EXHIBIT 10.33
EXECUTION COPY
$250,000,000
TERM LOAN AGREEMENT
dated as of
December 11, 1997
among
ACE US Holdings, Inc.,
as Borrower,
ACE Limited,
as Guarantor,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent
________________
J.P. Morgan Securities Inc.
and
Mellon Bank N.A.,
Co-Syndication Agents
Morgan Guaranty Trust Company of New York,
Documentation Agent
TABLE OF CONTENTS
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ARTICLE 1
Definitions
Section 1.01. Definitions................................................................. 1
Section 1.02. Accounting Terms and Determinations......................................... 12
Section 1.03. Types of Borrowings......................................................... 13
Section 1.04. United States Dollars....................................................... 13
ARTICLE 2
The Loans
Section 2.01. Commitments to Lend......................................................... 13
Section 2.02. Notice of Borrowing......................................................... 13
Section 2.03. Notice of Banks; Funding of Loans........................................... 14
Section 2.04. Notes....................................................................... 14
Section 2.05. Amortization of Loans....................................................... 15
Section 2.06. Interest Rates.............................................................. 15
Section 2.07. Fees........................................................................ 17
Section 2.08. Mandatory Termination of Commitments........................................ 17
Section 2.09. Method of Electing Interest Rates........................................... 17
Section 2.10. Optional Prepayments........................................................ 19
Section 2.11. General Provisions as to Payments........................................... 19
Section 2.12. Funding Losses.............................................................. 20
Section 2.13. Computation of Interest and Fees............................................ 20
Section 2.14. Regulation D Compensation................................................... 20
ARTICLE 3
Conditions
Section 3.01. Closing..................................................................... 21
Section 3.02. Borrowing................................................................... 22
ARTICLE 4
Representations and Warranties
Section 4.01. Corporate Existence and Power............................................... 24
Section 4.02. Corporate and Governmental Authorization; No
Contravention............................................................................ 24
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Section 4.03. Binding Effect.............................................................. 24
Section 4.04. Financial Information....................................................... 24
Section 4.05. Litigation.................................................................. 26
Section 4.06. ERISA....................................................................... 26
Section 4.07. Taxes....................................................................... 27
Section 4.08. Not an Investment Company................................................... 27
Section 4.09. Full Disclosure............................................................. 27
Section 4.10. Compliance with Laws........................................................ 27
ARTICLE 5
Covenants
Section 5.01. Information................................................................. 28
Section 5.02. Payment of Obligations...................................................... 29
Section 5.03. Maintenance of Property; Insurance.......................................... 30
Section 5.04. Conduct of Business and Maintenance of Existence............................ 30
Section 5.05. Compliance with Laws........................................................ 30
Section 5.06. Inspection of Property, Book and Records.................................... 31
Section 5.07. Leverage.................................................................... 31
Section 5.08. Debt........................................................................ 31
Section 5.09. Minimum Tangible Net Worth.................................................. 32
Section 5.10. Negative Pledge............................................................. 32
Section 5.11. Consolidations, Mergers and Sales of Assets................................. 33
Section 5.12. Use of Proceeds............................................................. 33
Section 5.13. ERISA....................................................................... 33
Section 5.14. Restricted Payments......................................................... 34
Section 5.15. Investments; Acquisitions................................................... 34
Section 5.16. Transactions with Affiliates................................................ 34
Section 5.17. No Modification of Documents Without Consent................................ 34
Section 5.18. Debt Service Coverage Ratio................................................. 35
ARTICLE 6
Defaults
Section 6.01. Events of Default........................................................... 35
Section 6.02. Notice of Default........................................................... 39
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ARTICLE 7
The Agents
Section 7.01. Appointment and Authorization..................................................... 39
Section 7.02. Administrative Agent and Affiliates............................................... 39
Section 7.03. Action by Administrative Agent.................................................... 39
Section 7.04. Consultation with Experts......................................................... 39
Section 7.05. Liability of Administrative Agent................................................. 39
Section 7.06. Indemnification................................................................... 40
Section 7.07. Credit Decision................................................................... 40
Section 7.08. Successor Administrative Agent.................................................... 40
Section 7.09. Administrative Agent's Fee........................................................ 41
Section 7.10. Other Agents...................................................................... 41
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determination Interest Rate Inadequate or
Unfair................................................................................... 41
Section 8.02. Illegality........................................................................ 42
Section 8.03. Increased Cost and Reduced Return................................................. 42
Section 8.04. Taxes............................................................................. 44
Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans......................... 46
Section 8.06. Substitution of Bank.............................................................. 47
ARTICLE 9
Guaranty
Section 9.01. The Guaranty...................................................................... 47
Section 9.02. Guaranty Unconditional............................................................ 47
Section 9.03. Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances.................................................................... 48
Section 9.04. Waiver by the Guarantor........................................................... 49
Section 9.05. Subrogation....................................................................... 49
Section 9.06. Stay of Acceleration.............................................................. 49
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ARTICLE 10
Miscellaneous
Section 10.01. Notices................................................. 49
Section 10.02. No Waivers.............................................. 50
Section 10.03. Expenses; Indemnification............................... 50
Section 10.04. Sharing; Set-Offs....................................... 50
Section 10.05. Amendments and Waivers.................................. 51
Section 10.06. Successors and Assigns.................................. 52
Section 10.07. Collateral.............................................. 53
Section 10.08. Governing Law........................................... 53
Section 10.09. Counterparts; Integration; Effectiveness................ 54
Section 10.10. Judicial Proceedings.................................... 54
Section 10.11. Judgment Currency....................................... 55
Section 10.12. WAIVER OF JURY TRIAL.................................... 56
Section 10.13. Confidentiality......................................... 56
EXHIBIT A - NOTE
EXHIBIT B - FORM OF PLEDGE AGREEMENT
EXHIBIT C - FORM OF SUBORDINATED LOAN AGREEMENT
EXHIBIT D - FORM OF MAPLES AND CALDER OPINION
EXHIBIT E - FORM OF CONYERS, DILL & PEARMAN OPINION
EXHIBIT F - FORM OF MAYER, BROWN & PLATT OPINION
EXHIBIT G - FORM OF DAVIS POLK & WARDWELL OPINION
EXHIBIT H - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT I - LETTER FROM CT CORPORATION SYSTEM
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TERM LOAN AGREEMENT
AGREEMENT dated as of December 11, 1997 among ACE US HOLDINGS, INC., ACE
LIMITED, the BANKS listed on the signature pages hereof and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"ACE INSURANCE" means A.C.E. Insurance Company, Ltd., a Bermuda limited
liability company, and its successors.
"ACQUISITION" means an acquisition by the Borrower or any of its
Subsidiaries of a company, a division, a location or a line of business or of
all or substantially all of the assets of any of the foregoing.
"ADMINISTRATIVE AGENT" means Morgan Guaranty Trust Company of New York in
its capacity as administrative agent for the Banks under the Financing
Documents, and its successors in such capacity.
"AFFILIATE" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a "CONTROLLING PERSON") or (ii)
any Person (other than the Borrower or a Subsidiary of the Borrower) which is
controlled by or is under common control with a Controlling Person; provided
that no Relevant Party shall be an Affiliate for purposes hereof. As used
herein, the term "CONTROL" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether though the ownership of voting securities, by contract or
otherwise.
"AGENT" means each of the Administrative Agent, the Documentation Agent,
the Syndication Agents, the Managing Agent and the Co-Agents, and "AGENTS" means
any combination of them, as the context may require.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Bank.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office and (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"ASSIGNEE" has the meaning set forth in Section 10.06.
"BANK" means each bank listed on the signature pages hereof, each Assignee
which becomes a Bank pursuant to Section 10.06, and their respective successors.
"BASE RATE" means, for any day, a rate per annum equal to the higher of (i)
the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds
Rate for such day.
"BASE RATE LOAN" means a Loan which bears interest at the Base Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.09 or Article 8.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the Borrower's
ERISA Group.
"BERMUDA COMPANIES LAW" means The Companies Act 1981 of Bermuda, as
amended, and the regulations promulgated thereunder.
"BORROWER" means ACE US Holdings, Inc., a Delaware corporation, and its
successors.
"BORROWING" has the meaning set forth in Section 1.03.
"BORROWING DATE" means the date of the Borrowing hereunder.
"CASH AVAILABLE" means, for any period, the sum (without duplication) of
(i) the excess over $3,000,000 of the cash and cash equivalents held by the
Borrower on the first day of such period, (ii) cash dividends, cash interest
payments, and other cash income received by the Borrower during such period,
(iii) the cash proceeds to the Borrower of loans made under the Subordinated
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Loan Agreement during such period and (iv) the unused amount of the "Commitment"
(as defined in the Subordinated Loan Agreement) at the end of such period.
"CLOSING DATE" means the date on or after the Effective Date and on or
before the Borrowing Date on which the Administrative Agent shall have received
the documents specified in or pursuant to Section 3.01.
"CO-AGENT" means each Bank designated as a Co-Agent on the signature pages
hereof, in its capacity as co-agent in respect of this Agreement.
"COMMITMENT" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof.
"CONSOLIDATED DEBT" means at any date the Debt of the Guarantor and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Guarantor and its Consolidated Subsidiaries, determined on a consolidated basis
for such period.
"CONSOLIDATED SUBSIDIARY" means at any date, with respect to any Person,
any Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date.
"CONSOLIDATED TANGIBLE NET WORTH" means at any date the consolidated
stockholders' equity of the Guarantor and its Consolidated Subsidiaries less
their consolidated Intangible Assets, all determined as of such date; provided
that such determination for purposes of Sections , and shall be made without
giving effect to adjustments pursuant to Statement No. 115 of the Financial
Accounting Standards Board. For purposes of this definition "INTANGIBLE ASSETS"
means the amount (to the extent reflected in determining such consolidated
stockholders' equity) of (i) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of assets of a going concern
business made within twelve months after the acquisition of such business)
subsequent to June 30, 1997 in the book value of any asset owned by the
Guarantor or a Consolidated Subsidiary and (ii) all unamortized debt discount
and expense, unamortized deferred charges, deferred acquisition costs, goodwill,
patents, trademarks, service marks, trade names, anticipated future benefit of
tax loss carry-forwards, copyrights, organization or developmental expenses and
other intangible assets.
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"DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all non-contingent
obligations (and, solely for purposes of Section 5.10 and the definitions of
Material Debt and Material Financial Obligations, all contingent obligations) of
such Person to reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument, (vi) all Debt secured by a Lien
on any asset of such Person, whether or not such Debt is otherwise an obligation
of such Person, and (vii) all Debt of others Guaranteed by such Person, provided
that the term "DEBT" shall not include obligations of an insurance company under
insurance policies or surety bonds issued by it.
"DEBT SERVICE" means, for any period, the sum of (i) the interest expense
of the Borrower for such period and (ii) scheduled payments of principal on Debt
of the Borrower due during such period.
"DEBT SERVICE COVERAGE RATIO" means, at any date, the ratio of Cash
Available for the period of four consecutive fiscal quarters ended at such date
(or, if shorter, the period from the Borrowing Date through such date) to Debt
Service for such period.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DERIVATIVES OBLIGATIONS" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"DOCUMENTATION AGENT" means Morgan Guaranty Trust Company of New York in
its capacity as documentation agent in respect of this Agreement.
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"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at its
address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent.
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 10.09.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means, with respect to any Person, such Person, any
Subsidiary of such Person and all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with such Person or any such Subsidiary, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Administrative Agent.
"EURO-DOLLAR LOAN" means a Loan which bears interest at a Euro-Dollar Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election.
"EURO-DOLLAR MARGIN" has the meaning set forth in Section 2.06.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to Section
on the basis of a London Interbank Offered Rate.
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"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "EUROCURRENCY LIABILITIES" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company of New
York on such day on such transactions as determined by the Administrative Agent.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the Pledge Agreement
and the Subordinated Loan Agreement.
"GROUP OF LOANS" means at any time a group of Loans consisting of (i) all
Base Rate Loans which are outstanding at such time or (ii) all Euro-Dollar Loans
having the same Interest Period at such time; provided that, if a Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Section
8.02 or 8.04, such Loan shall be included in the same Group or Groups of Loans
from time to time as it would have been in if it had not been so converted or
made.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
6
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the holder of such Debt of the payment
thereof or to protect such holder against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "GUARANTEE"
used as a verb has a corresponding meaning.
"GUARANTOR" means ACE Limited, a Cayman Islands company limited by shares,
and its successors.
"INDEMNITEE" has the meaning set forth in Section 10.03(b).
"INFORMATION MEMORANDUM" means the confidential information memorandum
dated November 1997 furnished to the Banks in connection with this Agreement.
"INTEREST PERIOD" means, with respect to each Euro-Dollar Loan, the period
commencing on the date of borrowing specified in the Notice of Borrowing or on
the date specified in an applicable Notice of Interest Rate Election and ending
one, two, three or six months thereafter, as the Borrower may elect in the
applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-
Dollar Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last Euro-
Dollar Business Day of a calendar month; and
(c) no Interest Period applicable to any Loan shall extend
beyond any Principal Payment Date unless the aggregate principal amount of
Loans represented by Base Rate Loans, or by Euro-Dollar Loans having
Interest Periods that will expire on or before such Principal Payment Date,
equals or exceeds the amount of principal due on such Principal Payment
Date.
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"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means of share
purchase, capital contribution, loan, Guarantee, time deposit or otherwise (but
not including any demand deposit).
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"LOAN" means a loan made by a Bank pursuant to Section 2.01; provided that,
if any such loan or loans (or portions thereof) are combined or subdivided
pursuant to a Notice of Interest Rate Election, the term "LOAN" shall refer to
the combined principal amount resulting from such combination or to each of the
separate principal amounts resulting from such subdivision, as the case may be.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.01(b).
"MANAGING AGENT" means Citibank, N.A. in its capacity as managing agent in
respect of this Agreement.
"MATERIAL DEBT" means Debt (other than the Notes) of the Guarantor and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal or face amount exceeding $25,000,000.
"MATERIAL FINANCIAL OBLIGATIONS" means a principal or face amount of Debt
and/or current payment obligations in respect of Derivatives Obligations of the
Guarantor and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, exceeding in the aggregate $25,000,000.
"MATERIAL INSURANCE COMPANY" means each of ACE Insurance, Westchester Fire
Insurance Company, Westchester Surplus Lines Insurance Company and Industrial
Underwriters Insurance Company.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $25,000,000.
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"MULTIEMPLOYER PLAN" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
Borrower's ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
Borrower's ERISA Group during such five year period.
"NOTES" means promissory notes of the Borrower, substantially in the form
of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans, and "NOTE" means any one of such promissory notes issued hereunder.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.02.
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.09.
"OBLIGORS" means the Borrower and the Guarantor.
"OTHER TAXES" has the meaning set forth in Section 8.04(b).
"PARENT" means, with respect to any Bank, any Person controlling such Bank.
"PARTICIPANT" has the meaning set forth in Section 10.06(b).
"PERSON" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the Borrower's
ERISA Group for employees of any member of the Borrower's ERISA Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by any Person which was at such time a member of the Borrower's ERISA Group
for employees of any Person which was at such time a member of the Borrower's
ERISA Group.
"PLEDGE AGREEMENT" means a Pledge Agreement dated as of the Closing Date
between the Borrower and the Administrative Agent, substantially in the
9
form of Exhibit B hereto, as executed and delivered and as the same may be
amended from time to time in accordance with the provisions hereof and thereof.
"PRICING SCHEDULE" means the Schedule hereto titled as such.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"PRINCIPAL PAYMENT DATE" means each anniversary of the Borrowing Date from
and including the first anniversary thereof to and including the seventh
anniversary thereof.
"REFERENCE BANKS" means the principal London offices of Deutsche Bank AG,
Mellon Bank N.A. and Morgan Guaranty Trust Company of New York.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"RELATED DOCUMENTS" means (i) the Financing Documents, (ii) the "Financing
Documents" as defined in each of the Five-Year Credit Agreement and the 364-Day
Credit Agreement, each of even date herewith, among the Guarantor, as borrower,
the guarantors party thereto, the Banks parties thereto and Morgan Guaranty
Trust Company of New York, as administrative agent for such Banks, and (iii) the
"Financing Documents" as defined in the Amended and Restated Reimbursement
Agreement dated as of December 11, 1997 among ACE Insurance, the Banks parties
thereto and Morgan Guaranty Trust Company of New York, as issuing bank and
administrative agent for such Banks, in each case as the same may be amended and
in effect from time to time.
"RELEVANT PARTY" means each of the Obligors and ACE Insurance.
"REQUIRED BANKS" means at any time Banks having at least 66 2/3% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 66 2/3% of the aggregate unpaid
principal amount of the Loans.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on any
shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock other than mandatorily redeemable preferred stock)
or (ii) any payment on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the Borrower's capital stock or (b) any option,
warrant or other right to acquire shares of the Borrower's capital stock or
(iii) any payment of principal
10
of or, if at the time of such payment any Default exists, interest on Debt
incurred in reliance on clause (ii) or (iii) of Section 5.08(b).
