Document/Exhibit Description Pages Size
1: 10-K Annual Report 47 281K
2: EX-3.3 Special Resolutions Adopted January 22,2002 1 7K
3: EX-4.3 Specimen Certificate Representing Ordinary Shares 3 14K
4: EX-10.59 Amended and Restated Rights Agreement 57 242K
5: EX-10.60 Amendment to Ace Ltd. Deferred Compensation Plan 1 7K
6: EX-10.61 Employee Retirement Plan 37 156K
7: EX-10.62 Amendment and Restatement Dated 11/21/2001 125 403K
8: EX-10.63 Rembursement Agreement for $500,000,000 95 389K
9: EX-13.1 Management Discussion and Analysis 73 447K
10: EX-21.1 Subsidiaries of the Company 5 36K
11: EX-23.1 Consent of Pricewaterhousecoopers LLP 1 8K
Exhibit 10.63
================================================================================
REIMBURSEMENT AGREEMENT
among
ACE LIMITED
ACE BERMUDA INSURANCE LTD.
ACE TEMPEST LIFE REINSURANCE LTD.
ACE TEMPEST REINSURANCE LTD.,
as Account Parties,
THE BANKS NAMED HEREIN,
FLEET NATIONAL BANK,
as Documentation Agent,
and
FIRST UNION NATIONAL BANK,
as Issuing Bank and as Administrative Agent
$500,000,000 Secured Letter of Credit Facility
WACHOVIA SECURITIES*
Sole Book Runner and Lead Arranger
Dated as of December 20, 2001
================================================================================
*Wachovia Securities is the trade name under which First Union Securities, Inc.
conducts its investment banking business.
Table of Contents
[Enlarge/Download Table]
Page
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms ..................................................................................... 1
SECTION 1.02 Computation of Time Periods; Other Definitional Provisions ................................................ 16
SECTION 1.03 Accounting Terms and Determinations ....................................................................... 16
ARTICLE II
AMOUNTS AND TERMS OF THE LETTERS OF CREDIT
SECTION 2.01 The Letters of Credit ..................................................................................... 17
SECTION 2.02 Issuance and Renewals and Drawings, Participations and Reimbursement with Respect to Letters of Credit .... 17
SECTION 2.03 Repayment of Advances. .................................................................................... 21
SECTION 2.04 Termination or Reduction of the LC Commitment Amounts ..................................................... 22
SECTION 2.05 Fees. ..................................................................................................... 23
SECTION 2.06 Increased Costs, Etc. ..................................................................................... 23
SECTION 2.07 Payments and Computations ................................................................................. 25
SECTION 2.08 Taxes. .................................................................................................... 26
SECTION 2.09 Sharing of Payments, Etc .................................................................................. 28
SECTION 2.10 Use of Letters of Credit .................................................................................. 28
SECTION 2.11 Defaulting Banks. ......................................................................................... 28
SECTION 2.12 Replacement of Affected Bank .............................................................................. 30
SECTION 2.13 Certain Provisions Relating to the Issuing Bank and Letters of Credit ..................................... 30
SECTION 2.14 Downgrade Event with Respect to a Bank. ................................................................... 32
SECTION 2.15 Downgrade Event or Other Event with Respect to the Issuing Bank ........................................... 34
SECTION 2.16 Non-Dollar Letters of Credit .............................................................................. 34
SECTION 2.17 Extensions of Expiration Date ............................................................................. 36
SECTION 2.18 Tranches. ................................................................................................. 37
SECTION 2.19 Collateral. ............................................................................................... 40
ARTICLE III
CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT
SECTION 3.01 Conditions Precedent to Effective Date .................................................................... 40
SECTION 3.02 Conditions Precedent to Each Issuance, Extension or Increase of a Letter of Credit ........................ 42
SECTION 3.03 Determinations Under Section 3.01 ......................................................................... 42
[Enlarge/Download Table]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Account Parties .............................................. 43
ARTICLE V
COVENANTS OF THE ACCOUNT PARTIES
SECTION 5.01 Affirmative Covenants .............................................................................. 47
SECTION 5.02 Negative Covenants ................................................................................. 49
SECTION 5.03 Reporting Requirements ............................................................................. 53
SECTION 5.04 Financial Covenants ................................................................................ 56
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01 Events of Default .................................................................................. 56
SECTION 6.02 Actions in Respect of the Letters of Credit upon Default ........................................... 60
ARTICLE VII
THE GUARANTY
SECTION 7.01 The Guaranty ....................................................................................... 60
SECTION 7.02 Guaranty Unconditional ............................................................................. 61
SECTION 7.03 Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances ........................ 62
SECTION 7.04 Waiver by the Account Parties ...................................................................... 62
SECTION 7.05 Subrogation ........................................................................................ 62
SECTION 7.06 Stay of Acceleration ............................................................................... 63
SECTION 7.07 Continuing Guaranty; Assignments ................................................................... 63
ARTICLE VIII
THE AGENTS
SECTION 8.01 Authorization and Action ........................................................................... 63
SECTION 8.02 Agents' Reliance, Etc .............................................................................. 64
SECTION 8.03 First Union and Affiliates ......................................................................... 64
SECTION 8.04 Bank Credit Decision ............................................................................... 64
SECTION 8.05 Indemnification .................................................................................... 64
SECTION 8.06 Successor Administrative Agent ..................................................................... 65
SECTION 8.07 Collateral Matters ................................................................................. 66
ii
[Enlarge/Download Table]
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Amendments, Etc. ......................................................... 66
SECTION 9.02 Notices, Etc. ............................................................ 67
SECTION 9.03 No Waiver; Remedies ...................................................... 67
SECTION 9.04 Costs and Expenses. ...................................................... 67
SECTION 9.05 Right of Set-off ......................................................... 68
SECTION 9.06 Binding Effect ........................................................... 69
SECTION 9.07 Assignments and Participations. .......................................... 69
SECTION 9.08 Execution in Counterparts ................................................ 72
SECTION 9.09 No Liability of the Issuing Bank ......................................... 72
SECTION 9.10 Confidentiality .......................................................... 72
SECTION 9.11 Jurisdiction, Etc ........................................................ 73
SECTION 9.12 Governing Law ............................................................ 73
SECTION 9.13 Waiver of Jury Trial ..................................................... 73
SECTION 9.14 Disclosure of Information ................................................ 73
Schedule I LC Commitment Amounts
Schedule I - Part 2 Domestic Lending Offices
Schedule II Existing Letters of Credit
Schedule III Methodology for Calculation of Collateral Values
Schedule 4.01(b) Subsidiaries
Schedule 5.02(a) Liens
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Collateral Value Report
Exhibit C-1 Form of Opinion of Maples and Calder
Exhibit C-2 Form of Opinion of Mayer, Brown & Platt
Exhibit C-3 Form of Opinion of Conyers, Dill & Pearman
Exhibit D Form of Pledge and Security Agreement
Exhibit E Form of Letter of Instruction
iii
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT dated as of December 20, 2001, among ACE
Limited, a Cayman Islands company (the "Parent"), ACE Bermuda Insurance Ltd., a
------
Bermuda company ("ACE Bermuda"), ACE Tempest Life Reinsurance Ltd., a Bermuda
-----------
company ("Tempest Life"), and ACE Tempest Reinsurance Ltd., a Bermuda company
------------
("Tempest") (ACE Bermuda, Tempest Life and Tempest, together with the Parent,
-------
the "Account Parties" and individually an "Account Party"), the banks, financial
--------------- -------------
institutions and other institutional lenders listed on the signature pages
hereof as the Initial Banks (the "Initial Banks"), First Union National Bank
-------------
("First Union"), as Issuing Bank (as hereinafter defined), Fleet National Bank
-----------
("Fleet"), as documentation agent (Fleet, together with any successor
-----
documentation agent appointed pursuant to Article VIII, the "Documentation
-------------
Agent"), and First Union, as administrative agent (together with any successor
-----
administrative agent appointed pursuant to Article VIII, the "Administrative
--------------
Agent" and, together with the Documentation Agent, the "Agents") for the Banks.
----- ------
PRELIMINARY STATEMENTS:
The Account Parties have requested that the Issuing Bank and the Banks
make available to the Account Parties a secured credit facility in an amount up
to $500,000,000 to provide for the issuance of letters of credit for the account
of one or more of the Account Parties. The Issuing Bank and the Banks have
indicated their willingness to agree to make such letters of credit available on
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Account Parties" has the meaning specified in the recital of parties
---------------
to this Agreement.
"ACE Bermuda" has the meaning specified in the recital of parties to
-----------
this Agreement.
"ACE INA" means ACE INA Holdings Inc., a Delaware corporation.
-------
"Adjusted Consolidated Debt" means, at any time, an amount equal to (i)
--------------------------
the then outstanding Consolidated Debt of the Parent and its Subsidiaries plus
(ii) to the extent exceeding an amount equal to 15% of Total Capitalization, the
then issued and outstanding amount of Preferred Securities (other than any
Mandatorily Convertible Securities).
"Administrative Agent" has the meaning specified in the recital of
--------------------
parties to this Agreement.
"Administrative Agent's Account" means the account of the
------------------------------
Administrative Agent maintained by the Administrative Agent at First Union
National Bank, Charlotte Plaza Building CP-23, 201 South College Street,
Charlotte, North Carolina 28288-0680, Account No. 5000000027444, Re: ACE Ltd.,
Attn: Syndication Agency Services, or such other account as the Administrative
Agent shall specify in writing to the Banks.
"Advance" means a Letter of Credit Advance.
-------
"Affected Bank" means any Bank that (i) has made, or notified any
-------------
Account Party that an event or circumstance has occurred which may give rise to,
a demand for compensation under Section 2.06(a) or (b) or Section 2.08 (but only
so long as the event or circumstance giving rise to such demand or notice is
continuing) or (ii) is a Downgraded Bank.
"Affiliate" means, as to any Person, any other Person that, directly or
---------
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Interests of such Person
or to direct or cause the direction of the management and policies of such
Person, whether through the ownership of Voting Interests, by contract or
otherwise.
"Agents" has the meaning specified in the recital of parties to this
------
Agreement.
"Agreement Currency" has the meaning specified in Section 2.16(g).
------------------
"Applicable Account Party" with respect to any outstanding or proposed
------------------------
Letter of Credit means the Account Party for the account of which such Letter of
Credit was or is proposed to be issued.
"Applicable Lending Office" means, with respect to each Bank, such
-------------------------
Bank's Domestic Lending Office.
"Approved Investment" means any Investment that was made by the Parent
-------------------
or any of its Subsidiaries pursuant to investment guidelines set forth by the
board of directors of the Parent which are consistent with past practices.
"Arranger" means First Union Securities, Inc.
--------
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Bank and an Eligible Assignee, and accepted by the Administrative
Agent, in accordance with Section 9.07 and in substantially the form of Exhibit
A hereto.
"Available Amount" of any Letter of Credit means, at any time, the
----------------
maximum amount available to be drawn under such Letter of Credit at such time or
at any future time (assuming compliance at such time or such future time with
all conditions to drawing) (including without
2
limitation amounts which have been the subject of drawings by the applicable
beneficiary but which have not yet been paid by the Issuing Bank).
"Bankruptcy Law" means any proceeding of the type referred to in
--------------
Section 6.01(f) or Title 11, U.S. Code, or any similar foreign, federal or state
law for the relief of debtors.
"Banks" means the Initial Banks and each Person that shall become a
-----
Bank hereunder pursuant to Section 9.07(a), (b) and (c) for so long as such
Initial Bank or Person, as the case may be, shall be a party to this Agreement.
"Base Rate" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the rate of
interest announced publicly by First Union in Charlotte, North Carolina from
time to time, as First Union's prime rate (which may not be its best lending
rate) or, if higher on the day in question, 1/2 of 1% above the Federal Funds
Rate.
"Business Day" means a day of the year on which banks are not required
------------
or authorized by law to close in Charlotte, North Carolina, New York, New York,
London, England or Bermuda.
"Capitalized Leases" means all leases that have been or should be, in
------------------
accordance with GAAP, recorded as capitalized leases.
"Change of Control" means the occurrence of any of the following: (a)
-----------------
any Person or two or more Persons acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934), directly or
indirectly, of Voting Interests of the Parent (or other securities convertible
into such Voting Interests) representing 30% or more of the combined voting
power of all Voting Interests of the Parent; or (b) a majority of the board of
directors of the Parent shall not be Continuing Members; or (c) any Person or
two or more Persons acting in concert shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that results in
its or their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Parent.
"Collateral" means all the assets, property and interests in property
----------
that shall from time to time be pledged or be purported to be pledged as direct
or indirect security for the Obligations pursuant to any one or more of the
Security Documents.
"Collateral Value" means, for any Business Day as of which it is being
----------------
calculated, (a) for each category of Collateral set forth on Schedule III, an
amount equal to the "Eligible Percentage" of the market value (or, as to cash,
the dollar amount) thereof set forth opposite such category of Collateral on
Schedule III, and (b) for the Collateral, in the aggregate, the sum of such
amounts, in each case as of the close of business on the immediately preceding
Business Day or, if such amount is not determinable as of the close of business
on such immediately preceding Business Day, as of the close of business on the
most recent Business Day on which such amount is determinable, which Business
Day shall be not more than two (2) Business Days prior to the Business Day as of
which the Collateral Value is being calculated; provided that the calculation of
--------
the Collateral Value shall be further subject to the terms and conditions set
forth on Schedule III; and provided further that (i) no Collateral (including,
-------- -------
without limitation, cash)
3
shall be included in the calculation of the Collateral Value unless the
Administrative Agent has a first priority perfected Lien on and security
interest in such Collateral pursuant to the Security Documents and (ii) until
the Tempest Life Effective Date, any Collateral pledged by Tempest Life shall,
for purposes of all calculations of the Collateral Value hereunder, be taken
into account solely against Letter of Credit Obligations arising with respect to
Letters of Credit issued for the account of Tempest Life.
"Collateral Value Report" has the meaning specified in Section 2.19(b).
-----------------------
"Commitment Amount" means an LC Commitment Amount or the Letter of
-----------------
Credit Issuance Commitment Amount.
"Commitment Banks" has the meaning specified in Section 2.18(a).
----------------
"Committed Facility" means, at any time, the aggregate amount of the
------------------
Banks' LC Commitment Amounts at such time.
"Confidential Information" means information that any Loan Party
------------------------
furnishes to any Agent or any Bank, but does not include any such information
that is or becomes generally available to the public other than as a result of a
breach by any Agent or any Bank of its obligations hereunder or that is or
becomes available to such Agent or such Bank from a source other than the Loan
Parties that is not, to the best of such Agent's or such Bank's knowledge,
acting in violation of a confidentiality agreement with a Loan Party.
"Consolidated" refers to the consolidation of accounts in accordance
------------
with GAAP.
"Consolidated Net Income" means, for any period, the net income of the
-----------------------
Parent and its Consolidated Subsidiaries, determined on a Consolidated basis for
such period.
"Consolidated Net Worth" means at any date the Consolidated
----------------------
stockholders' equity of the Parent and its Consolidated Subsidiaries determined
as of such date, provided that such determination for purposes of Section 5.04
--------
shall be made without giving effect to adjustments pursuant to Statement No. 115
of the Financial Accounting Standards Board of the United States of America.
"Contingent Obligation" means, with respect to any Person, any
---------------------
obligation or arrangement of such Person to guarantee or intended to guarantee
any Debt, leases, dividends or other payment obligations ("primary obligations")
-------------------
of any other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (b) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement or (c) any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, assets, securities or services primarily for the purpose
4
of assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv) otherwise to
assure or hold harmless the holder of such primary obligation against loss in
respect thereof; provided, however, that Contingent Obligations shall not
-------- -------
include any obligations of any such Person arising under insurance contracts
entered into in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made (or, if less, the maximum amount of such primary obligation for which
such Person may be liable pursuant to the terms of the instrument evidencing
such Contingent Obligation) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder), as determined by such Person in good faith.
"Continuing Member" means a member of the Board of Directors of the
-----------------
Parent who either (i) was a member of the Parent's Board of Directors on the
date of execution and delivery of this Agreement by the Parent and has been such
continuously thereafter or (ii) became a member of such Board of Directors after
such date and whose election or nomination for election was approved by a vote
of the majority of the Continuing Members then members of the Parent's Board of
Directors.
"Conversion to Tranche System" has the meaning specified in Section
----------------------------
2.18(a).
"Current Expiration Date" has the meaning specified in Section 2.17.
-----------------------
"Custodial Account" means each custodial, brokerage or similar account
-----------------
of any Account Party maintained by a custodian, broker or other securities
intermediary as a "securities account" within the meaning of Section 8-501(a) of
the Uniform Commercial Code for such Account Party as the "entitlement holder"
within the meaning of Section 8-102(7) of the Uniform Commercial Code pursuant
to a Custodial Agreement, on which (and on the contents of which) a Lien has
been granted as security for the Obligations.
"Custodial Agreement" means each custodial or similar agreement between
-------------------
the Account Parties (or any of them) and a Custodian, pursuant to which one or
more Custodial Accounts are maintained, in each case as amended.
"Custodian" means (i) State Street (in its capacity as custodian of the
---------
State Street Custodial Accounts) and (ii) each other bank or financial
institution that maintains a Custodial Account (in its capacity as custodian
thereof), in each case including any sub-custodian.
"Debenture" means debt securities issued by ACE INA or the Parent to a
---------
Special Purpose Trust in exchange for proceeds of Preferred Securities and
common securities of such Special Purpose Trust.
"Debt" of any Person means, without duplication for purposes of
----
calculating financial ratios, (a) all indebtedness of such Person for borrowed
money, (b) all obligations of such Person for the deferred purchase price of
property or services (other than trade payables incurred in the ordinary course
of such Person's business), (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all obligations of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property
5
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all obligations of such Person as lessee under
Capitalized Leases (excluding imputed interest), (f) all obligations of such
Person under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interests (except for obligations to
pay for Equity Interests within customary settlement periods) in such Person or
any other Person or any warrants, rights or options to acquire such capital
stock (excluding payments under a contract for the forward sale of ordinary
shares of such Person issued in a public offering), valued, in the case of
Redeemable Preferred Interests, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends, (h) all Contingent
Obligations of such Person in respect of Debt (of the types described above) of
any other Person and (i) all indebtedness and other payment obligations referred
to in clauses (a) through (h) above of another Person secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such indebtedness or other payment
obligations; provided, however, that the amount of Debt of such Person under
-------- -------
clause (i) above shall, if such Person has not assumed or otherwise become
liable for any such Debt, be limited to the lesser of the principal amount of
such Debt or the fair market value of all property of such Person securing such
Debt; provided further that "Debt" shall not include obligations in respect of
-------- -------
insurance or reinsurance contracts entered into in the ordinary course of
business; provided further that, solely for purposes of Section 5.04 and the
-------- -------
definitions of "Adjusted Consolidated Debt" and "Total Capitalization", "Debt"
shall not include (x) any contingent obligations of any Person under or in
connection with acceptance, letter of credit or similar facilities or (y)
obligations of the Parent or ACE INA under any Debentures or under any
subordinated guaranty of any Preferred Securities or obligations of a Special
Purpose Trust under any Preferred Securities.
"Default" means any Event of Default or any event that would constitute
-------
an Event of Default but for the requirement that notice be given or time elapse
or both.
"Defaulted Amount" means, with respect to any Bank at any time, any
----------------
amount required to be paid by such Bank to any Agent or any other Bank hereunder
or under any other Loan Document at or prior to such time that has not been so
paid as of such time, including, without limitation, any amount required to be
paid by such Bank to (a) the Issuing Bank pursuant to Section 2.02(e) to
purchase a portion of a Letter of Credit Advance made by the Issuing Bank and
(b) any Agent or the Issuing Bank pursuant to Section 8.05 to reimburse such
Agent or the Issuing Bank for such Bank's ratable share of any amount required
to be paid by the Banks to such Agent or the Issuing Bank as provided therein.
"Defaulting Bank" means, at any time, any Bank that, at such time, (a)
---------------
owes a Defaulted Amount or (b) shall take any action or be the subject of any
action or proceeding of a type described in Section 6.01(f).
"Documentation Agent" has the meaning specified in the recital of
-------------------
parties to this Agreement.
6
"Dollar Equivalent" has the meaning specified in Section 2.16(h).
-----------------
"Domestic Lending Office" means, with respect to any Bank, the office
-----------------------
of such Bank specified as its "Domestic Lending Office" opposite its name on
Part 2 of Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Bank, as the case may be, or such other office of such Bank as
such Bank may from time to time specify to any Account Party and the
Administrative Agent.
"Downgrade Account" has the meaning specified in Section 2.14(a).
-----------------
"Downgrade Event" means, with respect to any Bank, a reduction of the
---------------
credit rating for the senior unsecured unsupported long-term debt of such Bank
by S&P or Moody's.
"Downgrade Notice" has the meaning specified in Section 2.14(a).
----------------
"Downgraded Bank" means any Bank which has a credit rating of less than
---------------
A- (in the case of S&P) or A3 (in the case of Moody's) for its senior unsecured
unsupported long-term debt or which does not have any credit rating on such debt
from one of S&P or Moody's.
"Effective Date" means the first date on which the conditions set forth
--------------
in Article III shall have been satisfied.
"Eligible Assignee" means (i) a Bank, (ii) an Affiliate of a Bank, or
-----------------
(iii) a commercial bank, a savings bank or other financial institution that is
approved by the Administrative Agent and the Issuing Bank and, unless an Event
of Default has occurred and is continuing at the time any assignment is effected
pursuant to Section 9.07, the Parent (such approval of the Parent not to be
unreasonably withheld or delayed); provided, however, that neither any Loan
-------- -------
Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee
under this definition.
"Environmental Action" means any action, suit, demand, demand letter,
--------------------
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to health, safety or
the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Law" means any Federal, state, local or foreign statute,
-----------------
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.
"Environmental Permit" means any permit, approval, identification
--------------------
number, license or other authorization required under any Environmental Law.
7
"Equity Interests" means, with respect to any Person, shares of capital
----------------
stock of (or other ownership or profit interests in) such Person, warrants,
options or other rights for the purchase or other acquisition from such Person
of shares of capital stock of (or other ownership or profit interests in) such
Person, securities convertible into or exchangeable for shares of capital stock
of (or other ownership or profit interests in) such Person or warrants, rights
or options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
---------------
ERISA is a member of the controlled group of any Loan Party, or under common
control with any Loan Party, within the meaning of Section 414 of the Internal
Revenue Code or Section 4001 of ERISA.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Existing Letters of Credit" means, collectively, one or more letters
--------------------------
of credit issued by First Union prior to the date hereof and outstanding on the
Effective Date, which letters of credit are listed on Schedule II hereto.
"Expiration Date" shall mean December 19, 2002, as such date may be
---------------
extended in accordance with Section 2.17 hereof.
"Extension Request" has the meaning specified in Section 2.17.
-----------------
"Federal Funds Rate" means, for any period, a fluctuating interest rate
------------------
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the fee letter dated November 26, 2001 among the
----------
Parent, First Union and the Arranger, as amended.
"First Union" has the meaning specified in the recital of parties to
-----------
this Agreement.
"Fiscal Year" means the fiscal year of the Parent and its Consolidated
-----------
Subsidiaries ending on December 31 in any calendar year.
"Fleet" has the meaning specified in the recital of parties to this
-----
Agreement.
8
"Foreign Government Scheme or Arrangement" has the meaning specified in
----------------------------------------
Section 4.01 (n) (iv).
"Foreign Plan" has the meaning specified in Section 4.01 (n) (iv).
------------
"GAAP" has the meaning specified in Section 1.03.
----
"Guaranty" means the undertaking by each of the Account Parties under
--------
Article VII.
"Hazardous Materials" means (a) petroleum or petroleum products,
-------------------
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other hedging agreements.
"Indemnified Party" has the meaning specified in Section 9.04(b).
-----------------
"Initial Banks" has the meaning specified in the recital of parties to
-------------
this Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Investment" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any Equity Interests or Debt or the assets
comprising a division or business unit or a substantial part or all of the
business of such Person, any capital contribution to such Person or any other
direct or indirect investment in such Person, including, without limitation, any
acquisition by way of a merger or consolidation and any arrangement pursuant to
which the investor incurs Debt of the types referred to in clause (h) or (i) of
the definition of "Debt" in respect of such Person; provided, however, that any
-------- -------
purchase by any Loan Party or any Subsidiary of any catastrophe-linked
instruments which are (x) issued for the purpose of transferring traditional
reinsurance risk to the capital markets and (y) purchased by such Loan Party or
Subsidiary in accordance with its customary reinsurance underwriting procedures,
or the entry by any Loan Party or any Subsidiary into swap instruments relating
to such instruments in accordance with such procedures, shall be deemed to be
the entry by such Person into a reinsurance contract and shall not be deemed to
be an Investment by such Person.
