EXHIBIT 10(g)
AMENDMENT NO. 2 TO CREDIT AGREEMENT
This AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment") is entered
into as of October 29, 1999 by and among Folksamerica Holding Company, Inc.,
a New York corporation (the "Borrower"), Bank One, NA (f/k/a The First
National Bank of Chicago), individually and as agent ("Agent"), and the other
financial institutions signatory hereto (the "Lenders").
R E C I T A L S
A. The Borrower, the Agent, the Lenders and ABN AMRO Bank, NA are party
to that certain $100,000,000 Credit Agreement dated as of February 24, 1999
(as amended, the "Credit Agreement"). Unless otherwise specified herein,
capitalized terms used in this Amendment shall have the meanings ascribed to
them by the Credit Agreement.
B. The Borrower, the Agent and the undersigned Lenders wish to amend the
Credit Agreement on the terms and conditions set forth below.
Now, therefore, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT. Upon the Effective Date (as
defined below), the Credit Agreement shall be amended as follows:
(a) ARTICLE I is amended as follows:
(i) by deleting the definitions of "Aggregate Commitment",
"Commitment", "Corporate Base Rate", "Documentation Agent", "Eurodollar
Base Rate", "Facility Termination Date", "Floating Rate" and "Lenders"
and replacing each in its entirety to read as follows:
"`Aggregate Commitment' means the aggregate of the Commitments
of all the Lenders, as reduced from time to time pursuant to the
terms hereof. The Aggregate Commitment as of October 29, 1999 is
$120,000,000."
"`Commitment' means, for each Lender, the obligation of such
Lender to make Loans and participate in Facility Letters of Credit
not exceeding the amount set forth opposite its name on the
Commitment Schedule or as set forth in any Notice of Assignment
relating to any assignment which has become effective pursuant to
SECTION 12.3.2, as such amount may be modified from time to time
pursuant to the terms hereof."
"`Corporate Base Rate' means a rate per annum equal to the
corporate base rate or prime rate of interest announced by Bank One
or by its parent, Bank One Corporation, from time to time, changing
when and as said corporate base rate or prime rate changes. The
Corporate Base Rate is a reference rate and does not necessarily
represent the lowest or best rate of interest actually charged to
any customer. Bank One may make commercial loans or other loans at
rates of interest at, above or below the Corporate Base Rate."
"`Documentation Agent' means First Union National Bank, in its
capacity as Documentation Agent for the Lenders pursuant to ARTICLE
X, and not in its capacity as Lender."
"`Eurodollar Base Rate' means, with respect to a Eurodollar
Advance for the relevant Interest Period, the applicable British
Bankers' Association Interest Settlement Rate for deposits in U.S.
dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, and having a maturity equal to such Interest Period,
PROVIDED that, (i) if Reuters Screen FRBD is not available to the
Agent for any reason, the applicable Eurodollar Base Rate for the
relevant Interest Period shall instead be the applicable British
Bankers' Association Interest Settlement Rate for deposits in U.S.
dollars as reported by any other generally recognized financial
information service as of 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period, and (ii) if no such British
Bankers' Association Interest Settlement Rate is available to the
Agent, the applicable Eurodollar Base Rate for the relevant
Interest Period shall instead be the rate determined by the Agent
to be the rate at which Bank One or one of its Affiliate banks
offers to place deposits in U.S. dollars with first-class banks in
the London interbank market at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, in the approximate amount of Bank One's relevant Loan and
having a maturity equal to such Interest Period."
"`Facility Termination Date' means February 24, 2005 or any
earlier date on which the Aggregate Commitment is reduced to zero
or otherwise terminated pursuant to the terms hereof."
