Exhibit 10.54
17 NOVEMBER 2004
XL CAPITAL LTD
AS ACCOUNT PARTY
THE GUARANTORS
(AS DEFINED HEREIN)
THE LENDERS PARTY HERETO
(AS DEFINED HEREIN)
CITIBANK INTERNATIONAL PLC
AS AGENT AND SECURITY TRUSTEE
CITIGROUP GLOBAL MARKETS LIMITED AND BARCLAYS CAPITAL
AS ARRANGERS
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LETTER OF CREDIT FACILITY AND
REIMBURSEMENT AGREEMENT
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CONTENTS
CLAUSE PAGE
1. DEFINITIONS............................................................1
2. THE FACILITY..........................................................14
3. UTILISATION OF THE FACILITY...........................................16
4. TERMINATION OF LETTERS OF CREDIT......................................17
5. PAYMENT OF DEMANDS....................................................21
6. THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF CREDIT......22
7. DEFAULT INTEREST......................................................23
8. TERMINATION AND REDUCTION OF THE COMMITMENTS..........................23
9. FEES..................................................................24
10. TAXES.................................................................26
11. TAX RECEIPTS..........................................................27
12. INCREASED COSTS.......................................................28
13. ILLEGALITY............................................................29
14. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS........................30
15. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS...........31
16. GUARANTEE AND INDEMNITY...............................................33
17. REPRESENTATIONS AND WARRANTIES........................................36
18. AFFIRMATIVE COVENANTS.................................................40
19. NEGATIVE COVENANTS....................................................45
20. EVENTS OF DEFAULT.....................................................49
21. THE AGENT, THE ARRANGERS AND THE LENDERS..............................52
22. NOTICES...............................................................59
23. WAIVERS AND AMENDMENTS................................................59
24. COSTS AND EXPENSES....................................................60
25. INDEMNITIES...........................................................61
26. ALTERATION TO THE PARTIES.............................................62
27. SET OFF...............................................................67
28. MISCELLANEOUS PROVISIONS..............................................68
29. GOVERNING LAW AND JURISDICTION........................................69
30. TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.....................70
31. THIRD PARTY RIGHTS....................................................71
Conformed Copy
LETTER OF CREDIT FACILITY AND REIMBURSEMENT AGREEMENT dated 17 November 2004
BETWEEN:
(1) XL CAPITAL LTD, a company incorporated under the laws of the Cayman
Islands (the ACCOUNT PARTY);
(2) The GUARANTORS as defined below;
(3) The LENDERS as defined below;
(4) CITIBANK INTERNATIONAL PLC, as agent and trustee for the Lenders (and when
acting in such capacities the AGENT and SECURITY TRUSTEE respectively);
and
(5) BARCLAYS CAPITAL and CITIGROUP GLOBAL MARKETS LIMITED as mandated lead
arrangers (the ARRANGERS).
1. DEFINITIONS
DEFINED TERMS
1.1 As used in this Agreement, the following terms have the meanings specified
below:
ACCELERATION EVENT means the provision by the Agent to the Account Party of an
Acceleration Notice and/or the occurrence of any event with respect to any
Obligor described in Clause 20(e) or 20(f);
ACCELERATION NOTICE has the meaning assigned to such term in Clause 20;
AFFILIATE means, with respect to a specified Person, another Person that
directly, or indirectly, Controls or is Controlled by or is under common Control
with the Person specified;
AMB CASH COLLATERAL has the meaning assigned to such term in Clause 19.8;
AMB RATING UNDERTAKING has the meaning assigned to such term in Clause 19.8;
APPLICABLE PERCENTAGE means, with respect to any Lender, the percentage of the
Total Commitments represented by such Lender's Commitment. If the Total
Commitments or Commitment of a Lender have terminated or expired, the Applicable
Percentage shall be determined based upon the Total Commitments or Commitment of
such Lender (as the case may be) most recently in effect, giving effect to any
permitted assignments or transfers;
APPLICANT means each of Mid Ocean, Stonebridge Underwriting, NAC Reinsurance,
Dornoch, County Down, XL London Market and XL Re and any other Affiliate of the
Account Party as may be agreed by the Agent and the Account Party from time to
time;
APPROVED CREDIT INSTITUTION means a credit institution within the meaning of the
First Council Directive on the co-ordination of laws, regulations and
administrative provisions relating to the taking up and pursuit of the business
of credit institutions (No 77/780/EEC) which has been approved by Lloyd's for
the purpose of providing guarantees and issuing or confirming letters of credit
comprising a member's Funds at Lloyd's;
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AUTHORISED SIGNATORY means, in relation to an Obligor, any person who is duly
authorised (in such manner as may be reasonably acceptable to the Agent) and in
respect of whom the Agent has received a certificate signed by a director or
another Authorised Signatory of such Obligor setting out the name and signature
of such person and confirming such person's authority to act;
AVAILABLE COMMITMENT means in relation to a Lender at any time and save as
otherwise provided herein its Commitment less the amount of its participation in
the LC Exposures at such time PROVIDED THAT such amount shall not be less than
zero;
AVAILABLE FACILITY means, at any time, the aggregate of the Available
Commitments adjusted, in the case of a proposed utilisation pursuant to a
Utilisation Request, so as to take into account:
(a) any reduction in the Commitment of a Lender pursuant to the terms hereof;
and
(b) any Letter of Credit which pursuant to any other Utilisation Request is to
be issued;
on or before the proposed Utilisation Date relating to such utilisation;
AVAILABILITY PERIOD means the period from (and including) the Closing Date to
(and including) the Commitment Termination Date;
BILATERAL LETTER OF CREDIT has the meaning given to it in Clause 4.5(b);
BIS QUALIFYING ASSETS means fixed income securities issued or guaranteed by US
Government Agencies or by the Central Governments of any OECD country having a
financial strength rating of at least "A+" from Standard & Poor's Rating
Services (or its successor);
BOARD means the Board of Governors of the Federal Reserve System of the United
States of America;
BUSINESS DAY means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City, London or Bermuda are authorised or required
by Law to remain closed;
CAPITAL LEASE OBLIGATIONS of any Person means the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalised amount thereof determined in accordance with GAAP;
CENTRAL GOVERNMENT means, without limitation, government departments, ministries
and central banks;
CHANGE IN CONTROL means the occurrence of any of the following events or
conditions:
(a) any Person, including any syndicate or group deemed to be a Person under
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
acquires beneficial ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of
shares of capital stock of the Account Party entitling such Person to
exercise 40% or more of the total voting power of all shares of capital
stock of the Account Party that is entitled to vote generally in elections
of
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directors, other than an acquisition by the Account Party, any of its
subsidiaries or any employee benefit plans of the Account Party; or
(b) the Account Party merges or consolidates with or into any other Person
(other than a Subsidiary), another person (other than a subsidiary) merges
into the Account Party or the Account Party conveys, sells, transfers or
leases all or substantially all of its assets to another Person (other
than a Subsidiary), other than any transaction: (i) that does not result
in a reclassification, conversion, exchange or cancellation of the
outstanding shares of capital stock of the Account Party (other than the
cancellation of any outstanding shares of capital stock of the Account
Party held by the Person with whom it merges or consolidates) or (ii)
which is effected solely to change the jurisdiction of incorporation of
the Account Party and results in a reclassification, conversion or
exchange of outstanding shares of capital stock of the Account Party
solely into shares of capital stock of the surviving entity; or
(c) a majority of the members of the Account Party's board of directors are
persons who are then serving on the board of directors without having been
elected by the board of directors or having been nominated for election by
its shareholders.
CHANGE IN LAW means (a) the adoption of any Law, rule or regulation after the
date of this Agreement, (b) any change in any Law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender (or, for purposes of
Clause 12.1 and 13, by any lending office of such Lender or by such Lender's
holding company, if any) with any request, guideline or directive (whether or
not having the force of Law) of any Governmental Authority made or issued after
the date of this Agreement;
CHARGE AGREEMENT means the charge agreement, in substantially the form set out
in Schedule 9 that may be required to be entered into by the Account Party as
chargor pursuant to the terms hereof and pursuant to which the Account Party
will grant cash cover in favour of the Security Trustee;
CLOSING DATE means the date on which the conditions set out in Schedule 5
(CONDITIONS PRECEDENT) have, in the reasonable opinion of the Agent, been
satisfied;
CODE means the Internal Revenue Code of 1986 of the United States of America, as
amended from time to time;
COMMENCEMENT DATE means, in respect of a Letter of Credit, the date upon which a
Letter of Credit shall become effective, being any date from (and including) the
Closing Date to (but excluding) 1 December 2005;
COMMITMENT means, with respect to each Lender, the commitment of such Lender to
participate in the issue of Letters of Credit hereunder. The initial amount of
each Lender's Commitment is set forth on Schedule 1, or in the Transfer
Certificate pursuant to which such Lender shall have assumed its Commitment, as
applicable, but in each case as such Commitment may be:
(a) reduced from time to time pursuant to Clause 8 (TERMINATION AND REDUCTION
OF THE COMMITMENTS) or Clause 4.5(b) (REPLACEMENT LETTERS OF CREDIT); and
(b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Clause 26.3 (TRANSFERS BY LENDERS);
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COMMITMENT LETTER means the letters so titled from each Arranger to the Account
Party dated 16 September 2004;
COMMITMENT TERMINATION DATE means 30 November 2005;
CONSOLIDATED NET WORTH means, at any time, the consolidated shareholders' equity
of the Account Party and its Subsidiaries;
CONTROL means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ability to exercise voting power, by contract or otherwise. CONTROLLING and
CONTROLLED have meanings correlative thereto;
COUNTY DOWN means County Down Limited, a company incorporated under the laws of
England and Wales;
DEFAULT means any event or condition which constitutes an Event of Default or a
Potential Event of Default;
DEFAULT PERIOD means the period from and including the date on which the Agent
makes payment of a Demand Amount to but excluding the date on which the Account
Party makes a corresponding reimbursement under Clause 6.1(a) and (b) (THE
ACCOUNT PARTY'S INDEMNITY TO LENDERS);
DEMAND AMOUNT means a principal amount to be paid by the Account Party pursuant
to Clause 6.1(a) and (b) (THE ACCOUNT PARTY'S INDEMNITY TO LENDERS);
DOLLARS or $ refers to the lawful money of the United States of America from
time to time;
DORNOCH means Dornoch Limited, a company incorporated under the laws of England
and Wales;
ENVIRONMENTAL LAWS means any Law, whether now existing or subsequently enacted
or amended, relating to (a) pollution or protection of the environment,
including natural resources, (b) exposure of Persons, including but not limited
to employees, to Hazardous Materials, (c) protection of the public health or
welfare from the effects of products, by-products, wastes, emissions, discharges
or releases of Hazardous Materials or (d) regulation of the manufacture, use or
introduction into commerce of Hazardous Materials, including their manufacture,
formulation, packaging, labelling, distribution, transportation, handling,
storage or disposal;
ENVIRONMENTAL LIABILITY means any liability, contingent or otherwise (including
any liability for damages, costs of environmental remediation, fines, penalties
or indemnities), of an Obligor or any Subsidiary resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract or agreement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing;
EQUITY RIGHTS means, with respect to any Person, any subscriptions, options,
warrants, commitments, pre-emptive rights or agreements of any kind (including
any shareholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or securities convertible into, any additional shares
of capital stock of any class, or partnership or other ownership interests of
any type in, such Person;
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ERISA means the Employee Retirement Income Security Act of 1974 of the United
States of America, as amended from time to time;
ERISA AFFILIATE means any trade or business (whether or not incorporated) that,
together with the Account Party, is treated as a single employer under Clause
414(b) or (c) of the Code, or, solely for purposes of Clause 302 of ERISA and
Clause 412 of the Code, is treated as a single employer under Clause 414 of the
Code;
ERISA EVENT means (a) any REPORTABLE EVENT, as defined in Clause 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an event
for which the 30-day notice period is waived); (b) the existence with respect to
any Plan of an ACCUMULATED FUNDING DEFICIENCY (as defined in Clause 412 of the
Code or Clause 302 of ERISA), whether or not waived; (c) the filing pursuant to
Clause 412(d) of the Code or Clause 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by any Obligor or any of such Obligor's ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by an Obligor or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any
Obligor or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Obligor or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from any Obligor or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganisation,
within the meaning of Title IV of ERISA;
EVENT OF DEFAULT has the meaning assigned to such term in Clause 20;
FACILITY means the letter of credit facility granted to the Account Party
pursuant to this Agreement;
FACILITY OFFICE means the office or offices notified by a Lender to the Agent in
writing on or before the date it becomes a Lender (or, following that date, by
not less than five Business Days' written notice) as the office or offices
through which it will perform its obligations under this Agreement;
FEE LETTER means the letter from the Arrangers to the Account Party dated 16
September 2004, relating to the payment of certain fees;
FINANCE DOCUMENTS means this Agreement, the Charge Agreement, the Commitment
Letter, the Fee Letter, any Letter of Credit and any other document or documents
as may be agreed by the Agent and the Account Party;
FINAL EXPIRATION DATE means the date on which a Letter of Credit terminates in
accordance with its terms;
FINANCE PARTIES means the Lenders, the Agent, the Arrangers and the Security
Trustee;
FINANCIAL OFFICER means, with respect to any Obligor, a principal financial
officer of such Obligor;
FINANCIAL STRENGTH RATING has the meaning assigned to such term in Clause 9.3.
FUNDS AT LLOYD'S has the meaning given to it in paragraph 4 of the Membership
Bylaw (No. 17 of 1993);
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FUNDS AT LLOYD'S REQUIREMENTS means, in respect of any member, the amount
required to be maintained by that member as Funds at Lloyd's;
FUNDS DATE means the date notified by Lloyd's each year as being the latest date
in that year by which Funds at Lloyd's can be placed with Lloyd's in order to
satisfy Funds at Lloyd's Requirements in respect of the immediately succeeding
calendar year being, in respect of the 2004 calendar year, 26 November 2004 or
such other date as may be advised by Lloyd's;
GAAP means generally accepted accounting principles in the United States of
America;
GIC means a guaranteed investment contract or funding agreement or other similar
agreement issued by an Obligor or any of its Subsidiaries that guarantees to a
counterparty a rate of return on the invested capital over the life of such
contract or agreement;
GOVERNMENTAL AUTHORITY means the government of the United Kingdom, or of any
other nation, or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government;
GUARANTEE means, with respect to any Person, without duplication, any
obligations of such Person (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) guaranteeing or
intended to guarantee any Indebtedness of any other Person in any manner,
whether direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any property
constituting security therefor for the purpose of assuring the holder of such
Indebtedness, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital, solvency or
other balance sheet condition of such other Person (including without limitation
keepwell agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of Indebtedness of
such other Person, (iii) to lease or purchase property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness, or (iv)
to otherwise assure or hold harmless the holder of such Indebtedness against
loss in respect thereof. The amount of any Guarantee hereunder shall (subject to
any limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount of the Indebtedness in respect of which such
Guarantee is made. The terms GUARANTEE and GUARANTEED used as a verb shall have
a correlative meaning;
GUARANTORS means each of the Account Party, XL America, XL Bermuda, and XL Re;
HAZARDOUS MATERIALS means all explosive or radioactive substances or wastes and
all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law;
HEDGING AGREEMENT means any interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest or
currency exchange rate or commodity price hedging arrangement;
INDEBTEDNESS means, for any Person, without duplication (it being understood,
for the avoidance of doubt, that insurance payment liabilities, as such, and
liabilities arising in the ordinary course of such Person's business as an
insurance or reinsurance company (including GICs and Stable Value Instruments
and any Specified Transaction Agreement relating
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thereto) or corporate member of Lloyd's or as a provider of financial or
investment services or contracts (including GICs and Stable Value Instruments
and any Specified Transaction Agreement relating thereto) (in each case other
than in connection with the provision of financing to such Person or any of such
Person's Affiliates) shall not be deemed to constitute Indebtedness): (i) all
indebtedness or liability for or on account of money borrowed by, or for or on
account of deposits with or advances to (but not including accrued pension
costs, deferred income taxes or accounts payable of) such Person; (ii) all
obligations (including contingent liabilities) of such Person evidenced by
bonds, debentures, notes, banker's acceptances or similar instruments; (iii) all
indebtedness or liability for or on account of property or services purchased or
acquired by such Person; (iv) any amount secured by a Lien on property owned by
such Person (whether or not assumed) and Capital Lease Obligations of such
Person (without regard to any limitation of the rights and remedies of the
holder of such Lien or the lessor under such capital lease to repossession or
sale of such property); (v) the maximum available amount of all standby letters
of credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed); and (vi) all Guarantees of
such Person;
INSURANCE SUBSIDIARY means any Subsidiary which is subject to the regulation of,
and is required to file statutory financial statements with, any governmental
body, agency or official in any State or territory of the United States or the
District of Columbia which regulates insurance companies or the doing of an
insurance business therein.
ISDA has the meaning assigned to such term in Clause 19.3(f);
ISSUING LENDER means any Lender in its capacity as an issuer of one or more
Letters of Credit hereunder;
LAW means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Governmental Authority;
LC DISBURSEMENT means a payment made by a Lender pursuant to a Letter of Credit;
LC EXPOSURE means the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit at such time plus (b) the aggregate amount of all Demand
Amounts. The LC Exposure of any Lender at any time shall be the sum of its
participation in the outstanding Letters of Credit at such time and the Demand
Amounts owed to it at such time;
LC PROPORTION means, in relation to the Lender in respect of any Letter of
Credit and save as otherwise provided herein, the proportion (expressed as a
percentage) of such Lender's Available Commitment to the Available Facility
immediately prior to the issue of such Letter of Credit;
LENDER AFFILIATE means with respect to any Lender, (a) an Affiliate of such
Lender or (b) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender;
LENDERS means any of the Persons listed in Schedule 1 (COMMITMENTS) or any other
Person that shall have become a party hereto pursuant to Clause 26.3 (TRANSFERS
BY Lenders), and which has not ceased to be a party hereto in accordance with
the terms hereof;
LETTERS OF CREDIT means Letters of Credit issued pursuant to the terms of this
Agreement (including, for the avoidance of doubt, any New Letter of Credit,
Reduced Letter of Credit or Bilateral Letter of Credit referred to in Clause 4.5
(REPLACEMENT LETTERS OF CREDIT));
LETTER OF CREDIT FEES means the fees payable by the Account Party pursuant to
Clause 9.2 (LETTER OF CREDIT FEES) (as adjusted from time to time in accordance
with the provisions of Clause 9.3) (ADJUSTMENT OF LETTER OF CREDIT FEE);
LIEN means, with respect to any asset, any mortgage, deed of trust, pledge,
lien, security interest, charge or other encumbrance or security arrangement of
any nature whatsoever, including but not limited to any conditional sale or
title retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security;
LIBOR means, in relation to any unpaid sum:
(a) the display rate per annum of the offered quotation for overnight deposits
in the currency of the relevant unpaid sum which appears on Telerate Page
3750 or Telerate Page 3740 (as appropriate) at or about 11.00 a.m. on any
relevant day; or
(b) if the display rate cannot be determined under paragraph (a) above, the
rate determined by the Agent to be the arithmetic mean (rounded, if
necessary, to the nearest five decimal places with the midpoint rounded
upwards) of the rates notified to the Agent by each of the Reference Banks
quoting (provided that at least two Reference Banks are quoting) as the
rate at which such Reference Bank is offering overnight deposits in the
required currency in an amount comparable to that amount to prime banks in
the London Interbank Market at or about 11.00 a.m. on any relevant day;
and
for the purposes of this definition: TELERATE PAGE 3750 means the display
designated as Page 3750, and TELERATE PAGE 3740 means the display designated as
Page 3740, in each case on the Telerate Service (or such other pages as may
replace Page 3750 or Page 3740 on that service or such other service as may be
nominated by the British Bankers' Association (including the Reuters Screen) as
the information vendor for the purposes of displaying British Bankers'
Association Interest Settlement Rates for deposits in the currency concerned);
LLOYD'S means the society incorporated by Lloyd's Xxx 0000 by the name of
Lloyd's;
MAJORITY LENDERS means, at any time, Lenders having Commitments representing
more than 50% of the sum of the total Commitments at such time; PROVIDED THAT,
if the Commitments have expired or been terminated, MAJORITY LENDERS means
Lenders having more than 50% of the aggregate LC Exposure of the Lenders;
MANDATORY COSTS means, in relation to any unpaid sum for any period, a rate per
annum calculated in accordance with Schedule 4;
MARGIN STOCK means MARGIN STOCK within the meaning of Regulations T, U and X of
the Board;
MATERIAL ADVERSE EFFECT means a material adverse effect on: (a) the assets,
business, financial condition or operations of an Obligor and its Subsidiaries
taken as a whole; or (b) the ability of an Obligor to perform any of its payment
or other material obligations under this Agreement;
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MID OCEAN means Mid Ocean Limited, a company incorporated under the laws of the
Cayman Islands;
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Clause 4001(a)(3) of
ERISA;
NAC REINSURANCE means NAC Reinsurance International Ltd, a company incorporated
under the laws of England and Wales;
NON-U.S. BENEFIT PLAN means any plan, fund (including any superannuation fund)
or other similar program established or maintained outside the United States by
any Obligor or any of its Subsidiaries, with respect to which such Obligor or
the Subsidiary has an obligation to contribute, for the benefit of employees of
such Obligor or such Subsidiary, which plan, fund or other similar program
provides, or results in, the type of benefits described in Clause 3(1) or 3(2)
of ERISA, and which plan is not subject to ERISA or the Code;
OBLIGOR JURISDICTION means (a) Bermuda, (b) the Cayman Islands, (c) United
States, and (d) any other country (i) where any Obligor is licensed or qualified
to do business or (ii) from or through which payments hereunder are made by any
Obligor;
OBLIGORS means each of the Account Party and the Guarantors;
OECD COUNTRY means any member of the Organisation for Economic Co-operation and
Development;
ORIGINAL AGREEMENT means the letter of credit and reimbursement agreement dated
14 November 2003 between, inter alios, the Account Party, the Agent and the
lenders thereto;
ORIGINAL LETTERS OF CREDIT means the letters of credit issued under the Original
Agreement;
ORIGINAL PARTIES means the parties to the Original Agreement;
PARTICIPATING MEMBER STATE means any member state of the European Communities
that adopts or has adopted the euro as its lawful currency in accordance with
legislation of the European Union relating to European Monetary Union;
PARTY means any party to this Agreement;
PBGC means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions;
PERSON means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or
other entity;
PLAN means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Clause 412 of the Code or
Clause 302 of ERISA, and in respect of which any Obligor or any ERISA Affiliate
is (or, if such plan were terminated, would under Clause 4069 of ERISA be deemed
to be) an EMPLOYER as defined in Clause 3(5) of ERISA;
POTENTIAL EVENT OF DEFAULT means an event or condition which upon notice, lapse
of time or both would, unless cured or waived, become an Event of Default;
PRIVATE ACT means separate legislation enacted in Bermuda with the intention
that such legislation apply specifically to an Obligor, in whole or in part;
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PROCESS AGENT has the meaning assigned to such term in Clause 29.3.
