Exhibit 10.1
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of October 20, 1997
among The Chase Manhattan Bank, as Collateral Agent (the "Collateral Agent"),
Barclays Bank PLC, the Swap Counterparty (the "Swap Counterparty") and Alleghany
Funding Corporation, a Delaware corporation (the "Company") and a wholly owned
subsidiary of Alleghany Corporation, a Delaware corporation (the "Parent").
W I T N E S S E T H:
WHEREAS, the Company and The Chase Manhattan Bank, as trustee (the
"Trustee") have entered into an Indenture dated as of October 20, 1997 (the
"Indenture") pursuant to which the Company will issue its $80,000,000 Floating
Rate Secured Notes Due 2007 (the "Notes");
WHEREAS, the Company acquired from the Parent the Installment Note, dated
January 7, 1987, from Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPFS"), to the Parent in the face amount of $91,535,343.54 (the "Original
Installment Note") the maturity of which has been extended from January 20, 1999
to January 22, 2007 (which, subject to further conditions, may be further
extended to January 19, 2010 as therein provided) pursuant to the terms of
Amendment No. 2 to Installment Sales Agreement, Installment Note No. 001 and
Guarantee dated October 20, 1997 by and among the Company, MLPFS and Merrill
Lynch & Co., Inc. ("ML&Co.") (the "Installment Note Extension" and together with
the original Installment Note, the "Installment Note"), which is entitled to the
benefit of the Guarantee, dated December 8, 1986 of ML&CO. in a principal amount
not to exceed $94,535,343.54 (the "Guarantee");
WHEREAS, the Company will also enter into a Master Agreement and related
Confirmation (together, the "Swap Agreement"), each dated October 20, 1997
between the Company and the Swap Counterparty pursuant to which the Company will
pay certain amounts received under the Installment Note and Guarantee and
receive an amount equal to the Note Interest Rate for each Interest Accrual
Period under the Indenture;
WHEREAS, under this Agreement, the Company will pledge the Installment
Note, the Guarantee and the Installment Sales Agreement, dated as of December 8,
1986 by and among the Parent, MLPFS and ML&CO. to the Collateral Agent as
security for the Noteholders and the Swap Counterparty pari passu in accordance
with the respective amounts owed by the Company to the Noteholders and the Swap
Counterparty;
WHEREAS, under the Indenture the Company will pledge the Swap Agreement to
the Trustee as security for the Noteholders and in this Agreement the Swap
Counterparty will consent to such pledge;
WHEREAS, the Company, the Noteholders and the Swap Counterparty wish to
appoint The Chase Manhattan Bank as Collateral Agent under this Agreement, to
take certain actions relating to the Intercreditor Collateral and to distribute
the proceeds of such Intercreditor Collateral and certain other monies to the
Holders of the Notes and the Swap Counterparty, all as more fully described
herein; and
NOW, THEREFORE, in consideration of the premises and agreements made herein
and for other good and valuable consideration receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. Capitalized terms used herein and defined in the
Indenture shall have the meanings therein indicated, except that the following
terms shall have the following meanings:
"Agreement" means this Intercreditor and Collateral Agency
Agreement.
"Final Judgment" means a judgment entered by a court having
jurisdiction over the subject matter of a proceeding and the parties
thereto as to which (a) no appeal or certiorari proceeding may be
commenced, or (b) no appeal or certiorari proceeding has been
commenced and as to which the time for filing a notice of appeal or
petition for certiorari has expired.
"Foreclosure Determination" shall have the meaning provided in
Section 4.1.
"Intercreditor Collateral" means the Installment Sales Agreement,
the Installment Note and the Guarantee and all proceeds thereof and
all proceeds of the conversion, voluntary or involuntary, of any of
the foregoing into cash or other liquid property.
"Lien" means a lien and security interest in and to all of the
Company's right, title and interest in the Intercreditor Collateral.
"Principal Office" shall mean the principal office of the
Collateral Agent, presently located at 450 West 33rd Street, 15th
Floor, New York, New York 10001.
"Settlement Amount" shall have the meaning ascribed to such term
in the Swap Agreement.
ARTICLE II
GRANT OF SECURITY INTEREST
TO COLLATERAL AGENT
Section 2.1 Grant of Security Interest. The Company hereby Grants to the
Collateral Agent, for the benefit and security of the Noteholders and of the
Swap Counterparty, all of its right, title and interest in and to the
Intercreditor Collateral, pari passu in accordance with the priorities set forth
herein. Such Grants are made, however, to secure the Noteholders and the Swap
Counterparty, equally and ratably without prejudice, priority or distinction,
except as expressly provided herein and in accordance with the priorities set
forth herein between the Holder of any Note and the Holder of any other Note or
the Swap Counterparty by reason of difference in time of issuance or otherwise,
and to secure (i) the payment of all amounts due on the Notes and to the Swap
Counterparty in accordance with their terms and the terms of the Swap Agreement,
respectively, and in accordance with the priorities set forth herein, (ii) the
payment of all other sums payable under this Agreement and (iii) compliance with
the provisions of this Agreement, all as provided in this Agreement. The
Collateral Agent acknowledges such Grant and agrees to perform the duties herein
to the best of its ability to the end that the interests of the Noteholders and
the Swap Counterparty may be adequately and effectively protected.
ARTICLE III
SECURITY
Section 3.1 Purpose of Agreement. This Agreement defines various
relationships among the parties hereto and sets forth the duties and powers of
the Collateral Agent with respect to the Intercreditor Collateral, and is made
for the benefit of the Swap Counterparty and the Noteholders each to the extent
provided herein to ensure the payment of the amounts owed to the Swap
Counterparty under the Swap Agreement and the Noteholders under the Indenture
from time to time and each of the Swap Counterparty's and the Company's due
performance of and compliance with all the terms of and other obligations under
the Intercreditor Collateral to which it is a party.
Section 3.2 Collateral. The Noteholders and the Swap Counterparty are
entitled to the benefits of any Intercreditor Collateral held or to be held by
or for the benefit of the Collateral Agent pursuant to this Agreement to the
extent more fully described herein. The Company will deliver or cause to be
delivered to the Collateral Agent, promptly upon the execution and delivery
hereof and thereof, the executed Installment Note and Guarantee and the
Assignment of the Intercreditor Collateral in the form of Exhibit A attached
hereto.