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated as of
September 18, 1997, between Talegen Holdings, Inc., a Delaware corporation, and
the Guarantor as amended and in effect from time to time; provided that any such
amendment from the form thereof heretofore furnished to each of the Banks shall
be effective for purposes of references thereto in this Agreement only if such
amendment shall have received the written consent of the Required Banks (which
shall not be unreasonably withheld).
"SUBORDINATED LOAN AGREEMENT" means a subordinated loan agreement dated as
of the Borrowing Date between ACE Insurance and the Borrower in substantially
the form of Exhibit C hereto, as executed and delivered and as the same may be
amended from time to time in accordance with the provisions hereof and thereof.
"SUBSIDIARY" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "SUBSIDIARY" means a Subsidiary of the Guarantor.
"SYNDICATION AGENT" means either J.P. Morgan Securities Inc. or Mellon Bank
N.A. in its capacity as a syndication agent in respect of this Agreement, and
"SYNDICATION AGENTS" means both of them.
"TAXES" has the meaning set forth in Section 8.04(a).
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct obligations
of the United States or any agency thereof or obligations guaranteed by the
United States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Services and P-1 by Moody's Investors Services, Inc.,
(iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized or licensed under the laws of the United States or any State thereof
and has capital, surplus and undivided profits aggregating at least
$1,000,000,000 or (iv) repurchase agreements with respect to securities
described in clause (i) above entered into an office of a bank or trust company
meeting the criteria specified in clause (iii) above.
"TERMINATION DATE" means the date on which the Commitments terminate
pursuant to Section 2.08 or 6.01.
11
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA (or other applicable standard),
exceeds (ii) the fair market value of all Plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess represents a potential
liability of a member of the Borrower's ERISA Group to the PBGC or any other
Person under Title IV of ERISA.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means, with respect to any Person,
any Consolidated Subsidiary all of the shares of capital stock or other
ownership interests of which (except directors' qualifying shares) are at the
time directly or indirectly owned by such Person.
"WSG" means Westchester Specialty Group, Inc., a Delaware corporation, and
the owner of all outstanding capital stock of Westchester Fire Insurance
Company, Westchester Surplus Lines Insurance Company and Industrial Underwriters
Insurance Company, all of which are engaged in the property and casualty
insurance business.
"WSG ACQUISITION" means the acquisition by the Borrower of WSG pursuant to
the Stock Purchase Agreement.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with United
States generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the
Guarantor's independent public accountants) with the most recent audited
consolidated financial statements of the Guarantor and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Obligors notify the
Administrative Agent that the Obligors wish to amend any covenant in Article to
eliminate the effect of any change in generally accepted accounting principles
on the operation of such covenant (or if the Administrative Agent notifies the
Obligors that the Required Banks wish to amend Article for such purpose), then
compliance with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the relevant change
in generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Obligors and the Required Banks.
12
Section 1.03. Types of Borrowings. The term "BORROWING" denotes the
aggregation of the Loans of the respective Banks to be made to the Borrower
pursuant to Article on a single date designated pursuant to Section . The
Borrowing is classified for purposes of this Agreement by reference to the
pricing of Loans comprising the Borrowing (e.g., "EURO-DOLLAR BORROWING" is used
to describe the Borrowing hereunder if the Borrowing is comprised of Euro-Dollar
Loans).
Section 1.04. United States Dollars. Each reference herein to "DOLLARS"
or "$" shall refer to United States Dollars.
ARTICLE 2
The Loans
Section 2.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make a loan to the Borrower
pursuant to this Section on a single date designated pursuant to Section 2.02,
in an amount equal to the amount of its Commitment.
Section 2.02. Notice of Borrowing. The Borrower shall give the
Administrative Agent notice (a "NOTICE OF BORROWING") not later than 10:30 A.M.
(New York City time) on (x) the date of the Borrowing if the Borrowing is a Base
Rate Borrowing and (y) the third Euro-Dollar Business Day before the Borrowing
if the Borrowing is a Euro-Dollar Borrowing, specifying:
(a) the date of the Borrowing, which shall be a Domestic Business Day in
the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,
(b) whether the Loans comprising the Borrowing are to bear interest
initially at the Base Rate or a Euro-Dollar Rate, and
(c) in the case of a Euro-Dollar Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.
Section 2.03. Notice of Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of
the contents thereof and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
13
(b) Not later than 12:00 Noon (New York City time) on the date of the
Borrowing, each Bank shall make available its share of the Borrowing, in Federal
or other funds immediately available in New York City, to the Administrative
Agent at its address referred to in Section 10.01. Unless the Administrative
Agent determines that any applicable condition specified in Article has not been
satisfied, the Administrative Agent will make the funds so received from the
Banks available to the Borrower at the Administrative Agent's aforesaid address.
(c) Unless the Administrative Agent shall have received notice from a Bank
prior to the date of the Borrowing that such Bank will not make available to the
Administrative Agent such Bank's share of the Borrowing, the Administrative
Agent may assume that such Bank has made such share available to the
Administrative Agent on the date of the Borrowing in accordance with subsection
of this Section 2.03(b) of this Section 2.03 and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Administrative Agent, such Bank and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrower, a rate
per annum equal to the interest rate applicable thereto pursuant to Section
2.06 and (ii) in the case of such Bank, the Federal Funds Rate. If
such Bank shall repay to the Administrative Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan included in the
Borrowing for purposes of this Agreement.
Section 2.04. Notes. (a) The Loans of each Bank shall be evidenced by a
Note payable to the order of such Bank for the account of its Applicable Lending
Office in an amount equal to the aggregate unpaid principal amount of such
Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Administrative Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "NOTE" of such Bank
shall be deemed to refer to and include any or all of such Notes, as the context
may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01, the
Administrative Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount and type of each Loan made by it and the date and amount
14
of each payment of principal made by the Borrower with respect thereto, and may,
if such Bank so elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make any such recordation
or endorsement shall not affect the obligations of any Obligor hereunder or
under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Note and to attach to and make a part of its Note a continuation
of any such schedule as and when required.
Section 2.05. Amortization of Loans. The Loans shall mature in seven
installments of principal as set forth below. On each Principal Payment Date,
the Borrower shall repay an aggregate principal amount of the Loans equal to the
applicable amount indicated in the table below.
Principal Payment Date Amortization Amount
--------------------------------------------------
Nos. 1-2 $ 10,000,000
--------------------------------------------------
Nos. 3-4 $ 25,000,000
--------------------------------------------------
No. 5 $ 32,500,000
--------------------------------------------------
No. 6 $ 37,500,000
--------------------------------------------------
No. 7 $110,000,000
--------------------------------------------------
Each such payment of principal shall be made together with accrued interest
thereon. Each such payment shall be applied to such Group or Groups of Loans as
the Borrower may designate by not less than three Euro-Dollar Business Days'
notice to the Administrative Agent (or, failing such designation, as determined
by the Administrative Agent), and shall be applied ratably to the Loans of the
several Banks included in any such Group.
Section 2.06. Interest Rates. (a) Each Base Rate Loan shall bear interest
on the outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the Base Rate
for such day. Such interest shall be payable at maturity, quarterly in arrears
on the last day of each March, June, September and December prior to maturity,
and with respect to the principal amount of any Base Rate Loan converted to a
Euro-Dollar Loan, on the date such amount is so converted. Any overdue
principal of or interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2% plus
the rate otherwise applicable to Base Rate Loans for such day.
15
(b) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus
the London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
"EURO-DOLLAR MARGIN" means a rate per annum determined daily in accordance
with the Pricing Schedule.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period means
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars are offered to each of
the Reference Banks in the London interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin plus the
London Interbank Offered Rate applicable to such Loan at the date of such
payment was due and (ii) the sum of 2% plus the Euro-Dollar Margin plus the
quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%)
by dividing (x) the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which one day (or, if such
amount due remains unpaid more than three Euro-Dollar Business Days, then for
such other period of time not longer than six months as the Administrative Agent
may select) deposits in dollars in an amount approximately equal to such overdue
payment due to each of the Reference Banks are offered to such Reference Bank in
the London interbank market for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a
rate per annum equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day).
(d) The Administrative Agent shall determine each interest rate applicable
to the Loans hereunder. The Administrative Agent shall give prompt notice to
the Borrower and the participating Banks of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
16
(e) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section 2.06. If
any Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
SECTION 2.07. Fees. (a) The Borrower shall pay to the Administrative Agent
for the account of the Banks ratably a ticking fee at the rate of 0.06% per
annum. Such ticking fee shall accrue from and including the date hereof to but
excluding the Termination Date on the aggregate amount of the Commitments and
shall be payable on the Termination Date.
(b) The Borrower shall pay to the Administrative Agent for the account of
the Banks in the proportions heretofore mutually agreed a participation fee in
the amount heretofore mutually agreed. Such participation fee shall be payable
on the Borrowing Date.
SECTION 2.08. Mandatory Termination of Commitments. The Commitments shall
terminate at the close of business on the earlier of (i) the Borrowing Date and
(ii) May 1, 1998.
SECTION 2.09. Method of Electing Interest Rates. (a) The Loans included in
the Borrowing shall bear interest initially at the type of rate specified by the
Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of interest rate borne by
each Group of Loans (subject to subsection 2.09(d) of this Section and the
provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, subject to Section
2.12 if any such conversion or continuation is effective on any day other
than the last day of an Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "NOTICE OF INTEREST
RATE ELECTION") to the Administrative Agent not later than 10:30 A.M. (New York
City time) on the third Euro-Dollar Business Day before the conversion or
17
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such notice applies, and the remaining portion to which it does not
apply, are each at least $10,000,000 or any larger amount in multiples of
$1,000,000 (unless such portion is comprised of Base Rate Loans). If no such
notice is timely received before the end of an Interest Period for any Group of
Euro-Dollar Loans, the Borrower shall be deemed to have elected that such Group
of Loans be converted to Base Rate Loans at the end of such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection 2.09(a) above;
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans and, if the Loans resulting from such conversion are to be
Euro-Dollar Loans, the duration of the initial Interest Period applicable
thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from the
Borrower pursuant to subsection 2.09(a) above, the Administrative Agent shall
notify each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any Loans to,
or continue any Loans for an additional Interest Period as, Euro-Dollar Loans if
(i) the aggregate principal amounts of any Group of Euro-Dollar Loans created or
continued as a result of such election would be less than $10,000,000 or (ii) a
Default shall have occurred and be continuing when the Borrower delivers notice
of such election to the Administrative Agent.
18
SECTION 2.10. Optional Prepayments. (a) Subject in the case of any
Euro-Dollar Loan to Section 2.12, the Borrower may, in the case of the Group of
Base Rate Loans, upon at least one Domestic Business Day's notice to the
Administrative Agent, or in the case of any Group of Euro-Dollar Loans, upon at
least three Euro-Dollar Business Days' notice to the Administrative Agent,
prepay such Group, in each case in whole at any time, or from time to time in
part in amounts aggregating $10,000,000 or any larger multiple of $1,000,000, by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment shall be applied (i) to
prepay retably the Loans of the several Banks included in such Group and (ii) to
scheduled amortization of the Loans in inverse order of maturity.
(b) Upon receipt of a notice of prepayment pursuant to this Section, the
Administrative Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.11. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 2:00 P.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York City and in the
lawful currency of the United States, to the Administrative Agent at its address
referred to in Section 10.01. The Administrative Agent will promptly distribute
to each Bank its ratable share of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Base Rate Loans or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day. If the date for
any payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent that the
19
Borrower shall not have so made such payment, each Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Funding Losses. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a Base Rate Loan (pursuant to Article 2, 6 or 8 or otherwise) on
any day other than the last day of an Interest Period applicable thereto, or the
last day of an applicable period fixed pursuant to Section 2.07(c), or if the
Borrower fails to borrow, prepay, convert or continue any Euro-Dollar Loans
after notice has been given to any Bank in accordance with Section 2.03(a),
2.09(c) or 2.10(b), the Borrower shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by it (or by an existing or,
in the case of the failure of the Borrower to borrow any Euro-Dollar Loans,
prospective Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment,
conversion or continuation or failure to borrow, prepay, convert or continue,
provided that such Bank shall have delivered to the Borrower a certificate as to
the amount of such loss or expense and setting forth the calculation thereof,
which certificate shall be conclusive in the absence of manifest error.
SECTION 2.13. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and all
ticking fees shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day but excluding the
last day).
SECTION 2.14. Regulation D Compensation. For so long as any Bank maintains
reserves against "EUROCURRENCY LIABILITIES" (or any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of such Bank to United
States residents), and as a result the cost to such Bank (or its Euro-Dollar
Lending Office) of making or maintaining its Euro-Dollar Loans is increased,
then such Bank may require the Borrower to pay, contemporaneously with each
payment of interest on the Euro-Dollar Loans, additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered
20
Rate. Any Bank wishing to require payment of such additional interest (x) shall
so notify the Borrower and the Administrative Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank shall be payable to
such Bank at the place indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days after the giving of
such notice and (y) shall furnish to the Borrower at least five Euro-Dollar
Business Days prior to each date on which interest is payable on the Euro-Dollar
Loans an officer's certificate setting forth the amount to which such Bank is
then entitled under this Section 2.14 (which shall be consistent with such
Bank's good faith estimate of the level at which the related reserves are
maintained by it). Each such certificate shall be accompanied by such
information as the Borrower may reasonably request as to the computation set
forth therein.
ARTICLE 3
CONDITIONS
SECTION 3.01 Closing. The closing hereunder shall occur upon receipt by
the Administrative Agent of the following documents, each dated the Closing Date
unless otherwise indicated:
(a) a duly executed Note for the account of each Bank dated on or before
the Closing Date complying with the provisions of Section 2.04;
(b) the Pledge Agreement, duly executed by the Borrower;
(c) the Subordinated Loan Agreement, duly executed by the Borrower and ACE
Insurance;
(d) an opinion of Maples and Calder, counsel for the Guarantor,
substantially in the form of Exhibit D hereto and covering such additional
matters relating to the transactions contemplated hereby as the Required Banks
may reasonably request;
(e) an opinion of Conyers, Dill & Pearman, special Bermuda counsel for ACE
Insurance, substantially in the form of Exhibit E hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(f) an opinion of Mayer, Brown & Platt, New York counsel for the Borrower,
the Guarantor and ACE Insurance, substantially in the form of Exhibit
21
F hereto and covering such additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably request;
(g) an opinion of Davis Polk & Wardwell, special United States counsel
for the Agents, substantially in the form of Exhibit G hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(h) a letter from CT System in New York, New York, substantially in the
form of Exhibit J hereto, evidencing CT System's agreement to act as agent for
service of process for the Relevant Parties pursuant to Section 10.10(b); and
(i) all documents the Administrative Agent may reasonably request
relating to the existence of the Borrower, the Guarantor and ACE Insurance, the
corporate authority for and the validity of the Financing Documents, and any
other matters relevant hereto, all in form and substance satisfactory to the
Administrative Agent.
The Administrative Agent shall promptly notify the Obligors and the Banks of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto.
SECTION 3.02. Borrowing. The obligation of any Bank to make a Loan on
the occasion of the Borrowing is subject to the satisfaction of the following
conditions:
(a) the fact that the Closing Date shall have occurred on or prior to
the Termination Date;
(b) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.02;
(c) receipt by the Administrative Agent of payment of the fees payable
pursuant to Section 2.07;
(d) the fact that, substantially simultaneously with the Borrowing, the
Borrower shall have consummated the WSG Acquisition in accordance with the Stock
Purchase Agreement without waiver of any condition specified therein;
(e) the fact that no development or change shall have occurred, and no
information shall have become known, after the date hereof that results in a
material change in or deviation from the information contained in the
Information Memorandum and that has had or would reasonably be expected to have
a
22
material adverse effect on the business, financial position or results of
operations of the Obligors or on the rights and remedies of the Administrative
Agent and the Banks under the Financing Documents;
(f) the fact that, immediately before and after the Borrowing, no
Default shall have occurred and be continuing; an d
(g) the fact that the representations and warranties of each Obligor
contained in this Agreement shall be true on and as of the Borrowing Date;
(h) the fact that the chief executive office of the Borrower on the
Borrowing Date shall be in Atlanta, Georgia;
(i) the fact that no Subsidiary of the Borrower shall be subject to
any restriction on its payment of dividends to the Borrower (directly or
indirectly) except such restrictions as are imposed by regulatory authorities to
whose jurisdiction such Subsidiary is subject; and
(j) receipt by the Administrative Agent of (i) an opinion of LeBeouf
Lamb Greene & McCrae, L.L.P., special counsel for the Borrower, to the effect
that no action or consent by, or in respect of, any insurance regulatory
authority to whose jurisdiction the Borrower or any of its Subsidiaries is
subject is required in connection with the execution, delivery and performance
by the Borrower of the Financing Documents except such as should have been
obtained and be in full force and effect, which opinion shall be in form and
substance satisfactory to the Administrative Agent, and (ii) a certificate of an
executive officer of the Borrower to the effect that the conditions specified in
this Section 3.02 shall have been satisfied on the Borrowing Date.
