Exhibit(b)(1)
SHORT TERM REVOLVING CREDIT AGREEMENT
BETWEEN
X.L. INSURANCE COMPANY, LTD. and X.L. REINSURANCE COMPANY, LTD.,
as Borrowers,
AND
X.L. INSURANCE COMPANY, LTD. and EXEL ACQUISITION LTD.,
as Guarantors,
AND
THE BANKS PARTIES HERETO FROM TIME TO TIME
AND
MELLON BANK, N.A.,
as Agent
TABLE OF CONTENTS
TABLE OF CONTENTS
Section Title Page
------- ----- ----
ARTICLE I DEFINITIONS; CONSTRUCTION 1
1.01 Certain Definitions 1
1.02 Construction 7
1.03 Accounting Principles 7
ARTICLE II THE CREDITS 8
2.01 Revolving Credit Loans 8
2.02 Facility Fee; Initial Fee, Reduction of
the Committed Amounts 8
2.03 Making of Loans 9
2.04 Interest Rates 9
2.05 Conversion or Renewal of Interest Rate
Options 12
2.06 Prepayments Generally 13
2.07 Optional Prepayments 13
2.08 Interest Payment Dates 13
2.09 Pro Rata Treatment; Payments Generally;
Interest on Overdue Amounts 14
2.10 Additional Compensation in Certain
Circumstances 14
2.11 Taxes 16
2.12 Funding by Branch, Subsidiary or Affiliate 18
2.13 Extensions of Expiration Date 18
ARTICLE III REPRESENTATIONS AND WARRANTIES 19
3.01 Organization and Qualification 19
3.02 Corporate Power and Authorization 19
3.03 Financial Information 19
3.04 Litigation 19
3.05 No Adverse Changes 20
3.06 No Conflicting Laws or Agreements; Consents
and Approvals 20
3.07 Execution and Binding Effect 20
3.08 Taxes 20
3.09 Use of Proceeds 20
3.10 Permits, Licenses and Rights 20
3.11 Accurate and Complete Disclosure 20
3.12 Absence of Violations 21
3.13 Environmental Matters 21
3.14 Not an Investment Company 21
ARTICLE IV CONDITIONS OF LENDING 21
4.01 Effectiveness 21
4.02 Borrowings 22
ARTICLE V AFFIRMATIVE COVENANTS 22
5.01 Reporting and Information Requirements 22
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5.02 Preservation of Existence and Franchises 23
5.03 Insurance 24
5.04 Maintenance of Properties 24
5.05 Payment of Taxes and Other Potential
Charges and Priority Claims Payment of
Other Current Liabilities 24
5.06 Financial Accounting Practices 24
5.07 Compliance with Applicable Laws 24
5.08 Use of Proceeds 25
5.09 Continuation Of and Change In Business 25
5.10 Visitation 25
5.11 Merger of Acquisition Target into a Borrower
or a Subsidiary 25
ARTICLE VI NEGATIVE COVENANTS 25
6.01 Mergers and Acquisitions 25
6.02 Dispositions of Assets 25
6.03 Liens 26
6.04 Transactions With Affiliates 26
6.05 Business 27
6.06 Ratio of Total Funded Debt to Consolidated
Tangible Net Worth 27
6.07 Consolidated Net Worth 27
6.08 Indebtedness 27
6.09 Operating Leverage 27
6.10 Private Act 27
ARTICLE VII EVENTS OF DEFAULT 28
7.01 Events of Default 28
ARTICLE VIII THE AGENT 29
8.01 Appointment 29
8.02 General Nature of Agent's Duties 30
8.03 Exercise of Powers 30
8.04 General Exculpatory Provisions 30
8.05 Administration by the Agent 31
8.06 Bank Not Relying on Agent or Other Banks 32
8.07 Indemnification 32
8.08 Agent in its Individual; Capacity 32
8.09 Holders of Notes 32
8.10 Successor Agent 32
8.11 Additional Agents 33
8.12 Calculations 33
8.13 Agent's Fee 33
8.14 Funding by Agent 33
ARTICLE IX MISCELLANEOUS 34
9.01 No Implied Waiver etc. 33
9.02 Set-Off 34
9.03 Survival of Provisions 34
9.04 Expenses and Fees; Indemnity 34
9.05 Severability 35
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9.06 Holidays 35
9.07 Notices, etc. 35
9.08 Forum Selection and Consent to Jurisdiction 36
9.09 Waiver of Jury Trial 36
9.10 Governing Law 36
9.11 Validity and Enforceability 36
9.12 Counterparts 36
9.13 Successors and Assigns; Participations;
Assignments 36
9.14 Amendments and Waivers 39
9.15 Judgment Currency 39
9.16 Records 40
9.17 Confidentiality 40
ARTICLE X GUARANTEE 40
10.01 The Guarantee 40
10.02 Obligations Unconditional 41
10.03 Reinstatement 42
10.04 Remedies 42
10.05 Continuing Guarantee 42
10.06 No Restrictions 42
10.07 Release of EXEL Acquisition from Guaranty
Obligations 42
Exhibit A-1 Form of Promissory Note (X.L. Insurance)
Exhibit A-2 Form of Promissory Note (X.L. Reinsurance)
Exhibit B Form of Transfer Supplement
Exhibit C Contents of Opinions of Counsel
Schedule 3.01 Subsidiaries
Schedule 6.03(a) Liens
Schedule 6.08(d) Indebtedness
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SHORT TERM REVOLVING CREDIT AGREEMENT, dated and effective as of June 6,
1997, by and between X.L. INSURANCE COMPANY, LTD. ("X.L. Insurance"), a Bermuda
limited liability corporation, and X.L. REINSURANCE COMPANY, LTD., a Bermuda
limited liability corporation ("X.L. Reinsurance") (X.L. Insurance and X.L.
Reinsurance are referred to hereinafter individually as "Borrower" and
collectively as the "Borrowers"), EXEL ACQUISITION LTD., a Cayman Islands
corporation ("EXEL Acquisition") (X.L. Insurance and EXEL Acquisition are
referred to herein individually as "Guarantor" and collectively as the
"Guarantors") the Banks (as defined further below) parties hereto from time to
time and MELLON BANK, N.A., a national banking association, as Agent for the
Banks hereunder (in such capacity, together with successors in such capacity,
the "Agent").
PRELIMINARY STATEMENT
WHEREAS, the Banks have agreed to make available to the Borrowers a Short
Term Revolving Credit Facility upon all of the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of their mutual agreements hereinafter set
forth and intending to be legally bound hereby, the Borrowers, the Agent and
each Bank agree as follows.
ARTICLE I
DEFINITIONS: CONSTRUCTION
1.01. CERTAIN DEFINITIONS. In addition to other words and terms defined
elsewhere in this Agreement, as used herein the following words and terms shall
have the following meanings, respectively, unless the context hereof otherwise
clearly requires:
"ALTERNATE BASE RATE" AND "ALTERNATE BASE RATE OPTION" shall have the
meaning assigned those terms in Section 2.04(a)(i) hereof.
"ALTERNATE BASE RATE LOAN" shall mean any loan bearing interest under the
Alternate Base Rate Option.
"ALTERNATE BASE RATE PORTION" of any Loan or Loans shall mean at any time
the portion, including the whole, of such Loan or Loans bearing interest at such
time under the Alternate Base Rate Option.
"AFFILIATE" shall mean an entity which is directly or indirectly controlled
by a Borrower or which controls a Borrower or which is under common control with
either of the Borrowers.
"AGREEMENT" shall mean this Agreement as amended, modified or supplemented
from time to time.
"APPLICABLE MARGIN" shall have the meaning given that term in Section
2.04(b) hereof.
"ASSETS" at any time shall mean the assets of either Borrower, as the
context requires, at such time, determined in accordance with GAAP or SAP, as
appropriate.
"BANKS" shall mean the parties listed on the signature pages hereof,
subject to the provisions of Section 9.13 hereof pertaining to Persons becoming
or ceasing to be Banks, and Bank shall mean any of them.
"BASE RATE" shall have the meaning given that term in Section 2.04(a)(i)
hereof.
"BERMUDA COMPANIES LAW" shall mean The Companies Act of 1981 of Bermuda, as
amended, and the regulations promulgated thereunder.
"BERMUDA INSURANCE LAW " shall mean The Insurance Act of 1978 of Bermuda,
as amended, and the regulations promulgated thereunder.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania or of Bermuda or
other day on which banking institutions are authorized or obligated to close in
Pittsburgh, Pennsylvania.
"CAPITALIZED LEASE OBLIGATION" shall mean any lease obligation which is
required to be capitalized in accordance with GAAP.
"CHANGE IN CONTROL" shall mean the occurrence of any of the following
events or conditions: (a) any Person or group of Persons (as used in Sections 13
and 14 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"),
and the rules and regulations thereunder) shall have become the beneficial owner
(as defined in rules promulgated by the Securities & Exchange Commission) of
more than 40% of the voting securities of EXEL Limited; (b) the sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of EXEL Limited; or
(c) a majority of the members of the EXEL Limited's Board of Directors are
persons who are then serving on the Board of Directors without having been
elected by the Board of Directors or having been nominated for election by its
shareholders.
"CLOSING DATE" shall mean June 6, 1997 or such later date as may be
specified by the Borrower by one day's written notice to the Agent.
"CO-AGENTS" shall the Bank of Tokyo-Mitsubishi Trust Co., Deutsche Bank AG
and the Bank of Nova Scotia.
"COMMITTED AMOUNT" shall have the meaning given that term in Section
2.01(a) hereof.
"CONSOLIDATED NET WORTH" shall mean at any date the consolidated
stockholders' equity of a Borrower and its Consolidated Subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean at any date the consolidated
stockholders' equity of a Borrower and its Consolidated Subsidiaries less their
consolidated Intangible Assets, all determined as of such date. For purposes of
this definition "Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to November 30, 1996, in the book value
of any asset owned by the applicable Borrower or a consolidated Subsidiary and
(ii) all unamortized debt discount and expense, unamortized deferred
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charges, deferred acquisition costs, goodwill, patents, trademarks, service
marks, trade names, anticipated future benefit of tax loss carry-forwards,
copyrights, organization or developmental expenses and other intangible assets.
"CORRESPONDING SOURCE OF FUNDS" shall mean in the case of any Euro-Rate
Loan, the proceeds of hypothetical receipts by a Notional Euro-Rate Funding
Office of one or more Dollar deposits in the interbank Eurodollar market at the
beginning of the Euro-Rate Maturity Period applicable to such Loan, having
maturities approximately equal to such Maturity Period and in an aggregate
amount approximately equal to such Loan.
"DOLLAR," "DOLLARS" AND the symbol $ shall mean lawful money of the United
States of America
"ENVIRONMENTAL CONCERN MATERIALS" shall mean (a) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in CERCLA or any similar Law),
(b) any toxic chemical or other substance from or related to industrial,
commercial or institutional activities, and (c) asbestos, gasoline, diesel fuel,
motor oil, waste and used oil, heating oil and other petroleum products or
compounds, polychlorinated biphenyls, radon and urea formaldehyde.
"ENVIRONMENTAL LAW" shall mean any Law, whether now existing or
subsequently enacted or amended, relating to (a) pollution or protection of the
environment, including natural resources, (b) exposure of Persons, including but
not limited to employees, to Environmental Concern Materials, (c) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or
(d) regulation of the manufacture, use or introduction into commerce of
Environmental Concern Materials, including their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage or
disposal.
"EURO-RATE" AND "EURO-RATE OPTION" shall have the meanings assigned to
those terms in Section 2.04(a)(ii) hereof
"EURO-RATE LOAN" shall mean any Loan bearing interest under the Euro-Rate
Option.
"EURO-RATE PORTION" of any Loan or Loans shall mean at any time the
portion, including the whole, of such Loan or Loans bearing interest at any time
under the Euro-Rate Option.
"EVENT OF DEFAULT" shall mean any of the Events of Default described in
Article VII hereof.
"EXEL Acquisition" shall mean EXEL Acquisition Ltd., a corporation
organized under the laws of the Cayman Islands, British West Indies.
"EXEL LIMITED" shall mean EXEL Limited, a corporation organized under the
laws of the Cayman Islands, British West Indies. EXEL Limited is the sole
shareholder of X.L. Insurance Company, Ltd., except for a nominal number of
shares owned by two nominee shareholders required by the Bermuda Companies Law.
"EXPIRATION DATE" shall mean June 5, 1998.
"FUNDING PERIODS" shall have the meaning given that term in Section 2.04(c)
hereof.
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"FUNDING SEGMENT" of the Euro-Rate Portion of the Loans at any time shall
mean the entire principal amount of such Portion to which at the time in
question there is applicable a particular Funding Period beginning on a
particular day and ending on a particular day.
"GAAP" shall have the meaning set forth in Section 1.03 hereof.
"GUARANTEED OBLIGATIONS" shall have the meaning given that term in Section
10.01 hereof.
"GUARANTORS" shall mean X.L. Insurance Company, Ltd., and EXEL Acquisition
Ltd. and "GUARANTOR" shall mean either one of them
"GUARANTEED OBLIGATIONS" shall have the meaning given that term in Section
10.01 hereof.
"GUARANTY EQUIVALENTS" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor for the purpose of assuring the
holder of such Indebtedness, (ii) to advance or provide funds or other support
for the payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keepwell agreements, maintenance agreements,
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Equivalent hereunder shall (subject to any limitations set -forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Equivalent is made.
"INDEBTEDNESS" of a Person shall mean:
(i) all indebtedness or liability for or on account of money borrowed
by, or for or on account of deposits with or advances to (but not including
accrued pension costs, deferred income taxes or accounts payable of) such
Person;
(ii) all obligations (including contingent liabilities) of such
Person evidenced by bonds, debentures, notes, banker's acceptances or
similar instruments;
(iii) all indebtedness or liability for or on account of property or
services purchased or acquired by such Person;
(iv) any amount secured by a Lien on property owned by such Person
(whether or not assumed) and Capitalized Lease Obligations of such Person
(without regard to any limitation of the rights and remedies of the holder
of such Lien or the lessor under such Capitalized Lease to repossession or
sale of such property);
(v) the maximum available amount of all standby letters of credit
issued for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed; and
(vi) all Guaranty Equivalents of such Person.
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"INSURANCE SUBSIDIARY" means any, present or future, direct or indirect
Subsidiary of either Borrower that offers insurance products, including but not
limited to X.L. Europe Insurance.
"LAW" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
"LEVEL ONE DAY," "LEVEL TWO DAY," "LEVEL THREE DAY" AND "LEVEL FOUR DAY"
SHALL HAVE THE MEANING GIVEN THOSE TERMS IN SECTION 2.02(A) HEREOF.
"LIEN" shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"LOAN" OR "LOANS" shall mean a loan or loans made by any Bank to either of
the Borrowers under this Agreement.
"LOAN DOCUMENT" OR "LOAN DOCUMENTS" shall mean this Agreement, any Note and
any other documents or instruments executed and delivered in connection herewith
or therewith.
"LONDON BUSINESS DAY" shall mean a Business Day (as herein defined) which
is also a day for dealing in deposits in Dollars by and among banks in the
London interbank market.
"MATERIAL ADVERSE EFFECT" shall mean the occurrence of an event (including
any adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), which has or could reasonably be expected to have
a materially adverse effect on: (a) the assets, business, financial condition or
operations of a Borrower and its Subsidiaries taken as a whole; or (b) the
ability of a Borrower to perform any of its payment or other material
obligations under this Agreement or the applicable Note; or (c) the legality,
validity, binding effect or enforceability against a Borrower of any Loan
Document that by its terms purports to bind such Borrower.
"NOTES" shall mean the promissory notes of either Borrower executed and
delivered under this Agreement, together with all extensions, renewals,
refinancings or refundings in whole or part and "NOTE" shall mean any one of the
Notes.
"NOTIONAL EURO-RATE FUNDING OFFICE" shall have the meaning given to that
term in Section 2.12(a) hereof.