ARTICLE IV
DISTRIBUTIONS
Section 4.1 Authorization. Each of the Swap Counterparty, the Company and
the Noteholders by their acceptance of the Notes hereby authorizes the
Collateral Agent to act as such party's exclusive agent for purposes of (i)
holding the Intercreditor Collateral, (ii) enforcing the respective Liens of the
Swap Counterparty and the Noteholders in the Intercreditor Collateral and (iii)
exercising only such powers under this Agreement as are expressly delegated to
the Collateral Agent hereunder provided, however, that the Collateral Agent
shall not foreclose or realize upon or otherwise exercise remedies with respect
to the Liens of the Swap Counterparty and the Noteholders unless (A) an Event of
Default has occurred and is continuing with respect to the Notes and the
Collateral Agent receives a notice that the Notes have been declared due and
payable under Section 5.2 of the Indenture and (B) the Trustee at the direction
of a Majority of the Noteholders directs the Collateral Agent in writing to sell
the Intercreditor Collateral or to foreclose or realize upon "Foreclosure
Determination."
Section 4.2 Distribution upon Event of Default Related to Swap Agreement.
In the event that the Collateral Agent receives the written notice and direction
referred to in Section 4.1 hereof such that a Foreclosure Determination has
occurred and is continuing by reason of a Default in the payment of any amount
under the Swap Agreement by the Swap Counterparty, the Collateral Agent shall
not apply any proceeds realized upon the Intercreditor Collateral to the payment
of any amounts owed to the Swap Counterparty under the Swap Agreement, but
rather shall apply such proceeds to the payment of the amounts described in
Section 4.3 except the amounts described in Section 4.3(ii)(B) hereof and shall
pay the excess, if any, to the Company.
Section 4.3 Distribution Upon Other Event of Default. In the event that the
Collateral Agent receives the written notice and direction referred to in
Section 4.1 hereof such that a Foreclosure Determination has occurred and is
continuing by reason of the occurrence of an Event of Default under the
Indenture other than by reason of a Default in the payment of any interest under
the Swap Agreement by the Swap Counterparty and upon receipt of any proceeds of
the Intercreditor Collateral, the Collateral Agent shall apply all such
proceeds: (i) first, to the payment of any fees, expenses, liabilities, advances
or other amounts reasonably incurred by the Collateral Agent in maintaining,
foreclosing, realizing upon or taking any other action with respect to the
Intercreditor Collateral pursuant to the terms of this Agreement, including,
without limitation, compensation to the Collateral Agent and its agents and
counsel in connection therewith; (ii) second, pro rata to the payment of (A) any
accrued and unpaid interest on the Notes owed to the Noteholders at the
applicable Note Interest Rate thereto for each Interest Accrual Period and the
unpaid principal amount of the Notes then due, if any, and (B) the Settlement
Amount owed to the Swap Counterparty together with interest at the rate
specified in the Swap Agreement to the date of such application; and (iii) third
the proceeds remaining after the distribution made pursuant to (i) and (ii), if
any, shall be paid by the Collateral Agent to the Company.
ARTICLE V
COLLATERAL ACCOUNT AND
PAYMENTS TO SWAP COUNTERPARTY
Section 5.1 Collateral Account. The Collateral Agent shall, prior to the
Closing Date, establish a segregated trust account identified in Schedule A
hereto which shall be designated as the Collateral Account identified as held in
trust for the benefit of the Noteholders and the Swap Counterparty under this
Agreement, into which shall be deposited before 10:00 a.m., New York City time,
on any Business Day from time to time all amounts paid by (i) MLPFS and ML&Co.,
pursuant to the Installment Note and the Guarantee, respectively, in immediately
available funds, (ii) any Person to whom the Collateral Agent transfers or sells
the Installment Note and the Guarantee pursuant to a Foreclosure Determination
and (iii) the Company, and from which the Collateral Agent shall from time to
time withdraw all amounts payable to (w) the Swap Counterparty pursuant to the
Swap Agreement, (x) the Trust Account pursuant to Section 5.2 hereof, (y) the
Swap Counterparty and the Noteholders upon the occurrence of an Event of Default
and a foreclosure on or sale of the Installment Note and the Guarantee in
accordance with the priorities and amounts described herein and (z) the Company
hereunder.
Section 5.2 Transfer to Trust Account. On the Installment Note Principal
Payment Date, if any, the Collateral Agent shall withdraw from the Collateral
Account and transfer to the Trust Account, established by the Trustee under the
Indenture, an amount equal to the amount paid by MLPFS or ML&Co. on such date in
accordance with the Installment Note and the Guarantee, respectively.
Section 5.3 Payments to the Swap Counterparty. (a) Notwithstanding any
other provision in this Agreement, the Collateral Agent shall on each
Installment Note Interest Payment Date, (x) withdraw from the Collateral Account
an amount representing the Swap Counterparty Payment Amount and disburse such
amount to the Swap Counterparty and (y) withdraw all amounts in the Collateral
Account in excess of the Swap Counterparty Payment Amount and disburse such
amounts to the Issuer.
(b) If on any Installment Note Interest Payment Date, the amount available
in the Collateral Account from the related four-week period is insufficient to
make the full amount of the disbursements required to be made by the Collateral
Agent on behalf of the Company, the Collateral Agent shall make the
disbursements called for in the order and according to the priority set forth
under Section 5.3(a) above to the extent funds are available therefor.
Section 5.4 Extension of Maturity of Installment Note. The Collateral Agent
shall, upon receipt of written certification from the Company that it has
deposited in the Trust Account the amount referred to in Section 11.1(a)(2)(x)
of the Indenture and a written request from the Company to extend the maturity
of the Installment Note in accordance with the Installment Note Extension,
provide the written notice to MLPFS and ML&CO. referred to in Section 1 thereof
to extend the maturity date of the Installment Note to January 19, 2010;
provided, however, that the Collateral Agent, as registered holder of the
Installment Note, shall have no obligation to extend the maturity date of the
Installment Note unless it has received the written certification regarding the
deposit amount and the request to extend referred to in this Section.
