FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
among
PXRE CORPORATION,
as Borrower,
PXRE GROUP LTD.
and
PXRE (BARBADOS) LTD.,
as Guarantors,
THE LENDERS NAMED HEREIN,
and
FIRST UNION NATIONAL BANK,
as Agent
$75,000,000 Senior Credit Facility
Arranged by
FIRST UNION CAPITAL MARKETS CORP.
Dated as of August __, 1999
TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE I
DEFINITIONS
1.1 Defined Terms 8
1.2 Accounting Terms 29
1.3 Other Terms; Construction 30
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments 30
2.2 Borrowings 30
2.3 Disbursements; Funding Reliance; Domicile of Loans 31
2.4 Notes 32
2.5 Termination and Reduction of Commitments 32
2.6 Mandatory Payments and Prepayments 33
2.7 Voluntary Prepayments 34
2.8 Interest 35
2.9 Fees 36
2.10 Interest Periods 37
2.11 Conversions and Continuations 38
2.12 Method of Payments; Computations 38
2.13 Recovery of Payments 39
2.14 Use of Proceeds 40
2.15 Pro Rata Treatment 40
2.16 Increased Costs; Change in Circumstances; Illegality; etc. 41
2.17 Taxes 43
2.18 Compensation 45
ARTICLE III
CONDITIONS OF BORROWING
3.1 [Intentionally left blank] 45
3.2 [Intentionally left blank] 45
3.3 Conditions of All Borrowings 45
3.4 Conditions of effectiveness of this Agreement and conditions
of Borrowings after
the Reorganization 46
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Organization and Power 48
4.2 Authorization; Enforceability 48
4.3 No Violation 49
4.4 Governmental and Third-Party Authorization; Permits 49
4.5 Litigation 50
4.6 Taxes 50
4.7 Subsidiaries 50
4.8 Full Disclosure 51
4.9 Margin Regulations 51
4.10 No Material Adverse Change 51
4.11 Financial Matters 51
4.12 Ownership of Properties 53
4.13 ERISA 53
4.14 Environmental Matters 54
4.15 Compliance With Laws 55
4.16 Regulated Industries 55
4.17 Insurance 55
4.18 Material Contracts 55
4.19 Reinsurance Agreements 55
4.20 Labor Relations 56
4.21 Year 2000 Compatibility 57
4.22 Compliance with Old Credit Agreement 57
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Financial Statements 57
5.2 Statutory Financial Statements 58
5.3 Other Business and Financial Information 59
5.4 Corporate Existence; Franchises; Maintenance of Properties 62
5.5 Compliance with Laws 62
5.6 Payment of Obligations 62
5.7 Insurance 63
5.8 Maintenance of Books and Records; Inspection 63
5.9 Permitted Acquisitions 63
5.10 Year 2000 Compatibility 64
5.11 Further Assurances 64
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ARTICLE VI
FINANCIAL COVENANTS
6.1 Leverage Ratio 65
6.2 Fixed Charge Coverage Ratio 65
6.3 Risk-Based Capital Ratio 65
6.4 Combined Statutory Surplus 65
ARTICLE VII
NEGATIVE COVENANTS
7.1 Merger; Consolidation 65
7.2 Indebtedness 66
7.3 Liens 68
7.4 Disposition of Assets 69
7.5 Investments 70
7.6 Restricted Payments 73
7.7 Transactions with Affiliates 73
7.8 Lines of Business 75
7.9 Certain Amendments 75
7.10 Limitation on Certain Restrictions 76
7.11 No Other Negative Pledges 76
7.12 Accounting Changes 76
7.13 Ratings 76
7.14 Reinsurance Agreements 77
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default 78
8.2 Remedies: Termination of Commitments, Acceleration, etc. 81
8.3 Remedies: Set-Off 81
ARTICLE IX
GUARANTY
9.1 Guaranty 82
9.2 Right of Set-Off 83
9.3 No Subrogation 83
9.4 Amendments, etc. with respect to the Obligations;
Waiver of Rights 83
9.5 Guaranty Absolute and Unconditional 84
9.6 Reinstatement 85
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9.7 Payments 85
ARTICLE X
THE AGENT
10.1 Appointment 85
10.2 Nature of Duties 85
10.3 Exculpatory Provisions 86
10.4 Reliance by Agent 86
10.5 Non-Reliance on Agent and Other Lenders 87
10.6 Notice of Default 87
10.7 Indemnification 87
10.8 The Agent in its Individual Capacity 88
10.9 Successor Agent 88
ARTICLE XI
MISCELLANEOUS
11.1 Fees and Expenses 89
11.2 Indemnification 89
11.3 Governing Law; Consent to Jurisdiction 90
11.4 Waiver of Jury Trial 91
11.5 Notices 92
11.6 Amendments, Waivers, etc. 92
11.7 Assignments, Participations 93
11.8 No Waiver 95
11.9 Successors and Assigns 96
11.10 Survival 96
11.11 Severability 96
11.12 Construction 96
11.13 Confidentiality 96
11.14 Counterparts; Effectiveness 97
11.15 Disclosure of Information 97
11.16 Entire Agreement 97
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EXHIBITS
Exhibit A Form of Note
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Conversion/Continuation
Exhibit C-1 Form of GAAP Compliance Certificate
Exhibit C-2 Form of SAP Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E-1 Form of Opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP
Exhibit E-2 Form of Opinion of Xxxxxxx Xxxx & Xxxxxxx, Bermuda Counsel
Exhibit E-3 Form of Opinion of Chancery Xxxxxxxx, Barbados Counsel
Exhibit F Form of Financial Condition Certificate
SCHEDULES
Schedule 1.1 Commitments and Addresses of Lenders
Schedule 4.4 Consents and Approvals
Schedule 4.7 Subsidiaries
Schedule 4.18 Material Contracts
Schedule 4.19 Reinsurance Agreements
Schedule 7.2 Indebtedness
Schedule 7.3 Liens
Schedule 7.5(a) Existing Investments
Schedule 7.5(b) PXRE Reinsurance's Investment Policy
Schedule 7.5(c) PXRE Bermuda's Investment Policy
Schedule 7.7 Transactions with Affiliates
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FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the ____
day of August, 1999 (this "Agreement"), is made among PXRE CORPORATION, a
Delaware corporation with its principal offices in Edison, New Jersey (the
"Borrower"), PXRE GROUP LTD., a Bermuda corporation ("PXRE Group"), PXRE
(BARBADOS) LTD., a Barbados corporation ("PXRE Barbados," and collectively with
PXRE Group, the "Guarantors"), the banks and financial institutions listed on
SCHEDULE 1.1 or that become parties hereto after the date hereof (collectively,
the "Lenders"), and FIRST UNION NATIONAL BANK ("First Union"), as agent for the
Lenders (in such capacity, the "Agent").
RECITALS
A. Pursuant to a Reorganization (as defined herein), PXRE Group intends
to become the indirect parent holding company of the Borrower. The
Reorganization will be effected by the merger of PXRE Merger Corp., a newly
formed wholly-owned Delaware subsidiary of PXRE (Barbados) Ltd., a newly formed
wholly-owned subsidiary of PXRE Group, into the Borrower, with the Borrower
being the surviving entity.
B. The Lenders are willing to approve the Reorganization and continue
to make available to the Borrower the credit facilities described herein subject
to and on the terms and conditions set forth in this Agreement.
C. This Agreement amends and restates the Credit Agreement, dated as of
the 30th day of December, 1998, among the Borrower, the Lenders and the Agent
(as amended through the Second Amendment dated June 25, 1999 and execution of
Joinder Agreements dated May 18, 1999, the "Old Credit Agreement"). The Old
Credit Agreement evidenced the commitment of First Union to make available to
the Borrower $50,000,000 of the credit facility described therein, which was
subsequently increased to $75,000,000 through the addition of new Lenders by
execution of Joinder Agreements on May 18, 1999.
D. This Agreement (other than SECTIONS 11.1 and 11.2) shall not become
effective until the consummation of the Reorganization and the satisfaction of
the terms and conditions set forth in SECTION 3.4, at which time the Old Credit
Agreement shall be amended hereby and, to the extent inconsistent herewith, of
no further effect; provided that until such time, the Old Credit Agreement shall
remain in full force and effect; provided, further, that, subject to the terms
and conditions set forth in this Agreement, the Required Lenders hereby consent
to the formation of PXRE Group, PXRE Barbados, PXRE Bermuda, and PXRE Merger
Corp. as described in the Reorganization Documents.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants
and agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, in addition to the
terms defined elsewhere herein, the following terms shall have the meanings set
forth below (such meanings to be equally applicable to the singular and plural
forms thereof):
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer and in form and
substance satisfactory to the Agent, listing any one or more accounts to which
the Borrower may from time to time request the Agent to forward the proceeds of
any Loans made hereunder.
"Acquisition" shall mean any transaction or series of related
transactions (other than the Reorganization), consummated on or after the date
hereof, by which PXRE Group directly, or indirectly through one or more
Subsidiaries, (i) acquires any going business, or all or substantially all of
the assets, of any Person or any line of business, block of business or division
of any Person, whether through purchase of assets, merger or otherwise, or (ii)
acquires securities or other ownership interests of any Person having at least a
majority of combined voting power of the then outstanding securities or other
ownership interests of such Person.
"Acquisition Amount" shall mean, with respect to any Acquisition, the
sum (without duplication) of (i) the amount of cash paid by PXRE Group and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all Capital Stock of PXRE Group issued or given in connection with such
Acquisition, (iii) the amount (determined by using the face amount or the amount
payable at maturity, whichever is greater) of all Indebtedness incurred, assumed
or acquired by PXRE Group and its Subsidiaries in connection with such
Acquisition, (iv) all additional purchase price amounts in connection with such
Acquisition in the form of earnouts and other contingent obligations that should
be recorded as a liability on the balance sheet of PXRE Group and its
Subsidiaries or expensed, in either event in accordance with GAAP, Regulation
S-X under the Securities Act of 1933, as amended, or any other rule or
regulation of the Securities and Exchange Commission, (v) all amounts paid in
respect of covenants not to compete, consulting agreements and other affiliated
contracts in connection with such Acquisition, (vi) the amount of all
transaction fees and expenses (including, without limitation, legal, accounting
and finders' fees and expenses) incurred by PXRE Group and its Subsidiaries in
connection with such Acquisition and (vii) the aggregate fair market value of
all other consideration given by PXRE Group and its Subsidiaries in connection
with such Acquisition.
"Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate Loan, a rate
8
per annum equal to the Base Rate as in effect at such time plus the Applicable
Margin Percentage for Base Rate Loans as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Margin Percentage for LIBOR Loans as in effect at such time.
"Affiliate" shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person "control" shall mean (i) the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 10% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.
"Agent" shall mean First Union, in its capacity as Agent appointed
under ARTICLE X, and its successors and permitted assigns in such capacity.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Amendment Fee Letter" shall mean the letter from First Union to
Borrower, dated August 3, 1999, relating to certain fees payable by the Borrower
in respect of the Reorganization.
"Annual Statement" shall mean, with respect to any Insurance Subsidiary
for any fiscal year, the annual financial statements of such Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority of
its jurisdiction of domicile and in accordance with the laws of such
jurisdiction, together with all exhibits, schedules, certificates and actuarial
opinions required to be filed or delivered therewith.
"Applicable Margin Percentage" shall mean, at any time from and after
the Closing Date, the applicable percentage (a) to be added to the Base Rate
pursuant to SECTION 2.8 for purposes of determining the Adjusted Base Rate, (b)
to be added to the LIBOR Rate pursuant to SECTION 2.8 for purposes of
determining the Adjusted LIBOR Rate, and (c) to be used in calculating the
commitment fee payable pursuant to SECTION 2.9(b), in each case as determined
under the following matrix with reference to the Borrower's senior unsecured
debt rating by Xxxxx'x or Standard & Poor's (in each case based upon the higher
of the two ratings), when available, or, if not available, then with reference
to an implied senior or unsecured debt rating, if available (provided that, for
purposes of this Agreement, the rating that is two levels higher than the rating
of the Borrower's Trust Preferred Securities by Standard & Poor's and Xxxxx'x
shall be deemed to be an implied senior or unsecured debt rating by Standard &
Poor's and Xxxxx'x, respectively):
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Applicable Applicable Margin
Xxxxx'x Margin Applicable Margin Percentage for
Standard & Percentage for Percentage for Unutilized
Level Poor's Rating Base Rate Loans LIBOR Loans Commitments Fee
----- ------------- --------------- ----------- ---------------
I A3 / A- or above 0.0% 0.750% 0.175%
II Baa1 / BBB+ 0.0% 0.875% 0.200%
III Baa2 / BBB 0.0% 1.000% 0.250%
IV Baa3 / BBB- 0.0% 1.125% 0.300%
V Less than Baa3 / BBB- 0.5% 1.625% 0.500%
Notwithstanding anything set forth herein to the contrary, if at any time the
difference between the senior unsecured debt ratings by Xxxxx'x and Standard &
Poor's is more than one rating grade, then for purposes of determining the
applicable level set forth above, the higher of the two ratings shall be reduced
to the rating that is the median between the higher rating and the lower rating
(or its equivalent); or, if the median is not determinable, then the higher of
such two ratings shall be reduced to one rating grade lower.
On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Loans and the commitment fee payable pursuant to SECTION
2.9(b) shall be adjusted effective as of such date in accordance with the above
matrix; provided, however, that, notwithstanding the foregoing or anything else
herein to the contrary, if at any time an Event of Default described in SECTION
8.1(a) shall have occurred and be continuing, then at the election of the
Required Lenders, at all times from and including the date on which such Event
of Default occurred to the date on which such Event of Default shall have been
cured or waived, each Applicable Margin Percentage shall be determined in
accordance with Level V of the above matrix (notwithstanding the actual level).
For purposes of this definition, "Adjustment Date" shall mean, with respect to
any fiscal period of the Borrower beginning with the fiscal quarter ending
December 31, 1998, the tenth (10th) Business Day after the announcement by
either Xxxxx'x or Standard & Poor's of any change in its rating with respect to
the Borrower's senior unsecured debt. Until the first Adjustment Date, each
Applicable Margin Percentage shall be determined in accordance with Level III of
the above matrix.
"Asset Disposition" shall mean any sale, assignment, transfer or other
disposition by the Borrower or any of its Subsidiaries to any other Person
(other than to the Borrower or to a Wholly Owned Subsidiary of Borrower),
whether in one transaction or in a series of related transactions, of any of its
assets, business units or other properties (including any interests in property,
whether tangible or intangible, and including Capital Stock of Subsidiaries),
excluding
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(i) sales of investment assets in the ordinary course of business, (ii) sales
and licenses of inventory and other assets in the ordinary course of business,
(iii) the sale or exchange of used or obsolete equipment to the extent the
proceeds of such sale are applied towards, or such equipment is exchanged for,
similar replacement equipment, and (iv) any other disposition expressly
permitted under SECTIONS 7.4, 7.6 or 7.7.
"Assignee" shall have the meaning given to such term in SECTION
11.7(a).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
entered into between a Lender and an Assignee and accepted by the Agent and the
Borrower, in substantially the form of EXHIBIT D.
"Authorized Officer" shall mean, with respect to any action specified
herein, any officer of the Borrower or either Guarantor duly authorized by
resolution of the board of directors of the Borrower or such Guarantor, as the
case may be, to take such action on its behalf, and whose signature and
incumbency shall have been certified to the Agent by the secretary or an
assistant secretary of the Borrower or such Guarantor, as the case may be.
"Available Dividend Amount" shall mean, with respect to any Insurance
Subsidiary (other than PXRE Bermuda) for any period of four consecutive fiscal
quarters, the aggregate maximum amount of dividends that is or, if such period
were a fiscal year, would be permitted by the Insurance Regulatory Authority of
its jurisdiction of domicile, under applicable Requirements of Law (without the
necessity of any consent, approval or other action of such Insurance Regulatory
Authority involving the granting of permission or the exercise of discretion by
such Insurance Regulatory Authority), to be paid by such Insurance Subsidiary to
the Borrower or another Subsidiary of the Borrower in respect of such
four-quarter period as if such period were a fiscal year (whether or not any
such dividends are actually paid).
"Average Combined Invested Assets" shall mean, with respect to the
Borrower's Insurance Subsidiaries for the four consecutive fiscal quarters most
recently ending prior to the date referred to in the context in which the term
is used, the average of the aggregate (without duplication) Invested Assets of
such Subsidiaries, determined by dividing the sum of the aggregate Invested
Assets as of the end of all four quarters by four.
"Bankruptcy Code" shall mean 11 U.S.C. 'SS''SS' 101 et seq., as amended
from time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime rate (which may not necessarily be its best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds Rate plus
0.5% per annum, as adjusted to conform to changes as of the opening of business
on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the
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Adjusted Base Rate.
"Bermuda Reinsurance Agreements" shall mean the quota share reinsurance
and stop-loss reinsurance agreements between PXRE Reinsurance and PXRE Bermuda
on terms and conditions substantially consistent with those set forth in the
summary of financial terms previously delivered to the Lenders, as the same may
be amended from time to time.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Loans pursuant to SECTION
2.11) on a single date of a group of Loans of a single Type and, in the case of
LIBOR Loans, as to which a single Interest Period is in effect.
"Borrowing Date" shall mean, with respect to any Borrowing, the date
upon which such Borrowing is made.
"Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least "A-1" or the equivalent thereof by
Standard & Poor's or at least "P-1" or the equivalent thereof by Xxxxx'x, (iii)
time deposits and certificates of deposit maturing within 90 days from the date
of issuance and issued by a bank or trust company organized under the laws of
the United States of America or any state thereof that has combined capital and
surplus of at least $500,000,000 and that has (or is a subsidiary of a bank
holding company that has) a long-term unsecured debt rating of at least A or the
equivalent thereof by Standard & Poor's or at least A2 or the equivalent thereof
by Xxxxx'x, (iv) repurchase obligations with a term not exceeding seven (7) days
with respect to underlying securities of the types described in clause (i) above
entered into with any bank or trust company meeting the qualifications specified
in clause (iii) above, and (v) money market funds at least 95% of the assets of
which are continuously invested in securities of the type described in clause
(i) through (iv) above.
"Closing Date" shall mean December 30, 1998.
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"CMOs" shall mean any security or certificate representing any interest
or participation in a pool of Mortgage Backed Securities (it being understood
that Mortgage Backed Securities themselves are not CMOs).
"Combined Net Cash Flow" shall mean, for any period and without
duplication, the aggregate Net Cash Flow of the Borrower's non-Insurance
Subsidiaries for such period. For purposes of this definition, "non-Insurance
Subsidiaries" shall not include any Subsidiary of an Insurance Subsidiary.
"Combined Statutory Capital and Surplus" shall mean, at any time, the
aggregate (without duplication) of Statutory Capital and Surplus of each of the
Borrower's Insurance Subsidiaries at such time, after eliminating the effect
thereupon of any transactions among such Insurance Subsidiaries.
"Commitment" shall mean, with respect to any Lender at any time, as
applicable, (i) the amount set forth opposite such Lender's name on SCHEDULE
1.1; or (ii) if such Lender has entered into one or more Assignment and
Acceptances, the amount set forth for such Lender at such time in the Register
maintained by the Agent pursuant to SECTION 11.7(b) as such Lender's
"Commitment," in each case as such amount may be reduced at or prior to such
time pursuant to the terms hereof.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of EXHIBIT C-1 or EXHIBIT C-2, together with a Covenant
Compliance Worksheet.
"Consolidated Indebtedness" shall mean, as of the last day of any
fiscal quarter, the aggregate (without duplication) of all Indebtedness (whether
or not reflected on PXRE Group's or any Subsidiary's balance sheet) of PXRE
Group and its Subsidiaries as of such date, determined on a consolidated basis
in accordance with GAAP, excluding reimbursement obligations with respect to
letters of credit issued on behalf of or deposits placed by any Insurance
Subsidiary for the benefit of Lloyd's to satisfy capital requirements imposed by
Lloyd's to support such Insurance Subsidiary's business in the Lloyd's insurance
Market and reimbursement obligations in respect of letters of credit issued for
the benefit of any Insurance Subsidiary or PXRE Group in the ordinary course of
its business to support the payment of obligations arising under insurance and
reinsurance contracts and weather and similar swap agreements, but only in each
case to the extent such letters of credit (i) are not drawn upon and (ii) are
collateralized by cash or Cash Equivalents.
"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total interest expense of PXRE Group and its
Subsidiaries for such period in respect of Consolidated Indebtedness of PXRE
Group and its Subsidiaries (including, without limitation, all such interest
expense accrued or capitalized during such period, whether or not actually paid
during such period), determined on a consolidated basis in accordance with GAAP,
(ii) all net amounts payable under or in respect of Hedge Agreements, to the
extent paid or accrued by PXRE Group and its Subsidiaries during such period,
and (iii) all commitment fees
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and other ongoing fees in respect of Consolidated Indebtedness (including the
fees provided for under SECTION 2.9) paid, accrued or capitalized by PXRE Group
and its Subsidiaries during such period.
"Consolidated Net Income" shall mean, for any period, net income (or
loss) for PXRE Group and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date of determination
with respect to any Person, the net worth of such Person and its Subsidiaries as
of such date, determined on a consolidated basis in accordance with GAAP but (i)
excluding any Disqualified Capital Stock and (ii) without regard to the
requirements of FAS 115. When used without reference to a particular Person, the
term "Consolidated Net Worth" shall be deemed to refer to PXRE Group.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability or other obligation (the "primary obligation") of another Person (the
"primary obligor"), whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to PXRE Group and its
Subsidiaries, the term Contingent Obligation shall not include (y) endorsements
for collection or deposit in the ordinary course of business or (z) obligations
entered into by an Insurance Subsidiary or by PXRE Group in the ordinary course
of its business under insurance policies or contracts, reinsurance agreements
and weather and similar swap agreements issued by it or to which it is a party
(and security posted in the ordinary course of its business to secure
obligations thereunder).
"Covenant Compliance Worksheet" shall mean a fully completed worksheet
in the form of Attachment A to EXHIBIT C-1 or EXHIBIT C-2.
"Credit Documents" shall mean this Agreement, the Notes, the Fee
Letter, the Amendment Fee Letter, and all other agreements, instruments,
documents and certificates now or hereafter executed and delivered to the Agent
or any Lender by or on behalf of the Borrower or any of its Subsidiaries with
respect to this Agreement and the transactions contemplated hereby, in each case
as amended, modified, supplemented or restated from time to time.
"Credit Party" shall mean each of the Borrower and the Guarantors.
"Debt Issuance" shall mean the issuance or sale by PXRE Group or any of
its
14
Subsidiaries of any debt securities, whether in a public offering of such
securities or otherwise.
"Debt Service" shall mean, for any period, the aggregate (without
duplication) of all principal and Consolidated Interest Expense paid or accrued
by PXRE Group and its Subsidiaries during such period in respect of Indebtedness
(including, without limitation, the Loans).
"Default" shall mean any event or condition that, with the passage of
time or giving of notice, or both, would constitute an Event of Default.
"Disqualified Capital Stock" shall mean, with respect to any Person,
any Capital Stock of such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event or otherwise, (i) matures or is mandatorily
redeemable or subject to any mandatory repurchase requirement, pursuant to a
sinking fund obligation or otherwise, (ii) is redeemable or subject to any
mandatory repurchase requirement at the sole option of the holder thereof, or
(iii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) or (ii) above, in each case under (i), (ii) or (iii) above at
any time on or prior to the first anniversary of the Maturity Date; provided,
however, that only the portion of Capital Stock that so matures or is
mandatorily redeemable, is so redeemable at the option of the holder thereof, or
is so convertible or exchangeable on or prior to such date shall be deemed to be
Disqualified Capital Stock.
"Dollar Roll Agreements" shall mean, as to any Person, an agreement
pursuant to which such Person sells securities to another Person and agrees to
repurchase "substantially the same" securities (as determined by the Public
Securities Association and GAAP) at a described or specified date and price.
"Dollars" or "$" shall mean dollars of the United States of America.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under "common
control" with, or a member of the same "controlled group" as, the Borrower, the
Guarantors or any of the Subsidiaries, within the meaning of Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by PXRE Group or
any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by PXRE Group or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has
15
terminated under Section 4041A of ERISA, (iii) the distribution by PXRE Group or
any ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent
to terminate any Plan or the taking of any action to terminate any Plan, (iv)
the commencement of proceedings by the PBGC under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by PXRE Group or any ERISA Affiliate of a notice from any Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of any
Multiemployer Plan against PXRE Group or any ERISA Affiliate to enforce Section
515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon PXRE Group or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of PXRE Group or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by PXRE Group or any ERISA Affiliate, (viii) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any
Plan for which PXRE Group or any of its ERISA Affiliates may be directly or
indirectly liable or (ix) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if PXRE Group or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $1,000,000,000, provided
that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $500,000,000, (v)
any Affiliate of an existing Lender or (vi) any other Person approved by the
Required Lenders, which approval shall not be unreasonably withheld.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
accusations, allegations, notices of noncompliance or violation, investigations
(other than internal reports prepared by any Person in the ordinary course of
its business and not in response to any third party action or request of any
kind) or proceedings relating in any way to any actual or alleged violation of
or liability under any Environmental Law or relating to any permit issued, or
any approval given, under any such Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by
16
any third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Substances or arising
from alleged injury or threat of injury to human health or the environment.
"Environmental Laws" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
rules of common law and orders of courts or Governmental Authorities, relating
to the protection of human health or occupational safety or the environment, now
or hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.
"Event of Default" shall have the meaning given to such term in SECTION
8.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"FAS 115" shall mean Statement of Financial Accounting Standards No.
115 issued by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants.
"Fair Market Value" shall mean, with respect to any Capital Stock of
PXRE Group given in connection with an Acquisition, the value given to such
Capital Stock for purposes of such Acquisition by the parties thereto, as
determined in good faith pursuant to the relevant acquisition agreement or
otherwise in connection with such Acquisition.
"Federal Funds Rate" shall mean, for any period, a fluctuating per
annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Letter" shall mean the letter dated December 2, 1998 from First
Union to the Borrower relating to certain fees payable by the Borrower in
respect of the transactions contemplated by the Old Credit Agreement, as
amended, modified or supplemented from time to time.