"OBLIGATIONS" shall mean the obligations of either Borrower to repay the
aggregate unpaid principal amount of all loans, and pay all interest accrued
thereon, all Facilities Fees accruing and all other liabilities of such Borrower
arising pursuant to the terms of this Agreement or the other Loan Documents.
"OFFICE," when used in connection with the Agent, shall mean its office
located at Xxx Xxxxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, or at such
other office or offices of the Agent or branch, subsidiary or affiliate thereof
as may be designated in writing from time to time by the Agent to the Borrowers.
"OFFICIAL BODY" shall mean any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"OPTION" shall mean the Alternate Base Rate Option or the Euro-Rate Option,
as the case may be.
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"PERSON" shall mean an individual, corporation, partnership, trust,
unincorporated association, joint venture, joint-stock company, government
(including political subdivisions), official body or agency, or any other
entity.
"PORTION" shall mean the Alternate Base Rate Portion or the Euro-Rate
Portion, as the case may be.
"POTENTIAL DEFAULT" shall mean any event or condition referenced in Article
VII hereof which with notice, passage of time or both would constitute an Event
of Default.
"PRIVATE ACT" shall mean separate legislation enacted in Bermuda with the
intention that such legislation applies specifically to a Borrower in whole or
in part.
"PRO RATA" shall mean from or to each Bank in proportion to its percentage
of the aggregated Committed Amounts of all of the Banks.
"REGULAR PAYMENT DATE" shall mean the last day of each March, June,
September and December after the date hereof, commencing June 30, 1997.
"REQUIRED BANKS" shall mean at any time Banks which have respective
Committed Amounts equal to or greater than 51% of the aggregate Committed
Amounts of all Banks or, if the obligations of the Banks to make loans shall
have terminated, Banks which have outstanding Loans in a principal amount equal
to or greater than 51% of the aggregate principal amount of all Loans
outstanding at such time.
"SAP" shall mean, as to each Borrower and each Insurance Subsidiary, the
statutory accounting practices prescribed or permitted by the relevant Official
Body for such Borrower's or such Insurance Subsidiary's domicile for the
preparation of Annual Statements and other Default reports by insurance
corporations of the same type as such Borrower or such Insurance Subsidiary in
effect on the date such statements or reports are to be prepared.
"S&P CLAIMS-PAYING RATING" shall mean the claims-paying rating of X.L.
Insurance Company, Ltd. as determined by Standard and Poor's Rating Group or any
successor thereto.
"STANDARD NOTICE" shall mean an irrevocable notice provided to the Agent on
a Business Day which is
(i) the same Business Day in the case of any Alternate Base Rate
Loan; and
(ii) at least three London Business Days in advance in the case
of any Euro-Rate Loan.
Standard Notice must be provided no later than: 10:00 o'clock a.m., Pittsburgh
time, on the last day permitted for such notice. Standard Notice shall be in
writing (including telex, facsimile or cable communication) or by telephone (to
be subsequently confirmed in writing) in any such case, effective upon receipt
by the Agent.
"SUBSIDIARY" of a Borrower at any time shall mean any corporation of which
a majority (by number of shares or number of votes) of any class of outstanding
capital stock normally entitled to vote for the election of one or more
directors (regardless of any contingency which does or may suspend or dilute the
voting rights of such class) is at such time owned directly or indirectly by a
Borrower or one or more Subsidiaries.
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"TOTAL EXPOSURE" of any Bank at any time shall mean the sum of the
outstanding principal amount of all of such Bank's Loans, whether such Loans are
made to X.L. Insurance or X.L. Reinsurance.
"TOTAL FUNDED DEBT" of a Person at any time shall mean all Indebtedness of
such person which would at such time be classified in whole or in part as a
liability on the balance sheet of such person in accordance with GAAP.
"TOTAL X.L. REINSURANCE EXPOSURE" of any Bank at any time shall mean the
sum of the outstanding principal amount of all of such Bank's Loans to X.L.
Reinsurance.
"X.L. INSURANCE" shall mean X.L. Insurance Company, Ltd., a Bermuda limited
liability corporation.
"X.L. REINSURANCE" shall mean X.L. Reinsurance Company, Ltd. a Bermuda
limited liability corporation and a wholly-owned subsidiary of X.L. Insurance.
"X.L. REINSURANCE COMMITTED AMOUNT" shall have the meaning given that term
in Section 2.01(a) hereof.
1.02 CONSTRUCTION. Unless the context of this Agreement otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or. "
References in this Agreement to "determination" by the Agent include good faith
estimates by the Agent (in the case of quantitative determinations) and good
faith belief of the Agent (in the case of qualitative determinations). The
words "hereof," "herein," "hereunder" and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The section and other headings contained in this Agreement are for
reference purposes only and shall not control or affect the construction of this
Agreement or the interpretation hereof in any respect. Section, subsection and
exhibit references are to this Agreement unless otherwise specified.
1.03. ACCOUNTING PRINCIPLES. (a) As used herein, "GAAP" shall mean
generally accepted accounting principles as such principles shall be in effect
in the United States of America at the Relevant Date, subject to the provisions
of this Section 1.03. As used herein, "Relevant Date" shall mean the date a
relevant computation or determination is to be made or the date of relevant
financial statements, as the case may be.
(b) Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters shall be made, and all
financial statements to be delivered pursuant to this Agreement shall be
prepared, in accordance with GAAP or SAP, as the context requires (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP or SAP, as
appropriate.
(c) If any change in GAAP or SAP after the date of this Agreement is or
shall be required to be applied to transactions then or thereafter in existence,
and a violation of one or more provisions of this Agreement shall have occurred
(or in the opinion of the Bank would be likely to occur) which would not have
occurred or be likely to occur if no change in accounting principles had taken
place, the parties agree in such event to negotiate in good faith an amendment
of this Agreement which shall approximate to the extent possible the economic
effect of the original financial covenants after taking into account such change
in GAAP or SAP, as appropriate.
(d) Without in any manner limiting the provisions of this Section 1.03, if
any change in GAAP or SAP occurs after the date of this Agreement and such
change in GAAP or SAP could or would materially change a Borrower's financial
results or position from that reflected in such
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Borrower's financial statements prior to such change, such Borrower shall notify
the Bank as soon as practicable.
ARTICLE II
THE CREDITS
2.01. REVOLVING CREDIT LOANS.
(a) REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Bank,
severally and not jointly, agrees to make loans ("Loans") to a Borrower at any
time or from time to time on or after the date hereof and to but not including
the Expiration Date (it being understood that Loans may be outstanding to both
of the Borrowers at any time). A Bank shall have no obligation to make any Loan
if, after such Loan is made, (i) such Bank's Total Exposure would exceed such
Bank's Committed Amount or (ii) in the case of borrowings by X.L. Reinsurance
only, such Bank's Total X.L. Reinsurance Exposure would exceed such Bank's X.L.
Reinsurance Committed Amount. Each Bank's "Committed Amount" at any time shall
be equal to the amount set forth as its "Initial Committed Amount" below its
name on the signature pages hereof, as such amount may have been reduced under
Section 2.02(c) hereof at such time, and subject to transfer to another Bank as
provided in Section 9.13 hereof. Each Bank's "X.L. Reinsurance Committed Amount"
at any time shall be equal to the amount set forth as its "Initial X.L.
Reinsurance Committed Amount" below its name on the signature pages hereof, as
such amount may have been reduced under Section 2.02(c) hereof at such time, and
subject to transfer to another Bank as provided in Section 9.13 hereof.
(b) NATURE OF CREDIT. Within the limits of time and amount set forth in
this Section 2.01, and subject to the provisions of this Agreement, the
Borrowers may borrow, repay and reborrow Loans hereunder.
(c) REVOLVING CREDIT NOTES. The obligation of the Borrowers to repay the
unpaid principal amount of the Loans made to it by each Bank and to pay interest
thereon shall be evidenced in part by promissory notes of the Borrowers, one to
each Bank, dated the Closing Date (the "Notes") in substantially the form
attached hereto as Exhibit A-1 (in the case of X.L. Insurance) and Exhibit A-2
(in the case of X.L. Reinsurance), with the blanks appropriately filled, payable
to the order of such Bank in a face amount equal to such Bank's Initial
Committed Amount or X.L. Committed Amount, as appropriate.
(d) MATURITY. To the extent not due and payable earlier, the Loans shall
be due and payable on the Expiration Date.
2.02. FACILITY FEE; INITIAL FEE, REDUCTION OF THE COMMITTED AMOUNTS.
(a) Facility Fee. X.L. Insurance agrees to pay to the Agent for the
account of each Bank a facility fee (the "Facility Fee") for each day during the
period from the Closing Date to and including the Expiration Date calculated
(based on a year of 360 days and actual days elapsed), at a per annum rate equal
to five basis points, payable on such Bank's Committed Amount (whether used or
unused) in effect on such day. Such fee shall be payable quarterly on the last
day of each March, June, September and December after the Closing Date, and on
the Expiration Date, for the preceding period for which such fee has not been
paid.
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(b) INITIAL FEE. X.L. Insurance agrees to pay on the Closing Date to the
Agent for the Account of the Agent and each Co-Agent an initial fee equal to
five basis points, payable on the Agent's or such Co-Agent's Committed Amount on
the date hereof.
(c) REDUCTION OF THE COMMITTED AMOUNTS. X.L. Insurance may at any time or
from time to time reduce Pro Rata the Committed Amounts of the Banks to an
aggregate amount (which may be zero) not less than the sum of the unpaid
principal amount of the Loans then outstanding plus the principal amount of all
Loans not yet made as to which notice has been given by the Borrower under
Section 2.03 hereof. Any reduction of the Committed Amounts shall be in an
aggregate minimum amount of $20,000,000 and in an amount which is an integral
multiple of $10,000,000. Reduction of the Committed Amounts shall be made by
providing not less than three Business Days' notice (which notice shall be
irrevocable) to such effect to the Agent. After the date specified in such
notice the Facility Fee shall be calculated upon the Committed Amounts as so
reduced.
2.03. MAKING OF LOANS. Whenever a Borrower desires that the Banks make
Loans, X.L. Insurance shall provide Standard Notice to the Agent setting forth
the following information (a separate notice being required for each such type
of Loans):
(a) Whether the proposed Loans are to be made to X.L. Insurance or to X.L.
Reinsurance;
(b) The date, which shall be a Business Day, on which such proposed Loans
are to be made;
(c) The aggregate principal amount of such proposed Loans, which shall be
the sum of the principal amounts selected pursuant to clause (d) of this
Section 2.06, and which shall be an integral multiple of $1,000,000.00 not less
than $10,000,000.00;
(d) The interest rate Option or Options selected in accordance with
Section 2.04(a) hereof and the principal amounts selected in accordance with
Section 2.04(d) hereof of the Alternate Base Rate Portion and each Funding
Segment of the Euro-Rate Portion of such proposed Loans; and
(e) With respect to each such Funding Segment of such proposed Loans, the
Funding Period to apply to such Funding Segment, selected in accordance with
Section 2.04(c) hereof.
Standard Notice having been so provided, the Agent shall promptly notify each
Bank of the information contained therein and of the amount of such Bank's Loan.
Unless any applicable condition specified in Article IV hereof has not been
satisfied, on the date specified in such Standard Notice each Bank shall make
the proceeds of its Loan available to the Agent at the Agent's Office, no later
than 12:00 o'clock Noon, Pittsburgh time, in funds immediately available at such
Office. The Agent will make the funds so received available to the applicable
Borrower in funds immediately available at the Agent's Office.
2.04. INTEREST RATES.
(a) OPTIONAL BASES OF BORROWING. The unpaid principal amount of the Loans
shall bear interest for each day until due on one or more bases selected by the
Borrower from among the interest rate Options set forth below. Subject to the
provisions of this Agreement the applicable Borrower may select different
Options to apply simultaneously to different Portions of its Loans and may
select different Funding Segments to apply simultaneously to different parts of
the Euro-Rate Portion of such Loans. The aggregate number of Funding Segments
applicable to the Euro-Rate Portion of the Loans at any time shall not exceed
six.
(i) ALTERNATE BASE RATE OPTION: A rate per annum (the "Alternate Base
Rate") (computed on the basis of a year of 365 or 366 days, as the case may
be) for each day equal to the higher of: (A) the Base Rate for such day or
(B) the Federal Funds Effective Rate for such
9
day plus 0.50% per annum. "Base Rate" as used herein shall mean the
interest rate per annum announced from time to time by the Agent as its
prime rate. "Federal Funds Effective Rate" for any day shall mean the rate
per annum (rounded upward to the nearest 1/100 of 1 %) determined by the
Agent (which determination shall be conclusive) to be the rate per annum
announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight Federal
funds transactions arranged by Federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal
Funds Effective Rate" as of the date of this Agreement; PROVIDED, that if
such Federal Reserve Bank (or its successor) does not announce such rate on
any day, the "Federal Funds Effective Rate" for such day shall be the
Federal Funds Effective Rate for the last day on which such rate was
announced. Changes in the Alternate Base Rate shall take effect on the
date the Agent announces a change in the Base Rate or the Federal Reserve
Bank announces a change in the Federal Funds Effective Rate, as the case
may be;
(ii) EURO-RATE OPTION: A rate per annum (based on a year of 360 days
and actual days elapsed) for each day equal to the Euro-Rate for such day
plus the Applicable Margin for such day. "Euro-Rate" for any day, as used
herein, shall mean for each Funding Segment of the Euro-Rate Portion
corresponding to a proposed or existing Euro-Rate Funding Period the rate
per annum determined by the Agent by dividing (the resulting quotient to be
rounded upward to the nearest 1/100 of 1%) (A) the rate of interest (which
shall be the same for each day in such Euro-Rate Funding Period) determined
in good faith by the Agent in accordance with its usual procedures (which
determination shall be conclusive) to be the average of the rates per annum
for deposits in Dollars offered to major money center banks in the London
interbank market at approximately 11:00 a.m., London time, two London
Business Days prior to the first day of such Euro-Rate Funding Period for
delivery on the first day of such Euro-Rate Funding Period in amounts
comparable to such Funding Segment and having maturities comparable to such
Funding Period by (B) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage.
The "Euro-Rate" may also be expressed by the following formula:
[average of the rates offered to major money ]
[center banks in the London interbank market ]
Euro-Rate = [DETERMINED BY THE AGENT PER SUBSECTION (A) ]
[1.00 - Euro-Rate Reserve Percentage ]
"Euro-Rate Reserve Percentage" for any day shall mean the percentage
(expressed as a decimal, rounded upward to the nearest 1/100 of 1%), as
determined in good faith by the Agent (which determination shall be
conclusive), which is in effect on such day as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) representing the
maximum reserve requirement (including, without limitation, supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency liabilities") of a member
bank in such System. The Euro-Rate shall be adjusted automatically as of
the effective date of each change in the Euro-Rate Reserve Percentage. The
Euro-Rate Option shall be calculated in accordance with the foregoing
whether or not any Bank is actually required to hold reserves in connection
with its eurocurrency funding or, if required to hold such reserves, is
required to hold reserves at the "Euro-Rate Reserve Percentage" as herein
defined.
The Agent shall give prompt notice to the Borrower and to the Banks of
the Euro-Rate determined or adjusted in accordance with the definition of
the Euro-Rate, which determination or adjustment shall be conclusive if
made in good faith.
10
(b) Applicable Margin. "Applicable Margin" shall mean 0.150%.
(c) FUNDING PERIODS. At any time when a Borrower shall select, convert to
or renew the Euro-Rate Option to apply to any part of the Loans, such Borrower
shall specify one or more periods (the "Funding Periods") during which each such
Option shall apply, such Funding Periods being as set forth below:
INTEREST RATE OPTION AVAILABLE FUNDING PERIODS
-------------------- -------------------------
Euro-Rate Option One, two, three or six months
("Euro-Rate Funding Period");
PROVIDED, that:
(i) Each Euro-Rate Funding Period shall begin on a London Business
Day, and the term "month", when used in connection with a Euro-Rate Funding
Period, shall be construed in accordance with prevailing practices in the
interbank eurodollar market at the commencement of such Euro-Rate Funding
Period, as determined in good faith by the Agent (which determination shall
be conclusive); and
(ii) The Borrower may not select a Funding Period that would end
after the Expiration Date.
