hereunder;
(e) release the Security Agreement or release all or a substantial
part of the Collateral granted thereunder except in accordance with the terms
thereof; or
(f) amend this Section, or any provision herein providing for consent
or other action by all Lenders;
and, provided further, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Administrative Agent in addition to the Required
Lenders or all the Lenders, as the case may be, affect the rights or duties of
the Administrative Agent under this Agreement or any other Credit Document and
no amendment of any provision relating to the LC Administrator shall be
effective without the written consent of the LC Administrator. Notwithstanding
the foregoing the Fee Letter may be amended, or rights of privileges thereunder
waived, in writing, executed by the parties thereto.
SECTION 10.2 Notices. All notices, requests and other communications
-------
shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter transmitted by
the Borrower by facsimile (i) shall be immediately confirmed by a telephone
call to the recipient at the number specified on Schedule 10.2, and (ii) shall
-------------
be followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
Schedule 10.2; or, as directed to the Borrower or the Administrative Agent, to
-------------
such other address as shall be designated by such party in a written notice to
the other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Borrower and the
Administrative Agent.
(a) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or, if delivered, upon delivery, except that notices
pursuant to Article II or IX shall not be effective until actually received by
---------- --
the Administrative Agent and/or the LC Administrator, as applicable.
(b) Any agreement of the Administrative Agent, the LC Administrator
and the Lenders herein to receive certain notices by telephone or facsimile is
solely for the convenience and at the request of the Borrower. The
Administrative Agent, the LC Administrator and the Lenders shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by the
Borrower to give such notice and the Administrative Agent, the LC Administrator
and the Lenders shall not have any liability to the Borrower or other Person on
account of any action taken or not taken by the Administrative Agent, the LC
Administrator or the Lenders in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Obligations shall not be
affected in any way or to any extent by any failure by the Administrative
54
Agent, the LC Administrator and the Lenders to receive written confirmation of
any telephonic or facsimile notice or the receipt by the Administrative Agent,
the LC Administrator and the Lenders of a confirmation which is at variance
with the terms understood by the Administrative Agent, the LC Administrator and
the Lenders to be contained in the telephonic or facsimile notice.
SECTION 10.3 No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of the Administrative Agent, the LC
Administrator or any Lender, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
SECTION 10.4 Costs and Expenses. The Borrower shall:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Administrative
Agent and LC Administrator) within ten Business Days after demand for all costs
and expenses incurred by BofA (including in its capacity as Administrative
Agent and LC Administrator), in connection with the negotiation, preparation,
delivery, syndication, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Credit Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by BofA (including in its capacity as Administrative Agent) with
respect thereto; and
(b) pay or reimburse the Administrative Agent, the Lenders and the LC
Administrator within ten Business Days after demand for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Credit Document during the existence of an Event of
Default or after acceleration of the Obligations (including in connection with
any "workout" or restructuring regarding the Obligations, and including in any
insolvency proceeding or appellate proceeding) provided that the parties shall
to the extent of common interests use a single counsel.
SECTION 10.5 Indemnity. Whether or not the transactions contemplated
--------
hereby are consummated, the Borrower shall indemnify and hold the Agent-Related
Persons and each Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified
-----------
Person") harmless from and against any and all liabilities, obligations,
------
losses, damages, penalties, actions, judgments, suits, costs, charges, expenses
and disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time (including at any time following repayment of the
Obligations and the termination, resignation or replacement of the
Administrative Agent or replacement of any Lender) be imposed on, incurred by
or asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising
55
out of this Agreement or the Credit Extensions or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
----------------------- --------
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence
or willful misconduct of such Indemnified Person. The agreements in this
Section shall survive payment of all other Obligations.
SECTION 10.6 Payments Set Aside. To the extent that the Borrower makes
------------------
a payment to the Administrative Agent, the Fronting Bank or the Lenders, or the
Administrative Agent, the Fronting Bank or the Lenders exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Administrative Agent, the Fronting Bank or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Lender severally agrees to pay to
the Administrative Agent upon demand its Percentage of any amount so recovered
from or repaid by the Administrative Agent.
SECTION 10.7 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent, the Fronting
Bank and each Lender.
SECTION 10.8 Assignments, Participations, etc.
--------------------------------
(a) Any Lender may, with the written consent of the Borrower (at all
times other than during the existence of an Event of Default) and the
Administrative Agent, which consents shall not be unreasonably withheld, and
the Fronting Bank, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Borrower or the
Administrative Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible Assignee that is an Affiliate of such
Lender) (each an "Assignee") all, or any ratable part of all, of the LC
--------
Obligations, the Commitments and the other rights and obligations of such
Lender hereunder, provided, however, that (w) the aggregate principal amount of
-------- -------
the Commitment assigned by any Lender to someone other than another Lender
shall be in a minimum amount of $5,000,000 (or if less, the entire Commitment
then held by such Lender), (x) after giving effect to any such assignment by a
Lender, the aggregate amount of the Commitments and/or LC Obligations held by
such assigning Lender is at least $5,000,000 (unless such Lender has assigned
the entire Commitment and LC Obligations then held by it), (y) after giving
effect to any such assignment by a Lender, the Assignee Percentage under the
Tranche A Commitment and Tranche B Commitment is the same and the Percentage of
the assignor Lender under the Tranche A Commitment and the Tranche B Commitment
is the same, and (z) the Assignee provides the Administrative Agent and the
Borrower with the form specified in Section 9.10. The Borrower and the
Administrative Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee
56
until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Administrative Agent by such
Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered
to the Borrower and the Administrative Agent an Assignment and Acceptance in
the form of Exhibit C ("Assignment and Acceptance") and (iii) the assignor
--------- ------------------------
Lender or Assignee has paid to the Administrative Agent a processing fee in the
amount of $3,500.