The Borrowing hereunder shall be deemed to be a representation and warranty by
the Obligors on the Borrowing Date as to the facts specified in clauses (d)
through (i) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Obligors jointly and severally represent and warrant that:
SECTION 4.01. Corporate Existence and Power. The Borrower and each of
its Subsidiaries is a corporation, the Guarantor is a company limited by shares
and ACE Insurance is a limited liability company, in each case duly
incorporated,
23
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Relevant Parties and the Material Insurance Companies
has all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its respective business as now
conducted. Each of the Borrower and ACE Insurance is a Wholly-Owned Consolidated
Subsidiary of the Guarantor.
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each Relevant Party of each Financing
Document to which it is a party are within its corporate powers, have been duly
authorized by all necessary corporate action, require no action or consent by or
in respect of, or filing with, any governmental body, agency or official (except
such as shall have been obtained and be in full force and effect on the
Borrowing Date), and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the charter or by-laws (or any
comparable document) of any Relevant Party or of any agreement, judgment,
injunction, order, decree or other instrument binding upon any Relevant Party or
any of their respective Subsidiaries or result in the creation or imposition of
any Lien on any asset of any Relevant Party or any of their respective
Subsidiaries .
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of each Obligor and each other Financing Document, when
executed and delivered in accordance with this Agreement, will constitute a
valid and binding obligation of each Relevant Party party thereto, in each case
enforceable in accordance with its terms.
SECTION 4.04. Financial Information. (a) The consolidated balance
sheet of the Guarantor and its Consolidated Subsidiaries as of September 30,
1996 and therelated consolidated statements of operations, shareholders' equity
and cash flows for the fiscal year then ended, reported on by Coopers & Lybrand
LLP, copies of which have been delivered to each of the Banks, fairly present,
in all material respects, in conformity with generally accepted accounting
principles, the consolidated financial position of the Guarantor and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of June 30, 1997 and the related unaudited
consolidated statements of operations and cash flows for the nine months then
ended, copies of which have been delivered to each of the Banks, fairly present,
in all material respects, in conformity with generally accepted accounting
principles (except for the absence of footnotes) applied on a basis consistent
with the financial statements referred to in subsection 4.04(a) of this Section,
the
24
consolidated financial position of the Guarantor and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such nine month period (subject to normal year-end adjustments).
(c) Since June 30, 1997 there has been no material adverse change in the
business, financial position, or results of operations of the Guarantor and its
Consolidated Subsidiaries, considered as a whole.
(d) The consolidated balance sheet of ACE Insurance and its Consolidated
Subsidiaries as of September 30, 1996 and the related consolidated statements of
operations and retained earnings and of cash flows for the fiscal year then
ended, all reported on by Coopers & Lybrand LLP, copies of which have been
delivered to each of the Banks, fairly present, in all material respects, in
conformity with generally accepted accounting principles, the consolidated
financial position of ACE Insurance and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and retained earnings and cash
flows for such fiscal year.
(e) Since September 30, 1996 there has been no material adverse change in
the business, financial position or results of operations of ACE Insurance and
its Consolidated Subsidiaries, considered as a whole.
(f) The consolidated balance sheet of WSG and its Consolidated
Subsidiaries as of December 31, 1996 and the related consolidated statements of
operations, of shareholder's equity and of cash flows for the fiscal year then
ended, all reported on by KPMG Peat Marwick LLP, copies of which have been
delivered to each of the Banks, fairly present, in all material respects, in
conformity with generally accepted accounting principles, the consolidated
financial position of WSG and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such fiscal year.
(g) The unaudited consolidated balance sheet of WSG and its Consolidated
Subsidiaries as of June 30, 1997 and the related unaudited consolidated
statements of operations, of shareholder's equity and of cash flows for the six
months then ended, copies of which have been delivered to each of the Banks,
fairly present, in all material respects, in conformity with generally accepted
accounting principles (except for the absence of footnotes), the consolidated
financial position of WSG and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such fiscal period.
25
(h) Since June 30, 1997 there has been no material adverse change in
the business, financial position or results of operations of WSG and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. Except as disclosed in the notes to the
financial statements referred to in Section 4.04(a), there is no action, suit or
proceeding pending against, or to the knowledge of the Obligors threatened
against or affecting, any Relevant Party or any of their respective Subsidiaries
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable likelihood of an adverse decision which could
materially adversely affect the business, consolidated financial position or
consolidated results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws into question
the validity of any Financing Document.
SECTION 4.06. ERISA. (a) Each member of the Borrower's ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV or ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
(b) Neither the Guarantor, nor any member of its ERISA Group, maintains or
contributes to, or has within the previous six years (whether or not while a
member of its current ERISA Group) maintained or contributed to, or been
required to maintain or been jointly and severally liable for contributions to,
or liability upon withdrawal from, any plan or arrangement subject to (i) the
minimum funding standards of ERISA and the Internal Revenue Code, (ii) Part 3 of
Subtitle B of Title I of ERISA or (iii) Title IV of ERISA.
SECTION 4.07. Taxes. The Guarantor and its Subsidiaries have filed all
income tax returns and all other material tax returns which are required to be
filed by them and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by the Guarantor or any Subsidiary. The charges,
accruals and reserves on the books of the Guarantor and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Guarantor, adequate.
26
SECTION 4.08. Not an Investment Company. No Relevant Party is an
"INVESTMENT COMPANY" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.09. Full Disclosure. All written information heretofore
furnished by the Obligors to the Administrative Agent or any Bank for purposes
of or in connection with this Agreement or any transaction contemplated hereby
is, and all such information hereafter furnished by the Obligors to the
Administrative Agent or any Bank will be, true and accurate in all material
respects on the date as of which such information is stated or certified. The
Obligors have disclosed to the Banks in writing any and all facts which
materially and adversely affect or may affect (to the extent the Obligors can
now reasonably foresee) the business, operations or financial condition of any
Relevant Party and its Consolidated Subsidiaries, taken as a whole, or the
ability of any Relevant Party to perform its obligations under the Financing
Documents.
SECTION 5.10. Compliance with Laws. The Guarantor and each Subsidiary
are in compliance, in all material respects, with all applicable laws,
ordinances, rules, regulations, guidelines and other requirements of
governmental authorities except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings and any reserves required
under generally accepted accounting principles with respect thereto have been
established and except where any such failure could not reasonably be expected
to materially adversely affect the business, consolidated financial position or
consolidated results of operations of the Guarantor and its Consolidated
Subsidiaries, considered as a whole.
ARTICLE 3
COVENANTS
Each Obligor agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. Each Obligor will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of such Obligor, a consolidated balance sheet of such
Obligor and its Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of operations, shareholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the
27
previous fiscal year, all reported on in a manner acceptable to the Securities
and Exchange Commission or otherwise reasonably acceptable to the Required Banks
by Coopers & Lybrand LLP or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of such Obligor, a
consolidated balance sheet of such Obligor and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of operations
and cash flows for such quarter and for the portion of such Obligor's fiscal
year ended at the end of such quarter, setting forth in the case of such
statements of operations and cash flows in comparative form the figures for the
corresponding quarter and the corresponding portion of such Obligor's previous
fiscal year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting officer of
such Obligor;
(c) simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate of the chief financial
officer or the chief accounting officer of such Obligor (i) setting forth in
reasonable detail the calculations required to establish whether such Obligor
was in compliance with the requirements of Article 5 on the date of such
financial statements and (ii) stating whether any Default exists on the date of
such certificate and, if any Default then exists, setting forth the details
thereof and the action which such Obligor is taking or proposes to take with
respect thereto;
(d) within five days after any executive officer of an Obligor obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the chief financial officer or the chief accounting officer of such Obligor
setting forth the details thereof and the action which such Obligor is taking or
proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of the Guarantor
generally, copies of all financial statements, reports and proxy statements so
mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Guarantor shall have filed with the Securities and
Exchange Commission;
28
(g) as soon as available and in any event within 20 days after submission,
each annual or quarterly statutory statement of each Material Insurance Company
in the form submitted to its principal insurance regulator;
(h) as soon as available and in any event within 120 days after the end of
each fiscal year of WSG, a consolidated balance sheet of WSG and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income and changes in financial position for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by the independent public accountants
which reported on the financial statements referred to in clause (a) above;
(i) promptly after any executive officer of an Obligor obtains knowledge
thereof, (i) a copy of any notice from any regulatory authority in any
jurisdiction material to the business of such Material Insurance Company of the
revocation, the suspension or the placing of any restriction or condition on the
registration or license as an insurer of any Material Insurance Company or of
the institution of any proceeding or investigation which could result in any
such revocation, suspension or placing of such a restriction or condition, (ii)
copies of any correspondence by, to or concerning any Material Insurance Company
relating to an investigation conducted by any regulatory authority in any
jurisdiction material to the business of such Material Insurance Company,
whether pursuant to Section 132 of the Bermuda Companies Law or otherwise, (iii)
a copy of any notice of or requesting or otherwise relating to the winding up or
any similar proceeding of or with respect to, or questioning in any material
respect the financial soundness of, any Material Insurance Company, and (iv) a
copy of any notice of the imposition of, or any modification to, any restriction
on the payment of dividends to the Borrower by any of its Subsidiaries (directly
or indirectly); and
(j) from time to time such additional information regarding the financial
position, results of operations or business of such Obligor or any of its
Subsidiaries as the Administrative Agent, at the request of any Bank, may
reasonably request from time to time.
SECTION 5.02. Payment of Obligations. The Guarantor will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
29
SECTION 5.03. Maintenance of Property; Insurance. (a) The Guarantor will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
(b) The Guarantor will maintain, and will cause each Subsidiary to
maintain, physical damage insurance on all real and personal property on an all
risks basis (including the perils of flood and quake), covering the repair and
replacement cost of all such property and consequential loss coverage for
business interruption and extra expense. The Guarantor will deliver to the Banks
(i) upon request of any Bank through the Administrative Agent from time to time,
full information as to the insurance carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Guarantor will continue, and will cause each Subsidiary to continue, to engage
in business of the same general type as now conducted by the Guarantor and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect,
their respective existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; provided
that nothing in this Section 5.04 shall prohibit (i) the merger of a Subsidiary
(other than a Relevant Party) into the Guarantor or the merger or consolidation
of a Subsidiary (other than a Relevant Party) with or into another Person if the
corporation surviving such consolidation or merger is a Subsidiary and if, in
each case, after giving effect thereto, no Default shall have occurred and be
continuing, (ii) any merger of a Relevant Party permitted by Section 5.11 or
(iii) the termination of the corporate existence of any Subsidiary (other than a
Relevant Party) if the Guarantor in good faith determines that such termination
is in the best interest of the Guarantor and is not materially disadvantageous
to the Banks.
SECTION 5.05. Compliance with Laws. The Guarantor will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, guidelines and other requirements of
governmental authorities except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings and any reserves required
under generally accepted accounting principles with respect thereto have been
established and except where any such failure could not reasonably be expected
to materially adversely affect the business, consolidated financial position or
consolidated results of operations of the Guarantor and its Consolidated
Subsidiaries, considered as a whole.
SECTION 5.06. Inspection of Property, Book and Records. The Guarantor
will keep, and will cause each Subsidiary to keep, proper books of record and
30
account in accordance with generally accepted accounting principles in which
full, true and correct entries shall be made of all dealings and transactions in
relation to its business and activities; and will permit, and will cause each
Subsidiary to permit, representatives of any Bank at such Bank's expense to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times and
as often as may reasonably be desired.
SECTION 5.07. Leverage. Consolidated Debt will at no time exceed 35%
of Consolidated Tangible Net Worth.
SECTION 5.08. Debt. (a) The Guarantor will not permit any of its
Subsidiaries to create, assume or suffer to exist any Debt, except (i) Debt
under the Related Documents, (ii) Debt owing to the Guarantor or a Wholly-Owned
Consolidated Subsidiary of the Guarantor, (iii) Debt of Tripar Partnership, a
Bermuda general partnership, owing to other Subsidiaries or Debt of such other
Subsidiaries owing to Tripar Partnership, (iv) Debt in respect of letters of
credit issued in the ordinary course of business, (v) Debt created by exercise
of overdraft privileges on a basis not more frequent than once each calendar
month for not more than five Euro-Dollar Business Days in an amount not to
exceed $50,000,000 in the aggregate at any one time, (vi) subordinated Debt of
the Borrower owing to ACE Insurance under the Subordinated Loan Agreement, (vii)
Debt in an amount not to exceed $70,000,000 incurred in connection with the
development by the Guarantor and/or any of its Subsidiaries of the "Bermudiana
Site" in Hamilton, Bermuda, and (viii) Debt not permitted by the foregoing
clauses of this Section in an aggregate principal amount not to exceed
$20,000,000 at any time outstanding.
(b) The Borrower will not, and will not permit any of its Subsidiaries to,
create, assume or suffer to exist any Debt, except (i) Debt under the Financing
Documents, (ii) Debt under the Subordinated Loan Agreement owing to ACE
Insurance, (iii) Debt owing to ACE Limited subordinated to the same extent as
Debt under the Subordinated Loan Agreement and (iv) Debt owing to the Borrower
or a Wholly-Owned Consolidated Subsidiary of the Borrower.
SECTION 5.09. Minimum Tangible Net Worth. Consolidated Tangible Net Worth
will at no time be less than (i) $1,400,000,000 plus (ii) 25% of Consolidated
Net Income for each fiscal quarter of the Guarantor ended after December 31,
1997 and on or prior to such date of determination and for which such
Consolidated Net Income is positive (but with no deduction on account of any
fiscal quarter for which Consolidated Net Income is negative) plus (iii) 50%
31
of the aggregate amount by which Consolidated Tangible Net Worth shall have been
increased by reason of the issuance and sale after the Effective Date and on or
prior to such date of determination of any capital stock or the conversion or
exchange of any Debt of the Guarantor into or with capital stock of the
Guarantor consummated after the Effective Date and on or prior to such date of
determination.
SECTION 5.10. Negative Pledge. Neither the Guarantor nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt outstanding
on the date of this Agreement in an aggregate principal or face amount not
exceeding $25,000,000;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 90
days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Guarantor or a Subsidiary
and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof by the
Guarantor or a Subsidiary and not created in contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that such Debt is not increased and is not
secured by any additional assets;
(g) Liens arising in the ordinary course of its business which (i) do not
secure Debt or Derivatives Obligations, (ii) do not secure any obligation in an
amount exceeding $25,000,000 and (iii) do not in the aggregate materially
detract from the value of its assets or materially impair the use thereof in the
operation of its business;
32
(h) Liens on cash and cash equivalents securing Derivatives Obligations,
provided that the aggregate amount of cash and cash equivalents subject to such
Liens may at no time exceed $25,000,000;
(i) Liens securing obligations in respect of letters of credit issued
pursuant to any of the Related Documents; and
(j) Liens not otherwise permitted by the foregoing clauses of this Section
securing Debt in an aggregate principal or face amount at any date not to exceed
10% of Consolidated Tangible Net Worth.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. No Relevant
Party will (i) consolidate with or merge into any other Person or (ii) sell,
lease or otherwise transfer, directly or indirectly, all or any substantial part
of its assets to any other Person; provided that if both immediately before and
after giving effect thereto no Default shall have occurred and be continuing,
then (A) ACE Insurance may merge or consolidate with any other Person so long as
the surviving entity is the Guarantor or a Wholly-Owned Consolidated Subsidiary
of the Guarantor and, if ACE Insurance is not the surviving entity, such
surviving entity shall have assumed the obligations of ACE Insurance under the
Subordinated Loan Agreement pursuant to an instrument in form and substance
reasonably satisfactory to the Required Banks and shall have delivered such
opinions of counsel with respect thereto as the Administrative Agent may
reasonably request and (B) the Borrower and the Guarantor may each merge with
another Person (other than each other) so long as the Borrower or the Guarantor,
as the case may be, is the surviving entity.
SECTION 5.12. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Borrower to finance the WSG Acquisition. None of
such proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of Regulation U.
SECTION 5.13. ERISA. Neither the Guarantor nor any member of its ERISA
Group will maintain or contribute to, or become obligated to maintain or become
jointly and severally liable for contributions to, or have liability upon
withdrawal from, any plan or arrangement subject to (i) the minimum funding
standards of ERISA and the Internal Revenue Code, (ii) Part 3 of Subtitle B of
Title I of ERISA or (iii) Title IV of ERISA.
SECTION 5.14. Restricted Payments. Neither the Borrower nor any
Subsidiary of the Borrower will declare or make any Restricted Payment.
33
SECTION 5.15. Investments; Acquisitions. (a) Neither the Borrower nor any
Subsidiary of the Borrower (other than a Material Insurance Company) will hold,
make or acquire any Investment in any Person other than:
(i) Investments existing on the date hereof in Persons which are
Subsidiaries on the date hereof and, subject to the limitations of
subsection (b), additional Investments on or after the date hereof in such
Subsidiaries and in Subsidiaries formed or acquired after the date hereof ;
(ii) Temporary Cash Investments; and
(iii) loans and advances to the Borrower or a Wholly-Owned
Consolidated Subsidiary of the Borrower.
(b) Except for the WSG Acquisition, the Borrower will not, and will not
permit any of its Subsidiaries to, make any Acquisitions; provided that the
Borrower and its Subsidiaries may make Acquisitions of or from a Person engaged
in the type of business conducted by the Borrower and other acquisitions of
assets used or useful in the conduct of the business of the Borrower and its
Subsidiaries.
