Exhibit 10.14
LETTER OF CREDIT REIMBURSEMENT AND PLEDGE AGREEMENT
Dated as of June 20, 2003
among
MONTPELIER REINSURANCE LTD.,
THE LENDERS LISTED ON SCHEDULE I HERETO
and
FLEET NATIONAL BANK, as Administrative Agent for itself and the other lending
institutions party thereto
with FLEET SECURITIES, INC. as Arranger
Exhibits
Exhibit A Form of Assignment and Acceptance
Exhibit B Control Agreement
Exhibit C Form of Letter of Credit Application
Exhibit D Form of Compliance Certificate
Exhibit E Pledged Collateral Certificate
Schedules
Schedule 1 Lenders and Commitments
Schedule 2.1.1 Existing Letters of Credit to become Tranche A Letters of Credit
Schedule 4.1 Property Held in Securities Account
Schedule 5.6 Litigation
Schedule 5.12 Security Interests; Financing Statements
Schedule 5.15 Subsidiaries, Etc.
Schedule 8 Financial Covenants
LETTER OF CREDIT REIMBURSEMENT AND PLEDGE AGREEMENT
This LETTER OF CREDIT REIMBURSEMENT AND PLEDGE AGREEMENT is made as of
June 20, 2003, by and among Montpelier Reinsurance Ltd. (the "Borrower"), a
limited liability company duly incorporated as an exempted company under the
laws of Bermuda, having its registered office at ▇ ▇▇▇-▇▇-▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇, ▇▇▇▇▇▇▇, the lending institutions listed on Schedule 1 (the "Lenders")
and Fleet National Bank, a national banking association, as administrative agent
for itself and such other lending institutions (the "Administrative Agent").
WHEREAS, pursuant to that certain letter of credit facility established by
Fleet National Bank in favor of the Borrower (the "Facility"), Fleet National
Bank (in its capacity as issuer of such letters of credit, "FNB") issued, for
the account of the Borrower, the letters of credit described on Schedule 2.1.1
hereto (the "Existing Letters of Credit");
WHEREAS, as set forth in Section 2.1.1 the Existing Letters of Credit
shall be Tranche A Letters of Credit under this Reimbursement and Pledge
Agreement; and
NOW THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1A. TRANSITIONAL ARRANGEMENTS. FNB, as issuing lender of the Existing
Letters of Credit under the Facility hereby assigns to the Administrative Agent
for the benefit of the Lenders and to secure the Obligations hereunder (i) all
of its right, title, and interest in and to the Facility (including, without
limitation, its right, title and interest in and to the Pledge Agreement, dated
as of February 26, 2002 between the Borrower and Fleet National Bank (as
amended, the "Existing Pledge Agreement"), (ii) all liens, security interests
and charges granted to, and collateral security held by, FNB in respect of the
Existing Letters of Credit, and (iii) all right, title and interest of FNB in
and to that certain Control Agreement, dated as of April 3, 2003, among the
Borrower, FNB and the Custodian (the "Existing Control Agreement"). Effective
immediately upon the Closing Date, (i) the terms and conditions of the Existing
Pledge Agreement shall be amended and restated as set forth herein and the
Existing Pledge Agreement shall be superseded by this Reimbursement and Pledge
Agreement and (ii) the terms and conditions of the Existing Control Agreement
shall be amended and restated as set
-2-
forth in the Control Agreement and the Existing Control Agreement shall be
superseded by the Control Agreement.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth in
this Section 1 or elsewhere in the provisions of this Reimbursement and Pledge
Agreement referred to below:
Acceding Bank. See Section 2.1.3.
Administrative Agent's Office. The Administrative Agent's office located
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as
the Administrative Agent may designate from time to time.
Administrative Agent. Fleet National Bank, acting as agent for the Lenders
and each other Person appointed as the successor Administrative Agent in
accordance with Section 12.9.
Administrative Agent's Special Counsel. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP or such
other counsel as may be approved by the Administrative Agent.
Administrative Questionnaire. An Administrative Questionnaire in a form
supplied by the Administrative Agent.
Affiliate. Any Person that would be considered to be an affiliate of any
other Person under Rule 144(a) of the Rules and Regulations promulgated under
the Securities Act of 1933, as amended, if such Person were issuing securities
or any Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person. "Control" of a Person means the power,
directly or indirectly, (a) to vote ten percent (10%) or more of the Capital
Stock (on a fully diluted basis) of such Person having ordinary voting power for
the election of directors, managing members or general partners (as applicable);
or (b) to direct or cause the direction of the management and policies of such
Person (whether by contract or otherwise).
Aggregate Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Agent for Service. See Section 14.15.
-3-
A.M. Best Rating. The financial strength rating issued with respect to the
Borrower by A.M. Best Company.
Approved Fund. Any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
Arranger. Fleet Securities, Inc.
Assignment and Acceptance. An assignment and acceptance entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 13.2), and accepted by the Administrative Agent, in
substantially the form of Exhibit A or any other form approved by the
Administrative Agent.
Balance Sheet Date. December 31, 2002.
Base Rate. The higher of (a) the variable annual rate of interest so
designated from time to time by Fleet as its "prime rate", such rate being a
reference rate and not necessarily representing the lowest or best rate being
charged to any customer, and (b) one-half of one percent (-%) above the Federal
Funds Effective Rate. For the purposes of this definition, "Federal Funds
Effective Rate" shall mean for any day, the rate per annum equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the preceding Business Day) by
the Federal Reserve Administrative Agent of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
such day on such transactions received by the Administrative Agent from three
funds brokers of recognized standing selected by the Administrative Agent.
Changes in the Base Rate resulting from any changes in Fleet's "prime rate"
shall take place at the opening of business on the day of any change established
by Fleet in the ordinary course of its business.
Borrower. As defined in the preamble hereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts and Bermuda are open for the transaction of banking business.
Capital Stock. Any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a
-4-
corporation) and any and all warrants, rights or options to purchase any of the
foregoing.
Change in Control. Any of (a) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of 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 (the "Exchange Act") other than the Parent or White Mountains Insurance
Group Ltd., is or becomes, directly or indirectly, the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act, of securities of the Borrower that
represent 51% or more of the combined voting power of the Borrower's then
outstanding securities; (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 or replacement directors whose
election by the Board of Directors or whose nomination by the stockholders of
the Borrower was approved by a vote of a majority of the Directors of the
Borrower then still in office who are either directors or replacement 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 the
Borrower's Board of Directors then in office; (d) the Parent ceases to (x) be
the single largest shareholder of the Borrower or (y) be directly or indirectly,
the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act, of
securities of the Borrower that represent 10% or more of the combined voting
power of the Borrower's then outstanding securities; or (e) White Mountain
Insurance Group Ltd. ceases to (x) be the single largest shareholder of the
Parent or (y) be directly or indirectly, the "beneficial owner," as defined in
Rule 13d-3 under the Exchange Act, of securities of the Parent that represent
10% or more of the combined voting power of the Parent's then outstanding
securities.
Closing Date. The first date on which the conditions set forth in Section
9 have been satisfied and any Letter of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986, as amended from time to time, and
regulations promulgated thereunder.
Collateral Coverage Amount. See Section 6.8.
Combined or combined. With reference to any term defined herein, shall
mean that term as applied to the accounts of the Parent and its Subsidiaries,
combined in accordance with GAAP.
Commitment. With respect to each Lender, such Lender's Tranche A
Commitment and/or Tranche B Commitment, as the case may be.
-5-
Commitment Increase Notice. See Section 2.1.3.
Commitment Maturity Date. June 18, 2004, as such may be extended pursuant
to Section 2.1.5 hereof.
Commitment Percentage. With respect to each Lender, such Lender's Tranche
A Commitment Percentage and/or Tranche B Commitment Percentage, as the case may
be.
Compliance Certificate. See Section 6.4(d).
Control Agreement. That certain Amended and Restated Control Agreement,
dated as of June 20, 2003 among the Administrative Agent, the Borrower and the
Custodian and attached hereto as Exhibit B.
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Parent and its
Subsidiaries, consolidated in accordance with GAAP.
Cure Contribution. Capital contributions or other equity infusions to the
Parent made on or before the 30th day after the date the Borrower has failed to
comply with the covenant set forth in Section 8.1 of Schedule 8, which cure such
default.
Custodial Lien and Set-off Rights. See Section 5.13.
Custodian. The Bank of New York
Default. Any event which would, with the giving of notice or the lapse of
time, constitute an Event of Default.
Delinquent Lender. See Section 12.5.3.
Deposit Account. The Borrower's demand deposit account no. 251473 and any
replacement or successor account maintained with the Custodian and subject to
the terms of the Control Agreement.
Dollars or $. Dollars in lawful currency of the United States of America.
Dollar Equivalent. On any particular date, with respect to any amount
denominated in Dollars, such amount in Dollars, and with respect to any amount
denominated in Pounds Sterling, the amount (as conclusively ascertained by the
Administrative Agent absent manifest error) of Dollars which could be purchased
by the Administrative Agent (in accordance with its normal banking practices) in
the London foreign currency deposit markets with such amount of such currency at
the spot
-6-
rate of exchange prevailing at or about 11:00 a.m. (London time) on such date.
Effective Commitment Amount. See Section 2.1.3.
Eligible Assignee. Any of (a) a Lender, (b) an Affiliate of a Lender or
(c) a financial institution having a senior unsecured debt rating of not less
than "A", or its equivalent, by S&P and (d) any other Person (other than a
natural person) approved by (i) the Administrative Agent and (ii) unless a
Default or an Event of Default has occurred and is continuing, the Borrower
(with each such approval not to be unreasonably withheld or delayed).
Event of Default. See Section 11.1.
Existing Letters of Credit. As defined in the recitals hereto.
Existing Pledge Agreement. See Section 1A.
Extension. See Section 2.1.5.
Facility. As defined in the recitals hereto.
Facility Fee. See Section 2.8.
Federal Agency. Any of the following agencies of the federal government of
the United States: (a) Government National Mortgage Association; (b) the
Export-Import Bank of the United States; (c) the Farmers Home Administration, an
agency of the United States Department of Agriculture; (d) the United States
General Services Administration; (e) the United States Maritime Administration;
(f) the United States Small Business Administration; (g) the Commodity Credit
Corporation; (h) the Rural Electrification Administration; (i) the Rural
Telephone Bank; (j) Washington Metropolitan Area Transit Authority; (k) the
Federal Home Loan Mortgage Corporation; (l) the Federal National Mortgage
Association; (m) the Federal Housing Finance Board; (n) the Federal Home Loan
Bank and (o) such other federal agencies as are reasonably acceptable to the
Administrative Agent.
Federal Agency Collateral. See Section 6.8.
Fee Letter. The fee letter dated as of June 20, 2003 among the Borrower,
the Administrative Agent and the Arranger.
Fees. The Letter of Credit Fee and the Facility Fee.
-7-
Financial Affiliate. A Subsidiary of the bank holding company controlling
any Lender, which Subsidiary is engaging in any of the activities permitted
by Section 4(e) of the Administrative Agent Holding Company Act of 1956 (12
U.S.C. Section 1843).
Fleet. Fleet National Bank, a national banking association, in its
individual capacity.
FNB. As defined in the recitals hereto.
Freely Transferable. Securities which are freely transferable and traded
in established and recognized markets and as to which there are readily
available price quotations.
Fund. Any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
GAAP or generally accepted accounting principles. (a) When used in
Section 6, whether directly or indirectly through reference to a capitalized
term used therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(ii) to the extent consistent with such principles, the accounting practice of
the Parent reflected in its financial statements for the year ended on the
Balance Sheet Date, and (b) when used in general, other than as provided above,
means principles that are (i) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (ii) consistently applied with past financial
statements of the Parent adopting the same principles, provided that in each
case referred to in this definition of "GAAP" a certified public accountant
would, insofar as the use of such accounting principles is pertinent, be in a
position to deliver an unqualified opinion (other than a qualification regarding
changes in GAAP) as to financial statements in which such principles have been
properly applied.
Governing Documents. With respect to any Person, its certificate or
articles of incorporation, memorandum of association, certificate of formation,
or, as the case may be, certificate of limited partnership, its by-laws,
operating agreement or, as the case may be, partnership agreement or other
constitutive documents and all shareholder agreements, voting trusts and similar
arrangements applicable to any of its Capital Stock.
-8-
Governmental Authority. Any foreign, federal, state, regional, local,
municipal or other government, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government or any court or arbitrator.
Indemnified Persons. See Section 14.5(a)
Indemnitee. See Section 14.4
Ineligible Securities. Securities which may not be underwritten or dealt
in by member Administrative Agents of the Federal Reserve System under Section
16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
Insurance Subsidiary. The Borrower and any other Subsidiary of the Parent
created after the Closing Date which is licensed by any Governmental Authority
to engage in the insurance business.
Lender Affiliate. With respect to any Lender, (a) an Affiliate of such
Lender or (b) any Approved Fund.
Lender Increase Notice. See Section 2.1.3.
Lenders. Fleet and the other lending institutions listed on Schedule 1
hereto and any other Person who becomes an assignee of any rights and
obligations of a Lender pursuant to Section 13.
Letters of Credit. The Tranche A Letters of Credit and the Tranche B
Letters of Credit.
Letter of Credit Application. See Section 2.1.1.
Letter of Credit Fee. See Section 2.8.
Letter of Credit Participation. See Section 2.1.6.
Lloyd's. Lloyd's of London or members of its syndicate.
Loan Documents. This Reimbursement and Pledge Agreement, the Letter of
Credit Applications, the Letters of Credit and the Control Agreement.
Material Adverse Effect. With respect to any event or occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) which results in:
-9-
(a) a material adverse effect on the business, properties, condition
(financial or otherwise), assets, operations or income of the Borrower,
individually or the Borrower and its Subsidiaries, taken as a whole;
(b) a material adverse effect on the ability of the Borrower to perform
any of its Obligations under any of the Loan Documents to which it is a party;
or
(c) any impairment of the validity, binding effect or enforceability of
this Reimbursement and Pledge Agreement or any of the other Loan Documents, any
impairment of the rights, remedies or benefits available to the Administrative
Agent or any Lender under any Loan Document or any impairment of the attachment,
perfection or priority of any lien of the Administrative Agent under this
Reimbursement and Pledge Agreement other than (i) liens arising by operation of
law, so long as the aggregate obligations secured thereby do not exceed
$1,000,000 and (ii) the Custodial Lien and Set-Off Rights.
In determining whether any individual event has a Material Adverse Effect,
notwithstanding that such event does not of itself have such effect, a Material
Adverse Effect shall be deemed to have occurred if the cumulative effect of such
event and all other then existing events results in a Material Adverse Effect.
Notice of Exclusive Control. A written notice, in the form attached to the
Control Agreement as Exhibit B, given by the Administrative Agent to the
Custodian upon an Event of Default that the Administrative Agent is exercising
sole and exclusive control of the Securities Account and the Pledged Collateral
credited thereto.
Obligations. All indebtedness, obligations and liabilities of the Borrower
to any of the Lenders and the Administrative Agent, individually or
collectively, existing on the date of this Reimbursement and Pledge Agreement or
arising thereafter, direct or indirect, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising or incurred
under this Reimbursement and Pledge Agreement or any of the other Loan Documents
or in respect of any Reimbursement Obligations incurred under any Letter of
Credit or other instrument at any time evidencing any thereof and arising by
contract, operation of law or otherwise.
Participant. See Section 13.4.
Parent. Montpelier Re Holdings Ltd., parent to the Borrower.
-10-
Person. Any individual, corporation, limited liability company
partnership, limited liability partnership, firm, trust, joint venture, joint
stock company, other unincorporated association, business, or other legal
entity, and any Governmental Authority, each whether acting in an individual,
fiduciary or other capacity.
Pledged Collateral. See Section 4.1.
Pledged Collateral Certificate. See Section 6.4(e).
Pounds Sterling or L. The lawful currency of the United Kingdom of Great
Britain and Northern Ireland.
Pounds Sterling Equivalent. On any particular date, with respect to any
amount denominated in Pounds Sterling, such amount in Pounds Sterling, and with
respect to any amount denominated in Dollars, the amount (as conclusively
ascertained by the Administrative Agent absent manifest error) of Pounds
Sterling which could be purchased by the Administrative Agent (in accordance
with its normal banking practices) in the London foreign currency deposit
markets with such amount of Dollars at the spot rate of exchange prevailing at
or about 11:00 a.m. (London time) on such date.
Qualified Securities. See Section 6.8.
Register. See Section 13.3.
Release Amount. See Section 4.7.
Reimbursement Obligation. The Borrower's obligation to reimburse the
Administrative Agent and the Lenders on account of any drawing under any Letter
of Credit as provided in Section 2.2.
Related Parties. With respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
Required Lenders. As of any date, the Lenders whose aggregate Commitments
constitutes at least fifty-one percent (51%) of the Total Commitment or, if the
Commitments have been terminated, the Lenders whose amount of Letter of Credit
Partipations constitute at least fifty-one percent (51%) of the aggregate Letter
of Credit Participations.
Replacement Lender. See Section 2.1.5.
-11-
Responsible Officer. The president, chief executive officer, chief
financial officer, chief operating officer, treasurer, controller or any
vice-president of the Borrower.
S&P. Standard & Poor's Ratings Group.
Securities Account. The Borrower's custodial account fund no. 251471
maintained with the Custodian and any replacement or successor account
maintained with the Custodian and subject to the terms of the Control Agreement.