(b) From and after the date that the Administrative Agent notifies the
assignor Lender that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Credit Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Credit
Documents have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Documents.
(c) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
--- -----
(d) Any Lender may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower (a "Participant") participating
-----------
interests in any LC Obligations, the Commitment of that Lender and the other
interests of that Lender (the "originating Lender") hereunder and under the
-----------------
other Credit Documents; provided, however, that (i) the originating Lender's
-------- ------
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Borrower and the Administrative Agent shall continue to deal solely
and directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Credit
Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Credit
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Lenders as described in the first proviso to Section
----- ------- -------
10.1. In the case of any such participation, the Participant shall be entitled
----
to the benefit of Sections 3.1, 3.3 and 10.5 to the extent the Lender selling
------------ --- ----
such participation would be so entitled as though it were also a Lender
hereunder, and if amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement. All
participations shall be pro rata among such Lender's Tranche A Commitment and
Tranche B Commitment.
(e) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this
57
Agreement and any LC Obligation held by it in favor of any Federal Reserve
Lender in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31
CFR [double sect]203.14, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.
SECTION 10.9 Confidentiality. Each Lender agrees to take and to cause its
---------------
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Borrower and provided to it by the Borrower, or by the
Administrative Agent on such Borrower's behalf, under this Agreement or any
other Credit Document, and neither it nor any of its Affiliates shall use any
such information other than in connection with or in enforcement of this
Agreement and the other Credit Documents or in connection with other business
now or hereafter existing or contemplated with the Borrower; except to the
extent such information (a) was or becomes generally available to the public
other than as a result of disclosure by the Lender, or (b) was or becomes
available on a non-confidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Lender; provided, however, that any Lender may disclose
-------- --------
such information (i) at the request or pursuant to any requirement of any
Governmental Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (ii) pursuant to subpoena or
other court process; (iii) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (iv) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent, any Lender or their respective Affiliates may be party;
(v) to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Credit Document; (vi) to such Lender's
independent auditors and other professional advisors; (vii) to any Participant
or Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Lenders
hereunder; (viii) as to any Lender or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Borrower is party or is deemed party with such Lender or such
Affiliate; and (ix) to its Affiliates which are either such Lender's parent or
it or its parent's wholly owned Subsidiary or, with the prior written consent of
the Borrower which shall not be unreasonably withheld, its other Affiliates.
SECTION 10.10 Set-off. In addition to any rights and remedies of the
-------
Lenders provided by law, if an Event of Default exists or the Obligations have
been accelerated, the Fronting Bank and each Lender is authorized at any time
and from time to time, without prior notice to the Borrower, any such notice
being waived by the Borrower to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held by, and other indebtedness at any time owing by, the
Fronting Bank and such Lender to or for the credit or the account of the
Borrower against any and all Obligations owing to the Fronting Bank and such
Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent the Fronting Bank and such Lender shall have made demand
under this Agreement or any Credit Document and although such Obligations may be
contingent or unmatured. The Fronting Bank and each Lender agree promptly to
notify the Borrower and the Administrative Agent after any such set-off and
application made by such Person; provided, however, that the failure to give
-------- -------
such notice shall not affect the validity of such set-off and application.
58
SECTION 10.11 Notification of Addresses, Lending Offices, Etc. Each Lender
------------------------------------------------
shall notify the Administrative Agent in writing of any changes in the address
to which notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
SECTION 10.12 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
SECTION 10.13 Severability. The illegality or unenforceability of any
------------
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
SECTION 10.14 No Third Parties Benefitted. This Agreement is made and
---------------------------
entered into for the sole protection and legal benefit of the Borrower, the LC
Administrator, the Fronting Bank, the Lenders, the Administrative Agent and the
Agent-Related Persons, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Credit Documents.
SECTION 10.15 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK PROVIDED THAT THE ADMINISTRATIVE AGENT, THE LC
ADMINISTRATOR AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT, THE
FRONTING BANK, THE LC ADMINISTRATOR AND THE LENDERS CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
OF THE BORROWER, THE ADMINISTRATIVE AGENT, THE FRONTING BANK, THE LC
ADMINISTRATOR AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
---------
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
----------
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE BORROWER, THE ADMINISTRATIVE AGENT, THE FRONTING BANK, THE
LC ADMINISTRATOR AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS AND IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS
59
BY REGISTERED MAIL, POSTAGE PREPAID OR BY ANY OTHER MEANS PERMITTED BY NEW YORK
OR FEDERAL LAW.
SECTION 10.16 Waiver of Jury Trial. THE BORROWER, THE LC ADMINISTRATOR, THE
--------------------
FRONTING BANK, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE LC
ADMINISTRATOR, THE FRONTING BANK, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
CREDIT DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
SECTION 10.17 Currency Indemnity. If, for the purposes of obtaining
------------------
judgment in any court in any jurisdiction with respect to any Credit Document,
it becomes necessary to convert into the currency of such jurisdiction (the
"Judgment Currency") any amount due under any Credit Document in any currency
-------------------
other than the Judgment Currency (the "Currency Due"), then conversion shall be
-------------
made at the rate of exchange prevailing on the Business Day before the day on
which judgment is given. For this purpose, "rate of exchange" means the rate at
which the Administrative Agent is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency in accordance with its normal practice
at its main branch in San Francisco, California. In the event that there is a
change in the rate of exchange prevailing between the Business Day before the
day on which the judgment is given and the date of payment of the amount due,
the Borrower will, on the day of payment, pay such additional amount, if any,
or be entitled to receive reimbursement of such amount, if any, as may be
necessary to ensure that the amount paid on such date is the amount in the
Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount then due under any Credit Document in the
Currency Due. If the amount of the Currency Due which the Administrative Agent
is so able to purchase is less than the amount of the Currency Due originally
due to it, the Borrower shall indemnify and save the Administrative Agent
harmless from and against loss or damage arising as a result of such
deficiency. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in any Credit Document, shall
give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Administrative Agent from time to
time and shall continue in full force and effect notwithstanding any judgment
or order for a liquidated sum in respect of an amount due under any Credit
Document or under any judgment or order.