SECTION 5.16. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, pay any
funds to or for the account of, make any Investment in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect, any transaction with, any Affiliate except on an arm's-length basis
on terms not materially less favorable to the Borrower or such Subsidiary than
could have been obtained from a third party who was not an Affiliate; provided
that the foregoing provisions of this Section shall not prohibit (i) the
transactions to be effected pursuant to the Financing Documents or (ii) the
declaration or payment of any lawful dividend or other payment ratably in
respect of all of its capital stock of the relevant class so long as, after
giving effect thereto, no Default shall have occurred and be continuing.
SECTION 5.17. No Modification of Documents Without Consent. The Borrower
will not, without the prior written consent of the Required Banks, consent to or
solicit any amendment or supplement to, or any waiver or other modification of,
the Subordinated Loan Agreement or any subordination agreement contemplated by
Section 5.08(b)(iii).
SECTION 5.18. Debt Service Coverage Ratio. At the end of each fiscal
quarter of the Borrower, commencing with the first quarter after the Borrowing
Date, the Debt Service Coverage Ratio will not be less than 1.20:1.
34
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan or
shall fail to pay within five Business Days of the due date thereof any interest
on any Loan, any fees or any other amount payable hereunder or the Guarantor
shall fail to pay when due any such principal, interest, fees or other amount
payable hereunder; provided that, for purposes of this Section 6.01(a), no such
payment default by the Borrower shall be continuing if the Guarantor pays the
amount thereof at the time and otherwise in the manner provided in Article 9;
(b) any Obligor shall fail to observe or perform any covenant contained in
Sections 5.07 through 5.11, inclusive, 5.14 or 5.17; or ACE Insurance shall fail
to perform any of its obligations under the Subordinated Loan Agreement;
(c) any Obligor shall fail to observe or perform any covenant or agreement
contained in the Financing Documents (other than those covered by clause (a) or
(b) above) for 30 days after notice thereof has been given to the Obligors by
the Administrative Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by any
Obligor in this Agreement or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been incorrect
in any material respect when made (or deemed made);
(e) the Guarantor or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations when due or within any applicable
grace period;
(f) any event or condition shall occur which results in the acceleration
of the maturity of any Material Debt or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof; or, without
limiting the foregoing, any "Event of Default" (as defined in any of the other
Related Documents) shall occur;
(g) (i) (x) a resolution or other similar action is passed authorizing the
voluntary winding up of the Guarantor or any other similar action with respect
to the Guarantor or a petition is filed for the winding up of the Guarantor or
the taking of any other similar action with respect to the Guarantor in the
Grand Court
35
of the Cayman Islands or (y) any corporate action is taken authorizing the
winding up, the liquidation, any arrangement or the taking of any other similar
action of or with respect to any Subsidiary of the Guarantor or authorizing any
corporate action to be taken to facilitate any such winding up, liquidation,
arrangement or other similar action or any petition shall be filed seeking the
winding up, the liquidation, any arrangement or the taking of any other similar
action of or with respect to any Subsidiary of the Guarantor by the Registrar of
Companies in Bermuda, one or more holders of insurance policies or reinsurance
certificates issued by any Subsidiary of the Guarantor or by any other Person or
Persons or any petition shall be presented for the winding up of any Subsidiary
of the Guarantor to a court of Bermuda as provided under the Bermuda Companies
Law and in either such case such petition shall remain undismissed and unstayed
for a period of 60 days or any creditors' or members' voluntary winding up of
any Subsidiary of the Guarantor as provided under the Bermuda Companies Law
shall be commenced or any receiver shall be appointed by a creditor of any
Subsidiary of the Guarantor or by a court of Bermuda on the application of a
creditor of any Subsidiary of the Guarantor as provided under any instrument
giving rights for the appointment of a receiver;
(ii) a decree or order or a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a trustee, receiver,
liquidator, custodian or other similar official in any insolvency proceedings,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings affecting such Subsidiary or substantially all of its assets, or for
the winding-up or liquidation of its affairs, shall have been entered, or a
proceeding shall be commenced by any Person seeking the rehabilitation,
liquidation, dissolution or conservation of the assets of any Subsidiary of the
Guarantor or any substantial part thereof or any similar remedy and such
proceedings shall remain undismissed and unstayed for a period of 60 days
(including, in either case, without limitation, the commencement of proceedings
for the rehabilitation or liquidation of such Subsidiary in accordance with the
applicable provisions of Chapter 37 of the Georgia Insurance Code, Article 74 of
the New York Insurance Law or Chapter 21 of the Texas Insurance Code);
(iii) the Guarantor or any Subsidiary of the Guarantor shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of
36
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(iv) an involuntary case or other proceeding shall be commenced against the
Guarantor or any Subsidiary of the Guarantor seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Guarantor or any Subsidiary of the Guarantor
under the United States federal bankruptcy laws as now or hereafter in effect;
or
(v) the rights, privileges or franchises of any Subsidiary of the
Guarantor to do business shall be declared forfeited by any governmental
authority or any court of competent jurisdiction where the loss of such rights,
privileges or franchises would have a material adverse effect on the ability of
such Subsidiary to meet its obligations under any of the Financing Documents;
(h) a judgment or order for the payment of money in excess of $25,000,000
shall be rendered against the Guarantor or any Subsidiary of the Guarantor and
such judgment or order shall continue unsatisfied and unstayed for a period of
45 days;
(i) any person or group of persons (within the meaning of Section 13 or 14
of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 30% or more of the
outstanding shares of voting stock of the Guarantor; or, during any period of 12
consecutive calendar months, individuals who were directors of the Guarantor on
the first day of such period shall cease to constitute a majority of the board
of directors of the Guarantor; or either the Borrower or ACE Insurance shall
cease to be a Wholly-Owned Consolidated Subsidiary of the Guarantor;
(j) any court or arbitrator or any governmental body, agency or official
which has jurisdiction in the matter shall decide, rule or order that any
provision of any of the Financing Documents is invalid or unenforceable in any
material respect, or any Relevant Party shall so assert in writing;
(k) the registration or license of any Subsidiary of the Guarantor as an
insurer shall be revoked, suspended or otherwise have restrictions or conditions
placed upon it unless, in the case of the placing of any such restrictions or
37
conditions, such restrictions or conditions could not have a material adverse
effect on the interests of the Administrative Agent and the Banks under the
Financing Documents; or
(l) any member of the Borrower's ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $25,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan in a distress termination shall be filed under Title IV of ERISA
by any member of the Borrower's ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Section 4042 of Title IV of ERISA to terminate, to impose liability on
Borrower's ERISA Group for an amount or amounts aggregating in excess of
$25,000,000 (other than for premiums under Section 4007 of ERISA); or there
shall occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which causes one or more members of the Borrower's ERISA
Group to incur a current payment obligation in excess of $25,000,000 in the
aggregate;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 50% in aggregate amount of the Commitments (if still
in existence), by notice to the Borrower terminate the Commitments and they
shall thereupon terminate, and (ii) if requested by Banks holding Notes
evidencing more than 50% in aggregate principal amount of the Loans, by notice
to the Borrower declare the Notes (together with accrued interest thereon) to
be, and the Notes (together with accrued interest thereon) shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Obligors;
provided that in the case of any of the Events of Default specified in clause
(g) above with respect to any Obligor, without any notice to any Obligor or any
other act by the Administrative Agent or the Banks, the Commitments (if still in
existence) shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Obligors.
SECTION 6.02. Notice of Default. The Administrative Agent shall give
notice to the Obligors under Section 6.01(c) promptly upon being requested to do
so by any Bank and shall thereupon notify all the Banks thereof.
38
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under the Financing Documents as are
delegated to the Administrative Agent by the terms hereof and thereof, together
with all such powers as are reasonably incidental thereto.
SECTION 7.02. Administrative Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same as though
it were not the Administrative Agent, and Morgan Guaranty Trust Company of New
York and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrower or any Subsidiary or affiliate
of the Borrower as if it were not the Administrative Agent hereunder.
SECTION 7.03. Action by Administrative Agent. The obligations of the
Administrative Agent under this Agreement are only those expressly set forth
herein. Without limiting the generality of the foregoing, the Administrative
Agent shall not be required to take any action with respect to any Default,
except as expressly provided in Article 6 and in the Pledge Agreement.
SECTION 7.04. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for an Obligor), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Administrative Agent. Neither the
Administrative Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks (or such different number of Banks as any provision hereof
expressly requires for such consent or request) or (ii) in the absence of its
own gross negligence or willful misconduct. Neither the Administrative Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
the Financing Documents or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any Obligor; (iii) the
satisfaction of any condition specified in Article 3, except receipt of items
required to be delivered to the Administrative Agent; or (iv) the validity,
effectiveness or genuineness of any Financing
39
Document or any other instrument or writing furnished in connection herewith.
The Administrative Agent shall not incur any liability by acting in reliance
upon any notice, consent, certificate, statement, or other writing (which may be
a bank wire, telex, facsimile transmission or similar writing) believed by it to
be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Administrative Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Obligors) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in such capacity in connection with the
Financing Documents or any action taken or omitted by such indemnitees hereunder
or thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon any Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon any Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving notice thereof to the Banks and the Borrower. Upon
any such resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent, which successor Administrative Agent shall be
reasonably acceptable to the Borrower. If no successor Administrative Agent
shall have been so appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent gives notice
of resignation, then the retiring Administrative Agent may, on behalf of the
Banks, appoint a successor Administrative Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Article shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent.
40
SECTION 7.09. Administrative Agent's Fee. The Borrower shall pay to the
Administrative Agent for its own account fees in the amounts and at the times
previously agreed upon between the Borrower and the Administrative Agent.
SECTION 7.10. Other Agents. Nothing contained in this Agreement shall be
construed to impose any obligation or duty whatsoever on either Syndication
Agent, on the Documentation Agent, on the Managing Agent or on any Co-Agent, in
its capacity as such an Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determination Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period:
(a) the Administrative Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to the
Reference Banks in the London interbank market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the Euro-Dollar
Loans advise the Administrative Agent that the London Interbank Offered Rate as
determined by the Administrative Agent will not adequately and fairly reflect
the cost to such Banks of funding their Euro-Dollar Loans for such Interest
Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist (i) the
obligations of the Banks to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended and (ii) each
outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the
last day of the then current Interest Period applicable thereto.
SECTION 8.02. Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar
41
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank
shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans, or to continue or convert outstanding Loans
as or into Euro-Dollar Loans, shall be suspended. Before giving any notice to
the Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan of
such Bank then outstanding shall be converted to a Base Rate Loan either (a) on
the last day of the then current Interest Period applicable to such Euro-Dollar
Loan if such Bank may lawfully continue to maintain and fund such Loan as a
Euro-Dollar Loan to such day or (b) immediately if such Bank shall determine
that it may not lawfully continue to maintain and fund such Loan as a Euro-
Dollar Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
with respect to any Euro-Dollar Loan any such requirement with respect to which
such Bank is entitled to compensation during the relevant Interest Period under
Section 2.14), special deposit, insurance assessment or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the London interbank market any other condition
affecting its Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Euro-Dollar
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
42
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Administrative Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. Notwithstanding the foregoing
subsections 8.03(a) and 8.03(b) of this Section 8.03, the Borrower shall only be
obligated to compensate any Bank for any amount arising or accruing during (i)
any time or period commencing not more than 180 days prior to the date on which
such Bank notifies the Administrative Agent and the Borrower that it proposes to
demand such compensation and identifies to the Administrative Agent and the
Borrower the statute, regulation or other basis upon which the claimed
compensation is or will be based and (ii) any time or period during which
because of the retroactive application of such statute, regulation or other such
basis, such Bank did not know in good faith that such amount would arise or
accrue.
SECTION 8.04. Taxes. (a) Any and all payments by any Obligor hereunder
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
penalties, interest, expenses and similar liabilities with respect thereto,
excluding (i) in the case of each Bank and the Administrative Agent, taxes
imposed on its income, and franchise and similar taxes imposed on it, by the
jurisdiction under
43
the laws of which such Bank or the Administrative Agent, as the case may be,
shall be organized or any political subdivision thereof, (ii) in the case of
each Bank, taxes imposed on its income, and franchise and similar taxes imposed
on it, by the jurisdiction of such Bank's Applicable Lending Office or any
political subdivision thereof or in which such Bank's principal executive office
is located or any political subdivision thereof and (iii) any Taxes imposed as a
result of a change of such Bank's Applicable Lending Office to the extent such
Taxes would not have been imposed absent such change; provided however, that (x)
a change in such Bank's Applicable Lending Office to which the Obligor has
consented and (y) a change in such Bank's Applicable Lending Office as a result
of legal or regulatory restrictions shall not constitute a change for the
purposes of this Section 8.04 (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). Each Obligor agrees that, if any Obligor shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to any Bank
or the Administrative Agent, (A) the sum payable to such Bank or the
Administrative Agent shall be increased as may be necessary so that after making
all required deductions for Taxes (including deductions applicable to additional
sums payable under this Section 8.04), such Bank or the Administrative Agent, as
the case may be, shall receive an amount equal to the sum it would have received
had no such deductions been made, (B) such Obligor shall make such deductions
and (C) such Obligor shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law.
(b) In addition, each Obligor agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which shall arise from any payment made under, or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
Note (all such taxes, charges or levies being hereinafter referred to as "Other
Taxes").
(c) Each Obligor agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed on amounts payable under this Section 8.04) paid by such Bank or
the Administrative Agent or any penalties, interest, expenses and similar
liabilities arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted provided that such Bank has
acted in good faith with respect to such Taxes or Other Taxes and that such Bank
reasonably cooperates with the Obligors in challenging such Taxes or Other
Taxes. Each indemnification under this paragraph (c) shall be made within 30
days from the date such Bank or the Administrative Agent makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the Borrowing Date in the case of each Bank listed
on
44
the signature pages hereof and on or prior to the date on which it becomes a
Bank in the case of each other Bank, and from time to time thereafter if
requested in writing by the Borrower (but only so long as such Bank remains
lawfully able to do so), shall provide the Borrower with Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Bank is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States. If the form provided by a
Bank at the time such Bank first becomes a party to this Agreement indicates a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from "Taxes" as defined in Section
8.04(a).
(e) Each Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions) (x) to file any certificate or document or to furnish
any information as reasonably requested by any Obligor pursuant to any
applicable treaty, law, rule or regulation or (y) to designate a different
Lending Office if the making of such a filing, the furnishing of such
information or the designation of such other Lending Office would avoid the need
for or reduce the amount of any additional amounts payable by any Obligor
pursuant to this Section 8.04 and would not, in the reasonable judgment of such
Bank, be disadvantageous to such Bank. Notwithstanding the foregoing, it is
understood and agreed that nothing in this Section 8.04 shall interfere with the
rights of any Bank to conduct its fiscal or tax affairs in such manner as it
deems fit.
(f) Within 90 days after the date of any payment of Taxes, the Obligors
will furnish to the Administrative Agent notarized copies for each Bank of the
original receipt evidencing payment thereof. If no Taxes shall be payable in
respect of any payment under this Agreement, the Obligors will, upon the
reasonable request of the Administrative Agent, furnish to the Administrative
Agent a certificate in form reasonably acceptable to the Administrative Agent's
counsel confirming that such payment is exempt from or not subject to Taxes.
(g) For any period with respect to which a Bank has failed to provide the
Obligors with the appropriate form pursuant to Section 8.04(d) or 8.04(e)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(a) or 8.04(b) with respect to Taxes imposed by the United States; provided
that if a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, the
45
Obligors shall take such steps as such Bank shall reasonably request to assist
such Bank to recover such Taxes.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make or to continue or convert
outstanding Loans as or to Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its Euro-Dollar Loans and the Borrower shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the
Administrative Agent, have elected that the provisions of this Section shall
apply to such Bank, then, unless and until such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans which would otherwise be made by such Bank as (or continued
as or converted to) Euro-Dollar Loans shall instead be Base Rate Loans (on which
interest and principal shall be payable contemporaneously with the related Euro-
Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid (or converted),
all payments of principal which would otherwise be applied to repay such Euro-
Dollar Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Base Rate Loan shall be converted into a Euro-Dollar Loan on the first
day of the next succeeding Interest Period applicable to the related Euro-Dollar
Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If (i) the obligation of any Bank to
make or to convert or continue outstanding Loans as or into Euro-Dollar Loans
have been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04, the Borrower shall have the right, with
the assistance of the Administrative Agent, to designate a substitute bank or
banks (which may be one or more of the Banks) mutually satisfactory to the
Borrower, the Administrative Agent (whose consent shall not be unreasonably
withheld) and the issuing banks under the Related Documents to purchase for
cash, pursuant to an Assignment and Assumption Agreement in substantially the
form of Exhibit I hereto, the outstanding loans of such Bank and assume the
commitment and letter of credit liabilities of such Bank (and its affiliates)
under each of the Related Documents, without recourse to or warranty by, or
expense to, such Bank, for a purchase price equal to the principal amount of all
of such Bank's outstanding loans and funded letter of credit liabilities plus
any accrued but unpaid interest thereon and the accrued but unpaid fees in
respect of such Bank's commitments
46
and letter of credit liabilities plus such amount, if any, as would be
payable pursuant to the funding loss indemnities in the Related Documents
if the outstanding loans of such Bank were prepaid in their entirety on the
date of consummation of such assignment.