"Financial Condition Certificate" shall mean a fully completed and duly
executed
17
certificate, substantially in the form of EXHIBIT F, together with the
attachments thereto.
"Financial Officer" shall mean the chief financial officer, vice
president - finance, principal accounting officer or treasurer of the Borrower
or any Guarantor.
"Fixed Charge Coverage Ratio" shall mean, as of the last day of any
period of four consecutive fiscal quarters (the "Measurement Period"), the ratio
of:
(i) the sum (without duplication) of (t) the Available
Dividend Amount for the Measurement Period for the Borrower's Insurance
Subsidiaries, other than each Insurance Subsidiary that is a Subsidiary
of another Insurance Subsidiary, plus (u) the Net Tax Sharing Payments
with respect to the Measurement Period, plus (v) the Combined Net Cash
Flow (whether positive or negative) of the Borrower's non-Insurance
Subsidiaries for the Measurement Period, plus (w) other Net Cash Flow
to the Borrower or PXRE Group (whether positive or negative) during the
Measurement Period, minus (x) Holding Company Expenses accrued during
such Measurement Period, (y) minus stock repurchases by PXRE Group
during such Measurement Period, other than stock repurchases effected
between January 1, 1998 and the day immediately preceding the Closing
Date, minus (z) dividends reasonably estimated by PXRE Group (based
upon the most recent quarterly dividend rate as set forth in the
relevant Covenant Compliance Worksheet) to be paid by PXRE Group during
the period of four consecutive fiscal quarters immediately following
the Measurement Period (the "Pro Forma Period"), to
(ii) the Debt Service with respect to the Loans and all other
Consolidated Indebtedness reasonably determined by PXRE Group (and as
set forth in the relevant Covenant Compliance Worksheet) to be required
to be paid or accrued by PXRE Group and its Subsidiaries during the Pro
Forma Period, based on the amount of the Loans and other Consolidated
Indebtedness outstanding at the beginning of such period and assuming
that the rates in effect at the beginning of such period, taking into
account the benefit and costs of any Hedge Agreement with respect to
the Loans, will remain in effect throughout such period;
provided that the stock repurchases referred to in subclause (y) of clause (i)
above shall not include the $16,195,677 of such repurchases occurring between
the Closing Date and June 30, 1999; and provided further that, for any portion
of the Measurement Period prior to the Reorganization Date, this definition and
the definitions of the capitalized terms used in this definition shall read as
if "Borrower" were substituted for "PXRE Group."
"GAAP" shall mean generally accepted accounting principles, as set
forth in the statements, opinions and pronouncements of the Accounting
Principles Board, the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained, as in
effect from time to time (subject to the provisions of SECTION 1.2).
"Governmental Authority" shall mean any nation or government, any state
or other
18
political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Gross Written Premiums" shall mean, with respect to any of the
Borrower's Insurance Subsidiaries at any time, the amount of premiums written
(after adding premiums on business assumed from others) as shown on line 32,
page 9, Part 2B, sum of columns 1, 2a and 2b, of the Annual Statement of such
Insurance Subsidiary, or the amount determined in a consistent manner for any
date other than a date as of which an Annual Statement of such Insurance
Subsidiary is prepared.
"Guarantor Margin Stock" shall mean shares of capital stock of PXRE
Group that are held by PXRE Group or any of its Subsidiaries and that constitute
Margin Stock.
"Hazardous Substances" shall mean any substances or materials (i) that
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance, or (vi)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Holding Company Expenses" shall mean, for any period, the aggregate of
all operating costs and expenses incurred or paid by the Borrower and the
Guarantors during such period, including without limitation rent, utilities,
professional fees, taxes (without duplication for taxes included in the
determination of Net Tax Sharing Payments) and payroll expenses.
"Hybrid Securities Issuance" shall mean the issuance, sale or other
disposition by PXRE Group or any of its Subsidiaries of any security that
creates an obligation of PXRE Group or such Subsidiary to pay money or issue (or
cause an Affiliate to issue) Disqualified Capital Stock to the holder thereof,
whether or not such security is classified or presented on PXRE Group's or such
Subsidiary's balance sheet as long-term debt.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness and obligations of such Person for borrowed
money or in respect of loans or advances of any kind, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (iii)
all reimbursement obligations of such Person with respect to surety
19
bonds, letters of credit and bankers' acceptances (in each case, whether or not
drawn or matured and in the stated amount thereof), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
obligations of such Person as lessee under leases that are or are required to
be, in accordance with GAAP, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all Disqualified Capital Stock
issued by such Person, with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to its involuntary liquidation
preference, but excluding accrued dividends, if any, (viii) the net termination
obligations of such Person under any Hedge Agreement that, as of any date of
calculation hereunder, the counterparty thereto has the right to terminate, (ix)
all indebtedness of such Person in respect of Dollar Roll Agreements and Reverse
Repurchase Agreements, other than Dollar Roll Agreements and Reverse Repurchase
Agreements of an Insurance Subsidiary entered into in the ordinary course of
such Insurance Subsidiary's business, (x) all Contingent Obligations of such
Person and (xi) all indebtedness referred to in clauses (i) through (x) above
secured by any Lien on any property or asset owned or held by such Person
regardless of whether the indebtedness secured thereby shall have been assumed
by such Person or is nonrecourse to the credit of such Person.
"Insurance Regulatory Authority" shall mean, with respect to any
Insurance Subsidiary, the insurance department or similar Governmental Authority
charged with regulating insurance companies or insurance holding companies, in
its jurisdiction of domicile and, to the extent that it has regulatory authority
over such Insurance Subsidiary, in each other jurisdiction in which such
Insurance Subsidiary conducts business or is licensed to conduct business.
"Insurance Subsidiary" shall mean any direct or indirect Subsidiary of
PXRE Group the ability of which to pay dividends is regulated by an Insurance
Regulatory Authority or that is otherwise required to be regulated thereby in
accordance with the applicable Requirements of Law of its jurisdiction of
domicile, and shall mean and include, without limitation, each of PXRE
Reinsurance, Transnational Insurance, PXRE Ltd. and PXRE Bermuda.
"Interest Period" shall have the meaning given to such term in SECTION
2.10.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Invested Assets" shall mean, as to any Insurance Subsidiary, as of any
date, the total amount shown on page 2, column 4, line 9 of the Annual Statement
of the Insurance Subsidiary, or an amount determined in a consistent manner for
any date other than one as of which an Annual Statement is prepared.
"Investment Policy" shall mean, with respect to PXRE Reinsurance and
PXRE Bermuda, such company's Investment Policy as of the date hereof, as set
forth in SCHEDULES 7.5(b) and 7.5(c).
20
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising
part of the same Borrowing for any Interest Period, an interest rate per annum
obtained by dividing (i) (y) the rate of interest appearing on Dow Xxxxx
Telerate Page 3750 (or any successor page) or (z) if no such rate is available,
the rate of interest determined by the Agent to be the rate or the arithmetic
mean of rates (rounded upward, if necessary, to the nearest 1/16 of one
percentage point) at which Dollar deposits in immediately available funds are
offered by First Union to first-tier banks in the London interbank Eurodollar
market, in each case under (y) and (z) above at approximately 11:00 a.m., London
time, two (2) Business Days prior to the first day of such Interest Period for a
period substantially equal to such Interest Period and in an amount
substantially equal to the amount of First Union's LIBOR Loan comprising part of
such Borrowing, by (ii) the amount equal to 1.00 minus the Reserve Requirement
(expressed as a decimal) for such Interest Period.
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that becomes a "Lender" hereunder pursuant to
SECTION 11.7, and their respective successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the office of
such Lender designated as its "Lending Office" on SCHEDULE 1.1 hereto or in an
Assignment and Acceptance, or such other office as may be otherwise designated
in writing from time to time by such Lender to the Borrower and the Agent. A
Lender may designate separate Lending Offices as provided in the foregoing
sentence for the purposes of making or maintaining different Types of Loans,
and, with respect to LIBOR Loans, such office may be a domestic or foreign
branch or Affiliate of such Lender.
"Leverage Ratio" shall mean, as of any date of determination, the ratio
of (i) Consolidated Indebtedness as of such date, provided that, whether or not
any Trust Preferred Securities issued by the Borrower or any Subsidiary are
included in Consolidated Indebtedness, the aggregate redemption value of all
such securities shall be included in or added to, as the case may be, this
clause (i) but only to the extent such aggregate redemption value as of such
date exceeds fifteen percent (15%) of clause (ii) below, to (ii) the sum of
Consolidated Indebtedness and Consolidated Net Worth, each as of such date,
which sum shall include (without duplication) the aggregate redemption value of
Trust Preferred Securities issued by the Borrower or any Subsidiary; provided
that for any date of determination occurring prior to the Reorganization Date,
the definitions of the capitalized terms used in this definition shall read as
if "the Borrower" were substituted for "PXRE Group."
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
security interest, lien (statutory or otherwise), preference, priority, charge
or other encumbrance of any nature, whether voluntary or involuntary, including,
without limitation, the interest of any vendor or lessor under any conditional
sale agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.
21
"Lloyd's" shall mean the Society of Lloyd's of London, the Council of
Lloyd's of London, or any other Person similarly associated with Lloyd's of
London.
"Loans" shall have the meaning given to such term in SECTION 2.1.
"Margin Stock" shall have the meaning given to such term in Regulation
U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, business, properties or assets
of PXRE Group and its Subsidiaries, taken as a whole; it being understood,
however, that the events occurring during the third fiscal quarter of 1998
described in the Borrower's Form 10-Q filed on November 12, 1998 do not
constitute, either individually or in the aggregate, a Material Adverse Change.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, business, properties or
assets of PXRE Group and its Subsidiaries, taken as a whole, (ii) the ability of
the Borrower, the Guarantors or any Subsidiary to perform its obligations under
this Agreement or any of the other Credit Documents to which it is a party or
(iii) the legality, validity or enforceability of this Agreement or any of the
other Credit Documents or the rights and remedies of the Agent and the Lenders
hereunder and thereunder.
"Material Contract" shall have the meaning given to such term in
SECTION 4.18.
"Material Insurance Subsidiary" shall mean any Insurance Subsidiary
that is a Material Subsidiary.
"Material Subsidiary" shall mean each of (i) PXRE Reinsurance, (ii)
Transnational Insurance, (iii) PXRE Bermuda, (iv) PXRE Barbados, (v) at the
relevant time of determination, any Subsidiary having (after the elimination of
intercompany accounts) (y) in the case of a non-Insurance Subsidiary, (A) assets
constituting at least ten percent (10%) of the total assets of PXRE Group and
its Subsidiaries on a consolidated basis, (B) revenues for the four quarters
most recently ended constituting at least ten percent (10%) of the total
revenues of PXRE Group and its Subsidiaries on a consolidated basis, or (C) Net
Income for the four quarters most recently ended constituting at least ten
percent (10%) of the Consolidated Net Income of PXRE Group and its Subsidiaries,
in each case determined in accordance with GAAP as of the date of the GAAP
financial statements of PXRE Group and all its Subsidiaries most recently
delivered under SECTION 5.1 prior to such time (or, with regard to
determinations at any time prior to the initial delivery of financial statements
under SECTION 5.1, as of the date of the most recent financial statements
referred to in SECTION 4.11(a)), or (z) in the case of an Insurance Subsidiary,
(A) assets constituting at least ten percent (10%) of the aggregate assets of
all the Borrower's Insurance Subsidiaries, or (B) Gross Written Premiums for the
four quarters most recently ended constituting at least ten percent (10%) of the
aggregate Gross Written Premiums (without duplication) of all the Borrower's
Insurance Subsidiaries, in each case determined in accordance with SAP as of the
date of the statutory financial statements most recently delivered under
22
SECTION 5.2 prior to such time (or, with regard to determinations at any time
prior to the initial delivery of financial statements under SECTION 5.2, as of
the date of the most recent financial statements referred to in SECTION 4.11(e))
and (vi) any Subsidiary that has one of the foregoing as a Subsidiary.
"Maturity Date" shall mean March 31, 2005.
"Moody's" shall mean Xxxxx'x Investors Service, Inc., its successors
and assigns.
"Mortgage Backed Securities" shall mean investment securities
representing any undivided interest or participation in, or which are secured
by, a pool of loans secured by mortgages or deeds of trust.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.
"NAIC" shall mean the National Association of Insurance Commissioners
and any successor thereto.
"Net Amount Recoverable from Reinsurers" shall mean, as to any
Insurance Subsidiary, as of any time, the amount as shown on Schedule F - Part
3, column 13 of the Annual Statement of such Insurance Subsidiary, or an amount
determined in a consistent manner as of any date other than one as of which an
Annual Statement is prepared.
"Net Cash Flow" shall mean, for any Person for any period, (i) the
aggregate Net Income of such Person for such period, plus (ii) the sum of
depreciation expense, amortization (whether positive or negative) of intangible
assets and other non-cash expenses, losses and charges reducing income, in each
case to the extent taken into account in the calculation of such Net Income for
such period, minus (iii) the sum of capital expenditures and all non-cash gains
and other non-cash items taken into account in determining such Net Income for
such period, plus (iv) any increase during such period in deferred taxes, minus
(v) any decrease during such period in deferred taxes; provided that with
respect to PXRE Group, Net Cash Flow shall not include the Net Income of any
Subsidiary except to the extent of cash dividends actually paid to PXRE Group
during such period.
"Net Cash Proceeds" shall mean, in the case of any Asset Disposition,
Hybrid Securities Issuance or Debt Issuance, the aggregate cash payments
received by PXRE Group and its Subsidiaries less reasonable and customary fees
and expenses (including underwriting discounts and commissions) incurred by PXRE
Group and its Subsidiaries in connection therewith.
"Net Income" shall mean, with respect to any Person for any period, the
net income (or loss), after extraordinary items, taxes and all other items of
expense and income of such person for such period, determined in accordance with
GAAP.
23
"Net Tax Sharing Payments" shall mean, for any period, (i) the
aggregate (without duplication) of all payments made or to be made to the
Borrower by its Subsidiaries pursuant to tax sharing or tax allocation
agreements or arrangements or otherwise in respect of taxable income realized
during such period, minus (ii) the aggregate (without duplication) of all
foreign, federal, state or local income, franchise and other tax payments made
or to be made by the Borrower in respect of taxable income realized during such
period and any payments made or to be made by the Borrower during such period
pursuant to such tax sharing or tax allocation agreement or arrangement. For
purposes of the Fixed Charge Coverage Ratio, if the amount in clause (ii)
exceeds the amount in clause (i) hereof, the result shall be expressed as a
negative amount.
"Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A, together with any amendments, modifications
and supplements thereto, substitutions therefor and restatements thereof.
"Notice of Borrowing" shall have the meaning given to such term in
SECTION 2.2(b).
"Notice of Conversion/Continuation" shall have the meaning given to
such term in SECTION 2.11(b).
"Obligations" shall mean all principal of and interest (including, to
the greatest extent permitted by law, post-petition interest) on the Loans and
all fees, expenses, indemnities and other obligations owing, due or payable at
any time by the Borrower to the Agent, any Lender or any other Person entitled
thereto, under this Agreement or any of the other Credit Documents.
"Old Credit Agreement" shall have the meaning given to such term in the
Recitals to this Agreement.
"PAC I" shall mean a planned amortization class bond which is a tranche
or class of CMO or REMIC that is retired according to a predetermined
amortization schedule independent of the prepayment rate on the underlying
collateral and which has the highest level of protection within the pool against
prepayment or extension.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"PXRE Bermuda" shall mean PXRE Reinsurance Ltd., a corporation
organized under the laws of Bermuda and a Wholly-Owned Subsidiary of PXRE Group
as of the date hereof.
"PXRE Barbados" shall mean PXRE (Barbados) Ltd., a corporation
organized under the laws of Barbados and a Wholly-Owned Subsidiary of PXRE Group
as of the date hereof.
"PXRE Group" shall mean PXRE Group Ltd., a corporation organized under
the laws of Bermuda and the indirect parent holding company of the Borrower.
"PXRE Ltd." shall mean PXRE Limited, a corporation organized under the
laws of the
00
Xxxxxx Xxxxxxx and a Wholly Owned Subsidiary of PXRE Reinsurance as of the date
hereof.
"PXRE Reinsurance" shall mean PXRE Reinsurance Company, a Connecticut
insurance company and a Wholly Owned Subsidiary of the Borrower as of the date
hereof.
"PXRE Syndicate" shall mean any syndicate operating in the Lloyd's
insurance Market in which PXRE Ltd. participates or is a member, including, as
of the date hereof and without limitation, XX Xxxxxx Non-Marine Syndicate 1224.
"Participant" shall have the meaning given to such term in SECTION
11.7(d).
"Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
shall be within the permitted lines of business described in SECTION 7.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of PXRE Group, (iii) in the case of an Acquisition involving the
acquisition of control of Capital Stock of any Person, immediately after giving
effect to such Acquisition such Person (or the surviving Person, if the
Acquisition is effected through a merger or consolidation) shall be PXRE Group
or a Wholly Owned Subsidiary, and (iv) all of the conditions and requirements of
SECTIONS 5.9 applicable to such Acquisition are satisfied; or (b) any other
Acquisition to which the Required Lenders (or the Agent on their behalf) shall
have given their prior written consent (which consent may be in their sole
discretion and may be given subject to such additional terms and conditions as
the Required Lenders shall establish) and with respect to which all of the
conditions and requirements set forth in this definition and in SECTION 5.9, and
in or pursuant to any such consent, have been satisfied or waived in writing by
the Required Lenders (or the Agent on their behalf).
"Permitted CMOs and Mortgage Backed Securities" shall mean (i) mortgage
participation certificates issued by the Federal Home Loan Mortgage Corporation,
(ii) mortgage backed securities issued by the Federal National Mortgage
Association, (iii) securities guaranteed by the Government National Mortgage
Association, and (iv) other securities and certificates representing
participations in any CMO or REMIC which are PAC I's or which have comparable
priority in respect of the repayment thereof.
"Permitted Liens" shall have the meaning given to such term in SECTION
7.3.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA that is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which PXRE Group or any ERISA
Affiliate may have any liability.
"Pro Forma Balance Sheets" shall have the meaning given to such term in
SECTION 4.11(b).
25
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
"Projections" shall have the meaning given to such term in SECTION
4.11(c).
"Quarterly Statement" shall mean, with respect to any Insurance
Subsidiary for any fiscal quarter, the quarterly financial statements of such
Insurance Subsidiary as required to be filed with the Insurance Regulatory
Authority of its jurisdiction of domicile, together with all exhibits,
schedules, certificates and actuarial opinions required to be filed or delivered
therewith.
"REMIC" shall mean a real estate mortgage investment conduit.
"Register" shall have the meaning given to such term in SECTION
11.7(b).
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reinsurance Agreement" shall mean any agreement, contract, treaty,
certificate or other arrangement whereby any Insurance Subsidiary agrees to
transfer, cede or retrocede to another insurer or reinsurer all or part of the
liability assumed or assets held by such Insurance Subsidiary under a policy or
policies of insurance issued by such Insurance Subsidiary or under a reinsurance
agreement assumed by such Insurance Subsidiary.
"Reinsurance Premiums Ceded" shall mean, for any Insurance Subsidiary,
for any period, the amount as shown on Schedule F -Part 3, column 1 of the
Annual Statement of such Insurance Subsidiary, or an amount determined in a
manner consistent for any period other than one for which an Annual Statement is
prepared.
"Reorganization" shall mean the merger of PXRE Merger Corp. into the
Borrower as contemplated by the Reorganization Documents.
"Reorganization Date" shall mean the date upon which the Reorganization
is consummated and all the conditions set forth in SECTION 3.4 have been
satisfied or waived in accordance herewith.
"Reorganization Documents" shall mean, collectively, the Form S-4
registration statement of PXRE Group, including the joint proxy statement,
prospectus forming a part thereof, the merger agreement annexed thereto and all
other agreements, instruments, certificates and documents executed and delivered
in connection with the foregoing.
"Reportable Event" shall mean (i) any "reportable event" within the
meaning of Section
26
4043(c) of ERISA for which the 30-day notice under Section 4043(a) of ERISA has
not been waived by the PBGC (including any failure to meet the minimum funding
standard of, or timely make any required installment under, Section 412 of the
Internal Revenue Code or Section 302 of ERISA, regardless of the issuance of any
waivers in accordance with Section 412(d) of the Internal Revenue Code), (ii)
any such "reportable event" subject to advance notice to the PBGC under Section
4043(b)(3) of ERISA, (iii) any application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Internal Revenue Code,
and (iv) a cessation of operations described in Section 4062(e) of ERISA.
"Required Lenders" shall mean the Lenders holding outstanding Loans and
Unutilized Commitments (or, after the termination of the Commitments,
outstanding Loans) representing more than fifty-one percent (51%) of the
aggregate at such time of all outstanding Loans and Unutilized Commitments (or,
after the termination of the Commitments, the aggregate at such time of all
outstanding Loans).
"Requirement of Law" shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) in effect from time to time
during such Interest Period, as provided by the Federal Reserve Board, applied
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean the president, chief executive
officer, chief financial officer, or any other Financial Officer of the Borrower
and the Guarantors, and any executive officer, other officer or similar official
thereof responsible for the administration of the obligations of the Borrower
and the Guarantors in respect of this Agreement.
"Reverse Repurchase Agreement" shall mean, as to any Person, an
agreement pursuant to which such Person sells securities to another Person (the
"Counterparty") and agrees to repurchase such securities at a described or
specified date and price, provided, however, that "Reverse Repurchase
Agreements" shall not include any agreement pursuant to which such Person lends
securities pursuant to a securities lending arrangement to a Counterparty who
collateralizes such borrowing with cash, Cash Equivalents, letters of credit or
other collateral acceptable to the Required Lenders, and agrees to return such
securities to such Person at a described or specified date.
27
"SAP" shall mean, with respect to any Insurance Subsidiary, the
statutory accounting practices prescribed or permitted by the relevant Insurance
Regulatory Authority of its state of domicile, consistently applied and
maintained and in conformity with those used in the preparation of the most
recent statutory financial statements described in SECTION 4.11(e) (except where
changes are required by the relevant Insurance Regulatory Authority).
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, and any successor statute, and all rules and regulations from time
to time promulgated thereunder.
"Standard & Poor's" shall mean Standard & Poor's Rating Services, a
division of XxXxxx-Xxxx Companies, and its successors and assigns.
"Statutory Capital and Surplus" shall mean, as to any Insurance
Subsidiary, as of any date, the sum (without duplication) of the total amounts
shown (i) with respect to an Insurance Subsidiary not legally domiciled in the
United States, the shareholders' equity of such Insurance Subsidiary as
determined in accordance with GAAP (without regard to the requirements of FAS
115), and (ii) with respect to any other Insurance Subsidiary, on line 25,
column 1, page 3 of the Annual Statement of such Insurance Subsidiary, or the
sum of amounts determined in a consistent manner for any date other than one as
of which an Annual Statement is prepared.
"Subordinated Indebtedness" shall have the meaning given to such term
in SECTION 7.2.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and one or more
of its other Subsidiaries or a combination thereof (irrespective of whether, at
the time, securities of any other class or classes of any such corporation or
other Person shall or might have voting power by reason of the happening of any
contingency). When used without reference to a parent entity, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of PXRE Group.
"Surplus Relief Reinsurance Agreement" shall mean any agreement or
other arrangement whereby any Insurance Subsidiary cedes business under a
reinsurance agreement that would not be considered a transaction that
indemnifies an insurer against loss or liability relating to insurance risk, as
determined in accordance with Statement of Financial Accounting Standards No.
113 ("FAS 113") issued by the Financial Accounting Standards Board (without
regard to the effective date of FAS 113).
"Termination Date" shall mean the Maturity Date or such earlier date of
termination of the Commitments pursuant to SECTION 2.5 or SECTION 8.2.
"Transnational Insurance" shall mean Transnational Insurance Company, a
Connecticut corporation and a Wholly Owned Subsidiary of PXRE Reinsurance as of
the date hereof.
28
"Trust Preferred Securities" shall mean the preferred securities issued
by PXRE Capital Trust I and any other preferred securities offered by a Delaware
statutory business trust of which the Borrower or any of its Subsidiaries is the
grantor, the proceeds of which securities are or have been used principally to
purchase debentures issued by the Borrower or an Affiliate of the Borrower or
such Subsidiary.
"Type" shall have the meaning given to such term in SECTION 2.2(a).
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Unutilized Commitment" shall mean, with respect to any Lender at any
time, such Lender's Commitment at such time less the aggregate principal amount
of all Loans made by such Lender that are outstanding at such time.
"Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, that 100% of the outstanding Capital Stock of such Subsidiary is owned,
directly or indirectly, by such Person.
1.2 Accounting Terms. Except as specifically provided otherwise in this
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them in accordance with GAAP (or, to
the extent that such terms apply solely to any Insurance Subsidiary or if
otherwise expressly required, SAP). All accounting determinations and
computations under this Agreement that refer to PXRE Group or to PXRE Group and
its Subsidiaries shall, with respect to any dates or periods occurring prior to
the Reorganization Date, be deemed to mean the Borrower or the Borrower and its
Subsidiaries, as the case may be. Notwithstanding anything to the contrary in
this Agreement, for purposes of calculation of the financial covenants set forth
in ARTICLE VI, all accounting determinations and computations hereunder shall be
made in accordance with GAAP or SAP, as applicable, as in effect as of the date
of the Old Credit Agreement applied on a basis consistent with the application
used in preparing the most recent financial statements of PXRE Group (or, if
none, the Borrower) referred to in SECTIONS 4.11(a) and 4.11(e). In the event
that any changes in GAAP or SAP after such date are required to be applied to
PXRE Group or the Borrower and would affect the computation of the financial
covenants contained in ARTICLE VI, such changes shall be followed only from and
after the date this Agreement shall have been amended to take into account any
such changes. References to amounts on particular exhibits, schedules, lines,
pages and columns of any Annual Statement or Quarterly Statement are based on
the format promulgated by the NAIC for the 1997 Annual Statements and Quarterly
Statements. In the event such format is changed in future years so that
different information is contained in such items or they no longer exist, or if
the Annual Statement or Quarterly Statement is replaced by the NAIC or by any
Insurance Regulatory Authority after the date hereof such that different forms
of financial statements are required to be furnished by the Insurance
Subsidiaries in lieu
29
thereof, such references shall be to information consistent with that reported
in the referenced item in the 1997 Annual Statements or Quarterly Statements, as
the case may be.
