[CLIFFFORD CHANCE LOGO]
EXHIBIT 10.33
EXECUTION COPY
31 DECEMBER 2003
ALLIED WORLD ASSURANCE COMPANY, LTD.
AS BORROWER
BARCLAYS BANK PLC
AS ISSUER
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$125,000,000
CREDIT AGREEMENT
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CONTENTS
CLAUSE PAGE
1. Definitions.................................................................................... 1
2. The Letter Of Credit Facility.................................................................. 10
3. Change In Circumstances........................................................................ 14
4. Conditions Precedent........................................................................... 17
5. Representations And Warranties................................................................. 19
6. Covenants...................................................................................... 23
7. Defaults....................................................................................... 28
8. Acceleration, Waivers, Amendments And Remedies................................................. 30
9. General Provisions............................................................................. 31
10. Set-Off........................................................................................ 35
11. Benefit Of Agreement........................................................................... 35
12. Notices........................................................................................ 35
SCHEDULE 1 Authorized Officers.................................................................... 37
EXHIBIT A FORM OF LETTER OF CREDIT................................................................ 38
EXHIBIT B FORM OF LC APPLICATION.................................................................. 40
EXHIBIT C FORM OF COMPLIANCE CERTIFICATE.......................................................... 42
THIS CREDIT AGREEMENT dated as of 31 December 2003
BETWEEN:
(1) ALLIED WORLD ASSURANCE COMPANY, LTD., a corporation organized under the
laws of Bermuda, as Borrower; and
(2) BARCLAYS BANK PLC, as Issuer.
RECITALS:
(A) The Borrower has requested the Issuer to make available to the Borrower a
standby letter of credit issuance facility in the aggregate principal
amount of up to $125,000,000 to support the reinsurance of business of the
Borrower in the United States.
(B) The Issuer is willing to extend such standby letter of credit issuance
facility on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Issuer hereby
agree as follows:
1. DEFINITIONS
As used in this Agreement:
"ACCOUNT CONTROL AGREEMENT" means the Account Control Agreement dated on
or about the date hereof among the Borrower, the Issuer and the Custodian,
or any other account control agreement among the Borrower, the Issuer and
the Custodian approved by the Issuer, as it may be amended, modified or
restated and in effect from time to time.
"ADJUSTED COLLATERAL VALUE" means the amount calculated as follows:
(i) US Government Securities and OECD Government Bonds: 95% of market
value;
(ii) Corporate Bonds: 90% of market value; and
(iii) Cash: 100%
Notwithstanding the above, no more than 50% of the Adjusted Collateral
Value may be comprised of Corporate Bonds and no more than 10% of Adjusted
Collateral Value may be from any one corporate issuer or any Affiliate of
such corporate issuer.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person.
"AGGREGATE FACILITY LC COMMITMENT" means the commitment of the Issuer to
issue Facility LCs from time to time issued or outstanding under Clause 2
(The Letter of Credit Facility), in an aggregate amount not to exceed
$125,000,000 at any time outstanding, as such amount may be decreased from
time to time pursuant to the terms hereof.
"AGREEMENT" means this credit agreement, as it may be amended, modified or
restated and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means the U.S. generally accepted
accounting principles as in effect from time to time, applied in a manner
consistent with those used in preparing the financial statements referred
to in Clause 5.5 (Financial Statements).
"AUTHORIZED OFFICER" means, with respect to the Borrower, any two of the
individuals, acting jointly, listed on Schedule 1 (Authorized Officers) as
such Schedule may be supplemented or modified from time to time by the
Borrower with the approval of the Issuer.
"BORROWER" means Allied World Assurance Company, Ltd., a corporation
organized under the laws of Bermuda, and its successors and assigns.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are open in London for the conduct of substantially all of their
commercial lending activities, interbank wire transfers can be made on the
Fedwire system and dealings in Dollars are carried on in the London
interbank market.
"CASH" means immediately available funds denominated in Dollars and
credited to an account in the name of the Borrower at the New York branch
of the Issuer and to which the Borrower is alone beneficially entitled and
for so long as the Issuer has a perfected security interest thereon under
security documents satisfactory to the Issuer.
"CEDING COMPANY" means an insurance or reinsurance company (including,
without limitation, any reinsurance or insurance company that is a
Wholly-Owned Subsidiary of the Borrower) that has, pursuant to an
Insurance Contract or a Reinsurance Contract with the Borrower, agreed
with the Borrower that the Borrower, as reinsurer, shall assume certain
liabilities of such insurance or reinsurance company under an Insurance
Contract.
"CHANGE" is defined in Clause 3.2 (Changes in Capital Adequacy
Regulations).
"CHANGE IN CONTROL" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 30% or more of the outstanding shares of voting
stock of the Borrower.
"CHANGE IN LAW" is defined in Clause 3.1 (Yield Protection).
"CLAUSE" means a numbered Clause of this Agreement, unless another
document is specifically referenced.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means at any time Cash, OECD Government Bonds, US Government
Bonds and Corporate Bonds.
"COLLATERAL DOCUMENTS" means all agreements, instruments and other
documents now or hereafter executed and delivered by the Borrower pursuant
to which liens and security interests in collateral are granted to secure
the Obligations, including, without limitation, the Security Agreement,
the Account Control Agreement, the Custody Agreement, UCC-1 Financing
Statements, security documents securing a pledge over Cash in favor of the
Issuer and any documentation delivered pursuant to Clause 2.9 (Facility LC
Collateral Account) with respect to the Facility LC Collateral Account.
"COLLATERAL SHORTFALL AMOUNT" is defined in Clause 8.1 (Acceleration;
Facility LC Collateral Account).
"COMMITMENT" means the Facility LC Commitment.
"CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or
otherwise assures any creditor of any other Person against loss,
including, without limitation, any comfort letter, operating agreement,
take or pay contract or application for a Facility LC or other Letter of
Credit, but excluding the Reimbursement Obligations, obligations in
respect of the endorsement of instruments for deposit or collection in the
ordinary course of business, obligations in respect of Insurance Contracts
and Reinsurance Contracts issued in the ordinary course of business and
obligations in respect of the extension of guaranties in the ordinary
course of business to insureds of the obligations of insurers under
Insurance Contracts and Reinsurance Contracts.
"CONTROLLED GROUP" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or
any of its Subsidiaries, are treated as a single employer under Section
414 of the Code.
"CORPORATE BONDS" means debt securities issued by any corporate and which
are rated at least AAA by S&P and which have a remaining modified duration
of less than eight years.
"CREDIT DOCUMENTS" means this Agreement, the Facility LC Applications, the
Facility LCs, the Collateral Documents and the other documents and
agreements contemplated
hereby and executed by the Borrower pursuant hereto in favor of the
Issuer, as amended, modified or supplemented from time to time.
"CUSTODIAL ACCOUNT" means the investment securities account of the
Borrower maintained with the Custodian pursuant to the Custody Agreement
into which the Collateral (other than Cash) shall be deposited from time
to time and over which the Issuer has a perfected security interest
(except for any failure of the Issuer to cause the filing of any relevant
financing statement to perfect the security interest) under the Account
Control Agreement.
"CUSTODIAN" shall mean, initially, Mellon Bank N.A. and any successor
thereto approved by the Issuer.
"CUSTODY AGREEMENT" means the Custody Agreement dated as of November 19,
2001 between the Borrower and Mellon Bank N.A. or any other custody
agreement between the Borrower and a Custodian approved by the Issuer, as
it may be amended, modified or restated and in effect from time to time.
"DEFAULT" means an event described in Clause 7 (Defaults).
"DOLLARS," "DOLLARS" and "$" each mean lawful money of the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"EUROCURRENCY BASE RATE" means, with respect to any unpaid Reimbursement
Obligation for the relevant Interest Period, the rate per annum determined
by the Issuer by reference to the applicable British Bankers' Association
LIBOR rate for deposits in the applicable agreed currency (as reported by
Reuters, or if Reuters quotations are not available, as reported by
Bloomberg L.P., or if neither is available, as reported by another
generally recognized financial information service selected by the
Facility Agent in its reasonable discretion) as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period,
and having a maturity equal to such Interest Period; PROVIDED THAT, if no
such British Bankers' Association LIBOR rate is available to the Issuer,
the applicable Eurocurrency Base Rate for the relevant Interest Period
shall instead be the arithmetic mean (rounded in accordance with normal
market practice) of the rates as the rate at which the Issuer offers to
place deposits in Dollars with first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period, in the approximate amount of the
Issuer's unpaid Reimbursement Obligations and having a maturity equal to
such Interest Period.
"EXCLUDED TAXES" means in the case of the Issuer, taxes imposed on its
overall net income, and franchise taxes imposed on it, in each case by:
(a) England and Wales;
(b) the jurisdiction in which the Issuer's principal executive office is
located; or
(c) any jurisdiction in which the Issuer is otherwise doing business.
"FACILITY LC" is defined in sub-clause 2.1.1 of Clause 2.1 (Issuance of
Facility LCs).
"FACILITY LC APPLICATION" is defined in Clause 2.2 (Notice).
"FACILITY LC COLLATERAL ACCOUNT" is defined in Clause 2.9 (Facility LC
Collateral Account).
"FACILITY LC COMMITMENT" means for the Issuer, the obligation to issue
Facility LCs in accordance with the terms hereof.