ARTICLE 9
GUARANTY
SECTION 9.01. The Guaranty. The Guarantor hereby unconditionally,
absolutely and irrevocably guarantees the full and punctual payment
(whether at stated maturity, upon acceleration or otherwise) of all amounts
payable by the Borrower under the Financing Documents including, without
limitation, the principal of and interest on each Note issued by the
Borrower pursuant to this Agreement. Upon failure by the Borrower to pay
punctually any such amount, the Guarantor shall forthwith on demand pay the
amount not so paid at the place and in the manner specified in this
Agreement.
SECTION 9.02. Guaranty Unconditional. The obligations of the Guarantor
hereunder shall be unconditional, absolute and irrevocable and, without
limiting the generality of the foregoing, shall not be released, discharged
or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Borrower under any of the Financing
Documents, by operation of law or otherwise;
(b) any modification or amendment of or supplement to any of the
Financing Documents;
(c) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Borrower under any of the
Financing Documents;
(d) any change in the corporate existence, structure or ownership of
the Borrower, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or its assets or any resulting
release or discharge of any obligation of the Borrower contained in any of
the Financing Documents;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Borrower, the Administrative
Agent,
47
any Bank or any other corporation or person, whether in connection with any
of the Financing Documents or any unrelated transactions, provided that
nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the
Borrower for any reason of any of the Financing Documents, or any provision
of applicable law or regulation purporting to prohibit the payment by the
Borrower of the principal of or interest on any Note or any other amount
payable under any of the Financing Documents; or
(g) any other act or omission to act or delay of any kind by the
Borrower, the Administrative Agent, any Bank or any other corporation or
person or any other circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal or equitable discharge of
or defense to the Guarantor's obligations hereunder.
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances. The Guarantor's obligations hereunder shall remain
in full force and effect until the Commitments shall have terminated and
the principal of and interest on the Notes and all other amounts payable by
the Borrower under the Financing Documents shall have been paid in full. If
at any time any payment of the principal of or interest on any Note or any
other amount payable by the Borrower under the Financing Documents is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, the Guarantor's
obligations hereunder with respect to such payment shall be reinstated as
though such payment had been due but not made at such time.
SECTION 9.04. Waiver by the Guarantor. The Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action
be taken by any corporation or person against the Borrower or any other
corporation or person.
SECTION 9.05. Subrogation. The Guarantor irrevocably waives any and
all rights to which it may be entitled, by operation of law or otherwise,
upon making any payment hereunder to be subrogated to the rights of the
payee against the Borrower with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Borrower in respect thereof.
SECTION 9.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under any of the Financing
48
Documents is stayed upon the insolvency, bankruptcy or reorganization of
the Borrower, all such amounts otherwise subject to acceleration under the
terms of this Agreement shall nonetheless be payable by the Guarantor
hereunder forthwith on demand by the Administrative Agent made at the
request of the requisite proportion of the Banks specified in Article 6.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of any Obligor or the Administrative Agent, at its
address, facsimile number or telex number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address, facsimile number or
telex number set forth in its Administrative Questionnaire or (z) in the
case of any party, such other address, facsimile number or telex number as
such party may hereafter specify for the purpose by notice to the
Administrative Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number specified in this
Section and confirmation of receipt is received, (iii) if given by mail, 10
days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address specified in this Section; provided
that notices to the Administrative Agent under Article 2 or Article 8 shall
not be effective until received.
SECTION 10.02. No Waivers. No failure or delay by the Administrative
Agent or any Bank in exercising any right, power or privilege under any
Financing Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies provided in the Financing Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 10.03. Expenses; Indemnification. (a) The Borrower shall pay
(i) all out-of-pocket expenses of the Administrative Agent, including fees
and disbursements of Davis Polk & Wardwell, special counsel for the Agents,
reasonably incurred in connection with the preparation of the Financing
Documents, any waiver or consent hereunder or thereunder or any amendment
49
hereof or thereof or any Default or alleged Default hereunder or thereunder
and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred
by the Administrative Agent and each Bank, including (without duplication)
the fees and disbursements of outside counsel and the allocated cost of
inside counsel, in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting
therefrom.
(b) The Borrower agrees to indemnify the Administrative Agent and
each Bank, their respective affiliates and the respective directors,
officers, agents and employees of the foregoing (each an "Indemnitee") and
hold each Indemnitee harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be
reasonably incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of the Financing Documents or any actual or
proposed use of proceeds of Loans; provided that no Indemnitee shall have
the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 10.04. Sharing; Set-Offs. (a) Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note held by such other
Bank, the Bank receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other Banks, and such
other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the
Banks shall be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of set-off
or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness hereunder. Each Obligor agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation
in a Note, whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of set-off or counterclaim and other rights with
respect to such participation as fully as if such holder of a participation
were a direct creditor of such Obligor in the amount of such participation.
(b) Upon (i) the occurrence and during the continuance of any Event
of Default and (ii) the making of the request specified by Section 6.01 to
the Administrative Agent to declare the Notes due and payable pursuant to
the provisions of Section 6.01, each Bank and each of its affiliates is
hereby
50
authorized at any time and from time to time, the fullest extent permitted
by law, to set off and otherwise apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank or such affiliate to or for the
credit or the account of any Obligor against any and all of the obligations
of such Obligor to such Bank now or hereafter existing under the Financing
Documents, irrespective of whether such Bank shall have made any demand for
payment thereof and although such obligations may be unmatured. Each Bank
agrees promptly to notify such Obligor, after any such setoff and
application; provided, however, that the failure to give notice shall not
affect the validity of such setoff and application. The rights of each Bank
and its affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) that such
Bank and its affiliates may have.
SECTION 10.05. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Obligors and the Required Banks
(and, if the rights or duties of the Administrative Agent are affected
thereby, by the Administrative Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank (except for a ratable decrease in the Commitments of
all Banks) or subject any Bank to any additional obligation, (ii) reduce
the principal of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal of or interest
on any Loan or any fees hereunder or for any reduction or termination of
any Commitment, (iv) release the Guarantor hereunder, (v) change the
percentage of the Commitments or of the aggregate unpaid principal amount
of the Notes, or the number of Banks, which shall be required for the Banks
or any of them to take any action under this Section or any other provision
of this Agreement or (vii) amend this Section 10.05.
SECTION 10.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the
Obligors may not assign or otherwise transfer any of their rights under
this Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not upon
notice to the Borrower and the Administrative Agent, such Bank shall remain
responsible for the performance of its obligations hereunder, and the
Borrower and the Administrative Agent shall
51
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant
to which any Bank may grant such a participating interest shall provide
that such Bank shall retain the sole right and responsibility to enforce
the obligations of the Borrower hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such participation agreement may provide
that such Bank will not agree to any modification, amendment or waiver of
this Agreement described in clause (i), (ii), (iii), (iv) or (v) of Section
10.05 without the consent of the Participant. The Borrower agrees that each
Participant shall, to the extent provided in its participation agreement
and subject to subsection 10.06(e) below, be entitled to the benefits of
Article 8 with respect to its participating interest. An assignment or
other transfer which is not permitted by subsection 10.06(c) or 10.06(d)
below shall be given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance with this
subsection 10.06(b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent
to an initial participation in the Related Documents of not less than
$15,000,000, unless the Borrower shall otherwise consent or the assignment
is for all of the rights and obligations of the transferor Bank) of all, of
its rights and obligations under this Agreement and the Notes, and such
Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit H
hereto executed by such Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Borrower and the Administrative
Agent, which shall not be unreasonably withheld; provided that if an
Assignee is an affiliate of such transferor Bank or was a Bank immediately
prior to such assignment, no such consent of the Borrower or the
Administrative Agent shall be required; and provided further that, unless
the Borrower shall otherwise consent or the assignment is for all of the
rights and obligations of the transferor Bank, the participation in the
Related Documents of such transferor Bank after giving effect to such
assignment (together with the participations of its affiliates) shall not
be less than $15,000,000; and provided further that such assignment shall
be accompanied by a ratably equivalent assignment of the rights and
obligations of the transferor Bank (and its affiliates) under each of the
other Related Documents. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee, such
Assignee shall be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by
any party shall be required. Upon the consummation of any assignment
pursuant to this
52
subsection 10.06(c), the transferor Bank, the Administrative Agent and the
Borrower shall make appropriate arrangements so that, if required, a new
Note is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Administrative Agent an administrative fee
for processing such assignment in the amount of $2,500.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations
hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04
than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or
8.04 requiring such Bank to designate a different Applicable Lending Office
under certain circumstances or at a time when the circumstances giving rise
to such greater payment did not exist.
SECTION 10.07. Collateral. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided for in
this Agreement.
SECTION 10.08. Governing Law. This Agreement and each Note shall be
governed by and construed in accordance with the laws of the State of New
York.
SECTION 10.09. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement and the other
Financing Documents constitute the entire agreement and understanding among
the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
This Agreement shall become effective upon receipt by the Administrative
Agent of counterparts hereof signed by each of the parties hereto (or, in
the case of any party as to which an executed counterpart shall not have
been received, receipt by the Administrative Agent in form satisfactory to
it of telegraphic, telex, facsimile or other written confirmation from such
party of execution of a counterpart hereof by such party).
SECTION 10.10. Judicial Proceedings. (a) Consent to Jurisdiction. Each
Obligor irrevocably submits to the jurisdiction of any federal court
sitting in New York City and, in the event that jurisdiction cannot be
obtained or maintained in a federal court, to the jurisdiction of any New
York State court sitting in New York
53
City over any suit, action or proceeding arising out of or relating to any
of the Financing Documents. Each Obligor irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought
in such court and any claim that any suit, action or proceeding brought in
such a court has been brought in an inconvenient forum. Each Obligor agrees
that a final judgment in any such suit, action or proceeding brought in
such a court shall be conclusive and binding upon it and will be given
effect in the Cayman Islands, to the fullest extent permitted by applicable
law and may be enforced in any federal or New York State court sitting in
New York City (or any other courts to the jurisdiction of which such
Obligor is or may be subject) by a suit upon such judgment, provided that
service of process is effected upon it in one of the manners specified
herein or as otherwise permitted by law.
(b) Appointment of Agent for Service of Process. Each Obligor hereby
irrevocably designates and appoints CT Corporation System having an office
on the date hereof at 1633 Broadway, New York, New York 10019 as its
authorized agent, to accept and acknowledge on its behalf, service of any
and all process which may be served in any suit, action or proceeding of
the nature referred to in subsection 10.10(a) above in any federal or New
York State court sitting in New York City. Each Obligor represents and
warrants that such agent has agreed in writing to accept such appointment
and that a true copy of such designation and acceptance has been delivered
to the Administrative Agent. Said designation and appointment shall be
irrevocable until the Commitments shall have terminated and all principal
and interest and all other amounts payable hereunder and under the Notes
shall have been paid in full in accordance with the provisions hereof and
thereof. If such agent shall cease so to act, each Obligor covenants and
agrees to designate irrevocably and appoint without delay another such
agent satisfactory to the Administrative Agent and to deliver promptly to
the Administrative Agent evidence in writing of such other agent's
acceptance of such appointment.
(c) Service of Process. Each Obligor hereby consents to process being
served in any suit, action or proceeding of the nature referred to in
subsection 10.10(a) above in any federal or New York State court sitting in
New York City by service of process upon the agent of such Obligor for
service of process in such jurisdiction appointed as provided in subsection
10.10(b) above; provided that, to the extent lawful and possible, notice of
said service upon such agent shall be mailed by registered or certified air
mail, postage prepaid, return receipt requested, to such Obligor at its
address specified on the signature page hereof or to any other address of
which such Obligor shall have given written notice to the Bank. Each
Obligor irrevocably waives, to the fullest extent permitted by law, all
claim of error by reason of any such service in such manner and agrees that
such service shall be deemed in every respect effective service of process
upon such
54
Obligor in any such suit, action or proceeding and shall, to the fullest
extent permitted by law, be taken and held to be valid and personal service
upon and personal delivery to such Obligor.
(d) No Limitation on Service or Suit. Nothing in this Section 10.10
shall affect the right of the Administrative Agent or any Bank to serve
process in any other manner permitted by law or limit the right of the
Administrative Agent or any Bank to bring proceedings against any Obligor
in the courts of any jurisdiction or jurisdictions.
SECTION 10.11. Judgment Currency. If, under any applicable law and
whether pursuant to a judgment being made or registered against any Obligor
or for any other reason, any payment under or in connection with any of the
Financing Documents is made or satisfied in a currency (the "OTHER
CURRENCY") other than that in which the relevant payment is due (the
"REQUIRED CURRENCY") then, to the extent that the payment (when converted
into the Required Currency at the rate of exchange on the date of payment
or, if it is not practicable for the party entitled thereto (the "PAYEE")
to purchase the Required Currency with the Other Currency on the date of
payment, at the rate of exchange as soon thereafter as it is practicable
for it to do so) actually received by the Payee falls short of the amount
due under the terms of this Agreement and the Notes, each Obligor shall, to
the extent permitted by law, as a separate and independent obligation,
indemnify and hold harmless the Payee against the amount of such short-
fall. For the purpose of this Section, "RATE OF EXCHANGE" means the rate at
which the Payee is able on the relevant date to purchase the Required
Currency with the Other Currency and shall take into account any premium
and other costs of exchange.
SECTION 10.12. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 10.13. Confidentiality. The Administrative Agent and each Bank
agrees to keep any information delivered or made available by the Borrower
pursuant to this Agreement confidential from anyone other than persons
employed or retained by such Bank and its affiliates who are engaged in
evaluating, approving, structuring or administering the credit facility
contemplated hereby; provided that nothing herein shall prevent any Bank
from disclosing such information (a) to any other Bank or to the
Administrative Agent, (b) subject to provisions substantially similar to
those contained in this Section 10.13, to any other Person if reasonably
incidental to the administration of the credit facility
55
contemplated hereby, (c) upon the order of any court or administrative
agency, (d) upon the request or demand of any regulatory agency or
authority, (e) which had been publicly disclosed other than as a result of
a disclosure by the Administrative Agent or any Bank prohibited by this
Agreement, (f) in connection with any litigation relating to the Related
Documents to which the Administrative Agent, any Bank or its subsidiaries
or Parent may be a party, (g) to the extent necessary in connection with
the exercise of any remedy hereunder, (h) to such Bank's or Administrative
Agent's legal counsel and independent auditors and (i) subject to
provisions substantially similar to those contained in this Section 10.13,
to any actual or proposed Participant or Assignee. Notwithstanding the
foregoing, this Section 10.13 shall not apply to information that is or
becomes publicly available, information that was available to a Bank on a
non-confidential basis prior to its disclosure hereunder and information
which becomes available to a Bank on a non-confidential basis from a source
that is not, to such Bank's knowledge, subject to a confidentiality
agreement with any Obligor.
56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ACE US HOLDINGS, INC.
By______________________________
Title:
The ACE Building
30 Woodbourne Avenue
Hamilton HM 08, Bermuda
Telex number: 3543ACEILBA
Facsimile number: (441) 295-5221
ACE LIMITED, as Guarantor
By______________________________
Title:
The ACE Building
30 Woodbourne Avenue
Hamilton HM 08, Bermuda
Telex number: 3543ACEILBA
Facsimile number: (441) 295-5221
The Common Seal of ACE
Limited was hereunto affixed
in the presence of:
Director
____________________________
Director/Secretary
____________________________
57
Commitments
- -----------
$24,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By__________________________
Title:
$24,000,000 MELLON BANK, N.A.
By__________________________
Title:
Managing Agent
$20,000,000 CITIBANK, N.A.
By__________________________
Title:
Co-Agents
$18,000,000 THE BANK OF NEW YORK
By__________________________
Title:
$18,000,000 THE BANK OF TOKYO-MITSUBISHI,
LTD.
By___________________________
Title:
58
$18,000,000 BARCLAYS BANK PLC
By___________________________
Title:
$18,000,000 DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS
BRANCH
By___________________________
Title:
By___________________________
Title:
$18,000,000 FLEET NATIONAL BANK
By___________________________
Title:
$18,000,000 ING BANK, N.V.
By___________________________
Title:
By___________________________
Title:
$18,000,000 ROYAL BANK OF CANADA
By___________________________
Title:
59
Other Banks
$8,000,000 BANK OF BERMUDA
(LUXEMBOURG) S.A.