QUARTERLY DATES means the last Business Day of March, June, September and
December in each year, the first of which shall be the first such day after the
date hereof;
REFERENCE BANKS means, subject to Clause 26.6 (REFERENCE BANKS), the principal
London offices of Citibank, N.A., ING Bank N.V., London Branch , Lloyds TSB Bank
plc and Barclays Bank PLC;
REGISTER has the meaning given to it in Clause 26.11 (MAINTENANCE OF REGISTER BY
AGENT);
RELATED PARTIES means, with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates;
REPRESENTATIONS means each of the representations and warranties set out in
Clause 17 (REPRESENTATIONS AND WARRANTIES);
SAP means, as to each Obligor and each Subsidiary that offers insurance
products, the statutory accounting practices prescribed or permitted by the
relevant Governmental Authority for such Obligor's or such Subsidiary's domicile
for the preparation of its financial statements and other reports by insurance
corporations of the same type as such Obligor or such Subsidiary in effect on
the date such statements or reports are to be prepared, except if otherwise
notified by the Account Party as provided in Clause 1.3;
SEC means the Securities and Exchange Commission of the United States of America
or any successor entity;
SIGNIFICANT SUBSIDIARY means, at any time, each Subsidiary of the Account Party
that, as of such time, meets the definition of a "significant subsidiary" under
Regulation S-X of the SEC;
SPECIFIED TRANSACTION AGREEMENT means any agreement, contract or documentation
with respect to the following types of transactions: rate swap transaction, swap
option, basis swap, asset swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, current swap transaction,
cross-currency rate swap transaction, currency option, credit protection
transaction, credit swap, credit default swap, credit default option, total
return swap, credit spread transaction, repurchase transaction, reverse
repurchase transaction, buy/sell-back transaction, securities lending or
borrowing transaction, weather index transaction or forward purchase or sale of
a security, commodity or other financial instrument or interest, and
transactions on any commodity futures or other exchanges, markets and their
associated clearing houses (including any option with respect to any of these
transactions);
STABLE VALUE INSTRUMENT means any insurance, derivative or similar financial
contract or instrument designed to mitigate the volatility of returns during a
given period on a specified portfolio of securities held by one party (the
CUSTOMER) through the commitment of the other party (the SVI PROVIDER) to
provide the Customer with a credited rate of return on the portfolio, typically
determined through an interest-crediting mechanism; in exchange, the SVI
Provider typically receives a fee;
STERLING or (POUND) refers to the lawful currency of the United Kingdom from
time to time;
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STONEBRIDGE UNDERWRITING means Stonebridge Underwriting Limited, a company
incorporated under the laws of England and Wales;
SUBSIDIARY means, with respect to any Person (the PARENT), at any date, any
corporation (or similar entity) of which a majority of the shares of outstanding
capital stock normally entitled to vote for the election of directors
(regardless of any contingency which does or may suspend or dilute the voting
rights of such capital stock) is at such time owned directly or indirectly by
the parent or one or more subsidiaries of the parent. Unless otherwise
specified, SUBSIDIARY means a Subsidiary of an Obligor;
SUBSTITUTE LENDER has the meaning give to it in Clause 4.4(a);
TAXES means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
TAXATION and TAX shall be construed accordingly;
TOTAL COMMITMENTS means, at any time, the aggregate of the Lenders' Commitments
(being on the date hereof (pound)450,000,000);
TOTAL FUNDED DEBT means, at any time, all Indebtedness of the Account Party and
its Subsidiaries which would at such time be classified in whole or in part as a
liability on the consolidated balance sheet of the Account Party in accordance
with GAAP;
TOTAL LC EXPOSURES means, at any time, the aggregate of the Lenders' LC
Exposures;
TRANSACTIONS means the execution, delivery and performance by the Obligors of
this Agreement and the other Finance Documents to which any Obligor is intended
to be a party and the issuance of Letters of Credit hereunder;
TRANSFER CERTIFICATE means a certificate in the form of Schedule 8 (FORM OF
TRANSFER CERTIFICATE) delivered pursuant to Clause 26.4 (TRANSFER PROCEDURE);
TRANSFEREE means a Person to which a Lender seeks to transfer by novation all or
part of such Lender's rights, benefits and obligations under the Finance
Documents;
US GOVERNMENT AGENCIES means US government agencies whose debt obligations are
fully and explicitly guaranteed as to the timely repayment of principal and
interest by the full faith and credit of the US federal government;
UTILISATION DATE means the date on which a Letter of Credit is to be issued;
UTILISATION REQUEST means a notice substantially in the form set out in Schedule
6 (FORM OF UTILISATION REQUEST);
WITHDRAWAL LIABILITY means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA;
XL AMERICA means X.L. America, Inc., a company incorporated under the laws of
Delaware, USA;
XL BERMUDA means XL Insurance (Bermuda) Ltd, a company organised under the laws
of Bermuda;
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XL LONDON MARKET means XL London Market Ltd (formerly known as Xxxxxxxxx), a
company incorporated under the laws of England and Wales;
XL RE means XL Re Ltd, a company organised under the laws of Bermuda.
INTERPRETATION
1.2 Any reference in this Agreement to:
(a) the AGENT, SECURITY TRUSTEE, ARRANGERS, LENDER or any other Person shall
be construed so as to include its and any subsequent successors and
permitted transferees in accordance with their respective interests;
(b) BARCLAYS CAPITAL is a reference to Barclays Capital, the investment
banking division of Barclays Bank PLC (and any references shall include
Barclays Bank PLC);
(c) CONTINUING, in the context of an Event of Default shall be construed as a
reference to an Event of Default which has not been remedied or waived in
accordance with the terms hereof and in relation to a POTENTIAL EVENT OF
DEFAULT, one which has not been remedied within the relevant grace period
or waived in accordance with the terms hereof;
(d) a HOLDING COMPANY of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a subsidiary;
(e) the EQUIVALENT on any date in one currency (the FIRST CURRENCY) of an
amount denominated in another currency (the SECOND CURRENCY) is a
reference to the amount of the first currency which could be purchased
with the amount of the second currency at the spot rate quoted by the
Agent at or about 11.00 a.m. on such date for the purchase of the first
currency with the second currency;
(f) a MEMBER shall be construed (as the context may require) as a reference to
an underwriting member of Lloyd's;
(g) a MONTH is a reference to a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next succeeding
calendar month save that, where any such period would otherwise end on a
day which is not a Business Day, it shall end on the next succeeding
Business Day, unless that day falls in the calendar month succeeding that
in which it would otherwise have ended, in which case it shall end on the
immediately preceding Business Day, PROVIDED THAT, if a period starts on
the last Business Day in a calendar month or if there is no numerically
corresponding day in the month in which that period ends, that period
shall end on the last Business Day in that later month (and references to
MONTHS shall be construed accordingly);
(h) a Lender's PARTICIPATION, in relation to a Letter of Credit, shall be
construed as a reference to the rights and obligations of such Lender in
relation to such Letter of Credit as are expressly set out in this
Agreement;
(i) a SUCCESSOR shall be construed so as to include an assignee or successor
in title of such party and any person who under the laws of its
jurisdiction of incorporation or domicile has assumed the rights and
obligations of such party under this Agreement or to which, under such
laws, such rights and obligations have been transferred;
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(j) an ASSET or PROPERTY shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights;
(k) TAX shall be construed so as to include any and all present or future
stamp or documentary taxes or any other excise or property taxes, charges,
interest, penalties or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement;
(l) VAT shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time;
(m) the WINDING-UP, DISSOLUTION or ADMINISTRATION of a company or corporation
shall be construed so as to include any equivalent or analogous
proceedings under the Law of the jurisdiction in which such company or
corporation is incorporated or any jurisdiction in which such company or
corporation carries on business including the seeking of liquidation,
winding-up, reorganisation, dissolution, administration, arrangement,
adjustment, protection or relief of debtors; and
(n) unless the contrary intention appears:
(i) a Letter of Credit is CANCELLED, REPAID or PREPAID by:
(A) providing the Issuing Lender(s) with cash cover (as defined
below); or
(B) reducing (in accordance with the terms of this Agreement and
the Letter of Credit) the amount that may be demanded under
the Letter of Credit (or by that amount automatically reducing
in accordance with the terms of the Letter of Credit); or
(C) cancelling the Letter of Credit by (x) providing written
confirmation (in form and substance satisfactory to the Agent
or the Issuing Lender) from Lloyd's that the Issuing Lender(s)
has no further liability under the Letter of Credit (including
by way of a notice specifying that Lloyd's does not accept or
unconditionally rejects a Letter of Credit (unless the Agent
or the Issuing Lender as the case may be, acting reasonably,
considers that Lloyd's remains entitled to make a claim under
such Letter of Credit)), and (y) if Lloyd's agrees, by
procuring the return of the original to the Agent;
(ii) CASH COVER is provided, pursuant to the terms of the Charge
Agreement, in respect of a Lender's participation in a Letter of
Credit at any time by paying an amount in Sterling equal to the
outstanding amount of that participation at that time to such
account or accounts as the Agent may specify and creating effective
security over such amount in favour of the Security Trustee on
behalf of the Finance Parties in form and substance satisfactory to
the Security Trustee (together with legal opinions, evidence of
corporate authorisation, and similar documentation reasonably
required by the Security Trustee), in the name of the Account Party
from which the only withdrawals which may be made are withdrawals
made with the prior written consent of the Security Trustee in
accordance with the terms of the Charge Agreement; and
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(iii) a reference to PRINCIPAL AMOUNT in respect of a Letter of Credit
means the maximum amount which is expressed to be capable of being
demanded under a Letter of Credit ignoring the aggregate amount of
any cash cover held in relation to that Letter of Credit.
ACCOUNTING TERMS; GAAP AND SAP
1.3 Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP or SAP, as the
context requires, each as in effect from time to time; provided that, if the
Account Party notifies the Agent that the Obligors request an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or SAP, as the case may be, or in the application thereof on the
operation of such provision (or if the Agent notifies the Obligors that the
Majority Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or SAP, as the case may be, or in the application thereof, then such
provision shall be interpreted on the basis of GAAP or SAP, as the case may be,
as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
AGREEMENTS AND STATUTES
1.4 Any reference in this Agreement to:
(a) this Agreement or any other agreement or document shall be construed as a
reference to this Agreement or, as the case may be, such other agreement
or document as the same may have been, or may from time to time be,
amended, varied, novated or supplemented;
(b) a statute or treaty shall be construed as a reference to such statute or
treaty as the same may have been, or may from time to time be, amended or,
in the case of a statute, re-enacted; and
(c) a bylaw shall be construed as a reference to a bylaw made under Lloyd's
Acts 1871 to 1982 as the same may have been, or may from time to time be,
amended or replaced.
HEADINGS
1.5 Clause and Schedule headings are for ease of reference only.
TIME
1.6 Any reference in this Agreement to a time of day shall, unless a contrary
indication appears, be a reference to London time.
2. THE FACILITY
GRANT OF THE FACILITY
2.1 The Lenders, upon the terms and subject to other conditions hereof, grant to
the Account Party a letter of credit facility in an aggregate amount of
(pound)450,000,000.
PURPOSE AND APPLICATION
2.2 (a) The Facility is intended to support Funds at Lloyd's for the
underwriting business of the Applicants, and, accordingly, the Account
Party shall apply all Letters of Credit issued hereunder in or towards
satisfaction of such purpose.
(b) Without prejudice to the Account Party's obligations under Clause 2.2(a)
and the remaining provisions of this Agreement, none of the Finance
Parties shall be bound to enquire as to, nor shall any of them be
responsible for, the purpose of, or application of the proceeds of any
Letter of Credit issued hereunder.
CONDITIONS PRECEDENT
2.3 Save as the Lenders may otherwise agree, the Account Party may not deliver
any Utilisation Request unless the Agent has confirmed to the Account Party and
the Lenders that it has waived and/or received all of the documents and other
evidence listed in Schedule 5 (CONDITIONS PRECEDENT) and that each is, in form
and substance, reasonably satisfactory to the Agent.
SEVERAL OBLIGATIONS
2.4 The obligations of each Lender are several and the failure by a Lender to
perform its obligations hereunder and/or under any Letter of Credit issued
hereunder shall not affect the obligations of either Obligor towards any other
party hereto nor shall any other party be liable for the failure by such Lender
to perform its obligations hereunder and/or under such Letter of Credit.
SEVERAL RIGHTS
2.5 The rights of each Finance Party are several and any debt arising hereunder
at any time from an Obligor to any Finance Party shall be a separate and
independent debt. Each such party shall be entitled to protect and enforce its
individual rights arising out of this Agreement independently of any other party
(so that it shall not be necessary for any party hereto to be joined as an
additional party in any proceedings for this purpose).
CHANGE OF CURRENCY
2.6 (a) If, after the date of this Agreement, more than one currency or currency
unit denomination are at the same time recognised by the central bank of
any country as the lawful currency of that country, then:
(i) any reference in the Finance Documents to, and any obligations
arising under the Finance Documents in, the currency of that country
shall be translated into, or paid in, the currency or currency unit
of that country designated by the Agent; and
(ii) any translation from one currency or currency unit to another shall
be at the official rate of exchange or conversion rate recognised by
the central bank for the conversion of that currency or currency
unit into the other, rounded up or down by the Agent acting
reasonably.
(b) If a change in any currency of a country occurs, this Agreement will be
amended in the manner determined by the Agent (acting reasonably) so as
to reflect the change in
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currency and to place the parties in the same position, so far as
possible, that they would have been in if no change in currency had
occurred.
CANCELLATION OF ORIGINAL AGREEMENT
2.7 (a) From the date of this Agreement the Account Party shall not deliver any
Utilisation Request (as defined in the Original Agreement) under the
Original Agreement.
(b) The Original Parties hereby agree that the Original Agreement shall be
automatically terminated and the Total Commitments thereunder cancelled
upon cancellation of all the Original Letters of Credit in accordance
with the terms of the Original Agreement.
3. UTILISATION OF THE FACILITY
UTILISATION CONDITIONS FOR THE FACILITY
3.1 Save as otherwise provided herein, a Letter of Credit will be issued at the
request of the Account Party on behalf of an Applicant if:
(a) no later than 10.00 a.m. two Business Days before the proposed Utilisation
Date, the Agent has received a duly completed Utilisation Request from the
Account Party;
(b) the proposed Utilisation Date is a Business Day falling within the
Availability Period;
(c) the proposed amount of such Letter of Credit is less than or equal to the
Available Facility;
(d) the Letter of Credit is substantially in the form set out in Schedule 7
(FORM OF LETTER OF CREDIT) or in such other form requested by the Account
Party which is approved by Lloyd's and the Lenders (such approval by the
Lenders not to be unreasonably withheld or delayed and shall not be
required unless the other form requested differs materially from the form
set out in Schedule 7);
(e) the beneficiary of such Letter of Credit is Lloyd's; and
(f) on and as of the proposed Utilisation Date (a) no Default has occurred and
is continuing and (b) the Representations are true in all material
respects.
REQUEST FOR LETTERS OF CREDIT
3.2 The Account Party may request the issue by the Lenders hereunder of a total
of up to thirty Letters of Credit in respect of the Applicants. A single
Utilisation Request may be issued in respect of more than one Letter of Credit.
COMPLETION OF LETTERS OF CREDIT
3.3 The Agent is authorised to arrange for the issue of any Letter of Credit
pursuant to Clause 3.1 (UTILISATION CONDITIONS FOR THE FACILITY) by:
(a) completing the Commencement Date of such Letter of Credit;
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(b) completing the schedule to such Letter of Credit with the percentage
participation of each Lender as allocated pursuant to the terms hereof;
and
(c) executing such Letter of Credit on behalf of each Lender and following
such execution delivering such Letter of Credit to Lloyd's on the
Utilisation Date.
FINAL EXPIRATION DATE
3.4 Each Letter of Credit shall expire on its Final Expiration Date.
EACH LENDER'S PARTICIPATION IN LETTERS OF CREDIT
3.5 (a) Save as otherwise provided herein, each Lender will participate in each
Letter of Credit issued pursuant to this Clause 3 in the proportion
borne by its Available Commitment to the Available Facility immediately
prior to the issue of such Letter of Credit.
(b) No Lender shall participate in or issue any Letter of Credit to the
extent that its LC Exposure would exceed its Commitment following the
issue of that Letter of Credit.
NOTIFICATION TO LENDERS
3.6 On or before each Utilisation Date the Agent shall notify each Lender of the
Letter of Credit that is to be issued by the Agent on behalf of the Lenders, the
name of the Applicant in respect of whom the Letter of Credit is being issued
and the aggregate principal amount of the relevant Letter of Credit allocated to
such Lender pursuant to this Agreement.
CANCELLATION OF AVAILABLE COMMITMENTS
3.7 On the expiry of the Availability Period, the Available Facility and each
Lender's Available Commitment shall be reduced to zero and accordingly the
remaining Commitments of each Lender shall be equal to their respective LC
Exposure under any issued Letters of Credit.
4. TERMINATION OF LETTERS OF CREDIT
CONTINUATION UNTIL LLOYD'S TERMINATION DATE
4.1 Each Party acknowledges that, subject to the terms of this Agreement:
(a) each issued Letter of Credit shall continue in force unless Lloyd's
receives a notice from the Agent (or any Finance Party, if pursuant to
Clause 4.6(b)) giving Lloyd's not less than four years' notice in writing,
terminating such Letter of Credit pursuant to Clause 3 of the Letter of
Credit (a LLOYD'S TERMINATION NOTICE):
(i) on the later of (x) 31 December 2009 and (y) any subsequent date as
specified in such notice (a LLOYD'S TERMINATION DATE); or
(ii) at any time after the occurrence of an Acceleration Event or whilst
any Continuation CP Event (as defined in Clause 4.6(b)) is
continuing;
(b) no Party, other than the Agent (or any Lender, if pursuant to Clause
4.6(b)), may deliver a Lloyd's Termination Notice (and the Agent may only
deliver a Lloyd's Termination Notice pursuant to Clause 3 of the Letter of
Credit and this Clause 4);
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(c) if the Account Party or any Lender (a RELEVANT PARTY) so requests (a
TERMINATION REQUEST), the Agent shall deliver a Lloyd's Termination Notice
as required by this Clause 4, on the later of:
(i) the expiration of the period ending on the day three weeks after the
corresponding Termination Request Receipt Date, as defined in Clause
4.2(b); and
(ii) the expiration of any Declining Lender Notice Period, as defined in
Clause 4.3(a);
(d) the Agent shall, promptly after delivery by the Agent of a Lloyd's
Termination Notice, provide a copy of such Lloyd's Termination Notice to
each Lender (and shall inform the Account Party of the Lloyd's Termination
Date); and
(e) a Letter of Credit will terminate on the Lloyd's Termination Date.