"FACILITY LC OBLIGATIONS" means, at any time, the sum, without
duplication, of:
(a) the aggregate undrawn stated amount under all Facility LCs
outstanding at such time; plus
(b) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
"FINANCIAL STATEMENTS" is defined in Clause 5.5 (Financial Statements).
"GOVERNMENTAL AUTHORITY" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including without limitation
any board of insurance, insurance department, insurance commission, taxing
authority or political subdivision) or any instrumentality or officer
thereof (including without limitation any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government and any corporation, partnership or other
entity directly or indirectly owned or controlled by or subject to the
control of any of the foregoing.
"INSURANCE CONTRACT" means an insurance contract or Reinsurance Contract
entered into by a Ceding Company.
"INTEREST PERIOD" means a period of one month, or such other period as the
Issuer may agree, commencing on a Business Day on which a Reimbursement
Obligation commenced but was not immediately paid. Such Interest Period
shall end on the day which corresponds numerically to such date one month
or such other applicable period, thereafter; PROVIDED, HOWEVER, THAT if
there is no such numerically corresponding day in such next succeeding
month, or such other applicable period, such Interest Period shall end on
the last Business Day of such next succeeding month, or such other
applicable period. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day; PROVIDED, HOWEVER, THAT if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end
on the immediately preceding Business Day.
"ISSUANCE DATE" means a date on which a Facility LC is issued, renewed or
amended hereunder.
"ISSUANCE REQUEST" is defined in Clause 2.2 (Notice).
"ISSUER" means Barclays Bank PLC.
"LC FACILITY TERMINATION DATE" means the date falling 364 days after the
date of issuance of a Facility LC (as such date may be extended by
amendment hereto) or any earlier date on which the Aggregate Facility LC
Commitment is reduced to zero or otherwise terminated and/or the Facility
LC Obligations shall become due and payable in accordance with the
provisions of this Agreement.
"LC PAYMENT DATE" is defined in Clause 2.5 (Reimbursement by Borrower).
"LETTER OF CREDIT" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon
which such Person is an account party or for which such Person is in any
way liable.
"LICENSE" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental
Authority in connection with the operation, ownership or transaction of
insurance or reinsurance business.
"LIEN" means any lien (statutory or other) mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever having a similar effect (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
capitalized lease or other title retention agreement).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on:
(a) the business, Property, condition (financial or otherwise),
prospects or results of operations of the Borrower and its
Subsidiaries taken as a whole,
(b) the ability of the Borrower to perform its obligations under the
Credit Documents, or
(c) the validity or enforceability of any of the Credit Documents or the
rights or remedies of the Issuer thereunder.
"MATERIAL INDEBTEDNESS" means indebtedness in an outstanding principal
amount of $25,000,000 or more in the aggregate (or the equivalent thereof
in any currency other than Dollars).
"MATERIAL INDEBTEDNESS AGREEMENT" means any agreement or instrument under
which any Material Indebtedness was created, is evidenced or is governed.
"MODIFY" and "MODIFICATION" are defined in sub-clause 2.1.1 of Clause 2.1
(Issuance of Facility LCs).
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined in Section
(3)(37) of ERISA) contributed to for any employees of the Borrower or any
Affiliate of the Borrower.
"OBLIGATIONS" means all unpaid principal and accrued and unpaid interest
on the Facility LC Obligations and all other liabilities, if any, whether
actual or contingent, of the Borrower with respect to Facility LCs, all
accrued and unpaid fees and all expenses, reimbursements, indemnities and
other obligations of the Borrower to the Issuer or any indemnified party
hereunder, in each case arising under any of the Credit Documents.
"OECD COUNTRY" means a country that (a) either (i) is a full member of the
Organization for Economic Cooperation and Development or (ii) has
concluded special lending arrangements with the International Monetary
Fund's General Arrangements to Borrow, and (b) has not rescheduled its
external sovereign debt within the previous five (5) years.
"OECD GOVERNMENT BONDS" means bonds issued by any OECD Country and which
are rated at least AAA by S&P and which have a remaining modified duration
of less than eight years.
"OTHER TAXES" is defined in sub-clause 3.3.2 of Clause 3.3 (Taxes).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PAYMENT DATE" means the last Business Day of each March, June, September
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERSON" means any natural person, corporation, limited liability company,
firm, joint venture, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which any Credit Party or any member of the Controlled
Group may have any liability.
"PROPERTY" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"REGULATION U" means Regulation U of the Board of Governors of the U.S.
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to member banks of the
Federal Reserve System.
"REIMBURSEMENT OBLIGATIONS" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Clause 2 (The Letter of
Credit Facility) to
reimburse the Issuer for amounts paid by the Issuer in respect of any one
or more drawings under Facility LCs.
"REINSURANCE CONTRACT" means a reinsurance contract between the Borrower
(or one of its Wholly-Owned Subsidiaries), as reinsurer, and a Ceding
Company pursuant to which the Borrower (or one of its Wholly-Owned
Subsidiaries), as reinsurer, assumes certain liabilities of the Ceding
Company with respect to one or more Insurance Contracts.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such Section, with respect to a
Single Employer Plan, excluding, however, such events as to which the PBGC
has by regulation waived the requirement of Section 4043(a) of ERISA that
it be notified within thirty (30) days of the occurrence of such event;
PROVIDED, HOWEVER, THAT a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable
Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"RISK-BASED CAPITAL GUIDELINES" is defined in Clause 3.2 (Changes in
Capital Adequacy Regulations).
"S & P" means Standard & Poor's Rating Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies or any successor rating agency thereto acceptable to
the Issuer.
"SCHEDULE" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.
"SECURITY AGREEMENT" means the Security Agreement dated as of 31 December
2003 between the Borrower and the Issuer, as it may be amended, modified
or restated and in effect from time to time.
"SENIOR FINANCIAL OFFICER" means any of the following officers of the
Borrower: Chief Accounting Officer, Treasurer and Group Comptroller.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group.
"SUBSIDIARY" of a Person means:
(a) any corporation more than 50% of the outstanding securities having
ordinary voting power of which shall at the time be owned or
controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its
Subsidiaries; or
(b) any partnership, association, joint venture, limited liability
company or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall at
the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"TAXES" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities
with respect to the foregoing, but excluding Excluded Taxes and Other
Taxes.
"TRANSFEREE" is defined in Clause 11.2 (Dissemination of Information).
"UNFUNDED LIABILITIES" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single
Employer Plans exceeds the fair market value of all such Plan assets
allocable to such benefits, all determined as of the then most recent
valuation date for such Plans using PBGC actuarial assumptions for single
employer plan terminations.
"UNFUNDED LIABILITIES" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single
Employer Plans exceeds the fair market value of all such Single Employer
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Single Employer Plans using PBGC actuarial
assumptions for single employer plan terminations.
"UNMATURED DEFAULT" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"US GOVERNMENT SECURITIES" means bonds issued by any agency of the US
Government and which are rated at least AAA by S&P and which have a
remaining modified duration of less than eight years.
"WHOLLY OWNED SUBSIDIARY" of a Person means:
(a) any Subsidiary, all of the outstanding voting securities (other than
directors' qualifying shares) of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more
Wholly Owned Subsidiaries of such Person, or by such Person and one
or more Wholly Owned Subsidiaries of such Person, or
(b) any partnership, association, joint venture, limited liability
company or similar business organization, 100% of the ownership
interests having ordinary voting power of which shall at the time be
so owned or controlled by such Person. Unless otherwise expressly
provided, all references herein to a "Wholly Owned Subsidiary" shall
mean a Wholly Owned Subsidiary of the Borrower.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
2. THE LETTER OF CREDIT FACILITY
2.1 ISSUANCE OF FACILITY LCS
2.1.1 The Issuer hereby agrees, on the terms and conditions set forth in
this Agreement, at any time subsequent to 31 December 2003 to issue
standby letters of credit denominated in Dollars and substantially
in the form of Exhibit A (or in such other form as may be acceptable
to the Issuer and the Borrower) (each, a "FACILITY LC") and to
renew, extend, increase, decrease or otherwise modify each Facility
LC ("MODIFY," and each such action a "MODIFICATION"), from time to
time from and including the date of this Agreement and prior to the
LC Facility Termination Date upon the request of and for the account
of the Borrower; PROVIDED THAT:
(a) immediately after each such Facility LC is issued or Modified,
the aggregate amount of the outstanding Facility LC
Obligations shall not exceed the Aggregate Facility LC
Commitment; and
(b) the initial face amount of any Facility LC shall not be less
than $250,000. No Facility LC shall have an expiry date later
than the earlier of:
(i) the one (1) year anniversary of the date of the Facility
LC or, as applicable, a Modification; and
(ii) the LC Facility Termination Date.
(c) The Issuer acknowledges that, subject to the terms of this
Agreement, each issued Facility LC shall continue in force
unless the Issuer receives a notice from the Borrower no more
than ninety (90) days and at least seventy (70) days (or such
shorter time as the Issuer may agree in a particular instance)
prior to the anniversary of the issuance of such Facility LC
or Modification, as the case may be, that such Facility LC is
to be cancelled, effective upon the ensuing anniversary of the
issuance of such Facility LC or Modification. Notwithstanding
the foregoing, all outstanding Facility LCs shall
automatically expire on the LC Facility Termination Date.