"Issuing Bank" means First Union and any "New Issuing Bank" appointed
------------
in accordance with Section 2.15.
"Judgment Currency" has the meaning specified in Section 2.16(g).
-----------------
"LC Commitment Amount" means, with respect to any Bank at any time, the
--------------------
amount set forth opposite such Bank's name on Schedule I hereto under the
caption "LC Commitment Amount" or, if such Bank has entered into one or more
Assignment and Acceptances, set forth
9
for such Bank in the Register maintained by the Administrative Agent pursuant to
Section 9.07(d) as such Bank's "LC Commitment Amount", as such amount may be
reduced at or prior to such time pursuant to Section 2.04. If the Conversion to
Tranche System shall have occurred, the LC Commitment Amount of a Bank which is
not a Commitment Bank will also be reduced, in the event of a reduction of the
Available Amount under (except, for so long as a drawing is not reimbursed, as a
result of a drawing under) any Letter of Credit (including upon expiration or
termination thereof) with respect to which such Bank has a funding obligation
(or with respect to which such Bank would have had a funding obligation if a
drawing had occurred prior to such expiration or termination), by an amount
equal to such reduction.
"LC Participation Obligations" has the meaning specified in Section
----------------------------
2.14(a).
"L/C Related Documents" has the meaning specified in Section
---------------------
2.03(a)(ii).
"L/C Termination Date" has the meaning specified in Section 2.18(a).
--------------------
"Letter of Credit Advance" has the meaning specified in Section
------------------------
2.02(f).
"Letter of Credit Agreement" has the meaning specified in Section
--------------------------
2.02(a).
"Letter of Credit Business Day" means a Business Day.
-----------------------------
"Letter of Credit Exposure" at any time means the sum at such time of
-------------------------
(a) the aggregate outstanding amount of Letter of Credit Advances, (b) the
aggregate Available Amounts of all outstanding Letters of Credit (including,
without limitation, all outstanding Existing Letters of Credit) and (c) the
aggregate Available Amounts of all Letters of Credit which have been requested
by an Account Party to be issued hereunder but have not yet been so issued.
"Letter of Credit Issuance Commitment Amount" means at any time the
-------------------------------------------
lesser of (a) $500,000,000 (or such lesser amount as may be agreed in writing
among the Account Parties, the Administrative Agent and the Issuing Bank) and
(b) the aggregate amount of the LC Commitment Amounts then in effect.
"Letter of Credit Outstandings" at any time means the sum at such time
-----------------------------
of (a) the aggregate outstanding amount of Letter of Credit Advances and (b) the
aggregate Available Amounts of all outstanding Letters of Credit, in each case
after giving effect to any issuance or renewal of a Letter of Credit occurring
on the date of determination and any other changes in the aggregate amounts
under clauses (a) and (b) above as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letter of Credit or any
reductions in the maximum amount available for drawings under any Letter of
Credit taking effect on such date.
"Letter of Credit Participating Interest" has the meaning specified in
---------------------------------------
Section 2.02(d).
"Letter of Credit Participating Interest Commitment" has the meaning
--------------------------------------------------
specified in Section 2.02(d).
10
"Letter of Credit Participating Interest Percentage" means, for any
--------------------------------------------------
Bank, a fraction, expressed as a percentage, the numerator of which is such
Bank's LC Commitment Amount and the denominator of which is the aggregate LC
Commitment Amounts of all the Banks.
"Letter of Instruction" means a letter in substantially the form of
---------------------
Exhibit E.
"Letters of Credit" has the meaning specified in Section 2.01.
-----------------
"Lien" means any lien, security interest or other charge or encumbrance
----
of any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"Loan Documents" means (i) this Agreement, (ii) the Fee Letter, (iii)
--------------
each Letter of Credit Agreement, (iv) each Security Document and (v) each Letter
of Instruction, in each case as amended.
"Loan Parties" means the Account Parties.
------------
"Mandatorily Convertible Preferred Securities" means units comprised of
--------------------------------------------
(i) Preferred Securities or preferred shares of Parent and (ii) a contract for
the sale of ordinary shares of the Parent (including "Feline Prides(TM)",
"Rhinos(TM)" or any substantially similar securities).
"Margin Stock" has the meaning specified in Regulation U.
------------
"Material Adverse Change" means any material adverse change in the
-----------------------
business, financial condition, operations or properties of the Parent and its
Subsidiaries, taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition, operations or properties of the Parent and its
Subsidiaries, taken as a whole, (b) the rights and remedies of the
Administrative Agent, the Issuing Bank or any Bank under any Loan Document or
(c) the ability of the Loan Parties, taken as a whole, to perform their
obligations under the Loan Documents.
"Material Financial Obligation" means a principal amount of Debt and/or
-----------------------------
payment obligations in respect of any Hedge Agreement of the Parent and/or one
or more of its Subsidiaries arising in one or more related or unrelated
transactions exceeding in the aggregate $25,000,000.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a multiemployer plan, as defined in Section
------------------
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"Non-Dollar Letters of Credit" has the meaning specified in Section
----------------------------
2.16(a).
11
"OECD" means the Organization for Economic Cooperation and Development.
----
"Obligations" means all obligations of every nature of the Account
-----------
Parties from time to time owing, due or payable to either Agent or to any Bank
under this Agreement or any of the other Loan Documents, whether for principal,
reimbursement for payments made under Letters of Credit (including, without
limitation, Existing Letters of Credit), interest (including, to the greatest
extent permitted by law, post-petition interest), fees, expenses, indemnities or
any other obligations, and whether now existing or hereafter incurred, created
or arising and whether direct or indirect, absolute or contingent, or due or to
become due (including obligations of performance).
"Other Taxes" has the meaning specified in Section 2.08(b).
-----------
"Overnight Rate" has the meaning specified in Section 2.16(h).
--------------
"Parent" has the meaning specified in the recital of parties to this
------
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
----
successor).
"Pension Plan" means a "pension plan", as such term is defined in
------------
section 3(2) of ERISA, which is subject to title IV of ERISA (other than any
"multiemployer plan" as such term is defined in section 4001(a)(3) of ERISA),
and to which any Loan Party or any ERISA Affiliate may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under section
4069 of ERISA.
"Permitted Collateral Liens" has the meaning specified in Section
--------------------------
5.02(a).
"Permitted Liens" means such of the following as to which no
---------------
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced or which are being contested in good faith by appropriate
proceedings: (a) Liens for taxes, assessments and governmental charges or levies
not yet due and payable; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 90 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; and (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially adversely affect the use of such
property for its present purposes.
"Person" means an individual, partnership, corporation (including a
------
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pledge and Security Agreement" means the Pledge and Security Agreement
-----------------------------
made by the Account Parties party thereto in favor of the Administrative Agent,
in substantially the form of Exhibit D, as amended.
12
"Preferred Interests" means, with respect to any Person, Equity
-------------------
Interests issued by such Person that are entitled to a preference or priority
over any other Equity Interests issued by such Person upon any distribution of
such Person's property and assets, whether by dividend or upon liquidation.
"Preferred Securities" means (i) preferred securities issued by a
--------------------
Special Purpose Trust which shall provide, among other things, that dividends
shall be payable only out of proceeds of interest payments on the Debentures, or
(ii) other instruments that may be treated in whole or in part as equity for
rating agency purposes while being treated as debt for tax purposes.
"Pro Rata" has the meaning specified in Section 2.18.
--------
"Pro Rata Share" means, for any Bank, its share determined Pro Rata, in
--------------
accordance with the definition of the term "Pro Rata" in Section 2.18(a) hereof.
"Redeemable" means, with respect to any Equity Interest, any Debt or
----------
any other right or obligation, any such Equity Interest, Debt, right or
obligation that (a) the issuer has undertaken to redeem at a fixed or
determinable date or dates, whether by operation of a sinking fund or otherwise,
or upon the occurrence of a condition not solely within the control of the
issuer or (b) is redeemable at the option of the holder.
"Register" has the meaning specified in Section 9.07(d).
--------
"Regulation U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"Required Banks" means, at any time, Banks owed or holding at least a
--------------
majority in interest of the sum of (a) aggregate principal amount of the Letter
of Credit Advances outstanding at such time and (b) the aggregate Available
Amount of all Letters of Credit outstanding at such time, or, if no such
principal amount and no Letters of Credit are outstanding at such time, Banks
having LC Commitment Amounts constituting at least a majority in interest of the
aggregate of the LC Commitment Amounts; provided, however, that if any Bank
-------- -------
shall be a Defaulting Bank at such time, there shall be excluded from the
determination of Required Banks at such time (A) the aggregate principal amount
of the interest of such Bank in Letter of Credit Advances and outstanding at
such time, (B) such Bank's Pro Rata Share of the aggregate Available Amount of
all Letters of Credit outstanding at such time and (C) the Unused LC Commitment
Amount of such Bank at such time.
"Required Commitment Banks" has the meaning specified in Section
-------------------------
2.18(a).
"Responsible Officer" means the Chairman, Chief Executive Officer,
-------------------
President, Chief Financial Officer, Chief Accounting Officer or Treasurer of the
Parent.
"S&P" means Standard & Poor's Ratings Services, a division of The
---
McGraw-Hill Companies, Inc.
"Securitization Transaction" means any sale, assignment or other
--------------------------
transfer by Parent or any Subsidiary of any accounts receivable, premium finance
loan receivables, lease receivables
13
or other payment obligations owing to Parent or such Subsidiary or any interest
in any of the foregoing, together in each case with any collections and other
proceeds thereof, any collection or deposit accounts related thereto, and any
collateral, guaranties or other property or claims in favor of Parent or such
Subsidiary supporting or securing payment by the obligor thereon of, or
otherwise related to, any such receivables.
"Security Documents" means, collectively, (i) the Pledge and Security
------------------
Agreement and all other security agreements, pledge agreements, charges and
mortgages at any time delivered to the Administrative Agent to create or
evidence the Liens securing the Obligations, and (ii) the State Street Control
Agreements and all other control agreements and similar agreements pursuant to
which a Lien on a Custodial Account (and on the contents thereof) securing the
Obligations is perfected in favor of the Administrative Agent, in each case
under (i) and (ii), as amended.
"Significant Subsidiary" means a Subsidiary of Parent that is a
----------------------
"significant subsidiary" of the Parent under Regulation S-X promulgated by the
Securities and Exchange Commission.
"Solvent" and "Solvency" mean, with respect to any Person on a
------- --------
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Special Expiration Date" has the meaning specified in Section 2.18(a).
-----------------------
"Special Purpose Trust" means a special purpose business trust
---------------------
established by the Parent or ACE INA of which the Parent or ACE INA will hold
all the common securities, which will be the issuer of the Preferred Securities,
and which will loan to the Parent or ACE INA (such loan being evidenced by the
Debentures) the net proceeds of the issuance and sale of the Preferred
Securities and common securities of such Special Purpose Trust.
"State Street" means State Street Bank and Trust Company.
------------
"State Street Control Agreements" means, collectively, the control
-------------------------------
agreements among State Street, the Administrative Agent and (respectively) each
of the Account Parties, each in form and substance reasonably satisfactory to
the Administrative Agent, pursuant to which a Lien on the State Street Custodial
Accounts and the contents thereof and all security entitlements related thereto
securing the Obligations is perfected in favor of the Administrative Agent, as
amended.
14
"State Street Custodial Accounts" means, collectively, the Custodial
-------------------------------
Accounts of each of the Account Parties pledged pursuant to the Pledge and
Security Agreement and in which the Administrative Agent's Lien is perfected
pursuant to the State Street Control Agreements.
"State Street Custodial Agreements" means, collectively, the Custodial
---------------------------------
Agreements, each dated as of December 14, 2001, between State Street and
(respectively) each of the Account Parties, in each case as amended.
"Subsidiary" of any Person means any corporation, partnership, joint
----------
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"Subsidiary Guarantors" means the Account Parties (other than the
---------------------
Parent).
"Supplement to Tranche System" has the meaning specified in Section
----------------------------
2.18(a).
"Taxes" has the meaning specified in Section 2.08(a).
-----
"Tempest" has the meaning specified in the recital of parties to this
-------
Agreement.
"Tempest Life" has the meaning specified in the recital of parties to
------------
this Agreement.
"Tempest Life Effective Date" has the meaning specified in Section
---------------------------
7.01(c).
"Total Capitalization" means, at any time, an amount (without
--------------------
duplication) equal to (i) the then outstanding Consolidated Debt of the Parent
and its Subsidiaries plus (ii) Consolidated stockholders equity of the Parent
and its Subsidiaries plus (without duplication) (iii) the then issued and
outstanding amount of Preferred Securities (including Mandatorily Convertible
Preferred Securities) and (without duplication) Debentures.
"Tranche 1 Bank" and other defined terms beginning with the word
--------------
"Tranche" have the respective meanings specified in Section 2.18(a).
"Uniform Commercial Code" has the meaning specified in the Pledge and
-----------------------
Security Agreement.
"Unused LC Commitment Amount" means, with respect to any Bank at any
---------------------------
time, (a) such Bank's LC Commitment Amount at such time minus (b) such Bank's
Pro Rata Share of (i) the aggregate Available Amount of all Letters of Credit
hereunder (including, without limitation, all Existing Letters of Credit) and
(ii) the aggregate principal amount of all Letter of Credit Advances made by the
Issuing Bank pursuant to Section 2.02(f) and outstanding at such time (whether
held by the Issuing Bank or the Banks). If the Conversion to Tranche System
15
shall have occurred, the Unused LC Commitment Amount of any Bank which is not a
Commitment Bank shall be zero.
"U.S. Government Securities" means securities issued or unconditionally
--------------------------
guaranteed by the United States of America or any agency or instrumentality
thereof and backed by the full faith and credit of the United States of America.
"Voting Interests" means shares of capital stock issued by a
----------------
corporation, or equivalent Equity Interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right so to vote has been suspended by the happening of such a
contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of
------------
ERISA, that is maintained for employees of any Loan Party or in respect of which
any Loan Party could have liability.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
--------------------
E of Title IV of ERISA.
SECTION 1.02 Computation of Time Periods; Other Definitional
-----------------------------------------------
Provisions. In this Agreement and the other Loan Documents in the computation of
----------
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding". References in the Loan Documents to any agreement or contract "as
amended" shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.
SECTION 1.03 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
generally accepted accounting principles as in effect from time to time
("GAAP"), applied on a basis consistent (except for changes concurred in by the
----
Parent's independent public accountants) with the most recent audited
consolidated financial statements of the Parent and its Subsidiaries delivered
to the Banks; provided that, if the Parent notifies the Administrative Agent
--------
that the Parent wishes to amend any covenant in Article V 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 Parent
that the Required Banks wish to amend Article V for such purpose), then the
Parent's 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
(and, concurrently with the delivery of any financial statements required to be
delivered hereunder, the Parent shall provide a statement of reconciliation
conforming such financial information to such generally accepted accounting
principles as previously in effect), until either such notice is withdrawn or
such covenant is amended in a manner satisfactory to the Parent and the Required
Banks.
16
ARTICLE II
AMOUNTS AND TERMS OF
THE LETTERS OF CREDIT
SECTION 2.01 The Letters of Credit. The Issuing Bank agrees, on the
---------------------
terms and subject to the conditions herein set forth, to issue standby letters
of credit (the "Letters of Credit") for the account of any Account Party on any
-----------------
Letter of Credit Business Day from time to time during the period from the
Effective Date to the Expiration Date. From and after the Effective Date, the
Existing Letters of Credit shall be Letters of Credit hereunder. The Issuing
Bank shall have no obligation to issue, and no Account Party will request the
issuance of, any Letter of Credit hereunder if either (a) at the time of
issuance of such Letter of Credit and after giving effect thereto, the Letter of
Credit Exposure would exceed the lesser of (x) the Letter of Credit Issuance
Commitment Amount and (y) the aggregate Collateral Value, or (b) any Bank's Pro
Rata Share of the Available Amount of such Letter of Credit exceeds, immediately
before the time of such issuance, an amount equal to such Bank's Pro Rata Share
of the total Unused LC Commitment Amounts of the Banks at such time (as such
amount shall be advised by the Administrative Agent to the Issuing Bank as
contemplated by Section 2.02). Unless all the Banks consent otherwise in
writing, the Issuing Bank shall have no obligation to issue, and no Account
Party shall request the issuance of, any Letter of Credit hereunder if the
Available Amount of such Letter of Credit exceeds, immediately before the time
of such issuance, an amount equal to the total Unused LC Commitment Amounts of
the Banks at such time (as such amount shall be advised by the Administrative
Agent to the Issuing Bank as contemplated by Section 2.02). The Issuing Bank
shall have no obligation to issue, and no Account Party shall request the
issuance of, any Letter of Credit except within the following limitations: (i)
subject to the provisions of Section 2.16, each Letter of Credit shall be
denominated in U.S. dollars, (ii) each Letter of Credit shall be payable only
against sight drafts (and not time drafts) and (iii) no Letter of Credit shall
have an expiration date (including all rights of the Applicable Account Party or
the beneficiary to require renewal) later than one year after the date of
issuance thereof, but a Letter of Credit may by its terms be automatically
renewable annually unless the Issuing Bank notifies the beneficiary thereof of
its election not to renew such Letter of Credit. The Issuing Bank shall have no
obligation to issue any letter of credit which is unsatisfactory in form,
substance or beneficiary to the Issuing Bank in the exercise of its reasonable
judgment consistent with its customary practice. Letters of Credit may be issued
for the account of any Subsidiary of the Parent that is not an Account Party
hereunder, provided that the Parent shall be a joint applicant and account party
--------
with respect to any such Letter of Credit.
SECTION 2.02 Issuance and Renewals and Drawings, Participations and
------------------------------------------------------
Reimbursement with Respect to Letters of Credit.
-----------------------------------------------
(a) Request for Issuance. An Account Party may from time to time
--------------------
request, upon at least three Letter of Credit Business Days' notice (given not
later than 11:00 A.M. Charlotte, North Carolina time on the last day permitted
therefor), the Issuing Bank to issue or renew (other than any automatic renewal
thereof) a Letter of Credit by:
(i) delivering to the Issuing Bank either (x) a written request
to such effect or (y) a request made in electronic form through the
Issuing Bank's remote access system
17
and in accordance with the terms and conditions (including any written
agreements between the Issuing Bank and any Account Party) applicable
thereto, in each case specifying the date on which such Letter of
Credit is to be issued (which shall be a Letter of Credit Business
Day), the expiration date thereof, the Available Amount thereof, the
name and address of the beneficiary thereof and the form thereof, and
in each case with a copy of such request (or, in the case of clause (y)
above, a written or electronic summary thereof) to the Administrative
Agent; and
(ii) in the case of the issuance of a Letter of Credit, delivering
to the Issuing Bank a completed agreement and application with respect
to such Letter of Credit as the Issuing Bank may specify for use in
connection with such requested Letter of Credit (a "Letter of Credit
----------------
Agreement"), together with such other certificates, documents and other
---------
papers or information as are specified in such Letter of Credit
Agreement or as may be required pursuant to the Issuing Bank's
customary practices for the issuance of letters of credit (including
requirements relating to requests made through the Issuing Bank's
remote access system).
In addition, the applicable Account Party shall deliver to the Administrative
Agent a Collateral Value Report not later than 11:00 A.M. Charlotte, North
Carolina time on the Letter of Credit Business Day immediately preceding the
date on which such Letter of Credit is to be issued.
The Administrative Agent shall, promptly upon receiving a copy of the notice
referred to in clause (i) above, notify the Banks of such proposed Letter of
Credit (which notice shall specify the Available Amount and term of such
proposed Letter of Credit) or such proposed renewal of a Letter of Credit (which
notice shall specify the term of such renewal), and shall determine, as of 11:00
A.M. (Charlotte, North Carolina time) on the Business Day immediately preceding
such proposed issuance, whether such proposed Letter of Credit complies with the
limitations set forth in Section 2.01 hereof. If such limitations set forth in
Section 2.01 are not satisfied or if the Required Banks have given notice to the
Administrative Agent to cease issuing or renewing Letters of Credit as
contemplated by this Agreement, the Administrative Agent shall immediately
notify the Issuing Bank (in writing or by telephone immediately confirmed in
writing) that the Issuing Bank is not authorized to issue or renew, as the case
may be, such Letter of Credit. If the Issuing Bank issues or renews a Letter of
Credit, it shall deliver the original of such Letter of Credit to the
beneficiary thereof or as the Applicable Account Party shall otherwise direct,
and shall promptly notify the Administrative Agent thereof and furnish a copy
thereof to the Administrative Agent. The Issuing Bank may issue Letters of
Credit through any of its branches or Affiliates (whether domestic or foreign)
that issue letters of credit, and each Account Party authorizes and directs the
Issuing Bank to select the branch or Affiliate that will issue or process any
Letter of Credit.
(b) Request for Extension or Increase. An Account Party may from time
---------------------------------
to time request the Issuing Bank to extend the expiration date of an outstanding
Letter of Credit issued for its account or increase (or, with the consent of the
beneficiary, decrease) the Available Amount of or the amount available to be
drawn on such Letter of Credit. Such extension or increase shall for all
purposes hereunder (including for purposes of Section 2.02(a)) be treated as
though such Account Party had requested issuance of a replacement Letter of
Credit (except only
18
that the Issuing Bank may, if it elects, issue a notice of extension or
increase in lieu of issuing a new Letter of Credit in substitution for the
outstanding Letter of Credit).
(c) Limitations on Issuance, Extension, Renewal and Amendment. As
---------------------------------------------------------
between the Issuing Bank, on the one hand, and the Agents and the Banks, on the
other hand, the Issuing Bank shall be justified and fully protected in issuing
or renewing a proposed Letter of Credit unless it shall have received notice
from the Administrative Agent as provided in Section 2.02(a) hereof that it is
not authorized to do so (and, in the case of automatic renewals, ten days shall
have passed following the date of the Issuing Bank's receipt of such notice),
notwithstanding any subsequent notices to the Issuing Bank, any knowledge of a
Default, any knowledge of failure of any condition specified in Article III
hereof to be satisfied, any other knowledge of the Issuing Bank, or any other
event, condition or circumstance whatsoever. The Issuing Bank may amend, modify
or supplement Letters of Credit or Letter of Credit Agreements, or waive
compliance with any condition of issuance, renewal or payment, without the
consent of, and without liability to, any Agent or any Bank, provided that any
--------
such amendment, modification or supplement that extends the expiration date or
increases the Available Amount of or the amount available to be drawn on an
outstanding Letter of Credit shall be subject to Section 2.01.
(d) Letter of Credit Participating Interests. Concurrently with the
----------------------------------------
issuance of each Letter of Credit (and upon the Effective Date, with respect to
each Existing Letter of Credit, and without any further action by any party to
this Agreement), the Issuing Bank automatically shall be deemed, irrevocably and
unconditionally, to have sold, assigned, transferred and conveyed to each other
Bank, and each other Bank automatically shall be deemed, irrevocably and
unconditionally, severally to have purchased, acquired, accepted and assumed
from the Issuing Bank, without recourse to, or representation or warranty by,
the Issuing Bank, an undivided interest, in a proportion equal to such Bank's
Pro Rata Share, in all of the Issuing Bank's rights and obligations in, to or
under such Letter of Credit, the related Letter of Credit Agreement, all
reimbursement obligations with respect to such Letter of Credit, and all
Collateral, guarantees and other rights from time to time directly or indirectly
securing the foregoing (such interest of each Bank being referred to herein as a
"Letter of Credit Participating Interest", it being understood that the Letter
---------------------------------------
of Credit Participating Interest of the Issuing Bank is the interest not
otherwise attributable to the Letter of Credit Participating Interests of the
other Banks). Each Bank irrevocably and unconditionally agrees to the
immediately preceding sentence, such agreement being herein referred to as such
Bank's "Letter of Credit Participating Interest Commitment". Amounts, other than
--------------------------------------------------
Letter of Credit Advances made by a Bank other than the Issuing Bank and other
than Letter of Credit commissions under Section 2.05(c)(i), payable from time to
time under or in connection with a Letter of Credit or Letter of Credit
Agreement shall be for the sole account of the Issuing Bank. On the date that
any assignee becomes a party to this Agreement in accordance with Section 9.07
hereof, Letter of Credit Participating Interests in all outstanding Letters of
Credit held by the Bank from which such assignee acquired its interest hereunder
shall be proportionately reallocated between such assignee and such assignor
Bank (and, to the extent such assignor Bank is the Issuing Bank, the assignee
Bank shall be deemed to have acquired a Letter of Credit Participating Interest
from the Issuing Bank to such extent). Notwithstanding any other provision
hereof, each Bank hereby agrees that its obligation to participate in each
Letter of Credit, its obligation to make the payments specified in Section
2.02(e), and the right of the Issuing Bank to receive such payments in the
manner specified therein, are each absolute, irrevocable and unconditional and
shall not be affected by
19
any event, condition or circumstance whatever. The failure of any Bank to make
any such payment shall not relieve any other Bank of its funding obligation
hereunder on the date due, but no Bank shall be responsible for the failure of
any other Bank to meet its funding obligations hereunder.