1.3 Other Terms; Construction. Unless otherwise specified or unless the
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments. Each Lender severally agrees, subject to and on the
terms and conditions of this Agreement, to make loans (each, a "Loan," and
collectively, the "Loans") to the Borrower, from time to time on any Business
Day during the period from and including the Closing Date to but not including
the Termination Date, in an aggregate principal amount at any time outstanding
not greater than its Commitment at such time, provided that no Borrowing of
Loans shall be made if, immediately after giving effect thereto, the aggregate
principal amount of Loans outstanding at such time would exceed the aggregate
Commitments at such time. Subject to and on the terms and conditions of this
Agreement, the Borrower may borrow, repay and reborrow Loans.
2.2 Borrowings. (a) The Loans shall, at the option of the Borrower and
subject to the terms and conditions of this Agreement, be either Base Rate Loans
or LIBOR Loans (each, a "Type" of Loan), provided that all Loans comprising the
same Borrowing shall, unless otherwise specifically provided herein, be of the
same Type.
(b) In order to make a Borrowing (other than Borrowings involving
continuations or conversions of outstanding Loans, which shall be made pursuant
to SECTION 2.11), the Borrower will give the Agent written notice of the
proposed Borrowing not later than 11:00 a.m., Charlotte time, three (3) Business
Days prior to each Borrowing to be comprised of LIBOR Loans and one (1) Business
Day prior to each Borrowing to be comprised of Base Rate Loans; provided,
however, that requests for the Borrowing of any Loans to be made on the Closing
Date may, at the discretion of the Agent, be given later than the times
specified hereinabove. Each such notice (each, a "Notice of Borrowing") shall be
irrevocable, shall be given in the form of EXHIBIT B-1 and shall specify (1) the
aggregate principal amount and initial Type of the Loans to be made pursuant to
such Borrowing, (2) in the case of a Borrowing of LIBOR Loans, the initial
Interest Period to be applicable thereto, and (3) the requested date of such
Borrowing (the "Borrowing Date"), which shall be a Business Day. Upon its
receipt of a Notice of Borrowing, the Agent will promptly notify each Lender of
the proposed Borrowing. Notwithstanding anything to the contrary contained
herein:
(i) the aggregate principal amount of each Borrowing
comprised of
30
Base Rate Loans shall not be less than $1,000,000 or, if greater, an
integral multiple of $500,000 in excess thereof (or, if less, in the
amount of the aggregate Unutilized Commitments), and the aggregate
principal amount of each Borrowing comprised of LIBOR Loans shall not
be less than $3,000,000 or, if greater, an integral multiple of
$1,000,000 in excess thereof;
(ii) if the Borrower shall have failed to designate the Type
of Loans comprising a Borrowing, the Borrower shall be deemed to have
requested a Borrowing comprised of Base Rate Loans; and
(iii) if the Borrower shall have failed to select the duration
of the Interest Period to be applicable to any Borrowing of LIBOR
Loans, then the Borrower shall be deemed to have selected an Interest
Period with a duration of one month.
(c) Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, each Lender will make available to the Agent at its office
referred to in SECTION 11.5 (or at such other location as the Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the Loan to be made by such Lender. To the extent the Lenders have
made such amounts available to the Agent as provided hereinabove, the Agent will
make the aggregate of such amounts available to the Borrower in accordance with
SECTION 2.3(a) and in like funds as received by the Agent.
2.3 Disbursements; Funding Reliance; Domicile of Loans. (a) The
Borrower hereby authorizes the Agent to disburse the proceeds of each Borrowing
in accordance with the terms of any written instructions from any of the
Authorized Officers, provided that the Agent shall not be obligated under any
circumstances to forward amounts to any account not listed in an Account
Designation Letter. The Borrower may at any time deliver to the Agent an Account
Designation Letter listing any additional accounts or deleting any accounts
listed in a previous Account Designation Letter.
(b) Unless the Agent has received, prior to 1:00 p.m., Charlotte time,
on the relevant Borrowing Date, written notice from a Lender that such Lender
will not make available to the Agent such Lender's ratable portion of the
relevant Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent in immediately available funds on such Borrowing Date in
accordance with the applicable provisions of SECTION 2.2, and the Agent may, in
reliance upon such assumption, but shall not be obligated to, make a
corresponding amount available to the Borrower on such Borrowing Date. If and to
the extent that such Lender shall not have made such portion available to the
Agent, and the Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, (i) in the case of such Lender, at the Federal Funds Rate, and (ii) in
the case of the Borrower, at the rate of interest applicable at such time to the
Type of Loans comprising such Borrowing, as determined under the provisions of
SECTION 2.8. If such Lender shall repay to the Agent such corresponding
31
amount, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement. The failure of any Lender to make any
Loan required to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Loan as part of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender as part of any
Borrowing.
(c) Each Lender may, at its option, make and maintain any Loan at, to
or for the account of any of its Lending Offices, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
2.4 Notes. (a) The Loans made by each Lender shall be evidenced by a
Note appropriately completed in substantially the form of EXHIBIT A.
(b) Each Note issued to a Lender shall (i) be executed by the Borrower,
(ii) be payable to the order of such Lender, (iii) be dated as of the Closing
Date (or, in the case of a Note issued after the Closing Date, dated the
effective date of such Lender's becoming a party to the Old Credit Agreement or
this Agreement, as the case may be, (iv) be in a stated principal amount equal
to such Lender's Commitment, (v) bear interest in accordance with the provisions
of SECTION 2.8, as the same may be applicable from time to time to the Loans
made by such Lender, and (vi) be entitled to all of the benefits of this
Agreement and the other Credit Documents and subject to the provisions hereof
and thereof.
(c) Each Lender will record on its internal records the amount and Type
of each Loan made by it and each payment received by it in respect thereof and
will, in the event of any transfer of any of its Notes, either endorse on the
reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount and Type of the Loans evidenced
thereby as of the date of transfer or provide such information on a schedule to
the Assignment and Acceptance relating to such transfer; provided, however, that
the failure of any Lender to make any such recordation or provide any such
information, or any error therein, shall not affect the Borrower's obligations
under this Agreement or the Notes.
2.5 Termination and Reduction of Commitments. (a) The Commitments shall
be automatically and permanently terminated on the Termination Date.
(b) On each date set forth below, the aggregate Commitments shall be
automatically and permanently reduced by the amounts set forth below opposite
such date:
Date Amount
---- ------
March 31, 2000 $10,000,000
March 31, 2001 $10,000,000
March 31, 2002 $10,000,000
March 31, 2003 $10,000,000
March 31, 2004 $10,000,000
32
March 31, 2005 $25,000,000
or, if less, the remaining balance of the aggregate Commitments.
(c) The Commitments shall, on the day two (2) Business Days after the
receipt of Net Cash Proceeds therefor, be automatically and permanently reduced
by the amount of the Net Cash Proceeds with respect to any Asset Disposition,
Hybrid Securities Issuance or Debt Issuance. Promptly upon (and in any event not
later than two (2) Business Days after) its receipt of such Net Cash Proceeds,
PXRE Group will deliver to the Agent a certificate signed by a Financial Officer
of PXRE Group in form and substance satisfactory to the Agent and setting forth
the calculation of such Net Cash Proceeds. Notwithstanding the foregoing,
nothing in this subsection shall be deemed to permit any Asset Disposition not
expressly permitted under SECTION 7.4.
(d) At any time and from time to time after the date hereof, upon not
less than five (5) Business Days' prior written notice to the Agent, the
Borrower may terminate in whole or reduce in part the aggregate Unutilized
Commitments, provided that any such partial reduction shall be in an aggregate
amount of not less than $1,000,000 or, if greater, an integral multiple thereof.
The amount of any termination or reduction made under this subsection (d) may
not thereafter be reinstated.
(e) Each reduction of the Commitments pursuant to this Section shall be
applied ratably among the Lenders according to their respective Commitments.
Each reduction of the Commitments pursuant to subsections (c) or (d) shall be
applied to reduce the scheduled reductions of the Commitments set forth in
subsection (b) pro rata among the remaining scheduled reductions.
2.6 Mandatory Payments and Prepayments. (a) Except to the extent due or
paid sooner pursuant to the provisions of this Agreement, the aggregate
outstanding principal of the Loans shall be due and payable in full on the
Maturity Date.
(b) In the event that, at any time (including, without limitation, in
the event of a mandatory reduction of the Commitments pursuant to SECTION
2.5(c)), the aggregate principal amount of Loans outstanding at such time shall
exceed the aggregate Commitments at such time (after giving effect to any
concurrent termination or reduction thereof), the Borrower will immediately
prepay the outstanding principal amount of the Loans in the amount of such
excess.
(c) Each prepayment of the Loans made pursuant to SECTION 2.6(b) above
shall be applied first to prepay all Base Rate Loans before any LIBOR Loans are
prepaid. Each payment or prepayment pursuant to the provisions of this SECTION
2.6 shall be applied ratably among the Lenders holding the Loans being prepaid,
in proportion to the principal amount held by each.
(d) Each payment or prepayment of a LIBOR Loan made pursuant to the
provisions of this Section on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
SECTION 2.18 to be paid as a consequence thereof;
33
provided, however, at the request of the Borrower, any amount of any such
prepayment of a LIBOR Loan required by SECTION 2.6(b) as a result of the
application of SECTION 2.5(c) shall be deposited in a Prepayment Account (as
defined below). The Agent shall apply any cash deposited in the Prepayment
Account to prepay LIBOR Loans on the day interest on such LIBOR Loans would be
due and payable under SECTION 2.8(c) (or, at the direction of the Borrower, on
any earlier date) until all outstanding Loans have been prepaid or until all the
allocable cash on deposit in the Prepayment Account has been exhausted. Until
the cash deposited in the Prepayment Account is so applied, the applicable LIBOR
Loan shall be deemed not to have been repaid and shall continue to accrue
interest pursuant to SECTION 2.8. For purposes of this Agreement, the term
"Prepayment Account" shall mean an account established by the Borrower with the
Agent and over which the Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal for application in accordance with
this paragraph. The Agent will, at the request of the Borrower, invest amounts
on deposit in the Prepayment Account in Cash Equivalents that mature prior to
the last day of the applicable Interest Periods of the LIBOR Loans to be
prepaid; provided, however, that (i) the Agent shall not be required to make any
investment that, in its sole judgment, would require or cause the Agent to be
in, or would result in any, violation of any law, statute, rule or regulation,
(ii) such Cash Equivalents shall be subjected to a first priority perfected
security interest in favor of the Agent and (iii) if an Event of Default shall
have occurred and be continuing, the selection of such investments shall be in
the sole discretion of the Agent. The Borrower shall indemnify the Agent for any
losses relating to the investments so that the amount available to prepay LIBOR
Loans on the last day of the applicable Interest Period is not less than the
amount that would have been available had no investments been made pursuant
thereto. Other than any interest or profits earned on such investments, the
Prepayment Accounts shall not bear interest. Interest or profits, if any, on the
investments in any Prepayment Account shall accumulate in such Prepayment
Account and shall be applied on the day when prepayment is made (x) first, to
pay interest due and payable under SECTION 2.8(c), (y) second, as a further
prepayment of the applicable LIBOR Loan, and (z) to the extent of any excess, at
the direction of the Borrower. If the maturity of the Loans has been accelerated
pursuant to SECTION 8.2, the Agent may, in its sole discretion, apply all
amounts on deposit in the Prepayment Account to satisfy any of the Obligations.
The Borrower hereby pledges and assigns to the Agent, for its benefit and the
benefit of the Lenders, each Prepayment Account established hereunder to secure
the Obligations.
2.7 Voluntary Prepayments. (a) At any time and from time to time, the
Borrower shall have the right to prepay the Loans, in whole or in part, without
premium or penalty (except as provided in clause (iii) below), upon written
notice given to the Agent not later than 11:00 a.m., Charlotte time, three (3)
Business Days prior to each intended prepayment of LIBOR Loans and one (1)
Business Day prior to each intended prepayment of Base Rate Loans, provided that
(i) each partial prepayment shall be in an aggregate principal amount of not
less than $1,000,000 or, if greater, an integral multiple of $500,000 in excess
thereof, (ii) no partial prepayment of LIBOR Loans made pursuant to any single
Borrowing shall reduce the aggregate outstanding principal amount of the
remaining LIBOR Loans under such Borrowing to less than $3,000,000 or to any
greater amount not an integral multiple of $1,000,000 in excess thereof, and
(iii) unless made together with all amounts required under SECTION 2.18 to be
paid as a consequence of such prepayment, a prepayment of a LIBOR Loan may be
made only on the last day of the Interest
34
Period applicable thereto. Each such notice shall specify the proposed date of
such prepayment and the aggregate principal amount and Type of the Loans to be
prepaid (and, in the case of LIBOR Loans, the Interest Period of the Borrowing
pursuant to which made), and shall be irrevocable and shall bind the Borrower to
make such prepayment on the terms specified therein. Loans prepaid pursuant to
this subsection (a) may be reborrowed, subject to the terms and conditions of
this Agreement.
(b) Each prepayment of the Loans made pursuant to subsection (a) above
shall be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each.
2.8 Interest. (a) The Borrower will pay interest in respect of the
unpaid principal amount of each Loan, from the date of Borrowing thereof until
such principal amount shall be paid in full, (i) at the Adjusted Base Rate, as
in effect from time to time during such periods as such Loan is a Base Rate
Loan, and (ii) at the Adjusted LIBOR Rate, as in effect from time to time during
such periods as such Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of an Event of
Default as the result of failure by the Borrower to pay any principal of or
interest on any Loan, any fees or other amount hereunder when due (whether at
maturity, pursuant to acceleration or otherwise), and (at the election of the
Required Lenders) upon the occurrence and during the continuance of any other
Event of Default, all outstanding principal amounts of the Loans and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other accrued and outstanding fees and other amounts hereunder, shall bear
interest at a rate per annum equal to the interest rate applicable from time to
time thereafter to such Loans (whether the Adjusted Base Rate or the Adjusted
LIBOR Rate) plus 2% (or, in the case of fees and other amounts, at the Adjusted
Base Rate plus 2%), and, in each case, such default interest shall be payable on
demand. To the greatest extent permitted by law, interest shall continue to
accrue after the filing by or against the Borrower of any petition seeking any
relief in bankruptcy or under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each Base Rate Loan (including any Base
Rate Loan or portion thereof paid or prepaid pursuant to the provisions
of SECTION 2.6, except as provided hereinbelow), in arrears on the last
Business Day of each calendar quarter, beginning with the first such
day to occur after the Closing Date; provided, that in the event the
Loans are repaid or prepaid in full and the Commitments have been
terminated, then accrued interest in respect of all Base Rate Loans
shall be payable together with such repayment or prepayment on the date
thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan
or portion thereof paid or prepaid pursuant to the provisions of
SECTION 2.6, except as provided hereinbelow), in arrears (y) on the
last Business Day of the Interest Period applicable thereto (subject to
the provisions of clause (iv) in SECTION 2.10) and (z) in
35
addition, in the case of a LIBOR Loan with an Interest Period having a
duration of six months or longer, on each date on which interest would
have been payable under clause (y) above had successive Interest Period
of three months' duration been applicable to such LIBOR Loan; provided
that in the event all LIBOR Loans made pursuant to a single Borrowing
are repaid or prepaid in full, then accrued interest in respect of such
LIBOR Loans shall be payable together with such repayment or prepayment
on the date thereof; and
(iii) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Credit Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Agent to provide the Borrower or the Lenders
with any such notice shall neither affect any obligations of the Borrower or the
Lenders hereunder nor result in any liability on the part of the Agent to the
Borrower or any Lender. Each such determination (including each determination of
the Reserve Requirement) shall, absent manifest error, be conclusive and binding
on all parties hereto.
2.9 Fees. The Borrower agrees to pay:
(a) To the Agent, for the account of the Lenders, an amendment fee of
0.15% of their respective Commitments, due and payable on the date of execution
of this Agreement by the Required Lenders.
(b) To the Agent, for the account of each Lender, a commitment fee for
each calendar quarter (or portion thereof) for the period from the date of this
Agreement to the Termination Date, at a per annum rate equal to the Applicable
Margin Percentage in effect for such fee from time to time during such quarter,
on such Lender's ratable share (based on the proportion that its
36
Commitment bears to the aggregate Commitments) of the average daily aggregate
Unutilized Commitments, payable in arrears (i) on the last Business Day of each
calendar quarter, beginning with the first such day to occur after the Closing
Date, and (ii) on the Termination Date; and
(c) To the Agent, for its own account, the annual administrative fee
described in paragraph (3) of the Fee Letter and, to First Union Capital Markets
Corp., the fee described in the Amendment Fee Letter, on the terms, in the
amounts and at the times set forth therein.
2.10 Interest Periods. Concurrently with the giving of a Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of Base Rate Loans to be converted into, or LIBOR Loans to be
continued as, LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, three or six-month period; provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at
all times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall
commence on the date of the Borrowing of such LIBOR Loan (including the
date of any continuation of, or conversion into, such LIBOR Loan), and
each successive Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) LIBOR Loans may not be outstanding under more than seven
(7) separate Interest Periods at any one time (for which purpose
Interest Periods shall be deemed to be separate even if they are
coterminous);
(iv) if any Interest Period otherwise would expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day unless such next succeeding Business Day
falls in another calendar month, in which case such Interest Period
shall expire on the next preceding Business Day;
(v) the Borrower may not select any Interest Period that
expires after the Maturity Date;
(vi) no Interest Period may be selected that would end after a
scheduled date for repayment of principal of the Loans occurring on or
after the first day of such Interest Period unless, immediately after
giving effect to such selection, the aggregate principal amount of
Loans that are Base Rate Loans or that have Interest Periods expiring
on or before such principal repayment date equals or exceeds the
principal amount required to be paid on such principal repayment date;
and
(vii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month during which
such Interest Period
37
would otherwise expire, such Interest Period shall expire on the last
Business Day of such calendar month.
2.11 Conversions and Continuations. (a) The Borrower shall have the
right, on any Business Day occurring on or after the Closing Date, to elect (i)
to convert all or a portion of the outstanding principal amount of any Base Rate
Loans into LIBOR Loans, or to convert any LIBOR Loans the Interest Periods for
which end on the same day into Base Rate Loans, or (ii) to continue all or a
portion of the outstanding principal amount of any LIBOR Loans the Interest
Periods for which end on the same day for an additional Interest Period,
provided that (x) any such conversion of LIBOR Loans into Base Rate Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; any such conversion
of Base Rate Loans into, or continuation of, LIBOR Loans shall involve an
aggregate principal amount of not less than $3,000,000 or, if greater, an
integral multiple of $1,000,000 in excess thereof; and no partial conversion of
LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding
principal amount of such LIBOR Loans to less than $3,000,000 or to any greater
amount not an integral multiple of $1,000,000 in excess thereof, (y) except as
otherwise provided in SECTION 2.16(d), LIBOR Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto (and,
in any event, if a LIBOR Loan is converted into a Base Rate Loan on any day
other than the last day of the Interest Period applicable thereto, the Borrower
will pay, upon such conversion, all amounts required under SECTION 2.18 to be
paid as a consequence thereof), and (z) no conversion of Base Rate Loans into
LIBOR Loans or continuation of LIBOR Loans shall be permitted during the
continuance of a Default or Event of Default.
(b) The Borrower shall make each such election by giving the Agent
written notice not later than 11:00 a.m., Charlotte time, three (3) Business
Days prior to the intended effective date of any conversion of Base Rate Loans
into, or continuation of, LIBOR Loans and one (1) Business Day prior to the
intended effective date of any conversion of LIBOR Loans into Base Rate Loans.
Each such notice (each, a "Notice of Conversion/Continuation") shall be
irrevocable, shall be given in the form of EXHIBIT B-2 and shall specify (x) the
date of such conversion or continuation (which shall be a Business Day), (y) in
the case of a conversion into, or a continuation of, LIBOR Loans, the Interest
Period to be applicable thereto, and (z) the aggregate amount and Type of the
Loans being converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Agent will promptly notify each Lender of the
proposed conversion or continuation. In the event that the Borrower shall fail
to deliver a Notice of Conversion/Continuation as provided herein with respect
to any outstanding LIBOR Loans, such LIBOR Loans shall automatically be
converted to Base Rate Loans upon the expiration of the then current Interest
Period applicable thereto (unless repaid pursuant to the terms hereof). In the
event the Borrower shall have failed to select in a Notice of
Conversion/Continuation the duration of the Interest Period to be applicable to
any conversion into, or continuation of, LIBOR Loans, then the Borrower shall be
deemed to have selected an Interest Period with a duration of one month.
2.12 Method of Payments; Computations. (a) All payments by the Borrower
hereunder shall be made without setoff, counterclaim or other defense, in
Dollars and in
38
immediately available funds to the Agent, for the account of the Lenders
entitled to such payment (except as otherwise expressly provided herein as to
payments required to be made directly to the Issuing Lender and the Lenders) at
its office referred to in SECTION 11.5, prior to 12:00 noon, Charlotte time, on
the date payment is due. Any payment made as required hereinabove, but after
12:00 noon, Charlotte time, shall be deemed to have been made on the next
succeeding Business Day. If any payment falls due on a day that is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day (except that in the case of LIBOR Loans to which the provisions of
clause (iv) in SECTION 2.10 are applicable, such due date shall be the next
preceding Business Day), and such extension of time shall then be included in
the computation of payment of interest, fees or other applicable amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of the Lenders as follows: (i) if the
payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 12:00 noon,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be disbursed by the Agent until the date
repaid to such Lender.
(c) Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment is due to any Lender hereunder
that such payment will not be made in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date, and the Agent
may, in reliance on such assumption, but shall not be obligated to, cause to be
distributed to such Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, and without limiting the obligation of the
Borrower to make such payment in accordance with the terms hereof, such Lender
shall repay to the Agent forthwith on demand such amount so distributed to such
Lender, together with interest thereon for each day from the date such amount is
so distributed to such Lender until the date repaid to the Agent, at the Federal
Funds Rate.
(d) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 365 or 366 days, as the case may be (in the case of interest on
Base Rate Loans), or 360 days (in all other instances), and the actual number of
days (including the first day, but excluding the last day) elapsed.
2.13 Recovery of Payments. (a) The Borrower agrees that to the extent
the Borrower makes a payment or payments to or for the account of the Agent or
any Lender, which payment
39
or payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the Obligation intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been received.
(b) If any amounts distributed by the Agent to any Lender are
subsequently returned or repaid by the Agent to the Borrower or its
representative or successor in interest, whether by court order or by settlement
approved by the Lender in question, such Lender will, promptly upon receipt of
notice thereof from the Agent, pay the Agent such amount. If any such amounts
are recovered by the Agent from the Borrower or its representative or successor
in interest, the Agent will redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.
2.14 Use of Proceeds. The proceeds of the Loans shall be used to
finance Permitted Acquisitions and stock repurchases, to provide capital to the
Insurance Subsidiaries and for working capital and general corporate purposes
including, without limitation, financing the operations of PXRE Group, PXRE
Bermuda, and PXRE Barbados, and in accordance with the terms and provisions of
this Agreement (provided that Permitted Acquisitions may only be effected in
accordance with the terms and provisions of this Agreement, including without
limitation the provisions set forth in SECTION 5.9).
2.15 Pro Rata Treatment. (a) All fundings, continuations and
conversions of Loans shall be made by the Lenders pro rata on the basis of their
respective Commitments (in the case of the initial funding of Loans pursuant to
SECTION 2.2) or on the basis of their respective outstanding Loans (in the case
of continuations and conversions of Loans pursuant to SECTION 2.11, and
additionally in all cases in the event the Commitments have expired or have been
terminated), as the case may be from time to time. All payments on account of
principal of or interest on any Loans, fees or any other Obligations owing to or
for the account of any one or more Lenders shall be apportioned ratably among
such Lenders in proportion to the amounts of such principal, interest, fees or
other Obligations owed to them respectively.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise, other
than pursuant to SECTION 11.7) applicable to the payment of any of the
Obligations that exceeds its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender at such time to
(ii) the aggregate amount of such Obligations due and payable to all Lenders at
such time) of payments on account of such Obligations then or therewith obtained
by all the Lenders to which such payments are required to have been made, such
Lender shall forthwith purchase from the other Lenders such participations in
such Obligations as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each such other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such
40
recovery, together with an amount equal to such other Lender's ratable share
(according to the proportion of (i) the amount of such other Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to the provisions of
this subsection may, to the fullest extent permitted by law, exercise any and
all rights of payment (including, without limitation, setoff, banker's lien or
counterclaim) with respect to such participation as fully as if such participant
were a direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or similar law, any Lender receives
a secured claim in lieu of a setoff to which this subsection applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this subsection to share in the benefits of any recovery on such secured
claim.
2.16 Increased Costs; Change in Circumstances; Illegality; etc. (a) If,
at any time after the date hereof and from time to time, the introduction of or
any change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), shall (i) subject such Lender to any tax or other charge, or
change the basis of taxation of payments to such Lender, in respect of any of
its LIBOR Loans or any other amounts payable hereunder or its obligation to
make, fund or maintain any LIBOR Loans (other than any change in the rate or
basis of tax on the overall net income, or a franchise tax imposed in lieu of a
tax on the overall net income, of such Lender or its applicable Lending Office),
(ii) impose, modify or deem applicable any reserve, special deposit or similar
requirement (other than as a result of any change in the Reserve Requirement)
against assets of, deposits with or for the account of, or credit extended by,
such Lender or its applicable Lending Office, or (iii) impose on such Lender or
its applicable Lending Office any other condition, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any LIBOR Loans or to reduce the amount of any sum received or receivable by
such Lender hereunder, the Borrower will, promptly upon demand therefor by such
Lender, pay to such Lender such additional amounts as shall compensate such
Lender for such increase in costs or reduction in return.
