Exhibit 10(ii)(b)
TERM LOAN AGREEMENT
dated as of
September 6, 2000
between
AMERICAN INTERNATIONAL GROUP, INC.
and
HSB GROUP, INC.
TABLE OF CONTENTS
Page
ARTICLE I Term Loan.................................................1
Section 1.01. Term Loan and Note...........................1
ARTICLE II Interest.................................................1
Section 2.01. Interest on the Loan.........................1
Section 2.02. Payment of Interest..........................2
Section 2.03. Post Maturity Interest.......................2
Section 2.04. Use of Proceeds..............................2
ARTICLE III Payments and Prepayments................................2
Section 3.01. Optional Prepayments.........................2
Section 3.02. Mandatory Prepayments........................2
Section 3.03. Method of Payment............................2
ARTICLE IV Representations and Warranties...........................3
Section 4.01. Representations and Warranties...............3
ARTICLE V Conditions of the Loan....................................5
Section 5.01. Conditions of the Loan.......................5
ARTICLE VI Covenants................................................6
Section 6.01. Covenants....................................6
ARTICLE VII Events of Default; Remedies.............................9
Section 7.01. Events of Default............................9
ARTICLE VIII Miscellaneous.........................................11
Section 8.01. Certain Definitions.........................11
Section 8.02. Expenses....................................12
Section 8.03. Cumulative Rights and No Waiver.............12
Section 8.04. Notices.....................................13
Section 8.05. Amendments..................................14
Section 8.06. Binding Effect..............................14
Section 8.07. Participations..............................14
Section 8.08. Disclosure of Information...................15
i
Section 8.09. APPLICABLE LAW..............................15
Section 8.10. Waiver of Jury Trial........................15
Section 8.11. Separability................................15
Section 8.12. Execution in Counterparts...................15
Section 8.13. Merger Agreement............................15
ii
Page
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Exhibit A Term Loan Note
Schedule I Opinion of Robert C. Walker, Esq.
iii
TERM LOAN AGREEMENT (this "Agreement"), dated as of September
6, 2000, between AMERICAN INTERNATIONAL GROUP, INC., a Delaware corporation (the
"Lender"), and HSB GROUP, INC., a Connecticut corporation (the "Company").
WHEREAS, an Agreement and Plan of Merger among the Lender, the
Company and Engine Acquisition Corporation, dated August 17, 2000 (the "Merger
Agreement"), contemplates the retirement of certain Capital Securities (as
defined in Section 8.01); and
WHEREAS, the Lender is prepared to extend the Loan (as
hereinafter defined) to finance such retirement of the Capital Securities;
NOW, THEREFORE, the Lender and the Company hereby agree as
follows:
ARTICLE I
Term Loan
Section 1.01. Term Loan and Note. Subject to the terms and conditions of
this Agreement, the Lender agrees to make a loan (the "Loan") to the Company on
September 14, 2000, or such earlier other date as the parties hereto may agree
(the "Closing Date"), in the principal amount of $315 million. The obligation of
the Company to repay the Loan, with interest thereon as hereinafter prescribed,
shall be evidenced by a promissory note of the Company, substantially in the
form of Exhibit A (the "Note"), payable to the order of the Lender. The Note
shall be dated the Closing Date, shall mature on September 30, 2005 (as such
date may be accelerated, the "Maturity Date") and shall bear interest from the
Closing Date on the principal balance thereof at the rate and payable on the
dates provided herein.
ARTICLE II
Interest
Section 2.01. Interest on the Loan. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum (on the basis of a 360-day year for
the actual number of days involved) equal to a percent per annum, agreed to by
the parties on the Closing Date, such rate to be approximately 50 basis points
in excess of the Lender's funding cost for debt of similar maturity to the Loan.
Section 2.02. Payment of Interest. Interest on the Loan shall be payable
quarterly on the last Business Day of each March, June, September and December,
commencing on the first such date after the Closing Date, and on the date of any
repayment of principal as provided in Section 3.01.
Section 2.03. Post Maturity Interest. After the principal amount of the
Loan shall become due and payable (whether by acceleration or otherwise), the
Loan shall bear interest, payable on demand, at a rate per annum (on the basis
of a 360-day year for the actual number of days involved) equal to 2 percent in
excess of the rate per annum specified in Section 2.01.