(d) TRANSACTIONAL AMOUNTS. Every selection of, conversion from,
conversion to or renewal of an interest rate Option and every payment or
prepayment of any Loans shall be in a principal amount such that after giving
effect thereto the aggregate principal amount of the Alternate Base Rate Portion
of the Loans, or the aggregate principal amount of each Funding Segment of the
Euro-Rate Portion of the Loans, shall be as set forth below:
PORTION OR FUNDING SEGMENT ALLOWABLE AGGREGATE PRINCIPAL AMOUNTS
-------------------------- -------------------------------------
Alternate Base Rate Portion and $10,000,000 plus an integral
Each Funding Segment of the multiple of $1,000,000.
Euro-Rate Portion
(e) EURO-RATE UNASCERTAINABLE; IMPRACTICABILITY. If
(i) on any date on which a Euro-Rate would otherwise be set the Agent
(in the case of clauses (A) or (B) below) or any Bank (in the case of
clause (C) below) shall have determined in good faith (which determination
shall be conclusive) that:
(A) adequate and reasonable means do not exist for ascertaining such
Euro-Rate,
(B) a contingency has occurred which materially and adversely affects
the interbank eurodollar market, or
(C) the effective cost to such Bank of funding a proposed Funding
Segment of the Euro-Rate Portion from a Corresponding Source of Funds shall
exceed the Euro-Rate applicable to such Funding Segment, or
(ii) at any time any Bank shall have determined in good faith (which
determination shall be conclusive) that the making, maintenance or funding
of any part of the Euro-Rate Portion has been made impracticable or
unlawful by compliance by such Bank or a
11
Notional Euro-Rate Funding Office in good faith with any applicable Law or
guideline or interpretation or administration thereof by any Official Body
charged with the interpretation or administration thereof or with any
applicable request or directive of any such Official Body (whether or not
having the force of law);
then, and in any such event, the Agent or such Bank, as the case may be, may
notify the Borrowers of such determination (and any Bank giving such notice
shall notify the Agent). Upon such date as shall be specified in such notice
(which shall not be earlier than the date such notice is given), the obligation
of each of the Banks to allow the Borrowers to select, convert to or renew the
Euro-Rate Option shall be suspended until the Agent or such Bank, as the case
may be, shall have later notified the Borrowers (and any Bank giving such notice
shall notify the Agent) of the Agent's or such Bank's determination in good
faith (which determination shall be conclusive) that the circumstance giving
rise to such previous determination no longer exist.
If any Bank notifies the Borrowers of a determination under subsection (ii)
of this Section 2.04(e), the Euro-Rate Portion of the Loans of such Bank (the
"Affected Bank") shall automatically be converted to the Alternate Base Rate
Option as of the date specified in such notice (and accrued interest thereon
shall be due and payable on such date).
If at the time the Agent or a Bank makes a determination under subsection
(i) or (ii) of this Section 2.04(e) and X.L. Insurance previously has notified
the Agent that a Borrower wishes to select, convert to or renew the Euro-Rate
Option with respect to any proposed Loans but such Loans have not yet been made,
such notification shall be deemed to provide for selection of, conversion to or
renewal of the Alternate Base Rate Option instead of the Euro-Rate Option, with
respect to such Loans or, in the case of a determination by a Bank, such Loans
of such Bank.
2.05. CONVERSION OR RENEWAL OF INTEREST RATE OPTIONS.
(a) CONVERSION OR RENEWAL. Subject to the provisions of Section 2.11(b)
hereof, and if no Event of Default or Potential Default shall have occurred and
be continuing or shall exist, a Borrower may convert any part of its Loans from
any interest rate Option or Options to one or more different interest rate
Options and may renew the Euro-Rate Option as to any Funding Segment of the
Euro-Rate Portion:
(i) At any time with respect to conversion from the Alternate Base
Rate Option; or
(ii) At the expiration of any Funding Period with respect to
conversions from or renewals of the Euro-Rate Option as to the Funding
Segment corresponding to such expiring Funding Period.
Whenever a Borrower desires to convert or renew any interest rate Option or
Options, X.L. Insurance shall provide to the Agent Standard Notice setting forth
the following information:
(w) The date, which shall be a Business Day, on which the proposed
conversion or renewal is to be made;
(x) The principal amounts selected in accordance with Section 2.04(d)
hereof of the Alternate Base Rate Portion and each Funding Segment of the
Euro-Rate Portion to be converted from or renewed;
(y) The interest rate Option or Options selected in accordance with
Section 2.04(a) hereof and the principal amounts selected in accordance
with Section 2.04(d) hereof of the Alternate Base Rate Portion and each
Funding Segment of the Euro-Rate Portion to be converted to; and
12
(z) With respect to each Funding Segment to be converted to or
renewed, the Funding Period selected in accordance with Section 2.04(c)
hereof to apply to such Funding Segment.
Standard Notice having been so provided, after the date specified in such
Standard Notice, interest shall be calculated upon the principal amount of the
Loans as so converted or renewed. Interest on the principal amount of any part
of the Loans converted or renewed (automatically or otherwise) shall be due and
payable on the conversion or renewal date.
(b) FAILURE TO CONVERT OR RENEW. Absent due notice from X.L. Insurance of
conversion or renewal in the circumstances described in Section 2.05(a)(ii)
hereof, any part of the Euro-Rate Portion for which such notice is not received
shall be converted automatically to the Alternate Base Rate Option on the last
day of the expiring Funding Period.
2.06. PREPAYMENTS GENERALLY. Whenever a Borrower desires or is required
to prepay any part of its Loans, X.L. Insurance shall provide Standard Notice to
the Agent setting forth the following information:
(a) Whether such prepayment is to be applied to the Loans outstanding to
X.L. Insurance or X.L. Reinsurance;
(b) The date, which shall be a Business Day, on which the proposed
prepayment is to be made;
(c) The total principal amount of such prepayment, which shall be the sum
of the principal amounts selected pursuant to clause (d) of this Section 2.06;
and
(d) The principal amounts selected in accordance with Section 2.04(d)
hereof of the Alternate Base Rate Portion and each part of each Funding Segment
of the Euro-Rate Portion to be prepaid.
Standard Notice having been so provided, on the date specified in such Standard
Notice, the principal amounts of the Alternate Base Rate Portion and each part
of the Euro-Rate Portion specified in such notice, together with interest on
each such principal amount to such date, shall be due and payable.
2.07. OPTIONAL PREPAYMENTS. Each Borrower shall have the right at its
option from time to time to prepay its Loans in whole or part without premium or
penalty (subject, however, to Section 2.10(b) hereof):
(a) At any time with respect to any part of the Alternate Base Rate
Portion, PROVIDED, HOWEVER, that such prepayment shall be in a principal amount
of $10,000,000 or an integral multiple of $1,000,000 in excess thereof; or
(b) At the expiration of any Funding Period with respect to prepayment of
the Euro-Rate Portion with respect to any part of the Funding Segment
corresponding to such expiring Funding Period, PROVIDED, HOWEVER, that such
prepayment shall be in a principal amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof.
Any such prepayment shall be made in accordance with Section 2.06 hereof.
2.08. INTEREST PAYMENT DATES. Interest on the Alternate Base Rate Portion
shall be due and payable on each Regular Payment Date. Interest on each Funding
Segment of the Euro-Rate Portion shall be due and payable on the last day of the
corresponding Euro-Rate Funding Period and, if such Euro-Rate Funding Period is
longer than three months, also every third month during such Funding Period.
After maturity of any part of the Loans (by acceleration or otherwise), interest
on such part of the Loans shall be due and payable on demand.
13
2.09. PRO RATA TREATMENT; PAYMENTS GENERALLY; INTEREST ON OVERDUE AMOUNTS.
(a) PRO RATA TREATMENT. Each borrowing and conversion and renewal of
interest rate Options hereunder shall be made, and all payments made in respect
of principal, interest, and Facility Fees due from the Borrowers hereunder or
under the Notes shall be applied, Pro Rata from and to each Bank, except for
payments of interest involving an Affected Bank as provided in Section 2.04(e)
hereof and payments to a Bank subject to a withholding deduction under Section
2.11(c) hereof. The failure of any Bank to make a Loan shall not relieve any
other Bank of its obligation to lend hereunder, but neither the Agent nor any
Bank shall be responsible for the failure of any other Bank to make a Loan.
(b) PAYMENTS GENERALLY. All payments and prepayments to be made by a
Borrower in respect of principal, interest, fees, indemnity, expenses or other
amounts due from such Borrower hereunder or under any Loan Document shall be
payable in Dollars at 12:00 o'clock Noon, Pittsburgh time, on the day when due
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue,
without setoff, counterclaim, withholding or other deduction of any kind or
nature, except for payments to a Bank subject to a withholding deduction under
Section 2.11(c) hereof. Except for payments under Sections 2.10 and 9.04
hereof, such payments shall be made to the Agent at its Office in Dollars in
funds immediately available at such Office, and payments under Sections 2.10 and
9.04 hereof shall be made to the applicable Bank at such domestic account as it
shall specify to the Borrowers from time to time in funds immediately available
at such account. Any payment or prepayment received by the Agent or such Bank
after 12:00 o'clock Noon, Pittsburgh time, on any day shall be deemed to have
been received on the next succeeding Business Day. The Agent shall distribute
to the Banks all such payments received by it from a Borrower as promptly as
practicable after receipt by the Agent.
(c) INTEREST ON OVERDUE AMOUNTS. To the extent permitted by law, after
there shall have become due (by acceleration or otherwise) principal, interest,
fees, indemnity, expenses or any other amounts due from the Borrowers hereunder
or under any other Loan Document, such amounts shall bear interest for each day
until paid (before and after judgment), payable on demand, at a rate per annum
(in each case based on a year of 360 days and actual days elapsed) which for
each day shall be equal to the following:
(i) In the case of any part of the Euro-Rate Portion of any Loans,
(A) until the end of the applicable then-current Funding Period at a rate
per annum 2% above the rate otherwise applicable to such part, and (B)
thereafter in accordance with the following clause (ii); and
(ii) In the case of any other amount due from a Borrower hereunder or
under any Loan Document, 2% above the then-current Alternate Base Rate
Option applicable to Loans.
To the extent permitted by law, interest accrued on any amount which has become
due hereunder or under any Loan Document shall compound on a day-by-day basis,
and hence shall be added daily to the overdue amount to which such interest
relates.
2.10. ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.
(a) INCREASED COSTS OR REDUCED RETURN RESULTING FROM TAXES, RESERVES,
CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC. If the introduction of or any
change in, or any change in the interpretation or application of, any Law,
regulation or guideline by any Official Body charged with the interpretation or
administration thereof or compliance with any request or directive of any
applicable Official Body (whether or not having the force of law):
(i) subjects any Bank or any Notional Euro-Rate Funding Office to any
tax or changes the basis of taxation with respect to this Agreement, the
Notes, the Loans or payments by the Borrowers of principal, interest,
facility fee or other amounts due from the Borrowers
14
hereunder or under the Notes (except for taxes on the overall net income or
overall gross receipts of such Bank or such Notional Euro-Rate Funding
Office imposed by the jurisdictions (federal, state and local) in which the
Bank's principal office or Notional Euro-Rate Funding Office is located),
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend
credit extended by, assets (funded or contingent) of, deposits with or for
the account of, other acquisitions of funds by, such Bank or any Notional
Euro-Rate Funding Office (other than requirements expressly included herein
in the determination of the Euro-Rate hereunder),
(iii) imposes, modifies or deems applicable any capital adequacy
or similar requirement (A) against assets (funded or contingent) of, or
credits or commitments to extend credit extended by, any Bank or any
Notional Euro-Rate Funding Office, or (B) otherwise applicable to the
obligations of any Bank or any Notional Euro-Rate Funding Office under this
Agreement, or
(iv) imposes upon any Bank or any Notional Euro-Rate Funding Office
any other condition or expense with respect to this Agreement, the Notes or
its making, maintenance or funding of any Loan,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank, any Notional Euro-Rate Funding Office or, in the case of clause (iii)
hereof, any Person controlling a Bank, with respect to this Agreement, the Notes
or the making, maintenance or funding of any Loan (or, in the case of any
capital adequacy or similar requirement, to have the effect of reducing the rate
of return on such Bank's or controlling Person's capital, taking into
consideration such Bank's or controlling Person's policies with respect to
capital adequacy so long as such policies are reasonable in light of prevailing
market practice at the time) by an amount which such Bank deems to be material
(such Bank being deemed for this purpose to have made, maintained or funded each
Funding Segment of the Euro-Rate Portion from a Corresponding Source of Funds),
such Bank may from time to time notify the Borrowers of the amount determined in
good faith (using any averaging and attribution methods) by such Bank (which
determination shall be conclusive) to be necessary to compensate such Bank or
such Notional Euro-Rate Funding Office for such increase, reduction or
imposition. Such amount shall be due and payable by any applicable Borrower to
such Bank five Business Days after such notice is given, together with an amount
equal to interest on such amount from the date two Business Days after the date
demanded until such due date at the Alternate Base Rate Option applicable to
Loans. A certificate by such Bank as to the amount due and payable under this
Section 2.10(a) from time to time and the method of calculating such amount
shall be conclusive. Each Bank agrees that it will use good faith efforts to
notify the Borrowers of the occurrence of any event that would give rise to a
payment under this Section 2.10(a); PROVIDED, however that, so long as such
notice is given within a reasonable period after the occurrence of such event,
any failure of such Bank to give any such notice shall have no effect on the
Borrowers' obligations hereunder.
(b) FUNDING BREAKAGE. In addition to all other amounts payable hereunder,
if and to the extent for any reason any part of any Funding Segment of any
Euro-Rate Portion of the Loans becomes due (by acceleration or otherwise), or is
paid, prepaid or converted to another interest rate Option (whether or not such
payment, prepayment or conversion is mandatory or automatic and whether or not
such payment or prepayment is then due), on a day other than the last day of the
corresponding Funding Period (the date such amount so becomes due, or is so
paid, prepaid or converted, being referred to as the "Funding Breakage Date"),
the applicable Borrower shall pay each Bank an amount ("Funding Breakage
Indemnity") determined by such Bank as follows:
15
(i) first, calculate the following amount: (A) the principal amount
of such Funding Segment of the Loans owing to such Bank which so became
due, or which was so paid, prepaid or converted, times (B) the greater of
(x) zero or (y) the rate of interest applicable to such principal amount on
the Funding Breakage Date minus the Treasury Rate as of the Funding
Breakage Date, times (C) the number of days from and including the Funding
Breakage Date to but not including the last day of such Funding Period,
times (D) 1/360;
(ii) the Funding Breakage Indemnity to be paid by such Borrower to
such Bank shall be the amount equal to the present value as of the Funding
Breakage Date (discounted at the Treasury Rate as of such Funding Breakage
Date, and calculated on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed) of the amount described in the preceding
clause (i) (which amount described in the preceding clause (i) is assumed
for purposes of such present value calculation to be payable on the last
day of the corresponding Funding Period).
Such Funding Breakage Indemnity shall be due and payable on demand, and each
Bank shall, upon making such demand, notify the Agent of the amount so demanded.
In addition, such Borrower shall, on the due date for payment of any Funding
Breakage Indemnity, pay to such Bank an additional amount equal to interest on
such Funding Breakage Indemnity from the Funding Breakage Date to but not
including such due date at the Alternate Base Rate Option applicable to Loans
(calculated on the basis of a year of 360 days and actual days elapsed). The
amount payable to each Bank under this Section 2.10(b) shall be determined in
good faith by such Bank, and such determination shall be conclusive.
