Exhibit 10.14.24
070299
$300,000,000
LETTER OF CREDIT FACILITY
AND REIMBURSEMENT AGREEMENT
BETWEEN
XL INSURANCE LTD, XL CAPITAL LTD,
XL EUROPE, XL MID OCEAN REINSURANCE LTD,
and
THE XXXXXXXXX GROUP Plc,
as Account Parties,
AND
XL INSURANCE LTD, XL CAPITAL LTD, XL MID OCEAN REINSURANCE LTD and
XL INVESTMENTS LTD,
as Guarantors,
AND
THE BANKS PARTIES HERETO FROM TIME TO TIME
AND
MELLON BANK, N.A.,
as Issuing Bank and as Agent
AND
MELLON BANK, N.A. and DEUTSCHE BANK SECURITIES INC., as Arrangers
DATED AS OF
June 30, 1999
Table of Contents
Section Title Page
------- ----- ----
ARTICLE I DEFINITIONS; CONSTRUCTION........................ 1
1
1.01 Certain Definitions.............................. 10
1.02 Construction..................................... 10
1.03 Accounting Principles............................ 10
ARTICLE II THE LETTER OF CREDIT FACILITY.................... 10
2.01 Letters of Credit................................ 10
2.02 Commitment Fee; Reduction of the Committed
Amounts.......................................... 12
2.03 Procedure for Issuance and Amendment of Letters
of Credit........................................ 12
2.04 Letter of Credit Participating Interests......... 14
2.05 Letter of Credit Drawings and Reimbursements..... 15
2.06 Equalization..................................... 16
2.07 Obligations Absolute............................. 16
2.08 Further Assurances............................... 16
2.09 Letter of Credit Applications.................... 16
2.10 Certain Provisions Relating to the issuing Bank.. 17
2.11 Payments Generally; Interest and Interest on
Overdue Amounts.................................. 18
2.12 Additional Compensation in Certain Circumstances. 18
2.13 Taxes............................................ 19
2.14 Extensions of Expiration Date.................... 21
2.15 Tranches......................................... 21
ARTICLE III REPRESENTATIONS AND WARRANTIES................... 24
3.01 Organization and Qualification................... 24
3.02 Corporate Power and Authorization................ 24
3.03 Financial Information............................ 25
3.04 Litigation....................................... 25
3.05 No Adverse Changes............................... 25
3.06 No Conflicting Laws or Agreements; Consents and
Approvals........................................ 25
3.07 Execution and Binding Effect..................... 25
3.08 Taxes............................................ 25
3.09 Use of Proceeds.................................. 26
3.10 Permits, Licenses and Rights..................... 26
3.11 Accurate and Complete Disclosure................. 26
3.12 Absence of Violations............................ 26
3.13 Environmental Matters............................ 26
3.14 Not an Investment Company........................ 26
3.15 Year 2000 Compliance 26
ARTICLE IV CONDITIONS....................................... 27
4.01 Effectiveness.................................... 27
4.02 Issuance of Letters of Credit.................... 28
i
ARTICLE V AFFIRMATIVE COVENANTS............................ 28
5.01 Reporting and Information Requirements........... 29
5.02 Preservation of Existence and Franchises......... 30
5.03 Insurance........................................ 30
5.04 Maintenance of Properties........................ 30
5.05 Payment of Taxes and Other Potential Charges and
Priority Claims Payment of Other Current
Liabilities...................................... 30
5.06 Financial Accounting Practices................... 31
5.07 Compliance with Applicable Laws.................. 31
5.08 Use of Proceeds.................................. 31
5.09 Continuation Of and Change In Business........... 31
5.10 Visitation....................................... 31
ARTICLE VI NEGATIVE COVENANTS............................... 31
6.01 Mergers and Acquisitions......................... 31
6.02 Dispositions of Assets........................... 32
6.03 Liens............................................ 32
6.04 Transactions With Affiliates..................... 33
6.05 Business......................................... 33
6.06 Ratio of Total Funded Debt to Consolidated
Tangible Net Worth............................... 33
6.07 Consolidated Tangible Net Worth.................. 34
6.08 Indebtedness..................................... 34
6.09 Claims-Paying Ratings............................ 34
6.10 Private Act...................................... 34
ARTICLE VII EVENTS OF DEFAULT................................ 34
7.01 Events of Default................................ 34
ARTICLE VIII THE AGENT........................................ 36
8.01 Appointment...................................... 36
8.02 General Nature of Agent's Duties................. 36
8.03 Exercise of Powers............................... 37
8.04 General Exculpatory Provisions................... 37
8.05 Administration by the Agent...................... 38
8.06 Bank Not Relying on Agent or Other Banks......... 39
8.07 Indemnification.................................. 39
8.08 Agent in its Individual; Capacity................ 39
8.09 Successor Agent.................................. 39
8.10 Additional Agents................................ 40
8.11 Calculations..................................... 40
8.12 Agent's Fee...................................... 40
ARTICLE IX MISCELLANEOUS.................................... 40
9.01 No Implied Waiver etc............................ 40
9.02 Set-Off.......................................... 40
9.03 Survival of Provisions........................... 41
9.04 Expenses and Fees; Indemnity..................... 41
9.05 Severability..................................... 42
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9.06 Holidays......................................... 42
9.07 Notices, etc..................................... 42
9.08 Forum Selection and Consent to Jurisdiction...... 42
9.09 Waiver of Jury Trial............................. 42
9.10 Governing Law.................................... 43
9.11 Validity and Enforceability...................... 43
9.12 Counterparts..................................... 43
9.13 Successors and Assigns; Participations;
Assignments...................................... 43
9.14 Amendments and Waivers........................... 45
9.15 Judgment Currency................................ 45
9.16 Records.......................................... 47
9.17 Confidentiality.................................. 47
9.18 Sharing of Collections 47
ARTICLE X GUARANTEE........................................ 47
10.01 The Guarantee.................................... 47
10.02 Obligations Unconditional........................ 48
10.03 Reinstatement.................................... 49
10.04 Remedies......................................... 49
10.05 Continuing Guarantee............................. 49
10.06 No Restrictions.................................. 49
Exhibit A Form of Continuing Letter of Credit Agreement
Exhibit B Form of Transfer Supplement
Exhibit C Form of Opinions of Counsel
Exhibit D Form of Compliance Certificate
Exhibit E [Intentionally Omitted]
Exhibit F Letter of Credit Application
Schedule 2.01(b) Form of Evergreen Provision
Schedule 3.01 Subsidiaries
Schedule 6.03(a) Liens
iii
LETTER OF CREDIT FACILITY AND REIMBURSEMENT AGREEMENT, dated as of June
30, 1999, by and between XL INSURANCE LTD, a Bermuda limited liability
corporation ("XL Insurance"), XL CAPITAL LTD, a corporation organized under the
laws of the Cayman Islands, British West Indies ("XL Capital"), XL EUROPE, a
company incorporated under the laws of Ireland ("XL Europe"), XL MID OCEAN
REINSURANCE LTD, a Bermuda limited liability corporation ("XL Mid Ocean"), THE
XXXXXXXXX GROUP Plc, an English limited company ("Xxxxxxxxx Group") (XL
Insurance, XL Capital, XL Europe, XL Mid Ocean and Xxxxxxxxx Group are referred
to hereinafter individually as an "Account Party" and collectively as the
"Account Parties"), XL INVESTMENTS LTD, a Bermuda limited liability corporation
("XL Investments") (XL Insurance, XL Mid Ocean, XL Investments and XL Capital
are referred to herein individually as a "Guarantor" and collectively as the
"Guarantors"), the Banks (as defined further below) parties hereto from time to
time, MELLON BANK, N.A., a national banking association, as Issuing Bank (the
"Issuing Bank"), MELLON BANK, N.A., a national banking association, as Agent for
the Banks and the Issuing Bank hereunder (in such capacity, together with
successors in such capacity, the "Agent") and MELLON BANK, N.A. and DEUTSCHE
BANK SECURITIES, INC., as Arrangers (collectively in such capacity, the
"Arrangers").
PRELIMINARY STATEMENT
WHEREAS, XL Insurance, XL Mid Ocean, XL Investments, XL Europe, Venton
Underwriting Group Limited (a former affiliate of XL Insurance), certain banks
and Mellon Bank, N.A., as Issuing Bank and Agent, entered into the Letter of
Credit Facility and Reimbursement Agreement, dated as of February 27, 1998, as
amended by the First and Second Amendments thereto (as so amended, the "Prior
Agreement"); and
WHEREAS, the parties hereto desire that the Prior Agreement be terminated
and replaced the same with this Agreement; and
WHEREAS, the Banks have agreed to make available to the Account Parties a
Letter of Credit Facility upon all of the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of their mutual agreements hereinafter
set forth and intending to be legally bound hereby, the Account Parties, the
Guarantors, the Agent, the Arrangers the Issuing Bank and each Bank agree as
follows.
ARTICLE I
DEFINITIONS: CONSTRUCTION
1.01. Certain Definitions. In addition to other words and terms defined
elsewhere in this Agreement, as used herein the following words and terms shall
have the following meanings, respectively, unless the context hereof otherwise
clearly requires:
"Account Parties" and "Account Party" shall have the meaning assigned
those terms in the preamble hereof.
