SECOND AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of October 30, 1997 (this "Second Amendment"), is made in respect of
the First Amended and Restated Credit Agreement dated November 14, 1996 (as
amended hereby and by the First Amendment to First Amended and Restated Credit
Agreement dated as of January 24, 1997, the "Credit Agreement"), by and between
CHARTWELL RE HOLDINGS CORPORATION, a Delaware corporation (the "Borrower"), the
financial institutions listed on the signature pages thereof or that become
parties thereto after the date thereof (collectively the "Lenders"), FIRST UNION
NATIONAL BANK (formerly known as First Union National Bank of North Carolina),
as agent for the Lenders (in such capacity, the "Agent") and as an Issuing Bank,
and FIRST UNION NATIONAL BANK (LONDON BRANCH), as an Issuing Bank. Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Credit Agreement.
RECITALS
A. The Borrower has requested that reimbursement obligations with
respect to certain Letters of Credit issued in favor of Lloyd's pursuant to
Article IV be excluded from Consolidated Indebtedness for purposes of the
Capitalization Ratio to the extent of cash, Cash Equivalents and Approved L/C
Collateral provided by the Borrower or any of its Subsidiaries to the issuers of
such Letters of Credit as security for such reimbursement obligations. The
Borrower also has requested that the limitations on letters of credit, including
Letters of Credit under Article IV, issued in favor of Lloyd's imposed by
Sections 4.1(e) and 9.2(iv) be eliminated. The Agent, Issuing Banks, and Lenders
agree to grant such requests.
B. The Borrower desires, and the Agent, Lenders, and Issuing Banks are
willing, to increase the Total Revolving Credit Commitments from Thirty-Five
Million Dollars ($35,000,000) to Sixty Million Dollars ($60,000,000), subject to
the terms and conditions of this Amendment and the Credit Agreement.
C. The Borrower, Agent, Lenders, and Issuing Banks agree to change the
maximum permitted Capitalization Ratio to 0.40 to 1.0 as of the last day of any
fiscal quarter ending on or before September 30, 1999, and to 0.375 to 1.0 as of
the last day of any fiscal quarter ending thereafter.
D. The Borrower has requested an extension of the Revolving Credit
Maturity Date from the current date of December 31, 2001, to January 7, 2003,
and the Agent, Lenders and Issuing Banks are willing to grant such extension.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Agent, the
Issuing Banks and the Lenders, for themselves and their successors and assigns,
agree as follows:
ARTICLE I
AMENDMENTS TO CREDIT AGREEMENT
1.1 Amendments to Section 1.1.
(a) The definition of "Consolidated Indebtedness" in Section 1.1 of the
Credit Agreement shall be deleted in its entirety and the following substituted
therefor:
"Consolidated Indebtedness" shall mean, as of the last day of
any fiscal quarter, the aggregate (without duplication) of all
Indebtedness of the Parent and its Subsidiaries as of such date,
determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles, excluding (y) the amount of the
Contingent Interest Notes as reported on the Parent's most recent
balance sheet and (z) reimbursement obligations with respect to (i)
letters of credit issued to secure the reinsurance obligations of one
or more Insurance Subsidiaries under reinsurance agreements entered
into in the ordinary course of such Insurance Subsidiaries' business
and (ii) the Specially Designated Letters of Credit but, in each case
described in the foregoing clauses (i) and (ii), only to the extent of
cash and Cash Equivalents provided to the issuer of such letter of
credit by the Borrower or any Subsidiary as collateral for such
reimbursement obligations, and, in the case of Letters of Credit issued
by either Issuing Bank, the amount of Approved L/C Collateral available
to be drawn upon to satisfy such reimbursement obligations.
(b) Clause (y) of the definition of "Consolidated Net Worth" in Section
1.1 of the Credit Agreement shall be amended by deleting the words "Tranche A
Maturity Date" and substituting therefor the words "Revolving Credit Maturity
Date."
(c) Clause (vii) in the definition of "Indebtedness" in Section 1.1 of
the Credit Agreement shall be amended by deleting the words "Tranche A Maturity
Date" and substituting therefor the words "Revolving Credit Maturity Date."