2.11. TAXES.
(a) PAYMENTS NET OF TAXES. All payments made by the Borrowers under this
Agreement or any other Loan Document shall be made free and clear of, and
without reduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Official Body, and all liabilities with respect thereto,
excluding
(i) in the case of the Agent and each Bank, income or franchise taxes
imposed on the Agent or such Bank by the jurisdiction under the laws of
which the Agent or such Bank is organized or any political subdivision or
taxing authority thereof or therein or as a result of a connection between
such Bank and any jurisdiction other than a connection resulting solely
from this Agreement and the transactions contemplated hereby, and
(ii) in the case of each Bank, income or franchise taxes imposed by
any jurisdiction in which such Bank's lending offices which make or book
Loans are located or any political subdivision or taxing authority thereof
or therein
(all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"), unless the Borrower is required
to withhold or deduct Taxes. If any Taxes are required to be withheld or
deducted from any amounts payable to the Agent or any Bank under this Agreement
or any other Loan Document, the applicable Borrower shall pay the relevant
amount of such Taxes and the amounts so payable to the Agent or such Bank shall
be increased to the extent necessary to yield to the Agent or such Bank (after
payment of all Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement and the other Loan
Documents. Whenever any Taxes are paid by a Borrower with respect to payments
made in connection with this Agreement or any other Loan Document, as promptly
as possible thereafter, such Borrower shall send to the Agent for its own
account or for the account of such Bank, as the case may be, a certified copy of
an original official receipt received by such Borrower showing payment thereof.
If a Bank determines in its sole discretion in good faith that it has received a
refund in respect of any
16
Taxes as to which it has been indemnified by a Borrower, or with respect to
which a Borrower has paid additional amounts pursuant to this Section 2.11. such
Bank shall promptly after the date of such receipt pay over the amount of such
refund to such Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by a Borrower under this Section 2.11 with respect to
Taxes giving rise to such refund and only to the extent that such Bank has
determined that the amount of any such refund is directly attributable to
payments made under this Agreement), net of all reasonable expenses of such Bank
(including additional Taxes attributable to such refund, as determined by such
Bank) and without interest (other than interest, if any, paid by the relevant
Official Body with respect to such refund). A Borrower receiving any such
payment from a Bank shall, upon demand, pay to such Bank any amount paid over to
such Borrower by such Bank (plus penalties, interest or other charges) in the
event such Bank is required to repay any portion of such refund to such Official
Body. Nothing in this Section 2.11(a) shall entitle a Borrower to have access
to the records of any Bank, including, without limitation, tax returns.
(b) INDEMNITY. Each Borrower hereby indemnifies the Agent and each of the
Banks for the full amount of all Taxes attributable to payments by or on behalf
of such Borrower hereunder or under any of the other Loan Documents, any Taxes
paid by the Agent or such Bank, as the case may be, any present or future
claims, liabilities or losses with respect to or resulting from any omission to
pay or delay in paying any Taxes (including any incremental Taxes, interest or
penalties that may become payable by the Agent or such Bank as a result of any
failure to pay such Taxes, except by reason of unreasonable delay by the Agent
or Bank in notifying the Borrower or in making payment after payment was
received from the Borrower), whether or not such Taxes were correctly or legally
asserted. Such indemnification shall be made within 30 days from the date such
Bank or the Agent, as the case may be, makes written demand therefor.
(c) WITHHOLDING AND BACKUP WITHHOLDING. Each Bank that is incorporated or
organized under the laws of any jurisdiction other than the United States or any
State thereof agrees that, on or prior to the date any payment is due to be made
to it hereunder or under any other Loan Document, it will furnish to the
Borrowers and the Agent
(i) two valid, duly completed copies of United States Internal
Revenue Service Form 4224 or United States Internal Revenue Form 1001 or
successor applicable form, as the case may be, certifying in each case that
such Bank is entitled to receive payments under this Agreement and the
other Loan Documents without deduction or withholding of any United States
federal income taxes and
(ii) a valid, duly completed Internal Revenue Service Form W-8 or W-9
or successor applicable form, as the case may be, to establish an exemption
from United States backup withholding tax.
Each Bank which so delivers to the Borrowers and the Agent a Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms, agrees to deliver to the
Borrowers and the Agent two further copies of the said Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from withholding tax, or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it, and such extensions or renewals thereof as may reasonably be
requested by the Borrowers and the Agent, certifying in the case of a Form 1001
or Form 4224 that such Bank is entitled to receive payments under this Agreement
or any other Loan Document without deduction or withholding of any United States
federal income taxes, unless in any such cases an event (including any changes
in Law) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such letter or form
with respect to it and such Bank advises the Borrowers and the Agent that it is
not capable of receiving payments without any deduction or
17
withholding of United States federal income tax, and in the case of a Form W-8
or W-9, establishing an exemption from United States backup withholding tax.
2.12. FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE.
(a) NOTIONAL FUNDING. Each Bank shall have the right from time to time,
prospectively or retrospectively, without notice to the Borrowers, to deem any
branch, subsidiary or affiliate of such Bank to have made, maintained or funded
any part of the Euro-Rate Portion at any time. Any branch, subsidiary or
affiliate so deemed shall be known as a "Notional Euro-Rate Funding Office."
Such Bank shall deem any part of the Euro-Rate Portion of the Loans or the
funding therefor to have been transferred to a different Notional Euro-Rate
Funding Office if such transfer would avoid or cure an event or condition
described in Section 2.04(e)(ii) hereof or would lessen compensation payable by
a Borrower under Section 2.10(a) hereof, and if such Bank determines in its sole
discretion that such transfer would be practicable and would not have a material
adverse effect on such part of the Loans, such Bank or any Notional Euro-Rate
Funding Office (it being assumed for purposes of such determination that each
part of the Euro-Rate Portion is actually made or maintained by or funded
through the corresponding Notional Euro-Rate Funding Office). Notional
Euro-Rate Funding Offices may be selected by such Bank without regard to such
Bank's actual methods of making, maintaining or funding Loans or any sources of
funding actually used by or available to such Bank.
(b) ACTUAL FUNDING. Each Bank shall have the right from time to time to
make or maintain any part of the Euro-Rate Portion by arranging for a branch,
subsidiary or affiliate of such Bank to make or maintain such part of the
Euro-Rate Portion. Such Bank shall have the right to (i) hold any applicable
Note payable to its order for the benefit and account of such branch, subsidiary
or affiliate or (ii) request the applicable Borrower to issue one or more
promissory notes in the principal amount of such Euro-Rate Portion, in
substantially the form attached hereto as Exhibit A-1 or A-2, as the case may
be, with the blanks appropriately filled, payable to such branch, subsidiary or
affiliate and with appropriate changes reflecting that the holder thereof is not
obligated to make any additional Loans to such Borrower. Each Borrower agrees
to comply promptly with any request under subsection (ii) of this Section
2.12(b). If any Bank causes a branch, subsidiary or affiliate to make or
maintain any part of the Euro-Rate Portion hereunder, all terms and conditions
of this Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Euro-Rate Portion and to any note payable to the
order of such branch, subsidiary or affiliate to the same extent as if such part
of the Euro-Rate Portion were made or maintained and such note were a Note
payable to such Bank's order.
2.13. EXTENSIONS OF EXPIRATION DATE. The Borrowers may, at their option,
give the Agent written notice (an "Extension Request") not more than 90 days,
nor less than 60 days, prior to the then effective Expiration Date, of the
Borrowers' desire to extend the then effective Expiration Date to a date which
is not later than 364 days after the "Reset Date". The "Reset Date" means the
date which is 30 days prior to the then effective Expiration Date. The Agent
shall promptly inform the Banks of such Extension Request. Each Bank that
agrees with such Extension Request shall deliver to the Agent its express
written consent thereto no later than the Reset Date. No extension shall become
effective unless agreed to by the Required Banks on or prior to the Reset Date.
If all Banks have not in writing expressly consented to any such Extension
Request by the Reset Date, then the Agent shall so notify the Borrowers and the
Borrowers, at their option, may, as of the then effective Expiration Date, (i)
replace any Bank which has not agreed to such Extension Request (a "Nonextending
Bank") with another commercial lending institution reasonably satisfactory to
the Agent (a "Replacement Bank") by giving notice of the name of such
Replacement Bank to the Agent not later than five Business Days prior to the
then effective Expiration Date or (ii) pay the Loans of such Nonextending Bank.
Upon notice from the Agent, such Nonextending Bank shall, as of the then
effective Expiration Date, assign all of its interests hereunder to such
Replacement Bank in accordance with the provisions of Section 9.13 hereof. If
the Required Banks shall have consented to such Extension Request, then, on the
then effective Expiration Date, after payment by the Borrower (or, if
applicable, by a Replacement Bank) of all amounts payable hereunder to each
Nonextending Bank, the
18
Expiration Date shall be deemed to have been extended to, and shall be, the date
specified in such Extension Notice. The Agent shall promptly after any such
extension advise the Banks of any decrease in the aggregate Committed Amounts
and X.L. Reinsurance Committed Amounts of the Banks and of the respective
Commitment Percentages of all Banks. Each Bank may agree or not agree to any
such Extension Request in its sole and absolute discretion and any Bank not
agreeing (or not responding) to an Extension Request shall not be deemed to have
extended the Expiration Date regardless of whether a Replacement Bank is
obtained.
ARTICLE III
REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants that:
3.01. ORGANIZATION AND QUALIFICATION. Such Borrower, and each of its
Subsidiaries, EXEL Acquisition and EXEL Limited are corporations duly organized,
validly existing and in good standing under the laws of the their respective
jurisdictions of incorporation; each of such Borrower, its Subsidiaries, EXEL
Acquisition and EXEL Limited has the power and authority to own its properties
and assets, and to carry on its business as presently conducted and is qualified
to do business in those jurisdictions in which its ownership of property or the
nature of its business activities is such that failure to receive or retain such
qualification would have a Material Adverse Effect. A list of such Borrower's
Subsidiaries setting forth their respective jurisdictions of incorporation is
set forth in Schedule 3.01 hereto. Such Borrower is not subject to any Private
Act other than the X.L. Insurance Company, Ltd. Xxx, 0000, a copy of which has
been provided to the Agent.
3.02. CORPORATE POWER AND AUTHORIZATION. Each of such Borrower and EXEL
Acquisition has corporate power and authority to, make and carry out this
Agreement and any other Loan Document to which it is a party, in the case of
such Borrower, to make the borrowings provided for herein, to execute and
deliver this Agreement and, in the case of such Borrower, the applicable Notes
and to perform its obligations hereunder and under any such Loan Documents and
all such action has been duly authorized by all necessary corporate proceedings
on its part.
3.03. FINANCIAL INFORMATION. X.L. Insurance has furnished to Agent with
sufficient copies for each Bank copies of the audited consolidated financial
statements and the consolidating financial statements of such Borrower and its
consolidated Subsidiaries including a consolidated and consolidating balance
sheet and related statements of income and retained earnings for the fiscal year
ending November 30, 1996. Such financial statements fairly present the
financial position of such Borrower and its consolidated Subsidiaries as of the
date of such reports and the consolidated and consolidating results of their
operations and cash flows for the fiscal period then ended in conformity with
GAAP applied on a consistent basis, and such consolidated financial statements
have been examined and reported upon by independent, certified public
accountants.
3.04. LITIGATION. Except as disclosed to the Banks in writing prior to
the Closing Date (including by disclosure in the financial statements delivered
to the Banks referred to in Section 3.03 hereof), there is no litigation or
governmental proceeding by or against such Borrower or any of its Subsidiaries
pending or, to its knowledge, threatened, which could reasonably be expected (in
light of reserves, and total shareholders' equity of such Borrower and after
taking into account the nature of such Borrower's business and activities) to
have a Material Adverse Effect if adversely determined.
19
3.05. NO ADVERSE CHANGES. Since November 30, 1996, there has been no
occurrence or event which has had a Material Adverse Effect.
3.06. NO CONFLICTING LAWS OR AGREEMENTS; CONSENTS AND APPROVALS. (a)
Neither the execution and delivery of this Agreement or any other Loan Document,
the consummation of the transactions herein or therein contemplated nor
compliance with the terms and provisions hereof or thereof will conflict with or
result in a breach of any of the terms, conditions or provisions of the articles
of incorporation or by-laws of such Borrower or of any applicable Law or of any
material agreement or instrument to which such Borrower is a party or by which
it is bound or to which it is subject, or constitute a default thereunder or
result in the creation or imposition of any Lien of any nature whatsoever upon
any of the property of such Borrower pursuant to the terms of any such agreement
or instrument.
(b) No authorization, consent, approval, license, exemption or other
action by, and no registration, qualification, designation, declaration or
filing with, any Official Body is or will be necessary or advisable in
connection with (i) execution and delivery of this Agreement or any other Loan
Document, (ii) the consummation of the transactions herein or therein
contemplated, or (iii) the performance of or compliance with the terms and
conditions hereof or thereof.
3.07. EXECUTION AND BINDING EFFECT. This Agreement has been duly and
validly executed and delivered by such Borrower. This Agreement constitutes,
and the applicable Notes when duly executed and delivered by such Borrower
pursuant to the provisions hereof will constitute, legal, valid and binding
obligations of such Borrower enforceable in accordance with the terms thereof
except, as to the enforcement of remedies, for limitations imposed by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally (excluding Laws with
respect to fraudulent conveyance), (ii) Laws limiting the right of specific
performance or (iii) general principles of equity.
3.08. TAXES. All tax returns required to be filed by such Borrower have
been properly prepared, executed and filed. All taxes, assessments, fees and
other governmental charges upon such Borrower or upon its properties, income or
sales which are due and payable have been paid. The reserves and provisions for
taxes, if any, on the books of such Borrower are adequate for all open years and
for its current fiscal period as determined in accordance with GAAP.
3.09. USE OF PROCEEDS. Such Borrower will use the proceeds from any
borrowing hereunder for general corporate purposes (which may include
acquisitions). Such Borrower will make no borrowing hereunder for the
purpose of buying or carrying any "margin stock" as such term is used in
Regulation U of the Board of Governors of the Federal Reserve System in
violation of such regulation. Such Borrower is not engaged in the business
of extending credit to others for the purposes of buying or carrying any
"margin stock."
3.10. PERMITS, LICENSES AND RIGHTS. Such Borrower and each Subsidiary of
such Borrower own or possess all the patents, trademarks, service marks, trade
names, copyrights, licenses, franchises, permits and rights with respect to the
foregoing necessary to own and operate their respective properties and to carry
on their respective businesses as presently conducted and presently planned to
be conducted without, to the best knowledge of such Borrower, conflict with the
rights of others.
3.11. ACCURATE AND COMPLETE DISCLOSURE. All information provided by or on
behalf of either Borrower to the Agent or any Bank pursuant to or in connection
with the Loan Documents and the transactions contemplated thereby is true and
accurate in all material respects on the date such information is dated (or, if
not dated, on the date such information was received by the Agent or such Bank,
as the case may be) and such information, taken as a whole, which was provided
on or prior to the time this representation is made or remade, does not, to the
best knowledge of the
20
Borrowers, omit to state any material fact necessary to make such information
not misleading at such time in light of the circumstances in which it was
provided.
3.12. ABSENCE OF VIOLATIONS. Such Borrower and each Affiliate of such
Borrower is not in violation of a any charter document, corporate minute or
resolution, any instrument or agreement, in each case binding on it or affecting
its property, or any Law, in a manner which could have a Materially Adverse
Effect.
3.13. ENVIRONMENTAL MATTERS. Such Borrower and each of its Subsidiaries
is and has been in full compliance with all applicable Environmental Laws. Such
Borrower and each of its Subsidiaries have all Approvals by Official Bodies
charged with the enforcement of Environmental Laws that are necessary or
desirable for the ownership and operation of their respective properties,
facilities and businesses as presently owned and operated and as presently
proposed to be owned and operated.
3.14. NOT AN INVESTMENT COMPANY. Such Borrower is not an Investment
Company required to be registered under the Investment Company Act of 1940.
