UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to __________________
Commission file number: 34-0-26512
RenaissanceRe Holdings Ltd.
(Exact name of registrant as specified in its charter)
Bermuda 98-013-8020
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Renaissance House
8-12 East Broadway
Pembroke, Bermuda HM 19
(Address of principal executive offices) (Zip Code)
(441) 295-4513
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No
--- ---
The number of outstanding shares of RenaissanceRe Holding Ltd.'s common stock,
par value US $1.00 per share as of June 30, 1998 was 22,264,485.
Total number of pages in this report: 25
RenaissanceRe Holdings Ltd.
INDEX TO FORM 10-Q
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets as of June 30, 1998 3
(Unaudited) and December 31, 1997
Unaudited Consolidated Statements of Operations for 4
the six months ended June 30, 1998 and 1997
Unaudited Consolidated Statements of Changes in Shareholders' 5
Equity for the six months ended June 30, 1998 and 1997
Unaudited Consolidated Statements of Cash Flows 6
for the six months ended June 30, 1998 and 1997
Notes to Unaudited Consolidated Financial Statements 7
Item II -- Management's Discussion and Analysis of 10
Results of Operations and Financial Condition
Part II -- Other Information 18
Item 1 - Legal Proceedings
Item 2 - Changes in Securities and Use of Proceeds
Item 3 - Defaults Upon Senior Securities
Item 4 - Submission of Matters to a Vote of Security Holders
Item 5 - Other Information
Item 6 - Exhibits and Reports on Form 8-K
Signature - RenaissanceRe Holdings Ltd. 25
Item 1 - Financial Statements
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Balance Sheets
(United States Dollars)
(in thousands, except per share amounts)
As at
---------------------------------------------------
June 30, 1998 December 31, 1997
------------------- ----------------------
Assets (Unaudited)
Fixed maturity investments available for sale, at fair value
(Amortized cost $809,836 and $712,946 at June 30, 1998 and
December 31, 1997, respectively) $ 804,558 $ 700,665
Equity securities at fair value (cost $5,808 and $24,229
at June 30, 1998 and December 31, 1997, respectively) 5,808 26,372
Short term investments 31,605 9,501
Cash and cash equivalents 87,823 122,929
------------ ----------
Total investments and cash 929,794 859,467
Premiums receivable 126,686 56,568
Ceded reinsurance balances 51,877 17,454
Losses recoverable 74,169 -
Accrued investment income 10,314 12,762
Deferred acquisition costs 18,496 5,739
Other assets 47,034 8,759
------------ ----------
Total assets $ 1,258,370 $ 960,749
============ ==========
Liabilities, Minority Interests and Shareholders' Equity
Liabilities
Reserve for claims and claim adjustment expenses $ 202,839 $ 110,037
Reserve for unearned premiums 144,997 57,008
Bank loans payable 85,000 50,000
Reinsurance balances payable 73,104 21,778
Other 11,921 9,541
------------ ----------
Total liabilities 517,861 248,364
------------ ----------
Minority Interest - Company obligated mandatorily redeemable
capital securities of a subsidiary trust holding solely junior
subordinated debentures of the Company 100,000 100,000
Minority interest - Glencoe - 13,682
Shareholders' Equity
Common shares 22,264 22,441
Additional paid-in capital 43,790 52,481
Unearned share grant compensation (9,607) (4,731)
Accumulated other comprehensive income (net unrealized
depreciation on investments) (5,278) (10,155)
Retained earnings 589,340 538,667
------------ ----------
Total shareholders' equity 640,509 598,703
------------ ----------
Total liabilities, minority interests, and
shareholders' equity $ 1,258,370 $ 960,749
============ ==========
Book value per Common Share $ 28.77 $ 26.68
============ ==========
Common Shares outstanding 22,264 22,441
============ ==========
The accompanying notes are an integral part of these financial statements
-3-
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Operations
(United States Dollars)
(in thousands, except per share amounts)
(Unaudited)
Quarters Ended Year-to-Date
----------------------------------------- ---------------------------------------
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------------ ----------------- --------------- ------------------
Revenues
Gross Premiums Written $ 45,851 $ 34,804 $ 164,996 $ 155,163
======== ======== ========= =========
Net premiums written $ 5,162 $ 20,576 $ 117,614 $ 138,224
Decrease (increase) in unearned premiums 41,879 30,887 (24,476) (30,860)
-------- -------- --------- ---------
Net premiums earned 47,041 51,463 93,138 107,364
Net investment income 12,629 12,216 26,258 24,341
Net foreign exchange gains (losses) (827) 479 (851) (1,164)
Other income 347 -- 347 --
Net realized losses on investments (2,163) (302) (927) (136)
-------- -------- --------- ---------
Total revenues 57,027 63,856 117,965 130,405
-------- -------- --------- ---------
Expenses
Claims and claim adjustment expenses incurred 10,294 11,106 18,170 25,344
Acquisition expenses 5,436 5,937 11,828 12,315
Operating expenses 7,827 6,099 14,202 12,017
Corporate expenses 812 605 1,602 2,562
Interest expense 794 769 1,580 2,702
-------- -------- --------- ---------
Total expenses 25,163 24,516 47,382 54,940
-------- -------- --------- ---------
Income before minority interest and taxes 31,864 39,340 70,583 75,465
Minority Interest - Company Obligated Mandatorily
Redeemable Capital Securities of a Subsidiary
Trust holding solely Junior Subordinated
Debentures of the Company 2,159 2,183 4,270 2,728
Minority interest - Glencoe 283 152 705 295
-------- -------- --------- ---------
Income before taxes 29,422 37,005 65,608 72,442
Income tax expense 884 -- 1,396 --
-------- -------- --------- ---------
Net income $ 28,538 $ 37,005 $ 64,212 $ 72,442
======== ======== ========= =========
Earnings per Common Share - basic $ 1.28 $ 1.63 $ 2.88 $ 3.19
Earnings per Common Share - diluted $ 1.26 $ 1.59 $ 2.83 $ 3.12
Average shares outstanding - basic 22,237 22,700 22,267 22,740
Average shares outstanding - diluted 22,728 23,201 22,718 23,248
Claims and claim expense ratio 21.9% 21.6% 19.6% 23.6%
Expense ratio 28.2% 23.4% 27.9% 22.7%
-------- -------- --------- ---------
Combined ratio 50.1% 45.0% 47.5% 46.3%
======== ======== ========= =========
The accompanying notes are an integral part of these financial statements
-4-
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
For the six months ended June 30, 1998 and 1997
(United States Dollars)
(in thousands, except per share amounts)
(Unaudited)
1998 1997
------------------------ ------------------------
Retained earnings
Balance -- January 1 $ 538,667 $ 422,061
Net income 64,212 $ 64,212 72,442 $72,442
Dividends paid (13,539) (11,438)
---------- ----------
Balance -- June 30 589,340 483,065
---------- ----------
Accumulated other comprehensive income
Balance -- January 1 (10,155) 1,577
Net unrealized gains on securities, net of
adjustment (see disclosure) 4,877 4,877 5,384 5,384
--------- --------
Comprehensive income $ 69,089 $77,826
---------- ========= ---------- ========
Balance -- June 30 (5,278) 6,961
---------- ----------
Unearned share grant compensation & loans to officers
Balance -- January 1 (4,731) (3,868)
Share grants awarded (5,964) -
Amortization and / or interest on loans 1,088 (122)
---------- ----------
Balance -- June 30 (9,607) (3,990)
---------- ----------
Common Shares
Balance -- January 1 22,441 23,531
Restricted stock granted and exercise of options 173 172
Issuance of shares - 174
Repurchase of shares (350) (1,513)
---------- ----------
Balance -- June 30 22,264 22,364
---------- ----------
Paid-in Capital
Balance -- January 1 52,481 102,902
Restricted stock granted and exercise of options 6,606 (2,226)
Issuance of shares - 5,764
Repurchase of shares (15,297) (51,945)
---------- ----------
Balance -- June 30 43,790 54,495
---------- ----------
Total Equity $ 640,509 $ 562,895
========== ==========
Disclosure regarding net unrealized gains
Net unrealized holding gains arising during period $ 5,804 $ 5,520
Less: net realized gains included in net income (927) (136)
---------- ----------
Net unrealized gains on securities $ 4,877 $ 5,384
========== ==========
The accompanying notes are an integral part of these financial statements.
-5-
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
(United States Dollars in thousands)
(Unaudited)
Year to date
-----------------------------------
June 30, 1998 June 30, 1997
------------- -------------
Cash Flows from Operating Activities
Net income $ 64,212 $ 72,442
Adjustments to reconcile net income to
cash provided by operating activities
Amortization and depreciation 2,540 520
Realized investment gains 927 136
Minority share of income 706 295
Change in:
Reinsurance balances, net (24,292) (36,099)
Deferred acquisition costs (7,140) (4,651)
Reserve for claims and claim adjustment expenses, net 4,235 756
Reserve for unearned premiums, net 28,366 38,191
Other (25) 1,679
--------- ----------
Cash provided by operating activities 69,529 73,269
--------- ----------
Cash flows from investing activities
Proceeds from sale of fixed income investments 340,078 278,100
Purchase of investments available for sale (385,811) (377,281)
Proceeds from sale of equity investments 26,148 -
Net purchases of short-term investments (18,312) -
Purchase of minority interest's share in Glencoe (13,682) -
Payment for puchase of Nobel, net of cash acquired (58,869) -
--------- ----------
Cash used in investing activities (110,448) (99,181)
--------- ----------
Cash flows from financing activities
Proceeds from issuance of capital securities - 100,000
Proceeds from (repayment of) bank loan 35,000 (100,000)
Dividends paid (13,539) (11,438)
Purchase of Common Shares (15,647) (53,458)
--------- ----------
Cash provided by (used in) financing activities 5,814 (64,896)
--------- ----------
Net decrease in cash and cash equivalents (35,105) (90,808)
Cash and cash equivalents, beginning of period 122,928 198,982
--------- ----------
Cash and cash equivalents, end of period $ 87,823 $ 108,174
========= ==========
The accompanying notes are an integral part of these financial statements
-6-
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
1. The consolidated financial statements have been prepared on the basis
of United States generally accepted accounting principles ("GAAP") for
interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by GAAP for complete
financial statements. The consolidated financial statements include the
accounts of RenaissanceRe Holdings Ltd. ("RenaissanceRe") and its
subsidiaries, which are collectively referred to herein as the
"Company". In the opinion of the Company's management, these financial
statements reflect all the normal recurring adjustments necessary for a
fair presentation of the Company's financial position at June 30, 1998
and December 31, 1997, and its results of operations, changes in
shareholders' equity and cash flows for the six months ended June 30,
1998 and 1997. These consolidated financial statements should be read
in conjunction with the 1997 audited consolidated financial statements
and related notes thereto. Certain comparative information has been
reclassified to conform to current presentation. Because of the
seasonality of the Company's business the results of operations for any
interim period will not necessarily be indicative of results of
operations for the full fiscal year.
2. Significant Accounting Policies
a) Earnings per share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per Share.
SFAS No. 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. All
earnings per share amounts for all periods have been presented, and
where necessary, restated to conform to the requirements of SFAS
No.128.
b) Comprehensive Income
As of January 1, 1998 the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 requires an enterprise to (a)
classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately in the equity section of a statement of
financial position. SFAS No. 130 requires net unrealized appreciation
(depreciation) on the Company's available for sale investments, which
were previously reported separately in shareholders' equity, to be
included in other comprehensive income. Prior year financial statements
have been reclassified to conform to the 1998 presentation. The
adoption of this accounting statement had no impact on the Company's
net income or shareholders' equity. Currently, other than the net
unrealized gain on the Company's investments available for sale, there
are no other Company balances which are required to be included as a
component of other comprehensive income.
-7-
3. Earnings per share
The following table sets forth the computation of basic and diluted
earnings per share.
------------------------------------------------------------- ------------------------------------ -------
Quarter ended June 30,
1998 1997
------------------------------------------------------------- --------------------- ----------------------
(in thousands of U.S. dollars except share and per share data)
------------------------------------------------------------- --------------------- ----------------------
Numerator:
Net income $ 28,538 $ 37,005
===================== ======================
Denominator:
Denominator for basic earnings per share -
weighted average shares 22,236,500 22,700,224
Per share equivalents of employee stock
options and restricted shares 491,732 501,075
--------------------- ----------------------
Denominator for diluted earnings per share -
adjusted weighted average shares and
assumed conversions 22,728,232 23,201,299
===================== ======================
Basic earnings per share $1.28 $1.63
Diluted earnings per share $1.26 $1.59
------------------------------------------------------------- ------------------------------------ -------
Six months to June 30,
1998 1997
------------------------------------------------------------- --------------------- ----------------------
(in thousands of U.S. dollars except share and per share data)
------------------------------------------------------------- --------------------- ----------------------
Numerator:
Net income $ 64,212 $ 72,442
===================== ======================
Denominator:
Denominator for basic earnings per share -
weighted average shares 22,267,217 22,739,843
Per share equivalents of employee stock
options and restricted shares 450,774 508,162
--------------------- ----------------------
Denominator for diluted earnings per share -
adjusted weighted average shares and
assumed conversions 22,717,991 23,248,005
===================== ======================
Basic earnings per share $2.88 $3.19
Diluted earnings per share $2.83 $3.12
4. The Board of Directors of the Company declared, and the Company paid,
dividends of $.30 per share to shareholders of record on each of May 20
and February 18, 1998. On August 5, 1998, the Board of Directors of the
Company declared a dividend of $.30 per share payable on September 2,
1998 to shareholders of record on August 19, 1998.
-8-
5. Interest paid was $1.6 million for the six month period ended June 30,
1998 and $2.5 for the same period in 1997. On March 1, 1998 the Company
paid a semi-annual dividend on the Capital Securities of $4.3 million.
6. In January 1998, the Company began to provide personal lines coverages
through DeSoto Insurance Company ("DeSoto"), a wholly owned subsidiary
of Glencoe. DeSoto is a special purpose Florida homeowners insurance
company that is licensed to assume and renew homeowner policies from
the Florida JUA, a state sponsored insurance company.
7. On June 25, 1998 the Company completed its acquisition of the U.S.
operating subsidiaries of Nobel Insurance Limited, a Bermuda company
("Nobel Limited"), for approximately $54.1 million. The Company also
provided Nobel Limited with a limited recourse loan of $8.9 million to
support Nobel Limited's liquidation. The Company estimates that Nobel
Limited, after liquidating its liabilities, will have the ability to
repay $7.9 million of this loan. The gross assets and gross liabilities
purchased in the transaction were $188.1 million and $155.9 million. In
connection with the transactions the Company recognized approximately
$23.9 million of goodwill, which included approximately $1 million of
loan forgiveness and $1 million in costs associated with the
transaction.
Also, as part of the transaction, the Company's U.S. holding company
borrowed $35 million from a syndicate of banks. This five year term
loan has mandatory repayment provisions in years two through five. The
banks also provided a $15 million revolving credit facility from which
the Company borrowed $4 million on July 13, 1998.
The principal U.S. operating subsidiaries of Nobel Limited, Nobel
Insurance Company and IAS/CatCrew Inc., will continue to conduct
business under their current names as subsidiaries of Renaissance U.S.
Holdings, Inc. The principal businesses of Nobel Insurance Company,
which is admitted in 50 states, are the service and underwriting of
personal lines property coverage for low-value dwellings and commercial
casualty risks for specialized industries. Contemporaneously with the
Nobel acquisition, Nobel Insurance Company entered into a retrospective
reinsurance agreement with respect to its casualty business with
Inter-Ocean Reinsurance Company Ltd. IAS/CatCrew Inc. provides
professional loss adjustment services to property insurance companies.
Effective April 20, 1998, Nobel Insurance Company sold the renewal
rights to its surety business for $3.5 million plus an additional
contingent fee of up to an additional $3.5 million. The Company does
not currently anticipate receiving any portion of this contingent fee.
8. In May 1998 the Company announced a $25 million share repurchase
program. Through June 30, 1998 the Company had repurchased 350,000
shares under this program at total cost of $15.6 million.
9. On June 5, 1998, Glencoe Insurance Ltd. completed the repurchase from
Underwriters Reinsurance Company of its 20 percent interest in Glencoe.
The purchase price was $15.2 million. RenaissanceRe now owns 100% of
the outstanding stock of Glencoe.
-9-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
For the quarter ended June 30, 1998 compared to the quarter ended June 30, 1997
For the quarter ended June 30, 1998, net income available to common shareholders
was $28.5 million or $1.26 per share, compared to $37.0 million or $1.59 per
share for the same quarter in 1997.
Gross premiums written for the second quarter of 1998 increased to $45.8 million
compared to gross written premiums of $34.8 million for the same quarter of
1997. The 31.6 percent increase in gross premiums written was the result of a
75.7 percent increase in premiums relating to new business, a 12.9 percent
decrease relating to the Company not renewing certain coverages and a 31.2
percent decrease related to changes in coverage, participation level and pricing
on certain renewed business. The quarterly increase in premiums related to new
business is primarily the result of new business written by Renaissance
Reinsurance.
During 1998, the Company continued to purchase reinsurance to reduce its
exposure to certain losses. During the second quarter of 1998, ceded premiums
written were $40.7 million compared with $14.2 million for the same quarter in
1997. This higher level of ceded reinsurance reduces net premiums earned but
management believes that purchases of reinsurance reduces the Company's level of
risk.
The table below sets forth the Company's combined ratio and components thereof
for the quarters ended June 30, 1998 and 1997.
Quarters Ended
--------------
June 30,
--------
1998 1997
---- ----
Loss ratio 21.9% 21.6%
Expense ratio 28.2% 23.4%
----- -----
Combined ratio 50.1% 45.0%
===== =====
Claims and claim adjustment expenses incurred for the quarter ended June 30,
1998 were $10.3 million or 21.9 percent of net premiums earned. In comparison,
claims and claim adjustment expenses for the quarter ended June 30, 1997 were
$11.1 million or 21.6 percent of net premiums earned.
Underwriting expenses are comprised of acquisition expenses and operational
expenses. Acquisition expenses were $5.4 million for the quarter ended June 30,
1998 and $5.9 million in the same quarter of 1997. Operating expenses for the
second quarter of 1998 increased to $7.8 million compared with $6.1 million for
the same quarter of 1997. The primary cause for the increase in operating
expenses was the continued development of the Company's primary operations.
-10-
Net investment income, excluding realized investment gains and losses, increased
to $12.6 million for the second quarter of 1998, compared to $12.2 million for
the same period in 1997.
Interest expense and minority interest for the quarters ended June 30, 1998 and
1997 increased to $3.2 million from $3.1 million.
For the six months ended June 30, 1998 compared to the six months ended
June 30, 1997
For the six months ended June 30, 1998, net income available to common
shareholders was $64.2 million or $2.83 per share, compared to $72.4 million or
$3.12 per share for the same six months in 1997.
Gross premiums written for the first six months of 1998 increased 6.3 percent to
$165.0 million compared to gross written premiums of $155.2 million for the same
six months of 1997. The 6.3 percent increase in written premiums was the result
of a 33.8 percent increase in premiums relating to new business, an 18.2 percent
decrease relating to the Company not renewing certain coverages and a 9.3
percent decrease related to changes in coverage, participation level and pricing
on certain renewed business.
During 1998, the Company continued to purchase reinsurance to reduce its
exposure to certain losses. During the first six months of 1998, ceded premiums
written were $47.4 million compared with $16.9 million for the same period in
1997. This higher level of ceded reinsurance reduces net premiums earned but
management believes that purchases of reinsurance significantly reduces the
company's level of risk.
The table below sets forth the Company's combined ratio and components thereof
for the six months ended June 30, 1998 and 1997.
Six months ended
----------------
June 30,
--------
1998 1997
---- ----
Loss ratio 19.6% 23.6%
Expense ratio 27.9% 22.7%
----- -----
Combined ratio 47.5% 46.3%
===== =====
Claims and claim adjustment expenses incurred for the six months ended June 30,
1998 were $18.2 million or 19.6 percent of net premiums earned. In comparison,
claims and claim adjustment expenses for the six months ended June 30, 1997 were
$25.3 million or 23.6 percent of net premiums earned.
Underwriting expenses are comprised of acquisition expenses and operational
expenses. Acquisition expenses were $11.8 million for the six months ended June
30, 1998 and $12.3 million in the same six months of 1997. Operating expenses
for the first six months of 1998 increased to $14.2 million compared with $12.0
million for the same six months of 1997. The primary cause for the increase in
operating expenses was the continued development of the Company's primary
operations.
-11-
Net investment income, excluding realized investment gains and losses, increased
for the first six months of 1998 to $26.3 million, compared to $24.3 million for
the same period in 1997. The
increase in net investment income was largely the result of higher average
invested assets which is primarily related to cash flows from operations.
Interest expense and minority interest for the six months ended June 30, 1998
increased to $6.6 million from $5.7 million for the same period in 1997. The
increase was related to increased minority interest earnings of Glencoe and the
accrual on the $100.0 million of Capital Securities that were issued during the
first quarter of 1997.
FINANCIAL CONDITION
General
The Company provides reinsurance and insurance where risk of natural catastrophe
represents a significant component of the overall exposure. The Company's
results depend to a large extent on the frequency and severity of catastrophic
events, and the concentration and coverage offered to clients impacted thereby.
In addition, the Company writes other lines of insurance and reinsurance on a
limited basis, and is actively exploring new opportunities.
Liquidity and Capital Requirements
As a holding company, RenaissanceRe relies on invested assets, investment
income, cash dividends and permitted payments from its subsidiaries to make
principal payments, interest payments, cash distributions on outstanding
obligations and pay quarterly dividends, if any, to RenaissanceRe's
shareholders. The payment of dividends by its subsidiaries to RenaissanceRe is,
under certain circumstances, limited under Bermuda insurance law. The Bermuda
Insurance Act 1978, amendments thereto and related regulations of Bermuda (the
"Act"), requires the subsidiaries to maintain certain measures of solvency and
liquidity. As at June 30, 1998 the statutory capital and surplus of the
Company's subsidiaries was $640.0 million, and the amount required to be
maintained was $170.5 million.
The Company's operating subsidiaries have historically produced sufficient cash
flows to meet expected claims payments and operational expenses and to provide
dividend payments to RenaissanceRe. The subsidiaries also maintain a
concentration of their investments in high quality liquid securities, which
management believes will provide sufficient liquidity to meet claims payments
should the need arise.
During the second quarter of 1998, Glencoe purchased the 20 percent minority
interest in Glencoe held by Underwriters Re for approximately $15.2 million. As
a result of the purchase of Glencoe's shares from Underwriters Re, Glencoe is
now wholly-owned by RenaissanceRe.
Under the terms of its agreement to acquire the operating subsidiaries of Nobel
Insurance Limited, the Company paid $54.1 million in cash to consummate the
purchase, and provided approximately $8.9 million of limited recourse financing,
in exchange for a promissory note from Nobel Insurance Limited, to enable Nobel
Insurance Limited to support certain of its obligations in the liquidation of
its remaining operations. As part of the transaction the Company's U.S. holding
company borrowed $35 million from a syndicate of banks. This five year term loan
has
-12-
mandatory repayment provisions in years two through five. The banks also
provided a $15 million revolving credit facility from which the Company borrowed
$4 million on July 13, 1998. Both the loan and the credit facility bear interest
at a spread above LIBOR and are guaranteed by RenaissanceRe.
The Company anticipates that its primary insurance operations, including
Glencoe, DeSoto and Nobel, will become an increasingly important element of the
Company over time. The Company currently believes that internally generated
capital will be sufficient to support its reinsurance and insurance businesses,
however external financing may be utilized to finance significant transactions.
From time to time, the Company may consider opportunistic diversification into
new ventures, either through organic growth or the acquisition of other
companies or books of business. In evaluating such new ventures, the Company
seeks an attractive return on equity, the ability to develop or capitalize on a
competitive advantage and opportunities that will not detract from its core
reinsurance operations. Accordingly, the Company regularly reviews strategic
transaction opportunities and periodically engages in discussions regarding
possible transactions. However, currently the Company has no definitive
agreements with respect to any material transaction..
Cash flows from operating activities for the first six months of 1998 resulted
principally from premium and investment income, net of paid losses, acquisition
costs and underwriting expenses. Cash flows from operations in the first six
months of 1998 were $69.5 million, compared to $73.2 million for the same period
in 1997. The Company has produced cash flows from operations in the first six
months of 1998, and the full years of 1997 and 1996 significantly in excess of
its commitments. To the extent that capital is not utilized in the Company's
reinsurance business, the Company will consider using such capital to invest in
new opportunities or will consider returning such capital to its shareholders.
Because of the potential high severity and low frequency of losses on the
coverages written by the Company, and the seasonality of the Company's business,
it is not possible to accurately predict the Company's future cash flows from
operating activities. As a consequence, cash flows from operating activities may
fluctuate, perhaps significantly, between individual quarters and years.
The Company has assumed risk through catastrophe and weather linked securities
and derivative instruments. The Company may in the future also utilize other
derivatives. To date the Company has not experienced any losses from such
securities or derivatives.
Reserves
The Company's policy is to establish claim reserves for the settlement costs of
all claims and claim adjustment expenses incurred by the Company when an event
occurs. During the quarter ended June 30, 1998 the Company incurred claims of
$10.3 million and paid losses of $6.6 million. Due to the high severity and low
frequency of losses related to the property catastrophe insurance and
reinsurance business, there can be no assurance that the Company will continue
to experience this level of losses.
Claim reserves represent estimates, including actuarial and statistical
projections at a given point in time, of an insurer's or reinsurer's
expectations of the ultimate settlement and administration costs of claims
incurred, and it is possible that the ultimate liability may exceed or be less
than
-13-
such estimates. Such estimates are not precise in that, among other things, they
are based on predictions of future developments and estimates of future trends
in claim severity and frequency and other variable factors such as inflation.
During the claim settlement period, it often becomes necessary to refine and
adjust the estimates of liability on a claim either upward or downward. Even
after such adjustments, ultimate liability may exceed or be less than the
revised estimates.
Reserves for claims and claim expenses may include reserves for unpaid reported
claims and claim expenses and reserves for estimated losses that have been
incurred but not reported to the Company. Such reserves are estimated by
management based upon reports received from ceding companies, as supplemented by
the Company's own estimates of reserves on such reported losses as well as
reserves for losses that are incurred but not reported. The Company's reserve
estimates are continually reviewed and, in accordance with GAAP, as adjustments
to these reserves become necessary, such adjustments are reflected in current
operations.
Capital Resources & Shareholders' Equity
The total capital resources of the Company as at June 30, 1998 and December 31,
1997 was as follows:
- --------------------------------------------------------------------------------------
June 30, December 31,
(in thousands) 1998 1997
- --------------------------------------------------------------------------------------
Term loan payable $ 35,000 $ -
Revolving Credit Facility-- borrowed 50,000 50,000
Revolving Credit Facility-- unborrowed 165,000 150,000
Minority interest-- Company obligated mandatorily
redeemable capital securities of a subsidiary trust 100,000 100,000
Shareholders' Equity 640,509 598,703
- --------------------------------------------------------------------------------------
TOTAL CAPITAL RESOURCES $990,509 $898,703
======================================================================================
During the first six months of 1998, shareholders' equity increased by $41.8
million, from $598.7 million at December 31, 1997 to $640.5 million at June 30,
1998. The significant components of the increase included net income from
continuing operations of $64.2 million, partially offset by the payment of
dividends of $13.5 million and the purchase of common stock of $15.6 million.
In May 1998 the Company announced a $25 million share repurchase program.
Through June 30, 1998 the Company had repurchased 350,000 shares under this
program at total cost of $15.6 million.
Investments
The table below shows the aggregate amounts of investments available for sale,
equity securities and cash and cash equivalents comprising the Company's
portfolio of invested assets:
-14-
- --------------------------------------------------------------------------------------------
June 30, December 31
(in thousands) 1998 1997
- --------------------------------------------------------------------------------------------
Investments available for sale, at fair value $ 804,558 $ 700,665
Equity securities, at fair value 5,808 26,372
Cash and cash equivalents 119,428 132,430
- --------------------------------------------------------------------------------------------
TOTAL INVESTED ASSETS $ 929,794 $ 859,467
============================================================================================
The growth in the Company's portfolio of invested assets for the six months
ended June 30, 1998 primarily resulted from net cash provided by operating
activities of $69.5 million.
The Company's current investment guidelines call for the invested asset
portfolio, including cash and cash equivalents, to have at least an average AA
rating as measured by Standard & Poor's Ratings Group. At June 30, 1998, the
fixed income portfolio had a dollar weighted average rating of AA, an average
duration of 2.6 years and an average yield to maturity of 6.0 percent, after
investment expenses.
All fixed income securities in the Company's investment portfolio are classified
as securities available for sale and are carried at fair value. Any unrealized
gains or losses as a result of changes in fair value over the period such
investments are held are not reflected in the Company's statement of operations,
but rather are reflected in accumulated other comprehensive income in the
consolidated statement of shareholders' equity, in accordance with SFAS No. 115
and 130.
As at June 30, 1998 the Company held investments and cash totaling $929.8
million with net unrealized depreciation of $5.3 million. The Company's
investment portfolio is subject to the risks of declines in realizable value.
The Company attempts to mitigate this risk through the diversification and
active management of its portfolio.
At June 30, 1998, $7.6 million of cash and cash equivalents were invested in
currencies other than the U.S. dollar, which represented less than 1.0 percent
of the Company's invested assets.
Effects of Inflation
The potential exists, after a catastrophe loss, for the development of
inflationary pressures in a local or regional economy. The anticipated effects
on the Company are implicitly considered in the Company's catastrophe loss
models. The effects of inflation are also considered in pricing and in
estimating reserves for unpaid claims and claim adjustment expenses. The actual
effects of this post event inflation on the results of the Company cannot be
accurately known until claims are ultimately settled.
Year 2000
Certain computer programs and/or software may recognize a date using "00" as the
year 1900 rather than the year 2000, which could result in miscalculations or
system failures. The Company has completed an assessment of its business
applications and computer systems, and believes that
-15-
all critical business applications and systems will function properly with
respect to dates in the year 2000 and thereafter.
The Company is in the process of evaluating its potential exposures from the
non-compliance, if any, of its vendors' and customers' systems with the Year
2000. There can be no assurance that the systems of its vendors and customers,
on which the Company relies for supporting information, will be timely converted
and would not have an effect on the Company's business operations.
Currently, none of the Company's reinsurance or insurance policies specifically
provides coverage for Year 2000 losses, and the Company does not intend to
provide coverage for these losses. However, in the future, it is possible that
the Company may elect to provide such coverage, or that certain of the Company's
policies could be held to cover such losses. If so, there can be no assurance
that such losses would not have a material adverse effect on the Company's
future results of operations.
The Company anticipates completing the Year 2000 evaluation prior to December
31, 1998 and it is anticipated that any future costs associated with the Year
2000 project will not be material and accordingly not have an adverse effect on
the future results of operations.
Current Outlook
It is anticipated that the competitive pressures that have existed since 1995
will continue through 1998. The Company anticipates that these pressures will
continue to suppress the growth in premiums from property catastrophe
reinsurance contracts. However, although no assurance can be given, the Company
believes that opportunities in certain select markets will continue to exist
which, because of the Company's competitive advantages, including its
technological capabilities and its relationships with leading brokers and ceding
companies, will enable the Company to find additional opportunities in the
property catastrophe reinsurance business that otherwise would not be available.
The Company has entered the primary insurance business, focusing particularly on
catastrophe exposed business, with a view to leveraging the risk assessment
skills of the core reinsurance business. Through Nobel, the Company's business
activities now also include liability insurance. In addition, the Company from
time to time considers other new business opportunities unrelated to its
business in catastrophe exposed insurance and reinsurance.
Note on Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by use of terms such as "believes," "anticipates," "intends,"
or "expects." These forward-looking statements relate, among other things, to
the plans and objectives of the Company for future operations. In light of the
risks and uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be considered as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved. Numerous factors could cause the
-16-
Company's actual results to differ materially from those in the forward-looking
statements, including the following: (i) the occurrence of catastrophic events
with a frequency or severity exceeding the Company's estimates; (ii) a decrease
in the level of demand for property catastrophe reinsurance, or increased
competition owing to increased capacity of property catastrophe reinsurers;
(iii) any lowering or loss of one of the financial or claims-paying ratings of
the Company or one or more of its subsidiaries; (iv) actions of competitors; (v)
loss of services of any one of the Company's key executive officers; (vi) the
passage of federal or state legislation subjecting Renaissance Reinsurance to
supervision or regulation in the United States; (vii) challenges by insurance
regulators in the United States to Renaissance Reinsurance's claim of exemption
from insurance regulation under the current laws; (viii) changes in economic
conditions, including currency rate conditions; or (ix) a contention by the
United States Internal Revenue Service that the Company or Renaissance
Reinsurance is engaged in the conduct of a trade or business within the U.S. The
foregoing review of important factors should not be construed as exhaustive; the
Company undertakes no obligation to release publicly the results of any future
revisions it may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
-17-
Part II -- OTHER INFORMATION
Item 1 -- Legal Proceedings
None
Item 2 -- Changes in Securities and Use of Proceeds
None
Item 3 -- Defaults Upon Senior Securities
None
Item 4 -- Submission of Matters to a Vote of Security Holders:
(a) The registrant's 1998 Annual General Meeting of Shareholders was
held on May 5, 1998.
(b) Proxies were solicited by Registrant's management pursuant to
Regulation 14A under the Securities Exchange Act of 1934; there was no
solicitation in opposition to management's nominees as listed in the proxy
statement. Each of the Directors was re-elected to the Board.
(c) The following matters were voted upon and approved at the Annual
General Meeting with the voting results as indicated:
1. To elect eleven directors of the Company to serve for the terms
indicated and until their successors are duly elected and
qualified, as follows: (x) four of the eleven directors to serve
until the Company's 1999 annual general meeting of shareholders;
(y) three of the eleven directors to serve until the Company's
2000 annual general meeting of shareholders; and (z) four of the
eleven directors to serve until the Company's 2001 annual
general meeting of shareholders.
Nominee Votes For Withheld
------- --------- --------
Arthur S. Bahr 18,590,490 2,962,783
Thomas A. Cooper 18,590,490 2,962,783
Edmund B. Greene 18,589,990 2,963,283
Daniel Hale 18,590,090 2,963,183
Gerald L. Igou 18,590,090 2,963,183
Kewsong Lee 18,589,990 2,963,283
Howard H. Newman 18,589,990 2,963,283
Scott E. Pardee 18,590,490 2,962,783
James N. Stanard 18,590,490 2,962,783
John C. Sweeney 18,589,990 2,963,283
David A. Tanner 18,589,990 2,963,283
2. To amend the Company's Bye-Laws to provide for a classified
Board of Directors.
-18-
Votes For Against Withheld
--------- ------- --------
12,288,851 4,849,718 4,414,704
3. To amend the Company's Bye-Laws to provide that Directors may be
removed only for cause upon the affirmative vote of the holders
of not less than 66-2/3% of the voting rights attached to all
issued and outstanding capital shares of the Company entitled to
vote thereon.
Votes For Against Withheld
--------- ------- --------
11,936,773 5,201,234 4,415,266
4. To amend the Company's Bye-Laws to fix the size of the Board at
eleven directors and to authorize the Board, at its discretion,
to expand the size of the Board to twelve directors and to fill
any additional position so created.
Votes For Against Withheld
--------- ------- --------
16,875,540 1,794,430 2,883,303
5. To amend the Company's Bye-Laws to provide that shareholders of
record may nominate persons for election as director at an
annual or special general meeting of shareholders only if prior
written notice signed by no less than 20 shareholders holding in
the aggregate not less than 10% of the outstanding paid up share
capital of the Company stating such shareholders' intent to make
such nomination has been given to the Secretary of the Company:
(a) in the case of an annual general meeting, not less than 60
days nor more than 90 days prior to the anniversary date of the
immediately preceding annual general meeting of shareholders;
and (b) in the case of a special general meeting called for the
purpose of electing directors, not later than the close of
business on the tenth day following the day on which notice of
the date of the special general meeting was mailed or public
disclosure of the date of the special general meeting was made,
whichever first occurs.