(b) If, at any time after the date hereof and from time to time, any
Lender shall have reasonably determined that the introduction of or any change
in any applicable law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law), has or would have the effect, as a consequence of
such Lender's Commitment or Loans hereunder, of reducing the rate of return on
the capital of such Lender or any Person controlling such Lender to a level
below that which such Lender or controlling Person could have achieved but for
such introduction, change or compliance (taking into account such Lender's or
controlling Person's policies with respect to capital adequacy), the Borrower
will, promptly upon demand therefor by such Lender therefor, pay to such Lender
such
41
additional amounts as will compensate such Lender or controlling Person for
such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (y) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period or (z) the Agent
shall have received written notice from the Required Lenders of their
determination that the rate of interest referred to in the definition of "LIBOR
Rate" upon the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such
Interest Period is to be determined will not adequately and fairly reflect the
cost to such Lenders of making or maintaining LIBOR Loans during such Interest
Period, the Agent will forthwith so notify the Borrower and the Lenders. Upon
such notice, (i) all then outstanding LIBOR Loans shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans, (ii) the obligation of
the Lenders to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to the Borrowing to which such
Interest Period applies), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall be deemed to be a request for Base Rate Loans, in each case until the
Agent or the Required Lenders, as the case may be, shall have determined that
the circumstances giving rise to such suspension no longer exist (and the
Required Lenders, if making such determination, shall have so notified the
Agent), and the Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Agent and the Borrower. Upon such notice, (i) each of such Lender's then
outstanding LIBOR Loans shall automatically, on the expiration date of the
respective Interest Period applicable thereto (or, to the extent any such LIBOR
Loan may not lawfully be maintained as a LIBOR Loan until such expiration date,
upon such notice), be converted into a Base Rate Loan, (ii) the obligation of
such Lender to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to any Borrowing for which the
Agent has received a Notice of Borrowing but for which the Borrowing Date has
not arrived), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall, as to such Lender, be deemed to be a request for a Base Rate Loan, in
each case until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the Agent,
and the Agent shall have so notified the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith.
42
No failure by the Agent or any Lender at any time to demand payment of any
amounts payable under this Section shall constitute a waiver of its right to
demand payment of any additional amounts arising at any subsequent time. Nothing
in this Section shall require or be construed to require the Borrower to pay any
interest, fees, costs or other amounts in excess of that permitted by applicable
law.
2.17 Taxes. (a) Any and all payments by the Borrower hereunder or under
any Note shall be made, in accordance with the terms hereof and thereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, other than net income and franchise taxes imposed on the Agent
or any Lender by the United States or by the jurisdiction under the laws of
which the Agent or such Lender, as the case may be, is organized or in which its
principal office or any country in which it receives payments hereunder or (in
the case of a Lender) its applicable Lending Office is located, or by any
political subdivision or taxing authority thereof, or by any other jurisdiction
as a result of a connection of the Lender or Agent to such jurisdiction other
than a connection resulting from entering into or enforcing this Agreement (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to the Agent or any Lender, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), the Agent or such Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower will make such deductions, (iii) the Borrower will pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower will deliver to the Agent
or such Lender, as the case may be, evidence of such payment.
(b) The Borrower will indemnify the Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Agent or such
Lender, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall be made within 30
days from the date the Agent or such Lender, as the case may be, makes written
demand therefor.
(c) Each of the Agent and the Lenders agrees that if it subsequently
recovers, or receives a permanent net tax benefit (as opposed to a mere timing
difference benefit) with respect to, any amount of Taxes (i) previously paid by
it and as to which it has been indemnified by or on behalf of the Borrower or
(ii) previously deducted by the Borrower (including, without limitation, any
Taxes deducted from any additional sums payable under clause (i) of subsection
(a) above), the Agent or such Lender, as the case may be, shall reimburse the
Borrower to the extent of the amount of any such recovery or permanent net tax
benefit (but only to the extent of indemnity payments made, or additional
amounts paid, by or on behalf of the Borrower under this Section with respect to
the Taxes giving rise to such recovery or tax benefit); provided, however, that
the Borrower, upon the request of the Agent or such Lender, agrees to repay to
the Agent or such Lender, as the case may be, the amount paid over to the
43
Borrower (together with any penalties, interest or other charges), in the event
the Agent or such Lender is required to repay such amount to the relevant taxing
authority or other Governmental Authority. The determination by the Agent or any
Lender of the amount of any such recovery or permanent net tax benefit shall, in
the absence of manifest error, be conclusive and binding.
(d) If any Lender is incorporated or organized under the laws of a
jurisdiction other than the United States of America or any state thereof (a
"Non-U.S. Lender"), such Non-U.S. Lender will deliver to each of the Agent and
the Borrower, on or prior to the Closing Date (or, in the case of a Non-U.S.
Lender that becomes a party to this Agreement as a result of an assignment or
execution of a Joinder Agreement after the Closing Date, on the effective date
of such assignment or execution), (i) in the case of a Non-U.S. Lender that is a
"bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue Code, a
properly completed Internal Revenue Service Form 4224 or 1001, as applicable (or
successor forms), certifying that such Non-U.S. Lender is entitled to an
exemption from United States federal income taxes in connection with payments
under this Agreement or any of the Notes, together with a properly completed
Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms),
and (ii) in the case of a Non-U.S. Lender that is not a "bank" for purposes of
Section 881(c)(3)(A) of the Internal Revenue Code, a certificate in form and
substance reasonably satisfactory to the Agent and the Borrower and to the
effect that (x) such Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been treated as a
bank for purposes of any tax, securities law or other filing or submission made
to any governmental authority, any application made to a rating agency or
qualification for any exemption from any tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder for purposes of Section
881(c)(3)(B) of the Internal Revenue Code and (z) is not a controlled foreign
corporation receiving interest from a related person for purposes of Section
881(c)(3)(C) of the Internal Revenue Code, together with a properly completed
Internal Revenue Service Form W-8 (or a successor form). Each such Non-U.S.
Lender further agrees to deliver to each of the Agent and the Borrower an
additional copy of each such relevant form on or before the date that such form
expires or becomes obsolete or after the occurrence of any event (including a
change in its applicable Lending Office) requiring a change in the most recent
forms so delivered by it, in each case certifying that such Non-U.S. Lender is
entitled to an exemption from withholding or deduction for or on account of
United States federal income taxes in connection with payments under this
Agreement or any of the Notes, unless an event (including, without limitation,
any change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required, which event renders all such
forms inapplicable or the exemption to which such forms relate unavailable and
such Non-U.S. Lender notifies the Agent and the Borrower that it is not entitled
to receive payments without deduction or withholding of United States federal
income taxes. Each such Non-U.S. Lender will promptly notify the Agent and the
Borrower of any changes in circumstances that would modify or render invalid any
claimed exemption or reduction.
(e) If any of the forms or other documentation required under
subsection (d) above are not delivered to the Borrower and the Agent as therein
required, then the Borrower and the Agent may withhold from any interest payment
owed to such Lender not providing such forms or
44
other documentation an amount equivalent to the applicable withholding tax, and
the Borrower shall not be required to indemnify or make an increased payment to
the Agent or Lender pursuant to subsection (a) or (b) hereunder.
2.18 Compensation. The Borrower will compensate each Lender upon demand
for all losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund or maintain LIBOR
Loans) that such Lender may incur or sustain (i) if for any reason (other than a
default by such Lender) a Borrowing or continuation of, or conversion into, a
LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation, (ii) if any repayment, prepayment or
conversion of any LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of acceleration
of the maturity of the Loans pursuant to SECTION 8.2), (iii) if any prepayment
of any LIBOR Loan is not made on any date specified in a notice of prepayment
given by the Borrower or (iv) as a consequence of any other failure by the
Borrower to make any payments with respect to any LIBOR Loan when due hereunder.
Calculation of all amounts payable to a Lender under this Section shall be made
as though such Lender had actually funded its relevant LIBOR Loan through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an amount
equal to the amount of such LIBOR Loan, having a maturity comparable to the
relevant Interest Period; provided, however, that each Lender may fund its LIBOR
Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section. Determinations
by any Lender for purposes of this Section of any such losses, expenses or
liabilities shall, absent manifest error, be conclusive, provided that such
determinations are made in good faith.
ARTICLE III
CONDITIONS OF BORROWING
3.1 [Intentionally left blank]
3.2 [Intentionally left blank]
3.3 Conditions of All Borrowings. The obligation of any Lender to make
any Loans hereunder is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date:
(a) The Agent shall have received a Notice of Borrowing in accordance
with SECTION 2.2(b);
(b) Each of the representations and warranties contained in ARTICLE IV
and in the other Credit Documents shall be true and correct on and as of such
Borrowing Date with the same effect as if made on and as of such date, both
immediately before and after giving effect to the Loans to be made on such date
(except to the extent any such representation or warranty is
45
expressly stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such date); and
(c) No Default or Event of Default shall have occurred and be
continuing on such date, both immediately before and after giving effect to the
Loans to be made on such date.
Each giving of a Notice of Borrowing, and the consummation of each
Borrowing, shall be deemed to constitute a representation by the Borrower that
the statements contained in subsections (b) and (c) above are true, both as of
the date of such notice and as of the relevant Borrowing Date.
3.4 Conditions of effectiveness of this Agreement and conditions of
Borrowings after the Reorganization. The effectiveness of this Agreement, the
amendment of the Old Credit Agreement hereby, the approval of the Reorganization
by the Required Lenders, and the obligation of each Lender to make Loans after
the consummation of the Reorganization are subject to the satisfaction, or
waiver in accordance with SECTION 11.6 hereof, of the conditions precedent of
SECTION 3.3 and the following conditions precedent:
(a) The Agent shall have received a certificate, signed by the
president, the chief executive officer or the chief financial officer of each
Credit Party, in form and substance satisfactory to the Agent, certifying that
(i) all representations and warranties of such Credit Party contained in this
Agreement and the other Credit Documents are true and correct as of the
Reorganization Date, immediately after giving effect to the consummation of the
Reorganization (except to the extent any such representation or warranty is
expressly stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such date), (ii) all representations and warranties of the Borrower contained
in the Old Credit Agreement and the other Credit Documents are true and correct
as of the Reorganization Date, immediately before giving effect to the
consummation of the Reorganization (except to the extent any such representation
or warranty is expressly stated to have been made as of a specific date, in
which case such representation or warranty shall be true and correct in all
material respects as of such date), (iii) before giving effect to the
Reorganization, no Default or Event of Default has occurred and is continuing
under the Old Credit Agreement, (iv) after giving effect to the Reorganization,
no Default or Event of Default has occurred and is continuing under this
Agreement, (v) no Material Adverse Change has occurred since December 31, 1998,
and there exists no event, condition or state of facts that could reasonably be
expected to result in a Material Adverse Change, and (vi) all conditions to the
extensions of credit hereunder set forth in this Section and SECTION 3.3 have
been satisfied or waived as required hereunder.
(b) The Agent shall have received certificates of the secretary, clerk
or director, as applicable, or an assistant secretary, clerk or director, as
applicable, of each Credit Party, in form and substance satisfactory to the
Agent, certifying (i) that attached thereto is a true and complete copy of the
articles or certificate of incorporation and all amendments thereto of such
Credit Party, as the case may be, certified, to the extent applicable, as of a
recent date by the Secretary of State (or comparable Governmental Authority) of
its jurisdiction or organization, and that the
46
same has not been amended since the date of such certification, (ii) that
attached thereto is a true and complete copy of the bylaws, operating agreement
or memorandum and articles of association, as applicable, of such Credit Party,
as the case may be, as then in effect and as in effect at all times from the
date on which the resolutions referred to in clause (iii) below were adopted to
and including the date of such certificate, (iii) that attached thereto is a
true and complete copy of resolutions adopted by the board of directors (or duly
authorized committee thereof) of such Credit Party authorizing the execution,
delivery and performance of this Agreement, the other Credit Documents to which
it is a party, and the Reorganization Documents to which it is a party, and (iv)
as to the incumbency and genuineness of the signature of each officer of such
Credit Party executing this Agreement or any of the other Credit Documents.
(c) The Credit Parties shall have duly complied with and performed all
of their agreements and conditions set forth in the Reorganization Documents
required to be complied with or performed by it on or prior to the
Reorganization Date thereunder and the Agent shall have received evidence
satisfactory to it that the Reorganization shall have been consummated in
compliance with all applicable Requirements of Law.
(d) The Agent shall have received a Covenant Compliance Worksheet, duly
completed and certified by the chief financial officer or treasurer of PXRE
Group and the Borrower and in form and substance satisfactory to the Agent,
demonstrating PXRE Group's and Borrower's compliance with the financial
covenants set forth in SECTIONS 6.1 through 6.4, determined on a pro forma basis
as of June 30, 1999, after giving effect to the consummation of the
Reorganization.
(e) The Lenders shall have received complete and final copies of the
Reorganization Documents satisfactory in all material respects to the Required
Lenders, and the corporate and capital structure of PXRE Group and its
Subsidiaries, after giving effect to the Reorganization, and all legal, tax,
accounting, business and other matters relating to the Reorganization or to PXRE
Group and its Subsidiaries, shall be satisfactory in all respects to the
Required Lenders. [THIS WILL BE DELETED UPON RECEIPT BY THE LENDERS OF FINAL
REORGANIZATION DOCUMENTS.]
(f) The Lenders shall have received, on or prior to the Reorganization
Date, a certificate as of a recent date of the good standing or existence of
each of the Credit Parties under the law of their respective state or country of
organization.
(g) All approvals, permits and consents of any Governmental Authorities
or other Person required in connection with the execution and delivery of this
Agreement, the other Credit Documents and the consummation of the Reorganization
shall have been obtained (without the imposition of conditions that are not
reasonably acceptable to the Agent), and all related filings, if any, shall have
been made, and all such approvals, permits, consents and filings shall be in
full force and effect and the Agent shall have received such copies thereof as
it shall have requested; all applicable waiting periods shall have expired
without any adverse action being taken by any Governmental Authority having
jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental
47
Authority, in each case to enjoin, restrain or prohibit, to obtain substantial
damages in respect of, or that is otherwise related to or arises out of, this
Agreement, any of the other Credit Documents or the consummation of the
Reorganization, or that, in the opinion of the Agent, would otherwise be
reasonably likely to have a Material Adverse Effect.
(h) The Agent shall have received the favorable opinions of (i) Xxxxxx,
Xxxxx & Xxxxxxx LLP, special counsel to the Borrower and the Guarantors, (ii)
Xxxxxxx Xxxx & Xxxxxxx, Bermuda counsel to PXRE Group and (iii) Chancery
Xxxxxxxx, Barbados counsel to PXRE Barbados, in the form of EXHIBITS E-1, E-2
and E-3, dated as of the Reorganization Date. [NOTE: SUCH OPINIONS FROM BERMUDA
AND BARBADOS COUNSEL SHALL BE PROVIDED BY COUNSEL ACCEPTABLE TO THE AGENT AND BE
SIMILAR TO MLB'S INCLUDING OPINIONS PERTAINING TO THE CHOICE OF LAW AND THE
VALIDITY AND ENFORCEABILITY OF THE GUARANTEES MADE BY PXRE GROUP AND PXRE
BARBADOS HEREUNDER RESPECTIVELY.]
(i) The Agent shall have received a Financial Condition Certificate,
together with the Pro Forma Balance Sheets and the Projections as described in
SECTIONS 4.11(b) and 4.11(c), all of which shall be in form and substance
satisfactory to the Agent.
(j) The Borrower shall have paid the fees due and payable under
SECTIONS 2.9(a) and (c).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to extend the credit contemplated hereby, the Borrower and
the Guarantors each represent and warrant as set forth below (PXRE Group making
such representations and warranties as to itself and as to its Subsidiaries, the
Borrower as to itself and its Subsidiaries and PXRE Barbados making such
representations and warranties as to itself):
4.1 Corporate Organization and Power. Each of the Guarantors, the
Borrower and the Material Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the full corporate power and authority to execute,
deliver and perform the Credit Documents and the Reorganization Documents to
which it is or will be a party, to own and hold its property and to engage in
its business as presently conducted, and (iii) is duly qualified, licensed,
admitted or approved to do business as a foreign corporation and is in good
standing in each jurisdiction where the nature of its business or the ownership
of its properties requires it to be so qualified, except where the failure to be
so qualified, licensed, admitted or approved would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
4.2 Authorization; Enforceability. Each of the Borrower and the
Guarantors has taken, or on the date hereof will have taken, all necessary
corporate action to execute, deliver and
48
perform each of the Credit Documents and Reorganization Documents to which it is
or will be a party, and has, or on the date hereof (or any later date of
execution and delivery) will have, validly executed and delivered each of the
Credit Documents to which it is or will be a party. This Agreement constitutes,
and each of the other Credit Documents upon execution and delivery will
constitute, the legal, valid and binding obligation of the Borrower and the
Guarantors enforceable against each of them in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, by
general equitable principles or by principles of good faith and fair dealing.
4.3 No Violation. The execution, delivery and performance by each of
the Borrower and the Guarantors of this Agreement, the other Credit Documents
and the Reorganization Documents, and compliance by it with the terms hereof and
thereof, do not and will not (i) violate any provision of its certificate of
incorporation or bylaws or contravene any other material Requirement of Law
applicable to it, (ii) conflict with, result in a breach of or constitute (with
notice, lapse of time or both) a default under any indenture, agreement or other
instrument to which it is a party, by which it or any of its properties is bound
or to which it is subject, or (iii) result in or require the creation or
imposition of any Lien upon any of its properties or assets. No Subsidiary is a
party to any agreement or instrument or otherwise subject to any restriction or
encumbrance that restricts or limits its ability to make dividend payments or
other distributions in respect of its Capital Stock, to repay Indebtedness owed
to the Borrower, the Guarantors or any other Subsidiary, to make loans or
advances to the Borrower, the Guarantors or any other Subsidiary, or to transfer
any of its assets or properties to the Borrower, the Guarantors or any other
Subsidiary, in each case other than such restrictions or encumbrances existing
under or by reason of the Credit Documents or applicable Requirements of Law.
4.4 Governmental and Third-Party Authorization; Permits. (a) No
consent, approval, authorization or other action by, notice to, or registration
or filing with, any Governmental Authority or other Person is or will be
required as a condition to or otherwise in connection with the due execution,
delivery and performance by the Borrower and the Guarantors of this Agreement or
any of the other Credit Documents or Reorganization Documents or the legality,
validity or enforceability hereof or thereof, other than (i) consents,
authorizations and filings that have been (or on or prior to the Reorganization
Date will have been) made or obtained and that are (or on the Reorganization
Date will be) in full force and effect, which consents, authorizations and
filings are listed on SCHEDULE 4.4, (ii) filings pursuant to the Exchange Act,
which will be made as soon as practicable after the Reorganization Date, and
(iii) consents and filings the failure to obtain or make which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Each of the Borrower, the Guarantors and their Subsidiaries has,
and is in good standing with respect to, all governmental approvals, licenses,
permits and authorizations necessary to conduct its business as presently
conducted and to own or lease and operate its properties, except for those the
failure to obtain which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
49
(c) To the knowledge of the Borrower and the Guarantors, (i) no
license, permit or authorization to transact insurance and reinsurance business
is the subject of a proceeding for suspension, revocation or limitation or any
similar proceedings; (ii) there is no sustainable basis for such a suspension,
revocation or limitation; and (iii) no such suspension, revocation or limitation
is threatened by any relevant Insurance Regulatory Authority. No Material
Insurance Subsidiary transacts any insurance business, directly or indirectly,
in any jurisdiction other than those listed on SCHEDULE 4.4, where such business
requires any license, permit or other authorization of an Insurance Regulatory
Authority of such jurisdiction.
4.5 Litigation. There are no actions, investigations, suits or
proceedings pending or, to the knowledge of the Borrower and the Guarantors,
threatened, at law, in equity or in arbitration, before any court, other
Governmental Authority or other Person, (i) against the Borrower or the
Guarantors or any of the Subsidiaries or against or affecting any of their
respective properties that would, if adversely determined, be reasonably likely
to have a Material Adverse Effect, other than actions, investigations, suits or
proceedings arising in the ordinary course of business of the Insurance
Subsidiaries for which reserves have been prudently estimated and set aside in
accordance with sound and standard industry practices; or (ii) with respect to
this Agreement, any of the other Credit Documents or the Reorganization.
4.6 Taxes. Each of the Borrower, the Guarantors and the Subsidiaries
has timely filed all federal, state and local tax returns and reports required
to be filed by it except where the failure to timely file would not,
individually or in the aggregate, have a Material Adverse Effect, and has paid
all taxes, assessments, fees and other charges levied upon it or upon its
properties that are shown thereon as due and payable, other than those that are
being contested in good faith and by proper proceedings and for which adequate
reserves have been established in accordance with GAAP. Such returns accurately
reflect in all material respects all liability for taxes of the Borrower, the
Guarantors and the Subsidiaries for the periods covered thereby. There is no
ongoing audit or examination or, to the knowledge of the Borrower and the
Guarantors, other investigation by any Governmental Authority of the tax
liability of the Borrower, the Guarantors, or any of their Subsidiaries, and
there is no unresolved claim by any Governmental Authority concerning the tax
liability of the Borrower, the Guarantors, or any of their Subsidiaries for any
period for which tax returns have been or were required to have been filed,
other than claims for which adequate reserves have been established in
accordance with GAAP. Neither the Borrower, the Guarantors nor any of the
Subsidiaries has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
4.7 Subsidiaries. SCHEDULE 4.7 sets forth a list, as of the date
hereof, of all of the Subsidiaries of PXRE Group and, as to each such
Subsidiary, the percentage ownership (direct and indirect) of PXRE Group and, as
applicable, the Borrower, in each class of its capital stock and each direct
owner thereof and indicates in each case whether such Subsidiary is a Material
Subsidiary. Except for the shares of capital stock expressly indicated on
SCHEDULE 4.7, there are no shares of capital stock, warrants, rights, options or
other equity securities, or other Capital Stock of any Subsidiary of PXRE Group
outstanding or reserved for any purpose. All outstanding shares of capital stock
of each Subsidiary of PXRE Group are duly and validly issued, fully paid and
nonassessable.
50
4.8 Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Agent or any Lender in writing by or on
behalf of the Borrower, the Guarantors or any of the Subsidiaries for purposes
of or in connection with this Agreement, the Reorganization and the transactions
contemplated hereby is, and all other such factual information hereafter
furnished to the Agent or any Lender in writing by or on behalf of the Borrower,
the Guarantors or any of the Subsidiaries will be, true and accurate in all
material respects on the date as of which such information is dated or certified
(or, if such information has been amended or supplemented, on the date as of
which any such amendment or supplement is dated or certified) and, when all such
information is taken together, not made incomplete by omitting to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which such information was provided, not materially
misleading.
4.9 Margin Regulations. Neither the Borrower, the Guarantors nor any of
the Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock. No proceeds of the Loans will be used, directly or indirectly, to
purchase or carry any Margin Stock (except as expressly permitted under SECTION
7.6(a)(i)), to extend credit for such purpose or for any other purpose that
would violate Regulations T, U or X or any provision of the Exchange Act.
4.10 No Material Adverse Change. There has been no Material Adverse
Change since December 31, 1997, and there exists no event, condition or state of
facts that could reasonably be expected to result in a Material Adverse Change.
4.11 Financial Matters. (a) The Borrower has heretofore furnished to
the Agent copies of (i) the audited consolidated balance sheets of the Borrower
and its Subsidiaries as of December 31, 1998, 1997, and 1996, and the related
statements of income, cash flows and stockholders' equity for the fiscal years
then ended, together with the opinion of PriceWaterhouseCoopers LLP thereon, and
(ii) the unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as of March 31, 1999 and June 30, 1999, and the related statements
of income, cash flows and stockholders' equity for the three- and six-month
periods then ended. Such financial statements have been prepared in accordance
with GAAP (subject, with respect to the unaudited financial statements, to the
absence of notes required by GAAP and to normal year-end adjustments) and
present fairly the financial condition of the Borrower and its Subsidiaries on a
consolidated basis as of the respective dates thereof and the consolidated
results of operations of the Borrower and its Subsidiaries for the respective
periods then ended. Except as fully reflected in (x) the most recent financial
statements referred to above and the notes thereto, (y) the financial statements
previously delivered pursuant to SECTION 5.1 of the Old Credit Agreement or this
Agreement, or (z) any Form 8-K filed by the Borrower with the Securities and
Exchange Commission and previously delivered by the Borrower to the Lenders,
there were, as of the date of the most recent financial statements described in
the immediately foregoing clause (x) or (y) or, if later, the date of the most
recently delivered Form 8-K, no material liabilities or obligations with respect
to the Borrower or any of its Subsidiaries of any nature whatsoever (whether
absolute, contingent or otherwise and whether or not due) that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect,
51
and since the date thereof neither the Borrower nor any Subsidiary has incurred
any liabilities or obligations that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) Each of the unaudited pro forma balance sheets of the Borrower and
PXRE Group as of June 30, 1999, a copy of which has heretofore been delivered to
the Lenders, gives pro forma effect to the consummation of the Reorganization,
the Bermuda Reinsurance Agreements, and the payment of transaction fees and
expenses related to the foregoing, all as if such events had occurred on such
date (the "Pro Forma Balance Sheets"). Each Pro Forma Balance Sheet has been
prepared in accordance with GAAP (subject to the absence of footnotes required
by GAAP and subject to normal year-end adjustments) and, subject to stated
assumptions made in good faith and having a reasonable basis set forth therein,
presents fairly the financial condition of the Borrower and PXRE Group,
respectively, on an unaudited pro forma basis as of the date set forth therein
after giving effect to the consummation of the transactions described above.
(c) The Borrower has prepared, and has heretofore furnished to the
Lenders a copy of, annual projected balance sheets and statements of income and
cash flows of each of the Borrower and PXRE Group giving effect to the
Reorganization, the Bermuda Reinsurance Agreements, and the payment of
transaction fees and expenses related to the foregoing (the "Projections") for
the period beginning with the year ended December 31, 1999 and continuing
through December 31, 2005. In the opinion of management of PXRE Group and the
Borrower, the assumptions used in the preparation of the Projections were fair,
complete and reasonable when made and continue to be fair, complete and
reasonable as of the date hereof. The Projections have been prepared in good
faith by the executive and financial personnel of PXRE Group and the Borrower,
are complete and represent a reasonable estimate of the future performance and
financial condition of PXRE Group and the Borrower, respectively, subject to the
uncertainties and approximations inherent in any projections and the business of
PXRE Group and Borrowers.