Section 2.04. Use of Proceeds. The proceeds of the Loan will be used to
retire the Capital Securities.
ARTICLE III
Payments and Prepayments
Section 3.01. Optional Prepayments. The Company shall have the right, at
any time and from time to time, to prepay the Loan, in whole or in part, without
premium or penalty, upon at least three Business Days' notice to the Lender,
specifying the date of prepayment and the amount of prepayment. Such notice
shall be irrevocable and the payment amount specified in such notice shall be
due and payable on the date specified, together with accrued interest to such
date on the amount prepaid. Partial prepayments shall be in a minimum aggregate
principal amount of $50,000,000 or, if greater, an integral multiple of
$25,000,000.
Section 3.02. Mandatory Prepayments. The Company shall prepay the Loan in
whole, and the Note shall become due and payable in full, together with accrued
interest to such date on the amount prepaid, on the earlier of (x) the Business
Day on which the Company terminates the Merger Agreement pursuant to Section
7.1(b)(iv) thereof and (y) the first Business Day after the thirtieth day after
the Closing Date if the Capital Securities have not been retired on or prior to
such thirtieth day.
Section 3.03. Method of Payment. Each payment and prepayment by the Company
of principal and interest on the Note shall be made to the Lender, in lawful
money of the United States and in immediately available funds, to a Lender
account located in the United States designated by the Lender.
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties. The Company represents and
warrants to the Lender that:
(a) Good Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Connecticut and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted. The Company is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties
make such qualification or licensing necessary, except where the
failure to be so qualified or licensed or to be in good standing is
not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on the Company. As used in this Agreement, the
phrase "Material Adverse Effect on the Company" means a material
adverse effect on the condition (financial or otherwise), properties,
business, or results of the operations of the Company and its
subsidiaries (as defined below) taken as a whole, other than (i)
effects caused by changes in general economic or securities markets
conditions, (ii) changes or conditions that affect the U.S.
property-casualty insurance industry in general, (iii) changes in
generally accepted accounting principles, consistently applied
("GAAP") or statutory accounting practices prescribed or permitted by
the applicable insurance regulatory authority and (iv) effects
resulting from the announcement of this Agreement and the transactions
contemplated hereby.
As used in this Agreement, the term "subsidiary" of a party shall
mean any corporation or other entity (including joint ventures,
partnerships and other business associations) in which such party
directly or indirectly owns outstanding capital stock or other voting
securities having the power to elect a majority of the directors or
similar members of the governing body of such corporation or other
entity, or otherwise direct the management and policies of such
corporation or other entity ("Voting Securities").
(b) Each subsidiary of the Company (a "Company Subsidiary") is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and has the
corporate or other power and authority necessary for it to own or
lease its properties and assets and to carry on its business as it is
now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power and authority is
not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on the Company. Each Company Subsidiary is
duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed or
to be in good standing is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Company.
(c) Power and Authority. The Company has full power and authority
to enter into this Agreement, to issue the Note and to incur and
perform the obligations provided for herein and therein, all of which
have been duly authorized by all proper and necessary action. No
consent or approval of any governmental or administrative authority,
instrumentality or agency that has not been obtained is required as a
condition to the validity of this Agreement or the Note.
(d) Binding Agreement. This Agreement constitutes, and the Note
when issued and delivered pursuant hereto for value received will
constitute, the valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(e) Litigation. There are no proceedings or investigations
pending or, to the knowledge of any Executive Officer, threatened
against the Company or any Company Subsidiary before any court,
arbitrator or governmental or administrative authority,
instrumentality or agency that, in any one case or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the
Company or a material adverse effect on the Company's ability to
perform its obligations under or pursuant to this Agreement or the
Note.
(f) No Conflicts. There is no statute, regulation, rule, order or
judgment, and no provision of any mortgage, indenture, contract or
agreement binding on the Company or affecting its property, that would
conflict with or prevent the execution, delivery or carrying out of
the terms of this Agreement or the Note, and no consents or waivers of
other lenders to the Company are required for the execution, delivery
or carrying out of the terms of this Agreement or the Note.