ARTICLE IV
CONDITIONS OF LENDING
4.01. EFFECTIVENESS. The effectiveness of this Agreement and the closing
of the transactions contemplated hereby shall be subject to the following
conditions:
(a) PROCEEDINGS AND INCUMBENCY. There shall have been delivered to the
Agent with sufficient copies for each Bank a certificate with respect to each
Borrower and EXEL Acquisition in form and substance satisfactory to the Agent
dated the Closing Date and signed on behalf of each Borrower or EXEL
Acquisition, as the case may be, by the Secretary or an Assistant Secretary of
such Borrower or EXEL Acquisition, as the case may be, certifying as to: (a)
true copies of all corporate action taken by such Borrower or EXEL Acquisition,
as the case may be, relative to this Agreement, and the other Loan Documents
applicable to it, including but not limited to that described in Section 3.02
hereof and (b) the names, true signatures and incumbency of the officer or
officers of such Borrower or EXEL Acquisition, as the case may be, authorized to
execute and deliver this Agreement and the other Loan Documents applicable to
it. Each Bank may conclusively rely on such certificates unless and until a
later certificate revising the prior certificate has been furnished to such
Bank.
(b) ORGANIZATIONAL DOCUMENTS. There shall have been delivered to the
Agent with sufficient copies for each Bank (i) certified copies of the articles
of incorporation and by-laws for each Borrower and EXEL Acquisition, (ii) a
certificate of good standing for each Borrower and any subsidiary of such
Borrower certified by the appropriate Official Body of Bermuda and (iii) a
certificate of good standing for EXEL Acquisition certified by the appropriate
Official Body of the Cayman Islands, British West Indies.
(c) OPINIONS OF COUNSEL. There shall have been delivered to the Agent
with sufficient copies for each Bank written opinions addressed to the Banks,
dated the Closing Date, of Xxxxxx, Xxxxxx & Reindel, Conyers, Xxxx & Xxxxxxx
and Xxxx X. Xxxxxxxx, Esq., respectively, the Borrowers' and Guarantors'
counsel, which together are substantially to the effects set forth in Exhibit
C.
(d) DETAILS, PROCEEDINGS AND DOCUMENTS. All legal details and proceedings
in connection with the transactions contemplated by this Agreement shall be
satisfactory to each Bank, and each
21
Bank shall have received all such counterpart originals or certified or other
copies of the Loan Documents and such other documents and proceedings in
connection with such transactions, in form and substance satisfactory to it, as
such Bank have reasonably requested.
(e) FEES AND EXPENSES. The Borrowers shall have paid all fees and other
compensation to be paid by it hereunder on or prior to the Closing Date.
(f) REPRESENTATION AND WARRANTIES. The representation and warranties
contained in Article III hereof shall be true on and as of the Closing Date with
the same effect as though made on and as of the Closing Date.
4.02. BORROWINGS. The obligations of each Bank to make any Loan hereunder
are subject to the accuracy as of the date hereof of the representations and
warranties herein contained, to the performance by each Borrower of its
obligations to be performed hereunder on or before the date of such Loans and to
the satisfaction of the following further conditions:
(a) REPRESENTATIONS AND WARRANTIES; EVENTS OF DEFAULT AND POTENTIAL
DEFAULTS. The representations and warranties contained in Article III hereof
shall be true on and as of the date of each Loan hereunder with the same effect
as though made on and as of each such date, and on the date of each Loan
hereunder no Event of Default and no Potential Default shall have occurred and
be continuing or exist or shall occur or exist after giving effect to the Loans
to be made on such date. Failure of the Agent to receive notice from the
applicable Borrower to the contrary before any Loan is made or deemed made
hereunder shall constitute a representation and warranty that: (i) the
representations and warranties contained in Article III hereof are true and
correct on and as of the date of such Loan with the same effect as though made
on and as of such date and (ii) on the date of such Loan no Event of Default or
Potential Default has occurred and is continuing or exists or will occur or
exist after giving effect to such Loan.
(b) COMMITMENT. The fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitment and, if applicable, the X.L. Reinsurance
Commitment;
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrowers hereby covenant to the Agent and each Bank as follows:
5.01. REPORTING AND INFORMATION REQUIREMENTS. Each Borrower shall deliver
to the Agent with sufficient copies for each Bank:
(a) ANNUAL REPORTS. (i) As soon as practicable and in any event within
100 days after the close of each fiscal year of X.L. Insurance, audited
consolidated statements and unaudited consolidating statements of income,
retained earnings and cash flows of such Borrower and its consolidated
Subsidiaries, for such fiscal year and a consolidated audited and consolidating
balance sheet of such Borrower and its consolidated Subsidiaries, as of the
close of such fiscal year, and notes to each, all in accordance with GAAP,
setting forth in comparative form the corresponding figures for the preceding
fiscal year, with such consolidated statements and balance sheets to be
certified by independent public accountants of recognized national standing in
the United States selected by such Borrower and not unacceptable to the Required
Banks, and the certificate or report of such accountants to be free of
exceptions or qualifications not reasonably acceptable to the Required Banks;
and (ii) as soon as
22
practical and in any event within 100 days after the close of each fiscal year
of EXEL Limited, audited consolidated statements of income, retained earnings
and cash flows of EXEL Limited and its consolidated Subsidiaries for such fiscal
year and a consolidated audited balance sheet of EXEL Limited and its
consolidated Subsidiaries as of the close of such fiscal year, and notes to
each, all in reasonable detail and in accordance with GAAP, setting forth in
comparative form the corresponding figures for the preceding fiscal year, with
such statements and balance sheets to be certified by independent public
accountants of recognized national standing in the United States selected by
EXEL Limited and not unacceptable to the Required Banks, and the certificate or
report of such accountants to be free of exceptions or qualifications not
reasonably acceptable to the Required Banks.
(b) QUARTERLY STATEMENTS. Within sixty days after the end of the first,
second and third quarterly accounting periods in each fiscal year of X.L.
Insurance, copies of the unaudited consolidated and consolidating balance sheets
of such Borrower and its consolidated Subsidiaries as of the end of such
accounting period and of the consolidated and consolidating income statements of
such Borrower and its consolidated Subsidiaries for the elapsed portion of the
fiscal year ended with the last day of such accounting period, all in accordance
with GAAP subject to year-end audit adjustments and certified by the principal
financial officer of such Borrower to have been prepared in accordance with
generally accepted accounting principles consistently applied by such Borrower
except as explained in such certificate.
(c) COMPLIANCE CERTIFICATES. Within 100 days after the end of each fiscal
year of the Borrowers and within sixty days after the end of each of the first
three quarters of each fiscal year, a certificate dated as of the end of such
fiscal year or quarter, signed on behalf of each Borrower by a principal
financial officer thereof, (i) stating that as of the date thereof no Event of
Default or Potential Default has occurred and is continuing or exists, or if an
Event of Default or Potential Default has occurred and is continuing or exists,
specifying in detail the nature and period of existence thereof and any action
with respect thereto taken or contemplated to be taken by such Borrower, (ii)
stating in reasonable detail the information and calculations necessary to
establish compliance with the provisions of Article VI hereof, and (iii) stating
that the signer has reviewed this Agreement and that such certificate is based
on an examination made by or under the supervision of the signer sufficient to
assure that such certificate is accurate.
(d) FURTHER INFORMATION. All such other information and in such form as
any Bank may reasonably request in writing.
(e) NOTICE OF EVENT OF DEFAULT. Immediately upon becoming aware of any
Event of Default or Potential Default, written notice thereof, together with a
written statement of the president or a principal financial officer of the
applicable Borrower setting forth the details thereof and any action with
respect thereto taken or contemplated to be taken by the Borrowers.
(f) NOTICE OF MATERIAL ADVERSE CHANGE. Promptly upon becoming aware
thereof, written notice of any event or occurrence constituting or which could
reasonably be expected to have a Material Adverse Effect.
(g) NOTICE OF MATERIAL PROCEEDINGS. Promptly upon becoming aware thereof,
written notice of the commencement, existence or threat of any proceeding or a
material change in any existing material proceeding by or before any Official
Body against or affecting such Borrower which, if adversely decided, could have
a Material Adverse Effect.
(h) NOTICE OF CERTAIN MATERIAL CHANGES. Promptly upon adoption thereof,
notice of each material change in either Borrower's investment policy,
underwriting policy or other business policy.
5.02. PRESERVATION OF EXISTENCE AND FRANCHISES. Each Borrower shall, and
shall cause each of its Subsidiaries to, maintain its corporate existence,
rights and franchises in full force and effect in its
23
jurisdiction of incorporation. Each Borrower shall, and shall cause each of its
Subsidiaries to, qualify and remain qualified as a foreign corporation in each
jurisdiction in which failure to receive or retain such qualification would have
a Material Adverse Effect.
5.03. INSURANCE. Each Borrower shall, and shall cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers,
insurance with respect to its properties in such amounts as is customary in the
case of corporations engaged in the same or a similar business having similar
properties similarly situated.
5.04. MAINTENANCE OF PROPERTIES. Each Borrower shall, and shall cause
each of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition the properties now or hereafter owned, leased or
otherwise possessed by and used or useful in its business and shall make or
cause to be made all needful and proper repairs, renewals, replacements and
improvements thereto so that the business carried on in connection therewith may
be properly conducted at all times, PROVIDED, however, that the foregoing shall
not impose on such Borrower or any Subsidiary of such Borrower any obligation in
respect of any property leased by such Borrower or such Subsidiary in addition
to such Borrower's obligations under the applicable document creating such
Borrower's or such Subsidiary's lease or tenancy.
5.05. PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND PRIORITY CLAIMS
PAYMENT OF OTHER CURRENT LIABILITIES. Each Borrower shall, and shall cause each
of its Subsidiaries to, pay or discharge:
(a) on or prior to the date on which penalties attach thereto, all taxes,
assessments and other governmental charges or levies imposed upon it or any of
its properties or income;
(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, if
unpaid, might result in the creation of a Lien upon any such property; and
(c) on or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any such property (other
than Liens not forbidden by Section 6.03 hereof) or which, if unpaid, might give
rise to a claim entitled to priority over general creditors of such Borrower in
any proceeding under the Bermuda Companies Law or Bermuda Insurance Law, or any
insolvency proceeding, liquidation, receivership, rehabilitation, dissolution or
winding-up involving such Borrower or such Subsidiary;
PROVIDED that, unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, such Borrower need not pay or discharge
any such tax, assessment, charge, levy or claim so long as the validity thereof
is contested in good faith and by appropriate proceedings diligently conducted
and so long as such reserves or other appropriate provisions as may be required
by GAAP and SAP shall have been made therefor and so long as such failure to pay
or discharge does not have a Material Adverse Effect.
5.06. FINANCIAL ACCOUNTING PRACTICES. Such Borrower shall, and shall
cause each of its Subsidiaries to, make and keep books, records and accounts
which, in reasonable detail, accurately and fairly reflect its transactions and
dispositions of its assets and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that transactions are recorded as
necessary to permit preparation of financial statements required under Section
5.01 hereof in conformity with GAAP and SAP, as applicable, and to maintain
accountability for assets.
5.07. COMPLIANCE WITH APPLICABLE LAWS. Each Borrower shall, and shall
cause each of its Subsidiaries to, comply with all applicable Laws (including
but not limited to the Bermuda Companies Law and Bermuda Insurance Laws) in all
respects; PROVIDED that such Borrower or any Subsidiary of such Borrower shall
not be deemed to be in violation of this Section 5.07 as a result of any failure
to
24
comply with any such Law which would not (i) result in fines, penalties,
injunctive relief or other civil or criminal liabilities which, in the
aggregate, would have a Materially Adversely Effect or (ii) otherwise impair the
ability of such Borrower to perform its obligations under this Agreement or the
Notes issued by it.
5.08. USE OF PROCEEDS. Each Borrower shall use the proceeds of all Loans
hereunder for its general corporate purposes (including to fund acquisitions).
5.09. CONTINUATION OF AND CHANGE IN BUSINESS. Each Borrower and its
Subsidiaries shall continue to engage in substantially the same business and
activities it currently engages in on the date of this Agreement.
5.10. VISITATION. Each Borrower shall permit such Persons as any Bank may
reasonably designate to visit and inspect any of the properties of such
Borrower, to discuss its affairs with its financial management, and provide such
other information relating to the business and financial condition of such
Borrower at such times as such Bank may reasonably request. Each Borrower
hereby authorizes its financial management to discuss with any Bank the affairs
of such Borrower.
5.11 MERGER OF ACQUISITION TARGET INTO A BORROWER OR A SUBSIDIARY. The
Borrowers will cause EXEL Acquisition (or such entity into which EXEL
Acquisition is merged following the acquisition by EXEL Acquisition of shares of
GCR Holdings Limited) to be merged into a Borrower or a Subsidiary as promptly
as reasonably practicable after the Closing Date, it being understood that the
Borrowers intend that such merger will be consummated by the end of the current
fiscal year.
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants to the Agent and to each Bank as follows:
6.01. MERGERS AND ACQUISITIONS. (a) Neither Borrower shall merge with or
into or consolidate with any other Person, or agree to do any of the foregoing,
except that if no Event of Default or Potential Event of Default shall occur and
be continuing or shall exist at the time of such merger or consolidation or
immediately thereafter and after giving effect thereto:
(i) either Borrower may merge with any other corporation,
including a Subsidiary, if such Borrower shall be the surviving
corporation; and
(ii) if the written consent of the Required Banks is obtained,
either Borrower may merge into or consolidate with any other
corporation if the corporation into which such Borrower is merged or
which is formed by such consolidation shall expressly assume all
obligations of such Borrower under this Agreement.
(b) Neither Borrower shall acquire the stock or other equity interests, or
all or any substantial portion of the properties or assets of any other Person,
or agree to do any of the foregoing, unless such Person is engaged primarily in
the insurance business or the financial services business.
6.02. DISPOSITIONS OF ASSETS. Neither Borrower shall, and nor shall it
permit any Subsidiary to, sell convey, assign, lease, abandon or otherwise
transfer or dispose of, voluntarily or involuntarily (any of the foregoing being
referred to in this Section 6.02 as a "transaction" and any series of related
transactions constituting but a single transaction), any of its properties or
Assets, tangible or
25
intangible (including but not limited to sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper or general intangibles
with or without recourse), except:
(a) Transactions in the ordinary course of business involving current
assets or other assets classified on the Borrower's balance sheet as available
for sale.
(b) Sales, conveyances, assignments or other transfers or dispositions in
immediate exchange for cash or tangible assets, provided that any such sales,
conveyances or transfers shall not individually, or in the aggregate, exceed
$50,000,000 in any calendar year; or
(c) Dispositions of equipment or other property which is obsolete or no
longer used or useful in the conduct of the business of such Borrower or its
Subsidiaries.
Nothing in this Section 6.02 shall prohibit a Borrower from
providing funds (some of which funds may be obtained by the disposition of
assets of a Borrower or its Subsidiaries) to EXCEL Acquisition for the
purpose of funding the acquisition by EXCEL Acquisition of shares of GCR
Holdings Limited.
6.03. LIENS. Neither Borrower shall, nor shall it permit any Subsidiary
to, at any time create, incur, assume or suffer to exist any Lien on any of its
property or assets, tangible or intangible, now owned or hereafter acquired or
agree or become liable to do so, except:
(a) Liens existing on the date hereof (and extension, renewal and
replacement Liens upon the same property, provided the amount secured by each
Lien constituting such an extension, renewal or replacement Lien shall not
exceed the amount secured by the Lien theretofore existing) and listed on
Schedule 6.03(a) hereto;
(b) Liens arising from taxes, assessments, charges, levies or claims
described in Section 5.05 hereof that are not yet due or that remain payable
without penalty or to the extent permitted to remain unpaid under the provision
of such Section 5.05;
(c) Liens on property securing all or part of the purchase price thereof
to such Borrower and Liens (whether or not assumed) existing on property at the
time of purchase thereof by such Borrower (and extension, renewal and
replacement Liens upon the same property), provided --
(i) each such Lien is confined solely to the property so purchased,
improvements thereto and proceeds thereof, and
(ii) the aggregate amount of the obligations secured by all such
Liens on any particular property at any time purchased by such Borrower, as
applicable, shall not exceed 100% (if such obligations are not subject when
created to United States income taxes) or 90% (in all other cases) of the
lesser of the fair market value of such property at such time or the actual
purchase price of such property; or
(d) Zoning restrictions, easements, minor restrictions on the use of real
property, minor irregularities in title thereto and other minor Liens that do
not in the aggregate materially detract from the value of a property or asset
to, or materially impair its use in the business of, such Borrower;
(e) Liens securing Indebtedness permitted by Section 6.08 (c) hereof
covering assets whose market value is not materially greater than the amount of
the Indebtedness secured thereby; or
(f) Liens on cash and securities of a Borrower or its Subsidiaries
incurred as part of the management of its investment portfolio in accordance
with customary portfolio management practice and not in violation of the
Borrower's investment policy as in effect on the date of the Agreement.