(d) Each of PXRE Group and its Subsidiaries, after giving effect to the
consummation of the transactions contemplated hereby, (i) has capital sufficient
to carry on its businesses as conducted and as proposed to be conducted, (ii)
has assets with a fair saleable value, determined on a going concern basis, (y)
not less than the amount required to pay the probable liability on its existing
debts as they become absolute and matured and (z) greater than the total amount
of its liabilities (including identified contingent liabilities, valued at the
amount that can reasonably be expected to become absolute and matured), and
(iii) does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay such debts and liabilities as they mature.
(e) The Borrower has heretofore furnished to the Agent copies of (i)
the Annual Statements of each of its Insurance Subsidiaries (other than PXRE
Ltd.) as of December 31, 1998, 1997 and 1996, and for the fiscal years then
ended, (ii) the Quarterly Statements of each of its Insurance Subsidiaries
(other than PXRE Ltd.) as of the end of the first two fiscal quarters of 1999,
and for the end of the fiscal quarters then ended, each as filed with the
relevant Insurance Regulatory Authority, and (iii) the annual report with
respect to PXRE Ltd. filed with Lloyd's (collectively, the "Historical Statutory
Statements"). The Historical Statutory Statements (including, without
limitation, the provisions made therein for investments and the valuation
52
thereof, reserves, policy and contract claims and statutory liabilities) have
been prepared in accordance with SAP where required (except as may be reflected
in the notes thereto and subject, with respect to the Quarterly Statements, to
the absence of notes required by SAP and to normal year-end adjustments), were
in compliance with applicable Requirements of Law when filed and present fairly
the financial condition of the respective Insurance Subsidiaries covered thereby
as of the respective dates thereof and the results of operations, changes in
capital and surplus and cash flow of the respective Insurance Subsidiaries
covered thereby for the respective periods then ended. Except for liabilities
and obligations disclosed or provided for in the Historical Statutory Statements
(including, without limitation, reserves, policy and contract claims and
statutory liabilities), no Insurance Subsidiary had, as of the date of its
respective Historical Statutory Statements, any material liabilities or
obligations of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due) that, in accordance with SAP (or, with respect to PXRE
Ltd., the requirements of Lloyd's), would have been required to have been
disclosed or provided for in such Historical Statutory Statements. All books of
account of each Insurance Subsidiary fully and fairly disclose all of its
material transactions, properties, assets, investments, liabilities and
obligations, are in its possession and are true, correct and complete in all
material respects.
4.12 Ownership of Properties. Each of the Borrower, the Guarantors and
the Subsidiaries (i) has good and marketable title to all real property owned by
it, (ii) holds interests as lessee under valid leases in full force and effect
with respect to all material leased real and personal property used in
connection with its business, (iii) possesses or has rights to use licenses,
patents, copyrights, trademarks, service marks, trade names and other assets
sufficient to enable it to continue to conduct its business substantially as
heretofore conducted and without any material conflict with the rights of
others, and (iv) has good title to all of its other properties and assets
reflected in the most recent financial statements referred to in SECTION 4.11(a)
(except as sold or otherwise disposed of since the date thereof in the ordinary
course of business), in each case under (i), (ii), (iii) and (iv) above free and
clear of all Liens other than Permitted Liens.
4.13 ERISA. (a) Each of the Borrower, the Guarantors and their
respective ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA, and each Plan is and has been administered in
compliance in all material respects with all applicable Requirements of Law,
including, without limitation, the applicable provisions of ERISA and the
Internal Revenue Code. No ERISA Event (i) has occurred within the five-year
period prior to the Reorganization Date, (ii) has occurred and is continuing, or
(iii) to the knowledge of the Borrower and the Guarantors, is reasonably
expected to occur with respect to any Plan, except in each case where such
occurrence would not be reasonably likely to have a Material Adverse Effect. No
Plan has any Unfunded Pension Liability as of the most recent annual valuation
date applicable thereto, and neither the Borrower, the Guarantors nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA, except where such Unfunded Pension Liability or transaction
would not be reasonably likely to have a Material Adverse Effect.
(b) Neither the Borrower, the Guarantors nor any ERISA Affiliate has
had a complete or partial withdrawal from any Multiemployer Plan, and neither
the Borrower, the Guarantors
53
nor any ERISA Affiliate would become subject to any liability under ERISA if the
Borrower or the Guarantors or any ERISA Affiliate were to withdraw completely
from all Multiemployer Plans as of the most recent valuation date. No
Multiemployer Plan is in "reorganization" or is "insolvent" within the meaning
of such terms under ERISA.
4.14 Environmental Matters. (a) No Hazardous Substances are or have
been generated, used, located, released, treated, disposed of or stored by the
Borrower, the Guarantors or any of the Subsidiaries or, to the knowledge of the
Borrower and the Guarantors, by any other Person (including any predecessor in
interest) or otherwise, in, on or under any portion of any real property, leased
or owned, of the Borrower or the Guarantors or any of the Subsidiaries, except
in material compliance with all applicable Environmental Laws, and no portion of
any such real property or, to the knowledge of the Borrower and the Guarantors,
any other real property at any time leased, owned or operated by the Borrower or
the Guarantors or any of the Subsidiaries, has been contaminated by any
Hazardous Substance; and no portion of any real property, leased or owned, of
the Borrower or the Guarantors or any of the Subsidiaries has been or is
presently the subject of an environmental audit, assessment or remedial action.
(b) No portion of any real property, leased or owned, of the Borrower
or the Guarantors or any of the Subsidiaries has been used by the Borrower or
the Guarantors or any of the Subsidiaries or, to the knowledge of the Borrower
and the Guarantors, by any other Person, as or for a mine, a landfill, a dump or
other disposal facility, a gasoline service station, or (other than for
petroleum substances stored in the ordinary course of business) a petroleum
products storage facility; no portion of such real property or any other real
property at any time leased, owned or operated by the Borrower or the Guarantors
or any of the Subsidiaries has, pursuant to any Environmental Law, been placed
on the "National Priorities List" or "CERCLIS List" (or any similar federal,
state or local list) of sites subject to possible environmental problems; and
there are not and have never been any underground storage tanks situated on any
real property, leased or owned, of the Borrower or the Guarantors or any of the
Subsidiaries.
(c) All activities and operations of the Borrower, the Guarantors and
the Subsidiaries are in compliance with the requirements of all applicable
Environmental Laws, except to the extent the failure so to comply, individually
or in the aggregate, would not be reasonably likely to have a Material Adverse
Effect. Each of the Borrower, the Guarantors and the Subsidiaries (i) has
obtained all licenses and permits under Environmental Laws necessary to its
respective operations, (ii) all such licenses and permits are being maintained
in good standing, and (iii) each of the Borrower, the Guarantors and the
Subsidiaries is in compliance with all terms and conditions of such licenses and
permits, except for such licenses and permits the failure to obtain, maintain or
comply with which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Other than normal claims in the
ordinary course of business pursuant to insurance policies written or reinsured
by an Insurance Subsidiary, the loss reserves for which are adequately and
properly reflected in such Insurance Subsidiary's most recent Annual or
Quarterly Statements, neither the Borrower, the Guarantors nor any of the
Subsidiaries is involved in any suit, action or proceeding, or has received any
notice, complaint or other request for information from any Governmental
Authority or other Person, with respect to any actual or alleged Environmental
Claims that, if adversely determined, would be reasonably
54
likely, individually or in the aggregate, to have a Material Adverse Effect;
and, to the knowledge of the Borrower and the Guarantors, there are no
threatened actions, suits, proceedings or investigations with respect to any
such Environmental Claims.
4.15 Compliance With Laws. Each of the Borrower, the Guarantors and the
Subsidiaries has timely filed all material reports, documents and other
materials required to be filed by it under all applicable Requirements of Law
with any Governmental Authority, has retained all material records and documents
required to be retained by it under all applicable Requirements of Law, and is
otherwise in compliance with all applicable Requirements of Law in respect of
the conduct of its business and the ownership and operation of its properties,
except for such Requirements of Law the failure to comply with which,
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect.
4.16 Regulated Industries. Neither the Borrower, the Guarantors nor any
of the Subsidiaries is (i) an "investment company," a company "controlled" by an
"investment company," or an "investment advisor," within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a "holding company," a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.17 Insurance. The assets, properties and business of the Borrower,
the Guarantors and the Subsidiaries are insured against such hazards and
liabilities, under such coverages and in such amounts, as are customarily
maintained by prudent companies similarly situated and under policies issued by
insurers of recognized responsibility.
4.18 Material Contracts. SCHEDULE 4.18 lists, as of the date hereof,
each "material contract" (within the meaning of Item 601(b)(10) of Regulation
S-K under the Exchange Act) (other than insurance policies and contracts,
reinsurance agreements and weather and similar swap agreements and directly
related documentation) to which the Borrower, the Guarantors or any of the
Subsidiaries is a party, by which any of them or their respective properties is
bound or to which any of them is subject (collectively, "Material Contracts"),
other than contracts disclosed in any filing by the Borrower or PXRE Group with
the Securities Exchange Commission pursuant to the Exchange Act or the
Securities Act, and also indicates the parties, subject matter and term thereof.
As of the date hereof, (i) each Material Contract is in full force and effect
and is enforceable by the Borrower, the Guarantors or the Subsidiary that is a
party thereto in accordance with its terms, and (ii) neither the Borrower, the
Guarantors nor any of the Subsidiaries (nor, to the knowledge of the Borrower
and the Guarantors, any other party thereto) is in breach of or default under
any Material Contract in any material respect or has given notice of termination
or cancellation of any Material Contract.
4.19 Reinsurance Agreements. (a) Except as set forth on Schedule F to
the Annual Statements for the Insurance Subsidiaries or, with respect to PXRE
Ltd., as set forth in the annual report filed with Lloyd's, for the fiscal year
ending December 31, 1998, and except as set forth on SCHEDULE 4.19, there were
no material liabilities outstanding as of June 30, 1999 under any Reinsurance
Agreement and since June 30, 1999, except as previously disclosed in writing by
55
PXRE Group to the Lenders pursuant to this Agreement, no Insurance Subsidiary
has incurred any material liabilities under any Reinsurance Agreement that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Each such Reinsurance Agreement (except any Reinsurance
Agreement that has expired by its terms in the ordinary course) is in full force
and effect; none of the Insurance Subsidiaries or, to the knowledge of the
Borrower and the Guarantors, any other party thereto, is in breach of or default
under any such contract; and the Borrower has no reason to believe that the
financial condition of any other party to any such contract is impaired such
that a default thereunder by such party could reasonably be anticipated. Each
such Reinsurance Agreement (except any Reinsurance Agreement that has expired by
its terms in the ordinary course) is qualified under all applicable Requirements
of Law to receive the statutory credit assigned to such Reinsurance Agreement in
the relevant Annual Statement or Quarterly Statement at the time prepared. Each
Person to whom any of the Insurance Subsidiaries has ceded any material
liability pursuant to any Reinsurance Agreement on the date hereof, other than
Select Re, either (i) has a rating of "A-" or better by A.M. Best & Company,
(ii) has a financial strength rating of "A-" or better by Standard & Poor's or
Xxxxx'x, (iii) is a syndicate that is operating as part of the Lloyd's insurance
Market, and the Lloyd's insurance Market is rated "A-" or better by A.M. Best &
Company or "A-" or better by Standard & Poors, (iv) has provided collateral in
favor of the applicable Insurance Subsidiary of the type described in SCHEDULE
4.19, or (v) has an aggregate amount of Net Amount Recoverable from Reinsurers
for the Insurance Subsidiaries attributable to it (collectively with all other
such Persons not described in clauses (i) through (iv) above) that is less than
$5,000,000 as of the end of the most recent fiscal year, and an aggregate amount
of Reinsurance Premiums Ceded by the Insurance Subsidiaries for the current
fiscal year (or portion thereof) to it (collectively with all other such Persons
not described in clauses (i) through (iv) above) that is less than $10,000,000,
or (vi) is a pooling arrangement composed solely of Persons who meet one of the
requirements described in clauses (i) through (iv) above; and with respect to
Select Re, (y) no more than $15,000,000 in Reinsurance Premiums Ceded is ceded
to it by the Insurance Subsidiaries as of the date hereof and (z) the Borrower
has submitted to the Agent recent financial statements of Select Re showing, to
the satisfaction of the Agent, that there has been no Material Adverse Change in
the financial condition of Select Re.
(b) As of the date hereof, no Insurance Subsidiary is a ceding party to
any Surplus Relief Reinsurance Agreement.
4.20 Labor Relations. Neither the Borrower, the Guarantors nor any of
the Subsidiaries is engaged in any unfair labor practice within the meaning of
the National Labor Relations Act of 1947, as amended. There is (i) no unfair
labor practice complaint before the National Labor Relations Board, or grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement, pending or, to the knowledge of the Borrower and the Guarantors,
threatened, against the Borrower or the Guarantors or any of the Subsidiaries,
(ii) no strike, lock-out, slowdown, stoppage, walkout or other labor dispute
pending or, to the knowledge of the Borrower and the Guarantors, threatened,
against the Borrower or the Guarantors or any of the Subsidiaries, and (iii) to
the knowledge of the Borrower and the Guarantors, no petition for certification
or union election or union organizing activities taking place with respect to
the Borrower or any of its Subsidiaries.
56
4.21 Year 2000 Compatibility. Any reprogramming required to permit the
proper functioning, before, on and after January 1, 2000, of (i) PXRE Group's
and its Subsidiaries' material computer-based systems and (ii) equipment
containing material embedded microchips, and the testing of all such systems and
equipment, as so reprogrammed, has been completed, except for such reprogramming
the absence of which would not be expected to have a Material Adverse Effect.
The cost to the Borrower and its Subsidiaries of such reprogramming and testing
and of the reasonably foreseeable consequences of the year 2000 to the Borrower,
the Guarantors and the Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) are not
expected to result in a Default or Material Adverse Effect. Except for such of
the reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower, the Guarantors and
the Subsidiaries are and, with ordinary course upgrading and maintenance will
continue for the term of this Agreement to be, sufficient to permit the
Borrower, the Guarantors and the Subsidiaries to conduct their respective
businesses without a Material Adverse Effect.
4.22 Compliance with Old Credit Agreement. Immediately before giving
effect to the Reorganization, each of the representations and warranties
contained in Article IV of the Old Credit Agreement are true and correct as of
the date hereof and No Default or Event of Default has occurred and is
continuing under the Old Credit Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower and the Guarantors covenant and agree that, until the
termination of the Commitments and the payment in full of all principal and
interest with respect to the Loans, together with all other amounts then due and
owing hereunder:
5.1 Financial Statements. PXRE Group will deliver to each Lender:
(a) As soon as available and in any event within the earlier of fifteen
(15) days after filing with the Securities Exchange Commission and sixty (60)
days after the end of each of the first three fiscal quarters of each fiscal
year, beginning with the fiscal quarter ending June 30, 1999, unaudited
consolidated and consolidating balance sheets of PXRE Group and its Subsidiaries
as of the end of such fiscal quarter and unaudited consolidated and
consolidating statements of income, cash flows and stockholders' equity for PXRE
Group and its Subsidiaries for the fiscal quarter then ended and for that
portion of the fiscal year then ended (except that, for fiscal quarters ending
prior to the Reorganization Date, the Borrower shall deliver such financial
statements only for the Borrower and its Subsidiaries), in each case setting
forth comparative consolidated figures as of the end of and for the
corresponding period in the preceding fiscal year, all in reasonable detail and
prepared in accordance with GAAP (subject to the absence of notes required by
GAAP and subject to normal year-end adjustments) applied on a basis consistent
with that of the preceding quarter or containing disclosure of the effect on the
financial condition or results of operations of any change in the application of
accounting principles and
57
practices during such quarter; and
(b) As soon as available and in any event within the earlier of fifteen
(15) days after filing with the Securities Exchange Commission and one hundred
five (105) days after the end of each fiscal year, beginning with the fiscal
year ending December 31, 1999, an audited consolidated balance sheet and an
unaudited consolidating balance sheet of PXRE Group and its Subsidiaries as of
the end of such fiscal year and audited consolidated and unaudited consolidating
statements of income, cash flows and stockholders' equity for PXRE Group and its
Subsidiaries for the fiscal year then ended, including the notes thereto, in
each case setting forth comparative figures as of the end of and for the
preceding fiscal year, all in reasonable detail and certified by the independent
certified public accounting firm regularly retained by PXRE Group or another
independent certified public accounting firm of recognized national standing
reasonably acceptable to the Required Lenders, together with (y) a report
thereon by such accountants that is not qualified as to going concern or scope
of audit and to the effect that such financial statements present fairly the
consolidated financial condition and results of operations of PXRE Group and its
Subsidiaries as of the dates and for the periods indicated in accordance with
GAAP applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
year, and (z) a report by such accountants to the effect that, based on and in
connection with their examination of the financial statements of the Borrower
and its Subsidiaries, they obtained no knowledge of the occurrence or existence
of any Default or Event of Default relating to accounting or financial reporting
matters, or a statement specifying the nature and period of existence of any
such Default or Event of Default disclosed by their audit; provided, however,
that such accountants shall not be liable by reason of the failure to obtain
knowledge of any Default or Event of Default that would not be disclosed or
revealed in the course of their audit examination.
(c) [ADD REQUIREMENT FOR UNAUDITED QUARTERLIES AND AUDITED ANNUALS FOR
BORROWER AND ITS SUBSIDIARIES IF REQUIRED FOR TRUPS]
5.2 Statutory Financial Statements. PXRE Group will deliver to each
Lender:
(a) As soon as available and in any event within sixty (60) days after
the end of each of the first three fiscal quarters of each fiscal year (or, in
the case of PXRE Bermuda, five (5) days following the filing date required for
such statements under any Bermuda Insurance Regulatory Authority, if later),
beginning with the fiscal quarter ending September 30, 1999, a Quarterly
Statement of each Insurance Subsidiary as of the end of such fiscal quarter and
for that portion of the fiscal year then ended, in the form filed with the
relevant Insurance Regulatory Authority, prepared in accordance with SAP (or,
for any non-U.S. domiciled Insurance Subsidiaries, the approximate equivalent
under such Subsidiary's Insurance Regulatory Authority);
(b) As soon as available and in any event within seventy-five (75) days
after the end of each fiscal year (or, in the case of PXRE Bermuda, five (5)
days following the filing date required for such statements under any Bermuda
Insurance Regulatory Authority, if later),
58
beginning with the fiscal year ended December 31, 1999, an Annual Statement of
each Insurance Subsidiary as of the end of such fiscal year and for the fiscal
year then ended, in the form filed with the relevant Insurance Regulatory
Authority, prepared in accordance with SAP (or, for any non-U.S. domiciled
Insurance Subsidiaries, the approximate equivalent under such Subsidiary's
Insurance Regulatory Authority); and
(c) As soon as available and in any event within one hundred
thirty-five (135) days after the end of each fiscal year, beginning with the
fiscal year ended December 31, 1999, the combined Annual Statement of the
Borrower's Insurance Subsidiaries as of the end of such fiscal year and for the
fiscal year then ended, in the form filed with the relevant Insurance Regulatory
Authority, prepared in accordance with SAP.
5.3 Other Business and Financial Information. PXRE Group will deliver
to each Lender:
(a) Concurrently with each delivery of the financial statements
described in SECTIONS 5.1 and 5.2, a Compliance Certificate in the form of
EXHIBIT C-1 (in the case of the financial statements described in SECTION 5.1)
or EXHIBIT C-2 (in the case of the financial statements described in SECTION
5.2) with respect to the period covered by the financial statements then being
delivered, executed by a Financial Officer of PXRE Group and the Borrower,
together in each case with a Covenant Compliance Worksheet reflecting the
computation of the respective financial covenants set forth in the Worksheets as
of the last day of the period covered by such financial statements;
(b) As soon as available and in any event prior to the end of each
fiscal year, beginning with the fiscal year ending December 31, 1999, a complete
set of projections for PXRE Group and its Subsidiaries for each of the
succeeding fiscal years remaining through the Maturity Date, consisting of (i)
consolidated projections prepared based on GAAP principles, (ii) consolidated
projections prepared based on SAP principles, (iii) individual projections for
each Material Subsidiary prepared based on GAAP principles, and (iv) individual
projections for each Material Insurance Subsidiary prepared based on SAP
principles or in accordance with the requirements imposed by Lloyd's, as
applicable, together with a certificate of a Financial Officer of the Borrower
to the effect that such projections have been prepared in good faith and are
reasonable estimates of the financial position and results of operations of the
Borrower and its Subsidiaries for the period covered thereby; and as soon as
available from time to time thereafter, any modifications or revisions to or
restatements of such projections;
(c) Promptly upon filing with the relevant Insurance Regulatory
Authority and in any event within ninety (90) days after the end of each fiscal
year, beginning with the fiscal year ended December 31, 1999, a copy of each
Insurance Subsidiary's "Statement of Actuarial Opinion" (or equivalent
information should the relevant Insurance Regulatory Authority not require such
a statement) as to the adequacy of such Insurance Subsidiary's loss reserves for
such fiscal year, together with a copy of its management discussion and analysis
in connection therewith, each in the format prescribed by the applicable
insurance laws of such Insurance Subsidiary's jurisdiction of domicile;
59
(d) Promptly upon receipt thereof, copies of any "management letter"
submitted to PXRE Group any of its Subsidiaries by its certified public
accountants in connection with an annual, interim or special audit, and promptly
upon completion thereof, any response reports from PXRE Group or any such
Subsidiary in respect thereof;
(e) Promptly upon the sending, filing or receipt thereof, copies of (i)
all financial statements, reports, notices and proxy statements that PXRE Group
or any of its Subsidiaries shall send or make available generally to its
shareholders, (ii) all regular, periodic and special reports, registration
statements and prospectuses (other than on Form S-8) that PXRE Group or any of
its Subsidiaries shall render to or file with the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any national
securities exchange, and (iii) all press releases and other statements made
available generally by PXRE Group or any of its Subsidiaries to the public
concerning material developments in the business of PXRE Group or any of its
Subsidiaries; (iv) all significant reports on examination or other similar
significant reports, financial examination reports or market conduct examination
reports by the NAIC or any Insurance Regulatory Authority or other Governmental
Authority with respect to any Insurance Subsidiary's insurance business; (v) all
significant filings made under applicable state insurance holding company acts
by PXRE Group or any of its Subsidiaries, including, without limitation, filings
seeking approval of material transactions with Affiliates; and (vi) all material
information sent to rating agencies, including without limitation Moody's,
Standard & Poor's, A.M. Best & Company and Duff & Xxxxxx Rating Co.
(f) Promptly upon (and in any event within five (5) Business Days
after) any Responsible Officer of PXRE Group or the Borrower obtaining knowledge
thereof, written notice of any of the following:
(i) the occurrence of any Default or Event of Default,
together with a written statement of a Responsible Officer of the
Borrower specifying the nature of such Default or Event of Default, the
period of existence thereof and the action that PXRE Group or the
Borrower has taken and proposes to take with respect thereto;
(ii) the institution or threatened institution of any action,
suit, investigation or proceeding against or affecting the Borrower or
the Guarantors or any of the Subsidiaries, including any such
investigation or proceeding by any Governmental Authority (other than
routine periodic inquiries, investigations or reviews), that would, if
adversely determined, be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, and any material
development in any litigation or other proceeding previously reported
pursuant to SECTION 4.5 or this subsection;
(iii) the receipt by the Borrower or the Guarantors or any of
the Subsidiaries from any Governmental Authority of (y) any notice
asserting any failure by the Borrower or the Guarantors or any of the
Subsidiaries to be in compliance with applicable Requirements of Law,
which failure is reasonably likely to have a Material Adverse Effect,
or that threatens the taking of any action against the Borrower or such
60
Subsidiary, in each case that, if taken or adversely determined, would
be reasonably likely to have a Material Adverse Effect; or (z) any
notice of any actual or threatened suspension, limitation or revocation
of, failure to renew, or imposition of any restraining order, escrow or
impoundment of funds in connection with, any license, permit,
accreditation or authorization of the Borrower or the Guarantors or any
of the Subsidiaries, where in each case such action would be reasonably
likely to have a Material Adverse Effect;
(iv) the occurrence of any ERISA Event, together with (x) a
written statement of a Responsible Officer of PXRE Group specifying the
details of such ERISA Event and the action that PXRE Group has taken
and proposes to take with respect thereto, (y) a copy of any notice
with respect to such ERISA Event that may be required to be filed with
the PBGC and (z) a copy of any notice delivered by the PBGC to PXRE
Group or such ERISA Affiliate with respect to such ERISA Event;
(v) the occurrence of any material default under, or any
proposed or threatened termination or cancellation (other than upon
expiration) of, any Material Contract or other material contract or
agreement to which the Borrower or the Guarantors or any of the
Subsidiaries is a party (other than insurance policies and contracts
and reinsurance agreements pursuant to which an Insurance Subsidiary is
the assuming party and weather and similar swap agreements, but
specifically including the Bermuda Reinsurance Agreements), the
termination or cancellation of which would be reasonably likely to have
a Material Adverse Effect;
(vi) the occurrence of any of the following: (x) the assertion
of any Environmental Claim against or affecting the Borrower, the
Guarantors, any of the Subsidiaries or any of their respective real
property, leased or owned; (y) the receipt by the Borrower, the
Guarantors or any of the Subsidiaries of notice of any alleged
violation of or noncompliance with any Environmental Laws; or (z) the
taking of any remedial action by the Borrower, any Guarantor, any of
the Subsidiaries or any other Person in response to the actual or
alleged generation, storage, release, disposal or discharge of any
Hazardous Substances on, to, upon or from any real property leased or
owned by the Borrower or the Guarantors or any of the Subsidiaries; but
in each case under clauses (x), (y) and (z) above, only to the extent
the same would be reasonably likely to have a Material Adverse Effect;
(vii) the occurrence of any actual changes in any insurance
statute or regulation governing the investment or dividend practices of
any Material Insurance Subsidiary that would be reasonably likely to
have a Material Adverse Effect; and
(viii) any other matter or event pertaining directly to the
Borrower, the Guarantors or any Insurance Subsidiary that has, or would
be reasonably likely to have, a Material Adverse Effect, together with
a written statement of a Responsible Officer of the Borrower setting
forth the nature and period of existence thereof and the action that
the Borrower has taken and proposes to take with respect thereto;
61
(g) Promptly, notice of (i) the occurrence of any material amendment or
modification (other than expiration) to any Reinsurance Agreement (whether
entered into before or after the Closing Date), including any such agreements
that are in a runoff mode on the date hereof, which amendment or modification
would be reasonably likely to have a Material Adverse Effect, or (ii) the
receipt by the Borrower or the Guarantors or any of its Subsidiaries of any
written notice of any denial of coverage or claim, litigation or arbitration
with respect to any Reinsurance Agreement to which it is a ceding party which
would be reasonably likely to have a Material Adverse Effect;
(h) As promptly as reasonably possible, such other information about
the business, condition (financial or otherwise), operations or properties of
the Borrower or the Guarantors or any of the Subsidiaries (including any Plan
and any information required to be filed under ERISA) as the Agent or any Lender
may from time to time reasonably request.