60
SECTION 10.18 Service of Process. On or prior to the Amendment Effective
------------------
Date, the Borrower shall appoint CT Corporation System (the "Process Agent"),
with an office on the date hereof at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, as its agent to receive on its behalf and its property service
of copies of the summons and complaints and any other process which may be
served in any such action or proceeding, provided that a copy of such process
is also mailed by registered or certified mail, postage prepaid, to the
Borrower at its address specified pursuant to Section 10.2. Such service may be
------------
made by mailing or delivering a copy of such process to the Borrower in care of
the Process Agent at the Process Agent's above address, and the Borrower hereby
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. The Borrower agrees to indemnify the Process Agent in connection
with all matters relating to its appointment as agent of the Borrower for such
purposes, to enter into any agreement relating to such appointment which such
Process Agent may customarily require, and to pay such Process Agent's
customary fees upon demand. As an alternative method of service, the Borrower
also irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to the Borrower
at its address specified pursuant to Section 10.2. Nothing in this Section
------------- -------
10.18 shall affect the right of the Administrative Agent or any Lender to serve
-----
legal process in any other manner permitted by law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against
the Borrower, or any of its properties in the courts of any other jurisdiction.
SECTION 10.19 Entire Agreement. This Agreement, together with the other
----------------
Credit Documents, embodies the entire agreement and understanding among the
Borrower, the LC Administrator, the Fronting Bank, the Lenders and the
Administrative Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
61
MAX RE LTD.
By:______________________________________
Title:___________________________________
S-1
BANK OF AMERICA, NATIONAL
ASSOCIATION, as Administrative Agent, LC
Administrator, Fronting Bank and Lender
By:_____________________________________
Title:__________________________________
S-2
FLEET NATIONAL BANK
By:_____________________________________
Title:__________________________________
S-3
CITIBANK, N.A.
By:_____________________________________
Title:__________________________________
S-4
AMENDMENT AGREEMENT
This Amendment Agreement (this "Agreement") is entered into as of May
11, 2001, by and among Max Re Ltd., a Bermuda company (the "Borrower"), Fleet
National Bank, Citibank, N.A. (together with Fleet National Bank and Bank of
America in its capacity as lender, the "Lenders"), and Bank of America, National
Association, in its respective capacities as lender, fronting bank, letter of
credit administrator and administrative agent for the Lenders (the "Agent").
RECITALS
WHEREAS, the Borrower, the Lenders and the Agent are parties to an
Amended and Restated Letter of Credit Reimbursement Agreement, dated as of April
3, 2001 (the "LC Agreement") pursuant to which the Lenders and Bank of America
maintain a letter of credit facility for the benefit of the Borrower
(capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the LC Agreement);
WHEREAS, the Borrower wishes to enter into one or more additional
letter of credit facilities with third parties (the "Other Agreements"); and
WHEREAS, the parties wish to amend the LC Agreement to make clear that
the execution, delivery and performance of the Other Agreements by the Borrower
will not violate certain provisions contained in the LC Agreement;
NOW, THEREFORE, in consideration of the mutual covenants of the
parties, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereby agree as
follows:
1. Debt Covenants. Section 6.3 of the LC Agreement is hereby
---------------
amended by deleting such section in its entirety and substituting the following
in lieu thereof:
"SECTION 6.3 Debt. Not, and not permit any Subsidiary to,
incur any Debt other than (a) Debt under this Agreement; (b) Purchase
Money Debt provided the aggregate principal amount outstanding at any
time does not exceed $500,000; (c) Debt pursuant to Capitalized Leases
provided such Leases do not cover any property other than property
acquired in connection therewith and the aggregate principal amount of
all such Debt outstanding at any time does not exceed $1,500,000; (d)
Hedging Obligations entered into in the ordinary course of business in
order to hedge currency, commodity or interest rate risks, and not for
purposes of speculation; (e) Debt for standby letters of credit which
have been, or may be from time to time in the future, issued to
insurance or reinsurance cedents in the ordinary course of business;
and (f) Debt not included in paragraphs (a) through (e) which does not
exceed at any time, in the aggregate, $1,000,000."
2. Miscellaneous.
(a) Successors. This Agreement shall be binding upon the
parties hereto and their successors and permitted assigns.
1
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
giving effect to principles of conflict of law thereunder.
(b) Severability. The provisions of this Agreement shall, to
the greatest extent possible, be interpreted in such a manner as to
comply with applicable law, but if any provision hereof is,
notwithstanding such interpretation, determined to be invalid, void or
unenforceable, the remaining provisions of this Agreement shall not be
affected thereby but will remain in full force and effect and binding
upon the parties hereto.
(c) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
[Signatures follow on the next page]
2
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MAX RE LTD.
By:
-----------------------------------------
Name:
Title:
BANK OF AMERICA, NATIONAL ASSOCIATION, as
lender, fronting bank, administrative agent,
and letter of credit administrator
By:
-----------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By:
-----------------------------------------
Name:
Title:
CITIBANK, N.A.