"`Floating Rate' means, for any day, a rate of interest per
annum equal to the higher of (a) the Corporate Base Rate for such
day, and (b) the sum of the Federal Funds Effective Rate for such
day PLUS 1/2% per annum; PROVIDED, that `Floating Rate' means, for
any day for the period from November 15, 1999 to January 15, 2000,
a rate of interest per annum equal to the highest of (i) the
Corporate Base Rate for such day, (ii) the sum of the Federal Funds
Effective Rate for such day plus 1/2% per annum and (iii) the sum
of the then current Federal Reserve Board Open Market Committee's
`Target Fed Funds Rate' for such day plus 1 1/2% per annum plus the
Applicable Eurodollar Margin, in each case changing when and as the
Corporate Base Rate, the Federal Funds Effective Rate or the Target
Fed Funds Rate, as the case may be, changes."
-2-
"`Lenders' means the lending institutions listed on the
signature pages of Amendment No. 2 to Credit Agreement, dated as of
October 29, 1999, and their respective successors and assigns."
(ii) by deleting the definition of "First Chicago" and
replacing it in its entirety with the following definition of "Bank One"
in its proper alphabetical order:
"`Bank One' means Bank One, NA, a national banking association
having its principal office in Chicago, Illinois, in its individual
capacity, and its successors."
(iii) by deleting the definition of "Fund" and replacing it in
its entirety with the following definition of "WMIG" in its proper
alphabetical order:
"`WMIG' means White Mountains Insurance Group, Inc., a
Delaware corporation formerly known as Fund American Enterprises
Holdings, Inc., and, subject to satisfaction of the applicable
Reorganization Conditions, its successors pursuant to the
Reorganization Transactions."
(iv) by adding the following definitions for "Commitment
Schedule", "Medium Term Notes", "Medium Term Note Indenture",
"Reorganization Conditions", "Reorganization Transactions", "Syndication
Agent", "White Mountains-Arizona", "White Mountains-Bermuda" and "White
Mountains-Delaware" each in its proper alphabetical order:
"`Commitment Schedule' means the Schedule attached hereto
identified as such."
"`Medium Term Notes' means the securities issued by WMIG under
the Medium Term Note Indenture in the original aggregate principal
amount of $150,000,000, of which approximately $100,385,000 remains
outstanding as of October 29, 1999."
"`Medium Term Note Indenture' means that certain indenture
dated as January 1, 1993 between WMIG, as issuer, and Bank One
Trust Company, NA (f/k/a The First National Bank of Chicago), as
trustee, as amended and supplemented from time to time."
"`Reorganization Conditions' means: (a) with respect to the
transaction described in CLAUSE (b) of the definition of
Reorganization Transactions, WMIG shall have furnished to the
Agent, with sufficient copies for the Lenders, the following
documents, all of which shall be in form and substance reasonably
satisfactory to the Lenders and their counsel: (i) the certificate
of merger and all other merger documents, (ii) the articles of
incorporation of the surviving entity, (iii) the bylaws of the
surviving entity, (iv) a certificate of incumbency as to the
authorized officers for the surviving entity, (v) an affirmation by
the surviving entity of its Obligations under the Guaranty as
successor to WMIG, (vi) opinions
-3-
of counsel as to such matters as the Agent may reasonably request
and (vii) a certificate of compliance by the surviving entity as to
the matters described in SECTIONS 6.12(c)(i) and (iii) of the WMIG
Credit Agreement; and (b) with respect to the transaction described
in CLAUSE (c) of the definition of Reorganization Transactions,
WMIG shall have furnished to the Agent, with sufficient copies for
the Lenders, the following documents, all of which shall be in form
and substance reasonably satisfactory to the Lenders and their
counsel: (i) the memorandum of continuance filed with the Registrar
of Companies in Bermuda and all other redomestication documents,
(ii) the bye-laws of the continuing entity, (iii) a certificate of
incumbency as to the authorized officers for the continuing entity,
(iv) an affirmation by the continuing entity of its Obligations
under the Guaranty as successor to WMIG, (v) opinions of counsel as
to such matters as the Agent may reasonably request and (vi) a
certificate of compliance by the continuing entity as to the
matters described in SECTIONS 6.12(c)(i) and (iii) of the WMIG
Credit Agreement."