(i) If prepared or upon the request of the Agent at the direction of
the Required Lenders, deliver to each Lender, within the earlier of (y) sixty
(60) days of such request or (z) ten (10) days of receipt by the Borrower, PXRE
Group or any Insurance Subsidiary, an actuarial review of the liabilities and
other items of each Insurance Subsidiary prepared at the Borrower's expense, by
an actuary or a firm of actuaries reasonably acceptable to the Agent, such
actuarial review to be in form and substance reasonably acceptable to the
Required Lenders.
5.4 Corporate Existence; Franchises; Maintenance of Properties. The
Borrower and the Guarantors will, and PXRE Group will cause each of its Material
Subsidiaries to, (i) maintain and preserve in full force and effect its
corporate existence, except as expressly permitted otherwise by SECTION 7.1,
(ii) obtain, maintain and preserve in full force and effect all other rights,
franchises, licenses, permits, certifications, approvals and authorizations
required by Governmental Authorities and necessary to the ownership, occupation
or use of its properties or the conduct of its business, except to the extent
the failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (iii) keep all material properties in good working order and
condition (normal wear and tear excepted) and from time to time make all
necessary repairs to and renewals and replacements of such properties, except to
the extent that any of such properties are obsolete or are being replaced.
5.5 Compliance with Laws. The Borrower and the Guarantors will, and
PXRE Group will cause each of its Subsidiaries to, comply in all respects with
all Requirements of Law applicable in respect of the conduct of its business and
the ownership and operation of its properties, except to the extent the failure
so to comply would not be reasonably likely to have a Material Adverse Effect.
5.6 Payment of Obligations. The Borrower and the Guarantors will, and
PXRE Group will cause each of its Subsidiaries to, (i) pay all liabilities and
obligations as and when due (subject to any applicable subordination
provisions), except to the extent failure to do so would not be reasonably
likely to have a Material Adverse Effect, and (ii) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it, upon its income
or profits or
62
upon any of its properties, prior to the date on which penalties would attach
thereto, and all lawful claims that, if unpaid, might become a Lien upon any of
the properties of the Borrower or the Guarantors or any of the Subsidiaries;
provided, however, that neither the Borrower, the Guarantors nor any of the
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim that is being contested in good faith and by proper proceedings and as to
which the Borrower or such Guarantor or such Subsidiary is maintaining adequate
reserves with respect thereto in accordance with GAAP.
5.7 Insurance. The Borrower and the Guarantors will, and PXRE Group
will cause each of its Material Subsidiaries to, maintain with financially sound
and reputable insurance companies insurance with respect to its assets,
properties and business, against such hazards and liabilities, of such types and
in such amounts, as is customarily maintained by companies in the same or
similar businesses similarly situated.
5.8 Maintenance of Books and Records; Inspection. The Borrower and the
Guarantors will, and PXRE Group will cause each of its Subsidiaries to, (i)
maintain adequate books, accounts and records, in which full, true and correct
entries shall be made of all financial transactions in relation to its business
and properties, and prepare all financial statements required under this
Agreement, in each case in accordance with GAAP and in compliance with the
requirements of any Governmental Authority having jurisdiction over it, and (ii)
permit employees or agents of the Agent or any Lender to inspect its properties
and examine or audit its books, records, working papers and accounts and make
copies and memoranda of them, and to discuss its affairs, finances and accounts
with its officers and employees and, upon notice to the Borrower or PXRE Group,
the independent public accountants and actuarial firms of the Borrower or PXRE
Group and the Subsidiaries (and by this provision the Borrower and PXRE Group
authorize such accountants and actuarial firms (if any) to discuss the finances
and affairs of the Borrower, the Guarantors and the Subsidiaries), all at such
times and from time to time, upon reasonable notice and during business hours,
as may be reasonably requested.
5.9 Permitted Acquisitions. (a) Subject to the provisions of subsection
(b) below and the requirements contained in the definition of Permitted
Acquisition, and subject to the other terms and conditions of this Agreement,
PXRE Group or its Subsidiaries may from time to time on or after the date hereof
effect Permitted Acquisitions, provided that, with respect to each Permitted
Acquisition:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of the consummation of such Permitted
Acquisition or would exist immediately after giving effect thereto; and
(ii) the Acquisition Amount with respect thereto (regardless
of the form of consideration) (y) shall not exceed $35,000,000, and (z)
together with the aggregate of the Acquisition Amounts (regardless of
the form of consideration) for all other Permitted Acquisitions
consummated during the same fiscal quarter, or the period of three
consecutive fiscal quarters immediately prior thereto, shall not exceed
$50,000,000.
63
(b) Not less than ten (10) Business Days prior to the consummation of
any Permitted Acquisition with respect to which the Acquisition Amount exceeds
$10,000,000, PXRE Group shall have delivered to the Agent and each Lender the
following:
(i) a reasonably detailed description of the material terms
of such Permitted Acquisition (including, without limitation, the
purchase price and method and structure of payment) and of each Person
or business that is the subject of such Permitted Acquisition (each, a
"Target"); and
(ii) historical financial statements of the Target (or, if
there are two or more Targets that are the subject of such Permitted
Acquisition and that are part of the same consolidated group,
consolidated historical financial statements for all such Targets) for
the two (2) most recent fiscal years available and, if available, for
any interim periods since the most recent fiscal year-end.
(c) As soon as reasonably practicable after the consummation of any
Permitted Acquisition, PXRE Group will deliver to the Agent and each Lender a
copy of the fully executed acquisition agreement (including schedules and
exhibits thereto) and other material documents and closing papers delivered in
connection therewith.
(d) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by the Borrower and the Guarantors that (except
as shall have been approved in writing by the Required Lenders) all conditions
thereto set forth in this Section and in the description furnished under clause
(i) of subsection (b) above have been satisfied and that the same is permitted
in accordance with the terms of this Agreement, which representation and
warranty shall be deemed to be a representation and warranty as of the date
thereof for all purposes hereunder, including, without limitation, for purposes
of SECTIONS 3.3 and 8.1.
5.10 Year 2000 Compatibility. The Borrower and the Guarantors will, and
PXRE Group will cause each of its Material Subsidiaries to, take all action
necessary to ensure that its material computer-based systems are able to operate
and effectively process data including dates on and after January 1, 2000. At
the request of the Agent or the Required Lenders, the Borrower and the
Guarantors will provide reasonable assurance of their Year 2000 compatibility.
5.11 Further Assurances. The Borrower and the Guarantors will, and PXRE
Group will cause each of its Subsidiaries to, make, execute, endorse,
acknowledge and deliver any amendments, modifications or supplements hereto and
restatements hereof and any other agreements, instruments or documents, and take
any and all such other actions, as may from time to time be reasonably requested
by the Agent or the Required Lenders to effect, confirm or protect and preserve
the interests, rights and remedies of the Agent and the Lenders under this
Agreement and the other Credit Documents.
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ARTICLE VI
FINANCIAL COVENANTS
The Borrower and the Guarantors covenant and agree that, until the
termination of the Commitments and the payment in full of all principal and
interest with respect to the Loans, together with all other amounts then due and
owing hereunder:
6.1 Leverage Ratio. The Leverage Ratio shall not exceed 0.3 to 1.0 at
any time.
6.2 Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of
the last day of any fiscal quarter beginning with the fiscal quarter ending
December 31, 1998, shall not be less than 1.5 to 1.0.
6.3 Risk-Based Capital Ratio. The "total adjusted capital" (within the
meaning of the Risk-Based Capital for Insurers Model Act as promulgated by the
NAIC as of the date hereof (the "Model Act")), as of the last day of any fiscal
year beginning with the fiscal year ending December 31, 1998, of any Material
Insurance Subsidiary other than PXRE Bermuda shall not be less than 250% of the
applicable "Company Action Level RBC" (within the meaning of the Model Act) as
of such date.
6.4 Combined Statutory Surplus. The Combined Statutory Capital and
Surplus of the Insurance Subsidiaries, as of the last day of any fiscal quarter
beginning with the fiscal quarter ending March 31, 1999, shall not be less than
$335,422, plus 50% of the aggregate increases in the stated capital and
additional paid-in capital accounts of the Insurance Subsidiaries (without
duplication) occurring after December 31, 1998, as determined in each case in
accordance with SAP.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower and the Guarantors covenant and agree that, until the
termination of the Commitments and the payment in full of all principal and
interest with respect to the Loans, together with all other amounts then due and
owing hereunder:
7.1 Merger; Consolidation. (a) The Borrower and the Guarantors will
not, and PXRE Group will not permit or cause any of its Material Subsidiaries
to, liquidate, wind up or dissolve, or enter into any consolidation, merger or
other combination, or agree to do any of the foregoing; provided, however, that:
(i) PXRE Group or the Borrower may merge or consolidate with
another Person so long as (x) either PXRE Group or the Borrower is the
surviving entity, (y) unless such other Person is a Wholly Owned
Subsidiary immediately prior to giving
65
effect thereto, such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
SECTION 5.9 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist;
(ii) any Material Subsidiary (other than the Borrower) may
merge or consolidate with another Person so long as (x) the surviving
entity is PXRE Group or a Wholly Owned Subsidiary, (y) unless such
other Person is a Wholly Owned Subsidiary immediately prior to giving
effect thereto, such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
SECTION 5.9 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist; and
(iii) Subject to satisfaction of the conditions set forth in
SECTION 3.4 (or the waiver thereof in accordance with SECTION 11.6),
PXRE Group, PXRE Barbados, and the Borrower may consummate the
Reorganization in accordance with the Reorganization Documents,
notwithstanding any other provision of this ARTICLE VII to the
contrary.
(b) PXRE Group and the Borrower will not permit or cause any of its
non-Material Subsidiaries to undertake any transaction or series of related
transactions that would not be permitted under SECTION 7.1(a) to be undertaken
by a Material Subsidiary if, immediately after the consummation of such
transaction or series of related transactions, the non-Material Subsidiary would
be a Material Subsidiary.
7.2 Indebtedness. The Borrower and the Guarantors will not, and PXRE
Group will not permit or cause any of its Subsidiaries to, create, incur, assume
or suffer to exist any Indebtedness other than:
(i) Indebtedness incurred under this Agreement and the Notes;
(ii) Indebtedness existing on the date hereof and described in
SCHEDULE 7.2;
(iii) accrued expenses (including salaries, accrued vacation
and other compensation), current trade or other accounts payable and
other current liabilities arising in the ordinary course of business
and not incurred through the borrowing of money, provided that the same
shall be paid when due except to the extent being contested in good
faith and by appropriate proceedings;
(iv) subject to SECTION 7.7(b), loans and advances by PXRE
Group or any Subsidiary to any other Subsidiary or by any Subsidiary to
PXRE Group, provided that, except for loans permitted under SECTION
7.7(b)(iv), any such loan or advance by any Subsidiary to either
Guarantor or to the Borrower is subordinated in right and time of
payment to the Obligations, except that PXRE Reinsurance may, during
the 1999 and 2000 fiscal years, make and maintain a short-term loan to
the Borrower that, so long as no Event of Default has occurred and is
continuing, is not subordinated in time of payment
66
to the Obligations, and provided further that the sole use of such
short-term loan shall be to repurchase shares of the Borrower's Capital
Stock and the principal amount thereof shall not exceed $17,000,000;
(v) unsecured Indebtedness of the Borrower or PXRE Group that
is expressly subordinated and made junior in right and time of payment
to the Obligations (including, in the case of indebtedness of PXRE
Group, PXRE Group's guaranty of such Obligations as set for forth in
ARTICLE IX) and that is evidenced by one or more written agreements or
instruments having terms, conditions and provisions (including, without
limitation, provisions relating to principal amount, maturity,
covenants, defaults, interest, and subordination) satisfactory in form
and substance to the Required Lenders in their sole discretion and
which shall provide, at a minimum and without limitation, that such
Indebtedness (a) shall mature by its terms no earlier than the first
anniversary of the Maturity Date, (b) shall not require any scheduled
payment of principal prior to the first anniversary of the Maturity
Date, and (c) shall have covenants and undertakings that, taken as a
whole, are materially less restrictive than those contained herein (the
Indebtedness described hereinabove, "Subordinated Indebtedness");
provided that, as further conditions to the issuance of any
Subordinated Indebtedness, (1) immediately after giving effect to the
issuance of such Subordinated Indebtedness, no Default or Event of
Default shall exist, (2) all agreements and instruments evidencing or
governing such Subordinated Indebtedness shall have been approved in
writing by the Required Lenders (or the Agent on their behalf), and (3)
prior to or concurrently with the issuance of such Subordinated
Indebtedness, the Borrower shall have delivered to each Lender a
certificate, signed by a Financial Officer of the Borrower or PXRE
Group, as the case may be, satisfactory in form and substance to the
Required Lenders and to the effect that, after giving effect to the
incurrence of such Subordinated Indebtedness, PXRE Group is in
compliance with the financial covenants set forth in SECTIONS 6.1 and
6.2, such compliance being determined with regard to calculations made
on a pro forma basis in accordance with GAAP as of the last day of the
fiscal quarter then most recently ended and as if such Subordinated
Indebtedness had been incurred on the first day of the period
applicable to such covenants (such calculations to be attached to such
certificate); and provided further that the Net Cash Proceeds from the
issuance of such Subordinated Indebtedness shall be applied to reduce
the Commitments in accordance with, and to the extent required under,
the provisions of SECTION 2.5(c);
(vi) purchase money Indebtedness of the Borrower and its
Subsidiaries incurred solely to finance the payment of all or part of
the purchase price of any equipment, real property or other fixed
assets acquired in the ordinary course of business, including
Indebtedness in respect of capital lease obligations, and any renewals,
refinancings or replacements thereof (subject to the limitations on the
principal amount thereof set forth in this clause (vi)), which
Indebtedness shall not exceed $10,000,000 in aggregate principal amount
outstanding at any time;
(vii) Indebtedness in respect of outstanding letters of credit,
in the aggregate not to exceed twenty-five percent (25%) of the
Statutory Capital and Surplus of
67
PXRE Reinsurance at any time, issued on behalf of any Insurance
Subsidiary for the benefit of Lloyd's to satisfy capital requirements
imposed by Lloyd's to support such Insurance Subsidiary's business in
the Lloyd's insurance Market, and Indebtedness in respect of
reimbursement obligations in respect of letters of credit issued for
the benefit of any Insurance Subsidiary or the Borrower in the ordinary
course of its business to support the payment of obligations arising
under insurance and reinsurance contracts and weather and similar swap
agreements; and
(viii) other unsecured Indebtedness not exceeding $20,000,000 in
aggregate principal amount outstanding at any time.
7.3 Liens. The Borrower and the Guarantors will not, and PXRE Group
will not permit or cause any of its Subsidiaries to, directly or indirectly,
make, create, incur, assume or suffer to exist, any Lien upon or with respect to
any part of its property or assets, whether now owned or hereafter acquired, or
file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any Lien with respect to any such property,
asset, income or profits under the Uniform Commercial Code of any state or under
any similar recording or notice statute, or agree to do any of the foregoing,
other than the following (collectively, "Permitted Liens"):
(i) Liens in existence on the date hereof and set forth on
SCHEDULE 7.3;
(ii) Liens imposed by law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar
Liens incurred in the ordinary course of business for sums not
constituting borrowed money that are not overdue for a period of more
than thirty (30) days or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(iii) Liens (other than any Lien imposed by ERISA, the creation
or incurrence of which would result in an Event of Default under
SECTION 8.1(i)) incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure the
performance of letters of credit, bids, tenders, statutory obligations
(including statutory obligations of Insurance Subsidiaries), surety and
appeal bonds, leases, government contracts and other similar
obligations (other than obligations for borrowed money) entered into in
the ordinary course of business;
(iv) Liens for taxes, assessments or other governmental
charges or statutory obligations that are not delinquent or remain
payable without any penalty or that are being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(v) Liens securing the purchase money Indebtedness permitted
under clause (vi) of SECTION 7.2, provided that any such Lien (a) shall
attach to such property
68
concurrently with or within ten (10) days after the acquisition thereof
by the Borrower or such Guarantor or Subsidiary, (b) shall not exceed
the lesser of (y) the fair market value of such property or (z) the
cost thereof to the Borrower or such Guarantor or Subsidiary and (c)
shall not encumber any other property of the Borrower or any Guarantor
or any of the Subsidiaries;
(vi) any attachment or judgment Lien not constituting an Event
of Default under SECTION 8.1(h) that is being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(vii) Liens arising from the filing, for notice purposes only,
of financing statements in respect of true leases;
(viii) Liens on Borrower Margin Stock, to the extent the fair
market value thereof exceeds 25% of the fair market value of the assets
of the Borrower and its Subsidiaries (including Borrower Margin Stock);
(ix) with respect to any real property occupied by the
Borrower or the Guarantors or any of the Subsidiaries, all easements,
rights of way, licenses and similar encumbrances on title that do not
materially impair the use of such property for its intended purposes;
(x) Liens on assets, not to exceed thirty percent (30%) of
the Statutory Capital and Surplus of PXRE Reinsurance at any time, (y)
pledged to secure letters of credit described in SECTION 7.2(vii) or
(z) held in trust for the benefit of Lloyd's to satisfy capital
requirements imposed by Lloyd's to support an Insurance Subsidiary's
business in the Lloyd's insurance Market; and
(xi) other Liens securing obligations of PXRE Group and its
Subsidiaries not exceeding $5,000,000 in aggregate amount outstanding
at any time.
7.4 Disposition of Assets. The Borrower and the Guarantors will not,
and PXRE Group will not permit or cause any of its Subsidiaries to, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) all or any portion of its assets, business or properties
(including, without limitation, any Capital Stock of any Subsidiary, but
excluding any payments of losses or other liabilities incurred by an Insurance
Subsidiary, the Borrower or PXRE Group pursuant to insurance policies and
contracts, reinsurance agreements, weather and similar swap agreements and other
commitments entered into by such Insurance Subsidiary, the Borrower or PXRE
Group in the ordinary course of business), or enter into any arrangement with
any Person providing for the lease by the Borrower or the Guarantors or any
Subsidiary as lessee of any material asset that has been sold or transferred by
the Borrower or such Guarantor or Subsidiary to such Person, or agree to do any
of the foregoing, except for:
(i) sales of inventory and licenses or leases of intellectual
property and
69
other assets, in each case in the ordinary course of business;
(ii) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such
equipment is exchanged for, replacement equipment or (z) such equipment
is no longer necessary for the operations of the Borrower or its
applicable Subsidiary in the ordinary course of business;
(iii) the sale or other disposition by PXRE Group and its
Subsidiaries of any Guarantor Margin Stock to the extent the fair
market value thereof exceeds 25% of the fair market value of the assets
of PXRE Group and its Subsidiaries (including Guarantor Margin Stock),
provided that fair value is received in exchange therefor;
(iv) the sale, lease or other disposition of assets by a
Subsidiary of the Borrower to the Borrower or its Subsidiary if,
immediately after giving effect thereto, no Default or Event of Default
would exist;
(v) sales of investment assets in the ordinary course of
business;
(vi) the sale by PXRE Group and its Subsidiaries of (x) the
capital stock or all or any portion of the assets, business or
properties of a Subsidiary that is not a Material Subsidiary; (y) any
asset or group of assets of an Insurance Subsidiary constituting less
than (A) in any single transaction or series of related transactions,
ten percent (10%) of Combined Statutory Capital and Surplus as of the
last day of the fiscal quarter ending on or immediately prior to the
date of such sale, and (B) during the term of this Agreement, in the
aggregate with all such other sales pursuant to this clause (vi),
thirty percent (30%) of Combined Statutory Capital and Surplus as of
the end of the immediately preceding fiscal quarter; and (z) any asset
or group of assets of a non-Insurance Subsidiary constituting less than
(A) in any single transaction or series of related transactions, ten
percent (10%) of the total assets of the Borrower and its Subsidiaries
on a consolidated basis, determined in accordance with GAAP as of the
last day of the fiscal quarter ending on or immediately prior to the
date of such sale, and (B) during the term of this Agreement, in the
aggregate with all such other sales pursuant to this clause (vi),
thirty percent (30%) of the total assets of the Borrower and its
Subsidiaries on a consolidated basis, determined in accordance with
GAAP as of the end of the immediately preceding fiscal quarter;
provided in the case of any sale pursuant to this clause (vi) that
immediately after giving effect thereto, no Default or Event of Default
would exist; and
(vii) transactions permitted under SECTION 7.7.
7.5 Investments. The Borrower and the Guarantors will not, and PXRE
Group will not permit or cause any of its Subsidiaries to, directly or
indirectly, purchase, own, invest in or otherwise acquire any Capital Stock,
evidence of indebtedness or other obligation or security or any interest
whatsoever in any other Person, or make or permit to exist any loans, advances
or extensions of credit to, or any investment in cash or by delivery of property
in, any other Person,
70
or purchase or otherwise acquire (whether in one or a series of related
transactions) any portion of the assets, business or properties of another
Person (including pursuant to an Acquisition), or create or acquire any
Subsidiary, or become a partner or joint venturer in any partnership or joint
venture (collectively, "Investments"), or make a commitment or otherwise agree
to do any of the foregoing, other than:
(i) Cash Equivalents;
(ii) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
intellectual property and other assets, in each case in the ordinary
course of business;
(iii) Investments consisting of loans and advances to
employees for reasonable travel, relocation and business expenses in
the ordinary course of business, extensions of trade credit in the
ordinary course of business, and prepaid expenses incurred in the
ordinary course of business;
(iv) without duplication, Investments consisting of
intercompany Indebtedness permitted under clause (iv) of SECTION 7.2;
(v) Investments existing on June 30, 1999 and set forth in
SCHEDULE 7.5(a);
(vi) Investments consisting of the making of capital
contributions or the ownership or purchase of Capital Stock (a) by PXRE
Group or any Subsidiary in any other Wholly Owned Subsidiary and (b) by
any Subsidiary in the Borrower or PXRE Group;
(vii) Permitted Acquisitions;
(viii) other Investments by the Borrower and its Subsidiaries
to the extent permitted under applicable Requirements of Law and in
compliance with the following restrictions:
(a) all investments shall be in compliance at all
times with (i) the Insurance Code, if applicable, (ii) the
requirements of the Lloyd's insurance Market, if applicable,
(iii) all applicable insurance laws and regulations of any
other relevant jurisdictions relating to investments by an
Insurance Subsidiary, and (iv) the limitations set forth in
the Investment Policy;
(b) the amount equal to forty percent (40%) of the
carrying value of the aggregate admitted assets of the
Borrower's Insurance Subsidiaries (determined in accordance
with SAP) and the aggregate investment assets of the Borrower
and its non-Insurance Subsidiaries (determined in accordance
with GAAP) that comprise the "Excess Capital and Surplus
Portfolio," as defined in
71
the Investment Policy, shall be less than one-third of the
Combined Statutory Capital and Surplus of the Borrower's
Insurance Subsidiaries at any time;
(c) with respect to the Insurance Subsidiaries'
Investments, other than those issued or unconditionally
guaranteed by the United States Government, the aggregate
Investments of such Insurance Subsidiaries in the securities
of any single issuer shall not constitute on any date during
the term of this Agreement more than five percent (5%) of the
Average Combined Invested Assets of such Insurance
Subsidiaries, it being understood that any securities held on
the last day of a fiscal quarter shall, for purposes of this
clause (c), be measured against the Average Combined Invested
Assets for the four quarters ending prior to such quarter;
provided that, the failure of the Borrower to comply with this
clause (c) shall not constitute a Default under this Agreement
if each failure to comply during any fiscal quarter shall have
been cured within forty-five (45) days following the end of
such fiscal quarter (or, with respect cure by the Borrower
through disposition of a limited partnership interest
requiring disposition in accordance with such limited
partnership's partnership agreement or other organizational
documents, definitive instruction to sell such partnership
interest has been given as soon as practicable (but in no
event later than five (5) Business Days) after the Borrower
obtains knowledge of noncompliance hereunder and such interest
is sold at the earliest possible date in accordance with such
partnership agreement and organizational documents); and
(d) with respect to the Investments of the Borrower
and its non-Insurance Subsidiaries (other than (A) Borrower's
Investments of cash and Cash Equivalents and (B) Borrower's
Investments of up to $10,000,000 equity in Cat Bond Investors,
L.L.C.), (i) the aggregate of such Investments shall not
exceed six and one-half percent (6-1/2%) of Borrower's
Consolidated Net Worth, and (ii) the aggregate of such
Investments in the securities of any single issuer shall
constitute at all times no more than one and one-half percent
(1-1/2%) of the Borrower's Consolidated Net Worth;
(ix) the Borrower's Investment in Cat Bond Investors, L.L.C.
up to $10,000,000;
(x) Investments of PXRE Group and its non-Insurance
Subsidiaries (other than Investments of cash and Cash Equivalents),
provided that (i) the aggregate of such Investments shall not exceed
six and one-half percent (6-1/2%) of PXRE Group's Consolidated Net
Worth, and (ii) the aggregate of such Investments in the securities of
any single issuer shall constitute at all times no more than one and
one-half percent (1-1/2%) of PXRE Group's Consolidated Net Worth; and
(xi) Investments by PXRE Bermuda to the extent permitted under
applicable Requirements of Law and in compliance with PXRE Bermuda's
Investment Policy.