2.1.2 The Issuer shall not be under any obligation to issue or extend any
Facility LC if any order, judgment or decree of any Governmental
Authority or other regulatory body with jurisdiction over the Issuer
shall purport by its terms to enjoin or restrain the Issuer from
issuing or extending such Facility LC, or any law or governmental
rule, regulation, policy, guideline or directive (whether or not
having the force of law) from any Governmental Authority or other
regulatory body with jurisdiction over the Issuer shall prohibit, or
request that the Issuer refrain from, the issuance or extension of
Facility LCs in particular or shall impose upon the Issuer with
respect to any Facility LC any restriction or reserve or capital
requirement (for which the Issuer is not otherwise compensated) or
any unreimbursed loss, cost or expense which was
not applicable and in effect with respect to the Issuer as of the
date of this Agreement and which the Issuer in good ▇▇▇▇▇ ▇▇▇▇▇
material to it.
2.1.3 Notwithstanding anything herein, the Borrower and the Issuer may
agree between themselves as to administrative procedures for the
issuance of Facility LCs by the Issuer which are different than
those set forth herein, and such procedures shall govern as between
the Issuer and the Borrowers.
2.2 NOTICE
Subject to Clause 2.1 (Issuance of Facility LCs), the Borrower shall,
through an Authorized Officer or authorized attorney in fact, give the
Issuer notice (an "ISSUANCE REQUEST") prior to 11:00 a.m. (the Issuer
time) at least two (2) Business Days prior to the proposed date of
issuance or Modification of each Facility LC, specifying the account
party, the beneficiary, the proposed date of issuance (or Modification)
and the expiry date of such Facility LC. If the Issuance Request requests
the issuance of a Facility LC, it shall be accompanied by a completed
standby letter of credit application substantially in the form of Exhibit
B (or such other form as from time to time is customarily utilized by the
Issuer) executed by the Borrower and related documentation reasonably
required by the Issuer (collectively, a "FACILITY LC APPLICATION"). The
issuance or Modification by the Issuer of any Facility LC shall be subject
to the conditions precedent set forth in Clause 4.2 (Continuation
Conditions Precedent). In the event of any conflict between the terms of
this Agreement and the terms of any Facility LC Application, the terms of
this Agreement shall control.
2.3 FACILITY LC FEES
The Borrower shall pay to the Issuer a letter of credit fee with respect
to each Facility LC for each day from and including the date of issuance
thereof until the date such Facility LC is fully drawn, cancelled or
expired (the "EXPIRY DATE") equal to 0.24% per annum multiplied by the
aggregate outstanding face amount thereof at the close of business on such
day, payable (in arrears) until the applicable Expiry Date of such
Facility LC on each Payment Date and, if any such fees are accrued and
unpaid on the LC Facility Termination Date, on such date. Notwithstanding
anything contained in this Clause 2.3 to the contrary, during the
continuance of a Default, the letter of credit fee rate shall be increased
to 2.00% per annum. The Borrower shall also pay to the Issuer (i) a
facility fee on the average daily amount equal to the difference between
the Aggregate Facility LC Commitment and the aggregate undrawn stated
amount under all Facility LCs outstanding from time to time, in an amount
equal to 0.09% per annum, such fee to be payable (in arrears) on each
Payment Date and, if any such fees are accrued and unpaid on the LC
Facility Termination Date, on such date; (ii) an upfront fee equal to
0.03% per annum of the Aggregate Facility LC Commitment, such fee to be
payable (in advance) on or before the date of execution of this Agreement;
and (iii) documentary and processing charges in connection with the
issuance or Modification of and draws under Facility LCs, in an amount
separately agreed upon between the Issuer and the Borrower, payable at the
time of issuance of each Facility LC. Interest and fees under this
Agreement shall be calculated for actual days elapsed on the basis of a
360-day year. If any payment shall become due on a day which is not a
Business Day,
such payment shall be made on the next succeeding Business Day and, in the
case of a payment of a Reimbursement Obligation, such extension of time
shall be included in computing interest in connection with such payment.
2.4 ADMINISTRATION; REIMBURSEMENT BY LC PARTICIPANTS.
Upon receipt from the beneficiary of any Facility LC of any demand for
payment under such Facility LC, the Issuer shall promptly notify the
Borrower as to the amount to be paid by the Issuer as a result of such
demand and the proposed payment date thereof. The responsibility of the
Issuer to the Borrower shall be only to determine that the documents
(including each demand for payment) delivered under each Facility LC in
connection with such presentment shall be in conformity in all material
respects with such Facility LC.
2.5 REIMBURSEMENT BY BORROWER
(a) The Borrower shall be irrevocably and unconditionally obligated to
reimburse the Issuer for any amounts paid by the Issuer upon any
drawing under any Facility LC, without presentment, demand, protest
or other formalities of any kind, not later than 3:00 p.m. (London
time) on the second Business Day after the date notice of such
payment is transmitted to the Borrower in accordance with Clause
12.1 (Giving Notice) and confirmation of receipt is received or such
notice is otherwise received by the Borrower (such second Business
Day being the "LC PAYMENT DATE"); PROVIDED THAT any such notice that
is transmitted to the Borrower after 12:00 noon (London time) on any
Business Day shall be deemed to have been transmitted on the
immediately following Business Day.
(b) All such amounts paid by the Issuer and remaining unpaid by the
Borrower shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of the Eurocurrency Base
Rate for such day plus 2.00% per annum.
Such interest shall accrue from and including the date of the applicable
drawing (unless the drawing is reimbursed in full prior to 3:00 p.m.
(London time) on such date) to and including the date of payment (unless
such payment in full is made prior to 3:00 p.m. (London time) on such
payment date).
2.6 OBLIGATIONS ABSOLUTE
The Borrower's obligations under this Clause 2 shall be absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defence to payment which the Borrower may have or
have had against the Issuer or any beneficiary of a Facility LC. The
Borrower further agrees with the Issuer that the Borrower shall not be
responsible for, and the Borrower's Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of any Facility LC or any financing institution or other party
to whom any Facility LC may be transferred or any
claims or defences whatsoever of the Borrower against the beneficiary of
any Facility LC or any such transferee. The Issuer shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted (except for the
Issuer's bad faith, gross negligence or wilful misconduct) in connection
with any Facility LC; PROVIDED FURTHER, that the Borrower agrees that any
action taken or omitted by the Issuer under or in connection with each
Facility LC and the related drafts and documents, if done without bad
faith, gross negligence or wilful misconduct, shall be binding upon the
Borrower and shall not put the Issuer under any liability to the Borrower.
2.7 ACTIONS OF ISSUER
The Issuer shall be entitled to rely, and shall be fully protected in
relying, upon any Facility LC, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document believed by
the Issuer in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons set forth on Schedule
1 (Authorized Officers) attached hereto, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Issuer.
2.8 INDEMNIFICATION
The Borrower hereby agrees to indemnify and hold harmless the Issuer and
its directors, officers, agents and employees from and against any and all
claims and damages, losses, liabilities, costs or expenses which the
Issuer may incur (or which may be claimed against the Issuer by any Person
whatsoever) by reason of or in connection with the issuance, execution and
delivery or transfer of or payment or failure to pay under any Facility LC
or any actual or proposed use of any Facility LC, including, without
limitation, any claims, damages, losses, liabilities, costs or expenses
which the Issuer may incur by reason of or on account of the Issuer
issuing any Facility LC which specifies that the term "BENEFICIARY"
included therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by
any such successor Beneficiary be accompanied by a copy of a legal
document, satisfactory to the Issuer, evidencing the appointment of such
successor Beneficiary; PROVIDED THAT the Borrower shall not be required to
indemnify any such indemnitee for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent,
caused by (a) the bad faith, wilful misconduct or gross negligence of such
indemnitee or (b) the Issuer's failure to pay under any Facility LC after
the presentation to it of a request strictly complying with the terms and
conditions of such Facility LC.
2.9 FACILITY LC COLLATERAL ACCOUNT
The Borrower agrees that it will (to the extent required by Clause 8.1
(Acceleration; Facility LC Collateral Account), upon the request of the
Issuer and until the final expiration date of any Facility LC and
thereafter as long as any amount is payable to the Issuer in respect of
any Facility LC, maintain a special collateral account pursuant to
documentation (including, without limitation, legal opinions) reasonably
satisfactory to the Issuer (the "FACILITY LC COLLATERAL ACCOUNT") at the
Issuer's office at the
address specified pursuant to Clause 12, in the name of the Borrower but
under the sole dominion and control of the Issuer and in which the
Borrower shall have no interest other than as set forth in Clause 8.1
(Acceleration; Facility LC Collateral Account). The Borrower hereby
pledges, assigns and grants to the Issuer a security interest in all of
the Borrower's right, title and interest in and to all funds which may
from time to time be on deposit in the Facility LC Collateral Account to
secure the prompt and complete payment and performance of the Obligations.
