CHANCE
WINTERTHUR SWISS INSURANCE COMPANY
WINTERTHUR INTERNATIONAL
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LIMITED RECOURSE RECEIVABLES FINANCING
FACILITY AGREEMENT
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THIS AGREEMENT is made the 24th day of July 2001
BETWEEN:
1. WINTERTHUR SWISS INSURANCE COMPANY a joint-stock company incorporated
under the laws of Switzerland (registered number CH-020.3.928.827-5) whose
registered office is at General Xxxxxx-Xxxxxxx 00, XX Xxx 000, XX-0000
Xxxxxxxxxx, Xxxxxxxxxxx ("WINTERTHUR"); and
2. WINTERTHUR INTERNATIONAL, a company incorporated under the laws of
Switzerland whose registered office is at Xxxxxxxxxxxxxxxx 00, XX-0000,
Xxxxxxxxxx ("WIRE").
WHEREAS
(A) By an agreement between Winterthur and the XL Insurance dated as of 15
February 2001 (the "SALE AND PURCHASE AGREEMENT"), Winterthur has agreed
to sell and to procure that the other Selers sell and XL Insurance has
agreed to purchase and to procure that the other Purchasers purchase the
Operations as a going concern at Completion and the parties intend to
transfer the Operations at Completion. The sale will be by share transfer,
by portfolio transfer and/or by reinsurance arrangements.
(B) Winterthur has made available certain cash facilities to WIRE to cover
claims payable by WIRE to its reinsureds pending receipt of payments from
its reinsurers pursuant to certain pre-existing arrangements (the
"ORIGINAL AGREEMENT").
(C) Following Completion of the Sale and Purchase Agreement Winterthur has
agreed to continue to make available a cash facility to WIRE on the terms
set out in this Agreement.
IT IS AGREED as follows:
1. Words and phrases defined in the Sale and Purchase Agreement shall in the
absence of a definition in this Agreement bear the meaning attributed to
them on the Sale and Purchase Agreement.
2. Winterthur hereby agrees to extend a limited recourse receivables
financing facility (the "FACILITY") to WIRE in accordance with the terms
of this Agreement.
3. The parties acknowledge and agree that as at the date hereof Winterthur
has advanced sums to WIRE under the Original Agreement of which
approximately CHF 440 million remains outstanding (the actual balance
being referred to as the "OUTSTANDING BALANCE"). This Agreement shall
supersede and replace the terms of the Original Agreement in respect of
such Outstanding Balance.
4. The period of availability of financing under the Facility shall be from
the date hereof until the second anniversary of the date hereof (the
"FACILITY PERIOD").
5. WIRE may at any time during the Facility Period draw down funds from the
Facility subject to providing Winterthur with notice in writing (a "DRAW
DOWN NOTICE") specifying the amount required and specifying that such
amount will be used to satisfy claims payable by WIRE in respect of which
WIRE has not received payment under its reinsurance arrangements which
were in force for any period prior to the Effective Time (the "RELEVANT
REINSURANCE AGREEMENTS") following WIRE having served a demand for payment
under the Relevant Reinsurance Agreement. Upon receipt of such Draw Down
Notice, Winterthur shall make the funds specified in the Draw Down Notice
(each "AN ADVANCE") available to WIRE promptly (and in any event within 5
Business Days) by crediting such account as WIRE may specify from time to
time in writing.
6. If there is no Outstanding Balance or Advance outstanding at the end of
the Facility Period this Agreement shall terminate automatically at such
time.
7. Winterthur acknowledges and agrees that WIRE shall have no obligation or
liability to repay the Outstanding Balance or any Advance unless and until
and then only to the extent that WIRE recovers any amount under the
Relevant Reinsurance Agreement in respect of the claims paid by WIRE to
which the Outstanding Balance or such Advance relates. If WIRE does make
such recovery at any time prior to the End Date under the Relevant
Reinsurance Agreement it will apply such recovery to repay the relevant
portion of the Outstanding Balance to such account as Winterthur may
specify from time to time in writing. WIRE shall provide quarterly
statements to Winterthur setting forth, in reasonable detail, such
payments and recoveries, accompanied by and payment to be made hereunder
by WIRE to Winterthur within 30 days after the last day of each calendar
quarter.