(d) The definition of "Revolving Credit Commitment" in Section 1.1 of
the Credit Agreement shall be deleted and the following substituted therefor:
"Revolving Credit Commitment" shall mean, with respect to any
Lender at any time, the amount set forth opposite such Lender's name on
Schedule 2.2 to the Second Amendment to the Credit Agreement dated as
of October __, 1997 under the caption "Revolving Credit Commitment" or,
if such Lender has entered into one or more Assignment and Acceptances
after such date, the amount set forth for such Lender at such time in
the Register maintained by the Agent pursuant to Section 12.7(b) as
such Lender's "Revolving Credit Commitment," as such amount may be
reduced at or prior to such time pursuant to the terms hereof.
(e) The definition of "Revolving Credit Maturity Date" in Section 1.1
of the Credit Agreement shall be deleted in its entirety and the following
substituted therefor:
"Revolving Credit Maturity Date" shall mean January 7, 2003.
(f) The following definition shall be added to Section 1.1 of the
Credit Agreement:
"Specially Designated Letters of Credit" shall mean those
specific Letters of Credit issued pursuant to Article IV enumerated LC
S230745 and LC S230429 and having the Stated Amounts of
(pound)3,275,000 and (pound)1,000,000, respectively, in each case made
in favor of Lloyd's to support the relationship between a Subsidiary of
Xxxxxx and Lloyd's.
(g) The definition of "Total Revolving Credit Commitments" in Section
1.1 of the Credit Agreement shall be deleted and the following substituted
therefor:
"Total Revolving Credit Commitments" shall mean at any time
the aggregate amount of Revolving Credit Commitments of all Revolving
Lenders at such time, being on the date of the Second Amendment to the
Credit Agreement Sixty Million Dollars ($60,000,000).
1.2 Amendment to Section 4.1(e). Section 4.1(e) of the Credit Agreement
shall be deleted in its entirety.
1.3 Amendment to Section 8.1. Section 8.1 of the Credit Agreement shall
be deleted in its entirety and the following substituted therefor:
8.1 Capitalization Ratio. The Borrower will not permit the
Capitalization Ratio to be greater than (y) 0.40 to 1.0 as of the last
day of any fiscal quarter ending on or before September 30, 1999, and
(z) 0.375 to 1.0 as of the last day of any fiscal quarter ending after
September 30, 1999.
1.4 Amendment to Section 9.2(iv). Section 9.2(iv) of the Credit
Agreement shall be deleted in its entirety and the following substituted
therefor:
(iv) Indebtedness under reimbursement obligations in respect
of (x) letters of credit issued for the benefit of one or more
Insurance Subsidiaries in the ordinary course of their business to
support the payment by such Insurance Subsidiaries of obligations
arising under insurance and reinsurance contracts, (y) Letters of
Credit issued for the account of Reinsurance in favor of the Society of
Lloyd's or the Council of Lloyd's in accordance with Article IV, and
(z) other letters of credit issued for the account of Reinsurance in
favor of the Society of Lloyd's or the Council of Lloyd's;
ARTICLE II
REPRESENTATIONS AND WARRANTIES; CONDITIONS
2.1 Representations and Warranties. The Borrower hereby certifies and
warrants to the Agent, Issuing Banks and Lenders (a) that each of the
representations and warranties contained in Article VI of the Credit Agreement
and in the other Credit Documents are true and correct in all material respects
on the date hereof with the same effect as though made on the date hereof, both
immediately before and after giving effect to this Amendment (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 as of such specified date), and (b) no Default or Event of
Default shall have occurred and be continuing on the date hereof, after giving
effect to this Amendment.