ARTICLE VI
ASSIGNMENT OF SWAP AGREEMENT
Section 6.1 Assignment of Swap Agreement. (a) Upon the retirement of the
Notes and the release of the Installment Note and the Guarantee from the lien of
the Noteholders in this Agreement, the Company agrees that the pledge of the
Intercreditor Collateral to the Collateral Agent for the benefit of the Swap
Counterparty as security for obligations of the Company under the Swap Agreement
shall survive such retirement and release and shall continue until the Swap
Agreement terminates in accordance with its terms; provided, however, that the
Company may substitute for such pledge a pledge to the Collateral Agent for the
benefit of the Swap Counterparty, of bills, notes and bonds issued by the
Department of the Treasury of the United States of America which are backed by
the full faith and credit of the United States of America ("Government
Securities') with a remaining maturity of not more than six months and with an
aggregate market value of not less than $2,000,000. Upon receipt of
documentation satisfactory to the Swap Counterparty providing for such pledge
and upon receipt of evidence satisfactory to the Swap Counterparty that such
pledge grants to the Collateral Agent, for the benefit of the Swap Counterparty,
a valid and perfected first priority security interest in the Government
Securities and all proceeds and reinvestments thereof, the Collateral Agent
shall deliver to the Company and the Swap Counterparty an instrument describing
the release of the Intercreditor Collateral from the lien of the Swap
Counterparty in this Agreement.
(b) The Company and the Swap Counterparty hereby agree, to the following:
(i) The Swap Counterparty consents to the provisions of the assignment
of the Swap Agreement, such consent to be evidenced by the delivery of
Exhibit B hereto upon the execution of this Agreement.
(ii) The Swap Counterparty acknowledges that the Company is assigning
all of its right, title and interest in, to and under the Swap Agreement to
the Trustee for the benefit of the Noteholders and the Swap Counterparty
agrees that all of the representations, covenants and agreements made by
the Swap Counterparty in the Swap Agreement are also for the benefit of the
Trustee and the Noteholders.
(iii) The Swap Counterparty shall deliver to the Trustee duplicate
original copies of all notices, statements, communications and instruments
delivered or required to be delivered to the Company pursuant to the Swap
Agreement.
(iv) Until such time as the Notes have been retired, neither the
Company nor the Swap Counterparty will enter into any agreement amending or
modifying the Swap Agreement without the prior written consent of the
Majority of the Noteholders and any such amendment or modification, without
such consent by the Majority of the Noteholders shall be void.
(v) Until such time as the Notes have been retired, neither the
Company nor the Swap Counterparty will deliver any notice of termination of
the Swap Agreement without the prior written consent of all the
Noteholders.
ARTICLE VII
POWERS OF THE COLLATERAL AGENT
Section 7.1 Enforcement of Security. The Swap Counterparty and the
Noteholders by their acceptance of the Notes confirm that, regardless of the
relative times of attachment or perfection of Liens simultaneously securing the
claims of both the Swap Counterparty and the Noteholders under this Agreement
and the obligations of the Company hereunder, or the order of filing of
financing statements or other security documents, the Liens granted to the
Collateral Agent in respect of the pari passu claims of the Swap Counterparty
and the Noteholders in the proceeds of the Installment Note and the Guarantee
pursuant to this Agreement shall in all respects be equal and ratable to each
other. So long as the Trustee at the direction of a Majority of the Noteholders
so directs, the Collateral Agent may foreclose on Liens in any manner which the
Trustee at the direction of a Majority of the Noteholders, in their sole
discretion, choose, even though a higher price might have been realized if the
Trustee at the direction of a Majority of the Noteholders had directed the
Collateral Agent to foreclose on the Liens in another manner.
Section 7.2 Marshalling. The Collateral Agent shall not be required to
marshal any present or future security for, or guaranties of, the Intercreditor
Collateral or to resort to such security or guaranties in any particular order;
and all of the Collateral Agent's rights hereunder and in respect of such
securities and guaranties shall be cumulative and in addition to all other
rights, however existing or arising.
ARTICLE VIII
AGENCY
Section 8.1 Appointment and Duties. (a) The Swap Counterparty, the Company
and the Noteholders by their acceptance of the Notes designate and appoint The
Chase Manhattan Bank, as the Collateral Agent hereunder. Notwithstanding any
provision to the contrary herein, the Collateral Agent shall not have any duties
or responsibilities except those expressly set forth herein, or any fiduciary
relationship with the Swap Counterparty, the Company or the Noteholders, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Intercreditor Collateral or this Agreement or
otherwise exist against the Collateral Agent. The Collateral Agent shall not be
liable for any action taken or omitted by it as such hereunder or under any
Intercreditor Collateral, or in connection herewith or therewith, unless caused
by its gross negligence or willful misconduct as determined in a Final Judgment.
(b) The Collateral Agent will give notice to the Swap Counterparty, the
Company and the Noteholders of any sale, foreclosure action or other exercise of
specific remedies taken by it hereunder relating to the Installment Note and the
Guarantee. Such notice shall be given prior to the taking of such action unless
the Collateral Agent determines that to do so would be detrimental to the
interests of the Swap Counterparty, the Company or the Noteholders, in which
event such notice shall be given promptly after the taking of such action.
(c) The Collateral Agent shall not exercise any rights or remedies, give
any consents or take any other actions under or relating to the Intercreditor
Collateral or enter into any agreement amending, modifying, supplementing or
waiving any provision of the Intercreditor Collateral other than the exercise of
such rights and remedies, the giving of consents and the taking of actions
delegated to the Collateral Agent hereunder or under the Intercreditor
Collateral, unless the Swap Counterparty or a majority of the Noteholders have
directed or consented to the Collateral Agent taking such action.
Section 8.2 Rights of Collateral Agent. (a) The Collateral Agent may
execute any of its duties under this Agreement by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.