Subsidiary. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Total Commitment. The sum of the Commitments of the Lenders, as in effect
from time to time.
Total Tranche A Commitment. The sum of the Tranche A Commitments of the
Tranche A Lenders, as in effect from time to time.
Total Tranche B Commitment. The sum of the Tranche B Commitments of the
Tranche B Lenders, as in effect from time to time.
Tranche A Commitment. With respect to each Tranche A Lender, the amount
set forth on Schedule 1 hereto as the amount of such Tranche A Lender's
commitment to participate in the issuance, extension and renewal of Tranche A
Letters of Credit for the account of the Borrower, as the same may be reduced
from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.
Tranche A Commitment Percentage. With respect to each Tranche A Lender,
the percentage set forth on Schedule 1 hereto as such Tranche A Lender's
percentage of the aggregate Tranche A Commitments of all of the Tranche A
Lenders.
Tranche A Lenders. The Lenders having a Tranche A Commitment, as set forth
on Schedule 1 hereto, along with their successors and assigns.
Tranche A Letters of Credit. See Section 2.1.1.
Tranche A Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Tranche A Letters of
Credit, as such aggregate amount may be reduced
-12-
time to time pursuant to the terms of the Tranche A Letters of Credit.
Tranche B Commitment. With respect to each Tranche B Lender, the amount
set forth on Schedule 1 hereto as the amount of such Tranche B Lender's
commitment to participate in the issuance, extension and renewal of Tranche B
Letters of Credit for the account of the Borrower, as the same may be reduced
from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.
Tranche B Commitment Percentage. With respect to each Tranche B Lender,
the percentage set forth on Schedule 1 hereto as such Tranche B Lender's
percentage of the aggregate Tranche B Commitments of all of the Tranche B
Lenders.
Tranche B Lenders. The Lenders having a Tranche B Commitment, as set
forth on Schedule 1 hereto, along with their successors and assigns.
Tranche B Letters of Credit. See Section 2.1.2.
Tranche B Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Tranche B Letters of
Credit, as such aggregate amount may be reduced from time to time pursuant to
the terms of the Tranche B Letters of Credit.
Treasury Collateral. See Section 6.8.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
the Borrower does not reimburse the Administrative Agent and the Lenders on the
date specified in, and in accordance with, Section 2.2.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or
-13-
supplemented from time to time in accordance with its terms or the
terms of this Reimbursement and Pledge Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by GAAP applied on a consistent basis by the
accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP,
which terms are defined in the Uniform Commercial Code as in effect in
the State of New York, have the meanings assigned to them therein, with
the term "instrument" being that defined under Article 9 of the Uniform
Commercial Code.
(h) Reference to a particular "Section" refers to that section
of this Reimbursement and Pledge Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Reimbursement and Pledge Agreement as a
whole and not to any particular section or subdivision of this
Reimbursement and Pledge Agreement.
(j) Unless otherwise expressly indicated, 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."
(k) This Reimbursement and Pledge Agreement may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are,
however, cumulative and are to be performed in accordance with the
terms thereof.
-14-
(l) This Reimbursement and Pledge Agreement is the result of
negotiation among, and has been reviewed by counsel to, among others,
the Administrative Agent and the Borrower and is the product of
discussions and negotiations among all parties. Accordingly, this
Reimbursement and Pledge Agreement is not intended to be construed
against the Administrative Agent or any of the Lenders merely on
account of the Administrative Agent's or any Lender's involvement in
the preparation of such documents.
2. LETTERS OF CREDIT.
2.1. LETTER OF CREDIT COMMITMENTS.
2.1.1. TRANCHE A LETTERS OF CREDIT. Subject to the terms and
conditions hereof and the execution and delivery by the Borrower of a
hard copy or electronically filed letter of credit application on the
Administrative Agent's customary form (a "Letter of Credit
Application"), with the Administrative Agent's form as of the Closing
Date attached hereto as Exhibit C, the Administrative Agent on behalf
of the Tranche A Lenders and in reliance upon the agreement of the
Tranche A Lenders set forth in Section 2.1.4 and upon the
representations and warranties of the Borrower contained herein, agrees
from time to time during the period from the Closing Date to the
Commitment Maturity Date, in its individual capacity, to issue, extend
and renew for the account of the Borrower one or more standby letters
of credit, each in a minimum face amount of (a) with respect to Tranche
A Letters of Credit denominated in Pounds Sterling, the Pounds Sterling
Equivalent of $100,000 and (b) with respect to Tranche A Letters of
Credit denominated in Dollars, $1,000, to be used in the ordinary
course of the Borrower's business, denominated in Pounds Sterling or in
Dollars in such form as may be requested from time to time by the
Borrower and agreed to by the Administrative Agent (individually, a
"Tranche A Letter of Credit"); provided, however, that, after giving
effect to such request, (i) the sum of the Dollar Equivalent of the
Aggregate Maximum Drawing Amount and the Dollar Equivalent of the
Unpaid Reimbursement Obligations shall not exceed the Total Commitment
at any one time, (ii) the sum of the Dollar Equivalent of the Tranche A
Maximum Drawing Amount and the Dollar Equivalent of the Unpaid
Reimbursement Obligations consisting of amounts paid under Letters of
Credit, as set forth in Section 2.2(a)(i), in respect of Tranche A
Letters of Credit shall not exceed the Total Tranche A Commitment at
any one time, (iii) no Tranche A Letter of Credit denominated in
Dollars shall be issued unless the face amount of such Tranche A Letter
of Credit is higher than
-15-
the unused portion of the Tranche B Commitment and (iv) the sum of the
Dollar Equivalent of the Aggregate Maximum Drawing Amount plus the
Dollar Equivalent of the Unpaid Reimbursement Obligations consisting of
amounts paid under Letters of Credit, as set forth in Section
2.2(a)(i), shall not, at any time, exceed the Collateral Coverage
Amount. The Borrower and the Lender agree that the Letters of Credit
listed on Schedule 2.1.1 hereof shall become Tranche A Letters of
Credit hereunder.
2.1.2. TRANCHE B LETTERS OF CREDIT. Subject to the terms and
conditions hereof and the execution and delivery by the Borrower of a
Letter of Credit Application, the Administrative Agent on behalf of the
Tranche B Lenders and in reliance upon the agreement of the Tranche B
Lenders set forth in Section 2.1.4 and upon the representations and
warranties of the Borrower contained herein, agrees from time to time
during the period from the Closing Date to the Commitment Maturity
Date, in its individual capacity, to issue, extend and renew for the
account of the Borrower one or more standby letters of credit, each in
a minimum face amount of $1,000, to be used in the ordinary course of
the Borrower's business, denominated in Dollars and otherwise in such
form as may be requested from time to time by the Borrower and agreed
to by the Administrative Agent (individually, a "Tranche B Letter of
Credit"); provided, however, that, after giving effect to such request,
(i) the sum of the Dollar Equivalent of the Aggregate Maximum Drawing
Amount and the Dollar Equivalent of the Unpaid Reimbursement
Obligations shall not exceed the Total Commitment at any one time, (ii)
the sum of the Tranche B Maximum Drawing Amount and all Unpaid
Reimbursement Obligations consisting of amounts paid under Letters of
Credit, as set forth in Section 2.2(a)(i), in respect of Tranche B
Letters of Credit shall not exceed the Total Tranche B Commitment at
any one time and (iii) the sum of the Dollar Equivalent of the
Aggregate Maximum Drawing Amount plus all Unpaid Reimbursement
Obligations consisting of amounts paid under Letters of Credit, as set
forth in Section 2.2(a)(i), shall not exceed the Collateral Coverage
Amount.
2.1.3. INCREASE TO TOTAL TRANCHE B COMMITMENT. At any time,
the Borrower may request that the Total Tranche B Commitment and its
components be increased, provided that, without the prior written
consent of the Required Lenders, (i) the Total Commitment shall at no
time exceed $500,000,000 and the Total Tranche B Commitment shall at no
time exceed $250,000,000 and (ii) each such request shall be in a
minimum
-16-
amount of at least $1,000,000. Such request shall be made in a written
notice given to the Administrative Agent and the Tranche B Lenders by
the Borrower not fewer than twenty (20) Business Days prior to the
proposed effective date of such increase, which notice (a "Commitment
Increase Notice") shall specify the amount of the proposed increase in
the Total Tranche B Commitment and the proposed effective date of such
increase. In the event of such a Commitment Increase Notice, each of
the Tranche B Lenders shall be given the opportunity to participate in
the requested increase ratably in proportion that its Tranche B
Commitments bears to the Total Tranche B Commitment under this
Reimbursement and Pledge Agreement, respectively. No Lender shall have
any obligation to increase its Commitment pursuant to a Commitment
Increase Notice. On or prior to a date that is ten (10) Business Days
after receipt of the Commitment Increase Notice, each Tranche B Lender
shall submit to the Administrative Agent a notice indicating the
maximum amount, if any, by which it is willing to increase its Tranche
B Commitment in connection with such Commitment Increase Notice (any
such notice to the Administrative Agent being herein a "Lender Increase
Notice"). Any Tranche B Lender which does not submit a Lender Increase
Notice to the Administrative Agent prior to the expiration of such ten
(10) Business Day period shall be deemed to have denied any increase in
its Commitment. In the event that the increases of Commitments set
forth in the Lender Increase Notices exceed the amount requested by the
Borrower in the Commitment Increase Notice, the Administrative Agent
shall have the right, in consultation with the Borrower, to allocate
the amount of increases necessary to meet the Borrower's Commitment
Increase Notice; provided that, no Lender shall be allocated an amount
less than its pro rata share of such increase based upon the proportion
its Tranche B Commitments bear to the Total Tranche B Commitment under
this Reimbursement and Pledge Agreement. In the event that the Lender
Increase Notices are less than the amount requested by the Borrower, no
later than five (5) Business Days prior to the proposed effective date
the Borrower may notify the Administrative Agent of any Eligible
Assignee that shall have agreed to become a "Tranche B Lender" party
hereto (an "Acceding Bank") in connection with the Commitment Increase
Notice. If the Borrower shall not have arranged any Acceding Bank(s) to
commit to the shortfall from the Lender Increase Notices, then the
Borrower shall be deemed to have reduced the amount of its Commitment
Increase Notice to the aggregate amount set forth in the Lender
Increase Notices. Based upon the Lender Increase Notices, any
allocations made in connection therewith and any
-17-
notice regarding any Acceding Bank, if applicable, the Administrative
Agent shall notify the Borrower and the Tranche B Lenders on or before
the Business Day immediately prior to the proposed effective date of
the amount of each Bank's and Acceding Bank's Commitment (the
"Effective Commitment Amount") and the increased amount of the Total
Tranche B Commitment, which amounts shall be effective on the following
Business Day subject to the conditions set forth herein. Any increase
in the Total Tranche B Commitment under this Reimbursement and Pledge
Agreement shall be subject to the following conditions precedent: (i)
as of the date of the Commitment Increase Notice and as of the proposed
effective date of the increase in the Total Commitment under this
Reimbursement and Pledge Agreement, all representations and warranties
shall be true and correct in all material respects as though made on
such date (unless such representation and warranty is made as of a
specific date, in which case, such representation and warranty shall be
true and correct as of such date) and no event shall have occurred and
then be continuing which constitutes a Default or Event of Default
under this Reimbursement and Pledge Agreement; (ii) the Borrower, the
Administrative Agent and each Acceding Bank shall have agreed to
provide a "Commitment" in support of such increase in the Total Tranche
B Commitment under this Reimbursement and Pledge Agreement, shall have
executed and delivered an "Instrument of Accession" in a form
reasonably acceptable to the Administrative Agent; (iii) to the extent
reasonably required by the Administrative Agent, counsel for the
Borrower shall have provided to the Administrative Agent a supplemental
opinion in form and substance reasonably satisfactory to the
Administrative Agent; (iv) the Acceding Bank(s) shall otherwise have
executed and delivered such other instruments and documents as the
Administrative Agent shall have reasonably requested in connection with
such increase and (v) the Borrower shall have executed and delivered
all corporate authority documents that the Administrative Agent shall
have reasonably requested in connection with such increase. Upon
satisfaction of the conditions precedent to any increase in the Total
Tranche B Commitment under this Reimbursement and Pledge Agreement, the
Administrative Agent shall promptly advise the Borrower and each Lender
of the effective date of such increase. Upon the effective date of any
increase the Total Tranche B Commitment under this Reimbursement and
Pledge Agreement that is supported by an Acceding Bank, such Acceding
Bank shall be a party to this Reimbursement and Pledge Agreement as a
Tranche B Lender and shall have the rights and obligations of a Tranche
B hereunder. In addition, on the effective date, the
-18-
Administrative Agent shall replace the existing Schedule 1 attached
hereto with the revised Schedule 1 reflecting such new Total Tranche B
Commitment and each Lender's Commitment. Nothing contained herein shall
constitute, or otherwise be deemed to be, a commitment on the part of
any Lender to increase its Commitment hereunder.
2.1.4. TERMS OF LETTERS OF CREDIT. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (a)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by
the documents described therein, and (b) (i) with respect of Tranche A
Letters of Credit, issued to Lloyd's, have an expiry date no later than
the date which is five (5) years from the date of issuance of such
Letter of Credit and (ii) with respect to all other Tranche A Letters
of Credit and all Tranche B Letters of Credit, have an expiry date no
later than the date which is one (1) year from the date of issuance of
such Letter of Credit. Each Letter of Credit so issued, extended or
renewed shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 or any successor version thereto adopted by the
Administrative Agent in the ordinary course of its business as a letter
of credit issuer and in effect at the time of issuance of such Letter
of Credit (the "Uniform Customs") or the International Standby
Practices (ISP98), International Chamber of Commerce Publication No.
590, or any successor code of standby letter of credit practices among
Administrative Agents adopted by the Administrative Agent in the
ordinary course of its business as a standby letter of credit issuer
and in effect at the time of issuance of such Letter of Credit, in each
case to the extent not inconsistent with New York law. Letters of
Credit may be issued at any time prior to the Commitment Maturity Date.
In the event of any conflict between the terms of any Letter of Credit
Application and this Reimbursement and Pledge Agreement, the terms of
this Reimbursement and Pledge Agreement shall govern.
2.1.5. EXTENSION OF COMMITMENT MATURITY DATE; REPLACEMENT
LENDER. The Borrower may request an extension of the Commitment
Maturity Date for one additional three-hundred sixty-four (364) day
period (the "Extension"). The Borrower must request the Extension in
writing to the Administrative Agent and the Lenders not less than sixty
(60) nor more than ninety (90) days prior to the Commitment Maturity
Date. Each Lender may decide, in its sole discretion, whether to
participate in the Extension and
-18-
shall notify the Administrative Agent and the Borrower in writing of
its decision within thirty (30) days after receipt of the Borrower's
request, provided that no Lender shall give formal notification of its
approval of the Extension more than sixty (60) days prior to the
Commitment Maturity Date. Any Lender not responding to a request for an
Extension within thirty (30) days after receipt of the Borrower's
request shall be deemed to have not consented to the Extension. If a
Lender does not approve the Extension by such date, the Borrower may,
up until the fifteenth (15th) day prior to the Commitment Maturity
Date, (i) request that all or a portion of the remaining Lenders
acquire and assume all of the non-approving Lender's Commitment as
provided herein, but none of such Lenders shall be under an obligation
to do so, (ii) designate a new Lender (a "Replacement Lender") which is
an Eligible Assignee, and/or (iii) with the approval of the
Administrative Agent and each of the remaining Lenders, downsize the
Tranche A Commitment or the Tranche B Commitment, as the case may be,
and, correspondingly, the Total Commitment, by the amount of the
non-approving Lender's pro rata share. If any satisfactory Replacement
Lender shall be obtained, and/or if any one or more of the existing
Lenders shall agree to acquire and assume all or any portion of the
non-approving Lender's Commitment, then such non-approving Lender shall
assign, in accordance with Section 13, all of its Commitment, Letter of
Credit Participations and other rights and obligations under this
Reimbursement and Pledge Agreement and all other Loan Documents to such
Replacement Lender or existing Lenders, as the case may be; provided,
however, that (A) such assignment shall be without recourse,
representation or warranty and shall be on terms and conditions
reasonably satisfactory to such non-approving Lender and such
Replacement Lender and/or existing Lenders, as the case may be, and (B)
prior to any such assignment, the Borrower shall have paid to such
non-approving Lender all amounts properly demanded and unreimbursed. If
all of the then Lenders have agreed to the Extension on or before the
fifteenth (15th) day prior to the Commitment Maturity Date, then the
Extension shall take effect. Upon the commencement of such Extension,
the Letter of Credit Fee for any existing or new Letters of Credit and
the Facility Fee may be subject to an annualized increase or decrease,
as determined by the Administrative Agent in its reasonable discretion.
2.1.6. REIMBURSEMENT OBLIGATIONS OF LENDERS. Each Tranche A
Lender and each Tranche B Lender severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default or
Event of Default or any other condition precedent
-20-
whatsoever, to the extent of such Lender's Tranche A Commitment
Percentage or Tranche B Commitment Percentage, as the case may be, to
reimburse the Administrative Agent on demand for the amount of each
draft paid by the Administrative Agent under each Letter of Credit,
required to be funded by it, to the extent that such amount is not
reimbursed by the Borrower pursuant to Section 2.2 (such agreement for
a Lender being called herein the "Letter of Credit Participation" of
such Lender).