2.2 Conditions to Amendments. The amendments set forth in Article I
hereof shall not be effective and in force and effect until the following
conditions have been satisfied to the reasonable satisfaction of the Agent and
the Issuing Banks:
(a) the Agent shall have received the following, each dated as of the
date hereof (unless otherwise specified):
(i) Revolving Credit Notes, in substantially the form of
Exhibit A-4 to the Credit Agreement, payable to the order of the
Lenders and in the amounts set forth on Schedule 2.2 attached hereto,
duly completed in accordance with the relevant provisions of Section
2.4 of the Credit Agreement and executed by the Borrower;
(ii) an acknowledgment and confirmation duly executed by the
Parent, as guarantor under the Guaranty, in form and substance
satisfactory to the Agent, reflecting the increase in the Total
Revolving Credit Commitments and the other amendments herein to the
Credit Agreement and confirming the Parent's obligations under the
Guaranty in respect of the Credit Agreement, as amended by this Second
Amendment;
(iii) the favorable opinions of LeBoeuf, Lamb, Xxxxxx &
XxxXxx, L.L.P., special counsel to the Parent, the Borrower and
Reinsurance, and of Xxxxxxxx X. Xxxxxxx, Vice President, General
Counsel and Secretary of Borrower, Reinsurance and Parent, in
substantially the form of the respective opinions provided by such
counsel in connection with the First Amendment to the Credit Agreement
dated as of January 24, 1997, addressed to the Agent, the Issuing Banks
and the Lenders; and
(iv) certificates of the secretary or an assistant secretary
of the Borrower, the Parent, and Reinsurance, in form and substance
satisfactory to the Agent, certifying (i) that the certificate of
incorporation and bylaws of each such corporation have not been amended
since January 24, 1997, (ii) that attached thereto is a true and
complete copy of resolutions adopted by the boards of directors of the
Borrower, the Parent and Reinsurance authorizing the execution,
delivery and performance of this Second Amendment and the other Credit
Documents required to be executed in connection herewith and to which
it is a party, and (iii) as to the incumbency and genuineness of the
signature of each officer of the Borrower, the Parent and Reinsurance
executing this Second Amendment or any of the other Credit Documents
required to be executed in connection herewith.
(b) the Borrower shall have paid to each of the Lenders an upfront fee
equal to 0.10% of such Lender's Revolving Commitment Percentage of $25,000,000.
ARTICLE III
GENERAL
3.1 Full Force and Effect. Except as expressly amended hereby, the
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof. As used in the Credit Agreement,
"hereinafter," "hereto," "hereof," and words of similar import shall, unless the
context otherwise requires, mean the Credit Agreement after amendment by this
Second Amendment. Any reference to the Credit Agreement or any of the other
Credit Documents herein or in any such documents shall refer to the Credit
Agreement and Credit Documents as amended hereby.
3.2 Applicable Law. This Second Amendment shall be governed by and
construed in accordance with the internal laws and judicial decisions of the
State of North Carolina.
3.3 Counterparts. This Second Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.
3.4 Headings. The headings of this Second Amendment are for the
purposes of reference only and shall not affect the construction of this Second
Amendment.
3.5 Effectiveness. This Second Amendment shall be deemed fully executed
when executed by the Borrower, First Union, as Agent, each of the Lenders, and
the Issuing Banks. The amendments set forth in Article I hereof shall be
effective upon full execution hereof and satisfaction of the conditions of
Section 2.2 hereof.
IN WITNESS WHEREOF, the Borrower, the Agent, the Issuing Banks, and the
Lenders have caused this Second Amendment to be executed by their duly
authorized officers all as of the day and year first above written.
CHARTWELL RE HOLDINGS CORPORATION
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
CHARTWELL REINSURANCE COMPANY
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
FIRST UNION NATIONAL BANK, as Agent, as an
Issuing Bank, and as a Lender
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
FIRST UNION NATIONAL BANK (LONDON
BRANCH), as an Issuing Bank
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
CIBC, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
CREDIT LYONNAIS
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
FLEET NATIONAL BANK
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
THE ROYAL BANK OF SCOTLAND
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
Schedule 2.2 to Second Amendment to First Amended
and Restated Credit Agreement
Revolving Credit Commitments
Revolving Credit Commitments
First Union National Bank $
CIBC, Inc. $
Credit Lyonnais $
Fleet National Bank $
The Royal Bank of Scotland $
Exhibit F-2
FIRST AMENDED AND RESTATED
BORROWER ESCROW AND SECURITY AGREEMENT
THIS FIRST AMENDED AND RESTATED BORROWER ESCROW AND SECURITY AGREEMENT,
dated as of the 27th day of February, 1997 (this "Agreement"), is made between
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association, as
Agent (in such capacity, the "Agent") under the Credit Agreement referred to
below, CHARTWELL RE HOLDINGS CORPORATION, a Delaware corporation (the
"Borrower"), CHARTWELL REINSURANCE COMPANY, a Minnesota corporation
("Reinsurance"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national
banking association, as escrow agent hereunder (in such capacity, the "Escrow
Agent"). Capitalized terms used herein and not defined elsewhere herein shall
have the meanings given to them in the Credit Agreement referred to below.