(b) Neither the Collateral Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with any Intercreditor Collateral or this Agreement (except for its
or such Person's own gross negligence or willful misconduct as determined in a
Final Judgment), or (ii) responsible in any manner to the Swap Counterparty, the
Company or the Noteholders for any recitals, statements, representations or
warranties made by the Swap Counterparty, the Parent or the Company or any
officer of any of them contained in this Agreement, any Intercreditor Collateral
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in connection
with, this Agreement or any of the Intercreditor Collateral or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Intercreditor Collateral or the Notes or for any failure of the
Company or the Swap Counterparty to perform their obligations hereunder or
thereunder. The Collateral Agent shall not be under any obligation to the Swap
Counterparty, the Company or the Noteholders to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any Intercreditor Collateral, or to inspect the
properties, books or records of the Company or the Swap Counterparty.
(c) The Collateral Agent shall have no obligation whatsoever to the Swap
Counterparty, the Noteholders or to any other Person to assure that the
Intercreditor Collateral exists or is owned by the Company, or is cared for,
protected or insured or has been encumbered or that the Liens granted to the
Collateral Agent herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and power granted or available to the Collateral Agent in
this Agreement or in the Intercreditor Collateral.
(d) The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and other experts
selected by the Collateral Agent. The Collateral Agent shall be fully justified
in failing or refusing to take any action hereunder or under any Intercreditor
Collateral (i) if such action would, in the opinion of the Collateral Agent (or
its counsel), be contrary to law or the terms of this Agreement or any
Intercreditor Collateral, (ii) if it shall not receive such instructions, advice
or concurrence of such Persons as it deems necessary or appropriate or (iii) if
it shall not first be indemnified to its satisfaction by the Swap Counterparty
and the Noteholders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any Intercreditor Collateral in
accordance with a request of the Swap Counterparty, a Majority of the
Noteholders or such other Persons whose approval, consent or instructions are
expressly required under the terms of this Agreement or any Intercreditor
Collateral, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Swap Counterparty, the Noteholders or such
other Persons and their successors and assigns.
(e) The Collateral Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default unless the Collateral Agent
has received notice from the Trustee describing such Default or Event of Default
and the agreement under which it arises and stating that such notice is a
"notice of default". In the event that the Collateral Agent receives such a
notice, the Collateral Agent shall give notice thereof to the Swap Counterparty,
the Company and the Noteholders. The Collateral Agent shall take such action
with respect to such Event of Default as shall be required herein pursuant to
Section 4.2 or Section 4.3 hereof. No provision of this Agreement shall require
the Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(f) In determining whether it has been directed to take action or refrain
from taking action by the Swap Counterparty, a Majority of the Noteholders or
such other Persons whose approval or consent the Collateral Agent deems
necessary or appropriate in its sole discretion, or in determining such other
matters as may be necessary pursuant to the terms of this Agreement or any of
the Intercreditor Collateral (including, without limitation, amounts payable
pursuant to Article IV), the Collateral Agent shall be entitled to request and
to rely upon certificates of the Note Registrar as to the outstanding principal
amount of the Notes or from the Swap Counterparty as to the Settlement Amount
due and payable under the Swap Agreement, and such other matters as the
Collateral Agent shall request.
Section 8.3 Lack of Reliance on the Agent. Each of the Swap Counterparty,
the Company and each of the Noteholders by their purchase of the Notes expressly
acknowledges that neither the Collateral Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Collateral Agent
hereafter taken, including, without limitation, any review of the affairs of
such Persons, shall be deemed to constitute any representation or warranty by
the Collateral Agent to such Person. Each Noteholder, by their purchase of the
Notes, and the Swap Counterparty represents to the Collateral Agent that it has,
independently and without reliance upon the Collateral Agent or any other
Person, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Company and made its own decision to enter into this Agreement. Each Noteholder,
by their purchase of the Notes, and the Swap Counterparty also represents that
it will, independently and without reliance upon the Collateral Agent or any
other Holder, 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 under this Agreement and any
Intercreditor Collateral as applicable, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly required to be furnished to the
Noteholders and the Swap Counterparty by the Collateral Agent hereunder, the
Collateral Agent shall not have any duty or responsibility to provide any such
Person with any credit or other information concerning the business, operations,
property, financial or other condition or creditworthiness of the Company which
may come into the possession of the Collateral Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
Section 8.4 The Collateral Agent in Its Individual Capacity. The Collateral
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with each of the Company, the Swap Counterparty
and the Noteholders as though the Collateral Agent were not the Collateral Agent
hereunder.
Section 8.5 Resignation of the Collateral Agent; Appointment of Successor.
(a) No resignation or removal of the Collateral Agent and no appointment of
a successor Collateral Agent pursuant to this Article shall become effective
until the acceptance of appointment by the successor Collateral Agent under
Section 8.6.
(b) The Collateral Agent may resign at any time by giving written notice
thereof to the Company, the Swap Counterparty and the Noteholders. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor Collateral Agent by written instrument, in duplicate, executed by an
Authorized Officer of the Company, one original copy of which shall be delivered
to the Collateral Agent so resigning and one original copy to the successor
Collateral Agent, together with a copy to each Noteholder, provided that such
successor Collateral Agent shall be appointed only upon the written consent of
the Holders of a Majority of the Notes if no successor Collateral Agent shall
have been appointed and an instrument of acceptance by a successor Collateral
Agent shall not have been delivered to the Collateral Agent within 30 days after
the giving of such notice of resignation, the resigning Collateral Agent, or any
Holder of a Note, may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Collateral Agent.
(c) The Collateral Agent may be removed at any time by Act of a Majority of
the Noteholders delivered to the Collateral Agent, the Swap Counterparty and to
the Company.
(d) If at any time the Collateral Agent shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver or liquidator of the
Collateral Agent or of its property shall be appointed or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then,
(i) the Company, by Issuer Order, may remove the Collateral Agent, or (ii) any
Noteholder may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Collateral Agent and
the appointment of a successor Collateral Agent.