2.1.7. PARTICIPATIONS OF LENDERS. Each such payment made by a
Lender shall be treated as the purchase by such Lender of a
participating interest in the Borrower's Reimbursement Obligation under
Section 2.2 in an amount equal to such payment. Each Lender shall share
in accordance with its participating interest in any interest which
accrues pursuant to Section 2.2.
2.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the
Administrative Agent to issue, extend and renew each Letter of Credit and the
Lenders to participate therein, the Borrower hereby agrees:
(a) to reimburse or pay to the Administrative Agent, for the
account of the Administrative Agent or (as the case may be) the
Lenders, with respect to each Letter of Credit issued, extended or
renewed by the Administrative Agent hereunder, on each date that any
draft presented under such Letter of Credit is honored by the
Administrative Agent, or the Administrative Agent otherwise makes a
payment with respect thereto, (i) the Dollar Equivalent of the amount
paid by the Administrative Agent under or with respect to such Letter
of Credit, and (ii) the amount of any taxes, fees, charges or other
costs and expenses whatsoever incurred by the Administrative Agent or
any Lender in connection with any payment made by the Administrative
Agent or any Lender under, or with respect to, such Letter of Credit,
provided that, the failure of the Borrower to immediately reimburse the
Administrative Agent for amounts due pursuant to this Section 2.2(a)
shall be an Event of Default and upon the occurrence of such Event of
Default, the Administrative Agent may issue a Notice of Exclusive
Control and apply all or any portion of the Pledged Collateral towards
the payment obligations described herein, and
(b) that the Administrative Agent may, upon the acceleration
of the Aggregate Reimbursement Obligations with respect to all Letters
of Credit in accordance with Section 11, exercise all rights and
remedies in respect of the Pledged Collateral and any
-21-
proceeds thereof, to collect an amount equal to the Dollar Equivalent
of the then outstanding Reimbursement Obligations.
Each payment contemplated by Section 2.2(a) shall be made to the Administrative
Agent at the Administrative Agent's Office in immediately available funds.
Interest on any and all amounts remaining unpaid by the Borrower under this
Section 2.2 at any time from the date such amounts become due and payable
(whether as stated in this Section 2.2, by acceleration or otherwise) until
payment in full (whether before or after judgment) shall be payable to the
Administrative Agent on demand at the rate specified in Section 3.8. Any Pledged
Collateral or proceeds thereof collected by the Administrative Agent pursuant
Sections 2.2(a) or 2.2(b) may be, at the Administrative Agent's sole
discretion, converted into Pounds Sterling, with any such conversion costs being
considered a collection expense and added to the Obligations. All payments of
Fees, interest and Reimbursement Obligations to the Lenders shall be made in
Dollars even if the underlying Letter of Credit is denominated in Pounds
Sterling.
2.3. VOLUNTARY COMMITMENT REDUCTIONS. The Borrower shall have the right
at any time and from time to time upon three (3) Business Days prior written
notice to the Administrative Agent to reduce by a minimum amount of $10,000,000
and in multiples of $1,000,000 in excess thereof, or to terminate entirely, the
Tranche A Commitment or the Tranche B Commitment, whereupon the Commitments of
the Tranche A Lenders or the Tranche B Lenders, as the case may be, shall be
reduced pro rata in accordance with their respective Commitment Percentages of
the amount specified in such notice or, terminated as the case may be provided
that (a) the Total Tranche A Commitment may not be reduced to an amount below
the Tranche A Maximum Drawing Amount, (b) the Total Tranche B Commitment may not
be reduced to an amount below the Tranche B Maximum Drawing Amount and (c) the
Total Commitment may not be reduced to an amount below the Aggregate Maximum
Drawing Amount. Promptly after receiving any notice of the Borrower delivered
pursuant to this Section 2.3, the Administrative Agent will notify the Lenders
of the substance thereof. No reduction or termination of the Commitments may be
reinstated.
2.4. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the
Administrative Agent shall notify the Borrower of the date and amount of the
draft presented or demand for payment and of the date and time when it expects
to pay such draft or honor such demand for payment. If the Borrower fails to
reimburse the Administrative Agent as provided in Section 2.2 or if the
Administrative Agent is unable to effect such reimbursement through the
application of the Pledged Collateral, on the
-22-
date that such draft is paid or other payment is made by the Administrative
Agent, the Administrative Agent may at any time thereafter notify the Tranche A
Lenders or the Tranche B Lenders, as the case may be, of the amount of any such
Unpaid Reimbursement Obligation. No later than 3:00 p.m. (Boston time) on the
Business Day next following the receipt of such notice, each Tranche A Lender or
Tranche B Lender, as the case may be, shall make available to the Administrative
Agent, in Dollars, at the Administrative Agent's Office, in immediately
available funds, such Lender's Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (a)
the average, computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Administrative Agent for federal
funds acquired by the Administrative Agent during each day included in such
period, times (b) the amount equal to such Lender's Tranche A Commitment
Percentage or Tranche B Commitment Percentage, as the case may be, of such
Unpaid Reimbursement Obligation, times (c) a fraction, the numerator of which is
the number of days that elapse from and including the date the Administrative
Agent paid the draft presented for honor or otherwise made payment to the date
on which such Lender's Tranche A Commitment Percentage or Tranche B Commitment
Percentage, as the case may be, of such Unpaid Reimbursement Obligation shall
become immediately available to the Administrative Agent, and the denominator of
which is 360. The responsibility of the Administrative Agent to the Borrower and
the Lenders shall be only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with such presentment shall
be in conformity in all material respects with such Letter of Credit.
2.5. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 2 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Administrative Agent, any
Lender or any beneficiary of a Letter of Credit. The Borrower further agrees
with the Administrative Agent and the Lenders that the Administrative Agent and
the other Lenders shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 2.2 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrower against the beneficiary of any Letter
-23-
of Credit or any such transferee. The Administrative Agent and the Lenders shall
not be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. The Borrower agrees that any action taken
or omitted by the Administrative Agent or any Lender under or in connection with
each Letter of Credit and the related drafts and documents, if done in good
faith and in the absence of gross negligence and willful misconduct, shall be
binding upon the Borrower and shall not result in any liability on the part of
the Administrative Agent or any Lender to the Borrower.
2.6. RELIANCE BY ISSUER. To the extent not inconsistent with
Section 2.4, the Administrative Agent shall be entitled to rely, and shall be
fully protected in relying upon, any Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document 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, 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 Reimbursement and Pledge
Agreement unless it shall first have received such advice or concurrence of the
Required Lenders as it reasonably deems appropriate or it shall first be
indemnified to its reasonable 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
Reimbursement and Pledge Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Lenders and all future holders of a Letter of
Credit Participation.
2.7. FACILITY FEE. The Borrower agrees to pay to the Administrative
Agent for the accounts of the Lenders in accordance with their respective
Commitment Percentages a facility fee (the "Facility Fee") calculated at the
rate equal to seven and one-half one-hundredths of one percent (.075%) per annum
of the Total Commitment. The Facility Fee shall be payable quarterly in arrears
on the first day of each calendar quarter for the immediately preceding calendar
quarter (or portion thereof in the event that less than a full calendar quarter
has elapsed) commencing on the first such date following the date hereof, with a
final payment (i) to the Tranche A Lenders on the date on which the Commitments
in respect of the Tranche A Letters of Credit shall terminate and (ii) to the
Tranche B Lenders on the date on which the
-24-
Commitments in respect of the Tranche B Letters of Credit shall terminate.
2.8. LETTER OF CREDIT FEE. The Borrower agrees to pay to the
Administrative Agent for the accounts of the Lenders in accordance with their
respective Commitment Percentages a Letter of Credit Fee (the "Letter of Credit
Fee") calculated based on the face amount of each outstanding Letter of Credit
at a rate equal to (a) with respect to the Tranche A Letters of Credit,
twenty-seven and one-half one-hundredths of one percent (.275%) per annum and
(b) with respect to the Tranche B Letters of Credit, twenty-two and one-half
one-hundredths of one percent (.225%) per annum. The Letter of Credit Fee shall
be payable quarterly in advance on the Closing Date, on the date of any issuance
of any Letter of Credit and on the first day of each calendar quarter (or
portion thereof in the event that less than a full calendar quarter has elapsed)
commencing on the first such date after the Closing Date with a final payment
(i) to the Tranche A Lenders on the date on which there are no outstanding
Tranche A Letters of Credit and the Tranche A Commitments have been terminated
and (ii) to the Tranche B Lenders on the date on which there are no outstanding
Tranche B Letters of Credit and the Tranche B Commitment have been terminated.
Upon the granting of an Extension, pursuant to Section 2.1.5, the Letter of
Credit Fee may be subject to an annualized increase or decrease, as determined
by the Administrative Agent in its reasonable discretion. The Borrower shall
also pay to the Administrative Agent, for its own account, the Administrative
Agent's customary or scheduled costs of issuance and usual and customary costs
of, amendment, negotiation or document examination with respect to the Letters
of Credit.
3. CERTAIN GENERAL PROVISIONS.
3.1. FEES PAYABLE PURSUANT TO THE FEE LETTER. The Borrower agrees to
pay to the Administrative Agent and the Arranger the fees set forth in the Fee
Letter.
3.2. FUNDS FOR PAYMENTS.
3.2.1. PAYMENTS TO ADMINISTRATIVE AGENT. All payments of
interest, Reimbursement Obligations, Fees and any other amounts due
hereunder or under any of the other Loan Documents shall be made on the
due date thereof to the Administrative Agent in Dollars, for the
respective accounts of the Lenders and the Administrative Agent, at the
Administrative Agent's Office or at such other place that the
Administrative Agent may from time to time designate, in each case at
or about 11:00
-25-
a.m. (Boston, Massachusetts, time or other local time at the place of
payment) and in immediately available funds.
3.2.2. NO OFFSET, ETC. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without
recoupment, setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions
of any nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other authority therein
unless the Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Administrative Agent, for
the account of the Lenders or the Administrative Agent, as the case may
be, on the date on which such amount is due and payable hereunder or
under such other Loan Document, such additional amount in Dollars as
shall be necessary to enable the Lenders or the Administrative Agent to
receive the same net amount which the Lenders or the Administrative
Agent would have received on such due date had no such obligation been
imposed upon the Borrower. The Borrower will deliver promptly to the
Administrative Agent certificates or other valid vouchers for all taxes
or other charges deducted from or paid with respect to payments made by
the Borrower hereunder or under such other Loan Document.
3.3. COMPUTATIONS. All computations of interest and of Fees shall be
based on a 360-day year and paid for the actual number of days elapsed.
3.4. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender or the Administrative Agent by any central
Administrative Agent or other fiscal, monetary or other authority (whether or
not having the force of law), shall:
(a) subject any Lender or the Administrative Agent to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any
-26-
nature with respect to this Reimbursement and Pledge Agreement, the
other Loan Documents, any Letters of Credit or such Lender's Commitment
(other than taxes based upon or measured by the income or profits of
such Lender or the Administrative Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Lender of the
fees or interest in respect of the Letters of Credit or any other
amounts payable to any Lender or the Administrative Agent under this
Reimbursement and Pledge Agreement or any of the other Loan Documents,
or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Reimbursement and
Pledge Agreement) any special deposit, reserve, assessment, liquidity,
capital adequacy or other similar requirements (whether or not having
the force of law) against assets held by, or deposits in or for the
account of, or loans by, or letters of credit issued by, or commitments
of an office of any Lender, or
(d) impose on any Lender or the Administrative Agent any other
conditions or requirements with respect to this Reimbursement and
Pledge Agreement, the other Loan Documents, any Letters of Credit, such
Lender's Commitment, or any letters of credit or commitments of which
such Lender's Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to any Lender of making,
funding, issuing, renewing, extending or maintaining such
Lender's Commitment or any Letter of Credit, or
(ii) to reduce the amount of interest, Reimbursement
Obligation or other amount payable to such Lender or the
Administrative Agent hereunder on account of such Lender's
Commitment or any Letter of Credit, or
(iii) to require such Lender or the Administrative
Agent to make any payment or to forego any interest or
Reimbursement Obligation or other sum payable hereunder, the
amount of which payment or foregone interest or Reimbursement
Obligation or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such
Lender or the Administrative Agent from the Borrower
hereunder,
-27-
then, and in each such case, the Borrower will, upon demand made by such Lender
or (as the case may be) the Administrative Agent at any time and from time to
time and as often as the occasion therefor may arise, pay to such Lender or the
Administrative Agent such additional amounts as will be sufficient to compensate
such Lender or the Administrative Agent for such additional cost, reduction,
payment or foregone interest or Reimbursement Obligation or other sum, provided
that the Borrower shall not be obligated to pay any additional amounts which
were incurred by any of the Lenders or the Administrative Agent more than
forty-five (45) days prior to the date on which such Lender or the
Administrative Agent, as the case may be, had knowledge of such additional
amounts. The Lender or the Administrative Agent shall present a certificate
setting forth a reasonable calculation of the amount of such increased costs as
per Section 3.6 hereof.
3.5. CAPITAL ADEQUACY. If after the date hereof any Lender or the
Administrative Agent determines that (a) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for bank holding
companies or any change in the interpretation or application thereof by a
Governmental Authority with appropriate jurisdiction, or (b) compliance by such
Lender or the Administrative Agent or any corporation controlling such Lender or
the Administrative Agent with any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect of reducing the return on such
Lender's or the Administrative Agent's commitment with respect to any
Reimbursement Obligations to a level below that which such Lender or the
Administrative Agent could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or the Administrative
Agent's then existing policies with respect to capital adequacy and assuming
full utilization of such entity's capital) by any amount deemed by such Lender
or (as the case may be) the Administrative Agent to be material, then such
Lender or the Administrative Agent may notify the Borrower of such fact. The
Borrower agrees to pay such Lender or (as the case may be) the Administrative
Agent for the amount of such reduction in the return on capital as and when such
reduction is determined upon presentation by such Lender or (as the case may be)
the Administrative Agent of a certificate in accordance with Section 3.6 hereof;
provided that the Borrower shall not be obligated to pay any additional amounts
which were incurred by any of the Lenders or the Administrative Agent more than
forty-five (45) days prior to the date on which such Lender or the
Administrative Agent, as the case may be, had knowledge of such additional
amounts. Each Lender shall allocate such cost increases among its customers in
good faith and on an equitable basis.
-28-
3.6. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Section 3.4 and 3.5 and a brief explanation of such amounts
which are due, submitted by any Lender or the Administrative Agent to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing.
3.7. CHANGE OF LOCATION OF LENDING OFFICE; REPLACEMENT OF LENDER. If
the Borrower shall, as a result of the requirements of Sections 3.4 or 3.5,
be required to pay any Lender the additional costs referred to in such Sections
and the Borrower, in its reasonable discretion, shall deem such additional
amounts to be material, the Borrower shall have the right to (a) request in
writing to such Lender which has certified additional costs to the Borrower,
with copy to the Administrative Agent, that such Lender change the location of
its lending office in order to mitigate such additional costs and (b) if (i)
such Lender does not change the location of its lending office within sixty (60)
days of receipt of such request, or (ii) the Borrower determines, in its
reasonable discretion, after such change in the location of such lending office
that any remaining additional costs are still material, substitute another
Lender who is an Eligible Assignee for such Lender which has certified the
additional costs to the Borrower. Any such substitution shall take place in
accordance with Section 13.2 and shall otherwise be on terms and conditions
reasonably satisfactory to the Administrative Agent, and until such time as such
substitution shall be consummated, the Borrower shall continue to pay such
additional costs. Upon any such substitution, the Borrower shall pay or cause to
be paid to the Lender that is being replaced all amounts properly demanded and
unreimbursed and such Lender will be released from liability hereunder.
3.8. INTEREST AFTER DEFAULT. Unpaid Reimbursement Obligations and all
other overdue amounts payable hereunder or under any of the other Loan
Documents, including, without limitation, overdue Fees, shall bear interest
compounded monthly and payable on demand at a rate per annum equal to the Base
Rate plus two percent (2%) until such amount shall be paid in full (after as
well as before judgment).
4. COLLATERAL SECURITY.
4.1. SECURITY OF BORROWER. The Obligations shall be secured by a
perfected first priority security interest (subject only to (i) liens arising by
operation of law, so long as the aggregate obligations secured thereby do not
exceed $1,000,000 and (ii) the Custodial Lien and Set-Off Rights) in the
following: (i) the Securities Account and all property held therein or
-29-
any replacement or successor account and/or any and all substitutions, additions
and accessions thereto, which shall include, but not be limited to, cash,
investment property, securities, security entitlements, securities accounts and
any and all financial assets credited to and held in the Securities Account or
any replacement or successor account, including, without limitation, the
property described on Schedule 4.1 attached hereto and made a part hereof, as
such property may be released or substituted pursuant to the terms hereof; (ii)
the Deposit Account and all of the property from time to time held therein, and
(iii) to the extent not already included in clauses (i) or (ii) above,
dividends, distributions, income, interest and all proceeds of the foregoing,
including, without limitation, the roll-over or reinvested proceeds of the
foregoing, whether now existing or hereafter arising (collectively, the "Pledged
Collateral"). Any delivery or transfer of any of the Pledged Collateral to the
Custodian and credited to the Securities Account or the Deposit Account shall be
deemed a delivery or transfer to the Administrative Agent.