DELIVERY BY A RELEVANT PARTY OF A TERMINATION REQUEST
4.2 A Termination Request may be delivered by a Relevant Party to the Agent in
accordance with the following:
(a) no Termination Request may be delivered before 1 January 2005;
(b) any Termination Request delivered on a date (a TERMINATION REQUEST
DELIVERY DATE) from 1 January 2005 to and including 30 November 2005 will
be deemed to have been received by the Agent on (a TERMINATION REQUEST
RECEIPT DATE) 30 November 2005 and the corresponding Lloyd's Termination
Date shall be 31 December 2009; and
(c) from 1 December 2005, any Termination Request Receipt Date will be the
later of (i) 1 January 2006 and (ii) the corresponding Termination Request
Delivery Date.
DECLINING LENDER MECHANICS (ON DELIVERY BY A LENDER OF A TERMINATION REQUEST)
4.3 (a) If a Lender (a DECLINING LENDER) delivers a Termination Request to the
Agent:
(i) the Agent shall notify the Account Party accordingly within two
Business Days thereafter; and
(ii) during the period ending on the day three weeks after the
corresponding Termination Request Receipt Date (a DECLINING LENDER
NOTICE PERIOD) the Account Party may designate a Substitute Lender
as contemplated in Clause 4.4.
(b) Unless a Substitute Lender has been designated pursuant to Clause 4.4 (in
which case the provisions of Clause 4.5(a) shall apply) upon expiry of the
Declining Lender Notice Period the Agent shall issue a Lloyd's Termination
Notice (in accordance with Clause 3 of the Letter of Credit) specifying a
Lloyd's Termination Date of the later of (i) 31 December 2009 and (ii) the
fourth anniversary of the date of that notice, whereupon the Letter of
Credit will terminate on such Lloyd's Termination Date.
(c) Unless notice is given to the Agent as aforesaid each Lender will be
deemed automatically to have agreed to continue its participation in each
Letter of Credit.
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SUBSTITUTE LENDER
4.4 (a) If any Declining Lender delivers a Termination Request, the Account
Party may designate by the date which falls no later than two Business
Days before the end of the corresponding Declining Lender Notice Period
an Approved Credit Institution (which may be an existing Lender or
Lenders) (the SUBSTITUTE LENDER) which is willing to assume all of the
rights and obligations of the Declining Lender in respect of its
participation in the relevant Letter of Credit (the OLD LETTER OF
CREDIT).
(b) If the Account Party has found a Substitute Lender it shall promptly
notify the Agent and the Declining Lender thereof and shall use its best
efforts to procure the release by Lloyd's of the Old Letter of Credit
(an OLD LETTER OF CREDIT RELEASE) from the Funds at Lloyd's of the
relevant Applicant.
(c) The Declining Lender shall as soon as reasonably practicable after
receipt of notice from the Account Party transfer its rights and
obligations hereunder to the Substitute Lender in accordance with the
provisions of Clause 26.3 (TRANSFERS BY LENDERS).
(d) The Substitute Lender shall pay to the Declining Lender all amounts then
due and owing (and all fees accrued to but excluding the date of such
transfer) to the Declining Lender in respect of its participation in the
Old Letter of Credit.
REPLACEMENT LETTERS OF CREDIT
4.5 (a) If a Substitute Lender has become party hereto pursuant to Clause 4.4
(SUBSTITUTE LENDER), then subject to the provisions of Clause 4.6
(CONTINUATION CONDITIONS PRECEDENT) the Lenders who are deemed to have
agreed to the continuation of the Old Letter of Credit (the EXTENDING
LENDERS) shall, together with the Substitute Lender, participate in, and
issue as soon as reasonably practicable (on or immediately after the Old
Letter of Credit Release), a new Letter of Credit (the NEW LETTER OF
CREDIT) which shall (i) replace the Old Letter of Credit and (ii) be in
an amount equal to the Old Letter of Credit. If the New Letter of Credit
has not been issued by the end of the Declining Lender Notice Period,
Clause 4.5(b) shall apply (on the assumption, if not the case, that a
Substitute Lender has not been found by the time specified in Clause
4.4(a)) and the Agent shall promptly deliver a Lloyd's Termination
Notice (in accordance with Clause 4.3 (DECLINING LENDER MECHANICS)).
(b) If a Substitute Lender has not been found by the time specified in
Clause 4.4(a), then the Account Party shall use its best efforts to
procure an Old Letter of Credit Release, and on or immediately after
such Old Letter of Credit Release (i) subject to the provisions of
Clause 4.6 (CONTINUATION CONDITIONS PRECEDENT), the Extending Lenders
shall participate in, and issue as soon as reasonably practicable, a new
Letter of Credit (the REDUCED LETTER OF CREDIT) which shall (x) replace
their participation in the Old Letter of Credit and (y) be in an amount
equal to the Old Letter of Credit LESS the amount of the Declining
Lender's participation and (ii) the Declining Lender shall participate
in a separate Letter of Credit (a BILATERAL LETTER OF CREDIT) which
shall (x) replace its participation in the Old Letter of Credit, (y) be
in an amount equal to the Declining Lender's participation in the Old
Letter of Credit and (z) have a Final Expiration Date which is the
Lloyd's Termination Date designated pursuant to Clause 4.3 (DECLINING
LENDER MECHANICS).
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CONTINUATION CONDITIONS PRECEDENT
4.6 (a) On or prior to close of business on 1 September of each year (each, a
CONTINUATION CP DATE), the Account Party shall promptly notify the Agent
if (as of such Continuation CP Date):
(i) an Event of Default or Potential Event of Default occurs which is
continuing;
(ii) any of the Representations cease to be correct in all material
respects, or become misleading in any material respect; or
(iii) any Letter of Credit ceases solely to be used to support the
relevant Applicant's underwriting business at Lloyd's which has been
provided in accordance with the requirements of Lloyd's applicable
to it.
(b) If on any Continuation CP Date any of the events specified in Clause
4.6(a) (each, a CONTINUATION CP EVENT) has occurred and is continuing,
then at any time thereafter (so long as any Continuation CP Event is
continuing):
(i) the Agent may, and at the request of the Majority Lenders shall,
issue a Lloyd's Termination Notice (containing the earliest possible
Lloyd's Termination Date); and
(ii) any Lender shall be entitled to issue a Lloyd's Termination Notice
(containing the earliest possible Lloyd's Termination Date) and such
Lender shall promptly provide a copy of such Lloyd's Termination
Notice to the Agent,
and the Agent shall, in each case, provide a copy of the Lloyd's
Termination Notice to the Account Party (and each other Lender) within
two Business Days of the Agent (x) issuing a Lloyd's Termination Notice
(in the case of paragraph (i) above) or (y) receiving a copy of a
Lloyd's Termination Notice from a Lender (in the case of paragraph (ii)
above).
CANCELLATION OF BILATERAL LETTERS OF CREDIT
4.7 At any time after the issue of a Bilateral Letter of Credit by a Declining
Lender the Account Party may give the Agent and the Declining Lender not less
than fourteen days' prior written notice of its intention to procure that the
liability of the Declining Lender under such Letter of Credit is reduced to zero
(whereupon it shall do so).
REVISED LETTERS OF CREDIT
4.8 In the event that the Funds at Lloyd's Requirements of an Applicant changes
at or around the time of any given Funds Date in terms of amount and/or the
identity of the Applicant, subject to the approval of Lloyd's and subject to
each Lender's LC Exposures under the Letters of Credit issued hereunder not
being increased, the Lenders shall co-operate with the Account Party to ensure
to the extent reasonably possible that the Letters of Credit provide for the
revised Funds at Lloyd's Requirements of the Applicants.
INCREASE TO FACILITY
4.9 If at any time a Bilateral Letter of Credit is outstanding, the Account
Party shall have the right to increase the size of the Facility by up to the
principal amount of the Bilateral
Letter of Credit(s) outstanding by introducing a new lender (which may be an
existing Lender) and on terms that one or more outstanding Bilateral Letters of
Credit having an aggregate principal amount at least equal to the increase are
cancelled at the time the increase takes effect. Each Lender agrees to execute
any documentation giving effect to this increase and new lender provided that no
such documentation may increase the Commitment of any Lender without the express
consent of that Lender at the time such documentation is executed.
5. PAYMENT OF DEMANDS
DISBURSEMENT PROCEDURES
5.1 (a) The Agent shall, within a reasonable time following its receipt thereof,
examine all documents purporting to represent a demand for payment under
any Letter of Credit. The Agent shall promptly after such examination
(and in any event by 12 noon on the Business Day immediately following
receipt of such demand) (i) notify each of the Lenders and the Account
Party by facsimile of such demand for payment and (ii) deliver to each
Lender and the Account Party a copy of each document purporting to
represent a demand for payment under such Letter of Credit.
(b) With respect to any drawing properly made under a Letter of Credit, each
Lender will make an LC Disbursement in respect of such Letter of Credit
in accordance with its liability under such Letter of Credit and this
Agreement, such LC Disbursement to be made to the account of the Agent
most recently designated by it for such purpose by notice to the Lenders
within two Business Days of receipt of a demand for payment under such
Letter of Credit by the Agent;
(c) The Agent will and undertakes to each Lender that it will:
(i) make any such LC Disbursement available to Lloyd's as the
beneficiary of such Letter of Credit by promptly crediting the
amounts so received from the Lenders, in like funds, to the account
identified by Lloyd's in connection with such demand for payment on
the date following two Business Days after the receipt by the Agent
of such demand; and
(ii) notify each Lender on the third Business Day after the receipt by
the Agent of such demand for payment that it has credited such
amounts to the account identified by Lloyd's.
(d) Promptly following any LC Disbursement by any Lender in respect of any
Letter of Credit, the Agent will notify the Account Party of such LC
Disbursement provided that any failure to give or delay in giving such
notice shall not relieve the Account Party of their obligation to
reimburse the Lenders with respect to any such LC Disbursement.
RIGHT TO MAKE PAYMENTS UNDER LETTERS OF CREDIT
5.2 Each Lender shall be entitled to make any payment in accordance with the
terms of the relevant Letter of Credit without any reference to or further
authority from the Account Party or any other investigation or enquiry.
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LIABILITY OF LENDERS
5.3 Neither the Agent, nor any Lender nor any of their Related Parties shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure to make
any payment thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond their control; provided that the
foregoing shall not be construed to excuse the Agent or a Lender from liability
to any Obligor to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Obligors to the
extent permitted by applicable Law) suffered by any Obligor that are caused by
the gross negligence or wilful misconduct of the Agent or a Lender. The parties
hereto expressly agree that:
(a) the Agent may accept documents that appear on their face to be in
substantial compliance with the terms of a Letter of Credit without
responsibility for further investigation, regardless of any notice or
information to the contrary, and may make payment upon presentation of
documents that appear on their face to be in substantial compliance with
the terms of such Letter of Credit;
(b) the Agent shall have the right, in its sole discretion, to decline to
accept such documents and to make such payment if such documents are not
in strict compliance with the terms of such Letter of Credit; and
(c) this Clause shall establish the standard of care to be exercised by the
Agent when determining whether drafts and other documents presented under
a Letter of Credit comply with the terms thereof (and the parties hereto
hereby waive, to the extent permitted by applicable Law, any standard of
care inconsistent with the foregoing).
6. THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF CREDIT
THE ACCOUNT PARTY'S INDEMNITY TO LENDERS
6.1 The Account Party shall irrevocably and unconditionally as a primary
obligation indemnify (on demand by the Agent (and any Lender may require the
Agent to make such demand)) each Lender against:
(a) any LC Disbursement paid or payable by such Lender in accordance with the
terms of any Letter of Credit requested by the Account Party; and
(b) all liabilities, reasonable costs (including, without limitation, any
costs incurred in funding any amount which falls due from such Lender in
connection with such Letter of Credit), claims, losses and reasonable
expenses which such Lender may at any time properly incur or sustain in
connection with any Letter of Credit.
PRESERVATION OF RIGHTS
6.2 Neither the obligations of the Account Party set out in this Clause 6 nor
the rights, powers and remedies conferred on any Lender by this Agreement or by
Law shall be discharged, impaired or otherwise affected by:
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(a) the winding-up, dissolution, administration or re-organisation of any
Lender or any other person or any change in its status, function, control
or ownership;
(b) any of the obligations of any Lender or any other person hereunder or
under any Letter of Credit or under any other security taken in respect of
the Account Party's obligations hereunder or otherwise in connection with
any Letter of Credit being or becoming illegal, invalid, unenforceable or
ineffective in any respect;
(c) time or other indulgence being granted or agreed to be granted to any
Lender or any other person in respect of its obligations hereunder or
under or in connection with any Letter of Credit or under any such other
security;
(d) any amendment to, or any variation, waiver or release of, any obligation
of any Lender or any other person under any Letter of Credit or this
Agreement;
(e) any other act, event or omission which, but for this Clause 6 might
operate to discharge, impair or otherwise affect any of the obligations of
the Account Party set out in this Clause 6 or any of the rights, powers or
remedies conferred upon any Lender by this Agreement or by Law.
The obligations of the Account Party set out in this Clause 6 shall be in
addition to and independent of every other security which any Lender may at any
time hold in respect of the Account Party's obligations hereunder.
SETTLEMENT CONDITIONAL
6.3 Any settlement or discharge between the Account Party and a Lender shall be
conditional upon no security or payment to such Lender by the Account Party or
any other person on behalf of the Account Party, being avoided or reduced by
virtue of any Laws relating to bankruptcy, insolvency, liquidation or similar
Laws of general application and, if any such security or payment is so avoided
or reduced, such Lender shall be entitled to recover the value or amount of such
security or payment from the Account Party subsequently as if such settlement or
discharge had not occurred.
7. DEFAULT INTEREST
A Demand Amount shall bear interest during each Default Period in respect
thereof, and any other amount unpaid hereunder shall bear interest for so long
as it remains outstanding at rate of the sum of (i) two per cent. per annum (ii)
the Mandatory Costs in respect thereof at such time, and (iii) LIBOR on each day
whilst such amount remains outstanding. Such interest shall be payable by the
Account Party on the date on which it reimburses the Lenders under Clause 6.1(a)
and (b) (THE ACCOUNT PARTY'S INDEMNITY TO LENDERS).
8. TERMINATION AND REDUCTION OF THE COMMITMENTS
SCHEDULED TERMINATION
8.1 Unless previously terminated, the unutilised Commitments shall terminate at
the close of business on the Commitment Termination Date.
VOLUNTARY CANCELLATION OR REDUCTION
8.2 The Account Party may at any time cancel, or from time to time reduce, the
Total Commitments; provided that (a) each reduction of the Total Commitments
shall be in an
amount of (pound)5,000,000 or a larger multiple of (pound)1,000,000 and (b) the
Account Party shall not cancel or reduce the Commitments if the Total LC
Exposures would exceed the Total Commitments.
NOTICE OF VOLUNTARY CANCELLATION OR REDUCTION
8.3 The Account Party shall notify the Agent of any election to cancel or reduce
the Total Commitments under Clause 8.2 at least three Business Days prior to the
effective date of such cancellation or reduction, specifying such election and
the effective date thereof. Promptly following receipt of any notice, the Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Account Party pursuant to this Clause shall be irrevocable; provided that a
notice of cancellation of the Commitments delivered by the Account Party may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Account Party (by
notice to the Agent on or prior to the specified effective date) if such
condition is not satisfied.
NO OTHER REPAYMENTS OR CANCELLATION
8.4 The Account Party shall not repay or cancel all or any part of the LC
Exposures except at the times and in the manner expressly provided for in this
Agreement.
EFFECT OF CANCELLATION OR REDUCTION
8.5 Any cancellation or reduction of the Commitments shall be permanent. Each
reduction of the Commitments shall be made rateably among the Lenders in
accordance with their respective Commitments.
9. FEES
PARTICIPATION FEE
9.1 The Account Party shall pay to the Agent for the account of the Lenders the
participation fees specified in the Fee Letter.
LETTER OF CREDIT FEE
9.2 (a) The Account Party shall pay to the Agent for account of each Lender pro
rata according to their respective LC Exposures hereunder a letter of
credit fee computed at the rate of 0.65 per cent. per annum (as such
rate may be adjusted from time to time in accordance with the provisions
of Clause 9.3) on the principal amount of each issued Letter of Credit
payable from the Utilisation Date until the Final Expiration Date (as
extended) of that Letter of Credit or any earlier cancellation,
repayment or prepayment of the Letter of Credit in accordance with
Clause 8 (TERMINATION AND REDUCTION OF THE COMMITMENTS) of this
Agreement;
(b) The Letter of Credit Fees shall be payable quarterly in arrears on each
Quarterly Date and on the date on which the Lenders cease to have any LC
Exposure. Letter of Credit Fees accrued through and including each
Quarterly Date shall be payable on the fifth Business Day following such
Quarterly Date, commencing on the first such date to occur after the
Commencement Date; and
(c) The Agent shall notify the Account Party in writing at least ten
Business Days prior to each Quarterly Date of (i) the letter of credit
fee payable in respect of each Letter
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of Credit issued and (ii) the aggregate letter of credit fee payable in
respect of all Letters of Credit issued.
ADJUSTMENT OF LETTER OF CREDIT FEE
9.3 (a) Notwithstanding Clause 9.2(a) above, when the Financial Strength Rating
(as defined below) corresponds to a rating set out in Column 1 or Column
2 below of the fee chart (the FEE CHART), the Letter of Credit Fee
payable in accordance with Clause 9.2 shall be the amount set out in the
corresponding row in Column 3 of the Fee Chart; provided however, that
whilst AMB Cash Collateral is posted in compliance with the provisions
of Clause 19.8 (RATINGS DOWNGRADE) the Letter of Credit Fee shall be
0.30 per cent. per annum. Upon any AMB Cash Collateral which has been
posted being fully released, in each case in compliance with Clause 19.8
(RATINGS DOWNGRADE), then the Letter of Credit Fee shall once again be
payable in accordance with the Fee Chart.
(b) Any change to the Letter of Credit Fee described above shall take effect
on the day on which the Financial Strength Rating change is publicly
announced by the applicable rating agency; or, in the event either of
the conditions set forth in Clause 19.8(a) or (b) are not satisfied, the
day on which the provisions of Clause 19.8 (RATINGS DOWNGRADE) have been
complied with.
FEE CHART
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A.M. BEST & CO. STANDARD & POOR'S LETTER OF CREDIT FEE
FINANCIAL-STRENGTH RATING RATING SERVICES Column 3
Column 1 FINANCIAL-STRENGTH RATING
Column 2
--------------------------------------------------------------------------------
A++ Greater than or equal to AA+ 0.55 per cent. per annum
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A+ AA 0.60 per cent. per annum
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A AA- 0.65 per cent. per annum
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A- A+ 0.725 per cent. per annu
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B++ and below A and below 0.80 per cent. per annum
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(c) In this Clause 9.3 and in Clause 19.8, FINANCIAL STRENGTH RATING means
the lower of:
(i) the financial-strength rating of the Account Party from A.M. Best &
Co. (or its successor); and
(ii) the lower of the financial-strength rating from Standard & Poor's
Rating Services (or its successor) of XL Bermuda and XL Re.
In the event that either A.M. Best & Co. or Standard & Poor's Ratings
Services changes the designation of its ratings (including without
limitation by increasing the number of ratings available or notches
within ratings), then the Agent and all the Lenders shall negotiate in
good faith such amendments to this Clause 9.3 as are necessary to ensure
that (in the opinion of the Lenders, acting reasonably) the Letter
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of Credit Fees payable relative to the strength of the relevant rating
are the same as they are on the date hereof.
COMMITMENT FEE
9.4 (a) The Account Party shall pay to the Agent for the account of each Lender
a fee computed at the rate of 33 per cent. per annum of the applicable
Letter of Credit Fee from time to time on that Lender's Available
Commitment for the Availability Period.
(b) The accrued commitment fee is payable quarterly in arrears on each
Quarterly Date during the Availability Period, on the last day of the
Availability Period and, if cancelled in full, on the cancelled amount
of the relevant Lender's Commitment at the time the cancellation is
effective.
AGENT FEES
9.5 The Account Party agrees to pay to the Agent, for its own account, the
agency fees payable in the amounts and at the times specified in the Fee Letter.