"`Reorganization Transactions' means the subsidiary formation,
merger and change of domicile transactions, taken together, by
which (a) White Mountains-Delaware has formed a Wholly-Owned
Subsidiary, White Mountains Insurance Group (Arizona), Inc., (b)
immediately preceding and for the purpose of consummating the
transaction described in CLAUSE (c) below, White Mountains-Delaware
merges with and into White Mountains-Arizona, which will be the
surviving corporation in the merger, with each outstanding share of
common stock of White Mountains-Delaware converted automatically
into one share of common stock of White Mountains-Arizona, (c)
White Mountains-Arizona is redomiciled and continues its existence
as White Mountains-Bermuda upon registration of the memorandum of
continuance by the Registrar of Companies in Bermuda, with each
outstanding share of common stock of White Mountains-Arizona
continuing automatically as one common share of White
Mountains-Bermuda, (d) White Mountains forms a new subsidiary,
White Mountains Properties (Barbados) SRL, a Barbados corporation
(and Wholly-Owned Subsidiary of White Mountains-Delaware), and
contributes all the shares of common stock of White Mountains
Properties, Inc., a Delaware corporation and survivor of a merger
with Fund American Enterprises, Inc., to such new subsidiary, after
which White Mountains Properties (Barbados) SRL will merge White
Mountains Properties, Inc. with and into the Borrower with the
Borrower being the surviving entity and (e) White
Mountains-Delaware forms a new Wholly-Owned Subsidiary, White
Mountains Holdings (Barbados) SRL, a Barbados corporation, and
contributes all the shares of common stock of White Mountains to
such new subsidiary."
"`Syndication Agent' means Fleet National Bank, in its
capacity as Syndication Agent for the Lenders pursuant to ARTICLE
X, and not in its capacity as Lender."
"`White Mountains-Arizona' means White Mountains Insurance
Group (Arizona), Inc., an Arizona corporation."
-4-
"`White Mountains-Bermuda' means White Mountains Insurance
Group, Ltd., a Bermuda company, following the registration of the
memorandum of continuance by White Mountains-Arizona with the
Registrar of Companies in Bermuda."
"`White Mountains-Delaware' means WMIG prior to the
consummation of the Reorganization Transactions."
(v) by deleting the definition for "Alternate Base Rate".
(b) Each reference therein to "First Chicago" is deemed amended
to be a reference to "Bank One".
(c) Each reference therein to "Alternate Base Rate" is deemed
amended to be a reference to "Floating Rate".
(d) Each reference therein to "Fund" is deemed amended
(including in other defined terms) to be a reference to "WMIG".
(e) SECTION 2.5.3(a) is amended by deleting the table therein
and replacing it in its entirety with the following table:
"DATE ANNUAL REDUCTION
---- ------------------
February 24, 2000 $ 5,000,000
February 24, 2001 $15,000,000
February 24, 2002 $20,000,000
February 24, 2003 $20,000,000
February 24, 2004 $25,000,000
February 24, 2005 $35,000,000"
(f) ARTICLE IV is amended by adding the following Section 4.3:
"4.3. ADVANCES FOLLOWING REORGANIZATION TRANSACTIONS. The
Lenders shall not be required to make any Advance and the Issuer
shall not be obligated to issue any future Facility Letter of
Credit after the consummation of any of the Reorganization
Transactions unless on the applicable Borrowing Date the applicable
Reorganization Conditions have been satisfied."
(g) SECTION 6.4(a) is amended by adding the following at the
end of the parenthetical phrase contained such section:
"and any Wholly-Owned Subsidiary may discontinue its business
pursuant to a merger permitted pursuant to SECTION 6.12 (or by a
liquidation into another entity if a merger into such entity would
be permitted by SECTION 6.12)"
(h) SECTION 6.4(c) is amended by adding the following
parenthetical phrase after the word "incorporation" on the second line
of such section:
-5-
"(except any Wholly-Owned Subsidiary may discontinue its
business pursuant to a merger permitted pursuant to SECTION 6.12
(or by a liquidation into another entity if a merger into such
entity would be permitted by SECTION 6.12))"
(i) SECTION 6.8 is amended by adding the following at the end
of the parenthetical phrase contained in such section:
"and any Wholly-Owned Subsidiary may discontinue its business
pursuant to a transaction permitted pursuant to SECTION 6.12(or by
a liquidation into another entity if a merger into such entity
would be permitted by SECTION 6.12)"
(j) SECTION 6.11(j) is amended by deleting the reference
contained therein to the dollar amount of "$10,000,000" and replacing it
with a reference to the dollar amount of "$15,000,000".