4.2. DEPOSIT ACCOUNT. The Borrower or any other person on behalf of the
Borrower, including the Custodian, may from time to time deposit cash sums
denominated in Dollars into the Deposit Account. Interest earned on the amounts
held or credited to the Deposit Account shall remain in the Deposit Account. The
Borrower may from time to time request, and the Administrative Agent agrees to,
effect transfers of cash from the Deposit Account to the Securities Account for
the sole purpose of allowing the Borrower to purchase Qualified Securities to be
held in or credited to the Securities Account; provided that (a) any such
transfer request shall involve a minimum amount of $500,000 or integral
multiples of $100,000 in excess thereof, (b) after giving effect to such
transfer request, the Borrower remains in compliance with the covenant contained
in Section 6.8 and (c) no Event of Default has occurred and is continuing
hereunder.
4.3. SECURITY INTEREST. For and in consideration of the sum of ten
Dollars ($10.00) and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and for and in consideration of the
Administrative Agent's agreement to issue the Letters of Credit and the Lenders'
agreement to purchase Letter of Credit Participations therein, the Borrower
hereby pledges, hypothecates, and impresses the Pledged Collateral with a lien
in favor of the Administrative Agent, on behalf of the Lenders, and grants to
the Administrative Agent a security interest in the Pledged Collateral, in each
case to secure the punctual payment and performance of all the Obligations. The
Borrower covenants and agrees that (i) with respect to the Pledged Collateral
consisting of the Securities Account, the property held therein and any and all
proceeds thereof, the Administrative Agent has control and, from
-30-
and after the issuance of a Notice of Exclusive Control, which notice shall not
be given unless an Event of Default has occurred and is continuing hereunder,
the Administrative Agent shall have sole and exclusive control, over such
Pledged Collateral and that it shall take all such steps as may be necessary to
cause the Administrative Agent to have sole and exclusive control over such
Pledged Collateral; (ii) with respect to the Pledged Collateral Consisting of
the Deposit Account, the property held therein and any and all proceeds thereof,
except as expressly permitted in Section 4.2 above, the Administrative Agent has
sole and exclusive control over such Pledged Collateral and the Borrower shall
take all such steps as may be necessary to cause the Administrative Agent to
have sole and exclusive control over such Pledged Collateral and the Borrower
shall have no rights to withdraw or direct the transfer of any or all credit
balances at any time in the Deposit Account for so long as any Obligations
remain outstanding under or in respect of the Loan Documents; (iii) it shall not
sell, transfer, assign, or otherwise dispose of any of the Pledged Collateral
without the prior written consent of the Administrative Agent except in
connection with substitutions of Pledged Collateral permitted pursuant to
Section 4.7(b) and provided that, after giving effect to such substitutions, the
Borrower is in compliance with the covenant contained in Section 6.8; (iv) it
shall do or cause to be done all things necessary to preserve and keep in full
force and effect the perfected first priority security interest in the Pledged
Collateral granted to the Administrative Agent hereunder (subject to laws
affecting creditor's rights, generally); (v) it shall not create or permit the
existence of liens or security interests in the Pledged Collateral in favor of
third parties other than (A) liens arising by operation of law, so long as the
aggregate obligations secured thereby do not exceed $1,000,000 and (B) the
Custodial Lien and Set-Off Rights; (vi) it shall not take any action or omit to
take any action that would result in the termination of the Control Agreement
without the prior consent of the Administrative Agent and it shall otherwise
comply in all respects with the provisions of the Control Agreement; and (vii)
with respect to the Deposit Account and the Securities Account, it shall not
give instructions or entitlement orders to the Custodian that would require the
Custodian to advance any margin or other credit to or for the benefit of the
Borrower.
4.4. BORROWER'S ADDITIONAL OBLIGATIONS. The Borrower agrees that: (1)
any distribution in kind received by the Borrower from any party for or on
account of the Pledged Collateral, including distributions of stock as a
dividend or split of any of the Pledged Collateral, shall be promptly delivered
to the Administrative Agent, for the account of the Lenders, in the form
received with any required endorsement; (2) additional collateral in form and
kind satisfactory to the Administrative Agent will be deposited by the Borrower
with the Administrative Agent,
-31-
for the account of the Lenders, in accordance with Section 6.8; (3) any note or
other instrument executed and delivered to the Borrower by any party to evidence
any obligation of such party with respect to the Pledged Collateral shall be
promptly delivered with any required endorsement to the Administrative Agent.
All such items shall be held by the Administrative Agent in accordance with the
terms of this Reimbursement and Pledge Agreement.
4.5. CERTAIN RIGHTS AND DUTIES OF ADMINISTRATIVE AGENT AND LENDERS. The
Borrower acknowledges that the Administrative Agent and the Lenders have no duty
of any type with respect to the Pledged Collateral except for the use of due
care in safekeeping any of the Pledged Collateral actually in the physical
custody of the Administrative Agent or the Lenders; prior to the occurrence of
any Event of Default the Administrative Agent's and the Lenders' rights with
respect to the Pledged Collateral shall be limited to the Administrative Agent's
and the Lenders' rights as secured party and pledgee and the right to perfect
their security interest, preserve, enforce and protect the lien granted
hereunder and their interest in the Pledged Collateral. Prior to the occurrence
and continuance of any Event of Default, the Borrower shall be entitled to vote
any Pledged Collateral constituting securities or capital stock and to give
consents, waivers and ratifications in respect thereof; provided, however, that
no vote shall be cast or consent, waiver or ratification given by the Borrower
if the effect thereof would impair any of the Pledged Collateral or be
inconsistent with or result in any violation of any of the provisions of this
Reimbursement and Pledge Agreement. All such rights of the Borrower to vote and
give consents, waivers and ratifications with respect to the Pledged Collateral
shall cease upon the occurrence and continuance of an Event of Default.
4.6. POWER OF ATTORNEY, ETC. The Borrower hereby irrevocably
constitutes and appoints the Administrative Agent the true and lawful
attorney-in-fact for and on behalf of the Borrower with full power of
substitution and revocation in its own name or in the name of the Borrower to
make, execute, deliver and record, as the case may be, any and all financing
statements, continuation statements, notices of exclusive control, assignments,
proofs of claim, powers of attorney, leases, discharges or other instruments or
agreements which the Administrative Agent in its sole discretion may deem
necessary or advisable to perfect, preserve, or protect (and, after the
occurrence and during the continuance of an Event of Default, to enforce) the
lien granted hereunder and the Administrative Agent's and the Lenders' interest
in the Pledged Collateral and to carry out the purposes of this Reimbursement
and Pledge Agreement, including but without limiting the generality of the
foregoing, any and all proofs of claim in bankruptcy
-32-
or other insolvency proceedings of the Borrower, with the right, upon the
occurrence and during the continuance of an Event of Default, to collect and
apply to the Obligations all distributions and dividends made on account of the
Pledged Collateral. The rights and powers conferred on the Administrative Agent
by the Borrower are expressly declared to be coupled with an interest and shall
be irrevocable until all the Obligations are paid and performed in full. A
carbon, photographic, or other reproduction of a security agreement (including
this Reimbursement and Pledge Agreement) or a financing statement is sufficient
as a financing statement to the extent permitted by applicable law.
4.7. RELEASE OF COLLATERAL. The Administrative Agent shall grant a
release of its lien on the Pledged Collateral:
(a) In the event that the Collateral Coverage Amount exceeds
the Dollar Equivalent of the Aggregate Maximum Drawing Amount plus the
Dollar Equivalent of all Unpaid Reimbursement Obligations consisting of
amounts paid under Letters of Credit, as set forth in Section
2.2(a)(i), (such excess being referred to herein as the "Release
Amount") then, so long as no Event of Default has occurred and is
continuing, the Administrative Agent shall, at the request and expense
of the Borrower, release such portions of the Pledged Collateral
designated by the Borrower with a fair market value equal to the
Release Amount (or such smaller amount as may be requested by the
Borrower); provided that in no event shall the Administrative Agent be
required to release any Pledged Collateral after the occurrence and
during the continuance of an Event of Default or in an aggregate amount
that is less than five hundred thousand dollars ($500,000). In
connection with any such partial release of the Pledged Collateral, the
Administrative Agent shall give such consents as may be necessary to
permit the Custodian to allow the Borrower to withdraw the Release
Amount from the Securities Account and/or the Deposit Account, as the
case may be. The Borrower agrees to reimburse the Administrative Agent
on demand for any and all out-of-pocket costs and expenses incurred by
the Administrative Agent in connection with any such partial release of
the Pledged Collateral, including, without limitation, reasonable
attorney's fees.
(b) So long as the Collateral Coverage Amount exceeds the
Dollar Equivalent of the Aggregate Maximum Drawing Amount plus all
Unpaid Reimbursement Obligations consisting of amounts paid under
Letters of Credit, as set forth in Section 2.2(a)(i), and so long as no
Event of Default has occurred and is continuing, the
-33-
Borrower may make substitutions of equal or greater value for the
Pledged Collateral; provided that such Pledged Collateral shall at all
times consist of cash and Qualified Securities. In the event that any
amounts are paid or due to be paid in respect of the Pledged Collateral
(whether at scheduled maturity or otherwise), the Borrower may give
instructions to roll-over or reinvest such amounts in Qualified
Securities, all of which shall remain Pledged Collateral hereunder.
(c) In the event that (i) any and all Letters of Credit are
fully drawn or expire or are returned to the Administrative Agent for
cancellation, and (ii) all Reimbursement Obligations with respect to
any drawings of Letters of Credit have been fully satisfied pursuant to
the provisions of this Reimbursement and Pledge Agreement and the other
Loan Documents, and (iii) no other Obligations, whether contingent or
otherwise, are then outstanding, the Administrative Agent agrees that
(A) it shall, after request by Borrower and at Borrower's sole cost and
expense, release the Pledged Collateral from the security interest and
lien created by this Reimbursement and Pledge Agreement and shall
execute, or cause to be executed, such instruments of release and
discharge as may be reasonably requested by the Borrower and (B) the
Borrower may thereafter withdraw from the Deposit Account any amounts
constituting the balance in the Deposit Account.
5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lenders and the
Administrative Agent as follows:
5.1. CORPORATE AUTHORITY.
5.1.1. INCORPORATION; GOOD STANDING. The Borrower (a) is a
corporation (or similar business entity) duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or formation, (b) has all requisite corporate (or the
equivalent company) power to own its property and conduct its business
as now conducted and as presently contemplated, and (c) is in good
standing as a foreign corporation (or similar business entity) and is
duly authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified
would not have a Material Adverse Effect.
5.1.2. AUTHORIZATION. The execution, delivery and performance
of this Reimbursement and Pledge Agreement and the other Loan Documents
to which the Borrower is, or is to become, a
-34-
party and the transactions contemplated hereby and thereby (a) are
within the corporate (or the equivalent company) authority of the
Borrower, (b) have been duly authorized by all necessary corporate (or
the equivalent company) proceedings, (c) do not and will not conflict
with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower is subject or any
judgment, order, writ, injunction, license or permit applicable to the
Borrower and (d) do not conflict with any provision of the Governing
Documents of, or any agreement or other instrument binding upon, the
Borrower.
5.1.3. ENFORCEABILITY. The execution and delivery of this
Reimbursement and Pledge Agreement and the other Loan Documents to
which the Borrower is or is to become a party will result in valid and
legally binding obligations of the Borrower enforceable against it in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights or by the application of
equitable principles relating to enforceability (regardless of whether
considered in a proceeding in equity or at law) including, without
limitation, (i) the possible unavailability of specific performance
injunctive relief or any equitable remedy and (ii) concepts of
materiality, reasonableness, good faith and fair dealings; provided
that the Borrower assumes for the purposes of this Section 5.1.3 that
this Reimbursement and Pledge Agreement and the other Loan Documents
have been validly executed and delivered by each of the parties thereto
other than the Borrower.
5.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
the Borrower of this Reimbursement and Pledge Agreement and the other
Loan Documents to which the Borrower is or is to become a party and the
transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or
authority other than those already obtained.
5.3. FINANCIAL STATEMENTS.
5.3.1. FISCAL YEAR. The Borrower and each of its Subsidiaries
has a fiscal (or financial) year which is the twelve months ending on
December 31 of each calendar year.
-35-
5.3.2. FINANCIAL STATEMENTS. There are no Contingent Liabilities (as
defined on Schedule 8 hereto) of the Borrower as of such date involving
material amounts, known to the officers of the Borrower, which were not
disclosed in such balance sheet and the notes related thereto. There has
been furnished to each of the Lenders a consolidated balance sheet of the
Parent and its Subsidiaries as at the Balance Sheet Date, and a
consolidated statement of income of the Parent and its Subsidiaries for
the fiscal year then ended, certified by a Responsible Officer. Such
balance sheet and statement of income have been prepared in accordance
with GAAP and fairly present the financial condition of the Parent as at
the close of business on the date thereof and the results of operations
for the fiscal year then ended. There are no Contingent Liabilities (as
defined on Schedule 8 hereto) of the Parent or any of its Subsidiaries as
of such date involving material amounts, known to the officers of the
Parent, which were not disclosed in such balance sheet and the notes
related thereto. In the event that GAAP requires that the financial
statements be presented on a combined basis, the Borrower shall have
furnished a combined balance sheet and a combined statement of income for
the Parent and its Subsidiaries.
5.4. NO MATERIAL ADVERSE CHANGES, ETC. Since the Balance Sheet Date there
has been no event or occurrence which has had a Material Adverse Effect.
5.5. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower possesses all
franchises, patents, copyrights, trademarks, trade names, licenses and permits,
and rights in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of others.
5.6. LITIGATION. Except as set forth in Schedule 5.6 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries before any Governmental
Authority, (a) that, if adversely determined, might, either in any case or in
the aggregate, (i) have a Material Adverse Effect or (ii) materially impair the
right of the Borrower and its Subsidiaries to carry on business substantially as
now conducted by them, or result in any substantial liability not adequately
covered by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Parent and its Subsidiaries or, in the event
that GAAP requires the financial statements to be presented on a combined basis,
the combined balance sheet or (b) which, question the validity of this
Reimbursement and Pledge Agreement.
-36-
5.7. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor or any
of its Subsidiaries is subject to any Governing Document or other legal
restriction, or any judgment, decree, order, law, statute, rule or regulation
that has or, to the knowledge of the Responsible Officers, is expected in the
future to have a Material Adverse Effect. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement that has or is expected, in
the judgment of the Borrower's officers, to have any Material Adverse Effect.
5.8. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its Governing
Documents, or any agreement or instrument to which it may be subject or by which
it or any of its properties may be bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial penalties or have a Material
Adverse Effect.
5.9. TAX STATUS. The Borrower and its Subsidiaries (a) have made or filed
all federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them is subject,
except those which the failure to file would not have a Material Adverse Effect,
(b) have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings or those which the
failure to pay would not have a Material Adverse Effect and (c) have set aside
on their books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and none of the Responsible Officers of
the Borrower know of any basis for any such claim.
5.10. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and
is continuing.
5.11. INVESTMENT COMPANY ACTS. Neither the Borrower nor any of its
Subsidiaries is an "investment company", or an "affiliated company" or a
"principal underwriter" of an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended.
5.12. ABSENCE OF FINANCING STATEMENTS, ETC. Except as set forth on
Schedule 5.12, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office,
-37-
that purports to cover, affect or give notice of any present or possible future
lien on any of the Pledged Collateral.
5.13. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable, under applicable law, to
establish and perfect the Administrative Agent's security interest in the
Pledged Collateral. The Administrative Agent and the Lenders acknowledge and
agree that the Pledged Collateral is subject to liens and set-off rights in
favor of the Custodian pursuant to Article V, Section 10 of the Control
Agreement (the "Custodial Lien and Set-off Rights"). The Pledged Collateral and
the Administrative Agent's rights with respect to the Pledged Collateral are not
subject to any setoff, claims, withholdings or other defenses other than the
Custodial Lien and Set-off Rights. The Borrower is the owner of the Pledged
Collateral free from any lien, encumbrance or security interest, other than (i)
liens arising by operation of law, so long as the aggregate obligations secured
thereby do not exceed $1,000,000, (ii) the Custodial Lien and Set-Off Rights and
(iii) those granted hereby.
5.14. USE OF PROCEEDS.
5.14.1. GENERAL. The Borrower will obtain Letters of Credit to be
issued in the ordinary course of the Borrower's business.
5.14.2. REGULATIONS U AND X. No portion of any Letter of Credit is
to be obtained, for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations U and X
of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
221 and 224.
5.14.3. INELIGIBLE SECURITIES. No portion of any Letter of Credit is
to be obtained, for the purpose of knowingly purchasing, or providing
credit support for the purchase of, during the underwriting or placement
period or within thirty (30) days thereafter, any Ineligible Securities
underwritten or privately placed by a Financial Affiliate.
5.15. SUBSIDIARIES, ETC. Montpelier Marketing Services (UK) Limited and
Montpelier Holdings (Barbados) SRL are the only Subsidiaries of the Borrower.
Except as set forth on Schedule 5.15 hereto, neither the Borrower nor any
Subsidiary of the Borrower is engaged in any joint venture or partnership with
any other Person. The jurisdiction of the registered office of each Subsidiary
of the Borrower is listed on Schedule 5.15 hereto.
-38-
5.16. DISCLOSURE. None of this Reimbursement and Pledge Agreement or any
of the other Loan Documents contains any untrue statement of a material fact or
omits to state a material fact known to the Borrower necessary in order to make
the statements herein or therein not misleading. There is no fact known to the
Borrower or any of its Subsidiaries which has a Material Adverse Effect, or
which is reasonably likely in the future to have a Material Adverse Effect,
exclusive of effects resulting from changes in general economic conditions,
legal standards or regulatory conditions.