RECITALS
A. The Borrower, Reinsurance, the Agent, certain Issuing Banks (the
"Issuing Banks") and certain lenders (the "Lenders") are parties to a First
Amended and Restated Credit Agreement, dated as of November 14, 1996 and as
amended by that First Amendment to First Amended and Restated Credit Agreement
dated as of January 24, 1997 (as further amended, modified, supplemented or
restated from time to time, the "Credit Agreement"), pursuant to which the
Lenders have agreed to make Term Loans and Revolving Loans to the Borrower, and
the Issuing Banks have agreed to issue Letters of Credit for the benefit of the
Borrower, upon the terms and conditions set forth therein.
B. The Credit Agreement provides that under certain circumstances payments
relating to the Letters of Credit may be deposited in cash collateral accounts
(collectively the "L/C Cash Collateral Accounts"). Such payments made into the
L/C Cash Collateral Accounts to secure Reimbursement Obligations under Letters
of Credit issued for the account of Reinsurance or for the account of
Reinsurance and the Borrower jointly shall be maintained in accounts referencing
Reinsurance and the Borrower jointly, and all other deposits shall be maintained
in accounts referencing solely the Borrower. Payments in Dollars relating to the
Letters of Credit issued in Dollar face amounts may be deposited, as applicable,
in cash collateral accounts (the "Borrower Dollars Account" and the "Joint
Dollars Account" and, collectively, the "Dollars Collateral Accounts") and
payments in Pounds Sterling relating to the Letters of Credit issued in Pounds
Sterling face amounts may be deposited, as applicable, in cash collateral
accounts (the "Borrower Sterling Account" and the "Joint Sterling Account" and,
collectively, the "Sterling Collateral Accounts"); in each case to secure
payment of the Reimbursement Obligations and the other Letter of Credit Exposure
under the Credit Agreement. The Borrower Dollars Account and the Borrower
Sterling Account shall be collectively referred to herein as the "Borrower
Collateral Accounts " and the Joint Dollars Account and the Joint Sterling
Account shall be collectively referred to herein as the "Joint Collateral
Accounts."
C. It is a condition to the making of the Loans and the issuance of the
Letters of Credit under the Credit Agreement that the Borrower shall have
agreed, by executing and delivering this Agreement, to establish the L/C Cash
Collateral Accounts and to grant and assign to the Agent a security interest in
such accounts and in the funds at any time held therein pursuant to the terms
hereof.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the payment by the
Borrower and Reinsurance to the Escrow Agent of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Agent, the Issuing Banks and the Revolving
Lenders to enter into the Credit Agreement and to issue the Letters of Credit or
make the Revolving Loans to the Borrower and Reinsurance thereunder, the parties
hereby agree as follows:
1. Appointment of Escrow Agent. The Borrower, Reinsurance and the Agent
hereby appoint the Escrow Agent to serve as escrow agent hereunder. The Escrow
Agent accepts such appointment and agrees to hold, invest and disburse the funds
maintained in the L/C Cash Collateral Accounts (collectively, the "Escrow
Funds") in accordance with this Agreement and as agent for the benefit of the
Agent and the Revolving Lenders so that the Agent shall have, pursuant to
Section 4, a valid and perfected first priority security interest in and Lien
upon all funds maintained and held in the L/C Cash Collateral Accounts.
2. Creation of L/C Cash Collateral Accounts; Withdrawals; Disbursements.
The Borrower and the Agent hereby establish the Borrower Dollars Account, the
Joint Dollars Account, the Borrower Sterling Account, and the Joint Sterling
Account, in each case to be maintained from and after the date hereof by and in
the name of the Escrow Agent. With respect to (i) the Borrower Dollars Account,
such account shall be designated the "Chartwell Re Holdings L/C Dollars Cash
Collateral Account", Account #1072636956, (ii) the Joint Dollars Account, such
account shall be designated the "Chartwell Re Holdings and Chartwell Reinsurance
L/C Dollars Cash Collateral Account", Account #____________, (iii) the Borrower
Sterling Account, such account shall be designated the "Chartwell Re Holdings
L/C Pounds Sterling Cash Collateral Account", Account # 1072636965, and (iv) the
Joint Sterling Account, such account shall be designated the "Chartwell Re
Holdings and Chartwell Reinsurance L/C Pounds Sterling Cash Collateral Account",
Account # ___________ . All deposits of funds into, investment of funds held in,
and disbursements of funds from each L/C Cash Collateral Account shall be made
on the terms and conditions set forth herein.