"Affiliate" shall mean an entity which is directly or indirectly
controlled by an Account Party or which controls an Account Party or which is
under common control with any of the Account Parties.
"Aggregate Letter of Credit Undrawn Availability" at any time shall mean
the aggregate amount of the Letter of Credit Undrawn Availability for all
Letters of Credit at such time.
"Aggregate Letter of Credit Unreimbursed Draws" at any time shall mean the
aggregate amount of Letter of Credit Unreimbursed Draws for all Letters of
Credit at such time.
"Agreement" shall mean this Letter of Credit Facility and Reimbursement
Agreement as amended, modified or supplemented from time to time.
"Applicable Interest Rate" as used herein, (i) with respect to obligations
denominated in Dollars, shall mean the Prime Rate and (ii) with respect to
obligations denominated in Pounds, shall mean 0.5% per annum in excess of the
rate appearing on the Telerate Screen page 3740 or 3750 or any equivalent
successor to such page or other page as appropriate on the Telerate Service or
such other service as may, from time to time, display the British Bankers'
Association Interest Settlement Rate for deposits in Pounds.
"Assets" at any time shall mean the assets of any Credit Party, as the
context requires, at such time, determined in accordance with GAAP or SAP, as
appropriate.
"Bank Parties" shall mean the Banks, the Issuing Bank, the Arrangers and
the Agent.
"Banks" shall mean the parties (other than the Credit Parties but
including the Issuing Bank) listed on the signature pages hereof, subject to the
provisions of Section 9.13 hereof pertaining to Persons becoming or ceasing to
be Banks, and "Bank" shall mean any of them.
"Bermuda Companies Law" shall mean The Companies Act of 1981 of Bermuda,
as amended, and the regulations promulgated thereunder.
"Bermuda Insurance Law " shall mean The Insurance Act of 1978 of Bermuda,
as amended, and the regulations promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania or of Bermuda or
other day on which banking institutions are authorized or obligated to close in
Pittsburgh, Pennsylvania or Bermuda.
"Capitalized Lease Obligation" shall mean any lease obligation which is
required to be capitalized in accordance with GAAP.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to time.
"Change in Control" shall mean the occurrence of any of the following
events or conditions: (a) any Person or group of Persons (as used in Sections 13
and 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations thereunder) shall have become the beneficial owner
(as defined in rules promulgated by the Securities and Exchange Commission) of
more than 40% of the voting securities of XL Capital; (b)
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the sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of XL Capital;
or (c) a majority of the members of XL Capital's Board of Directors are persons
who are then serving on the Board of Directors without having been elected by
the Board of Directors or having been nominated for election by its
shareholders.
"Closing Date" shall mean July 2, 1999 or such later date prior to August
1, 1999, as may be specified by XL Capital by one day's written notice to the
Agent.
"Commitment Banks" shall have the meaning assigned to that term in Section
2.15 hereof.
"Commitment Fee" shall have the meaning assigned to that term in Section
2.02(a) hereof.
"Consolidated Net Worth" shall mean at any date the consolidated
stockholders' equity of XL Capital and its Consolidated Subsidiaries.
"Consolidated Subsidiaries" of a Person shall mean those Subsidiaries of
such Person the accounts of which are consolidated with the accounts of such
Person in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean at any date the consolidated
stockholders' equity of XL Capital and its Consolidated Subsidiaries less their
consolidated Intangible Assets, all determined as of such date. For purposes of
this definition "Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to November 30, 1998, in the book value
of any asset owned by XL Capital or a Consolidated Subsidiary and (ii) all
unamortized debt discount and expense, unamortized deferred charges, deferred
acquisition costs, goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards, copyrights, organization
or developmental expenses and other intangible assets.
"Continuing Letter of Credit Agreement" shall mean the letter of credit
agreement executed and delivered by the Account Parties substantially in the
form of Exhibit A hereto.
"Conversion to Tranche System" shall have the meaning assigned to that
term in Section 2.15 hereof.
"Credit Parties" means the Account Parties and the Guarantors and "Credit
Party" means any of them.
"Credit Subsidiary" shall mean a Person which is Subsidiary of both (i) a
Credit Party and (ii) a party to the Syndicated Revolving Credit Agreements.
"Current Expiration Date" shall have the meaning assigned to that term in
Section 2.14 hereof.
"Custodian" shall mean Mellon Bank, N.A., or any successor, in its
capacity as Custodian for XL Investments and XL Mid Ocean pursuant to the Master
Custody Agreement, dated as of June 30, 1998, as amended, restated or otherwise
modified from time to time, or any successor custodian appointed in accordance
with Section 6.11 of the Pledge Agreement.
"Designated Accounts" shall have the meaning given that term in the Pledge
Agreement.
3
"Dollar," "Dollars" and the symbol $ shall mean lawful money of the United
States of America.
"Dollar Equivalent" of an amount of a currency other than Dollars shall
mean the amount of Dollars which such amount of such currency could purchase at
11:00 o'clock A.M., Pittsburgh time on the date of determination, based upon the
quoted spot rates of the Issuing Bank at which its applicable branch or office
offers to exchange Dollars for such currency in the foreign exchange market and
"Dollar Equivalent" of an amount denominated in Dollars shall mean such amount
of Dollars.
"Dollar Equivalent Amount" of any Pledged Security shall mean (i) with
respect to any Pledged Security denominated in a currency other than Dollars,
the Dollar Equivalent of the market value of such Pledged Security as most
recently determined at the time in question in accordance with the Pledge
Agreement and (ii) with respect to a Pledged Security denominated in Dollars,
the market value of such Pledged Security as most recently determined at the
time in question in accordance with the Pledge Agreement.
"Environmental Concern Materials" shall mean (a) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in CERCLA or any similar Law),
(b) any toxic chemical or other substance from or related to industrial,
commercial or institutional activities, and (c) asbestos, gasoline, diesel fuel,
motor oil, waste and used oil, heating oil and other petroleum products or
compounds, polychlorinated biphenyls, radon and urea formaldehyde.
"Environmental Law" shall mean any Law, whether now existing or
subsequently enacted or amended, relating to (a) pollution or protection of the
environment, including natural resources, (b) exposure of Persons, including but
not limited to employees, to Environmental Concern Materials, (c) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (d)
regulation of the manufacture, use or introduction into commerce of
Environmental Concern Materials, including their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage or
disposal.
"Event of Default" shall mean any of the Events of Default described in
Article VII hereof.
"Existing Letters of Credit" shall mean the letters of credit issued and,
immediately prior to the Closing Date, outstanding as "Letters of Credit" under
the Prior Agreement.
"Expiration Date" shall mean the Business Day immediately preceding the
first anniversary of the Closing Date, as the same may be extended in accordance
with Section 2.14 hereof.
"Extension Request" shall have the meaning set forth in Section 2.14
hereof.
"GAAP" shall have the meaning set forth in Section 1.03 hereof.
"Guaranteed Obligations" shall have the meaning assigned to that term in
Section 10.01 hereof.
"Guarantors" shall mean XL Insurance, XL Capital, XL Mid Ocean and XL
Investments and "Guarantor" shall mean any one of them.
4
"Guaranty Equivalents" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor for the purpose of assuring the
holder of such Indebtedness, (ii) to advance or provide funds or other support
for the payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keepwell agreements, maintenance agreements,
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Equivalent hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Equivalent is made.
"Indebtedness" of a Person shall mean (it being understood, for the
avoidance of doubt, that insurance payment liabilities, as such, and liabilities
arising in the ordinary course of such Person's business as an insurance or
reinsurance company or corporate member of Lloyds or as a provider of financial
services or contracts (in each case other than in connection with the provision
of financing to such Person or any of such Person's Affiliates) shall not be
deemed to constitute Indebtedness):
(i) all indebtedness or liability for or on account of money
borrowed by, or for or on account of deposits with or advances to (but not
including accrued pension costs, deferred income taxes or accounts payable
of) such Person;
(ii) all obligations (including contingent liabilities) of such
Person evidenced by bonds, debentures, notes, banker's acceptances or
similar instruments;
(iii) all indebtedness or liability for or on account of property or
services purchased or acquired by such Person;
(iv) any amount secured by a Lien on property owned by such Person
(whether or not assumed) and Capitalized Lease Obligations of such Person
(without regard to any limitation of the rights and remedies of the holder
of such Lien or the lessor under such Capitalized Lease to repossession or
sale of such property);
(v) the maximum available amount of all standby letters of credit
issued for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed; and
(vi) all Guaranty Equivalents of such Person.
"Insurance Subsidiary" means any, present or future, direct or indirect
Subsidiary of any Account Party that offers insurance products, including but
not limited to certain of the Account Parties.
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
"Letter of Credit" shall mean each letter of credit issued by the Issuing
Bank for the account of one or more of the Account Parties pursuant to this
Agreement and each of the Existing Letters of Credit, each as amended, modified
or supplemented from time to time.
5
"Letter of Credit Application" shall have the meaning given that term in
Section 2.03(a)(ii) hereof.
"Letter of Credit Exposure" at any time shall mean the sum at such time of
(a) the Aggregate Letter of Credit Unreimbursed Draws (determined as a Dollar
Equivalent), (b) the Aggregate Letter of Credit Undrawn Availability and (c) the
aggregate Stated Amount (determined as a Dollar Equivalent) of Letters of Credit
which have been requested by an Account Party to be issued hereunder but are not
yet so issued.