(e) Payment by Banks on Account of Unreimbursed Draws. If the Issuing
-------------------------------------------------
Bank makes a payment under any Letter of Credit and is not reimbursed in full
therefor on such payment date in accordance with Section 2.03(a), the Issuing
Bank may notify the Administrative Agent thereof (which notice may be by
telephone), and the Administrative Agent shall forthwith notify each Bank (which
notice may be by telephone promptly confirmed in writing) thereof. No later than
the Administrative Agent's close of business on the date such notice is given
(if notice is given by 2:00 P.M. Charlotte, North Carolina time) or 10:00 A.M.
Charlotte, North Carolina time the following day (if notice is given after 2:00
P.M. Charlotte, North Carolina time or in the case of any Bank whose Applicable
Lending Office is located in Europe), each Bank will pay to the Administrative
Agent, for the account of the Issuing Bank, in immediately available funds, an
amount equal to such Bank's Pro Rata Share of the unreimbursed portion of such
payment by the Issuing Bank. Amounts received by the Administrative Agent for
the account of the Issuing Bank shall be forthwith transferred, in immediately
available funds, to the Issuing Bank. If and to the extent that any Bank fails
to make such payment to the Administrative Agent for the account of the Issuing
Bank on such date, such Bank shall pay such amount on demand, together with
interest, for the Issuing Bank's own account, for each day from and including
the date such payment is due from such Bank to the Issuing Bank to but not
including the date of repayment to the Issuing Bank (before and after judgment)
at a rate per annum for each day (i) from and including the date such payment is
due from such Bank to the Issuing Bank to and including the second Business Day
thereafter equal to the Federal Funds Rate and (ii) thereafter equal to the Base
Rate.
(f) Letter of Credit Advances. The term "Letter of Credit Advance" is
------------------------- ------------------------
used in this Agreement in accordance with the meanings set forth in this
paragraph 2.02(f). The making of any payment by the Issuing Bank under a Letter
of Credit is sometimes referred to herein as the making of a Letter of Credit
Advance by the Issuing Bank in the amount of such payment. The making of any
payment by a Bank for the account of the Issuing Bank under Section 2.02(e) on
account of an unreimbursed drawing on a Letter of Credit is sometimes referred
to herein as the making of a Letter of Credit Advance to the Applicable Account
Party by such Bank. The making of such a Letter of Credit Advance by a Bank with
respect to an unreimbursed drawing on a Letter of Credit shall reduce, by a like
amount, the outstanding Letter of Credit Advance of the Issuing Bank with
respect to such unreimbursed drawing.
(g) Letter of Credit Reports. The Issuing Bank will furnish to the
------------------------
Administrative Agent prompt written notice of each issuance or renewal of a
Letter of Credit (including the Available Amount and expiration date thereof),
amendment to a Letter of Credit, cancellation of a Letter of Credit and payment
on a Letter of Credit. The Administrative Agent will furnish (A) to each Bank
prior to the tenth Business Day of each calendar quarter a written report
summarizing issuance, renewal and expiration dates of Letters of Credit issued
or renewed during the preceding calendar quarter and payments and reductions in
Available Amount during such calendar quarter on all Letters of Credit and (B)
to each Bank prior to the tenth Business
20
Day of each calendar quarter a written report setting forth the average
daily aggregate Available Amount during the preceding calendar quarter of all
Letters of Credit.
SECTION 2.03 Repayment of Advances.
---------------------
(a) Account Parties' Reimbursement Obligation.
-----------------------------------------
(i) Each Account Party hereby agrees to reimburse the Issuing
Bank (by making payment to the Administrative Agent for the account of
the Issuing Bank in accordance with Section 2.07) in the amount of
each payment made by the Issuing Bank under any Letter of Credit
issued for such Account Party's account, such reimbursement to be made
on the date such payment under such Letter of Credit is made by the
Issuing Bank (but not earlier than the date which is one Business Day
after notice of such payment under such Letter of Credit or of the
drawing giving rise to such payment under such Letter of Credit is
given to such Account Party). Such reimbursement obligation shall be
payable without further notice, protest or demand, all of which are
hereby waived, and an action therefor shall immediately accrue. To the
extent such payment by such Account Party is not timely made as
provided in the first sentence of this clause (i), (x) such Account
Party hereby agrees to pay to the Administrative Agent, for the
respective accounts of the Issuing Bank and the Banks which have
funded their respective shares of such amount remaining unpaid by such
Account Party, on demand, interest thereon at a rate per annum for
each day equal to 2% plus the Base Rate in effect on such day, and (y)
each Account Party shall be deemed to have delivered an irrevocable
and continuing Letter of Instruction to the Administrative Agent
(which each Account Party hereby irrevocably authorizes the
Administrative Agent to date the date that such payment to the
Administrative Agent is due and payable and to deliver to the Persons
identified therein) instructing the Administrative Agent to obtain,
receive and apply at or after such time such part of the Collateral or
the proceeds thereof as is equivalent to such reimbursement obligation
and any interest thereon that may accrue prior to such application.
(ii) The obligation of each Account Party to reimburse the Issuing
Bank for any payment made by the Issuing Bank under any Letter of
Credit, and the obligation of each Bank under Section 2.02(e) with
respect thereto, shall be unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement, the
applicable Letter of Credit Agreement and any other applicable
agreement or instrument under all circumstances, including, without
limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or
any other agreement or instrument relating thereto (all of the
foregoing being, collectively, the "L/C Related Documents");
---------------------
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of any Account
Party or any other Person in respect of any L/C Related Document or
any other amendment or
21
waiver of or any consent to departure from all or any of the L/C
Related Documents;
(C) the existence of any claim, set-off, defense or other
right that any Account Party or any other Person may have at any
time against any beneficiary or any transferee of a Letter of
Credit (or any Persons for which any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person,
whether in connection with the transactions contemplated by the L/C
Related Documents or any unrelated transaction;
(D) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(E) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not
strictly comply with the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral,
or any release or amendment or waiver of or consent to departure
from the Guaranty or any other guarantee, for all or any of the
obligations of any Account Party or any other Person in respect of
the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Account Party or a guarantor.
(b) Rescission. If any amount received by the Issuing Bank on account
----------
of any Letter of Credit Advance shall be avoided, rescinded or otherwise
returned or paid over by the Issuing Bank for any reason at any time, whether
before or after the termination of this Agreement (or the Issuing Bank believes
in good faith that such avoidance, rescission, return or payment is required,
whether or not such matter has been adjudicated), each Bank will (except to the
extent a corresponding amount received by such Bank on account of its Letter of
Credit Advance relating to the same payment on a Letter of Credit has been
avoided, rescinded or otherwise returned or paid over by such Bank), promptly
upon notice from the Administrative Agent or the Issuing Bank, pay over to the
Administrative Agent for the account of the Issuing Bank its Pro Rata Share of
such amount, together with its Pro Rata Share of any interest or penalties
payable with respect thereto.
SECTION 2.04 Termination or Reduction of the LC Commitment Amounts.
-----------------------------------------------------
The Parent may, upon at least three Business Days' notice to the Administrative
Agent, terminate in whole or reduce in part the unused portion of the LC
Commitment Amounts; provided, however, that each partial reduction (i) shall be
-------- -------
in an aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof, (ii) shall be made ratably among the Banks in accordance with
their LC Commitment Amounts and (iii) shall automatically reduce the Issuing
22
Bank's Letter of Credit Issuance Commitment Amount, as contemplated by the
definition of that term.
SECTION 2.05 Fees.
----
(a) Commitment Fee. The Account Parties jointly and severally agree to
--------------
pay to the Administrative Agent for the account of the Banks a commitment fee,
from the Effective Date in the case of each Initial Bank and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Bank in the case of each other Bank until the Expiration Date, payable in
arrears quarterly on the last Business Day of each March, June, September and
December commencing December 31, 2001 and on the Expiration Date, at a rate
equal to 0.08% per annum on the average daily Unused LC Commitment Amount of
each Bank during such quarter (or shorter period); provided, however, that no
-------- -------
commitment fee shall accrue on the LC Commitment Amount of a Defaulting Bank so
long as such Bank shall be a Defaulting Bank.
(b) Administrative Agent's Fees. The Account Parties jointly and
---------------------------
severally agree to pay to the Administrative Agent for its own account such fees
as may from time to time be agreed between the Parent and the Administrative
Agent.
(c) Letter of Credit Fees, Etc.
---------------------------
(i) The Account Parties jointly and severally agree to pay to the
Administrative Agent for the account of each Bank a commission, payable
in arrears quarterly on the last Business Day of each March, June,
September and December commencing December 31, 2001 and on the
Expiration Date, on such Bank's Pro Rata Share of the average daily
aggregate Available Amount during such quarter (or shorter period) of
all Letters of Credit outstanding from time to time at a rate equal to
0.30% per annum.
(ii) The Account Parties jointly and severally agree to pay to the
Issuing Bank, for its own account, (x) the facing fee referred to the
Fee Letter, on the terms set forth therein, and (y) the Issuing Bank's
customary issuance, presentation, amendment and other processing fees,
and other standard costs and charges, relating to letters of credit as
are from time to time in effect. With respect to the Existing Letters
of Credit, First Union shall be entitled to receive the fees and other
amounts provided for under this Section 2.05(c)(ii) (to the extent not
previously paid to First Union) as if the Existing Letters of Credit
were issued hereunder on the Effective Date.
(iii) Notwithstanding the foregoing provisions of this Section
2.05(c), until the Tempest Life Effective Date, Tempest Life shall be
obligated under this Section 2.05(c) only for the portion of such fees,
commissions and charges allocable or attributable to Letters of Credit
issued for its own account.
SECTION 2.06 Increased Costs, Etc.
--------------------
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of, in each case after the date hereof, any law or regulation
or (ii) the compliance with any guideline
23
or request issued after the date hereof from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Bank of agreeing to issue or of issuing or
maintaining or participating in Letters of Credit or the making of Letter of
Credit Advances (excluding, for purposes of this Section 2.06, any such
increased costs resulting from (x) Taxes or Other Taxes (as to which Section
2.08 shall govern) and (y) changes in the basis of taxation of overall net
income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Bank is organized or has its
Applicable Lending Office or any political subdivision thereof), then the
Account Parties jointly and severally agree to pay, from time to time, within
five days after demand by such Bank (with a copy of such demand to the
Administrative Agent), which demand shall include a statement of the basis for
such demand and a calculation in reasonable detail of the amount demanded, to
the Administrative Agent for the account of such Bank additional amounts
sufficient to compensate such Bank for such increased cost. A certificate as to
the amount of such increased cost, submitted to the Account Parties by such
Bank, shall be conclusive and binding for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation, in each case after the date hereof,
or (ii) the compliance with any guideline or request issued after the date
hereof from any central bank or other governmental authority (whether or not
having the force of law), there shall be any increase in the amount of capital
required or expected to be maintained by any Bank or any corporation controlling
such Bank as a result of or based upon the existence of such Bank's commitment
to lend hereunder and other commitments of such type, then, within five days
after demand by such Bank or such corporation (with a copy of such demand to the
Administrative Agent), which demand shall include a statement of the basis for
such demand and a calculation in reasonable detail of the amount demanded, the
Account Parties jointly and severally agree to pay to the Administrative Agent
for the account of such Bank, from time to time as specified by such Bank,
additional amounts sufficient to compensate such Bank in the light of such
circumstances, to the extent that such Bank reasonably determines such increase
in capital to be allocable to the existence of such Bank's commitment to issue
or participate in Letters of Credit hereunder or to the issuance or maintenance
of or participation in any Letters of Credit. A certificate as to such amounts
submitted to the Account Parties by such Bank shall be conclusive and binding
for all purposes, absent manifest error.
(c) Each Bank shall promptly notify the Account Parties and the
Administrative Agent of any event of which it has actual knowledge which will
result in, and will use reasonable commercial efforts available to it (and not,
in such Bank's good faith judgment, otherwise disadvantageous to such Bank) to
mitigate or avoid any obligation by the Account Parties to pay any amount
pursuant to subsection (a) or (b) above or pursuant to Section 2.08 (and, if any
Bank has given notice of any such event and thereafter such event ceases to
exist, such Bank shall promptly so notify the Account Parties and the
Administrative Agent). Without limiting the foregoing, each Bank will designate
a different Applicable Lending Office if such designation will avoid (or reduce
the cost to the Account Parties of) any event described in the preceding
sentence and such designation will not, in such Bank's good faith judgment, be
otherwise disadvantageous to such Bank.
24
(d) Notwithstanding the provisions of subsections (a) and (b) above or
Section 2.08 (and without limiting subsection (c) above), if any Bank fails to
notify the Account Parties of any event or circumstance that will entitle such
Bank to compensation pursuant subsection (a) or (b) above or Section 2.08 within
120 days after such Bank obtains actual knowledge of such event or circumstance,
then such Bank shall not be entitled to compensation from the Account Parties
for any amount arising prior to the date which is 120 days before the date on
which such Bank notifies the Account Parties of such event or circumstance. For
avoidance of doubt, it is noted that the term "Bank" as used in this Section
2.06 and in other Sections of this Agreement includes the Issuing Bank in its
capacity as such.
SECTION 2.07 Payments and Computations.
-------------------------
(a) The Account Parties shall make each payment hereunder irrespective of
any right of counterclaim or set-off (except as otherwise provided in Section
2.11), not later than 11:00 A.M. (Charlotte, North Carolina time) on the day
when due, in U.S. dollars, to the Administrative Agent at the Administrative
Agent's Account in same day funds, with payments being received by the
Administrative Agent after such time being deemed to have been received on the
next succeeding Business Day. The Administrative Agent will promptly thereafter
cause like funds to be distributed (i) if such payment by such Account Party is
in respect of principal, interest, commitment fees or any other amount then
payable hereunder to more than one Bank, to such Banks for the account of their
respective Applicable Lending Offices ratably in accordance with the amounts of
such respective amount then payable to such Banks and (ii) if such payment by
such Account Party is in respect of any amount then payable hereunder to one
Bank, to such Bank for the account of its Applicable Lending Office, in each
case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.07(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder in respect of the interest assigned thereby to
the Bank assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.
(b) Each Account Party hereby authorizes each Bank, if an Event of Default
under Section 6.01(a) has occurred and is continuing, to charge from time to
time against any or all of such Account Party's accounts with such Bank any
amount that resulted in such Event of Default.
(c) All computations of interest on Letter of Credit Advances (and any
other amount payable by reference to the Base Rate) when the Base Rate is
determined by reference to First Union's prime rate shall be made by the
Administrative Agent on the basis of a year of 365 or, if applicable, 366 days;
all other computations of interest, fees and Letter of Credit commissions shall
be made by the Administrative Agent on the basis of a year of 360 days. All such
computations shall be made for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest,
fees or commissions are payable. Each determination by the Administrative Agent
of an interest rate, fee or commission hereunder shall be conclusive and binding
for all purposes, absent manifest error.
25
(d) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or fee, as the case may be.
SECTION 2.08 Taxes.
-----
(a) Any and all payments by any Loan Party hereunder shall be made, in
accordance with Section 2.07, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and each Agent, taxes that are imposed on its overall net income by
the United States and taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction
under the laws of which such Bank or such Agent, as the case may be, is
organized or any political subdivision thereof and, in the case of each Bank,
taxes that are imposed on its overall net income (and franchise taxes imposed in
lieu thereof) by the state or foreign jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder being herein referred to as "Taxes"). If any Loan
-----
Party shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or to any Bank or any Agent, (i) the sum payable by such Loan
Party shall be increased as may be necessary so that after such Loan Party and
the Administrative Agent have made all required deductions (including deductions
applicable to additional sums payable under this Section 2.08) such Bank or such
Agent, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Loan Party shall make all
such deductions and (iii) such Loan Party shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, each Loan Party shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or from the execution, delivery or registration
of, performance under, or otherwise with respect to, this Agreement or any other
Loan Document (herein referred to as "Other Taxes").
-----------
(c) Each Loan Party shall indemnify each Bank and each Agent for and hold
them harmless against the full amount of Taxes and Other Taxes, and for the full
amount of taxes of any kind imposed by any jurisdiction on amounts payable under
this Section 2.08, imposed on or paid by such Bank or such Agent (as the case
may be) and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This indemnification
payment shall be made within 30 days from the date such Bank or such Agent (as
the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, each Loan Party
shall furnish to the Administrative Agent, at its address referred to in Section
9.02, the original or a certified copy of a receipt evidencing such payment. In
the case of any payment hereunder by or on behalf of a Loan Party through an
account or branch outside the United States or by or on behalf of a Loan Party
by a payor that is not a United States person, if such Loan Party determines
that no Taxes are payable in respect thereof, such Loan Party shall furnish, or
shall
26
cause such payor to furnish, to the Administrative Agent, at such address, an
opinion of counsel acceptable to the Administrative Agent stating that such
payment is exempt from Taxes. For purposes of subsections (d) and (e) of this
Section 2.08, the terms "United States" and "United States person" shall have
the meanings specified in Section 7701(a)(9) and 7701(a)(10) of the Internal
Revenue Code, respectively.
(e) Each Bank organized under the laws of a jurisdiction outside the United
States shall, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Bank or the Issuing Bank, as the case may
be, and on the date of the Assignment and Acceptance pursuant to which it
becomes a Bank in the case of each other Bank, and from time to time thereafter
as requested in writing by the Parent (but only so long thereafter as such Bank
remains lawfully able to do so), provide each of the Administrative Agent and
the Parent with two original Internal Revenue Service forms W-8BEN or W-8ECI or
(in the case of a Bank that has certified in writing to the Administrative Agent
that it is not a "bank" as defined in Section 881(c)(3)(A) of the Internal
Revenue Code) form W-8 (and, if such Bank delivers a form W-8, a certificate
representing that such Bank is not a "bank" for purposes of Section 881(c)(3)(A)
of the Internal Revenue Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Parent and
is not a controlled foreign corporation related to the Parent (within the
meaning of Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or
any successor or other form prescribed by the Internal Revenue Service,
certifying that such Bank is exempt from or entitled to a reduced rate of United
States withholding tax on payments pursuant to this Agreement or, in the case of
a Bank providing a form W-8, certifying that such Bank is a foreign corporation,
partnership, estate or trust. If the forms provided by a Bank at the time such
Bank first becomes a party to this Agreement indicate a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Bank provides the
appropriate forms certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; provided, however, that if, at the effective date of the
-------- -------
Assignment and Acceptance pursuant to which a Bank becomes a party to this
Agreement, the Bank assignor was entitled to payments under subsection (a) of
this Section 2.08 in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Bank assignee on such date. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form W-8BEN,
W-8ECI or W-8 (and the related certificate described above), that the Bank
reasonably considers to be confidential, the Bank shall give notice thereof to
the Parent and shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Bank which may lawfully do so
has failed to provide the Parent with the appropriate form described in
subsection (e) above (other than if such failure is due to a change in law
occurring after the date on which a form originally was required to be provided
or if such form otherwise is not required under subsection (e) above), such Bank
shall not be entitled to indemnification under subsection (a) or (c) of this
Section 2.08 with respect to Taxes imposed by the United States by reason of
such failure; provided, however,
-------- -------
27
that should a Bank become subject to Taxes because of its failure to deliver
a form required hereunder, the Parent shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(g) Each Bank represents and warrants to the Account Parties that, as of
the date such Bank becomes a party to this Agreement, such Bank is entitled to
receive payments hereunder from the Account Parties without deduction or
withholding for or on account of any Taxes.
SECTION 2.09 Sharing of Payments, Etc. If any Bank shall obtain at any time
------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise, other than as a result of an assignment pursuant to
Section 9.07) (a) on account of Obligations due and payable to such Bank
hereunder at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations due and payable to such Bank at
such time to (ii) the aggregate amount of the Obligations due and payable to all
Banks hereunder at such time) of payments on account of the Obligations due and
payable to all Banks hereunder at such time obtained by all the Banks at such
time or (b) on account of Obligations owing (but not due and payable) to such
Bank hereunder at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations owing to such Bank at such time
to (ii) the aggregate amount of the Obligations owing (but not due and payable)
to all Banks hereunder at such time) of payments on account of the Obligations
owing (but not due and payable) to all Banks hereunder at such time obtained by
all of the Banks at such time, such Bank shall forthwith purchase from the other
Banks such interests or participating interests in the Obligations due and
payable or owing to them, as the case may be, as shall be necessary to cause
such purchasing Bank to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
-------- -------
thereafter recovered from such purchasing Bank, such purchase from each other
Bank shall be rescinded and such other Bank shall repay to the purchasing Bank
the purchase price to the extent of such Bank's ratable share (according to the
proportion of (i) the purchase price paid to such Bank to (ii) the aggregate
purchase price paid to all Banks) of such recovery together with an amount equal
to such Bank's ratable share (according to the proportion of (i) the amount of
such other Bank's required repayment to (ii) the total amount so recovered from
the purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. Each Account Party
agrees that any Bank so purchasing an interest or participating interest from
another Bank pursuant to this Section 2.09 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such interest or participating interest, as the case may be, as fully
as if such Bank were the direct creditor of such Account Party in the amount of
such interest or participating interest, as the case may be.
SECTION 2.10 Use of Letters of Credit. The Letters of Credit shall be used
------------------------
for the general corporate purposes of the Account Parties and their respective
Subsidiaries.
SECTION 2.11 Defaulting Banks.
----------------
(a) In the event that, at any one time, (i) any Bank shall be a Defaulting
Bank, (ii) such Defaulting Bank shall owe a Defaulted Amount to any Agent or any
of the other Banks and (iii) any Account Party shall make any payment hereunder
or under any other Loan Document to the Administrative Agent for the account of
such Defaulting Bank, then the
28
Administrative Agent may, on its behalf or on behalf of such other Banks and
to the fullest extent permitted by applicable law, apply at such time the amount
so paid by such Account Party to or for the account of such Defaulting Bank to
the payment of each such Defaulted Amount to the extent required to pay such
Defaulted Amount. In the event that the Administrative Agent shall so apply any
such amount to the payment of any such Defaulted Amount on any date, the amount
so applied by the Administrative Agent shall constitute for all purposes of this
Agreement and the other Loan Documents payment, to such extent, of such
Defaulted Amount on such date. Any such amount so applied by the Administrative
Agent shall be retained by the Administrative Agent or distributed by the
Administrative Agent to such other Banks, ratably in accordance with the
respective portions of such Defaulted Amounts payable at such time to the
Administrative Agent and such other Banks and, if the amount of such payment
made by such Account Party shall at such time be insufficient to pay all
Defaulted Amounts owing at such time to the Administrative Agent, such other
Agents and such other Banks, in the following order of priority:
(i) first, to the Agents for any Defaulted Amounts then owing to the
Agents;
(ii) second, to the Issuing Bank for any amount then due and payable to
it, in its capacity as such, by such Defaulting Bank, ratably in accordance
with such amounts then due and payable to the Issuing Bank; and
(iii) third, to any other Banks for any Defaulted Amounts then owing to
such other Banks, ratably in accordance with such respective Defaulted
Amounts then owing to such other Banks.
Any portion of such amount paid by such Account Party for the account of such
Defaulting Bank remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (a), shall be applied by the
Administrative Agent as specified in subsection (b) of this Section 2.11.
(b) In the event that, at any one time, (i) any Bank shall be a Defaulting
Bank, (ii) such Defaulting Bank shall not owe a Defaulted Amount and (iii) any
Account Party, any Agent or other Bank shall be required to pay or distribute
any amount hereunder or under any other Loan Document to or for the account of
such Defaulting Bank, then such Account Party or such Agent or such other Bank
shall pay such amount to the Administrative Agent to be held by the
Administrative Agent, to the fullest extent permitted by applicable law, in
escrow and the Administrative Agent shall, to the fullest extent permitted by
applicable law, hold in escrow such amount otherwise held by it. Any funds held
by the Administrative Agent in escrow under this subsection (b) shall be
deposited by the Administrative Agent in an account with First Union in the name
and under the control of the Administrative Agent, but subject to the provisions
of this subsection (b). The terms applicable to such account, including the rate
of interest payable with respect to the credit balance of such account from time
to time, shall be First Union's standard terms applicable to escrow accounts
maintained with it. Any interest credited to such account from time to time
shall be held by the Administrative Agent in escrow under, and applied by the
Administrative Agent from time to time in accordance with the provisions of,
this subsection (b). The Administrative Agent shall, to the fullest extent
permitted by applicable law, apply all funds so held in escrow from time to time
to the extent necessary to make any Advances required to be
29
made by such Defaulting Bank and to pay any amount payable by such
Defaulting Bank hereunder and under the other Loan Documents to the
Administrative Agent or any other Bank, as and when such Advances or amounts are
required to be made or paid and, if the amount so held in escrow shall at any
time be insufficient to make and pay all such Advances and amounts required to
be made or paid at such time, in the following order of priority:
(i) first, to the Agents for any amounts then due and payable by such
Defaulting Bank to the Agents hereunder;
(ii) second, to the Issuing Bank for any amount then due and payable
to it, in its capacity as such, by such Defaulting Bank, ratably in
accordance with such amounts then due and payable to such Issuing Bank; and
(iii) third, to any other Banks for any amount then due and payable by
such Defaulting Bank to such other Banks hereunder, ratably in accordance
with such respective amounts then due and payable to such other Banks.