(g) Financial Statements. The financial statements of the Company
included or incorporated by reference in the Company's most recent
report on Form 10-K and any subsequent reports on Form 10-Q filed by
the Company with the Securities and Exchange Commission have been
prepared in accordance with generally accepted accounting principles
and fairly present the financial condition and results of operations
of the Company and its consolidated subsidiaries as of the respective
dates thereof (subject, in the case of such reports on Form 10-Q, to
changes resulting from normal year-end adjustments). There has been
(x) no Material Adverse Effect on the Company since the date of the
Merger Agreement and (y) no material adverse change since the date of
the most recent such financial statements in the financial condition
of the Company and its consolidated subsidiaries which would be likely
to impair materially the Company's ability to perform its obligations
hereunder or under the Note.
(h) Pari Passu Obligations. The obligations of the Company
hereunder rank and will at all times rank pari passu with all other
obligations of the Company in respect of its unsecured and
unsubordinated indebtedness for borrowed money.
(i) Regulatory Compliance. The execution and delivery by the
Company of this Agreement and the Note do not constitute a violation
of Regulation U or X of the Board of Governors of the Federal Reserve
System, as now in effect.
ARTICLE V
Conditions of the Loan
Section 5.01. Conditions of the Loan. The obligation of the Lender to make
the Loan on the Closing Date is subject to the following conditions precedent:
(a) Compliance -- Terms and Covenants. The Company shall be in
compliance with all the terms, covenants and conditions of this
Agreement which are binding upon it and shall not have intentionally
violated any term, covenant and condition of the Merger Agreement.
(b) Compliance -- No Events of Default. There shall exist no
Event of Default and no event which with the giving of notice or the
lapse of time, or both, would constitute an Event of Default.
(c) Compliance -- Representations and Warranties. The
representations and warranties contained in Article IV hereof shall be
true with the same effect as though such representations and
warranties had been made at the time of the Loan, and the Company
shall not have taken any action since the date of the Merger Agreement
that could reasonably have been expected to cause any representation
or warranty in the Merger Agreement to be untrue as of the time of the
Loan.
(d) Opinions of Company Counsel. The Lender shall have received a
favorable written opinion of Robert C. Walker, General Counsel of the
Company, in the form of Schedule I hereto.
(e) The Note. The Lender shall have received the Note duly
executed by the Company.
(f) Merger Agreement Termination. No termination of the Merger
Agreement pursuant to Section 7.1(b)(iv) thereof shall have occurred.
(g) Compliance -- Certificate. The Lender shall have received a
certificate dated the date of the initial Loan and signed by an
Executive Officer of the Company as to the matters set forth in this
Section 5.01.
ARTICLE VI
Covenants
Section 6.01. Covenants. Until payment in full of the Note and performance
of all other obligations of the Company hereunder:
(a) Financial Statements and Other Reports and Information. The
Company will furnish to the Lender:
(i) within 60 days after the end of each quarterly fiscal period
in each fiscal year of the Company (other than the last quarter in any
fiscal year), a consolidated statement of financial condition of the
Company and its subsidiaries as at the end of such period, prepared in
accordance with GAAP and certified, subject to changes resulting from
subsequent audit adjustments, by an officer of the Company with
responsibility for financial matters;
(ii) within 90 days after the end of each fiscal year of the
Company, a consolidated statement of financial condition of the
Company and its subsidiaries as at the end of such year, and a
consolidated condensed statement of revenues and expenses of the
Company and its subsidiaries for such year, such financial statements
to be audited by and accompanied by an opinion of independent
certified public accountants of nationally-recognized standing
selected by the Company, which opinion shall state that such financial
statements have been prepared in accordance with GAAP consistently
applied (except as otherwise stated in such opinion) and that the
audit by such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing
standards;
(iii) forthwith upon any Executive Officer of the Company
obtaining any knowledge of any condition or event which constitutes or
which, after notice or lapse of time or both, would constitute an
Event of Default, a certificate executed by an Executive Officer
specifying the nature and period of existence thereof and what action
the Company has taken or is taking or proposes to take with respect
thereto;
(iv) together with each delivery of financial statements pursuant
to subdivisions (i) and (ii) above, a certificate executed by an
Executive Officer stating that the signer has reviewed the terms of
this Agreement and the Note and has made, or caused to be made under
his or her supervision, a review of the transactions and condition of
the Company and the Company's Subsidiaries during the accounting
period covered by such financial statements and that such review has
not disclosed the existence during such accounting period, and that