By:
-----------------------------------------
Name:
Title:
3
SECOND AMENDMENT AGREEMENT
--------------------------
This Second Amendment Agreement (the "Amendment") is entered into as of
December 21, 2001 among Max Re Ltd., a Bermuda company, ( the "Borrower"), the
Lenders listed on the signature pages hereto (the "Lenders") and Bank of
America, N.A., in its capacity as administrative agent (the "Agent"), Fronting
Bank and Letter of Credit Administrator.
R E C I T A L S
- - - - - - - -
WHEREAS, the Borrower, Bank of America, Fleet National Bank and
Citibank, N.A. ("Existing Lenders") and the Agent are parties to the Amended and
Restated Letter of Credit Reimbursement Agreement, dated as of April 3, 2001, as
amended by Amendment Agreement, dated as of May 11, 2001 (the "LC Agreement")
pursuant to which the Existing Lenders and Bank of America maintain a letter of
credit facility for the benefit of the Borrower;
WHEREAS, pursuant to Section 2.18 of the LC Agreement, the Borrower has
requested that the Commitments be increased to $375,000,000, and ING Bank N.V.,
London Branch ("ING") desires to become a Lender under the LC Agreement in
connection with such increased Commitment; and
WHEREAS, the Borrower desires to reallocate the Commitments of the
Existing Lenders under the Tranche A Commitment and Tranche B Commitment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
SECTION 1 LC AGREEMENT DEFINITIONS. Capitalized terms used herein that
------------------------
are defined in the LC Agreement shall have the same meaning when used herein
unless otherwise defined herein.
SECTION 2 AMENDMENTS TO LC AGREEMENT. Effective on, and subject to the
--------------------------
occurrence of the Second Amendment Effective Date (as defined below), the LC
Agreement shall be as amended as follows:
2.1 Amendment to Section 1. Section 1.1 of the LC Agreement is amended
----------------------
by adding the following definition in the proper alphabetical order:
(a) Participating Bank means ING Bank N.V., London Branch and each
------------------
other Lender as the Fronting Bank may from time to time agree may
become a Participating Bank.
2.2 Amendments to Sections 2.1, 2.2 and 2.3. Sections 2.1, 2.2 and 2.3
---------------------------------------
of the LC Agreement are amended in their entirety to read as follows:
SECTION 2.1 Letter of Credit Commitment.
---------------------------
(a) Upon and subject to the terms and conditions
hereof, (i) the Fronting Bank hereby agrees to issue Letters of Credit
at the request of and for the account of the Borrower from time to time
before the Commitment Termination Date, (ii) each Issuer hereby agrees
to issue Letters of Credit at the request of and for the account of the
Borrower from time to time before the Commitment Termination Date in
such Issuer's Percentage of such aggregate stated amounts of Letters of
Credit as the Borrower may from time to time request, (iii) each Lender
hereby agrees to purchase Risk Participations in the obligations of the
Fronting Bank under Letters of Credit Issued by the Fronting Bank, and
(iv) with respect to Letters of Credit Issued by the Issuers severally
based on their respective Percentages, the Fronting Bank shall be
severally (and not jointly) liable for an amount equal to its
Percentage plus each Participating Bank's Percentage and each
Participating Bank hereby agrees to purchase Risk Participations in the
obligations of the Fronting Bank under any such Letter of Credit in an
amount equal to such Participating Bank's Percentage; provided that no
Issuer shall be obligated to issue (and no Participating Bank shall be
obligated to participate in) any Letter of Credit if as of the date of
issuance of such Letter of Credit (A) in the case of a Tranche A Letter
of Credit, the Tranche A LC Obligations outstanding shall exceed the
lesser of (x) the combined Tranche A Commitments and (y) the Tranche A
Borrowing Base or (B) with respect to any Tranche B Letter of Credit,
the aggregate amount of LC Obligations outstanding shall exceed the
lesser of (x) the combined Tranche B Commitments and (y) the Tranche B
Borrowing Base.
(b) No Issuer shall be under any obligation to
Issue any Letter of Credit and no Participating Bank shall have any
obligation to participate in any Letter of Credit if:
(i) such issuance would be prohibited under
Section 3.2;
-----------
(ii) the Administrative Agent or LC Administrator
has received written notice from the Fronting Bank or the
Required Lenders, as the case may be, or the Borrower, on or
prior to the Business Day prior to the requested date of
Issuance of such Letter of Credit, that one or more of the
applicable conditions contained in Section 8.2 is not then
-----------
satisfied;
(iii) the expiry date of such Letter of Credit is
less than five Business Days prior to the Final Maturity Date,
unless all of the Lenders have approved such expiry date in
writing;
(iv) in the case of Letters of Credit issued by the
Lenders (other than a Participating Bank), such Letter of
Credit is not substantially in the form of Exhibit E hereto,
or is not
2
otherwise in form and substance reasonably acceptable to the
Administrative Agent, the LC Administrator and the Fronting
Bank; provided that the Administrative Agent and the LC
Administrator can and will, agree to reasonable changes to
such form, not adverse to the interests of the Lenders,
requested by applicable insurance regulators; or
(v) such Letter of Credit is denominated in a
currency other than Dollars.
(c) The Letters of Credit Issued by and the Risk
Participations of each Lender and the reimbursement obligations with
respect thereto shall be evidenced by one or more accounts or records
maintained by such Lender in the ordinary course of business. The
accounts or records maintained by the Administrative Agent shall be
conclusive (absent manifest error) as to the amount of the LC Advances
made to the Borrower and the Letters of Credit Issued for the account
of the Borrower, and the amounts of principal, interest and fees owing
hereunder. Any failure so to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to any LC Advance or any
Letter of Credit.