"Letter of Credit Fee" shall have the meaning given that term in Section
2.01(d) hereof.
"Letter of Credit Participating Interest" shall have the meaning given
that term in Section 2.04(a) hereof.
"Letter of Credit Participating Interest Committed Amount" shall have the
meaning given that term in Section 2.01(a) hereof.
"Letter of Credit Participating Interest Commitment" shall have the
meaning given that term in Section 2.04(a) hereof.
"Letter of Credit Participating Interest Percentage" and "Letter of Credit
Participating Interest Commitment Percentage" for each Bank shall mean a
fraction, expressed as percentage, the numerator of which is such Bank's Letter
of Credit Participating Interest Committed Amount and the denominator of which
is the aggregate Letter of Credit Participating Interest Committed Amounts of
all of the Banks.
"Letter of Credit Reimbursement Obligation" with respect to a Letter of
Credit means the obligation of the applicable Account Party to reimburse the
Issuing Bank for drawings on a Letter of Credit, together with interest thereon,
and "Letter of Credit Reimbursement Obligations" shall mean all such obligations
with respect to all Letters of Credit.
"Letter of Credit Undrawn Availability" with respect to a Letter of Credit
at any time shall mean the maximum amount (determined as a Dollar Equivalent)
available to be drawn under such Letter of Credit at such time or thereafter,
regardless of the existence or satisfaction of any conditions or limitations on
drawing (including, without limitation, the amount of drafts presented but not
yet paid).
"Letter of Credit Unreimbursed Draw" with respect to a Letter of Credit at
any time shall mean the amount at such time of a payment made by the Issuing
Bank under such Letter of Credit, to the extent not repaid by the applicable
Account Party.
"Level One Day" shall mean each day during the period from (but not
including) a Valuation Date to and including the next succeeding Valuation Date
if on the Valuation Date which is the last day of such period the market value
(determined as a Dollar Equivalent Amount) of Zero Percent Risk-Capital
Securities included in the Pledged Securities is less than 35% of the market
value (determined as a Dollar Equivalent Amount) of the Required Pledged
Securities; "Level Two Day" shall mean each day (which is not a Level One Day)
during the period from (but not including) a Valuation Date to and including the
next succeeding Valuation Date if on the Valuation Date which is the last day of
such period the market value (determined as a Dollar Equivalent Amount) of Zero
Percent Risk-Capital Securities included in the Pledged Securities is less than
50% of the market value (determined as a Dollar Equivalent Amount) of the
Required Pledged Securities; "Level Three Day" shall mean each day (which is not
a Level Two Day or a Level One Day) during the period from (but not including) a
Valuation Date to and including the next succeeding Valuation Date if on the
Valuation Date which is the last day of such period the
6
market value (determined as a Dollar Equivalent Amount) of Zero Percent
Risk-Capital Securities included in the Pledged Securities is less than 75% of
the market value (determined as a Dollar Equivalent Amount) of the Required
Pledged Securities; "Level Four Day" shall mean each day (which is not a Level
Three Day, a Level Two Day or a Level One Day) during the period from (but not
including) a Valuation Date to and including the next succeeding Valuation Date
if on the Valuation Date which is the last day of such period the market value
(determined as a Dollar Equivalent Amount) of Zero Percent Risk-Capital
Securities included in the Pledged Securities is less than 100% of the market
value (determined as a Dollar Equivalent Amount) of the Required Pledged
Securities; "Level Five Day" shall mean each day during the period from (but not
including) a Valuation Date to and including the next succeeding Valuation Date
if on the Valuation Date which is the last day of such period the market value
(determined as a Dollar Equivalent Amount) of Zero Percent Risk-Capital
Securities included in the Pledged Securities is 100% or more of the market
value (determined as a Dollar Equivalent Amount) of the Required Pledged
Securities.
"Lien" shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"Material Adverse Effect" shall mean the occurrence of an event (including
any adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), which has or could reasonably be expected to have
a materially adverse effect on: (a) the assets, business, financial condition or
operations of a Credit Party and its Subsidiaries taken as a whole; or (b) the
ability of a Credit Party to perform any of its payment or other material
obligations under this Agreement; or (c) the legality, validity, binding effect
or enforceability against a Credit Party of any Transaction Document that by its
terms purports to bind such Credit Party.
"Nonextending Bank" shall have the meaning assigned to that term in
Section 2.14 hereof.
"Obligations" shall mean, collectively, the Letter of Credit Reimbursement
Obligations and the obligations of each and every Account Party to pay all fees,
indemnities and all other liabilities of such Account Party arising pursuant to
the terms of this Agreement or the other Transaction Documents.
"Office," when used in connection with the Agent, shall mean its office
located at Xxx Xxxxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, or at such
other office or offices of the Agent or branch, subsidiary or affiliate thereof
as may be designated in writing from time to time by the Agent to the Account
Parties and the Banks.
"Official Body" shall mean any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Permitted Liens" shall mean the Liens described in paragraphs (a) through
(g) of Section 6.03.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated association, joint venture, joint-stock company, government
(including political subdivisions), official body or agency, or any other
entity.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of June 30,
1999, between the Agent, XL Investments and XL Mid Ocean, as amended or modified
from time to time.
7
"Pledged Securities" shall have the meaning given that term in the Pledge
Agreement.
"Pledged Securities Available Amount" at any time shall mean the amount
which is equal to 90% of the value of the Qualifying Pledged Securities (as
determined as a Dollar Equivalent Amount at such time).
"Potential Default" shall mean any event or condition referenced in
Article VII hereof which with notice, passage of time or both would constitute
an Event of Default.
"Pound," "Pounds" and the symbol "(pound)" shall mean the lawful money of
the United Kingdom.
"Prime Rate" shall mean the interest rate per annum announced from time to
time by the Agent as its prime rate, such rate to change automatically effective
as of the effectiveness of each announced change in such prime rate (it being
understood that such Prime Rate may be greater or less than other interest rates
charged by the Agent to other borrowers and is not solely based or dependent
upon the interest rate which the Agent may charge any particular borrower or
class of borrower).
"Prior Agreement" has the meaning ascribed to that term in the preambles
to this Agreement.
"Private Act" shall mean separate legislation enacted in Bermuda with the
intention that such legislation applies specifically to a Credit Party in whole
or in part.
"Pro Rata" shall have the meaning assigned to that term in Section 2.15
hereof.
"Purchasing Bank" shall have the meaning assigned to that term in Section
9.13(c) hereof.
"Qualifying Pledged Securities" shall mean (i) direct claims (including
securities, loans and leases) on, and the portions of claims that are directly
and unconditionally guaranteed by, the central government of any OECD country or
any U.S. Government Agency, as such terms are used in Appendix A, Section
III(C), Category I to Regulation H, as promulgated by the Board of Governors of
the Federal Reserve System and (ii) claims on, and the portions of claims that
are guaranteed by, U. S. Government-sponsored agencies and claims on, and the
portions of claims guaranteed by, certain multilateral lending institutions in
which the U. S. government is a shareholder or contributing member or shares of
money market mutual funds investing solely in U.S. Government Securities, as
such terms are used in Appendix A, Section III(C), Category II to such
Regulation H; provided, however, that those securities or obligations referred
to in clauses (i) and, (ii) above shall not be counted towards the Collateral
Value Requirement under the Pledge Agreement unless such securities or
obligations have a twenty percent or lower risk capital weighting under such
Regulation H, as amended from time to time.
"Register" shall have the meaning given that term in Section 9.13(d)
hereof.
"Regular Payment Date" shall mean the last day of each March, June,
September and December after the date hereof, or, if such last day is not a
Business Day, the next succeeding Business Day.
"Replacement Bank" shall have the meaning assigned to that term in Section
2.14 hereof.
"Required Banks" shall mean at any time Banks which have at least 51% of
the aggregate Letter of Credit Participating Interests in Letters of Credit
outstanding at such time.
8
"Required Commitment Banks" shall have the meaning assigned to that term
in Section 2.15 hereof.
"Required Pledged Securities" shall mean at any time Qualifying Pledged
Securities 90% of the market value of which (expressed as a Dollar Equivalent
Amount) is equal to, but not greater than, the sum of the Aggregate Letter of
Credit Unreimbursed Draws (determined as a Dollar Equivalent) at such time and
the Aggregate Letter of Credit Undrawn Availability at such time.
"SAP" shall mean, as to each Account Party and each Insurance Subsidiary,
the statutory accounting practices prescribed or permitted by the relevant
Official Body (including, in the case of Xxxxxxxxx Group, the Lloyds council)
for such Account Party's or such Insurance Subsidiary's domicile for the
preparation of Annual Statements and other Default reports by insurance
corporations of the same type as such Account Party or such Insurance Subsidiary
in effect on the date such statements or reports are to be prepared.
"Standard Notice" shall mean an irrevocable notice provided to the Agent
at no later than 10:00 o'clock a.m., Pittsburgh time, on a Business Day.
Standard Notice shall be in writing (including telex, facsimile or cable
communication) or by telephone (to be subsequently confirmed in writing) in any
such case, effective upon receipt by the Agent.
"Stated Amount" shall mean, with respect to a Letter of Credit, the
maximum face or stated amount of such Letter of Credit, irrespective of whether
such maximum amount is available for drawing at the time in question.