6.04. TRANSACTIONS WITH AFFILIATES. Neither Borrower shall, nor shall it
permit any Subsidiary to, enter into or carry out any transaction with
(including, without limitation, purchase or lease property or services to, loan
or advance to or enter into, suffer to remain in existence or amend any
contract, agreement or arrangement with) any Affiliate of such Borrower, or
directly or indirectly agree to do any of the foregoing, except transactions
among the Borrowers and their wholly-owned Subsidiaries and transactions with
Affiliates in good faith in the ordinary course of such Borrower's business
consistent with past practice and on terms no less favorable to such
26
Borrower or any Subsidiary than those that could have been obtained in a
comparable transaction on an arm's length basis from an unrelated Person.
Nothing in this Section 6.04 shall prohibit a Borrower from providing funds to
EXEL Acquisition for the purpose of funding the acquisition by EXEL Acquisition
of shares of GCR Holdings Limited or shall prohibit a Borrower from incurring
the Indebtedness described in Section 6.08(g).
6.05. BUSINESS. Neither Borrower will, nor will it permit any Subsidiary
to, engage (directly or indirectly) in any businesses other than the businesses
substantially the same as those in which such Borrower and its Subsidiaries are
engaged on the Closing Date and any businesses reasonably related thereto or in
the financial services industry. Neither Borrower will permit, at any time, its
net premiums earned from insurance operations to comprise less than 50% of gross
revenues of such Borrower (on a consolidated basis exclusive of net gains and
losses from investments and investment income).
6.06. RATIO OF TOTAL FUNDED DEBT TO CONSOLIDATED TANGIBLE NET WORTH. X.L.
Insurance will not permit its ratio of Total Funded Debt to Consolidated
Tangible Net Worth to be greater than 0.35 at any time.
6.07. CONSOLIDATED NET WORTH. X.L. Insurance will not permit its
Consolidated Net Worth to be less than $1,200,000,000 at any time.
6.08. INDEBTEDNESS. Neither Borrower shall, nor shall it permit any
Subsidiary to, at any time create, incur, assume or suffer to exist any
Indebtedness, or agree, become or remain liable (contingent or otherwise) to do
any of the foregoing, except:
(a) Indebtedness to the Banks pursuant to this Agreement and the other
Loan Document;
(b) Unsecured Indebtedness of either Borrower or any Subsidiary in an
aggregate principal amount not exceeding $300,000,000 at any time outstanding;
(c) Reimbursement obligations with respect to letters of credit not
exceeding $200,000,000 in the aggregate, of which not more than $100,000,000 may
be secured;
(d) Indebtedness described on Schedule 6.08(d);
(e) Accounts or claims payable and accrued and deferred compensation
(including options) incurred in the ordinary course of business by either
Borrower or any Subsidiary of either Borrower;
(f) Indebtedness incurred in transactions described in Section 6.03(f);
and
(g) Unsecured Indebtedness owing to GCR Holdings Limited or its
subsidiaries the proceeds of the issuance of which are cash and are used to
refinance obligations incurred (including obligations to Affiliates) by or
reimburse monies advanced by a Borrower or its Subsidiaries to fund the
acquisition by EXCEL Acquisition of shares of GCR Holdings Limited.
6.09. OPERATING LEVERAGE. X.L. Insurance will not permit its ratio of net
premiums written to statutory capital and surplus, in each case as reflected in
the notes to its consolidated financial statements, to be greater than 1.2 to
1.0 at any time.
6.10. PRIVATE ACT. Neither Borrower shall become subject to a Private Act
other than the X.L. Insurance Company, Ltd. Xxx, 0000.
27
ARTICLE VII
EVENTS OF DEFAULT
7.01. EVENTS OF DEFAULT. An Event of Default shall mean the occurrence or
existence of one or more of the following events or conditions (for any reason,
whether voluntary, involuntary or effected or required by Law):
(a) Either Borrower shall default in the payment when due of the principal
of any Loan;
(b) Either Borrower shall default in the payment when due of any interest,
Facility Fee, or any other fee or amount payable hereunder which default shall
continue for a period of three days from the due date thereof;
(c) Either Borrower shall default in the observance, performance or
fulfillment of any covenant contained in Article VI hereof;
(d) Either Borrower shall default in the observance, performance or
fulfillment of any other covenant, condition or provision hereof and such
default shall not be remedied for a period of twenty days after written notice
thereof to such Borrower from the Agent or the holder of any Note issued
hereunder;
(e) Either Borrower, EXEL Limited, or any Subsidiary of either Borrower
shall default (i) in any payment of principal of or interest on any other
obligation for borrowed money in principal amount of $10,000,000 or more beyond
any period of grace provided with respect thereto, or (ii) in the performance of
any other agreement, term or condition contained in any such agreement under
which any such obligation in principal amount of $ 10,000,000.00 or more is
created, if the effect of such default is to cause or permit the holder or
holders of such obligation (or trustee on behalf of such holder or holders) to
cause such obligation to become due prior to its stated maturity or to terminate
its commitment under such agreement;
(f) One or more judgments for the payment of money shall have been entered
against either Borrower or EXEL Limited which judgments exceed $50,000,000 in
the aggregate and such judgments shall remain undischarged or uncontested or
appealed in good faith for a period of thirty consecutive days;
(g) Any representation or warranty herein made by either Borrower, or any
certificate or financial statement furnished pursuant to the provisions hereof,
shall prove to have been false or misleading in any material respect as of the
time made or furnished;
(h) X.L. Insurance shall cease to own, beneficially and of record,
directly or indirectly, 100% of the outstanding voting shares of common stock of
X.L. Reinsurance;
(i) EXEL Limited shall cease to own, beneficially and of record, directly
or indirectly all of the outstanding voting shares of capital stock of X.L.
Insurance, except for a nominal number of shares owned by two nominee
shareholders required by the Bermuda Companies Law;
(j) A Change in Control shall occur;
(k) The guarantee contained in Article X hereof shall terminate or
cease, in whole or material part, to be a legally valid and binding
obligation of X.L. Insurance or EXCEL Acquisition (except pursuant to Section
10.07 hereof), or either Borrower or any Person acting for or on behalf of
either of such parties contests such validity or binding nature
28
of such guarantee itself or the transactions contemplated by this Agreement and
the Notes, or any other Person shall assert any of the foregoing;
(l) A decree or order by a court having jurisdiction in the premises shall
have been enter adjudging either Borrower or EXEL Limited a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization of
such Borrower or EXEL Limited under the Bermuda Companies Law, or any other
similar applicable Law, and such decree or order shall have continued
undischarged or unstayed for a period of sixty days; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of such Borrower
or EXEL Limited or a substantial part of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree or order
shall have remained in force undischarged and unstayed for a period of sixty
days; or
(m) Either Borrower or EXEL Limited shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent seeking
reorganization under the Bermuda Companies Law or any other similar applicable
Law, or shall consent to the filing of any such petition, or shall consent to
the appointment of a receiver or liquidator or trustee or assignee in bankruptcy
or insolvency of it or of a substantial part of its property, or shall make an
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due, or corporate action shall be
taken by such Borrower or EXEL Limited in furtherance of any of the aforesaid
purposes;
then, (i) as to any Event of Default specified under subsections (a) through (k)
of this Article VII, the Banks shall be under no further obligation to make
Loans hereunder and the Agent by written request of the Required Banks may, by
written notice to the Borrowers, declare the unpaid balance of all Loans then
outstanding and interest accrued thereon and all other liabilities of the
Borrowers hereunder and thereunder to be forthwith due and payable, and the same
shall thereupon become and be immediately due and payable, without presentment,
demand, protest or notice or any kind, all of which are hereby expressly waived;
and (ii) as to any Event of Default specified under subsections (l) or (m) of
this Article VII, the Banks shall be under no further obligation to make Loans
hereunder and the unpaid balance of all Loans outstanding hereunder and interest
accrued thereon and all other liabilities of the Borrowers hereunder and
thereunder shall be immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived.
ARTICLE VIII
THE AGENT
8.01. APPOINTMENT. Each Bank hereby irrevocably appoints Mellon Bank,
N.A. to act as Agent for such Bank under this Agreement and the other Loan
Documents. Each Bank hereby irrevocably authorizes the Agent to take such
action on behalf of such Bank under the provisions of this Agreement and the
other Loan Documents, and to exercise such powers and to perform such duties, as
are expressly delegated to or required of the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto. Mellon
Bank, N.A. hereby agrees to act as Agent on behalf of the Banks on the terms and
conditions set forth in this Agreement and the other Loan Documents, subject to
its right to resign as provided in Section 8.10 hereof. Each Bank hereby
irrevocably authorizes the Agent to execute and deliver each of the Loan
Documents and to accept delivery of such of the other Loan Documents as may not
require execution by the Agent. Each Bank
29
agrees that the rights and remedies granted to the Agent under the Loan
Documents shall be exercised exclusively by the Agent, and that no Bank shall
have any right individually to exercise any such right or remedy, except to the
extent expressly provided herein or therein.
8.02. GENERAL NATURE OF AGENT'S DUTIES. Notwithstanding anything to the
contrary elsewhere in this Agreement or in any other Loan Document:
(a) The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Loan Documents, and no
implied duties or responsibilities on the part of the Agent shall be read
into this Agreement or any Loan Document or shall otherwise exist.
(b) The duties and responsibilities of the Agent under this Agreement
and the other Loan Documents shall be mechanical and administrative in
nature, and the Agent shall not have a fiduciary relationship in respect of
any Bank.
(c) The Agent is and shall be solely the agent of the Banks. The
Agent does not assume, and shall not at any time be deemed to have, any
relationship of agency or trust with or for, or any other duty or
responsibility to, any other Person (except only for its relationship as
agent for, and its express duties and responsibilities to, the Banks as
provided in this Agreement and the other Loan Documents).
(d) The Agent shall be under no obligation to take any action
hereunder or under any other Loan Document if the Agent believes in good
faith that taking such action may conflict with any Law or any provision of
this Agreement or any other Loan Document, or may require the Agent to
qualify to do business in any jurisdiction where it is not then so
qualified.
8.03. EXERCISE OF POWERS. The Agent shall take any action of the type
specified in this Agreement or any other Loan Document as being within the
Agent's rights, powers or discretion in accordance with directions from the
Required Banks (or, to the extent this Agreement or such Loan Document expressly
requires the direction or consent of some other Person or set of Persons, then
instead in accordance with the directions of such other Person or set of
Persons). In the absence of such directions, the Agent shall have the authority
(but under no circumstances shall be obligated), in its sole discretion, to take
any such action, except to the extent this Agreement or such Loan Document
expressly requires the direction or consent of the Required Banks (or some other
Person or set of Persons), in which case the Agent shall not take such action
absent such direction or consent. Any action or inaction pursuant to such
direction, discretion or consent shall be binding on all the Banks. The Agent
shall not have any liability to any Person as a result of (x) the Agent acting
or refraining from acting in accordance with the directions of the Required
Banks (or other applicable Person or set of Persons), (y) the Agent refraining
from acting in the absence of instructions to act from the Required Banks (or
other applicable Person or set of Persons), whether or not the Agent has
discretionary power to take such action, or (z) the Agent taking discretionary
action it is authorized to take under this Section (subject, in the case of this
clause (z), to the provisions of Section 8.04(a) hereof).
8.04. GENERAL EXCULPATORY PROVISIONS. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) The Agent shall not be liable for any action taken or omitted to be
taken by it under or in connection with this Agreement or any other Loan
Document, unless caused by its own gross negligence or willful misconduct.
(b) The Agent shall not be responsible for (i) the execution, delivery,
effectiveness, enforceability, genuineness, validity or adequacy of this
Agreement or any other Loan Document, (ii)
30
any recital, representation, warranty, document, certificate, report or
statement in, provided for in, or received under or in connection with, this
Agreement or any other Loan Document, (iii) any failure of any Loan Party or
Bank to perform any of their respective obligations under this Agreement or any
other Loan Document, or (iv) the existence, validity, enforceability,
perfection, recordation, priority, adequacy or value, now or hereafter, of any
Lien or other direct or indirect security afforded or purported to be afforded
by any of the Loan Documents or otherwise from time to time.
(c) The Agent shall not be under any obligation to ascertain, inquire or
give any notice relating to (i) the performance or observance of any of the
terms or conditions of this Agreement or any other Loan Document on the part of
either Borrower, (ii) the business, operations, condition (financial or
otherwise) or prospects of either Borrower or any other Person, or (iii) except
to the extent set forth in Section 8.05(f) hereof, the existence of any Event of
Default or Potential Default.
(d) The Agent shall not be under any obligation, either initially or on a
continuing basis, to provide any Bank with any notices, reports or information
of any nature, whether in its possession presently or hereafter, except for such
notices, reports and other information expressly required by this Agreement or
any other Loan Document to be furnished by the Agent to such Bank.
8.05. ADMINISTRATION BY THE AGENT.
(a) The Agent may rely upon any notice or other communication of any
nature (written or oral, including but not limited to telephone conversations,
whether or not such notice or other communication is made in a manner permitted
or required by this Agreement or any Loan Document) purportedly made by or on
behalf of the proper party or parties, and the Agent shall not have any duty to
verify the identity or authority of any Person giving such notice or other
communication.
(b) The Agent may consult with legal counsel (including, without
limitation, in-house counsel for the Agent or in-house or other counsel for
either Borrower), independent public accountants and any other experts selected
by it from time to time, and the Agent shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts.
(c) The Agent may conclusively rely upon the truth of the statements and
the correctness of the opinions expressed in any certificates or opinions
furnished to the Agent in accordance with the requirements of this Agreement or
any other Loan Document. Whenever the Agent shall deem it necessary or
desirable that a matter be proved or established with respect to either Borrower
or Bank, such matter may be established by a certificate of such Borrower or
Bank, as the case may be, and the Agent may conclusively rely upon such
certificate (unless other evidence with respect to such matter is specifically
prescribed in this Agreement or another Loan Document).
(d) The Agent may fail or refuse to take any action unless it shall be
indemnified to its satisfaction from time to time against any and all amounts,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature which may be imposed on,
incurred by or asserted against the Agent by reason of taking or continuing to
take any such action.
(e) The Agent may perform any of its duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact. The Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in fact selected by it with reasonable care.
(f) The Agent shall not be deemed to have any knowledge or notice of the
occurrence of any Event of Default or Potential Default unless the Agent has
received notice from a Bank or either Borrower referring to this Agreement,
describing such Event of Default or Potential Default, and
31
stating that such notice is a "notice of default". If the Agent receives such a
notice, the Agent shall give prompt notice thereof to each Bank.
8.06. BANK NOT RELYING ON AGENT OR OTHER BANKS. Each Bank acknowledges as
follows: (a) Neither the Agent nor any other Bank has made any representations
or warranties to it, and no act taken hereafter by the Agent or any other Bank
shall be deemed to constitute any representation or warranty by the Agent or
such other Bank to it. (b) It has, independently and without reliance upon the
Agent or any other Bank, and based upon such documents and information as it has
deemed appropriate, made its own credit and legal analysis and decision to enter
into this Agreement and the other Loan Documents. (c) It will, independently
and without reliance upon the Agent or any other Bank, and based upon such
documents and information as it shall deem appropriate at the time, make its own
decisions to take or not take action under or in connection with this Agreement
and the other Loan Documents.