SECTION 2.2 Issuance, Amendment and Renewal of Letters of
---------------------------------------------
Credit
------
(a) Each Letter of Credit shall be Issued upon the
irrevocable written request of the Borrower received by the LC
Administrator at least 5 Business Days (or such shorter time as the
Administrative Agent, the LC Administrator and the Issuer may agree in
a particular instance in their sole discretion) prior to the proposed
date of issuance. The LC Administrator shall promptly advise the
Administrative Agent of any such request. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed
immediately in an original writing, in the form of an LC Application,
and shall specify in form and detail satisfactory to the LC
Administrator: (i) the proposed date of issuance of the Letter of
Credit (which shall be a Business Day); (ii) the face amount of the
Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv)
the name and address of the Beneficiary thereof; (v) the documents to
be presented by the Beneficiary of the Letter of Credit in case of any
drawing thereunder; (vi) the full text of any certificate to be
presented by the Beneficiary in case of any drawing thereunder; (vii)
whether such Letter of Credit is to be issued by the Fronting Bank or
by the Issuers (it being agreed that in the event an Issuer advises the
LC Administrator that such Issuer is unable (due to regulatory
restrictions or other legal impediments) to Issue a Letter of Credit
because of its relationship to the Beneficiary, such Letter of Credit
will be issued by the Fronting Bank); (viii) whether
3
such Letter of Credit is to be a Tranche A Letter of Credit or a
Tranche B Letter of Credit; and (ix) such other matters as the LC
Administrator may require. The LC Administrator is hereby authorized
to execute and deliver each Letter of Credit to be Issued by the
Issuers on behalf of the Issuers provided, that at the request of the
Borrower, such Letter of Credit will be executed by each of the
Issuers. In the event of a conflict between the provisions of this
Agreement and the provisions of an LC Application, this Agreement
shall govern. The LC Administrator shall use each Issuer's Percentage
as its "Commitment Share" under each Letter of Credit Issued by the
Issuers provided that the Fronting Bank shall be severally (and not
jointly) liable for an amount equal to its Percentage plus the
Percentage of each Participating Bank. The LC Administrator shall not
amend any Letter of Credit Issued by the Issuers to change the
"Commitment Shares" or add or delete an Issuer liable thereunder
unless such amendment is done in connection with an assignment
pursuant to Section 10.8 or in connection with the addition of an
Issuer or a Participating Bank pursuant to Section 2.18.
(b) From time to time while a Letter of Credit is
outstanding and prior to the Commitment Termination Date, the Issuer
will, upon the written request of the Borrower received by the LC
Administrator at least 5 Business Days (or such shorter time as the
Administrative Agent, the LC Administrator and the Issuer may agree in
a particular instance in their sole discretion) prior to the proposed
date of amendment, amend any Letter of Credit Issued by them. The LC
Administrator shall promptly advise the Administrative Agent of any
such request. Each such request for amendment of a Letter of Credit
shall be made by facsimile, confirmed immediately in an original
writing, made in the form of an LC Amendment Application and shall
specify in form and detail satisfactory to the LC Administrator: (i)
the Letter of Credit to be amended; (ii) the proposed date of
amendment of such Letter of Credit (which shall be a Business Day);
(iii) the nature of the proposed amendment; and (iv) such other
matters as the LC Administrator may require. No Issuer shall have any
obligation to amend any Letter of Credit if: (A) such Issuer would
have not been obligated at such time to Issue or participate in such
Letter of Credit in its amended form under the terms of this
Agreement; or (B) the Beneficiary of such Letter of Credit does not
accept the proposed amendment to such Letter of Credit. The Issuers
and the Fronting Bank agree, upon the request of the Borrower and as
long as no Event of Default or Default shall have occurred and be
continuing, to amend any Letter of Credit to extend the expiry date
thereof to a date not later than the Final Maturity Date. The LC
Administrator is hereby authorized to execute and deliver each
amendment to a Letter of Credit Issued by the Issuers on behalf of the
Issuers provided that, upon request of the Borrower, such amendment
will be executed by each Issuers.
4
(c) The Administrative Agent shall promptly notify
each Lender of the receipt of a written request from the Borrower for
the issuance of or an amendment to a Letter of Credit and, with respect
to the issuance of or Risk Participation in a Letter of Credit, the
amount of such Lender's share of such Letter of Credit which shall
equal its Percentage thereof. In addition, at least two Business Days
prior to the issuance or amendment of any Letter of Credit, the
Administrative Agent will confirm to the Lenders (by telephone or in
writing) that the Administrative Agent has received a copy of the LC
Application or LC Amendment Application from the Borrower.
(d) With respect to a request to Issue a Letter of
Credit, unless the Administrative Agent has received, on or before the
Business Day immediately preceding the date on which such Letter of
Credit will be Issued, (A) notice from the Fronting Bank or the
Required Lenders, as the case may be, or the Borrower directing the
Administrative Agent not to permit the issuance of such Letter of
Credit because such issuance is not then permitted under Section 2.1(a)
--------------
as a result of the limitations set forth therein or (B) a notice
described in Section 2.1(b)(ii), then, subject to the terms and
----------
conditions hereof, the LC Administrator shall, on the requested date,
cause a Letter of Credit to be Issued by the Fronting Bank or by the
Issuers in accordance with their Percentages (provided that the
Fronting Bank shall be severally (and not jointly) liable for an amount
equal to its Percentage plus the Percentage of each Participating
Bank), as the case may be, for the account of the Borrower in
accordance with the LC Administrator's usual and customary business
practices.
(e) The LC Administrator may, at its election (or at
the direction of the Administrative Agent, the Fronting Bank or the
Required Lenders, as the case may be), deliver any notices of
termination or other communications to any Beneficiary or transferee,
and take any other action as necessary or appropriate, at any time and
from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the five Business Days prior to the
Final Maturity Date.