(a) Except for distributions and disbursements by Escrow Agent pursuant
to Section 3 or as directed by joint direction of the Borrower and the Agent, or
joint direction of the Borrower, Reinsurance and the Agent, pursuant to Section
2(g), or as directed by the Agent pursuant to Section 2(c) or 2(d), neither the
Borrower nor Reinsurance shall be permitted to withdraw any funds from any L/C
Cash Collateral Account for any purpose.
(b) In the event of a drawing on any Letter of Credit and subsequent
payment by either Issuing Bank at any time during which any amounts are held in
the applicable L/C Cash Collateral Account, the Agent shall have the right
immediately to instruct the Escrow Agent to disburse to the Agent, and the
Escrow Agent will disburse to the Agent upon receipt of such instructions, funds
held in the applicable L/C Cash Collateral Account (including any undisbursed
interest and income) in an amount sufficient to pay in full the amount of any
Reimbursement Obligation arising therefrom (it being understood that, pursuant
to Sections 4.4 and 4.8 of the Credit Agreement, (i) disbursements to the Agent
for Reimbursement Obligations for the account of the Borrower in Dollars will be
made from the Borrower Dollars Account, (ii) disbursements to the Agent for
Reimbursement Obligations under Letters of Credit issued for the account of
Reinsurance or the Borrower and Reinsurance jointly in Dollars will be made from
the Joint Dollars Account, (iii) disbursements to the Agent for Reimbursement
Obligations under Letters of Credit issued for the account of the Borrower in
Pounds Sterling will be made from the Borrower Sterling Account, and (iv)
disbursements to the Agent for Reimbursement Obligations under Letters of Credit
issued for the account of Reinsurance or the Borrower and Reinsurance jointly in
Pounds Sterling will be made from the Joint Sterling Account); provided that, in
the event such funds in the applicable L/C Cash Collateral Account shall be
insufficient to pay in full the Reimbursement Obligation then due and owing, the
Agent may instruct the Escrow Agent to disburse to the Agent, and the Escrow
Agent will so disburse to the Agent, all of the funds then held in the
applicable L/C Cash Collateral Account, provided further, however, that each of
the Agent and Escrow Agent shall give notice to the Borrower promptly, and in
any event not more than two (2) Business Days) after, the delivery of any such
instruction.
(c) If either the Borrower or Reinsurance has made a deposit to any of
the L/C Cash Collateral Accounts pursuant to Section 4.8(b) of the Credit
Agreement, the Agent shall, upon request of the Borrower (with respect to any
deposit made by Borrower) or the Borrower and Reinsurance jointly (with respect
to any deposit made by Reinsurance), instruct the Escrow Agent to disburse to
the Borrower or Reinsurance, as applicable, and the Escrow Agent will so
disburse to the Borrower or Reinsurance, as applicable, all or a part of the
amount of funds so deposited (it being understood that neither Borrower nor
Reinsurance shall be entitled to make such request if a Default shall have
occurred and be continuing).
(d) If the Borrower has made a deposit to either of the L/C Cash Collateral
Accounts pursuant to Section 4.8(a) of the Credit Agreement, and if the amounts
deposited pursuant to Section 4.8(a) are at any time thereafter not required to
be maintained in the L/C Cash Collateral Accounts, the Agent shall instruct the
Escrow Agent to disburse to the Borrower, and the Escrow Agent will so disburse
to the Borrower, the appropriate amount of such funds.
(e) Until disbursed in accordance with Section 3, all undisbursed interest
and income on the Escrow Funds shall be deemed part of, as and when accrued, the
principal balance of such funds whereupon the same shall be deemed temporarily
part of such principal balance and shall constitute Collateral secured under
Section 4 hereof until so disbursed.
(f) Funds held in the applicable L/C Cash Collateral Account shall be
disbursed in same day available funds by the Escrow Agent in the Applicable
Currency on the Business Day next following its receipt of instructions therefor
as provided herein; provided, however, that if such instructions are received by
the Escrow Agent on a day that is not a Business Day or after 1:00 p.m.,
Charlotte time, on a Business Day, such funds shall be disbursed on the second
Business Day following receipt of such notice.