In the event that any Bank that is a Defaulting Bank shall, at any time, cease
to be a Defaulting Bank, any funds held by the Administrative Agent in escrow at
such time with respect to such Bank shall be distributed by the Administrative
Agent to such Bank and applied by such Bank to the Obligations owing to such
Bank at such time under this Agreement and the other Loan Documents ratably in
accordance with the respective amounts of such Obligations outstanding at such
time.
(c) The rights and remedies against a Defaulting Bank under this Section
2.11 are in addition to other rights and remedies that any Agent or any Bank may
have against such Defaulting Bank with respect to any Defaulted Amount.
SECTION 2.12 Replacement of Affected Bank. At any time any Bank is an
----------------------------
Affected Bank, the Account Parties may replace such Affected Bank as a party to
this Agreement with one or more other Banks and/or Eligible Assignees, and upon
notice from the Account Parties such Affected Bank shall assign pursuant to an
Assignment and Acceptance, and without recourse or warranty, its LC Commitment
Amount, its Letter of Credit Advances, its obligations to fund Letter of Credit
payments, its participation in, and its rights and obligations with respect to,
Letters of Credit, and all of its other rights and obligations hereunder to such
other Banks and/or Eligible Assignees for a purchase price equal to the sum of
the principal amount of the Letter of Credit Advances so assigned, all accrued
and unpaid interest thereon, such Affected Bank's ratable share of all accrued
and unpaid fees payable pursuant to Section 2.05 and all other Obligations owed
to such Affected Bank hereunder.
SECTION 2.13 Certain Provisions Relating to the Issuing Bank and Letters
-----------------------------------------------------------
of Credit.
----------
(a) Letter of Credit Agreements. The representations, warranties and
---------------------------
covenants by the Account Parties under, and the rights and remedies of the
Issuing Bank under, any Letter of Credit Agreement relating to any Letter of
Credit are in addition to, and not in limitation or derogation of,
representations, warranties and covenants by the Account Parties under, and
rights and remedies of the Issuing Bank and the Banks under, this Agreement and
applicable law. Each Account Party acknowledges and agrees that all rights of
the Issuing Bank under any Letter of
30
Credit Agreement shall inure to the benefit of each Bank to the extent of
its Letter of Credit Participating Interest Commitment and Letter of Credit
Advances as fully as if such Bank was a party to such Letter of Credit
Agreement. In the event of any inconsistency between the terms of this Agreement
and any Letter of Credit Agreement, this Agreement shall prevail.
(b) Certain Provisions. The Issuing Bank shall have no duties or
------------------
responsibilities to any Agent or any Bank except those expressly set forth in
this Agreement, and no implied duties or responsibilities on the part of the
Issuing Bank shall be read into this Agreement or shall otherwise exist. The
duties and responsibilities of the Issuing Bank to the Banks and the Agents
under this Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and the Issuing Bank shall not have a fiduciary
relationship in respect of any Agent, any Bank or any other Person. The Issuing
Bank shall not be liable for any action taken or omitted to be taken by it under
or in connection with this Agreement or any Loan Document or Letter of Credit,
except to the extent resulting from the gross negligence or willful misconduct
of the Issuing Bank, as finally determined by a court of competent jurisdiction.
The Issuing Bank shall not be under any obligation to ascertain, inquire or give
any notice to any Agent or any Bank relating to (i) the performance or
observance of any of the terms or conditions of this Agreement or any other Loan
Document on the part of any Account Party, (ii) the business, operations,
condition (financial or otherwise) or prospects of the Account Parties or any
other Person, or (iii) the existence of any Default. The Issuing Bank shall not
be under any obligation, either initially or on a continuing basis, to provide
any Agent or any Bank with any notices, reports or information of any nature,
whether in its possession presently or hereafter, except for such notices,
reports and other information expressly required by this Agreement to be so
furnished. The Issuing Bank shall not be responsible for the execution,
delivery, effectiveness, enforceability, genuineness, validity or adequacy of
this Agreement or any Loan Document.
(c) Administration. The Issuing Bank may rely upon any notice or other
--------------
communication of any nature (written, electronic or oral, including but not
limited to telephone conversations and transmissions through the Issuing Bank's
remote access system, whether or not such notice or other communication is made
in a manner permitted or required by this Agreement or any other Loan Document)
purportedly made by or on behalf of the proper party or parties, and the Issuing
Bank shall not have any duty to verify the identity or authority of any Person
giving such notice or other communication. The Issuing Bank may consult with
legal counsel (including, without limitation, in-house counsel for the Issuing
Bank or in-house or other counsel for the Account Parties), independent public
accountants and any other experts selected by it from time to time, and the
Issuing Bank shall not be liable for any action taken or omitted to be taken in
good faith in accordance with the advice of such counsel, accountants or
experts. Whenever the Issuing Bank shall deem it necessary or desirable that a
matter be proved or established with respect to any Account Party, any Agent or
any Bank, such matter may be established by a certificate of such Account Party,
such Agent or such Bank, as the case may be, and the Issuing Bank may
conclusively rely upon such certificate. The Issuing Bank shall not be deemed to
have any knowledge or notice of the occurrence of any Default unless the Issuing
Bank has received notice from a Bank, an Agent or an Account Party referring to
this Agreement, describing such Default, and stating that such notice is a
"notice of default".
(d) Indemnification of Issuing Bank by Banks. Each Bank hereby agrees to
----------------------------------------
reimburse and indemnify the Issuing Bank and each of its directors, officers,
employees and
31
agents (to the extent not reimbursed by the Account Parties and without
limitation of the obligations of the Account Parties to do so), in accordance
with its Pro Rata Share, from and against any and all amounts, losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature (including,
without limitation, the reasonable fees and disbursements of counsel (other than
in-house counsel) for the Issuing Bank or such other Person in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not the Issuing Bank or such other Person shall be
designated a party thereto) that may at any time be imposed on, incurred by or
asserted against the Issuing Bank, in its capacity as such, or such other
Person, as a result of, or arising out of, or in any way related to or by reason
of, this Agreement, any other Loan Document or any Letter of Credit, any
transaction from time to time contemplated hereby or thereby, or any transaction
financed in whole or in part or directly or indirectly with the proceeds of any
Letter of Credit, provided, that no Bank shall be liable for any portion of such
--------
amounts, losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements to the extent resulting from
the gross negligence or willful misconduct of the Issuing Bank or such other
Person, as finally determined by a court of competent jurisdiction.
(e) Issuing Bank in its Individual Capacity. With respect to its
---------------------------------------
commitments and the obligations owing to it, the Issuing Bank shall have the
same rights and powers under this Agreement and each other Loan Document as any
other Bank and may exercise the same as though it were not the Issuing Bank, and
the term "Banks" and like terms shall include the Issuing Bank in its individual
capacity as such. The Issuing Bank and its affiliates may, without liability to
account to any Person, make loans to, accept deposits from, acquire debt or
equity interests in, act as trustee under indentures of, act as agent under
other credit facilities for, and engage in any other business with, any Account
Party and any stockholder, subsidiary or affiliate of any Account Party, as
though the Issuing Bank were not the Issuing Bank hereunder.
SECTION 2.14 Downgrade Event with Respect to a Bank.
--------------------------------------
(a) If a Downgrade Event shall occur with respect to (i) any Downgraded
Bank or (ii) any other Bank and, as a result thereof, such other Bank becomes a
Downgraded Bank, then the Issuing Bank may, by notice to such Downgraded Bank,
the Administrative Agent and the Parent within 45 days after such Downgrade
Event (any such notice, a "Downgrade Notice"), request that the Account Parties
----------------
use reasonable efforts to replace such Bank as a party to this Agreement
pursuant to Section 2.12. If such Bank is not so replaced within 45 days after
receipt by the Account Parties of such Downgrade Notice, then (x) if no Default
----
exists and such Downgraded Bank has not exercised its right to remain a Bank
hereunder pursuant to clause (y) below, the following shall occur concurrently:
(A) the Committed Facility shall be reduced by the amount of the
LC Commitment Amount of such Downgraded Bank,
(B) the Account Parties shall prepay all amounts owed to such
Downgraded Bank hereunder or in connection herewith
(C) if, upon the reduction of the Committed Facility under clause
(A) above and the payment under clause (B) above, the sum of the
principal amount
32
of all Advances plus the Available Amount of all Letters of Credit
(valuing the Available Amount of, and Letter of Credit Advances of the
Issuing Bank in respect of, any Non-Dollar Letter of Credit at the
Dollar Equivalent thereof as of the time of such calculation) would
exceed the amount of the Committed Facility, then the Account Parties
will immediately eliminate such excess by paying Advances and/or
causing the Available Amount of one or more Letters of Credit to be
reduced, and
(D) upon completion of the events described in clauses (A), (B)
and (C) above, such Downgraded Bank shall cease to be a party to this
Agreement;
or (y) if a Default exists or, not later than 30 days after receipt of such
Downgrade Notice, such Downgraded Bank notifies the Account Parties, the Issuing
Bank and the Administrative Agent that such Downgraded Bank elects to provide
(in a manner reasonably satisfactory to the Issuing Bank) cash collateral to the
Issuing Bank for (or if such Downgraded Bank is unable, without regulatory
approval, to provide cash collateral, a letter of credit reasonably satisfactory
to the Issuing Bank covering) its contingent obligations to reimburse the
Issuing Bank for any payment under any Letter of Credit as provided in Section
2.02(e) (its "LC Participation Obligations"), such Downgraded Bank shall be
----------------------------
obligated to (and each Bank agrees that in such circumstances it will) deliver
to the Issuing Bank (I) immediately, cash collateral (or, as aforesaid, a letter
of credit) in an amount equal to its LC Participation Obligations and (II) from
time to time thereafter (so long as it is a Downgraded Bank), cash collateral
(or, as aforesaid, a letter of credit) sufficient to cover any increase in its
LC Participation Obligations as a result of any proposed issuance of or increase
in a Letter of Credit. Any funds provided by a Downgraded Bank for such purpose
shall be maintained in a segregated deposit account in the name of the Issuing
Bank at the Issuing Bank's principal office in the United States (a "Downgrade
---------
Account"). The funds so deposited in any Downgrade Account (or any drawing under
------
such a letter of credit) shall be used only in accordance with the following
provisions of this Section 2.14.
(b) If any Downgraded Bank shall be required to fund its participation
in a payment under a Letter of Credit pursuant to Section 2.02(e), then the
Issuing Bank shall apply the funds deposited in the applicable Downgrade Account
by such Downgraded Bank (or any drawing under such a letter of credit) to fund
such participation. The deposit of funds in a Downgrade Account by any
Downgraded Bank (or any drawing under such a letter of credit) shall not
constitute a Letter of Credit Advance (and the Downgraded Bank shall not be
entitled to interest on such funds except as provided in clause (c) below)
unless and until (and then only to the extent that) such funds (or any drawing
under such a letter of credit) are used by the Issuing Bank to fund the
participation of such Downgraded Bank pursuant to the first sentence of this
clause (b).
(c) Funds in a Downgrade Account shall be invested in such investments
as may be agreed between the Issuing Bank and the applicable Downgraded Bank,
and the income from such investments shall be distributed to such Downgraded
Bank from time to time (but not less often than monthly) as agreed between the
Issuing Bank and such Downgraded Bank. The Issuing Bank will (i) from time to
time, upon request by a Downgraded Bank, release to such Downgraded Bank any
amount on deposit in the applicable Downgrade Account in excess of the
33
LC Participation Obligations of such Downgraded Bank (or, if applicable, not
draw under any such letter of credit in excess of the L/C Participation
Obligations of such Downgraded Bank) and (ii) upon the earliest to occur of (A)
the effective date of any replacement of such Downgraded Bank as a party hereto
pursuant to an Assignment and Acceptance, (B) the termination of such Downgraded
Bank's LC Commitment Amount pursuant to clause (a) or (C) the first Letter of
Credit Business Day after receipt by the Issuing Bank of evidence (reasonably
satisfactory to the Issuing Bank) that such Bank is no longer a Downgraded Bank,
release to such Bank all amounts on deposit in the applicable Downgrade Account
(or, if applicable, return such letter of credit to such Bank for cancellation).
(d) At any time any Downgraded Bank is required to maintain cash
collateral with the Issuing Bank pursuant to this Section 2.14, the Issuing Bank
shall have no obligation to issue or increase any Letter of Credit unless such
Downgraded Bank has provided sufficient funds as cash collateral to the Issuing
Bank to cover all LC Participation Obligations of such Downgraded Bank
(including in respect of the Letter of Credit to be issued or increased).
SECTION 2.15 Downgrade Event or Other Event with Respect to the Issuing
----------------------------------------------------------
Bank. At any time that the Issuing Bank is a Downgraded Bank or at such other
----
times as the Issuing Bank and the Account Parties may agree, the Account Parties
may, upon not less than three Letter of Credit Business Days' notice to the
Issuing Bank (in this Section sometimes referred to as the "Old Issuing Bank")
----------------
and the Administrative Agent, designate any Bank (so long as such Bank has
agreed to such designation) as an additional "Issuing Bank" hereunder (in this
Section sometimes referred to as the "New Issuing Bank"). Such notice shall
----------------
specify the date (which shall be a Letter of Credit Business Day) on which the
New Issuing Bank is to become an additional "Issuing Bank" hereunder. From and
after such date, all new Letters of Credit requested to be issued hereunder
shall be issued by the New Issuing Bank. From and after such date (and until the
first date on which no Letters of Credit issued by the Old Issuing Bank are
outstanding and no reimbursement obligations are owed to the Old Issuing Bank,
on which date the Old Issuing Bank shall cease to be an Issuing Bank hereunder),
references in this Agreement to the "Issuing Bank" shall be deemed to refer (a)
to the Old Issuing Bank, with respect to Letters of Credit issued by it, (b) to
the New Issuing Bank, with respect to Letters of Credit issued or to be issued
by it, and (c) to each of the Old Issuing Bank and the New Issuing Bank, with
respect to other matters. Notwithstanding the fact that an Old Issuing Bank
shall cease to be an "Issuing Bank" hereunder, all of the exculpatory,
indemnification and similar provisions hereof in favor of the "Issuing Bank"
shall inure to such Old Issuing Bank's benefit as to any actions taken or
omitted by it while it was an "Issuing Bank" under this Agreement. The Account
Parties agree that after any appointment of a New Issuing Bank hereunder, the
Account Parties shall use reasonable commercial efforts to promptly replace (or
otherwise cause the applicable beneficiary to return to the Old Issuing Bank for
cancellation) each letter of credit issued by the Old Issuing Bank with a Letter
of Credit issued by the New Issuing Bank.
SECTION 2.16 Non-Dollar Letters of Credit.
----------------------------
(a) The Account Parties, the Administrative Agent, the Issuing Bank and
the Banks (i) agree that the Issuing Bank may (in its sole discretion) issue
Letters of Credit ("Non-Dollar Letters of Credit") in currencies other than U.S.
----------------------------
dollars and (ii) further agree as set forth in the following paragraphs of this
Section with respect to such Non-Dollar Letters of Credit.
34
(b) The Account Parties agree that their reimbursement obligations
under Section 2.03(a) and any resulting Letter of Credit Advance, in each case
in respect of a drawing under any Non-Dollar Letter of Credit, (i) shall be
payable in Dollars at the Dollar Equivalent of such obligation in the currency
in which such Non-Dollar Letter of Credit was issued (determined on the date of
payment), and (ii) shall bear interest at a rate per annum equal to the Base
Rate plus 2%, for each day from and including the date on which the Applicable
Account Party is to reimburse the Issuing Bank pursuant to Section 2.03(a) to
but excluding the date such obligation is paid in full.
(c) Each Bank agrees that its obligation to pay the Issuing Bank such
Bank's Pro Rata Share of the unreimbursed portion of any payment by the Issuing
Bank under Section 2.02(e) in respect of a drawing under any Non-Dollar Letter
of Credit shall be payable in Dollars at the Dollar Equivalent of such
obligation in the currency in which such Non-Dollar Letter of Credit was issued
(calculated on the date of payment), and any such amount which is not paid when
due shall bear interest at a rate per annum equal to the Overnight Rate plus,
----
beginning on the third Business Day after such amount was due, 2%.
(d) For purposes of determining whether there is availability for the
Account Parties to request any Advance or to request the issuance or extension
of, or any increase in, any Letter of Credit, the Dollar Equivalent amount of
the Available Amount of each Non-Dollar Letter of Credit shall be calculated as
of the date such Advance is to be made or such Letter of Credit is to be issued,
extended or increased.
(e) For purposes of determining the letter of credit fee under Section
2.05(c), the Dollar Equivalent amount of the Available Amount of any Non-Dollar
Letter of Credit shall be determined on each of (1) the date of an issuance,
extension or change in the Available Amount of such Non-Dollar Letter of Credit,
(2) the date of any payment by the Issuing Bank in respect of a drawing under
such Non-Dollar Letter of Credit, (3) the last Business Day of each March, June,
September and December and (4) each day on which the LC Commitment Amounts are
to be reduced pursuant to Section 2.04 (it being understood that no requested
reduction shall be permitted to the extent that, after making a calculation
pursuant to this clause (e), such reduction would be greater than the unused
portion of the LC Commitment Amounts).
(f) If, on the last Business Day of each March, June, September and
December, the sum of the principal amount of all Advances plus the Available
Amount of all Letters of Credit (valuing the Available Amount of, and Letter of
Credit Advances in respect of, any Non-Dollar Letter of Credit at the Dollar
Equivalent thereof as of such day) would exceed the amount of the Committed
Facility, then the Account Parties will immediately eliminate such excess by
paying Advances and/or causing the Available Amount of one or more Letters of
Credit to be reduced.
(g) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due in respect of any Non-Dollar Letter of Credit in
one currency into another currency, the rate of exchange used shall be that at
which in accordance with its normal banking procedures the Issuing Bank could
purchase the first currency with such other currency on the Letter of Credit
Business Day preceding that on which final judgment is given. The obligation of
any Account Party in respect of any such sum due from it to the Issuing Bank or
any Bank hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in
-----------------
35
which such sum is denominated in accordance with the applicable provisions
of this Agreement and the applicable Non-Dollar Letter of Credit (the "Agreement
---------
Currency"), be discharged only to the extent that on the Letter of Credit
--------
Business Day following receipt by the Issuing Bank or such Bank of any sum
adjudged to be so due in the Judgment Currency, the Issuing Bank or such Bank
may in accordance with normal banking procedures purchase the Agreement Currency
with the Judgment Currency. If the amount of the Agreement Currency so purchased
is less than the sum originally due to the Issuing Bank or such Bank in the
Agreement Currency, the Applicable Account Party agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Issuing Bank
or such Bank, as applicable, against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the Issuing Bank
or such Bank in such currency, the Issuing Bank and each Bank agrees to return
the amount of any excess to the Applicable Account Party (or to any other Person
who may be entitled thereto under applicable law).
(h) For purposes of this Section, "Dollar Equivalent" means, in
-----------------
relation to an amount denominated in a currency other than U.S. dollars, the
amount of U.S. dollars which could be purchased with such amount by the Issuing
Bank in accordance with its customary procedures (and giving effect to any
transaction costs) at the quoted foreign exchange spot rate of the Issuing Bank
at the time of determination; and "Overnight Rate" means, for any day, the rate
--------------
of interest per annum at which overnight deposits in the applicable currency, in
an amount approximately equal to the amount with respect to which such rate is
being determined, would be offered for such day by the Issuing Bank to major
banks in the London or other applicable offshore interbank market. The Overnight
Rate for any day which is not a Letter of Credit Business Day (or on which
dealings are not carried on in the applicable offshore interbank market) shall
be the Overnight Rate for the immediately preceding Letter of Credit Business
Day.
SECTION 2.17 Extensions of Expiration Date. The Parent may, at its
-----------------------------
option, give the Administrative Agent and the Issuing Bank written notice (an
"Extension Request") at any time not more than sixty days, nor less than thirty
-----------------
days, prior to the Expiration Date in effect at such time (the "Current
-------
Expiration Date") of the Parent's desire to extend the Expiration Date to a date
---------------
which is not later than 364 days after the Current Expiration Date. The
Administrative Agent shall promptly inform the Banks of such Extension Request.
Each Bank which agrees to such Extension Request shall deliver to the
Administrative Agent its express written consent thereto no later than ten days
prior to the Current Expiration Date, and any failure of a Bank so to respond
shall be deemed to be such Bank's determination not to extend. No extension
shall become effective unless the express written consent thereto by the
Required Commitment Banks and the Issuing Bank is received by the Administrative
Agent on or before the tenth day prior to the Current Expiration Date. If the
Issuing Bank and the Required Commitment Banks, but not all Commitment Banks,
have expressly consented in writing to such Extension Request by such tenth day,
then the Administrative Agent shall so notify the Parent and the Parent may,
effective as of the Current Expiration Date, take one or both of the following
actions: (i) replace (as a party to, and for all purposes of, this Agreement)
any Commitment Bank which has not agreed to such Extension Request (a
"Nonextending Bank") with another commercial lending institution satisfactory to
-----------------
the Issuing Bank (a "Replacement Bank") by giving notice of the name of such
----------------
Replacement Bank to the Administrative Agent and the Issuing Bank not later than
five Business Days prior to the then Current Expiration Date and (ii) elect to
implement a Conversion to Tranche System as contemplated by Section 2.18 hereof
(or, if the Conversion to Tranche
36
System has previously been implemented, elect to implement a Supplement to
Tranche System as contemplated by Section 2.18 hereof). In the event that a
Nonextending Bank is to be replaced by a Replacement Bank, such Nonextending
Bank shall, upon payment to it of all amounts owing to it on the date of its
replacement, assign all of its interests hereunder to such Replacement Bank in
accordance with the provisions of Section 9.07(c) hereof. If the Issuing Bank
and the Required Commitment Banks shall have consented to such Extension
Request, then, on the Current Expiration Date, the Expiration Date shall be
deemed to have been extended to, and shall be, the date specified in such
Extension Request. The Administrative Agent shall promptly after any such
extension advise the Banks of any changes in the LC Commitment Amounts and the
Letter of Credit Participating Interest Percentages, as well as any changes
effected by the election of the Conversion to Tranche System or a Supplement to
Tranche System.
SECTION 2.18 Tranches.
--------
(a) Certain Definitions. As used in this Agreement the following terms
-------------------
have the meanings ascribed thereto:
"Commitment Banks" at any time means Banks which have Letter of Credit
Participating Interest Commitments at such time and "Commitment Bank" means any
one of them.
"Conversion to Tranche System" means the election by the Parent, at a
time when the Parent has made an Extension Request pursuant to Section 2.17
hereof and such Extension Request has been consented to in writing by the
Issuing Bank and the Required Commitment Banks, but not by all of the Commitment
Banks, to classify Letters of Credit as Tranche 1 Letters of Credit and Tranche
2 Letters of Credit, all in accordance with Section 2.18(b) hereof.
"L/C Termination Date" means, with respect to a Letter of Credit, the
date which is stated therein to be the last day on which the beneficiary thereof
may draw thereon.
"Pro Rata" means: (i) until the first Special Expiration Date, from and
to the Banks in accordance with their respective Letter of Credit Participating
Interest Percentages and (ii) thereafter, (x) with respect to Tranche 1 Letters
of Credit, from and to the Tranche 1 Banks in accordance with their respective
Tranche 1 Letter of Credit Participating Interest Percentages, (y) with respect
to Tranche 2 Letters of Credit and Tranche 2 Letter of Credit Participating
Interest Commitments, from and to the Tranche 2 Banks in accordance with their
respective Tranche 2 Letter of Credit Participating Interest Percentages and (z)
with respect to each additional Tranche of Letters of Credit (i.e., Tranche 3
Letters of Credit, Tranche 4 Letters of Credit, and so on), if any, from and to
the Banks which have Letter of Credit Participating Interest Commitments or
Letter of Credit Participating Interests, as applicable, with respect to such
Tranche in accordance with their respective related Letter of Credit
Participating Interest Percentages.
"Required Commitment Banks" at any time means Commitment Banks which
have, in the aggregate, LC Commitment Amounts in excess of 50% of the total
outstanding LC Commitment Amounts at such time.