Votes For Against Withheld
--------- ------- --------
12,588,366 4,551,809 4,413,098
6. To amend the Company's Bye-Laws to provide that business may be
properly introduced by the shareholders at an annual general
meeting where such business is not brought by or at the
direction of the Board, in addition to any other applicable
requirements, only if written notice thereof containing certain
prescribed information concerning such proposal is deposited
with the Secretary of the Company by shareholders representing
at least one-twentieth of the Company's outstanding voting
rights or constituting not less than 100 persons at least six
weeks prior to the date of the annual general meeting whichever
first occurs.
Votes For Against Withheld
--------- ------- --------
12,551,585 4,587,968 4,413,720
-19-
7. To amend the Company's Bye-Laws to provide that not less than 60
nor more than 90 days notice shall be given of a special general
meeting properly requisitioned by shareholders holding at least
10% of the outstanding paid up share capital of the Company.
Votes For Against Withheld
--------- ------- --------
12,800,686 4,337,634 4,414,953
8. To amend the Company's Bye-Laws to prohibit holders of the
Company's capital shares, other than certain exempted persons,
from obtaining or exercising more than 9.9% of the voting rights
attached to all issued and outstanding capital shares of the
Company.
Votes For Against Withheld
--------- ------- --------
12,245,618 4,895,595 4,412,060
9. To amend the Company's Bye-Laws to require the affirmative vote
of at least 66-2/3% of the outstanding voting rights attached to
all issued and outstanding capital shares of the Company
entitled to vote thereon to amend, repeal or adopt any provision
inconsistent with any of Proposals 2, 3, 4, 5, 6, 7 or 8 and the
amendment contemplated by this Proposal.
Votes For Against Withheld
--------- ------- --------
11,165,498 5,975,680 4,412,095
10. To amend the Company's Memorandum of Association to increase the
Company's authorized capital to an aggregate of 325,000,000
shares, consisting of 225,000,000 Common Shares and 100,000,000
Preference Shares, in order to facilitate the potential adoption
by the Board in the future of a shareholder rights plan.
Votes For Against Withheld
--------- ------- --------
13,472,537 5,197,333 2,883,403
11. To amend the RenaissanceRe Holdings Ltd. Amended and Restated
Non-Employee Directors Stock Plan (the "Directors Plan") which
would (i) increase the number of authorized shares available for
issuance thereunder from 100,000 Common Shares to 200,000 Common
Shares, and (ii) provide that any shares which are tendered to
or withheld by the Company under the Directors Plan in
connection with the exercise of options granted thereunder or
the payment of related withholding taxes shall again become
available for grant thereunder.
Votes For Against Withheld
--------- ------- --------
18,374,051 290,694 2,888,528
12. To appoint independent auditors of the Company for the 1998
fiscal year to serve until the Company's 1999 annual general
meeting of shareholders and to refer to the Board the
determination of the auditors' remuneration.
-20-
Votes For Against Withheld
--------- ------- --------
18,663,299 7,917 2,882,057
13. In accordance with the Company's Bye-Laws, to vote on a proposal
as the holder of all outstanding capital shares of Renaissance
Reinsurance Ltd. ("Reinsurance"), to elect eleven directors of
Reinsurance to serve for the terms indicated and until their
successors are duly elected and qualified, as follows: (x) four
of the eleven directors to serve until the Reinsurance 1999
annual general meeting of shareholders; (y) three of the eleven
directors to serve until the Reinsurance 2000 annual general
meeting of shareholders; and (z) four of the eleven directors to
serve until the Reinsurance 2001 annual general meeting of
shareholders.
Nominee Votes For Withheld
------- --------- --------
Arthur S. Bahr 18,590,490 2,962,783
Thomas A. Cooper 18,590,490 2,962,783
Edmund B. Greene 18,589,990 2,963,283
Daniel Hale 18,590,090 2,963,183
Gerald L. Igou 18,590,090 2,963,183
Kewsong Lee 18,589,990 2,963,283
Howard H. Newman 18,589,990 2,963,283
Scott E. Pardee 18,590,490 2,962,783
James N. Stanard 18,590,490 2,962,783
John C. Sweeney 18,589,990 2,963,283
David A. Tanner 18,589,990 2,963,283
14. In accordance with the Company's Bye-Laws, to vote on a proposal
as the holder of all outstanding capital shares of Reinsurance,
to amend the Reinsurance Bye-Laws to provide for a classified
board of directors of Reinsurance (the "Reinsurance Board").
Votes For Against Withheld
--------- ------- --------
12,338,711 4,800,143 4,414,419
15. In accordance with the Company's Bye-Laws, as the holder of all
outstanding capital shares of Reinsurance, to amend the
Reinsurance Bye-Laws to fix the size of the Reinsurance Board at
eleven directors and to authorize the Reinsurance Board, at its
discretion, to expand its size to twelve directors and to fill
any additional position so created.
Votes For Against Withheld
--------- ------- --------
16,696,465 1,971,805 2,885,003
16. In accordance with the Company's Bye-Laws, as the holder of all
outstanding capital shares of Reinsurance, to appoint
independent auditors of Reinsurance for the 1998 fiscal year to
serve until the 1999 annual general meeting of shareholders of
Reinsurance and to refer to the Reinsurance Board the
determination of the auditors' remuneration.
Votes For Against Withheld
--------- ------- --------
18,660,824 8,867 2,883,582
-21-
17. RESOLVED, in accordance with the Company's Bye-Laws, to vote on
a proposal to amend the Memorandum of Association of Reinsurance
to increase the minimum issued and fully paid share capital of
Reinsurance to $1 million.
Votes For Against Withheld
--------- ------- --------
18,484,754 176,297 2,892,222
Item 5. Other Information
Pursuant to recent amendments to the rules relating to proxy statements
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shareholders of the Company are hereby notified that any
shareholder proposal not included in the Company's proxy materials for
its 1999 Annual Meeting of Shareholders (the "Annual Meeting") in
accordance with Rule 14a-8 under the Exchange Act but subsequently or
otherwise proposed for presentment at the Annual Meeting will be
considered untimely for the purposes of Rules 14a-4 and 14a-5 under the
Exchange Act if notice thereof is received by the Company (i) with
respect to the election of directors, after March 6, 1999 and (ii) with
respect to any other matter, after March 21, 1999. Management proxies
will be authorized to exercise discretionary voting authority with
respect to any shareholder proposal not included in the Company's proxy
materials for the Annual Meeting unless (a) the Company receives notice
of such proposal by March 21, 1999, and (b) the conditions set forth in
Rule 14a-4(c)(2)(i)-(iii) under the Exchange Act are met.
The Company's Bye-laws provide that, in addition to any other
applicable requirements, in order for a resolution to be properly moved
by shareholders in accordance with the Bermuda Companies Act and the
Bye-laws at an annual general meeting of shareholders where such
business is not brought by or at the direction of the Board, such
resolution may be introduced by such shareholders at such meeting only
if prior written notice thereof is given by such shareholders to the
Secretary of the Company at the Company's registered office setting
forth as to each matter such shareholders propose to bring before the
annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such
business at the annual meeting; (ii) the name and record address of
such shareholder; (iii) the class or series and number of shares of
capital stock of the Company which are owned beneficially or of record
by such shareholder; (iv) a description of all arrangements or
understandings between such shareholder and any other person (including
his or her name and address) in connection with the proposal of such
business by such shareholder and any material interest of such
shareholder in such business; and (v) a representation that such
shareholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting. The Chairman of an
annual general meeting may, if the facts warrant, determine and declare
that any business was not properly brought before the meeting and such
business will not be transacted.
With respect to the election of directors, the Company's Bye-laws
provide that the only persons who shall be eligible for appointment or
election as a director of the Company at any general meeting of the
Company other than persons nominated by the Board shall be persons for
whom a written notice of nomination signed by not less than twenty
shareholders of the Company holding in the aggregate not less than 10%
of the outstanding paid up share capital of the Company at that time
has been delivered to the
-22-
registered office of the Company for the attention of the Secretary not
less than sixty days prior to the scheduled date of such general
meeting or any adjournment thereof. A shareholder's notice proposing a
director for nomination must set forth (x) as to each person whom the
shareholder proposes to nominate for election as a director: (i) the
name, age, business address and residence address of the person; (ii)
the principal occupation or employment of the person; (iii) the class
or series and number of shares of capital stock of the Company which
are owned beneficially or of record by the person; and (iv) any other
information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the
"Proxy Filings"); and (y) as to the shareholder giving the notice: (i)
the name and record address of such shareholder; (ii) the class or
series and number of shares of capital stock of the Company which are
owned beneficially or of record by such shareholder; (iii) a
description of all arrangements or understandings between such
shareholder and each proposed nominee and any other person (including
his name and address) pursuant to which the nomination(s) are to be
made by such shareholder; (iv) a representation that such shareholder
intends to appear in person or by proxy at the meeting to nominate the
persons named in its notice; and (v) any other information relating to
such shareholder that would be required to be disclosed in a Proxy
Filing. Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a director
if elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing
procedure.
Item 6 -- Exhibits and Reports on Form 8-K
a. Exhibits:
5.1 Amended and Restated Bye-laws of the Company
10.1 Credit Agreement, dated as of June 24, 1998, among
Renaissance U.S. Holdings, Inc., as Borrower,
Various Financial Institutions, as Lenders, Bank of
America National Trust and Savings Association, as
Administrative Agent, and BancAmerica Robertson
Stephens, as Arranger.
10.2 Guaranty, dated as of June 24, 1998, among
RenaissanceRe Holdings, Ltd., as Guarantor, and
Bank of America National Trust & Savings
Association.
10.3 Second Amendment Agreement, dated as of June 15,
1998, among RenaissanceRe Holdings Ltd., the
Lenders identified therein and Bank of America
National Trust and Savings Association, as
Administrative Agent for the Lenders.
10.4 Third Amended and Restated Employment Agreement,
dated as of June 3, 1998, between Renaissance
Reinsurance Ltd. and James N. Stanard.
21.1 List of Subsidiaries of RenaissanceRe Holdings Ltd.
-23-
27 Financial Data Schedule
b. Current Reports on Form 8-K:
None.
-24-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
RenaissanceRe Holdings Ltd.
Date: August 14, 1998
By: /s/ John M. Lummis
------------------
John M. Lummis
Senior Vice President and
Chief Financial Officer
-25-
AMENDED AND RESTATED
B Y E - L A W S
of
RENAISSANCERE HOLDINGS LTD.
INTERPRETATION
1. Interpretation
(a) In these Bye-laws the following words and expressions shall, where not
inconsistent with the context, have the following meanings respectively:
(i) "Act" means the Companies Act 1981 as amended from time to
time;
(ii) "Affiliate" means any person or entity, directly or
indirectly, controlling, controlled by or under common control
with any such person or entity.
(iii) "Alternate Director" means an alternate Director;
(iv) "Auditor" includes any individual or partnership;
(v) "Board" means the Board of Directors appointed or elected
pursuant to these Bye-laws and acting by resolution in
accordance with the Act and these Bye-laws or the Directors
present at a meeting of Directors at which there is a quorum;
(vi) "Common Shares" means the common shares of the Company par
value US $1.00 per share;
(vii) "Company" means the company for which these Bye-laws are
approved and confirmed;
(viii) "Director" means a director of the Company and shall, include
an Alternate Director;
(ix) "General Meeting" means any annual or special general meeting
of the Members;
(x) "Member" means the person registered in the Register of
Members as the holder of shares
in the Company and, when two or more persons are so registered
as joint holders of shares, means the person whose name stands
first in the Register of Members as one of such joint holders
or all of such persons as the context so requires;
(xi) "notice" means written notice as further defined in these
Bye-laws unless otherwise specifically stated;
(xii) "Person" means an individual, partnership, joint-stock
company, corporation, trust or unincorporated organization,
and a government or agency or political subdivision thereof;
(xiii) "Officer" means any person appointed by the Board to hold an
office in the Company;
(xiv) "Register of Directors and Officers" means the Register of
Directors and Officers referred to in Bye-law 28;
(xv) "Register of Members" means the Register of Members referred
to in Bye-law 58; and
(xvi) "Secretary" means the person appointed to perform any or all
the duties of secretary of the Company and includes any deputy
or assistant secretary.
(b) In these Bye-laws, where not inconsistent with the context:
(i) words denoting the plural number include the singular number
and vice versa;
(ii) words denoting a particular gender shall include all and any
genders;
(iii) words importing persons include companies, associations or
bodies of persons whether corporate or not;
(iv) the word:-
(A) "may" shall be construed as permissive;
(B) "shall" shall be construed as imperative; and
(v) unless otherwise provided herein words or expressions defined
in the Act shall bear the same meaning in these Bye-laws.
-2-
(c) Expressions referring to writing or written shall, unless the contrary
intention appears, include facsimile, printing, lithography, photography and
other modes of representing words in a visible form.
(d) Headings used in these Bye-laws are for convenience only and are not
to be used or relied upon in the construction hereof.
BOARD OF DIRECTORS
2. Board of Directors
(a) The business of the Company shall be managed and conducted by the
Board.
3. Management of the Company
(a) In managing the business of the Company, the Board may exercise all
such powers of the Company as are not, by statute or by these Bye-laws, required
to be exercised by the Company in General Meeting subject, nevertheless, to
these Bye-laws, the provisions of any statute and to such regulations as may be
prescribed by the Company in General Meeting.
(b) No regulation or alteration to these Bye-laws made by the Company in
General Meeting shall invalidate any prior act of the Board which would have
been valid if that regulation or alteration had not been made.
(c) The Board may procure that the Company pays all expenses incurred in
promoting and incorporating the Company.
4. Power to appoint managing director or chief executive officer
The Board may from time to time appoint one or more Directors to the
office of managing director or chief executive officer of the Company who shall,
subject to the control of the Board, supervise and administer all of the general
business and affairs of the Company.
5. Power to appoint manager
The Board may appoint a person to act as manager of the Company's day to
day business and may entrust to and confer upon such manager such powers and
duties as it deems appropriate for the transaction or conduct of such business.
6. Power to authorize specific actions
The Board may from time to time and at any time authorize any
Director or Officer to act on behalf of the Company
-3-
for any specific purpose and in connection therewith to execute any agreement,
document or instrument on behalf of the Company.
7. Power to appoint attorney
The Board may from time to time and at any time by power of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Board, to be an attorney of the Company for such purposes
and with such powers, authorities and discretions (not exceeding those vested in
or exercisable by the Board) and for such period and subject to such conditions
as it may think fit and any such power of attorney may contain such provisions
for the protection and convenience of persons dealing with any such attorney as
the Board may think fit and may also authorize any such attorney to sub-delegate
all or any of the powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorized under the seal of the Company, execute any
deed or instrument under such attorney's personal seal with the same effect as
the affixation of the seal of the Company.
8. Power to delegate to a committee
(a) The Board shall appoint an Executive Committee of the Board which
shall have the power of the Board between meetings of the Board. The Executive
Committee shall consist of at least two and not more than four Directors. The
Executive Committee shall have the authority to oversee the general business and
affairs of the Company along with whatever additional authority the Board may
grant as necessary for the management of the Company.
(b) The Board may delegate any of its powers, authorities and discretion
to such other committees as it deems appropriate, each such committee to consist
of no fewer than two persons (including persons who are not Directors). Any
committee so formed shall, in the exercise of the powers, authorities and
discretion so delegated, conform to any regulations which may be imposed upon it
by the Board.
9. Power to appoint and dismiss employees
The Board may appoint, suspend or remove any manager, secretary, clerk,
agent or employee of the Company and may fix their remuneration and determine
their duties.
10. Power to borrow and charge property
The Board may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital, or any
part thereof, and may issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of the
Company or any third party.
-4-
11. Power to purchase shares of the Company
Subject to the provisions of Section 42A of the Act, the Board may
exercise all the powers of the Company to purchase all or any part of its own
shares.
12. Election of Directors
(a) The business of the Company shall be managed and conducted by a Board
of Directors consisting of eleven Directors who shall be elected or appointed at
the annual general meetings of the Company; provided, however, that a majority
of the Board may determine, in its discretion, to expand the size of the Board
to twelve directors. At the annual general meeting when this Bye-law becomes
effective, the persons nominated to be elected or appointed as Directors shall
be divided into three classes of approximately equal size, designated Class I,
Class II and Class III, each consisting initially of such Directors as the Board
shall determine; the term of office of those Directors in Class I to expire at
the annual general meeting next following such meeting, the term of office of
those Directors in Class II to expire at the second annual general meeting
following such meeting, and the term of office of those Directors in Class III
to expire at the third annual general meeting following such meeting. At each
annual general meeting held after such classification and election, Directors
shall be elected or appointed for a full three-year term, as the case may be, to
succeed those whose terms expire at such meeting. Each Director shall hold
office for the term for which he is elected and until his successor is
appointed. The shareholders may, at any general meeting, authorize the Board to
fill any vacancy on the Board unfilled at a general meeting.
(b) The only persons who shall be eligible for appointment or election as
a Director in accordance with Bye-law 12(a) at any general meeting of the
Company shall be persons either (i) for whom a written notice of nomination
signed by not less than twenty Members holding in the aggregate not less than
10% of the outstanding paid up share capital of the Company at that time has
been delivered to the registered office of the Company for the attention of the
Secretary not less than sixty days prior to the scheduled date of such general
meeting or any adjournment thereof, or (ii) who have been approved for such
purpose by the Board and identified in the Notice of such general meeting or by
way of note or other document sent to the Members not less than five days prior
to the scheduled date of such general meeting. A shareholder's notice pursuant
to (i) above shall set forth (x) as to each person whom the shareholder proposes
to nominate for election as a director: (i) the name, age, business address and
residence address of the person; (ii) the principal occupation or employment of
the person; (iii) the class or series and number of shares of capital stock of
the Company which are owned beneficially or of record by the person; and (iv)
any other information relating to the person
-5-
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder (the "Proxy Filings"); and (y) as to the
shareholder giving the notice: (i) the name and record address of such
shareholder; (ii) the class or series and number of shares of capital stock of
the Company which are owned beneficially or of record by such shareholder; (iii)
a description of all arrangements or understandings between such shareholder and
each proposed nominee and any other person (including his name and address)
pursuant to which the nomination(s) are to be made by such shareholder; (iv) a
representation that such shareholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice; and (v) any other
information relating to such shareholder that would be required to be disclosed
in a Proxy Filing. Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a director if
elected. The chairman of the meeting may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure.
13. Defects in appointment of Directors
All acts done bona fide by any meeting of the Board or by a committee of
the Board or by any person acting as a Director shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
was qualified to be a Director.
14. Alternate Directors
(a) Any General Meeting of the Company may elect a person or persons to
act as a Director in the alternative to any one or more of the Directors of the
Company or may authorize the Board to appoint such Alternate Directors. Any
person so appointed shall have all the rights and powers of the Director or
Directors for whom such person is appointed in the alternative provided that
such person shall not be counted more than once in determining whether or not a
quorum is present.
(b) An Alternate Director shall be entitled to receive notice of all
meetings of the Board and to attend and vote at any such meeting at which a
Director for whom such Alternate Director was appointed in the alternative is
not personally present and generally to perform at such meeting all the
functions of such Director for whom such Alternate Director was appointed.
(c) An Alternate Director shall cease to be such if the Director for whom
such Alternate Director was appointed ceases for any reason to be a Director but
may be re-appointed by
-6-
the Board as alternate to the person appointed to fill the vacancy in accordance
with these Bye-laws.
15. Removal of Directors
(a) The Members shall not be entitled to remove a Director other than for
cause.
(b) Subject to subparagraph (a) of this Bye-law, the Members may, at any
special general meeting convened and held in accordance with these Bye-laws,
upon the affirmative vote of the holders of not less than 66-2/3% of the voting
rights attached to all issued and outstanding capital shares of the Company,
remove a Director for cause provided that the notice of any such meeting
convened for the purpose of removing a Director shall contain a statement of the
intention so to do and be served on such Director not less than 60 days before
the meeting and at such meeting such Director shall be entitled to be heard on
the motion for such Director's removal.
(c) A vacancy on the Board created by the removal of a Director under the
provisions of subparagraph (b) of this Bye-law may be filled by the Members at
the meeting at which such Director is removed. A Director so appointed shall
hold office until the expiration of the term of the Director so removed or until
such new Director's successor is elected or appointed or such new Director's
office is otherwise vacated and, in the absence of such election or appointment,
the Members may authorize the Board to fill any vacancy.
16. Vacancies on the Board
(a) The Board shall have the power from time to time and at any time to
appoint any person as a Director to fill a vacancy on the Board occurring as the
result of the death, disability, disqualification or resignation of any Director
and to appoint an Alternate Director to any Director so appointed. A Director so
appointed shall hold office until the annual general meeting at which such
Director's predecessor's term would have expired or until such Director's
successor is elected or appointed or such Director's office is otherwise
vacated.
(b) The Board may act notwithstanding any vacancy in its number but, if
and so long as its number is reduced below the number fixed by these Bye-laws as
the quorum necessary for the transaction of business at meetings of the Board,
the continuing Directors or Director may act for the purpose of (i) summoning a
General Meeting of the Company or (ii) preserving the assets of the Company.
(c) The office of Director shall be vacated if the Director:
(i) is prohibited from being a Director by law;
-7-
(ii) is or becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(iii) is or becomes of unsound mind or dies;
(iv) resigns her or his office by notice in writing to the
Company.
17. Notice of meetings of the Board
(a) A Director may, and the Secretary on the requisition of a Director
shall, at any time summon a meeting of the Board.
(b) Notice of a meeting of the Board shall be deemed to be duly given to a
Director if it is given to such Director verbally in person or by telephone or
otherwise communicated or sent to such Director by post, cable, telex, board,
facsimile or other mode of representing words in a legible and non-transitory
form at such Director's last known address or any other address given by such
Director to the Company for this purpose.
18. Quorum at meetings of the Board
The quorum necessary for the transaction of business at a meeting of the
Board shall be two Directors.
19. Meetings of the Board
(a) The Board may meet for the transaction of business, adjourn and
otherwise regulate its meetings as it sees fit.
(b) Directors may participate in any meeting of the Board by means of such
telephone, electronic or other communication facilities as permit all persons
participating in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting, except that Directors may not participate in any
meeting of the Board while present in the United States of America or its
territories.
(c) A resolution put to the vote at a meeting of the Board shall be
carried by the affirmative votes of a majority of the votes cast and in the case
of an equality of votes the resolution shall fail.
20. Unanimous written resolutions
A resolution in writing signed by all the Directors or, for the avoidance
of doubt, their respective Alternate Directors, if any, which may be in
counterparts, shall be as valid as if it had been passed at a meeting of the
Board duly called and
-8-
constituted, such resolution to be effective on the date on which the last
Director or such Director's alternate signs the resolution.
21. Contracts and disclosure of Directors' interests
(a) Any Director, or any Director's firm, partner or any company with whom
any Director is associated, may act in a professional capacity for the Company
and such Director or such Director's firm, partner or such company shall be
entitled to remuneration for professional services as if such Director were not
a Director, provided that nothing herein contained shall authorize a Director or
Director's firm, partner or such company to act as Auditor of the Company.
(b) A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the nature of
such interest as required by the Act.
(c) Following a declaration being made pursuant to this Bye-law, the
approval of a majority of disinterested Directors (as defined below) shall be
required prior to the Company entering into any transaction with a Member or an
Affiliate of any Member. For purposes of this Bye-law 21(c), a Director shall be
deemed to be disinterested in a transaction provided such Director, any entity
employing such Director and any Affiliate of such entity, is neither a party to
such transaction nor will receive any benefit as a result of such transaction
other than by virtue of his or its rights as a Member.
22. Remuneration of Directors
The remuneration, (if any) of the Directors shall be determined by the
Board and shall be deemed to accrue from day to day. The Directors may also be
paid all travel, hotel and other expenses properly incurred by them in attending
and returning from meetings of the Board, any committee appointed by the Board,
General Meetings of the Company, or in connection with the business of the
Company or their duties as Directors generally.
OFFICERS
23. Officers of the Company
The Officers of the Company shall consist of a President, one or more Vice
Presidents, a Secretary and such additional Officers as the Board may from time
to time determine all of whom shall be deemed to be Officers for the purposes of
these Bye-laws.
24. Appointment of Officers
-9-
(a) The Board shall, as soon as possible after the statutory meeting and
after each annual General Meeting elect one of its number to be President of the
Company and another of its number to be Vice President.
(b) The Secretary and additional Officers, if any, shall be appointed by
the Board from time to time.
25. Remuneration of Officers
The Officers shall receive such remuneration as the Board may from time to
time determine in accordance with their employment contracts or otherwise.
26. Duties of Officers
The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them by
the Board from time to time.
27. Chairperson of meetings
Unless otherwise agreed by a majority of those attending and entitled to
attend and vote thereat, the President shall act as chairperson at all meetings
of the Members and of the Board at which such person is present. In the absence
of the President, a Vice President, if present, shall act as chairperson and in
their absence, a chairperson shall be appointed or elected by those present at
the meeting and entitled to vote.
28. Register of Directors and Officers
(a) The Board shall cause to be kept in one or more books at its
registered office a Register of Directors and Officers and shall enter therein
the following particulars with respect to each Director and the President, each
Vice President and the Secretary, that is to say:
(i) first name and surname; and
(ii) address.
(b) The Board shall, within the period of fourteen days from the
occurrence of:
(i) any change among its Directors and in the President, any Vice
President or Secretary; or
(ii) any change in the particulars contained in the Register of
Directors and Officers, cause to be entered on the Register of
Directors and Officers the particulars of such change and the
date on which such change occurred.
-10-
(c) The Register of Directors and Officers shall be open to inspection at
the office of the Company on every business day, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours in each
business day be allowed for inspection.
MINUTES
29. Obligations of Board to keep minutes
The Board shall cause minutes to be duly entered in books provided for the
purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the Board
and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of General Meetings of the
Members, meetings of the Board, meetings of managers and meetings of
committees appointed by the Board.
INDEMNITY
30. Indemnification of Directors and Officers of the Company
The Directors, Secretary and other Officers of the Company and the
liquidator or trustees (if any) acting in relation to any of the affairs of the
Company and every one of them, and their heirs, executors and administrators,
shall be indemnified and secured harmless out of the assets of the Company from
and against all actions, costs, charges, losses, damages and expenses which they
or any of them, their heirs, executors or administrators, shall or may incur or
sustain by or by reason of any act done, concurred in or omitted in or about the
execution of their duty, or supposed duty, or in their respective offices or
trusts, and none of them shall be answerable for the acts, receipts, neglects or
defaults of the others of them or for joining in any receipts for the sake of
conformity, or for any bankers or other persons with whom any moneys or effects
belonging to the Company shall or may be lodged or deposited for safe custody,
or for insufficiency or deficiency of any security upon which any moneys of or
belonging to the Company shall be placed out on or invested, or for any other
loss, misfortune or damage which may happen in the execution of their respective
offices or trusts, or in relation thereto, PROVIDED THAT this indemnity shall
not extend to any matter in respect of any willful negligence, willful default,
fraud or dishonesty which may attach to any of said persons.
-11-
31. Waiver of claim by Member
Each Member agrees to waive any claim or right of action such Member might
have, whether individually or by or in the right of the Company, against any
Director or Officer on account of any action taken by such Director or Officer,
or the failure of such Director or Officer to take any action in the performance
of his duties with or for the Company, PROVIDED THAT such waiver shall not
extend to any matter in respect of any willful negligence, willful default,
fraud or dishonesty which may attach to such Director or Officer.
MEETINGS
32. Notice of annual General Meeting
(a) The annual General Meeting of the Company shall be held in each year
other than the year of incorporation at such time and place outside the United
States or its territories as the President or any two Directors or any Director
and the Secretary or the Board shall appoint. At least 5 days' notice of such
meeting shall be given to each Member stating the date, place and time at which
the meeting is to be held, that the election of Directors will take place
thereat, and as far as practicable, the other business to be conducted at the
meeting.
(b) Notwithstanding any other provisions of these Bye-laws, in addition to
any other applicable requirements, in order for a resolution to be properly
moved by shareholders in accordance with the Act and these Bye-laws at an annual
general meeting of shareholders where such business is not brought by or at the
direction of the Board, such resolution may be introduced by such shareholders
at such meeting only if prior written notice thereof is given by such
shareholders to the Secretary of the Company at the Company's registered office
setting forth as to each matter such shareholders propose to bring before the
annual meeting: (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting; (ii) the name and record address of such shareholder; (iii) the
class or series and number of shares of capital stock of the Company which are
owned beneficially or of record by such shareholder; (iv) a description of all
arrangements or understandings between such shareholder and any other person
(including his or her name and address) in connection with the proposal of such
business by such shareholder and any material interest of such shareholder in
such business; and (v) a representation that such shareholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting. The Chairman of an annual general meeting may, if the facts warrant,
determine and declare that any business was not properly brought before the
meeting and such business will not be transacted.
-12-
33. Notice of Special General Meeting
The President or any two Directors or any Director and the Secretary or
the Board may convene a special General Meeting of the Company whenever in their
judgment such a meeting is necessary, upon not less than 5 days' notice which
shall state the time, place and the general nature of the business to be
considered at the meeting.
34. Accidental omission of notice of General Meeting
The accidental omission to give notice of a General Meeting to, or the
non-receipt of notice of a General Meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.
35. Meeting called on requisition of Members
Notwithstanding anything herein, the Board shall, on the requisition of
Members holding at the date of the deposit of the requisition not less than
one-tenth of such of the paid-up share capital of the Company as at the date of
the deposit carries the right to vote at General Meetings of the Company,
forthwith proceed to convene a special General Meeting of the Company and the
provisions of section 74 of the Act shall apply. Notwithstanding any other
provisions of these Bye-laws, not less than 60 nor more than 90 days notice
shall be given of any special general meeting properly requisitioned by
shareholders in accordance with the Act and these Bye-laws holding at least 10%
of the outstanding paid up share capital of the Company.
36. Short notice
A General Meeting of the Company shall, notwithstanding that it is called
by shorter notice than that specified in these Bye-laws, be deemed to have been
properly called if it is so agreed by (a) all the Members entitled to attend and
vote thereat in the case of an annual General Meeting; and (b) by a majority in
number of the Members having the right to attend and vote at the meeting, being
a majority together holding not less than 95% in nominal value of the shares
giving a right to attend and vote thereat in the case of a special General
Meeting.
37. Postponement of meetings
The Board may postpone any General Meeting called in accordance with the
provisions of these Bye-laws (other than a meeting requisitioned under Bye-law
36) provided that notice of postponement is given to each Member before the time
for such meeting. Fresh notice of the date, time and place for the postponed
meeting shall be given to each Member in accordance with the provisions of these
Bye-laws.
-13-
38. Quorum for General Meeting
At any General Meeting of the Company, two persons present in person and
throughout the meeting representing in person or by proxy more than 50% of the
total issued shares in the Company entitled to vote on the matters to be
considered by the meeting shall form a quorum for the transaction of business.
If, within half an hour from the time appointed for the meeting, a quorum is not
present, the meeting shall stand adjourned to the same day two weeks later, at
the same time and place or to such other day, time or place as the Board may
determine. Unless the meeting is adjourned to a specific date and time, fresh
notice of the date, time and place for the adjourned meeting shall be given to
each Member in accordance with the provisions of these Bye-laws.
39. Adjournment of meetings
The chairperson of a General Meeting may, with the consent of the Members
at any General Meeting at which a quorum is present (and shall if so directed),
adjourn the meeting. Unless the meeting is adjourned to a specific date and
time, fresh notice of the date, time and place for the resumption of the
adjourned meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.
40. Attendance at meetings
Members may participate in any General Meeting by means of such telephone,
electronic or other communication facilities as permit all persons participating
in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting except that Members may not participate in any General
Meeting while present in the United States or its territories.
41. Written resolutions
A resolution in writing signed by all of the Members, which may be in
counterparts, shall be as valid as if it had been passed by a General Meeting
duly called and constituted, such resolution to be effective on the date on
which the last Member signs the resolution.
42. Attendance of Directors
The Directors of the Company shall be entitled to receive notice of and to
attend and be heard at any General Meeting.
-14-
43. Voting at meetings
(a) Subject to the provisions of the Act and these Bye-laws, any question
proposed for the consideration of the Members at any General Meeting shall be
decided by the affirmative votes of a majority of the votes cast in accordance
with the provisions of these Bye-laws and in the case of an equality of votes
the resolution shall fail.
(b) (1) Notwithstanding any other provisions of these Bye-laws to the
contrary, the Company may authorize or effect any amalgamation or other
reorganization of the Company with or into any Person (other than an
amalgamation pursuant to Section 107 of the Act) in a General Meeting only upon
the affirmative vote of a majority of all issued and outstanding capital shares
of the Company.
(2) Notwithstanding any other provisions of these Bye-laws to the
contrary, the Company may (i) authorize or effect any acquisition or disposition
of all or substantially all of the assets of the Company; (ii) authorize or
effect the liquidation, dissolution or winding-up of the Company or (iii) amend,
alter or repeal any provision of this Bye-law 43 in a General Meeting only upon
the affirmative vote of a majority of the voting rights attached to all issued
and outstanding capital shares of the Company entitled to vote thereon in
accordance with these Bye-Laws.
(3) Notwithstanding any other provisions of these Bye-laws to the
contrary, a Director may only be removed for cause, and Bye-laws 12, 15, 32, 35,
43(b)(3) and 46A may, in each case, only be amended or repealed in a general
meeting upon the affirmative vote of 66-2/3% of the voting rights attached to
all of the issued and outstanding capital shares of the Company.
(4) Notwithstanding any other provisions of these Bye-laws to the
contrary, with respect to any matter required to be submitted to a vote of the
shareholders of Renaissance Reinsurance Ltd. ("Renaissance Reinsurance"), the
Company shall be required to submit a proposal relating to such matters to the
shareholders of the Company and shall vote all the shares of Renaissance
Reinsurance owned by the Company in accordance with and proportional to such
vote of the Company's shareholders; provided, however, that the Board shall not
be required to submit such a proposal contemplated by this Bye-law 43(b)(3) to
the shareholders of the Company at such time as Renaissance Reinsurance shall no
longer be a subsidiary of the Company or no Diluted Voting Shares shall be
outstanding.
(c) No Member shall be entitled to vote at any General Meeting unless such
Member has paid all the calls on all shares held by such Member.
-15-
44. Voting on show of hands
At any General Meeting a resolution put to the vote of the meeting shall,
in the first instance, be voted upon by a show of hands and, subject to any
rights or restrictions for the time being lawfully attached to any class of
shares and subject to the provisions of these Bye-laws, every Member present in
person and every person holding a valid proxy at such meeting shall be entitled
to one vote per share and shall cast such vote by raising his or her hand.
45. Decision of chairperson
At any General Meeting a declaration by the chairperson of the meeting
that a question proposed for consideration has, on a show of hands, been
carried, or carried unanimously, or by a particular majority, or lost, or an
entry to that effect in a book containing the minutes of the proceedings of the
Company shall, subject to the provisions of these Bye-laws, be conclusive
evidence of that fact.
46. Demand for a poll
(a) Notwithstanding the provisions of the immediately preceding two
Bye-laws, at any General Meeting of the Company, in respect of any question
proposed for the consideration of the Members (whether before or on the
declaration of the result of a show of hands as provided for in these Bye-laws),
a poll may be demanded by any of the following persons:
(i) the chairperson of such meeting; or
(ii) at least three Members present in person or represented by
proxy; or
(iii) any Member or Members present in person or represented by
proxy and holding between them not less than one-tenth of the
total voting rights of all the Members having the right to
vote at such meeting; or
(iv) any Member or Members present in person or represented by
proxy holding shares in the Company conferring the right to
vote at such meeting, being shares on which an aggregate sum
has been paid up equal to not less than one-tenth of the total
sum paid up on all such shares conferring such right.