5.17. FOREIGN ASSETS CONTROL REGULATIONS, ETC. None of the requesting or
issuance, extension or renewal of any Letters of Credit or the use of the
proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C.
Section 1 et seq., as amended) (the "Trading With the Enemy Act") or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) (the "Foreign Assets Control
Regulations") or any enabling legislation or executive order relating thereto
(which for the avoidance of doubt shall include, but shall not be limited to (a)
Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) (the "Executive Order") and (b) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, neither the
Borrower nor any of its Subsidiaries (a) is or will become a "blocked person" as
described in the Executive Order, the Trading With the Enemy Act or the Foreign
Assets Control Regulations or (b) engages or will engage in any dealings or
transactions, or be otherwise associated, with any such "blocked person".
6. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, so long as any Unpaid
Reimbursement Obligation or Letter of Credit is outstanding or the
Administrative Agent has any obligation to issue, extend or renew any Letters of
Credit:
6.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause
to be paid the interest on all Reimbursement Obligations, Fees and all other
amounts provided for in this Reimbursement and Pledge Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is a party, all
in accordance with the terms of this Reimbursement and Pledge Agreement and such
other Loan Documents.
-39-
6.2. MAINTENANCE OF OFFICE. The Borrower will maintain its registered
office at ▇ ▇▇▇-▇▇-▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ 08, Bermuda, or at such other place
as the Borrower shall designate upon written notice to the Administrative Agent,
where notices, presentations and demands to or upon the Borrower in respect of
the Loan Documents to which the Borrower is a party may be given or made.
6.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause each of
its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with GAAP, (b)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves, and (c) at
all times engage PricewaterhouseCoopers or other independent certified public
accountants satisfactory to the Administrative Agent as the independent
certified public accountants of the Borrower and its Subsidiaries and will not
permit more than thirty (30) days to elapse between the cessation of such firm's
(or any successor firm's) engagement as the independent certified public
accountants of the Borrower and its Subsidiaries and the appointment in such
capacity of a successor firm as shall be satisfactory to the Administrative
Agent.
6.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will
deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Parent, the
consolidated balance sheet of the Parent and its Subsidiaries and the
consolidating balance sheet of the Parent and its Subsidiaries, each as at
the end of such year, and the related consolidated statement of income and
consolidated statement of cash flow and consolidating statement of income
and consolidating statement of cash flow for such year, each setting forth
in comparative form the figures for the previous fiscal year and all such
consolidated and consolidating statements to be in reasonable detail,
prepared in accordance with GAAP, and certified, without qualification and
without an expression of uncertainty as to the ability of the Parent, the
Borrower or any of their Subsidiaries to continue as going concerns, by
PricewaterhouseCoopers or any other independent certified public
accountant engaged pursuant to Section 6.3(c);
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of the
Parent, copies of the unaudited consolidated balance sheet of the
-40-
Parent and its Subsidiaries and the unaudited consolidating balance sheet
of the Parent and its Subsidiaries, each as at the end of such quarter,
and the related consolidated statement of income and consolidated
statement of cash flow and consolidating statement of income and
consolidating statement of cash flow for the portion of the Parent's
fiscal year then elapsed, all in reasonable detail and prepared in
accordance with GAAP, together with a certification by the principal
financial or accounting officer of the Parent that the information
contained in such financial statements fairly presents the financial
position of the Parent and its Subsidiaries on the date thereof (subject
to year-end adjustments);
(c) Within thirty (30) days of receipt of any audit committee report
prepared by the Borrower's accountants, if there are any reportable events
resulting in any discussion in the sections of such report entitled
"Errors or Irregularities", "Illegal Acts" and "Misstatements Due to
Fraud", the Borrower will provide copies of such sections to the
Administrative Agent;
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Parent in substantially
the form of Exhibit D hereto (a "Compliance Certificate") and setting
forth in reasonable detail computations evidencing compliance with the
covenants contained in Section 8 and (if applicable) reconciliations to
reflect changes in GAAP since the Balance Sheet Date;
(e) no later than the tenth (10th) Business Day of each month, or,
following the occurrence and during the continuance of an Event of
Default, at such other times as the Administrative Agent may request, a
certificate (the "Pledged Collateral Certificate") substantially in the
form of Exhibit E attached hereto, signed by an officer of the Borrower,
certifying compliance with the collateral coverage requirement set forth
in Section 6.8 and demonstrating, in detail satisfactory to the
Administrative Agent, the fair market value (as valued by Bloomberg or, if
Bloomberg is not available, another quotation service reasonably
acceptable to the Administrative Agent) of the Qualified Securities and
the amount of cash on deposit in the Deposit Account as of the last
Business Day of the immediately preceding month;
(f) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities
-41-
and Exchange Commission or sent to the stockholders of the Borrower;
(g) from time to time such other financial data and information as
the Administrative Agent or any Lender may reasonably request;
In the event that GAAP requires the financial statements required under
clauses (a) and (b) above to be presented on a combined basis, the
Borrower shall deliver such combined and combining statements in lieu of
the required consolidated and consolidating financial statements.
6.5. NOTICES.
6.5.1. DEFAULTS. As soon as practicable after Responsible Officer of
the Borrower knows of the existence of any Default or Event of Default,
the Borrower will notify the Administrative Agent, in writing, of the
occurrence of such Default or Event of Default, together with a reasonably
detailed description thereof, and the actions the Borrower proposes to
take with respect thereto.
6.5.2. NOTIFICATION OF CLAIM AGAINST PLEDGED COLLATERAL. The
Borrower will, immediately upon becoming aware thereof, notify the
Administrative Agent, in writing, of any setoff, claims, withholdings or
other defenses to which any of the Pledged Collateral, or the
Administrative Agent's rights with respect to the Pledged Collateral, are
subject other than with respect to the Custodial Lien and Set-off Rights,
provided that the Borrower will notify the Administrative Agent hereunder
of any set-off exercised by the Custodian pursuant to the Custodial Lien
and Set-off Rights.
6.5.3. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and
will cause each of its Subsidiaries to, give notice to the Administrative
Agent and each of the Lenders in writing within thirty (30) days of
becoming aware of any litigation or proceedings threatened in writing or
any pending litigation and proceedings affecting the Borrower or any of
its Subsidiaries or to which the Borrower or any of its Subsidiaries is or
becomes a party involving an uninsured claim against the Borrower or any
of its Subsidiaries that could reasonably be expected to have a Material
Adverse Effect on the Borrower or any of its Subsidiaries and stating the
nature and status of such litigation or proceedings. The Borrower will
give notice to the Administrative Agent, in writing, in form and detail
satisfactory to the Administrative Agent, within ten (10) days
-42-
of any final judgment not covered by insurance, against the Borrower or
any of its Subsidiaries in an amount in excess of $5,000,000.
6.6. LEGAL EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will do or
cause to be done all things necessary to preserve and keep in full force and
effect its legal existence, rights and franchises and those of its Subsidiaries.
It (i) will cause all of its properties and those of its Subsidiaries used or
useful in the conduct of its business or the business of its Subsidiaries to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment, (ii) will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times,
and (iii) will continue to engage primarily in the businesses now conducted by
them and in related businesses; provided that nothing in this Section 6.6 shall
prevent the Borrower from discontinuing the operation of any Subsidiary or the
operation and maintenance of any of its properties or any of those of its
Subsidiaries if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate have a Material Adverse Effect.
6.7. TAXES. The Borrower will, and will cause each of its Subsidiaries to,
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real estate, sales and activities, or any part thereof,
or upon the income or profits therefrom, other than where failure to pay such
taxes would not result in a Material Adverse Effect; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Borrower or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto; and provided further that the Borrower
and each Subsidiary will pay all such taxes, assessments, charges, levies or
claims forthwith upon the commencement of proceedings to foreclose any lien that
may have attached to the Pledged Collateral as security therefor.
6.8. COLLATERAL COVERAGE. The Borrower hereby covenants and agrees that
the Collateral Coverage Amount (as hereinafter defined) must at all times be
equal to or greater than the Dollar Equivalent of the Aggregate Maximum Drawing
Amount plus the Dollar Equivalent of all Unpaid Reimbursement Obligations
consisting of amounts paid under Letters of Credit, as set forth in Section
2.2(a)(i). As used herein, the
-43-
"Collateral Coverage Amount" means the sum of (a) the fair market value (as
calculated by the Administrative Agent in its reasonable discretion) of the
Pledged Collateral consisting of cash multiplied by 1.0 plus (b) the fair market
value (as calculated by the Administrative Agent by reference to Bloomberg or,
if Bloomberg is not available, another quotation service reasonably acceptable
to the Administrative Agent) of the Pledged Collateral consisting of Freely
Transferable debt obligations issued by the U.S. Treasury Department or backed
by the full faith and credit of the United States of America (the "Treasury
Collateral") multiplied by .90 plus (c) the fair market value (as calculated by
the Administrative Agent by reference to Bloomberg or, if Bloomberg is not
available, another quotation service reasonably acceptable to the Administrative
Agent) of the Pledged Collateral consisting of Freely Transferable debt
obligations issued by U.S. Federal Agencies other than the U.S. Treasury
Department (the "Federal Agency Collateral") multiplied by .80. The Federal
Agency Collateral together with the Treasury Collateral, shall be referred to
collectively as the "Qualified Securities". If the Borrower's A.M. Best Rating
falls below the rating of "A"-, (x) the multiplier "1.0" contained in clause (a)
above shall be decreased to ".90", (y) the multiplier ".90" contained in clause
(b) above shall be decreased to ".80" and (z) the multiplier ".80" contained in
clause (c) above shall be decreased to .70. If at any time the Collateral
Coverage Amount is less than the Dollar Equivalent of the Aggregate Maximum
Drawing Amount plus the Dollar Equivalent of all Unpaid Reimbursement
Obligations consisting of amounts paid under Letters of Credit, as set forth in
Section 2.2(a)(i), then the Borrower shall promptly provide to the
Administrative Agent and pledge hereunder such additional cash or Qualified
Securities as may be necessary to satisfy the foregoing Collateral Coverage
Amount. Failure to do so within two (2) Business Days shall constitute an
immediate and automatic Event of Default under the terms and conditions of this
Reimbursement and Pledge Agreement. Notwithstanding the monthly reporting
obligations set forth in Section 6.4(e), the covenant contained herein shall be
tested at all times.
6.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
6.9.1. GENERAL. The Borrower shall permit the Administrative Agent,
upon reasonable prior notice and at reasonable times to visit and inspect
any of the properties of the Borrower or any of its Subsidiaries, to
examine the books of account of the Borrower and its Subsidiaries (and to
make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of the Borrower and its Subsidiaries with, and to be
advised as to the same by, its and their officers. Following the
occurrence and during the continuance of an Event of Default, any
-44-
of the Lenders and any of the Administrative Agent's or any of the
Lenders' employees, agents, consultants or attorneys, may accompany the
Administrative Agent on such visits, inspections or discussions.
6.9.2. COMMUNICATIONS WITH ACCOUNTANTS. The Borrower authorizes the
Administrative Agent to communicate directly with the Borrower's
independent certified public accountants and authorizes such accountants
to disclose to the Administrative Agent and the Lenders any and all
financial statements and other supporting financial documents and
schedules with respect to the business, financial condition and other
affairs of the Borrower or any of its Subsidiaries. Following the
occurrence and during the continuance of an Event of Default, any of the
Lenders and any of the Administrative Agent's or any of the Lenders'
employees, agents, consultants or attorneys, may participate in such
communications.
At the request of the Administrative Agent, the Borrower shall
deliver a letter addressed to such accountants instructing them to comply
with the provisions of this Section 6.9.2.
6.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower
will, and will cause each of its Subsidiaries to, comply with (a) the applicable
laws and regulations wherever its business is conducted, including all
environmental laws, except where failure to do so would not have a Material
Adverse Effect, (b) the provisions of its Governing Documents, (c) all
agreements and instruments by which it or any of its properties may be bound,
except where failure to do so would not have a Material Adverse Effect, and (d)
all applicable decrees, orders, and judgments, except where failure to do so
would not have a Material Adverse Effect. If any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
competent government shall become necessary or required in order that the
Borrower fulfill any of its obligations hereunder or any of the other Loan
Documents to which the Borrower is a party, the Borrower will immediately take
or cause to be taken all reasonable steps within the power of the Borrower to
obtain such authorization, consent, approval, permit or license and furnish the
Administrative Agent and the Lenders with evidence thereof.
6.11. USE OF PROCEEDS. The Borrower will obtain Letters of Credit solely
for the purposes set forth in Section 2.1.1 and 2.1.2.
6.12. FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Lenders and the
-45-
Administrative Agent and execute such further instruments and documents as the
Lenders or the Administrative Agent shall reasonably request to carry out to
their satisfaction the transactions contemplated by this Reimbursement and
Pledge Agreement and the other Loan Documents.
7. CERTAIN NEGATIVE COVENANTS.
The Borrower covenants and agrees that, so long as any Unpaid
Reimbursement Obligation or Letter of Credit is outstanding or the
Administrative Agent has any obligations to issue, extend or renew any Letters
of Credit:
7.1. BUSINESS ACTIVITIES. The Borrower will not engage directly or
indirectly (whether through Subsidiaries or otherwise), as its primary business,
in any type of business other than the businesses conducted by them on the
Closing Date and in related businesses.
7.2. FISCAL YEAR. The Borrower will not, and will not permit any of it
Subsidiaries to, change the date of the end of its fiscal or financial year from
that set forth in Section 5.3.1.
7.3. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any transaction with any Affiliate
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any such Affiliate has a substantial interest or is an officer,
director, trustee or partner, on terms more favorable to such Person than would
have been obtainable on an arm's-length basis in the ordinary course of business
provided that transactions between the Parent and any wholly-owned Subsidiary of
the Parent or between any wholly-owned Subsidiaries of the Parent shall be
excluded from the restrictions set forth in this Section 7.3.
7.4. DISPOSITION OF ASSETS. The Borrower shall not, and not permit any of
its Insurance Subsidiaries to, sell, transfer, convey or lease all or any
substantial part of its assets or sell or assign with or without recourse any
receivables, other than any sale, transfer, conveyance or lease in the ordinary
course of business, except for (x) any sale, transfer, lease or disposition of
an asset by or to a Subsidiary and (y) any such sale, transfer, conveyance,
lease or assignment of any wholly owned Subsidiary to the Borrower or any other
wholly owned Subsidiary,
-46-
provided in each case no Default or Event of Default has occurred and is
continuing or would result therefrom.
8. FINANCIAL COVENANTS.
The Borrower covenants and agrees that, so long as any Unpaid
Reimbursement Obligation or Letter of Credit is outstanding or the
Administrative Agent has any obligation to issue, extend or renew any Letters of
Credit, it shall comply with the financial covenants set forth on Schedule 8
hereto.
9. CLOSING CONDITIONS.
The obligations of the Administrative Agent to issue any initial Letters
of Credit shall be subject to the satisfaction of the following conditions
precedent on or prior to June 20, 2003:
9.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to the Administrative
Agent and the Administrative Agent shall have received a fully executed copy of
each such document.
9.2. CERTIFIED COPIES OF GOVERNING DOCUMENTS. The Administrative Agent
shall have received from the Borrower a copy, certified by a duly authorized
officer of the Borrower to be true and complete on the Closing Date, of each of
its Governing Documents as in effect on such date of certification.
9.3. CORPORATE OR OTHER ACTION. All corporate (or other) action necessary
for the valid execution, delivery and performance by the Borrower of this
Reimbursement and Pledge Agreement and the other Loan Documents to which it is
or is to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Administrative Agent shall have been provided to the
Administrative Agent.
9.4. INCUMBENCY CERTIFICATE. The Administrative Agent shall have received
from the Borrower an incumbency certificate, dated as of the Closing Date,
signed by a duly authorized officer of the Borrower and giving the name and
bearing a specimen signature of each individual who shall be authorized: (a) to
sign, in the name and on behalf of the Borrower, each of the Loan Documents to
which the Borrower is or is to become a party; (b), to apply for Letters of
Credit; and (c) to give notices and to take other action on its behalf under the
Loan Documents.
-47-
9.5. VALIDITY OF LIENS. This Reimbursement and Pledge Agreement and the
other Loan Documents shall be effective to create in favor of the Administrative
Agent a legal, valid and enforceable first security interest in and lien upon
the Pledged Collateral (subject to (i) liens arising by operation of law, so
long as the aggregate obligations secured thereby do not exceed $1,000,000 and
(ii) the Custodial Lien and Set-Off Rights). All filings, recordings, deliveries
of instruments and other actions necessary or desirable in the opinion of the
Administrative Agent to protect and preserve such security interests shall have
been duly effected. The Administrative Agent shall have received evidence
thereof in form and substance satisfactory to the Administrative Agent.
9.6. PERFECTION CERTIFICATES. The Administrative Agent shall have received
from the Borrower a completed and fully executed perfection certificate and the
results of collateral searches with respect to the Pledged Collateral,
indicating no liens, encumbrances or security interest other those granted
hereby and otherwise in form and substance satisfactory to the Administrative
Agent, it being understood that current liens in favor of Fleet National Bank,
which liens will be released on the Closing Date, will be evidenced on such
collateral searches.