(f) This Agreement shall control in the event of any
conflict with any LC Related Document (other than any Letter of
Credit).
(g) The LC Administrator, concurrently or promptly
following the delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to a Beneficiary, shall send to the
Administrative Agent and the Lenders a true and complete copy of each
such Letter of Credit or amendment to or renewal of a Letter of Credit.
After giving effect to the Issuance of any Letter of Credit, there
shall be no more than 25 Letters of Credit outstanding.
SECTION 2.3 Drawings and Reimbursements.
---------------------------
5
(a) With respect to each Letter of Credit for which
the LC Administrator receives a request for a drawing which is in form
and substance reasonably satisfactory to the LC Administrator (a
"Drawing Request"), if such Drawing Request is received prior to 10:00
a.m (Chicago time) on any Business Day, such Business Day shall be the
"Drawing Request Date" and if such Drawing Request is received after
10:00 a.m (Chicago time) on any Business Day, the following Business
Day shall be the "Drawing Request Date." Upon receiving a Drawing
Request, the LC Administrator shall promptly notify the Borrower of
such Drawing Request (which notice may be oral if immediately confirmed
in writing (including by facsimile)) and upon receipt of such
notification, the Borrower shall promptly reimburse the Administrative
Agent on behalf of the Issuer for the amount of such drawing by
delivering to the LC Administrator in immediately available funds the
amount of the Drawing Request. Nothing herein stated shall be deemed a
waiver by the Lenders of the obligation of the Borrower to make such
prompt reimbursement. To the extent that funds are received by the LC
Administrator prior to 3:00 p.m. (Chicago time) on the first Business
Day after the Drawing Request Date, the LC Administrator shall
promptly, on behalf of the Issuer, make an equivalent amount available
to the Beneficiary of the related Letter of Credit on such first
Business Day after the Drawing Request Date and shall reimburse itself
for such amount with the funds provided by the Borrower.
(b) With respect to any Drawing Request, if
immediately available funds are not received by the LC Administrator
from the Borrower prior to 3:00 p.m. (Chicago time) on the first
Business Day after the Drawing Request Date in the amount of such
Drawing Request, the LC Administrator shall promptly notify the
Administrative Agent and the Administrative Agent shall notify each
Lender on the first Business Day after the Drawing Request Date of such
Drawing Request and such Lender's share of such Drawing Request (which
shall be an amount equal to (i) such Lender's Percentage multiplied by
the lesser of (ii)(A) the maximum amount available to be drawn under
such Letter of Credit and (B) the amount of such drawing which was not
reimbursed by the Borrower pursuant to Section 2.3(a)) and the Borrower
shall be deemed to have requested an LC Borrowing in an amount equal to
the amount of such drawing which was not reimbursed by the Borrower
pursuant to Section.3(a). Any notice given by the Administrative Agent
to the Lenders pursuant to this Section 2.3(b) may be oral if
immediately confirmed in writing (including by facsimile); provided
that (i) the failure of the Administrative Agent to give any such
notice in sufficient time to enable any Lender to effect such payment
at the time required under Section 2.3(c) or (ii) the failure of the
Administrative Agent to deliver an immediate confirmation of such
notice shall not affect the conclusiveness or binding effect of such
notice or relieve any Lender from its obligations under this Section
2.3.
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(c) Upon receiving a Drawing Request, each Lender
shall make available to the Administrative Agent for the account of LC
Administrator at the Administrative Agent's Payment Office by 3:00 p.m.
(Chicago time) in immediately available funds on the second Business
Day after the Drawing Request Date (such date, an "LC Advance Date")
its share of such request; provided that in the case of a Letter of
Credit issued by the Fronting Bank, if a Lender shall fail to make such
funds so available, the Fronting Bank shall make such funds available
and provided further that if a Participating Bank shall fail to make
such funds so available, the Fronting Bank shall make such funds
available. Upon delivering such funds to the Administrative Agent
pursuant to this Section 2.3(c), such Lender (or the Fronting Bank, if
the Fronting Bank has made such funds available after the failure of
such Lender to do so) shall be deemed to have made an LC Advance to the
Borrower in such amount. To the extent that immediately available funds
are received by the Administrative Agent from the Lenders prior to 3:00
p.m. (Chicago time) on any LC Advance Date, the Administrative Agent
shall notify the LC Administrator and the LC Administrator shall
promptly make such funds available to the Beneficiary of the related
Letter of Credit on such date. To the extent that the LC Administrator
has not delivered funds to any Beneficiary on behalf of a Lender
pursuant to the first sentence of Section 2.3(d) and that immediately
available funds are received by the Administrative Agent from such
Lender: (i) after 3:00 p.m. on any LC Advance Date, the LC
Administrator shall make such funds available to such Beneficiary on
the next Business Day following such LC Advance Date; (ii) prior to
3:00 p.m. on any Business Day after the LC Advance Date, the LC
Administrator shall make those funds available to such Beneficiary on
such Business Day; and (iii) after 3:00 p.m. on any Business Day after
the LC Advance Date, the LC Administrator shall make those funds
available to such Beneficiary on the next Business Day following such
Business Day.