(b) Where, in accordance with the provisions of subparagraph (a) of this
Bye-law, a poll is demanded, subject to any rights or restrictions for the time
being lawfully attached to any class of shares, every person present at such
meeting shall have one vote for each share of which such person is the
-16-
holder or for which such person holds a proxy and such vote shall be counted in
the manner set out in paragraph (d) of this Bye-law or in the case of a General
Meeting at which one or more Members are present by telephone in such manner as
the chairperson of the meeting may direct and the result of such poll shall be
deemed to be the resolution of the meeting at which the poll was demanded and
shall replace any previous resolution upon the same matter which has been the
subject of a show of hands.
(c) A poll demanded in accordance with the provisions of subparagraph (a)
of this Bye-law, for the purpose of electing a chairperson or on a question of
adjournment, shall be taken forthwith and a poll demanded on any other question
shall be taken in such manner and at such time and place as the chairperson may
direct and any business other than that upon which a poll has been demanded may
be proceeded with pending the taking of the poll.
(d) Where a vote is taken by poll each person present and entitled to vote
shall be furnished with a ballot paper on which such person shall record her or
his vote in such manner as shall be determined at the meeting having regard to
the nature of the question on which the vote is taken, and each ballot paper
shall be signed or initialled or otherwise marked so as to identify the voter
and the registered holder in the case of a proxy. At the conclusion of the poll
the ballot papers shall be examined and counted by a committee of not less than
two Members or proxy holders appointed by the chairperson for the purpose and
the result of the poll shall be declared by the chairperson.
46A. Excess Shares
Notwithstanding anything else in these Bye-laws to the contrary:
(a) Other than as provided herein, no Person other than a Permitted Person
shall be permitted to own or control shares in the Company (including as a
result of the repurchase of shares by the Company) to the extent that such
holder or any other Person will be considered to own or control Controlled
Shares (as defined below), as the Board may determine in its sole discretion,
which represent in excess of 9.9% of the voting rights attached to all of the
issued and outstanding capital shares of the Company, nor shall any Person be
permitted to own or control Controlled Shares if the result thereof would be to
render such Person or any other Person other than a Permitted Person a Ten
Percent Shareholder. In accordance with the foregoing, the Company may decline
to register any transfer of its capital shares (including its public shares) if
such transfer, in the discretion of the Board, would cause the transferee or any
other Person (other than a Permitted Person) to own or control
-17-
Controlled Shares representing more than 9.9% of the voting rights attached to
all of the issued and outstanding capital shares of the Company.
(b) To the extent that, for any reason whatsoever and by any means
howsoever, a Person other than a Permitted Person, whether or not an existing
Member of the Company, shall be deemed by the Board in its sole discretion to
own or control Controlled Shares which represent in excess of 9.9% of the voting
rights attached to all of the issued and outstanding capital shares of the
Company, then all shares which such person may Own or Control which carry in
excess of 9.9% of all of the issued and outstanding capital shares of the
Company shall carry no voting rights whatsoever, and shall be discounted in
respect of such Member for the purpose of the calculation of any vote which may
or which is required to be taken at any general meeting of the Company for any
purpose. The Controlled Shares of such Member which represent in excess of 9.9%
of the voting rights attached to all of the issued and outstanding capital
shares of the Company shall be allocated for voting purposes to all the other
Members of the Company pro rata to the common shareholdings of such other
Members; provided, however, that no other Member other than a Permitted Person
shall be allocated voting rights pursuant to this sentence if to do so would
render such other Member a Ten Percent Shareholder. In the event that a
reallocation of voting rights pursuant to this Bye-law would result in the
creation of additional Ten Percent Shareholders, the reallocation to be made
shall only be made to such Members (other than Permitted Persons) who, after the
re-allocation, would not be Ten Percent Shareholders. Notwithstanding the
foregoing, after having applied the provisions hereof as best as it considers
reasonably practicable, the Board may make such adjustments to the voting rights
conferred by the Controlled Shares of any Person (other than a Permitted Person)
that the Board shall consider fair and reasonable under all the applicable facts
and circumstances to ensure that such Controlled Shares represent no more than
9.9% of the aggregate voting rights of all of the outstanding capital shares of
the Company at any time.
(c) With respect to Bye-Law 46A(a) and (b), such provisions shall not
operate unless there are at least eleven (11) Members of the Company.
(d) Notwithstanding anything to the contrary in this Bye-law 46A, the
Board may waive the restrictions set forth in this Bye-law 46A, on a case by
case basis, in its sole and absolute discretion. Further, the Board may
designate the Company's Chief
-18-
Executive Officer to exercise its authority to decline to register transfers or
to limit voting rights as described above, or to take any other action, for as
long as such officer is also a director.
(e) The Board may, by notice in writing, require any Member or prospective
acquiror of capital shares of the Company (including its publicly held capital
shares) to provide, within not less than ten (10) business days, complete and
accurate information to the Company's registered office or such other place as
the Board may reasonably designate, information including: (i) the number of
capital shares of the Company in which such Person is legally or beneficially
interested; (ii) the Persons who are beneficially interested in capital shares
of the Company in respect of which such Person is the registered holder; (iii)
the relationship, association or affiliation of such Person with any other
Member or Person whether by means of common control or ownership or otherwise;
or (iv) any other facts or matters which the Board may consider relevant to the
determination of the number of Controlled Shares attributable to any Person. If
any Member or prospective acquiror of capital shares of the Company does not
respond to any notice given pursuant to this Bye-law within the time specified
in such notice, or the Board shall have reason to believe that any information
provided in relation thereto is incomplete or inaccurate, the Board may
determine in its sole and absolute discretion that the votes attaching to any
capital shares of the Company registered in the name of such Member or
prospective acquiror shall be disregarded for all purposes until such time as a
response (or additional response) to such notice reasonably satisfactory to the
Board has been received as specified therein.
(f) One of the purposes of the 9.9% limitation set forth in this Bye-law
is to seek to lessen the likelihood the Company will be characterized as a
foreign personal holding company or as a controlled foreign corporation within
the meaning of the Internal Revenue Code of 1986 of the United States, as
amended. Nevertheless, the Board will not be liable to the Company, its
shareholders or any other person whatsoever for any errors in judgment made by
it in interpreting or enforcing this Bye-law or in granting any waiver or
waivers to the foregoing restrictions in any case so long as the Board shall
have acted in good faith.
(g) The restrictions on transfer authorized by this Bye-law 46A shall not
be imposed in any circumstances in a way that would interfere with the
-19-
settlement of trades or transactions in the Common Shares entered into through
the facilities of the New York Stock Exchange, Inc.; provided, however, that the
Company may decline to register transfers in accordance with these Bye-laws or
resolutions of the Board after a settlement has taken place.
(h) For purposes of this Bye-law 46A, the following terms shall have the
following respective meanings:
"Controlled Shares" in reference to any Person means: (i) all capital
shares of the Company that such Person is deemed to own directly,
indirectly or by attribution (within the meaning of Section 958 of the
United States Internal Revenue Code of 1986, as amended) and (ii) all
capital shares of the Company directly, indirectly or beneficially owned
by such person within the meaning of section 13(d) of the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including any shares owned by a "group" of persons as so defined and
including any capital shares that would otherwise be excluded by section
13(d) of the Exchange Act).
"Permitted Person" means any of (i) Warburg, Pincus Investors, L.P., PT
Investments, Inc. or United States Fidelity and Guaranty Company, or any
of their respective affiliates; (ii) any person who directly or indirectly
shall purchase and retain Controlled Shares from a Permitted Person
representing more than 5.0% of the voting rights attached to all of the
issued and outstanding capital shares of the Company; (iii) any person who
shall purchase and retain Controlled Shares in a single transaction from
any of Warburg, Pincus Investors, L.P., PT Investments, Inc., or United
States Fidelity and Guaranty Company, or any of their respective
affiliates (or from any combination of such Persons) representing in the
aggregate more than 5.0% of the voting rights attached to all of the
issued and outstanding capital shares of the Company; or (iv) any such
other Person as the Board may designate, in its discretion, from time to
time.
"Person" means an individual, a partnership, a joint-stock company, a
corporation, a trust
-20-
or unincorporated organization, a limited liability company or a
government or an agency or political subdivision thereof.
"Ten Percent Shareholder" means a person who the Board determines, in its
sole and absolute discretion, owns or controls Controlled Shares
representing more than 9.9% of the total voting rights of all of the
issued and outstanding capital shares of the Company."
47. Seniority of joint holders voting
In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders, and for this purpose seniority shall be determined
by the order in which the names stand in the Register of Members.
48. Instrument of proxy
The instrument appointing a proxy shall be in writing in the form, or as
near thereto as circumstances admit, of Form "A" in the Appendix hereto under
the hand of the appointor or of her or his attorney duly authorized in writing,
or if the appointor is a corporation, either under its seal, or under the hand
of a duly authorized officer or attorney. The decision of the chairperson of any
General Meeting as to the validity of any instrument of proxy shall be final.
49. Representation of corporations at meetings
A corporation which is a Member may by written instrument authorize such
person as it thinks fit to act as its representative at any meeting of the
Members and the person so authorized shall be entitled to exercise the same
powers on behalf of the corporation which such person represents as that
corporation could exercise if it were an individual Member. Notwithstanding the
foregoing, the chairperson of the meeting may accept such assurances as she or
he thinks fit as to the right of any person to attend and vote at General
Meetings on behalf of a corporation which is a Member.
SHARE CAPITAL AND SHARES
50. Rights of shares
(a) Subject to any special rights previously conferred on the holders of
any existing shares or class of shares, the share capital of the Company shall
be divided into shares of two classes, being 225 million common shares of
US$1.00 each (the "Common Shares") and 100 million preference shares of US$1.00
each (the "Preference Shares"), which shall have the rights, terms, restrictions
and preferences set out in or determined in accordance with these Bye-laws.
-21-
(b) The Common Shares shall be divided into 81,570,583 Full Voting Common
Shares; 16,789,776 Diluted Voting Class I Common Shares; and 1,639,641 Diluted
Voting Class II Common Shares. The Diluted Voting Class I Common Shares and the
Diluted Voting Class II Common Shares shall have the rights, terms, restrictions
and preferences as set forth in Schedule A to these Bye-laws, but otherwise the
holders of Common Shares shall:
(i) be entitled to one vote per share;
(ii) be entitled to such dividends as the Board may from time to
time declare;
(iii) in the event of a winding-up or dissolution of the Company,
whether voluntary or involuntary or for the purpose of a
reorganization or otherwise or upon any distribution of
capital, be entitled to the surplus assets of the Company; and
(iv) generally be entitled to enjoy all of the rights attaching to
shares.
(c) The Board is authorized, subject to limitations prescribed by law, to
issue the Preference Shares in one or more series, and to fix the rights,
preferences, privileges and restrictions thereof, including but not limited to
dividend rates, conversion rights, voting rights, terms of redemption (including
sinking fund provisions), redemption prices and liquidation preferences, and the
number of shares constituting and the designation of any such series, without
further vote or action by the shareholders.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
(i) The distinctive designation of that series and the number of
Preference Shares constituting that series, which number (except as
otherwise provided by the Board in the resolution establishing such
series) may be increased or decreased (but not below the number of
shares of such series then outstanding) from time to time by like
action of the Board;
(ii) The rights in respect of dividends, if any, of such series of
Preference Shares, the extent of the preference or relation, if any,
of such dividends to the dividends payable on any other class or
classes or any other series of the same or other class or classes of
shares of the Company, and whether such dividends shall be
cumulative or non-cumulative;
-22-
(iii) The voting powers, if any, of the holders of any series of
Preference Shares generally or with respect to any particular
matter, which may be less than, equal to or greater than one vote
per share, and which may, without limiting the generality of the
foregoing, include the right, voting as a series by itself or
together with the holders of any other series of Preference Shares
or all series of Preference Shares as a class, or together with the
holders of any other class of the capital stock of the Company to
elect one or more directors of the Company (which, without limiting
the generality of the foregoing, may include a specified number or
portion of the then-existing number of authorized directorships of
the Company or a specified number or portion of directorships in
addition to the then-existing number of authorized directorships of
the Company), generally or under such specific circumstances and on
such conditions, as shall be provided in the resolution or
resolutions of the Board adopted pursuant hereto;
(iv) Whether the Preference Shares may be redeemed and, if so, the terms
and conditions on which they may be redeemed (including, without
limitation, the dates upon or after which they may be redeemed,
which price or prices may be different in different circumstances or
at different redemption dates), and whether they may be redeemed at
the option of the Company, at the option of the holder, or at the
option of both the Company and the holder;
(v) The right, if any, of the holders of such series of Preference
Shares to convert the same into, or exchange the same for, shares of
any other class or classes or of any other series of the same or any
other class or classes of shares of the Company and the terms and
conditions of such conversion or exchange, including, without
limitation, whether or not the number of shares of such other class
or series into which shares of such series may be converted or
exchanged shall be adjusted in the event of any share split, stock
dividend, subdivision, combination, reclassification or other
transaction or series of transactions affecting the class or series
into which such series of Preference Shares may be converted or
exchanged;
-23-
(vi) The amounts, if any, payable upon the Preference Shares in the event
of voluntary liquidation, dissolution or winding up of the Company
in preference of shares of any other class or series or in the event
of any merger or consolidation of or sale of assets by the Company;
(vii) The terms of any sinking fund or redemption or purchase account, if
any, to be provided for shares of such series of Preference Shares;
and
(viii) Any other relative rights, preferences, limitations and powers of
that series.
51. Power to issue shares
(a) Subject to these Bye-laws and to any resolution of the Members to the
contrary and without prejudice to any special rights previously conferred on the
holders of any existing shares or class of shares, the Board shall have power to
issue any unissued shares of the Company on such terms and conditions as it may
determine.
(b) The Board shall, in connection with the issue of any share, have the
power to pay such commission and brokerage as may be permitted by law.
(c) The Company shall not give, whether directly or indirectly, whether by
means of loan, guarantee, provision of security or otherwise, any financial
assistance for the purpose of or in connection with a purchase or subscription
made or to be made by any person of or for any shares in the Company, but
nothing in this Bye-law shall prohibit transactions mentioned in Sections 39A,
39B and 39C of the Act.
-24-
52. Variation of rights and alteration of share capital
(a) If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may, whether or not the Company is being
wound-up, be varied with the consent in writing of the holders of three-fourths
of the issued shares of that class or with the sanction of a resolution passed
by a majority of the votes cast at a separate General Meeting of the holders of
the shares of the class in accordance with Section 47 (7) of the Act. The rights
conferred upon the holders of the shares of any class issued with preferred or
other rights shall not, unless otherwise expressly provided by the terms of
issue of the shares of that class, be deemed to be varied by the creation or
issue of further shares ranking pari passu therewith.
(b) The Company may from time to time by resolution of the Members change
the currency denomination of, increase, alter or reduce its share capital in
accordance with the provisions of Sections 45 and 46 of the Act. Where, on any
alteration of share capital, fractions of shares or some other difficulty would
arise, the Board may deal with or resolve the same in such manner as it thinks
fit including, without limiting the generality of the foregoing, the issue to
Members, as appropriate, of fractions of shares and/or arranging for the sale or
transfer of the fractions of shares of Members.
53. Registered holder of shares
(a) The Company shall be entitled to treat the registered holder of any
share as the absolute owner thereof and accordingly shall not be bound to
recognize any equitable or other claim to, or interest in, such share on the
part of any other person.
(b) Any dividend, interest or other moneys payable in cash in respect of
shares may be paid by cheque or draft sent through the post directed to the
Member at such Member's address in the Register of Members or, in the case of
joint holders, to such address of the holder first named in the Register of
Members, or to such person and to such address as the holder or joint holders
may in writing direct. If two or more persons are registered as joint holders of
any shares any one can give an effectual receipt for any dividend paid in
respect of such shares.
54. Death of a joint holder
Where two or more persons are registered as joint holders of a share or
shares then in the event of the death of any joint holder or holders the
remaining joint holder or holders shall be absolutely entitled to the said share
or shares and the Company shall recognize no claim in respect of the estate of
any
-25-
joint holder except in the case of the last survivor of such joint holders.
55. Share certificates
(a) Every Member shall be entitled to a certificate under the seal of the
Company (or a facsimile thereof) with such legends as the Board sees fit,
specifying the number and, where appropriate, the class of shares held by such
Member and whether the same are fully paid up and, if not, how much has been
paid thereon. The Board may by resolution determine, either generally or in a
particular case, that any or all signatures on certificates may be printed
thereon or affixed by mechanical means.
(b) If any such certificate shall be proved to the satisfaction of the
Board to have been worn out, lost, mislaid or destroyed the Board may cause a
new certificate to be issued and request an indemnity for the lost certificate
if it sees fit.
56. Calls on shares
(a) With respect to any shares which are not fully paid, the Board may
from time to time make such calls as it thinks fit upon the Members in respect
of any monies unpaid on any such shares allotted to or held by such Members and,
if a call is not paid on or before the day appointed for payment thereof, the
Member may at the discretion of the Board be liable to pay the Company interest
on the amount of such call at such rate as the Board may determine, from the
date when such call was payable up to the actual date of payment. The joint
holders of any such share shall be jointly and severally liable to pay all calls
in respect thereof.
(b) The Board may, on the issue of shares, differentiate between the
holders as to the amount of calls to be paid and the times of payment of such
calls.
57. Forfeiture of shares
(a) If any Member fails to pay, on the day appointed for payment thereof,
any call in respect of any share allotted to or held by such Member, the Board
may, at any time thereafter during such time as the call remains unpaid, direct
the Secretary to forward to such Member a notice in the form, or as near thereto
as circumstances admit, of Form "B" in the Appendix hereto.
(b) If the requirements of such notice are not complied with, any such
share may at any time thereafter before the payment of such call and the
interest due in respect thereof be forfeited by a resolution of the Board to
that effect, and such share shall thereupon become the property of the Company
and may be disposed of as the Board shall determine.
-26-
(c) A Member whose share or shares have been forfeited as aforesaid shall,
notwithstanding such forfeiture, be liable to pay to the Company all calls owing
on such share or shares at the time of the forfeiture and all interest due
thereon.
REGISTER OF MEMBERS
58. Contents of Register of Members
The Board shall cause to be kept in one or more books a Register of
Members and shall enter therein the following particulars:
(a) the name and address of each Member, the number and, where
appropriate, the class of shares held by such Member and the amount paid or
agreed to be considered as paid on such shares;
(b) the date on which each person was entered in the Register of Members;
and
(c) the date on which any person ceased to be a Member for one year after
such person so ceased.
59. Inspection of Register of Members
The Register of Members shall be open to inspection at the registered
office of the Company on every business day, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours in each
business day be allowed for inspection.
The Register of Members may, after notice has been given by advertisement
in an appointed newspaper to that effect, be closed for any time or times not
exceeding in the whole thirty days in each year.
60. Determination of record dates
Notwithstanding any other provision of these Bye-laws, the Board may fix
any date as the record date for:
(a) determining the Members entitled to receive any dividend; and
(b) determining the Members entitled to receive notice of and to vote at
any General Meeting of the Company.
TRANSFER OF SHARES
61. Instrument of transfer
(a) An instrument of transfer shall be in the form or as near thereto as
circumstances admit of Form "C" in the
-27-
Appendix hereto or in such other common form as the Board may accept. Such
instrument of transfer shall be signed by or on behalf of the transferor and
transferee provided that, in the case of a fully paid share, the Board may
accept the instrument signed by or on behalf of the transferor alone. The
transferor shall be deemed to remain the holder of such share until the same has
been transferred to the transferee in the Register of Members.
(b) The Board may refuse to recognize any instrument of transfer unless it
is accompanied by the certificate in respect of the shares to which it relates
and by such other evidence as the Board may reasonably require to show the right
of the transferor to make the transfer.
62. Restriction on transfer
(a) The Board shall refuse to register a transfer unless all applicable
consents, authorizations and permissions of any governmental body or agency in
Bermuda have been obtained.
(b) If the Board refuses to register a transfer of any share the Secretary
shall, within 10 days after the date on which the transfer was lodged with the
Company, send to the transferor and transferee notice of the refusal.
63. Transfers by joint holders
The joint holders of any share or shares may transfer such share or shares
to one or more of such joint holders, and the surviving holder or holders of any
share or shares previously held by them jointly with a deceased Member may
transfer any such share to the executors or administrators of such deceased
Member.
TRANSMISSION OF SHARES
64. Representative of deceased Member
In the case of the death of a Member the survivor or survivors where the
deceased Member was a joint holder, and the legal personal representatives of
the deceased Member where the deceased Member was a sole holder, shall be the
only persons recognized by the Company as having any title to the deceased
Member's interest in the shares.
Nothing herein contained shall release the estate of a deceased joint
holder from any liability in respect of any share which had been jointly held by
such deceased Member with other persons. Subject to the provisions of Section 52
of the Act, for the purpose of this Bye-law, legal personal representative means
the executor or administrator of a deceased Member or such other person as the
Board may in its absolute discretion decide as
-28-
being properly authorized to deal with the shares of a deceased Member.
65. Registration on death or bankruptcy
Any person becoming entitled to a share in consequence of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as the
Board may deem sufficient or may elect to nominate some person to be registered
as a transferee of such share, and in such case the person becoming entitled
shall execute in favour of such nominee an instrument of transfer in the form,
or as near thereto as circumstances admit, of Form "D" in the Appendix hereto.
On the presentation thereof to the Board, accompanied by such evidence as
the Board may require to prove the title of the transferor, the transferee shall
be registered as a Member but the
Board shall, in either case, have the same right to decline or suspend
registration as it would have had in the case of a transfer of the share by that
Member before such Member's death or bankruptcy, as the case may be.
DIVIDENDS AND OTHER DISTRIBUTIONS
66. Declaration of dividends by the Board
Subject to these Bye-laws, the Board may, in accordance with Section 54 of
the Act, declare a dividend to be paid to the Members, in proportion to the
number of shares held by them, and such dividend may be paid in cash or wholly
or partly in specie in which case the Board may fix the value for distribution
in specie of any assets.
67. Other distributions
The Board may declare and make such other distributions (in cash or in
specie) to the Members as may be lawfully made out of the assets of the Company.
68. Reserve fund
The Board may from time to time before declaring a dividend set aside, out
of the surplus or profits of the Company, such sum as it thinks proper as a
reserve fund to be used to meet contingencies or for equalizing dividends or for
any other special purpose.
69. Deduction of Amounts due to the Company
The Board may deduct from the dividends or distributions payable to any
Member all monies due from such Member to the Company on account of calls.
-29-
CAPITALIZATION
70. Issue of bonus shares
(a) The Board may resolve to capitalize any part of the amount for the
time being standing to the credit of any of the Company's share premium or other
reserve accounts or to the credit of the profit and loss account or otherwise
available for distribution by applying such sum in paying up unissued shares to
be allotted as fully paid bonus shares pro rata to the Members.
(b) The Company may capitalize any sum standing to the credit of a reserve
account or sums otherwise available for dividend or distribution by applying
such amounts in paying up in full partly paid shares of those Members who would
have been entitled to such sums if they were distributed by way of dividend or
distribution.
ACCOUNTS AND FINANCIAL STATEMENTS
71. Records of account
The Board shall cause to be kept proper records of account with respect to
all transactions of the Company and in particular with respect to:
(a) all sums of money received and expended by the Company and the matters
in respect of which the receipt and expenditure relates;
(b) all sales and purchases of goods by the Company; and
(c) the assets and liabilities of the Company.
Such records of account shall be kept at the registered office of the Company
or, subject to Section 83 (2) of the Act, at such other place as the Board
thinks fit and shall be available for inspection by the Directors during normal
business hours.
72. Financial year end
The financial year end of the Company may be determined by resolution of
the Board and failing such resolution shall be 31st December in each year.
73. Financial statements
Subject to any rights to waive laying of accounts pursuant to Section 88
of the Act, financial statements as required by the Act shall be laid before the
Members in General Meeting.
-30-
AUDIT
74. Appointment of Auditor
Subject to Section 88 of the Act, at the annual General Meeting or at a
subsequent special General Meeting in each year, an independent representative
of the Members shall be appointed by them as Auditor of the accounts of the
Company. Such Auditor may be a Member but no Director, Officer or employee of
the Company shall, during his or her continuance in office, be eligible to act
as an Auditor of the Company.
75. Remuneration of Auditor
The remuneration of the Auditor shall be fixed by the Company in General
Meeting or in such manner as the Members may determine.
76. Vacation of office of Auditor
If the office of Auditor becomes vacant by the resignation or death of the
Auditor, or by the Auditor becoming incapable of acting by reason of illness or
other disability at a time when the Auditor's services are required, the Board
shall, as soon as practicable, convene a special General Meeting to fill the
vacancy thereby created.
77. Access to books of the Company
The Auditor shall at all reasonable times have access to all books kept by
the Company and to all accounts and vouchers relating thereto, and the Auditor
may call on the Directors or Officers of the Company for any information in
their possession relating to the books or affairs of the Company.
78. Report of the Auditor
(a) Subject to any rights to waive laying of accounts or appointment of an
Auditor pursuant to Section 88 of the Act, the accounts of the Company shall be
audited at least once in every year.
(b) The financial statements provided for by these Bye-laws shall be
audited by the Auditor in accordance with generally accepted auditing standards.
The Auditor shall make a written report thereon in accordance with generally
accepted auditing standards and the report of the Auditor shall be submitted to
the Members in General Meeting.
(c) The generally accepted auditing standards referred to in sub-paragraph
(b) of this Bye-law may be those of a country or jurisdiction other than Bermuda
as shall be determined by the Board. If so, the financial statements and the
report of the Auditor must disclose this fact and name such country or
jurisdiction.
-31-
NOTICES
79. Notices to Members of the Company
A notice may be given by the Company to any Member either by delivering it
to such Member in person or by sending it to such Member's address in the
Register of Members or to such other address given for the purpose. For the
purposes of this Bye-law, a notice may be sent by mail, courier service, cable,
telex, board, facsimile or other mode of representing words in a legible and
non-transitory form.
80. Notices to joint Members
Any notice required to be given to a Member shall, with respect to any
shares held jointly by two or more persons, be given to whichever of such
persons is named first in the Register of Members and notice so given shall be
sufficient notice to all the holders of such shares.
81. Service and delivery of notice
Any notice shall be deemed to have been served at the time when the same
would be delivered in the ordinary course of transmission and, in proving such
service, it shall be sufficient to prove that the notice was properly addressed
and prepaid, if posted, and the time when it was posted, delivered to the
courier or to the cable company or transmitted by telex, facsimile or other
method as the case may be.
SEAL OF THE COMPANY
82. The seal
The seal of the Company shall be in such form as the Board may from time
to time determine. The Board may adopt one or more duplicate seals for use
outside Bermuda.
83. Manner in which seal is to be affixed
The seal of the Company shall not be affixed to any instrument except
attested by the signature of a Director and the Secretary or any two Directors,
provided that any Director, or Officer, may affix the seal of the Company
attested by such Director or Officer's signature only to any authenticated
copies of these Bye-laws, the incorporating documents of the Company, the
minutes of any meetings or any other documents required to be authenticated by
such Director or Officer.
WINDING-UP
84. Winding up/distribution by liquidator
-32-
If the Company shall be wound up the liquidator may, with the sanction of
a resolution of the Members, divide amongst the Members in specie or in kind the
whole or any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may, for such purpose, set such value as
he or she deems fair upon any property to be divided as aforesaid and may
determine how such division shall be carried out as between the Members or
different classes of Members. The liquidator may, with the like sanction, vest
the whole or any part of such assets in trustees upon such trusts for the
benefit of the Members as the liquidator shall think fit, but so that no Member
shall be compelled to accept any shares or other securities or assets whereon
there is any liability.
ALTERATION OF BYE-LAWS
85. Alteration of Bye-laws
No Bye-law shall be rescinded, altered or amended and no new Bye-law shall
be made until the same has been approved by a resolution of the Board and by a
resolution of the Members.
-33-
SCHEDULE A TO AMENDED AND RESTATED BYE-LAWS
DESIGNATIONS, NUMBER, VOTING POWERS; PREFERENCES AND RIGHTS
OF
DILUTED VOTING CLASS I COMMON SHARES
AND
DILUTED VOTING CLASS II COMMON SHARES
1. Designation and Amount.
The shares of each such series shall be designated (i) the Diluted Voting
Class I Common Shares, par value $1.00 per share (the "Diluted Voting I
Shares"), and (ii) the Diluted Voting Class II Common Shares, par value $1.00
per share (the "Diluted Voting II Shares"). The number of shares constituting
the Diluted Voting I Shares shall be 4,199,191 shares. The number of shares
constituting the Diluted Voting II Shares shall be 1,454,109 shares.
2. General.
Except as provided in items 3 and 4 below, each Diluted Voting I Share and
each Diluted Voting II Share shall be entitled to the same rights, and be
subject to the same restrictions, as the Full Voting Common Shares as set forth
in these Bye-laws.
3. Voting.
A. Diluted Voting I Shares. Except as set forth below, holders of
Diluted Voting I Shares shall be entitled to one vote for each Diluted Voting I
Share held at each meeting of shareholders of the Company with respect to any
and all matters presented to the shareholders of the Company for their action or
consideration and upon which such holder is entitled to vote in accordance with
these Bye-Laws. Except as provided by law or these Bye-laws, holders of Diluted
Voting I Shares shall vote together with the holders of Common Shares and
Diluted Voting II Shares as a single class.
Except as required by law and in respect of a vote contemplated by Bye-law
43(b)(1), each holder of issued and outstanding Diluted Voting I Shares shall be
entitled to a fixed voting interest in the Company of up to 9.9% of all
outstanding voting rights attached to the Common Shares, inclusive of the
percentage interest in the Company represented by Controlled Common Shares (as
defined below) owned by the holder thereof from time to time, but in no event
greater than one vote for each Diluted Voting I Share so held, at each meeting
of shareholders of the Company with respect to any and all matters presented to
the shareholders of the Company for their action or consideration and upon which
such holder is entitled to vote in accordance with these Bye-laws.
B. Diluted Voting II Shares. Except as required by law and in
respect of a vote contemplated by Bye-law 43(b)(1), holders of Diluted Voting II
Shares shall be entitled to one-third of a vote for each Diluted Voting II Share
held, provided, that in no event shall a holder of Diluted Voting II Shares have
greater than 9.9% of all outstanding voting rights attached to the Common
Shares, inclusive of the percentage interest in the Company represented by
Controlled Common Shares, at each meeting of shareholders of the Company with
respect to any and all matters presented to the shareholders of the Company for
their action or consideration and upon which such holder is entitled to vote in
accordance with these Bye-laws.
Except as provided by law or these Bye-laws, holders of Diluted
Voting II Shares shall vote together with the holders of Common Shares and
Diluted Voting I Shares as a single class.
C. As used herein, with respect to any holder of Diluted Voting
Shares, "Controlled Common Shares" means Common Shares owned directly,
indirectly or constructively by such holder within the meaning of Section 958 of
the U.S. Internal Revenue Code of 1986, as amended, and applicable rules and
regulations thereunder.
4. Conversion.
Following a sale, transfer, exchange or other disposition of any Diluted
Voting I Shares or Diluted Voting II Shares by a holder thereof, the Diluted
Voting I Shares and Diluted Voting II Shares are convertible into an equal
number of Full Voting Common Shares on a one-for-one basis at the option of the
purchaser or transferee thereof upon two days prior written notice to the
Company.
-2-
APPENDIX - FORM A (Bye-law 48)
P R 0 X Y
I
of
the holder of share in the above-named
Company hereby appoint .........................................................
or failing her or him...........................................................
or failing her or
him.............................................................................
as my proxy to vote on my behalf at the General Meeting of the Company to be
held on the day of , 19 and at any adjournment thereof.
Dated this day of , 19
*GIVEN under the seal of the company
*Signed by the above-named
..................................................
..................................................
Witness
*Delete as applicable.
A-1
APPENDIX - FORM B (Bye-law 57)
NOTICE OF LIABILITY TO FORFEITURE FOR NON PAYMENT OF CALL
You have failed to pay the call of [amount of call] made on the ...... day of
........, 19.. last, in respect of the [number] share(s) [numbers in figures]
standing in your name in the Register of Members of the Company, on the ......
day of ........., 19.. last, the day appointed for payment of such call. You are
hereby notified that unless you pay such call together with interest thereon at
the rate of .............. per annum computed from the said ....... day of 19...
last, on or before the ....... day of ..............19... next at the place of
business of the said Company the share(s) will be liable to be forfeited.
Dated this ....... day of .............., 19...
[Signature of Secretary]
By order of the Board
A-2
APPENDIX - FORM C (Bye-law 61)
TRANSFER OF A SHARE OR SHARES
FOR VALUE RECEIVED .....................................................[amount]
[transferor]
hereby sell assign and transfer unto ...........................................
[transferee]
of ....................................................................[address]
[number of shares]
shares of
...............................................................[name of Company]
Dated ...................
(Transferor)
In the presence of:
....................
(Witness)
(Transferee)
In the presence of:
...........................
(Witness)
A-3
APPENDIX - Form D (Bye-law 65)
TRANSFER BY A PERSON BECOMING ENTITLED ON DEATH OF A MEMBER
I/We having become entitled in consequence of the death of [name of the deceased
Member] to [number] share(s) numbered [number in figures] standing in the
register of members of [Company] in the name of the said [name of deceased
Member] instead of being registered myself/ourselves elect to have [name of
transferee] (the "Transferee") registered as a transferee of such share(s) and
I/we do hereby accordingly transfer the said share(s) to the Transferee to hold
the same unto the Transferee her or his executors administrators and assigns
subject to the conditions on which the same were held at the time of the
execution thereof; and the Transferee does hereby agree to take the said
share(s) subject to the same conditions.
WITNESS our hands this ........ day of ..........., 19...