(k) SECTION 6.12(c) is amended by adding the following to the
parenthetical phrase after the words "Borrower's Subsidiaries" and
before the comma:
"or pursuant to the Reorganization Transactions"
(l) SECTION 6.14(a)(v) is amended by inserting on the first
line after the word "entities" contained therein, the parenthetical
phrase reading as follows:
"(including the creation of Wholly-Owned Subsidiaries)"
(m) SECTION 6.21.1 is amended by adding the following clause
"(d)" at the end of such section:
", MINUS (d) an amount equal to 90% of the Special Dividend
(as defined in the Dividend Schedule)."
(n) Section 6.21.2 is amended in its entirety and replaced with
the following:
"6.21.2 MAXIMUM LEVERAGE RATIO. The Borrower shall at all
times maintain a Leverage Ratio of (a) not greater than 37.5%
through and including Xxxxx 00, 0000 (x) not greater than 35% from
April 1, 2000 through and including December 31, 2000, (c) not
greater than 30% from January 1, 2001 through and including
Xxxxxxxx 00, 0000, (x) not greater than 25% from January 1, 2002
through and including December 31, 2002, and (e) not greater than
20% at all times thereafter."
(o) SECTION 6.21.4 is amended by adding the following clause
"(c)" at the end of such section:
", MINUS (c) $13,500,000."
-6-
(p) SECTION 6.22(a) is amended in its entirety and replaced
with the following:
"(a) file or consent to the filing of any consolidated,
combined or unitary income tax return with any Person other than
WMIG or the Borrower and its Wholly-Owned Subsidiaries or"
(q) SECTION 7.5 is amended by adding the following proviso at
the end of such section:
"PROVIDED, HOWEVER, that in each case if any of the above
described events arises with respect to WMIG and with respect to
the Medium Term Notes or the Medium Term Notes Indenture and arises
solely out of WMIG's consummation of the Reorganization
Transactions, a Default shall not occur unless WMIG shall fail
within ninety (90) days to pay in full any such Funded Indebtedness
which has been declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the
stated maturity thereof."
(r) SECTION 10.17 is amended in its entirety and replaced with
the following:
"10.17 SYNDICATION AGENT AND DOCUMENTATION AGENT.
(a) Fleet National Bank is hereby appointed Syndication Agent
of the Lenders hereunder and under each Loan Document. Fleet
National Bank shall not have any duties, responsibilities or
liabilities in its capacity as Syndication Agent.
(b) First Union National Bank is hereby appointed
Documentation Agent of the Lenders hereunder and under each Loan
Document. First Union National Bank shall not have any duties,
responsibilities or liabilities in its capacity as Documentation
Agent."
(s) The DIVIDEND SCHEDULE is amended in its entirety and
replaced with the DIVIDEND SCHEDULE attached hereto.
(t) The PRICING SCHEDULE is amended in its entirety and
replaced with the PRICING SCHEDULE attached hereto.
(u) EXHIBIT C is amended in its entirety and replaced with
EXHIBIT C attached hereto.
(v) The Credit Agreement is amended by adding the COMMITMENT
SCHEDULE attached hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants that:
-7-
(a) The execution, delivery and performance by the Borrower of
this Amendment has been duly authorized by all necessary corporate
action and that this Amendment is a legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with its
terms, except as the enforcement thereof may be subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally;
(b) After giving effect to this Amendment, each of the
representations and warranties contained in the Credit Agreement is true
and correct in all material respects on and as of the date hereof as if
made on the date hereof; and
(c) After giving effect to this Amendment, no Default or
Unmatured Default has occurred and is continuing.