"Special Expiration Date" means the Expiration Date which is in effect
immediately prior to the occurrence of the event described in the following
clause (iii) after the occurrence of the
37
events described in the following clauses (i) and (ii): (i) the Parent has made
an Extension Request pursuant to Section 2.17 hereof, (ii) such Extension
Request has been consented to in writing by the Issuing Bank and the Required
Commitment Banks, but not by all of the Commitment Banks, and (iii) the Parent
has elected to implement a Conversion to Tranche System or a Supplement to
Tranche System with respect to such Extension Request and Expiration Date.
"Supplement to Tranche System" means the election by the Parent, at a
time when the Conversion to Tranche System has been previously made and when the
Parent has made an Extension Request pursuant to Section 2.17 hereof and such
Extension Request has been consented to in writing by the Issuing Bank and the
Required Commitment Banks, but not by all of the Commitment Banks, to classify
additional Letters of Credit as Tranche X Letters of Credit.
"Tranche 1 Bank" shall mean each Bank which is a Bank immediately prior
to the first Special Expiration Date.
"Tranche 1 Letter of Credit" means each Letter of Credit which is
issued prior to the first Special Expiration Date, but shall not include any
such Letter of Credit as to which the L/C Termination Date has been extended to
a date after the L/C Termination Date which was in effect on such first Special
Expiration Date.
"Tranche 1 Letter of Credit Participating Interest Percentage" for each
Tranche 1 Bank means such Bank's Letter of Credit Participating Interest
Percentage immediately prior to the first Special Expiration Date.
"Tranche 2 Bank" shall mean each Bank which has a Tranche 2 Letter of
Credit Participating Interest Commitment.
"Tranche 2 Letter of Credit" means each Letter of Credit which is
issued prior to the second Special Expiration Date, but shall not include any
such Letter of Credit as to which the L/C Termination Date has been extended to
a date after the L/C Termination Date which was in effect on such second Special
Expiration Date and shall not include any Tranche 1 Letter of Credit (it being
understood that a Letter of Credit may change from a Tranche 1 Letter of Credit
to a Tranche 2 Letter of Credit as a result of the extension, after the first
Special Expiration Date, of its L/C Termination Date).
"Tranche 3 Letter of Credit" and "Tranche 4 Letter of Credit" have the
meanings set forth in the definition of the term "Tranche X".
"Tranche X" shall mean Tranche 3 if there are existing Tranche 2
Letters of Credit but not Tranche 3 Letters of Credit, Tranche 4 if there are
existing Tranche 3 Letters of Credit but not Tranche 4 Letters of Credit, and so
on in consecutive integral succession. The terms "Tranche X Bank", "Tranche X
Letter of Credit Participating Interest Commitment", "Tranche X LC Commitment
Amount" and "Tranche X Letter of Credit Participating Interest Percentage" shall
have comparable meanings. The term "Tranche X Letter of Credit" shall have a
comparable meaning, but such meaning shall be consistent with the following: (i)
the term "Tranche 3 Letter of Credit" means each Letter of Credit which is
issued prior to the third Special Expiration Date, but shall not include any
such Letter of Credit as to which the L/C
38
Termination Date has been extended to a date after the L/C Termination Date
which was in effect on such third Special Expiration Date and shall not include
any Tranche 1 Letter or Credit or any Tranche 2 Letter of Credit; (ii) the term
"Tranche 4 Letter of Credit" means each Letter of Credit which is issued prior
to the fourth Special Expiration Date, but shall not include any such Letter of
Credit as to which the L/C Termination Date has been extended to a date after
the L/C Termination Date which was in effect on such fourth Special Expiration
Date and shall not include any Tranche 1 Letter of Credit, any Tranche 2 Letter
of Credit or any Tranche 3 Letter of Credit; (iii) the terms "Tranche 5 Letter
of Credit", "Tranche 6 Letter of Credit", and so on shall have comparable
meanings (it being understood that a Letter of Credit can change from one
Tranche to another as a result of an extension of its L/C Termination Date).
(b) Conversion to Tranche System. If the Parent elects the Conversion
----------------------------
to Tranche System with respect to an Extension Request, the following shall
occur: (i) the Letter of Credit Participating Interest Commitments of Banks
which, with respect to such Extension Request, are Nonextending Banks shall
terminate as of the Special Expiration Date related to such Extension Request,
but such Nonextending Banks (other than Nonextending Banks which have been
replaced as contemplated by Section 2.17 hereof) shall remain parties to this
Agreement and shall retain all of their respective obligations with respect to
Tranche 1 Letters of Credit and shall retain their respective Letter of Credit
Participating Interests in and with respect to Tranche 1 Letters of Credit; (ii)
from and after the Special Expiration Date related to such Extension Request,
the Letter of Credit Participating Interest Commitment of each Bank which has
consented in writing to such Extension Request shall be a "Tranche 2 Letter of
Credit Participating Interest Commitment" and the LC Commitment Amount of such
Bank shall be its "Tranche 2 LC Commitment Amount" (in addition to being its LC
Commitment Amount applicable to Tranche 1 Letters of Credit); (iii) the "Tranche
2 Letter of Credit Participating Interest Percentage" for each Tranche 2 Bank
shall mean a fraction, expressed as percentage, the numerator of which is such
Tranche 2 Bank's Tranche 2 LC Commitment Amount and the denominator of which is
the aggregate Tranche 2 LC Commitment Amounts of all of the Tranche 2 Banks.
(c) Supplement to Tranche System. If the Parent elects a Supplement to
----------------------------
Tranche System with respect to an Extension Request, the following shall occur:
(i) the Letter of Credit Participating Interest Commitments of Banks which, with
respect to such Extension Request, are Nonextending Banks shall terminate, but
such Nonextending Banks shall remain parties to this Agreement and shall retain
all of their respective obligations with respect to Letters of Credit under
existing Tranches and shall retain their respective Letter of Credit
Participating Interests in and with respect to existing Letters of Credit; (ii)
from and after the Special Expiration Date related to such Extension Request,
the Letter of Credit Participating Interest Commitment of each Bank which has
consented in writing to such Extension Request shall be a "Tranche X Letter of
Credit Participating Interest Commitment" and the LC Commitment Amount of such
Bank shall be its "Tranche X LC Commitment Amount" (in addition to being its LC
Commitment Amount applicable to prior Tranches of Letters of Credit); (iii) the
"Tranche X Letter of Credit Participating Interest Percentage" for each Tranche
X Bank shall mean a fraction, expressed as percentage, the numerator of which is
such Tranche X Bank's Tranche X LC Commitment Amount and the denominator of
which is the aggregate Tranche X LC Commitment Amounts of all of the Tranche X
Banks, all as contemplated by the definition of the term "Tranche X" contained
in paragraph (a) of this Section 2.18.
39
SECTION 2.19 Collateral.
----------
(a) Pursuant to the Security Documents and as collateral security for
the payment and performance of the Obligations, the Account Parties shall grant
and convey, or cause to be granted and conveyed, to the Administrative Agent for
its benefit and the benefit of the Banks, a Lien and security interest in, to
and upon the Collateral, prior and superior to all other Liens. Each Account
Party shall cause the Collateral to be charged or pledged and be made subject to
the Security Documents (in form and substance acceptable to the Administrative
Agent) necessary for the perfection of the Lien and security interest in, to and
upon the Collateral and for the exercise by the Administrative Agent and the
Banks of their rights and remedies hereunder and thereunder. Notwithstanding the
foregoing, and for the sake of clarity, until the Tempest Life Effective Date,
the Obligations secured by any Collateral pledged by Tempest Life shall not
include any Obligations of Tempest Life under Article VII of this Agreement.
(b) (i) On the Letter of Credit Business Day immediately preceding the
proposed date of issuance or renewal of a Letter of Credit under Section
2.02(a), (ii) within ten (10) Business Days after the end of each calendar
month, and (iii) at and as of such other times as the Administrative Agent or
the Required Banks may reasonably request in its (or their) sole discretion, the
Account Parties shall deliver or cause to be delivered to the Administrative
Agent a certificate executed by the Parent, in the form of Exhibit B or
otherwise in a form reasonably satisfactory to the Administrative Agent (which
form may vary depending on the frequency of the delivery of such certificate),
setting forth the Letter of Credit Outstandings, the Collateral Value of the
Collateral by category and in the aggregate, and such other information as the
Administrative Agent may reasonably request (such certificate, a "Collateral
----------
Value Report"). Such certificate shall be subject to review and verification by
------------
the Administrative Agent, it being understood and agreed that the Administrative
Agent shall have the right to redetermine the Collateral Value of the Collateral
in accordance with the terms and provisions of this Agreement and the Security
Documents.
ARTICLE III
CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT
SECTION 3.01 Conditions Precedent to Effective Date. The occurrence of
--------------------------------------
the Effective Date, and the obligation of the Issuing Bank to issue any Letter
of Credit on the Effective Date, is subject to the satisfaction of the following
conditions precedent:
(i) The Administrative Agent shall have received the following,
each dated the Effective Date (unless otherwise specified), in form
and substance reasonably satisfactory to the Administrative Agent
(unless otherwise specified) and in sufficient copies for each Bank:
(A) Copies of the Pledge and Security Agreement, duly
completed and executed by each Account Party that is a party
thereto, the State Street Control Agreements, each duly completed
and executed by State Street and by the Account Party that is a
party thereto, and the State Street Custodial Agreements.
40
(B) Certified copies of the resolutions of the Board of Directors of
each Loan Party approving the transactions contemplated by the Loan
Documents and each Loan Document to which it is or is to be a party, and of
all documents evidencing other necessary corporate action and governmental
and other third party approvals and consents, if any, with transactions
contemplated by the Loan Documents and each Loan Document to which it is or
is to be a party.
(C) A copy of a certificate of the Secretary of State or other
appropriate official of the jurisdiction of incorporation of each Loan
Party, dated reasonably near the Effective Date, certifying as to the good
standing (or existence) of such Loan Party.
(D) A certificate of each Loan Party, signed on behalf of such Loan
Party by its President or a Vice President (or equivalent officer if such
Loan Party has no Vice President) and its Secretary or any Assistant
Secretary (the statements made in which certificate shall be true on and as
of the Effective Date), certifying as to (1) a true and correct copy of the
constitutional documents of such Loan Party as in effect on the date on
which the resolutions referred to in Section 3.01(a)(i)(B) were adopted and
on the Effective Date, (2) the due incorporation and good standing or valid
existence of such Loan Party as a corporation organized under the laws of
the jurisdiction of its incorporation, and the absence of any proceeding
for the dissolution or liquidation of such Loan Party, (3) the truth of the
representations and warranties contained in the Loan Documents as though
made on and as of the Effective Date and (4) the absence of any event
occurring and continuing, or resulting from the Effective Date, that
constitutes a Default.
(E) A certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying the names and true signatures of the officers of such
Loan Party authorized to sign each Loan Document to which it is or is to be
a party and the other documents to be delivered hereunder and thereunder.
(F) A favorable opinion of (1) Maples and Calder, Cayman Islands
counsel for the Parent, in substantially the form of Exhibit C-1 hereto and
as to such other matters as any Bank through the Administrative Agent may
reasonably request, (2) Mayer, Brown & Platt, New York counsel for the Loan
Parties, in substantially the form of Exhibit C-2 hereto and as to such
other matters as any Bank through the Administrative Agent may reasonably
request, and (3) Conyers Dill & Pearman, Bermuda counsel for ACE Bermuda,
Tempest Life and Tempest, in substantially the form of Exhibit C-3 hereto
and as to such other matters as any Bank through the Administrative Agent
may reasonably request.
(ii) There shall exist no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (x) could be
reasonably expected to have a Material Adverse Effect or (y) would reasonably be
expected to materially adversely
41
affect the legality, validity or enforceability of any Loan Document
or the other transactions contemplated by the Loan Documents.
(iii) No development or change shall have occurred after December
31, 2000, and no information shall have become known after such date,
that has had or could reasonably be expected to have a Material
Adverse Effect.
(iv) The Account Parties shall have paid all accrued fees of the
Administrative Agent and the Banks and all accrued expenses of the
Administrative Agent (including the accrued fees and expenses of
counsel to the Administrative Agent and local counsel on behalf of all
of the Banks), in each case to the extent then due and payable.
SECTION 3.02 Conditions Precedent to Each Issuance, Extension or
---------------------------------------------------
Increase of a Letter of Credit. The obligation of the Issuing Bank to issue,
------------------------------
extend or increase a Letter of Credit (including any issuance on the Effective
Date) shall be subject to the further conditions precedent that on the date of
such issuance, extension or increase (a) the following statements shall be true
(and each request for issuance, extension, or increase, and the acceptance by
the Account Party that requested such issuance, extension or increase shall
constitute a representation and warranty by such Account Party that both on the
date of such notice and on the date of such issuance, extension or increase such
statements are true):
(i) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of such date,
before and after giving effect to such issuance, extension or
increase, as though made on and as of such date, other than any such
representations or warranties that, by their terms, refer to a
specific date other the date of such issuance, extension or increase,
in which case as of such specific date (provided, however, that the
-------- -------
representation and warranty contained in the last sentence of Section
4.01(g) shall be excluded from this clause (i) at all times after (but
shall be included on and as of) the Effective Date); and
(ii) no Default has occurred and is continuing, or would result
from such issuance, extension or increase;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Bank or the Issuing Bank through the Administrative
Agent may reasonably request.
SECTION 3.03 Determinations Under Section 3.01. For purposes of
---------------------------------
determining compliance with the conditions specified in Section 3.01, each Bank
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to the Banks unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Bank prior to the Effective Date
specifying its objection thereto, provided that such Bank has been given at
--------
least one Business Day's notice that the final form of such document or matter
is available for its review.
42
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Account Parties.
-----------------------------------------------------
Each Account Party represents and warrants as follows:
(a) Each Loan Party and each of its Subsidiaries (i) is duly organized
or formed, validly existing and, to the extent such concept applies, in good
standing under the laws of the jurisdiction of its incorporation or formation,
(ii) is duly qualified and in good standing as a foreign corporation or other
entity in each other jurisdiction in which it owns or leases property or in
which the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed would not be reasonably
likely to have a Material Adverse Effect and (iii) has all requisite power and
authority (including, without limitation, all governmental licenses, permits and
other approvals) to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, except where the
failure to have any license, permit or other approval would not be reasonably
likely to have a Material Adverse Effect. All of the outstanding Equity
Interests in each Account Party (other than the Parent) have been validly
issued, are fully paid and non-assessable and (except for any Preferred
Securities issued after the date of this Agreement) are owned, directly or
indirectly, by the Parent free and clear of all Liens.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list of all Subsidiaries of each Loan Party.
(c) The execution, delivery and performance by each Loan Party of each
Loan Document to which it is or is to be a party and the consummation of the
transactions contemplated by the Loan Documents, are within such Loan Party's
corporate powers, have been duly authorized by all necessary corporate action,
and do not (i) contravene such Loan Party's constitutional documents, (ii)
violate any law, rule, regulation (including, without limitation, Regulation X
of the Board of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result in the
breach of, or constitute a default under, any contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument binding on or
affecting any Loan Party, any of its Subsidiaries or any of their properties or
(iv) except for the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of
its Subsidiaries is in violation of any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument, the violation or breach of which could be reasonably likely to have
a Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other third
party is required for (i) the due execution, delivery, recordation, filing or
performance by any Loan Party of any Loan Document to which it is or is to be a
party or the other transactions contemplated by the Loan Documents, or (ii) the
exercise by the Administrative Agent or any Bank of its rights under the Loan
43
Documents, except for the authorizations, approvals, actions, notices and
filings which have been duly obtained, taken, given or made and are in full
force and effect.
(e) This Agreement has been, and each other Loan Document when
delivered hereunder will have been, duly executed and delivered by each Loan
Party party thereto. This Agreement is, and each other Loan Document when
delivered hereunder will be, the legal, valid and binding obligation of each
Loan Party party thereto, enforceable against such Loan Party in accordance with
its terms.
(f) There is no action, suit, investigation, litigation or proceeding
affecting any Loan Party or any of its Subsidiaries, including any Environmental
Action, pending or threatened before any court, governmental agency or
arbitrator that (i) could be reasonably likely to have a Material Adverse Effect
or (ii) would reasonably be expected to affect the legality, validity or
enforceability of any Loan Document or the transactions contemplated by the Loan
Documents.
(g) The Consolidated balance sheets of the Parent and its Subsidiaries
as at December 31, 2000, and the related Consolidated statements of income and
of cash flows of the Parent and its Subsidiaries for the fiscal year then ended,
accompanied by an unqualified opinion of PricewaterhouseCoopers LLP, independent
public accountants, and the Consolidated balance sheets of the Parent and its
Subsidiaries as at September 30, 2001, and the related Consolidated statements
of income and cash flows of the Parent and its Subsidiaries for the nine months
then ended, duly certified by the Chief Financial Officer of the Parent, copies
of which have been furnished to each Bank, fairly present, subject, in the case
of said balance sheet as at September 30, 2001, and said statements of income
and cash flows for the nine months then ended, to year-end audit adjustments,
the Consolidated financial condition of the Parent and its Subsidiaries as at
such dates and the Consolidated results of operations of the Parent and its
Subsidiaries for the periods ended on such dates, all in accordance with
generally accepted accounting principles applied on a consistent basis (subject,
in the case of the September 30, 2001 balance sheet and statements, to the
absence of footnotes). Since December 31, 2000, there has been no Material
Adverse Change.
(h) The Parent has delivered to the Administrative Agent a true and
correct copy of each State Street Custodial Agreement as in effect as of the
date of this Agreement. Each State Street Custodial Agreement is in full force
and effect and no default or event of default by any Account Party exists
thereunder.
(i) No written information, exhibit or report furnished by or on behalf
of any Loan Party to any Agent or any Bank in connection with the negotiation
and syndication of the Loan Documents or pursuant to the terms of the Loan
Documents contained any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements made therein not misleading as
at the date it was dated (or if not dated, so delivered).
(j) Margin Stock will constitute less than 25% of the value of those
assets of any Account Party which are subject to any limitation on sale, pledge
or other disposition hereunder. None of the Collateral constitutes or will
constitute Margin Stock.
44
(k) Neither any Loan Party nor any of its Subsidiaries is an
"investment company", or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any Advances,
nor the issuance of any Letters of Credit, nor the application of the proceeds
or repayment thereof by any Account Party, nor the consummation of the other
transactions contemplated by the Loan Documents, will violate any provision of
such Act or any rule, regulation or order of the Securities and Exchange
Commission thereunder.
(l) Neither any Loan Party nor any of its Subsidiaries is a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction that is reasonably
likely to have a Material Adverse Effect.
(m) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(n) Except to the extent that any and all events and conditions under
clauses (i) through (vi) below of this paragraph (n) in the aggregate are not
reasonably expected to have a Material Adverse Effect:
(i) Schedule B (Actuarial Information) to the most recent
annual report (Form 5500 Series) for each Pension Plan, copies of
which have been filed with the Internal Revenue Service, is complete
and accurate and fairly presents the funding status of such Pension
Plan, and since the date of such Schedule B there has been no material
adverse change in such funding status.
(ii) Neither any Loan Party nor any ERISA Affiliate has incurred
or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan.
(iii) Neither any Loan Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and no such Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated,
within the meaning of Title IV of ERISA.
(iv) With respect to each scheme or arrangement mandated by a
government other than the United States (a "Foreign Government Scheme
-------------------------
or Arrangement") and with respect to each employee benefit plan that
--------------
is not subject to United States law maintained or contributed to by
any Loan Party or with respect to which any Subsidiary of any Loan
Party may have liability under applicable local law (a "Foreign
-------
Plan"):
----
(x) Any employer and employee contributions required by law
or by the terms of any Foreign Government Scheme or Arrangement
or any Foreign Plan have been made, or, if applicable, accrued,
in accordance with normal accounting practices.
(y) The fair market value of the assets of each funded
Foreign Plan, the liability of each insurer for any Foreign Plan
funded through insurance or the book reserve established for any
Foreign Plan, together with any accrued contributions, is
sufficient to procure or provide for the accrued benefit
45
obligations, as of the date hereof, with respect to all current
and former participants in such Foreign Plan according to the
actuarial assumptions and valuations most recently used to
account for such obligations in accordance with applicable
generally accepted accounting principles.
(z) Each Foreign Plan required to be registered has been
registered and has been maintained in good standing with
applicable regulatory authorities.
(v) To the extent the assets of any Loan Party are or are deemed
under applicable law to be "plan assets" within the meaning of
Department of Labor Regulation (S) 2510.3-101, the execution, delivery
and performance of the Loan Documents and the consummation of the
transactions contemplated therein will not result in a non-exempt
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code.
(vi) During the twelve-consecutive-month period to the date of
the execution and delivery of this Agreement and prior to the request
for any Letter of Credit to be issued hereunder, no steps have been
taken to terminate any Pension Plan, no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a
lien under section 302(f) of ERISA and no minimum funding waiver has
been applied for or is in effect with respect to any Pension Plan. No
condition exists or event or transaction has occurred or is reasonably
expected to occur with respect to any Pension Plan which could result
in any Loan Party or any ERISA Affiliate incurring any material
liability, fine or penalty.
(o) In the ordinary course of its business, each Account Party reviews
the effect of Environmental Laws on the operations and properties of such
Account Party and its Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs (including, without limitation, any
capital or operating expenditures required for clean-up or closure of properties
presently or previously owned, any capital or operating expenditures required to
achieve or maintain compliance with environmental protection standards imposed
by law or as a condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or permanent
shutdown of any facility or reduction in the level of or change in the nature of
operations conducted thereat, and any actual or potential liabilities to third
parties and any related costs and expenses). On the basis of this review, each
Account Party has reasonably concluded that such associated liabilities and
costs, including the costs of compliance with Environmental Laws, are unlikely
to have a Material Adverse Effect. The operations and properties of each Loan
Party and each of its Subsidiaries comply in all material respects with all
applicable Environmental Laws and Environmental Permits, except for
non-compliances which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; Hazardous Materials have not been
released, discharged or disposed of on any property currently or formerly owned
or operated by any Loan Party or any of its Subsidiaries that would reasonably
be expected to have a Material Adverse Effect; and there are no Environmental
Actions pending or threatened against any Loan Party or its Subsidiaries, and no
circumstances exist that could be reasonably likely to form the basis of any
such Environmental Action, which (in either case), individually or in the
aggregate with all other such
46
pending or threatened actions and circumstances, would reasonably be expected to
have a Material Adverse Effect.
(p) Each Loan Party and each of its Subsidiaries has filed, has caused
to be filed or has been included in all material federal tax returns and all
other material tax returns required to be filed and has paid all taxes shown
thereon to be due, together with applicable interest and penalties, except to
the extent contested in good faith and by appropriate proceedings (in which case
adequate reserves have been established therefor in accordance with GAAP).
ARTICLE V
COVENANTS OF THE ACCOUNT PARTIES
SECTION 5.01 Affirmative Covenants. So long as any Advance or any other
---------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Bank shall have any Letter of
Credit Participating Interest Commitment or commitment to issue a Letter of
Credit hereunder, each Account Party will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
-------------------------
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
compliance with Environmental Laws, Environmental Permits, ERISA and the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime
Control Act of 1970.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
---------------------
Subsidiaries to pay and discharge, before the same shall become delinquent, (i)
all material taxes, assessments and governmental charges or levies imposed upon
it or upon its property and (ii) all lawful material claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that neither
-------- -------
any Account Party nor any of its Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge or claim that is being contested in
good faith and by proper proceedings and as to which appropriate reserves are
being maintained.
(c) Maintenance of Insurance. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Parent or such Subsidiary operates (it
being understood that the foregoing shall not apply to maintenance of
reinsurance or similar matters which shall be solely within the reasonable
business judgment of the Parent and its Subsidiaries).
(d) Preservation of Corporate Existence, Etc. Preserve and maintain,
----------------------------------------
and cause each of its Subsidiaries to preserve and maintain, its existence,
legal structure, legal name, rights (charter and statutory), permits, licenses,
approvals, privileges and franchises; provided, however, that the Parent and its
-------- -------
Subsidiaries may consummate any merger or consolidation permitted under Section
5.02(c) and provided further that neither the Parent nor any of its Subsidiaries
-------- -------
shall be required to preserve any right, permit, license, approval, privilege or
franchise if the Board of Directors of the Parent or such Subsidiary shall
determine that the
47
preservation thereof is no longer desirable in the conduct of the business
of the Parent or such Subsidiary, as the case may be, and that the loss thereof
is not disadvantageous in any material respect to the Parent, such Subsidiary or
the Banks.
(e) Visitation Rights. At any reasonable time and from time to time
-----------------
upon prior notice, permit the Administrative Agent (upon request made by any
Agent or any Bank), or any agents or representatives thereof, at the expense (so
long as no Default has occurred and is continuing) of such Agent or such Bank,
as the case may be, to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the Parent and any of its
Subsidiaries, and to discuss the affairs, finances and accounts of the Parent
and any of its Subsidiaries with any of their officers or directors and with, so
long as a representative of the Parent is present, their independent certified
public accountants.