Signed by the above-named )
[person or persons entitled] )
in the presence of: )
Signed by the above-named )
[transferee] )
in the presence of: )
A-4
TABLE OF CONTENTS
Page
Bye-Law
1. Interpretation.........................................................................1
2. Board of Directors.....................................................................3
3. Management of the Company..............................................................3
4. Power to appoint managing director or chief executive officer..........................3
5. Power to appoint manager...............................................................3
6. Power to authorize specific actions....................................................3
7. Power to appoint attorney..............................................................4
8. Power to delegate to a committee.......................................................4
9. Power to appoint and dismiss employees.................................................4
10. Power to borrow and charge property....................................................4
11. Power to purchase shares of the Company................................................5
12. Election of Directors..................................................................5
13. Defects in appointment of Directors....................................................6
14. Alternate Directors....................................................................6
15. Removal of Directors...................................................................7
16. Vacancies on the Board.................................................................7
17. Notice of meetings of the Board........................................................8
18. Quorum at meetings of the Board........................................................8
19. Meetings of the Board..................................................................8
20. Unanimous written resolutions..........................................................8
21. Contracts and disclosure of Directors' interests.......................................9
22. Remuneration of Directors..............................................................9
23. Officers of the Company................................................................9
24. Appointment of Officers................................................................9
25. Remuneration of Officers...............................................................10
26. Duties of Officers.....................................................................10
27. Chairperson of meetings................................................................10
28. Register of Directors and Officers.....................................................10
29. Obligations of Board to keep minutes...................................................11
30. Indemnification of Directors and Officers of the Company...............................11
31. Waiver of claim by Member..............................................................12
32. Notice of annual General Meeting.......................................................12
33. Notice of Special General Meeting......................................................13
34. Accidental omission of notice of General Meeting.......................................13
35. Meeting called on requisition of Members...............................................13
36. Short notice...........................................................................13
37. Postponement of meetings...............................................................13
38. Quorum for General Meeting.............................................................14
39. Adjournment of meetings................................................................14
40. Attendance at meetings.................................................................14
41. Written resolutions....................................................................14
42. Attendance of Directors................................................................14
43. Voting at meetings.....................................................................15
44. Voting on show of hands................................................................16
45. Decision of chairperson................................................................16
46. Demand for a poll......................................................................16
46A. Excess Shares.........................................................................17
47. Seniority of joint holders voting......................................................21
(i)
48. Instrument of proxy....................................................................21
49. Representation of corporations at meetings.............................................21
50. Rights of shares.......................................................................21
51. Power to issue shares..................................................................24
52. Variation of rights and alteration of share capital....................................25
53. Registered holder of shares............................................................25
54. Death of a joint holder................................................................25
55. Share certificates.....................................................................26
56. Calls on shares........................................................................26
57. Forfeiture of shares...................................................................26
58. Contents of Register of Members........................................................27
59. Inspection of Register of Members......................................................27
60. Determination of record dates..........................................................27
61. Instrument of transfer.................................................................27
62. Restriction on transfer................................................................28
63. Transfers by joint holders.............................................................28
64. Representative of deceased Member......................................................28
65. Registration on death or bankruptcy....................................................29
66. Declaration of dividends by the Board..................................................29
67. Other distributions....................................................................29
68. Reserve fund...........................................................................29
69. Deduction of Amounts due to the Company................................................29
70. Issue of bonus shares..................................................................30
71. Records of account.....................................................................30
72. Financial year end.....................................................................30
73. Financial statements...................................................................30
74. Appointment of Auditor.................................................................31
75. Remuneration of Auditor................................................................31
76. Vacation of office of Auditor..........................................................31
77. Access to books of the Company.........................................................31
78. Report of the Auditor..................................................................31
79. Notices to Members of the Company......................................................32
80. Notices to joint Members...............................................................32
81. Service and delivery of notice.........................................................32
82. The seal...............................................................................32
83. Manner in which seal is to be affixed..................................................32
84. Winding up/distribution by liquidator..................................................32
85. Alteration of Bye-laws.................................................................33
Schedule A to Amended and Restated Bye-Laws
(ii)
EXECUTION COPY
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of June 24, 1998
among
RENAISSANCE U.S. HOLDINGS, INC.
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent for the Lenders
and
BANCAMERICA ROBERTSON STEPHENS,
as Arranger
- --------------------------------------------------------------------------------
|| TABLE OF CONTENTS
ARTICLE I DEFINITIONS.......................................................................1
SECTION 1.1 Definitions.............................................................1
SECTION 1.2 Other Interpretive Provisions..........................................18
SECTION 1.3 Accounting Principles..................................................19
ARTICLE II AMOUNT AND TERMS OF COMMITMENT..................................................19
SECTION 2.1 Commitments............................................................19
SECTION 2.2 Termination or Reduction of Commitments................................20
SECTION 2.3 Loan Accounts..........................................................20
SECTION 2.4 Procedure for Borrowing................................................21
SECTION 2.5 Conversion and Continuation Elections..................................22
SECTION 2.6 Repayments.............................................................23
SECTION 2.7 Interest...............................................................24
SECTION 2.8 Fees...................................................................25
SECTION 2.9 Computation of Fees and Interest.......................................26
SECTION 2.10 Payments by the Borrower...............................................26
SECTION 2.11 Payments by the Lenders to the
Administrative Agent...................................................27
SECTION 2.12 Sharing of Payments, Etc...............................................28
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.........................................29
SECTION 3.1 Taxes..................................................................29
SECTION 3.2 Illegality.............................................................30
SECTION 3.3 Increased Costs and Reduction of Return................................31
SECTION 3.4 Funding Losses.........................................................31
SECTION 3.5 Inability to Determine Rates...........................................32
SECTION 3.6 Certificates of Lenders................................................33
SECTION 3.7 Substitution of Lenders................................................33
SECTION 3.8 Survival...............................................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................................33
SECTION 4.1 Due Organization, Authorization, etc...................................33
SECTION 4.2 Statutory Financial Statements.........................................34
SECTION 4.3 GAAP Financial Statements..............................................35
SECTION 4.4 Litigation and Contingent Liabilities..................................36
SECTION 4.5 Employee Benefit Plans.................................................36
SECTION 4.6 Investment Company Act.................................................36
SECTION 4.7 Regulations G, U and X.................................................36
SECTION 4.8 Proceeds...............................................................37
SECTION 4.9 Insurance..............................................................37
SECTION 4.10 Ownership of Properties................................................37
SECTION 4.11 Business Locations.....................................................37
SECTION 4.12 Accuracy of Information................................................37
SECTION 4.13 Subsidiaries...........................................................37
SECTION 4.14 Insurance Licenses.....................................................38
SECTION 4.15 Taxes..................................................................38
SECTION 4.16 Securities Laws........................................................39
SECTION 4.17 Compliance with Laws...................................................39
SECTION 4.18 Year 2000 Issues.......................................................39
i
SECTION 4.19 Purchase...............................................................39
ARTICLE V AFFIRMATIVE COVENANTS............................................................40
SECTION 5.1 Reports, Certificates and Other
Information............................................................40
SECTION 5.2 Corporate Existence; Foreign Qualification.............................44
SECTION 5.3 Books, Records and Inspections.........................................44
SECTION 5.4 Insurance..............................................................45
SECTION 5.5 Taxes and Liabilities..................................................45
SECTION 5.6 Employee Benefit Plans.................................................45
SECTION 5.7 Compliance with Laws...................................................45
SECTION 5.8 Maintenance of Permits.................................................45
SECTION 5.9 Conduct of Business....................................................45
ARTICLE VI NEGATIVE COVENANTS..............................................................46
SECTION 6.1 Debt Service Coverage Ratio............................................46
SECTION 6.2 Risk Based Capital.....................................................46
SECTION 6.3 Mergers, Consolidations and Sales......................................46
SECTION 6.4 Regulations G, U and X.................................................46
SECTION 6.5 Other Agreements.......................................................46
SECTION 6.6 Transactions with Affiliates...........................................47
SECTION 6.7 Liens..................................................................47
SECTION 6.8 Restrictions On Negative Pledge Agreements.............................48
SECTION 6.9 No Amendment of Certain Documents......................................48
SECTION 6.10 Dividends, Etc. .......................................................48
ARTICLE VII EVENTS OF DEFAULT AND THEIR EFFECT.............................................48
SECTION 7.1 Events of Default......................................................48
SECTION 7.2 Effect of Event of Default.............................................51
ARTICLE VIII CONDITIONS....................................................................52
SECTION 8.1 Conditions to Occurrence of the
Effective Date.........................................................52
SECTION 8.2 Conditions to Occurrence of the
Funding Date...........................................................53
SECTION 8.3 Conditions to All Borrowings...........................................54
ARTICLE IX THE ADMINISTRATIVE AGENT........................................................56
SECTION 9.1 Appointment and Authorization..........................................56
SECTION 9.2 Delegation of Duties...................................................56
SECTION 9.3 Liability of Administrative Agent......................................56
SECTION 9.4 Reliance by Administrative Agent.......................................57
SECTION 9.5 Notice of Default......................................................57
SECTION 9.6 Credit Decision........................................................58
SECTION 9.7 Indemnification........................................................58
SECTION 9.8 Administrative Agent in Individual
Capacity...............................................................59
SECTION 9.9 Successor Administrative Agent.........................................59
SECTION 9.10 Withholding Tax........................................................60
ARTICLE X MISCELLANEOUS....................................................................61
ii
SECTION 10.1 Amendments and Waivers................................................61
SECTION 10.2 Notices...............................................................62
SECTION 10.3 No Waiver; Cumulative Remedies........................................63
SECTION 10.4 Costs and Expenses....................................................63
SECTION 10.5 Indemnity.............................................................63
SECTION 10.6 Payments Set Aside....................................................64
SECTION 10.7 Successors and Assigns................................................64
SECTION 10.8 Assignments, Participations, etc......................................64
SECTION 10.9 Confidentiality.......................................................66
SECTION 10.10 Set-off..............................................................67
SECTION 10.11 Notification of Addresses, Lending
Offices, Etc.........................................................67
SECTION 10.12 Counterparts.........................................................68
SECTION 10.13 Severability.........................................................68
SECTION 10.14 No Third Parties Benefited...........................................68
SECTION 10.15 Governing Law and Jurisdiction.......................................68
SECTION 10.16 Waiver of Jury Trial.................................................69
SECTION 10.17 Entire Agreement.....................................................69
||
SCHEDULES AND EXHIBITS
SCHEDULE 1.2 Pricing Grid
SCHEDULE 2.1 Commitments
SCHEDULE 4.1 Jurisdictions
SCHEDULE 4.2(a) SAP Exceptions
SCHEDULE 4.2(c) Adverse Changes
SCHEDULE 4.4 Litigation
SCHEDULE 4.5 ERISA
SCHEDULE 4.9 Insurance
SCHEDULE 4.11 Locations
SCHEDULE 4.13 Subsidiaries
SCHEDULE 4.14 Insurance Licenses
SCHEDULE 4.15 Taxes
SCHEDULE 6.7 Liens
SCHEDULE 10.2 Addresses
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B Form of Notice of Conversion/Continuation
EXHIBIT C Form of Compliance Certificate
EXHIBIT D-1 Form of Legal Opinion of Borrower's Counsel
EXHIBIT D-2 Form of Legal Opinion of Guarantor's Bermuda counsel
EXHIBIT E Form of Assignment and Acceptance
EXHIBIT F Form of Promissory Note
EXHIBIT G Form of Guaranty
iii
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 24, 1998, is entered into by and
among Renaissance U.S. Holdings, Inc., a Delaware corporation (the "Borrower"),
various financial institutions which are parties hereto (the "Lenders") and Bank
of America National Trust and Savings Association, as Administrative Agent for
the Lenders (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower proposes to acquire the capital stock and certain
assets of certain operating subsidiaries of Nobel Insurance Limited pursuant to
the Purchase Agreement (this, and other capitalized terms used in these recitals
being defined in Section 1.1 of this Agreement);
WHEREAS, in order to finance the Purchase, to pay certain fees and
expenses incurred in connection with the Purchase and to provide for the general
corporate needs of the Borrower and its Subsidiaries, the Borrower has requested
the Lenders to make up to $35,000,000 in Term Loans and provide up to a
$15,000,000 Revolving Loan facility;
WHEREAS, the Guarantor is the ultimate parent of the Borrower and has
agreed to guaranty the credit facilities hereunder;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. When used herein the following terms
shall have the following meanings:
Administrative Agent means (a) Bank of America National Trust and
Savings Association, in its capacity as administrative agent for the Lenders,
and (b) each other Person as shall have subsequently been appointed as the
successor Administrative Agent pursuant to Section 9.9.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be:
(a) "controlled by" any other Person if such other Person
possesses, directly or indirectly, power:
(i) to vote 20% or more of the securities having at the
time of any determination hereunder voting power for the election
of directors of such Person; or
(ii) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise; or
(b) "controlled by" or "under common control with" such other
Person if such other Person is the executor, administrator, or other
personal representative of such Person.
Agent-Related Persons means BofA, any successor administrative
agent arising under Section 9.9 and the Arranger, together with their respective
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
Agent's Payment Office means the address for payments set forth
on Schedule 10.2 in relation to the Administrative Agent, or such other address
as the Administrative Agent may from time to time specify.
Agreement means this Credit Agreement.
Annual Statement means the annual financial statement of any
Insurance Subsidiary as required to be filed with the Department (or similar
Governmental Authority) of such Insurance Subsidiary's domicile, together with
all exhibits or schedules filed therewith, prepared in conformity with SAP.
References to amounts on particular exhibits, schedules, lines, pages and
columns of the Annual Statement are based on the format promulgated by the
Department for the 1997 Annual Statements. If such format is changed in future
years so that different information is contained in such items or they no longer
exist, it is understood that the reference is to information consistent with
that reported in the referenced item in the 1997 Annual Statement of such
Insurance Subsidiary.
Applicable Margin means (a) in the case of Offshore Rate Loans,
the rate set forth opposite "Offshore Rate" on the Pricing Grid for the
applicable Pricing Level and (b) in the case of Base Rate Loans, 0%.
2
Applicable Non-Use Fee Rate means the rate set forth opposite the
"Non-Use Fee" on the Pricing Grid for the applicable Pricing Level.
Arranger means BancAmerica Robertson Stephens.
Assignee is defined in Section 10.8(a).
Assignment and Acceptance is defined in Section 10.8(a).
Attorney Costs means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
Authorized Officers means those officers of the Borrower whose
signatures and incumbency shall have been certified to the Administrative Agent
pursuant to Section 8.1(c).
Available Dividends means, for any Fiscal Quarter, the maximum
allowable unpaid dividends (based on the prior Fiscal Year) which, under
Department regulations, may be paid by the Insurance Subsidiaries to the
Borrower.
Base Rate means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in effect for
such day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.)
Any change in the reference rate announced by BofA shall take
effect at the opening of business on the day specified in the public
announcement of such change.
Base Rate Loan means a Loan that bears interest based on the Base
Rate.
BofA means Bank of America National Trust and Savings
Association, a national banking association.
Borrowing means a borrowing hereunder consisting of Loans of the
same Type made to the Borrower on the same day by the Lenders under Article II,
and, other than in the case of Base Rate Loans, having the same Interest Period.
3
Borrowing Date means any date on which a Borrowing occurs under
Section 2.4.
Borrower is defined in the Preamble.
Borrower Reinsurance Agreement means any arrangement whereby any
Insurance Subsidiary, as reinsurer, agrees to indemnify any other insurance or
reinsurance company against all or a portion of the insurance or reinsurance
risks underwritten by such insurance or reinsurance company under any insurance
or reinsurance policy and any Catastrophe Bonds purchased by the Borrower or any
of its Subsidiaries.
Business Day means any day other than a Saturday, Sunday or other
day on which commercial banks in Chicago, New York or Bermuda are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable eurodollar interbank market.
Capital Adequacy Regulation means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
Capitalized Lease means, as to any Person, any lease which is or
should be capitalized on the balance sheet in accordance with GAAP, together
with any other lease which is in substance a financing lease, including, without
limitation, any lease under which (a) such Person has or will have an option to
purchase the property subject thereto at a nominal amount or an amount less than
a reasonable estimate as of the date the lease is entered into of the fair
market value of such property or (b) the term of the lease approximates or
exceeds the expected useful life of the property leased thereunder.
Catastrophe Bonds means (a) any note, bond or other Debt
instrument or agreement which has a catastrophe risk feature linked to payments
thereunder and (b) any equity interest in a Person that is not a Subsidiary
controlled, directly or indirectly, by the Borrower for the sole purpose of
investing in Debt of the type described in clause (a), which, in the case of
Catastrophe Bonds purchased by the Borrower or any of its Subsidiaries, are
purchased in accordance with its customary reinsurance underwriting procedures.
Change in Control shall be deemed to have occurred if (a) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Guarantor occurs; (b) any
4
"person" as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") other than a Founding
Shareholder, is or becomes, directly or indirectly, the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act, of securities of the Guarantor
that represent 51% or more of the combined voting power of the Guarantor's then
outstanding securities; (c) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Guarantor (together with any new directors whose election by
the Board of Directors or whose nomination by the stockholders of the Guarantor
was approved by a vote of a majority of the Directors of the Guarantor then
still in office who are either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Guarantor's Board of Directors then
in office; or (d) the Guarantor ceases to own, directly or indirectly, 100% of
the capital stock of and beneficial interest in the Borrower other than any
directors' qualifying shares.
Code means the Internal Revenue Code of 1986, as amended and any
successor statute of similar import, together with the regulations thereunder,
as amended, reformed or otherwise modified and in effect from time to time.
References to sections of the Code shall be construed to also refer to successor
sections.
Commitments means the Revolving Loan Commitments and
the Term Loan Commitments.
Commitment Termination Event means (a) the occurrence of a
Default described in Section 7.1(e) or (b) the occurrence and continuance of any
other Event of Default and either (i) the Loans are declared to be due and
payable pursuant to Section 7.2, or (ii) in the absence of such declaration, the
Administrative Agent, acting at the direction of the Required Lenders, gives
notice to the Borrower that the Commitments have been terminated.
Compliance Certificate means a certificate substantially in the
form of Exhibit C but with such changes as the Administrative Agent may from
time to time reasonably request for purposes of monitoring the Borrower's
compliance herewith.
Computation Period means, for each Fiscal Quarter, the four
consecutive Fiscal Quarters ending on the last day of such Fiscal Quarter.
Consolidated EBITDA means, as of the last day of any Fiscal
Quarter, the sum, without duplication, of: (a) Consolidated Net Income for the
Computation Period for the Non- Insurance Subsidiaries, plus (b) the
consolidated interest
5
expense and other financing costs of the Non-Insurance Subsidiaries deducted in
determining Consolidated Net Income for such Computation Period, plus (c) all
depreciation and amortization of assets (including goodwill and other intangible
assets) of the Non-Insurance Subsidiaries deducted in determining Consolidated
Net Income for such Computation Period, plus (d) all federal, state, local and
foreign income taxes (whether paid or deferred) of the Non-Insurance
Subsidiaries deducted in determining Consolidated Net Income for such
Computation Period, plus (e) other non-cash expenses and all extraordinary and
non-recurring expenses of the Non-Insurance Subsidiaries deducted in determining
Consolidated Net Income for such Computation Period.
Consolidated Net Income means, with respect to any Person, the
consolidated net income for such period as determined by GAAP, adjusted by
excluding, without duplication, to the extent included in calculating such
Consolidated Net Income, all extraordinary gains and losses.
Contingent Liability means any agreement, undertaking or
arrangement by which any Person (outside the ordinary course of business)
guarantees, endorses, acts as surety for or otherwise becomes or is contingently
liable for (by direct or indirect agreement, contingent or otherwise, to provide
funds for payment by, to supply funds to, or otherwise to invest in, a debtor,
or otherwise to assure a creditor against loss) the Debt, obligation or other
liability of any other Person (other than by endorsements of instruments in the
course of collection), or for the payment of dividends or other distributions
upon the shares of any other Person or undertakes or agrees (contingently or
otherwise) to purchase, repurchase, or otherwise acquire or become responsible
for any Debt, obligation or liability or any security therefor, or to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition of any other
Person, or to make payment or transfer property to any other Person other than
for fair value received; provided, however, that obligations of each of the
Insurance Subsidiaries under Primary Policies or Borrower Reinsurance Agreements
which are entered into in the ordinary course of business (including security
posted by each of the Insurance Subsidiaries in the ordinary course of its
business to secure obligations thereunder) shall not be deemed to be Contingent
Liabilities of such Insurance Subsidiary or the Borrower for the purposes of
this Agreement. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum permitted principal amount, if
larger) of the Debt, obligation or other liability guaranteed or supported
thereby.
6
Contractual Obligation means, relative to any Person, any
obligation, commitment or undertaking under any agreement or other instrument to
which such Person is a party or by which it or any of its property is bound or
subject.
Controlled Group means the Borrower and any corporation, trade or
business that is, along with the Borrower, a member of a controlled group of
corporations or a controlled group of trades or businesses as described in
sections 414(b) and 414(c), respectively, of the Code or in section 4001 of
ERISA.
Debt means, with respect to any Person, at any date, without
duplication, (a) all obligations of such Person for borrowed money or in respect
of loans or advances (including, without limitation, any such obligations issued
by such Person that qualify as Catastrophe Bonds described in clause (a) of the
definition thereof net of any escrow established (whether directly or to secure
any letter of credit issued to back such Catastrophe Bonds) in connection with
such Catastrophe Bonds); (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (c) all obligations in respect
of letters of credit which have been drawn but not reimbursed by the Person for
whose account such letter of credit was issued, and bankers' acceptances issued
for the account of such Person; (d) all obligations in respect of Capitalized
Leases of such Person; (e) all Hedging Obligations of such Person other than
Hedging Obligations which are reflected in such Person's financial statements;
(f) whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of property or
services; (g) Debt of such Person secured by a Lien on property owned or being
purchased by such Person (including Debt arising under conditional sales or
other title retention agreements) whether or not such Debt is limited in
recourse; (h) any Debt of another Person secured by a Lien on any assets of such
first Person, whether or not such Debt is assumed by such first Person (it being
understood that if such Person has not assumed or otherwise become personally
liable for any such Debt, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of such Debt and the
fair market value of all property of such Person securing such Debt); (i) any
Debt of a partnership in which such Person is a general partner unless such debt
is nonrecourse to such Person; and (j) all Contingent Liabilities of such Person
whether or not in connection with the foregoing; provided that, notwithstanding
anything to contrary contained herein, Debt shall not include(x) unsecured
current liabilities incurred in the ordinary course of business and paid within
90 days after the due date (unless contested diligently in good faith by
appropriate proceedings and, if requested by the Administrative Agent, reserved
against in conformity with GAAP) other than liabilities that are for
7
money borrowed or are evidenced by bonds, debentures, notes or other similar
instruments or (y) any obligations of such Person under any Borrower Reinsurance
Agreement or any Primary Policy.
Debt Service Coverage Ratio means the ratio of (a) the sum of (i)
Available Dividends plus (ii) Consolidated EBITDA plus (iii) cash and cash
equivalents on hand at the Guarantor as of the last day of the Computation
Period to (b) Future Debt Service.
Default means any condition or event, which, after notice or
lapse of time or both, would constitute an Event of Default.
Department is defined in Section 4.2.
Dollar(s) and the sign "$" means lawful money of the United
States of America.
Effective Date means the date on which the conditions precedent
for the effectiveness of this Agreement specified in Section 8.1 shall be met.
Eligible Assignee means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $250,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $250,000,000,
provided that such bank is acting through a branch or agency located in the
United States; (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary
of a Person of which a Lender is a Subsidiary, or (iii) a Person of which a
Lender is a Subsidiary; and (d) mutual funds, pension funds and other
institutional investors (except an Affiliate of the Borrower) regularly engaged
in the making of commercial loans; provided, that any Eligible Assignee which is
not organized under the laws of the United States or a state thereof must, on
the date it becomes a Lender hereunder, make the representation and give the
documents required under Section 9.10.
ERISA means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations promulgated thereunder and under the Code, in each case as in effect
from time to time. References to sections of ERISA also refer to successor
sections.
8
ERISA Event means, with respect to the Borrower, (a) a Reportable
Event (other than a Reportable Event not subject to the provision for 30-day
notice to the PBGC under regulations issued under section 4043 of ERISA), (b)
the withdrawal of the Borrower or any Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in section 4001(a)(2) of
ERISA if such withdrawal would have a Material Adverse Effect, (c) the filing of
a notice of intent to terminate a Plan under a distress termination or the
treatment of a Plan amendment as a distress termination under section 4041(c) of
ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC under
section 4042 of ERISA, (e) the failure to make required contributions which
would result in the imposition of a Lien under section 412 of the Code or
section 302 of ERISA, or (f) any other event or condition which might reasonably
be expected to constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
Event of Default means any of the events described in Section
7.1.
Executive Officer means, as to any Person, the president, the
chief financial officer, the chief executive officer, the general counsel, the
treasurer or the secretary.
Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Administrative Agent.
Final Maturity Date means the fifth anniversary of the Funding
Date.
Fiscal Quarter means any quarter of a Fiscal Year.
Fiscal Year means any period of twelve consecutive calendar
months ending on the last day of December.
FRB means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.
9
Founding Shareholders means Persons who are signatories to the
Shareholders Agreement on the Effective Date or their Affiliates.
Funding Date means the date on which the conditions precedent for
the initial Borrowing specified in Section 8.2 shall be met.
Funding Percentage means for any Lender, the percentage set forth
opposite the name of such Lender in Schedule 2.1 as the same may be adjusted
from time to time pursuant to Section 10.8.
Future Debt Service shall mean at any time the sum of (a) the
consolidated projected interest expense on all outstanding Debt of the Borrower
and its Subsidiaries for the next four consecutive Fiscal Quarters plus (b) all
scheduled principal payments on outstanding Debt of the Borrower and its
Subsidiaries during the next four consecutive Fiscal Quarters. For purposes of
this definition, (i) the projected interest expense with respect to any Debt
shall be calculated by multiplying the outstanding principal amount of such Debt
at the date of calculation by the annualized interest rate then applicable or
which would be applicable to such principal amount and subtracting therefrom,
for each mandatory reduction of principal that is scheduled to occur within such
four Fiscal Quarters, the corresponding portion of such interest and (ii)
repayments of Revolving Loans hereunder (other than Revolving Loans due on the
Commitment Termination Date) shall not be included as scheduled principal
payments.
GAAP means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.
Governmental Authority means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Guarantor means RenaissanceRe Holdings Ltd., a Bermuda company.
Guaranty means a Guaranty substantially in the form of Exhibit G
executed by the Guarantor.
10
Hedging Obligations means, with respect to any Person, the net
liability of such Person under any futures contract or options contract
(including property catastrophe futures and options), interest rate swap
agreements and interest rate collar agreements and all other agreements or
arrangements (other than Reinsurance Agreements and Catastrophe Bonds) designed
to protect such Person against catastrophic events, fluctuations in interest
rates or currency exchange rates.
Indemnified Liabilities is defined in Section 10.5.
Indemnified Person is defined in Section 10.5.
Insurance Code means, with respect to any Insurance Subsidiary,
the Insurance Code of such Insurance Subsidiary's domicile and any successor
statute of similar import, together with the regulations thereunder, as amended
or otherwise modified and in effect from time to time. References to sections of
the Insurance Code shall be construed to also refer to successor sections.
Insurance Policies means policies purchased from insurance
companies by the Borrower or any of its Subsidiaries, for its own account to
insure against its own liability and property loss (including, without
limitation, casualty, liability and workers' compensation insurance).
Insurance Subsidiary means Nobel and any other Subsidiary of the
Borrower created after the Effective Date which is licensed by any Governmental
Authority to engage in the insurance business.
Interest Payment Date means, as to any Offshore Rate Loan, the
last day of each Interest Period applicable to such Loan and if an Interest
Period exceeds three months, the day three months after the commencement of the
Interest Period and the last day thereof and, as to any Base Rate Loan, the last
Business Day of each calendar quarter.
Interest Period means as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on the date one, two, three or six months thereafter as selected by
the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall
11
be extended to the following Business Day unless the result of such
extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the preceding
Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(iii) no Interest Period for any Revolving Loan shall extend
beyond the Revolving Commitment Termination Date; and
(iv) no Interest Period for any Term Loan shall extend beyond the
Final Maturity Date.
IRS means the U.S. Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
Lenders is defined in the Preamble.
Lending Office means, as to any Lender, the office or offices of
such Lender specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 10.2, or such other
office or offices as such Lender may from time to time notify the Borrower and
the Administrative Agent.
License(s) is defined in Section 4.14.
Lien means, when used with respect to any Person, any interest in
any real or personal property, asset or other right held, owned or being
purchased or acquired by such Person for its own use, consumption or enjoyment
which secures payment or performance of any obligation and shall include any
mortgage, lien, pledge, encumbrance, charge, retained title of a conditional
vendor or lessor, or other security agreement, mortgage, deed of trust, chattel
mortgage, assignment, pledge, retention of title, financing or similar statement
or notice, or other encumbrance arising as a matter of law, judicial process or
otherwise.
"Loan" means an extension of credit by a Lender to the Borrower
under Article II, and may be a Base Rate Loan or an Offshore Rate Loan (each, a
"Type" of Loan).
Loan Documents means this Agreement, the Guaranty, any
Notes and all other agreements, instruments, certificates,
12
documents, schedules or other written indicia delivered by the Borrower or any
of its Subsidiaries or the Guarantor in connection with any of the foregoing.
Margin Stock means "margin stock" as such term is defined in
Regulation U or X of the FRB.
Material Adverse Effect means, the occurrence of an event
(including any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), which has or could reasonably be
expected to have a materially adverse effect on:
(a) the assets, business, financial condition or
operations of the Guarantor and its Subsidiaries taken as a
whole; or
(b) the ability of the Guarantor to perform any of its payment or
other material obligations under any of the Loan Documents; or
(c) the legality, validity, binding effect or enforceability
against the Borrower or the Guarantor of any Loan Document that by its
terms purports to bind the Borrower or the Guarantor.
Multiemployer Plan means a "multiemployer plan" as defined in
section 4001(a)(3) of ERISA, and to which the Borrower or any of the
Subsidiaries is making, or is obligated to make, contributions, or has made, or
has been obligated to make, contributions.
Net Debt Proceeds means, relative to Debt described in clause (a)
or (b) of the definition of Debt issued or incurred by the Borrower or any of
its Subsidiaries after the Effective Date (other than Debt under this Agreement,
Debt owed to the Guarantor or any of its Subsidiaries and Debt incurred in
connection with liens permitted under Section 6.7(iii) and (vi)), the excess of
(a) the gross cash proceeds received by the Borrower
or such Subsidiary
over
(b) all reasonable underwriting commissions, private placement
fees, legal, investment banking, and accounting fees and disbursements,
printing expenses, and any governmental or exchange fees incurred (or
reasonably expected to be incurred) in connection with such issuance or
incurrence which are not payable to Affiliates of the Borrower and any
escrows established (whether directly or to
13
secure any letter of credit issued to back such Catastrophe Bonds) to
support or in connection with the issuance of Catastrophe Bonds.
Nobel means Nobel Insurance Company, a Texas corporation.
Non-Insurance Subsidiary means any Subsidiary of the Borrower
which is not an Insurance Subsidiary.
Note means a promissory note executed by the Borrower in favor of
a Lender pursuant to Section 2.3(b), in substantially the form of Exhibit F.
Notice of Borrowing means a notice in substantially the form of
Exhibit A.
Notice of Conversion/Continuation means a notice in substantially
the form of Exhibit B.
Obligations means all obligations and liabilities of the Borrower
and its Subsidiaries to the Administrative Agent or any of the Lenders,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, primary or secondary, joint or several, recourse or nonrecourse or
now or hereafter existing or due or to become due, whether for principal,
interest, fees, expenses, lease obligations, claims, indemnities or otherwise,
under or in connection with this Agreement or any other Loan Document.
Offshore Rate means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of interest
per annum (rounded upward to the next 1/16th of 1%) determined by the
Administrative Agent as follows:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
Eurodollar Reserve Percentage means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day (whether or not
applicable to any Lender) under regulations issued from time to time by
the FRB for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"); and
14
IBOR means the rate of interest per annum determined by the
Administrative Agent to be the arithmetic mean (rounded upward to the
next 1/16th of 1%) of the rates of interest per annum determined by the
Administrative Agent as the rate of interest at which dollar deposits in
the approximate amount of the amount of the Loan to be made or continued
as, or converted into, an Offshore Rate Loan by the Administrative Agent
or its Affiliates and having a maturity comparable to such Interest
Period would be offered by the Administrative Agent to prime
international banks in the offshore dollar market at approximately 10:00
a.m. (Chicago time) two Business Days prior to the commencement of such
Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any change in
the Eurodollar Reserve Percentage.
Offshore Rate Loan means a Loan that bears interest based on the
Offshore Rate.
Ordinary Course Litigation is defined in Section 4.4.
Organization Documents means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
Other Taxes means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
Participants is defined in Section 10.8(d).
PBGC means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.
Person means any natural person, corporation, partnership, firm,
trust, association, government, governmental agency or other entity, whether
acting in an individual, fiduciary or other capacity.
Plan means any "employee pension benefit plan," as such term is
defined in ERISA, which is subject to Title IV of ERISA (other than a
"Multiemployer Plan"), and as to which any entity in the Controlled Group has or
may have any liability, including
15
any liability by reason of having been a substantial employer within the meaning
of section 4063 of ERISA for any time within the preceding five years or by
reason of being deemed to be a contributing sponsor under section 4069 of ERISA.
Pricing Grid means the Pricing Grid set forth on Schedule 1.2.
Pricing Level means the Pricing Level on the Pricing Grid which
is applicable from time to time and in accordance with Section 2.7(c).
Primary Policies means any insurance policies issued by an
Insurance Subsidiary.
Pro Rata Share means as to any Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender's Commitment divided by the combined Commitments of all
Lenders.
Purchase means the purchase by the Borrower of Nobel and certain
other operating subsidiaries and other certain assets of Nobel Insurance Limited
pursuant to the Purchase Agreement.
Purchase Agreement means the Stock Purchase Agreement dated
December 19, 1997 among the Borrower, the Guarantor, Nobel Insurance Limited and
Nobel Holdings, Inc. as in effect on the Effective Date.
Quarterly Statement means the quarterly financial statement of
any Insurance Subsidiary as required to be filed with the Department (or similar
Governmental Authority) of such Insurance Subsidiary's domicile, together with
all exhibits or schedules filed therewith, prepared in conformity with SAP.
Reinsurance Agreement means any arrangement whereby an insurance
company, the reinsurer, agrees to indemnify any Insurance Subsidiary against all
or a portion of the insurance or reinsurance risks underwritten by such
Insurance Subsidiary under any insurance policy.
Reportable Event means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
Required Lenders means, at any time, Lenders then having at least
60% of the aggregate amount of the Revolving Commitments or, if the Commitments
have been terminated, Lenders then holding at least 60% of the then aggregate
unpaid principal amount of the Loans.
16
Requirement of Law for any Person means the Organization
Documents of such Person, and any law, treaty, rule, ordinance or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
Revolving Commitment Termination Date means the earliest to occur
of (a) the fifth anniversary of the Funding Date or (b) the date on which any
Commitment Termination Event occurs.
Revolving Credit Agreement means that certain Third Amended and
Restated Credit Agreement, dated as of December 12, 1996, as amended through the
Effective Date, among the Guarantor, the various financial institutions party
thereto from time to time and Bank of America National Trust & Savings
Association, as Administrative Agent for such lenders and as thereafter amended
in accordance with the Guaranty.
Revolving Loan - see Section 2.1(a).
Revolving Loan Commitment means as to any Lender the Commitment
of such Lender to make Revolving Loans pursuant to Section 2.1(a). The initial
amount of the Revolving Loan Commitment of each Lender is set forth on Schedule
2.1.
SAP means, as to each Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the Department (or other similar
authority) in such Insurance Subsidiary's domicile for the preparation of Annual
Statements and other financial reports by insurance corporations of the same
type as such Insurance Subsidiary.
Shareholders Agreement means the Shareholders Agreement dated as
of August 1, 1995 among the Guarantor, United States Fidelity and Guaranty
Company, Warburg, Pincus Investors, L.P., Trustees of the General Electric
Pension Trust and GE Investment Private Placement Partners I, Limited
Partnership.
S&P Claims Rating means the claims paying ability rating of
Renaissance Reinsurance Ltd. as determined from time to time by Standard &
Poor's Rating Group. If at any time no such rating shall be determined, it shall
be assumed to be below BBB+.
Statutory Financial Statements is defined in Section 4.2(a).
Subsidiary means a corporation of which the indicated Person
and/or its other Subsidiaries, individually or in the aggregate, own, directly
or indirectly, such number of
17
outstanding shares as have at the time of any determination hereunder more than
50% of the ordinary voting power. Unless otherwise specified, "Subsidiary" shall
mean a Subsidiary of the Borrower.
Taxes means 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 Lender and the Administrative Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Administrative Agent, as the
case may be, is organized or maintains a lending office.
Term Loan - see Section 2.1(b).
Term Loan Commitment means, as to any Lender, the Commitment of
such Lender to make Term Loans pursuant to Section 2.1(b). The initial amount of
the Term Loan Commitment of each Lender is set forth on Schedule 2.1.
Welfare Plan means any "employee welfare benefit plan" as such
term is defined in ERISA, as to which the Borrower has any liability.
SECTION 1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other
18
contractual instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the
Administrative Agent merely because of the Administrative Agent's or Lenders'
involvement in their preparation.