3. EFFECTIVE DATE. This Amendment shall become effective upon the
execution and delivery hereof by the Borrower, the Agent and each of Lenders;
provided that SECTION 1 hereof shall not become effective until the date (the
"Effective Date") when the following additional conditions have also been
satisfied:
(a) a certificate, executed by the Secretary or Assistant
Secretary of the Borrower, certifying (i) an attached copy of the
Borrower's Board of Directors' resolutions authorizing its execution,
delivery and performance under this Amendment and (ii) that there have
been no amendments, supplements or modifications to any of the Articles
of Incorporation, Bylaws or certificate of incumbency of the Borrower
delivered to the Agent on February 24, 1999;
(b) the execution and delivery of the Reaffirmation of Guaranty
in the form of EXHIBIT A hereto;
(c) a certificate, executed by the Secretary or Assistant
Secretary of WMIG, certifying that there have been no amendments,
supplements or modifications to any of the Articles of Incorporation,
Bylaws or certificate of incumbency of Fund delivered to the Agent on
February 24, 1999, or attached copies of such amendments, supplements or
modifications;
(d) Notes payable to the order of each of the Lenders in the
amount of their respective increased Commitment duly executed by the
Borrower;
(e) payment of all fees by the Borrower due to the Agent and
the Lenders;
(f) ABN AMRO Bank, NA shall have consented to this Amendment
and the reduction to $0 of its commitment under the Credit Agreement,
such consent to be in form and substance satisfactory to the Agent; and
(g) such other documents as the Agent or its counsel may have
reasonably requested.
-8-
In the event the Effective Date has not occurred on or before November
15, 1999, SECTION 1 hereof shall not become operative and shall be of no
force or effect.
4. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
(a) Except as specifically amended above, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Agent
or any Lender under the Credit Agreement or any Loan Document, nor
constitute a waiver of any provision of the Credit Agreement or any Loan
Document, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in the Credit Agreement
to "this Agreement", "hereunder", "hereof", "herein" or words of similar
import shall mean and be a reference to the Credit Agreement as amended
hereby.
5. COSTS AND EXPENSES. The Borrower hereby affirms its obligations
under Section 9.7 of the Credit Agreement to reimburse the Agent for all
reasonable costs, internal charges and out-of-pocket expenses paid or
incurred by the Agent in connection with the preparation, negotiation,
execution and delivery of this Amendment, including but not limited to the
attorneys' fees and time charges of attorneys for the Agent with respect
thereto.
6. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION
105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
7. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.
[signature pages to follow]
-9-
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date and year first above written.
FOLKSAMERICA HOLDING COMPANY, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-00-
XXXX XXX, XX,
Xxxxxxxxxxxx and as Agent
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address: Xxx Xxxx Xxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
First Vice President
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
-11-
FLEET NATIONAL BANK
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address: Xxx Xxxxxxx Xxxxxx-XXXXX00X
Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxxx
Vice President
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
-12-
FIRST UNION NATIONAL BANK
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address: 0000 Xxxxxxxx Xxxxxx, XX0000
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx XxXxxxxxxxx
Fax No.: 000-000-0000
Tel. No.: 000-000-0000
-00-
XXXXXXXX XXXX XX,
Xxx Xxxx and/or Cayman Islands Branch
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address: 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxxx
Fax No.: 000-000-0000
Tel. No.: 000-000-0000
-00-
XXXXXXXX XXXX XX, Xxx Xxxx and
Grand Cayman Branches
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address: 00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Fax No.: 000-000-0000
Tel. No.: 000-000-0000
-15-
EXHIBIT A
REAFFIRMATION OF GUARANTY
The undersigned acknowledges receipt of a copy of Amendment No. 2 to
Credit Agreement (the "Amendment") dated as of October 29, 1999, consents to
such amendment and hereby reaffirms its obligations under the Guaranty dated
as of February 24, 1999 in favor of Bank One, NA (f/k/a The First National
Bank of Chicago), as Agent, for the Lenders (as defined in the Amendment).