9.7. CONTROL AGREEMENT. The Administrative Agent shall have executed, and
shall have received a fully-executed copy of, the Control Agreement, in form and
substance satisfactory to the Administrative Agent.
9.8. PLEDGED COLLATERAL CERTIFICATE. The Administrative Agent shall have
received from the Borrower the initial Pledged Collateral Certificate dated as
of the Closing Date.
9.9. OPINION OF COUNSEL. Each of the Lenders and the Administrative Agent
shall have received a favorable legal opinion addressed to the Lenders and the
Administrative Agent, dated as of the Closing Date, in form and substance
satisfactory to the Administrative Agent, from New York and Bermuda counsel to
the Borrower.
9.10. PAYMENT OF FEES AND EXPENSES. The Borrower shall have paid to the
Lenders or the Administrative Agent, as appropriate, the portion of the Letter
of Credit Fee due on the Closing Date, all other fees required to be paid
pursuant to the Fee Letter and any and all other fees and expenses incurred by
the Administrative Agent or the Lenders in connection with this Reimbursement
and Pledge Agreement and the other Loan Documents, including, without
limitation, legal fees and expenses.
-48-
10. CONDITIONS TO ALL LETTER OF CREDIT ISSUANCES.
The obligations of the Administrative Agent to issue, extend or renew any
Letter of Credit, in each case whether on or after the Closing Date, shall also
be subject to the satisfaction of the following conditions precedent:
10.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrower contained in this Reimbursement
and Pledge Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Reimbursement and Pledge
Agreement shall be true as of the date as of which they were made and shall also
be true at and as of the time of the issuance, extension or renewal of such
Letter of Credit, with the same effect as if made at and as of that time (except
to the extent of changes resulting from transactions contemplated or permitted
by this Reimbursement and Pledge Agreement and the other Loan Documents and
changes occurring in the ordinary course of business that singly or in the
aggregate do not have a Material Adverse Effect, and to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing. The
Administrative Agent shall have received a certificate of the Borrower signed by
an authorized officer of the Borrower to such effect.
10.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any applicable
law or regulations thereunder or interpretations thereof that in the reasonable
opinion of the Administrative Agent would make it illegal for the Administrative
Agent to issue, extend or renew such Letter of Credit.
10.3. DOCUMENTS. All documents in connection with the transactions
contemplated by this Reimbursement and Pledge Agreement, the other Loan
Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Lenders and to the Administrative Agent and the
Administrative Agent's Special Counsel, and the Lenders, the Administrative
Agent and such counsel shall have received all information and such counterpart
originals or certified or other copies of such documents as the Administrative
Agent may reasonably request.
10.4. PLEDGED COLLATERAL CERTIFICATE. The Administrative Agent shall have
received the most recent Pledged Collateral Certificate required to be delivered
to the Administrative Agent in accordance with Section 6.4(d) and, if requested
by the Administrative Agent, a Pledged
-49-
Collateral Certificate dated within three (3) days of the issuance, extension or
renewal of such Letter of Credit.
10.5. COLLATERAL COVERAGE AMOUNT. The Dollar Equivalent of the Aggregate
Maximum Drawing Amount plus the Dollar Equivalent of all Unpaid Reimbursement
Obligations consisting of amounts paid under Letters of Credit, as set forth in
Section 2.2(a)(i), shall not exceed the Collateral Coverage Amount.
11. EVENTS OF DEFAULT; ACCELERATION; ETC.
11.1. EVENTS OF DEFAULT AND ACCELERATION. Upon the occurrence and
continuance of any of the following events of default (each an "Event of
Default"):
(a) default in the payment of any of the Obligations consisting of
Reimbursement Obligations;
(b) default in the payment of any Obligations (other than those
specified in clause (a) above) under any of the Loan Documents, including,
without limitation, default in the payment of Fees and interest, which
shall continue for more than three (3) Business Days;
(c) default in the performance of any of the agreements or covenants
of the Borrower set forth in Section 6.5, 6.6, 6.8, 6.11, 7.1 or 7.4 or in
Section 8.2 of Schedule 8 under this Reimbursement and Pledge Agreement
after the date upon which any applicable grace or cure periods that are
expressly herein provided shall have elapsed;
(d) default in the performance of any of the agreements or covenants
of the Borrower set forth in Section 6.4(e) and continuance of such
default for a period of 10 days after the date upon which any applicable
grace or cure periods that are expressly herein provided shall have
elapsed;
(e) default in the performance of any of the agreements or covenants
of the Borrower set forth in Section 8.1 of Schedule 8 and continuance of
such default for a period of 30 days unless a Cure Contribution is made
during such 30 days;
(f) default in the performance of any of the agreements or covenants
of the Borrower under this Reimbursement and Pledge Agreement or any other
Loan Document (other than those specified in Sections 11.1(a), (b), (c),
(d) or (e) above and continuance of such default for a period of 30 days
after the date upon which (x) any
-50-
Responsible Officer had actual knowledge of such default or (y) any
applicable grace or cure periods that are expressly herein provided shall
have elapsed;
(g) the Control Agreement is terminated by any party thereto and the
Borrower, the Administrative Agent and another securities intermediary
satisfactory to the Administrative Agent and the Required Lenders have
not, as of the date that is three (3) Business Days prior to the effective
date of such termination, entered into a control agreement in form and
substance reasonably satisfactory to the Administrative Agent, such that
the Administrative Agent's first priority lien and security interest in
the Pledged Collateral is preserved unimpaired;
(h) the Administrative Agent's security interest in the Pledged
Collateral shall cease to be a first priority perfected security interest,
otherwise than in accordance with the terms hereof, or in connection with
(i) liens arising by operation of law, so long as the aggregate
obligations secured thereby do not exceed $1,000,000 or (ii) the Custodial
Lien and Set-Off Rights or with the express prior written agreement,
consent or approval of the Administrative Agent and the Required Lenders;
or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind this Reimbursement and Pledge Agreement or any
Loan Document shall be commenced by or on behalf of the Borrower or any of
its shareholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that, the
Reimbursement and Pledge Agreement or any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the
terms thereof;
(i) the Borrower shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business and such order
shall continue in effect for more than thirty (30) days;
(j) the Borrower admits in writing that it is generally unable to
pay debts as they mature or become due;
(k) the Borrower makes a general assignment for the benefit of
creditors;
(l) any of the Pledged Collateral is subject to any lien or
encumbrance or any claim or demand, other than (i) liens arising
-51-
by operation of law, so long as the aggregate obligations secured thereby
do not exceed $1,000,000 or (ii) the Custodial Lien and Set-Off Rights,
that if unpaid might by law or upon bankruptcy, insolvency or otherwise,
be given any priority whatsoever over the Borrower's general creditors
with respect to the Pledged Collateral or is transferred for the purposes
of the payment of indebtedness not arising hereunder or is taken by
attachment, execution or any other form of legal process and/or the
commencement of a proceeding by or against the Borrower under the federal
bankruptcy code or the equivalent under Bermuda law, or any other federal,
state or Bermuda laws seeking to adjudicate the Borrower a bankrupt or
insolvent, or seeking the liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of the Borrower
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, debtor in possession, examiner or other similar
official for the Borrower, the Pledged Collateral or any substantial part
of the Borrower's property, with or without consent of the Borrower, for
any purpose whatsoever and, in the case of any such proceeding instituted
against the Borrower (but not instituted by it), either such proceeding
shall remain unstayed and undismissed for a period of sixty (60) days; or
any of the following actions sought in such proceeding shall occur: the
entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, the Borrower, the
Pledged Collateral or for any substantial part of its property;
(m) the assertion of any levy, seizure or attachment on the Pledged
Collateral, other than with respect to the Custodial Lien and Set-Off
Rights, or the taking of any action by a regulatory authority to obtain
control of the Borrower, a substantial part of its assets (which shall not
have been vacated, discharged or stayed or bonded pending appeal within
sixty (60) days from the entry thereof), or any part of the Pledged
Collateral, other than with respect to the Custodial Lien and Set-Off
Rights;
(n) a Change in Control shall occur; or
(o) there shall occur any (i) default in the payment when due
(subject to any applicable grace period), whether by acceleration or
otherwise, of any other Debt (as defined on Schedule 8 hereto) of the
Borrower or any of its Subsidiaries if the aggregate amount of Debt of the
Borrower and/or any of its
-52-
Subsidiaries 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 and/or any of its Subsidiaries 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 indebtedness 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;
If any Event of Default shall have occurred and be continuing, the
Administrative Agent may and, upon the request of the Required Lenders, shall,
by notice to the Borrower, terminate the unused portion of the credit hereunder,
and upon such notice being given such unused portion of the credit hereunder
shall terminate immediately and the Administrative Agent shall be relieved of
all further obligations to issue, extend or renew Letters of Credit. No
termination of the credit hereunder shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations. Notwithstanding anything to the contrary
contained herein, no notice given or declaration by the Administrative Agent
pursuant to this Section 11 shall affect (i) the obligation of the Lenders or
the Administrative Agent to make any payment under any Letter of Credit in
accordance with the terms of such Letter of Credit or (ii) the obligations of
each Lender in respect of each Letter of Credit.
If any Event of Default shall occur and be continuing, the Administrative Agent
may or at the request of the Required Lenders, shall, with or without prior
notice to the Borrower, and without demand for additional collateral, (a)
transfer, or cause the Custodian to transfer any or all of the Pledged
Collateral and/or the Securities Account and/or the Deposit Account into the
name of the Administrative Agent or its nominee (including, without limitation,
having the Pledged Collateral debited from the Securities Account and/or the
Deposit Account and credited to an account designated by the Administrative
Agent) and vote any Pledged Collateral constituting securities or closely held
Capital Stock; (b) sell at public or private sale any or all of the Pledged
Collateral, which the Administrative Agent may purchase free from any right of
redemption; (c) apply to, or set off against, the Obligations of the Borrower
all or any portion of the Pledged Collateral, securities or other property of
the Borrower in the possession of the Administrative Agent; (d) convert any of
the Pledged Collateral or any proceeds thereof into Pounds Sterling, with
-53-
any such conversion costs being considered a collection expense and added to the
Obligations; and (e) at its discretion in its own name or in the name of the
Borrower take any action for the collection of the Pledged Collateral, including
the filing of a proof of claim in insolvency proceedings, and may receive the
proceeds thereof and execute releases therefor. After deducting its expenses,
including reasonable out-of-pocket attorney's fees, incurred in the sale or
collection of the Pledged Collateral, the Administrative Agent shall apply the
proceeds to the Obligations and shall account to the Borrower for any surplus.
The Borrower agrees that the Administrative Agent has no obligation to sell or
otherwise liquidate the Pledged Collateral in any particular order or to apply
the proceeds thereof to any particular portion of the Obligations. The Borrower
further agrees that after the occurrence and during the continuance of an Event
of Default, to the extent that any voting rights exist, the Administrative Agent
shall have no obligation to vote any Pledged Collateral constituting securities
or closely held Capital Stock but shall have the right to do so in its sole
discretion.
In connection with any secured party's sale, the Administrative Agent is
authorized, if it deems it advisable to do so, in order to comply with any
applicable securities laws, to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Pledged
Collateral for their own account for investment, and not with a view to the
distribution or re-sale thereof. Sales made subject to such restriction shall be
deemed to have been made in a commercially reasonable manner.
-54-
12. THE ADMINISTRATIVE AGENT.
12.1. AUTHORIZATION.
(a) The Administrative Agent is authorized to take such action on
behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to the Administrative Agent, together with such powers
as are reasonably incident thereto, including the authority, without the
necessity of any notice to or further consent of the Lenders, from time to
time to take any action with respect to any Pledged Collateral which may
be necessary to perfect, maintain perfected or insure the priority of the
security interest in and liens upon the Pledged Collateral, provided that
no duties or responsibilities not expressly assumed herein or therein
shall be implied to have been assumed by the Administrative Agent.
(b) The relationship between the Administrative Agent and each of
the Lenders is that of an independent contractor. The use of the term
"Administrative Agent" is for convenience only and is used to describe, as
a form of convention, the independent contractual relationship between the
Administrative Agent and each of the Lenders. Nothing contained in this
Reimbursement and Pledge Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary relationship
between the Administrative Agent and any of the Lenders.
(c) As an independent contractor empowered by the Lenders to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Administrative Agent is
nevertheless a "representative" of the Lenders, as that term is defined in
Article 1 of the Uniform Commercial Code, for purposes of actions for the
benefit of the Lenders and the Administrative Agent with respect to all
collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of the Administrative Agent as
"secured party", "mortgagee" or the like on all financing statements and
other documents and instruments, whether recorded or otherwise, relating
to the attachment, perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral security intended to
secure the payment or performance of any of the Obligations, all for the
benefit of the Lenders and the Administrative Agent.
-55-
12.2. EMPLOYEES AND ADMINISTRATIVE AGENTS. The Administrative Agent may
exercise its powers and execute its duties by or through employees or agents and
shall be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Reimbursement and Pledge
Agreement and the other Loan Documents. The Administrative Agent may utilize the
services of such Persons as the Administrative Agent in its sole discretion may
reasonably determine.
12.3. NO LIABILITY. Neither the Administrative Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Administrative
Agent or such other Person, as the case may be, shall be liable for losses due
to its willful misconduct or gross negligence.
12.4. NO REPRESENTATIONS.
12.4.1. GENERAL. The Administrative Agent shall not be responsible
for the execution or validity or enforceability of this Reimbursement and
Pledge Agreement, the Letters of Credit, any of the other Loan Documents
or any instrument at any time constituting, or intended to constitute,
collateral security for the Obligations, or for the value of any such
collateral security or for the validity, enforceability or collectability
of any such amounts owing with respect to any of the Obligations, or for
any recitals or statements, warranties or representations made herein or
in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Borrower or any of its
Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein
or in any instrument at any time constituting, or intended to constitute,
collateral security for the Obligations or to inspect any of the
properties, books or records of the Borrower or any of its Subsidiaries.
The Administrative Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or any
Lender shall have been duly authorized or is true, accurate and complete.
The Administrative Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Lenders, with respect to the credit
-56-
worthiness or financial conditions of the Borrower or any of its
Subsidiaries. Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and
based upon such information and documents as it has deemed appropriate,
made its own credit analysis and decision to enter into this Reimbursement
and Pledge Agreement.
12.4.2. CLOSING DOCUMENTATION, ETC. For purposes of determining
compliance with the conditions set forth in Section 12, each Lender that
has executed this Reimbursement and Pledge Agreement shall be deemed to
have consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the Administrative
Agent or the Arranger to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Lender, unless an officer of the
Administrative Agent or the Arranger active upon the Borrower's account
shall have received notice from such Lender not less than two (2) days
prior to the Closing Date specifying such Lender's objection thereto and
such objection shall not have been withdrawn by notice to the
Administrative Agent or the Arranger to such effect on or prior to the
Closing Date.
12.5. PAYMENTS.
12.5.1. PAYMENTS TO ADMINISTRATIVE AGENT. A payment by the Borrower
to the Administrative Agent hereunder or any of the other Loan Documents
for the account of any Lender shall constitute a payment to such Lender.
The Administrative Agent agrees promptly to distribute to each Lender such
Lender's pro rata share of payments received by the Administrative Agent
for the account of the Lenders except as otherwise expressly provided
herein or in any of the other Loan Documents.
12.5.2. DISTRIBUTION BY ADMINISTRATIVE AGENT. If in the opinion of
the Administrative Agent the distribution of any amount received by it in
such capacity hereunder or under any of the other Loan Documents might
involve it in liability, it may refrain from making distribution until its
right to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall adjudge
that any amount received and distributed by the Administrative Agent is to
be repaid, each Person to whom any such distribution shall have been made
shall either repay to the Administrative Agent its proportionate share of
-57-
the amount so adjudged to be repaid or shall pay over the same in such
manner and to such Persons as shall be determined by such court.
12.5.3. DELINQUENT LENDERS. Notwithstanding anything to the contrary
contained in this Reimbursement and Pledge Agreement or any of the other
Loan Documents, any Lender that fails (a) to purchase any Letter of Credit
Participation or (b) to comply with the provisions of Section 14.2 with
respect to making dispositions and arrangements with the other Lenders,
where such Lender's share of any payment received, whether by setoff or
otherwise, is in excess of its pro rata share of such payments due and
payable to all of the Lenders, in each case as, when and to the full
extent required by the provisions of this Reimbursement and Pledge
Agreement, shall be deemed delinquent (a "Delinquent Lender") and shall be
deemed a Delinquent Lender until such time as such delinquency is
satisfied. A Delinquent Lender shall be deemed to have assigned any and
all payments due to it from the Borrower, whether on account of Unpaid
Reimbursement Obligations, interest, fees or otherwise, to the remaining
nondelinquent Lenders for application to, and reduction of, their
respective pro rata shares of all Unpaid Reimbursement Obligations. The
Delinquent Lender hereby authorizes the Administrative Agent to distribute
such payments to the nondelinquent Lenders in proportion to their
respective pro rata shares of all Unpaid Reimbursement Obligations. A
Delinquent Lender shall be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payments to all
Unpaid Reimbursement Obligations of the nondelinquent Lenders, the
Lenders' respective pro rata shares of all Unpaid Reimbursement
Obligations have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such
delinquency.
12.6. HOLDERS OF PARTICIPATIONS. The Administrative Agent may deem and
treat the purchaser of any Letter of Credit Participation as the absolute owner
or purchaser thereof for all purposes hereof until it shall have been furnished
in writing with a different name by such purchaser or by a subsequent holder,
assignee or transferee.