(d) Unless the Administrative Agent or LC
Administrator receives notice from a Lender prior to any LC Advance
Date that such Lender will not make available as and when required
hereunder to the Administrative Agent for the account of the Borrower
the amount of such Lender's LC Advance on such LC Advance Date, the
Administrative Agent and the LC Administrator may assume that such
Lender has made such amount available to the Administrative Agent in
immediately available funds on the LC Advance Date and the LC
Administrator may (but shall not be required), in reliance upon such
assumption, make available to the Beneficiary of the related Letter of
Credit on such date such Lender's LC Advance. If and to the extent (i)
any Lender shall not have made its full amount available to the
Administrative Agent in immediately available funds and (ii) the LC
Administrator in such circumstances has made available to the
Beneficiary such amount, then such Lender shall, on the Business Day
following such
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LC Advance Date, make such amount available to the Administrative Agent,
together with interest thereon until the date made available (i) at the
Federal Funds Rate for the period ending two Business Days after such LC
Advance Date and (ii) at the Base Rate plus 2.00% thereafter; provided,
however, that if a Lender has failed to make such an amount available with
respect to a Letter of Credit issued by the Fronting Bank, the Fronting
Bank shall make such amount available and provided further that if a
Participating Bank has failed to make such an amount available with respect
to a Letter of Credit, the Fronting Bank shall make such amount available.
If a Participating Bank fails to make such amount available, it shall pay
interest to the Fronting Bank. If the Fronting Bank shall fail to make such
amount available, it shall pay such interest to the LC Administrator and if
a Lender fails to make such amount available, it shall pay such interest to
the Fronting Bank. A notice of the Administrative Agent submitted to a
Lender with respect to amounts owing under Section 2.3(b) shall be
conclusive, absent manifest error. If such amount is so made available,
together with interest thereon, such payment to the Administrative Agent
shall constitute such Lender's LC Advance on the LC Advance Date for all
purposes of this Agreement. If such amount, together with interest thereon,
is not made available to the Administrative Agent on the Business Day
following the LC Advance Date, the Administrative Agent will notify the
Borrower of such failure to fund and, upon demand by the Administrative
Agent, the Borrower shall pay such amount to the Administrative Agent for
the LC Administrator's account, together with interest thereon for each day
elapsed since the date of such LC Borrowing, at a rate per annum equal the
Base Rate plus 2.00%.
(e) The failure of any Lender to make any LC Advance on any LC
Advance Date shall not relieve any other Lender of any obligation hereunder
to make an LC Advance on such LC Advance Date, and neither the
Administrative Agent, the LC Administrator nor any Lender shall be
responsible for the failure of any other Lender to make any LC Advance on
any LC Advance Date. Each Lender's obligation in accordance with this
Agreement to make LC Advances, as contemplated by this Section 2.3, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Administrative Agent, the
Fronting Bank or the LC Administrator and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense
or other right which such Lender may have against the Administrative Agent,
the LC Administrator, the Fronting Bank, the Borrower or any other Person
for any reason whatsoever; (ii) the occurrence or continuance of an Event
of Default, an Default or a Material Adverse Effect; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided the LC Administrator shall exercise the same
care in examining documents and determining whether or not to honor a
Drawing Request as it would
8
exercise if the LC Administrator had Issued such Letter of Credit for its
own account. Nothing contained in this Agreement, and no actions taken by
the Lenders, the LC Administrator, the Fronting Bank or the Administrative
Agent pursuant hereto or in connection with a Letter of Credit shall be
deemed to constitute the Lenders, together or with the Administrative
Agent, the Fronting Bank and the LC Administrator, a partnership,
association, joint venture or other entity.
2.3 Amendment to Section 2.14. The first sentence of Section 2.14(c)(i) of
-------------------------
the LC Agreement is amended by adding the following at the end thereof:
"; provided that a portion of the letter of credit fee equal to 0.125%
per annum otherwise payable to each Participating Bank shall be
payable to the Fronting Bank with respect to Letters of Credit for
which a fee is not paid to the Fronting Bank pursuant to Section
-------
2.14(c)(ii)."
-----------
2.4 Amendment to Section 2.18. The Existing Lenders hereby waive any
-------------------------
rights they may have pursuant to Section 2.18 of the LC Agreement to subscribe
to any amount of the increased Commitments and further waive the requirement
that such increase be in even multiples of $10,000,000.
SECTION 3 AMENDMENT TO REALLOCATION OF COMMITMENTS. The Existing Lenders
----------------------------------------
agree that their Tranche A Commitments and Tranche B Commitments shall be
reallocated and that effective as of Second Amendment Effective Date, their
Commitments shall be as set forth on Schedule 2.1 as amended by this Amendment.
SECTION 4 AMENDMENT TO SCHEDULE 2.1. Schedule 2.1 of the LC Agreement is
-------------------------
deleted and Schedule 2.1 attached hereto is substituted therefore.
SECTION 5 ADDITION OF LENDERS.
-------------------
(a) By execution hereof, ING, as of the Second Amendment
Effective Date, shall become a Lender under the LC Agreement, as amended
through the Second Amendment Effective Date, with a Tranche A Commitment
and a Tranche B Commitment as set forth on Schedule 2.1 attached to this
Amendment and from and after the Second Amendment Effective Date shall have
all the rights and obligations of a Lender thereunder provided, however ING
shall not be obligated to Issue Letters of Credit.
(b) (i) As of the Second Amendment Effective Date, the Letters of
Credit set forth on Exhibit A to this Amendment have been issued
pursuant to the LC Agreement. Each Letter of Credit listed in Part I
of Exhibit A (the "Fronted Letters of Credit") has been issued by the
Fronting Bank and each Existing Lender has purchased a Risk
Participation therein in accordance with their respective Percentages.
Each Letter of Credit listed in Part II of Exhibit A (the "Several
Letters of
9
Credit") has been issued by the LC Administrator on behalf of the
Existing Lenders who have several liability under such existing
Letters of Credit in accordance with their respective Percentages.