(g) In addition to disbursements permitted or required under
subsections (b), (c), (d) and (e) above and Section 3, the Escrow Agent will
disburse funds held in each L/C Cash Collateral Account at any time and from
time to time in accordance with the joint written directions of the Borrower and
the Agent; provided, however, that such joint written direction with respect to
either of the Joint Dollars Collateral Accounts shall also include Reinsurance.
3. Interest and Income. All interest and income earned during any
calendar quarter on funds maintained in each L/C Cash Collateral Account shall
be disbursed by the Escrow Agent to or at the written direction of the Borrower
within ten (10) days after the end of such quarter, beginning with the quarter
ending December 31, 1996.
4. L/C Cash Collateral Account Security Interest. As security for the
payment and performance of the Reimbursement Obligations and the other Letter of
Credit Exposure of the Revolving Lenders under the Credit Agreement, the
Borrower, with respect to the Borrower Collateral Accounts, and the Borrower and
Reinsurance jointly, with respect to the Joint Collateral Accounts, hereby
pledge, grant and assign to the Agent, for the benefit of the Issuing Banks and
the Revolving Lenders, a security interest in, and all right, title and interest
in, to and under, each L/C Cash Collateral Account and in the funds now or
hereafter existing in each L/C Cash Collateral Account (the "Collateral").
5. Investment of Funds. (a) The Escrow Agent shall invest and reinvest
the funds held in the Dollars Collateral Accounts as the Borrower shall direct
in writing or pursuant to telephone instruction confirmed promptly in writing;
provided, however, that no investment or reinvestment may be made except in the
following:
(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 Moody's;
(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 Moody's;
(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; or
(v) money market funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through (iv) above.
(b) The Escrow Agent shall invest and reinvest the funds held in the Sterling
Collateral Accounts as the Borrower shall direct in writing or pursuant to
telephone instruction confirmed promptly in writing; provided, however, that no
investment or reinvestment may be made except in the following:
(i) 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 England and Wales 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 Moody's
or equivalent ratings from an English rating agency; or
(ii) money market funds substantially all of whose assets are comprised of
securities of the types described in clause (i) above or the equivalent in
Pounds to securities of the types described in (a)(i) through (iv) above.
(c) Each of the foregoing investments shall be made in the name of the Escrow
Agent. If the Escrow Agent has not received investment direction from the
Borrower at any time at which an investment decision must be made, the Escrow
Agent shall invest the funds held in the Dollars Collateral Accounts, or such
portion thereof as to which no direction has been received, in investments
described in clause (a)(v) above, and the funds held in the Sterling Collateral
Accounts, or such portion thereof as to which no direction has been received, in
investments described in clause (b)(ii) above. Notwithstanding anything to the
contrary contained herein, the Escrow Agent may, without notice to the Borrower
or Reinsurance, sell or liquidate any of the foregoing investments at any time,
in accordance with standard commercial practices, endeavoring to mitigate costs
to the extent reasonably possible, if the proceeds thereof are required for any
release of funds permitted or required hereunder, and the Escrow Agent shall not
be liable or responsible for any loss, expense or penalty resulting from any
such sale or liquidation.
6. Escrow Agent to Maintain Records. The Escrow Agent will maintain
adequate records of all deposits to the L/C Cash Collateral Accounts and
investments of Escrow Funds and will make such records available to Borrower
upon reasonable notice.
7. Resignation of Escrow Agent. The Escrow Agent may resign from the
performance of its duties hereunder at any time by giving thirty (30) days'
prior written notice to the Borrower, Reinsurance and the Agent. Such
resignation shall take effect upon the appointment of a successor Escrow Agent
as provided hereinbelow. Upon any such notice of resignation, the Agent shall,
with the consent of the Borrower (which consent shall not be unreasonably
withheld), appoint a successor Escrow Agent hereunder, which shall be a
commercial bank, trust company or other financial institution with a combined
capital and surplus in excess of $100,000,000. Upon the acceptance of any
appointment as Escrow Agent hereunder by a successor Escrow Agent, such
successor Escrow Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Escrow Agent, and the
retiring Escrow Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Escrow Agent's resignation hereunder as
Escrow Agent, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Escrow Agent under
this Agreement.