By___________________________
Title:
$8,000,000 BANQUE NATIONALE DE PARIS
By___________________________
Title:
By___________________________
Title:
$8,000,000 THE CHASE MANHATTAN BANK
By___________________________
Title:
$8,000,000 CREDIT LYONNAIS NEW YORK
BRANCH
By___________________________
Title:
60
$8,000,000 DRESDNER BANK A.G., NEW YORK
BRANCH AND GRAND CAYMAN
BRANCH
By___________________________
Title:
By___________________________
Title:
$8,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By___________________________
Title:
$8,000,000 STATE STREET BANK AND TRUST
COMPANY
By___________________________
Title:
- -----------------
Total Commitments
$250,000,000
=================
61
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent
By___________________________
Title
60 Wall Street
New York, New York 10260-0060
Attention: Glenda Irving
Telex number: 177615
Facsimile number: 212-648-5249
62
PRICING SCHEDULE
"EURO-DOLLAR MARGIN" means, for any date, the rate set forth below in the
row opposite such term and in the column corresponding to the "Pricing Level"
that applies at such date:
- --------------------------------------------------------------------------
Euro-Dollar Margin Level I Level II Level III Level IV
- --------------------------------------------------------------------------
On or before fifth
Principal Payment Date 0.375% 0.50% 0.625% 0.75%
- --------------------------------------------------------------------------
After fifth Principal
Payment Date 0.50% 0.625% 0.75% 0.875%
- --------------------------------------------------------------------------
For purposes of this Schedule, the following terms have the following
meanings:
"LEVEL I" applies at any date if, at such date, ACE Insurance's claims
paying ability is rated AA- or higher by S&P and (if rated by Moody's) Aa3 or
---
higher by Moody's.
"LEVEL II" applies at any date if, at such date, (i) ACE Insurance's claims
paying ability is rated A+ or higher by S&P and (if rated by Moody's) A1 or
---
higher by Moody's and (ii) Level I does not apply.
"LEVEL III" applies at any date if, at such date, (i) ACE Insurance's
claims paying ability is rated A or higher by S&P and (if rated by Moody's) A2
---
or higher by Moody's and (ii) neither Level I nor Level II applies.
"LEVEL IV" applies at any date if, at such date, no other Pricing Level
applies.
"MOODY'S" means Moody's Investors Service, Inc., and any successor thereto.
"PRICING LEVEL" refers to the determination of which of Level I, Level II,
Level III or Level IV applies at any date.
"S&P" means Standard & Poor's Rating Services, a division of The McGraw-
Hill Companies, Inc., and any successor thereto.
The credit ratings to be utilized for purposes of this Schedule are those
ratings assigned to the claims paying ability of ACE Insurance and any rating
assigned to any debt security of any Obligor or the claims paying ability of any
Obligor shall be disregarded. The rating in effect at any date is that in effect
at the close of business on such date.
2
EXHIBIT A
NOTE
$______________ New York, New York
December 11, 1997
For value received, ACE US Holdings, Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of (the "Bank"), for the
account of its Applicable Lending Office, the unpaid principal amount of each
Loan made by the Bank to the Borrower pursuant to the Loan Agreement referred to
below in installments as specified in the Loan Agreement. The Borrower promises
to pay interest on the unpaid principal amount of each such Loan on the dates
and at the rate or rates provided for in the Loan Agreement. All such payments
of principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all repayments
of the principal thereof shall be recorded by the Bank and, if the Bank so
elects in connection with any transfer or enforcement hereof, appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding may be endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of any Obligor hereunder or under the Loan Agreement.
This note is one of the Notes referred to in the Term Loan Agreement dated
as of December 11, 1997 among the Borrower, ACE Limited, as Guarantor, the banks
listed on the signature pages thereof and Morgan Guaranty Trust
Company of New York, as Administrative Agent (as the same may be amended from
time to time, the "Loan Agreement"). Terms defined in the Loan Agreement are
used herein with the same meanings. Reference is made to the Loan Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
Pursuant to the Loan Agreement payment of principal and interest on this
Note is unconditionally guaranteed by the Guarantor named above and secured by
the Pledge Agreement referred to in the Loan Agreement.
ACE US HOLDINGS, INC.
By___________________________
Title:
2
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
________________________________________________________________________________
Amount of
Amount of Type of Principal Notation
Date Loan Loan Repaid Made By
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3
EXHIBIT B
PLEDGE AGREEMENT
AGREEMENT dated as of December 11, 1997 between ACE US HOLDINGS, INC. (with
its successors, the "BORROWER") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as administrative agent (the "ADMINISTRATIVE AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower, certain banks (the "BANKS") and the Administrative
Agent are parties to a Term Loan Agreement dated as of December 11, 1997 (as the
same may be amended from time to time, the "TERM LOAN AGREEMENT"); and
WHEREAS, in order to induce the Banks and the Administrative Agent to enter
into the Term Loan Agreement, the Borrower has agreed to grant a continuing
security interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Term Loan Agreement and the Notes issued pursuant thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Term Loan Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein. The following additional terms, as used herein, have the following
respective meanings:
"ACE INSURANCE" means A.C.E. Insurance Company Ltd., a Bermuda limited
liability company.
"COLLATERAL" has the meaning assigned to such term in Section 3(a).
"PERFECTION CERTIFICATE" means a certificate substantially in the form of
Exhibit A, completed and supplemented with the schedules and attachments
contemplated thereby to the satisfaction of the Administrative Agent, and duly
executed by the chief executive officer and the chief legal officer of the
Borrower.
"PROCEEDS" means all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization upon,
collateral, including without limitation all claims of the Borrower against
third parties for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance in respect
of, any collateral, and any condemnation or requisition payments with respect to
any collateral, in each case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this Agreement
including (i) all principal of and interest (including, without limitation, any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Borrower,
whether or not allowed or allowable as a claim in any such proceeding) on any
Note issued pursuant to, the Term Loan Agreement, (ii) all other amounts payable
by the Borrower hereunder or under the other Financing Documents and (iii) any
renewals or extensions of any of the foregoing.
"SECURITY INTERESTS" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
"SUBORDINATED LOAN AGREEMENT" means the subordinated loan agreement dated
as of December 11, 1997 among ACE Insurance, the Borrower and the Administrative
Agent, as amended from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or non-
perfection.
Unless otherwise defined herein, or unless the context otherwise requires,
all terms used herein which are defined in the UCC shall have the meanings
therein stated.
SECTION 2. Representations and Warranties. The Borrower represents
and warrants as follows:
(a) The Borrower has good title to all of the Collateral, free and
clear of any Liens.
2
(b) The Borrower has not performed any acts which might prevent the
Administrative Agent from enforcing any of the terms of this Agreement or
which would limit the Administrative Agent in any such enforcement. No
financing statement, mortgage, security agreement or similar or equivalent
document or instrument covering all or any part of the Collateral is on
file or of record in any jurisdiction in which such filing or recording
would be effective to perfect a Lien on such Collateral.
(c) Not less than five Domestic Business Days prior to the date of the
first Borrowing under the Term Loan Agreement, the Borrower shall deliver
the Perfection Certificate to the Administrative Agent. The information set
forth therein shall be correct and complete. Not later than 60 days
following the date of the Borrowing, the Borrower shall furnish to the
Administrative Agent file search reports from each UCC filing office set
forth in Schedule 7 to the Perfection Certificate confirming the filing
information set forth in such Schedule.
(d) The Security Interests constitute valid first-priority security
interests under the UCC securing the Secured Obligations. When UCC
financing statements in the form specified in Exhibit A shall have been
filed in the offices specified in the Perfection Certificate, the Security
Interests shall constitute perfected security interests in the Collateral
to the extent that a security interest therein may be perfected by filing
pursuant to the UCC, prior to all other Liens and rights of others therein
except for the Security Interests.
SECTION 3. The Security Interests. (a) In order to secure the full and
punctual payment of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all the obligations of the Borrower
under the Financing Documents, the Borrower hereby grants to the Administrative
Agent for the benefit of the Banks a continuing security interest in and to all
of the following property of the Borrower, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the "COLLATERAL"):
(i) The Subordinated Loan Agreement and all rights and privileges of
the Borrower with respect thereto and all payments, and rights to receive
payments, thereunder or with respect thereto (including without limitation
all rights to demand and receive advances of subordinated loans
thereunder);
(ii) All books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other
3
computer materials and records) of the Borrower pertaining to any of the
Collateral; and
(iii) All Proceeds of all or any of the Collateral described in
clauses 3(a)(i) and 3(a)(ii) hereof.
(b) The Security Interests are granted as security only and shall
not subject the Administrative Agent or any Bank to, or transfer or in any
way affect or modify, any obligation or liability of the Borrower or any of
its Subsidiaries with respect to any of the Collateral or any transaction
in connection therewith.
SECTION 4. Further Assurances.
(a) The Borrower will not change its name, identity or corporate structure
in any manner unless it shall have given the Administrative Agent not less than
30 days' prior notice thereof and delivered an opinion of counsel with respect
thereto in accordance with Section 4(c). The Borrower will not change the
location of its chief executive office or chief place of business from the
applicable location described in the Perfection Certificate unless it shall have
given the Administrative Agent not less than 30 days' prior notice thereof and
delivered an opinion of counsel with respect thereto in accordance with Section
4(c).
(b) The Borrower will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action, (including, without
limitation, any filings of financing or continuation statements under the UCC)
that from time to time may be necessary or desirable, or that the Administrative
Agent may request, in order to create, preserve, perfect, confirm or validate
the Security Interests or to enable the Administrative Agent and the Banks to
obtain the full benefits of this Agreement, or to enable the Administrative
Agent to exercise and enforce any of its rights, powers and remedies hereunder
with respect to any of the Collateral. To the extent permitted by applicable
law, the Borrower hereby authorizes the Administrative Agent to execute and file
financing statements or continuation statements without the Borrower's signature
appearing thereon. The Borrower agrees that a carbon, photographic, photostatic
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement. The Borrower shall pay the costs of, or
incidental to, any recording or filing of any financing or continuation
statements concerning the Collateral.
(c) Not more than six months nor less than 30 days prior to each date on
which the Borrower proposes to take any action contemplated by Section 4(a), the
Borrower shall, at its cost and expense, cause to be delivered to the Banks an
4
opinion of counsel, satisfactory to the Administrative Agent, substantially in
the form of Exhibit B to the effect that all financing statements and amendments
or supplements thereto, continuation statements and other documents required to
be recorded or filed in order to perfect and protect the Security Interests for
a period, specified in such opinion, continuing until a date not earlier than
six months from the date of such opinion, against all creditors of and
purchasers from the Borrower have been filed in each filing office necessary for
such purpose and that all filing fees and taxes, if any, payable in connection
with such filings have been paid in full.
SECTION 5. General Authority. The Borrower hereby irrevocably appoints the
Administrative Agent its true and lawful attorney, with full power of
substitution, in the name of the Borrower, the Administrative Agent, the Banks
or otherwise, for the sole use and benefit of the Administrative Agent and the
Banks, but at the Borrower's expense, to the extent permitted by law to
exercise, at any time and from time to time while an Event of Default has
occurred and is continuing, all or any of the following powers with respect to
all or any of the Collateral:
(a) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due thereon or by virtue thereof, and,
without limiting the generality of the foregoing, to give a borrowing
request under Section 2 of the Subordinated Loan Agreement,
(b) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(c) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the
Administrative Agent were the absolute owner thereof,
(d) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto, and
(e) to exercise any other remedies provided by applicable law;
provided that the Administrative Agent shall give the Borrower not less than ten
days' prior notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market. The Administrative Agent and the Borrower agree that such
notice constitutes "reasonable notification" within the meaning of Section 9-
504(3) of the UCC.
5
SECTION 6. Limitation on Duty of Administrative Agent in Respect of
Collateral. Beyond the exercise of reasonable care in the custody thereof, the
Administrative Agent shall have no duty as to any Collateral in its possession
or control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Administrative Agent in good
faith.
SECTION 7. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any realization upon all or
any part of the Collateral shall be applied by the Administrative Agent in the
following order of priorities:
FIRST, to payment of the expenses of such realization, including
reasonable compensation to agents and counsel for the Administrative Agent,
and all expenses, liabilities and advances incurred or made by the
Administrative Agent in connection therewith, and any other unreimbursed
expenses for which the Administrative Agent or any Bank is to be reimbursed
pursuant to Section 10.03 of the Term Loan Agreement and unpaid fees owing
to the Administrative Agent under the Term Loan Agreement;
SECOND, to the ratable payment of unpaid principal of the Secured
Obligations;
THIRD, to the ratable payment of accrued but unpaid interest on the
Secured Obligations in accordance with the provisions of the Term Loan
Agreement;
FOURTH, to the ratable payment of all other Secured Obligations, until
all Secured Obligations shall have been paid in full; and finally, to
payment to the Borrower or its successors or assigns, or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Administrative Agent may make distributions hereunder in cash or in kind or,
on a ratable basis, in any combination thereof.
6
SECTION 8. Concerning the Administrative Agent. The provisions of Article 7
of the Term Loan Agreement shall inure to the benefit of the Administrative
Agent in respect of this Agreement and shall be binding upon the parties to the
Term Loan Agreement in such respect. In furtherance and not in derogation of the
rights, privileges and immunities of the Administrative Agent therein set forth:
(a) The Administrative Agent is authorized to take all such action as is
provided to be taken by it as Administrative Agent hereunder and all other
action reasonably incidental thereto. As to any matters not expressly provided
for herein (including, without limitation, the timing and methods of realization
upon the Collateral) the Administrative Agent shall act or refrain from acting
in accordance with written instructions from the Required Banks or, in the
absence of such instructions, in accordance with its discretion.
(b) The Administrative Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Administrative Agent shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement by the Borrower.
SECTION 9. Appointment of Co-Agents. At any time or times, in order to
comply with any legal requirement in any jurisdiction, the Secured Party may
appoint another bank or trust company or one or more other Persons, either to
act as co-agent or co-agents, jointly with the Secured Party, or to act as
separate agent or co-agents on behalf of the Secured Party with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment.
SECTION 10. Termination of Security Interests; Release of Collateral. Upon
the repayment in full of all Secured Obligations and the termination of the
Commitments under the Credit Agreement, the Security Interests shall terminate
and all rights to the Collateral shall revert to the Borrower. At any time and
from time to time prior to such termination of the Security Interests, the
Administrative Agent may release any of the Collateral with the prior written
consent of the Required Banks. Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the expense of the
Borrower, execute and deliver to the Borrower such documents as the Borrower
shall reasonably request to evidence the termination of the Security Interests
or the release of such Collateral, as the case may be.
SECTION 11. Notices. All notices, communications and distributions
hereunder shall be given in accordance with Section 10.01 of the Term Loan
Agreement.
SECTION 12. Successors and Assigns. This Agreement is for the benefit of
the Administrative Agent and the Banks and their successors and assigns, and in
the event of an assignment of all or any of the Secured Obligations, the rights
hereunder, to the extent applicable to the indebtedness so assigned, shall be
transferred with such indebtedness. This Agreement shall be binding on the
Borrower and its successors and assigns.
SECTION 13. Changes in Writing. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by the Borrower and the Administrative Agent with the consent of
the Required Banks.
SECTION 14. New York Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York, except as otherwise
required by mandatory provisions of law and except to the extent that remedies
provided by the laws of any jurisdiction other than New York are governed by the
laws of such jurisdiction.
SECTION 15. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Banks in order to carry out the intentions of the parties hereto
as nearly as may be possible; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ACE US HOLDINGS, INC.
By:___________________________________
Name:
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent
By:___________________________________
Name:
Title:
9
EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, the _________________________ of ACE US HOLDINGS, INC., a
Delaware corporation (the "BORROWER"), hereby certify with reference to the
Pledge Agreement dated as of December 11, 1997 between the Borrower and Morgan
Guaranty Trust Company of New York, as Administrative Agent (terms defined
therein being used herein as therein defined), to the Administrative Agent and
each Bank as follows:
1. Names. (a) The exact corporate name of the Borrower as it appears in
its certificate of incorporation is as follows:
(b) Set forth below is each other corporate name the Borrower has had
since its organization, together with the date of the relevant change:
(c) Except as set forth in Schedule 1, the Borrower has not changed its
identity or corporate structure in any way within the past five years.
(d) The following is a list of all other names (including trade names or
similar appellations) used by the Borrower or any of its divisions or other
business units at any time during the past five years:
2. Current Locations. (a) The chief executive office of the Borrower is
located at the following address:
MAILING ADDRESS COUNTY STATE
--------------- ------ -----
MAILING ADDRESS COUNTY STATE
--------------- ------ -----
(b) The following are all the places of business of the Borrower not
identified above in the state identified above:
MAILING ADDRESS COUNTY STATE
--------------- ------ -----
3. UCC Filings. A duly signed financing statement on Form UCC-1 in
substantially the form of Schedule 3(A) hereto has been duly filed in the
Uniform Commercial Code filing office in each jurisdiction identified in
paragraph 2 hereof. Attached hereto as Schedule 3(B) is a true copy of each such
filing duly acknowledged by the filing officer.
4. Schedule of Filings. Attached hereto as Schedule 4 is a schedule
setting forth filing information with respect to the filings described in
paragraph 4 above.
5. Filing Fees. All filing fees and taxes payable in connection with the
filings described in paragraph 4 above have been paid.
2
IN WITNESS WHEREOF, we have hereunto set our hands this __ day of
_________, 199_.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
3
SCHEDULE 3(A)
DESCRIPTION OF COLLATERAL
4
SCHEDULE 4
SCHEDULE OF FILINGS
DEBTOR FILING OFFICER FILE NUMBER DATE OF FILING /1/
- ------------- ----------------- -------------- -------------------
___________________
Indicate lapse of date, if other than fifth anniversary.
5
EXHIBIT C
SUBORDINATED LOAN AGREEMENT
AGREEMENT dated as of December 11, 1997 among ACE US HOLDINGS, INC.