8.07. INDEMNIFICATION. Each Bank agrees to reimburse and indemnify the
Agent and its directors, officers, employees and agents (to the extent not
reimbursed by a Loan Party and without limitation of the obligations of the Loan
Parties to do so), pro rata, from and against any and all amounts, losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature (including,
without limitation, the fees and disbursements of counsel for the Agent or such
other Person in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not the Agent or such other
Person shall be designated a party thereto) that may at any time be imposed on,
incurred by or asserted against the Agent or such other Person as a result of,
or arising out of, or in any way related to or by reason of, this Agreement, any
other Loan Document, any transaction from time to time contemplated hereby or
thereby, or any transaction financed in whole or in part or directly or
indirectly with the proceeds of any Loan, PROVIDED that no Bank shall be liable
for any portion of such amounts, losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
resulting solely from the gross negligence or willful misconduct of the Agent or
such other Person, as finally determined by a court of competent jurisdiction.
Payments under this Section shall be due and payable on demand, and to the
extent that any Bank fails to pay any such amount on demand, such amount shall
bear interest for each day from the date of demand until paid (before and after
judgment) at a rate per annum (calculated on the basis of a year of 360 days and
actual days elapsed) which for each day shall be equal to 2% over the Federal
Funds Effective Rate.
8.08. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its Commitments
and the Obligations owing to it, the Agent shall have the same rights and powers
under this Agreement and each other Loan Document as any other Bank and may
exercise the same as though it were not the Agent, and the terms "Banks,"
"holders of Notes" and like terms shall include the Agent in its individual
capacity as such. The Agent and its affiliates may, without liability to
account, make loans to, accept deposits from, acquire debt or equity interests
in, act as trustee under indentures of, and engage in any other business with,
either Borrower and any stockholder, subsidiary or affiliate of either Borrower,
as though the Agent were not the Agent hereunder.
8.09. HOLDERS OF NOTES. The Agent may deem and treat the Bank which is
payee of a Note as the owner and holder of such Note for all purposes hereof
unless and until a Transfer Supplement with respect to the assignment or
transfer thereof shall have been filed with the Agent in accordance with Section
9.13 hereof. Any authority, direction or consent of any Person who at the time
of giving such authority, direction or consent is shown in the Register as being
a Bank shall be conclusive and binding on each present and subsequent holder,
transferee or assignee of any Note or Notes payable to such Bank or of any Note
or Notes issued in exchange therefor.
8.10. SUCCESSOR AGENT. The Agent may resign at any time by giving 10
days' prior written notice thereof to the Banks and the Borrowers. The Agent
may be removed by the Required Banks at any time by giving 10 days' prior
written notice thereof to the Agent, the other Banks and the
32
Borrowers. Upon any such resignation or removal, the Required Banks shall have
the right to appoint a successor Agent. If no successor Agent shall have been
so appointed and consented to, and shall have accepted such appointment, within
30 days after such notice of resignation or removal, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent. Each successor Agent
shall be a commercial bank or trust company organized under the laws of the
United States of America or any State thereof and having a combined capital and
surplus of at least $1,000,000,000. Upon the acceptance by a successor Agent of
its appointment as Agent hereunder, such successor Agent shall thereupon succeed
to and become vested with all the properties, rights, powers, privileges and
duties of the former Agent, without further act, deed or conveyance. Upon the
effective date of resignation or removal of a retiring Agent, such Agent shall
be discharged from its duties under this Agreement and the other Loan Documents,
but the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted by it while it was Agent under this Agreement. If and
so long as no successor Agent shall have been appointed, then any notice or
other communication required or permitted to be given by the Agent shall be
sufficiently given if given by the Required Banks, all notices or other
communications required or permitted to be given to the Agent shall be given to
each Bank, and all payments to be made to the Agent shall be made directly to
the Borrowers or Bank for whose account such payment is made.
8.11. ADDITIONAL AGENTS. If the Agent shall from time to time deem it
necessary or advisable, for its own protection in the performance of its duties
hereunder or in the interest of the Banks, the Agent and the Borrowers shall
execute and deliver a supplemental agreement and all other instruments and
agreements necessary or advisable, in the opinion of the Agent, to constitute
another commercial bank or trust company, or one or more other Persons approved
by the Agent, to act as co-Agent or agent with such powers of the Agent as may
be provided in such supplemental agreement and to vest in such bank, trust
company or Person as such co-Agent or separate agent, as the case may be, any
properties, rights, powers, privileges and duties of the Agent under this
Agreement or any other Loan Document.
8.12. CALCULATIONS. The Agent shall not be liable for any calculation,
apportionment or distribution of payments made by it in good faith. If such
calculation, apportionment or distribution is subsequently determined to have
been made in error, the sole recourse of any Bank to whom payment was due but
not made shall be to recover from the other Banks any payment in excess of the
amount to which they are determined to be entitled or, if the amount due was not
paid by the appropriate Borrower, to recover such amount from the appropriate
Borrower.
8.13. AGENT'S FEE. The Borrower agrees to pay to the Agent, for its
individual account, a nonrefundable Agent's fee in an amount and at such time or
times as the Agent and the Borrower have heretofore agreed.
8.14. FUNDING BY AGENT. Unless the Agent shall have been notified in
writing by any Bank not later than the close of business on the day before the
day on which Loans are requested by the Borrower to be made that such Bank will
not make its ratable share of such Loans, the Agent may assume that such Bank
will make its ratable share of the Loans, and in reliance upon such assumption
the Agent may (but in no circumstances shall be required to) make available to
the applicable Borrower a corresponding amount. If and to the extent that any
Bank fails to make such payment to the Agent on such date, such Bank shall pay
such amount on demand (or, if such Bank fails to pay such amount on demand, such
Borrower shall pay such amount on demand), together with interest, for the
Agent's own account, for each day from and including the date of the Agent's
payment to and including the date of repayment to the Agent (before and after
judgment) at the rate or rates per annum applicable to such Loans. All payments
to the Agent under this Section shall be made to the Agent at its Office in
Dollars in funds immediately available at such Office, without set-off,
withholding, counterclaim or other deduction of any nature.
33
ARTICLE IX
MISCELLANEOUS
9.01. NO IMPLIED WAIVER ETC. No delay or failure of the Agent or any
Bank, or the holder of any Note in exercising any right, power or privilege
hereunder shall affect such right, power or privilege; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further exercise thereof
or of any other right, power or privilege. The rights and remedies hereunder of
the Agent, the Banks and any holder of the Notes are cumulative and not
exclusive of any rights or remedies which, it or they would otherwise have. Any
amendment, waiver, permit, consent or approval of any kind or character on the
part of the Agent or a Bank of any breach or default under this Agreement or any
such waiver of any provision or condition of this Agreement must be in writing
and shall be effective only to the extent in such writing specifically set
forth.
9.02. SET-OFF. In case any one or more of the Events of Default described
in Article VII hereof shall occur, the holder of any Note shall have the right,
in addition to all other rights and remedies available to it, to set-off against
the unpaid balance of the Note held by it any debt owing by such holder to the
applicable Borrower, including without limitation any funds in any deposit
account maintained by such Borrower with such holder, and such holder shall have
and there is hereby created in favor of such holder a security interest in all
deposit accounts maintained by such Borrower with such holder. Any sums
obtained by the holder of any Note issued hereunder by way of counterclaim,
set-off, banker's lien or other lien for application upon any Note held by it
shall be shared pro rata with the holders of the other Notes. Nothing in this
Agreement shall be deemed any waiver or prohibition of any right of banker's
lien or set-off under applicable Law.
9.03. SURVIVAL OF PROVISIONS. Each of the representations, warranties,
covenants and agreements of the Borrowers and the Guarantor contained herein or
made in writing in connection herewith shall survive the execution and delivery
of this Agreement, the making of Loans hereunder and the issuance of the Note.
9.04. EXPENSES AND FEES; INDEMNITY.
(a) Each Borrower agrees to pay or cause to be paid and to save the Agent
and (in the case of clause (iii) below) each of the Banks harmless against
liability for the payment of all reasonable out-of-pocket costs and expenses
(including but not limited to reasonable fees and expenses of counsel, including
local counsel, auditors, and all other professional, accounting, evaluation and
consulting costs) incurred by the Agent or such Bank from time to time arising
from or relating to (i) the negotiation, preparation, execution, delivery,
administration and performance of this Agreement and the other Loan Documents,
(ii) any requested amendments, modifications, supplements, waivers or consents
(whether or not ultimately entered into or granted) to this Agreement or any
Loan Document, and (iii) the enforcement or preservation of rights under this
Agreement or any Loan Document (including but not limited to any such costs or
expenses arising from or relating to (A) collection or enforcement of an
outstanding Loan or any other amount owing hereunder or thereunder by the Agent
or any Bank and (B) any litigation, proceeding, dispute, work-out, restructuring
or rescheduling related in any way to this Agreement or the Loan Documents.
Notwithstanding the foregoing, the Borrower shall not be required to pay costs
and expenses of a Bank (in its capacity as such) which were incurred by such
Bank in connection with any litigation, proceeding or other dispute relating
solely to a claim made against such Bank by one or more of the other Banks.
Each Borrower hereby agrees to pay all stamp, document, transfer, recording,
filing, registration, search, sales and excise fees and taxes and all similar
impositions now or hereafter determined by the Agent or any Bank to be payable
in connection with this Agreement or any other Loan Documents or any other
documents, instruments or
34
transactions pursuant to or in connection herewith or therewith, and the
Borrower agrees to save the Agent and each Bank harmless from and against any
and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such fees.
(b) Each Borrower hereby agrees to reimburse and indemnify the Agent and
each Bank (the "Indemnified Parties") from and against any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for the
Indemnified Parties in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnified
Party shall be designated a party thereto) that may at any time be imposed on,
asserted against or incurred by such Indemnified Party as a result of, or
arising out of, or in any way related to or by reason of, this Agreement or any
other Loan Document, any transaction from time to time contemplated hereby or
thereby, or any transaction financed in whole or in part or directly or
indirectly with the proceeds of any Loan (and without in any way limiting the
generality of the foregoing, including any violation or breach of any Law by
either Borrower or any exercise by the Agent or any Bank of any of its rights or
remedies under this Agreement or any other Loan Document; any breach of any
representation or warranty, covenant or agreement of either Borrower); but
excluding any such losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements to the extent
resulting from the gross negligence or willful misconduct of such Indemnified
Party, as finally determined by a court of competent jurisdiction. If and to
the extent that the foregoing obligations of the Borrowers under this Section
9.04, or any other indemnification obligation of the Borrowers hereunder or
under any other Loan Document, are unenforceable for any reason, the Borrowers
hereby agree to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable Law. Notwithstanding the
foregoing, the Borrower shall not be required to pay costs and expenses of a
Bank (in its capacity as such) which were incurred by such Bank in connection
with any litigation, proceeding or other dispute relating solely to a claim made
against such Bank by one or more of the other Banks.
9.05. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
9.06. HOLIDAYS. Unless otherwise specified herein, whenever any payment
or action to be made or taken hereunder or under the Notes shall be stated to be
due on a Saturday, Sunday or public holiday under the laws of the Commonwealth
of Pennsylvania or Bermuda, such payment or action shall be made or taken on the
next succeeding Business Day and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment or
action.
9.07. NOTICES, ETC. Any notice or other communication in connection with
this Agreement shall be deemed to have been given or made when received by the
party to whom directed. All such notices and other communications shall be in
writing unless otherwise provided herein and shall be directed, if to a Bank, at
such Bank's address on the signature pages hereof, if to the Agent at Xxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Loan Administration; and
if to either Borrower, at Cumberland House, One Xxxxxxxx Xxxxxx, X.X. Xxx XX
0000, Xxxxxxxx HMJX Bermuda, Attention: Xxxxx X. Xxxxxxx, or in accordance with
the latest unrevoked written direction from any party to the other parties
hereto. For the purposes of both receiving information from the Agent or any
Bank or providing information to the Agent or any Bank, X.L. Insurance shall act
as the agent for X.L. Reinsurance.
35
9.08. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR ANY OTHER
MATTER RELATED THERETO MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF
COMMONWEALTH OF PENNSYLVANIA OR IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF PENNSYLVANIA. EACH BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE WESTERN AND IN THE
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION,
SUBJECT TO ANY GENERAL RIGHT OF APPEAL. EACH BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS PROVIDED IN THIS AGREEMENT.
9.09. WAIVER OF JURY TRIAL. TO THE EXTENT LITIGATION HEREUNDER IS BROUGHT
BEFORE A COURT IN THE UNITED STATES, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY. EACH PARTY
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISIONS OF EACH OTHER DOCUMENT HERETO TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT AND EACH BANK ENTERING INTO THIS AGREEMENT AND RELATED AGREEMENTS.
9.10. GOVERNING LAW. This Agreement and any other documents delivered in
connection herewith and the rights and obligations of the parties hereto and
thereto shall for all purposes be governed by and construed and enforced in
accordance with the substantive law of the Commonwealth of Pennsylvania without
giving effect to conflict of laws principles.
9.11 VALIDITY AND ENFORCEABILITY. If any stamp tax, levy, duty or fee is
imposed or payable in respect to this Agreement or the transaction contemplated
hereby or is necessary or advisable to ensure the legality, validity or
enforceability of the documents in this transaction, the Borrower shall promptly
pay such stamp tax, levy, duty or fee. No government approval or consent is
necessary for the execution, delivery and performance of the transactions
contemplated under this Agreement and the Notes.
9.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one (1) and the same instrument.
9.13. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Borrowers, the Banks, the Agent,
all future holders of the Notes and their respective successors and assigns,
except that neither Borrower may assign or otherwise transfer any of its rights
or duties under this Agreement without the prior written consent of the Agent
and all of the Banks, and any purported assignment without such consent shall be
void.
(b) PARTICIPATIONS. Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable Law, at any time
sell participations to one or more commercial banks or other Persons (each a
"Participant") in a portion of its rights and obligations
36
under this Agreement and the other Loan Documents (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
any Notes held by it); PROVIDED, that
(i) any such participation sold to a Participant which is not a Bank,
an affiliate of a Bank or a Federal Reserve Bank shall be made only with
the consent (which in each case shall not be unreasonably withheld) of each
Borrower and the Agent, unless an Event of Default has occurred and is
continuing, in which case the consent of the Borrowers shall not be
required,
(ii) any such Bank's obligations under this Agreement and the other
Loan Documents shall remain unchanged,
(iii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations,
(iv) the parties hereto shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement and each of the other Loan Documents,
(v) such Participant shall be bound by the provisions of Section 9.13
hereof, and the Bank selling such participation shall obtain from such
Participant a written confirmation of its agreement to be so bound,
(vi) no Participant (unless such Participant is an affiliate of such
Bank, or is itself a Bank) shall be entitled to require such Bank to take
or refrain from taking action under this Agreement or under any other Loan
Document, except that such Bank may agree with such Participant that such
Bank will not, without such Participant's consent, take action of the type
described in subsections (a), (b), (c) or (d) of Section 9.14 hereof, and
(vii) a Participant shall have the right to vote regarding amendments
to this Agreement only in connection with amendments which effect changes
in the amount of principal, interest rates, fees and maturity.
The Borrowers agree that any such Participant shall be entitled to the benefits
of Sections 2.09 and 9.04 with respect to its participation in the Commitments
and the Loans outstanding from time to time; PROVIDED, that no such Participant
shall be entitled to receive any greater amount pursuant to such Sections than
the transferor Bank would have been entitled to receive in respect of the amount
of the participation transferred to such Participant had no such transfer
occurred.