8. Liability of Escrow Agent. The Escrow Agent shall have no liability
or obligation with respect to any L/C Cash Collateral Account except for the
Escrow Agent's willful misconduct or gross negligence. The Escrow Agent's sole
responsibility shall be for the safekeeping, investment and disbursement of the
funds maintained in any L/C Cash Collateral Account in accordance with the terms
of this Agreement. The Escrow Agent shall treat the Escrow Funds with the same
care as it treats its own property. The Escrow Agent shall have no implied
duties or obligations and shall not be charged with knowledge or notice of any
fact or circumstance not specifically set forth herein. The Escrow Agent may
rely upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein, that the Escrow Agent shall in good faith believe to be
genuine, to have been signed or presented by the person or parties purporting to
sign the same and to conform to the provisions of this Agreement. The Escrow
Agent shall be responsible for actual losses (defined as and limited to any
decline in principal value of an investment between the time of purchase and
time of sale) from investments in other than investments permitted under Section
5 hereof. In no event shall the Escrow Agent be liable for incidental, indirect,
special, consequential or punitive damages. The Escrow Agent shall not be
obligated to take any legal action or commence any proceeding in connection with
any L/C Cash Collateral Account or the funds therein, this Agreement or any
other Credit Document, or to appear in, prosecute or defend any such legal
action or proceeding. The Escrow Agent may consult legal counsel selected by it
in the event of any dispute or question as to the construction of any of the
provisions hereof or of any other agreement or of its duties hereunder, and
shall incur no liability and shall be fully protected in acting in accordance
with the opinion or instruction of such counsel.
9. Indemnification. From and at all times after the date of this Agreement,
and in addition to the fees, costs and expenses payable under Section 9, the
Borrower agrees and, with respect to any of the following arising out of or
related to either of the Joint Collateral Accounts, the Borrower and Reinsurance
jointly and severally agree to indemnify and hold harmless the Escrow Agent and
each of its directors, officers, employees, agents and Affiliates (each, an
"Indemnified Person") against any and all claims, losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever, including, without
limitation, reasonable attorneys' fees and expenses (collectively, "Indemnified
Costs"), incurred by or asserted against any such Indemnified Person from and
after the date hereof, whether direct, indirect or consequential, as a result of
or arising from or in any way relating to any action, suit or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, arising from or in connection with the negotiation, preparation,
execution, performance or enforcement of this Agreement or any of the
transactions contemplated herein, in any case whether or not any such
Indemnified Person is a party to any such action, suit or proceeding or a
subject of any such inquiry or investigation if such Indemnified Person
reasonably determines that it may become a party to any such action; 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 as finally
determined by a court of competent jurisdiction and not subject to any appeal.
If any such action or claim shall be brought or asserted against any Indemnified
Party, such Indemnified Party shall promptly notify the Borrower in writing, and
the Borrower shall assume the defense thereof, including the employment of
counsel and the payment of all expenses. Such Indemnified Party shall, in its
sole discretion, have the right to employ separate counsel (who may be selected
by such Indemnified Party in its sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Indemnified Party unless (a) the Borrower agrees to pay
such fees and expenses, (b) the Borrower shall fail to assume the defense of
such action or proceeding or shall fail, in the reasonable discretion of such
Indemnified Party, to employ counsel satisfactory to the Indemnified Party in
any such action or proceeding, or (c) the named parties to any such action or
proceeding (including any impleaded parties) include both such Indemnified Party
and the Borrower, Reinsurance or any other Indemnified Party, and such
Indemnified Party shall have been advised by counsel that there may be one or
more non-frivolous legal defenses available to it that are different from or
additional to those available to the Borrower, Reinsurance or such other
Indemnified Party. All of the foregoing Indemnified Costs of any Indemnified
Person shall be paid or reimbursed by the Borrower and, as applicable,
Reinsurance as and when incurred and upon demand.
10. Fees and Expenses of Escrow Agent. The Borrower will pay to the
Escrow Agent an annual escrow fee of $2,000, payable in advance on the Closing
Date and on each anniversary of the Closing Date, will pay the Escrow Agent a
handling fee of $50 per transaction associated with investments and $25 per
transaction associated with deposits and disbursements, for which handling fees
the Borrower shall be billed monthly with payment due within ten (10) days of
such invoice, and will promptly reimburse the Escrow Agent upon demand for all
reasonable out-of-pocket costs and expenses incurred by the Escrow Agent.