Dated as of , 1999
---------- ---
WHITE MOUNTAINS INSURANCE GROUP, LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-16-
PRICING SCHEDULE
--------------------------------------------------------------------------------------------------------------------------------
EURODOLLAR RATE APPLICABLE MARGIN*
(AS A PER ANNUM RATE)
--------------------------------------------------------------------------------------------------------------------------------
LEVERAGE RATIO BEST'S RATING** GREATER THAN OR EQUAL TO"A" BEST'S RATING** LESS THAN "A"
--------------------------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 0.275 to 1.0 1.250% 1.50%
--------------------------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 0.20 to 1.0 but LESS THAN 0.275 to 1.0 1.000% 1.25%
--------------------------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 0.15 to 1.0 but LESS THAN 0.20 to 1.0 0.750% 1.00%
--------------------------------------------------------------------------------------------------------------------------------
LESS THAN 0.15 to 1.0 0.625% 0.75%
--------------------------------------------------------------------------------------------------------------------------------
* Beginning on February 24, 2003, and continuing through the Maturity Date,
the Applicable Margins shown in the table above will increase by 0.50%.
** Means the rating of Folksamerica Reinsurance Company provided by A. M.
Best & Co.
-----------------------------------------------------------------------------
COMMITMENT FEE
(AS A PER ANNUM RATE)
-----------------------------------------------------------------------------
LEVERAGE RATIO APPLICABLE FEE RATE
-------------- -------------------
GREATER THAN OR EQUAL TO 0.20 to 1.0 0.250%
GREATER THAN OR EQUAL TO 0.15 to 1.0 but LESS THAN 0.20 to 1.0 0.225%
LESS THAN 0.15 to 1.0 0.200%
-17-
DIVIDEND SCHEDULE
I. APPLIES AT ALL TIMES PRIOR TO TERMINATION OR EXPIRATION OF THE WMIG CREDIT
AGREEMENT:
-----------------------------------------------------------------------------------------------------------------------------------
No "default" has occurred and is continuing A "default" has occurred and is continuing
under the WMIG Credit Agreement AND WMIG owns under the WMIG Credit Agreement OR WMIG owns
directly or indirectly at least 80% of the directly or indirectly less than 80% of the
fully-diluted common equity of the Borrower. fully-diluted common equity of the Borrower
-----------------------------------------------------------------------------------------------------------------------------------
Dividends, Repurchases or The Borrower will be permitted in any The Borrower will be permitted in any
other Capital Distributions Fiscal Year to pay dividends, repurchase Fiscal Year to pay dividends, repurchase
stock or make other capital distributions stock or make other capital distributions
(excluding the FAE Amount and the Special (excluding the FAE Amount and the Special
Dividend) in an aggregate amount equal to Dividend) in an aggregate amount equal to
the lesser of: the lesser of:
(a) $8,000,000; (a) $2,000,000;
(b) Combined Statutory Net Income for all (b) Combined Statutory Net Income for all
First-Tier Significant Insurance Subsidiaries First-Tier Significant Insurance Subsidiaries
for the most recently completed Fiscal Year; for the most recently completed Fiscal Year;
and and
(c) an amount equal to the excess of (i) the (c) an amount equal to the excess of (i) the
sum of (x) Cash Flow (determined as of sum of (x) Cash Flow (determined as of
December 31 of the preceding Fiscal Year) December 31 of the preceding Fiscal Year)
PLUS (y) cash and cash equivalents of the PLUS (y) cash and cash equivalents of the
Borrower (determined as of December 31 of the Borrower (determined as of December 31 of the
preceding Fiscal Year), MINUS (ii) Fixed preceding Fiscal Year), MINUS (ii) Fixed
Charges (determined as of December 31 of the Charges (determined as of December 31 of the
preceding Fiscal Year) multiplied by 125%. preceding Fiscal Year) multiplied by 125%.
-----------------------------------------------------------------------------------------------------------------------------------
-18-
II. APPLIES AT ALL OTHER TIMES:
-----------------------------------------------------------------------------------------------------------------------------------
WMIG is in compliance with each of the WMIG is not in compliance with each of the
Guarantor Ratios AND WMIG owns directly Guarantor Ratios OR WMIG owns directly
or indirectly at least 80% of the fully- or indirectly less than 80% of the fully-
diluted common equity of the Borrower. diluted common equity of the Borrower.