12.7. INDEMNITY. The Lenders ratably agree hereby to indemnify and hold
harmless the Administrative Agent and its Affiliates from and against any and
all claims, actions and suits (whether groundless or otherwise), losses,
damages, costs, expenses (including any expenses for which the Administrative
Agent or such Affiliate has not been reimbursed
-58-
by the Borrower as required by Section 14.3), and liabilities of every nature
and character arising out of or related to this Reimbursement and Pledge
Agreement or any of the other Loan Documents (including without limitation, the
Administrative Agent's indemnity obligations under the Control Agreement), or
the transactions contemplated or evidenced hereby or thereby, or the
Administrative Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Administrative
Agent's willful misconduct or gross negligence.
12.8. ADMINISTRATIVE AGENT AS LENDER. In its individual capacity, Fleet
shall have the same obligations and the same rights, powers and privileges in
respect to its Commitment and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Administrative Agent.
12.9. RESIGNATION. The Administrative Agent may resign at any time by
giving sixty (60) days prior written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Administrative Agent. Unless a Default or Event of
Default shall have occurred and be continuing, such successor Administrative
Agent shall be reasonably acceptable to the Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a financial institution (a) having a senior
unsecured debt rating of not less than "A+" or its equivalent by S&P and (b) so
long as no Default or Event of Default has occurred, approved by the Borrower in
its reasonable discretion. If no successor shall have been so appointed and
accepted within sixty (60) days after the retiring Administrative Agent's giving
of notice of resignation, then the retiring Administrative Agent's registration
shall nonetheless become effective and (1) the retiring Administrative Agent
shall be discharged form its duties and obligations hereunder and (2) the
Required Lenders shall perform the duties of the Administrative Agent (and all
payments and communications provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly) until
such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this paragraph. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and
-59-
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation,
the provisions of this Reimbursement and Pledge Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.
12.10. ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial, administrative or like proceeding or any
assignment for the benefit of creditors relative to the Borrower or any of
its Subsidiaries, the Administrative Agent (irrespective of whether the
principal of any Reimbursement Obligation or Unpaid Reimbursement
Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative
Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding, under any such assignment
or otherwise:
(i) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the
Reimbursement Obligations or Unpaid Reimbursement Obligations and
all other Obligations that are owing and unpaid and to file such
other documents as may be necessary or advisable in order to have
the claims of the Lenders and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under this Reimbursement and Pledge
Agreement) allowed in such proceeding or under any such assignment;
and
(ii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the
same;
(b) Any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such proceeding or under any
such assignment is hereby authorized by each Lender to make such payments
to the Administrative Agent and, in the event that the Administrative
Agent shall consent to the making of such
-60-
payments directly to the Lenders, nevertheless to pay to the
Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its
agents and counsel, and any other amounts due the Administrative Agent
under this Reimbursement and Pledge Agreement.
(c) Nothing contained herein shall authorize the Administrative
Agent to consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations owed to such Lender or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any
Lender in any such proceeding or under any such assignment.
12.11. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Lender hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Administrative Agent thereof. The Administrative
Agent hereby agrees that upon receipt of any notice under this Section 12.11 it
shall promptly notify the other Lenders of the existence of such Default or
Event of Default.
12.12. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Administrative Agent shall, if (a)
so requested by the Required Lenders and (b) the Lenders have provided to the
Administrative Agent such additional indemnities and assurances against expenses
and liabilities as the Administrative Agent may reasonably request, proceed to
enforce the provisions of this Reimbursement and Pledge Agreement and the other
Loan Documents authorizing the sale or other disposition of all or any part of
the Pledged Collateral and exercise all or any such other legal and equitable
and other rights or remedies as it may have in respect of such Pledged
Collateral. The Required Lenders may direct the Administrative Agent in writing
as to the method and the extent of any such sale or other disposition, the
Lenders hereby agreeing to indemnify and hold the Administrative Agent, harmless
from all liabilities incurred in respect of all actions taken or omitted in
accordance with such directions, provided that the Administrative Agent need not
comply with any such direction to the extent that the Administrative Agent
reasonably believes the Administrative Agent's compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction.
-61-
13. SUCCESSORS AND ASSIGNS.
13.1. GENERAL CONDITIONS. The provisions of this Reimbursement and Pledge
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except
(a) to an Eligible Assignee in accordance with the provisions of Section 13.2,
or (b) by way of participation in accordance with the provisions of Section 13.4
or (c) by way of pledge or assignment of a security interest subject to the
restrictions of Section 13.6 (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Reimbursement and
Pledge Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in Section 13.4 and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Reimbursement and Pledge Agreement or any of
the other Loan Documents.
13.2. ASSIGNMENTS. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Reimbursement and Pledge Agreement (including all or a portion of its
Commitment); provided that (a) except in the cases of an assignment of the
entire remaining amount of the assigning Lender's Commitment or, of an
assignment to a Lender or a Lender Affiliate, the aggregate amount of the
Commitment shall not be less than $5,000,000 unless each of the Administrative
Agent and, so long as no Default or Event of Default has occurred and is
continuing, the Borrower, otherwise consent (each such consent not to be
unreasonably withheld or delayed); (b) each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Reimbursement and Pledge Agreement with respect the
Commitment assigned, it being understood that non-pro rata assignments of or
among any of the Commitments and the Reimbursement Obligations are not
permitted; (c) any assignment of a Commitment must be approved by the
Administrative Agent and so long as no Default or Event of Default has occurred
and is continuing, the Borrower, (such approval of the Borrower not to be
unreasonably withheld), unless the Person that is the proposed assignee is
itself a Lender with a Commitment; and (d) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation
-62-
fee of $3,500 (provided that such processing and recordation fee may be waived
by the Administrative Agent, in its sole discretion) and the Eligible Assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Subject to acceptance and recording thereof by the
Administrative Agent pursuant to Section 13.3, from and after the effective date
specified in each Assignment and Acceptance, the Eligible Assignee thereunder
shall be a party to this Reimbursement and Pledge Agreement and, to the extent
of the interest assigned by such Assignment and Acceptance have the rights and
obligations of a Lender under this Reimbursement and Pledge Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Reimbursement and Pledge Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Reimbursement and Pledge Agreement, such Lender shall cease to be a party
hereto) but shall continue to be entitled to the benefits of Sections 14.3 and
14.4 with respect to facts and circumstances occurring prior to the effective
date of such assignment. Any assignment or transfer by a Lender of rights or
obligations under this Reimbursement and Pledge Agreement that does not comply
with this paragraph shall be treated for purposes of this Reimbursement and
Pledge Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 13.4.
13.3. REGISTER. The Administrative Agent, acting solely for this purpose
as an agent of the Borrower, shall maintain at the Administrative Agent's Office
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Reimbursement and Pledge Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
13.4. PARTICIPATIONS. Any Lender may at any time, without the consent of,
or notice to, the Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person) (each, a "Participant") in all or a
portion of such Lender's rights and/or obligations under this Reimbursement and
Pledge Agreement (including all or a portion of its Commitment); provided that
(a) such Lender's obligations under this Reimbursement and Pledge Agreement
shall
-63-
remain unchanged, (b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (c) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Reimbursement and Pledge Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Reimbursement and
Pledge Agreement and to approve any amendment, modification or waiver of any
provision of this Reimbursement and Pledge Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that
would extend the term or increase the amount of the Commitment of such Lender as
it relates to such Participant, reduce the amount of any Letter of Credit Fee to
which such Participant is entitled or extend any regularly scheduled payment
date for principal or interest. Subject to Section 13.5, the Borrower agrees
that each Participant shall be entitled to the benefits of Sections 3.3.2, 3.4
and 3.5 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to Section 13.2. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 14.2 as though it
were a Lender, provided such Participant agrees to be subject to Section 14.2 as
though it were a Lender.
13.5. PAYMENTS TO PARTICIPANTS. A Participant shall not be entitled to
receive any greater payment under Sections 3.2.2, 3.4 and 3.5 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant.
13.6. MISCELLANEOUS ASSIGNMENT PROVISIONS. A Lender may at any time grant
a security interest in all or any portion of its rights under this Reimbursement
and Pledge Agreement to secure obligations of such Lender, in connection with
any pledge or assignment to secure obligations to any of the twelve Federal
Reserve Administrative Agents organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341; provided that no such grant shall release such
Lender from any of its obligations hereunder, provide any voting rights
hereunder to the secured party thereof, substitute any such secured party for
such Lender as a party hereto or affect any rights or obligations of the
Borrower or Administrative Agent hereunder.
13.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Lender is an Affiliate of the Borrower, then any such assignee Lender
shall have no right to vote as a Lender hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other
-64-
modifications to any of the Loan Documents or for purposes of making requests to
the Administrative Agent pursuant to Section 11, and the determination of the
Required Lenders shall for all purposes of this Reimbursement and Pledge
Agreement and the other Loan Documents be made without regard to such assignee
Lender's interest in any of the Reimbursement Obligations. If any Lender sells a
participating interest in any of the Reimbursement Obligations to a Participant,
and such Participant is the Borrower or an Affiliate of the Borrower, then such
transferor Lender shall promptly notify the Administrative Agent of the sale of
such participation. A transferor Lender shall have no right to vote as a Lender
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the
Administrative Agent pursuant to Section 11 to the extent that such
participation is beneficially owned by the Borrower or any Affiliate of the
Borrower, and the determination of the Required Lenders shall for all purposes
of this Reimbursement and Pledge Agreement and the other Loan Documents be made
without regard to the interest of such transferor Lender in the Reimbursement
Obligations to the extent of such participation.
14. PROVISIONS OF GENERAL APPLICATIONS.
14.1. AUTHORIZATION TO FILE FINANCING STATEMENTS. The Administrative Agent
is hereby authorized to file in any Uniform Commercial Code filing office a
financing statement naming the Borrower as the debtor and indicating the
collateral as the Pledged Collateral, including, the Securities Account and the
Deposit Account and all property held therein and any and all proceeds of any
thereof, whether now or hereafter existing or arising.
14.2. SETOFF. The Borrower hereby grants to the Administrative Agent and
each of the Lenders a continuing lien, security interest and right of setoff as
security for all liabilities and obligations to the Administrative Agent and
each Lender, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of the Administrative Agent or such Lender or
any Lender Affiliate and their successors and assigns or in transit to any of
them. Regardless of the adequacy of any collateral, if any of the Obligations
are due and payable and have not been paid or any Event of Default shall have
occurred, any deposits or other sums credited by or due from any of the Lenders
to the Borrower and any securities or other property of the Borrower in the
possession of such Lender may be applied to or set off by such Lender against
the payment of Obligations and any and all other liabilities,
-65-
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrower to such Lender. ANY AND ALL RIGHTS TO
REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Each of the Lenders
agree with each other Lender that (a) if an amount to be set off is to be
applied to indebtedness of the Borrower to such Lender, other than indebtedness
constituting Reimbursement Obligations owed to such Lender, such amount shall be
applied ratably to such other indebtedness and to the indebtedness constituting
Reimbursement Obligations owed to such Lender, and (b) if such Lender shall
receive from the Borrower, whether by voluntary payment, exercise of the right
of setoff, counterclaim, cross action, enforcement of the claim constituting
Reimbursement Obligations owed to, such Lender by proceedings against the
Borrower at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Reimbursement Obligations owed to, such Lender
any amount in excess of its ratable portion of the payments received by all of
the Lenders with respect to the Reimbursement Obligations owed to, all of the
Lenders, such Lender will make such disposition and arrangements with the other
Lenders with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Lender
receiving in respect of the Reimbursement Obligations owed it, its proportionate
payment as contemplated by this Reimbursement and Pledge Agreement; provided
that if all or any part of such excess payment is thereafter recovered from such
Lender, such disposition and arrangements shall be rescinded and the amount
restored to the extent of such recovery, but without interest.
14.3. EXPENSES. The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Reimbursement and Pledge Agreement, the other
Loan Documents and the other agreements and instruments mentioned herein, (b)
the reasonable fees, expenses and disbursements of the Administrative Agent's
Special Counsel or any local counsel to the Administrative Agent incurred in
connection with the preparation, syndication, administration or interpretation
of the Loan Documents and other instruments mentioned herein, each closing
hereunder, any amendments, modifications, approvals, consents or waivers hereto
or hereunder, or the cancellation of any Loan Document upon payment in full of
all of the Obligations or pursuant to any terms of such Loan Document for
providing for such cancellation, (c) the fees,
-66-
expenses and disbursements of the Administrative Agent and the Arranger incurred
by the Administrative Agent or the Arranger in connection with the preparation,
syndication, administration or interpretation of the Loan Documents and other
instruments mentioned herein, (d) all reasonable out-of-pocket expenses
(including without limitation reasonable attorneys' fees and costs, which
attorneys may be employees of any Lender or the Administrative Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges so long as the engagement of such professionals is
reasonable) incurred by any Lender or the Administrative Agent in connection
with (i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or any of its Subsidiaries or the administration
thereof after the occurrence of a Default or Event of Default and (ii) any
litigation or proceeding arising hereunder or related hereto or in any way
related to any Lender's or the Administrative Agent's relationship hereunder
with the Borrower or any of its Subsidiaries and (e) all reasonable fees,
expenses and disbursements of any Lender or the Administrative Agent incurred in
connection with UCC searches or UCC filings. The covenants contained in this
Section 14.3 shall survive payment or satisfaction in full of all other
obligations.
14.4. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless
the Administrative Agent, its Affiliates and the Lenders and their respective
Affiliates, directors, officers, employees, agents and advisors (collectively,
the "Indemnitees") from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Reimbursement and Pledge Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any actual
or proposed use by the Borrower or any of its Subsidiaries of the Letters of
Credit, (b) any payments to the Custodian or in connection with the Pledged
Collateral or (c) the Borrower entering into or performing this Reimbursement
and Pledge Agreement or any of the other Loan Documents, in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding; provided however that the
Borrower shall have no obligation to indemnify any Indemnitee for any liability,
losses, damages or expenses resulting solely from the gross negligence or
willful misconduct of such Indemnitee. Subject to Section 14.5 below, in
litigation, or the preparation therefor, the Indemnitees shall be entitled to
select their own counsel and, in addition to the foregoing indemnity, the
Borrower agrees to pay promptly the reasonable fees and expenses of such
-67-
counsel. If, and to the extent that the obligations of the Borrower under this
Section 14.4 are unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The covenants contained in this
Section 14.4 shall survive payment or satisfaction in full of all other
Obligations.
14.5. PAYMENTS BY BORROWER WITH RESPECT TO INDEMNIFIED PERSONS.
(a) Any Person entitled to reimbursement for expenses pursuant to Section
14.3 or indemnification pursuant to Section 14.4 (an "Indemnified Person") shall
promptly notify the Borrower in writing as to any action, claim, suit,
proceeding or investigation for which indemnity may be sought. After such notice
to the Borrower, so long as the position of the Borrower is not adverse to that
of the Indemnified Person, the Borrower shall be entitled to participate in, and
to the extent that it shall elect by written notice delivered to such
Indemnified Person promptly after receiving the aforesaid notice of such
Indemnified Person, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Person to represent such Indemnified Person in
such action, claim, suit, proceeding or investigation and shall pay as incurred
the reasonable fees and expenses of such counsel related to such action, claim,
suit, proceeding or investigation.
(b) In any action, claim, suit, proceeding or investigation, any
Indemnified Person shall have the right to retain its own separate counsel at
such Indemnified Person's own expense and not subject to reimbursement by the
Borrower; provided, however, that the Borrower shall pay as incurred the
reasonable fees and expenses of such counsel incurred in connection with
investigating, preparing, defending, paying, settling or compromising any
action, claim, suit, proceeding or investigation if (i) the parties to such
action, claim, suit, proceeding or investigation include both the Indemnified
Person and the Borrower and there may be legal defenses available to such
Indemnified Person which are different from or additional to those available to
the Borrower; (ii) the use of counsel chosen by the Borrower to represent both
the Borrower and such Indemnified Person would present such counsel with an
actual or potential conflict of interest; (iii) the Borrower shall not have
employed satisfactory counsel to represent the Indemnified Person within a
reasonable time after notice of the institution of such action, claim, suit,
proceeding or investigation; (iv) the Borrower has not provided the Indemnified
Person with adequate assurance of its acceptance of its liability for the
underlying claim pursuant to Section 14.4 and of its financial capacity to pay
the full amount of such underlying claim or (v) the
-68-
Borrower shall authorize the Indemnified Person to employ separate counsel (in
addition to any local counsel) at the expense of the Borrower. The Borrower
shall not, in connection with any action, claim, suit, proceeding or
investigation, be liable for the fees and expenses of more than one separate
firm of legal counsel for all Indemnified Parties, except to the extent the use
of one counsel to represent all Indemnified Persons would present such counsel
with an actual or potential conflict of interest, and in the event that separate
counsel is to be retained to represent one or more Indemnified Parties, such
separate counsel shall be chosen by Administrative Agent.
(c) Each Indemnified Person agrees that, unless the Borrower is unable to
comply with the provisions set forth in Section 14.5(a) above, without the
Borrower's prior written consent (not to be unreasonably withheld), it will not
settle, compromise or consent to the entry of any judgment in or otherwise seek
to terminate any claim, action, suit, proceeding or investigation in respect of
which indemnification could be sought hereunder unless such settlement,
compromise, consent or termination includes an unconditional release of the
Borrower and the Indemnified Person from all liabilities arising out of such
claim, action, suit, proceeding or investigation.