(c) ASSIGNMENTS. Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time assign all
or a portion of its rights and obligations under this Agreement and the other
Loan Documents (including, without limitation, all or any portion of its
Commitments and Loans owing to it and any Note held by it) to any Bank, any
affiliate of a Bank or to one or more additional commercial banks or other
Persons (each a "Purchasing Bank"); PROVIDED, that
(i) any such assignment to a Purchasing Bank which is not a Bank, an
affiliate of a Bank or a Federal Reserve Bank shall be made only with the
consent (which in each case shall not be unreasonably withheld) of the
Borrower and the Agent, unless an Event of Default has occurred and is
continuing or exists, in which case the consent of the Borrower shall not
be required,
(ii) if a Bank makes such an assignment of less than all of its then
remaining rights and obligations under this Agreement and the other Loan
Documents, such
37
assignment shall be in a minimum aggregate principal amount of $10,000,000
of the Commitments and Loans then outstanding,
(iii) each such assignment shall be of a constant, and not a varying,
percentage of each Commitment of the transferor Bank and of all of the
transferor Bank's rights and obligations under this Agreement and the other
Loan Documents, and
(iv) each such assignment shall be made pursuant to a Transfer
Supplement in substantially the form of Exhibit B to this Agreement, duly
completed (a "Transfer Supplement").
In order to effect any such assignment, the transferor Bank and the
Purchasing Bank shall execute and deliver to the Agent a duly completed
Transfer Supplement (including the consents required by clause (i) of the
preceding sentence) with respect to such assignment, together with any
Notes subject to such assignment (the "Transferor Bank Notes") and a
processing and recording fee of $2,500; and, upon receipt thereof, the
Agent shall accept such Transfer Supplement; PROVIDED, HOWEVER, that no
such processing and recording fee shall be due if such assignment is to an
affiliate of a Bank or a Federal Reserve Bank . Upon receipt of the
Purchase Price Receipt Notice pursuant to such Transfer Supplement, the
Agent shall record such acceptance in the Register. Upon such execution,
delivery, acceptance and recording, from and after the close of business at
the Agent's Office on the Transfer Effective Date specified in such
Transfer Supplement.
(x) the Purchasing Bank shall be a party hereto and, to the extent
provided in such Transfer Supplement, shall have the rights and obligations
of a Bank hereunder, and
(y) the transferor Bank thereunder shall be released from its
obligations under this Agreement to the extent so transferred (and, in the
case of an Transfer Supplement covering all or the remaining portion of a
transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party to this Agreement) from and after
the Transfer Effective Date.
On or prior to the Transfer Effective Date specified in an Transfer Supplement,
the Borrowers, at their expense, shall execute and deliver to the Agent (for
delivery to the Purchasing Bank) new Notes evidencing such Purchasing Bank's
assigned Commitments or Loans and (for delivery to the transferor Bank)
replacement Notes in the principal amount of the Loans or Commitments retained
by the transferor Bank (such Notes to be in exchange for, but not in payment of,
those Notes then held by such transferor Bank). Each such Note shall be dated
the date and be substantially in the form of the predecessor Note. The Agent
shall xxxx the predecessor Notes "exchanged" and deliver them to the Borrower.
Accrued interest and accrued fees shall be paid to the Purchasing Bank at the
same time or times provided in the predecessor Notes and this Agreement.
(d) REGISTER. The Agent shall maintain at its office a copy of each
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the banks and the Commitment of, and
principal amount of the Loans owing to, each Bank from time to time. The
entries in the Register shall be conclusive absent manifest error and the
Borrowers, the Agent and the Banks may treat each person whose name is recorded
in the Register as a Bank hereunder for all purposes of the Agreement. The
Register shall be available for inspection by the Borrower or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(e) FINANCIAL AND OTHER INFORMATION. The Borrower authorizes the Agent
and each Bank to disclose to any Participant or Purchasing Bank (each, a
"transferee") and any prospective transferee any and all financial and other
information in such Person's possession concerning the Borrowers and their
affiliates which has been or may be delivered to such Person by or on behalf
38
of the Borrowers in connection with this Agreement or any other Loan Document or
such Person's credit evaluation of the Borrowers and their affiliates. At the
request of any Bank, the Borrower, at the Borrower's expense, shall provide to
each prospective transferee the conformed copies of documents referred to in
Section 4 of the form of Transfer Supplement.
9.14. AMENDMENTS AND WAIVERS. Neither this Agreement nor any Loan
Document may be amended, modified or supplemented except in accordance with the
provisions of this Section. The Agent and the Borrowers may from time to time
amend, modify or supplement the provisions of this Agreement or any other Loan
Document for the purpose of amending, adding to, or waiving any provisions or
changing in any manner the rights and duties of either Borrower, the Agent or
any Bank. Any such amendment, modification or supplement made by the Borrowers
and the Agent in accordance with the provisions of this Section shall be binding
upon the Borrowers, each Bank and the Agent. The Agent shall enter into such
amendments, modifications or supplements from time to time as directed by the
Required Banks, and only as so directed, PROVIDED, that no such amendment,
modification or supplement may be made which will:
(a) Increase the Committed Amount or X.L. Reinsurance Committed Amount of
any Bank over the amount thereof then in effect, or extend the Expiration Date,
without the written consent of each Bank affected thereby;
(b) Reduce the principal amount of or extend the payment of principal of
any Loan, or reduce the rate of interest or extend the time for payment of
interest borne by any Loan or extend the time for payment of or reduce the
amount of any Facility Fee or reduce or postpone the date for payment of any
other fees, expenses, indemnities or amounts payable under any Loan Document,
without the written consent of each Bank affected thereby;
(c) Change the definition of "Required Banks" or amend this Section 9.14,
without the written consent of all the Banks;
(d) Amend or waive any of the provisions of Article IX hereof, or impose
additional duties upon the Agent or otherwise adversely affect the rights,
interests or obligations of the Agent, without the written consent of the Agent;
or
(e) Subject to Section 10.07, amend or waive any of the provisions of
Article X or release any Guarantor from its obligations hereunder;
and PROVIDED FURTHER, that Transfer Supplements may be entered into in the
manner provided in Section 9.13 hereof. Any such amendment, modification or
supplement must be in writing and shall be effective only to the extent set
forth in such writing. Any Event of Default or Potential Default waived or
consented to in any such amendment, modification or supplement shall be deemed
to be cured and not continuing to the extent and for the period set forth in
such waiver or consent, but no such waiver or consent shall extend to any other
or subsequent Event of Default or Potential Default or impair any right
consequent thereto.
9.15. JUDGMENT CURRENCY. In the event of a judgment or order being
rendered by any court or tribunal for the payment of any amounts owing to the
Banks or any of them under this Agreement or any other Loan Document or for the
payment of damages in respect of any breach of this Agreement or any other Loan
Document or under or in respect of a judgment or order of another court or
tribunal for the payment of such amounts or damages, such judgment or order
being expressed in a currency (the "Judgment Currency") other than Dollars the
party against whom the judgment or order is made shall indemnify and hold the
Banks harmless against any deficiency in terms of Dollars in the amounts
received by the Banks arising or resulting from any variations as between (i)
the exchange rate at which Dollars are converted into the Judgment Currency for
the purposes of such judgment or order and (ii) the exchange rate at which each
Bank is able to purchase Dollars with the amount of the
39
Judgment Currency actually received by the Banks on the date of such receipt.
The indemnity in this section shall constitute a separate and independent
obligation from the other obligations of the Borrowers hereunder and shall apply
irrespective of any indulgence granted by the Banks.
9.16. RECORDS. The unpaid principal amount of the Loans owing to each
Bank, the unpaid interest accrued thereon, the interest rate or rates applicable
to such unpaid principal amount, the duration of such applicability, each Bank's
Committed Amount and the accrued and unpaid Facility Fees shall at all times be
ascertained from the records of the Agent, which shall be conclusive absent
manifest error.
9.17 CONFIDENTIALITY. Each of the Agent and the Banks agree to keep
confidential any information relating to the Borrowers received by it pursuant
to or in connection with this Agreement which is (a) information which the Agent
and the Banks reasonably expect that the applicable Borrower would want to keep
confidential or (b) information which is clearly marked "CONFIDENTIAL";
provided, however, that this Section 9.17 shall not be construed to prevent the
Agent or any Bank from disclosing such information (i) to any affiliate that
shall agree in writing for the benefit of the Borrowers to be bound by this
obligation of confidentiality, (ii) upon the order of any court or
administrative agency of competent jurisdiction, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over the Agent
or such Bank which request or demand has the force of Law or is made by a bank
regulatory agency, (iv) that has been publicly disclosed, other than from a
breach of this provision by the Agent or any Bank, (v) that has been obtained
from any person that is neither a party to this Agreement nor an affiliate of
any such party, but only to the extent that such Bank does not know or have
reason to know that such disclosure violates a confidentiality agreement between
such person and the applicable Borrower (vi) in connection with the exercise of
any right or remedy hereunder or under any other Loan Document, (vii) as
expressly contemplated by this Agreement or any other Loan Document or (viii) to
any prospective purchaser of all or any part of the interest of any Bank which
shall agree in writing for the benefit of the Borrowers to be bound by the
obligation of confidentiality in this Agreement or the other Loan Documents if
such prospective purchaser is a financial institution or has been consented to
by the Borrower, which consent will not be withheld if such purchaser is not a
competitor of the Borrower or an affiliate of a competitor of the Borrower.
ARTICLE X
GUARANTEE
10.01. THE GUARANTEE. Each of X.L. Insurance and EXEL Acquisition, (the
"Guarantors") guarantee to the Agent and the Banks as hereinafter provided the
prompt payment of the Obligations of X.L. Reinsurance and, in the case of EXEL
Acquisition only, X.L. Insurance, (the "Guaranteed Obligations") in full when
due (whether at stated maturity, by acceleration, or otherwise) strictly in
accordance with the terms thereof. Each Guarantor hereby further agrees that if
any of the Guaranteed Obligations are not paid in full when due (whether at
stated maturity, by acceleration, or otherwise), the Guarantor will promptly pay
the same, without any demand or notice whatsoever (except as expressly provided
herein), and that in the case of any extension of time of payment or renewal of
any of the Guaranteed Obligations, the same will be promptly paid in full when
due (whether at extended maturity, by acceleration or otherwise) in accordance
with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any other
of the Loan Documents, to the extent the obligations of either Guarantor shall
be adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable law, including the insolvency laws,
relating to fraudulent conveyances or transfers) then the obligations
40
of such Guarantor hereunder automatically shall be limited to the maximum amount
that is permissible under applicable law.
10.02. OBLIGATIONS UNCONDITIONAL. The obligations of each Guarantor under
this Article are absolute and unconditional (to the fullest extent permitted by
applicable law), irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Loan Documents, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Article that the obligations of each Guarantor hereunder shall be absolute and
unconditional under any and all circumstances. Each Guarantor agrees that such
Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against X.L. Reinsurance or X.L. Insurance, as the case may be, for
amounts paid under his Guarantee until such time as the Banks have been paid in
full, the Commitment under the Credit Agreement has been terminated and no
Person or Official Body shall have any right to request any return or
reimbursement of funds from any Bank in connection with monies received under
the Loan Documents. Without limiting the generality of the foregoing, it is
agreed that, to the fullest extent permitted by applicable law, the occurrence
of any one or more of the following shall not alter or impair the liability of
either Guarantor hereunder which shall remain absolute and unconditional as
described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of the
Loan Documents, or any other agreement or instrument referred to in the
Loan Documents shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the Loan
Documents, or any other agreement or instrument referred to in the Loan
Documents shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any Bank as
security for any of the Guaranteed Obligations shall be void or violable,
or shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined to be void
or violable (including, without limitation, for the benefit of any creditor
of either Guarantor) or shall be subordinated to the claims of any Person
(including, without limitation, any creditor of either Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever (except notices expressly required hereunder), and any requirement
that the Banks exhaust any right, power or remedy or proceed against any Person
under any of the Loan Documents, or any other agreement or instrument referred
to in the Loan Documents, or against any other Person under any other guarantee
of, or security for, any of the Guaranteed Obligations.
41
10.03. REINSTATEMENT. The obligations of the Guarantors under this
Article shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy, receivership, or reorganization or otherwise, and each Guarantor
agrees that it will indemnify the Agent and the Banks on demand for all
reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred by the Agent or any Bank in
connection with such rescission or restoration, including any such reasonable
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency, receivership, reorganization or similar law.
10.04. REMEDIES. Each Guarantor agrees that, to the fullest extent
permitted by applicable law, as between such Guarantor, on the one hand, and the
Agent and the Banks, on the other hand, the Guaranteed Obligations may be
declared to be forthwith due and payable as provided in Section 7.01 hereof (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 7.01) for purposes of Section 10.01
hereof notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Guaranteed Obligations from becoming
automatically due and payable) as to any other Person and that, in the event of
such declaration (or Guaranteed Obligations being deemed to have become
automatically due and payable), the Guaranteed Obligations (whether or not due
and payable by any other Person) shall forthwith become due and payable by such
Guarantor for purposes of said Section 10.01.
10.05. CONTINUING GUARANTEE. The guarantee in this Article is a
continuing guarantee, and shall apply to all of the Guaranteed Obligations
whenever arising.
10.06. NO RESTRICTIONS. Except for restrictions under the Loan Documents,
neither Guarantor shall be or become subject to any restriction of any nature
(whether arising by operation of Law, by agreement, by its articles of
incorporation, by-laws or other constituent documents of such Guarantor, or
otherwise) on the right of such Guarantor from time to time to (x) pay any
indebtedness, obligations or liabilities from time to time owed to X.L.
Reinsurance or X.L. Insurance, as the case may be, or (y) make loans or advances
to X.L. Reinsurance or X.L. Insurance, as the case may be, or (z) transfer any
of its properties or assets to X.L. Reinsurance or X.L. Insurance, as the case
may be.
10.07. RELEASE OF EXEL ACQUISITION FROM GUARANTY OBLIGATIONS. EXEL
Acquisition shall be released from its obligations under this Agreement upon
the merger of EXEL Acquisition into a subsidiary of EXEL Limited so long as such
successor entity assumes the obligations of EXEL Acquisition under this
Agreement or such assumption occurs by operation of applicable Law and the
Borrowers furnish to the Agent an opinion of counsel in form and substance
satisfactory to the Agent to such effect. To the extent not otherwise released
by the operation of applicable Law, such successor entity shall be released from
its obligations under this Agreement upon the merger of such successor entity
into X.L. Reinsurance or a Subsidiary of X.L. Reinsurance as required by Section
5.11 hereof.
42
IN WITNESS WHEREOF, the parties hereto, by their respective officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
X.L. INSURANCE COMPANY, LTD., AS A
BORROWER AND A GUARANTOR
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
X.L. REINSURANCE, LTD., AS A BORROWER
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
EXEL ACQUISITION LTD., AS A GUARANTOR
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
43
MELLON BANK, N.A., as a Bank and as Agent
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
Notice Address:
Xxx Xxxxxx Xxxx Xxxxxx, Xxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. XxXxxxxx
Initial Committed Amount: $100,000,000.00
Initial X.L. Reinsurance Committed Amount: $20,000,000.00
44
BANK OF TOKYO-MITSUBISHI TRUST CO., as a Bank and a Co-Agent
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
Notice Address:
1251 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxx
Initial Committed Amount: $37,000,000.00
Initial X.L. Reinsurance Committed Amount: $7,500,000.00
45
DEUTSCHE BANK AG, as a Bank and a Co-Agent
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
Notice Address:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X Xxxxxxx
Initial Committed Amount: $37,500,000.00
Initial X.L. Reinsurance Committed Amount: $7,500,000.00
00
XXX XXXX XX XXXX XXXXXX, as a Bank and a Co-Agent
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
Notice Address:
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxxx
Initial Committed Amount: $37,500,000.00
Initial X.L. Reinsurance Committed Amount: $7,500,000.00
47
THE CHASE MANHATTAN BANK, as a Bank
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
Notice Address:
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx
Initial Committed Amount: $25,000,000.00
Initial X.L. Reinsurance Committed Amount: $5,000,000.00
48
THE BANK OF BERMUDA LIMITED, as a Bank
By:___________________________________
(Signature)
Name:_________________________________
Title:________________________________
Notice Address:
0 Xxxxx Xxxxxx
Xxxxxxxx XX 00, Xxxxxxx
Attn: Xxxxxxx Xxxxxxxx
Initial Committed Amount: $12,500,000.00
Initial X.L. Reinsurance Committed Amount: $2,500,000.00
49