PAYMENT OF FEES
9.6 All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Agent for distribution, in the case of the Letter of
Credit Fees referred to in Clause 9.2 and the commitment fee referred in Clause
9.4, to the Lenders entitled thereto. Fees paid shall not be refundable under
any circumstances absent manifest error in the calculation or payment of fees
due and payable.
BASIS OF CALCULATION
9.7 The fees payable pursuant to Clauses 9.1, 9.2 and 9.4 shall be calculated on
the basis of actual days elapsed and a 365 day year.
10. TAXES
TAX GROSS-UP
10.1 All payments to be made by an Obligor to any Finance Party hereunder,
whether in respect of principal, interest, fees or any other item, shall be made
free and clear of and without deduction for or on account of tax unless such
Obligor is required to make such a payment subject to the deduction or
withholding of tax, in which case the sum payable by such Obligor (in respect of
which such deduction or withholding is required to be made) shall be increased
to the extent necessary to ensure that such Finance Party receives a sum net of
any deduction or withholding equal to the sum which it would have received had
no such deduction or withholding been made or required to be made.
TAX INDEMNITY
10.2 Without prejudice to Clause 10.1 (TAX GROSS-UP), if any Finance Party is
required to make any payment of or on account of tax on or in relation to any
sum received or receivable hereunder (including any sum deemed for purposes of
tax to be received or receivable by such Finance Party whether or not actually
received or receivable) or if any liability in respect of any such payment is
asserted, imposed, levied or assessed against any Finance Party, the Account
Party shall, upon demand of the Agent, promptly indemnify the Finance Party
which
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suffers a loss or liability as a result against such payment or liability,
together with any interest, penalties, costs and expenses payable or incurred in
connection therewith, PROVIDED THAT this Clause 10.2 shall not apply to:
(a) any tax imposed on and calculated by reference to the net income actually
received or receivable by such Finance Party by the jurisdiction in which
such Finance Party is incorporated; or
(b) any tax imposed on and calculated by reference to the net income of the
Facility Office of such Finance Party actually received or receivable by
such Finance Party by the jurisdiction in which its Facility Office is
located; or
(c) the extent a loss, liability or cost is compensated for by an increased
payment under Clause 10.1 (TAX GROSS-UP).
CLAIMS BY LENDERS
10.3 A Lender intending to make a claim pursuant to Clause 10.2 (TAX INDEMNITY)
shall promptly notify the Agent of the event giving rise to the claim, whereupon
the Agent shall promptly notify the Account Party thereof.
11. TAX RECEIPTS
NOTIFICATION OF REQUIREMENT TO DEDUCT TAX
11.1 If, at any time, an Obligor is required by Law to make any deduction or
withholding from any sum payable by it hereunder (or if thereafter there is any
change in the rates at which or the manner in which such deductions or
withholdings are calculated), such Obligor shall promptly, upon becoming aware
of the same, notify the Agent.
EVIDENCE OF PAYMENT OF TAX
11.2 If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full amount
required to be deducted or withheld to the relevant taxation or other authority
within the time allowed for such payment under applicable Law and shall deliver
to the Agent for each Lender, within thirty days after it has made such payment
to the applicable authority, an original receipt (or a certified copy thereof)
issued by such authority evidencing the payment to such authority of all amounts
so required to be deducted or withheld in respect of that Lender's share of such
payment.
TAX CREDIT PAYMENT
11.3 If an additional payment is made under Clause 10 (TAXES) by an Obligor for
the benefit of any Finance Party and such Finance Party, in its sole discretion,
determines that it has obtained (and has derived full use and benefit from) a
credit against, a relief or remission for, or repayment of, any tax, then, if
and to the extent that such Finance Party, in its sole opinion, determines that:
(a) such credit, relief, remission or repayment is in respect of or calculated
with reference to the additional payment made pursuant to Clause 10
(TAXES); and
(b) its tax affairs for its tax year in respect of which such credit, relief,
remission or repayment was obtained have been finally settled,
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such Finance Party shall, to the extent that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or repayment, pay
to such Obligor such amount as such Finance Party shall, in its sole opinion,
determine to be the amount which will leave such Finance Party (after such
payment) in no worse after-tax position than it would have been in had the
additional payment in question not been required to be made by such Obligor.
TAX CREDIT CLAWBACK
11.4 If any Finance Party makes any payment to an Obligor pursuant to Clause
11.3 (TAX CREDIT PAYMENT) and such Finance Party subsequently determines, in its
sole opinion, that the credit, relief, remission or repayment in respect of
which such payment was made was not available or has been withdrawn or that it
was unable to use such credit, relief, remission or repayment in full, the
Obligor shall reimburse such Finance Party such amount as such Finance Party
determines, in its sole opinion, is necessary to place it in the same after-tax
position as it would have been in if such credit, relief, remission or repayment
had been obtained and fully used and retained by such Finance Party.
TAX AND OTHER AFFAIRS
11.5 No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever manner it
thinks fit, oblige any Finance Party to claim any credit, relief, remission or
repayment in respect of any payment under Clause 10.1 (TAX GROSS-UP) in priority
to any other credit, relief, remission or repayment available to it nor oblige
any Finance Party to disclose any information relating to its tax or other
affairs or any computations in respect thereof.
12. INCREASED COSTS
INCREASED COSTS
12.1 Subject to Clause 12.2 (EXCEPTIONS), if after the date of this Agreement,
the result of:
(a) the introduction of or any change in the official or judicial
interpretation or application of any Law (having the force of law or if
not having the force of law, generally complied with by a Lender in
relation to any relevant jurisdiction); and/or
(b) compliance (without adopting materially less prudent policies or standards
than those previously adopted by it) by any Lender or by the holding
company of any Lender with any of the matters mentioned in paragraph (a)
above,
including in each case, without limitation, those Laws relating to Taxation, any
change in currency, any reserve, special deposit, cash ratio, liquidity or
capital adequacy requirement or any other form of banking or monetary controls,
is that:
(i) a Lender or its holding company incurs an additional cost as a
result of that Finance Party having entered into, or performing,
maintaining or funding its obligations under this Agreement; or
(ii) a Lender or its holding company incurs an additional cost in making,
funding or maintaining any Letters of Credit made or to be made by
it under this Agreement; or
(iii) any amount payable to a Lender or the effective return to a Lender
under this Agreement or the effective return to a Lender or its
holding company on its
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capital is reduced as a result of any change in the amount or nature
of the capital resources required to be allocated in respect of a
Lender's participation under this Agreement; or
(iv) a Lender makes any payment or foregoes any interest or other return
on or calculated by reference to any amount received or receivable
by it from the Account Party or the Agent under this Agreement;
then and in each such case:
(A) the Lender shall notify the Account Party through the Agent of
the relevant event promptly upon becoming aware of the event
giving details of any costs or amount likely to be demanded
under paragraph (B);
(B) promptly following any demand from time to time by that Lender
through the Agent, the Account Party shall pay to the Agent
for the account of that Finance Party (or, as the case may be,
its holding company) such amount as shall compensate such
Finance Party or its holding company for the additional cost,
reduction, payment or foregone interest or other return.
EXCEPTIONS
12.2 Clause 12.1 shall not apply to or in respect of:
(a) any circumstances referred to in Clause 10.2 (TAX INDEMNITY);
(b) any circumstances for which a relevant Lender has been compensated for
under Clause 11.3 (TAX CREDIT PAYMENT).
13. ILLEGALITY
If, after the date of this Agreement, any Change in Law or in the official or
judicial interpretation or application thereof shall make it unlawful or
contrary to an official directive in any jurisdiction for any Lender to make
available or fund or maintain or to give effect to its obligations as
contemplated by this Agreement or the Letters of Credit (or, by reason only of a
Change of Law, the Lender ceases to be an Approved Credit Institution), the
Lender shall promptly on becoming aware of the same give notice thereof to the
Account Party through the Agent, whereupon:
(a) where such change makes it unlawful or contrary to an official directive
to maintain or give effect to its obligations under this Agreement, if the
Agent on behalf of such Lender so requires, the Account Party shall by no
later than the last day of any applicable grace period specified by the
applicable Law ensure that the liabilities of such Lender under or in
respect of each Letter of Credit are cancelled within the meaning of
Clause 1.2(l)(i)(A) (or use its best efforts to ensure that such
liabilities are cancelled within the meaning of Clause 1.2(l)(i)(C)), the
Commitment of that Lender shall forthwith be cancelled and the Account
Party shall prepay forthwith fees, costs and expenses due to that Lender
hereunder;
(b) where such change only makes it unlawful or contrary to an official
directive to participate in further Letters of Credit under this
Agreement, then upon receipt by the Agent of that notice, the Available
Commitment of that Lender shall be reduced to
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zero, and upon the expiry of each Letter of Credit in which it is
participating at such time, its resulting Available Commitment shall also
be cancelled, provided that if the Lender subsequently transfers or
assigns its rights and obligations under this Agreement to a new lender
pursuant to Clause 26.5 (RIGHTS TO SUBSTITUTE A SINGLE BANK), the Account
Party may by notice to the Agent increase the Commitment of such new
lender by the amount of the Available Commitment that was previously
cancelled.
14. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.
DESIGNATION OF A DIFFERENT LENDING OFFICE
14.1 If any Lender requests compensation under Clause 12 (INCREASED COSTS), or
if the Account Party is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Clause 10
(TAXES), then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Letters of Credit hereunder or to
transfer its rights and obligations hereunder to another of its offices,
branches or Affiliates, if, in the reasonable judgment of such Lender, such
designation or assignment (a) would eliminate or reduce amounts payable pursuant
to Clause 12 (INCREASED COSTS) or 10 (TAXES), as the case may be, in the future
and (b) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Account Party hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
REPLACEMENT OF LENDERS
14.2 If any Lender requests compensation under Clause 12 (INCREASED COSTS), or
if any Account Party is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Clause 10
(TAXES), or if any Lender defaults in its obligation to make LC Disbursements
hereunder, or if any Lender ceases to be an Approved Credit Institution, then
the Account Party may, at its sole expense and effort, upon notice to such
Lender and the Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Clause
26.5 (RIGHT TO SUBSTITUTE SINGLE LENDER)), all its interests, rights and
obligations under this Agreement to an Approved Credit Institution that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that:
(a) the Account Party shall have received the prior written consent of the
Agent, which consent shall not unreasonably be withheld;
(b) such Lender shall have received payment of an amount equal to the
outstanding amount of its LC Disbursements, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest
and fees) or the relevant Account Party (in the case of all other
amounts); and
(c) in the case of any such assignment resulting from a claim for compensation
under Clause 12 (INCREASED COSTS) or payments required to be made pursuant
to Clause 10 (TAXES), such assignment will result in a reduction in such
compensation or payments.
A Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the relevant Account Party to require such assignment
and delegation cease to apply.
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15. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS.
PAYMENTS BY THE ACCOUNT PARTY
15.1 (a) The Account Party shall make each payment required to be made by them
hereunder or under any other Finance Document (except to the extent
otherwise provided therein) in Sterling on the date when due, in
immediately available cleared funds, without set-off or counterclaim
(and in the case of payments required pursuant to Clause 6, by 11.00
a.m. on the due date). Any amounts received after such time on any date
may, in the discretion of the Agent, be deemed to have been received on
the next succeeding Business Day for the purposes of calculating
interest thereon. All such payments shall be made to the Agent at the
account most recently notified by it, except payments pursuant to
Clauses 12 (INCREASED Costs), 10 (TAXES), 24 (COSTS AND EXPENSES) and
25 (INDEMNITIES), which shall be made directly to the Persons entitled
thereto. The Agent shall distribute any such payments received by it
for account of any other Person to the appropriate recipient promptly
following receipt thereof.
(b) If any payment hereunder shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding
Business Day and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.
CURRENCY
15.2 All amounts payable under this Agreement in respect of any Letter of Credit
shall be payable in Sterling.
APPLICATION OF INSUFFICIENT PAYMENTS
15.3 If at any time insufficient funds are received by and available to the
Agent to pay fully all Demand Amounts, interest, fees and expenses then due
hereunder, such funds shall be applied:
(a) FIRST, in or towards payment pro rata of any unpaid fees, costs, expenses,
indemnity payments and other amounts due to the Agent and the Security
Trustee under the Finance Documents;
(b) SECONDLY, in or towards payment pro rata of any unpaid costs and expenses
of the Lenders under the Finance Documents;
(c) THIRDLY, in or towards payment pro rata of any outstanding fees (other
than Letter of Credit Fees) payable to the Lenders under the Finance
Documents;
(d) FOURTHLY, in or towards payment pro rata of all accrued Letter of Credit
Fees due to Issuing Lenders but unsatisfied under this Agreement;
(e) FIFTHLY, in or towards payment pro rata of any interest on Demand Amounts;
(f) SIXTHLY, in or towards payment pro rata of Demand Amounts;
(g) SEVENTHLY, in or towards payment pro rata of any principal (other than a
Demand Amount) due but unsatisfied under this Agreement (including, for
the avoidance of doubt, any cash cover to be provided under a Letter of
Credit); and
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(h) EIGHTHLY, in or towards payment pro rata of any other sum due but
unsatisfied under this Agreement.
PRO RATA TREATMENT
15.4 Except to the extent otherwise provided herein:
(a) each reimbursement of LC Disbursements shall be made to the Lenders, each
payment of fees under Clause 9 (FEES) shall be made for account of the
Lenders, and each termination or reduction of the Commitments under Clause
8 (TERMINATION AND REDUCTION OF THE COMMITMENTS) shall be applied to the
respective Commitments of the Lenders, pro rata according to their
respective Commitments; and
(b) each payment of interest shall be made for account of the Lenders pro rata
in accordance with the amounts of interest then due and payable to the
respective Lenders.
SHARING OF PAYMENTS BY LENDERS
15.5 If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any LC Exposures resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
LC Exposures and accrued interest thereon then due than the proportion received
by any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the LC Exposures of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders rateably in accordance with the aggregate amount of LC
Exposures; provided that:
(a) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and
(b) the provisions of this Clause shall not be construed to apply to any
payment made by any Obligor pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in LC
Disbursements to any assignee or participant, other than to the Account
Party or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply).
Each Obligor consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Account Party rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Account
Party in the amount of such participation and the Obligors authorise the Lenders
to exchange Transfer Certificates and any other documentation to give effect to
those purchases of participations.
PRESUMPTIONS OF PAYMENT
15.6 Unless the Agent shall have received notice from any party prior to the
date on which any payment is due to the Agent hereunder that the payor will not
make such payment, the Agent may assume that the payor has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the relevant payee the amount due. In such event, if the payor has
not in fact made such payment, then each of the
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payees severally agrees to repay to the Agent forthwith on demand the amount so
distributed to that payee with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Agent, at the Agent's cost of funds from such sources as the Agent may
reasonably select.
CERTAIN DEDUCTIONS BY THE AGENT
15.7 If any Lender shall fail to make any payment required to be made by it
pursuant to Clause 15.5 (SHARING OF PAYMENTS BY LENDERS), then the Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Agent for account of such Lender to satisfy
such Lender's obligations under such Clauses until all such unsatisfied
obligations are fully paid.
16. GUARANTEE AND INDEMNITY
GUARANTEE AND INDEMNITY
16.1 The Guarantors, jointly and severally, irrevocably and unconditionally:
(a) guarantee to each Finance Party the due and punctual payment from time to
time on demand any and every sum or sums of money which the Account Party
is at any time liable to pay to any Finance Party under or pursuant to the
Finance Documents and which has become due and payable but has not been
paid at the time such demand is made (the GUARANTEED OBLIGATIONS); and
(b) agree as a primary obligation to indemnify each Finance Party from time to
time on demand from and against any loss incurred by any Finance Party as
a result of any of the obligations of the Account Party under or pursuant
to the Finance Documents being or becoming void, voidable, unenforceable
or ineffective as against the Account Party for any reason whatsoever,
whether or not known to any Finance Party or any other person, the amount
of such loss being the amount which the person or persons suffering it
would otherwise have been entitled to recover from the Account Party.
ADDITIONAL SECURITY
16.2 The obligations of each Guarantor herein contained shall be in addition to
and independent of every other security which any Finance Party may at any time
hold in respect of any of the Account Party's obligations under the Finance
Documents.
CONTINUING OBLIGATIONS
16.3 The obligations of each Guarantor herein contained shall constitute and be
continuing obligations notwithstanding any settlement of account or other matter
or thing whatsoever and shall not be considered satisfied by any intermediate
payment or satisfaction of all or any of the obligations of the Account Party
under the Finance Documents and shall continue in full force and effect until
final payment in full of all amounts owing by the Account Party under this
Agreement and total satisfaction of all the Account Party's actual and
contingent obligations under the Finance Documents.
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OBLIGATIONS NOT DISCHARGED
16.4 Neither the obligations of the Guarantors herein contained nor the rights,
powers and remedies conferred in respect of the Guarantors upon any Finance
Party by the Finance Documents or by Law shall be discharged, impaired or
otherwise affected by:
(a) the winding-up, dissolution, administration or re-organisation of the
Account Party or any other person or any change in its status, function,
control or ownership;
(b) any of the obligations of the Account Party or any other person under the
Finance Documents or under any other security taken in respect of any of
its obligations under the Finance Documents being or becoming illegal,
invalid, unenforceable or ineffective in any respect;
(c) time or other indulgence being granted or agreed to be granted to any
Obligor in respect of its obligations under the Finance Documents or under
any such other security;
(d) any amendment to, or any variation, waiver or release of, any obligation
of any Obligor under the Finance Documents or under any such other
security;
(e) any failure to take, or fully to take, any security contemplated hereby or
otherwise agreed to be taken in respect of the Obligors' obligations under
the Finance Documents;
(f) any failure to realise or fully to realise the value of, or any release,
discharge, exchange or substitution of, any security taken in respect of
the Obligors' obligations under the Finance Documents; or
(g) any other act, event or omission which, but for this Clause 16.4, might
operate to discharge, impair or otherwise affect any of the obligations of
any Guarantor herein contained or any of the rights, powers or remedies
conferred upon any of the Finance Parties by the Finance Documents or by
Law.
SETTLEMENT CONDITIONAL
16.5 Any settlement or discharge between any Obligor and any of the Finance
Parties shall be conditional upon no security or payment to any Finance Party by
the Account Party or any other person on behalf of the Account Party being
avoided or reduced by virtue of any Laws relating to bankruptcy, insolvency,
liquidation or similar Laws of general application and, if any such security or
payment is so avoided or reduced, each Finance Party shall be entitled to
recover the value or amount of such security or payment from the Account Party
subsequently as if such settlement or discharge had not occurred.
EXERCISE OF RIGHTS
16.6 No Finance Party shall be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of any Guarantor by the
Finance Documents or by Law to:
(a) make any demand of the Account Party or any other Obligor;
(b) take any action or obtain judgment in any court against the Account Party
or any other Obligor;
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(c) make or file any claim or proof in a winding-up or dissolution of the
Account Party or any other Obligor; or
(d) enforce or seek to enforce any other security taken in respect of any of
the obligations of the Account Party or any other Obligor under the
Finance Documents.
DEFERRAL OF GUARANTOR'S RIGHTS
16.7 Each Guarantor agrees that, so long as any amounts are or may be owed by
the Account Party under the Finance Documents or the Account Party is under any
actual or contingent obligations under the Finance Documents, it shall not
exercise any rights which it may at any time have by reason of performance by it
of its obligations under the Finance Documents:
(a) to be indemnified by the Account Party; and/or
(b) to claim any contribution from any other Guarantor of the Account Party's
obligations under the Finance Documents; and/or
(c) to take the benefit (in whole or in part and whether by way of subrogation
or otherwise) of any rights of the Finance Parties under the Finance
Documents or of any other security taken pursuant to, or in connection
with, this Agreement by all or any of the Finance Documents.
RIGHTS OF CONTRIBUTION
16.8 The Guarantors (other than the Account Party) hereby agree, as between
themselves, that if any such Guarantor shall become an Excess Funding Guarantor
(as defined below) by reason of the payment by such Guarantor of any Guaranteed
Obligations, each other Guarantor (other than the Account Party) shall, on
demand of such Excess Funding Guarantor (but subject to the next sentence), pay
to such Excess Funding Guarantor an amount equal to such Guarantor's Pro Rata
Share (as defined below and determined, for this purpose, without reference to
the properties, debts and liabilities of such Excess Funding Guarantor) of the
Excess Payment (as defined below) in respect of such Guaranteed Obligations. The
payment obligation of a Guarantor to any Excess Funding Guarantor under this
Clause shall be subordinate and subject in right of payment to the prior payment
in full of the obligations of such Guarantor under the other provisions of this
Clause 16 and such Excess Funding Guarantor shall not exercise any right or
remedy with respect to such excess until payment and satisfaction in full of all
of such obligations.