2.10 REDUCTIONS IN AGGREGATE FACILITY LC COMMITMENT
2.10.1 The Borrower may permanently reduce the Aggregate Facility LC
Commitment in whole or in part in a minimum aggregate amount of
the lesser of (i) $25,000,000 (or any integral multiple of
$5,000,000 in excess thereof) and (ii) the total amount of the
unused Aggregate Facility LC Commitment, upon at least three (3)
Business Days' written notice to the Issuer, which notice shall
specify the amount of any such reduction; PROVIDED, HOWEVER, THAT
the amount of the Aggregate Facility LC Commitment may not be
reduced below the aggregate amount of the outstanding Facility LC
Obligations (and if, at any time, the aggregate outstanding amount
of the Facility LC Obligations exceeds the Aggregate Facility LC
Commitment, then the Issuer shall immediately deposit an amount
equal to such excess in the Facility LC Collateral Account in
accordance with Clause 8.1 (Acceleration; Facility LC Collateral
Account)).
3. CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION
If, on or after the date of this Agreement, the adoption of or any change
in any law or any governmental or quasi governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law),
or any change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the Issuer with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency (each of the foregoing being a "CHANGE IN LAW"):
3.1.1 subjects the Issuer to any Taxes, or changes the basis of taxation
of payments (except for Taxes covered by Clause 3.3 (Taxes) and
changes in the rate of tax on the overall net income of the Issuer)
to the Issuer in respect of its interest in the Facility LCs or
other amounts due it hereunder; or
3.1.2 imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended
by the Issuer; or
3.1.3 imposes any other condition the result of which is to increase the
cost to the Issuer of issuing in Facility LCs or reduces any amount
receivable by the Issuer in connection with any Facility LC, or
requires the Issuer to make any
payment calculated by reference to the amount of the Issuer Facility
LCs issued or interest received by it, in each case, by an amount
reasonably deemed material by the Issuer,
and the result of any of the foregoing is to increase the cost to the
Issuer of funding or maintaining its interest in the Facility LCs and its
Commitment or to reduce the return received by it in connection with its
interest in the Facility LCs and its Commitment, then, within fifteen (15)
days of demand by the Issuer, the Borrower shall pay the Issuer such
additional amount or amounts as will compensate the Issuer for such
increased cost or reduction in amount received.
3.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS
If the Issuer reasonably determines the amount of capital required or
expected to be maintained by the Issuer or any corporation controlling the
Issuer is increased as a result of a Change, then, within fifteen (15)
Business Days of demand by the Issuer, the Borrower shall pay the Issuer
the amount necessary to compensate for any shortfall in the rate of return
on the portion of such increased capital which the Issuer reasonably
determines is attributable to this Agreement, its interest in the Facility
LCs or its obligation to issue Facility LCs hereunder (after taking into
account the Issuer's policies as to capital adequacy). "CHANGE" means (a)
any change after the date of this Agreement in the Risk Based Capital
Guidelines, or (b) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law)
after the date of this Agreement which affects the amount of capital
required or expected to be maintained by the Issuer or corporation
controlling the Issuer. "RISK BASED CAPITAL GUIDELINES" means (a) the risk
based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (b) the corresponding
capital regulations promulgated by regulatory authorities outside the
United States implementing the July 1988 report of the Basel Committee on
Banking Regulation and Supervisory Practices entitled "International
Convergence of Capital Measurements and Capital Standards", including
transition rules, and any amendments to such regulations adopted prior to
the date of this Agreement.
3.3 TAXES
3.3.1 All payments by or on behalf of the Borrower to or for the account
of the Issuer hereunder shall be made free and clear of and without
deduction for any and all Taxes. If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Issuer, (a) the sum payable by the Issuer shall be
increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this Clause 3.3) the Issuer receives an amount equal to the sum it
would have received had no such deductions been made, (b) the
Borrower shall make such deductions, (c) the Borrower shall pay the
full amount deducted to the relevant authority in accordance with
applicable law and (d) the Borrower shall furnish to the Issuer the
original copy of a receipt evidencing payment thereof or other
evidence of such payment reasonably
satisfactory to the Issuer within thirty (30) days after such
payment is made. The Borrower shall not be required to increase any
amounts payable to the Issuer's hereunder with respect to any United
States withholding Taxes to the extent that such Taxes are imposed
on the Issuer on the date of this Agreement.
3.3.2 In addition, the Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made
hereunder or from the execution or delivery of, or otherwise with
respect to, any Credit Document ("OTHER TAXES").
3.3.3 The Borrower hereby agrees to indemnify the Issuer for the full
amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed on amounts payable under this Clause
3.3) paid by the Issuer as a result of its Commitment, its interest
in Facility LCs, or otherwise in connection with its participation
in this Agreement and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. Payments
due under this indemnification shall be made within thirty (30) days
of the date the Issuer makes demand therefor pursuant to Clause 3.4
(Issuer Statements); PROVIDED THAT the Issuer shall contest such
Taxes or Other Taxes and liabilities, at the Borrower's expense, if
(a) the Borrower furnishes to it an opinion of reputable tax counsel
acceptable to the Issuer to the effect that such Taxes or Other
Taxes and liabilities were wrongfully or illegally imposed and (b)
the Issuer determines in its sole good faith discretion that it
would not be disadvantaged or prejudiced in any manner as a result
of such contest.
3.3.4 If the Issuer receives a refund in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant
to sub-clause 3.3.1, it shall, within thirty (30) days from the date
of such receipt, pay over the amount of such refund to the Borrower,
net of all reasonable out-of-pocket expenses of the Issuer and
without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); PROVIDED THAT
the Borrower, upon the request of the Issuer, agrees to repay the
amount paid over to the Borrower (plus penalties, interest or other
reasonable charges) to the Issuer in the event the Issuer is
required to repay such refund to such Governmental Authority.
3.4 ISSUER STATEMENTS
To the extent reasonably possible, the Issuer shall designate an alternate
issuing office to reduce any liability of the Borrower to the Issuer under
Clause 3.1 (Yield Protection), Clause 3.2 (Changes in Capital Adequacy
Regulations) and Clause 3.3 (Taxes) so long as such designation is not, in
the reasonable judgment of the Issuer, disadvantageous to the Issuer. The
Issuer shall deliver a written statement to the Borrower as to the amount
due, if any, under Clause 3.1 (Yield Protection), Clause 3.2
(Changes in Capital Adequacy Regulations) and Clause 3.3 (Taxes). Such
written statement shall set forth in reasonable detail the calculations
upon which the Issuer determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Unless otherwise provided herein, the amount specified in the written
statement of the Issuer shall be payable within 30 days after receipt by
the Borrower of such written statement. The obligations of the Issuer
under Clause 3.1 (Yield Protection), Clause 3.2 (Changes in Capital
Adequacy Regulations) and Clause 3.3 (Taxes) shall survive payment of the
Obligations and termination of this Agreement.
3.5 FUNDING INDEMNIFICATION
If any payment of any default interest occurs on a date which is not the
last day of the applicable Interest Period the Borrower will indemnify the
Issuer for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired.
3.6 SURVIVAL
The agreements and obligations of the Issuer in this Clause 3 shall
survive the payment of the Obligations and termination of this Agreement.
4. CONDITIONS PRECEDENT
4.1 INITIAL EXTENSION OF CREDIT
The Issuer shall not be required to issue any Facility LC hereunder unless
the Borrower has furnished the following to the Issuer and the other
conditions set forth below have been satisfied:
4.1.1 Charter Documents; Good Standing Certificates. Copies of the Clauses
or certificate of incorporation or other similar organizational
document of the Borrower, together with all amendments thereto, and
a good standing certificate (to the extent issued in the ordinary
course in the applicable jurisdiction) as of a recent date, each
certified by the appropriate governmental officer in its
jurisdiction of organization.
4.1.2 By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant Secretary of the Borrower, of its by laws or other similar
document and of resolutions of its Board of Directors or other
similar governing body (and resolutions of other bodies, if any are
deemed necessary by counsel for the Issuer) authorizing the
execution, delivery and performance of the Credit Documents to which
the Borrower is a party.
4.1.3 Incumbency Certificate. An incumbency certificate, executed by the
Secretary or Assistant Secretary of the Borrower, which shall
identify by name and title and bear the signature of the officers or
attorneys in fact of the Borrower authorized to sign the Credit
Documents to which it is a party and to request the issuance of
Facility LCs hereunder, upon which certificate the Issuer shall be
entitled to rely until informed of any change in writing by the
Borrower.
4.1.4 Officer's Certificate. A certificate, dated the date of this
Agreement, signed by an Authorized Officer of the Borrower, in form
and substance satisfactory to the Issuer, to the effect that: (a) on
the date of this Agreement (after giving effect to the issuance of
any Facility LCs hereunder) no Default or Unmatured Default has
occurred and is continuing; (b) each of the representations and
warranties set forth in Clause 5 (Representations and Warranties) of
this Agreement is true and correct in all material respects on and
as of the date of the Agreement; (c) on the date of this Agreement
(both before and after giving effect to this Agreement and the
issuance of any Facility LCs hereunder) the Borrower is not in
breach of any borrowing limit applicable to the Borrower; and (d)
since December 31, 2002, no event or change has occurred that has
caused or evidences a Material Adverse Effect with regard to the
Borrower or its parent.
4.1.5 Legal Opinions. Written opinions of (a) inside counsel to the
Borrower, (b) ▇▇▇▇▇▇▇▇ Chance LLP, special New York counsel to the
Issuer and, (c) external Bermuda counsel to the Borrower, both
addressed to the Issuer in form and substance acceptable to the
Issuer and its counsel.