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7.6 Restricted Payments. (a) The Borrower and the Guarantors will not,
and PXRE Group will not permit or cause any of its Subsidiaries to, directly or
indirectly, declare or make any dividend payment, or make any other distribution
of cash, property or assets, in respect of any of its Capital Stock or any
warrants, rights or options to acquire its Capital Stock, or purchase, redeem,
retire or otherwise acquire for value any shares of its Capital Stock or any
warrants, rights or options to acquire its Capital Stock, or set aside funds for
any of the foregoing, except that:
(i) PXRE Group may (v) declare and make dividend payments or
other distributions to holders of PXRE Group's Capital Stock
(including, without limitation, its common stock), in cash or in shares
of such Capital Stock, (w) cause the Borrower to make payments to any
Subsidiary pursuant to Indebtedness related to any Trust Preferred
Securities, and (x) purchase, redeem, retire or otherwise acquire
shares of its Capital Stock, in cash or in-kind, and the Subsidiary of
the Borrower that has issued Trust Preferred Securities may declare and
make dividend payments or other distributions to holders of such Trust
Preferred Securities and purchase, redeem, retire or otherwise acquire
such Trust Preferred Securities, in cash or in-kind, in each case
provided that, immediately after giving effect thereto, (y) no Default
or Event of Default would exist, and (z) the Fixed Charge Coverage
Ratio would be at least 1.5 to 1.0, such ratio to be determined for
purposes of this clause (i) as of the last day of the most recently
ended fiscal quarter as if such dividend, distribution, payment or
acquisition had been effected as of such date; and
(ii) each Wholly Owned Subsidiary of PXRE Group may declare
and make dividend payments or other distributions to PXRE Group or
another Wholly Owned Subsidiary of PXRE Group, to the extent not
prohibited under applicable Requirements of Law.
(b) The Borrower and the Guarantors will not, and PXRE Group will not
permit or cause any of its Subsidiaries to, make (or give any notice in respect
of) any voluntary or optional payment or prepayment of principal on any
Subordinated Indebtedness, or directly or indirectly make any redemption
(including pursuant to any change of control provision), retirement, defeasance
or other acquisition for value of any Subordinated Indebtedness, or make any
deposit or otherwise set aside funds for any of the foregoing purposes.
7.7 Transactions with Affiliates. (a) The Borrower and the Guarantors
will not, and PXRE Group will not permit or cause any of its Subsidiaries to,
enter into any transaction (including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service) with any officer,
director, stockholder or other Affiliate of the Borrower or any Subsidiary,
except in the ordinary course of its business and upon fair and reasonable terms
that are no less favorable to it than would obtain in a comparable arm's length
transaction with a Person other than an Affiliate of the Borrower or such
Subsidiary; provided, however, that nothing contained in this Section shall
prohibit:
73
(i) transactions described in the Borrower's or PXRE Group's
filings under the Exchange Act or the Securities Act or on SCHEDULE 7.7
or otherwise expressly permitted under this Agreement;
(ii) the payment by PXRE Group or any Subsidiary of reasonable
and customary fees to members of its board of directors; and
(iii) the payment by the Borrower to the Guarantors of
reasonable and customary annual guaranty fees not to exceed one percent
(1%) of the aggregate Commitment of the Lenders.
(b) In addition to the requirements of SECTION 7.7(a), and
notwithstanding any provision of this Agreement to the contrary, the Borrower
will not, and PXRE Group and the Borrower will not permit or cause any of the
Borrower's Subsidiaries to, enter into any transaction with PXRE Group or any of
its Subsidiaries (other than Borrower and its Subsidiaries) other than:
(i) the following reinsurance agreements and the transactions
incident thereto (herein "Permitted Intercompany Reinsurance
Agreements"):
(A) the Bermuda Reinsurance Agreement constituting a
quota share agreement (the "Initial Quota Share Agreement"),
provided such agreement shall initially have a one year term
and be on a basis of reinsurance not exceeding thirty percent
(30%) quota share and any amendments or modifications thereto
shall be subject to SECTION 7.7(b)(i)(B);
(B) any other quota share reinsurance agreement
between any of Borrower's Insurance Subsidiaries and any of
PXRE Group's Insurance Subsidiaries and any amendments,
modifications or replacements of the Initial Quota Share
Agreement (in each case, a "New Quota Share Agreement") if (1)
no Default has occurred or is continuing immediately after
giving effect to such New Quota Share Agreement, and (2) in
the event such New Quota Share Agreement would alter the
accounting treatment or underlying economic or financial terms
of the prior agreement, the Borrower shall have provided, at
least thirty (30) days prior to the effectiveness of such New
Quota Share Agreement, the Agent and the Lenders projections,
based on reasonable assumptions and prepared in a manner
consistent with the projections required under SECTION 5.3(b),
showing that such New Quota Share Agreement (after taking into
account all other Permitted Reinsurance Agreements) will not
create or result in a Default during the period such New Quota
Share Agreement shall be in effect;
(C) the Bermuda Reinsurance Agreement constituting a
stop loss agreement (the "Initial Stop Loss Agreement"),
provided its initial term does not exceed one year, PXRE
Reinsurance's maximum loss amount
74
thereunder shall not exceed $30,000,000, and any amendments
or modifications thereto shall be subject to SECTION
7.7(b)(i)(D);
(D) any other stop loss reinsurance agreement between
any of Borrower's Insurance Subsidiaries and any of PXRE
Group's Insurance Subsidiaries and any amendments,
modifications or replacements of the Initial Stop Loss
Agreement (in each case, a "New Stop Loss Agreement" and,
collectively with the Initial Stop Loss Agreement, "Permitted
Stop Loss Agreements") if (1) no Default has occurred or is
continuing immediately after giving effect to such New Stop
Loss Agreement, and (2) the aggregate of the Borrower's
Insurance Subsidiaries' maximum loss amount thereunder and
under all other Permitted Stop Loss Agreements then in effect
shall then and at all times thereafter be less than the
difference between the actual Combined Statutory Capital and
Surplus and the minimum Combined Statutory Capital and Surplus
required under SECTION 6.4;
[NOTE: THE TYPES OF PERMITTED REINSURANCE ARE STILL UNDER DISCUSSION, SO THE
WORDING IN SUBSECTIONS (B) AND (D) COULD CHANGE.]
(ii) the Reorganization in accordance with the Reorganization
Documents;
(iii) dividends and distributions by the Borrower to PXRE
Barbados otherwise permitted under SECTION 7.6;
(iv) loans from Borrower or any of its Subsidiaries to either
Guarantor (A) up to an aggregate outstanding principal amount of
$35,000,000 for the sole purpose of providing capital for PXRE Bermuda
and (B) up to an aggregate outstanding principal amount of $1,500,000
for general corporate purposes, which loans shall not be required to be
subordinated in time of payment to the Obligations so long as no Event
of Default has occurred and is continuing; and
(v) agreements for the provision of intermediary, investment,
administrative, personnel, technology or similar services by the
Borrower or any of its Subsidiaries for or on behalf of PXRE Group or
any of its Subsidiaries.
7.8 Lines of Business. The Borrower and the Guarantors will not, and
PXRE Group will not permit or cause any of its Subsidiaries to, engage in any
business other than (i) the businesses engaged in by it on the date hereof and
businesses and activities reasonably related thereto (including without
limitation insurance management, agency and brokerage business undertaken
through a Subsidiary other than a Material Subsidiary) or (ii) in the case of an
Insurance Subsidiary, the offering and sale of any property and casualty
insurance or reinsurance products or, in the case of PXRE Bermuda, life
reinsurance products.
7.9 Certain Amendments. The Borrower and the Guarantors will not, and
PXRE Group will not permit or cause any of its Subsidiaries to, (i) amend,
modify or waive, or permit
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the amendment, modification or waiver of, any provision of any agreement or
instrument evidencing or governing any Subordinated Indebtedness, the effect of
which would be to (a) increase the principal amount due thereunder, (b) shorten
or accelerate the time of payment of any amount due thereunder, (c) increase the
applicable interest rate or amount of any fees or costs due thereunder, (d)
amend any of the subordination provisions thereunder (including any of the
definitions relating thereto), (e) make any covenant therein more restrictive or
add any new covenant, or (f) otherwise materially and adversely affect the
Lenders, or breach or otherwise violate any of the subordination provisions
applicable thereto, including, without limitation, restrictions against payment
of principal and interest thereon, or (ii) amend, modify or change any provision
of its articles or certificate of incorporation or bylaws, or the terms of any
class or series of its Capital Stock or the provisions of the Reorganization
Documents, other than in a manner that could not reasonably be expected to
adversely affect the Lenders.
7.10 Limitation on Certain Restrictions. The Borrower and the
Guarantors will not, and PXRE Group will not permit or cause any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any restriction or encumbrance on (i) the ability of
the Borrower, the Guarantors and the Subsidiaries to perform and comply with
their respective obligations under the Credit Documents or (ii) the ability of
any Subsidiary to make any dividend payments or other distributions in respect
of its Capital Stock, to repay Indebtedness owed to the Borrower, the Guarantors
or any other Subsidiary, to make loans or advances to the Borrower, the
Guarantors or any other Subsidiary, or to transfer any of its assets or
properties to the Borrower, the Guarantors or any other Subsidiary, in each case
other than such restrictions or encumbrances existing under or by reason of the
Credit Documents or applicable Requirements of Law.
7.11 No Other Negative Pledges. The Borrower and the Guarantors will
not, and PXRE Group will not permit or cause any of its Subsidiaries to,
directly or indirectly, enter into or suffer to exist any agreement or
restriction that prohibits or conditions the creation, incurrence or assumption
of any Lien upon or with respect to any part of its property or assets, whether
now owned or hereafter acquired, or agree to do any of the foregoing, other than
as set forth in (i) this Agreement, (ii) any agreement or instrument creating a
Permitted Lien (but only to the extent such agreement or restriction applies to
the assets subject to such Permitted Lien), and (iii) operating leases of real
or personal property entered into by the Borrower or any of its Subsidiaries as
lessee in the ordinary course of business.
7.12 Accounting Changes. The Borrower and the Guarantors will not, and
PXRE Group will not permit or cause any of its Subsidiaries (other than PXRE
Ltd.) to, make or permit any material change in its accounting policies or
reporting practices, except as may be required by GAAP or SAP.
7.13 Ratings. The Borrower and the Guarantors will not permit or cause
(i) the rating and financial strength rating of any Material Insurance
Subsidiary (other than PXRE Ltd.) by A.M. Best & Company and Standard & Poor's,
respectively, to be lower than "A-" at any time, (ii) the rating of each PXRE
Syndicate by Standard & Poor's to be lower than "A-" at any time (in each case
to the extent such ratings are provided), or (iii) the "group rating" of
Standard &
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Poor's applicable to PXRE Bermuda to be lower than "A-" at any time.
7.14 Reinsurance Agreements. The Borrower and the Guarantors will not,
and PXRE Group will not permit or cause any of its Insurance Subsidiaries to do
any of the following:
(i) enter into any Reinsurance Agreement, or remain a party
to any Reinsurance Agreement (whether in effect as of the Closing Date
or at any time thereafter) for any period longer than the period
legally required under the terms of such Reinsurance Agreement (after
taking into account all rights not to renew such Reinsurance Agreement
or to withdraw from or terminate it without material penalty or
financial detriment to PXRE Group, the Borrower or any of its Material
Subsidiaries) with any reinsurer that is neither rated "A-" or better
by A.M. Best & Company nor has a financial strength or group rating of
"A-" or better by Standard & Poor's or Xxxxx'x (any such reinsurer, a
"Rating Deficient Reinsurer") unless such Rating Deficient Reinsurer
either
(u) is a syndicate that is operating as part of the
Lloyd's insurance Market during any period that the Lloyd's
insurance Market maintains a rating of "A-" or better by A.M.
Best & Company or "A-" or better by Standard & Poor's;
(v) is Select Re, provided that without the consent
of the Agent (which shall not be unreasonably withheld), the
amount of gross premium ceded to Select Re by the Insurance
Subsidiaries during any calendar year shall not materially
exceed that amount of gross premium determined by multiplying
Select Re's capital and surplus as at December 31 of the prior
year by a fraction the numerator of which is the aggregate
amount of gross premiums written by the Insurance Subsidiaries
and retained for their own account during such prior year and
the denominator of which is the Combined Statutory Capital and
Surplus of the Insurance Subsidiaries as at December 31 of
such prior year (all determined in accordance with SAP), and
provided further that the obligations of Select Re to the
Insurance Subsidiaries shall be secured by one or more trust
accounts, one or more clean, irrevocable and unconditional
letters of credit, or other security arrangements or
combination of the foregoing, all as more fully described in
retrocessional agreements substantially in the form of the
existing retrocessional agreements between Select Re and the
Insurance Subsidiaries.
(w) is a pooling arrangement composed solely of
Persons that are not, on an individual basis, Rating Deficient
Reinsurers;
(x) has provided a letter of credit, issued by a
"qualified" bank (as defined in the Requirements of Law of
Connecticut) having a long term senior debt rating of "A" or
better by Standard & Poor's and Xxxxx'x, in favor of the
applicable Insurance Subsidiary in an amount equal to or
greater than the obligations transferred pursuant to such
Reinsurance Agreement;
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(y) has placed assets in a trust with a fiduciary and
under terms, including investment restrictions consistent with
this Agreement, such that the ceding Insurance Subsidiary
shall be entitled to receive credit as admitted reinsurance,
under the requirements of the applicable Insurance Regulatory
Authority, for the reinsurer's share of the obligations
transferred pursuant to such Reinsurance Agreement;
(z) has otherwise provided collateral in favor of the
applicable Insurance Subsidiary in form and amount
satisfactory to the Required Lenders;
provided, however, that any Insurance Subsidiary may remain a party to
a Reinsurance Agreement with a Rating Deficient Reinsurer that does not
meet the description of clause (u), clause (v) or clause (w) above and
has not provided the collateral of the type described in clauses (x),
(y) and (z) above (all such Ratings Deficient Reinsurers, collectively,
the "Non-Approved Reinsurers") provided that for each fiscal year (or
portion thereof) ending with each fiscal quarter thereof, the aggregate
amount of Reinsurance Premiums Ceded by the Insurance Subsidiaries
during such fiscal year (or portion thereof) to all Non-Approved
Reinsurers as of each such quarter ended is not greater than
$15,000,000;
(ii) enter into any Reinsurance Agreements or, except to the
extent required by an applicable Requirement of Law, make any amendment
or modification to or waiver of any Reinsurance Agreements, that would,
individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect; or
(iii) be or become a party to any Surplus Relief Reinsurance
Agreement if the increase in Combined Statutory Capital and Surplus as
a result of or arising from such Surplus Relief Reinsurance Agreement,
when added to the increase in Combined Statutory Capital and Surplus as
a result of or arising from all other Surplus Relief Reinsurance
Agreements theretofore entered into by any Insurance Subsidiary, net of
any surplus relief recaptured in respect of such Surplus Relief
Reinsurance Agreements, exceeds five percent (5%) of Combined Statutory
Capital and Surplus as of the most recent fiscal year end.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay any principal of any Loan when due
or shall fail to pay any interest on any Loan or any fee or any other Obligation
within three (3) Business Days of the date due;
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(b) The Borrower or Guarantors shall fail to observe, perform or comply
with any condition, covenant or agreement contained in any of SECTIONS 2.14,
5.1, 5.2, 5.3(f), 5.8, 5.9, 5.10 or in ARTICLE VI or ARTICLE VII;
(c) The Borrower or Guarantors or any of the Subsidiaries shall fail to
observe, perform or comply with any condition, covenant or agreement contained
in this Agreement or any of the other Credit Documents other than those
enumerated in subsections (a) and (b) above, and such failure (i) is deemed by
the terms of the relevant Credit Document to constitute an Event of Default or
(ii) shall continue unremedied for any grace period specifically applicable
thereto or, if no such grace period is applicable, for a period of thirty (30)
days after the earlier of (y) the date on which a Responsible Officer of the
Borrower or any Guarantor acquires knowledge thereof and (z) the date on which
written notice thereof is delivered by the Agent or any Lender to the Borrower;
(d) Any representation or warranty made or deemed made by or on behalf
of the Borrower or Guarantors or any of the Subsidiaries in this Agreement, any
of the other Credit Documents or in any certificate, instrument, report or other
document furnished in connection herewith or therewith or in connection with the
transactions contemplated hereby or thereby shall prove to have been false or
misleading in any material respect as of the time made, deemed made or
furnished;
(e) The Borrower, any Guarantor or Subsidiary shall (i) fail to pay
when due (whether by scheduled maturity, acceleration or otherwise and after
giving effect to any applicable grace period) (y) any principal of or interest
on any Indebtedness (other than the Indebtedness incurred pursuant to this
Agreement) having an aggregate principal amount of at least $5,000,000 or (z)
any termination or other payment under any Hedge Agreement covering a notional
amount of Indebtedness of at least $25,000,000 or (ii) fail to observe, perform
or comply with any condition, covenant or agreement contained in any agreement
or instrument evidencing or relating to any such Indebtedness, or any other
event shall occur or condition exist in respect thereof, and the effect of such
failure, event or condition is to cause such Indebtedness to become due, or to
be required to be prepaid, redeemed, purchased or defeased, prior to its stated
maturity;
(f) The Borrower, any Guarantor or Subsidiary shall (i) file a
voluntary petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in subsection (g) below, (iii) apply for
or consent to the appointment of or taking possession by a custodian, trustee,
receiver or similar official for or of itself or all or a substantial part of
its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;
(g) Any involuntary petition or case shall be filed or commenced
against the
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Borrower, any Guarantor or Subsidiary seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such
proceeding;
(h) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$3,000,000 shall be entered or filed against the Borrowers, any Guarantor or
Subsidiary or any of their respective properties and the same shall not be
dismissed, stayed or discharged for a period of thirty (30) days or in any event
later than five days prior to the date of any proposed sale thereunder;
(i) Any ERISA Event or any other event or condition shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result thereof,
together with all other ERISA Events and other events or conditions then
existing, PXRE Group and its ERISA Affiliates have incurred or would be
reasonably likely to incur liability to any one or more Plans or Multiemployer
Plans or to the PBGC (or to any combination thereof) that has or would be
reasonably likely to have a Material Adverse Effect;
(j) Any one or more licenses, permits, accreditations or authorizations
of the Borrower, any Guarantor or any of the Subsidiaries shall be suspended,
limited or terminated or shall not be renewed, or any other action shall be
taken, by any Governmental Authority in response to any alleged failure by the
Borrower, any Guarantor or any of the Subsidiaries to be in compliance with
applicable Requirements of Law, and such action, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse Effect;
(k) Any one or more Environmental Claims shall have been asserted
against the Borrower, any Guarantor or any of the Subsidiaries (or a reasonable
basis shall exist therefor); the Borrower, the Guarantors and the Subsidiaries
have incurred or would be reasonably likely to incur liability as a result
thereof; and such liability, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect;
(l) Any of the following shall occur: (i) any Person or group of
Persons acting in concert as a partnership or other group shall, as a result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become, after the date hereof, the "beneficial
owner" (within the meaning of such term under Rule 13d-3 under the Exchange Act)
of securities of the Borrower or any Guarantor representing 20% or more of the
combined voting power of the then outstanding securities of the Borrower or such
Guarantor ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors; or (ii)
the Board of Directors of the Borrower shall cease to consist of a majority of
the individuals who constituted the Board of Directors as of the date hereof or
who
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shall have become a member thereof subsequent to the date hereof after having
been nominated, or otherwise approved in writing, by at least a majority of
individuals who constituted the Board of Directors of the Borrower as of the
date hereof (or their replacements approved as herein required).
8.2 Remedies: Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments to be terminated, whereupon the same shall
terminate (provided that, upon the occurrence of an Event of Default pursuant to
SECTION 8.1(f) or SECTION 8.1(g), the Commitments shall automatically be
terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to SECTION 8.1(f) or SECTION 8.1(g), all of the outstanding
principal amount of the Loans and all other amounts described in this subsection
(b) shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower and Guarantors);
(c) Obtain, at the Borrower's and Guarantors' expense and as soon as
reasonably possible, with respect to each Insurance Subsidiary, a current
actuarial review and valuation statement of, and opinion as to the adequacy of,
such Insurance Subsidiary's loss and loss adjustment expense reserve positions
with respect to the insurance business then in force, and covering such other
subjects as are customary in actuarial reviews and as may be requested by the
Required Lenders, prepared by an independent actuarial firm acceptable to the
Required Lenders in accordance with reasonable actuarial assumptions and
procedures (the Borrower hereby agreeing to cooperate in connection therewith);
and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.
8.3 Remedies: Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law or otherwise, upon and at
any time after the occurrence and during the continuance of any Event of
Default, each Lender may, and each is hereby authorized by the Borrower and
Guarantors, at any such time and from time to time, to the fullest extent
permitted by applicable law, without presentment, demand, protest or other
notice of any kind, all of which are hereby knowingly and expressly waived by
the Borrower and Guarantors, to set off and to apply any and all deposits
(general or special, time or demand, provisional or
81
final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
such Lender to or for the credit or the account of the Borrower or either
Guarantor against any or all of the Obligations to such Lender now or hereafter
existing, whether or not such Obligations may be contingent or unmatured, the
Borrower and Guarantors hereby granting to each Lender a continuing security
interest in and Lien upon all such deposits and other property as security for
such Obligations. Each Lender agrees promptly to notify the Borrower and the
Agent after any such set-off and application; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.
ARTICLE IX
GUARANTY
9.1 Guaranty.
(a) In consideration for the Lenders' willingness to permit the
Reorganization and the amendments to the Old Credit Agreement reflected in this
Agreement, the Guarantors hereby unconditionally, irrevocably and jointly and
severally guarantee to the Agent, for the ratable benefit of the Agent and the
Lenders and their respective successors, indorsees, transferees and assigns, the
prompt and complete payment and performance by the Borrower when due (whether at
the stated maturity, by acceleration or otherwise) of the Obligations.
(b) The Guarantors further agree to pay any and all expenses
(including, without limitation, all reasonable fees and expenses of counsel
actually incurred) that may be paid or incurred by the Agent or any Lender in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, the Guarantors under this ARTICLE IX.
This ARTICLE IX shall remain in full force and effect until the Obligations are
paid in full and the Commitments have been terminated, notwithstanding that from
time to time prior thereto the Borrower may be free from any Obligations.
(c) No payment or payments made by the Borrower or any other Person or
received or collected by the Agent or any Lender from the Borrower or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Guarantors hereunder, and the Guarantors shall,
notwithstanding any such payment or payments, remain liable hereunder for the
Obligations until the Obligations are paid in full and the Commitments have been
terminated.
(d) The Guarantors agree that whenever, at any time, or from time to
time, they shall make any payment to the Agent or any Lender on account of their
liability under this ARTICLE IX, they will notify the Agent and such Lender in
writing that such payment is made under this ARTICLE IX for such purpose.
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9.2 Right of Set-Off. The Agent and each Lender is hereby irrevocably
authorized at any time and from time to time without notice to the Guarantors,
any such notice being expressly waived by the Guarantors, to set off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Agent or such
Lender to or for the credit or the account of either Guarantor, or any part
thereof in such amounts as the Agent or such Lender may elect, against or on
account of the obligations and liabilities of the Guarantors to the Agent or
such Lender hereunder which are then due and payable and claims of every nature
and description of the Agent or such Lender against the Guarantors, in any
currency, whether arising hereunder, under any other Credit Document or
otherwise in connection therewith, as the Agent or such Lender may elect,
whether or not the Agent or such Lender has made any demand for payment. The
Agent or such Lender shall notify the Guarantors promptly of any such set-off
and the application made by the Agent or such Lender, as the case may be, of the
proceeds thereof; provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Agent and each
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that the Agent or such
Lender may have.
9.3 No Subrogation. Notwithstanding any payment or payments made by the
Guarantors hereunder, or any set-off or application of funds of the Guarantors
by the Agent or any Lender, the Guarantors shall not be entitled to be
subrogated to any of the rights of the Agent or any Lender against the Borrower
or against any collateral or other security or guarantee or right of offset held
by the Agent or any Lender for the payment of the Obligations, nor shall the
Guarantors seek or be entitled to seek any contribution or reimbursement from
the Borrower in respect of payments made by the Guarantors hereunder, until all
amounts owing to the Agent and the Lenders by the Borrower on account of the
Obligations are paid in full and the Commitments have been terminated. If any
amount shall be paid to the Guarantors on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full, such
amount shall be held by the Guarantors in trust for the Agent and the Lenders,
segregated from other funds of the Guarantors, and shall, forthwith upon receipt
by the Guarantors, be turned over to the Agent in the exact form received by the
Guarantors (duly endorsed by the Guarantors to the Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
Agent may determine. The provisions of this Section shall survive the
termination of this Agreement and the payment in full of the Obligations and the
termination of the Commitments.
9.4 Amendments, etc. with respect to the Obligations; Waiver of Rights.
The Guarantors shall remain obligated hereunder notwithstanding that, without
any reservation of rights against the Guarantors, and without notice to or
further assent by the Guarantors, any demand for payment of any of the
Obligations made by the Agent or any Lender may be rescinded by the Agent or
such Lender, and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral or
other security or guarantee therefor or right of offset with respect thereto,
may, from time to time,
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in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Agent or any Lender, and any
Credit Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, in accordance with the provisions thereof as the Agent (or the requisite
Lenders, as the case may be) may deem advisable from time to time, and any
collateral or other security, guarantee or right of offset at any time held by
the Agent or any Lender for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. None of the Agent or any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this Agreement or any
property subject thereto. When making any demand hereunder against either
Guarantor the Agent or any Lender may, but shall be under no obligation to, make
a similar demand on the Borrower or the other Guarantor or any other guarantor,
and any failure by the Agent or any Lender to make any such demand or to collect
any payments from the Borrower, the other Guarantor, or any such other guarantor
or any release of the Borrower, the other Guarantor or such other guarantor
shall not relieve either Guarantor of its obligations or liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of the Agent or any Lender against either Guarantor. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
9.5 Guaranty Absolute and Unconditional. The Guarantors waive any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Agreement or acceptance of this Agreement; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Agreement; and
all dealings between the Guarantors, on the one hand, and the Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon this Agreement. The Guarantors waive diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Guarantors and the Borrower with respect to the Obligations, and
without limitation of the foregoing, specifically waive the benefits of Sections
26-7 through 26-9, inclusive, of the General Statutes of North Carolina, as
amended from time to time, and any similar statute or law of any other
jurisdiction, as the same may be amended from time to time. This ARTICLE IX
shall be construed as a continuing, absolute and unconditional guaranty of
payment without regard to (a) the validity, regularity or enforceability of this
Agreement, any other Credit Document, any of the Obligations or any other
Collateral or other security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) that may at any time be available to or be asserted by
the Borrower against the Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Guarantors or the
Borrower) that constitutes, or might be construed to constitute, an equitable or
legal discharge of the Borrower for the Obligations, or of the Guarantors under
this ARTICLE IX, in bankruptcy or in any other instance. When pursuing its
rights and remedies hereunder against the Guarantors, the Agent and any Lender
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against the Borrower or any other Person or against any collateral or
other security or guarantee for the Obligations or any right of offset with
respect thereto, and any failure by the Agent or any Lender to pursue
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such other rights or remedies or to collect any payments from the Borrower or
any such other Person or to realize upon any such collateral or other security
or guarantee or to exercise any such right of offset, or any release of any of
the Borrower or any such other Person or of any such Collateral or other
security, guarantee or right of offset, shall not relieve the Guarantors of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Agent or any
Lender against the Guarantors. This ARTICLE IX shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantors and their respective successors and assigns, and shall inure to the
benefit of the Agent and the Lenders, and their respective successors,
indorsees, transferees and assigns, until all the Obligations and the
obligations of the Guarantors under this Agreement shall have been satisfied by
payment in full and the Commitments shall have been terminated, notwithstanding
that from time to time during the term of this Agreement the Borrower may be
free from any Obligations.