For purposes of this Clause, (i) EXCESS FUNDING GUARANTOR means, in respect of
any Guaranteed Obligations, a Guarantor that has paid an amount in excess of its
Pro Rata Share of such Guaranteed Obligations, (ii) EXCESS PAYMENT means, in
respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations and
(iii) PRO RATA SHARE means, for any Guarantor, the ratio (expressed as a
percentage) of (x) the amount by which the aggregate present fair saleable value
of all properties of such Guarantor (excluding any shares of stock of any other
Guarantor) exceeds the amount of all the debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder and any obligations of any
other Guarantor that have been Guaranteed by such Guarantor) to (y) the amount
by which the aggregate fair saleable value of all properties of all of the
Guarantors (other than the Account Party) exceeds the amount of all the debts
and liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors under this Clause
16) of all of the
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Guarantors (other than the Account Party), determined (A) with respect to any
Guarantor that is a party hereto on the date hereof, as of the date hereof, and
(B) with respect to any other Guarantor, as of the date such Guarantor becomes a
Guarantor hereunder.
GENERAL LIMITATION ON GUARANTEE OBLIGATIONS
16.9 In any action or proceeding involving any state corporate Law, or any state
or Federal bankruptcy, insolvency, reorganisation or other Law in any other
jurisdiction affecting the rights of creditors generally, if the obligations of
any Guarantor under Clause 16.1 (GUARANTEE AND INDEMNITY) would otherwise,
taking into account the provisions of Clause 16.8, be held or determined to be
void, invalid or unenforceable, or subordinated to the claims of any other
creditors, on account of the amount of its liability under Clause 16.1
(GUARANTEE AND INDEMNITY), then, notwithstanding any other provision hereof to
the contrary, the amount of such liability shall, without any further action by
such Guarantor, any Lender, the Agent or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
17. REPRESENTATIONS AND WARRANTIES
17.1 Each Obligor represents and warrants to the Lenders on the date of this
Agreement, the Closing Date and on 1 September of each year unless all of the
Letters of Credit will terminate on or before the fourth anniversary of such
date (with reference to the facts and circumstances subsisting on each such
date) as follows.
ORGANISATION; POWERS
17.2 It and each of its Significant Subsidiaries is duly organised, validly
existing and in good standing under the Laws of the jurisdiction of its
organisation, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
AUTHORISATION; ENFORCEABILITY
17.3 The Transactions are within such Obligor's corporate powers and have been
duly authorised by all necessary corporate and, if required, by all necessary
shareholder action. Each Finance Document to which such Obligor is party has
been duly executed and delivered by such Obligor and constitutes a legal, valid
and binding obligation of such Obligor, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganisation, moratorium or similar Laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
GOVERNMENTAL APPROVALS; NO CONFLICTS
17.4 The Transactions (a) do not require any consent or approval of (including
any exchange control approval), registration or filing with, or any other action
by, any Governmental Authority, except such as have been obtained or made and
are in full force and effect, (b) will not violate any applicable Law or
regulation or the charter, by-laws or other organisational documents of such
Obligor or any of its Significant Subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default under any material
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indenture, agreement or other instrument binding upon such Obligor or any of its
Significant Subsidiaries or assets, or give rise to a right thereunder to
require any payment to be made by any such Person, and (d) will not result in
the creation or imposition of any Lien on any asset of such Obligor or any of
its Significant Subsidiaries.
FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE
17.5 (a) FINANCIAL CONDITION. The Account Party has heretofore furnished to the
Lenders the consolidated balance sheet and statements of income,
stockholders' equity and cash flows of the Account Party and its
consolidated Subsidiaries (A) as of and for the fiscal year ended
December 31, 2003, reported on by PricewaterhouseCoopers LLP,
independent public accountants (as provided in the Account Party's
Report on Form 10-K filed with the SEC for the fiscal year ended
December 31, 2003), and (B) as of and for the fiscal quarter ended
September 30, 2004, as provided in the Account Party's Report on Form
10-Q filed with the SEC for the fiscal quarter ended September 30,
2004. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash
flows of the Account Party and its respective consolidated Subsidiaries
as of such dates and for such periods in accordance with GAAP or (in
the case of XL Bermuda or XL Re) SAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements
referred to in Clause (B) of the first sentence of this paragraph.
(b) NO MATERIAL ADVERSE CHANGE. Since December 31, 2003, there has been no
material adverse change in the assets, business, financial condition or
operations of such Obligor and its Subsidiaries, taken as a whole.
PROPERTIES
17.6 (a) PROPERTY GENERALLY. Such Obligor and each of its Significant
Subsidiaries has good title to, or valid leasehold interests in, all
its real and personal property material to its business, subject only
to Liens permitted by Clause 19.3 (LIENS) and except for minor defects
in title that do not interfere with its ability to conduct its business
as currently conducted or to utilise such properties for their intended
purposes.
(b) INTELLECTUAL PROPERTY. Such Obligor and each of its Significant
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its
business, and the use thereof by such Obligor and its Significant
Subsidiaries does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
LITIGATION AND ENVIRONMENTAL MATTERS
17.7 (a) ACTIONS, SUITS AND PROCEEDINGS. Except as disclosed in Schedule 2 Part
C or as disclosed in the Account Party's filings with the SEC, or as
routinely encountered in claims activity, there are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority
now pending against or, to the knowledge of such Obligor, threatened
against or affecting such Obligor or any of its Subsidiaries (x) as to
which there is a reasonable possibility of an adverse determination and
that could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (y) that involve the Finance
Documents or the Transactions.
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(b) ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 2 Part D and except
with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect,
neither such Obligor nor any of its Subsidiaries (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required for its business under any
Environmental Law, (ii) has incurred any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any Environmental Liability.
COMPLIANCE WITH LAWS AND AGREEMENTS
17.8 Such Obligor and each of its Subsidiaries is in compliance with all Laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
INVESTMENT AND HOLDING COMPANY STATUS
17.9 Such Obligor is not (a) an INVESTMENT COMPANY as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a HOLDING COMPANY as
defined in, or subject to regulation under, the Public Utility Holding Company
Act of 1935.
TAXES
17.10 Such Obligor and each of its Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
such Person has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
ERISA
17.11 No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount that could reasonably be
expected to result in a Material Adverse Effect.
Except as could not reasonably be expected to result in a Material Adverse
Effect, (i) all contributions required to be made by any Obligor or any of their
Subsidiaries with respect to a Non-U.S. Benefit Plan have been timely made, (ii)
each Non-U.S. Benefit Plan has been maintained in compliance with its terms and
with the requirements of any and all applicable Laws and has been maintained,
where required, in good standing with the applicable Governmental Authority and
(iii) neither any Obligor nor any of their Subsidiaries has incurred any
obligation in connection with the termination or withdrawal from any Non-U.S.
Benefit Plan.
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DISCLOSURE
17.12 The reports, financial statements, certificates or other information
furnished by such Obligor to the Lenders in connection with the negotiation of
this Agreement or any other Finance Document or delivered hereunder (taken as a
whole) do not contain any material misstatement of fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, such Obligor represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
USE OF CREDIT
17.13 Neither such Obligor nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
Margin Stock, and no Letter of Credit will be used in connection with buying or
carrying any Margin Stock.
SUBSIDIARIES
17.14 Set forth in Schedule 3 is a complete and correct list of all of the
Subsidiaries of the Account Party as of 30 September 2004, together with, for
each such Subsidiary, (i) the jurisdiction of organisation of such Subsidiary,
(ii) each Person holding ownership interests in such Subsidiary and (iii) the
percentage of ownership of such Subsidiary represented by such ownership
interests. Except as disclosed in Schedule 3, (x) each of the Account Party and
its Subsidiaries owns, free and clear of Liens, and has the unencumbered right
to vote, all outstanding ownership interests in each Person shown to be held by
it in Schedule 3, (y) all of the issued and outstanding capital stock of each
such Person organised as a corporation is validly issued, fully paid and
nonassessable and (z) except as disclosed in filings of the Account Party with
the SEC prior to the date hereof, there are no outstanding Equity Rights with
respect to any Obligor.
WITHHOLDING TAXES
17.15 Based upon information with respect to each Lender provided by each Lender
to the Agent, as of the date hereof, the payment of the LC Disbursements and
interest thereon, the fees under Clause 9 (FEES) and all other amounts payable
hereunder will not be subject, by withholding or deduction, to any Taxes imposed
by any Obligor Jurisdiction.
STAMP TAXES
17.16 To ensure the legality, validity, enforceability or admissibility in
evidence of the Finance Documents, it is not necessary that the Finance
Documents or any other document be filed or recorded with any Governmental
Authority or that any stamp or similar tax be paid on or in respect of any of
the Finance Documents, or any other document other than such filings and
recordations that have already been made and such stamp or similar taxes that
have already been paid.
LEGAL FORM
17.17 The Finance Documents are in proper legal form under the Laws of any
Obligor Jurisdiction for the admissibility thereof in the courts of such Obligor
Jurisdiction.
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CLAIMS PARI PASSU
17.18 Under the Laws of its jurisdiction of incorporation in force at the date
hereof, the claims of the Finance Parties against it under this Agreement or any
other Finance Document will rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors save (i) those whose claims are
preferred solely by any bankruptcy, insolvency, liquidation or other similar
Laws of general application; and (ii) with respect to XL Re only, those claims
required to be preferred by and under the Bermuda Insurance Xxx 0000.
18. AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and all fees payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Obligors covenant and agree with the Lenders that:
FINANCIAL STATEMENTS AND OTHER INFORMATION
18.1 Each Obligor will furnish to the Agent and each Lender:
(a) within 135 days after the end of each fiscal year of such Obligor except
for XL America (but in the case of the Account Party, within 100 days
after the end of each fiscal year of the Account Party), the audited
consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows of such Obligor and its consolidated
Subsidiaries as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year (if such
figures were already produced for such corresponding period or periods)
(it being understood that delivery to the Lenders of the Account Party's
Report on Form 10-K filed with the SEC shall satisfy the financial
statement delivery requirements of this paragraph (a) to deliver the
annual financial statements of the Account Party so long as the financial
information required to be contained in such Report is substantially the
same as the financial information required under this paragraph (a)), all
reported on by independent public accountants of recognised national
standing (without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present fairly in
all material respects the financial condition and results of operations of
such Obligor and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP or (in the case of XL Bermuda and XL Re) SAP, as the
case may be, consistently applied;
(b) by June 15 of each year, (i) an unaudited consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows of
XL America and its consolidated Subsidiaries as of the end of and for the
immediately preceding fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year (if such figures
were already produced for such corresponding period or periods), all
certified by a Financial Officer of XL America as presenting fairly in all
material respects the financial condition and results of operations of XL
America and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes, and audited statutory
financial statements for each Insurance Subsidiary of XL America reported
on by independent public accountants of recognized national standing
(without a "going concern" or like qualification or exception and without
any qualification or exception as to the scope of such audit) to the
effect that such audited consolidated financial statements present fairly
in all
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material respects the financial condition and results of operations of
such Insurance Subsidiaries in accordance with SAP, consistently applied;
(c) within 60 days after the end of each of the first three fiscal quarters of
each fiscal year of such Obligor, the consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows of
such Obligor and its consolidated Subsidiaries as of the end of and for
such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for (or, in the
case of the balance sheet, as of the end of) the corresponding period or
periods of the previous fiscal year (if such figures were already produced
for such corresponding period or periods), all certified by a Financial
Officer of such Obligor as presenting fairly in all material respects the
financial condition and results of operations of such Obligor and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
or (in the case of XL Bermuda and XL Re) SAP, as the case may be,
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes (it being understood that delivery to the Lenders of
the Account Party's Report on Form 10-Q filed with the SEC shall satisfy
the financial statement delivery requirements of this paragraph (c) to
deliver the quarterly financial statements of the Account Party so long as
the financial information required to be contained in such Report is
substantially the same as the financial information required under this
paragraph (c));
(d) concurrently with any delivery of financial statements under Clause
18.1(a), (b) or (c), a certificate signed on behalf of each Obligor by a
Financial Officer (i) certifying as to whether a Default has occurred and,
if a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Clauses
19.3 (LIENS), 19.5 (RATIO OF TOTAL FUNDED DEBT TO TOTAL CAPITALISATION),
19.6 (CONSOLIDATED NET WORTH) and 19.7 (INDEBTEDNESS) and (iii) stating
whether any change in GAAP or (in the case of XL Bermuda, XL Re and any
Insurance Subsidiary of XL America) SAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Clause 17.5(a) and, if any such change has occurred, specifying any
material effect of such change on the financial statements accompanying
such certificate;
(e) concurrently with any delivery of financial statements under Clause
18.1(a) and (b)(ii), a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any
Default (which certificate may be limited to the extent required by
accounting rules or guidelines);
(f) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by such
Obligor or any of its respective Subsidiaries with the SEC, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any U.S. or other securities exchange, or distributed
by such Obligor to its shareholders generally, as the case may be;
(g) concurrently with any delivery of financial statements under Clause
18.1(a), (b) or (c) a certificate of a Financial Officer of the Account
Party, setting forth on a consolidated basis for the Account Party and its
consolidated Subsidiaries as of the end of the fiscal year or quarter to
which such certificate relates (i) the aggregate book value of assets
which are subject to Liens permitted under Clause 19.3(g) (LIENS) and the
aggregate book value of liabilities which are subject to Liens
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permitted under Clause 19.3(g) (it being understood that the reports
required by paragraphs (a), (b) and (c) of this Clause shall satisfy the
requirement of this Clause (i) of this Clause 18.1(g) if such reports set
forth separately, in accordance with GAAP, line items corresponding to
such aggregate book values) and (ii) a calculation showing the portion of
each of such aggregate amounts which portion is attributable to
transactions among wholly-owned Subsidiaries of the Account Party;
(h) within 90 days after the end of each of the first three fiscal quarters of
each fiscal year and within 135 days after the end of each fiscal year of
the Account Party (commencing with the fiscal year ending December 31,
2004), a statement of a Financial Officer of the Account Party listing, as
of the end of the immediately preceding fiscal quarter of the Account
Party, the amount of cash and the securities of the Obligors and their
Subsidiaries that have been posted as collateral under Clause 19.3(f); and
(i) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Account
Party or any of its Subsidiaries, or compliance with the terms of this
Agreement, as the Agent or any Lender may reasonably request.
"KNOW YOUR CUSTOMER" CHECKS
18.2 (a) If:
(i) the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation made after
the date of this Agreement;
(ii) any change in the status of an Obligor after the date of this
Agreement; or
(iii) a proposed assignment or transfer by a Lender of any of its rights
and obligations under this Agreement to a party that is not a Lender
prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of paragraph (iii) above,
any prospective new Lender) to comply with "know your customer" or similar
identification procedures in circumstances where the necessary information
is not already available to it, each Obligor shall promptly upon the
request of the Agent or any Lender supply, or procure the supply of, such
documentation and other evidence as is reasonably requested by the Agent
(for itself or on behalf of any Lender) or any Lender (for itself or, in
the case of the event described in paragraph (iii) above, on behalf of any
prospective new Lender) in order for the Agent, such Lender or, in the
case of the event described in paragraph (iii) above, any prospective new
Lender to carry out and be satisfied it has complied with all necessary
"know your customer" or other similar checks under all applicable laws and
regulations pursuant to the transactions contemplated in the Finance
Documents.
(b) Each Lender shall promptly upon the request of the Agent supply, or
procure the supply of, such documentation and other evidence as is
reasonably requested by the Agent (for itself) in order for the Agent to
carry out and be satisfied it has complied with all necessary "know your
customer" or other similar checks under all applicable laws and
regulations pursuant to the transactions contemplated in the Finance
Documents.
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NOTICES OF MATERIAL EVENTS
18.3 Each Obligor will furnish to the Agent and each Lender prompt written
notice of the following:
(a) the occurrence of any Default; and
(b) any event or condition constituting, or which could reasonably be expected
to have a Material Adverse Effect.
Each notice delivered under this Clause shall be accompanied by a statement of a
Financial Officer or other executive officer of the relevant Obligor setting
forth the details of the event or development requiring such notice and any
action taken or proposed to be taken by such Obligor with respect thereto.
PRESERVATION OF EXISTENCE AND FRANCHISES
18.4 Each Obligor will, and will cause each of its Significant Subsidiaries to,
maintain its corporate existence and its material rights and franchises in full
force and effect in its jurisdiction of incorporation except where the failure
to maintain such corporate existence and material rights and franchises would
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect; provided that the foregoing shall not prohibit any
merger or consolidation permitted under Clause 19.1 (MERGERS) or 19.2
(DISPOSITIONS). Each Obligor will, and will cause each of its Significant
Subsidiaries to, qualify and remain qualified as a foreign corporation in each
jurisdiction in which failure to receive or retain such qualification would have
a Material Adverse Effect.
INSURANCE
18.5 Each Obligor will, and will cause each of its Significant Subsidiaries to,
maintain with financially sound and reputable insurers, insurance with respect
to its properties in such amounts as is customary in the case of corporations
engaged in the same or similar businesses having similar properties similarly
situated.
MAINTENANCE OF PROPERTIES
18.6 Each Obligor will, and will cause each of its Significant Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition
the properties now or hereafter owned, leased or otherwise possessed by and used
or useful in its business and will make or cause to be made all needful and
proper repairs, renewals, replacements and improvements thereto so that the
business carried on in connection therewith may be properly conducted at all
times except if the failure to do so would not have a Material Adverse Effect,
provided, however, that the foregoing shall not impose on such Obligor or any
Subsidiary of such Obligor any obligation in respect of any property leased by
such Obligor or such Subsidiary in addition to such Obligor's obligations under
the applicable document creating such Obligor's or such Subsidiary's lease or
tenancy.
PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND PRIORITY CLAIMS PAYMENT OF
OTHER CURRENT LIABILITIES
18.7 Each Obligor will, and will cause each of its Subsidiaries to, pay or
discharge:
(a) on or prior to the date on which penalties attach thereto, all taxes,
assessments and other governmental charges or levies imposed upon it or
any of its properties or income;
(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which,
if unpaid, might result in the creation of a Lien upon any such property;
and
(c) on or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any such property
(other than Liens not forbidden by Clause 19.3 (LIENS)) or which, if
unpaid, might give rise to a claim entitled to priority over general
creditors of such Obligor or such Subsidiary in any proceeding under the
Bermuda Companies Law or Bermuda Insurance Law, or any insolvency
proceeding, liquidation, receivership, rehabilitation, dissolution or
winding-up involving such Obligor or such Subsidiary;
provided that, unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, such Obligor or such Subsidiary need not
pay or discharge any such tax, assessment, charge, levy or claim so long as (i)
the validity thereof is contested in good faith and by appropriate proceedings
diligently conducted or (ii) such reserves or other appropriate provisions as
may be required by GAAP or SAP, as the case may be, shall have been made
therefor and so long as such failure to pay or discharge would not have a
Material Adverse Effect.
FINANCIAL ACCOUNTING PRACTICES
18.8 Such Obligor will, and will cause each of its consolidated Subsidiaries to,
make and keep books, records and accounts which, in reasonable detail,
accurately and fairly reflect its transactions and dispositions of its assets
and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are recorded as necessary to permit
preparation of financial statements required under Clause 18.1 (FINANCIAL
STATEMENTS AND OTHER INFORMATION) in conformity with GAAP and SAP, as
applicable, and to maintain accountability for assets.
COMPLIANCE WITH APPLICABLE LAWS
18.9 Each Obligor will, and will cause each of its Subsidiaries to, comply with
all applicable Laws (including but not limited to the Bermuda Companies Law and
Bermuda Insurance Laws) in all respects; provided that such Obligor or any
Subsidiary of such Obligor will not be deemed to be in violation of this Clause
as a result of any failure to comply with any such Law which would not (i)
result in fines, penalties, injunctive relief or other civil or criminal
liabilities which, in the aggregate, would have a Material Adverse Effect or
(ii) otherwise impair the ability of such Obligor to perform its obligations
under this Agreement.
USE OF LETTERS OF CREDIT AND PROCEEDS
18.10 No Letter of Credit will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X. Each Applicant will use the Letters of Credit
issued for its account hereunder in the ordinary course of business of such
Applicant and its Affiliates. For the avoidance of doubt, the Parties agree that
the Account Party may apply for a Letter of Credit hereunder to support the
obligations of any Affiliate of an Applicant, it being understood that the
Account Party shall nonetheless remain the Obligor and as such be liable with
respect to such Letter of Credit.
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CONTINUATION OF AND CHANGE IN BUSINESSES
18.11 Each Obligor and its Significant Subsidiaries will continue to engage in
substantially the same business or businesses it engaged in (or proposes to
engage in) on the date of this Agreement and businesses related or incidental
thereto.