4.1.6 Credit Documents. Executed originals of this Agreement and each of
the other Credit Documents, which shall be in full force and effect,
together with all schedules, exhibits, certificates, instruments,
documents and financial statements required to be delivered pursuant
hereto and thereto.
4.1.7 Regulatory Matters. Receipt of any required regulatory approvals
from any Governmental Authority with respect to the transactions
contemplated by the Credit Documents, including all hearing orders,
if any, issued by insurance regulatory authorities.
4.1.8 Other. Such other documents as the Issuer or its counsel may have
reasonably requested.
4.2 CONTINUATION CONDITIONS PRECEDENT
The following conditions will be deemed to have been confirmed by the
Borrower on 31 December of each year and on each date of issuance of a
Facility LC (each such date, a "REPETITION DATE"):
4.2.1 there exists no Default or Unmatured Default and none would result
from such issuance of such Facility LC; and
4.2.2 the representations and warranties (deemed to be made by reference
to the facts and circumstances existing on each Repetition Date)
contained in Clause 5 (Representations and Warranties) (other than
Clause 5.6 (Material Adverse Change), paragraph (a) of Clause 5.8
(Litigation and Contingent Obligations) and sub-clause 5.14.1 of
Clause 5.14 (Material Agreements)) are true and correct in all
material respects as of such Issuance Date except to the extent any
such representation or warranty is stated to relate solely to an
earlier date,
in which case such representation or warranty shall be true and
correct on and as of such earlier date.
4.3 ISSUANCE REQUEST
Each properly submitted Issuance Request (with respect to each such
Facility LC) shall constitute a representation and warranty by the
Borrower that the conditions contained in Clause 4.2 (Continuation
Conditions Precedent) have been satisfied.
5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Issuer that on the date
hereof:
5.1 CORPORATE EXISTENCE AND STANDING
The Borrower is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
5.2 AUTHORIZATION AND VALIDITY
The Borrower has all requisite power and authority and legal right to
execute and deliver each of the Credit Documents to which it is a party
and to perform its obligations thereunder. The execution and delivery by
the Borrower of the Credit Documents to which it is a party and the
performance of its respective obligations thereunder have been duly
authorized by proper corporate proceedings and the Credit Documents
constitute legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
5.3 NO CONFLICT
Neither the execution and delivery by the Borrower of the Credit
Documents, nor the consummation of the transactions therein contemplated,
nor compliance with the provisions of the Credit Documents, including the
application of the proceeds of the Facility LCs, will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Borrower or any of its Subsidiaries or the Borrower's or
any of its Subsidiaries' Clauses or certificate of incorporation or
by-laws or the provisions of any indenture, instrument or agreement to
which the Borrower or any of its Subsidiaries is a party or is subject, or
by which it or its Property is bound, or conflict with or constitute a
default thereunder, or result in the creation or imposition of any Lien
in, of or on the Property of the Borrower or any of its Subsidiaries
pursuant to the terms of any such indenture, instrument or agreement.
5.4 GOVERNMENTAL CONSENTS
No order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any Governmental
Authority is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Credit Documents, the application
of the proceeds of the Facility LCs or the
consummation of any other transaction contemplated by the Credit Documents
except for those which have been obtained and are in full force and
effect.
5.5 FINANCIAL STATEMENTS
The 31 December 2002 audited consolidated financial statements of the
Borrower's parent holding company and its consolidated Subsidiaries and
the September 30, 2003 unaudited consolidated financial statements of the
Borrower's parent holding company and its consolidated Subsidiaries
heretofore delivered to the Issuer (the "FINANCIAL STATEMENTS") were
prepared in accordance with U.S. generally accepted accounting principles
in effect on the date such statements were prepared, consistently applied,
and fairly present the consolidated financial condition and operations of
the Borrower's parent holding company and its consolidated Subsidiaries at
such dates and the consolidated results of their operations for the
periods then ended.
5.6 MATERIAL ADVERSE CHANGE
Since 31 December 2002, there has been no change in the business,
Property, condition (financial or otherwise), prospects or results of
operations of the Borrower and its Subsidiaries taken as a whole which
could reasonably be expected to have a Material Adverse Effect.
5.7 TAXES
The Borrower and its Subsidiaries have filed all material tax returns
(domestic or foreign) which are required to be filed and have paid all
taxes due pursuant to said returns or pursuant to any assessment received
by the Borrower or any of its Subsidiaries, except (a) such taxes, if any,
as are being contested in good faith and as to which, in the good faith
judgment of the Borrower, adequate reserves have been provided and (b)
taxes the failure of which to pay could not reasonably be expected to have
a Material Adverse Effect. Except for liens and claims of which the
executive officers of the Borrower are unaware or which are immaterial, no
tax liens have been filed and no claims against the Borrower or its
Subsidiaries are being asserted with respect to any such taxes except
claims being contested in good faith and as to which, in the good faith
judgment of the Borrower, adequate reserves have been provided. The
charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of any taxes or other governmental charges are
adequate in the good faith judgment of the Borrower.
5.8 LITIGATION AND CONTINGENT OBLIGATIONS
There is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any of their
officers, threatened against or affecting the Borrower or any of its
Subsidiaries which could reasonably be expected to (a) have a Material
Adverse Effect or (b) prevent, enjoin or unduly delay the issuance of
Facility LCs under this Agreement. As of the date hereof, the Borrower has
no material Contingent Obligations not provided for or disclosed in the
Financial Statements.
5.9 SUBSIDIARIES
The Borrower does not have any Subsidiaries.
5.10 ERISA
5.10.1 The Unfunded Liabilities of all Single Employer Plans do not in
the aggregate exceed $100,000,000. Each Single Employer Plan
complies in all material respects with all applicable requirements
of law and regulations except where such non-compliance could not
reasonably be expected to have a Material Adverse Effect.
5.10.2 No Reportable Event has occurred with respect to any Single
Employer Plan.
5.10.3 Neither the Borrower nor any Affiliate of the Borrower contributes
to a Multiemployer Plan.
5.11 DEFAULTS
No Default or Unmatured Default has occurred and is continuing.
5.12 ACCURACY OF INFORMATION
No information, exhibit or report furnished by the Borrower or any of its
Subsidiaries to the Issuer in connection with the negotiation of, or
compliance with, the Credit Documents (as modified or supplemented by
other information so furnished) contained any material misstatement of
fact, omitted to state a material fact or omitted to state any fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading in any material
respect; provided, that with respect to projected financial information,
the Borrower represents only that such information was prepared in good
faith upon assumptions believed to be reasonable at the time prepared.
5.13 REGULATION U
Margin stock (as defined in Regulation U) constitutes less than 25% of
those assets of the Borrower and its Subsidiaries which are subject to any
limitation on sale, pledge or other restriction hereunder. Neither the
Borrower nor any Subsidiary is engaged, directly or indirectly,
principally, or as one of its important activities, in the business of
extending, or arranging for the extension of, credit for the purpose of
purchasing or carrying margin stock. No part of any Facility LC will be
used in a manner which would violate, or result in a violation of,
Regulation U. Neither the issuance of any Facility LC hereunder nor the
use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulation U.
5.14 MATERIAL AGREEMENTS
5.14.1 Neither the Borrower nor any Subsidiary is a party to any
agreement or instrument which could reasonably be expected to have
a Material Adverse Effect;
5.14.2 Neither the Borrower nor any Subsidiary is subject to any charter
or other corporate restriction which could reasonably be expected
to have a Material Adverse Effect; and
5.14.3 Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfilment of any of the obligations,
covenants or conditions
contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.
5.15 INSURANCE
The Borrower and each of its Subsidiaries maintain, with financially sound
and reputable insurance companies, insurance on their Property in such
amounts and covering such risks as is consistent with sound business
practice.
5.16 INSURANCE LICENSES
No material license, permit or authorization of the Borrower or any
material Subsidiary to engage in the business of insurance, reinsurance or
insurance-related activities is the subject of a proceeding for suspension
or revocation, except where such suspension or revocation would not
individually or in the aggregate have a Material Adverse Effect.
5.17 COMPLIANCE WITH LAWS
To the best of its knowledge, the Borrower and each of its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality
or agency thereof, having jurisdiction over the conduct of their
respective businesses or the ownership of their respective Property,
except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect. There shall have occurred no material
changes in governmental regulation or policy adversely affecting the
Issuer or the Borrower in this transaction.
5.18 OWNERSHIP OF PROPERTIES
Except for Liens permitted by Clause 6.10 (Liens), on the date of this
Agreement the Borrower and each of its Subsidiaries have good title to all
of the Property and assets reflected in the Financial Statements as owned
by it, free of all Liens other than those permitted by this Agreement,
except for assets sold, transferred or otherwise disposed of in the
ordinary course of business since the date of such Financial Statements.
5.19 INVESTMENT COMPANY ACT
Neither the Borrower (nor, to the extent such status would have a Material
Adverse Effect, any of its Subsidiaries) is an "investment company" which
is registered or required to be registered under the Investment Company
Act of 1940, as amended, or is "controlled" by an "investment company"
which is registered or required to be registered under such Act (all
quoted terms in this Clause 5.19 having the meaning ascribed to them by
such Act).