the signer does not have knowledge of the existence as of the date of
such certificate, of any condition or event which constitutes an Event
of Default or which, after notice or lapse of time or both, would
constitute an Event of Default or, if any such condition or event
existed or exists, specifying the nature and period of the existence
thereof and what action the Company has taken or is taking or proposes
to take with respect thereto;
(v) together with each delivery of financial statements pursuant
to subdivision (ii), a letter, by the independent certified public
accountants reporting thereon, (1) stating that they have examined and
reported upon the financial statements delivered pursuant to
subdivision (ii), (2) stating that for the purposes of such letter
they have read this Agreement insofar as it relates to accounting
matters and (3) stating that during the course of their audit, they
have not obtained any knowledge of any condition or event which
constitutes an Event of Default or which, after notice or lapse of
time or both, would constitute an Event of Default or, if their audit
has disclosed such condition or event, specifying the nature and the
period of existence thereof (but such accountants shall not be liable,
directly or indirectly, to anyone for failure to obtain knowledge of
any such condition or event); and
(vi) forthwith upon any Executive Officer of the Company
obtaining any knowledge of an event that could reasonably be expected
to result in the Company terminating the Merger Agreement pursuant to
Section 7.1(b)(iv) thereof, a certificate executed by an Executive
Officer specifying that such an event has occurred, providing a
description of such event and what action the Company has taken or is
taking or proposes to take with respect thereto; and
(vii) such additional financial information, reports or
statements as the Lender may from time to time reasonably request
consistent with the Company's policies with respect to similar
borrowings.
(b) Taxes. The Company will pay and discharge all taxes, assessments and
governmental charges and levies upon it, its income and its properties prior to
the date on which penalties are attached thereto, unless such taxes,
assessments, governmental charges or levies shall be contested in good faith by
appropriate proceedings and the Company shall have set aside adequate reserves
with respect thereto (segregated to the extent required by GAAP).
(c) Continued Existence. The Company will preserve and keep in full force
and effect its corporate existence in its jurisdiction of incorporation and will
not directly or indirectly sell, lease or otherwise dispose of all or
substantially all of its properties or assets or consolidate with or merge into
any other Person, or permit any other Person to consolidate or merge with it;
provided, that (x) the Company may sell, lease or otherwise dispose of all or
substantially all of its properties or assets to, or may consolidate with or
merge into, a Successor Entity (as such term is defined in Section 8.06) and (y)
the Company may permit any other Person to merge or consolidate with the Company
if the Company is the survivor and if immediately after giving effect to such
transaction there is no Event of Default and no event which upon notice or lapse
of time, or both, would constitute an Event of Default.
(d) Inspection. The Company will permit the Lender to have one or more of
its officers or employees, or any other persons designated by the Lender and
reasonably acceptable to the Company, visit and inspect, under the guidance of
the Company, any of the properties of the Company or any Company Subsidiary, and
to discuss the Company's or any Company Subsidiary's affairs, finances and
accounts with appropriate officers of the Company; provided, however, that the
Lender shall use its reasonable efforts to minimize the impact of such visits
and inspections on the operations of the Company or any Company Subsidiary.
(e) Funding of Employee Benefit Plans. The Company will comply in all
material respects with the funding requirements of the Employee Retirement
Income Security Act of 1974 with respect to employee benefit plans for its
employees.
(f) Regulatory Compliance. The Company and the Company Subsidiaries will
comply with all statutes, regulations, orders and other regulatory requirements
the noncompliance with which would materially and adversely affect its ability
to conduct its business as presently or hereafter conducted or result in a
Material Adverse Effect on the Company.
(g) Ownership and Control of HSBIIC and HSBIICC. The Company will cause
HSBIIC and HSBIICC to remain Company Subsidiaries and will continue to own
directly, or indirectly through one or more wholly-owned subsidiaries, all of
the Voting Securities of HSBIIC and HSBIICC, free and clear of all liens, claims
and encumbrances other than (x) liens for taxes, assessments or other
governmental charges or levies which are not yet due or are payable without
penalty or of which the amount, applicability or validity is being contested by
the Company in good faith by appropriate proceedings and the Company shall have
set aside on its books adequate reserves with respect thereto (segregated to the
extent required by GAAP), or (y) the liens of any judgment, if such judgment is
being contested by the Company in good faith by appropriate proceedings and the
Company shall have set aside on its books adequate reserves with respect thereto
(segregated to the extent required by GAAP).