(f) Keeping of Books. Keep, and cause each of its Subsidiaries to keep,
----------------
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Parent and
each such Subsidiary sufficient to permit the preparation of financial
statements in accordance with GAAP.
(g) Maintenance of Properties, Etc. Maintain and preserve, and cause
------------------------------
each of its Subsidiaries to maintain and preserve, all of its properties that
are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(h) Transactions with Affiliates. Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates (other than any such transactions between
Loan Parties or wholly owned Subsidiaries of Loan Parties) on terms that are
fair and reasonable and no less favorable than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
(i) Pari Passu Ranking. Ensure that at all times the claims of the
------------------
Banks, the Issuing Bank and the Agents against it under the Loan Documents will
rank at least pari passu with the claims of all its other unsecured and
unsubordinated creditors, except for claims which are preferred by any
bankruptcy, insolvency, liquidation or other similar laws of general application
or are mandatorily preferred by law applying to insurance companies generally.
(j) Additional Collateral. Comply with the provisions of this Section
---------------------
regarding any new or additional Collateral. The Account Parties may from time to
time add Collateral to the State Street Custodial Accounts without the necessity
of executing or delivering any documents pursuant to this Agreement (but subject
to the provisions of Section 5.02(g)). The Account Parties may from time to time
pledge new or additional Collateral contained in Custodial Accounts other than
the State Street Custodial Accounts by executing and delivering to the
Administrative Agent either a supplement to the Pledge and Security Agreement in
the form attached thereto (in the case of any new Custodial Account maintained
with State Street), or a new pledge and security agreement (in substantially the
form of the Pledge and Security Agreement) or other pledge agreement, security
agreement or charge (in the case of any new Custodial Account maintained with
another Custodian), in form and substance reasonably satisfactory to the
Administrative Agent, and by causing to be executed and delivered to the
Administrative Agent a control agreement or such other Security Documents as the
48
Administrative Agent shall reasonably require together with such other
documents, certificates and opinions (including opinions as to the validity and
perfection of the Administrative Agent's Lien on such Collateral), in form and
substance reasonably satisfactory to the Administrative Agent, as the
Administrative Agent may reasonably request in connection therewith; and the
applicable Account Parties will take such other action as the Administrative
Agent may reasonably request to create in favor of the Administrative Agent a
perfected security interest in and Lien on the Collateral being pledged pursuant
to the documents described above.
(k) Custodial Account Statements. Cause to be delivered to the
----------------------------
Administrative Agent, promptly upon receipt after the end of each calendar
month, a monthly statement of each Custodial Account prepared by the Custodian
thereof, showing the assets credited to such account as of the date of such
statement.
SECTION 5.02 Negative Covenants. So long as any Advance or any other
------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Bank shall have any Letter of
Credit Participating Interest Commitment or commitment to issue a Letter of
Credit hereunder, each of the Account Parties will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any of
-----------
its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or
with respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or assign or
permit any of its Subsidiaries to assign, any accounts or other right to receive
income, except:
(i) Permitted Liens;
(ii) Liens described on Schedule 5.02(a) hereto;
(iii) purchase money Liens upon or in real property or equipment
acquired or held by the Parent or any of its Subsidiaries in the ordinary
course of business to secure the purchase price of such property or
equipment or to secure Debt incurred solely for the purpose of financing
the acquisition, construction or improvement of any such property or
equipment to be subject to such Liens, or Liens existing on any such
property or equipment at the time of acquisition or within 180 days
following such acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price),
or extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided, however, that no such Lien shall extend
-------- -------
to or cover any property other than the property or equipment being
acquired, constructed or improved, and no such extension, renewal or
replacement shall extend to or cover any property not theretofore subject
to the Lien being extended, renewed or replaced;
(iv) Liens arising in connection with Capitalized Leases; provided
--------
that no such Lien shall extend to or cover any assets other than the assets
subject to such Capitalized Leases;
(v) (A) any Lien existing on any asset of any Person at the time
such Person becomes a Subsidiary and not created in contemplation of such
event, (B) any Lien on
49
any asset of any Person existing at the time such Person is merged or
consolidated with or into the Parent or any of it Subsidiaries in
accordance with Section 5.02(c) and not created in contemplation of such
event and (C) any Lien existing on any asset prior to the acquisition
thereof by the Parent or any of its Subsidiaries and not created in
contemplation of such acquisition;
(vi) Liens securing obligations under credit default swap
transactions determined by reference to, or Contingent Obligations in
respect of, Debt issued by the Parent or one of its Subsidiaries; such Debt
not to exceed an aggregate principal amount of $550,000,000;
(vii) Liens arising in the ordinary course of its business which (A)
do not secure Debt and (B) 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;
(viii) Liens on cash and Approved Investments securing Hedge
Agreements arising in the ordinary course of business;
(ix) other Liens securing Debt or other obligations outstanding in
an aggregate principal or face amount not to exceed at any time 5% of
Consolidated Net Worth;
(x) Liens consisting of deposits made by the Parent or any
insurance Subsidiary with any insurance regulatory authority or other
statutory Liens or Liens or claims imposed or required by applicable
insurance law or regulation against the assets of the Parent or any
insurance Subsidiary, in each case in favor of policyholders of the Parent
or such insurance Subsidiary or an insurance regulatory authority and in
the ordinary course of the Parent's or such insurance Subsidiary's
business;
(xi) Liens on Investments and cash balances of the Parent or any
insurance Subsidiary (other than capital stock of any Subsidiary) securing
obligations of the Parent or any insurance Subsidiary in respect of (i)
letters of credit obtained in the ordinary course of business (including,
without limitation, Liens created by the Security Documents) and/or (ii)
trust arrangements formed in the ordinary course of business for the
benefit of cedents to secure reinsurance recoverables owed to them by the
Parent or any insurance Subsidiary;
(xii) the replacement, extension or renewal of any Lien permitted by
clause (iii) or (vi) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in the
amount (other than in respect of fees, expenses and premiums, if any) or
change in any direct or contingent obligor) of the Debt secured thereby;
(xiii) Liens securing obligations owed by any Loan Party to any other
Loan Party or owed by any Subsidiary of the Parent (other than a Loan
Party) to the Parent or any other Subsidiary;
50
(xiv) Liens incurred in the ordinary course of business in favor of
financial intermediaries and clearing agents pending clearance of payments
for investment or in the nature of set-off, banker's lien or similar rights
as to deposit accounts or other funds;
(xv) judgment or judicial attachment Liens, provided that the
--------
enforcement of such Liens is effectively stayed;
(xvi) Liens arising in connection with Securitization Transactions;
provided that the aggregate principal amount of the investment or claim
--------
held at any time by all purchasers, assignees or other transferees of (or
of interests in) receivables and other rights to payment in all
Securitization Transactions (together with the aggregate principal amount
of any other obligations secured by such Liens) shall not exceed U.S.
$250,000,000;
(xvii) Liens arising in connection with certain equity proceeds
received on or about September 12, 2000 (plus interest accrued thereon)
placed in a segregated account in support of (or pledged as collateral for)
Parent's guaranty of the $412,372,000 principal amount of Auction Rate
Reset Subordinated Notes Series A issued by ACE INA to ACE RHINOS Trust on
June 30, 1999;
(xviii) Liens on securities arising out of repurchase agreements with
a term of not more than three months entered into with "Lenders" (as such
term is defined in the Five Year Credit Agreement) or their Affiliates or
with securities dealers of recognized standing; provided that the aggregate
amount of all assets of the Parent and its Subsidiaries subject to such
agreements shall not at any time exceed $800,000,000. For purposes of this
clause (xviii), "Five Year Credit Agreement" shall mean the Amended and
--------------------------
Restated Five Year Credit Agreement dated as of May 8, 2000 among the
Parent, ACE Bermuda, Tempest, ACE INA Holdings Inc. and ACE Financial
Services, Inc., as borrowers, various financial institutions, and JPMorgan
Chase Bank, as administrative agent, as amended, modified, supplemented or
restated from time to time; and
(xix) Liens securing up to an aggregate amount of $200,000,000 of
obligations of Tempest, the Parent or any wholly owned Subsidiary, arising
out of catastrophe bond financing.
Notwithstanding the foregoing provisions of this subsection (a) or any
other provision of this Agreement or any other Loan Document, in no event shall
any Account Party create, incur, assume or suffer to exist any Lien on or with
respect to the Collateral or any portion thereof other than (w) the Liens
created in favor of the Administrative Agent under the Security Documents, (x)
Liens described in clause (a) of the definition of Permitted Liens, (y) Liens
described in clause (xv) above, and (z) Liens in favor of any Custodian pursuant
to such Custodian's standard Custodial Agreements securing payment of such
Custodian's customary fees, commissions and charges (the Liens described in
clauses (w), (x), (y) and (z), collectively, "Permitted Collateral Liens").
--------------------------
(b) Change in Nature of Business. Make any material change in the nature
----------------------------
of the business of the Parent and its Subsidiaries, taken as a whole, as carried
on at the date hereof.
51
(c) Mergers, Etc. Merge into or consolidate with any Person or permit any
------------
Person to merge into it, or permit any of its Subsidiaries to do so, except
that:
(i) any Subsidiary of the Parent may merge into or consolidate with
any other Subsidiary of the Parent, provided that, in the case of any such
--------
merger or consolidation, the Person formed by such merger or consolidation
shall be a wholly owned Subsidiary of the Parent, provided further that, in
-------- -------
the case of any such merger or consolidation to which an Account Party is a
party, the Person formed by such merger or consolidation shall be such
Account Party;
(ii) any Subsidiary of any Account Party may merge into or
consolidate with any other Person or permit any other Person to merge into
or consolidate with it; provided that the Person surviving such merger
--------
shall be a wholly owned Subsidiary of the Account Party;
(iii) in connection with any sale or other disposition permitted under
Section 5.02(d), any Subsidiary of the Parent may merge into or consolidate
with any other Person or permit any other Person to merge into or
consolidate with it; and
(iv) the Parent or any Account Party may merge into or consolidate
with any other Person; provided that, in the case of any such merger or
--------
consolidation, the Person formed by such merger or consolidation shall be
the Parent or such Account Party, as the case may be;
provided, however, that in each case, immediately after giving effect thereto,
-------- -------
no event shall occur and be continuing that constitutes a Default.
(d) Sales, Etc., of Assets. Sell, lease, transfer or otherwise dispose of,
----------------------
or permit any other Account Party to sell, lease, transfer or otherwise dispose
of, all or substantially all of its assets (excluding sales of investment
securities in the ordinary course of business); provided, however, that the
-------- -------
provisions of Section 5.02(g) shall apply independent of this Section 5.02(d).
(e) Restricted Payments. In the case of the Parent, declare or pay any
-------------------
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its Equity Interests now or hereafter outstanding, return any capital to its
stockholders, partners or members (or the equivalent Persons thereof) as such,
make any distribution of assets, Equity Interests, obligations or securities to
its stockholders, partners or members (or the equivalent Persons thereof) as
such or issue or sell any Equity Interests or accept any capital contributions,
or permit any of its Subsidiaries to do any of the foregoing, or permit any of
its Subsidiaries to purchase, redeem, retire, defease or otherwise acquire for
value any Equity Interests in the Parent or to issue or sell any Equity
Interests therein, except that, so long as no Default shall have occurred and be
continuing at the time of any action described in clause (i) or (ii) below or
would result therefrom:
(i) the Parent may (A) declare and pay dividends and distributions
payable only in common stock of the Parent, (B) issue and sell shares of
its capital stock, (C) purchase, redeem, retire, defease or otherwise
acquire for value any of its Equity Interests
52
in an aggregate amount during the term of this Agreement not exceeding
$300,000,000 and (D) declare and pay cash dividends to its stockholders,
(ii) (A) any Loan Party (other than the Parent) may declare and pay
cash dividends to another Loan Party and (B) any Subsidiary of the Parent
(other than any Loan Party) may (x) declare and pay cash dividends to the
Parent or any other wholly owned Subsidiary of the Parent of which it is a
Subsidiary and (y) accept capital contributions from its parent, and
(iii) a Special Purpose Trust may issue Preferred Securities and pay
dividends thereon with the proceeds of payments of interest on the
Debentures.
(f) Accounting Changes. Make or permit, or permit any of its Subsidiaries
------------------
to make or permit, any change in accounting policies or reporting practices,
except as permitted by GAAP.
(g) Collateral. Permit (i) the Letter of Credit Outstandings to exceed the
----------
aggregate Collateral Value at any time or (ii) the average rating (calculated on
a weighted average basis) of the securities included within the calculation of
the aggregate Collateral Value to be less than "A-" (with rating methodologies
to be taken into account in the manner set forth in Schedule III). The Account
Parties may from time to time add Collateral to or sell, deliver, transfer or
otherwise withdraw Collateral from any Custodial Account (including, without
limitation, by trading of securities), but only so long as (i) immediately after
giving effect thereto no Default or Event of Default would exist and (ii) with
respect to the addition or termination (or removal as Collateral) of Custodial
Accounts, the Account Parties comply with any applicable restrictions and
conditions set forth in the Security Documents.
(h) Custodial Agreements. Make or permit any amendment or modification to
--------------------
any Custodial Agreement that is adverse in any material respect to the interests
of the Account Parties or the Banks.
SECTION 5.03 Reporting Requirements. So long as any Advance or any other
----------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Bank shall have any Letter of
Credit Participating Interest Commitment or commitment to issue a Letter of
Credit hereunder, the Parent will furnish to the Agents and the Banks:
(a) Default Notice. As soon as possible and in any event within two days
--------------
after the occurrence of each Default or any event, development or occurrence
reasonably likely to have a Material Adverse Effect continuing on the date of
such statement, a statement of the chief financial officer of the Parent setting
forth details of such Default, event, development or occurrence and the action
that the Parent or the applicable Subsidiary has taken and proposes to take with
respect thereto.
(b) Annual Financials.
-----------------
(i) As soon as available and in any event within 90 days after the
end of each Fiscal Year, a copy of the annual Consolidated audit report for
such year for the Parent
53
and its Subsidiaries, including therein a Consolidated balance sheet of the
Parent and its Subsidiaries as of the end of such Fiscal Year and
Consolidated statements of income and cash flows of the Parent and its
Subsidiaries for such Fiscal Year, all reported on in a manner reasonably
acceptable to the Securities and Exchange Commission in each case and
accompanied by an opinion of PricewaterhouseCoopers LLP or other
independent public accountants of recognized standing reasonably acceptable
to the Required Banks, together with (i) a certificate of the Chief
Financial Officer of the Parent stating that no Default has occurred and is
continuing, or if a Default has occurred and is continuing, a statement as
to the nature thereof and the action that the Parent has taken a proposes
to take with respect thereto, and a schedule in form reasonably
satisfactory to the Administrative Agent of the computations used by the
Parent in determining, as of the end of such Fiscal Year, compliance with
the covenants contained in Section 5.04 (which schedule shall include a
statement as to the ratio of the aggregate Collateral Value to the Letter
of Credit Outstandings as of the end of each calendar month during the
period covered by such financial statements, to the extent not previously
furnished to the Agents and the Banks).
(ii) As soon as available and in any event within 120 days after the
end of each Fiscal Year, a copy of the annual Consolidated audit report for
such year for each Subsidiary Guarantor and its Subsidiaries, including
therein a Consolidated balance sheet of such Subsidiary Guarantor and its
Subsidiaries as of the end of such Fiscal Year and a Consolidated statement
of income and a Consolidated statement of cash flows of such Subsidiary
Guarantor and its Subsidiaries for such Fiscal Year, in each case
accompanied by an opinion acceptable to the Required Banks of
PricewaterhouseCoopers LLP or other independent public accountants of
recognized standing acceptable to the Required Banks.
(c) Quarterly Financials. 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,
Consolidated balance sheets of the Parent and its Subsidiaries as of the end of
such quarter and Consolidated statements of income and a Consolidated statement
of cash flows of the Parent and its Subsidiaries for the period commencing at
the end of the previous fiscal quarter and ending with the end of such fiscal
quarter and Consolidated statements of income and a Consolidated statement of
cash flows of the Parent and its Subsidiaries for the period commencing at the
end of the previous Fiscal Year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding date or period of the preceding Fiscal Year, all in reasonable
detail and duly certified (subject to the absence of footnotes and normal
year-end audit adjustments) by the Chief Financial Officer of the Parent as
having been prepared in accordance with GAAP, together with (i) a certificate of
said officer stating that no Default has occurred and is continuing or, if a
Default has occurred and is continuing, a statement as to the nature thereof and
the action that the Parent has taken and proposes to take with respect thereto
and (ii) a schedule in form reasonably satisfactory to the Administrative Agent
of the computations used by the Parent in determining compliance with the
covenants contained in Section 5.04 (which schedule shall include a statement as
to the ratio of the aggregate Collateral Value to the Letter of Credit
Outstandings as of the end of each calendar month during the period covered by
such financial statements).
54
(d) Litigation. Promptly after the commencement thereof, notice of all
----------
actions, suits, investigations, litigation and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any Loan Party or any of its Subsidiaries of the
type described in Section 4.01(f).
(e) Securities Reports. Promptly after the sending or filing thereof,
------------------
copies of all proxy statements, financial statements and reports that the Parent
sends to its stockholders generally, and copies of all regular, periodic and
special reports, and all registration statements, that any Loan Party or any of
its Subsidiaries files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or with any national
securities exchange.
(f) ERISA.
-----
(i) ERISA Events. Promptly and in any event within 10 days after any
------------
Loan Party or any ERISA Affiliate institutes any steps to terminate any
Pension Plan or becomes aware of the institution of any steps or any threat
by the PBGC to terminate any Pension Plan, or the failure to make a
required contribution to any Pension Plan if such failure is sufficient to
give rise to a lien under section 302(f) of ERISA, or the taking of any
action with respect to a Pension Plan which could result in the requirement
that any Loan Party or any ERISA Affiliate furnish a bond or other security
to the PBGC or such Pension Plan, or the occurrence of any event with
respect to any Pension Plan which could result in any Loan Party or any
ERISA Affiliate incurring any material liability, fine or penalty, or any
material increase in the contingent liability of any Loan Party or any
ERISA Affiliate with respect to any post-retirement Welfare Plan benefit,
notice thereof and copies of all documentation relating thereto.
(ii) Plan Annual Reports. Promptly upon request of any Agent or any
-------------------
Bank, copies of each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each Pension Plan.
(iii) Multiemployer Plan Notices. Promptly and in any event within 15
--------------------------
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, copies of each notice
concerning (A) the imposition of Withdrawal Liability by any such
Multiemployer Plan, (B) the reorganization or termination, within the
meaning of Title IV of ERISA, of any such Multiemployer Plan or (C) the
amount of liability incurred, or that may be incurred, by such Loan Party
or any ERISA Affiliate in connection with any event described in clause (A)
or (B); provided, however, that such notice and documentation shall not be
-------- -------
required to be provided (except at the specific request of any Agent or any
Bank, in which case such notice and documentation shall be promptly
provided following such request) if such condition or event is not
reasonably expected to result in any Loan Party or any ERISA Affiliate
incurring any material liability, fine, or penalty.
(g) Statutory Statements. As soon as available and in any event within 20
--------------------
days after submission, each statutory statement of the Loan Parties (or any of
them) in the form submitted to The Insurance Division of the Office of Registrar
of Companies of Bermuda.
55
(h) Regulatory Notices, Etc. Promptly after any Responsible Officer of the
-----------------------
Parent obtains knowledge thereof, (i) a copy of any notice from the Bermuda
Minister of Finance or the Registrar of Companies or any other person of the
revocation, the suspension or the placing of any restriction or condition on the
registration as an insurer of any Account Party under the Bermuda Insurance Act
1978 (and related regulations) 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 Loan Party relating to an investigation conducted by the Bermuda
Minister of Finance, whether pursuant to Section 132 of the Bermuda Companies
Act 1981 (and related regulations) or otherwise and (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 any Loan Party.
(i) Other Information. Such other information respecting the business,
-----------------
condition (financial or otherwise), operations, performance, properties or
prospects of any Loan Party or any of its Subsidiaries as the Administrative
Agent, or any Bank through the Administrative Agent, may from time to time
reasonably request.
SECTION 5.04 Financial Covenants. So long as any Advance or any other
-------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Bank shall have any Letter of
Credit Participating Interest Commitment or commitment to issue a Letter of
Credit hereunder, the Parent will:
(a) Adjusted Consolidated Debt to Total Capitalization Ratio. Maintain at
--------------------------------------------------------
all times a ratio of Adjusted Consolidated Debt to Total Capitalization of not
more than 0.35 to 1.0.
(b) Consolidated Net Worth. Maintain at all times Consolidated Net Worth in
----------------------
an amount not less than the sum of (i) $3,600,000,000 plus (ii) 25% of
Consolidated Net Income for each fiscal quarter of the Parent ending on or after
March 31, 2000 for which such Consolidated Net Income is positive.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01 Events of Default. If any of the following events ("Events of
-----------------
Default") shall occur and be continuing:
(a) (i) any Account Party shall fail to pay any principal of any Advance
when the same shall become due and payable or (ii) any Account Party shall fail
to pay any interest on any Advance, or any Loan Party shall fail to make any
other payment under any Loan Document, in each case under this clause (ii)
within five Business Days after the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of its
officers) under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
56
(c) any Account Party shall fail to perform or observe any term, covenant
or agreement contained in Section 2.10, 5.01(d) (with respect to the Parent) or
(e), 5.02 (other than 5.02(g)) or 5.04; or
(d) any Loan Party shall fail to perform or observe any other term,
covenant or agreement contained in any Loan Document on its part to be performed
or observed if such failure shall remain unremedied for (1) in the case of any
covenant contained in Section 5.02(g), three Business Days after the earlier of
the date on which (i) a Responsible Officer becomes aware of such failure or
(ii) written notice thereof shall have been given to such Loan Party by any
Agent or any Bank, and (2) in all other cases, 30 days after the earlier of the
date on which (i) a Responsible Officer becomes aware of such failure or (ii)
written notice thereof shall have been given to such Loan Party by any Agent or
any Bank; or
(e) the Parent or any of its Significant Subsidiaries shall fail to pay any
Material Financial Obligation (but excluding Debt outstanding hereunder) of the
Parent or such Significant Subsidiary (as the case may be), when the same
becomes due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Material Financial Obligation; or any other event shall occur
or condition shall exist under any agreement or instrument relating to any such
Material Financial Obligation and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Material Financial Obligation or otherwise to cause, or to
permit the holder thereof to cause, such Material Financial Obligation to
mature; or any such Material Financial Obligation shall be declared to be due
and payable or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or an offer
to prepay, redeem, purchase or defease such Material Financial Obligation shall
be required to be made, in each case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Loan Party or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it)
that is being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or any Loan Party or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set forth above in this
subsection (f); or
(g) any judgment or order for the payment of money in excess of
$100,000,000 shall be rendered against any Loan Party or any of its Subsidiaries
and either (i) enforcement
57
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered against any Loan
Party or any of its Subsidiaries that could be reasonably likely to have a
Material Adverse Effect, and there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(i) any provision of any Loan Document after delivery thereof pursuant to
Section 3.01 shall for any reason cease to be valid and binding on or
enforceable against any Loan Party party to it (other than as a result of a
transaction permitted hereunder), or any such Loan Party shall so state in
writing; or any Security Document shall for any reason (other than pursuant to
the terms thereof) cease to create in favor of the Administrative Agent a valid
and perfected first priority Lien on and security interest in the Collateral
purported to be covered thereby; or the Administrative Agent shall cease for any
reason to hold a perfected first priority Lien on and security interest in the
Collateral; or
(j) a Change of Control shall occur; or
(k) Any Loan Party or any ERISA Affiliate shall incur or shall be
reasonably expected to incur liability in excess of $25,000,000 in the aggregate
with respect to any Pension Plan or any Multiemployer Plan in connection with
the occurrence of any of the following events or existence of any of the
following conditions:
(i) Institution of any steps by any Loan Party, any ERISA Affiliate
or any other Person, including, without limitation, the PBGC to terminate a
Pension Plan if as a result of such termination a Loan Party or any ERISA
Affiliate could be required to make a contribution to such Pension Plan, or
could incur a liability or obligation; or
(ii) A contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a lien under section 302(f) of ERISA; or
(iii) Any condition shall exist or event shall occur with respect to a
Pension Plan that is reasonably expected to result in any Loan Party or any
ERISA Affiliate being required to furnish a bond or security to the PBGC or
such Pension Plan, or incurring a liability or obligation; or
(l) any Loan Party or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan; or
(m) any Loan Party or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
and as a result of such reorganization or termination the aggregate annual
contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years of such
58
Multiemployer Plans immediately preceding the plan year in which such
reorganization or termination occurs; or
(n) any Custodial Agreement is amended or modified in any manner that is
inconsistent with the terms of the Loan Documents or that otherwise could
reasonably be expected to have a Material Adverse Effect, or is terminated, or
ceases to be in full force and effect or is declared by a court of competent
jurisdiction to be null and void, invalid or unenforceable in any material
respect, or any party thereto denies that it has any further liability or
obligation thereunder; or
(o) any Account Party shall (i) change its name, identity or corporate
structure, (ii) change its chief executive office from the location thereof
listed on Annex A to the Pledge and Security Agreement, or (iii) change the
jurisdiction of its incorporation or organization from the jurisdiction listed
on Annex A to the Pledge and Security Agreement (whether by merger or
otherwise), unless in each case such Account Party has (1) given twenty (20)
days' prior written notice to the Administrative Agent of its intention to do
so, together with information regarding any such new location and such other
information in connection with such proposed action as the Administrative Agent
may reasonably request, and (2) delivered to the Administrative Agent ten (10)
days prior to any such change or removal such documents, instruments and
financing statements as may be required by the Administrative Agent, all in form
and substance satisfactory to the Administrative Agent, paid all necessary
filing and recording fees and taxes, and taken all other actions reasonably
requested by the Administrative Agent (including, at the request of the
Administrative Agent, delivery of opinions of counsel reasonably satisfactory to
the Administrative Agent to the effect that all such actions have been taken),
in order to perfect and maintain the Lien upon and security interest in the
Collateral provided for in the Pledge and Security Agreement in accordance with
the provisions of Section 3(c) thereof; provided that an Event of Default under
--------
this subsection shall not occur unless any failure of any Account Party to
perform or observe any provision of this subsection shall remain unremedied for
30 days after the earlier of the date on which (y) a Responsible Officer becomes
aware of such failure or (z) written notice thereof shall have been given to
such Loan Party by any Agent or any Bank;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Banks, by notice to the Account
Parties, declare the obligation of the Issuing Bank to issue Letters of Credit
to be terminated, whereupon the same shall forthwith terminate, and/or (ii)
shall at the request, or may with the consent, of the Required Banks, by notice
to the Account Parties, declare all amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Account Parties, and/or (iii) shall at the request, or may with the
consent, of the Required Banks, proceed to exercise the rights and remedies of
the Administrative Agent and the Banks under the Loan Documents and applicable
law, including, without limitation, by dating, delivering and acting upon
Letters of Instruction; provided, however, that in the event of an actual or
-------- -------
deemed entry of an order for relief with respect to any Account Party under the
Federal Bankruptcy Code, (x) the obligation of the Issuing Bank to issue Letters
of Credit shall automatically be terminated and (y) all such amounts shall
automatically become and be due and payable, without presentment, demand,
59
protest or any notice of any kind, all of which are hereby expressly waived by
the Account Parties.