(e) If the Collateral Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Collateral Agent for
any cause, the Company, by Issuer Order, shall promptly appoint a successor
Collateral Agent, provided that such successor Collateral Agent shall be
appointed only upon the written notice to the Noteholders, which notice states
that such appointment shall be effective unless rejected by a Majority of the
Noteholders within 30 days after the date of such notice and which notice is not
followed by a rejection of the appointment by a Majority of the Noteholders
within 30 days. If no successor Collateral Agent shall have been so appointed by
the Company or the Noteholders and shall have accepted appointment in the manner
hereinafter provided any Noteholder may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent.
(f) The Company shall give prompt notice of each resignation and each
removal of the Collateral Agent and each appointment of a successor Collateral
Agent by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of the Notes as their names and addresses appear in the
Note Register. Each notice shall include the name of the successor Collateral
Agent and its Principal Office.
Section 8.6 Acceptance of Appointment by Successor. Every successor
Collateral Agent appointed hereunder shall execute, acknowledge and deliver to
the Company, the retiring Collateral Agent and each Noteholder an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Collateral Agent shall become effective and such successor Collateral
Agent, without any further act, deed or conveyance, shall become vested with all
the rights, powers, trusts, duties and obligations of the retiring Collateral
Agent; but, on request of the Company or the successor Collateral Agent or the
Majority of the Noteholders, such retiring Collateral Agent shall, upon payment
of its charges then unpaid, execute and deliver an instrument transferring to
such successor Collateral Agent all the rights, powers and trusts of the
retiring Collateral Agent, and shall duly assign, transfer and deliver to such
successor Collateral Agent all property and money held by such retiring
Collateral Agent hereunder. Upon request of any such successor Collateral Agent,
the Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Collateral Agent all such rights,
powers and trusts.
Upon acceptance of appointment by a successor Collateral Agent as provided
in this Section, the Company shall mail notice thereof by first-class mail,
postage prepaid, to the Noteholders at their last addresses appearing upon the
Note Register. If the Company fails to mail such notice within ten days after
acceptance of appointment by the successor Collateral Agent, the successor
Collateral Agent shall cause such notice to be mailed at the expense of the
Company.
ARTICLE IX
COVENANTS OF THE COMPANY
Section 9.1 Protection of Intercreditor Collateral. (a) The Company shall
from time to time execute and deliver all such supplements and amendments hereto
and all such financing statements, continuation statements, instruments of
further assurance and other instruments, and shall take such other action as may
be necessary or advisable to:
(i) grant more effectively all or any portion of the Intercreditor
Collateral;
(ii) maintain or preserve the lien (and the priority thereof) of this
Intercreditor Agreement or to carry out more effectively the purposes
hereof;
(iii) perfect, publish notice of, or protect the validity of any Grant
made or to be made by this Intercreditor Agreement;
(iv) enforce any of the instruments or property included in the
Intercreditor Collateral;
(v) preserve and defend title to the Intercreditor Collateral and the
rights therein of the Trustee and Collateral Agent and the Holders of the
Notes in such Intercreditor Collateral against the claims of all persons
and parties; or
(vi) pay any and all taxes levied or assessed upon all or any part of
the Intercreditor Collateral.
The Company hereby designates the Collateral Agent its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required pursuant to this Section 9.1; provided, however, that
the Collateral Agent shall not be responsible for preparing, filing or recording
any such instrument.
(b) The Collateral Agent shall not remove any portion of the Intercreditor
Collateral that consists of money or is evidenced by an instrument, certificate
or other writing (A) from the jurisdiction in which it was held at the date the
most recent Opinion of Counsel was delivered pursuant to Section 9.2 hereof (or
from the jurisdiction in which it was held as described in the Opinion of
Counsel delivered at the Closing Date pursuant to Section 3.1(11) of the
Indenture, if no Opinion of Counsel has yet been delivered pursuant to Section
9.2 hereof) or (B) from the possession of the Person who held it on such date
unless the Collateral Agent shall have first received an Opinion of Counsel to
the effect that the lien and security interest created by this Intercreditor
Agreement with respect to such property will continue to be maintained after
giving effect to such action or actions.
Section 9.2 Opinions as to Intercreditor Collateral. On or before February
1 in each calendar year, commencing in 1998, the Company shall furnish to the
Collateral Agent an Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the Intercreditor
Collateral, this Intercreditor Agreement, any agreements supplemental thereto
and any other requisite documents as is necessary to maintain the first lien and
perfected security interest created by this Intercreditor Agreement with respect
to the Intercreditor Collateral and reciting the details of such action or
stating that, in the opinion of such counsel, no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the actions that will, in the opinion of such counsel, be required to
maintain the lien and security interest of this Intercreditor Agreement with
respect to the Intercreditor Collateral until February 1 in the following
calendar year.
Section 9.3 Negative Covenants. The Company will not:
(1) sell, transfer, exchange or otherwise dispose of, or pledge,
mortgage, hypothecate or otherwise encumber (or permit such to occur or
suffer such to exist), any part of the Intercreditor Collateral, except as
expressly permitted by this Intercreditor Agreement;
(2) claim any credit on, or make any deduction from, the principal or
interest payable with respect to the Notes other than amounts withheld
pursuant to Section 7.1 of the Indenture, or assert any claim against any
present or future Noteholder, by reason of the payment of any taxes levied
or assessed upon any part of the Intercreditor Collateral; or
(3) (A) permit the validity or effectiveness of this Intercreditor
Agreement or any Grant hereunder to be impaired, or permit the lien of this
Intercreditor Agreement to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to this Intercreditor Agreement or
the Notes, except as may be expressly permitted hereby or thereby, (B)
permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance (other than the lien of this Intercreditor Agreement) to
be created on or extended to or otherwise arise upon or burden the
Intercreditor Collateral, respectively, or any part thereof, any interest
therein or the proceeds thereof or (C) take any action that would permit
the lien of this Intercreditor Agreement not to constitute a valid first
priority perfected security interest in the Intercreditor Collateral.
ARTICLE X
MISCELLANEOUS
Section 10.1 Waivers, Amendments. None of the terms or provisions of this
Agreement may be amended, supplemented, waived or otherwise modified except by
an instrument in writing duly executed by the Collateral Agent, the Company, the
Swap Counterparty and the Trustee on behalf of the Noteholders.