"Subsidiary" of a Person at any time shall mean any corporation of which a
majority (by number of shares or number of votes) of any class of outstanding
capital stock normally entitled to vote for the election of one or more
directors (regardless of any contingency which does or may suspend or dilute the
voting rights of such class) is at such time owned directly or indirectly by
such Person or one or more Subsidiaries of such Person.
"Syndicated Revolving Credit Agreements" shall mean the Revolving Credit
Agreement, dated as of June 6, 1997, among XL Insurance, XL Mid Ocean, EXEL
Acquisition Ltd., XL Capital, the banks parties thereto and Mellon Bank, N. A.,
as Agent, as amended or extended from time to time, and the Short Term Revolving
Credit Agreement, dated as of June 30, 1999, among XL Insurance, XL Mid Ocean,
XL Capital, the banks parties thereto and Mellon Bank, N. A. and The Chase
Manhattan Bank, as Agents, as amended or extended from time to time, and such
one or more other agreements as are replacements for one or both of such
Agreements.
"Total Funded Debt" of a Person at any time shall mean all Indebtedness of
such person which would at such time be classified in whole or in part as a
liability on the balance sheet of such person in accordance with GAAP.
"Tranche 1 Bank", "Tranche 1 Letter of Credit", "Tranche 1 Letter of
Credit Participating Interest Percentage", "Tranche 2 Bank", "Tranche 2 Letter
of Credit", "Tranche 2 Letter of Credit Participating Interest Commitment
Percentage", "Tranche 2 Letter of Credit Participating Interest Commitment",
"Tranche 2 Letter of Credit Participating Interest Committed Amount", "Tranche 2
Letter of Credit Participating Interest Commitment Percentage", "Tranche 3
Letter of Credit", "Tranche 4 Letter of Credit" and "Tranche X" shall have the
respective meanings assigned to those terms in Section 2.15 hereof.
"Transaction Document" or "Transaction Documents" shall mean this
Agreement, the Pledge Agreement, each Letter of Credit and any other documents
or instruments executed and delivered in connection herewith or therewith.
9
"Transfer Supplement" shall have the meaning given that term in Section
9.13(c)(iv) hereof.
"Valuation Date" shall mean the last Business Day of each month.
"Zero Percent Risk-Capital Securities" means Pledged Securities which have
a 0% risk-capital weighting for bank regulatory capital purposes.
1.02. Construction. Unless the context of this Agreement otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or. "
References in this Agreement to "determination" by the Agent include estimates
by the Agent in good faith, without gross negligence and without manifest error
(in the case of quantitative determinations) and beliefs held by the Agent in
good faith and without gross negligence (in the case of qualitative
determinations). The words "hereof," "herein," "hereunder" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation hereof in any respect.
Section, subsection and exhibit references are to this Agreement unless
otherwise specified.
1.03. Accounting Principles. (a) As used herein, "GAAP" shall mean
generally accepted accounting principles as such principles shall be in effect
in the United States of America, or with respect to Xxxxxxxxx Group, the United
Kingdom, and with respect to XL Europe, the Republic of Ireland, at the Relevant
Date, subject to the other provisions of this Section 1.03. As used herein,
"Relevant Date" shall mean the date a relevant computation or determination is
to be made or the date of relevant financial statements, as the case may be.
(b) Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters shall be made, and all
financial statements to be delivered pursuant to this Agreement shall be
prepared, in accordance with GAAP or SAP, as the context requires (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP or SAP, as
appropriate.
(c) If any change in GAAP or SAP after the date of this Agreement is or
shall be required to be applied to transactions then or thereafter in existence,
and a violation of one or more financial covenants of this Agreement shall have
occurred (or in the opinion of the Required Banks would be likely to occur)
which would not have occurred or be likely to occur if no change in accounting
principles had taken place, the parties agree in such event to negotiate in good
faith an amendment of this Agreement which shall approximate to the extent
possible the economic effect of the original financial covenants after taking
into account such change in GAAP or SAP, as appropriate.
(d) Without in any manner limiting the provisions of this Section 1.03, if
any change in GAAP or SAP occurs after the date of this Agreement and such
change in GAAP or SAP would have materially changed an Account Party's reported
financial results or position from that reflected in such Account Party's
financial statements most recently prepared prior to such change, such Account
Party shall notify the Agent as soon as practicable.
ARTICLE II
THE LETTER OF CREDIT FACILITY
2.01. Letters of Credit.
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(a) Letter of Credit Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, the Issuing
Bank agrees to issue (or, in the case of Existing Letters of Credit, maintain
outstanding) Letters of Credit for the account of an Account Party at any time
or from time to time on or after the date hereof and to but not including the
Expiration Date (it being understood that Letters of Credit may be outstanding
for the account of one or more of the Account Parties at any time). The Issuing
Bank shall have no obligation to issue any Letters of Credit if, after such
Letters of Credit are issued, the Letter of Credit Exposure upon such issuance
would exceed the lesser of (x) the aggregate of the Banks' Letter of Credit
Participating Interest Committed Amounts and (y) the Pledged Securities
Available Amount. Each Bank's "Letter of Credit Participating Interest Committed
Amount" at any time shall be equal to the amount set forth as its "Initial
Letter of Credit Participating Interest Committed Amount" below its name on the
signature pages hereof, as such amount may have been reduced under Section
2.02(b) hereof at such time, and subject to transfer to or from another Bank as
provided in Section 9.13 hereof.
(b) Terms of Letters of Credit. The Account Parties shall not request to
be issued, and the Issuing Bank shall have no obligation to issue, any Letter of
Credit except within the following limitations: (i) each Letter of Credit shall
have an expiration date no later than 12 months after the date of issuance
thereof; provided, however, that (x) one or more Letters of Credit with
aggregate Stated Amounts for all such Letters of Credit (determined as a Dollar
Equivalent) of up to an amount equal to 60% of the aggregate of the Banks'
Letter of Credit Participating Interest Committed Amounts may have an expiration
date no later than five years from the date of issuance and (y) any Letter of
Credit may have an "evergreen" provision having substantially the effect set
forth on Schedule 2.01(b) hereof, (ii) each Letter of Credit shall be
denominated in Dollars or Pounds and (iii) each Letter of Credit shall be
payable only against sight drafts (and not time drafts).
(c) Form of Letters of Credit. The Issuing Bank shall have no obligation
to issue any letter of credit which is unsatisfactory in form, substance or
beneficiary to the Issuing Bank in the exercise of its reasonable judgment
consistent with its customary practice. The Issuing Bank may not object to a
letter of credit on account of the fact that it may be presented for drawing at
the Issuing Bank's branch in London, England (or, if the Issuing Bank no longer
maintains such a branch at the time of issuance of a Letter of Credit, at such
other location in London, England as may be commercially reasonable). It is
contemplated that one or more Letters of Credit which are requested to be issued
by, and which are issued for the account of, XL Capital, XL Insurance or XL Mid
Ocean, respectively, may be stated to be issued for the account of NAC Re
Corporation, ECS, Inc., or Latin American Reinsurance Company, Ltd., in which XL
Capital, XL Insurance or XL Mid Ocean, as the case may be, has a direct or
indirect ownership interest, provided that, notwithstanding the fact that the
name of XL Capital, XL Insurance or XL Mid Ocean, as the case may be, may not
appear on the face of any such Letter of Credit, XL Capital, XL Insurance or XL
Mid Ocean, as the case may be, shall be the Account Party with respect to such
Letter of Credit and shall have all Letter of Credit Reimbursement Obligations
and other obligations hereunder with respect thereto.
(d) Letter of Credit Fee. Each Account Party shall pay or cause to be paid
to the Agent for the account of each Bank, in accordance with its Letter of
Credit Participating Interest Commitment Percentage , a fee (the "Letter of
Credit Fee") for Letters of Credit (based on a year of 360 days and actual days
elapsed), for each Letter of Credit issued for the account of such Account Party
for each day from and including the date of issuance thereof to and including
the date of expiration or termination thereof, on the Letter of Credit Undrawn
Availability on such day at a rate per annum equal to 0.15% for each Level Five
Day, 0.165% for each Level Four Day, 0.18% for each Level Three Day, 0.23% for
each Level Two Day and 0.28% for each Level One Day. Such Letter of Credit Fee
shall be due and payable for the preceding period for which such fee has not
been paid on each of the following dates: (i) each Regular Payment Date, (ii)
the date of each drawing on such Letter of Credit, and (iii) the date of
expiration or termination of such Letter of Credit. If any Letter of Credit Fee
payment is made on a day which is not a Valuation Date, the amount of such
Letter of Credit Fee attributable to the period from the preceding Valuation
Date until such day shall be determined by
11
reference to the rate applicable on such preceding Valuation Date, subject to
retroactive adjustment on the next succeeding Valuation Date. The Agent shall
provide to XL Capital on a monthly basis a certificate, showing in reasonable
detail (with reference to the valuation report as of the last business day of
the applicable month provided by the Custodian to the Agent pursuant to the
Custodian's Acknowledgments (as defined in the Pledge Agreement)) the Agent's
calculation of the Letter of Credit Fee.