SECTION 6.02 Actions in Respect of the Letters of Credit upon Default. If
--------------------------------------------------------
any Event of Default shall have occurred and be continuing, the Administrative
Agent may, or shall at the request of the Required Banks, after having taken any
of the actions described in Section 6.01(ii) or otherwise, make demand upon the
Account Parties to, and forthwith upon such demand the Account Parties will, pay
to the Administrative Agent on behalf of the Banks in same day funds at the
Administrative Agent's office designated in such demand, an amount equal to the
aggregate Available Amount of all Letters of Credit then outstanding as cash
collateral. If at any time during the continuance of an Event of Default the
Administrative Agent determines that such funds are subject to any right or
claim of any Person other than the Administrative Agent and the Banks or that
the total amount of such funds is less than the aggregate Available Amount of
all Letters of Credit, the Account Parties will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional cash
collateral, an amount equal to the excess of (a) such aggregate Available Amount
over (b) the total amount of funds, if any, that the Administrative Agent
determines to be free and clear of any such right and claim. Upon the drawing of
any Letter of Credit, such funds shall be applied to reimburse the Issuing Bank
or Banks, as applicable, to the extent permitted by applicable law.
ARTICLE VII
THE GUARANTY
SECTION 7.01 The Guaranty.
------------
(a) Subject to subsection (c) below, each Account Party hereby jointly and
severally, unconditionally, absolutely and irrevocably guarantees the full and
punctual payment (whether at stated maturity, upon acceleration or otherwise) of
all Obligations of each of the other Account Parties under the Loan Documents
including, without limitation, the principal of and interest on reimbursement
obligations owing by such other Account Parties pursuant to this Agreement with
respect to Letters of Credit. Upon failure by an Account Party to pay punctually
any such amount, each other Account Party agrees to pay forthwith on demand the
amount not so paid at the place and in the manner specified in this Agreement.
For the avoidance of doubt, notwithstanding the limitations of subsection (c)
below as to the guarantee obligations of Tempest Life, all other Account Parties
at all times, including prior to the Tempest Life Effective Date, jointly and
severally, unconditionally, absolutely and irrevocably guarantee the full and
punctual payment (whether at stated maturity, upon acceleration or otherwise) of
all Obligations of Tempest Life.
(b) Each Account Party (other than the Parent), and by its acceptance of
this Guaranty, the Administrative Agent and each other Bank, hereby confirms
that it is the intention of all such Persons that this Guaranty and the
obligations of each Account Party hereunder not constitute a fraudulent transfer
or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Guaranty and the obligations of each
Account Party
60
(other than the Parent) hereunder. To effectuate the foregoing intention,
the Administrative Agent, the other Banks and the Account Parties hereby
irrevocably agree that the obligations of each Account Party (other than the
Parent) under this Article VII at any time shall be limited to the maximum
amount as will result in the obligations of such Account Party under this
Guaranty not constituting a fraudulent transfer or conveyance.
(c) Notwithstanding anything to the contrary in this Agreement, the
guarantee made by Tempest Life under this Article VII shall not be effective
until the date (the "Tempest Life Effective Date") on which Tempest Life
receives the necessary direction or exemption from the Bermuda Supervisor of
Insurance to the effect that any liability with respect to its guaranty provided
under this Article VII, until a claim or demand is made or funds are drawn
against, directly or indirectly, under this Article VII, need not be recorded as
a liability and thereby decrease its statutory capital and surplus as
determinable under the Insurance Act 1978 of Bermuda and the related
regulations. Upon the Tempest Life Effective Date, automatically and without
necessity of any acknowledgment or affirmation by Tempest Life or any further
action by any party, the guarantee made by Tempest Life under this Article VII
shall become effective and the obligations of Tempest Life under this Article
VII shall become Obligations for all purposes of this Agreement and the other
Loan Documents. The Administrative Agent shall promptly notify the Banks of the
date and occurrence of the Tempest Life Effective Date.
SECTION 7.02 Guaranty Unconditional. The obligations of each Account Party
----------------------
under this Article VII shall be unconditional, absolute and irrevocable and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release (including with respect to any Collateral) in respect of any
obligation of any other obligor under any of the Loan Documents, by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to any of the
Loan Documents;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of any other obligor under any of the
Loan Documents;
(iv) any change in the corporate existence, structure or ownership of
any obligor, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any other obligor or its assets or any resulting
release or discharge of any obligation of any other obligor contained in
any of the Loan Documents;
(v) the existence of any claim, set-off or other rights which any
obligor may have at any time against any other obligor, the Administrative
Agent, any Bank or any other corporation or person, whether in connection
with any of the Loan Documents or any unrelated transactions, provided that
--------
nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against any
other obligor for any reason of any of the Loan Documents, or any provision
of applicable law or
61
regulation purporting to prohibit the payment by any other obligor of
principal interest or any other amount payable under any of the Loan
Documents; or
(vii) any other act or omission to act or delay of any kind by any
obligor, 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 an Account Party's obligations under this Article VII.
SECTION 7.03 Discharge Only upon Payment in Full; Reinstatement in Certain
-------------------------------------------------------------
Circumstances. Each Account Party's obligations under this Article VII shall
-------------
remain in full force and effect until the commitments of the Banks hereunder
shall have terminated, no Letters of Credit shall be outstanding and all amounts
payable by the other Account Parties under the Loan Documents shall have been
paid in full. If at any time any payment of the principal of or interest on any
reimbursement obligation or any other amount payable by an Account Party under
the Loan Documents is rescinded or must be otherwise restored or returned upon
the insolvency, bankruptcy or reorganization of such Account Party or otherwise,
each other Account Party's obligations under this Article VII with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time.
SECTION 7.04 Waiver by the Account Parties. Each Account Party 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 any other obligor or any other
corporation or person.
SECTION 7.05 Subrogation. Each Account Party hereby unconditionally and
-----------
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against any other Account Party, any other Loan Party or any other
insider guarantor that arise from the existence, payment, performance or
enforcement of such Account Party's obligations under or in respect of this
Guaranty or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Bank against any other
Account Party, any other Loan Party or any other insider guarantor or any
collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any other Account Party, any other Loan Party or any other
insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all amounts payable under this Guaranty shall
have been paid in full in cash, no Letters of Credit shall be outstanding and
the commitments of the Banks hereunder shall have expired or been terminated. If
any amount shall be paid to any Account Party in violation of the immediately
preceding sentence at any time prior to the latest of (a) the payment in full in
cash of all amounts payable under this Guaranty, and (b) the Expiration Date,
such amount shall be received and held in trust for the benefit of the Banks,
shall be segregated from other property and funds of such Account Party and
shall forthwith be paid or delivered to the Administrative Agent in the same
form as so received (with any necessary endorsement or assignment) to be
credited and applied to all amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as collateral for any amounts payable under this
62
Guaranty thereafter arising. If (i) any Account Party shall make payment to any
Bank of all or any amounts payable under this Guaranty, (ii) all amounts payable
under this Guaranty shall have been paid in full in cash, and (iii) the final
Expiration Date shall have occurred, the Banks will, at such Account Party's
request and expense, execute and deliver to such Account Party appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Account Party of an interest in the
obligations resulting from such payment made by such Account Party pursuant to
this Guaranty.
SECTION 7.06 Stay of Acceleration. If acceleration of the time for payment
--------------------
of any amount payable by any Account Party under any of the Loan Documents is
stayed upon the insolvency, bankruptcy or reorganization of such Account Party,
all such amounts otherwise subject to acceleration under the terms of this
Agreement shall nonetheless be payable by the other Account Parties under this
Article VII forthwith on demand by the Administrative Agent made at the request
of the requisite proportion of the Banks.
SECTION 7.07 Continuing Guaranty; Assignments. This Guaranty is a
--------------------------------
continuing guaranty and shall (a) remain in full force and effect until the
latest of (i) the payment in full in cash of all amounts payable under this
Guaranty and (ii) the final Expiration Date, (b) be binding upon each Account
Party, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Banks and their successors, transferees and assigns. Without
limiting the generality of clause (c) of the immediately preceding sentence, any
Bank may assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its Letter of Credit Participating Interest Commitment and the
Advances owing to it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Bank
herein or otherwise, in each case as and to the extent provided in Section 9.07.
ARTICLE VIII
THE AGENTS
SECTION 8.01 Authorization and Action. Each Bank (in its capacity as a
------------------------
Bank) hereby appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to such Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto. As to any matters not expressly provided for by the Loan Documents, no
Agent shall be required to exercise any discretion or take any action, but shall
be required to act (in the case of the Administrative Agent) or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Banks or all the Banks where unanimity is
required, and such instructions shall be binding upon all Banks; provided,
--------
however, that no Agent shall be required to take any action that exposes such
-------
Agent to personal liability or that is contrary to this Agreement or applicable
law. The Administrative Agent agrees to give to each Bank prompt notice of each
notice given to it by any Account Party pursuant to the terms of this Agreement.
63
SECTION 8.02 Agents' Reliance, Etc. Neither any Agent nor any of its
---------------------
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each Agent:
(a) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to any Bank and shall not be responsible to any Bank
for any statements, warranties or representations (whether written or oral) made
in or in connection with the Loan Documents; (c) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of any Loan Document on the part of any Loan Party or to
inspect the property (including the books and records) of any Loan Party; (d)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (e) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram or telecopy) reasonably
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 8.03 First Union and Affiliates. With respect to its LC Commitment
--------------------------
Amounts, and the Advances, First Union shall have the same rights and powers
under the Loan Documents as any other Bank and may exercise the same as though
it were not an Agent; and the term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include First Union in its individual capacity. First Union
and its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person that may do business with or own securities of any Loan Party or any such
Subsidiary, all as if First Union were not an Agent and without any duty to
account therefor to the Banks.
SECTION 8.04 Bank Credit Decision. Each Bank acknowledges that it has,
--------------------
independently and without reliance upon any Agent or any other Bank and based on
the financial statements referred to in Section 4.01 and such other 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 action under
this Agreement.
SECTION 8.05 Indemnification.
---------------
(a) Each Bank severally agrees to indemnify each Agent and its officers,
directors, employees, agents, advisors and Affiliates (to the extent not
promptly reimbursed by the Account Parties) from and against such Bank's ratable
share (determined as provided below) of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against such Agent or any such other Person in any way relating
to or arising out of the Loan
64
Documents or any action taken or omitted by such Agent under the Loan Documents;
provided, however, that no Bank shall be liable for any portion of such
-------- -------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's or other Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank agrees to reimburse each Agent promptly upon demand for its ratable
share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by the Account Parties under Section 9.04, to the
extent that such Agent is not promptly reimbursed for such costs and expenses by
the Account Parties.
(b) For purposes of this Section 8.05, the Banks' respective ratable
shares of any amount shall be determined, at any time, according to the sum of
(i) the aggregate principal amount of the Advances outstanding at such time and
owing to the respective Banks, (ii) their respective Pro Rata Shares of the
aggregate Available Amounts of all Letters of Credit outstanding at such time
and (iii) their respective Unused LC Commitment Amounts at such time. The
failure of any Bank to reimburse any Agent promptly upon demand for its ratable
share of any amount required to be paid by the Banks to such Agent as provided
herein shall not relieve any other Bank of its obligation hereunder to reimburse
such Agent for its ratable share of such amount, but no Bank shall be
responsible for the failure of any other Bank to reimburse such Agent for such
other Bank's ratable share of such amount. Without prejudice to the survival of
any other agreement of any Bank hereunder, the agreement and obligations of each
Bank contained in this Section 8.05 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
SECTION 8.06 Successor Administrative Agent. Any Agent may resign at any
------------------------------
time by giving written notice thereof to the Banks and the Parent and may be
removed at any time with or without cause by the Required Banks. Upon any such
resignation or removal of the Administrative Agent, the Required Banks shall
have the right to appoint a successor Administrative Agent, subject (so long as
no Event of Default exists) to the consent of the Parent (which consent shall
not be unreasonably withheld). 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's giving of
notice of resignation or the Required Banks' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent, which shall be a commercial
bank organized under the laws of the United States or of any State thereof and
having a combined capital and surplus of at least $250,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent such successor Administrative Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under the Loan Documents. If
within 45 days after written notice is given of the retiring Administrative
Agent's resignation or removal under this Section 8.06 no successor
Administrative Agent shall have been appointed and shall have accepted such
appointment, then on such 45th day (i) the retiring Administrative Agent's
resignation or removal shall become effective, (ii) the retiring Administrative
Agent shall thereupon be discharged from its duties and obligations under the
Loan Documents and (iii) the Required Banks shall thereafter perform all duties
of the retiring Administrative Agent under the Loan Documents until such time,
if any, as the Required Banks appoint a successor Administrative Agent as
provided above. After any retiring Agent's
65
resignation or removal hereunder as Agent shall have become effective, the
provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If
Fleet ceases to be a Bank hereunder, it shall be deemed to have resigned as
Documentation Agent and no replacement shall be appointed.
SECTION 8.07 Collateral Matters.
------------------
(a) The Administrative Agent is authorized on behalf of the Banks, without
the necessity of any further notice to or consent from any of the Banks, from
time to time to take any action with respect to any Collateral or Security
Document that may be necessary or as it may deem to be appropriate to perfect,
maintain and protect the security interests in and Liens on the Collateral
granted pursuant to the Security Documents.
(b) The Banks irrevocably authorize the Administrative Agent to release
any security interest in or Lien on the Collateral held by it pursuant to the
Security Documents (i) upon the termination of the Issuing Bank's obligation to
issue Letters of Credit hereunder, the payment in full of the Obligations and
the satisfaction and termination in full of all other Letter of Credit
Outstandings, (ii) that is sold or disposed of as permitted hereunder or any
other Loan Document or to which the requisite number or percentage of Banks have
consented or (iii) otherwise pursuant to and in accordance with the provisions
of any applicable Loan Document. Upon request by the Administrative Agent at any
time, the Banks will confirm in writing the Administrative Agent's authority to
release Collateral pursuant to this subsection (b).
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement or any other Loan Document, nor consent to any departure by any
Loan Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Issuing Bank and the Required Banks (and, in the
case of an amendment, the Parent), and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by all of the Banks (other than (A) any Bank that is, at such
time, a Defaulting Bank, (B) in the case of clause (v) below, any Bank which is
not a Commitment Bank and which is not affected by such amendment, waiver or
consent and (C) in the case of clauses (ii), (iii), (vi) and (vii) below, any
Bank which is not and will not be (and is not and will not be owed any
obligation which is or will be) affected thereby), do any of the following at
any time: (i) waive any of the conditions specified in Section 3.01 or, in the
case of the Effective Date, Section 3.02, (ii) change the number of Banks or the
percentage of (x) the LC Commitment Amounts, (y) the aggregate unpaid principal
amount of the Advances or (z) the aggregate Available Amount of outstanding
Letters of Credit that, in each case, shall be required for the Banks or any of
them to take any action hereunder, (iii) reduce or limit the obligations of any
Account Party under Section 7.01 or release such Account Party or otherwise
limit such Account Party's liability with respect to the Obligations owing to
the Agents and the Banks, (iv) amend this Section 9.01, (v) increase the LC
Commitment Amounts of the Banks, extend the then
66
applicable Expiration Date or subject the Banks to any additional obligations,
(vi) reduce the principal of, or interest on, any reimbursement obligation or
any fees or other amounts payable hereunder, or increase any Bank's LC
Commitment Amount, (vii) postpone any date fixed for any payment of principal
of, or interest on, any reimbursement obligation or any fees or other amounts
payable hereunder, (viii) limit the liability of any Loan Party under any of the
Loan Documents, or (ix) release any of the Collateral if such release would
cause the aggregate Collateral Value to be less than the Letter of Credit
Outstandings; provided further that no amendment, waiver or consent shall,
-------- -------
unless in writing and signed by an Agent in addition to the Banks required above
to take such action, affect the rights or duties of such Agent under this
Agreement or the other Loan Documents.
SECTION 9.02 Notices, Etc. All notices and other communications provided
------------
for hereunder shall be in writing (including telegraphic or telecopy
communication) and mailed, telegraphed, telecopied or delivered, if to any
Account Party, at its address set forth below on the signature pages hereof; if
to any Initial Bank, at its Domestic Lending Office specified opposite its name
on Part 2 of Schedule I hereto; if to any other Bank, at its Domestic Lending
Office specified in the Assignment and Acceptance pursuant to which it became a
Bank; if to First Union (in its capacity as Issuing Bank) at its address at One
South Broad Street, Mail Code PA4928, Philadelphia, Pennsylvania 19107, Attn:
Standby Letter of Credit Department, Telecopy No. (215) 786-8803; and if to the
Administrative Agent, at its address at Charlotte Plaza Building CP-23, 201
South College Street, Charlotte, North Carolina 28288-0680, Attn: Syndication
Agency Services, Telecopy No. (704) 383-0288; or, as to any party, at such other
address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed, telegraphed or
telecopied, be effective when deposited in the mails, delivered to the telegraph
company or transmitted by telecopier, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II, III or VIII
shall not be effective until received by the Administrative Agent. Manual
delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Exhibit hereto to be executed and
delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.
SECTION 9.03 No Waiver; Remedies. No failure on the part of any Bank or any
-------------------
Agent to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.04 Costs and Expenses.
------------------
(a) Each of the Account Parties agrees to pay on demand (i) all reasonable
costs and expenses of the Administrative Agent and of the Issuing Bank in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all due diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of a single
counsel for the Administrative Agent and a single counsel for the Issuing Bank
with respect thereto, with respect to advising the Administrative Agent as to
its rights and responsibilities, or the perfection,
67
protection or preservation of rights or interests, under the Loan Documents,
with respect to negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries arising out of any Default or any events
or circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all reasonable costs and expenses of each
Agent, the Issuing Bank and each Bank in connection with the enforcement of the
Loan Documents (including, without limitation, in connection with the sale of,
collection from, or other realization upon, the Collateral), whether in any
action, suit or litigation, or any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including, without limitation,
the reasonable fees and expenses of counsel for the Administrative Agent, the
Issuing Bank and each Bank with respect thereto).
(b) Each of the Account Parties jointly and severally agrees to indemnify
and hold harmless each Agent, the Arranger, the Issuing Bank, each Bank and each
of their Affiliates and their respective officers, directors, employees, agents
and advisors (each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) this Agreement, the actual or proposed use of the proceeds
of the Advances, the Loan Documents or any of the transactions contemplated
thereby, except to the extent such claim, damage, loss, liability or expense is
found in a final, non-appealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party's gross negligence or willful
misconduct. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 9.04(b) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by any Loan Party, its directors, shareholders or creditors or an Indemnified
Party or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated by the Loan Documents are consummated. Each of the
Account Parties also agrees not to assert any claim against any Agent, the
Arranger, any Bank or any of their Affiliates, or any of their respective
officers, directors, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to the credit facilities provided hereunder, the actual
or proposed use of the proceeds of the Advances or the Letters of Credit, the
Loan Documents or any of the transactions contemplated by the Loan Documents.
(c) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Account Parties contained in Section 2.07 and this Section 9.04 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.
SECTION 9.05 Right of Set-off. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare amounts owing hereunder to be due and payable
pursuant to the provisions of Section 6.01, each Agent and each Bank and each
68
of their respective Affiliates is hereby authorized at any time and from time to
time, to 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 Agent, such Bank
or such Affiliate to or for the credit or the account of any Account Party
against any and all of the Obligations of such Account Party now or hereafter
existing under the Loan Documents, irrespective of whether such Agent or such
Bank shall have made any demand under this Agreement and although such
Obligations may be unmatured. Each Agent and each Bank agrees promptly to notify
each Account Party after any such set-off and application; provided, however,
-------- -------
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Agent and each Bank and their
respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Agent, such Bank and their respective Affiliates may have.
SECTION 9.06 Binding Effect. This Agreement shall become effective when it
--------------
shall have been executed by each Account Party, the Issuing Bank and each Agent
and the Administrative Agent shall have been notified by each Initial Bank that
such Initial Bank has executed it and thereafter shall be binding upon and inure
to the benefit of each Account Party, each Agent, the Issuing Bank and each Bank
and their respective successors and assigns, except that no Account Party shall
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Banks.
SECTION 9.07 Assignments and Participations.
------------------------------
(a) Each Bank may, and so long as no Default shall have occurred and be
continuing, if demanded by any Account Party (following a demand by such Bank
pursuant to Section 2.12) upon at least five Business Days notice to such Bank
and the Administrative Agent, will, assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its LC Commitment Amount, its Letter of
Credit Participating Interest Commitment and the Letter of Credit Advances owing
to it); provided, however, that (i) each such assignment shall be of a uniform,
-------- -------
and not a varying, percentage of all rights and obligations of such Bank
hereunder, except for any non-pro rata assignment made by a Downgraded Bank
after a request by the Issuing Bank pursuant to Section 2.14 (and any subsequent
non-pro rata assignment of the interest so assigned or by the Downgraded Bank)
and any other non-pro rata assignment approved by the Administrative Agent and
any Account Party, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Bank or an Affiliate of any Bank or
an assignment of all of a Bank's rights and obligations under this Agreement,
the aggregate amount of the LC Commitment Amounts being assigned to such
Eligible Assignee pursuant to such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $10,000,000 unless it is an assignment of the entire amount of such
assignor's LC Commitment Amount, (iii) each such assignment shall be to an
Eligible Assignee, (iv) each assignment made as a result of a demand by any
Account Party pursuant to Section 2.12 shall be arranged by such Account Party
after consultation with the Administrative Agent and shall be either an
assignment of all of the rights and obligations of the assigning Bank under this
Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and
69
obligations of the assigning Bank under this Agreement, (v) no Bank shall be
obligated to make any such assignment as a result of a demand by any Account
Party pursuant to Section 2.12 unless and until such Bank shall have received
one or more payments from either such Account Party or other Eligible Assignees
in an aggregate amount at least equal to the aggregate outstanding principal
amount of the Advances made by such Bank, together with accrued interest thereon
to the date of payment of such principal amount and all other amounts payable to
such Bank under this Agreement, (vi) as a result of such assignment, no Account
Party shall be subject to additional amounts under Section 2.06 or 2.08, (vii)
no such assignment shall be permitted without the consent of the Administrative
Agent and, so long as no Default shall have occurred and be continuing, the
Parent (which consents shall not be unreasonably withheld) and (viii) the
parties to each such assignment shall execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with a processing and recordation fee of $2,500.00.