SECTION 1.3 Accounting Principles. Unless otherwise defined or the
context otherwise requires, all financial and accounting terms used herein or in
any of the Loan Documents or any certificate or other document made or delivered
pursuant hereto shall be defined in accordance with GAAP or SAP, as the context
may require. When used in this Agreement, the term "financial statements" shall
include the notes and schedules thereto. In addition, when used herein, the
terms "best knowledge of" or "to the best knowledge of" any Person shall mean
matters within the actual knowledge of such Person (or an Executive Officer or
general partner of such Person) or which should have been known by such Person
after reasonable inquiry.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENT
SECTION 2.1 Commitments. Upon and subject to the terms and conditions
hereof, each of the Lenders severally and for itself agrees as follows:
19
(a) Each Lender agrees to make revolving loans to the Borrower
(collectively called the "Revolving Loans" and individually called a "Revolving
Loan") from time to time on any Business Day during the period from the Funding
Date to the Revolving Commitment Termination Date, in an aggregate amount not to
exceed at any time outstanding the amount set forth on Schedule 2.1 under the
heading Revolving Loan Commitment for each respective Lender (such amount as the
same may be adjusted under Section 2.2 or as a result of one or more assignments
under Section 10.8, the Lender's "Revolving Loan Commitment"); provided,
however, that, after giving effect to any Borrowing, the aggregate principal
amount of all outstanding Revolving Loans shall not at any time exceed the
combined Revolving Loan Commitments. Within the limits of each Lender's
Revolving Loan Commitment, and subject to the other terms and conditions hereof,
the Borrower may borrow under this Section 2.1(a), prepay under Section 2.6 and
reborrow under this Section 2.1(a).
(b) Each Lender agrees to make a Term Loan to the Borrower
(collectively called the "Term Loans" and individually called a "Term Loan") on
the Funding Date in such Lender's Pro Rata Share of such aggregate amounts as
the Borrower may request from all Lenders under the Term Loan Commitments,
provided that the aggregate principal amount of all Term Loans shall not exceed
$35,000,000 and no Lender's Term Loan shall exceed its Term Loan Commitment.
Each Lender's Term Loan Commitment shall expire concurrently with the making of
such Lender's Term Loan.
SECTION 2.2 Termination or Reduction of Commitments. (a) The Borrower
may, upon not less than five Business Days' prior notice to the Administrative
Agent, terminate either Commitment, or permanently reduce either Commitment by
an aggregate minimum amount of $3,000,000 or any multiple of $500,000 in excess
thereof; unless, in the case of the Revolving Loan Commitment, after giving
effect thereto and to any prepayments of Revolving Loans to be made on the
effective date thereof, the then-outstanding principal amount of the Revolving
Loans would exceed the amount of the combined Revolving Loan Commitment then in
effect. Once reduced in accordance with this Section, the Commitments may not be
increased. Any reduction of the Commitments shall be applied to each Lender
according to its Pro Rata Share.
(b) Mandatory Commitment Reduction. On each date a Revolving
Loans Commitment reduction is required pursuant to Section 2.6(d), the Revolving
Loan Commitments shall, without any further action, automatically and
permanently be reduced by such amount.
SECTION 2.3 Loan Accounts. (a) The Loans made by each Lender shall be
evidenced by one or more loan accounts or records
20
maintained by such Lender in the ordinary course of business. The loan accounts
or records maintained by each Lender shall be conclusive, absent manifest error,
of the amount of the Loans made by such Lender to the Borrower and the interest
and payments thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Borrower hereunder
to pay any amount owing with respect to the Loans.
(b) Upon the written request of any Lender made through the
Administrative Agent, the Loans made by such Lender may be evidenced by one or
more Notes, instead of loan accounts. Each such Lender shall endorse on the
schedules annexed to its Note(s) the date, amount and maturity of each Loan made
by it and the date and amount of each payment of principal made by the Borrower
with respect thereto. Each such Lender is irrevocably authorized by the Borrower
to endorse its Note(s) and each such Lender's Note shall be conclusive, absent
manifest error; provided, however, that the failure of a Lender to make, or an
error in making, a notation thereon with respect to any Loan shall not limit or
otherwise affect the obligations of the Borrower hereunder or under any such
Note to such Lender.
SECTION 2.4 Procedure for Borrowing. (a) Each Borrowing shall be made
upon the Borrower's irrevocable written notice delivered to the Administrative
Agent in the form of a Notice of Borrowing (which notice must be received by the
Administrative Agent prior to 9:00 a.m. (San Francisco time) (x) three Business
Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans;
and (y) one Business Day prior to the requested Borrowing Date, in the case of
Base Rate Loans, specifying:
(i) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $3,000,000 or any multiple of $500,000 in excess
thereof;
(ii) the requested Borrowing Date, which shall be a Business Day;
(iii) the Type of Loans comprising the Borrowing; and
(iv) the duration of the Interest Period applicable to any
Offshore Loans included in such notice. If the Notice of Borrowing fails
to specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be three
months.
(b) The Administrative Agent will promptly notify each Lender of
its receipt of any Notice of Borrowing and of the amount of such Lender's Pro
Rata Share of that Borrowing.
21
(c) Each Lender will make the amount of its Pro Rata Share of
each Borrowing available to the Administrative Agent for the account of the
Borrower at the Administrative Agent's Payment Office by 10:00 a.m. (San
Francisco time) on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. The proceeds of all such
Loans will then be made available to the Borrower by the Administrative Agent by
wire transfer in accordance with written instructions provided to the
Administrative Agent by the Borrower of like funds as received by the
Administrative Agent.
(d) After giving effect to any Borrowing, there may not be more
than five (5) different Interest Periods in effect.
SECTION 2.5 Conversion and Continuation Elections. (a) The Borrower may,
upon irrevocable written notice to the Administrative Agent in accordance with
Section 2.5(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of any other Type of Loans, to convert any such Loans (or any part
thereof in an amount not less than $3,000,000, or that is in an integral
multiple of $500,000 in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest Period,
to continue any Loans having Interest Periods expiring on such day (or
any part thereof in an amount not less than $3,000,000, or that is in an
integral multiple of $500,000 in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrower to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
(b) The Borrower shall deliver a Notice of Conversion/
Continuation to be received by the Administrative Agent not later than 9:00 a.m.
(San Francisco time) at least (x) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans; and (y) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(i) the proposed Conversion/Continuation Date;
22
(ii) the aggregate amount of Loans to be converted or continued;
(iii) the Type of Loans resulting from the proposed conversion or
continuation; and
(iv) other than in the case of conversions into Base Rate Loans,
the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Borrower has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans or if any Default or Event
of Default then exists, the Borrower shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Administrative Agent will promptly notify each Lender of
its receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Borrower, the Administrative Agent will promptly notify each
Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
(e) After giving effect to any conversion or continuation of
Loans, there may not be more than five (5) different Interest Periods in effect.
(f) The Borrower may not select any Interest Period for a Term
Loan if, after giving effect to such selection, the Borrower would have to
prepay any Offshore Rate Loan in order to make any scheduled prepayment of such
Term Loan.
SECTION 2.6 Repayments. (a) Subject to Section 3.4, the Borrower may, at
any time or from time to time, upon not less than three (3) Business Days'
irrevocable notice to the Administrative Agent, ratably prepay Loans in whole or
in part, in minimum amounts of $1,000,000 or any multiple of $500,000 in excess
thereof. Such notice of prepayment shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of any such notice, and of such
Lender's Pro Rata Share of such prepayment. If such notice is given by the
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
Term Loans once repaid may not be reborrowed. Prepayments of Term Loans shall be
applied in the inverse order of maturity.
23
(b) If at any time the aggregate outstanding principal amount of
the Revolving Loans shall exceed the Revolving Loan Commitment in effect at such
time, the Borrower shall make a principal repayment of the Revolving Loans in an
amount equal to such excess.
(c) The Borrower shall, immediately upon any acceleration of the
maturity date of the Loans pursuant to Section 7.2, repay the Loans.
(d) Within one Business Day after the Borrower receives any Net
Debt Proceeds, the Borrower shall repay the Loans and/or reduce the Revolving
Loan Commitment in an amount equal to such Net Debt Proceeds unless such payment
has been previously waived in writing by the Required Lenders. Net Debt Proceeds
shall be applied as follows: (i) Net Debt Proceeds shall be applied to repay
Term Loans (in the inverse order of maturity), and (ii) to the extent there are
any Net Debt Proceeds remaining after the application required pursuant to
clause (i), the Revolving Loan Commitment shall be reduced in an amount equal to
such unapplied Net Debt Proceeds and, to the extent such Revolving Loan
Commitment Reduction requires payment of Revolving Loans, the Net Debt Proceeds
shall be applied to such repayment.
(e) The Borrower shall repay to the Lenders on the Revolving
Commitment Termination Date the aggregate principal amount of Revolving Loans
outstanding on such date.
(f) The Borrower shall repay to the Lenders on each date set
forth below the aggregate principal amount of Term Loans set forth opposite such
date:
Term Loan Payment Date Principal Amount
---------------------- ----------------
The second anniversary of the
Funding Date $ 8,000,000
The third anniversary of the
Funding Date $ 8,500,000
The fourth anniversary of the
Funding Date $ 8,500,000
The fifth anniversary of the
Funding Date $10,000,000
The Borrower shall repay to the Lenders on the Final Maturity Date the aggregate
principal amount of Term Loans outstanding on such date.
(g) Each prepayment of Offshore Rate Loans shall be accompanied
by payment of accrued interest to the date of prepayment on the amount prepaid
and amounts required pursuant to Section 3.4.
24
SECTION 2.7 Interest. (a) Each Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to, the Offshore Rate or the Base Rate, as the case may be
(and subject to the Borrower's right to convert to other Types of Loans under
Section 2.5), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of Offshore Rate Loans under Section 2.6 for the portion of the Loans so prepaid
and upon payment (including prepayment) in full thereof and, during the
existence of any Event of Default, interest shall be paid on demand of the
Administrative Agent at the request or with the consent of the Required Lenders.
(c) Any change in the Applicable Margin or Applicable Non-Use Fee
Rate resulting from a change in the S & P Claims Rating shall be effective as of
the effective date of the change in the S & P Claims Rating. The Borrower agrees
promptly upon any change in the S & P Claims Rating to inform the Administrative
Agent thereof.
(d) Notwithstanding clause (a) of this Section, after
acceleration or, at the election of the Required Lenders while any Event of
Default exists, the Borrower shall pay interest (after as well as before entry
of judgment thereon to the extent permitted by law) on the principal amount of
all outstanding Obligations, at a rate per annum which is determined by adding
3% per annum to the Applicable Margin then in effect for such Loans and, in the
case of Obligations not subject to an interest rate, at a rate per annum equal
to the Base Rate plus 3%; provided, however, that, on and after the expiration
of any Interest Period applicable to any Offshore Rate Loan outstanding on the
date of occurrence of such Event of Default or acceleration, the principal
amount of such Loan shall, during the continuation of such Event of Default or
after acceleration, bear interest at a rate per annum equal to the Base Rate
plus 3%.
(e) Anything herein to the contrary notwithstanding, the
obligations of the Borrower to any Lender hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest rate
of interest that may be lawfully contracted for, charged or received by such
Lender, and in such event the Borrower shall pay such Lender interest at the
highest rate permitted by applicable law.
25
SECTION 2.8 Fees. (a) Agent Fees. The Borrower shall pay fees to the
Administrative Agent for the Administrative Agent's own account, as required by
the letter agreement ("Fee Letter") between the Borrower and the Administrative
Agent dated February 23, 1998 and as the Borrower and the Administrative Agent
may agree from time to time.
(b) Non-Use Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender a non-use fee on the actual daily unused
portion of such Lender's Commitments, computed on a quarterly basis in arrears
on the last Business Day of each calendar quarter based upon the daily
utilization for that quarter as calculated by the Administrative Agent, equal to
the Applicable Non-Use Fee Rate. Such non-use fee shall accrue (x) in the case
of the Revolving Loan Commitments, from the Effective Date to the Revolving
Commitment Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each March, June, September and December commencing on
June 30, 1998 through the Revolving Commitment Termination Date, with the final
payment to be made on the Revolving Commitment Termination Date and (y) in the
case of the Term Loan Commitments, from the Effective Date to the Funding Date
and shall be due and payable on the Funding Date. The non- use fees provided in
this subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article VIII
are not met.
SECTION 2.9 Computation of Fees and Interest. (a) All computations of
fees and interest (other than interest on Base Rate Loans) shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest on Base
Rate Loans shall be computed on the basis of a 365/366-day year and actual days
elapsed. Interest and fees shall accrue during each period during which interest
or such fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Borrower and the Lenders in the
absence of manifest error.
SECTION 2.10 Payments by the Borrower. (a) All payments to be made by
the Borrower shall be made without set-off, recoupment or counterclaim. Except
as otherwise expressly provided herein, all payments by the Borrower shall be
made to the Administrative Agent for the account of the Lenders at the
Administrative Agent's Payment Office, and shall be made in Dollars and in
immediately available funds, no later than 10:00 a.m. (San Francisco time) on
the date specified herein. The Administrative Agent will promptly distribute to
each Lender its
26
Pro Rata Share (or other applicable share as expressly provided herein) of such
payment in like funds as received. Any payment received by the Administrative
Agent later than 10:00 a.m. (San Francisco time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue to such Business Day.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Borrower prior to the date on which any payment is due to the Lenders that the
Borrower will not make such payment in full as and when required, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
SECTION 2.11 Payments by the Lenders to the Administrative Agent. (a)
Unless the Administrative Agent receives notice from a Lender on or prior to the
Effective Date or, with respect to any Borrowing after the Effective Date, at
least one Business Day prior to the date of such Borrowing, that such Lender
will not make available as and when required hereunder to the Administrative
Agent for the account of the Borrower the amount of that Lender's Pro Rata Share
of the Borrowing, the Administrative Agent may assume that each Lender has made
such amount available to the Administrative Agent in immediately available funds
on the Borrowing Date and the Administrative Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to the Administrative Agent in immediately
available funds and the Administrative Agent in such circumstances has made
available to the Borrower such amount, that Lender shall on the Business Day
following such Borrowing Date make such amount available to the Administrative
Agent, together with interest at the Federal Funds Rate for each day during such
period. A notice of the Administrative Agent
27
submitted to any Lender with respect to amounts owing under this subsection (a)
shall be conclusive, absent manifest error. If such amount is so made available,
such payment to the Administrative Agent shall constitute such Lender's Loan on
the date of Borrowing for all purposes of this Agreement. If such amount is not
made available to the Administrative Agent on the Business Day following the
Borrowing Date, the Administrative Agent will notify the Borrower of such
failure to fund and, upon demand by the Administrative Agent, the Borrower shall
pay such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing
Date shall not relieve any other Lender of any obligation hereunder to make a
Loan on such Borrowing Date, but no Lender shall be responsible for the failure
of any other Lender to make the Loan to be made by such other Lender on any
Borrowing Date.
SECTION 2.12 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Lender shall obtain on account of the Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share, such Lender
shall immediately (a) notify the Administrative Agent of such fact, and (b)
purchase from the other Lenders such participations in the Loans made by them as
shall be necessary to cause such purchasing Lender to share the excess payment
pro rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Lender, such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the proportion of (i)
the amount of such paying Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section 10.10) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify the Lenders following any such purchases or repayments.
28
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
SECTION 3.1 Taxes. (a) Any and all payments by the Borrower to each
Lender or the Administrative Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or withholding
for any Taxes. In addition, the Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each
Lender and the Administrative Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Lender or the Administrative Agent and
any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Payment under this indemnification
shall be made within 30 days after the date the Lender or the Administrative
Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this
Section) such Lender or the Administrative Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay, without duplication, to each
Lender or the Administrative Agent for the account of such Lender, at
the time interest is paid, all additional amounts which the respective
Lender specifies as necessary to preserve the after-tax yield the Lender
would have received if such Taxes or Other Taxes had not been imposed.
29
(d) Within 30 days after the date of any payment by the Borrower
of Taxes or Other Taxes, the Borrower shall furnish the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Administrative Agent.
(e) If the Borrower is required to pay additional amounts to any
Lender or the Administrative Agent pursuant to Section 3.1(c), then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender
or inconsistent with such Lender's internal policies.
SECTION 3.2 Illegality. (a) If any Lender determines that the
introduction of any Requirement of Law, or any change in any Requirement of Law,
or in the interpretation or administration of any Requirement of Law, has made
it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable Lending Office to
make Offshore Rate Loans, then, on notice thereof by the Lender to the Borrower
through the Administrative Agent, any obligation of that Lender to make Offshore
Rate Loans shall be suspended until the Lender notifies the Administrative Agent
and the Borrower that the circumstances giving rise to such determination no
longer exist.
(b) If a Lender determines that it is unlawful to maintain any
Offshore Rate Loan, the Borrower shall, upon its receipt of notice of such fact
and demand from such Lender (with a copy to the Administrative Agent), prepay in
full such Offshore Rate Loans of that Lender then outstanding, together with
interest accrued thereon and amounts required under Section 3.4, either on the
last day of the Interest Period thereof, if the Lender may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if the Lender may
not lawfully continue to maintain such Offshore Rate Loan. If the Borrower is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Borrower shall borrow from the affected Lender, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Borrower may elect, by
giving notice to the Lender through the Administrative Agent that all Loans
which would otherwise be made by the Lender as Offshore Rate Loans shall be
instead Base Rate Loans.
30
(d) Before giving any notice to the Administrative Agent under
this Section, the affected Lender shall designate a different Lending Office
with respect to its Offshore Rate Loans if such designation will avoid the need
for giving such notice or making such demand and will not, in the judgment of
the Lender, be illegal or otherwise disadvantageous to the Lender or
inconsistent with such Lender's internal policies.
SECTION 3.3 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change (other than
any change by way of imposition of or increase in reserve requirements included
in the calculation of the Offshore Rate) in or in the interpretation of any law
or regulation or (ii) the compliance by that Lender with any guideline or
request 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 such Lender
of agreeing to make or making, funding or maintaining any Offshore Rate Loans,
then the Borrower shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs; provided that the
Borrower shall not be obligated to pay any additional amounts which were
incurred by such Lender more than 90 days prior to the date of such request.
(b) If any Lender shall have determined that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Lender (or its Lending Office) or any corporation controlling the Lender
with any Capital Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by the Lender or any corporation
controlling the Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased or its rate of return is decreased as a consequence of its Commitment,
loans, credits or obligations under this Agreement, then, upon demand of such
Lender to the Borrower through the Administrative Agent, the Borrower shall pay
to the Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase; provided that the
Borrower shall not be obligated to pay any additional amounts which were
incurred by such Lender more than 90 days prior to the date of such request.
31
SECTION 3.4 Funding Losses. The Borrower shall reimburse each Lender and
hold each Lender harmless from any loss or expense which the Lender may sustain
or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a
Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation that includes an Offshore Rate
Loan;
(c) the failure of the Borrower to make any prepayment in
accordance with any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.6) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.5 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Lenders under this Section
and under Section 3.3(a), each Offshore Rate Loan made by a Lender (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the IBOR used in determining the Offshore Rate for
such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
SECTION 3.5 Inability to Determine Rates. If the Administrative Agent
determines that for any reason adequate and reasonable means do not exist for
determining the Offshore Rate for any requested Interest Period with respect to
a proposed Offshore Rate Loan, or the Administrative Agent determines (or the
Required Lenders advise the Administrative Agent) that the Offshore Rate
applicable pursuant to Section 2.7(a) for any requested Interest Period with
respect to a proposed Offshore Rate Loan does not adequately and fairly reflect
the cost to the Lenders of funding such Loan, the Administrative Agent will
promptly so notify the Borrower and each Lender. Thereafter, the obligation of
the Lenders to make or maintain Offshore Rate
32
Loans, as the case may be, hereunder shall be suspended until the Administrative
Agent revokes such notice in writing. Upon receipt of such notice, the Borrower
may revoke any Notice of Borrowing or Notice of Conversion/ Continuation then
submitted by it. If the Borrower does not revoke such Notice, the Lenders shall
make, convert or continue the Loans, as proposed by the Borrower, in the amount
specified in the applicable notice submitted by the Borrower, but such Loans
shall be made, converted or continued as Base Rate Loans instead of Offshore
Rate Loans.
SECTION 3.6 Certificates of Lenders. Any Lender claiming reimbursement
or compensation under this Article III shall deliver to the Borrower (with a
copy to the Administrative Agent) a certificate setting forth in reasonable
detail the amount payable to the Lender hereunder and such certificate shall be
conclusive and binding on the Borrower in the absence of manifest error.
SECTION 3.7 Substitution of Lenders. Upon the receipt by the Borrower
from any Lender (an "Affected Lender") of a claim for compensation under Section
3.1, 3.2 or 3.3 the Borrower may: (i) request the Affected Lender to use its
reasonable efforts to obtain a replacement bank or financial institution
satisfactory to the Borrower to acquire and assume all or a ratable part of all
of such Affected Lender's Loans and Commitment (a "Substitute Lender"); (ii)
request one more of the other Lenders to acquire and assume all or part of such
Affected Lender's Loans and Commitment; or (iii) designate a Substitute Lender.
Any such designation of a Substitute Lender under clause (i) or (iii) shall be
subject to the prior written consent of the Administrative Agent (which consent
shall not be unreasonably withheld).
SECTION 3.8 Survival. The agreements and obligations of the Borrower in
this Article III shall survive the payment of all other Obligations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants (provided that for
purposes of giving representations and warranties prior to the date the Purchase
has been consummated, the Borrower has assumed that the Purchase has been
consummated in accordance with the terms of the Purchase Agreement) to each
Lender that:
33
SECTION 4.1 Due Organization, Authorization, etc. Each of the Borrower
and each Subsidiary (a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, (b) is duly
qualified to do business and in good standing in each jurisdiction where,
because of the nature of its activities or properties, such qualification is
required except where the failure to qualify would not have a Material Adverse
Effect, which jurisdictions are set forth with respect to the Borrower and each
Subsidiary on Schedule 4.1 as revised from time to time by the Borrower pursuant
to Section 5.1(l), (c) has the requisite corporate power and authority and the
right to own and operate its properties, to lease the property it operates under
lease, and to conduct its business as now and proposed to be conducted, and (d)
has obtained all material licenses, permits, consents or approvals from or by,
and has made all filings with, and given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct (including, without limitation, the consummation of the
transactions contemplated by this Agreement) as to each of the foregoing, except
where the failure to do so would not have a Material Adverse Effect. The
execution, delivery and performance by the Borrower of this Agreement and the
consummation of the transactions contemplated hereby and thereby are within its
corporate powers and have been duly authorized by all necessary corporate action
(including, without limitation, shareholder approval, if required). Each of the
Borrower and its Subsidiaries has received all other material consents and
approvals (if any shall be required) necessary for such execution, delivery and
performance, and such execution, delivery and performance do not and will not
contravene or conflict with, or create a Lien or right of termination or
acceleration under, any Requirement of Law or Contractual Obligation binding
upon the Borrower or such Subsidiaries. This Agreement and each of the Loan
Documents to which the Borrower is a party is (or when executed and delivered
will be) the legal, valid, and binding obligation of the Borrower enforceable
against the Borrower in accordance with its respective terms; provided that the
Borrower assumes for purposes of this Section 4.1 that this Agreement and the
other Loan Documents have been validly executed and delivered by each of the
parties thereto other than the Borrower.
SECTION 4.2 Statutory Financial Statements. (a) The Annual Statement and
the March 31, 1998 Quarterly Statement of each of the Insurance Subsidiaries
(including, without limitation, the provisions made therein for investments and
the valuation thereof, reserves, policy and contract claims and statutory
liabilities) as filed with the appropriate Governmental Authority of its
jurisdiction of domicile (the "Department") and delivered to each Lender prior
to the execution and delivery of this Agreement, as of and for the 1997 Fiscal
Year and the Fiscal
34
Quarter ended March 31, 1998, (collectively the "Statutory Financial
Statements"), have been prepared in accordance with SAP applied on a consistent
basis (except as noted therein). Each such Statutory Financial Statement was in
compliance with applicable law when filed. To the best of the Borrower's
knowledge, the 1997 Fiscal Year and the March 31, 1998 Statutory Financial
Statements fairly present the financial position, the results of operations and
changes in equity of each such Insurance Subsidiary as of and for the respective
dates and periods indicated therein in accordance with SAP applied on a
consistent basis, except as set forth in the notes thereto or on Schedule
4.2(a). Except for liabilities and obligations, including, without limitation,
reserves, policy and contract claims and statutory liabilities (all of which
have been computed in accordance with SAP), disclosed or provided for in the
Statutory Financial Statements, the Insurance Subsidiaries did not have, as of
the respective dates of each of such financial statements, any liabilities or
obligations (whether absolute or contingent and whether due or to become due)
which, in conformity with SAP, applied on a consistent basis, would have been
required to be or should be disclosed or provided for in such financial
statements. All books of account of each of the Insurance Subsidiaries fully and
fairly disclose all of the transactions, properties, assets, investments,
liabilities and obligations of such Insurance Subsidiary and all of such books
of account are in the possession of each such Insurance Subsidiary and are true,
correct and complete in all material respects.
(b) With respect to any representation and warranty with respect
to the 1997 Fiscal Year and the March 31, 1998 Statutory Financial Statements,
such representation and warranty is to the best of the Borrower's knowledge.
With respect to any representation and warranty which is deemed to be made after
the date hereof by the Borrower, references to the Statutory Financial
Statements shall refer to the Statutory Financial Statements which as of such
date shall have most recently been furnished by or on behalf of the Insurance
Subsidiaries to each Lender pursuant to this Agreement.
(c) Except as set forth on Schedule 4.2(c), there has been no
change in the business, assets, operations or financial condition of the
Borrower or any Subsidiary which has had or could reasonably be expected to have
a Material Adverse Effect since December 31, 1997.
SECTION 4.3 GAAP Financial Statements. (a) The Borrower has heretofore
furnished to the Lenders the consolidated financial statements of Nobel
Insurance Limited and its Subsidiaries for the Fiscal Year ending December 31,
1997 and the Fiscal Quarter ending March 31, 1998. To the best of the Borrower's
knowledge, such financial statements are free of
35
material misstatement and present fairly, in all material respects, the
consolidated financial condition of Nobel Insurance Limited and its Subsidiaries
at such dates.
(b) With respect to any representation and warranty which is
deemed to be made after the date hereof by the Borrower, the balance sheet and
statements of operations, of shareholders' equity and of cash flow, which as of
such date shall most recently have been furnished by or on behalf of the
Borrower to each Lender for the purposes of or in connection with this Agreement
or any transaction contemplated hereby, shall have been prepared in accordance
with GAAP consistently applied (except as disclosed therein and, in the case of
interim financial statements, for the absence of footnote disclosures), and
shall present fairly the consolidated financial condition of the corporations
covered thereby as at the dates thereof for the periods then ended, subject, in
the case of quarterly financial statements, to normal year-end audit
adjustments.
(c) The forecasted cash flow statement of the Borrower and its
Subsidiaries (after giving effect to the Purchase and the borrowings hereunder),
copies of which have been delivered to each Lender, have been prepared by the
Borrower in light of the past operations of the business of Nobel Insurance
Limited and its Subsidiaries and represent, as of the date of this Agreement,
the good faith estimate of the Borrower and its senior management for the most
probable course of the business of the Borrower and its Subsidiaries after
giving effect to such transactions.
SECTION 4.4 Litigation and Contingent Liabilities. (a) Except as set
forth (including estimates of the dollar amounts involved) in Schedule 4.4
hereto and (b) except for claims which are covered by Insurance Policies,
coverage for which has not been denied in writing, or which relate to Primary
Policies or Borrower Reinsurance Agreements issued by the Borrower or its
Insurance Subsidiaries or to which it is a party entered into by the Borrower or
its Insurance Subsidiaries in the ordinary course of business (referred to
herein as "Ordinary Course Litigation"), no claim, litigation (including,
without limitation, derivative actions), arbitration, governmental investigation
or proceeding or inquiry is pending or, to its knowledge, threatened against the
Borrower or any of its Subsidiaries (i) which would, if adversely determined,
have a Material Adverse Effect or (ii) which relates to any of the transactions
contemplated hereby, and there is no basis known to the Borrower for any of the
foregoing. Other than any liability incident to such claims, litigation or
proceedings, the Borrower has no material Contingent Liabilities not provided
for or referred to in the financial statements delivered pursuant to Section
4.3.
36
SECTION 4.5 Employee Benefit Plans. Set forth on Schedule 4.5 as revised
from time to time by the Borrower pursuant to Section 5.1(l) is a list of all
Plans and all Multiemployer Plans respectively, which, to the knowledge of the
Borrower, are maintained with respect to employees of the Borrower or its
Subsidiaries.
SECTION 4.6 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled by an
investment company," within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.7 Regulations U and X. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock. None of the Borrower, any of its Subsidiaries, any Affiliate of
any of them or any Person acting on their behalf has taken or will take action
to cause the execution, delivery or performance of this Agreement, the making or
existence of the Loans or the use of proceeds of the Loans to violate
Regulations U or X of the FRB.
SECTION 4.8 Proceeds. The proceeds of the Term Loans will be used to
finance the Purchase and the costs associated therewith. The proceeds of the
Revolving Loans will be used for general corporate purposes (including capital
contributions to Subsidiaries and acquisitions permitted under Section 6.3).
None of such proceeds will be used in violation of applicable law, and none of
such proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any margin stock as
defined in Regulation U of the FRB.
SECTION 4.9 Insurance. Schedule 4.9 as revised from time to time by the
Borrower pursuant to Section 5.1(l) sets forth a true and correct summary of all
Insurance Policies. No notice of any pending or threatened cancellation or
premium increase has been received by the Borrower or its Subsidiaries with
respect to any such Insurance Policies. The Borrower and its Subsidiaries are in
substantial compliance with all material conditions contained in such Insurance
Policies.
SECTION 4.10 Ownership of Properties. On the date of any Loan, the
Borrower and its Subsidiaries will have good title to all of their respective
material properties and assets, real and personal, of any nature whatsoever.
SECTION 4.11 Business Locations. Schedule 4.11 as revised from time to
time by the Borrower pursuant to Section 5.1(l) lists each of the locations
where the Borrower maintains an office, a place of business or any records.
37
SECTION 4.12 Accuracy of Information. All factual written information
furnished heretofore or contemporaneously herewith by or on behalf of the
Borrower or any of its Subsidiaries to the Administrative Agent or the Lenders
for purposes of or in connection with this Agreement, the Purchase or any of the
transactions contemplated hereby, as supplemented to the date hereof, is and all
other such factual written information hereafter furnished by or on behalf of
the Borrower or any of its Subsidiaries to the Administrative Agent or the
Lenders will be, true and accurate in every material respect on the date as of
which such information is dated or certified and not incomplete by omitting to
state any material fact necessary to make such information not misleading;
provided, however, that with respect to information provided by the Borrower
with respect to Nobel (including its Statutory Financial Statements or GAAP
financial statements) and other information relating to the Purchase, the
Borrower's representation hereunder is to the best of its knowledge.
SECTION 4.13 Subsidiaries. Schedule 4.13 as updated from time to time
pursuant to Section 5.1(l) contains a complete list of the Borrower's
Subsidiaries and designates each such Subsidiary as an Insurance Subsidiary or a
Non-Insurance Subsidiary.
SECTION 4.14 Insurance Licenses. Schedule 4.14 as revised from time to
time by the Borrower pursuant to Section 5.1(l) lists all of the jurisdictions
in which any of the Insurance Subsidiaries hold licenses (including, without
limitation, licenses or certificates of authority from applicable insurance
departments), permits or authorizations to transact insurance business
(collectively, the "Licenses"). Except as set forth on Schedule 4.14, to the
best of the Borrower's knowledge, no such License is the subject of a proceeding
for suspension or revocation or any similar proceedings, there is no sustainable
basis for such a suspension or revocation, and no such suspension or revocation
is threatened by the Department. Schedule 4.14 as revised from time to time by
the Borrower pursuant to Section 5.1(l) indicates the line or lines of insurance
which each such Insurance Subsidiary is permitted to be engaged in with respect
to each License therein listed. The Insurance Subsidiaries do not transact any
insurance business, directly or indirectly, in any jurisdiction other than those
enumerated on Schedule 4.14 as revised from time to time by the Borrower
pursuant to Section 5.1(l) hereto, where such business requires that any such
Insurance Subsidiary obtain any license, permit, governmental approval, consent
or other authorization.
SECTION 4.15 Taxes. The Borrower and each of its Subsidiaries has filed
all tax returns that are required to be filed by it, and has paid or provided
adequate reserves for the
38
payment of all material taxes, including, without limitation, all payroll taxes
and federal and state withholding taxes, and all assessments payable by it that
have become due, other than (a) those that are not yet delinquent or that are
disclosed on Schedule 4.15 or that are being contested in good faith by
appropriate proceedings and with respect to which reserves have been
established, and are being maintained, in accordance with GAAP or (b) those
which the failure to file or pay would not have a Material Adverse Effect.
Except as set forth in Schedule 4.15, on the Effective Date there is no ongoing
audit or, to the Borrower's knowledge, other governmental investigation of the
tax liability of the Borrower or any of its Subsidiaries and there is no
unresolved claim by a taxing authority concerning the Borrower's or any such
Subsidiary's tax liability, for any period for which returns have been filed or
were due. As used in this Section 4.15, the term "taxes" includes all taxes of
any nature whatsoever and however denominated, including, without limitation,
excise, import, governmental fees, duties and all other charges, as well as
additions to tax, penalties and interest thereon, imposed by any government or
instrumentality, whether federal, state, local, foreign or other.
SECTION 4.16 Securities Laws. Neither the Borrower nor any Affiliate,
nor anyone acting on behalf of any such Person, has directly or indirectly
offered any interest in the Loans or any other Obligation for sale to, or
solicited any offer to acquire any such interest from, or has sold any such
interest to any Person that would subject the issuance or sale of the Loans or
any other liability to registration under the Securities Act of 1933, as
amended.
SECTION 4.17 Compliance with Laws. Neither the Borrower nor any of its
Subsidiaries is in violation of any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any Governmental Authority, if the
effect of such violation could reasonably be expected to have a Material Adverse
Effect and, to the best of the Borrower's knowledge, no such violation has been
alleged and each of the Borrower and its Subsidiaries (i) has filed in a timely
manner all reports, documents and other materials required to be filed by it
with any Governmental Authority, if such failure to so file could reasonably be
expected to have a Material Adverse Effect; and the information contained in
each of such filings is true, correct and complete in all material respects and
(ii) has retained all records and documents required to be retained by it
pursuant to any law, ordinance, rule, regulation, order, policy, guideline or
other requirement of any Governmental Authority, if the failure to so retain
such records and documents could reasonably be expected to have a Material
Adverse Effect.
39
SECTION 4.18 Year 2000 Issues. The Borrower and its Subsidiaries have
developed and implemented a comprehensive, detailed program to address on a
timely basis the "Year 2000 Problem" (that is the risk that computer
applications used by the Borrower or its Subsidiaries may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior and
any date after December 31, 1999) and reasonably anticipates that it will on a
timely basis successfully resolve the Year 2000 Problem for all material
computer applications used by the Borrower or any of its Subsidiaries. The
Borrower believes, based upon inquiry made, that each supplier and vendor of the
Borrower and its Subsidiaries that is of material importance to the financial
well being of the Borrower and its Subsidiaries taken as a whole will also
successfully resolve on a timely basis the Year 2000 Problem for all of its
material computer applications.