(e) Purpose of Letters of Credit. The Account Parties agree that each
Letter of Credit shall be used by the Account Party for whom it is issued as a
standby letter of credit, to provide credit enhancement for contract performance
guarantees or for similar bonding requirements, all in the ordinary course of
business of such Account Party. The provisions of this Section 2.01(e) represent
only an obligation of the Account Parties to the Issuing Bank and the Banks; the
Issuing Bank shall have no obligation to the Banks to ascertain the purpose of
any Letter of Credit, and, without limiting the generality of the provisions of
Section 2.04(b) hereof, the rights and obligations of the Banks and the Issuing
Bank among themselves shall not be impaired or affected by a breach of this
Section 2.01(e).
(f) Administration Fees. Each Account Party shall pay to the Agent, for
the sole account of the Issuing Bank, such other administration, maintenance,
amendment, drawing and negotiation fees as are customarily charged by the
Issuing Bank to its customers generally at the time in question (a list of which
customary charges as of the date of this Agreement has been provided by the
Issuing Bank to XL Insurance) or are otherwise agreed between the Issuing Bank
and the Account Parties.
2.02. Commitment Fee; Reduction of the Committed Amounts.
(a) Commitment Fee. XL Insurance agrees to pay to the Agent for the
account of each Bank a commitment fee (the "Commitment Fee") for each day during
the period from the Closing Date to and including the Expiration Date calculated
(based on a year of 360 days and actual days elapsed) at a per annum rate equal
to 0.07% payable on the unused portion of such Bank's Letter of Credit
Participating Interest Committed Amount in effect on such day. Such fee shall be
payable on each Regular Payment Date and on the Expiration Date for the
preceding period for which such fee has not been paid.
(b) Reduction of the Committed Amounts. XL Capital may at any time or from
time to time reduce Pro Rata the Letter of Credit Participating Interest
Committed Amounts of the Banks to an aggregate amount (which may be zero) not
less than the Letter of Credit Exposure. Any reduction of the Letter of Credit
Participating Interest Committed Amounts shall be in an aggregate minimum amount
of $25,000,000 and in an amount which is an integral multiple of $5,000,000.
Reduction of the Letter of Credit Participating Interest Committed Amounts shall
be made by providing not less than five Business Days' notice (which notice
shall be irrevocable) to such effect to the Agent, which will promptly advise
the Banks of such notice. After the date specified in such notice, the
Commitment Fee shall be calculated upon the Letter of Credit Participating
Interest Committed Amounts as so reduced.
2.03. Procedure for Issuance and Amendment of Letters of Credit.
(a) Request for Issuance. An Account Party may from time to time request,
upon at least three Business Days' notice, the Issuing Bank to issue a Letter of
Credit by:
(i) delivering to the Issuing Bank and the Agent a written request
to such effect, specifying the date on which such Letter of Credit is to
be issued, the expiration date thereof, and the Stated Amount thereof, and
(ii) delivering to the Issuing Bank a completed application, in the
form annexed hereto as Exhibit F, or in such other form as is from time to
time be required by the Issuing
12
Bank in accordance with its customary practice with respect to its
customers generally (a "Letter of Credit Application"), together with such
other certificates, documents and other papers as are specified in such
application.
Upon receiving any such notice, the Issuing Bank shall promptly notify the Agent
(by telephone or otherwise), and furnish the Agent with the proposed form of
Letter of Credit to be issued. The Agent shall, promptly upon receiving such
notice, notify the Banks of such proposed Letter of Credit (which notice shall
specify the Stated Amount and term of such proposed Letter of Credit), and shall
determine, as of the close of business on the Business Day before such proposed
issuance, whether such proposed Letter of Credit complies with the limitations
set forth in Section 2.01 hereof. If such limitations set forth in Section 2.01
are not satisfied or if the Required Banks have given notice to the Agent to
cease issuing Letters of Credit pursuant to Section 2.03(c)(ii) hereof, the
Agent shall notify the Issuing Bank (in writing or by telephone promptly
confirmed in writing) that the Issuing Bank is not authorized to issue such
Letter of Credit. If the Issuing Bank issues a Letter of Credit, it shall
deliver the original of such Letter of Credit to the beneficiary thereof or as
the Account Party shall otherwise direct, and shall promptly notify the Agent
thereof and furnish a copy thereof to the Agent.
(b) Request for Extension or Increase. An Account Party may from time to
time request the Issuing Bank to extend the expiration date of an outstanding
Letter of Credit or increase (or, with the consent of the beneficiary, decrease)
the Stated Amount of or the amount available to be drawn on such Letter of
Credit. Such extension or increase shall for all purposes hereunder be treated
as though such Account Party had requested issuance of a replacement Letter of
Credit (except only that the Issuing Bank may, if it elects, issue a notice of
extension or increase in lieu of issuing a new Letter of Credit in substitution
for the outstanding Letter of Credit).
(c) Limitations on Issuance, Extension and Amendment.
(i) As between the Issuing Bank, on the one hand, and the Agent and
the Banks, on the other hand, the Issuing Bank shall be justified and
fully protected in issuing a Letter of Credit after receiving
authorization from the Agent as provided in Section 2.03(a) hereof,
notwithstanding any subsequent notices to the Issuing Bank, any knowledge
of an Event of Default (unless the Issuing Bank shall have received a
notice specifying that such Event of Default is an "Event of Default"
under this Agreement) or Potential Default, any knowledge of failure of
any condition specified in Section 4.02 hereof to be satisfied, any other
knowledge of the Issuing Bank, or any other event, condition or
circumstance whatsoever. The Issuing Bank may amend, modify or supplement
Letters of Credit or Letter of Credit Applications, or waive compliance
with any condition of issuance or payment, without the consent of, and
without liability to, the Agent or any Bank, provided that any such
amendment, modification or supplement that extends the expiration date or
increases the Stated Amount of or the amount available to be drawn on an
outstanding Letter of Credit shall be subject to Section 2.01.
(ii) As between the Agent, on the one hand, and the Banks, on the
other hand, the Agent shall not authorize issuance of any Letter of Credit
if the Agent shall have received, at least two Business Days before
authorizing such issuance, from the Required Banks an unrevoked written
notice that any condition precedent set forth in Section 4.02 will not be
satisfied as of the time of such issuance and expressly requesting that
the Agent direct the Issuing Bank to cease to issue Letters of Credit.
Absent such notice, or unless the Agent determines that the applicable
limitations set forth in Section 2.01 hereof are not satisfied, the Agent
shall be justified and fully protected, as against the Banks, in
authorizing the Issuing Bank to issue such Letter of Credit,
notwithstanding any subsequent notices to the Agent, any knowledge of an
Event of Default or Potential Default, any knowledge of failure of any
condition specified in Section 4.02 hereof to be satisfied, any other
knowledge of the Agent, or any other event, condition or circumstance
whatsoever.
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2.04. Letter of Credit Participating Interests.
(a) Generally. Concurrently with the issuance of each Letter of Credit,
the Issuing Bank automatically shall be deemed, irrevocably and unconditionally,
to have sold, assigned, transferred and conveyed to each other Bank, and each
other Bank automatically shall be deemed, irrevocably and unconditionally,
severally to have purchased, acquired, accepted and assumed from the Issuing
Bank, without recourse to, or representation or warranty by, the Issuing Bank,
an undivided interest, in a proportion equal to such Bank's Pro Rata share, in
all of the Issuing Bank's rights and obligations in, to or under such Letter of
Credit, the related Letter of Credit Application, the Letter of Credit
Reimbursement Obligations, and all collateral, guarantees and other rights from
time to time directly or indirectly securing the foregoing (such interest of
each Bank being referred to herein as a "Letter of Credit Participating
Interest", it being understood that the Letter of Credit Participating Interest
of the Issuing Bank is the interest not otherwise attributable to the Letter of
Credit Participating Interests of the other Banks). Each Bank irrevocably and
unconditionally agrees to the immediately preceding sentence, such agreement
being herein referred to as such Bank's "Letter of Credit Participating Interest
Commitment". Amounts other than Letter of Credit Reimbursement Obligations and
Letter of Credit Fees payable from time to time under or in connection with a
Letter of Credit or Letter of Credit Application shall be for the sole account
of the Issuing Bank. On the date that any Purchasing Bank becomes a party to
this Agreement in accordance with Section 9.13(c) hereof, Letter of Credit
Participating Interests in all outstanding Letters of Credit held by the Bank
from which such Purchasing Bank acquired its interest hereunder shall be
proportionately reallocated between such Purchasing Bank and such transferor
Bank (and, to the extent such transferor Bank is the Issuing Bank, the
Purchasing Bank shall be deemed to have acquired a Letter of Credit
Participating Interest from the Issuing Bank to such extent).
(b) Maximum Amounts of Funding of Participations.
(i) This Section 2.04(b)(i) is applicable if the Conversion to
Tranche System has not occurred. No Bank will be obligated to fund its Letter of
Credit Participating Interest Percentage of a drawing on a Letter of Credit if
such funding would cause the aggregate amount of outstanding unreimbursed
fundings by such Bank of drawings on Letters of Credit to exceed such Bank's
Letter of Credit Participating Interest Committed Amount, unless such excess
results from the fact, with respect to a drawing on a Letter of Credit
denominated in Pounds, that the Dollar Equivalent of one Pound is higher at the
time of such funding than it was at the time of issuance of such Letter of
Credit denominated in Pounds.