ARTICLE VII
Events of Default; Remedies
Section 7.01. Events of Default. If any one or more of the following events
(each, an "Event of Default") shall have occurred and be continuing:
(a) if default shall be made in the due and punctual payment of the
principal of the Note, when and as the same shall become due and payable,
whether at the maturity thereof, by acceleration, by notice of prepayment,
by mandatory prepayment or otherwise; or
(b) if default shall be made in the due and punctual payment of any
interest on the Note, when and as such interest installment shall become
due and payable, and such default shall have continued for five Business
Days; or
(c) if any representation or warranty made by the Company in this
Agreement or any certificate or financial statement delivered hereunder or
thereunder shall prove to have been false or misleading in any material
respect on the date as of which made; or
(d) if default shall be made by the Company in the performance of or
compliance in any material respect with any other term contained in this
Agreement and such default shall not have been remedied within 30 days; or
(e) if the Company or any Company Subsidiary shall fail to make any
payment at maturity, including any applicable grace period, on any bond,
debenture, note or other evidence of indebtedness for money borrowed by the
Company or such Company Subsidiary (other than non-recourse indebtedness
and the Note) ("Debt") having a principal amount in excess of $5,000,000 in
the aggregate for the Company and all Company Subsidiaries for a period of
30 days, or if a default shall have occurred with respect to any Debt
having a principal amount in excess of $5,000,000 in the aggregate for the
Company and all Company Subsidiaries which default results in the
acceleration of such Debt without such Debt having been discharged or such
acceleration having been cured, waived, rescinded or annulled for a period
of 30 days; or
(f) if an involuntary case or other proceeding shall be commenced
against the Company, HSBIIC or HSBIICC seeking liquidation, reorganization
or other relief with respect to it or its debts under any applicable
Federal or State bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, conservatorship, receivership or similar law
now or hereafter in effect or seeking the appointment of a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of it or any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed, or an order or
decree approving or ordering any of the foregoing shall be entered and
continued unstayed and in effect, in any such event, for a period of 60
days; or
(g) if the Company, HSBIIC or HSBIICC shall commence a voluntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, conservatorship,
receivership or other similar law or any other case or proceeding to be
adjudicated a bankrupt or insolvent, or shall consent to the entry of a
decree or order for relief in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization,
conservatorship, receivership or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or if it
shall file a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or consent to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
for it, or any substantial part of its property, or shall make an
assignment for the benefit of creditors, or admit in writing its inability
to pay its debts generally as they become due, or shall take corporate
action in furtherance of any such action; or
(h) if a final judgment which, with other final judgments against the
Company and Company Subsidiaries, exceeds an aggregate of $5,000,000 shall
be rendered against the Company or any Company Subsidiary by a court of
competent jurisdiction in the United States and if, within 60 days after
the entry thereof, such judgment shall not have been discharged or
satisfied or execution thereof stayed pending appeal, or if, within 60 days
after the expiration of any stay, such judgment shall not have been
discharged or satisfied;
then and in any such event the Lender may at its option, exercised by written
notice given at any time (unless all Events of Default shall theretofore have
been remedied) to the Company declare the Note to be due and payable, whereupon
the same shall mature and become payable, together with interest accrued
thereon, without the necessity of any presentment, demand, protest or further
notice, all of which are hereby waived by the Company; provided, that upon the
happening of any event specified in clause (f) or (g) above all amounts owing
hereunder and under the Note shall automatically become immediately due and
payable, all without declaration or any notice to the Company.
ARTICLE VIII
Miscellaneous
Section 8.01. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings.
"Business Day" means any day on which commercial Lenders are open for
business (including dealings in dollar deposits) in New York City.
"Capital Securities" means the (i) $300,000,000 principal amount of the
Convertible Capital Securities (liquidation amount $1,000 per Capital Security)
issued by HSB Capital II and guaranteed by the Company, and (ii) $300,000,000
principal amount of the 7.0% Convertible Subordinated Deferrable Interest
Debentures due December 31, 2017, issued by the Company.
"Closing Date" has the meaning specified in Section 1.01.
"Company Subsidiary" has the meaning specified in Section 4.01(b).
"Debt" has the meaning specified in Section 7.01(e).
"Event of Default" has the meaning specified in Section 7.01.