SECTION 4.19 Purchase. The Purchase will be consummated substantially in
accordance with the terms of the Purchase Agreement and will comply in all
respects with all applicable legal requirements. All necessary governmental,
regulatory, shareholder and other consents and approvals required for the
consummation of the Purchase will be, prior to the consummation thereof, duly
obtained and in full force and effect.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Loans and all other Obligations are paid in full, and
until the Revolving Commitment Termination Date, the Borrower agrees that,
unless at any time the Required Lenders shall otherwise expressly consent in
writing, it will:
SECTION 5.1 Reports, Certificates and Other Information. Furnish or
cause to be furnished to the Administrative Agent and the Lenders:
(a) GAAP Financial Statements:
(i) Within 50 days after the close of each of the first three
Fiscal Quarters of each Fiscal Year of the Borrower, a copy of the
unaudited consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries, as of the close of such quarter and the related
consolidated and consolidating statements of income and cash flows for
that portion of the Fiscal Year ending as of the close of such Fiscal
Quarter, all prepared in accordance with GAAP (subject to normal
year-end adjustments and except that footnote and
40
schedule disclosure may be abbreviated) and accompanied by the
certification of the chief executive officer, chief financial officer or
treasurer of the Borrower that all such financial statements are
complete and correct and present fairly in accordance with GAAP (subject
to normal year-end adjustments) the consolidated results of operations
and cash flows of the Borrower as at the end of such Fiscal Quarter and
for the period then ended.
(ii) Within 95 days after the close of each Fiscal Year, (A) a
copy of the annual audited consolidated financial statements of the
Borrower and its Subsidiaries, consisting of consolidated balance sheets
and consolidated statements of income and retained earnings and cash
flows, setting forth in comparative form in each case the consolidated
figures for the previous Fiscal Year, which financial statements shall
be prepared in accordance with GAAP, certified without material
qualification (including any Year 2000 Problem) by the independent
certified public accountants regularly retained by the Borrower, or any
other firm of independent certified public accountants of recognized
national standing selected by the Borrower and reasonably acceptable to
the Required Lenders that all such financial statements are complete and
correct and present fairly in accordance with GAAP the consolidated
financial position and the consolidated results of operations and cash
flows of the Borrower and its Subsidiaries as at the end of such Fiscal
Year and for the period then ended and (B) a copy of the consolidating
balance sheets and consolidating statements of income and retained
earnings and cash flows for the Borrower and its Subsidiaries as of the
end of such Fiscal Year, accompanied by the certificate of the chief
executive officer, chief financial officer or treasurer of the Borrower
that all such consolidating financial statements are complete and
correct and present fairly the results of operations and cash flows of
the Borrower as at the end of such Fiscal Year and for the period then
ended.
(b) Tax Returns. If requested by the Administrative Agent, copies
of all federal, state, local and foreign tax returns and reports in respect of
income, franchise or other taxes on or measured by income (excluding sales, use
or like taxes) filed by the Borrower or any of its Subsidiaries.
(c) SAP Financial Statements. Within (i) 5 days after the date
filed with the Department for each of its Fiscal Years,
41
but in any event within 125 days after the end of each Fiscal Year of each
Insurance Subsidiary a copy of the Annual Statement of each Insurance Subsidiary
for such Fiscal Year and (ii) 5 days after the date filed with any Department
for each of its Fiscal Quarters, but in any event within 60 days after the end
of each Fiscal Quarter of each Insurance Subsidiary a copy of the Quarterly
Statement of each Insurance Subsidiary for such Fiscal Quarter, if any, required
by such Department to be filed, each of which statements delivered pursuant to
clause (i) or (ii) to be prepared in accordance with SAP and accompanied by the
certification of the chief financial officer or chief executive officer of each
Insurance Subsidiary that such financial statement is complete and correct and
presents fairly in accordance with SAP the financial position of such Insurance
Subsidiary for the period then ended.
(d) Notice of Default, etc. Immediately after an Executive
Officer of the Borrower knows or has reason to know of the existence of any
Default, or any development or other information which would have a Material
Adverse Effect, telephonic or telegraphic notice specifying the nature of such
Default or development or information, including the anticipated effect thereof,
which notice shall be promptly confirmed in writing within two (2) Business
Days.
(e) Other Information. The following certificates and other
information related to the Borrower:
(i) Promptly after completion of each such item but in no event
later than the 95th day after the close of each Fiscal Year of the
Borrower, a copy of the Borrower's business plan.
(ii) Within five (5) Business Days of receipt, a copy of any
financial examination reports by a Governmental Authority with respect
to the Insurance Subsidiaries relating to the insurance business of the
Insurance Subsidiaries (when, and if, prepared); provided, the Borrower
shall only be required to deliver any interim report hereunder at such
time as Borrower has knowledge that a final report will not be issued
and delivered to the Administrative Agent within 90 days of any such
interim report.
(iii) Copies of all filings (other than nonmaterial tax filings)
with Governmental Authorities by the Borrower or any Subsidiary not
later than five (5) Business Days after such filings are made,
including, without limitation, filings which seek approval of
Governmental Authorities with respect to
42
transactions between the Borrower or such Subsidiary and its Affiliates.
(iv) Within five (5) Business Days of such notice, notice of
proposed or actual suspension, termination or revocation of any material
License of the Insurance Subsidiaries by any Governmental Authority or
of receipt of notice from any Governmental Authority notifying the
Borrower of a hearing relating to such a suspension, termination or
revocation, including any request by a Governmental Authority which
commits the Borrower or any Insurance Subsidiary to take, or refrain
from taking, any action or which otherwise materially and adversely
affects the authority of the Borrower or any Insurance Subsidiary to
conduct its business.
(v) Within five (5) Business Days of such notice, notice of any
pending or threatened investigation or regulatory proceeding (other than
routine periodic investigations or reviews) by any Governmental
Authority concerning the business, practices or operations of the
Borrower or any Insurance Subsidiary.
(vi) Simultaneously with delivery of the financial statements
provided pursuant to Section 5.1(a)(i), a list of all investments
(including, without limitation, Permitted Investments) of the Borrower
and its Insurance Subsidiaries as of the end of such Fiscal Quarter.
(vii) Promptly, notice of any actual or, to the best of the
Borrower's knowledge, proposed material changes in the Insurance Code
governing the investment or dividend practices of any Insurance
Subsidiary.
(viii) Promptly, such additional financial and other information
as the Administrative Agent may from time to time reasonably request.
(f) Compliance Certificates. Concurrently with the delivery to
the Administrative Agent of the GAAP financial statements under Sections
5.1(a)(i) and 5.1(a)(ii), for each Fiscal Quarter and Fiscal Year of the
Borrower, and at any other time no later than thirty (30) Business Days
following a written request of the Administrative Agent, a duly completed
Compliance Certificate, signed by the chief financial officer or treasurer of
the Borrower, containing, among other things, a computation of, and showing
compliance with, each of the applicable financial ratios and restrictions
contained in Sections 6.1, 6.2 and 6.10, and to the effect that, to the best of
such officer's knowledge, as of such date no Default has occurred and is
continuing.
43
(g) Reports to SEC and to Shareholders. Promptly upon the filing
or making thereof (i) copies of each filing and report made by the Borrower or
any of its Subsidiaries with or to any securities exchange or the Securities and
Exchange Commission and (ii) if the Borrower has issued stock in a public
offering, of each communication from the Borrower to shareholders generally.
(h) Notice of Litigation, License and ERISA Matters. Promptly
upon learning of the occurrence of any of the following, written notice thereof,
describing the same and the steps being taken by the Borrower with respect
thereto: (i) the institution of, or any adverse determination in, any
litigation, arbitration proceeding or governmental proceeding (including any
Internal Revenue Service or Department of Labor proceeding with respect to any
Plan or Welfare Plan) which could, if adversely determined, be reasonably
expected to have a Material Adverse Effect and which is not Ordinary Course
Litigation, (ii) the occurrence of an ERISA Event; (iii) the commencement of any
dispute which might lead to the modification, transfer, revocation, suspension
or termination of this Agreement or any Loan Document or (iv) any event which
could be reasonably expected to have a Material Adverse Effect or a material
adverse effect on the ability of the Borrower to perform any of its payment or
other material obligations under any of the Loan Documents.
(i) Insurance Reports. Within five (5) Business Days of receipt
of such notice by the Borrower or its Subsidiaries, written notice of any
cancellation or material adverse change in any material Insurance Policy carried
by the Borrower or any of its Subsidiaries.
(j) List of Directors and Officers and Amendments. Concurrently
with the delivery of the financial statements required pursuant to Section
5.1(a)(i) and (ii), a list of the Executive Officers and Directors of the
Borrower and its Subsidiaries to the extent such information is not included in
the information provided pursuant to Section 5.1(g) and to the extent such
information has changed since the last delivery pursuant to this Section.
(k) Formation of Subsidiaries. Promptly upon formation of any
Subsidiary, written notice of the name, purpose and capitalization of such
Subsidiary.
(l) Updated Schedules. From time to time, and in any event
concurrently with delivery of the financial statements under Section 5.1(a)(i)
and (ii), revised Schedules 4.1, 4.5, 4.9, 4.11, 4.13 and 4.14, if applicable,
showing changes from the Schedules previously delivered.
44
(m) Other Information. From time to time such other information
concerning the Borrower or any Subsidiary as the Administrative Agent or any
Lender may reasonably request.
SECTION 5.2 Corporate Existence; Foreign Qualification. Do and cause to
be done at all times all things necessary to (a) maintain and preserve the
corporate existence of the Borrower and each Insurance Subsidiary of the
Borrower (except that inactive Subsidiaries of the Borrower may be merged out of
existence or dissolved), (b) be, and ensure that each Subsidiary of the Borrower
is, duly qualified to do business and be in good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary unless the failure to be so qualified would not have a
Material Adverse Effect, and (c) do or cause to be done all things necessary to
preserve and keep in full force and effect the Borrower's corporate existence.
SECTION 5.3 Books, Records and Inspections. (a) Maintain, and cause each
of its Subsidiaries to maintain, materially complete and accurate books and
records in accordance with GAAP and in addition, with respect to each Insurance
Subsidiary, SAP, (b) permit, and cause each of its Subsidiaries to permit,
access at reasonable times by the Administrative Agent to its books and records,
(c) permit, and cause each of its Subsidiaries to permit, the Administrative
Agent or its designated representative to inspect at reasonable times its
properties and operations, and (d) permit, and cause each of its Subsidiaries to
permit, the Administrative Agent to discuss its business, operations and
financial condition with its officers and its independent accountants.
SECTION 5.4 Insurance. Maintain, and cause each of its Subsidiaries to
maintain, Insurance Policies to such extent and against such hazards and
liabilities as is required by law or customarily maintained by prudent companies
similarly situated.
SECTION 5.5 Taxes and Liabilities. Pay, and cause each of its
Subsidiaries to pay, when due all material taxes, assessments and other material
liabilities except as contested in good faith and by appropriate proceedings
with respect to which reserves have been established, and are being maintained,
in accordance with GAAP if and so long as such contest could not reasonably be
expected to have a Material Adverse Effect.
SECTION 5.6 Employee Benefit Plans. Maintain, and cause each of its
Subsidiaries to maintain, each Plan and Welfare Plan in compliance in all
material respects with all applicable Requirements of Law.
45
SECTION 5.7 Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, (a) with all federal and local laws, rules and
regulations related to its businesses (including, without limitation, the
establishment of all insurance reserves required to be established under SAP and
applicable laws restricting the investments of the Borrower), and (b) with all
Contractual Obligations binding upon such entity, except where, in each case,
failure to so comply would not in the aggregate have a Material Adverse Effect.
SECTION 5.8 Maintenance of Permits. Maintain, and cause each of its
Subsidiaries to maintain, all permits, licenses and consents as may be required
for the conduct of its business by any federal or local government agency or
instrumentality except where failure to maintain the same could not reasonably
be expected to have a Material Adverse Effect.
SECTION 5.9 Conduct of Business. Engage, and cause each Subsidiary to
engage, primarily in the same business in which the Borrower and its
Subsidiaries are engaged on the date hereof (including, without limitation,
making no major changes in its business lines, geographic exposures or retention
levels); provided, however, Nobel may cede its casualty business to American
Re-Insurance Company and/or Inter-Ocean Reinsurance Company Ltd.
ARTICLE VI
NEGATIVE COVENANTS
Until the Loans and all other Obligations are paid in full and until the
Revolving Commitment Termination Date, the Borrower agrees that, unless at any
time the Required Lenders shall otherwise expressly consent in writing, it will:
SECTION 6.1 Debt Service Coverage Ratio. Not permit the Debt Service
Coverage Ratio to be less than 1.25:1.00 as of the end of any Fiscal Quarter.
SECTION 6.2 Risk Based Capital. Not permit the adjusted surplus (as
defined by the applicable Department's Risk Based Capital Guidelines) of each
Insurance Subsidiary to be less than 125% of such Insurance Subsidiary's
respective Company Action Level (as defined by the applicable Department's Risk
Based Capital Guidelines) as of the end of each Fiscal Year.
SECTION 6.3 Mergers, Consolidations and Sales. Not, and not permit any
of its Insurance Subsidiaries to, (a) merge or consolidate, or purchase or
otherwise acquire all or substantially all of the assets or stock of any class
of, or any
46
partnership or joint venture interest in, any other Person (other than a newly
formed Subsidiary or the acquisition of a Subsidiary which complies with clause
(ii) of this Section 6.3), or (b) sell, transfer, convey or lease all or any
substantial part of its assets or sell or assign with or without recourse any
receivables, other than any sale, transfer, conveyance or lease in the ordinary
course of business except for (i) any such merger or consolidation, sale,
transfer, conveyance, lease or assignment of any wholly owned Subsidiary into,
with or to the Borrower or any other wholly owned Subsidiary, (ii) purchases or
acquisitions which comply with Section 5.9 provided no Default or Event of
Default has occurred and is continuing or would result therefrom and (iii) the
Purchase.
SECTION 6.4 Regulations U and X. Not, and not permit any of its
Subsidiaries to, hold margin stock (as such term is defined in Regulation U of
the FRB) having a value in excess of 20% of the value of the assets of the
Borrower and its Subsidiaries taken as a whole after taking into account the
application of the proceeds of the Loans.
SECTION 6.5 Other Agreements. Not, and not permit any of its
Subsidiaries to, enter into any agreement containing any provision which would
be violated or breached by the performance of obligations hereunder or under any
instrument or document delivered or to be delivered by it hereunder or in
connection herewith.
SECTION 6.6 Transactions with Affiliates. Not, and not permit any
Subsidiary to, enter into, or cause, suffer or permit to exist, directly or
indirectly, any arrangement, transaction or contract with any of its Affiliates
unless such arrangement, transaction or contract is on an arm's length basis;
provided that transactions between the Borrower and the Guarantor or any
wholly-owned Subsidiary of the Guarantor or between any wholly-owned
Subsidiaries of the Borrower shall be excluded from the restrictions set forth
in this Section 6.6.
SECTION 6.7 Liens. Not, and not permit any of its Subsidiaries to,
create or permit to exist any Lien with respect to any assets now or hereafter
existing or acquired, except the following: (i) Liens for current taxes not
delinquent or for taxes being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves have been established,
and are being maintained, in accordance with GAAP; (ii) easements, party wall
agreements, rights of way, restrictions, minor defects or irregularities in
title and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of the Borrower and its Subsidiaries taken as a
whole; (iii) Liens in connection with the acquisition of fixed assets after the
date hereof and attaching
47
only to the property being acquired; (iv) Liens incurred in the ordinary course
of business in connection with workers' compensation, unemployment insurance or
other forms of governmental insurance or benefits and Liens pursuant to letters
of credit or other security arrangements in connection with such insurance or
benefits; (v) attachments, judgments and other similar Liens for sums not
exceeding $5,000,000 (excluding any portion thereof which is covered by
insurance so long as the insurer is reasonably likely to be able to pay and has
accepted a tender of defense and indemnification without reservation of rights);
(vi) attachments, judgments and other similar Liens for sums of $5,000,000 or
more (excluding any portion thereof which is covered by insurance so long as the
insurer is reasonably likely to be able to pay and has accepted a tender of
defense and indemnification without reservation of rights) provided the
execution or other enforcement of such Liens is effectively stayed and claims
secured thereby are being actively contested in good faith and by appropriate
proceedings and have been bonded off; (vii) Liens identified on Schedule 6.7 and
extensions, renewals or replacements thereof but only if the principal amount of
the Debt secured thereby immediately prior to such extension, renewal or
replacement is not increased and such Lien is not extended to any other
property; (viii) mechanics', workers', materialmen's, landlord liens and other
like Liens arising in the ordinary course of business in respect of obligations
which are not delinquent or which are being contested in good faith and by
appropriate proceedings and with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP, and (ix) liens
pursuant to trust, letter of credit or other security arrangements in connection
with Primary Policies, Borrower Reinsurance Agreements or Catastrophe Bonds;
provided, however, that, no Lien shall be permitted to exist on the shares of
stock of any Subsidiary.
SECTION 6.8 Restrictions On Negative Pledge Agreements. Not, and not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
agreement, other than this Agreement which places any restrictions upon the
right of the Borrower or any of its Subsidiaries to sell, pledge or otherwise
dispose of any material portion of its properties now owned or hereafter
acquired other than as permitted under Section 6.7, except for such restrictions
imposed by federal or state laws upon the right of the Borrower or any of its
Subsidiaries to sell, pledge or otherwise dispose of securities owned by it.
SECTION 6.9 No Amendment of Certain Documents. Not enter into or permit
to exist any amendment, modification or waiver of the Purchase Agreement as in
effect on the Effective Date which would in any manner be materially adverse to
the interests of the Lenders.
48
SECTION 6.10 Dividends, Etc.. Not, and not permit its Subsidiaries to,
(a) declare or pay any dividends on any of its capital stock (other than
payments of dividends by a Subsidiary to the Borrower), (b) purchase or redeem
any capital stock of the Guarantor or any of its Subsidiaries other than the
Borrower or any of its Subsidiaries or any warrants, options or other rights in
respect of such stock, or (c) set aside funds for any of the foregoing, except
that the Borrower may declare or pay dividends on any of its Capital Stock
provided no Default or Event of Default has occurred and is continuing on the
date of or would result from such declaration or payment.
ARTICLE VII
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 7.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
(a) Non-Payment of Loan. Default in the payment when due of any
principal on the Loans.
(b) Non-Payment of Interest, Fees, etc. Default, and continuance
thereof for three (3) Business Days, in the payment when due of interest on the
Loans, fees or of any other amount payable hereunder or under the Loan
Documents.
(c) Non-Payment of Other Debt. (i) Default in the payment when
due (subject to any applicable grace period), whether by acceleration or
otherwise, of any other Debt of, or guaranteed by, the Borrower or any of its
Subsidiaries if the aggregate amount of Debt of the Borrower and/or any of its
Subsidiaries which is accelerated or due and payable, or which (subject to any
applicable grace period) may be accelerated or otherwise become due and payable,
by reason of such default or defaults is $5,000,000 or more, or (ii) default in
the performance or observance of any obligation or condition with respect to any
such other Debt of, or guaranteed by, the Borrower and/or any of its
Subsidiaries if the effect of such default or defaults is to accelerate the
maturity (subject to any applicable grace period) of any such Debt of $5,000,000
or more in the aggregate or to permit the holder or holders of such Debt of
$5,000,000 or more in the aggregate, or any trustee or agent for such holders,
to cause such Debt to become due and payable prior to its expressed maturity.
(d) Other Material Obligations. Except for obligations covered
under other provisions of this Article VII, default in the payment when due, or
in the performance or observance of, any material obligation of, or material
condition
49
agreed to by, the Borrower or any of its Subsidiaries with respect to any
material purchase or lease obligation of $5,000,000 or more (unless the
existence of any such default is being contested by the Borrower in good faith
and by appropriate proceedings and the Borrower has established, and is
maintaining, adequate reserves therefor in accordance with GAAP) which default
continues for a period of 30 days.
(e) Bankruptcy, Insolvency, etc. (i) The Guarantor, the Borrower
or any Insurance Subsidiary becomes insolvent or generally fails to pay, or
admits in writing its inability to pay, debts as they become due; (ii) there
shall be commenced by or against the Guarantor, the Borrower or any Insurance
Subsidiary any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, supervision, conservatorship, liquidation, reorganization or relief
of debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
rehabilitation, conservation, supervision, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, obligations or liabilities, or (B) seeking appointment of a receiver,
trustee, custodian, rehabilitator, conservator, supervisor, liquidator or other
similar official for it or for all or any substantial part of its assets, in
each case which (1) results in the entry of an order for relief or any such
adjudication or appointment or (2) if filed against such Person, remains
undismissed, undischarged or unstayed for a period of 60 days; or (iii) there
shall be commenced against any of such Person any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any of such Persons shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause(ii) or (iii) above; or (v) any Governmental Authority shall
issue any order of conservation, supervision or any other order of like effect
relating to any of such Persons.
(f) Non-compliance With Section 6.1. The Borrower shall fail to
comply with the covenant set forth in Section 6.1 unless the Borrower thereafter
complies with such covenant on or before the last day of the Fiscal Quarter
following the Fiscal Quarter in which such noncompliance occurred.
(g) Non-compliance With Other Financial Conditions. Failure by
the Borrower to comply with its covenants set forth in Section 6.2, 6.8, 6.9, or
6.10.
50
(h) Non-compliance With Other Provisions. Failure by the Borrower
to comply with or to perform any provision of this Agreement or the other Loan
Documents (and not constituting an Event of Default under any of the other
provisions of this Article VII) and continuance of such failure for 30 days
after notice thereof from the Administrative Agent to the Borrower.
(i) Guarantor Default. Failure by the Guarantor (or any of its
Insurance Subsidiaries) to comply or perform any covenants or agreements of
Guarantor or any its Insurance Subsidiaries set forth in the Guaranty or the
other Loan Documents applicable to the Guarantor or any of the Insurance
Subsidiaries (other than those constituting an Event of Default under any of the
other provisions of this Article VII).
(j) Warranties and Representations. Any warranty or
representation made by or on behalf of the Guarantor, the Borrower or any
Subsidiary in any of the Loan Documents is inaccurate or incorrect or is
breached or false or misleading in any material respect as of the date such
warranty or representation is made; or any schedule, certificate, financial
statement, report, notice, or other instrument furnished by or on behalf of the
Guarantor, the Borrower or any Subsidiary to the Administrative Agent or the
Lenders is false or misleading in any material respect on the date as of which
the facts therein set forth are stated or certified.
(k) Employee Benefit Plans. A contribution failure occurs with
respect to any Plan sufficient to give rise to a Lien against the Borrower or
any of its Subsidiaries under section 302(f)(1) of ERISA (as in effect on the
Effective Date); or withdrawal by one or more companies in the Controlled Group
from one or more Multiemployer Plans to which it or they have an obligation to
contribute and the withdrawal liability (without unaccrued interest) to
Multiemployer Plans as a result of such withdrawal or withdrawals (including any
outstanding withdrawal liability that the Controlled Group has incurred on the
date of such withdrawal) is $5,000,000 or more.
(l) Loan Documents. Any action shall be taken by or on behalf of
the Borrower, the Guarantor or any Affiliate thereof to discontinue any of the
Loan Documents or to contest the validity, binding nature or enforceability of
any thereof.
(m) Change in Control. A Change in Control occurs.
(n) Judgments. A final judgment or judgments which exceed an
aggregate of $5,000,000 (excluding any portion thereof which is covered by
insurance so long as the insurer is reasonably likely to be able to pay and has
accepted a tender of defense and indemnification without reservation of rights)
shall
51
be rendered against the Borrower or any Subsidiary and shall not have been
discharged or vacated or had execution thereof stayed pending appeal within 60
days after entry or filing of such judgment(s).
(o) Change in Law. Any change is made in the Insurance Code which
affects the dividend practices of any Insurance Subsidiary and which is
reasonably likely to have a Material Adverse Effect and such circumstances shall
continue for 120 days.
(p) Defaults Under Revolving Credit Agreement. An event of
default shall have occurred and be continuing under the Revolving Credit
Agreement. If the Revolving Credit Agreement is terminated, the occurrence of
any event or the existence of any circumstance which would have, had it occurred
or existed prior to such termination, constituted an event of default, shall
constitute an Event of Default hereunder.
SECTION 7.2 Effect of Event of Default. If any Event of Default
described in Section 7.1(e) shall occur, the Loans and all other Obligations
shall become immediately due and payable, all without notice of any kind; and,
in the case of any other Event of Default, the Administrative Agent upon the
written request of the Required Lenders shall terminate the Commitments
hereunder and declare all or any portion of the Loans and all other Obligations
to be due and payable, whereupon the Commitments shall terminate and all or such
portion of the Loans and all other Obligations shall become immediately due and
payable, all without further notice of any kind. The Administrative Agent shall
promptly advise the Borrower of any such declaration but failure to do so shall
not impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 7.1(a) may not
be waived except by consent of all of the Lenders and acknowledged by the
Administrative Agent in writing.
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Occurrence of the Effective Date. The
occurrence of the Effective Date shall be subject to receipt by the
Administrative Agent of all of the following, each duly executed and dated the
Effective Date (or such earlier date as shall be satisfactory to the
Administrative Agent), each in form and substance satisfactory to the
Administrative Agent:
(a) This Agreement and Certain Related Documents. This Agreement,
the Guaranty and such other Loan Documents as are required to be delivered by
the terms of this Agreement.
52
(b) Resolutions. Certified copies of resolutions of the Board of
Directors of each of the Borrower and the Guarantor authorizing the execution,
delivery and performance, respectively, of those documents and matters required
of it with respect to the Loan Documents to which such Person is a party.
(c) Incumbency and Signatures. A certificate of an Authorized
Officer of each of the Borrower and the Guarantor certifying the names of the
individual or individuals authorized to sign the Loan Documents to which such
Person is a party, together with a sample of the true signature of each such
individual. (The Lenders may conclusively rely on each such certificate until
formally advised by a like certificate of any changes therein.)
(d) Opinions of Counsel. A favorable opinion of U.S. counsel to
the Borrower and the Guarantor substantially in the form of Exhibit D-1, and
addressing such legal matters as the Administrative Agent may require and a
favorable opinion of Bermuda counsel to the Guarantor, substantially in the form
of Exhibit D-2, and addressing such other legal matters as the Administrative
Agent may require.
(e) Organization Documents, etc. A Certificate of an Authorized
Officer of the Borrower certifying true and correct copies of the Purchase
Agreement and the Organization Documents of the Borrower.
(f) Insurance Proceedings. Certificate of an Authorized Officer
of the Borrower and the Guarantor that there are no material insurance
regulatory proceedings pending or threatened against the Borrower or any
Insurance Subsidiary (including Nobel) in any jurisdiction.
(g) Fees. The fees referred to in Section 2.8 which are due and
payable on or prior to the Effective Date shall have been paid to the
Administrative Agent where applicable for the benefit of the Lenders.
(h) Other. Such other documents as the Administrative Agent may
reasonably request.
SECTION 8.2 Conditions to Occurrence of the Funding Date. The occurrence
of the Funding Date and the initial Borrowing hereunder shall be subject to
receipt by the Administrative Agent of all of the following, each duly executed
and dated the Funding Date (or such earlier date as shall be satisfactory to the
Administrative Agent), each in form and substance satisfactory to the
Administrative Agent:
53
(a) Insurance Proceedings. Certificate of an Authorized Officer
of the Borrower and the Guarantor that there are no material insurance
regulatory proceedings pending or, to its knowledge, threatened against the
Borrower or any Insurance Subsidiary (including Nobel) in any jurisdiction.
(b) Material Adverse Change Certificate. An officer's
certificate, signed by an Authorized Officer of the Borrower and the Guarantor,
certifying that to such officer's best knowledge, since December 31, 1997, no
event has occurred which individually or in the aggregate (i) could reasonably
be expected to have a Material Adverse Effect or (ii) could reasonably be
expected to have a materially adverse effect on the assets, business, financial
conditions, operations or prospects of Nobel or the other entities being
acquired by the Borrower in the Purchase.
(c) Effective Date. The Effective Date shall have occurred.
(d) Capital Structure. The Administrative Agent and its counsel
shall be satisfied with the existing and proposed capital structure and
corporate structure of the Borrower.
(e) Purchase. There shall not exist any litigation or claims with
respect to any aspect of the Purchase, any related transaction or any other
transaction contemplated by the Purchase Agreement or the financing thereof
which the Administrative Agent reasonably considers to be material.
(f) The Funding and Close. The Administrative Agent shall have
received evidence, reasonably satisfactory to the Administrative Agent, that the
Purchase will be closed within 72 hours of the Funding Date on terms and
conditions reasonably satisfactory to the Lenders and that sufficient cash is
available to the Borrower to consummate the Purchase taking into account the
Term Loans hereunder.
(g) Officer's Certificate. A certificate (which shall be given on
the date the Purchase is closed) executed by an Authorized Officer of the
Borrower certifying that:
(i) the Purchase has been consummated in accordance
with the terms of the Purchase Agreement;
(ii) the Purchase complied in all respects with all applicable
legal requirements, and all necessary governmental, regulatory,
shareholder and other consents and approvals required for the
consummation of the Purchase were duly obtained, were and continue to be
in full force and effect;
54
(iii) the Purchase and the consummation thereof do not violate
any statute or regulations or any order, judgment, or decree of any
Governmental Authority and will not result in a breach, or constitute a
default under, any agreement, indenture, order or decree affecting the
Guarantor, the Borrower or any of its Subsidiaries;
(iv) all of the representations and warranties of the Borrower,
and to the best of the Borrower's knowledge, the other parties to the
Purchase Agreement, contained in the Purchase Agreement and the other
documents executed in connection therewith are true and correct in all
material respects as of the Funding Date of the Purchase; and
(v) that Nobel has entered into agreements with American
Re-Insurance Company and/or Inter-Ocean Reinsurance Company Ltd.
providing for the reinsurance by such Persons of the casualty business
of Nobel.
(h) Other. Such other documents as the Administrative Agent may
reasonably request.
SECTION 8.3 Conditions to All Borrowings. The obligation of the Lenders
to make all Loans (including the initial Loans) shall be subject to the prior or
concurrent satisfaction (in form and substance satisfactory to the
Administrative Agent) of each of the conditions precedent set forth below:
(a) No Default. No Default (excluding a Default under Section
7.1(f) but including an Event of Default under Section 7.1(f)) shall have
occurred and be continuing or will result from the making of the Loans and no
Default or Event of Default shall have occurred and be continuing under the Loan
Documents or will result from the making of the Loans and no Default (as defined
under the Revolving Credit Agreement) has occurred and is continuing.
(b) Warranties and Representations. (i) All warranties and
representations contained in this Agreement (other than Section 4.4 except in
the case of the initial Loans) and the representations and warranties of the
Guarantor contained in Article III of the Guaranty shall be true and correct in
all material respects as of the date of any Loan, with the same effect as though
made on the date of and concurrently with the making of such Loan (except where
such representation speaks as of specified date) and (ii) all covenants
contained herein and in such documents to be performed by each of the parties
thereto (other than the Administrative Agent or the Lenders) prior to the date
of any Loan shall have been performed.
55
(c) Litigation. (i) No litigation (including, without limitation,
derivative actions), arbitration, governmental investigation or proceeding or
inquiry shall be, on the date of any Loan, pending, or to the knowledge of the
Borrower, threatened which seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or to obtain material relief as a result of, the
transactions contemplated hereunder or, in the reasonable opinion of the
Required Lenders, could be reasonably expected to be materially adverse to any
of the parties to this Agreement and which is not Ordinary Course Litigation,
and (ii) in the reasonable opinion of the Required Lenders, no material adverse
development shall have occurred in any litigation (including, without
limitation, derivative actions), arbitration, government investigation or
proceeding or inquiry disclosed in Schedule 4.4 which is likely to have a
Material Adverse Effect.
(d) Fees. The fees referred to in Section 2.8 which are due and
payable on or prior to the Funding Date or the date of any Loan shall have been
paid to the Administrative Agent, where applicable, for the benefit of the
Lenders.
(e) Borrowing Request. The Administrative Agent shall have
received a Notice of Borrowing.
(f) Material Adverse Effect. There shall not have occurred any
event which, in the reasonable judgment of the Required Lenders, constitutes a
Material Adverse Effect.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.1 Appointment and Authorization. Each Lender hereby
irrevocably (subject to Section 9.9) appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
56
SECTION 9.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
SECTION 9.3 Liability of Administrative Agent. None of the Agent-Related
Persons shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (b) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Guarantor,
the Borrower or any Subsidiary or Affiliate of the Borrower, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Guarantor, the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Guarantor, the Borrower or any
of the Borrower's Subsidiaries or Affiliates.
SECTION 9.4 Reliance by Administrative Agent. (a) The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Borrower), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any
57
other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 8.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lender.
SECTION 9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Lenders, unless the Administrative Agent shall have received written notice from
a Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Required Lenders in accordance with
Article VII; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Lenders.
SECTION 9.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of the Borrower and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Guarantor, the Borrower and its
Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any Agent-
58
Related Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Guarantor or the Borrower which may come
into the possession of any of the Agent-Related Persons.
SECTION 9.7 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of the
Administrative Agent.
SECTION 9.8 Administrative Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Guarantor, the Borrower and its Subsidiaries and Affiliates as though BofA were
not the Administrative Agent hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Guarantor, the Borrower or its
Affiliates (including information that may be
59
subject to confidentiality obligations in favor of the Guarantor, the Borrower
or such Subsidiary) and acknowledge that the Administrative Agent shall be under
no obligation to provide such information to them. With respect to its Loans,
BofA shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Administrative Agent,
and the terms "Lender" and "Lenders" include BofA in its individual capacity.
SECTION 9.9 Successor Administrative Agent. The Administrative Agent
may, and at the request of the Required Lenders shall, resign as Administrative
Agent upon 30 days' notice to the Lenders. If the Administrative Agent resigns
under this Agreement, the Required Lenders shall appoint from among the Lenders
a successor agent for the Lenders which successor agent shall be approved by the
Borrower. If no successor agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint,
after consulting with the Lenders and the Borrower, a successor agent from among
the Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article IX and Sections 10.4 and
10.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
agent has accepted appointment as Administrative Agent by the date which is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.
SECTION 9.10 Withholding Tax. (a) Each Lender which is not organized
under the laws of the United States or a state thereof hereby agrees, to the
extent permitted by applicable law (including any applicable double taxation
treaty), to execute and deliver to the Borrower and the Administrative Agent on
or before the first scheduled payment date (or, if later, the date it becomes a
party to this Agreement), a properly completed IRS Form 1001 or Form 4224, as
appropriate, or, such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from United States
withholding tax. Such Lender agrees to promptly notify the Administrative Agent
and the Borrower of any change in circumstances or
60
Requirement of Law which would modify or render invalid any claimed exemption.
(b) Each Lender hereby represents and warrants to the Borrower
that on the Effective Date (or, if later, the date it becomes a party to this
Agreement) it is entitled to receive payments of principal of, and interest on,
Loans made by such Lender without withholding or deduction of U.S. withholding
tax.
(c) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Borrower and/or the
Administrative Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify the Borrower
and/or the Administrative Agent of a change in circumstances which rendered the
exemption from withholding tax ineffective, or for any other reason) such Lender
shall indemnify the Borrower and/or the Administrative Agent fully for all
amounts paid, directly or indirectly, by the Borrower and/or the Administrative
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Borrower and/or
the Administrative Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Administrative Agent.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by the
Administrative Agent at the written request of the Required Lenders) and the
Borrower and acknowledged by the Administrative Agent, 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 such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Borrower
and acknowledged by the Administrative Agent, do any of the following:
(a) increase or extend any Commitment of any Lender (or reinstate
any Commitment terminated pursuant to Section 7.2);
61
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce or forgive the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any of
them to take any action hereunder;
(e) release the Guarantor from its obligations under the
Guaranty; or
(f) amend this Section 10.1, or Section 2.12, or any provision
herein providing for consent or other action by all Lenders;
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Required
Lenders or all the Lenders, as the case may be, affect the rights or duties of
the Administrative Agent under this Agreement or any other Loan Document.
SECTION 10.2 Notices. (a) All notices, requests and other communications
shall be in writing (including, unless the context expressly otherwise provides,
by facsimile transmission, provided that any matter transmitted by the Borrower
by facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 10.2, and (ii) except in the case
of Notices of Borrowing and Notices of Conversions/Continuation, shall be
followed promptly by delivery of a hard copy original thereof) and mailed, faxed
or delivered, to the address or facsimile number specified for notices on
Schedule 10.2; or, as directed to the Borrower or the Administrative Agent, to
such other address as shall be designated by such party in a written notice to
the other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Borrower and the
Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or, if delivered, upon delivery, except that notices
pursuant to Article II or IX shall not be effective until actually received by
the Administrative Agent.