5.20 PUBLIC UTILITY HOLDING COMPANY ACT
Neither the Borrower nor any of its Subsidiaries is a "holding company" or
a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
5.21 PARI PASSU RANKING
The Borrower's payment obligations under the Credit Agreement rank at
least pari passu with the claims of all its other unsecured and
unsubordinated creditors, except obligations mandatorily preferred by law
applying to companies generally.
6. COVENANTS
While the Aggregate Facility LC Commitment remains outstanding and until
the payment in full of any outstanding Obligations (other than contingent
Obligations in respect of claims for indemnification) unless the Issuer
shall otherwise consent in writing:
6.1 FINANCIAL REPORTING
The Borrower will maintain, for itself and each of its Subsidiaries, a
system of accounting established and administered in accordance with
generally accepted accounting principles, and the Borrower will furnish to
the Issuer:
6.1.1 As soon as available, but, in any event, no later than within 120
days after the close of each of its fiscal years, an unqualified
audit report certified by independent certified public accountants,
reasonably acceptable to the Issuer, prepared in accordance with
Agreement Accounting Principles on a consolidated basis for the
Borrower's parent and its consolidated Subsidiaries, including
balance sheets as of the end of such period, related profit and loss
and reconciliation of surplus statements, and a statement of cash
flows.
6.1.2 As soon as available, but, in any event, no later than within 60
days after the end of each semi-annual reporting period of each of
its fiscal years, for the Borrower and its consolidated
Subsidiaries, consolidated unaudited balance sheets as at the close
of each such period and consolidated profit and loss statements and
a statement of cash flows for the period from the beginning of such
fiscal year to the end of such period, all certified by the senior
financial officer or senior accounting officer of the Borrower.
6.1.3 Together with the financial statements required under sub-clause
6.1.1 and 6.1.2, a compliance certificate in substantially the form
of Exhibit C hereto signed by a Senior Financial Officer showing the
calculations necessary to determine compliance with this Agreement
and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status
thereof.
6.1.4 Within ten (10) Business Days after the end of each month (or at any
time while any Default (or breach of Clause 6.3 (Adjusted Collateral
Value)) is continuing), a certificate of a Senior Financial Officer
as to (a) the aggregate fair market value of all amounts deposited
in the Facility LC Collateral Account and the Custodial Account and
(b) the Collateral Shortfall Amount, if any, each as of the end of
such month. In addition, the Issuer shall receive all the
information (or rights to access such information) as set out in the
Account
Control Agreement, including, in particular, Section 5 (Statements,
Confirmations and Notices of Adverse Claims) of the Account Control
Agreement.
6.1.5 Such other information (including, without limitation, non financial
information) as the Issuer may from time to time reasonably request;
PROVIDED, HOWEVER, THAT the Borrower shall not be obligated to
provide information pursuant to this sub-clause 6.1.5 to the extent
that disclosure thereof is prohibited by any existing customary
confidentiality agreement restricting the dissemination of such
information.
6.2 USE OF FACILITY LCS
The Borrower will use the Facility LCs only to secure its
reinsurance-related obligations to Ceding Companies. The Borrower will not
request the issuance of any Facility LC, the proceeds of which are to be
used to purchase or carry any "margin stock" (as defined in Regulation U).
6.3 CERTAIN NOTICES
The Borrower will give prompt notice in writing to the Facility Agent, the
Issuer of the occurrence of any Default or Unmatured Default. Any such
notice shall state that it is given pursuant to this Clause 6.3.
6.4 CONDUCT OF BUSINESS
The Borrower will (a) carry on and conduct its business in the fields of
enterprise of insurance, reinsurance and financial services and similar
and ancillary activities, (b) do all things necessary to remain duly
incorporated, validly existing and in good standing in its jurisdiction of
formation, and (c) do all things necessary to renew, extend and continue
in effect all Licenses which may at any time and from time to time be
necessary to operate its insurance business in compliance with all
applicable laws and regulations (except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect). The
Borrower will not change its jurisdiction of domicile without the prior
written consent of the Issuer, which shall not be unreasonably withheld or
delayed.
6.5 TAXES
The Borrower will, and will cause each of its Subsidiaries to, pay when
due all taxes, assessments and governmental charges and levies upon it or
its income, profits or Property, except those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside and those the failure of which to pay could
not reasonably be expected to have a Material Adverse Effect.
6.6 INSURANCE
The Borrower will, and will cause each of its Subsidiaries to, maintain
with financially sound and reputable insurance companies insurance on all
or substantially all of its Property, or shall maintain self-insurance, in
such amounts and covering such risks as is consistent with sound business
practice for Persons in substantially the same industry
as such the Borrower or such Subsidiary, and the Borrower will furnish to
the Issuer upon request full information as to the insurance carried.
6.7 COMPLIANCE WITH LAWS
The Borrower will, and will cause each of its Subsidiaries to, comply with
all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject (including, without
limitation, environmental laws), except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
6.8 MERGER
The Borrower will not, nor will it permit any Subsidiary to, merge or
consolidate with or into any other Person, except that (a) a Subsidiary
may merge with the Borrower or a Wholly Owned Subsidiary, (b) the Borrower
and any Subsidiary may merge or consolidate with or into any other Person
PROVIDED THAT the Borrower or such Subsidiary shall be the continuing or
surviving corporation and, after giving effect to such merger or
consolidation, no Default or Unmatured Default shall exist and (c) a
Material Subsidiary may merge or consolidate with or into another Person
as a means of effecting a disposition otherwise permitted by this
Agreement.
6.9 SALE OF ASSETS
Neither the Borrower will, nor will it permit any of its Subsidiaries to,
lease, sell, transfer or otherwise dispose of, by one or more transactions
or series of transactions (whether related or not), all or a material
portion of its Property to any other Person(s) except for:
6.9.1 sales, transfers and other dispositions of securities and other
financial instruments sold, transferred or disposed of in the
ordinary course of business (excluding sales, transfers or other
dispositions of interests in operating companies of the Borrower
or holding companies for such operating companies);
6.9.2 sales or other dispositions of obsolete Property in the ordinary
course of business;
6.9.3 transfers of assets and liabilities under Reinsurance Contracts in
the ordinary course of business;
6.9.4 sales, transfers or other dispositions made to the Borrower or
between the Wholly-Owned Subsidiaries of the Borrower;
6.9.5 sales of assets (excluding any sales of all or substantially all
the assets of such Person) upon fair and reasonable terms in an
arms-length transaction; and
6.9.6 leases, sales or other dispositions of its Property that, together
with all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of pursuant to this sub-clause
6.9.6 during the twelve (12) month
period ending with the month in which any such lease, sale or
other disposition occurs, do not constitute exceed $50,000,000;
provided, in the case of sub-clauses 6.9.1 through 6.9.6, any lease, sale,
transfer or other disposition of cash deposited in the Facility LC
Collateral Account may only be made in accordance with the terms of this
Agreement and any related Collateral Document.
6.10 LIENS
Neither the Borrower will create, incur, or suffer to exist any Lien in,
of or on the Property of the Borrower, except:
6.10.1 Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate
reserves in accordance with Agreement Accounting Principles shall
have been set aside on its books.
6.10.2 Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more
than ninety (90) days past due or which are being contested in
good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books.
6.10.3 Liens arising out of pledges or deposits under worker's
compensation, unemployment insurance, old age pensions, or other
social security or retirement benefits laws or regulations, or
similar legislation or regulations.
6.10.4 Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the
business of the Borrower or its Subsidiaries.
6.10.5 Liens arising under or pursuant to the Credit Documents.
6.10.6 Liens incurred in the ordinary course of the Borrower's business,
including:
(a) stock loans, repurchase agreements and reverse repurchase
agreements; buy/sell agreements, prime brokerage agreements,
credit support annexes and pledge and security agreements
entered into as part of, or incidental to, in each case
granted in the ordinary course of the Borrower's business;
(b) collateralization or margin obligations arising as part of,
or incidental to, transactions in the ordinary course of the
Borrower's business, whether to third parties or to
exchanges;
(c) Liens in respect of assets or rights where such assets or
rights are inherent in, and arise or are created as part of
a structured finance, funding, financing or liquidity
transaction, payment undertaking arrangement, credit
enhancement or derivatives transaction, in each case granted
in the ordinary course of the Borrower's business; and
(d) deposits with Ceding Companies and with insurance regulators
in the ordinary course of the Borrower's business;
PROVIDED, HOWEVER, THAT neither this sub-clause 6.10.6 nor the
following sub-clause 6.10.7 shall permit Liens securing
indebtedness for borrowed money incurred to finance either
ordinary course operations or extraordinary activities.
6.10.7 Set-off and netting arrangements entered into by the Borrower in
the normal course of its banking arrangements.
6.10.8 Title transfer and retention of title arrangements entered into by
the Borrower in the ordinary course of business.
6.10.9 Liens on assets acquired after the date of this Agreement;
PROVIDED THAT (i) such Lien was not created in connection with or
in contemplation of the acquisition of such assets and (ii) the
amount thereby secured has not been increased in contemplation of,
or since the date of, acquisition of such assets.