"Executive Officer" means any of the Chief Executive Officer, President,
Chief Operating Officer, Chief Financial Officer, Principal Accounting Officer,
Treasurer or General Counsel of the Company.
"GAAP" has the meaning specified in Section 4.01(a).
"HSBIIC" means The Hartford Steam Boiler Inspection and Insurance Company
and any entity or entities in whatever form that succeed to all or substantially
all of such company's assets and business.
"HSBIICC" means The Hartford Steam Boiler Inspection and Insurance Company
of Connecticut and any entity or entities in whatever form that succeed to all
or substantially all of such company's assets and business.
"Loan" has the meaning specified in Section 1.01.
"Material Adverse Effect on the Company" has the meaning specified in
Section 4.01(a).
"Maturity Date" has the meaning specified in Section 1.01.
"Merger Agreement" has the meaning specified in the recitals hereto.
"Note" has the meaning specified in Section 1.02.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Subsidiary" has the meaning specified in Section 4.01(a).
"Successor Entity" has the meaning specified in Section 8.06.
"Voting Securities" has the meaning specified in Section 4.01(a).
Section 8.02. Expenses. The Company agrees, in the case of an Event of
Default, to pay all reasonable expenses incurred by the Lender in connection
with the enforcement of any provision of this Agreement and the collection of
the Note.
Section 8.03. Cumulative Rights and No Waiver. Each and every right granted
to the Lender hereunder or under any other document delivered hereunder or in
connection herewith, or allowed it by law or equity, shall be cumulative and may
be exercised from time to time. No failure on the part of the Lender to
exercise, and no delay in exercising, any right will operate as a waiver
thereof, nor will any single or partial exercise of any right preclude any other
or future exercise thereof or the exercise of any other right.
Section 8.04 Notices. Any communication, demand or notice to be given
hereunder or with respect to the Note will be duly given when delivered in
writing or sent by tested telex to a party at its address as indicated below.
A communication, demand or notice given pursuant to this Section 8.04 shall
be addressed:
If to the Company, at
HSB Group, Inc.
P.O. Box 5024
One State Street
Hartford, CT 06102-5024
Attention: Robert Walker, Esq.
Facsimile: 860-722-5710
With a concurrent copy (which shall not serve as
notice to the Company) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Thomas H. Kennedy
Facsimile: 917-777-2526
If to the Lender, at
American International Group, Inc.
70 Pine Street
New York, New York 10270
Attention: General Counsel
Facsimile: 212-425-2175
With a concurrent copy (which shall not serve as
notice to the Lender) to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Michael M. Wiseman
Stephen M. Kotran
Facsimile: 212-558-3588
Section 8.05. Amendments. This Agreement may only be amended in a writing
executed by the Lender and the Company.
Section 8.06. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the Lender and their respective
successors and assigns; provided, however, that the Company may not assign any
of its rights or delegate any of its obligations hereunder or under the Note
without the prior written consent of the Lender, except that the Company may
assign all of its rights and delegate all of its obligations hereunder and under
the Note to a Successor Entity without the prior written consent of the Lender.
"Successor Entity" means an entity in whatever form that succeeds to all or
substantially all of the Company's assets and business and that assumes all of
the Company's obligations hereunder and under the Note by contract or by
operation of law. Upon any such delegation and assumption, the Company shall be
relieved of and fully discharged from all obligations hereunder and under the
Note, whether such obligations arose before or after such delegation and
assumption. The Lender shall have the right to assign its rights and delegate
all of its obligations to any subsidiary of the Lender. Any assignment purported
to be made in contravention of this Section shall be null and void.
Section 8.07. Participations. The Lender shall have the right to grant
participations (to be evidenced by one or more participation agreements or
certificates of participation) in all or any portion of the Note at any time and
from time to time to one or more subsidiaries of the Lender or commercial banks;
provided, however, that the Lender shall obtain the prior written consent of the
Company to any such participation to a party other than a subsidiary of the
Lender, which consent will not be unreasonably withheld.
Section 8.08. Disclosure of Information. The Company authorizes the Lender
to disclose any information relating to the Company which has been furnished to
the Lender by the Company in connection with this Agreement to any prospective
assignee or participant in connection with an assignment or participation
permissible pursuant to Section 8.06 and 8.07.
SECTION 8.09. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF
AMERICA.
Section 8.10. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10.
Section 8.11. Separability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any law, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
Section 8.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
and all the counterparts shall together constitute one and the same instrument.