(ii) This Section 2.04(b)(ii) is applicable if the Conversion to
Tranche System has occurred. No Tranche 1 Bank, Tranche 2 Bank or Tranche X
Bank, as the case may be, will be obligated to fund its Letter of Credit
Participating Interest Percentage of a drawing on a Tranche 1 Letter of Credit,
Tranche 2 Letter of Credit or Tranche X Letter of Credit, as the case may be, if
such funding would cause the aggregate amount of outstanding unreimbursed
fundings by such Bank of drawings on Letters of Credit under such applicable
Tranche to exceed such Bank's Letter of Credit Participating Interest Committed
Amount under such applicable Tranche, unless such excess results from the fact,
with respect to a drawing on a Letter of Credit denominated in Pounds, that the
Dollar Equivalent Amount of one Pound is higher at the time of such funding than
it was at the time of issuance of such Letter of Credit denominated in Pounds.
(c) Obligations Absolute. Notwithstanding any other provision hereof, each
Bank hereby agrees that its obligation to participate in each Letter of Credit
issued in accordance herewith, its obligation to make the payments specified in
Section 2.05 hereof, and the right of the Issuing Bank to receive such payments
in the manner specified therein, are each absolute, irrevocable and
unconditional and shall not be affected by any event, condition or circumstance
whatever. The failure of any Bank to make any such payment shall not relieve any
other Bank of its funding obligation
14
hereunder on the date due, but no Bank shall be responsible for the failure of
any other Bank to meet its funding obligations hereunder.
2.05. Letter of Credit Drawings and Reimbursements.
(a) Account Party's Reimbursement Obligation. Each Account Party hereby
agrees to reimburse the Issuing Bank, by making payment to the Agent for the
account of the Issuing Bank in accordance with Section 2.11(a) hereof on the
date of each payment made by the Issuing Bank under any Letter of Credit issued
for such Account Party's account (or, if later, the date which is one Business
Day after notice of such payment or of the drawing giving rise to such payment
is given to XL Capital), without, protest or demand, all of which are hereby
waived, and an action therefor shall immediately accrue. Each Account Party
agrees that it will make such payment to the Agent for the account of the
Issuing Bank in the same currency as the currency of the payment by the Issuing
Bank under such Letter of Credit. To the extent such payment is not timely made,
such Account Party hereby agrees to pay to the Agent, for the account of the
Issuing Bank, on demand, interest on any Letter of Credit Unreimbursed Draws for
each day from and including the date of such payment by the Issuing Bank until
paid (before and after judgment) in accordance with Section 2.11(a) hereof, at
the rate per annum set forth in Section 2.11(b) hereof.
(b) Payment by Banks on Account of Unreimbursed Draws. If the Issuing Bank
makes a payment under any Letter of Credit and is not reimbursed in full
therefor on such payment date in accordance with Section 2.05(a) hereof, the
Issuing Bank will promptly notify the Agent thereof (which notice may be by
telephone), and the Agent shall forthwith notify each Bank (which notice may be
by telephone promptly confirmed in writing) thereof. No later than the Agent's
close of business on the date such notice is given (if notice is given by 2:00
o'clock P.M., Pittsburgh time) or 10:00 o'clock A.M., Pittsburgh time the
following day (if notice is given after 2:00 o'clock P.M., Pittsburgh time) ,
each Bank will pay to the Agent, for the account of the Issuing Bank, in
immediately available funds, an amount equal to such Bank's Pro Rata share of
the unreimbursed portion of such payment by the Issuing Bank, provided such
notice is given no later than 2:00 o'clock P.M., Pittsburgh time and subject to
Section 2.04(b). Each Bank agrees that such payment to the Agent for the account
of the Issuing Bank shall be in the same currency as the currency of the payment
by the Issuing Bank under the Letter of Credit. If and to the extent that any
Bank fails to make such payment to the Issuing Bank on such date, such Bank
shall pay such amount on demand, together with interest, for the Issuing Bank's
own account, for each day from and including the date of the Issuing Bank's
payment to and including the date of repayment to the Issuing Bank (before and
after judgment) at rate per annum for each day from and including the date of
such payment by the Issuing Bank to and including the second Business Day
thereafter equal to the Applicable Interest Rate.
(c) Distributions to Banks. If, at any time, after there occurs a Letter
of Credit Unreimbursed Draw and the Issuing Bank has received from any Bank such
Bank's share of such Letter of Credit Unreimbursed Draw, and the Issuing Bank
receives any payment or makes any application of funds on account of the Letter
of Credit Reimbursement Obligation arising from such Letter of Credit
Unreimbursed Draw, the Issuing Bank will pay to the Agent, for the account of
such Bank , such Bank's Pro Rata share of such payment.
(d) Rescission. If any amount received by the Issuing Bank on account of
any Letter of Credit Reimbursement Obligation shall be avoided, rescinded or
otherwise returned or paid over by the Issuing Bank for any reason at any time,
whether before or after the termination of this Agreement (or the Issuing Bank
believes in good faith that such avoidance, rescission, return or payment is
required, whether or not such matter has been adjudicated), each such Bank will,
promptly upon notice from the Agent or the Issuing Bank, pay over to the Agent
for the account of the Issuing Bank its Pro Rata share of such amount, together
with its Pro Rata share of any interest or penalties payable with respect
thereto.
15
2.06 Equalization. If any Bank receives any payment or makes any
application on account of its Letter of Credit Participating Interest, such Bank
shall forthwith pay over to the Issuing Bank, in Dollars and in like kind of
funds received or applied by it the amount in excess of such Bank's ratable
share of the amount so received or applied.
2.07. Obligations Absolute. The payment obligations of the Account Parties
and of the Banks under Section 2.05 shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of this Agreement, any Letter
of Credit or any Transaction Document against an Account Party;
(b) the existence of any claim, set-off, defense or other right which any
Account Party, any Guarantor or any other Person may have at any time against
any beneficiary or transferee of any Letter of Credit (or any Persons for whom
any such beneficiary or transferee may be acting), the Issuing Bank, any Bank,
or any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or any unrelated transaction;
(c) any draft, certificate, statement or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(d) payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit, or payment by the Issuing Bank under the Letter of Credit
in any other circumstances in which conditions to payment are not met, except
any such wrongful payment resulting solely from the gross negligence or willful
misconduct of the Issuing Bank; or
(e) any other event, condition or circumstance whatever, whether or not
similar to any of the foregoing, except if the same results solely from the
gross negligence or willful misconduct of the Issuing Bank.
Each Account Party bears the risk of, and neither the Issuing Bank, any of its
directors, officers, employees or agents, nor any Bank, shall be liable or
responsible for any of, the foregoing matters, the use which may be made of any
Letter of Credit, or acts or omissions of the beneficiary or any transferee in
connection therewith, except for such person's gross negligence or willful
misconduct.
2.08. Further Assurances. Each Account Party and each Guarantor hereby
agrees, from time to time, to do and perform any and all acts and to execute any
and all further instruments reasonably requested by the Issuing Bank more fully
to effect the purposes of this Agreement and the issuance of the Letters of
Credit hereunder.
2.09. Letter of Credit Applications. The representations, warranties and
covenants by the Account Parties under, and the rights and remedies of the
Issuing Bank under, the Continuing Letter of Credit Agreement and any Letter of
Credit Application relating to any Letter of Credit are in addition to, and not
in limitation or derogation of, representations, warranties and covenants by the
Account Parties under, and rights and remedies of the Issuing Bank and the Banks
under, this Agreement, the Transaction Documents, and applicable Law. Each
Account Party acknowledges and agrees that all rights of the Issuing Bank under
any Letter of Credit Application shall inure to the benefit of each Bank to the
extent of its Letter of Credit Participating Interest Commitment Percentage as
fully as if such Bank was a party to such Letter of Credit Application. In the
event of any inconsistency between the terms of this Agreement and any Letter of
Credit Application, this Agreement shall prevail.
16
2.10. Certain Provisions Relating to the Issuing Bank.
(a) General. The Issuing Bank shall have no duties or responsibilities
except those expressly set forth in this Agreement and the other Transaction
Documents, and no implied duties or responsibilities on the part of the Issuing
Bank shall be read into this Agreement or any Transaction Document or shall
otherwise exist. The duties and responsibilities of the Issuing Bank to the
other Bank Parties under this Agreement and the other Transaction Documents
shall be mechanical and administrative in nature, and the Issuing Bank shall not
have a fiduciary relationship in respect of any Bank Party or any other Person.
The Issuing Bank shall not be liable for any action taken or omitted to be taken
by it under or in connection with this Agreement or any other Transaction
Document, unless caused by its own gross negligence or willful misconduct. The
Issuing Bank shall not be under any obligation to ascertain, inquire or give any
notice relating to (i) the performance or observance of any of the terms or
conditions of this Agreement or any other Transaction Document on the part of
any Account Party, (ii) the business, operations, condition (financial or
otherwise) or prospects of the Account Parties or any other Person, or (iii) the
existence of any Event of Default or Potential Default. The Issuing Bank shall
not be under any obligation, either initially or on a continuing basis, to
provide the Agent or any Bank with any notices, reports or information of any
nature, whether in its possession presently or hereafter, except for such
notices, reports and other information expressly required by this Agreement to
be so furnished. The Issuing Bank shall not be responsible for the execution,
delivery, effectiveness, enforceability, genuineness, validity or adequacy of
this Agreement or any other Transaction Document.