(together with its successors, the "BORROWER"), A.C.E. Insurance Company, Ltd.,
a Bermuda limited liability company (together with its respective successors and
permitted assigns, the "LENDER") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent (the "Administrative Agent").
W I T N E S S E T H :
WHEREAS the Borrower, the banks listed on the signature pages thereof (the
"BANKS"), ACE Limited, a Cayman Islands company limited by shares, as Guarantor,
and the Administrative Agent are parties to a Term Loan Agreement dated as of
December 11, 1997 (as amended from time to time the "TERM LOAN AGREEMENT");
WHEREAS, it is a condition to the closing of the Term Loan Agreement that
the parties hereto enter into a Subordinated Loan Agreement substantially in the
form hereof; and
WHEREAS, the Borrower will pursuant to the Pledge Agreement referred to in
the Term Loan Agreement assign to the Administrative Agent as security for its
obligations under the Term Loan Agreement all its right, title and interest in,
to and under this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Each term used herein which is defined in the Term
Loan Agreement shall have the meaning assigned to such term in the Term Loan
Agreement. In addition, the following terms have the following meanings:
"Commitment" means during any period the amount set forth for such period
on Schedule 1 hereto.
"Current Interest" has the meaning set forth in Section 4(b).
"Deferred Interest" has the meaning set forth in Section 4(b).
"Reorganization Securities" has the meaning set forth in Section 5(a).
"Senior Commitments" means, without duplication, all commitments to extend
credit and all instruments pursuant to which commitments or instruments Senior
Debt may be incurred.
"Senior Debt" means all amounts payable with respect to the Term Loan
Agreement, which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Borrower
or any of its Subsidiaries or Affiliates, whether or not allowed or allowable as
a claim in any such proceeding) on any loan under, or any note issued pursuant
to, the Term Loan, (b) all other amounts payable by the Borrower thereunder or
under any other Financing Document and (c) any amendments, restatements,
renewals, extensions or modifications of any of the foregoing.
"Subdebt Maturity Date" means the date one year and one day after the
Termination Date.
"Subordinated Loans" means any subordinated loans made by the Lender
pursuant to Section 2.
"Subordinated Obligations" means all amounts payable with respect to this
Agreement, which include (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Borrower
or any of its Subsidiaries or affiliates, whether or not allowed or allowable as
a claim in any such proceeding) on any Subordinated Loan, (b) all other amounts
payable by the Borrower hereunder or with respect hereto and (c) any amendments,
restatements, renewals, extensions or modifications of any of the foregoing.
"Term Loan Agreement" means the Term Loan Agreement and, if the Term Loan
Agreement is refinanced or repaid in its entirety and the commitments thereunder
terminated, any successor agreement (i) pursuant to which all or any portion of
the amounts outstanding from time to time under the Term Loan Agreement are
refinanced and (ii) designated by the Borrower as a "Term Loan Agreement" for
purposes hereof.
"Termination Date" means the later of the latest maturity date of any
Senior Debt and the latest expiration date of any Senior Commitments.
2
SECTION 2. Obligation to Make Subordinated Loans; Guarantee by Certain
Lenders. (a) From time to time on or prior to the Termination Date, upon request
of the Borrower or, if an Event of Default under the Term Loan Agreement has
occurred or is continuing, upon request of the Administrative Agent, not less
than three business days prior to the requested date of borrowing, the Lender
agrees to make subordinated loans to the Borrower in an amount that equals the
principal amount of the loan so requested provided, that the aggregate principal
amount of the Subordinated Loans (exclusive of Deferred Interest) at any time
shall not exceed the Commitment at such time.
(b) Not later than 1:00 P.M. (New York City time) on the requested date of
borrowing, the Lender shall deposit in immediately available funds in an account
of the Borrower the principal amount of the Subordinated Loans to be made by the
Lender on such date.
SECTION 3. Obligations Unconditional. The obligation of the Lender
hereunder shall be unconditional, absolute and irrevocable and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any change in the corporate existence, structure or ownership of the
Borrower or any other Person or any of their respective Subsidiaries, or any
insolvency, bankruptcy, reorganization or other similar proceeding affecting the
Borrower or any other Person or any of their assets or any resulting release or
discharge of any obligation of the Borrower or any other Person contained in any
Financing Document;
(b) the existence of any claim, set-off or other rights which the Lender
may have at any time against the Borrower, the Administrative Agent, any Bank or
any other Person, whether in connection herewith or any unrelated transactions,
provided that nothing herein shall prevent the assertion of any such claim by
- --------
separate suit or compulsory counterclaim; or
(c) any other act or omission to act or delay of any kind by the Borrower,
the Administrative Agent, any other party to any Financing Document, any Bank or
any other Person or any other circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal or equitable discharge of or
defense to the Lender's obligations hereunder.
SECTION 4. Terms of Subordinated Loans. (a) Maturity. Each Subordinated
Loan shall mature, and the outstanding principal amount thereof shall be due and
payable, on the Subdebt Maturity Date.
3
(b) Interest. The unpaid principal amount of the Subordinated Loans from
time to time outstanding (including the unpaid principal amount of all
Subordinated Loans and all amounts representing Deferred Interest) shall bear
interest at a rate per annum (based upon a 365/366 day year) equal to 10%,
provided, however, that the Borrower shall be obligated to pay currently (in
- -------- -------
accordance with the terms of this Agreement) only such portion of such interest
that accrues on the principal amount of the Subordinated Loans (exclusive of
capitalized interest) at a rate per annum equal to 4% (herein "Current
Interest"), with all remaining interest that accrues at a rate per annum equal
to 6% being deferred and capitalized as principal outstanding under this
Agreement (herein "Deferred Interest"), which Deferred Interest (together with
all interest thereon) shall be due and payable on the Subdebt Maturity Date;
provided, further, however, that in the event that any principal or interest
- -------- -------
under this Agreement is not paid when due (whether by acceleration or
otherwise), the interest rate applicable to the unpaid principal amount
outstanding under this Agreement (including the unpaid principal amount of all
Subordinated Loans and all amounts representing Deferred Interest) shall be at a
rate per annum equal to 12% (with all such accrued interest payable upon demand
in accordance with the terms of this Agreement) until such unpaid principal or
interest is paid.
Subject to Sections 5 and 6 hereof and Section 5.14 of the Term Loan
Agreement, accrued Current Interest on the unpaid principal amount of this
Agreement from time to time outstanding (including the unpaid principal amount
of all Subordinated Loans and all amounts representing Deferred Interest) shall
be payable on the last day of each calendar quarter, on the date of any
prepayment of principal, and at maturity (including on the Subdebt Maturity
Date), commencing with the first of such dates to occur after the date hereof.
After maturity (whether by acceleration or otherwise), accrued Current Interest
on the unpaid principal amount outstanding under this Agreement (including the
unpaid principal amount of all Subordinated Loans and all amounts representing
Deferred Interest) shall be payable on demand subject to Sections 5 and 6 hereof
and Section 5.14 of the Term Loan Agreement.
(c) Optional Prepayments. Subject to Section 5.14 of the Term Loan
Agreement, the Borrower may at any time, upon at least one Domestic Business
Day's notice, prepay all or any portion of the principal of, or accrued interest
on, any Subordinated Loan. Any such prepayment shall be applied to prepay
ratably the principal of, or accrued interest on, the Subordinated Loans of the
Lender outstanding at such time.
SECTION 5. Restrictions While Senior Debt or Senior Commitments Are
Outstanding. (a) The Lender acknowledges and agrees that (i) the Term Loan
restricts the ability of the Borrower to make payments in respect of
Subordinated
4
Obligations and (ii) should the Lender collect or receive, directly or
indirectly, any payment of any kind or character, whether in cash or property in
respect of any Subordinated Obligations (and whether by way of payment of
principal or interest, redemption, purchase, other acquisition, dividend,
distribution, guarantee, grant of a security interest, realization of security
or the proceeds thereof, set-off, exercise of contractual or statutory rights or
otherwise), (x) at a time when such payment is prohibited by the terms of the
Term Loan Agreement, (y) through exercise of remedies permitted under Section
5(c) at any time while any Senior Debt or any Senior Commitment is outstanding
or (z) in the event of any insolvency or bankruptcy proceeding or any
receivership, liquidation, reorganization or other similar proceeding in
connection therewith, relative to the Borrower or to any of its creditors, in
their capacity as creditors of the Borrower, or to substantially all of its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Borrower, whether or not involving
insolvency or bankruptcy, the Lender will forthwith deliver the same to the
Administrative Agent (or other representatives of the holders of Senior Debt)
for the equal and ratable benefit of the holders of Senior Debt in precisely the
form received (except for the endorsement or the assignment of or by the Lender
where necessary) for application to payment of all Senior Debt in full, after
giving effect to any concurrent payment or distribution to the holders of Senior
Debt and, until so delivered, the same shall be held in trust by the Lender as
the property of the holders of Senior Debt; provided that the Lender may receive
--------
and hold securities of the Borrower (or any successor entity) in a
reorganization of the Borrower effected pursuant to a plan of reorganization
which has given effect to the subordination provisions set forth in this
Agreement (without amendment, waiver or modification of any of the terms
hereof), so long as such securities are subordinated to the Senior Debt at least
to the same extent as the Subordinated Obligations (any such securities,
"Reorganization Securities").
(b) Unless and until all Senior Debt shall have been paid in full and all
Senior Commitments shall have terminated or been canceled, neither the Borrower
nor any of its Subsidiaries or Affiliates shall make, and the Lender shall not
demand, accept or receive, or shall attempt to collect or commence any legal
proceedings to collect, any direct or indirect payment (in cash or property or
by setoff, exercise of contractual or statutory rights or otherwise) of or on
account of any amount payable on or with respect to any Subordinated Obligations
(including any payment in respect of redemption or purchase or other
acquisition), except that (i) the Borrower may make payments with respect to the
Subordinated Obligations if such payments are permitted under Section 5.14 of
the Term Loan Agreement, and (ii) as expressly permitted under Section 5(c).
(c) Unless and until all Senior Debt shall have been paid in full and all
Senior Commitments shall have terminated or been canceled, the Lender will not
5
commence or maintain any action, suit or any other legal or equitable proceeding
against the Borrower or any of its Subsidiaries, or join with any creditor in
any such proceeding; provided that nothing in this Section 5(c) will preclude
--------
the Lender (i) from commencing at any time any action, suit or any other legal
or equitable proceeding to enforce any remedies to which the Lender is entitled
hereunder if at such time the holders of Senior Debt have commenced an action,
suit or proceeding to enforce substantially similar remedies, (ii) from joining
with any creditor in any such proceeding, under any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding if the
holders of Senior Debt have joined in any such proceeding or (iii) from
asserting a compulsory counterclaim in any action, suit or proceeding to which
the Borrower is a party; provided that nothing in this clause(iii) shall be
--------
construed to permit the Lender to enforce any judgement obtained with respect to
such compulsory counterclaim or receive any payment pursuant thereto except as
expressly permitted by other provisions of this Agreement.
(d) The Lender hereby waives any and all notice in respect of the Term
Loan Agreement and agrees and consents that without notice to or assent by the
Lender:
(i) the obligations and liabilities of the Borrower or any other
party or parties to the Term Loan Agreement (or any promissory note,
security document or guaranty evidencing or securing the same) may, from
time to time, in whole or in part, be renewed, extended, modified, amended,
restated, accelerated, compromised, supplemented, terminated, sold,
exchanged, waived or released;
(ii) the Administrative Agent and the Banks may exchange, release or
surrender any collateral to the Borrower or any other Person, waive,
release or subordinate any security interest, obtain a guaranty of any
Person or a security interest in or mortgage or other encumbrance on any
additional property as collateral for any obligations of the Borrower in
its sole discretion may elect;
(iii) the Administrative Agent and the Banks may apply payments by
the Borrower or any other Person to such portion of the Secured Obligations
(as defined in the Pledge Agreement) as they in their sole discretion may
elect;
(iv) the Administrative Agent and the Banks may exercise or refrain
from exercising any right, remedy or power granted by or in connection with
the Term Loan Agreement, any other Financing Documents or any other
agreements relating thereto; and
6
(v) any Bank or the Administrative Agent may surrender or release,
from time to time, in whole or in part, any balance or balances of funds
with the Administrative Agent or any Bank at any time standing to the
credit of the Borrower;
all as the Administrative Agent or the Banks may deem advisable and all without
impairing, abridging, diminishing, releasing or affecting the obligations of the
Borrower and the Lender hereunder.
SECTION 6. Dissolution, Liquidation or Reorganization of the Borrower.
(a) In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Borrower or to any of its creditors, in
their capacity as creditors of the Borrower, or to substantially all of its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Borrower, whether or not involving
insolvency or bankruptcy, then:
(i) the holders of the Senior Debt shall first be entitled to receive
payment in full in cash of the principal thereof, premium, if any, interest
and all other amounts payable thereon (accruing before and after the
commencement of the proceedings) before the Lender is entitled to receive
any payment on account or in respect of Subordinated Obligations; provided
--------
that nothing in this clause (i) shall prevent the Lender from receiving or
holding Reorganization Securities; and
(ii) any payment or distribution of assets of the Borrower of any kind
or character, whether in cash, property or securities to which the Lender
would be entitled, but for the provisions of this Section 6, shall be paid
or distributed by the liquidating trustee or agent or other Person making
such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or other trustee or agent, directly to the
Administrative Agent and any other representative on behalf of the holders
of Senior Debt to the extent necessary to make payment in full of all
amounts of Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of the Senior Debt;
provided that nothing in this clause (ii) shall prevent the Lender from
--------
receiving or holding Reorganization Securities.
(b) The Lender shall not be subrogated to the rights of the holders of the
Senior Debt to receive payments or distributions of assets of the Borrower until
all
7
Senior Debt shall have been paid in full and all Senior Commitments shall have
terminated or been canceled; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Debt of any cash,
property or securities to which the Lender would be entitled except for these
provisions shall, as between the Borrower, its creditors other than the holders
of the Senior Debt, and the Lender, be deemed to be a payment by the Borrower to
or on account of the Senior Debt. The provisions of Sections 5 and 6 of this
Agreement are and are intended solely for the purpose of defining the relative
rights of the Lender, on the one hand, and the holders of the Senior Debt, on
the other hand.
(c) Upon payment in full of all Senior Debt and the termination or
cancellation of all Senior Commitments, the Lender shall be subrogated to the
rights of the holders of Senior Debt to receive payments or distributions of
cash, property or securities of the Borrower applicable to the Senior Debt until
all amounts owing on the Subordinated Obligations shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holder of the
Subordinated Obligations of cash, property, securities or other assets by virtue
of the subrogation herein provided which otherwise would have been made to the
holders of the Senior Debt shall, as between the Borrower, its creditors other
than the holders of Senior Debt and the holder of the Subordinated Obligations,
be deemed to be a payment to or on account of the Subordinated Obligations. The
Lender agrees that, in the event that all or any part of any payment made on
account of the Senior Debt is recovered from the holders of Senior Debt as a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law, any payment or distribution received by the Lender on
account of the Subordinated Obligations at any time after the date of the
payment so recovered, whether pursuant to the right of subrogation provided for
in this Section 6(c) or otherwise, shall be deemed to have been received by such
holder of Subordinated Obligations in trust as the property of the holders of
the Senior Debt and such holders shall forthwith deliver the same to the
Administrative Agent for the equal and ratable benefit of the holders of the
Senior Debt for application to payment of all Senior Debt in full.
(d) The provisions of Sections 5 and 6 of this Agreement are applicable by
their terms to the Lender in its capacity as holder of the Subordinated
Obligations, and shall not affect any right or claim the Lender may have against
the Borrower or any of its Subsidiaries with respect to any obligation owed by
the Borrower or any of its Subsidiaries to the Lender other than the
Subordinated Obligations and any claim arising under, or with respect to, the
Subordinated Obligations and this Agreement.
SECTION 7. Representations and Warranties of Lender. The Lender represents
and warrants that:
8
(a) The execution, delivery and performance by the Lender of this
Agreement require no action by or in respect of, or filing with, any
governmental body, agency or official, do not contravene, or constitute a
default under, any provision of applicable law or regulation, or of any
agreement, instrument, judgment, injunction, order or decree binding upon the
Lender or result in the creation or imposition of any Lien on any asset of the
Lender.
(b) This Agreement constitutes a valid and binding agreement of the
Lender, enforceable against the Lender in accordance with its terms.
SECTION 8. Governing Law; Consent to Jurisdiction. (a) This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY FEDERAL COURT SITTING IN THE CITY OF NEW YORK AND, IN THE EVENT THAT
JURISDICTION CANNOT BE OBTAINED OR MAINTAINED IN A FEDERAL COURT, TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR
PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT THAT MAY BE BROUGHT OR INSTITUTED AGAINST IT. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(c) Each of the Borrower and the Lender hereby irrevocably designates and
appoints CT Corporation System having an office on the date hereof at 1633
Broadway, New York, New York 10019 as its authorized agent, to accept and
acknowledge on its behalf, service of any and all process which may be served in
any suit, action or proceeding of the nature referred to in subsection 8(b)
above until the Commitment shall have terminated and the Subordinated
Obligations shall have been paid in full in accordance with the provisions
hereof. Each of the Borrower and the Lender represents and warrants that such
agent has agreed in writing to accept such appointment and that a true copy of
such designation and acceptance has been delivered to the Administrative Agent.