Section 8.13. Merger Agreement. The Lender acknowledges that execution and
performance of this Term Loan Agreement does not violate the Merger Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Howard I. Smith
Title: Executive Vice President & Chief
Financial Officer
By: /s/ Eric N. Litzky
Title: Assistant Secretary
HSB GROUP, INC.
By: /s/ Saul L. Basch
Title: Senior Vice President, Treasurer
and Chief Financial Officer
Exhibit A
TERM LOAN NOTE
$315,000,000 September__, 2000
HSB GROUP, INC., a Connecticut corporation (the "Company"),
for value received, hereby promises to pay to the order of AMERICAN
INTERNATIONAL GROUP, INC. (the "Lender"), by wire transfer of immediately
available funds in United States dollars to the account of the Lender specified
by the Lender in the United States on the Maturity Date (as defined in the
Agreement specified below), the principal sum of $315,000,000 or, if less, the
aggregate unpaid principal amount of the Loan made by the Lender to the Company
pursuant to the Agreement (as hereinafter defined). This Note shall bear
interest on the unpaid principal amount hereof, payable at a rate per annum (on
the basis of a 360-day year for the actual number of days involved) equal to
[___%], or, as applicable, at the higher rate provided in Section 2.03 of the
Agreement, and on the dates set forth in the Agreement.
If this Note becomes due and payable on a day which is not a
Business Day (as defined in the Agreement), the maturity hereof shall be
extended to the next succeeding Business Day, and interest shall be payable
hereon at the rate herein specified during such extension.
The Company waives presentment, demand, protest or other
notice of any kind.
This Note is the Note referred to in a Term Loan Agreement,
dated as of September__, 2000, between the Company and the Lender (the
"Agreement"), and is entitled to the benefits provided therein. This Note is
subject to optional and mandatory prepayment in whole or in part and its
maturity is subject to acceleration upon the terms provided in the Agreement.
HSB GROUP, INC.
By:
Title:
Schedule I
[Letterhead of Robert C. Walker, Esq.]
[September __, 2000]
American International Group, Inc.
70 Pine Street
New York, New York 10270
Ladies and Gentlemen:
I have acted as counsel to HSB Group, Inc., a Connecticut
corporation (the "Company"), in connection with the Company's execution and
delivery of the Term Loan Agreement dated as of [September __, 2000] (said
Agreement being herein referred to as the "Agreement"), between the Company, as
borrower, and you, as lender, and the Company's execution and delivery to you of
its Note thereunder. Terms used herein which are defined in the Agreement have
the meanings herein as therein defined unless the context hereof requires
otherwise. In this connection, I have examined such records, certificates and
other documents and such questions of law as I have considered necessary or
appropriate for the purposes of this opinion, and on the basis of such
examination advise you that, in my opinion:
1. The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Connecticut
and has all requisite power and authority to own and operate its
properties and to carry on its business as now being conducted.
2. The Company has all requisite power and authority to enter
into the Agreement, to make the borrowings provided for therein, to
execute and deliver the Note and to perform its obligations under the
Agreement and under the Note; and all necessary proceedings on its part
to duly authorize such action have been taken.
3. The Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
4. The Note has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with the terms
thereof and of the Agreement, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
5. The execution and delivery by the Company of the Agreement
and the Note do not violate any provision of the Amended and Restated
Certificate of Incorporation or By-laws of the Company.
6. No consent or approval of any governmental or
administrative authority, instrumentality or agency is required as a
condition to the validity of the Agreement or the Note; and there is no
statute, rule or regulation which prevents the execution, delivery or
carrying out by the Company of the Agreement or the Note.
7. To the best of my knowledge and after due inquiry, there is
no litigation or governmental proceeding or investigation pending or
threatened against the Company or any subsidiary before any court or
administrative agency which could reasonably be expected to result in
any material adverse change in the financial condition of the Company
and its subsidiaries taken as a whole.
The foregoing opinion is limited to the Federal laws of the
United States, the laws of the States of New York and Connecticut, and I am
expressing no opinion as to the effect of the laws of any other jurisdiction.
In rendering the foregoing opinion, I have, with your
approval, relied as to certain matters on information obtained from public
officials and officers of the Company and other sources believed by me to be
responsible, and I have assumed that the signatures on all documents examined by
me are genuine.
Very truly yours,