(b) Administration. The Issuing Bank may rely upon any notice or other
communication of any nature (written or oral, including but not limited to
telephone conversations, whether or not such notice or other communication is
made in a manner permitted or required by this Agreement or any Transaction
Document) purportedly made by or on behalf of the proper party or parties, and
the Issuing Bank shall not have any duty to verify the identity or authority of
any Person giving such notice or other communication. The Issuing Bank may
consult with legal counsel (including, without limitation, in-house counsel for
the Issuing Bank or in-house or other counsel for the Account Parties),
independent public accountants and any other experts selected by it from time to
time, and the Issuing Bank shall not be liable for any action taken or omitted
to be taken in good faith in accordance with the advice of such counsel,
accountants or experts. Whenever the Issuing Bank shall deem it necessary or
desirable that a matter be proved or established with respect to any Account
Party or Bank Party, such matter may be established by a certificate of such
Account Party or Bank Party, as the case may be, and the Issuing Bank may
conclusively rely upon such certificate. The Issuing Bank shall not be deemed to
have any knowledge or notice of the occurrence of any Event of Default or
Potential Default unless the Issuing Bank has received notice from a Bank or any
Credit Party referring to this Agreement, describing such Event of Default or
Potential Default, and stating that such notice is a "notice of default". If the
Issuing Bank receives such a notice, the Issuing Bank shall give prompt notice
thereof to the Agent.
(c) Indemnification of Issuing Bank by Banks. Each Bank hereby agrees to
reimburse and indemnify the Issuing Bank and each of its directors, officers,
employees and agents (to the extent not reimbursed by the Account Parties and
without limitation of the obligations of the Account Parties to do so), Pro
Rata, from and against any and all amounts, losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature (including, without limitation, the
reasonable fees and disbursements of counsel (other than in-house counsel) for
the Issuing Bank or such other Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
the Issuing Bank or such other Person shall be designated a party thereto) that
may at any time be imposed on, incurred by or asserted against the Issuing Bank,
in its capacity as such, or such other Person, as a result of, or arising out
of, or in any way related to or by reason of, this Agreement, any other
Transaction Document, any transaction from time to time contemplated hereby or
thereby, or any transaction financed in whole or in part or directly or
indirectly with the proceeds of any Letter of Credit, provided, that no Bank
shall be liable for any
17
portion of such amounts, losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
resulting from the gross negligence or willful misconduct of the Issuing Bank or
such other Person, as finally determined by a court of competent jurisdiction.
(d) Issuing Bank in its Individual Capacity. With respect to its
commitment hereunder and the Obligations owing to it, the Issuing Bank shall
have the same rights and powers under this Agreement and each other Transaction
Document as any other Bank and may exercise the same as though it were not the
Issuing Bank, and the terms "Banks," "holders of Notes" and like terms shall
include the Issuing Bank in its individual capacity as such. The Issuing Bank
and its affiliates may, without liability to account, make loans to, accept
deposits from, acquire debt or equity interests in, act as trustee under
indentures of, act as agent under other credit facilities for, and engage in any
other business with, any Credit Party and any stockholder, subsidiary or
affiliate of any Credit Party, as though the Issuing Bank were not the Issuing
Bank hereunder.
2.11. Payments Generally; Interest and Interest on Overdue Amounts.
(a) Payments Generally. All payments to be made by an Account Party in
respect of fees, indemnity, expenses or other amounts due from such Account
Party hereunder or under any Transaction Document shall be payable in Dollars at
12:00 o'clock Noon, Pittsburgh time, on the day when due without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived,
and an action therefor shall immediately accrue, without setoff, counterclaim,
withholding or other deduction of any kind or nature. Except for payments under
Sections 2.12, 2.13 and 9.04 hereof, such payments shall be made to the Agent at
its Office in Dollars in funds immediately available at such Office. Payments
under Sections 2.12, 2.13 and 9.04 hereof shall be made to the applicable Bank
at such domestic account as it shall specify to the Account Parties from time to
time in funds immediately available at such account. Any payment or prepayment
received by the Agent or such Bank after 12:00 o'clock Noon, Pittsburgh time, on
any day shall be deemed to have been received on the next succeeding Business
Day. The Agent shall distribute to the Banks all such payments received by it
from an Account Party as promptly as practicable after receipt by the Agent.
(b) Interest and Interest on Overdue Amounts. Interest on Letter of Credit
Reimbursement Obligations shall accrue at a rate per annum (based on a year of
360 days and actual days elapsed) which for each day shall be equal to the
then-current Applicable Interest Rate beginning on the day that the related
Letter of Credit payment is made and shall be due and payable on the day that
the Letter of Credit Reimbursement Obligation is due and payable in accordance
with Section 2.05(a) hereof. To the extent permitted by law, after there shall
have become due (by acceleration or otherwise) fees, indemnity, expenses or any
other amounts due from the Account Parties hereunder or under any other
Transaction Document, such amounts shall bear interest for each day until paid
(before and after judgment), payable on demand, at a rate per annum (in each
case based on a year of 360 days and actual days elapsed) which for each day
shall be equal to 2% above the then-current Applicable Interest Rate. To the
extent permitted by law, interest accrued on any amount which has become due
hereunder or under any Transaction Document shall compound on a day-by-day
basis, and hence shall be added daily to the overdue amount to which such
interest relates.
2.12. Additional Compensation in Certain Circumstances. If the
introduction of or any change in, or any change in the interpretation or
application of, any Law, regulation or guideline by any Official Body charged
with the interpretation or administration thereof or compliance with any request
or directive of any applicable Official Body (whether or not having the force of
law):
(i) subjects any Bank to any tax or changes the basis of taxation
with respect to this Agreement, the Letters of Credit or payments by the
Account Parties of fees or other amounts due from the Account Parties
hereunder or under the other Transaction Documents (except for taxes on
the overall net income or overall gross receipts of such Bank imposed by
the jurisdictions (federal, state and local) in which the Bank's principal
office is located),
18
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend
credit extended by, assets (funded or contingent) of, deposits with or for
the account of, other acquisitions of funds by, such Bank,
(iii) imposes, modifies or deems applicable any capital adequacy or
similar requirement (A) against assets (funded or contingent) of, or
credits or commitments to extend credit extended by, any Bank or (B)
otherwise applicable to the obligations of any Bank under this Agreement,
or
(iv) imposes upon any Bank any other condition or expense with
respect to this Agreement or the issuance of any Letter of Credit,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank or, in the case of clause (iii) hereof, any Person controlling a Bank, with
respect to this Agreement or the issuance of any Letter of Credit (or, in the
case of any capital adequacy or similar requirement, to have the effect of
reducing the rate of return on such Bank's or controlling Person's capital,
taking into consideration such Bank's or controlling Person's policies with
respect to capital adequacy so long as such policies are reasonable in light of
prevailing market practice at the time) by an amount which such Bank deems to be
material, such Bank may from time to time notify the Account Parties of the
amount determined in good faith (using any averaging and attribution methods) by
such Bank (which determination shall be conclusive) to be necessary to
compensate such Bank for such increase, reduction or imposition. Such amount
shall be due and payable by any applicable Account Party to such Bank five
Business Days after such notice is given, together with an amount equal to
interest on such amount from the date two Business Days after the date demanded
until such due date at the Prime Rate. A certificate by such Bank as to the
amount due and payable under this Section 2.12 from time to time and the method
of calculating such amount shall be conclusive. Each Bank agrees that it will
use good faith efforts to notify the Account Parties of the occurrence of any
event that would give rise to a payment under this Section 2.12; provided,
however that, so long as such notice is given within a reasonable period after
the occurrence of such event, any failure of such Bank to give any such notice
shall have no effect on the Account Parties' obligations hereunder.
2.13. Taxes.
(a) Payments Net of Taxes. All payments made by the Account Parties under
this Agreement or any other Transaction Document shall be made free and clear
of, and without reduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Official Body, and all liabilities with respect
thereto, excluding
(i) in the case of the Agent and each Bank, income or franchise
taxes imposed on the Agent or such Bank by the jurisdiction under the laws
of which the Agent or such Bank is organized or any political subdivision
or taxing authority thereof or therein or as a result of a connection
between such Bank and any jurisdiction other than a connection resulting
solely from this Agreement and the transactions contemplated hereby, and
(ii) in the case of each Bank, income or franchise taxes imposed by
any jurisdiction in which such Bank's lending offices which issue Letters
of Credit are located or any political subdivision or taxing authority
thereof or therein
(all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"), unless an Account Party is
required to withhold or deduct Taxes. If any Taxes are required to be withheld
or deducted from any amounts payable to the Agent or any Bank under this
Agreement or any other Transaction Document, the applicable Account Party shall
pay the relevant
19
amount of such Taxes and the amounts so payable to the Agent or such Bank shall
be increased to the extent necessary to yield to the Agent or such Bank (after
payment of all Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement and the other
Transaction Documents. Whenever any Taxes are paid by an Account Party with
respect to payments made in connection with this Agreement or any other
Transaction Document, as promptly as possible thereafter, such Account Party
shall send to the Agent for its own account or for the account of such Bank, as
the case may be, a certified copy of an original official receipt received by
such Account Party showing payment thereof. If the Agent or a Bank determines in
its sole discretion in good faith that it has received a refund in respect of
any Taxes as to which it has been indemnified by an Account Party, or with
respect to which an Account Party has paid additional amounts pursuant to this
Section 2.13, the Agent or such Bank shall promptly after the date of such
receipt pay over the amount of such refund to such Account Party (but only to
the extent of indemnity payments made, or additional amounts paid, by an Account
Party under this Section 2.13 with respect to Taxes giving rise to such refund
and only to the extent that the Agent or such Bank has determined that the
amount of any such refund is directly attributable to payments made under this
Agreement), net of all reasonable expenses of the Agent or such Bank (including
additional Taxes attributable to such refund, as determined by the Agent or such
Bank) and without interest (other than interest, if any, paid by the relevant
Official Body with respect to such refund). An Account Party receiving any such
payment from the Agent or a Bank shall, upon demand, pay to the Agent or such
Bank any amount paid over to such Account Party by the Agent or such Bank (plus
penalties, interest or other charges) in the event the Agent or such Bank is
required to repay any portion of such refund to such Official Body. Nothing in
this Section 2.13(a) shall entitle an Account Party to have access to the
records of the Agent or any Bank, including, without limitation, tax returns.