9.6 Reinstatement. This ARTICLE IX shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or returned
by the Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any substantial part of its property, or otherwise,
all as though such payments had not been made.
9.7 Payments. The Guarantors hereby agree that all payments required to
be made by them hereunder will be made to the Agent without set-off or
counterclaim in accordance with the terms of the Obligations, including, without
limitation, in the currency in which payment is due.
ARTICLE X
THE AGENT
10.1 Appointment. Each Lender hereby irrevocably appoints and
authorizes First Union to act as Agent hereunder and under the other Credit
Documents and to take such actions as agent on its behalf hereunder and under
the other Credit Documents, and to exercise such powers and to perform such
duties, as are specifically delegated to the Agent by the terms hereof or
thereof, together with such other powers and duties as are reasonably incidental
thereto.
10.2 Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Credit Documents. The Agent shall not have, by reason of this Agreement or
any other Credit Document, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Credit Document, express or implied,
is intended to or shall be so construed as to impose upon the Agent any
obligations or liabilities in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein. The Agent may execute
any of its duties under this Agreement or any other Credit Document by or
through agents or attorneys-in-fact and shall not be responsible for
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the negligence or misconduct of any agents or attorneys-in-fact that it selects
with reasonable care. The Agent shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Credit Documents and its
duties hereunder and thereunder and 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. The Lenders hereby acknowledge that the Agent
shall not be under any duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Agreement or any other Credit
Document unless it shall be requested in writing to do so by the Required
Lenders (or, where a higher percentage of the Lenders is expressly required
hereunder, such Lenders).
10.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by it or such Person under or
in connection with the Credit Documents, except for its or such Person's own
gross negligence or willful misconduct, (ii) responsible in any manner to any
Lender for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Credit Document, or
for the financial condition of each Credit Party, their respective Subsidiaries
or any other Person, or (iii) required to ascertain or make any inquiry
concerning the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Credit Document or the existence or
possible existence of any Default or Event of Default, or to inspect the
properties, books or records of any Credit Party or any of their respective
Subsidiaries.
10.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Credit Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable law or any provision
of this Agreement or any other Credit Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a result of the
Agent's acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders (or, where
a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such instructions and any action
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taken or failure to act pursuant thereto shall be binding upon all of the
Lenders (including all subsequent Lenders).
10.5 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereinafter
taken, including any review of the affairs of the Credit Parties and their
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Lender. Each Lender represents to the Agent that (i) it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
properties, financial and other condition and creditworthiness of the Borrower,
the Guarantors and the Subsidiaries and made its own decision to enter into this
Agreement and extend credit to the Borrower hereunder, and (ii) it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action hereunder and under the other Credit Documents and to make
such investigation as it deems necessary to inform itself as to the business,
prospects, operations, properties, financial and other condition and
creditworthiness of the Credit Parties and their respective Subsidiaries. Except
as expressly provided in this Agreement and the other Credit Documents, the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information concerning the
business, prospects, operations, properties, financial or other condition or
creditworthiness of the Credit Parties, their respective Subsidiaries or any
other Person that may at any time come into the possession of the Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.6 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from the Borrower or a Lender referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent will give notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also been
furnished to the Lenders, the Agent shall have no obligation to notify the
Lenders with respect thereto. The Agent shall (subject to SECTIONS 10.4 and
11.6) take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders except to the extent that this Agreement expressly
requires that such action be taken, or not be taken, only with the consent or
upon the authorization of the Required Lenders or all of the Lenders.
10.7 Indemnification. To the extent the Agent is not reimbursed by or
on behalf of the Borrower, and without limiting the obligation of the Borrower
to do so, the Lenders agree (i) to indemnify the Agent and its officers,
directors, employees, agents, attorneys-in-fact and
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Affiliates, ratably in proportion to their respective percentages as used in
determining the Required Lenders as of the date of determination, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys' fees and expenses) or disbursements of any kind or nature whatsoever
that may at any time (including, without limitation, at any time following the
repayment in full of the Loans and the termination of the Commitments) be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any other Credit Document or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing, and (ii) to reimburse the Agent upon demand, ratably in
proportion to their respective percentages as used in determining the Required
Lenders as of the date of determination, for any expenses incurred by the Agent
in connection with the preparation, negotiation, execution, delivery,
administration, amendment, modification, waiver or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any of the other Credit
Documents (including, without limitation, reasonable attorneys' fees and
expenses and compensation of agents and employees paid for services rendered on
behalf of the Lenders); provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the gross negligence or willful misconduct of the party to be
indemnified.
10.8 The Agent in its Individual Capacity. With respect to its
Commitment, the Loans made by it and the Note or Notes issued to it, the Agent
in its individual capacity and not as Agent shall have the same rights and
powers under the Credit Documents as any other Lender and may exercise the same
as though it were not performing the agency duties specified herein; and the
terms "Lenders," "Required Lenders," "holders of Notes" and any similar terms
shall, unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, make investments in, and generally engage in any kind of banking,
trust, financial advisory or other business with the Credit Parties, any of
their respective Subsidiaries or any of their respective Affiliates as if the
Agent were not performing the agency duties specified herein, and may accept
fees and other consideration from any of them for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
10.9 Successor Agent. The Agent may resign at any time by giving ten
(10) days' prior written notice to the Borrower and the Lenders. Upon any such
notice of resignation, the Required Lenders will, with the prior written consent
of the Borrower (which consent shall not be unreasonably withheld), appoint from
among the Lenders a successor to the Agent (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing). If no successor to the Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within such ten-day period, then the retiring Agent may, on behalf of the
Lenders and after consulting with the Lenders and the Borrower, appoint a
successor Agent from among the Lenders. Upon the acceptance of any appointment
as Agent by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the
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retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Credit Documents. After any retiring Agent's resignation as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent. If no successor
to the Agent has accepted appointment as Agent by the thirtieth (30th) day
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective, and the Lenders shall
thereafter perform all of the duties of the Agent hereunder and under the other
Credit Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided for hereinabove.
ARTICLE XI
MISCELLANEOUS
11.1 Fees and Expenses. The Borrower and the Guarantors agree effective
upon the execution of this Agreement (i) whether or not the transactions
contemplated by this Agreement shall be consummated, to pay upon demand all
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and expenses of counsel to the Agent) in
connection with the Agent's due diligence investigation in connection with, and
the preparation, negotiation, execution, delivery and syndication of, this
Agreement and the other Credit Documents, and any amendment, modification or
waiver hereof or thereof or consent with respect hereto or thereto, (ii) to pay
upon demand all reasonable out-of-pocket costs and expenses of the Agent and
each Lender (including, without limitation, reasonable attorneys' fees and
expenses) in connection with (y) any refinancing or restructuring of the credit
arrangement provided under this Agreement, whether in the nature of a
"work-out," in any insolvency or bankruptcy proceeding or otherwise and whether
or not consummated, and (z) the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or any of the other
Credit Documents, whether in any action, suit or proceeding (including any
bankruptcy or insolvency proceeding) or otherwise, and (iii) to pay and hold the
Agent and each Lender harmless from and against all liability for any
intangibles, documentary, stamp or other similar taxes, fees and excises, if
any, including any interest and penalties, and any finder's or brokerage fees,
commissions and expenses (other than any fees, commissions or expenses of
finders or brokers engaged by the Agent or any Lender), that may be payable in
connection with the transactions contemplated by this Agreement and the other
Credit Documents. The Borrower's obligations under this SECTION 11.1 shall
survive the repayment of the Loans.
11.2 Indemnification. (a) The Borrower and the Guarantors agree,
effective upon the execution of this Agreement and whether or not the
transactions contemplated by this Agreement shall be consummated, to indemnify
and hold the Agent and each Lender and each of their respective directors,
officers, employees, agents and Affiliates (each, an "Indemnified Person")
harmless from and against any and all claims, losses, damages, obligations,
liabilities, penalties, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) of any kind or nature whatsoever,
whether direct, indirect or consequential (collectively, "Indemnified Costs"),
that may at any time be imposed on, incurred by or asserted against any such
Indemnified Person as a result of, arising from or in any way relating to the
preparation,
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execution, performance or enforcement of this Agreement or any of the other
Credit Documents, any of the transactions contemplated herein or therein or any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loans (including, without limitation, in
connection with the actual or alleged generation, presence, discharge or release
of any Hazardous Substances on, into or from, or the transportation of Hazardous
Substances to or from, any real property at any time owned or leased by the
Borrower or any of its Subsidiaries, any other Environmental Claims or any
violation of or liability under any Environmental Law), or any action, suit or
proceeding (including any inquiry or investigation) by any Person, whether
threatened or initiated, related to any of the foregoing, and in any case
whether or not such Indemnified Person is a party to any such action, proceeding
or suit or a subject of any such inquiry or investigation; provided, however,
that no Indemnified Person shall have the right to be indemnified hereunder for
any Indemnified Costs to the extent resulting from the gross negligence or
willful misconduct of such Indemnified Person. Subject only to paragraph (b)
below, all of the foregoing Indemnified Costs of any Indemnified Person shall be
paid or reimbursed by the Borrower, as and when incurred and upon demand. The
obligations of the Borrower under this Section 11.2 shall survive the repayment
of the Loans.
(b) Any Indemnified Person shall give prompt written notice to the
Borrower after the receipt by such Indemnified party of any written notice, or
after such Indemnified Person becomes aware, of the commencement of any action,
suit, claim or proceeding for which such Indemnified Person seeks
indemnification hereunder. Upon such notice, the Borrower shall be entitled to
defend such action, suit, claim or proceeding at its own expense and by its own
counsel, provided that (i) such counsel is reasonably satisfactory to the
Indemnified Person, (ii) the Indemnified Person is kept reasonably informed of
developments, and (iii) such counsel proceeds with diligence and in good faith
with respect thereto. The Indemnified Person shall have the right to participate
in the defense and investigation of such action, suit, claim or proceeding with
its own counsel and at its own expense, except that the Borrower shall bear the
reasonable expense of such separate counsel if (x) in the reasonable judgment of
the Indemnified Person, based upon written advice of its counsel, a conflict of
interest may exist between such Indemnified Person and the Borrower with respect
to the matter, in which case if the Indemnified Person notifies the Borrower in
writing that such Indemnified Person elects to employ separate counsel at the
Borrower's expense, the Borrower shall not have the right to assume the defense
of such action, suit, claim or proceeding on behalf of such Indemnified Person,
or (y) the Borrower shall have failed to assume the defense of such claim in the
manner provided above within a reasonable time after notice thereof is given to
the Borrower; provided, however, that the Borrower shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expense of more than one separate firm for all
Indemnified Persons unless, in the reasonable judgment of any Indemnified
Person, based upon written advice of its counsel, a conflict of interest may
exist between or among the Indemnified Persons. No Indemnified Person seeking
indemnification hereunder will, without the Borrower's prior written consent,
settle, compromise, consent to the entry of any judgment in or otherwise seek to
terminate any action, suit, claim or proceeding referred to above.
11.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
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STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES
HERETO HEREBY DECLARE THAT IT IS THEIR INTENTION THAT THIS AGREEMENT SHALL BE
REGARDED AS MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND THAT THE LAWS OF
SAID STATE SHALL BE APPLIED IN INTERPRETING ITS PROVISIONS IN ALL CASES WHERE
LEGAL INTERPRETATION SHALL BE REQUIRED. EACH OF THE PARTIES HERETO AGREES (A)
THAT THIS AGREEMENT INVOLVES AT LEAST $250,000; AND (B) THAT THIS AGREEMENT HAS
BEEN ENTERED INTO BY THE PARTIES HERETO IN EXPRESS RELIANCE UPON NEW YORK
GENERAL OBLIGATIONS LAW 'SS' 5-1401. NOTWITHSTANDING THE FOREGOING CHOICE OF
LAW, THE BORROWER AND GUARANTORS HEREBY CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL
COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA OR THE
SOUTHERN DISTRICT OF THE STATE OF NEW YORK FOR ANY PROCEEDING INSTITUTED
HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY
PROCEEDING TO WHICH THE AGENT OR ANY LENDER OR THE BORROWER OR ANY GUARANTOR IS
A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT OR ANY LENDER OR THE BORROWER OR ANY GUARANTOR. THE
BORROWER AND EACH GUARANTOR IRREVOCABLY AGREE TO BE BOUND (SUBJECT TO ANY
AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY
AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION
OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING.
THE BORROWER AND EACH GUARANTOR CONSENT THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS SET FORTH
HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ANY GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
11.4 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, EACH OF THE BORROWER, THE GUARANTORS, THE LENDERS AND THE AGENT
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT
AND
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THE OTHER CREDIT DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
11.5 Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
(a) if to the Borrower, to 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx
00000, Attention: Xx. Xxxxx X. Xxxx, Executive Vice President and Chief
Financial Officer, or Xx. Xxxxxxx X. Xxxxxx, Senior Vice President and
Treasurer, Telecopy No. (000) 000-0000, with a copy to Xxxxxx, Xxxxx & Bockius
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: X. Xxxxxxxx Xxxxxx,
Telecopy No. (000) 000-0000;
(b) if to PXRE Group, to Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, P.O. Box
HM666, Xxxxxxxx XX CX Bermuda, Attention: Xxxxx X. Xxxxx, Telecopy No.
(____)________________, with a copy to _______________________________;
(c) if to PXRE Barbados, to Xxxxxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx West Indies, Attention: Xxxxxx X. Xxxxxxxxxx, Telecopy No.
(____)________________, with a copy to _______________________________;
(d) if to the Agent, to First Union National Bank, Xxx Xxxxx Xxxxx
Xxxxxx, XX-0, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000,
Attention: Syndication Agency Services, Telecopy No. (000) 000-0000; and
(e) if to any Lender, to it at the address set forth on SCHEDULE 1.1
(or if to any Lender not a party hereto as of the date hereof, at the address
set forth in its Assignment and Acceptance);
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery; provided that notices and communications to
the Agent shall not be effective until received by the Agent.
11.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the Borrower or
either Guarantor from, any provision of this Agreement or any other Credit
Document, shall be effective unless in a writing signed by the Required Lenders
(or by the Agent at the direction or with the consent of the Required Lenders),
and then the same shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
modification,
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waiver, discharge, termination or consent shall:
(a) unless agreed to by each Lender directly affected thereby, (i)
reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other Obligations
(other than fees payable to the Agent for its own account), or (ii) extend the
Maturity Date or any other date (including any scheduled date for the mandatory
reduction or termination of any Commitments) fixed for the payment of any
principal of or interest on any Loan (other than additional interest payable
under SECTION 2.8(b) at the election of the Required Lenders, as provided
therein), any fees (other than fees payable to the Agent for its own account) or
any other Obligations;
(b) unless agreed to by all of the Lenders, (i) increase or extend any
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase), (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Agent to take, any action hereunder (including as set
forth in the definition of "Required Lenders"), (iii) release any Guarantor from
its obligations under ARTICLE IX, or (iv) change any provision of SECTION 2.15
or this Section; and
(c) unless agreed to by the Agent in addition to the Lenders required
as provided hereinabove to take such action, affect the respective rights or
obligations of the Agent, hereunder or under any of the other Credit Documents;
and provided further that the Fee Letter may be amended or modified, and any
rights thereunder waived, in a writing signed by the parties thereto.
11.7 Assignments, Participations. (a) Each Lender may assign to one or
more other Eligible Assignees (each, an "Assignee") all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment, the outstanding Loans made by it, and the Note
or Notes held by it); provided, however, that (i) any such assignment (other
than an assignment to a Lender or an Affiliate of a Lender) shall not be made
without the prior written consent of the Agent and the Borrower (to be evidenced
by its counterexecution of the relevant Assignment and Acceptance), which
consent shall not be unreasonably withheld (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing), (ii) each such assignment shall be of a uniform,
and not varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement, (iii) except in the case of an assignment to a
Lender or an Affiliate of a Lender, no such assignment shall be in an aggregate
principal amount (determined as of the date of the Assignment and Acceptance
with respect to such assignment) less than $5,000,000 determined by combining
the amount of the assigning Lender's outstanding Loans and Unutilized Commitment
being assigned pursuant to such assignment, and (iv) the parties to each such
assignment will execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment, and will pay a nonrefundable processing fee
of $3,000 to the Agent for its own
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account. Upon such execution, delivery, acceptance and recording of the
Assignment and Acceptance, from and after the effective date specified therein,
which effective date shall be at least five (5) Business Days after the
execution thereof (unless the Agent shall otherwise agree), (A) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of the assigning Lender
hereunder with respect thereto and (B) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than rights under the
provisions of this Agreement and the other Credit Documents relating to
indemnification or payment of fees, costs and expenses, to the extent such
rights relate to the time prior to the effective date of such Assignment and
Acceptance) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The terms and provisions of each
Assignment and Acceptance shall, upon the effectiveness thereof, be incorporated
into and made a part of this Agreement, and the covenants, agreements and
obligations of each Lender set forth therein shall be deemed made to and for the
benefit of the Agent and the other parties hereto as if set forth at length
herein.
(b) The Agent will maintain at its address for notices referred to
herein a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and each Lender at any reasonable time
and from time to time upon reasonable prior notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee and, if required,
counterexecuted by the Borrower, together with the Note or Notes subject to such
assignment and the processing fee referred to in subsection (a) above, the Agent
will (i) accept such Assignment and Acceptance, (ii) on the effective date
thereof, record the information contained therein in the Register and (iii) give
notice thereof to the Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, will execute
and deliver to the Agent, in exchange for the surrendered Note or Notes, a new
Note or Notes to the order of the Assignee (and, if the assigning Lender has
retained any portion of its rights and obligations hereunder, to the order of
the assigning Lender), prepared in accordance with the provisions of SECTION 2.4
as necessary to reflect, after giving effect to the assignment, the Commitments
of the Assignee and (to the extent of any retained interests) the assigning
Lender, dated the date of the replaced Note or Notes and otherwise in
substantially the form of EXHIBIT A. The Agent will return canceled Notes to the
Borrower.
(d) Each Lender may, without the consent of the Borrower, the Agent or
any other Lender, sell to one or more other Persons (each, a "Participant")
participations in any portion
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comprising less than all of its rights and obligations under this Agreement
(including, without limitation, a portion of its Commitment, the outstanding
Loans made by it and the Note or Notes held by it); provided, however, that (i)
except in the case of a participation sold to a Lender or an Affiliate of a
Lender, no such participation shall be in an aggregate principal amount less
than $3,000,000, (ii) such Lender's obligations under this Agreement shall
remain unchanged and such Lender shall remain solely responsible for the
performance of such obligations, (iii) no Lender shall sell any participation
that, when taken together with all other participations, if any, sold by such
Lender, covers all of such Lender's rights and obligations under this Agreement,
(iv) the Borrower, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and no Lender shall permit any Participant to
have any voting rights or any right to control the vote of such Lender with
respect to any amendment, modification, waiver, consent or other action
hereunder or under any other Credit Document (except as to actions that would
(x) reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other
Obligations, (y) extend the Maturity Date or any other date fixed for the
payment of any principal of or interest on any Loan, any fees or any other
Obligations, or (z) increase or extend any Commitment of any Lender), and (v) no
Participant shall have any rights under this Agreement or any of the other
Credit Documents, each Participant's rights against the granting Lender in
respect of any participation to be those set forth in the participation
agreement, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not granted such participation. Notwithstanding the
foregoing, each Participant shall have the rights of a Lender for purposes of
SECTIONS 2.16(a), 2.16(b), 2.17, 2.18 and 8.3 and the obligations of a Lender
under SECTION 2.17, and shall be entitled to the benefits thereto, to the extent
that the Lender granting such participation would be entitled to such benefits
if the participation had not been made, provided that no Participant shall be
entitled to receive any greater amount pursuant to any of such Sections than the
Lender granting such participation would have been entitled to receive in
respect of the amount of the participation made by such Lender to such
Participant had such participation not been made.
(e) Nothing in this Agreement shall be construed to prohibit any Lender
from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release a Lender from any of its obligations hereunder.
(f) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the Assignee or Participant or proposed Assignee or Participant any
information relating to the Borrower and its Subsidiaries furnished to it by or
on behalf of any other party hereto, provided that such Assignee or Participant
or proposed Assignee or Participant agrees in writing to keep such information
confidential to the same extent required of the Lenders under SECTION 11.13.
11.8 No Waiver. The rights and remedies of the Agent and the Lenders
expressly set forth in this Agreement and the other Credit Documents are
cumulative and in addition to, and not exclusive of, all other rights and
remedies available at law, in equity or otherwise. No failure or delay on the
part of the Agent or any Lender in exercising any right, power or privilege
shall
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operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or be construed to be a waiver
of any Default or Event of Default. No course of dealing between any of the
Borrower, Guarantors, Agent or Lenders or their agents or employees shall be
effective to amend, modify or discharge any provision of this Agreement or any
other Credit Document or to constitute a waiver of any Default or Event of
Default. No notice to or demand upon the Borrower or any Guarantor in any case
shall entitle the Borrower or any Guarantor to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
the Agent or any Lender to exercise any right or remedy or take any other or
further action in any circumstances without notice or demand.
11.9 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, and all references herein to any party shall be
deemed to include its successors and assigns; provided, however, that (i)
neither the Borrower nor either Guarantor shall sell, assign or transfer any of
its rights, interests, duties or obligations under this Agreement without the
prior written consent of all of the Lenders and (ii) any Assignees and
Participants shall have such rights and obligations with respect to this
Agreement and the other Credit Documents as are provided for under and pursuant
to the provisions of SECTION 11.7.
11.10 Survival. All representations, warranties and agreements made by
or on behalf of the Guarantors, the Borrower or any of their Subsidiaries in
this Agreement and in the other Credit Documents shall survive the execution and
delivery hereof or thereof, the Reorganization and the making and repayment of
the Loans. In addition, notwithstanding anything herein or under applicable law
to the contrary, the provisions of this Agreement and the other Credit Documents
relating to indemnification or payment of fees, costs and expenses, including,
without limitation, the provisions of SECTIONS 2.16(a), 2.16(b), 2.17, 2.18,
9.7, 11.1 and 11.2, shall survive the payment in full of all Loans, the
termination of the Commitments, and any termination of this Agreement or any of
the other Credit Documents.
11.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
11.12 Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
11.13 Confidentiality. Each Lender agrees to keep confidential,
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance
96
with safe and sound banking practices, all nonpublic information provided to it
by or on behalf of any Guarantor, the Borrower or any of their Subsidiaries in
connection with this Agreement or any other Credit Document; provided, however,
that any Lender may disclose such information (i) to its directors, employees
and agents and to its auditors, counsel and other professional advisors, (ii) at
the demand or request of any bank regulatory authority, court or other
Governmental Authority having or asserting jurisdiction over such Lender, as may
be required pursuant to subpoena or other legal process, or otherwise in order
to comply with any applicable Requirement of Law, (iii) in connection with any
proceeding to enforce its rights hereunder or under any other Credit Document or
any other litigation or proceeding related hereto or to which it is a party,
(iv) to the Agent or any other Lender, (v) to the extent the same has become
publicly available other than as a result of a breach of this Agreement and (vi)
pursuant to and in accordance with the provisions of SECTION 11.7(f).
11.14 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by the Agent and the Borrower of written
or telephonic notification of such execution and authorization of delivery
thereof.
11.15 Disclosure of Information. The Borrower and Guarantor agree and
consent to the Agent's disclosure of information relating to this transaction to
Gold Sheets and other similar bank trade publications. Such information will
consist of deal terms and other information customarily found in such
publications.
11.16 Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (B) UPON COMPLIANCE WITH THE CONDITIONS
SET FORTH IN SECTION 3.4 HEREOF AND CONSUMMATION OF THE REORGANIZATION,
SUPERSEDE ANY AND ALL PRIOR AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL
OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF, INCLUDING,
WITHOUT LIMITATION, THE COMMITMENT LETTER FROM FIRST UNION TO THE BORROWER DATED
DECEMBER 2, 1998 (EXCEPT FOR PROVISIONS THE SURVIVAL OF WHICH IS EXPLICITLY SET
FORTH THEREIN) BUT SPECIFICALLY EXCLUDING THE OLD CREDIT AGREEMENT, EXCEPT TO
THE EXTENT AMENDED HEREBY, THE FEE LETTER AND THE AMENDMENT FEE LETTER, AND (C)
MAY NOT BE AMENDED, SUPPLEMENTED, CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
PXRE CORPORATION
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
PXRE GROUP LTD
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
PXRE (BARBADOS) LTD
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
(signatures continued)
FIRST UNION NATIONAL BANK, as Agent
and as a Lender
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
THE FIRST NATIONAL BANK OF CHICAGO
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
FLEET NATIONAL BANK
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
CREDIT LYONNAIS NEW YORK BRANCH
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