62
(c) Any agreement of the Administrative Agent and the Lenders
herein to receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Borrower. The Administrative Agent and the
Lenders shall be entitled to rely on the authority of any Person purporting to
be a Person authorized by the Borrower to give such notice and the
Administrative Agent and the Lenders shall not have any liability to the
Borrower or other Person on account of any action taken or not taken by the
Administrative Agent or the Lenders in reliance upon such telephonic or
facsimile notice. The obligation of the Borrower to repay the Loans shall not be
affected in any way or to any extent by any failure by the Administrative Agent
and the Lenders to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Administrative Agent and the Lenders of a
confirmation which is at variance with the terms understood by the
Administrative Agent and the Lenders to be contained in the telephonic or
facsimile notice.
SECTION 10.3 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
SECTION 10.4 Costs and Expenses. The Borrower shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Administrative
Agent) within ten Business Days after demand for all costs and expenses incurred
by BofA (including in its capacity as Administrative Agent) in connection with
the development, preparation, delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable Attorney Costs incurred by
BofA (including in its capacity as Administrative Agent) with respect thereto;
and
(b) pay or reimburse the Administrative Agent and each Lender
within ten Business Days after demand for all costs and expenses (including
Attorney Costs) incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
any other Loan Document during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the
63
Loans, and including any bankruptcy or other insolvency proceeding or appellate
proceeding).
SECTION 10.5 Indemnity. Whether or not the transactions contemplated
hereby are consummated, the Borrower shall indemnify and hold the Agent-Related
Persons, and each Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Administrative Agent or
replacement of any Lender) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with any of the foregoing, including with respect to any investigation,
litigation or proceeding (including any bankruptcy or other insolvency
proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Borrower shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
SECTION 10.6 Payments Set Aside. To the extent that the Borrower makes a
payment to the Administrative Agent or the Lenders, or the Administrative Agent
or the Lenders exercise their right of set-off, and such payment or the proceeds
of such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any bankruptcy or other insolvency proceeding or otherwise, then
(a) to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
pro rata share of any amount so recovered from or repaid by the Administrative
Agent.
64
SECTION 10.7 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Administrative Agent and each Lender.
SECTION 10.8 Assignments, Participations, etc. (a) Any Lender may, with
the written consent of the Borrower (at all times other than during the
existence of an Event of Default) and the Administrative Agent, which consents
shall not be unreasonably withheld, at any time assign and delegate to one or
more Eligible Assignees (provided that no written consent of the Borrower or the
Administrative Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible Assignee that is an Affiliate of such
Lender) (each an "Assignee") all, or any ratable part of all, of the Loans, the
Commitments and the other rights and obligations of such Lender hereunder,
provided, however, that (x) any assignment and delegation shall be a constant
and not a varying, percentage of all of the assigning Lender's Commitments and
Loans hereunder, (y) the aggregate principal amount of the Commitments and Loans
assigned by any Lender to someone other than another Lender shall be in a
minimum amount of $5,000,000 (or if less, the entire Commitments then held by
such Lender) and after giving effect to any such assignment by a Lender, the
aggregate amount of the Commitments and/or Loans held by such assigning Lender
is at least $5,000,000 (unless such Lender has assigned the entire Commitment
and Loans then held by it). The Borrower and the Administrative Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrower and the
Administrative Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Borrower and the Administrative Agent an
Assignment and Acceptance in the form of Exhibit E ("Assignment and Acceptance")
and (iii) the assignor Lender or Assignee has paid to the Administrative Agent a
processing fee in the amount of $3,000.
(b) From and after the date that the Administrative Agent
notifies the assignor Lender that it has received (and provided the required
consents with respect to) an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (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, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to
65
the extent that rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(d) Any Lender may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "Participant")
participating interests in any Loans, the Commitment of that Lender and the
other interests of that Lender (the "Originating Lender") hereunder and under
the other Loan Documents provided that such assignment shall be a constant and
not a varying percentage of that Lender's Commitments and Loans; provided,
however, that (i) the originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the Originating Lender shall remain solely
responsible for the performance of such obligations, (iii) the Borrower and the
Administrative Agent shall continue to deal solely and directly with the
Originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Lenders
as described in the first proviso to Section 10.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 3.1,
3.3 and 10.5 to the extent the Lender selling such participation would be so
entitled, and if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal
66
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
SECTION 10.9 Confidentiality. Each Lender agrees to take and to cause
its Affiliates to take normal and reasonable precautions and exercise due care
to maintain the confidentiality of all information identified as "confidential"
or "secret" by the Borrower and provided to it by the Guarantor, the Borrower or
any Subsidiary, or by the Administrative Agent on behalf of the Guarantor, the
Borrower or any Subsidiary of either of them, under this Agreement or any other
Loan Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated directly with the Guarantor, the Borrower or
any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Lender, or (ii) was or becomes available on a non-confidential basis from a
source other than the Guarantor or the Borrower, provided that such source is
not bound by a confidentiality agreement with the Guarantor or the Borrower
known to the Lender; provided, however, that any Lender may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent, any Lender or their respective Affiliates may be party;
(E) to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Loan Document; (F) to such Lender's
independent auditors and other professional advisors; (G) to any Participant or
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Lenders
hereunder; (H) as to any Lender or its Affiliate, as expressly permitted under
the terms of any other document or agreement regarding confidentiality to which
the Guarantor, the Borrower or any Subsidiary is party or is deemed party with
such Lender or such Affiliate; and (I) to its Affiliates which are either such
Lender's parent or it or its parent's wholly owned Subsidiary or, with the prior
written consent of the Borrower which shall not be unreasonably withheld, its
other Affiliates.
SECTION 10.10 Set-off. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower, any such notice being waived by the
67
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender to or for
the credit or the account of the Borrower against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this Agreement
or any Loan Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.
SECTION 10.11 Notification of Addresses, Lending Offices, Etc. Each
Lender shall notify the Administrative Agent in writing of any changes in the
address to which notices to the Lender should be directed, of addresses of any
Lending Office, of payment instructions in respect of all payments to be made to
it hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
SECTION 10.12 Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
SECTION 10.13 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
SECTION 10.14 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Borrower, the
Lenders, the Administrative Agent and the Agent-Related Persons, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
SECTION 10.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN
ALL RIGHTS ARISING UNDER FEDERAL LAW.
68
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID OR BY ANY OTHER MEANS PERMITTED BY ILLINOIS OR FEDERAL LAW.
SECTION 10.16 Waiver of Jury Trial. THE BORROWER, THE LENDERS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE BORROWER, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
SECTION 10.17 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding among the
Borrower, the Lenders and the Administrative Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
69
RENAISSANCE U.S. HOLDINGS, INC.
By:
----------------------------------------
Title:
-------------------------------------
S-1
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent and Lender
By: /s/ Gary R. Peet
---------------------------------------
Title: Managing Director
------------------------------------
S-2
FLEET NATIONAL BANK, as Lender
By: /s/ Thomas McKinley
---------------------------------------
Title: SVP
------------------------------------
S-3
MELLON BANK N.A., as Lender
By: /s/ Edward Chidine
---------------------------------------
Title: Vice President
------------------------------------
S-4
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCH, as Lender
By: /s/ John S. McGill
---------------------------------------
Title: Vice President
-------------------------------------
By: /s/ Gayma Shivnarain
---------------------------------------
Title: Vice President
-------------------------------------
S-5
FIRST UNION NATIONAL BANK, as
Lender
By: /s/ Gail Golightly
---------------------------------------
Title: Senior Vice President
-------------------------------------
S-6
SCHEDULE 1.2
Pricing Grid
===========================================================================================
Pricing Pricing Pricing
Level I Level II Level III
- -------------------------------------------------------------------------------------------
S & P Claims BBB+ or A-, A or A+ AA- or above
Rating below
- -------------------------------------------------------------------------------------------
Offshore Rate 0.625% 0.500% 0.375%
- -------------------------------------------------------------------------------------------
Non-Use Fee 0.175% 0.150% 0.125%
Rate
===========================================================================================
S-7
SCHEDULE 2.1
COMMITMENTS
Revolving Loan
Commitment Term Loan Pro Rata
Lender Amount Commitment Share
- ------ -------------- ---------- --------
Bank of America $ 3,600,000 $ 8,400,000 24.0000%
National Trust &
Savings Associa-
tion
Fleet National Bank $ 2,850,000 $ 6,650,000 19.0000%
Mellon Bank, N.A. $ 2,850,000 $ 6,650,000 19.0000%
First Union
National Bank $ 2,850,000 $ 6,650,000 19.0000%
Deutsche Bank AG $ 2,850,000 $ 6,650,000 19.0000%
=========== ===========
$15,000,000 $35,000,000 100.0000%
EXECUTION COPY
================================================================================
GUARANTY
Dated as of June 24, 1998
among
RENAISSANCERE HOLDINGS LTD.,
as Guarantor,
and
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Administrative Agent
================================================================================
GUARANTY
THIS GUARANTY (this "Guaranty") is entered into as of June 24, 1998
between RENAISSANCERE HOLDINGS LTD., a Bermuda company ("Guarantor"), in favor
of the Lenders and the Administrative Agent (individually a "Guarantied Party"
and collectively the "Guarantied Parties"). Unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned to such terms
pursuant to Article I.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of June 24, , 1998 (as
from time to time, in whole or in part, the same may be amended, modified,
supplemented, restated, refinanced, refunded or renewed, the "Credit
Agreement"), among Renaissance U.S. Holdings, Inc. (the "Borrower"), Bank of
America National Trust & Savings Association, as administrative agent (the
"Administrative Agent"), and various financial institutions (together with their
respective successors and assigns, collectively the "Lenders" and each
individually a "Lender");
WHEREAS, the Lenders have agreed to make Revolving Loans and Term Loans to
the Borrower on the terms and subject to the conditions contained in the Credit
Agreement;
WHEREAS, as a condition precedent to the making of the initial Loans and
any subsequent Loans under the Credit Agreement, Guarantor is required to
execute and deliver this Guaranty;
WHEREAS, Guarantor has been duly authorized to execute, deliver and
perform this Guaranty; and
WHEREAS, it is in the best interest of Guarantor to execute this Guaranty
inasmuch as Guarantor will derive substantial direct and indirect benefits from
the Loans made from time to time to the Borrower by the Lenders pursuant to the
Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the Lenders
to make Loans (including the initial Loans) to the Borrower pursuant to the
Credit Agreement, Guarantor agrees, for the benefit of the Guarantied Parties,
as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Certain Terms. Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings assigned thereto in the Credit
Agreement; provided that such definitions shall survive any termination of the
Credit Agreement. In addition, when used herein the following terms shall have
the following meanings (such definitions to be equally applicable to the
singular and plural forms thereof):
"Administrative Agent" - see Recitals.
-2-
"Borrower" - see Recitals.
"Credit Agreement" - see Recitals.
"Guarantied Parties" - see Preamble.
"Guarantor" - see Preamble.
"Guaranty" - see Preamble.
"Indemnified Parties" - see Section 5.2.
"Lender" or "Lenders" - see Recitals.
"Obligations" - see Section 2.1.
"Subrogation Rights" - see Section 2.6.
ARTICLE II.
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. Guarantor hereby absolutely, unconditionally and
irrevocably:
(a) guaranties to the Guarantied Parties the full and punctual
payment when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, and at all times thereafter, of
all obligations of the Borrower to the Guarantied Parties, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, or now
or hereafter existing, or due or to become due under the Credit Agreement
whether for principal, interest, fees, expenses or otherwise (including all such
amounts which would become due but for the operation of the automatic stay
provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
ss. 362(a), and the operation of Sections 502(b) and 506(b) of the United States
Bankruptcy Code, 11 U.S.C. ss. 502(b) and ss. 506(b)) (all such obligations
hereinafter collectively called the "Obligations"); and
(b) indemnifies and holds harmless each Guarantied Party for any and
all costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses) incurred by such Guarantied Party in enforcing any rights
under this Guaranty.
This Guaranty constitutes a guaranty of payment when due and not of collection,
and Guarantor specifically agrees that it shall not be necessary or required
that any Guarantied Party exercise any right, assert any claim or demand or
enforce any remedy whatsoever against the Borrower or any other obligor (or any
other Person) before the performance of, or as a condition to, the obligations
of Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. Guarantor agrees that, upon the
occurrence of an Event of Default under Section 7.1(e) of the Credit Agreement,
if such event shall occur at a
-2-
time when any of the Obligations may not then be due and payable, Guarantor will
pay to the Administrative Agent, for the benefit of the Administrative Agent and
the Lenders, the full amount which would be payable hereunder by Guarantor if
all Obligations of the Borrower were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all respects
be a continuing, absolute, unconditional and irrevocable guaranty of payment,
and shall remain in full force and effect until all Obligations of the Borrower
have been paid in full, all obligations of Guarantor hereunder shall have been
paid in full and all Commitments shall have terminated. Guarantor guarantees
that the Obligations of the Borrower will be paid strictly in accordance with
the terms of the Credit Agreement and each other Loan Document under which they
arise, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of any Guarantied
Party with respect thereto. The liability of Guarantor under this Guaranty shall
be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Guarantied Party:
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other obligor or any other Person under the
provisions of the Credit Agreement, any Note, any other Loan Document or
otherwise; or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the Borrower or any
other obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower or any other
obligor, or any other extension, compromise or renewal of any Obligations of the
Borrower or any other obligor;
(d) any reduction, limitation, impairment or termination of the
Obligations of the Borrower or any other obligor for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the Obligations
of the Borrower, any other obligor or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to any departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral, or any amendment to or waiver or release or addition of, or
consent to any departure from, any other guaranty, held by any Guarantied Party
securing any of the Obligations of the Borrower or any other obligor; or
-3-
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower, any
other obligor, any surety or any guarantor other than payment in full of the
Obligations.
SECTION 2.4. Reinstatement, etc. Guarantor agrees that this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) of any of the Obligations is rescinded or must
otherwise be restored by any Guarantied Party, upon the insolvency, bankruptcy
or reorganization of the Borrower, any other obligor or otherwise, all as though
such payment had not been made.
SECTION 2.5. Waiver, etc. Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
of the Borrower or any other obligor, and this Guaranty and any requirement that
the Administrative Agent or any other Guarantied Party protect, secure, perfect
or insure any security interest or Lien, or any property subject thereto, or
exhaust any right or take any action against the Borrower, any other obligor or
any other Person (including any other guarantor) or entity or any collateral
securing the Obligations of the Borrower or any other obligor, as the case may
be.
SECTION 2.6. Waiver of Subrogation; Subordination. Guarantor hereby
irrevocably waives with respect to the Borrower, until termination of the
Commitment of the Lenders with respect to the Borrower and thereafter until the
prior indefeasible payment in full in cash of all Obligations of the Borrower
under the Loan Documents, any claim or other rights which it may now or
hereafter acquire against the Borrower or any other obligor that arises from the
existence, payment, performance or enforcement of Guarantor's obligations under
this Guaranty or any other Loan Document or otherwise, including any right of
subrogation, reimbursement, exoneration, or indemnification, any right to
participate in any claim or remedy of the Guarantied Parties against the
Borrower or any other obligor or any collateral which any Guarantied Party now
has or hereafter acquires, whether or not such claim, remedy or right (all such
claims, remedies and rights being collectively called "Subrogation Rights")
arises in equity, or under contract, statute or common law, including the right
to take or receive from the Borrower or any other obligor, directly or
indirectly, in cash or other property or by set-off or in any manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to Guarantor in violation of the preceding sentence and the Obligations shall
not have been paid in cash, in full, and the Commitments of the Lenders have not
been terminated, such amount shall be deemed to have been paid to Guarantor for
the benefit of, and held in trust for, the Guarantied Parties, and shall
forthwith be paid to the Guarantied Parties to be credited and applied upon the
obligations of the Borrower, whether matured or unmatured. Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the waiver
set forth in this Section is knowingly made in contemplation of such benefits.
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes, etc.
This Guaranty shall:
(a) be binding upon Guarantor, and its successors, transferees and
assigns; and
-4-
(b) inure to the benefit of and be enforceable by the Administrative
Agent and each other Guarantied Party.
Without limiting the generality of clause (b), each Lender may assign or
otherwise transfer (in whole or in part) any Note or Loan held by it to any
other Person, and such other Person shall thereupon become vested with all
rights and benefits in respect thereof granted to such Lenders under any Loan
Document (including this Guaranty) or otherwise. Notwithstanding anything
contained in this Section 2.7 to the contrary, this Section 2.7 shall not be
deemed to enlarge or create additional rights with respect to any Lender's
ability to assign its Commitments and Loans or rights under any Note or any
other Loan Document pursuant to Section 10.8 of the Credit Agreement, and this
Section 2.7 is expressly made subject thereto.
SECTION 2.8. Payments Free and Clear of Taxes, etc. Guarantor hereby
agrees that:
(a) any and all payments made by such Guarantor hereunder shall be
made in accordance with Section 3.1 of the Credit Agreement free and clear of,
and without deduction for, any and all Taxes.
(b) Guarantor hereby indemnifies and holds harmless each Guarantied
Party for the full amount of any Taxes paid by such Guarantied Party in
connection with any payments under this Guaranty and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.
(c) Without prejudice to the survival of any other agreement of
Guarantor hereunder, the agreements and obligations of Guarantor contained in
this Section 2.8 shall survive the payment in full of the principal of and
interest on the Loans.
SECTION 2.9. Right of Offset. In addition to and not in limitation of all
rights of offset that any Guarantied Party may have under applicable law or any
other Loan Document, subject to the terms of the Credit Agreement, each
Guarantied Party shall upon the occurrence of any Event of Default and whether
or not such Guarantied Party has made any demand or Guarantor's obligations are
matured, have the right to appropriate and apply to the payment of Guarantor's
obligations hereunder all deposits (general or special, time or demand,
provisional or final) then or thereafter held by, and other indebtedness or
property then or thereafter owing to, such Guarantied Party whether or not
related to this Guaranty or any transaction hereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; INCORPORATION BY REFERENCE
To induce the Administrative Agent and each Lender to enter into the
Credit Agreement and to make the Loans thereunder, Guarantor represents and
warrants to the Administrative Agent and each Lender that:
SECTION 3.1. Organization, etc. Guarantor and each of its Subsidiaries is
a company duly organized, validly existing and in good standing under the laws
of the jurisdiction of its
-5-
incorporation or formation and each of Guarantor and its Subsidiaries is duly
qualified to transact business and in good standing as a foreign corporation,
authorized to do business in each jurisdiction where the nature of its business
makes such qualification necessary except where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.2. Authorization. The Guarantor (a) has the power to execute,
deliver and perform this Guaranty, and (b) has taken all necessary action to
authorize the execution, delivery and performance by it of this Guaranty and the
other Loan Documents to which it is a party.
SECTION 3.3. No Conflict. The execution, delivery and performance by
Guarantor of this Guaranty does not and will not (a) contravene or conflict with
any provision of any law, statute, rule or regulation, (b) contravene or
conflict with, result in any breach of, or constitute a default under, any
material agreement or instrument binding on Guarantor or any of its Subsidiaries
(including, without limitation, any writ, judgment, injunction or other similar
court order), (c) result in the creation or imposition of or the obligation to
create or impose any Lien upon any of the property or assets of the Guarantor or
any of its Subsidiaries or (d) contravene or conflict with any provision of the
memorandum of incorporation or by-laws of Guarantor.
SECTION 3.4. Incorporation by Reference. Guarantor agrees that the
representations and warranties of Guarantor set forth in Section 4 of the
Revolving Credit Agreement (other than Sections 4.2, 4.3 and 4.8,) shall be
incorporated by reference in this Guaranty in their entirety as if fully set
forth herein with the same effect as if applied to this Guaranty. All
capitalized terms set forth in such Sections shall have the meanings provided in
the Revolving Credit Agreement; provided that for purposes of this Guaranty, to
the extent set forth in the Revolving Credit Agreement (a) the term "Borrower"
shall be deemed to refer to Guarantor and (b) the terms "Agent", "Lenders", and
"Required Lenders" shall be deemed to refer to the Administrative Agent, the
Lenders and the Required Lenders as such terms are defined in the Credit
Agreement. Such representations and warranties shall not be affected in any
manner by the termination of the Revolving Credit Agreement.
ARTICLE IV.
COVENANTS
SECTION 4.1. Guarantor agrees that, on and after the Closing Date until
the termination or expiration of the Commitments and for so long thereafter as
any of the Obligations or the obligations of Guarantor hereunder remain unpaid
or outstanding (except Obligations which by the terms hereof survive the payment
in full of the Loans and termination of this Guaranty), the Guarantor will
comply with the covenants set forth in Sections 5 and 6 of the Revolving Credit
Agreement and the terms and provisions set forth therein shall be incorporated
by reference in this Guaranty in their entirety as if fully set forth herein
with the same effect as if applied to this Guaranty. All capitalized terms set
forth in Sections 5 and 6 of the Revolving Credit Agreement shall have the
meanings provided in the Revolving Credit Agreement; provided that for purposes
of this Guaranty, to the extent set forth in the Revolving Credit Agreement (a)
the term "Borrower" shall be deemed to refer to Guarantor and (b) the terms
"Agent", "Lenders", and "Required Lenders", shall be deemed to refer to the
Administrative Agent, the Lenders and the
-6-
Required Lenders as such terms are defined in the Credit Agreement. Such
covenants shall not be affected in any manner by any amendment or modification
of or the termination of the Revolving Credit Agreement; provided, that any
amendment, agreement or waiver to the Revolving Credit Agreement which has been
agreed to by the Required Lenders (as defined in the Credit Agreement), as
Lenders under the Revolving Credit Agreement, shall be, upon the effectiveness
thereof, automatically deemed to be an amendment, modification or supplement of
the Revolving Credit Agreement as incorporated herein without further action on
the part of the Guarantor or the Guaranteed Parties.
SECTION 4.2. Certain Indebtedness. Guarantor shall not, and shall not
permit any of its Insurance Subsidiaries to amend or modify any provision of the
Revolving Credit Agreement if such amendment or modification could have an
adverse effect on the Lenders or any material provision of the Loan Documents.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1. The Guarantor agrees to pay, or cause to be paid, on demand
all reasonable expenses of the Administrative Agent (including the
non-duplicative fees and reasonable expenses of counsel (including allocated
costs and expenses of in-house counsel) and of local counsel, if any, who may be
retained by such counsel) in connection with:
(a) the negotiation, preparation, execution and delivery of the
Credit Agreement, this Guaranty and the other Loan Documents, including
schedules and exhibits, and any amendments, waivers, consents, supplements or
other modifications to the Credit Agreement, this Guaranty or the other Loan
Documents as may from time to time hereafter be required, whether or not the
transactions contemplated hereby or thereby are consummated; and
(b) the preparation and/or review of the form of any document or
instrument relevant to the Credit Agreement, this Guaranty or any other Loan
Document.
The Guarantor further agrees to pay, and to hold the Guarantied Parties harmless
from all liability for, any stamp or other Taxes (other than income taxes of the
Guarantied Parties) which may be payable in connection with the execution or
delivery of the Credit Agreement, any Borrowing thereunder, the issuance of the
Notes, this Guaranty or any other Loan Document. The Guarantor also agrees to
reimburse the Guarantied Parties upon demand for all reasonable expenses
(including attorneys' fees and legal expenses) incurred by the Guarantied
Parties in connection with the enforcement of any Obligations or obligations
hereunder and the consideration of legal issues relevant hereto and thereto. All
obligations of the Guarantor provided for in this Section 6.1 shall survive
termination of this Agreement. Notwithstanding the foregoing, no Guarantied
Party shall have the right to reimbursement under this Section 6.1 for amounts
determined by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Guarantied Party.
-7-
SECTION 5.2. The Guarantor agrees to indemnify each Guarantied Party and
its directors, officers, employees, persons controlling or controlled by any of
them or their respective agents, consultants, attorneys and advisors (the
"Indemnified Parties") and hold each Indemnified Party harmless from and against
any and all liabilities, losses, claims, damages, costs and expenses of any kind
to which any of the Indemnified Parties may become subject, whether directly or
indirectly (including, without limitation, the reasonable fees and disbursements
of counsel for any Indemnified Party), relating to or arising out of the Credit
Agreement, this Guaranty, the other Loan Documents, or any actual or proposed
use of the proceeds of the Loans hereunder; provided, that no Indemnified Party
shall have the right to be indemnified hereunder for its own gross negligence or
willful misconduct as determined by a court of competent jurisdiction. All
obligations of the Guarantor provided for in this Section 6.2 shall survive
termination of the Credit Agreement and this Guaranty.
SECTION 5.3. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile) and shall be given to in the
case of the Guarantor at its address or facsimile number set forth on the
signature page hereof and in the case of any Guarantied Party, care of the
Administrative Agent at the address or facsimile number set forth on its
signature page to the Credit Agreement, provided that all reports and other
notices required pursuant to Section 5.1 of the Revolving Credit Agreement shall
be provided to the Administrative Agent and to each Lender at its address or
facsimile number set forth on its signature page to the Credit Agreement) or
such other address or facsimile or telex number as such party may hereafter
specify for the purpose by written notice to the Administrative Agent or the
Guarantor, as the case may be. Each such notice, request or other communication
shall be effective (a) if given by facsimile when such facsimile is transmitted
in legible form to the facsimile number specified in this Section, receipt
confirmed and (b) if given by overnight delivery, when delivered for overnight
(next day) delivery, addressed as specified in this Section.
SECTION 5.4. This Guaranty, and the terms, covenants and conditions
hereof, shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns, except Guarantor shall not be
permitted to assign this Guaranty nor any interest herein nor in the Collateral,
nor any part thereof, nor otherwise pledge, encumber or grant any option with
respect to the Collateral, nor any part thereof, except in accordance with the
terms of the Credit Agreement.
SECTION 5.5. The provisions of this Guaranty may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to by Guarantor and by the Administrative Agent, and then
any such amendment, modification, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. The
Administrative Agent shall not execute any such amendment, modification or
waiver unless it has received the consent of the Required Lenders or all the
Lenders, as the case may be, as provided in Section 10.1 of the Credit
Agreement.
SECTION 5.6. The section headings in this Guaranty are inserted for
convenience of reference and shall not be considered a part of this Guaranty or
used in its interpretation.
-8-
SECTION 5.7. No action of any Guarantied Party permitted hereunder shall
in any way affect or impair the rights of any Guarantied Party and the
obligations of Guarantor under this Guaranty. Guarantor hereby acknowledges that
there are no conditions to the effectiveness of this Guaranty.
SECTION 5.8. All obligations of Guarantor and rights of the Guarantied
Parties or obligation expressed in this Guaranty shall be in addition to and not
in limitation of those provided in applicable law or in any other written
instrument or agreement relating to any of the Obligations.
SECTION 5.9. Governing Law and Jurisdiction. THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS;
PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
SECTION 5.10. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE GUARANTOR, THE ADMINISTRATIVE AGENT
AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE GUARANTOR, THE
ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE GUARANTOR, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID OR BY ANY OTHER MEANS PERMITTED BY ILLINOIS OR FEDERAL LAW.
SECTION 5.11. This Guaranty may be executed in any number of counterparts,
each of which shall for all purposes be deemed an original, but all such
counterparts shall constitute but one and the same agreement. Guarantor hereby
acknowledges receipt of a true, correct and complete counterpart of this
Guaranty.
SECTION 5.12. The Administrative Agent acts herein as agent for itself and
any and all future holders of the Obligations.
SECTION 5.13. Waiver of Jury Trial . THE GUARANTOR, THE LENDERS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION,
-9-
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR, THE
LENDERS AND THE ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS.
SECTION 5.14. Currency Indemnity. If, for the purposes of obtaining
judgment in any court in any jurisdiction with respect to any Loan Document, it
becomes necessary to convert into the currency of such jurisdiction (the
"Judgment Currency") any amount due under any Loan Document in any currency
other than the Judgment Currency (the "Currency Due"), then conversion shall be
made at the rate of exchange prevailing on the Business Day before the day on
which judgment is given. For this purpose, "rate of exchange" means the rate at
which the Administrative Agent is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency in accordance with its normal practice
at its main branch in San Francisco, California. In the event that there is a
change in the rate of exchange prevailing between the Business Day before the
day on which the judgment is given and the date of payment of the amount due,
the Guarantor will, on the day of payment, pay such additional amount, if any,
or be entitled to receive reimbursement of such amount, if any, as may be
necessary to ensure that the amount paid on such date is the amount in the
Judgment Currency which when converted at the rate of exchange prevailing on the
date of payment is the amount then due under any Loan Document in the Currency
Due. If the amount of the Currency Due which the Administrative Agent is so able
to purchase is less than the amount of the Currency Due originally due to it,
the Guarantor shall indemnify and save the Administrative Agent harmless from
and against loss or damage arising as a result of such deficiency. This
indemnity shall constitute an obligation separate and independent from the other
obligations contained in any Loan Document, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by the Administrative Agent from time to time and shall continue in full force
and effect notwithstanding any judgment or order for a liquidated sum in respect
of an amount due under any Loan Document or under any judgment or order.
-10-
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
RENAISSANCERE HOLDINGS LTD.
By: /s/ John M. Lummis
-------------------------------------------
Name: /s/ John M. Lummis
----------------------------------------
Title: Senior Vice President and CFO
---------------------------------------
Notice Address:
Renaissance House
8-12 E. Broadway
Hamilton HM19, Bermuda
Attention: John Lummis, Chief Financial Officer
Telephone: 441-295-4513
Facsimile: 441-292-9453
SECOND AMENDMENT AGREEMENT
--------------------------
THIS SECOND AMENDMENT AGREEMENT (this "Amendment"), dated as of June 15,
1998, is among RENAISSANCERE HOLDINGS LTD. (the "Borrower"), the Lenders listed
on the signature pages hereto, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as Administrative Agent for the Lenders;
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to that certain Third Amended and
Restated Credit Agreement dated as of December 12, 1996, as amended to date (the
"Credit Agreement");
WHEREAS, the parties hereto wish to amend the Credit Agreement as
hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
the mutual agreements herein contained, hereby agree as follows:
Section 1.. Credit Agreement Definitions Capitalized terms used herein
that are defined in the Credit Agreement shall have the same meaning when used
herein unless otherwise defined herein.
Section 2.. Amendments To Credit Agreement. Effective on (and subject to
the occurrence of) the Second Amendment Effective Date (as defined below), the
Credit Agreement shall be amended as follows:
2.1. Amendment to Section 1.1. Section 1.1 of the Credit Agreement
is amended as follows:
(a) The definition of "Catastrophe Bonds" is amended in its entirety
to read as follows:
"Catastrophe Bonds means (a) any note, bond or other Debt
instrument or agreement which has a catastrophe risk feature linked
to payments thereunder and (b) any equity interest in a Person that
is not a Subsidiary controlled, directly or indirectly, by the
Borrower for the sole purpose of investing in Debt of the type
described in clause (a), which, in the case of Catastrophe Bonds
purchased by the Borrower or any of its Subsidiaries, are purchased
in accordance with its customary reinsurance underwriting
procedures."
(b) Clause (c) of the definition of "Change in Control" is amended
in its entirety to read as follows:
"(c) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of the Borrower (together with any new directors whose
election by the Board of Directors or
whose nomination by the stockholders of the Borrower was approved by
a vote of the directors of the Borrower then still in office who are
either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Borrower's Board of Directors
then in office."
(c) The definition of "Debt" is amended as follows:
(i) Clause (a) is amended by inserting the following at the
end thereof:
"(including, without limitation, any such obligation
issued by such Person that qualify as Catastrophe Bonds
described in clause (a) of the definition thereof net of any
escrow established (whether directly or to secure any letter
of credit issued to back such Catastrophe Bonds) in connection
with such Catastrophe Bonds)"
(ii) Clause (e) is amended by inserting following the word
"all" and before the words "Hedging Obligations" the word "net";
(iii) Clause (h) is amended by inserting the following at the
end thereof:
"(it being understood that if such Person has not
assumed or otherwise become personally liable for any such
Debt, the amount of the Debt of such person in connection
therewith shall be limited to the lesser of the face amount of
such Debt and the fair market value of all property of such
person securing such Debt);"
(iv) Clause (i) is amended by inserting the following at the
end thereof:
"unless such Debt is nonrecourse to such Person".
(d) The definition of "Hedging Obligations" is amended by inserting
following the words "other than Reinsurance Agreements" the words "and
Catastrophe Bonds".
(e) Clause (b) of the definition of "Net Debt Proceeds" is amended
by inserting the following at the end thereof:
"and any escrows established (whether directly or to
secure any letter of credit issued to back such Catastrophe
Bonds) to support or in connection with the issuance of
Catastrophe Bonds"
(f) The following new definition is inserted in Section 1.1 in its
proper alphabetical order:
"Renaissance U.S. Credit Agreement" means any credit
agreement entered into by Renaissance U.S. Holdings, Inc. with
various financial
-2-
institutions and Bank of America National Trust and Savings
Association, as administrative agent.
2.2. Amendment to Section 5.1. Section 5.1(e) is amended as follows:
(a) Subclause (i) is amended in its entirety to read as follows:
"Promptly after completion of each such item but in no event later
than the 95th day after the close of each Fiscal Year of the Borrower, a copy of
the Borrower's business plan;"
(b) Subclause (iv) is amended by inserting the words "or any
Insurance Subsidiary" following the words "the Borrower" each time it appears in
such subclause (iv).
(c) Subclause (v) is amended by inserting the following at the end
thereof: "or any Insurance Subsidiary".
(d) Subclause (vi) is amended by inserting following the words "and
its" and before the words "Subsidiaries" the word "Insurance".
(e) Clause (h)(ii) and (iii) are deleted and the following inserted
therefor:
"(ii) an ERISA Event; and"
and subclauses (iv) and (v) are renumbered (iii) and (iv) respectively.
2.3. Amendment to Section 5.3. Section 5.3(a) of the Credit
Agreement is amended in its entirety to read as follows:
(a) Maintain, and cause each of its Subsidiaries to maintain,
materially complete and accurate books and records in accordance with GAAP and
in addition, with respect to each Insurance Subsidiary, SAP,
2.4. Amendment to Section 5.10. Section 5.10 of the Credit Agreement
is amended by inserting the following at the end thereof: "; provided, however
Nobel Insurance Company may cede its casualty business to American Re-Insurance
Company and/or Inter-Ocean Reinsurance Company Ltd.
2.5. Amendment to Section 6.4. Section 6.4 of the Credit Agreement
is amended in its entirety to read as follows:
"Section 6.4 Regulations U and X. Not, and not permit any of
its Subsidiaries to, hold margin stock (as such term is defined in
Regulation U of the FRB) having a value in excess of 20% of the
value of the assets of the Borrower and its Subsidiaries taken as a
whole after taking into account the application of the proceeds of
the Loans.
-3-
2.6. Amendment to Section 6.7. Section 6.7 of the Credit Agreement
is amended as follows:
(a) Clause (ii) is amended in its entirety to read as follows:
"(ii) easements, party wall agreements, rights of way,
restrictions, minor defects or irregularities in title and other
similar Liens not interfering in any material respect with the
ordinary course of the business of the Borrower and its Subsidiaries
taken as a whole;"
(b) Clause (iv) is amended by inserting the following at the end
thereof:
"and Liens pursuant to letters of credit or other security
arrangements in connection with such insurance or benefits,"
(c) Clause (v) is amended by inserting between the words
"materialmen's" and the words "and other" the words ", landlord liens".