VISITATION
18.12 Each Obligor will permit such Persons as any Lender may reasonably
designate to visit and inspect any of the properties of such Obligor, to discuss
its affairs with its financial management, and provide such other information
relating to the business and financial condition of such Obligor at such times
as such Lender may reasonably request. Each Obligor hereby authorises its
financial management to discuss with any Lender the affairs of such Obligor.
19. NEGATIVE COVENANTS
Until the Total Commitments have expired or terminated and all fees payable
hereunder have been paid in full and all Letters of Credit have expired or
terminated and all LC Disbursements have been reimbursed, each of the Obligors
covenants and agrees with the Lenders that:
MERGERS
19.1 No Obligor will merge with or into or consolidate with any other Person,
except that if no Default shall occur and be continuing or shall exist at the
time of such merger or consolidation or immediately thereafter and after giving
effect thereto:
(a) any Obligor may merge or consolidate with any other corporation, including
a Subsidiary, if such Obligor shall be the surviving corporation;
(b) the Account Party may merge with or into or consolidate with any other
Person in a transaction that does not result in a reclassification,
conversion, exchange or cancellation of the outstanding shares of capital
stock of the Account Party (other than the cancellation of any outstanding
shares of capital stock of the Account Party held by the Person with whom
it merges or consolidates); and
(c) any Obligor may enter into a merger or consolidation which is effected
solely to change the jurisdiction of incorporation of such Obligor and
results in a reclassification, conversion or exchange of outstanding
shares of capital stock of such Obligor solely into shares of capital
stock of the surviving entity.
DISPOSITIONS
19.2 No Obligor will, nor will it permit any of its Significant Subsidiaries to,
sell, convey, assign, lease, abandon or otherwise transfer or dispose of,
voluntarily or involuntarily (any of the foregoing being referred to in this
Clause as a DISPOSITION and any series of related Dispositions constituting but
a single Disposition), any of its properties or assets, tangible or intangible
(including but not limited to sale, assignment, discount or other disposition of
accounts, contract rights, chattel paper or general intangibles with or without
recourse), except:
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(a) Dispositions in the ordinary course of business involving current assets
or other invested assets classified on such Obligor's or its respective
Subsidiaries balance sheet as available for sale or as a trading account;
(b) sales, conveyances, assignments or other transfers or dispositions in
immediate exchange for cash or tangible assets, provided that any such
sales, conveyances or transfers shall not individually, or in the
aggregate for the Obligor and their respective Subsidiaries, exceed
$500,000,000 in any calendar year;
(c) Dispositions of equipment or other property which is obsolete or no longer
used or useful in the conduct of the business of such Obligor or its
Subsidiaries;
(d) Dispositions between or among the Obligors and their wholly owned
Subsidiaries; or
(e) Dispositions with Affiliates in accordance with Clause 19.4(c)
(TRANSACTIONS WITH AFFILIATES).
LIENS
19.3 No Obligor will, nor will it permit any of its Subsidiaries to, create,
incur, assume or permit to exist any Lien on any property or assets, tangible or
intangible, now owned or hereafter acquired by it, except:
(a) Liens existing on the date hereof (and extension, renewal and replacement
Liens upon the same property, provided that the amount secured by each
Lien constituting such an extension, renewal or replacement Lien shall not
exceed the amount secured by the Lien theretofore existing) and listed on
Part B of Schedule 2;
(b) Liens arising from taxes, assessments, charges, levies or claims described
in Clause 18.7 (PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND PRIORITY
CLAIMS, PAYMENTS OF OTHER CURRENT LIABILITIES) that are not yet due or
that remain payable without penalty or to the extent permitted to remain
unpaid under the provision of Clause 18.7;
(c) Liens on property securing all or part of the purchase price thereof to
such Obligor and Liens (whether or not assumed) existing on property at
the time of purchase thereof by such Obligor (and extension, renewal and
replacement Liens upon the same property); provided (i) each such Lien is
confined solely to the property so purchased, improvements thereto and
proceeds thereof, and (ii) the aggregate amount of the obligations secured
by all such Liens on any particular property at any time purchased by such
Obligor, as applicable, shall not exceed 100% of the lesser of the fair
market value of such property at such time or the actual purchase price of
such property;
(d) zoning restrictions, easements, minor restrictions on the use of real
property, minor irregularities in title thereto and other minor Liens that
do not in the aggregate materially detract from the value of a property or
asset to, or materially impair its use in the business of, such Obligor or
any such Subsidiary;
(e) Liens securing Indebtedness permitted by Clause 19.7(b) (INDEBTEDNESS)
covering assets whose market value is not materially greater than the
amount of the Indebtedness secured thereby plus a commercially reasonable
margin;
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(f) Liens on cash and securities of an Obligor or any of its Subsidiaries
incurred as part of the management of its investment portfolio including,
but not limited to, pursuant to any International Swaps and Derivatives
Association, Inc. (ISDA) documentation or any Specified Transaction
Agreement in accordance with the Account Party's Statement of Investment
Policy Objectives and Guidelines as in effect on the date hereof or as it
may be changed from time to time by resolution duly adopted by the board
of directors of the Account Party (or any committee thereof);
(g) Liens on cash and securities not to exceed $500,000,000 in the aggregate
securing obligations of an Obligor or any of its Subsidiaries arising
under any ISDA documentation or any other Specified Transaction Agreement
(it being understood that in no event shall this paragraph (g) preclude
any Person (other than any Subsidiary of the Account Party) in which the
Account Party or any of its Subsidiaries shall invest (each an INVESTEE)
from granting Liens on such Person's assets to secure hedging obligations
of such Person, so long as such obligations are non-recourse to the
Account Party or any of its Subsidiaries (other than any investees)),
provided that, for purposes of determining the aggregate amount of cash
and/or securities subject to such Liens under this paragraph (g) the
aggregate amount of cash and/or securities on which any Obligor or any
Subsidiary shall have granted a Lien in favour of a counterparty at any
time shall be netted against the aggregate amount of cash and/or
securities on which such counterparty shall have granted a Lien in favour
of such Obligor or Subsidiary, as the case may be, at such time, so long
as the relevant agreement between such Obligor or such Subsidiary, as the
case may be, provides for the netting of their respective obligations
thereunder;
(h) Liens on (i) assets received, and on actual or imputed investment income
on such assets received incurred as part of its business including
activities utilizing ISDA documentation or any Specified Transaction
Agreement relating and identified to specific insurance payment
liabilities or to liabilities arising in the ordinary course of any
Obligors' or any of their Subsidiary's business as an insurance or
reinsurance company (including GICs and Stable Value Instruments) or
corporate member of Lloyd's or as a provider of financial or investment
services or contracts, or the proceeds thereof (including GICs and Stable
Value Instruments), in each case held in a segregated trust, trust or
other account and securing such liabilities, or (ii) any other assets
subject to any trust or other account arising out of or as a result of
contractual, regulatory or any other requirements; provided that in no
case shall any such Lien secure Indebtedness and any Lien which secures
Indebtedness shall not be permitted under this clause (h);
(i) statutory and common law Liens of materialmen, mechanics, carriers,
warehousemen and landlords and other similar Liens arising in the ordinary
course of business; and
(j) Liens existing on property of a Person immediately prior to its being
consolidated with or merged into any Obligor or any of their Subsidiaries
or its becoming a Subsidiary, and Liens existing on any property acquired
by any Obligor or any of their Subsidiaries at the time such property is
so acquired (whether or not the Indebtedness secured thereby shall have
been assumed) (and extension, renewal and replacement Liens upon the same
property, provided that the amount secured by each Lien constituting such
an extension, renewal or replacement Lien shall not exceed the amount
secured by the Lien theretofore existing), provided that (i) no such Lien
shall have been created or assumed in contemplation of such consolidation
or merger or such Person's becoming a Subsidiary or such acquisition of
property and (ii) each such Lien shall extend solely to the item or items
of property so acquired and, if
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required by terms of the instrument originally creating such Lien, other
property which is an improvement to or is acquired for specific use in
connection with such acquired property.
TRANSACTIONS WITH AFFILIATES
19.4 No Obligor will, nor will it permit any of its Significant Subsidiaries to,
enter into or carry out any transaction with (including, without limitation,
purchase or lease property or services to, loan or advance to or enter into,
suffer to remain in existence or amend any contract, agreement or arrangement
with) any Affiliate of such Obligor, or directly or indirectly agree to do any
of the foregoing, except:
(a) transactions involving guarantees or co-obligors with respect to any
Indebtedness described in Part A of Schedule 2;
(b) transactions between any Obligor and its wholly-owned Subsidiaries; and
(c) transactions with Affiliates in good faith in the ordinary course of such
Obligor's business consistent with past practice and on terms no less
favourable to such Obligor or any Subsidiary than those that could have
been obtained in a comparable transaction on an arm's length basis from an
unrelated Person.
RATIO OF TOTAL FUNDED DEBT TO TOTAL CAPITALISATION
19.5 The Account Party will not permit its ratio of (a) Total Funded Debt to (b)
the sum of Total Funded Debt plus Consolidated Net Worth to be greater than
0.35:1.00 at any time.
CONSOLIDATED NET WORTH
19.6 The Account Party will not permit its Consolidated Net Worth to be less
than the sum of (a) $5,000,000,000 plus (b) 25% of consolidated net income (if
positive) of the Account Party and its Subsidiaries for each fiscal quarter
ending on or after March 31, 2005.
INDEBTEDNESS
19.7 No Obligor will, nor will it permit any of its Subsidiaries to, at any time
create, incur, assume or permit to exist any Indebtedness, or agree, become or
remain liable (contingent or otherwise) to do any of the foregoing, except:
(a) Indebtedness created hereunder and under any other Finance Document;
(b) secured Indebtedness (including secured reimbursement obligations with
respect to letters of credit) of any Obligor or any Subsidiary in an
aggregate principal amount (for all Obligors and their respective
Subsidiaries) not exceeding at any time outstanding 15% of Consolidated
Net Worth;
(c) other unsecured Indebtedness, so long as upon the incurrence thereof no
Default would occur or exist;
(d) Indebtedness consisting of accounts or claims payable and accrued and
deferred compensation (including options) incurred in the ordinary course
of business by any Obligor or any Subsidiary;
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(e) Indebtedness incurred in transactions described in Clauses 19.3(f) and
19.3(g); and
(f) Indebtedness existing on the date hereof and described in Part A of
Schedule 2 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof.
RATINGS DOWNGRADE
19.8 The Account Party will not permit the financial-strength rating from A.M.
Best & Co. or its successor (such rating, an AMB RATING) of each of the Account
Party, XL Bermuda and XL Re to fall below "A-" (the AMB RATING UNDERTAKING). The
Agent may (and if so instructed by the Majority Lenders shall) require the
Account Party within 5 Business Days of a failure to comply with the AMB Rating
Undertaking, either:
(a) to provide cash cover in an amount equal to the aggregate LC Exposures for
the time being; or
(b) to deposit BIS Qualifying Assets with a custodian acceptable to the Agent,
and enter into custodian and other relevant documentation, together with
documentation required by the Security Trustee to give the Security
Trustee (for the benefit of itself and the other Finance Parties) an
effective and perfected security interest in respect of those BIS
Qualifying Assets, in an aggregate amount equal to 105% of the aggregate
LC Exposures for the time being.
(each of (a) and (b), AMB CASH COLLATERAL)
Notwithstanding any of the foregoing provisions of this Clause 19.8, if at any
time subsequent to the Account Party posting AMB Cash Collateral, any of the
Account Party, XL Bermuda and XL Re has an AMB Rating of at least "A", the
Security Trustee will instruct a bank holding any cash cover or otherwise take
all necessary actions to release and return any AMB Cash Collateral to the
Account Party and the Letter of Credit Fee shall be determined by reference to
Clause 9.3.
PRIVATE ACT
19.9 No Obligor will become subject to a Private Act other than the X.L.
Insurance Company, Ltd. Xxx, 0000.
20. EVENTS OF DEFAULT
If any of the following events (EVENTS OF DEFAULT) shall occur:
(a) FAILURE TO PAY:
(i) any Obligor shall fail to pay any Demand Amount when and as the same
shall become due and payable; or
(ii) any Obligor shall fail to pay any interest or any fee payable under
this Agreement or any other Finance Document or any other amount
(other than an amount referred to in Clause 20(a)(i)) payable under
this Agreement or any other Finance Document, when and as the same
shall become due and payable, and such failure shall continue
unremedied for a period of 3 or more days;
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(b) MISREPRESENTATION: any representation or warranty made or deemed made by
any Obligor in or in connection with this Agreement or any other Finance
Document or any amendment or modification hereof, or in any certificate or
financial statement furnished pursuant to the provisions hereof, shall
prove to have been false or misleading in any material respect as of the
time made (or deemed made) or furnished;
(c) BREACH OF OBLIGATIONS:
(i) any Obligor shall fail to observe or perform any covenant, condition
or agreement contained in Clause 19 (NEGATIVE COVENANTS) provided
that any failure by the Account Party to comply with the AMB Rating
Undertaking shall not constitute an Event of Default if, within 5
Business Days of a failure to comply with such AMB Rating
Undertaking, the Account Party posts and maintains AMB Cash
Collateral in accordance with Clause 19.8 (RATINGS DOWNGRADE); or
(ii) any Obligor shall fail to observe or perform any covenant, condition
or agreement contained in this Agreement or any other Finance
Document (other than those specified in Clause 20(a) or (c)(i)) and
such failure shall continue unremedied for a period of 20 or more
days after notice thereof from the Agent (given at the request of
any Lender) to such Obligor;
(d) CROSS DEFAULT: any Obligor or any of its Subsidiaries shall default (i) in
any payment of principal of or interest on any other obligation for
borrowed money in principal amount of $50,000,000 or more, or any payment
of any principal amount of $50,000,000 or more under Hedging Agreements,
in each case beyond any period of grace provided with respect thereto, or
(ii) in the performance of any other agreement, term or condition
contained in any such agreement (other than Hedging Agreements) under
which any such obligation in principal amount of $50,000,000 or more is
created, if the effect of such default is to cause or permit the holder or
holders of such obligation (or trustee on behalf of such holder or
holders) to cause such obligation to become due prior to its stated
maturity or to terminate its commitment under such agreement, provided
that this Clause 20(d) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;
(e) WINDING-UP: a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging any Obligor a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganisation of such Obligor under the Bermuda Companies Law or the
Cayman Islands Companies Law (2002 Revision) or any other similar
applicable Law, and such decree or order shall have continued undischarged
or unstayed for a period of 60 days; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of such
Obligor or a substantial part of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree or
order shall have continued undischarged and unstayed for a period of 60
days;
(f) INSOLVENCY AND RESCHEDULING: any Obligor shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganisation under the Bermuda Companies Law or the
Cayman Islands Companies Law (2002 Revision) or any other similar
applicable Law, or shall consent to the filing of any such petition, or
shall consent to the appointment of a receiver or
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liquidator or trustee or assignee in bankruptcy or insolvency of it or a
substantial part of its property, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or corporate or other action shall be
taken by such Obligor in furtherance of any of the aforesaid purposes;
(g) MATERIAL UNSATISFIED JUDGMENT OR ORDER: one or more judgments for the
payment of money in an aggregate amount in excess of $100,000,000 shall be
rendered against any Obligor or any of its Subsidiaries or any combination
thereof and the same shall not have been vacated, discharged, stayed
(whether by appeal or otherwise) or bonded pending appeal within 45 days
from the entry thereof;
(h) ERISA EVENT: an ERISA Event (or similar event with respect to any Non-U.S.
Benefit Plan) shall have occurred that, in the opinion of the Majority
Lenders, when taken together with all other ERISA Events and such similar
events that have occurred, could reasonably be expected to result in
liability of the Obligors and their Subsidiaries in an aggregate amount
exceeding $100,000,000;
(i) CHANGE OF CONTROL: a Change in Control shall occur;
(j) CHANGE IN OWNERSHIP: the Account Party shall cease to own, beneficially
and of record, directly or indirectly all of the outstanding voting shares
of capital stock of XL Bermuda, XL Re or XL America; or
(k) ILLEGALITY: at any time it is or becomes unlawful for any Obligor to
perform or comply with any or all of its obligations hereunder or any
court or arbitrator or any governmental body, agency or official which has
jurisdiction in the matter shall decide, rule or order that any provision
of the Finance Documents is invalid or unenforceable in any material
respect, or any Obligor shall so assert in writing;
(l) DEFAULT UNDER GUARANTEE: the guarantee contained in Clause 16 (GUARANTEE
AND INDEMNITY) shall terminate or cease, in whole or material part, to be
a legally valid and binding obligation of each Guarantor or any Guarantor
or any Person acting for or on behalf of any of such parties shall contest
such validity or binding nature of such guarantee itself or the
Transactions, or any other Person shall assert any of the foregoing,
then, and in every such event (other than an event with respect to any Obligor
described in Clause 20(e) or 20(f)), and at any time thereafter during the
continuance of such event, the Agent may, and at the request of the Majority
Lenders shall, by notice to the Account Party (an ACCELERATION NOTICE), take any
of the following actions, at the same or different times:
(i) terminate the Total Commitments, and thereupon the Total Commitments
shall terminate immediately;
(ii) require the Account Party forthwith to provide cash cover in respect
of any LC Exposure pursuant to a Letter of Credit; and
(iii) declare all fees and other obligations of the Account Party accrued
hereunder to be due and payable in whole (or in part, in which case
any fees and other obligations not so declared to be due and payable
may thereafter be declared to be due and payable) and thereupon such
fees and other obligations, shall become due and payable
immediately, without presentment, demand, protest
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or other notice of any kind, all of which are hereby waived by the
Account Party,
and in case of any event with respect to any Obligor described in Clause
20(e) or 20(f):
(A) the Commitments shall automatically terminate; and
(B) the Account Party shall automatically be required to provide
cash cover in respect of any LC Exposure pursuant to a Letter
of Credit; and
(C) all fees and other obligations of the Account Party accrued
hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Account Party.
21. THE AGENT, THE ARRANGERS AND THE LENDERS
APPOINTMENT OF THE AGENT
21.1 The Arrangers and each of the Lenders hereby appoints the Agent to act as
its agent in connection herewith and authorises the Agent to exercise such
rights, powers, authorities and discretions as are specifically delegated to the
Agent by the terms hereof together with all such rights, powers, authorities and
discretions as are reasonably incidental thereto.
AGENT'S DISCRETIONS
21.2 The Agent may:
(a) assume, unless it has, in its capacity as agent for the Lenders, received
notice to the contrary from any other party hereto, that (a) any
representation made or deemed to be made by an Obligor in connection with
the Finance Documents is true, (b) no Event of Default or Potential Event
of Default has occurred, (c) no Obligor is in breach of or default under
its obligations under the Finance Documents and (d) any right, power,
authority or discretion vested therein upon the Majority Lenders, the
Lenders or any other person or group of persons has not been exercised;
(b) assume that the Facility Office of each Lender is that notified to it by
such Lender in writing prior to the date hereof (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it is a party
as Transferee) until it has received from such Lender a notice designating
some other office of such Lender to replace its Facility Office and act
upon any such notice until the same is superseded by a further such
notice;
(c) engage and pay for the advice or services of any lawyers, accountants,
surveyors or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so obtained;
(d) rely as to any matters of fact which might reasonably be expected to be
within the knowledge of an Obligor upon a certificate signed by or on
behalf of such Obligor;
(e) rely upon any communication or document believed by it to be genuine;
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(f) refrain from exercising any right, power or discretion vested in it as
agent hereunder unless and until instructed by the Majority Lenders as to
whether or not such right, power or discretion is to be exercised and, if
it is to be exercised, as to the manner in which it should be exercised;
(g) refrain from acting in accordance with any instructions of the Majority
Lenders to begin any legal action or proceeding arising out of or in
connection with the Finance Documents until it shall have received such
security as it may require (whether by way of payment in advance or
otherwise) for all costs, claims, losses, expenses (including legal fees)
and liabilities together with any VAT thereon which it will or may expend
or incur in complying with such instructions; and
(h) assume (unless it has specific notice to the contrary) that any notice or
request made by the Account Party is made on behalf of the Obligors.
AGENT'S OBLIGATIONS
21.3 The Agent shall:
(a) promptly inform each Lender of the contents of any notice or document
received by it in its capacity as Agent from an Obligor under the Finance
Documents and shall promptly deliver to each Lender a copy of each Letter
of Credit delivered to Lloyd's pursuant to Clause 3.3 (COMPLETION OF
LETTERS OF CREDIT);
(b) promptly notify each Lender of the occurrence of any Event of Default or
any default by an Obligor in the due performance of or compliance with its
obligations under the Finance Documents of which the Agent has notice from
any other party hereto;
(c) save as otherwise provided herein, act as agent under the Finance
Documents in accordance with any instructions given to it by an Majority
Lenders, which instructions shall be binding on the Arrangers and the
Lenders; and
(d) if so instructed by the Majority Lenders, refrain from exercising any
right, power or discretion vested in it as agent under the Finance
Documents.