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (i) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank, hereunder and (ii) the
Bank assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than its rights under Sections 2.06, 2.08 and 9.04
to the extent any claim thereunder relates to an event arising prior to such
assignment and any other rights that are expressly provided hereunder to
survive) and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, each Bank
assignor thereunder and each assignee thereunder confirm to and agree with each
other and the other parties thereto and hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, any
Loan Document or any other instrument or document furnished pursuant thereto;
(ii) such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon any Agent, such
assigning Bank 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 action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each
Agent to take such action as agent on
70
its behalf and to exercise such powers and discretion under the Loan Documents
as are delegated to such Agent by the terms hereof and thereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(d) The Administrative Agent, acting for this purpose (but only for this
purpose) as the agent of the Account Parties, shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Banks and the LC Commitment Amount of, and principal amount of
the Advances owing to, each Bank from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Account Parties, the Agents and the Banks shall treat
each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
any Account Party or any Agent or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit A hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Parent and to the parties to such Assignment and Acceptance.
(f) Each Bank may sell participations to one or more Persons (other than
any Loan Party or any of its Affiliates) in or to all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its LC Commitment Amount, its Letter of Credit Participating Interest
Commitment and the Advances owing to it; provided, however, that (i) such Bank's
-------- -------
obligations under this Agreement (including, without limitation, its Letter of
Credit Participating Interest Commitment) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the Account Parties, the Agents and the other Banks
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement and (iv) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of any Loan Document, or any consent to any departure by
any Loan Party therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, reimbursement obligations
or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, postpone any date fixed for any payment of
principal of, or interest on, the reimbursement obligations or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation. Each Bank shall, as agent of the Account Parties solely for the
purposes of this Section, record in book entries maintained by such Bank, the
name and amount of the participating interest of each Person entitled to receive
payments in respect of any participating interests sold pursuant to this
Section.
(g) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.07, disclose to
the assignee or participant or proposed assignee or participant any information
relating to any Account Party furnished to
71
such Bank by or on behalf of any Account Party; provided, however, that, prior
--------
to any such disclosure, the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any Confidential
Information received by it from such Bank.
(h) Notwithstanding any other provision set forth in this Agreement, any
Bank may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it) in favor of any Federal Reserve Bank in accordance with Regulation A of
the Board of Governors of the Federal Reserve System.
SECTION 9.08 Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.
SECTION 9.09 No Liability of the Issuing Bank. Each Account Party assumes
--------------------------------
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any of its officers, directors, employees or agents shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not strictly comply with the
terms of a Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that such Account Party shall have a claim against the Issuing
Bank, and the Issuing Bank shall be liable to such Account Party, to the extent
of any direct, but not consequential, damages suffered by such Account Party
that such Account Party proves were caused by (i) the Issuing Bank's willful
misconduct or gross negligence as determined in a final, non-appealable judgment
by a court of competent jurisdiction in determining whether documents presented
under any Letter of Credit comply with the terms of the Letter of Credit or (ii)
the Issuing Bank's willful failure to make lawful payment under a Letter of
Credit after the presentation to it of a draft and certificates strictly
complying with the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
SECTION 9.10 Confidentiality. Neither any Agent nor any Bank shall disclose
---------------
any Confidential Information to any Person without the consent of the Parent,
other than (a) to such Agent's or such Bank's Affiliates and their officers,
directors, employees, agents and advisors and to actual or prospective Eligible
Assignees and participants, and then only on a confidential basis, (b) as
required by any law, rule or regulation or judicial process, (c) as requested or
required by any state, Federal or foreign authority or examiner regulating such
Bank and (d) to any rating agency when required by it, provided that, prior to
--------
any such disclosure, such rating
72
agency shall undertake to preserve the confidentiality of any Confidential
Information relating to the Loan Parties received by it from such Bank.
SECTION 9.11 Jurisdiction, Etc.
-----------------
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is a party, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the extent permitted by
law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding relating to this Agreement
or any of the other Loan Documents in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is a party in any New York State or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
SECTION 9.12 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
SECTION 9.13 Waiver of Jury Trial. Each of the Account Parties, the Agents
--------------------
and the Banks irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to any of the Loan Documents, the Advances or the
actions of any Agent or any Bank in the negotiation, administration, performance
or enforcement thereof.
SECTION 9.14 Disclosure of Information. Each Account Party agrees and
-------------------------
consents to the Administrative Agent's and the Arranger's disclosure of
information relating to this transaction to Gold Sheets and other similar bank
-----------
trade publications. Such information will consist of deal terms and other
information customarily found in such publications. The Parent shall have the
right to review and approve any such disclosure made by the Administrative Agent
or the Arranger before such disclosure is made (such approval not to be
unreasonably withheld).
[Remainder of page intentionally left blank]
73
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ACE LIMITED
The Common Seal of ACE Limited was hereunto
affixed in the presence of:
________________________________________________
Director
________________________________________________
Secretary
ACE BERMUDA INSURANCE LTD.
The Common Seal of ACE Bermuda Insurance Ltd.
was hereunto affixed in the presence of:
________________________________________________
Director
________________________________________________
Secretary
ACE TEMPEST LIFE REINSURANCE LTD.
The Common Seal of ACE Tempest Life Reinsurance
Ltd. was hereunto affixed in the presence of:
________________________________________________
Director
________________________________________________
Secretary
(signatures continued)
S-1
ACE TEMPEST REINSURANCE LTD.
The Common Seal of ACE Tempest Reinsurance Ltd.
was hereunto affixed in the presence of:
________________________________________________
Director
________________________________________________
Secretary
Address for each Account Party:
The ACE Building
17 Woodbourne Avenue
Hamilton HM08 Bermuda
Telecopy: (441) 296-0087
(signatures continued)
S-2
FIRST UNION NATIONAL BANK, as
Administrative Agent, as Issuing Bank
and as an Initial Bank
By: _________________________________
Title: _________________________________
FLEET NATIONAL BANK, as Documentation
Agent and as an Initial Bank
By: _________________________________
Title: _________________________________
JPMORGAN CHASE BANK, as an Initial Bank
By: _________________________________
Title: _________________________________
THE BANK OF NEW YORK, as an Initial Bank
By: _________________________________
Title: _________________________________
BARCLAYS BANK PLC, as an Initial Bank
By: _________________________________
Title: _________________________________
(signatures continued)
S-3
COMERICA BANK, as an Initial Bank
By: _________________________________
Title: _________________________________
DEUTSCHE BANK AG, NEW YORK BRANCH, as
an Initial Bank
By: _________________________________
Title: _________________________________
By: _________________________________
Title: _________________________________
MELLON BANK, N.A., as an Initial Bank
By: _________________________________
Title: _________________________________
ROYAL BANK OF CANADA, as an Initial Bank
By: _________________________________
Title: _________________________________
BANK ONE, N.A., as an Initial Bank
By: _________________________________
Title: _________________________________
S-4
SCHEDULE I
LC COMMITMENT AMOUNTS
---------------------
First Union National Bank $ 75,000,000
Fleet National Bank $ 65,000,000
JPMorgan Chase Bank $ 65,000,000
The Bank of New York $ 42,500,000
Barclays Bank PLC $ 42,500,000
Comerica Bank $ 42,500,000
Deutsche Bank AG, New York Branch $ 42,500,000
Mellon Bank, N.A. $ 42,500,000
Royal Bank of Canada $ 42,500,000
Bank One, N.A. $ 40,000,000
Total $500,000,000.00
===============
SCHEDULE I - Part 2
DOMESTIC LENDING OFFICES
------------------------
----------------------------------------------------------------------------
First Union National Bank Financial Institutions Group
1339 Chestnut Street, PA 4819
Philadelphia, Pennsylvania 19107
Attn: Joseph DiFrancesco
Telephone: (215) 973-2944
Telecopy: (215) 786-4114
----------------------------------------------------------------------------
Fleet National Bank 777 Main Street
Hartford, Connecticut 06115
Attn: Anson Harris
Telephone: (860) 986-7518
Telecopy: (860) 986-1264
----------------------------------------------------------------------------
JPMorgan Chase Bank Financial Institutions Group
270 Park Avenue, 15/th/ Floor
New York, New York 10017
Attn: Helen Newcomb
Telephone: (212) 270-6260
Telecopy: (212) 270-1511
-----------------------------------------------------------------------------
The Bank of New York Insurance Division
One Wall Street, 17/th/ Floor
New York, New York 10286
Attn: David Trick, VP
Telephone: (212) 635-7273
Telecopy: (212) 809-9520
-----------------------------------------------------------------------------
Barclays Bank PLC P.O. Box 544
1/st/ Floor
54 Lombard Street
London EC3V 9EX England
Attn: Neil Holmes
Telephone: 44 (0) 20 7699 3125
Telecopy: 44 (0) 20 7699 2407
Copies to:
Barclays Capital
GSU, 5 North Colonade
Canary Wharf
London E14 4BB England
Attn: Graham Smart
Telephone: 44 (0) 20 7773 6450
Telecopy: 44 (0) 20 7773 6807
-----------------------------------------------------------------------------
--------------------------------------------------------------------------------
Comerica Bank 500 Woodward Avenue
Detroit, Michigan 48226-3331
Attn: Martin G. Ellis
Telephone: (313) 222-9443
Telecopy: (313) 222-5466
--------------------------------------------------------------------------------
Deutsche Bank AG, New York 31 West 52/nd/ Street Mail Stop NYC01-2402
Branch New York, New York 10019
Attn: Clinton M. Johnson
Telephone: (212) 469-8101
Telecopy: (212) 469-8366
--------------------------------------------------------------------------------
Mellon Bank, N.A. One Mellon Center, Room 4401
Pittsburgh, Pennsylvania 15258
Attn: Karla Maloof
Telephone: (412) 236-4147
Telecopy: (412) 234-8087
--------------------------------------------------------------------------------
Bank One, N.A. 1 Bank One Plaza, Suite IL1-0085
Chicago, Illinois 60670
Attn: Gretchen Roetzer
Telephone: (312) 732-8068
Telecopy: (312) 732-4033
--------------------------------------------------------------------------------
Royal Bank of Canada Royal Bank of Canada, New York Branch
One Liberty Plaza, 3/rd/ Floor
New York, New York 10006-1404
Attn: Manager, Loans Administration
Telephone: (416) 955-6679
Telecopy: (416) 955-6722
with a copy of notices to:
Royal Bank of Canada
One Liberty Plaza, 3/rd/ Floor
New York, New York 10006-1404
Attn: Alexander Birr
Telephone: (212) 428-6404
Telecopy: (914) 696-6717
--------------------------------------------------------------------------------
2
SCHEDULE II
Existing Letters of Credit
1. Letter of Credit No. SM419401P
Beneficiary: UNUM Life Insurance Company of America
Amount: $129,507,168
Effective Date: Dec 14, 2001
SCHEDULE III
Methodology for Calculation of Collateral Values
In order to be included in the calculation of aggregate Collateral Value
(in addition to other requirements set forth in the Reimbursement Agreement and
this Schedule), investments shall satisfy each of the criteria (including as to
rating) under one of the categories listed below. In addition, the following
conditions shall apply:
1. No portion of the Collateral (other than U.S. Government Securities)
consisting of securities of a single issuer shall exceed 10% of the Collateral
Value at any time.
2. No security shall be included in the calculation of aggregate
Collateral Value unless it is listed on a national securities exchange or freely
tradeable at readily established prices in over-the-counter transactions.
3. For purposes of this Schedule and each Collateral Value Report, all
maturities are calculated from the relevant date of determination of the
Collateral Value.
4. For purposes of calculating the average rating of the Collateral
included in the calculation of the aggregate Collateral Value, (a) Moody's
ratings shall be converted to their respective S&P equivalents in accordance
with established practice, and (b) commercial paper rated "A2" shall be deemed
to be rated "A."
---------------------------------------------------------------------------
Category of Investment/Security Eligible Percentage
---------------------------------------------------------------------------
Cash (denominated in U.S. Dollars) 100%
---------------------------------------------------------------------------
Prime bank certificates of deposit issued by
U.S. banks rated Aa3/AA- or better 95%
---------------------------------------------------------------------------
U.S. Government Securities
Maturity 2 years or less 95% of Market
Maturity over 2 years 90% of Market
---------------------------------------------------------------------------
Investment-grade municipal bonds (Rating
Aaa/AAA - Baa3/BBB-)
Maturity 5 years or less 85% of Market
Maturity over 5 years 80% of Market
---------------------------------------------------------------------------
Investment-grade corporate bonds (Rating
Aa3/AA- or better, non-convertible, NYSE-traded)
Maturity 2 years or less 90% of Market
Maturity over 2 years 85% of Market
---------------------------------------------------------------------------
Investment-grade corporate bonds (Rating
A1/A+ to Baa3/BBB-, non-convertible, NYSE-traded)
Maturity 2 years or less 85% of Market
Maturity over 2 years 80% of Market
---------------------------------------------------------------------------
Commercial paper (Rating A1-A2, P1-P2) 85% of Market
---------------------------------------------------------------------------
SCHEDULE 4.01(B)
Subsidiaries
[attached hereto]
EXHIBIT A
Form of Assignment and Acceptance
ASSIGNMENT AND ACCEPTANCE dated as of ____________, 20___ between
________________________ (the "Assignor") and ________________________ (the
--------
"Assignee"), and [consented to and] accepted by First Union National Bank, as
--------
administrative agent (the "Administrative Agent")[, and ACE Limited (the
--------------------
"Parent")].
------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, this Assignment and Acceptance (the "Agreement") relates to the
---------
Reimbursement Agreement dated as of ___________, 2001 among the Parent and other
Account Parties party thereto, the Assignor and the other Banks party thereto,
the Documentation Agent party thereto and the Administrative Agent (as amended
or otherwise modified from time to time, the "Reimbursement Agreement");
-----------------------
WHEREAS, as provided under the Reimbursement Agreement, the Assignor has a
commitment to participate in Letters of Credit and make Letter of Credit
Advances to the Account Parties in an aggregate principal amount at any time
outstanding not to exceed $_______________;
WHEREAS, Letters of Credit with a total amount available for drawing
thereunder of $_______________ are outstanding at the date hereof;
WHEREAS, Letter of Credit Advances made to the Account Parties by the
Assignor under the Reimbursement Agreement in the aggregate principal amount of
$___________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Reimbursement Agreement and the other Loan Documents
in respect of a portion of its LC Commitment Amount thereunder in an amount
equal to $____________ (the "Assigned Amount"), together with a corresponding
---------------
portion of its outstanding Letter of Credit Participating Interest, Letter of
Credit Participating Interest Commitment, LC Participation Obligations, Letter
of Credit Exposure, and Letter of Credit Advances, if any, 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:
1. Definitions. All capitalized terms not otherwise defined herein shall
-----------
have the respective meanings set forth in the Reimbursement Agreement.
2. Assignment. The Assignor hereby assigns and sells to the Assignee all
----------
of the rights of the Assignor under the Reimbursement Agreement and the other
Loan Documents to the extent of the Assigned Amount, and the Assignee hereby
accepts such assignment from the Assignor and assumes all of the obligations of
the Assignor under the Reimbursement Agreement to the extent of the Assigned
Amount, including the outstanding Letter of Credit Participating Interest
Commitment and Letter of Credit Exposure, and the amount of the Letter of Credit
Advances, if any, outstanding at the date hereof. Upon the execution and
delivery hereof by the Assignor, the Assignee[, the Administrative Agent and the
Parent] 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 a Bank under the
Reimbursement Agreement with an LC Commitment Amount (in addition to any LC
Commitment Amount theretofore held by it) equal to the Assigned Amount, and (ii)
the LC Commitment Amount of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor shall be released from its obligations
under 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.
3. Payments. As consideration for the assignment and sale contemplated in
--------
Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof the
amount heretofore agreed between them./1/ It is understood that commitment and
Letter of Credit fees accrued to the date hereof in respect of the Assigned
Amount 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 the
Reimbursement Agreement 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.
4. [Consent of the Administrative Agent and the Parent. Pursuant to
---------------------------------------------------
Section 9.07(a) of the Reimbursement Agreement, this Agreement is conditioned
upon the consent of the Administrative Agent and, so long as no Default has
occurred and is continuing, the Parent. The execution of this Agreement by the
Administrative Agent and, if applicable, the Parent is evidence of this
consent.]
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 the Account Parties or any of
their respective Subsidiaries, or the validity and enforceability of the
obligations of the Account Parties or any of their respective Subsidiaries in
respect of any Loan Document. 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 the Account Parties and their respective Subsidiaries.
___________________________
/1/ Amount should combine the principal amount of any Letter of Credit Advances
made by the Assignor together with accrued interest and breakage compensation,
if any, to be paid by the Assignee, net of any portion of any upfront fee to be
paid by the Assignor to the Assignee. It may be preferable in an appropriate
case to specify these amounts generically or by formula rather than as a fixed
sum.
2
6. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York.
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.
[Remainder of page intentionally left blank.]
3
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: _______________________________
FIRST UNION NATIONAL BANK, as
Administrative Agent
By: _______________________________
Title: ______________________________]
4
SCHEDULE 5.02(A)
Liens
1. Liens securing letters of credit issued by Citibank for the account of
Cigna Europe in an aggregate stated amount not exceeding $16,000,000
(subject to currency fluctuations).
2. Liens securing letters of credit issued by Citibank for the account of
INA(UK) in an aggregate stated amount not exceeding $8,000,000.
3. $70,000,000 of Cigna Overseas Insurance Company investments are
pledged to Domestic Pool companies under a Regulation 114 trust.
4. Lien arising under a Subordination Agreement dated as of October 27,
1998 among ACE US Holdings, Inc., ACE Limited and The Chase Manhattan
Bank encumbering ACE US Holdings, Inc.'s rights under the Subordinated
Loan Agreement dated as of October 27, 1998 among ACE US Holdings,
Inc., ACE Bermuda Insurance Ltd. and United States Trust Company of
New York, as trustee under the Indenture dated October 27, 1998 of ACE
US Holdings, Inc.
5. Liens securing the Second Amendment and Restatement of Letter of
Credit Facility Agreement dated November 21, 2001 among ACE Limited,
ACE Bermuda Insurance Ltd., certain other financial institutions and
Citibank International plc, as Agent and Security Trustee.
EXHIBIT B
Form of Collateral Value Report
______ _____, 200_
First Union National Bank,
as Administrative Agent
Charlotte Plaza Building CP-23
201 South College Street
Charlotte, North Carolina 28288-0680
Attn: Syndication Agency Services
Ladies and Gentlemen:
Reference is made to the Reimbursement Agreement dated as of ___________, 2001
among ACE Limited, ACE Bermuda Insurance Ltd., ACE Tempest Life Reinsurance Ltd.
and ACE Tempest Reinsurance Ltd., as Account Parties, the Banks party thereto,
and First Union National Bank, as Administrative Agent (as amended or otherwise
modified from time to time, the "Reimbursement Agreement"). Terms defined in the
-----------------------
Reimbursement Agreement are, unless otherwise defined herein or the context
otherwise requires, used herein as defined therein.
This Collateral Value Report is delivered pursuant to Section 2.19(b) of the
Reimbursement Agreement. The date of this Collateral Value Report is
_____________, 200__(the "Report Date"). Set forth below is the Collateral Value
-----------
of the Collateral and certain other information required by Section 2.19(b) of
the Reimbursement Agreement as of ______________, 200__ (the "Valuation Date"),
--------------
calculated in accordance with the definition of Collateral Value contained in
the Reimbursement Agreement and the other provisions of the Agreement (including
Schedule III to the Reimbursement Agreement):
[Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------
Amount/ Eligible
Type of Security Market Value Percentage Collateral Value
--------------------------------------------------------------------------------------------------------
Cash Denominated in U.S. Dollars 100%
--------------------------------------------------------------------------------------------------------
Prime bank certificates of deposit issued by U.S. 95%
banks rated Aa3/AA- or better
--------------------------------------------------------------------------------------------------------
U.S. Government and U.S. Government Agency
Obligations
Maturity 2 years or less 95% of Market
Maturity over 2 years 90% of Market
--------------------------------------------------------------------------------------------------------
Investment Grade Municipal Bonds (Rating Aaa-Baa3)
Maturity 5 years or less
Maturity over 5 years 85% of Market
--------------------------------------------------------------------------------------------------------
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------
Amount/ Eligible
Type of Security Market Value Percentage Collateral Value
------------------------------------------------------------------------------------------------------------
Maturity over 5 years 80% of Market
------------------------------------------------------------------------------------------------------------
Investment Grade Corporate Bonds (Rating Aa3 or
better, Non-convertible, NYSE)
Maturity 2 years or less 90% of Market
Maturity over 2 years 85% of Market
------------------------------------------------------------------------------------------------------------
Investment Grade Corporate Bonds (Rating Baa3 to
A1, Non-convertible, NYSE)
Maturity 2 years or less 85% of Market
Maturity over 2 years 80% of Market
------------------------------------------------------------------------------------------------------------
Commercial Paper (Rating A1-A2, P1-P2) 85% of Market
------------------------------------------------------------------------------------------------------------
Total $
------------------------------------------------------------------------------------------------------------
Outstanding Letters of Credit
--------------------------------------------------------------------------------
Unreimbursed
Beneficiary Date Undrawn Amount Drawings
--------------------------------------------------------------------------------
$ $
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total $ $
--------------------------------------------------------------------------------
Ratio of Aggregate Collateral Value to Letter of Credit Outstandings: __________
The Parent certifies that the foregoing information correctly sets forth the
Collateral Value (in the aggregate and for each category of Collateral) and the
Letter of Credit Outstandings as of the Valuation Date, that the Letter of
Credit Outstandings do not exceed the aggregate Collateral Value as of the
Valuation Date, and that nothing has come to the attention of the undersigned to
cause the undersigned to believe that the Letter of Credit Outstandings exceed
the aggregate Collateral Value as of the Report Date.
ACE LIMITED
By: _______________________________
Name: _______________________________
Title: _______________________________
2
EXHIBIT E
Form of Letter of Instruction
_______ ____, 200_
First Union National Bank,
as Administrative Agent
Charlotte Plaza Building CP-23
201 South College Street
Charlotte, North Carolina 28288-0680
Attn: Syndication Agency Services
Ladies and Gentlemen:
Reference is made to the Reimbursement Agreement, dated as of ___________, 2001,
among ACE Limited, ACE Bermuda Insurance Ltd., ACE Tempest Life Reinsurance Ltd.
and ACE Tempest Reinsurance Ltd., as Account Parties, the Banks party thereto,
and First Union National Bank, as Administrative Agent (as amended or otherwise
modified from time to time, the "Reimbursement Agreement"). Terms defined in the
-----------------------
Reimbursement Agreement are, unless otherwise defined herein or the context
otherwise requires, used herein as defined therein.
We refer to the notification received from the Administrative Agent pursuant to
Section 2.03(a) of the Reimbursement Agreement that requires us to make on the
date of this letter a reimbursement payment (the "Required Payment") with
----------------
respect to a drawing under a Letter of Credit issued under the Reimbursement
Agreement. Pursuant to this notification and inasmuch as the Required Payment
has not been made, we hereby irrevocably authorize and direct you to liquidate
and receive the proceeds of Collateral in an amount equal to the Required
Payment plus interest thereon as provided in the Reimbursement Agreement.
We further irrevocably authorize and direct you to deliver this letter to the
Custodian or any other Person (and we agree that they may rely hereon and are
hereby irrevocably authorized and instructed to act in reliance hereon without
further consent or authorization from us or any other Account Party) as you may
deem to be appropriate to give effect to the authorization and direction
contained herein.
Very truly yours,
for and on behalf of
_________________________
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/19/02 | | 12 |
| Filed on: | | 3/18/02 |
| For Period End: | | 12/31/01 | | 27 | | | | | 4, 4/A, 5, 5/A, S-8 |
| | 12/20/01 | | 1 | | 5 | | | 8-K |
| | 12/14/01 | | 19 |
| | 11/26/01 | | 12 |
| | 11/21/01 | | 92 |
| | 9/30/01 | | 48 | | | | | 10-Q, 4 |
| | 12/31/00 | | 46 | | 48 | | | 10-K, 4, 5, 5/A |
| | 9/12/00 | | 55 |
| | 5/8/00 | | 55 |
| | 3/31/00 | | 60 | | | | | 10-Q, 4, 424B5 |
| | 6/30/99 | | 55 | | | | | 10-Q |
| | 10/27/98 | | 92 |
| List all Filings |
↑Top
Filing Submission 0000950131-02-000922 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Mon., Apr. 29, 12:07:31.2pm ET 