SECTION 9. Notices. All notices, requests and other communications to any
party hereunder shall be given at the address, facsimile number or telex number
of such party set forth on the signature pages hereof (or at such other
9
address as such party shall specify for such purpose from time to time by notice
to all other parties hereto) and shall be effective upon receipt.
SECTION 10. Successors and Assigns. The covenants of the Lender contained
herein shall be binding upon the Lender and upon its respective heirs, legal
representatives, successors and assigns. The Lender agrees that it will not
assign, pledge or otherwise transfer, for security purposes or otherwise, any
interest in the Subordinated Obligations held by it unless (i) the Borrower and
the Administrative Agent (with the prior written consent of the Required Banks)
shall have given their prior written consent to such transfer and (ii) the
transferee thereof expressly acknowledges and agrees in a writing delivered to
the Administrative Agent that the transfer is made subject to the terms of this
Agreement and further agrees to be bound by the terms hereof. This Agreement is
for the benefit of the holders of Senior Debt and their respective successors
and assigns, and the Lender acknowledges that each of the Administrative Agent
and each Bank has relied upon the obligations of the Lender hereunder in
entering into the Term Loan Agreement.
SECTION 11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
10
SCHEDULE 1
Period Commitment
------ ----------
Borrowing Date to but not $ 35,000,000
including the first anniversary of
the Borrowing Date
First anniversary of the Borrowing $ 65,000,000
Date to but not including the
second anniversary of the
Borrowing Date
Second anniversary of the $95,000,000
Borrowing Date to but not
including the third anniversary of
the Borrowing Date
Third anniversary of the $120,000,000
Borrowing Date to but not
including the fourth anniversary
of the Borrowing Date
Fourth anniversary of the $130,000,000
Borrowing Date to but not
including the fifth anniversary of
the Borrowing Date
Fifth anniversary of the $140,000,000
Borrowing Date to but not
including the sixth anniversary of
the Borrowing Date
Sixth anniversary of the $150,000,000
Borrowing Date to but not
including the seventh anniversary
of the Borrowing Date
On and after the seventh $160,000,000
anniversary of the Borrowing
Date
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ACE US HOLDINGS, INC.
By___________________________
Name:
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By___________________________
Name:
Title:
A.C.E. INSURANCE COMPANY,
LTD.
By___________________________
Name:
Title:
The Common Seal of A.C.E. Insurance Company, Ltd.
was hereunto affixed in the presence of:
Director
_______________________________
Director/Secretary
_______________________________
12
EXHIBIT G
FORM OF DAVIS POLK & WARDWELL OPINION
-------------------------------------
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
We have participated in the preparation of the Term Loan Agreement (the
"Loan Agreement") dated as of December 11, 1997 among ACE US Holdings, Inc., a
Delaware corporation, as Borrower, ACE Limited, a Cayman Islands company limited
by shares, as Guarantor, the Banks listed on the signature pages thereof (the
"Banks") and Morgan Guaranty Trust Company of New York, as Administrative Agent,
and have acted as special United States counsel for the Agents for the purpose
of rendering this opinion pursuant to Section 3.01(e) of the Loan Agreement.
Terms defined in the Loan Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the Loan
Agreement and the Notes are within the Borrower's corporate powers and have been
duly authorized by all necessary corporate action.
2. The execution, delivery and performance by the Guarantor of the Loan
Agreement are within the Guarantor's corporate powers and have been duly
authorized by all necessary corporate action.
3. The Loan Agreement constitutes a valid and binding agreement of the
Borrower and each Note constitutes a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
4. The Loan Agreement constitutes a valid and binding agreement of the
Guarantor enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
In giving the foregoing opinion we have relied, with your consent and
without independent investigation, as to all matters governed by the laws of the
Cayman Islands, upon the opinion of Maples and Calder dated the date hereof, a
copy of which has been delivered by you pursuant to Section 3.01(b) of the Loan
Agreement.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by any other Person without our prior written consent.
Very truly yours,
2
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of __________ __, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), ACE Limited, ACE US Holdings, Inc.
("ACE US"), A.C.E. Insurance Company, Ltd ("ACE Insurance") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Issuing Bank and as Administrative Agent (the
"Administrative Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, this Assignment and Assumption Agreement (the "Assignment
Agreement") relates to (i) the Five-Year Credit Agreement (as amended from time
to time, the "Five Year Credit Agreement") and the 364-Day Credit Agreement (as
amended from time to time, the "364-Day Credit Agreement") each dated as of
December 11, 1997 among ACE Limited, as Borrower, A.C.E. Insurance Company,
Ltd., Corporate Officers & Directors Assurance Ltd. and Tempest Reinsurance
Company Limited, as Guarantors, the Assignor and the other Banks party thereto,
as Banks, and the Administrative Agent, (ii) the Term Loan Agreement (as amended
from time to time, the "Term Loan Agreement") the dated as of December 11, 1997
among ACE US, as Borrower, ACE Limited, as Guarantor, the Assignor and the other
Banks party thereto, as Banks, and the Administrative Agent and (iii) the
Amended and Restated Reimbursement Agreement dated as of December 11, 1997 among
ACE Insurance, the Assignor and the other Banks party thereto and the
Administrative Agent (the "Reimbursement Agreement" and together with the Five-
Year Credit Agreement, the 364-Day Credit Agreement and the Term Loan Agreement,
collectively, the "Facilities");
WHEREAS, under the Five-Year Credit Agreement, the Assignor has a
Commitment to make Loans to ACE Limited and participate in Letters of Credit in
an aggregate principal amount at any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to ACE Limited by the Assignor under the
Five-Year Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof;
WHEREAS, Letters of Credit with a total amount available for drawing under
the Five-Year Credit Agreement of $____________ are outstanding at the date
hereof;
WHEREAS, under the 364-Day Credit Agreement, the Assignor has a Commitment
to make Loans to ACE Limited in an aggregate principal amount at any time
outstanding not to exceed $_________;
WHEREAS, Committed Loans made to ACE Limited by the Assignor under the 364-
Day Credit Agreement in the aggregate principal amount of $_________ are
outstanding at the date hereof;
WHEREAS, under the Term Loan Agreement, the Assignor has [a Commitment to
make][outstanding] Loans to ACE US in an aggregate principal amount of
$_____________ at the date hereof;
WHEREAS, pursuant to the Reimbursement Agreement, the Assignor is a
participant to the extent of _____% in up to (pound)153,584,466 of Letters of
Credit outstanding thereunder;
WHEREAS, the Assignor proposes to assign to the Assignee an aggregate
interest in the Facilities of $__________, comprised as follows: (i) all of the
rights of the Assignor under the Five-Year Credit Agreement in respect of a
portion of its Commitment thereunder in an amount equal to $__________ (the
"Five-Year Assigned Amount"), together with a corresponding portion of its
outstanding Committed Loans and Letter of Credit Liabilities thereunder, (ii)
all of the rights of the Assignor under the 364-Day Credit Agreement in respect
of a portion of its Commitment thereunder in an amount equal to $_____________
(the "364-Day Assigned Amount"), together with a corresponding portion of its
outstanding Committed Loans thereunder, (iii) all of the rights of the Assignor
under the Term Loan Agreement in respect of a portion of its [Commitment]
[Loans] thereunder in an amount equal to $_______________ (the "Term Loan
Assigned Amount" and, together with the Five-Year Assigned Amount and the 364-
Day Assigned Amount, collectively the "Assigned Amounts"), and (iv) a portion of
the rights and obligations of the Assignor under the Reimbursement Agreement
equivalent to a Participation Percentage of ____% (the "Assigned Percentage"),
and the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
2
SECTION 1. Definitions. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Five-Year Credit Agreement,
the 364-Day Credit Agreement, the Term Loan Agreement and the Reimbursement
Agreement, as applicable.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under each of the Five-Year Credit
Agreement, the 364-Day Credit Agreement and the Term Loan Agreement to the
extent of the Five-Year Assigned Amount, the 364-Day Assigned Amount and the
Term Loan Assigned Amount, respectively, and under the Reimbursement Agreement
to the extent of the Assigned Percentage, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under each of the Five-Year Credit Agreement, the 364-Day Credit Agreement and
the Term Loan Agreement to the extent of the Five-year Assigned Amount, the 364-
Day Assigned Amount and the Term Loan Assigned Amount and under the
Reimbursement Agreement to the extent of the Assigned Percentage, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Committed Loans made by the Assignor and Letter of Credit Liabilities of
and the corresponding portion of the participating interests of the Assignor in
the Letters of Credit under the Reimbursement Agreement, outstanding at the date
hereof. Upon the execution and delivery hereof by the Assignor, the Assignee,
ACE Limited, ACE US, ACE Insurance, the Issuing Bank(s) and the Administrative
Agent and the payment of the amounts specified in Section 3 required to be paid
on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of the Assignor under each of
the Five-Year Credit Agreement, the 364-Day Credit Agreement and the Term Loan
Agreement with a Commitment in an amount equal to the Five-Year Assigned Amount,
the 364-Day Assigned Amount and the Term Loan Assigned Amount, respectively and
under the Reimbursement Agreement to the extent of the Assigned Percentage, and
(ii) the Commitment of the Assignor under each of the Facilities and the
Participation Percentage of the Assignor under the Reimbursement Agreement
shall, as of the date hereof, be reduced by the corresponding amount and the
Assignor released from its obligations under each of the Five-Year Credit
Agreement, the 364-Day Credit Agreement, the Term Loan Agreement and the
Reimbursement Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
3
date hereof in Federal funds the amount heretofore agreed between them.* It is
understood that ticking and/or facility fees accrued to the date hereof are for
the account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under any Related Document
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Consents. This Agreement is conditioned upon the consent of the
Administrative Agent and the Issuing Bank(s) and ACE Limited, ACE US and ACE
Insurance, pursuant to Section 10.06 of each of the Five-Year Credit Agreement,
the 364-Day Credit Agreement and the Term Loan Agreement and Section 8.06(c) of
the Reimbursement Agreement. The execution of this Agreement by such persons is
evidence of such consents. Pursuant to Section 10.06 of each of the 364-Day
Credit Agreement, the Five-Year Credit Agreement and the Term Loan Agreement,
each of ACE Limited and ACE US, respectively, agrees to execute and deliver a
Note payable to the order of the Assignee to evidence the assignment and
assumption provided for herein.
SECTION 5. Non-reliance on Assignor. The Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of any of ACE Limited and
its subsidiaries or the validity and enforceability of the obligations of ACE
Limited and its subsidiaries under the Related Documents. The Assignee
acknowledges that it has, independently and without reliance on the Assignor,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and will
continue to be responsible for making its own independent appraisal of the
business, affairs and financial condition of ACE Limited and its subsidiaries.
SECTION 6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
__________________
*Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any up front fee to be paid by the Assignor to the Assignee.
4
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
[ASSIGNOR]
By______________________________
Title:
[ASSIGNEE]
By______________________________
Title:
ACE LIMITED
By______________________________
Title:
ACE US HOLDINGS, INC.
By______________________________
Title:
A.C.E. INSURANCE COMPANY, LTD.
By______________________________
Title:
5
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Issuing
Bank and as Administrative Agent
By_____________________________
Title:
6
EXHIBIT I
[CT Corporation System]
December 11, 1997
To the Persons Identified on
on Schedule A Attached Hereto:
We have reviewed (i) the Five-Year Credit Agreement dated as of December
11, 1997 (the "Five-Year Credit Agreement") and the 364-Day Credit Agreement
(the "364-Day Credit Agreement") each among ACE Limited, as Borrower, A.C.E.
Insurance Company, Ltd., Corporate Officers & Directors Assurance Ltd. and
Tempest Reinsurance Company Limited, as Guarantors, the Banks listed therein,
and Morgan Guaranty Trust Company of New York, as Administrative Agent, (ii) the
Term Loan Agreement (the "Term Loan Agreement") dated as of December 11, 1997
among ACE US Holdings, Inc., as Borrower, ACE Limited, as Guarantor, the Banks
listed therein and Morgan Guaranty Trust Company of New York, as Administrative
Agent, (iii) the Subordinated Loan Agreement dated as of December 11, 1997 (the
"Subordinated Loan Agreement") among ACE US Holdings, Inc., as Borrower, A.C.E.
Insurance Company, Ltd., as Lender and Morgan Guaranty Trust Company of New
York, as Administrative Agent and (iv) the Amended and Restated Reimbursement
Agreement dated as of December 11, 1997 among A.C.E. Insurance Company, Ltd., as
Account Party, the Banks listed therein and Morgan Guaranty Trust Company of New
York, as Issuing Bank and Agent (the "Amended and Restated Reimbursement
Agreement" and together with the Five- Year Credit Agreement, the 364-Year
Credit Agreement, the Term Loan Agreement and the Subordinated Loan Agreement,
collectively, the "Agreements"), in each of which CT Corporation System is named
as agent to receive service of process in the State of New York on behalf of (a)
the Borrower and each Guarantor under each of the Five-Year Credit Agreement and
the 364- Day Credit Agreement, (b) the Borrower and the Guarantor under the Term
Loan Agreement, (c) the Borrower and the Lender under the Subordinated Loan
Agreement and (d) the Account Party under the Amended and Restated Reimbursement
Agreement, at the address of 1633 Broadway, New York, New York 10019. Upon
review of our appointment outlined in Section 10.10(b) of each of the 364-Day
Credit Agreement, the Five-Year Credit Agreement and the
Term Loan Agreement, Section 8(c) of the Subordinated Loan Agreement and Section
8.10(b) of the Amended and Restated Reimbursement Agreement, we understand that
our role as registered agent is confined to receiving service of process only.
We also understand that the term of our appointment as registered agent under
each such Agreements shall remain in effect until each of the Agreements shall
have been terminated and all obligations thereunder of each Borrower, each
Guarantor, the Lender and the Account Party shall have been paid in full, or
until such time as we are instructed in writing by the Administrative Agent to
discontinue our service.
We accept and confirm our appointment as registered agent and we understand
that any notice or process received by us in our capacity as registered agent
shall be promptly sent by telephone, fax, telex, cable or any other means of
instant communication, and thereafter by reputable overnight carrier to:
On Behalf of the Borrower and each Guarantor under each of the 364-Day
Credit Agreement and the Five-Year Credit Agreement and the Guarantor under the
Term Loan Agreement:
ACE Limited
The ACE Building
30 Woodbourne Avenue
Hamilton HM 08, Bermuda
(Fax 441-295-5221)
with copy to:
Morgan Guaranty Trust
Company of New York
60 Wall Street
New York, NY 10260-0060
(Fax 212-648-5249)
On behalf of the Borrower under the Term Loan Agreement and the
Subordinated Loan Agreement
2
ACE US Holdings, Inc.
Atlanta, GA 30374
with copy to:
Morgan Guaranty Trust
60 Wall Street
New York, NY 10260-0060
(Fax 212-648-5249)
On behalf of the Account Party under the Amended and Restated Reimbursement
Agreement and the Lender under the Subordinated Loan Agreement
A.C.E. Insurance Company, Ltd.
The ACE Building
30 Woodbourne Avenue
Hamilton HM 08, Bermuda
(Fax 441-295-5221)
with copy to:
Morgan Guaranty Trust
Company of New York
60 Wall Street
New York, NY 10260-0060
(Fax 212-648-5249)
We appreciate this opportunity to be of service.
Very truly yours,
CT CORPORATION SYSTEM
___________________________
By:
Title:
3
SCHEDULE A
Morgan Guaranty Trust Company
of New York, as Issuing Bank
and as Administrative Agent
Morgan Guaranty Trust Company
of New York
Mellon Bank, N.A.
Citibank, N.A.
The Bank of New York
The Bank of Tokyo-Mitsubishi, Ltd.
Barclays Bank PLC
Deutsche Bank AG, New York and/or
Cayman Islands Branch
Fleet National Bank
ING Bank, N.V.
Royal Bank of Canada
Bank of Bermuda (Luxembourg) S.A.
Banque Nationale de Paris
The Chase Manhattan Bank
Credit Lyonnais New York Branch
Dresdner Bank A.G., New York Branch and
Grand Cayman Branch
The First National Bank of Chicago
4
State Street Bank and Trust Company
ACE Limited, as Borrower under the
364-Day Credit Agreement and the
Five-Year Credit Agreement and as
Guarantor under the Term Loan Agreement
A.C.E. Insurance Company, Ltd., as Guarantor
under the 364-Day Credit Agreement and
the Five-Year Credit Agreement, as
Account Party under the Amended and Restated
Reimbursement Agreement and as Lender under
the Subordinated Loan Agreement
Corporate Officers & Directors
Assurance Ltd., as Guarantor under
the 364-Day Credit Agreement and
the Five-Year Credit Agreement
Tempest Reinsurance Company Limited,
as Guarantor under the 364-Day Credit
Agreement and the Five-Year Credit
Agreement
ACE US Holdings, Inc., as Borrower under
the Term Loan Agreement and as Borrower
under the Subordinated Loan Agreement
5