11. Termination of Escrow. Upon the indefeasible payment in full of the
Obligations and receipt by the Escrow Agent of notice thereof from the Agent
(which notice the Agent agrees to give promptly thereupon), this Agreement shall
terminate, and the Escrow Agent shall forthwith disburse all funds held in each
L/C Cash Collateral Account to or at the written direction of the Borrower;
provided, however, that the provisions of Sections 7, 8 and 9 shall survive such
termination.
12. Disbursement Into Court. If, at any time, there shall exist any
dispute between the Borrower or Reinsurance, on the one hand, and the Agent, on
the other hand, with respect to the holding or disposition of any portion of the
funds held in the L/C Cash Collateral Accounts or any other obligations of the
Escrow Agent hereunder, or if at any time the Escrow Agent is unable to
determine, to its sole satisfaction, the proper disposition of any portion of
such funds or Escrow Agent's proper actions with respect to its obligations
hereunder, or if the Agent has not, within thirty (30) days of the furnishing by
the Escrow Agent of a notice of resignation pursuant to Section 6, appointed a
successor Escrow Agent to act hereunder, then the Escrow Agent may, in its sole
discretion, take either or both of the following actions:
(i) suspend the performance of any of its obligations under this Agreement
until such dispute or uncertainty shall be resolved to the sole satisfaction of
the Escrow Agent or until a successor Escrow Agent shall have been appointed (as
the case may be); provided, however, that the Escrow Agent shall continue to
invest the Escrow Funds in accordance with Section 5; and
(ii) petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in Charlotte, North Carolina, for
instructions with respect to such dispute or uncertainty, and pay into such
court all or part of the Escrow Funds for holding and disposition in accordance
with the instructions of such court.
The Escrow Agent shall have no liability to the Borrower, Reinsurance or any
other Person with respect to any such suspension of performance or disbursement
into court, specifically including any liability or claimed liability that may
arise, or be alleged to have arisen, out of or as a result of any delay in the
disbursement of funds held in any L/C Cash Collateral Account or any delay in or
with respect to any other action required or requested of the Escrow Agent.
13. Tax Reporting. The Escrow Agent will provide to the Borrower and
Reinsurance a statement of investment income and such other statements with
respect to each L/C Cash Collateral Account as the Borrower or Reinsurance may
reasonably request from time to time. The Borrower and Reinsurance shall be
responsible for all tax reporting with respect to the L/C Cash Collateral
Accounts and the income therefrom.
14. 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:
If to the Borrower: Chartwell Re Holdings Corporation
0 Xxxxxxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Reinsurance: Chartwell Reinsurance Company
0 Xxxxxxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Agent: First Union National Bank of North Carolina
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Syndication Agency Services
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Escrow Agent: First Union National Bank of North Carolina
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 28288-1179
Attention: Bond Administration
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or 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 fifth Business Day after deposit in the
mails, (ii) if mailed by overnight delivery service, telegraphed, telexed or
telecopied, when delivered for overnight delivery, delivered to the telegraph
company, confirmed by telex answerback or transmitted by telecopier,
respectively, or (iii) if delivered by hand, upon delivery.
15. Amendments, Waivers, etc. No amendment, modification, waiver,
discharge or termination of, or consent to any departure by any party hereto
from, any provision of this Agreement, shall be effective unless in a writing
signed by the Agent (and, in the event the same shall affect the rights or
obligations of the Escrow Agent under Sections 7, 8, 9 or 10, the Escrow Agent)
and the Borrower, and then the same shall be effective only in the specific
instance and for the specific purpose for which given.
16. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of North Carolina (without
regard to the conflicts of law provisions thereof).
17. 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 any such jurisdiction, without prohibiting or
invalidating such provision in any other jurisdiction or the remaining
provisions of this Agreement in any jurisdiction.
18. Construction. The headings of the various 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. Unless
the context otherwise requires, words in the singular include the plural and
words in the plural include the singular.
19. Counterparts. 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.
20. Entire Agreement. This Agreement and the other documents and
instruments executed contemporaneously herewith constitute the entire agreement
between the parties hereto relating to the subject matter hereof.
21. Successors and Assigns. The provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of the Borrower, Reinsurance, the Escrow Agent and the
Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized corporate officers as of the date first above
written.
CHARTWELL RE HOLDINGS CORPORATION
By:
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Name:
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Title:
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CHARTWELL REINSURANCE COMPANY
By:
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Name:
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Title:
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FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Agent
By:
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Name:
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Title:
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FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Escrow Agent
By:
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Name:
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Title:
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