6.10.10 Liens in favor of the Borrower.
6.10.11 Other Liens securing an aggregate principal amount of obligations
at no time exceeding an amount equal to $50,000,000 at such time.
6.11 ADJUSTED COLLATERAL VALUE
The Borrower shall at all times maintain Collateral in the Custodial
Account (or, in the case of Cash, in an account with the Issuer) in an
amount such that the Adjusted Collateral Value of such Collateral is not
less than the Obligations outstanding from time to time.
6.12 INCONSISTENT AGREEMENTS
Neither the Borrower nor any of its Subsidiaries shall enter into any
indenture, agreement, instrument (or amendment thereto) or other
arrangement which, (a) directly or indirectly prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially
adverse conditions upon, the incurrence or repayment of the Obligations,
the amendment of the Credit Documents, or the ability of any Subsidiary to
pay dividends or make other distributions on its capital stock (other than
restrictions on the payment of dividends or other distributions imposed
under subordinated debt obligations entered into for purposes of having
such Indebtedness treated as capital for rating agency or regulatory
purposes) or (b) contains any provision which would be violated or
breached by the issuance of Facility LCs or by the performance by the
Borrower of any of its obligations under any Credit Document.
6.13 CUSTODY AGREEMENT
The Borrower shall not agree to any waiver or amendment of the Custody
Agreement without first obtaining the written consent of the Issuer, which
shall not be unreasonably withheld or delayed.
7. DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1 Any representation or warranty made or deemed made (when required to be
repeated under the terms of this Agreement) by or on behalf of the
Borrower to the Issuer under or in connection with this Agreement, any
other Credit Document, any Facility LC or any certificate or information
delivered in connection with this Agreement or any other Credit Document
shall be materially false or misleading on the date as of which made or
deemed made.
7.2 Non-payment of any principal of any Reimbursement Obligation when due or
non-payment of any interest or any fee or other obligation owing by the
Borrower under any of the Credit Documents within five (5) Business Days
after the same becomes due.
7.3 The breach by the Borrower of any of the terms or provisions of Clause 6.2
(Use of Facility LCs), Clause 6.3 (Certain Notices), Clause 6.8 (Merger),
Clause 6.9 (Sale of Assets), Clause 6.10 (Liens), Clause 6.12
(Inconsistent Agreements) or Clause 5.21 (Pari Passu Ranking) or a breach
by the Borrower of any of the terms or provisions of Clause 6.11 (Adjusted
Collateral Value) which is not remedied within two (2) Business Days, or
within a period otherwise agreed to by the Issuer.
7.4 The breach by the Borrower (other than a breach which constitutes a
Default under Clause 7.1, 7.2 or 7.3 of this Clause 7) of any of the terms
or provisions of this Agreement which is not remedied within thirty (30)
days after written notice from the Issuer.
7.5 Failure of the Borrower or any of its Subsidiaries to pay when due (beyond
the applicable grace period with respect thereto, if any) any indebtedness
constituting in the aggregate Material Indebtedness; or the default by the
Borrower or any of its Subsidiaries in the performance (beyond the
applicable grace period with respect thereto, if any) of any material
term, provision or condition contained in any Material Indebtedness
Agreement, or any other event shall occur or condition exist, the effect
of which default, event or condition is to cause, or to permit the
lender(s) under any Material Indebtedness Agreement to cause, Material
Indebtedness thereunder to become due prior to its stated maturity; or any
Material Indebtedness of the Borrower or any of its Subsidiaries shall be
declared to be due and payable or required to be prepaid or repurchased
(other than by a regularly scheduled payment or prepayment not associated
with a contractual breach) prior to the stated maturity thereof; PROVIDED
THAT it shall not constitute a Default if the relevant Indebtedness arises
under a derivative or structured finance transaction entered into in the
ordinary course of
business and (a) the failure to pay is caused by a technical or
administrative failure and is remedied within three (3) Business Days or
(b) such Indebtedness becomes due prior to its stated maturity or is
prepaid pursuant to unwind or termination provisions not associated with
performance defaults.
7.6 The Borrower or any of its Subsidiaries shall:
7.6.1 have an order for relief entered with respect to it under any state,
federal or foreign bankruptcy or similar laws as now or hereafter in
effect;
7.6.2 make an assignment for the benefit of creditors;
7.6.3 apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar
official for it or any of its assets;
7.6.4 institute any proceeding seeking an order for relief under any
state, federal or foreign bankruptcy or similar laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such
proceeding filed against it;
7.6.5 take any corporate action to authorize or effect any of the
foregoing actions set forth in this Clause 7.6;
7.6.6 fail to contest in good faith within thirty (30) days any
appointment or proceeding described in Clause 7.7; or
7.6.7 not pay, or admit in writing its inability to pay, its debts
generally as they become due.
7.7 Without the application, approval or consent of the Borrower or any of its
Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries,
or a proceeding described in sub-clause 7.6.4 of Clause 7.6 shall be
instituted against the Borrower or any of its Subsidiaries and such
appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of forty-five (45) consecutive days.
7.8 The Borrower or any of its Subsidiaries shall fail within 45 days to pay,
bond or otherwise discharge any judgment or order for the payment of
money, either singly or in the aggregate, in excess of $100,000,000, which
is not stayed on appeal or otherwise being appropriately contested in good
faith.
7.9 Any Change in Control shall occur or the Borrower's Parent shall cease to
own, directly or indirectly, 100% of the outstanding shares of capital
stock of the Borrower.
7.10 The occurrence of any default or breach of its material obligations under,
or any "event of default" as defined in, any Credit Document (other than
this Agreement) on the part of or relating to the Borrower, which default,
breach or "event of default" continues beyond any period of grace therein
provided.
7.11 Any Collateral Document delivered by the Borrower pursuant to this
Agreement shall for any reason fail to create a valid and perfected first
priority security interest in any collateral purported to be covered
thereby, except as permitted by the terms of any such Collateral Document
(and save for any failure of the Issuer to cause the filing of any
relevant financing statement to perfect the security interest), or any
Collateral Document shall fail to remain in full force or effect or any
action shall be taken by the Borrower or any Governmental Authority to
discontinue or to assert the invalidity or unenforceability of any
Collateral Document.
8. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 ACCELERATION; FACILITY LC COLLATERAL ACCOUNT
8.1.1 If any Default described in Clause 7.6 or Clause 7.7 of Clause 7
(Defaults) occurs with respect to the Borrower, the obligation of
the Issuer to issue Facility LCs shall automatically terminate and
the Obligations shall immediately become due and payable without any
election or action on the part of the Issuer and the Borrower will
be and become thereby unconditionally obligated, without any further
notice, act or demand, to pay or transfer to the Issuer an amount in
immediately available funds, which funds shall be held in the
Facility LC Collateral Account, or at the Borrower's choosing, the
Custodian Account, equal to the difference of (i) the amount of
Facility LC Obligations at such time, less (ii) the amount on
deposit in the Facility LC Collateral Account or under any
Collateral Document at such time which is free and clear of all
rights and claims of third parties and has not been applied against
the Obligations (such difference, the "COLLATERAL SHORTFALL
AMOUNT"). If any other Default occurs and is continuing, the Issuer
may (i) terminate or suspend the obligation of the Issuer to issue
Facility LCs, or declare the Obligations to be due and payable, or
both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind,
all of which the Borrower hereby expressly waives, and (ii) upon
notice to the Borrower and in addition to the continuing right to
demand payment of all amounts payable under this Agreement, make
demand on the Borrower, and the Borrower will, forthwith upon such
demand and without any further notice or act, to pay or transfer to
the Issuer an amount in immediately available funds, the Collateral
Shortfall Amount, which funds shall be deposited in the Facility LC
Collateral Account or, at the Borrower's choosing, the Custodian
Account.
8.1.2 If at any time while any Default is continuing, the Issuer
determines that the Collateral Shortfall Amount at such time is
greater than zero, the Issuer may, make demand on the Borrower to,
and the Borrower will, forthwith upon such
demand and without any further notice or act, pay or transfer to the
Issuer an amount in immediately available funds the Collateral
Shortfall Amount, which funds shall be deposited in the Facility LC
Collateral Account or, at the Borrower's choosing, the Custodian
Account.
8.1.3 The Issuer may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to
the payment of the Facility LC Obligations and any other amounts as
shall from time to time have become due and payable by the Borrower
to the Issuer under the Credit Documents.
8.1.4 At any time while any Default (or breach of Clause 6.11 (Adjusted
Collateral Value)) is continuing neither the Borrower nor any Person
claiming on behalf of or through the Borrower shall have any right
to withdraw any of the funds held in the Facility LC Collateral
Account. After all of the Obligations have been indefeasibly paid in
full (other than contingent Obligations in respect of claims for
indemnification hereunder) and the Aggregate Facility LC Commitment
has been terminated, any funds remaining in the Facility LC
Collateral Account shall be returned by the Issuer to the Borrower
or paid to whomever may be legally entitled thereto at such time.
8.2 AMENDMENTS
Subject to the provisions of this Clause 8.2, the Issuer and the Borrower
may enter into agreements supplemental hereto for the purpose of adding or
modifying any provisions to the Credit Documents or changing in any manner
the rights of the Issuer or the Borrower hereunder or waiving any Default
or Unmatured Default hereunder.