14.6. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in any of the other Loan Documents
or in any documents or other papers delivered by or on behalf of the Borrower or
any of its Subsidiaries pursuant hereto shall be deemed to have been relied upon
by the Lenders and the Administrative Agent, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any Letter of Credit or any amount
due under this Reimbursement and Pledge Agreement or any of the other Loan
Documents remains outstanding or the Administrative Agent has any obligation to
issue, extend or renew any Letter of Credit, and for such further time as may be
otherwise expressly specified in this Reimbursement and Pledge Agreement. All
statements contained in any Letter of Credit Application, Compliance Certificate
or Pledged Collateral Certificate delivered to any Lender or the Administrative
Agent at any time by or on behalf of the Borrower shall constitute
representations and warranties by the Borrower hereunder.
14.7. NOTICES. Except as otherwise specifically provided for herein, any
notice, demand or communication hereunder shall be given in writing (including
facsimile transmission) and mailed or delivered by hand or overnight courier to
the parties at their respective addresses set
-▇▇-
▇▇▇▇▇ ▇▇▇▇▇, ▇▇, as to each party, at such other address as shall be designated
by such party by a prior notice to the other party in accordance with the terms
of this provision.
(a) any notice to the Administrative Agent shall be sent as follows:
Fleet National Bank, Mail Stop: ▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with
a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any notice to the Borrower shall be sent as follows: Montpelier
Reinsurance Ltd., ▇ ▇▇▇-▇▇-▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇: The
Chairman, Fax: ▇▇▇-▇▇▇-▇▇▇▇, with a copy to: LeBoeuf, Lamb, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇.
(c) if to any Lender, at such Lender's address set forth on Schedule
1 hereto, or such other address for notice as such Lender shall have last
furnished in writing to the Person giving the notice.
All notices hereunder shall be effective (i) five (5) Business Days after
such notice is mailed, by registered or certified mail, postage prepaid (return
receipt requested), (ii) upon delivery by hand, (iii) upon delivery if delivered
by overnight courier (such delivery to be evidenced by the courier's records),
and (iv) in the case of any notice or communication by facsimile transmission,
on the date when sent.
14.8. MISCELLANEOUS. This Reimbursement and Pledge Agreement and the
Pledged Collateral shall not be in any way affected by the extension of time or
renewal of any of the Obligations, the modification in any manner or the taking
or release in whole or in part of any security therefor or the obligations of
the Borrower or any endorsers, sureties, guarantors or other parties or the
granting of any other indulgences to the Borrower. No termination of this
Reimbursement and Pledge Agreement shall be effective until the Obligations of
the Borrower secured by this Reimbursement and Pledge Agreement have been
satisfied in full.
14.9. SUCCESSORS AND ASSIGNS. This Reimbursement and Pledge Agreement
shall inure to the benefit of the Administrative Agent and the Lenders and its
and their successors and assigns and shall bind the Borrower and the successors,
representatives, legal representatives and/or heirs and assigns of the Borrower.
-70-
14.10. CHOICE OF LAW/BINDING EFFECT. This Reimbursement and Pledge
Agreement and the rights and obligations of the parties hereunder shall be
construed and interpreted in accordance with the laws of the State of New York,
excluding the laws applicable to conflicts or choice of law (other than Section
5-1401 of the New York General Obligations Law). Regardless of any provision in
any other agreement, for purposes of Article 9 of the uniform commercial code as
in effect in the State of New York, New York shall be deemed to be the
Administrative Agent's and the Lenders' jurisdiction.
14.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS REIMBURSEMENT AND PLEDGE AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY,
INCLUDING ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF
ANY OF THE PARTIES HERETO RELATING TO ENFORCEMENT OF THE LOAN DOCUMENTS AND
AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. Except as
prohibited by law, each of the Borrower, the Lenders and the Administrative
Agent hereby waives any right it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Borrower (a) certifies that no representative, agent or attorney of
any Lender or the Administrative Agent has represented, expressly or otherwise,
that such Lender or the Administrative Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that the
Administrative Agent and the Lenders have been induced to enter into this
Reimbursement and Pledge Agreement, the other Loan Documents to which it is a
party by, among other things, the waivers and certifications contained herein.
14.12. DELIVERY OF ADDITIONAL DOCUMENTS. The Borrower agrees to execute
and deliver to the Administrative Agent and/or third parties designated by the
Administrative Agent such additional documents, notices, requests and other
instruments as the Administrative Agent deems reasonably necessary or advisable
to protect the Administrative Agent's rights under this Reimbursement and Pledge
Agreement.
-71-
14.13. CONFIDENTIALITY. Each Lender agrees to maintain and to cause its
Affiliates to maintain the confidentiality of all information provided to it by
the Borrower or any Subsidiary of the Borrower, or by the Administrative Agent
on behalf of the Borrower or any Subsidiary of either of them, under this
Reimbursement and Pledge Agreement or any other Loan 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 Loan Documents
or in connection with other business now or hereafter existing or contemplated
directly with the Borrower or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Lender or its Affiliates or in violation of any
applicable confidentiality agreement known to the Lender, or (ii) 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 and/or with any restrictions on its use known to the Lender; provided,
however, that any Lender may disclose such information (A) 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; provided that the Lender makes reasonable efforts to request
confidential treatment of such information to the extent permitted by law; (B)
pursuant to subpoena or other court process; (C) as may be required (in such
Lender's reasonable judgment) in accordance with the provisions of any
applicable requirement of law; (D) 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; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Lender's independent auditors and
other professional advisors who agree to the confidentiality provisions hereof;
and (G) 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. Notwithstanding anything herein to the
contrary, the Administrative Agent and each Lender may disclose to any and all
persons, without limitation of any kind, any information with respect to U.S.
federal income tax treatment and U.S. federal income tax structure of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Administrative Agent or
such Lender relating to such tax treatment and tax structure.
14.14. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this Reimbursement and Pledge Agreement to be given by
the Lenders may be given, and any term of this
-72-
Reimbursement and Pledge Agreement, the other Loan Documents or any other
instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrower or any of its Subsidiaries of any
terms of this Reimbursement and Pledge Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrower and
the written consent of the Required Lenders. Notwithstanding the foregoing, no
amendment, modification or waiver shall:
(a) without the written consent of the Borrower and each
Lender directly affected thereby:
(i) reduce or forgive the principal amount of any
Reimbursement Obligations, or reduce the Letter of Credit Fee,
the Facility Fee or interest on amounts due hereunder or under
the other Loan Documents (other than interest accruing
pursuant to Section 3.8 following the effective date of any
waiver by the Required Lenders of the Default or Event of
Default relating thereto);
(ii) increase the amount of such Lender's Commitment
or extend the expiration date of such Lender's Commitment;
(iii) postpone or extend the Commitment Maturity Date
or any other regularly scheduled dates for payments of the
Reimbursement Obligations or any Fees or other amounts payable
to such Lender (it being understood that (A) a waiver of the
application of the default rate of interest and (B) any vote
to rescind any exercise of remedies made pursuant to Section
11 of amounts owing with respect to the Obligations shall
require only the approval of the Required Lenders); and
(iv) other than pursuant to a transaction permitted by
the terms of this Reimbursement and Pledge Agreement, release
all or substantially all of the Pledged Collateral (excluding,
if the Borrower or any Subsidiary of a Borrower becomes a
debtor under the federal Bankruptcy Code, the release of "cash
collateral", as defined in Section 363(a) of the federal
Bankruptcy Code pursuant to a cash collateral stipulation with
the debtor approved by the Required Lenders);
(b) without the written consent of all of the Lenders, amend
or waive this Section 14.14 or the definition of Required Lenders;
-73-
(c) without the written consent of the Administrative Agent,
amend or waive Section 12, the amount or time of payment of any fees or
expenses payable to the Administrative Agent or any other provision
applicable to the Administrative Agent.
No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or omission
on the part of the Administrative Agent or any Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrower shall entitle the Borrower to other or further
notice or demand in similar or other circumstances.
14.15. AGENT FOR SERVICE. The Borrower has irrevocably designated,
appointed, and empowered LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. with an office
on the date hereof at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as its
designee, appointee and agent to receive and accept for and on its behalf, and
its properties, assets and revenues, service of any and all legal process,
summons, notices and documents which may be served in any action, suit or
proceedings brought against the Borrower in any United States or State of New
York court. If for any reason such designee, appointee and agent hereunder shall
cease to be available to act as such, the Borrower agrees to designate a new
designee, appointee and agent in the Borough of Manhattan, The City of New York
on the terms and for the purposes of this Section 14.15 satisfactory to the
Administrative Agent. The Borrower further hereby irrevocably consents and
agrees to the service of any and all legal process, summons, notices and
documents in any action, suit or proceeding against the Borrower by serving a
copy thereof upon the relevant agent for service of process referred to in this
Section 14.15 (whether or not the appointment of such agent shall for any reason
prove to be ineffective or such agent shall accept or acknowledge such service)
or by mailing copies thereof by registered or certified air mail, postage
prepaid, to the Borrower at its address specified in Section 14.7 hereof. The
Borrower agrees that the failure of any such designee, appointee and agent to
give any notice of such service to it shall not impair or affect in any way the
validity of such service or any judgment rendered in any action or proceeding
based thereon. Nothing herein shall in any way be deemed to limit the ability of
the Lenders or the Administrative Agent to serve any such legal process,
summons, notices and documents in any other manner permitted by applicable law
or to obtain jurisdiction over the Borrower or bring actions, suits or
proceedings against the Borrower in such other jurisdictions, and in such
manner, as may be permitted by applicable law. Each of the Borrower, the
Administrative Agent and the Lenders irrevocably and unconditionally waives, to
the fullest extent
-74-
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions, suits or proceedings arising
out of or in connection with this Reimbursement and Pledge Agreement or any
other Loan Document brought in the United States Federal courts located in the
Borough of Manhattan, The City of New York or the courts of the State of New
York and hereby further irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. The
Borrower, the Administrative Agent and the Lenders each waive personal service
of any summons, complaint or other process and irrevocably consent to the
service of process by registered mail, postage prepaid, or by any other means
permitted by New York or federal law.
14.16. CONVERSION. If, for the purpose of obtaining judgment in any
court or obtaining an order enforcing a judgment, it becomes necessary to
convert any amount due under this Reimbursement and Pledge Agreement in Dollars
into any other currency (hereinafter in this Section 14.16 called the "second
currency"), then the conversion shall be made at the rate of exchange used by
the Administrative Agent prevailing on the Business Day preceding the day on
which the judgment is given or (as the case may be) the order is made. In the
event that there is a difference between the rate of exchange on the basis of
which the amount of such judgment or order is determined and the rate of
exchange prevailing on the date of payment, then the rate of exchange prevailing
on the date of payment shall govern the amount owing hereafter, and the Borrower
agrees to pay such amount as may be necessary to ensure that the amount paid on
such date in the second currency is the amount in such second currency which,
when converted at the rate of exchange for buying Dollars with the second
currency prevailing on the date of payment, is the amount which was due under
this Reimbursement and Pledge Agreement in Dollars before such judgment was
obtained or made. Any amount due from the Borrower to the Administrative Agent
and/or the Lenders under the second sentence of this Section 14.16 will be due
as a separate debt of the Borrower to the Administrative Agent and/or the
Lenders, shall constitute an Obligation hereunder and shall not be affected by
judgment or order being obtained for any other sum due under or in respect of
this Reimbursement and Pledge Agreement. The covenants contained in this Section
14.16 shall survive the payment in full of all of the other obligations of the
Borrower under this Reimbursement and Pledge Agreement.
14.17. COUNTERPARTS. This Reimbursement and Pledge Agreement and any
amendment hereof may be executed in several counterparts and by each party on a
separate counterpart, each of which
-75-
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. Delivery by facsimile by any of the parties
hereto of an executed counterpart hereof or of any amendment or waiver hereto
shall be as effective as an original executed counterpart hereof or of such
amendment or waiver and shall be considered a representation that an original
executed counterpart hereof or such amendment or waiver, as the case may be,
will be delivered.
-76-
IN WITNESS WHEREOF, the undersigned have duly executed this
Reimbursement and Pledge Agreement as a sealed instrument as of the date first
set forth above.
MONTPELIER REINSURANCE LTD.
By: ________________________________________
Name:
Title:
FLEET NATIONAL BANK, individually and as
Administrative Agent
By: ________________________________________
Name:
Title:
BANK OF AMERICA
By: ________________________________________
Name:
Title:
THE BANK OF NEW YORK
By: ________________________________________
Name:
Title:
BANK ONE
By: ________________________________________
Name:
Title:
BARCLAYS BANK PLC
By: ________________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, CAYMAN ISLAND
BRANCH
By: ________________________________________
Name:
Title:
ING BANK N.V., LONDON BRANCH
By: ________________________________________
Name:
Title:
ROYAL BANK OF SCOTLAND PLC
By: ________________________________________
Name:
Title:
Consented and Agreed to:
FLEET NATIONAL BANK,
as Party to the Existing Control Agreement
and the Existing Pledge Agreement
By:_______________________________________________
Name:
Title:
Date:
Schedule 8
Financial Covenants
8.1. LEVERAGE RATIO. The Parent will not permit the Leverage Ratio
to be more than thirty percent (30%).
8.2. A.M. BEST RATING. The Borrower will not permit its A.M. Best
Rating to fall below the rating of "B++".
Capitalized terms used in this Schedule 8 and not defined in the
Reimbursement and Pledge Agreement shall have the meanings ascribed to them
below.
Borrower Reinsurance Agreement. Any arrangement whereby the Borrower or
any other Insurance Subsidiary, as reinsurer, agrees to indemnify any other
insurance or reinsurance company against all or a portion of the insurance or
reinsurance risks underwritten by such insurance or reinsurance company under
any insurance or reinsurance policy.
Capital Lease Obligation. As to any Person, the obligations of such
Person to pay rent or other amounts under any lease which is required to be
classified and accounted for as a capital lease on a balance sheet of such
Person in accordance with GAAP. For purposes of this Reimbursement and Pledge
Agreement, the amount of such Capital Lease Obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
Consolidated Debt. The consolidated Debt (excluding Hedging
Obligations) of the Parent and its Subsidiaries.
Consolidated Net Worth. The Net Worth of the Parent and its
Subsidiaries on a consolidated basis.
Contingent Liability. Any agreement, undertaking or arrangement by
which any Person (outside the ordinary course of business) guarantees, endorses,
acts as surety for or otherwise becomes or is contingently liable for (by direct
or indirect agreement, contingent or otherwise, to provide funds for payment by,
to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure
a creditor against loss) the Debt, obligation or other liability of any other
Person (other than by endorsements of instruments in the course of collection),
or for the payment of dividends or other distribution 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 therefore, or to provide funds for the
-2-
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 each of the Borrower and the
Insurance Subsidiaries under Primary Policies or Borrower Reinsurance Agreements
which are entered into in the ordinary course of business (including security
posted by the Borrower and each of the Insurance Subsidiaries in the ordinary
course of its business to secure obligations thereunder) shall not be deemed to
be Contingent Liabilities of such Insurance Subsidiary or the Borrower 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 lesser of (i) the outstanding principal amount (or maximum
permitted principal amount, if larger) of the Debt, obligation or other
liability guaranteed or supported thereby or (ii) the maximum stated amount so
guaranteed or supported.
Debt. With respect to any Person, at any date, without duplication, (a)
all obligations of such Person for borrowed money or in respect of loans or
advances; (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) all obligations in respect of letters of
credit which have been drawn but not reimbursed by the Person for whose account
such letter of credit was issued within the later of (x) three (3) Business Days
and (y) the applicable cure period and bankers' acceptances issued for the
account of such Person; (d) all Capital Lease Obligations of such Person; (e)
all Hedging Obligations of such Person; (f) to the extent required to be
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) unsecured current
liabilities incurred in the ordinary course of business
-3-
and paid within ninety (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 or (y) any obligations of such Person under any Borrower Reinsurance
Agreement or any Primary Policy.
Hedging Obligations. With respect to any Person, the liability of such
Person under any futures contract or options contract, interest rate swap
agreements and interest rate collar agreements and all other agreements or
arrangements (other than Retrocession Agreements), designed to protect such
Person against fluctuations in interest rates or currency exchange rates. Debt
under a Hedging Obligation shall be the amount of such Person's net obligation,
if any, under each Hedging agreement (determined on the ▇▇▇▇-to-market value for
such agreement based upon a readily available quotation provided by a recognized
dealer in such type of Hedging agreement).
Leverage Ratio. The ratio, expressed as a percentage, of (a)
Consolidated Debt to (b) the sum of Tangible Net Worth plus Consolidated Debt.
Lien. 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.
Net Worth. With respect to any Person, the consolidated net worth of
such Person calculated in accordance with GAAP.
Primary Policies. Any insurance policies issued by the Borrower or any
other Insurance Subsidiary.
Retrocession Agreements. Any agreement, treaty, certificate or other
arrangement whereby the Borrower or any other Insurance Subsidiary cedes to
another insurer all or part of the Borrower's or such Insurance Subsidiary's
liability under a policy or policies of insurance reinsured by the Borrower or
such Insurance Subsidiary.
-4-
Tangible Net Worth. As to the Borrower, Consolidated Net Worth minus
intangible assets minus capitalized expenses.