-----------------------------------------------------------------------------------------------------------------------------------
Dividends, Repurchases or The Borrower will be permitted in any The Borrower will be permitted in any
other Capital Distributions Fiscal Year to pay dividends, repurchase Fiscal Year to pay dividends, repurchase
stock or make other capital distributions stock or make other capital distributions
(excluding the FAE Amount and the Special (excluding the FAE Amount and the Special
Dividend) in an aggregate amount equal to Dividend) in an aggregate amount equal to
the lesser of: the lesser of:
(a) $8,000,000; (a) $2,000,000;
(b) Combined Statutory Net Income for all (b) Combined Statutory Net Income for all
First-Tier Significant Insurance Subsidiaries First-Tier Significant Insurance Subsidiaries
for the most recently completed Fiscal Year; for the most recently completed Fiscal Year;
and (c) an amount equal to the excess of (i) and (c) an amount equal to the excess of (i)
the sum of (x) Cash Flow (determined as of the sum of (x) Cash Flow (determined as of
December 31 of the preceding Fiscal Year) December 31 of the preceding Fiscal Year)
PLUS (y) cash and cash equivalents of the PLUS (y) cash and cash equivalents of the
Borrower (determined as of December 31 of Borrower (determined as of December 31 of
the preceding Fiscal Year), MINUS (ii) Fixed the preceding Fiscal Year), MINUS (ii) Fixed
Charges (determined as of December 31 of the Charges (determined as of December 31 of the
preceding Fiscal Year) multiplied by 125% preceding Fiscal Year) multiplied by 125%
-----------------------------------------------------------------------------------------------------------------------------------
For the purposes of this Dividend Schedule, the following terms have the
following meanings:
"FAE Amount" means a certain dividend, stock repurchase or other capital
distribution by the Borrower in an aggregate amount not in excess of
$30,000,000 to Fund American Enterprises, Inc., a Delaware corporation, on
February 24, 1999, the total amount of which is used to repay all
indebtedness, liabilities and obligations under and to terminate the
$50,000,000 credit agreement of WMH.
"Guarantor Ratios" shall mean:
-19-
WMIG MINIMUM NET WORTH WMIG shall at all times maintain a minimum Net
Worth at least equal to (a) the sum of (i) $514,530,000, PLUS (ii) an
amount equal to 90% of the cash and non-cash proceeds of any equity
securities issued by WMIG after September 30, 1998, MINUS (b) an amount
equal to the lesser of (i) $30,000,000 or (ii) the aggregate amount
expended by WMIG after September 30, 1998 to repurchase its capital
stock in compliance with the WMIG Credit Agreement.
WMIG MAXIMUM LEVERAGE RATIO WMIG shall at all times maintain a Leverage
Ratio of not greater than 35%.
"Special Dividend" means that certain one-time dividend (payable in two
installments) made prior to December 31, 1999 by the Borrower to White
Mountains Properties, Inc., a Delaware corporation and survivor of a merger
with Fund American Enterprises, Inc., a Delaware corporation, and/or White
Mountains Properties (Barbados) SRL, a Barbados corporation (or their
successors) in an aggregate amount not to exceed $30,000,000.
"Statutory Net Income" means, with respect to any First-Tier Significant
Insurance Subsidiary for any computation period, the net income earned by
such First-Tier Significant Insurance Subsidiary during such period, as
determined in accordance with standard accounting practices.
-20-
COMMITMENT SCHEDULE
LENDER COMMITMENT AMOUNT
------ -----------------
Bank One, NA $ 30,000,000
Fleet National Bank $ 27,000,000
First Union National Bank $ 24,000,000
Dresdner Bank AG, New York and $ 22,000,000
Grand Cayman Branches
Deutsche Bank AG, New York and/or $ 17,000,000
Cayman Islands Branch ------------
AGGREGATE COMMITMENT $120,000,000
-21-