Section 10.2 Agents of the Parent or the Company. Neither the Parent, nor
any of the agents, partners, beneficiaries, officers, directors, employees,
stockholders, attorneys, advisors or assigns of successors of the Parent or the
Company shall be liable for any amounts payable, or performance due, under this
Agreement. It is understood that the foregoing provisions of this paragraph
shall not (A) prevent recourse to the Intercreditor Collateral or the sums due
or to become due under any security, instrument or agreement which is part of
the Intercreditor Collateral or (B) constitute a waiver, release or discharge of
any indebtedness or obligation evidenced by the Notes or secured by this
Agreement, but the same shall continue until paid or discharged, and provided,
further, that the foregoing provisions of this Section shall not limit the right
of any person to name the Company as a party defendant in any action, suit or in
the exercise of any other remedy under the Notes or this Agreement, so long as
no judgment in the nature of a deficiency judgment or seeking personal liability
shall be asked for or (if obtained) enforced against any such person or entity
other than the Company.
Section 10.3 Payment of Expenses, etc. The Company shall: (i) pay on
demand, or reimburse the Collateral Agent for, all the Collateral Agent's
internal and external legal, appraisal, valuation and investigation expenses and
for all other out-of-pocket costs and expenses of every type and nature
(including, without limitation, the fees, expenses and disbursements of
attorneys retained by the Collateral Agent and other consultants and agents)
incurred by the Collateral Agent in connection with (A) the negotiation,
preparation and execution of this Agreement; (B) the administration of this
Agreement including consultation with attorneys in connection therewith, (C) the
protection, collection or enforcement of any of the Liens granted in the
Intercreditor Collateral, (D) foreclosing against the Intercreditor Collateral
or exercising or enforcing any other right or remedy available by reason of an
Event of Default, (E) the Collateral Agent's commencement, defense or
intervention in any litigation or its filing of a petition, complaint, answer,
motion or other pleadings in any legal proceeding relating to the Company and
related to or arising out of the transactions contemplated hereby, (F) the
taking of any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise), (G) the protection, preservation, collection, lease,
sale, taking possession of, or liquidation of any of the Intercreditor
Collateral, or (H) the attempt to enforce or the enforcement of any Lien in any
of the Intercreditor Collateral or any other rights under this Agreement or the
Intercreditor Collateral; (ii) pay such fees as may be agreed to from time to
time between the Collateral Agent and the Company and (iii) indemnify the
Collateral Agent, its officers, directors, employees, representatives, attorneys
and agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them arising out of
or by reason of any investigation, litigation or other proceeding related to
this Agreement, the Intercreditor Collateral, and any other agreement entered
into by it in connection therewith including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding, unless, pursuant to a Final
Judgment, the Collateral Agent is found to have acted with gross negligence or
willful misconduct in the underlying action. To the extent that the obligations
of the Company under this Section 10.3 are unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.
Section 10.4 Termination. The respective obligations and responsibilities
of the Company, the Swap Counterparty and the Collateral Agent created hereby
shall terminate upon the earlier of (i) January 22, 2007 and (ii) upon the
retirement of the Notes, and the satisfaction of the conditions described in
Section 6.1 hereof, the close of business on the date on which the Collateral
Agent delivers to the Swap Counterparty and the Company the release described
therein. Notwithstanding the above, Section 8.2 shall survive the termination of
this Agreement.
Section 10.5 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when received by the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed to such party
at its address set forth on the signature pages hereto, or at such other address
as any of the parties hereto may hereafter notify the others in writing.
Section 10.6 Binding Effect. This Agreement and the obligations of the
parties hereto shall be binding upon their respective successors and assigns,
and shall, together with the rights and remedies of the Collateral Agent and the
other parties hereto, inure to the benefit of the Collateral Agent, the Swap
Counterparty (including, without limitation, any replacement Swap Counterparty
succeeding to the duties of the initial Swap Counterparty pursuant to the
proviso to Section 5.1 of the Indenture), the Noteholders and their respective
successors and assigns; provided, however, that except as provided in Section
7.10 of the Indenture, notwithstanding anything in this Agreement to the
contrary, the rights or duties of each of the parties hereto may not be assigned
by operation of law or otherwise without the written consent of each of the
other parties hereto.
Section 10.7 Survival of Indemnities. All indemnities set forth herein
including, without limitation those contained in Section 8.2 shall survive the
termination of this Agreement.
Section 10.8 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
Section 10.9 Section References. Any reference to a section or subsection
is, unless otherwise indicated, a reference to a section or subsection contained
in this Agreement.
Section 10.10 Counterparts; Receipt of Documents. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 10.11 Governing Law; Submission to Jurisdiction. This Agreement and
the rights and obligations of the parties hereunder shall be construed in
accordance with and be governed by the laws of the State of New York. Any legal
action or proceeding with respect to this Agreement or any other Intercreditor
Collateral may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the Company and the Swap
Counterparty hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each of the
Company and the Swap Counterparty irrevocably designates CT Corporation System,
located at 1633 Broadway, New York, New York 10019 the designee, appointee and
agent of such Person (the "Process Agent") to receive, for and on behalf of such
Person, service of process in such respective jurisdictions in any legal action
or proceeding with respect to this Agreement or any other Intercreditor
Collateral, and such service shall be deemed completed ten days after delivery
thereof to said agent. It is understood that a copy of such process served on
such Process Agent for any of the aforementioned Persons will be promptly
forwarded by mail to such Person at its address set forth opposite its signature
below, but the failure of such Person to receive such copy shall not affect in
any way the service of such process. Each party further irrevocably consents to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to such Person at its said address, such service to
become effective ten days after such mailing. Each of the parties hereto
irrevocably waives any objection, including without limitation, any objection to
the laying of venue based on the grounds of forum non conveniens which it may
now or hereafter have to the bringing of any such action or proceeding in the
jurisdictions hereinabove referenced. Nothing herein shall affect the right of
any party hereto to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any such party in any
other jurisdiction.
Section 10.12 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the agreements referred to herein set forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered by their duly authorized officers on the day and year
first above written.