8. If any part of the Outstanding Balance or any Advances remain outstanding
at the end of the Facility Period WIRE shall for the avoidance of doubt
repay the Outstanding Balance or any Advance only to the extent it is
obliged to do so under the terms of Clause 7 above. Notwithstanding the
above, WIRE shall, simultaneously with the making of the payment to be
made under Clause 4.3 of the Sale and Purchase Agreement, repay the
Outstanding Balance and any Advance which has not already been repaid, at
WIRE's option, either (i) in cash in US Dollars; or (ii) by way of the
transfer of rights to receive monies from its reinsurers (such rights to
be valued for these purposes in the same way as they would be valued for
the purposes of the seasoning mechanism under Clause 4 of the SPA and for
the avoidance of doubt rights to receive monies from reinsurers who are at
the relevant time subject to insolvency or receivership proceedings or
other similar events arising after Completion being valued at zero); or
(iii) a combination of (i) and (ii) above, as WIRE may determine in its
absolute discretion, provided that, for the avoidance of doubt the
aggregate of the sums under (i) and (ii) to be repaid shall be equal to
the aggregate of the Outstanding Balance and Advances outstanding.
9. In consideration of Winterthur's agreement to provide Advances WIRE agrees
to pay interest from the date hereof on the lower of (i) the sum of the
Outstanding Balance
outstanding from day to day and (ii) US$75 million at a rate equal to 3
month LIBOR plus 50 basis points for a period of six months from the date
hereof only, such interest payment to be made promptly (and in any event
within 5 Business Days of the end of the said period of six months). No
further interest shall accrue on either the Outstanding Balance or the
Advances.
10. If WIRE transfers any of its obligations to pay claims to which the
Facility relates to any other company in the XL Insurance Group then the
transferee of such obligations shall be entitled to draw down funds under
the Facility in accordance with the terms hereof as if it were party to
this Agreement. In the event that any reinsurance is provided to any of
the Operations in relation to Policies (which Policies are written and
reinsurance ceded prior to Completion) by any of the Operations other than
WIRE the provisions of this Agreement shall in such circumstances apply
mutatis mutandis in respect of claims payable by such other reinsurer and
such other reinsurer shall (provided that they have joined as parties to
this Agreement in such a way as to undertake to Winterthur the same
obligations hereunder as WIRE with respect to such Policies) enjoy the
same rights hereunder as WIRE.
11. Each communication or notice to be made or given hereunder shall be made
in writing in the English language and, unless otherwise stated, shall be
made by fax or letter:-
in the case of Winterthur at:
General Xxxxxx-Xxxxxxx 00
XX Xxx 000
XX-0000Xxxxxxxxxx
Xxxxxxxxxxx
Fax: x00 00 000 00 00
Attention: Katharina. Xxxxxx; and
in the case of WIRE at:
Xxxxxxxxxxxxxxxx 00
XX-0000 Xxxxxxxxxx
Xxxxxxxxxxx
Fax: x00 00 000 00 00
Attention: Xxxxxx Xxxx
with a copy to Xxxxxxxxx Xxxxxx at Xxxxxxxx Chance, 000 Xxxxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX, Xxxxxxx (fax x00 (00) 0000 0000) and Xxxxxxxx Xxxx at
Xxxxxx Xxxxxx & Xxxxxxx at 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, XXX (fax
x0 (000) 000 0000). Any such notice or other communication shall be sent
by fax or prepaid first class post. If sent by fax such notice or
communication shall conclusively be deemed to have been given or served on
the following business day. If sent by post such notice or communication
shall conclusively be deemed to have been received five business days from
the time of posting.
12. This Agreement is governed by English Law.
13. The courts of England have exclusive jurisdiction to settle any dispute
hereunder. The parties agree that the courts of England are the most
appropriate and convenient courts to settle disputes between them and,
accordingly, that they will not argue to the contrary.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
SIGNED by }
for and on behalf of } /s/ Xxxx Xxxxxxx
WINTERTHUR SWISS INSURANCE COMPANY } --------------------
SIGNED by }
for and on behalf of } /s/ Xxxxx Xx Xxxx
WINTERTHUR INTERNATIONAL } --------------------