8.3 PRESERVATION OF RIGHTS
No delay or omission of the Issuer to exercise any right under the Credit
Documents shall impair such right or be construed to be a waiver of any
Default or an acquiescence therein, and the issuance or Modification of a
Facility LC notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such issuance or
Modification shall not constitute any waiver or acquiescence. Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the
Credit Documents whatsoever shall be valid unless in writing signed by the
Issuer and then only to the extent in such writing specifically set forth.
All remedies contained in the Credit Documents or by law afforded shall be
cumulative and all shall be available to the Issuer until the Obligations
have been paid in full.
9. GENERAL PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS
All representations and warranties of the Borrower contained in this
Agreement or in any other Credit Document shall survive the issuance of
the Facility LCs herein contemplated.
9.2 INTEREST LIMITATION
Anything in this Agreement or any other Credit Document to the contrary
notwithstanding, the Borrower shall not be required to pay interest at a
rate in excess of the highest lawful rate, and if the effective rate of
interest that would otherwise be payable under this Agreement or any other
Credit Document would exceed the highest lawful rate, or if any Issuer
shall receive monies that are deemed to constitute interest which would
increase the effective rate of interest payable under this Agreement or
any other Credit Document to a rate in excess of the highest lawful rate,
then (a) the amount of interest that would otherwise be payable under this
Agreement and the other Credit Documents shall be reduced to the amount
allowed under applicable law, and (b) any interest paid in excess of the
highest lawful rate shall, at the option of the Issuer, be either refunded
to the payor or credited to the payment of the Obligations.
9.3 HEADINGS
Clause headings in the Credit Documents are for convenience of reference
only and shall not govern the interpretation of any of the provisions of
the Credit Documents.
9.4 ENTIRE AGREEMENT
The Credit Documents embody the entire agreement and understanding between
the Issuer and the Borrower and supersede all prior agreements and
understandings between the Issuer and the Borrower relating to the subject
matter thereof.
9.5 EXPENSES; INDEMNIFICATION
The Borrower shall reimburse the Issuer for any reasonable and documented
costs and out-of-pocket expenses (including reasonable attorneys' fees)
paid or incurred by the Issuer in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Credit Documents. The Borrower also agrees to
reimburse the Issuer, for any reasonable costs and out-of-pocket expenses
(including attorneys' fees paid or incurred by the Issuer in connection
with the collection of the Obligations or the enforcement of the Credit
Documents. The Borrower further agrees to indemnify the Issuer its
affiliates, and each of its directors, officers and employees against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all reasonable expenses of litigation or
preparation therefor whether or not the Issuer, or any affiliate is a
party thereto) which any of them may pay or incur arising out of or
relating to this Agreement or the other Credit Documents, the transactions
contemplated hereby or thereby or the use or intended use of any Facility
LC, except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have
resulted from the bad faith, gross negligence or wilful misconduct of the
party seeking indemnification. The obligations of the Borrower under this
Clause 9.5 incurred prior to the termination of this Agreement shall
survive the termination of this Agreement.
9.6 ACCOUNTING
Except as provided to the contrary or otherwise defined herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement
Accounting Principles.
9.7 SEVERABILITY OF PROVISIONS
Any provision in any Credit Document that is held to be inoperative,
unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting
the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction,
and to this end the provisions of all Credit Documents are declared to be
severable.
9.8 NON-LIABILITY OF ISSUER
The relationship between the Borrower on the one hand and the Issuer on
the other shall be solely that of debtor/account party and creditor. The
Issuer shall not have any fiduciary responsibilities to the Borrower. The
Issuer undertakes no responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the Borrower's
business or operations. The Borrower agrees that the Issuer shall have no
liability to the Borrower (whether sounding in tort, contract or
otherwise) for losses suffered by the Borrower in connection with, arising
out of, or in any way related to, the transactions contemplated and the
relationship established by the Credit Documents, or any act, omission or
event occurring in connection therewith, unless it is determined in a
final non-appealable judgment by a court of competent jurisdiction that
such losses resulted from the gross negligence or wilful misconduct of the
party from which recovery is sought. The Issuer shall not have any
liability with respect to, and the Borrower hereby waives, releases and
agrees not to ▇▇▇ for, any special, indirect, consequential or punitive
damages suffered by the Borrower in connection with, arising out of, or in
any way related to the Credit Documents or the transactions contemplated
thereby.
9.9 CHOICE OF LAW
THE CREDIT DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS
CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF NEW YORK.
9.10 CONSENT TO JURISDICTION
THE BORROWER AND THE ISSUER AND EACH FACILITY PROVIDER HEREBY IRREVOCABLY
SUBMITS TO THE NON EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT AND EACH SUCH PARTY
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM. ANY JUDICIAL PROCEEDING BY THE
ISSUER AGAINST THE BORROWER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY CREDIT
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK OR WITH
RESPECT TO JUDGMENT ENFORCEMENT PROCEEDINGS ONLY, IN ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE ISSUER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY CREDIT DOCUMENT SHALL BE BROUGHT ONLY IN
A COURT IN NEW YORK, NEW YORK.
9.11 WAIVER OF JURY TRIAL
THE BORROWER AND THE ISSUER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
9.12 COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower and
the Issuer.
9.13 CONFIDENTIALITY
The Issuer and each Transferee agrees to hold any confidential information
which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (a) to its Affiliates in connection with
the transactions contemplated by the Credit Documents, (b) to legal
counsel, accountants, and other professional advisors to the Issuer or to
a Transferee, (c) to regulatory officials, (d) as requested by a
governmental agency or as required by law, regulation, or legal process,
(e) to any Person in connection with any legal proceeding arising in
connection with this Agreement to which the Issuer is a party, (f)
permitted by Clause 11.2 (Benefit of Certain Provisions) and (g) which is
otherwise made publicly available through no fault of the Issuer.
Notwithstanding anything herein to the contrary, the Issuer, the Borrower
and any Transferee (and each employee, representative, or other agent of
any of the foregoing) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the
transactions contemplated hereby, and all materials of any kind (including
opinions or other tax analyses) that are provided to such Person related
to such tax treatment and tax structure.
10. SET-OFF
10.1 SETOFF
In addition to, and without limitation of, any rights of the Issuer under
applicable law, if any Default occurs and is continuing, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available), in any currency, and any other
Indebtedness at any time held or owing by the Issuer to or for the credit
or account of the Borrower may be offset and applied toward the payment of
the Obligations owing to the Issuer, whether or not the Obligations, or
any part hereof, shall then be due. Such right of setoff shall be without
notice or demand to the Borrower and be without liability to the Issuer.
Any party exercising setoff rights hereunder shall promptly provide the
Borrower with written notice thereof after such setoff; PROVIDED THAT the
failure to provide such notice shall not give rise to liability hereunder.
11. BENEFIT OF AGREEMENT
11.1 SUCCESSORS AND ASSIGNS
The terms and provisions of the Credit Documents shall be binding upon and
inure to the benefit of the Borrower, the Issuer and their respective
successors and assigns, except that the Borrower shall not have the right
to assign its rights or obligations under the Credit Documents. Any
attempted assignment or transfer by any party not made in compliance with
this Clause 11.1 shall be null and void.
11.2 DISSEMINATION OF INFORMATION
The Borrower authorizes the Issuer to disclose to any subparticipant or
purchaser or any other Person acquiring an interest in the Credit
Documents by operation of law or any counterparty to any swap,
securitisation or derivative transaction referencing or involving any
rights or obligations of the Issuer hereunder (each a "TRANSFEREE") and
any prospective Transferee any and all information in the Issuer's
possession concerning the creditworthiness of the Borrower; PROVIDED THAT
each Transferee and prospective Transferee agrees to be bound by Clause
9.13 (Confidentiality) of this Agreement.
12. NOTICES
12.1 GIVING NOTICE
All notices, requests and other communications to any party hereunder
shall be in writing (including electronic transmission, facsimile
transmission or similar writing) and shall be given to such party: (a) in
the case of the Borrower and the Issuer at its respective address or
facsimile number set forth on the signature pages hereof or (b) in the
case of any party, at such other address or facsimile number as such party
may hereafter specify for the purpose by notice to the Issuer and the
Borrower in accordance with the provisions of this Clause 12.1. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified
in this Clause and confirmation of receipt is received, (ii) if given by
recognized courier service, 72 hours after such communication is deposited
with such courier service with delivery prepaid, addressed
as aforesaid, or (iii) if given by any other means, when delivered (or, in
the case of electronic transmission, received) at the address specified in
this Clause; PROVIDED THAT notices to the Issuer under Clause 2 (The
Letter of Credit Facility) shall not be effective until received.
12.2 CHANGE OF ADDRESS
The Borrower and the Issuer may each change the address for service of
notice upon it by a notice in writing to the other parties hereto.
IN WITNESS WHEREOF, the Borrower and the Issuer have executed this Agreement as
of the date first above written.
SIGNATURES
ALLIED WORLD ASSURANCE COMPANY, LTD., as Borrower
By: /s/ ▇.▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and Treasures
Address: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ 12
Besmuda
Attention:
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
BARCLAYS BANK PLC, as Issuer
By: /s/ C.M.J. ▇▇▇
Name: C.M.J. ▇▇▇
Title: Manager
Address: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇ 9EX
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
Telephone: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