THE CHASE MANHATTAN BANK
as Collateral Agent
By /s/ Wanda Eiland
--------------------------
Title: Trust Officer
Notice Address:
450 West 33rd Street
15th Floor
New York, New York 10001
ALLEGHANY FUNDING CORPORATION
By /s/ David B. Cuming
--------------------------
Title: President
Notice Address:
375 Park Avenue
New York, New York 10152
Attn: Secretary
BARCLAYS BANK PLC
By /s/ J. Robert Bredahl
--------------------------
Title: Managing Director
Notice Address:
----------------------------
----------------------------
Attn:-----------------------
INSTALLMENT NOTE AND GUARANTEE ASSIGNMENT
This Agreement is made as of October 20, 1997 among Alleghany Funding
Corporation (the "Company"), The Chase Manhattan Bank in its capacity as
Collateral Agent (the "Collateral Agent"), Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPFS") and Merrill Lynch & Co., Inc. ("ML&Co.").
W I T N E S S E T H
WHEREAS, the Company and Trustee have entered into an Indenture dated as of
October 20, 1997 (the "Indenture") pursuant to which the Company will issue its
$80,000,000 Floating Rate Secured Notes Due 2007 (the "Notes");
WHEREAS, the Company acquired from Alleghany Corporation (the "Parent") the
Installment Note, dated January 7, 1987, from MLPFS, to the Parent in the face
amount of $91,535,343.54 (the "Original Installment Note") the maturity of which
was extended from January 20, 1999 to January 22, 2007 (which, subject to
further conditions, may be further extended to January 19, 2010 as therein
provided) pursuant to the terms of Amendment No. 2 to the Installment Sales
Agreement, Installment Note No. 001 and Guarantee dated as of October 20, 1997
by and among the Company, MLPFS and ML&Co. (the "Installment Note Extension" and
together with the Original Installment Note, the "Installment Note"), which is
entitled to the benefit of the Guarantee, dated December 8, 1986 of ML&Co. in a
principal amount not to exceed $94,535,343.54 (the "Guarantee"), and (iii)
received the assignment from the Parent of the Installment Sales Agreement dated
December 8, 1986 by and among Alleghany Financial Corporation (the predecessor
of the Parent), MLPFS and ML&Co., as amended by the Installment Note Extension
(the "Installment Sales Agreement");
WHEREAS, the Company will also enter into a Master Agreement and related
Confirmation (together, the "Swap Agreement"), each dated as of October 20, 1997
between the Company and the Swap Counterparty pursuant to which the Company will
pay certain amounts received under the Installment Note and Guarantee and
receive an amount equal to the Note Interest Rate for each Interest Accrual
Period under the Indenture;
WHEREAS, under the Intercreditor and Collateral Agency Agreement (the
"Intercreditor Agreement"), dated as of October 20, 1997 among the Collateral
Agent, the Swap Counterparty and the Company, the Company will pledge the
Installment Note, the Guarantee and the Installment Sales Agreement to the
Collateral Agent as security for the Noteholders and the Swap Counterparty pari
passu in accordance with the respective amounts owed by the Company to the
Noteholders and the Swap Counterparty;
WHEREAS, under the Indenture the Company will pledge the Swap Agreement to
the Trustee as security for the Noteholders and under the Intercreditor
Agreement the Swap Counterparty will consent to such pledge;
WHEREAS, the parties hereto wish to enter into this assignment agreement
under which the Company will assign all its right, title and interest in and to
the Installment Note, the Guarantee and the Installment Sales Agreement to the
Collateral Agent for the benefit of the Noteholders and the Swap Counterparty
and MLPFS and ML&Co. will consent to such assignment, all as more fully
described herein; and
NOW, THEREFORE, know by all men these presents, in consideration of the
mutual covenants set forth herein, the parties hereto agree as follows:
1. The Company hereby irrevocably assigns, transfers and sets over to the
Collateral Agent all of the Company's interest in and rights, benefits and
remedies under the Installment Sales Agreement, the Installment Note and the
Guarantee as security under and pursuant to the terms of the Intercreditor
Agreement. Such assignment is given pursuant to the terms and provisions of the
Installment Sales Agreement, the Installment Note and the Guarantee, and the
Collateral Agent and its rights pursuant to such assignment shall be subject to
the terms and provisions of the Installment Sales Agreement, the Installment
Note and the Guarantee, including, without limit, the restrictions on transfers.
MLPFS and ML&Co. shall in no event be obligated to make any payments or to take
any actions to any extent other than those expressly stated in the Installment
Sales Agreement, the Installment Note and the Guarantee.
2 Upon the occurrence of a Foreclosure Determination (as such term is
defined in the Intercreditor Agreement), the Collateral Agent, and not the
Company, shall have the right to exercise the rights, benefits and remedies
under the Intercreditor Agreement and the Intercreditor Collateral (as such term
is defined in the Intercreditor Agreement).
3. MLPFS hereby confirms its consent to, and agrees to honor, the
assignment of the Installment Note, Guarantee and Installment Sales Agreement by
the Parent to the Company, and further confirms its agreement that such
assignments shall be deemed to be in compliance with all applicable requirements
of the Installment Note, the Guarantee and the Installment Sales Agreement.
4. ML&Co. hereby confirms its consent to, and agrees to honor, the
assignment of the Installment Note, Guarantee and Installment Sales Agreement by
the Parent to the Company, and further confirms its agreement that such
assignments shall be deemed to be in compliance with all applicable requirements
of the Installment Note, the Guarantee and the Installment Sales Agreement.
5. MLPFS hereby irrevocably grants its consent to, and agrees to honor, the
foregoing irrevocable assignment to the Collateral Agent, and agrees that such
assignment shall be deemed to be in compliance with all applicable requirements
of the Installment Note, the Guarantee and the Installment Sales Agreement.
6. ML&Co. hereby irrevocably grants its consent to, and agrees to honor,
the foregoing irrevocable assignment to the Collateral Agent, and agrees that
such assignment shall be deemed to be in compliance with all applicable
requirements of the Installment Note, the Guarantee and the Installment Sales
Agreement.