The Agent's duties under the Finance Documents are solely mechanical and
administrative in nature.
EXCLUDED OBLIGATIONS
21.4 Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arrangers shall:
(a) be bound to enquire as to (i) whether or not any representation made or
deemed to be made by an Obligor in connection with the Finance Documents
is true, (ii) the occurrence of any Default, (iii) the performance by an
Obligor of its obligations under the Finance Documents or (iv) any breach
of or default by an Obligor of or under its obligations under the Finance
Documents;
(b) be bound to account to any Lender for any sum or the profit element of any
sum received by it for its own account;
(c) be bound to disclose to any other person any information relating to any
Obligor or any Related Party if (i) such person, on providing such
information, expressly stated
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to the Agent or, as the case may be, the Arrangers, that such information
was confidential or (ii) such disclosure would or might in its opinion
constitute a breach of any Law or be otherwise actionable at the suit of
any person;
(d) be under any obligations other than those for which express provision is
made herein;
(e) be or be deemed to be a fiduciary for any other party hereto; or
(f) be obliged to carry out any "know your customer" or other checks in
relation to any person on behalf of any Lender and each Lender confirms to
the Agent and the Arranger that it is solely responsible for any such
checks it is required to carry out and that it may not rely on any
statement in relation to such checks made by the Agent or the Arranger.
INDEMNIFICATION
21.5 Each Lender shall, pro rata according to its respective Commitment, from
time to time on demand by the Agent, indemnify the Agent against any and all
costs, claims, losses, expenses (including legal fees) and liabilities together
with any value added tax thereon (or equivalent) which the Agent may incur,
otherwise than by reason of its own gross negligence or wilful misconduct, in
acting in its capacity as agent hereunder.
EXCLUSION OF LIABILITIES
21.6 Except in the case of gross negligence or wilful default, neither the Agent
nor the Arrangers accept any responsibility:
(a) for the adequacy, accuracy and/or completeness of any information supplied
by the Agent or the Arrangers, by an Obligor or by any other person in
connection with the Finance Documents or any other agreement, arrangement
or document entered into, made or executed in anticipation of, pursuant to
or in connection with the Finance Documents;
(b) for the legality, validity, effectiveness, adequacy or enforceability of
the Finance Documents or any other agreement, arrangement or document
entered into, made or executed in anticipation of, pursuant to or in
connection with the Finance Documents; or
(c) for the exercise of, or the failure to exercise, any judgement, discretion
or power given to any of them by or in connection with the Finance
Documents or any other agreement, arrangement or document entered into,
made or executed in anticipation of, pursuant to or in connection with the
Finance Documents.
Accordingly, neither the Agent nor the Arrangers shall be under any liability
(whether in negligence or otherwise) in respect of such matters, save in the
case of gross negligence or wilful misconduct.
NO ACTIONS
21.7 Each of the Lenders agree that it will not assert or seek to assert against
any director, officer or employee of the Agent or the Arrangers any claim it
might have against any of them in respect of the matters referred to in Clause
21.6 (EXCLUSION OF LIABILITIES).
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BUSINESS WITH THE GROUP
21.8 The Agent and the Arrangers may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any of the
Obligors or their Subsidiaries.
RESIGNATION
21.9 The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior notice
to that effect to each of the other parties hereto, PROVIDED THAT no such
resignation shall be effective until a successor for the Agent is appointed in
accordance with the succeeding provisions of this Clause 21.
SUCCESSOR AGENT
21.10 If the Agent gives notice of its resignation pursuant to Clause 21.9
(RESIGNATION) then any reputable and experienced Lender or other financial
institution may be appointed as a successor to the Agent by the Majority Lenders
(with the approval of the Account Party, not to be unreasonably withheld or
delayed,) during the period of such notice (with the co-operation of the Agent)
but, if no such successor is so appointed, the Agent may appoint such a
successor itself.
RIGHTS AND OBLIGATIONS
21.11 If a successor to the Agent is appointed under the provisions of Clause
21.10 (SUCCESSOR AGENT), then (a) the retiring Agent shall be discharged from
any further obligation hereunder but shall remain entitled to the benefit of the
provisions of this Clause 21 and (b) its successor and each of the other parties
hereto shall have the same rights and obligations amongst themselves as they
would have had if such successor had been a party hereto.
OWN RESPONSIBILITY
21.12 It is understood and agreed by each Lender that at all times it has itself
been, and will continue to be, solely responsible for making its own independent
appraisal of and investigation into all risks arising under or in connection
with this Agreement including, but not limited to:
(a) the financial condition, creditworthiness, condition, affairs, status and
nature of each member of the Group;
(b) the legality, validity, effectiveness, adequacy and enforceability of the
Finance Documents and any other agreement, arrangement or document entered
into, made or executed in anticipation of, pursuant to or in connection
with the Finance Documents;
(c) whether such Lender has recourse, and the nature and extent of that
recourse, against an Obligor or any other person or any of its assets
under or in connection with the Finance Documents, the Transactions or any
other agreement, arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with the Finance Documents;
and
(d) the adequacy, accuracy and/or completeness of any information provided by
the Agent or the Arrangers, an Obligor or by any other person in
connection with the Finance Documents, the Transactions or any other
agreement, arrangement or
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document entered into, made or executed in anticipation of, pursuant to or
in connection with the Finance Documents.
Accordingly, each Lender acknowledges to the Agent and the Arrangers that it has
not relied on and will not hereafter rely on the Agent and the Arrangers or any
of them in respect of any of these matters.
AGENCY DIVISION SEPARATE
21.13 In acting as agent hereunder for the Lenders, the Agent shall be regarded
as acting through its agency division which shall be treated as a separate
entity from any other of its divisions or departments and, notwithstanding the
foregoing provisions of this Clause 21, any information received by some other
division or department of the Agent may be treated as confidential and shall not
be regarded as having been given to the Agent's agency division.
DECLARATION OF AGENT AS SECURITY TRUSTEE
21.14 The Agent hereby declares that it shall hold:
(a) all rights, titles and interests that may hereafter be mortgaged, charged,
assigned or otherwise secured in favour of the Agent by or pursuant to the
Finance Documents;
(b) the benefit of all representations, covenants, guarantees, indemnities and
other contractual provisions given in favour of the Agent (other than any
such benefits given to the Agent solely for its own benefit) by or
pursuant to the Finance Documents (other than this Agreement); and
(c) all proceeds of the security referred to in paragraph (a) above and of the
enforcement of the benefits referred to in paragraph (b) above,
on trust for itself and the other Finance Parties from time to time.
Such declaration shall remain valid notwithstanding that the Agent may on the
date hereof or at any other time be the sole Finance Party; for the avoidance of
doubt, however, such declaration shall, in such case, be deemed repeated on each
date on which the Agent ceases to be the sole Finance Party.
Each of the parties hereto agrees that the obligations, rights and benefits
vested or to be vested in the Agent as trustee as aforesaid by the Finance
Documents or any document entered into pursuant thereto shall (as well before as
after enforcement) be performed and (as the case may be) exercised by the Agent
in accordance with the provisions of this Clause 21.
POWERS AND DISCRETIONS
21.15 The Agent shall have all the powers and discretions conferred upon
trustees by the Trustee Xxx 0000 (to the extent not inconsistent herewith) and
by way of supplement it is expressly declared as follows:
(a) the Agent shall be at liberty to place any of the Finance Documents and
any other instruments, documents or deeds delivered to it pursuant thereto
or in connection therewith for the time being in its possession in any
safe deposit, safe or receptacle selected by the Agent or with any Lender,
any company whose business includes undertaking the safe custody of
documents or any firm of lawyers of good repute;
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(b) the Agent may, whenever it thinks fit, delegate by power of attorney or
otherwise to any person or persons or fluctuating body of persons all or
any of the rights, trusts, powers, authorities and discretions vested in
it by any of the Finance Documents and such delegation may be made upon
such terms and subject to such conditions (including the power to
sub-delegate) and subject to such regulations as the Agent may think fit
and the Agent shall not be bound to supervise, or be in any way
responsible for any loss incurred by reason of any misconduct or default
on the part of, any such delegate (or sub-delegate);
(c) notwithstanding anything else herein contained, the Agent may refrain from
doing anything which would or might in its opinion be contrary to any Law
of any jurisdiction or any directive or regulation of any agency of any
state or which would or might otherwise render it liable to any person and
may do anything which is, in its opinion, necessary to comply with any
such Law, directive or regulation;
(d) save in the case of gross negligence or wilful misconduct, the Agent and
every attorney, agent, delegate, sub-delegate and any other person
appointed by any of them under any of the Finance Documents may indemnify
itself or himself out of the security held by the Agent against all
liabilities, costs, fees, charges, losses and expenses incurred by any of
them in relation to or arising out of the taking or holding of any of the
security constituted by, or any of the benefits provided by, any of the
Finance Documents, in the exercise or purported exercise of the rights,
trusts, powers and discretions vested in any of them or in respect of any
other matter or thing done or omitted to be done in any way relating to
any of the Finance Documents or pursuant to any Law or regulation; and
(e) without prejudice to the provisions of any of the Finance Documents, the
Agent shall not be under any obligation to insure any property or to
require any other person to maintain any such insurance and shall not be
responsible for any loss which may be suffered by any person as a result
of the lack of or inadequacy or insufficiency of any such insurance.
LIABILITY
21.16 The Agent shall not be liable for any failure:
(a) to require the deposit with it of any deed or document certifying,
representing or constituting the title of the Account Party to any of the
property mortgaged, charged, assigned or otherwise encumbered by or
pursuant to any of the Finance Documents;
(b) to obtain any licence, consent or other authority for the execution,
delivery, validity, legality, adequacy, performance, enforceability or
admissibility in evidence of any of the Finance Documents;
(c) to register or notify any deed or document mentioned at paragraph (a)
above in accordance with the provisions of any of the documents of title
of the Account Party;
(d) to effect or procure registration of or otherwise protect any of the
security created by any of the Finance Documents by registering the same
under any applicable registration Laws in any territory or otherwise by
registering any notice, caution or other entry prescribed by or pursuant
to the provisions of relevant Laws;
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(e) to take or to require the Account Party to take any steps to render the
security created or purported to be created by or pursuant to any of the
Finance Documents effective or to secure the creation of any ancillary
charge under the Laws of any jurisdiction; or
(f) to require any further assurances in relation to any of the Finance
Documents.
TITLE TO SECURITY ETC.
21.17 The Agent may accept without enquiry, requisition or objection such right
and title as the Account Party may have to the property belonging (or
purportedly belonging) to it (or any part thereof) which is the subject matter
of any of the Finance Documents and shall not be bound or concerned to
investigate or make any enquiry into the right or title of the Account Party to
such property (or any part thereof) or, without prejudice to the foregoing, to
require the Account Party to remedy any defect in the Account Party's right or
title as aforesaid.
NEW SECURITY TRUSTEE
21.18 The Agent may at any time appoint any person (whether or not a trust
corporation) to act either as a separate trustee or as a co-trustee jointly with
the Agent:
(a) if the Agent considers such appointment to be in the interests of the
Lenders; or
(b) for the purposes of conforming to any legal requirements, restrictions or
conditions which the Agent deems relevant for the purposes of the Finance
Documents and the Agent shall give prior notice to the Account Party and
the Lenders of any such appointment.
Any person so appointed shall (subject to the provisions of the Finance
Documents) have such powers, authorities and discretions and such duties and
obligations as shall be conferred or imposed or such person by the instrument of
appointment and shall have the same benefits under this Clause 21 as the Agent.
The Agent shall have power in like manner to remove any person so appointed.
Such reasonable remuneration as the Agent may pay to any person so appointed,
and any costs, charges and expenses incurred by such person in performing its
functions pursuant to such appointment, shall for the purposes hereof be treated
as costs, charges and expenses incurred by the Agent under the Finance
Documents.
PERPETUITY PERIOD
21.19 The perpetuity period under the rule against perpetuities if applicable to
the trusts constituted in this Clause 21 and the other Finance Documents shall
be the period of eighty years from the date of this Agreement and, subject
thereto, if the Agent determines that all of the obligations of the Account
Party under any of the Finance Documents have been fully and unconditionally
discharged, such trusts shall be wound up.
LENDER REPRESENTATIONS
21.20 Each Lender represents to the Agent on the date of issue of each Letter of
Credit that:
(a) the execution and delivery of each Letter of Credit by the Agent on the
Lender's behalf has been duly authorised by all necessary action on the
part of the Lender; and
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(b) the obligations of the Lender under each Letter of Credit constitute its
legal, valid and binding obligations.
LETTERS OF CREDIT
21.21 Each Lender shall, (a) pro rata according to its respective Commitment,
indemnify the Agent against any and all liabilities, costs and expenses which
the Agent may incur otherwise than by reason of its own gross negligence or
wilful misconduct (in its capacity as Agent) as a result of the execution and
delivery of any Letter of Credit and any documents executed and delivered by the
Agent in connection therewith; and (b) inform the Agent promptly if at any time
the collateral securing the repayment of any amounts payable under any Letter of
Credit comprises directly or indirectly a security interest over a principal
private residence.
22. NOTICES
Except in the case of notices and other communications expressly permitted to be
given by telephone, all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile, as follows:
(a) if to any Obligor, to:
XL Capital Ltd
XX Xxxxx
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx XX 00
Bermuda
Fax: 0 000 000 0000
Attention: Xxxxxxx Xxxxx
(b) if to the Agent:
0xx Xxxxx
0 Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxx X00 0XX
Fax: 00 000 000 0000/4484
Attention: Loans Agency
(c) if to a Lender, to it at its address (or facsimile number) on the
signature pages of this Agreement, or such other address as it shall
notify to the Agents and the Account Party.
Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto (or, in the
case of any such change by a Lender, by notice to the Account Party and the
Agent). All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
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23. WAIVERS AND AMENDMENTS
NO DEEMED WAIVERS
23.1 No failure or delay by any Finance Party in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. No waiver of any provision
of this Agreement or consent to any departure by an Obligor therefrom shall in
any event be effective unless the same shall be permitted by Clause 23.3
(AMENDMENTS), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Agent or any
Lender may have had notice or knowledge of such Default at the time.
REMEDIES CUMULATIVE
23.2 The rights and remedies of the Finance Parties hereunder are cumulative and
are not exclusive of any rights or remedies that they would otherwise have.
AMENDMENTS
23.3 Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Obligors and the Majority Lenders or by the Obligors and the Agent with
the consent of the Majority Lenders; PROVIDED that no such agreement shall:
(a) increase the Commitment of any Lender without the written consent of such
Lender,
(b) reduce the amount of any reimbursement obligation of the Account Party in
respect of any LC Disbursement or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each
Lender affected thereby,
(c) postpone the scheduled date for reimbursement of any LC Disbursement, or
any interest thereon, or any fees payable hereunder, or reduce the amount
of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Commitment or any Letter of Credit (other than an
extension thereof pursuant to Clause 4), without the written consent of
each Lender affected thereby,
(d) change Clause 15.4 (PRO RATA TREATMENT) or 15.5 (SHARING OF PAYMENTS BY
LENDERS) without the consent of each Lender affected thereby,
(e) release any of the Guarantors from any of their guarantee obligations
under Clause 16 (GUARANTEE AND INDEMNITY) without the written consent of
each Lender,
(f) release any security granted by the Account Party pursuant to Clause 19.8
(RATINGS DOWNGRADE) or 20 (EVENTS OF DEFAULT) without the written consent
of each Lender, and
(g) change any of the provisions of this Clause or the percentage in the
definition of the term MAJORITY LENDERS or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or
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make any determination or grant any consent hereunder, without the written
consent of each Lender;
and PROVIDED FURTHER that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Agent hereunder without the prior written
consent of the Agent.
24. COSTS AND EXPENSES
24.1 The Account Party shall pay:
(a) all reasonable out-of-pocket expenses and charges incurred by the Agent
and/or the Arrangers (together with VAT or any similar tax thereon and
including the reasonable fees, charges and disbursements of counsel for
the Agent) in connection with the syndication of the credit facilities
provided for herein, the negotiation, preparation, execution and
administration of the Finance Documents (subject to the terms of the
Commitment Letter) or any amendments, modifications or waivers of the
provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated);
(b) all reasonable out-of-pocket expenses incurred by the Agent, the Security
Trustee or any Lender, (together with VAT or any similar tax thereon and
including the reasonable fees, charges and disbursements of one legal
counsel for the Agent and one legal counsel for the Lenders), in
connection with the preservation and/or enforcement or protection of its
rights in connection with the Finance Documents, including its rights
under this Clause, or in connection with Letters of Credit issued
hereunder, including in connection with any workout, restructuring or
negotiations in respect thereof.
STAMP DUTY
24.2 The Account Party shall pay all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any other document referred to herein.
25. INDEMNITIES
CURRENCY INDEMNITY
25.1 (a) If:
(i) any amount payable by the Account Party under or in connection with
this Agreement is received by any Finance Party in a currency (the
PAYMENT CURRENCY) other than that agreed in this Agreement (the
AGREED CURRENCY) whether as a result of any judgement or order or
the enforcement thereof, the liquidation of the payer or otherwise;
and
(ii) the amount produced by converting the Payment Currency so received
into the Agreed Currency is less than the relevant amount of the
Agreed Currency.
then the Account Party shall, as an independent obligation, indemnify such
Finance Party for the deficiency and any loss sustained as a result. Such
conversion shall be made at such prevailing rate of exchange, on such date
and in such market as is
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determined by such Finance Party (acting reasonably) as being most
appropriate for the conversion. The Account Party shall in addition pay
the costs of the conversion.
(b) The Account Party waives any right it may have in any jurisdiction to pay
any amount under this Agreement in a currency other than that in which it
is expressed to be payable in this Agreement.
OTHER INDEMNITIES
25.2 The Obligors shall indemnify the Agent and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an
INDEMNITEE) against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of:
(a) the execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions
or any other transactions contemplated hereby;
(b) any Letter of Credit or the use of any thereof (including any refusal by
any Lender to honour a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit);
(c) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any
other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available
to the extent that such losses, claims, damages, liabilities or related
expenses result from or arise out of the gross negligence or wilful
misconduct of such Indemnitee.
REIMBURSEMENT BY LENDERS
25.3 To the extent that the Obligors fail to pay any amount required to be paid
by them to the Agent under Clauses 25 (COSTS AND EXPENSES) or 25.1 (CURRENCY
INDEMNITY) and 25.2 (OTHER INDEMNITIES), each Lender severally agrees to pay to
the Agent such Lender's Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; PROVIDED that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agent in its capacity as such.
26. ALTERATION TO THE PARTIES
SUCCESSORS
26.1 The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby.
ASSIGNMENTS AND TRANSFERS BY THE ACCOUNT PARTY
26.2 The Account Party shall not assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Account Party without such consent
shall be null and void).
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TRANSFERS BY LENDERS.
26.3 (a) Any Lender (the TRANSFEROR) may at any time transfer to another
Approved Credit Institution (the TRANSFEREE) all or a portion of its
rights and obligations under this Agreement (including all or a portion
of its Commitment) and under any Letter of Credit to which it is a
party; PROVIDED THAT:
(i) except in the case of an transfer to a Lender or a Lender Affiliate,
each of the Account Party and the Agent must give their prior
written consent to such assignment (which consent shall not be
unreasonably withheld or delayed);
(ii) except in the case of an transfer to a Lender or a Lender Affiliate
or a transfer of the entire remaining amount of the Transferor's
Commitment, the amount of the Commitment of the Transferor subject
to each such transfer (determined as of the date of the Transfer
Certificate) shall not be less than (pound)3,000,000 unless each of
the Account Party and the Agent otherwise consent;
(iii) a transfer of obligations shall only be effective if the Transferee:
(A) if it shall not be a Lender, has delivered relevant contact,
notice and account details to the Agent (with a copy to the
Account Party) as well as any information required by the
Agent to perform "know your customer" or other checks relating
to any person that it is required to carry out in relation to
the Transferee, the completion of which the Agent shall
promptly notify to the Transferor and the Transferee; and
(B) has confirmed to the Agent and the Account Party prior to the
transfer taking effect that it undertakes to be bound by the
terms of this Agreement as Lender in form and substance
reasonably satisfactory to the Agent and the Account Party;
and on any such transfer being made the Transferor shall be
relieved of its obligations to the extent they are transferred
to the Transferee.