(d) The following new subclauses (viii), (ix) and (x) are inserted
at the end of subclause (vii) and before the words "provided however":
(viii) attachments, judgments and other similar Liens for sums
not exceeding $5,000,000 (excluding any portion thereof which is
covered by insurance so long as the insurer is reasonably likely to
be able to pay and has accepted a tender of defense and
indemnification without reservation of rights);
(ix) attachments, judgments and other similar Liens for sums
of $5,000,000 or more (excluding any portion thereof which is
covered by insurance so long as the insurer is reasonably likely to
be able to pay and has accepted a tender of defense and
indemnification without reservation of rights) provided the
execution or other enforcement of such Liens is effectively stayed
and claims secured thereby are being actively contested in good
faith and by appropriate proceedings and have been bonded off;
(x) Liens on assets acquired by Renaissance U.S. Holdings,
Inc. from Nobel Insurance Limited outstanding on the date of such
acquisition and extensions, renewals or replacements thereof but
only if the principal amount of Debt secured thereby immediately
prior to such extension, renewal or replacement is not increased and
such Lien is not extended to any other property;
2.7. Section 6.8. Section 6.8 of the Credit Agreement is amended by
inserting the following at the end thereof:
"and restrictions imposed by the Renaissance U.S. Credit
Agreement."
-4-
2.8. Amendment to Section 7.1. Section 7.1 of the Credit Agreement
is amended as follows:
(a) Clause (d) is amended by inserting following the words "lease
obligation" and before the parenthetical, the words "of $5,000,000 or more".
(b) Clause (j) is amended by deleting the word "material" at the end
thereof and inserting "$5,000,000 or more" therefor.
Section 3.. Representation And Warranties. In order to induce the Lenders
and the Administrative Agent to execute and deliver this Amendment, the Borrower
hereby represents and warrants to the Lenders and to the Administrative Agent
that:
(a) No Event of Default or Default has occurred and is continuing or
will result from the execution and delivery or effectiveness of this Amendment;
and
(b) the warranties of the Borrower contained in Article IV of the
Credit Agreement are true and correct as of the date hereof, with the same
effect as though made on such date; provided that (i) with respect to clause (a)
of Section 4.2, the reference to "1995 Fiscal Year" therein shall instead be a
reference to "1996 Fiscal Year" and (ii) with respect to clause (a) of Section
4.3, the reference to "December 31, 1996" shall instead be a reference to
"December 31, 1997" and the reference to the nine months ended September 30,
1996 shall instead be a reference to "the three months ended March 31, 1998".
Section 4. Conditions to Effectiveness. The Amendment set forth in Section
2 hereof shall become effective on the date (the "Second Amendment Effective
Date") when the Administrative Agent shall have received all of the following,
each in form and substance satisfactory to the Administrative Agent:
(a) eight counterparts of this Amendment executed by the Borrower
and the Required Lenders;
(b) a certificate of an authorized officer of the Borrower as to the
satisfaction of the conditions set forth in Section 3 of this Amendment; and
(c) such other documents as the Administrative Agent or any Lender
may reasonably request.
Section 5. Reaffirmation of Loan Documents. From and after the date
hereof, each reference that appears in any other Loan Document to the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as amended
hereby. As amended hereby, the Credit Agreement, is hereby reaffirmed, approved
and confirmed in every respect and shall remain in full force and effect.
Section 6. Counterparts; Effectiveness. This Amendment may be executed by
the parties hereto in any number of counterparts and by the different parties on
separate counterparts and
-5-
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same agreement.
Section 7. Governing Law; Entire Agreement. This Amendment shall be deemed
a contract made under and governed by the laws of the State of Illinois, without
giving effect to conflicts of laws principles. This agreement constitutes the
entire understanding among the parties hereto with respect to the subject matter
hereof and supersedes any prior agreements with respect thereto.
Section 8. Loan Document. This Amendment is a Loan Document.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
RENAISSANCERE HOLDINGS LTD.
By:
-----------------------------------------------
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Administrative Agent and Lender
By:
-----------------------------------------------
Title:
FLEET NATIONAL BANK
By:
-----------------------------------------------
Title:
MELLON BANK, N.A.
By:
-----------------------------------------------
Title:
THE BANK OF N.T. BUTTERFIELD & SON LIMITED
By:
-----------------------------------------------
Title:
BANK OF MONTREAL
By:
-----------------------------------------------
Title:
-7-
DEUTSCHE BANK AG, New York and/or
Cayman Islands Branch
By:
-----------------------------------------------
Title:
By:
-----------------------------------------------
Title:
BANK OF BERMUDA
By:
-----------------------------------------------
Title:
-8-
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Third Amended and Restated Employment Agreement (the
"Agreement") is dated as of June 3, 1998, and is entered into between
Renaissance Reinsurance Ltd., a Bermuda Company (the "Company"), and James N.
Stanard ("Executive").
WHEREAS, Executive and the Company are parties to an Amended and
Restated Employment Agreement, dated July 1, 1997 (the "Prior Agreement"); and
WHEREAS, Executive and the Company have agreed to amend the Prior
Agreement as set forth herein.
NOW, THEREFORE, the parties hereby agree to amend and restate the
Prior Agreement as follows:
ARTICLE I
Employment, Duties and Responsibilities
1.01. Employment. The Executive shall continue to serve as Chief Executive
Officer and Chairman of the Board of the Company and its parent, RenaissanceRe
Holdings Ltd. ("Holdings"). Executive agrees to devote his full time and efforts
to promote the interests of the Company.
1.02. Duties and Responsibilities. Executive shall have such duties and
responsibilities as are consistent with his position.
1.03. Base of Operation. Executive's principal base of operation for the
performance of his duties and responsibilities under this Agreement shall be the
offices of the Company in Hamilton, Bermuda; provided, however, that Executive
shall perform such duties and responsibilities outside of Bermuda as shall from
time to time be reasonably necessary to fulfill his obligations hereunder.
Executive's performance of any duties and responsibilities outside of Bermuda
shall be conducted in a manner consistent with any guidelines provided to
Executive by the Holdings' Board of Directors (the "Holdings Board").
ARTICLE II
Term
2.01. Term. The term of this Agreement (the "Term") shall commence on June
23, 1997 and, unless terminated earlier as provided in Article V, shall continue
until the earlier of (i)
July 1, 2001, or (ii) the date which is one year following a "Change in Control"
(as defined in Section 5.06 below).
ARTICLE III
Compensation and Expenses
3.01. Salary, Incentive Awards and Benefits. As compensation and
consideration for the performance by Executive of his obligations under this
Agreement, Executive shall be entitled, during the Term, to the following
(subject, in each case, to the provisions of ARTICLE V hereof):
(a) Salary; Bonus. The Company shall pay Executive a base salary at
the rate of $412,000 per year ("Base Salary"), payable in accordance with the
normal payment procedures of the Company and subject to such withholding and
other normal employee deductions as may be required by law. The Company shall
review the base salary annually. In addition, not later than January 1, 1998,
the Company shall pay executive a one-time bonus of $162,500. Annual bonuses
shall be payable at the discretion of the Company and shall be determined in a
manner consistent with the treatment of other executive officers of the Company.
(b) Additional Bonus.
(i) Except as provided in clause (ii) below, each year during
the Term, the Company shall pay Executive, in addition to any discretionary
bonus, an additional annual bonus of $815,000 (the "Additional Bonus") payable
on each of June 30, 1998, June 30, 1999, June 30, 2000, and June 30, 2001. In
addition, on each such date, Executive shall receive an additional payment (the
"Gross-Up Payment") in an amount which, after reduction of all applicable income
taxes incurred by Executive in connection with such Gross-Up Payment, is equal
to the amount of income tax payable by the Executive in respect of the
Additional Bonus payable on such date. For this purpose, the income taxes
payable by Executive shall be computed based on the effective combined Federal
and State income tax rate then applicable to Executive.
(ii) The foregoing notwithstanding, in the event of (x) a
termination of Executive's employment by reason of Executive's death or
disability (as defined in Section 5.03) or (y) a termination of Executive's
employment by the Company without "Cause" (as defined in Section 5.04 below) or
by Executive for "Good Reason" (as defined in Section 5.01 below) prior to a
Change in Control, the Additional Bonus and the Gross-Up Payment shall be
accelerated and shall be paid on the date of such termination pursuant to clause
(i) above. In the event of a termination of Executive's employment by the
Company without Cause or by Executive for Good Reason on or after a Change in
Control, or in the event of an expiration of this Agreement one
2
year following a Change in Control, any portion of the Additional Bonus and the
Gross-Up Payment not previously paid shall be accelerated and paid on the last
day of the "Non-Competition Period" (as defined in Section 4.04 below) pursuant
to clause (i) above. No payments of Additional Bonus or Gross-Up Payment shall
be made following a termination of Executive's employment for Cause, or by
Executive without Good Reason, regardless of whether a Change in Control has
occurred.
(c) Awards.
(i) Executive shall participate in the Second Amended and
Restated 1993 Stock Incentive Plan of RenaissanceRe Holdings Ltd., as amended
from time to time and any successor plan thereto (the "Plan"). Executive shall
enter into separate award agreements with respect to awards granted to him under
the Plan ("Awards").
(ii) Effective as of the date of this Agreement, the Company,
by action of the Section 162(m) Subcommittee of the Stock Option Committee of
the Board of Directors, has granted to Executive 111,111 shares of restricted
common stock of Holdings ("Restricted Stock") and options ("Options") to
purchase 66,667 shares of unrestricted common stock of Holdings ("Common
Stock"). The Options shall vest at the rate of 25% a year commencing as of the
date hereof, with the first vesting date being June 23, 1998, and shall be
governed by the terms and conditions of the Plan. The Restricted Stock shall
vest on June 3, 1998 with respect to 83,333 shares and on June 23, 1998 with
respect to 27,778 shares, and shall otherwise be governed by the terms and
conditions of the Plan and the Restricted Stock Agreements dated June 23, 1997.
The vesting of such Awards and any future Awards shall be accelerated in the
event of a termination of Executive's employment by the Company without Cause,
or by Executive for Good Reason, or by reason of Executive's death or disability
unless, with respect only to future Awards, Executive is otherwise notified by
the Company at the time of grant. The Options shall be exercisable at a price of
$38 per share. The Company and the Executive will enter into customary Award
agreements with respect to such Awards.
(iii) (A) Executive shall be eligible to earn an incentive
bonus (the "Incentive Bonus"). Subject to subparagraph (iii)(B), the Incentive
Bonus shall be payable over four years as follows: a payment in the amount of
$475,000 shall be made in each of June 1999, June 2000 and June 2001, and a
payment of $375,000 shall be made in June 2002.
(B) Incentive Bonuses shall be paid only if the
Company meets cumulative Return on Equity ("ROE") targets for each immediately
preceding fiscal year established under the Company's business plan adopted by
the Holdings Board. ROE shall be computed on a cumulative basis (i.e.,
percentage excesses or
3
shortfalls against annual targets will be applied toward subsequent fiscal
years). An Incentive Bonus which is not payable for a given fiscal year as a
result of the Company's failure to meet the cumulative ROE target for that year
shall be payable in a subsequent year if the Company meets the cumulative ROE
target for that subsequent year.
(C) In the event of a termination of Executive's
employment without Cause, or by Executive for Good Reason, which occurs prior to
a Change in Control, Executive shall be paid an Incentive Bonus equal to the
aggregate amount of Incentive Bonuses payable through June 2002, reduced by the
aggregate amount of all previous Incentive Bonuses paid to Executive (the
"Remaining Incentive Balance"), such amount to be paid on the date of such
termination. In the event of a termination of Executive's employment by the
Company without Cause, or by Executive for Good Reason, which occurs on or after
a Change in Control or upon expiration of this Agreement one year following a
Change in Control, Executive shall be paid an Incentive Bonus equal to the
Remaining Incentive Balance, such amount to be paid on the last day of the
Non-Competition Period. In the event of a termination of Executive's employment
by reason of Executive's death or disability, regardless of whether a Change in
Control has occurred, Executive shall be paid an Incentive Bonus equal to the
Remaining Incentive Balance, such amount to be paid on the date of such
termination. The amounts described in this subsection (c)(iii)(C) shall be paid
irrespective of whether applicable ROE targets have been met.
(D) No Incentive Bonus shall be paid following a
termination of Executive's employment for Cause, or by Executive without Good
Reason, regardless of whether a Change in Control has occurred.
(E) In the event Executive's employment is terminated
under circumstances where a portion of the 83,333 shares of Restricted Stock as
to which vesting was accelerated to June 3, 1998, would have been forfeited to
Holdings, based on the forfeiture conditions which were applicable to such
shares under the terms of the Plan and the Restricted Stock Agreement relating
to such shares dated June 23, 1997 (i.e., had the vesting of such shares not
been so accelerated), the Executive shall, not later than five days following
the date of such termination, transfer and deliver to Holdings a number of
shares of Common Stock (other than shares comprising the Restricted Stock) equal
to the number of shares of Restricted Stock which would have been so forfeited.
Holdings and the Company acknowledge that the foregoing obligation shall be
unsecured and Executive shall not be required to escrow, set aside, legend or
otherwise designate any specific shares of Common Stock for purposes of
satisfying such obligation.
4
(iv) The Company acknowledges that the Executive will incur
obligations under the Credit Agreement in respect of taxes payable on the
Restricted Stock and in respect of the purchase price paid for certain shares of
Common Stock purchased by Executive, and may incur additional obligations under
the Credit Agreement in the future. In the event that Executive's obligations
under the Credit Agreement become due and Executive is precluded from selling
shares of Common Stock owned by the Executive by reason of Company-imposed
transfer restrictions (other than Restricted Stock which has not vested), the
Company shall waive such transfer restrictions to the extent necessary to allow
Executive to sell his shares and apply the proceeds thereof toward the repayment
of his obligations under the Credit Agreement.
(d) Benefits. Executive shall be eligible to participate in such
life insurance, health, disability and major medical insurance benefits, and in
such other employee benefit plans and programs for the benefit of the employees
of the Company, as may be maintained from time to time during the Term, in each
case to the extent and in the manner available to other officers of the Company
and subject to the terms and provisions of such plan or program, except that
Executive shall not be entitled to participate in any plan or program maintained
for the purpose of providing retirement income to participants other than the
RenaissanceRe Holdings Ltd. Retirement Plan.
(e) Vacation. Executive shall be entitled to reasonable paid
vacation periods, to be taken at his discretion, in a manner consistent with his
obligations to the Company under this Agreement.
(f) Indemnification/Liability Insurance. The Company shall indemnify
Executive as required by the By-laws, and may maintain customary insurance
policies providing for indemnification of Executive.
3.02. Expenses; Perquisites. During the Term, the Company shall provide
Executive with the following expense reimbursements and perquisites:
(a) Housing. The Company shall reimburse Executive for all
reasonable expenses incurred in connection with Executive's maintenance of a
place of residence in Bermuda, as approved from time to time by the Board.
(b) Business Expenses. The Company will reimburse Executive for
reasonable business-related expenses incurred by him in connection with the
performance of his duties hereunder, subject, however, to the Company's policies
relating to business-related expenses as in effect from time to time.
5
(c) Automobile. The Company shall provide Executive with an
automobile with a value comparable to automobiles customarily provided to Chief
Executive Officers of comparable Bermuda-based companies.
(d) Personal Travel. The Company shall provide Executive with
first-class air travel between Bermuda and the United States for the personal
purposes of Executive and members of his immediate family, up to a maximum of 40
visits by Executive and 12 visits for his family during each year of employment.
(e) Financial Services. The Company shall provide Executive with the
services of a professional tax and financial planning company.
(f) Incentive Gross-Up. To the extent that benefits provided to
Executive under subsections 3.02(a), (c) and (d) of this Agreement result in
imputed income and a resulting increased income tax liability to Executive, the
Company shall pay Executive a tax reimbursement benefit in an amount such that,
after deduction of all income taxes payable with respect to such tax
reimbursement benefit, the amount retained by Executive will be equal to the
amount of such increased income tax liability.
ARTICLE IV
Exclusivity, Etc.
4.01. Exclusivity; Non-Competition. Executive agrees to perform his
duties, responsibilities and obligations hereunder efficiently and to the best
of his ability. Executive agrees that he will devote his entire working time,
care and attention and best efforts to such duties, responsibilities and
obligations throughout the Term, it being understood that Executive anticipates
spending three-day weekends with his family during non-peak periods. Executive
also agrees that during the Term he will not engage in any business activities
that are competitive with the business activities of the Company or any of its
divisions, subsidiaries or affiliates.
4.02. Other Business Ventures. Executive agrees that during the Term he
will not own, directly or indirectly, any controlling or substantial stock or
other beneficial interest in any business enterprise which is engaged in
business activities that are competitive with the business activities of the
Company or any of its divisions, subsidiaries or affiliates. The preceding
sentence notwithstanding, Executive may own, directly or indirectly, up to 1% of
the outstanding capital stock of any business having a class of capital stock
which is traded on any major stock exchange or in the over-the-counter market.
6
4.03. Confidential Information. Executive agrees that he will not, at any
time during or after the Term, make use of or divulge to any other person, firm
or corporation any trade or business secret, process, method or means, or any
other confidential information concerning the business or policies of the
Company or any of its divisions, subsidiaries or affiliates, which he may have
learned in connection with his employment hereunder. For purposes of this
Agreement, a "trade or business secret, process, method or means, or any other
confidential information" shall mean any information designated as confidential
by the Board of Directors of the Company (the "Board") and as to which Executive
receives notice, provided that Executive shall be obligated to confer
periodically with and assist the Board in determining which information should,
in the best interests of the Company, be so designated. Executive's obligation
under this Section 4.03(a) shall not apply to any information which (i) is known
publicly; (ii) is in the public domain or hereafter enters the public domain
without the fault of Executive; (iii) is known to Executive prior to his receipt
of such information from the Company, as evidenced by written records of
Executive or (iv) is hereafter disclosed to Executive by a third party not under
an obligation of confidence to the Company. Executive agrees not to remove from
the premises of the Company, except as an employee of the Company in pursuit of
the business of the Company or except as specifically permitted in writing by
the Board, any document or other object containing or reflecting any such
confidential information. Executive recognizes that all such documents and
objects, whether developed by him or by someone else, will be the sole exclusive
property of the Company. Upon termination of his employment hereunder, Executive
shall forthwith deliver to the Company all such confidential information,
including without limitation all lists of customers, correspondence, accounts,
records and any other documents or property made or held by him or under his
control in relation to the business or affairs of the Company or its
subsidiaries or affiliates, and no copy of any such confidential information
shall be retained by him.
4.04. Non-Competition Obligations. During Executive's employment and, upon
any termination of Executive's employment (including upon the expiration of the
Term on the earlier of July 1, 2001 or the date one year following a Change in
Control), other than (a) a termination of Executive's employment by reason of
his death or disability, or (b) a termination of Executive's employment by the
Company without Cause, or by Executive for Good Reason, which occurs prior to a
Change in Control, the Executive shall not, for a period of one year from the
date of such termination (the "Non-Competition Period"), directly or indirectly,
whether as an employee consultant, independent contractor, partner, joint
venturer or otherwise, (i) engage in any business activities reasonably
determined by the Board to be competitive, to a material extent, with any
substantial type or kind of business activities conducted by the Company or any
of
7
its divisions, subsidiaries or affiliates at the time of such termination; (ii)
on behalf of any person or entity engaged in business activities competitive
with the business activities of the Company or any of its divisions,
subsidiaries or affiliates, solicit or induce, or in any manner attempt to
solicit or induce, any person employed by, or as agent of, the Company or any of
its divisions, subsidiaries or affiliates to terminate such person's contract of
employment or agency, as the case may be, with the Company or with any such
division, subsidiary or affiliate or (iii) divert, or attempt to divert, any
person, concern, or entity from doing business with the Company or any of its
divisions, subsidiaries or affiliates, nor will he attempt to induce any such
person, concern or entity to cease being a customer or supplier of the Company
or any of its divisions, subsidiaries or affiliates. The preceding sentence
notwithstanding, (I) in the event of a termination of Executive's employment by
the Company for Cause, or by Executive without Good Reason, which occurs within
one year following a Change in Control, the Non-Competition Period shall be one
year from the date of such termination, plus a number of days equal to (x) 365,
minus (y) the number of days which have elapsed from the date of such Change in
Control until the date of such termination, provided that it shall expire no
later than June 30, 2002; and (II) irrespective of whether a Change in Control
has occurred, in the case of (A) a voluntary termination of employment by the
Executive which is not for Good Reason, (B) a termination by the Company for
Cause, or (C) a termination which occurs by reason of the expiration of the Term
on the earlier of July 1, 2001 or the date one year following a Change in
Control, the Company may elect, within 14 days after the date of such
termination, to waive the Executive's non-competition obligations, in which case
it shall not be required to make payments to the Executive during the
Non-Competition Period, as provided in Section 5.05(a) of this Agreement.
4.05. Remedies. Executive acknowledges that the Company's remedy at law
for a breach by him of the provisions of this Article IV will be inadequate.
Accordingly, in the event of the breach or threatened breach by Executive of any
provision of this Article IV, the Company shall be entitled to injunctive relief
in addition to any other remedy it may have. If any of the provisions of, or
covenants contained in, this Article IV are hereafter construed to be invalid or
unenforceable in any jurisdiction, the same shall not affect the remainder of
the provisions or the enforceability thereof in any other jurisdiction, which
shall be given full effect, without regard to the invalidity or unenforceability
in such other jurisdiction. If any of the provisions of, or covenants contained
in, this Article IV are held to be unenforceable in any jurisdiction because of
the duration or geographical scope thereof, the parties agree that the court
making such determination shall have the power to reduce the duration or
geographical scope of such provision or covenant and, in its reduced form, such
provision or
8
covenant shall be enforceable; provided, however, that the determination of such
court shall not affect the enforceability of this Article IV in any other
jurisdiction.
ARTICLE V
Termination
5.01. Termination for Cause. The Company shall have the right to terminate
Executive's employment at any time for "Cause". For purposes of this Agreement,
"Cause" shall mean (a) Executive's willful and continued failure to
substantially perform his duties under this Agreement, (b) the engaging by
Executive in willful misconduct which is demonstrably and materially injurious
to the Company or any of its divisions, subsidiaries or affiliates, monetarily
or otherwise, (c) the commission by Executive of an act of fraud or embezzlement
against the Company or any of its divisions, subsidiaries or affiliates, (d) the
conviction of Executive of a felony, or (e) Executive's material breach of the
provisions of any of Sections 4.01, 4.02, 4.03 or 4.04 of this Agreement,
provided Executive has received prior written notice of such breach.
5.02. Death. In the event Executive dies during the Term, this Agreement
shall automatically terminate, such termination to be effective on the date of
Executive's death.
5.03. Disability. In the event that Executive suffers a disability which
prevents him from substantially performing his duties under this Agreement for a
period of at least 90 consecutive days, or 180 non-consecutive days within any
365-day period, the Company shall have the right to terminate this Agreement,
such termination to be effective upon the giving of notice to Executive in
accordance with Section 6.03 of this Agreement.
5.04. Termination for Good Reason. For purposes of this Agreement, the
following circumstances shall constitute "Good Reason":
(a) the assignment to Executive of any duties materially
inconsistent with his authority, duties or responsibilities, or any other action
by the Company which results in a material diminution or material adverse change
in such authority, duties or responsibilities, excluding for this purpose an
isolated action not taken in bad faith and which is remedied promptly after
receipt of notice thereof given by Executive;
(b) any material breach of this Agreement by the Company, other than
an isolated failure not occurring in bad faith and which is remedied promptly
after receipt of written notice thereof given by Executive;
9
(c) any failure by the Company to require any successor to be bound
by the terms of this Agreement as required by Section 6.02(b) of this Agreement;
or
(d) any decision by the Board to effect a winding down and eventual
dissolution of the Company.
5.05. Effect of Termination.
(a) Obligations of Company. In the event of any termination of the
Executive's employment hereunder, the Company shall pay Executive any earned but
unpaid Base Salary. In addition, except as provided in Section 5.06 of this
Agreement, upon a termination of Executive's employment for any reason other
than the Executive's death or disability (including the expiration of this
Agreement on July 1, 2001 or one year following a Change in Control), the
Company shall continue to pay Executive for a period of twelve (12) months his
then current Base Salary, and an amount equal to the highest regular
discretionary bonus paid or payable to Executive over the preceding three fiscal
years (excluding the Additional Bonus, the Incentive Bonus and any extraordinary
or non-recurring bonus), such amounts to be payable in equal monthly
installments commencing on the date which is one month after the date of such
termination. The preceding sentence notwithstanding, in the event of a
termination of employment described in the last sentence of Section 4.04 of this
Agreement, if the Company elects to waive the Executive's non-competition
obligations within 14 days after the date of such termination, the Company shall
not be required to make the additional payments set forth in the preceding
sentence.
(b) Awards. The Executive's rights with respect to Awards, upon any
termination of his employment with the Company, shall be governed exclusively by
this Agreement, the terms and conditions of the Plan and any agreement executed
by Executive in connection with such Awards. With respect to the Award of
Options to purchase 66,667 shares of Common Stock described in Section 3.01(c)
hereof, and any Awards granted prior or subsequent to the date hereof, the Award
agreements shall provide (or shall be amended to provide) that in the event of
termination of Executive's employment by reason of the expiration of this
Agreement on July 1, 2001 or one year following a Change in Control, Executive
shall continue to be treated as employed by the Company for purposes of vesting
in such Awards, for so long as (i) Executive has not engaged in conduct which
would be inconsistent with the non-competition obligations described in Section
4.04 of this Agreement, and (ii) Executive has not voluntarily resigned from the
Holdings Board, and (iii) with respect only to Awards granted prior to the date
hereof, Executive is either serving on the Holdings Board or providing
substantial services to the Company and/or Holdings in a
10
consulting capacity. With respect to Executive's Options to purchase 66,667
shares of Common Stock described in Section 3.01(c), and any options granted
prior or subsequent to the date hereof, the Award agreements shall provide (or
shall be amended to provide) that during the applicable period described in the
preceding sentence, such Options shall remain outstanding and exercisable. The
Award agreements shall further provide (or shall be amended to provide) that, in
the event Executive (A) resigns from the Holdings Board, (B) has engaged in
conduct which is inconsistent with the non-competition obligations described in
Section 4.04 of this Agreement, or (C) with respect only to options granted
prior to the date hereof, is not serving on the Holdings Board and is not
providing (or has ceased providing) substantial services to the Company and/or
Holdings in a consulting capacity, such options shall remain exercisable for a
period of no more than thirty days following the date Executive receives notice
from the Company of such occurrence, to the extent exercisable on that date, and
shall thereafter terminate.
(c) Obligations of Executive. Subject to this Section 5.05 of this
Agreement, Executive may terminate this Agreement at any time. Except as
otherwise provided in Sections 4.03 and 4.04 of this Agreement, Executive shall
not have obligations to the Company hereunder by reason of the termination of
his employment.
5.06. Termination Following a Change in Control.
(a) In the event that a Change in Control occurs and, on or within
one year following the date of such Change in Control: (i) the Executive's
employment is terminated by the Company without Cause, or (ii) the Executive
terminates his employment voluntarily for Good Reason, then in lieu of the
payments described in the second sentence of Section 5.05(a) of this Agreement,
the Company shall pay the Executive, within fifteen days following the date of
such termination, a lump sum cash amount equal to two times the sum of:
(A) Executive's annual Base Salary at the highest rate in effect
during the Term; and
(B) the highest regular discretionary bonus paid or payable to the
Executive over the preceding three fiscal years (excluding the
Additional Bonus, the Incentive Bonus and any extraordinary or
non-recurring bonus).
(b) For purposes of this Agreement, "Change in Control" means the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of securities representing more
than 50% of the value and voting power of all
11
of the outstanding equity securities of Holdings (the "Outstanding Equity
Securities"); provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by Holdings, (ii) any
acquisition by one or more of the "Investors" (as such term is defined in the
Plan) or any entity directly or indirectly controlling, controlled by, or under
common control with, one or more of the Investors (an "Investor Affiliate"), or
(iii) any acquisition by a corporation pursuant to a merger, consolidation or
other similar transaction (a "Corporate Event") if, as a result of such
Corporate Event, (A) substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Equity Securities
immediately prior to such Corporate Event beneficially own, directly or
indirectly, securities representing more than 50% of the value and voting power
of the then outstanding equity securities of the corporation resulting from such
Corporate Event (including a corporation which, as a result of such transaction,
owns Holdings or all or substantially all of Holdings' assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Event, of the Outstanding Equity
Securities, and (B) no Person other than (1) one or more of the Investors or any
Investor Affiliate, or (2) any corporation resulting from such Corporate Event,
beneficially owns, directly or indirectly, securities representing more than 50%
of the value and voting power of the then outstanding equity securities of the
corporation resulting from such Corporate Event.
(c) Except as specifically provided in this Section 5.06, the
provisions of this Agreement, including, but not limited to, Sections 4.04,
shall not be effected by a termination of Executive's employment following a
Change in Control.
ARTICLE VI
Miscellaneous
6.01. Life Insurance. Executive agrees that the Company or any of its
divisions, subsidiaries or affiliates may apply for and secure and own insurance
on Executive's life (in amounts determined by the Company). Executive agrees to
cooperate fully in the application for and securing of such insurance, including
the submission by Executive to such physical and other examinations, and the
answering of such questions and furnishing of such information by Executive, as
may be required by the carrier(s) of such insurance. Notwithstanding anything to
the contrary contained herein, neither the Company nor any of its divisions,
subsidiaries or affiliates shall be required to obtain any insurance for or on
behalf of Executive, except as provided in Section 3.01(c) of this Agreement.
12
6.02. Benefit of Agreement; Assignment; Beneficiary.
(a) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns, including, without limitation, any
corporation or person which may acquire all or substantially all of the
Company's assets or business, or with or into which the Company may be
consolidated or merged. This Agreement shall also inure to the benefit of, and
be enforceable by, Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
(b) The Company shall require any successor (whether direct or
indirect, by operation of law, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.
6.03. Notices. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
telegram or telex or by registered or certified mail, postage prepaid, with
return receipt requested, addressed: (a) in the case of the Company to
Renaissance Reinsurance Ltd., Sofia House, 48 Church Street, Hamilton, Bermuda,
Attention: Board of Directors, or to such other address and/or to the attention
of such other person as the Company shall designate by written notice to
Executive; and (b) in the case of Executive, to James N. Stanard, at the address
shown on the Company's records, or to such other address as Executive shall
designate by written notice to the Company. Any notice given hereunder shall be
deemed to have been given at the time of receipt thereof by the person to whom
such notice is given.
6.04. Entire Agreement; Amendment. This Agreement contains the entire
agreement of the parties hereto with respect to the terms and conditions of
Executive's employment during the Term and supersedes any and all prior
agreements and understandings, whether written or oral, between the parties
hereto with respect to compensation due for services rendered hereunder
including, without limitation, the Prior Agreement. This Agreement may not be
changed or modified except by an instrument in writing signed by both of the
parties hereto.
6.05. Waiver. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof.
6.06. Headings. The Article and Section headings herein are for
convenience of reference only, do not constitute a part
13
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
6.07. Enforcement. If any action at law or in equity is brought by either
party hereto to enforce or interpret any of the terms of this Agreement, the
prevailing party shall be entitled to reimbursement by the other party of the
reasonable costs and expenses incurred in connection with such action (including
reasonable attorneys' fees), in addition to any other relief to which such party
may be entitled. Executive shall have no right to enforce any of his rights
hereunder by seeking or obtaining injunctive or other equitable relief and
acknowledges that damages are an adequate remedy for any breach by the Company
of this Agreement.
6.08. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of Bermuda without
reference to the principles of conflict of laws.
6.09. Agreement to Take Actions. Each party to this Agreement shall
execute and deliver such documents, certificates, agreements and other
instruments, and shall take such other actions, as may be reasonably necessary
or desirable in order to perform his or its obligations under this Agreement or
to effectuate the purposes hereof.
6.10. No Mitigation; No Offset. Executive shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking (and, without limiting the generality of this sentence, no payment
otherwise required under this Agreement shall be reduced on account of) other
employment or otherwise, and payments under this Agreement shall not be subject
to offset in respect of any claims which the Company may have against Executive.
6.11. Attorneys' Fees. Each party to this Agreement will bear its own
expenses in connection with any dispute or legal proceeding between the parties
arising out of the subject matter of this Agreement, including any proceeding to
enforce any right or provision under this Agreement.
6.12. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of this Agreement to the
extent necessary to the intended preservation of such rights and obligations.
6.13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.
14
6.14. Other Agreements. Executive represents and warrants to the Company
that to the best of his knowledge, neither the execution and delivery of this
Agreement nor the performance of his duties hereunder violates or will violate
the provisions of any other agreement to which he is a party or by which he is
bound.
6.15. Subsidiaries, etc. (a) The obligations of the Company under this
Agreement may be satisfied by any subsidiary or affiliate of the Company for
which Executive serves as an employee under this Agreement, to the extent such
obligations relate to Executive's employment by such subsidiary or affiliate.
(b) The rights of the Company under this Agreement may be enforced by any
Subsidiary or affiliate of the Company for which Executive serves as an employee
under this Agreement, to the extent such rights relate to Executive's employment
by such subsidiary or affiliate.
6.16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have duly executed this
Agreement as of the date first above written.
RENAISSANCE REINSURANCE LTD.
By: /s/ John M. Lummis
-------------------------------------
Name: John M. Lummis
Title: Senior Vice President and
Chief Financial Officer
/s/ James N. Stanard
----------------------------------------
James N. Stanard
15
Exhibit 21.1
SUBSIDIARIES OF RENAISSANCERE HOLDINGS LTD.
1. 100% of the issued and outstanding capital shares of Renaissance
Reinsurance Ltd., a company organized under the laws of Bermuda, is
owned by RenaissanceRe Holdings Ltd.
2. 100% of the issued and outstanding capital shares of Glencoe Insurance
Ltd., a company organized under the laws of Bermuda, is owned by
RenaissanceRe Holdings Ltd.
3. 100% of the issued and outstanding capital shares of DeSoto Insurance
Company, a company organized under the laws of Florida, is owned by
Glencoe Insurance Ltd.
4. 100% of the issued and outstanding shares of Paget Insurance Agents,
Inc., a corporation organized under the laws of Florida, is owned by
RenaissanceRe Holdings Ltd.
5. 100% of the issued and outstanding shares of Pembroke Managing Agents,
Inc., a corporation organized under the laws of Florida, is owned by
RenaissanceRe Holdings Ltd.
6. 100% of the issued and outstanding capital shares of Renaissance
Services Ltd., a company organized under the laws of Bermuda, is owned
by RenaissanceRe Holdings Ltd.
7. 100% of the issued and outstanding capital shares of Renaissance U.S.
Holdings, Inc., a corporation organized under the laws of Delaware, is
owned by RenaissanceRe Holdings Ltd.
8. 100% of the issued and outstanding capital shares of Nobel Insurance
Company, an insurance company organized under the laws of Texas, is
owned by Renaissance U.S. Holdings Inc.
9. 100% of the issued and outstanding capital shares of Nobel Service
Corporation, a corporation organized under the laws of Texas, is owned
by Renaissance U.S. Holdings Inc.
10. 100% of the issued and outstanding capital shares of IAS Claim Services,
Inc., a corporation organized under the laws of Delaware, is owned by
Renaissance U.S. Holdings Inc.
11. 100% of the issued and outstanding capital shares of Nobel Insurance
Agency, Inc., a corporation organized under the laws of Texas, is owned
beneficially by Renaissance U.S. Holdings Inc.
12. 100% of the issued and outstanding capital shares of Nobel Managing
Agents, Inc., a corporation organized under the laws of Texas, is owned
by Nobel Insurance Company.
II-1
7
1,000
6-MOS
DEC-31-1998
JUN-30-1998
$804,558
0
0
5,808
0
0
810,366
119,428
74,169
18,496
1,258,370
202,839
144,997
0
0
85,000
100,000
0
22,264
618,245
1,258,370
93,138
26,258
(927)
347
18,170
11,828
14,202
65,608
1,396
64,212
0
0
0
64,212
2.88
2.83
0
0
0
0
0
0
0