7. For the purpose of paragraph (3) on page six of the original Installment
Note only, the Parent shall be deemed to be the registered holder of the
Installment Note so long as the Installment Note is owned by the Company or
pledged by the Company to secure its obligations. For all other purposes under
the Installment Note and the Guarantee, MLPFS and ML&Co. hereby agree to treat
the Collateral Agent as the registered holder of the Installment Note and the
beneficiary of the Guarantee, respectively.
8. The Company hereby instructs MLPFS and ML&Co. and MLPFS and ML&Co.
hereby agree to make all payments under the Installment Note and the Guarantee,
respectively, to the Collateral Account (as such term is defined in the
above-referenced Intercreditor Agreement).
9. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
therein without regard to conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as
of the day and year first above mentioned.
COLLATERAL AGENT: THE CHASE MANHATTAN BANK
By:------------------------------
Name:----------------------------
Title:---------------------------
COMPANY: ALLEGHANY FUNDING CORPORATION
By:-----------------------------
Name:---------------------------
Title:--------------------------
MLPFS: MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:-----------------------------
Name:---------------------------
Title:--------------------------
ML&Co.: MERRILL LYNCH & CO., INC.
By:-----------------------------
Name:---------------------------
Title:--------------------------
SWAP AGREEMENT ASSIGNMENT
This Agreement is made as of October 20, 1997, among Alleghany Funding
Corporation (the "Company"), The Chase Manhattan Bank in its capacity as
collateral agent (the "Collateral Agent") and in its capacity as trustee (the
"Trustee"), and Barclays Bank PLC (the "Swap Counterparty").
W I T N E S S E T H
WHEREAS, the Company and Trustee have entered into an Indenture dated as of
October 20, 1997 (the "Indenture"; capitalized terms used herein and not defined
having the meanings assigned to such terms in the Indenture) pursuant to which
the Company will issue its $80,000,000 Floating Rate Secured Notes Due 2007 (the
"Notes");
WHEREAS, the Company acquired from Alleghany Corporation (the "Parent") the
Installment Note, dated January 7, 1987, from Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPFS"), to the Parent in the face amount of $91,535,343.54
(the "Original Installment Note") the maturity of which was extended from
January 20, 1999 to January 22, 2007 (which, subject to further conditions, may
be further extended to January 19, 2010 as therein provided) pursuant to the
terms of Amendment No. 2 to the Installment Sales Agreement, Installment Note
No. 001 and Guarantee dated as of October 20, 1997 by and among the Company,
MLPFS and Merrill Lynch & Co., Inc. ("ML&Co.") (the "Installment Note Extension"
and together with the Original Installment Note, the "Installment Note"), which
is entitled to the benefit of the Guarantee, dated December 8, 1986 of ML&Co. in
a principal amount not to exceed $94,535,343.54 (the "Guarantee");
WHEREAS, the Company will also enter into an Interest Rate and Currency
Exchange Agreement and related Confirmation (together, the "Swap Agreement"),
each dated as of October 20, 1997 between the Company and the Swap Counterparty
pursuant to which the Company will pay an amount equal to certain amounts
received under the Installment Note and Guarantee and receive an amount equal to
the Note Interest Rate for each Interest Accrual Period under the Indenture;
WHEREAS, under the Intercreditor and Collateral Agency Agreement (the
"Intercreditor Agreement"), dated as of October 20, 1997 among the Collateral
Agent, the Swap Counterparty and the Company, the Company will pledge the
Installment Note and the Installment Sales Agreement (the "Installment Sales
Agreement"), dated as of December 8, 1986 by and among the Parent, MLPFS and
ML&Co. to the Collateral Agent as security for the Noteholders and the Swap
Counterparty pari passu in accordance with the respective amounts owed by the
Company to the Noteholders and the Swap Counterparty;
WHEREAS, under the Indenture the Company will pledge the Swap Agreement to
the Trustee as security for the Noteholders and under the Intercreditor
Agreement the Swap Counterparty will consent to such pledge;
WHEREAS, the parties hereto wish to enter into this assignment agreement
under which the Company will assign all its right, title and interest in and to
the Swap Agreement to the Trustee for the benefit of the Noteholders and the
Swap Counterparty will consent to such assignment;
NOW, THEREFORE, know by all men these presents, in consideration of the
mutual covenants set forth herein, the parties hereto agree as follows:
1. The Company hereby irrevocably assigns, transfers and sets over to the
Trustee all of the Company's estate, right, title and interest in, to and under
the Swap Agreement as security under, and pursuant to the terms of, the
Indenture; provided, however, that so long as no Event of Default has occurred
and is continuing, the Trustee hereby grants the Issuer a license to exercise
any of such rights under the Swap Agreement without notice to or the consent of
the Trustee or the Noteholders, except that, until such time as the Notes have
been retired, neither the Company nor the Swap Counterparty shall (i) enter into
any agreement amending or modifying the Swap Agreement without the prior written
consent of a majority of the Noteholders or (ii) deliver any notice of
termination of the Swap Agreement without the prior written consent of all the
Noteholders.
2. Upon the occurrence of an Event of Default under the Indenture, the
Trustee, and not the Company, shall have the right to exercise the rights,
benefits and remedies under the Swap Agreement.
3. The Swap Counterparty hereby irrevocably grants its consent to the
foregoing irrevocable assignment to the Trustee.
4. The Company hereby instructs the Swap Counterparty and the Swap
Counterparty hereby agrees to make all payments under the Swap Agreement to the
Trust Account (as such term is defined in the above-referenced Indenture).
5. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
therein without regard to conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as
of the day and year first above mentioned.
COMPANY: ALLEGHANY FUNDING CORPORATION
By:-----------------------------
Name:---------------------------
Title:--------------------------
SWAP COUNTERPARTY: BARCLAYS BANK PLC
By:-----------------------------
Name:---------------------------
Title:--------------------------
TRUSTEE: THE CHASE MANHATTAN BANK
By:-----------------------------
Name:---------------------------
Title:--------------------------
Schedule A - Identification of Collateral Account
No. xxxxxxx
Designation: Intercreditor Trust Account 1997
Location: The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001