PROVIDED FURTHER that any consent of the Account Party otherwise required
under this paragraph shall not be required if an Event of Default under
Clause 20(a), (e) or (f) has occurred and is continuing. Upon transfer
pursuant to Clause 26.4, from and after the last to occur of (i) the
effective date specified in each Transfer Certificate; and (ii) the
cancellation of a Letter of Credit and the issue of a new Letter of Credit
with the Transferee identified as an Issuing Lender (the ISSUING LENDER
TRANSFER), the Transferee thereunder shall be a party hereto and, to the
extent of the lesser of the interest assigned by such Transfer Certificate
and the Transferee's participation as an Issuing Lender of a re-issued
Letter of Credit (the TRANSFERRED INTEREST), have the rights and
obligations of a Lender under this Agreement, and the Transferor
thereunder shall, to the extent of the Transferred Interest, be released
from its obligations under this Agreement (and, in the case of Transfer
Certificate covering all of the Transferor's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Clauses 12 (INCREASED COSTS),
10 (TAXES) 24 (COSTS AND EXPENSES) and 25 (INDEMNITIES)). Any assignment
or transfer by a Lender of rights or obligations under this Agreement that
does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Clause 26.7 (PARTICIPATIONS).
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Notwithstanding anything to the contrary contained herein, any Lender (a
GRANTING LENDER) may grant to a special purpose vehicle (an SPV) of such
Granting Lender, identified as such in writing from time to time by the
Granting Lender to the Agent and the Account Party, the option to provide
to the Account Party all or any part of any LC Disbursement that such
Granting Lender would otherwise be obligated to make to the Account Party
pursuant to Clause 2.1, PROVIDED that (i) nothing herein shall constitute
a commitment by any SPV to make any LC Disbursement, (ii) if an SPV elects
not to exercise such option or otherwise fails to provide all or any part
of such LC Disbursement, the Granting Lender shall be obligated to make
such LC Disbursement pursuant to the terms hereof and (iii) the Account
Party may bring any proceeding against either or both the Granting Lender
or the SPV in order to enforce any rights of the Account Party hereunder;
and (iv) the SPV shall agree to the terms of Clause 30.2
(CONFIDENTIALITY). The making of an LC Disbursement by an SPV hereunder
shall utilise the Commitment of the Granting Lender to the same extent,
and as if, such LC Disbursement were made by the Granting Lender. Each
party hereto hereby agrees that no SPV shall be liable for any payment
under this Agreement for which a Lender would otherwise be liable, for so
long as, and to the extent, the related Granting Lender makes such
payment. In furtherance of the foregoing, each party hereto hereby agrees
(which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any
SPV, it will not institute against, or join any other person in
instituting against, such SPV any bankruptcy, reorganisation, arrangement,
insolvency or liquidation proceedings or similar proceedings under the
Laws of the United States or any State thereof arising out of any claim
against such SPV under this Agreement. In addition, notwithstanding
anything to the contrary contained in this Clause, any SPV may with notice
to, but without the prior written consent of, the Account Party or the
Agent and without paying any processing fee therefor, assign all or a
portion of its interests in any Letter of Credit to its Granting Lender or
to any financial institutions (consented to by the Account Party and the
Agent) providing liquidity and/or credit support (if any) with respect to
commercial paper issued by such SPV to issue such Letters of Credit and
such SPV may disclose, on a confidential basis, confidential information
with respect to any Account Party and its Subsidiaries to any rating
agency, commercial paper dealer or provider of a surety, guarantee or
credit liquidity enhancement to such SPV. This paragraph may not be
amended without the consent of any SPV at the time holding LC
Disbursements under this Agreement.
(b) On each occasion a Transferor assigns, transfers or novates any of its
rights and/or obligations under this Agreement, the Transferee (unless it
is already a Lender or a Lender Affiliate immediately prior to the
transfer) shall ensure that the Agent has notice of the same and shall, on
the date the assignment, transfer and/or novation takes effect, pay to the
Agent for its own account a fee of (pound)1,000.
(c) Neither a Transferor nor any other Finance Party is responsible to a
Transferee for:
(i) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Documents or any other document;
(ii) the collectability of amounts payable under any Finance Documents or
the financial condition of or the performance of its obligations
under the Finance Documents by any Obligor; or
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(iii) the accuracy of any statements or information (whether written or
oral) made in or in connection with or supplied in connection with
any Finance Documents.
(d) Each Transferee confirms to the Transferor and the other Finance Parties
that it:
(i) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Transferor or any other Finance Party in connection with any Finance
Documents; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities for so
long as there are any Commitments or LC Exposures under this
Agreement.
(e) Nothing in any Finance Document obliges a Transferor to:
(i) accept a re-transfer from an Transferee of any of the rights and/or
obligations assigned, transferred or novated under this Clause; or
(ii) support any losses incurred by the Transferee by reason of the
non-performance by any Obligor of its obligations under any Finance
Document or otherwise.
26.4 TRANSFER PROCEDURE:
(a) A novation is effected if:
(i) the Transferor and the Transferee deliver to the Agent a duly
completed Transfer Certificate executed by the Transferor and the
Transferee; and
(ii) the Agent executes it
PROVIDED THAT the Agent shall only be obliged to execute a Transfer
Certificate delivered to it by the Transferor and the Transferee once it
is satisfied it has complied with all necessary "know your customer" or
similar other checks under all applicable laws and regulations in relation
to the transfer to such Transferee.
(b) Each Party (other than the Transferor and the Transferee) irrevocably
authorises the Agent to execute any duly completed Transfer Certificate on
its behalf.
(c) To the extent that they are expressed to be the subject of the novation in
the Transfer Certificate:
(i) the Transferor and the other Parties (the EXISTING PARTIES) will be
released from their obligations to each other under the Finance
Documents (the DISCHARGED OBLIGATIONS);
(ii) the Transferee and the existing Parties will assume obligations
towards each other under the Finance Documents which differ from the
discharged obligations only insofar as they are owed to or assumed
by the Transferee instead of the Transferor;
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(iii) the rights of the Transferor against the existing Parties under the
Finance Documents and vice versa (the DISCHARGED RIGHTS) will be
cancelled; and
(iv) the Transferee and the existing Parties will acquire rights against
each other under the Finance Documents which differ from the
discharged rights only insofar as they are exercisable by or against
the Transferee instead of the Transferor,
all on the date specified in the proviso to Clause 26.3(a).
RIGHT TO SUBSTITUTE SINGLE LENDER
26.5 If:
(a) any sum payable to any Finance Party by the Account Party is required to
be increased under Clause 10 (TAXES); or
(b) any Lender claims indemnification from the Account Party under Clause 12.1
(INCREASED COSTS); or
(c) a Lender's Available Commitment has been reduced to zero pursuant to
Clause 13(b) (ILLEGALITY),
the Account Party may give the Agent notice of its intention to arrange the
substitution of that Lender with a new bank or financial institution.
On receipt of a notice from the Account Party referred to above, the Lender
shall use its best endeavours to promptly assign or transfer all of its rights
and obligations under this Agreement to an Approved Credit Institution nominated
by the Account Party. Such transfer will be effected in accordance with Clause
26.4 (TRANSFER PROCEDURE) and the consideration for such transfer shall be an
amount equal to the sum of all amounts accrued and owing by the Account Party to
the transferring Lender as calculated on the date of transfer.
REFERENCE BANKS
26.6 If a Reference Bank ceases to be one of the Lenders, the Agent shall (in
consultation with the Account Party) appoint another Lender or an affiliate of a
Lender to replace that Reference Bank.
PARTICIPATIONS
26.7 Any Lender may sell participations to one or more Lenders or other entities
(a PARTICIPANT) in all or a portion of such Lender's rights and obligations
under this Agreement and the other Credit Documents (including all or a portion
of its Commitment); PROVIDED that:
(a) any such participation sold to a Participant which is not a Lender or a
Lender Affiliate shall be made only with the consent (which in each case
shall not be unreasonably withheld) of the Account Party and the Agent,
unless an Event of Default under Clause 20(a), (e) or (f) has occurred and
is continuing, in which case the consent of the Account Party shall not be
required;
(b) such Lender's obligations under this Agreement and the other Finance
Documents shall remain unchanged;
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(c) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations;
(d) the Account Party, the Agent, the Security Trustee and the other Lenders
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and the
other Finance Documents; and
(e) the Participant shall agree to the terms of Clause 30.2 (CONFIDENTIALITY).
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and the other Finance Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or the
other Finance Documents; PROVIDED that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Clause 23.3
(Amendments) that affects such Participant. Subject to Clause 26.8 (NO INCREASED
COSTS), the Obligors agree that each Participant shall be entitled to the
benefits of Clauses 12 (INCREASED COSTS) and 10 (TAXES) to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Clause
26.3 (TRANSFERS BY LENDERS).
NO INCREASED COSTS
26.8 No Participant or Transferee shall be entitled to receive any greater
payment under Clause 12 (INCREASED COSTS) and 10 (TAXES) than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant or the Lender interest transferred.
CERTAIN PLEDGES
26.9 Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, and this Clause shall not apply to any such pledge or assignment of a
security interest; PROVIDED that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
NO TRANSFERS TO ANY ACCOUNT PARTY OR AFFILIATES
26.10 Anything in this Clause to the contrary notwithstanding, no Lender may
assign or participate any interest in any LC Exposure held by it hereunder to
any Obligor or any of its Affiliates or Subsidiaries without the prior consent
of each Lender.
MAINTENANCE OF REGISTER BY THE AGENT
26.11 The Agent, acting for this purpose as an agent of the Account Party, shall
maintain at one of its offices in London a copy of each Transfer Certificate
delivered to it and a register of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the REGISTER). The
entries in the Register shall be conclusive, and the Account Party, the Agent,
the Security Trustee and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by any Account Party and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
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27. SET OFF
RIGHT OF SET-OFF
If an Event of Default shall have occurred and be continuing, each Finance Party
is hereby authorised at any time and from time to time, to the fullest extent
permitted by Law, to set off and apply any and all deposits in any currency
(general or special, time or demand, provisional or final) at any time held and
other indebtedness in any currency at any time owing by such Finance Party to or
for the credit or the account of any Obligor against any of and all the
obligations of such Obligor now or hereafter existing under this Agreement held
by such Finance Party, irrespective of whether or not such Finance Party shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Finance Party under this Clause are in addition to
other rights and remedies (including other rights of set-off) which such Finance
Party may have. The relevant Finance Party may effect any appropriate currency
exchanges to implement such set-off.
28. MISCELLANEOUS PROVISIONS
CERTIFICATES
28.1 Any determination or notification by the Agent or any other Finance Party
concerning any rate or amount under the Finance Documents shall, in the absence
of manifest error, be conclusive evidence as to that matter.
SURVIVAL
28.2 All covenants, agreements, representations and warranties made by the
Account Party herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that the Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Clauses 12 (INCREASED COSTS), 10
(TAXES), 24 (COSTS AND EXPENSES), 25 (INDEMNITIES) and 21 (AGENT) shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement or any
provision hereof.
COUNTERPARTS
28.3 This Agreement may be executed in counterparts (and by different parties
hereto on separate counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute one and the same
instrument.
ENTIRE AGREEMENT
28.4 This Agreement and the other Finance Documents constitute the entire
contract between the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof.
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SEVERABILITY
28.5 Any provision of this Agreement or any other Finance Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof. The invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction. To the extent permitted by applicable Law, each Obligor hereby
waives any provision of Law which renders any provision of the Finance Documents
prohibited or unenforceable in any respect.
29. GOVERNING LAW AND JURISDICTION
GOVERNING LAW
29.1 This Agreement shall be construed in accordance with and governed by
English law.
JURISDICTION
29.2 (a) All the parties agree that the courts of England are, subject to Clause
29.2(b) and (c) below, to have jurisdiction to settle any disputes
which may arise in connection with the creation, validity, effect,
interpretation or performance of, or the legal relationships
established by, this Agreement (including, without limitation, claims
for set-off or counterclaim) or otherwise arising in connection with
this Agreement and for such purposes irrevocably submit to the
jurisdiction of the English courts;
(b) notwithstanding the agreement in (a) above, each of the Finance Parties
shall retain the right to bring proceedings in any other court which
has jurisdiction whether by virtue of the Convention on Jurisdiction
and the Enforcement of Judgments signed on 27 September 1968 (as from
time to time amended and extended) or by virtue of the Convention on
Jurisdiction and the Enforcement of Judgments signed on 16 September
1988 (from time to time amended and extended) or otherwise;
(c) with respect to the courts agreed in paragraphs (a) and (b) above, each
of the Parties irrevocably waives any objections on the ground of venue
or forum non conveniens or any similar ground;
(d) each of the Parties irrevocably agrees that a judgment or order of any
court referred to in this Clause in connection with this Agreement is
conclusive and binding on it and may be enforced against it in the
courts of any other jurisdiction; and
(e) each of the Parties irrevocably consents to service of process by mail
or in any other manner permitted by the relevant Law.
AGENT FOR SERVICE OF PROCESS
29.3 Each Obligor shall at all times maintain an agent for service of process
and any other documents in proceedings in England or any other proceedings in
connection with this Agreement (a PROCESS AGENT). The Process Agent shall be XL
Services UK Limited, XX Xxxxx, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (Attn:
Company Secretary) and any writ, judgment or other notice of legal process shall
be sufficiently served on the relevant Obligor if delivered to the Process Agent
marked for the attention of the Finance Director at its address for the time
being. Each Obligor undertakes not to revoke the authority of the Process Agent
without promptly appointing a successor and notifying the Agent thereof.
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WAIVER OF IMMUNITIES
29.4 To the extent that any Obligor has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
or execution, on the ground of sovereignty or otherwise) with respect to itself
or its property, it hereby irrevocably waives, to the fullest extent permitted
by applicable Law, such immunity in respect of its obligations under the Finance
Documents.
30. TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY
TREATMENT OF CERTAIN INFORMATION
30.1 Each of the Obligors acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
any Obligor or one or more of their Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and each of the Obligors hereby authorises each Lender
to share any information delivered to such Lender by such Obligor and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such subsidiary or affiliate,
it being understood that (a) any such information shall be used only for the
purpose of advising the Obligor or preparing presentation materials for the
benefit of the Obligor and (b) any such subsidiary or affiliate receiving such
information shall be bound by Clause 30.2 (CONFIDENTIALITY) as if it were a
Lender hereunder. Such authorisation shall survive the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
CONFIDENTIALITY
30.2 Each of the Finance Parties agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed:
(a) to its and its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to
keep such Information confidential);
(b) to the extent requested by any regulatory authority having jurisdiction
over the Agent or any Lender;
(c) to the extent required by applicable Laws or regulations or by any
subpoena or similar legal process;
(d) to any other Party;
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of
rights hereunder;
(f) subject to an agreement in writing containing provisions substantially the
same as those of this paragraph and for the benefit of the Obligor, to (i)
any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap
or derivative transaction relating to any Obligor and its obligations;
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(g) with the consent of the Obligor; or
(h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Clause 30.2 or (ii) becomes available to
the Agent or any Lender on a non-confidential basis from a source other
than an Obligor.
For the purposes of this Clause, INFORMATION means all information received from
an Obligor relating to an Obligor or its business, other than any such
information that is available to the Finance Parties on a non-confidential basis
prior to disclosure by such Obligor; PROVIDED that, in the case of information
received from an Obligor after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Clause shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding the foregoing, each of the Finance Parties agree that they will
not trade the securities of any of the Obligors based upon non-public
Information that is received by them.
30.3 Notwithstanding anything in this Agreement to the contrary, the Agent, the
Lenders and the Account Party (and each of their respective employees,
representatives or other agents) may disclose to any and all persons, without
limitation of any kind, the U.S. tax treatment and U.S. tax structure of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to such person
relating to such tax treatment or tax structure, other than any information for
which nondisclosure is reasonably necessary in order to comply with applicable
securities laws, and except that, with respect to any document or similar item
that in either case contains information concerning the U.S. tax treatment or
U.S. tax structure of such transactions as well as other information, this
paragraph shall only apply to such portions of the document or similar item that
relate to such tax treatment or tax structure
31. THIRD PARTY RIGHTS
A person who is not a Party shall have no rights under the Contracts (Rights of
Third Parties) Xxx 0000 to enforce any of its terms.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed on the date first written above.
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IN WITNESS WHEREOF, XL CAPITAL LTD has caused this Agreement to be duly executed
as a Deed by an authorised officer on the day and year first above written.
ACCOUNT PARTY
EXECUTED as a DEED
for and on behalf of XL CAPITAL LTD
By: /s/ XXXXX X. DE ST. PAER
In the presence of: /s/ FIONA LUCK
GUARANTORS
EXECUTED as a DEED
for and on behalf of XL CAPITAL LTD
By: /s/ XXXXX X. DE ST. PAER
In the presence of: /s/ FIONA LUCK
SIGNED for and on behalf of XL AMERICA, INC.
By: /s/ XXXXX X. XXXXXX
Title: Managing Director, Treasury
SIGNED for and on behalf of XL INSURANCE (BERMUDA) LTD
By: /s/ XXXXXXXXXXX X. XXXXXX
Title: Senior Vice - President & Chief Financial Officer
SIGNED for and on behalf of XL RE LTD
By: /s/ XXXXXXXXXXX X. XXXXXXXX
Title: Executive Vice President and Chief Investment Officer
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AGENT
SIGNED for and on behalf of CITIBANK INTERNATIONAL PLC
By: /s/ XXXX XXXXX
Address: Citigroup Centre
33 Canada Square
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Fax: x00 00 0000 0000/4484
Tel: x00 00 0000 0000
Attention: Loans Agency
ARRANGERS
SIGNED for and on behalf of BARCLAYS CAPITAL
By: /s/ XXXXX XXXXXX
Address: 5 Xxx Xxxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Xxxxx Xxxxxx
SIGNED for and on behalf of CITIGROUP GLOBAL MARKETS LIMITED
By: /s/ XXXX XXXXX
Address: Citigroup Centre
33 Canada Square
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Xxxxxxxx Xxxxxxx
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SECURITY TRUSTEE
SIGNED for and on behalf of CITIBANK INTERNATIONAL PLC
By: /s/ XXXX XXXXX
Address: Citigroup Centre
33 Canada Square
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Fax: x00 00 0000 0000/4484
Tel: x00 00 0000 0000
Attention: Loans Agency
LENDERS
SIGNED for and on behalf of BARCLAYS BANK PLC
By: /s/ XXXXX XXXXXX
Address: 0xx Xxxxx
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Xxxx Xxxxxxx
SIGNED for and on behalf of CITIBANK, N.A.
By: /s/ XXXX XXXXX
Address: Citigroup Centre
33 Canada Square
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Loans Processing Unit
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SIGNED for and on behalf of ING BANK N.V., LONDON BRANCH
By: /s/ X. XXXXX & X. XXXXXX
Address: 00 Xxxxxx Xxxx
Xxxxxx
XX0X 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Xxxxxx XxXxxxxxx
SIGNED for and on behalf of LLOYDS TSB BANK PLC
By: /s/ XXXXX XXXXXXX
Address: 00 Xxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Xxxxx Xxxxxxx
SIGNED for and on behalf of THE ROYAL BANK OF SCOTLAND
By: /s/ XXXX XXXXXXX
Address: 0xx Xxxxx, 000 Xxxxxxxxxxx, Xxxxxx XX0X 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Xxxx Xxxxxxx
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SIGNED for and on behalf of CALYON NEW YORK BRANCH
By: /s/ XXXXXXXXX XXXXX /s/ XXXXXXX XXXXXX
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
XX 00000
XXX
Fax: x0 000 000 0000
Tel: x0 000 000 0000 / 7227
Attention: Xxxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxx
SIGNED for and on behalf of ABN AMRO BANK N.V.
By: /s/ XXX XXXXXX /s/ XXXXXX XXXXXX
Address: 000 Xxxxxxxxxxx, Xxxxxx, XX0x 0XX
Fax: x00 000 000 0000
Tel: x00 000 000 0000
Attention: Xxxxxx Xxxxx
SIGNED for and on behalf of THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH
By: /s/ CHIMIE T. PEMBA
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Fax: x0 000 000 0000
Tel: x0 000 000 0000
Attention: Chimie T. Pemba
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SIGNED for and on behalf of COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
By: /s/ XXXXX X. XXXXX /s/ XXXXXXX X. XXXXXXXX
Address: 0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: x0 000 000 0000
Tel: x0 000 000 0000
Attention: Xx X. Xxxxx
SIGNED for and on behalf of NATIONAL AUSTRALIA BANK LIMITED
A.B.N. 12 004 044 937
By: /s/ XXX XXXX
Address: 00 Xxxx Xxxxxx
Xxxxxx XX0X 0XX
Fax: x00 00 0000 0000
Tel: x00 00 0000 0000
Attention: Lending Admin NHH