(ii) On the Second Amendment Effective Date, each Existing
Lender shall be deemed to have sold and transferred to ING, and ING
shall be deemed irrevocably and unconditionally to have purchased and
received from each Existing Lender, without recourse or warranty, an
undivided interest in each Existing Lender's Risk Participation in
each Fronted Letter of Credit and the Borrower's reimbursement
obligations with respect thereto in an amount such that, after giving
effect to such purchase, the Risk Participation of each Lender in the
Fronted Letters of Credit and the Borrower's reimbursement obligations
with respect thereto shall be equal to such Lender's Percentage as set
forth on Schedule 2.1 to this Amendment.
(iii) On the Second Amendment Effective Date, each Existing
Lender shall be deemed to have sold and transferred to the Fronting
Bank, and the Fronting Bank shall be deemed irrevocably and
unconditionally to have purchased and received from each Existing
Lender, without recourse or warranty, an undivided interest and
participation in each Several Letter of Credit and the Borrower's
reimbursement obligations with respect thereto in amount such that,
after giving effect to such purchase the obligation of the Fronting
Bank in each Several Letter of Credit shall be equal to the sum of its
Percentage plus ING's Percentage and the obligation of each Lender
(other than the Participating Bank) in each Several Letter of Credit
and the Borrower's reimbursement obligations with respect thereto
shall be equal to such Lender's Percentage as set forth on Schedule
2.1 to this Amendment.
(iv) On the Second Amendment Effective Date, simultaneously with
the sale and transfer from the Existing Lenders to the Fronting Bank,
the shall be deemed to have sold and transferred to ING, and ING shall
be deemed irrevocably and unconditionally to have purchased and
received from the Fronting Bank, without recourse or warranty, a Risk
Participation in the Several Letters of Credit equal to ING's
Percentage as set forth on Schedule 2.1 to this Amendment.
(c) The LC Administrator and the Borrower shall promptly amend each
of the Several Letters of Credit to reflect the increase of the Fronting
Bank's Percentage thereunder to be the sum of its Percentage plus ING's
Percentage under such Existing Letters of Credit.
(d) The Existing Lenders agree that from and after the Second
Amendment Effective Date, fees paid pursuant to Section 2.14(b) and (c)
shall be made in accordance with the Percentages set forth on Schedule 2.1
attached to this Amendment.
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(e) ING hereby confirms it has received a copy of the LC Agreement
and exhibits related thereto, together with copies of the documents which
were required to be delivered under the LC Agreement as a condition to the
making of the Credit Extensions thereunder. ING acknowledges and agrees
that it (i) has made and will continue to make such inquiries and will take
such care on its own behalf as would have been the case had its Commitments
been granted, the Letters of Credit issued directly by ING without the
intervention of the Agent, the Fronting Bank, the LC Administrator or any
Lender and (ii) has made and will continue to make independently and
without reliance upon the Agent, the Fronting Bank, the LC Administrator or
any other Lender and based on such documents and information as it has
deemed appropriate, its own credit analysis and decisions relating to the
LC Agreement. ING further acknowledges and agrees that none of the Agent,
the Fronting Bank, the LC Administrator or any other Lender makes any
representations or warranties about the creditworthiness of the Borrower or
any other party to the Credit Agreement or any other Credit Documents or
with respect to the legality, validity, sufficiency or enforceability of
the LC Agreement or any other Credit Document or the value of any security
therefore.
SECTION 6 REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders,
------------------------------
the Fronting Bank, the LC Administrator and the Agent to execute and deliver
this Amendment, the Borrower hereby represents and warrants to each such Person
that:
(a) No Default or Event of Default has occurred and is continuing or
will result from the execution and delivery or effectiveness of this
Amendment; and
(b) The warranties of the Borrower contained in Article IV of the LC
Agreement are true and correct as of the date hereof, with the same effect
as though made on such date.
SECTION 7 CONDITIONS TO EFFECTIVENESS.
---------------------------
(a) The provisions of Sections 1, 2, 3, 4 and 5 hereof, shall become
effective as of the date when the Agent shall have received all of the
following, each in form and substance satisfactory to the Agent (the
"Second Amendment Effective Date"):
(i) six counterparts of this Amendment executed by each of the
parties hereto;
(ii) a certificate of an Authorized Officer of the Borrower as
to satisfaction of the items set forth in Section 6 of this Amendment;
(iii) a certified copy of the resolutions of the board of
directors of the Borrower authorizing the execution, delivery and
performance of this Amendment; and
11
(iv) such other documents as the Agent may reasonable request.
SECTION 8 GENERAL.
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8.1 Reaffirmation of Credit Documents. From and after the date hereof,
---------------------------------
each reference that appears in any other Credit Document to the LC Agreement
shall be deemed to be a reference to the LC Agreement as amended hereby. As
amended hereby, the LC Agreement is hereby reaffirmed, approved and confirmed in
every respect and shall remain in full force and effect.
8.2 Counterparts; Effectiveness. This Amendment may be executed by the
---------------------------
parties hereto in any number of counterparts and by the different parties and
separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one in the
same agreement.
8.3 Governing Law; Entire Agreement. THIS AMENDMENT SHALL BE GOVERNED BY,
-------------------------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. This
Amendment constitutes the entire understanding among the parties hereto with
respect to the subject matter hereof and supercedes any prior agreements with
respect thereto.
SECTION 9 THIS AMENDMENT IS A CREDIT DOCUMENT.
-----------------------------------
12
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by the respective officers thereunto duly organized as of the date and
year first above written.
MAX RE LTD.
By:_____________________________
Name:
Title:
BANK OF AMERICA, NATIONAL ASSOCIATION, as
lender, fronting bank, administrative
agent, and letter of credit administrator
By:_____________________________
Name:
Title:
FLEET NATIONAL BANK
By:_____________________________
Name:
Title:
CITIBANK, N.A.
By:_____________________________
Name:
Title:
ING BANK N.V., London Branch
By:_____________________________
Name:
Title:
13