(b) Indemnity. Each Account Party hereby indemnifies the Agent and each of
the Banks for the full amount of all Taxes attributable to payments by or on
behalf of such Account Party hereunder or under any of the other Transaction
Documents, any Taxes paid by the Agent or such Bank, as the case may be, any
present or future claims, liabilities or losses with respect to or resulting
from any omission to pay or delay in paying any Taxes (including any incremental
Taxes, interest or penalties that may become payable by the Agent or such Bank
as a result of any failure to pay such Taxes, except by reason of unreasonable
delay by the Agent or Bank in notifying an Account Party or in making payment
after payment was received from an Account Party), whether or not such Taxes
were correctly or legally asserted. Such indemnification shall be made within 30
days from the date such Bank or the Agent, as the case may be, makes written
demand therefor.
(c) Withholding and Backup Withholding. Each Bank that is incorporated or
organized under the laws of any jurisdiction other than the United States or any
State thereof agrees that, on or prior to the date the first payment is due to
be made to it hereunder or under any other Transaction Document, it will furnish
to the Account Parties and the Agent
(i) two valid, duly completed copies of United States Internal
Revenue Service Form 4224 or United States Internal Revenue Form 1001 or
successor applicable form, as the case may be, certifying in each case
that such Bank is entitled to receive payments under this Agreement and
the other Transaction Documents without deduction or withholding of any
United States federal income taxes and
(ii) a valid, duly completed Internal Revenue Service Form W-8 or
W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax.
Each Bank which so delivers to the Account Parties and the Agent a Form 1001 or
4224 and Form W-8 or W-9, or successor applicable forms, agrees to deliver to
the Account Parties and the Agent two further copies of the said Form 1001 or
4224 and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such form
expires or
20
becomes obsolete or otherwise is required to be resubmitted as a condition to
obtaining an exemption from withholding tax, or after the occurrence of any
event requiring a change in the most recent form previously delivered by it, and
such extensions or renewals thereof as may reasonably be requested by the
Account Parties and the Agent, certifying in the case of a Form 1001 or Form
4224 that such Bank is entitled to receive payments under this Agreement or any
other Transaction Document without deduction or withholding of any United States
federal income taxes, unless in any such cases an event (including any changes
in Law) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such letter or form
with respect to it and such Bank advises the Account Parties and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax, in which
case Section 2.13(a) and (b) shall apply to all further payments.
2.14. Extensions of Expiration Date. XL Insurance may, at its option, give
the Agent and the Issuing Bank written notice (an "Extension Request") at any
time not more than ninety days, nor less than forty-five days, prior to the
Expiration Date in effect at such time (the "Current Expiration Date") of XL
Insurance's desire to extend the Expiration Date to a date which is not later
than 364 days after the Current Expiration Date. The Agent shall promptly inform
the Banks of such Extension Request. Each Bank which agrees to such Extension
Request shall deliver to the Agent its express written consent thereto no later
than thirty days prior to the Current Expiration Date. No extension shall become
effective unless the express written consent thereto by the Required Commitment
Banks and the Issuing Bank is received by the Agent on or before the thirtieth
day prior to the Current Expiration Date. If the Issuing Bank and the Required
Commitment Banks, but not all Commitment Banks, have expressly consented in
writing to such Extension Request by such thirtieth day, then the Agent shall so
notify XL Insurance and XL Insurance may, effective as of the Current Expiration
Date, take one or both of the following actions: (i) replace any Commitment Bank
which has not agreed to such Extension Request (a "Nonextending Bank") with
another commercial lending institution satisfactory to the Issuing Bank (a
"Replacement Bank") by giving notice of the name of such Replacement Bank to the
Agent and the Issuing Bank not later than five Business Days prior to the then
Current Expiration Date and (ii) elect to implement a Conversion to Tranche
System as contemplated by Section 2.15 hereof (or, if the Conversion to Tranche
System has previously been implemented, elect to implement a Supplement to
Tranche System as contemplated by Section 2.15 hereof). In the event that a
Nonextending Bank is to be replaced by a Replacement Bank, such Nonextending
Bank shall, upon payment to it of all amounts owing to it on the date of its
replacement, assign all of its interests hereunder to such Replacement Bank in
accordance with the provisions of Section 9.13(c) hereof. If the Issuing Bank
and the Required Commitment Banks shall have consented to such Extension
Request, then, on the Current Expiration Date, the Expiration Date shall be
deemed to have been extended to, and shall be, the date specified in such
Extension Request. The Agent shall promptly after any such extension advise the
Banks of any changes in the Letter of Credit Participating Interest Committed
Amounts and the Letter of Credit Participating Interest Commitment Percentages,
as well as any changes effected by the election of the Conversion to Tranche
System or a Supplement to Tranche System.
2.15. Tranches. (a) Certain Definitions. As used in this Agreement the
following terms have the meanings ascribed thereto:
"Commitment Banks" at any time means Banks which have Letter
of Credit Participating Interest Commitments at such time and
"Commitment Bank" means any one of them.
"Conversion to Tranche System" means the election by XL
Capital, at a time when XL Capital has made an Extension Request
pursuant to Section 2.14
21
hereof and such Extension Request has been consented to in writing
by the Issuing Bank and the Required Commitment Banks, but not by
all of the Commitment Banks, to classify Letters of Credit as
Tranche 1 Letters of Credit and Tranche 2 Letters of Credit, all in
accordance with Section 2.15(b) hereof.
"L/C Termination Date" means, with respect to a Letter of
Credit, the date which is stated therein to be the last day on which
the beneficiary thereof may draw thereon.
"Pro Rata" means: (i) until the first Special Expiration Date,
from and to the Banks in accordance with their respective Letter of
Credit Participating Interest Percentages and (ii) thereafter, (x)
with respect to Tranche 1 Letters of Credit, from and to the Tranche
1 Banks in accordance with their respective Tranche 1 Letter of
Credit Participating Interest Percentages, (y) with respect to
Tranche 2 Letters of Credit and Tranche 2 Letter of Credit
Participating Interest Commitments, from and to the Tranche 2 Banks
in accordance with their respective Tranche 2 Letter of Credit
Participating Interest Commitment Percentages and (z) with respect
to each additional Tranche of Letters of Credit (i.e., Tranche 3
Letters of Credit, Tranche 4 Letters of Credit, and so on), if any,
from and to the Banks which have Letter of Credit Participating
Interest Commitments or Letter of Credit Participating Interests, as
applicable, with respect to such Tranche in accordance with their
respective related Letter of Participating Interest Percentages.
"Required Commitment Banks" at any time means Commitment Banks
which have, in the aggregate, Letter of Credit Participating
Interest Committed Amounts in excess of 50% of the total outstanding
Letter of Credit Participating Interest Committed Amounts at such
time.
"Special Expiration Date" means the Expiration Date which is
in effect at a time when each of the following has occurred: (i) XL
Capital has made an Extension Request pursuant to Section 2.14
hereof, (ii) such Extension Request has been consented to in writing
by the Issuing Bank and the Required Commitment Banks, but not by
all of the Commitment Banks, and (iii) XL Capital has elected to
implement a Conversion to Tranche System or a Supplement to Tranche
System.
"Supplement to Tranche System" means the election by XL
Capital, at a time when the Conversion to Tranche System has been
previously made and when XL Capital has made an Extension Request
pursuant to Section 2.14 hereof and such Extension Request has been
consented to in writing by the Issuing Bank and the Required
Commitment Banks, but not by all of the Commitment Banks, to
classify additional Letters of Credit as Tranche X Letters of
Credit.
"Tranche 1 Bank" shall mean each Bank which is a Bank
immediately prior to the first Special Expiration Date.
"Tranche 1 Letter of Credit" means each Letter of Credit which
is issued prior to the first Special Expiration Date, but shall not
include any such Letter of Credit as to which the L/C Termination
Date has been extended to a date after the L/C Termination Date
which was in effect on such first Special Expiration Date.
22
"Tranche 1 Letter of Credit Participating Interest Percentage"
for each Tranche 1 Bank means such Bank's Letter of Credit
Participating Interest Percentage immediately prior to the first
Special Expiration Date.
"Tranche 2 Bank" shall mean each Bank which has a Tranche 2
Letter of Credit Participating Interest Commitment.
"Tranche 2 Letter of Credit" means each Letter of Credit which
is issued prior to the second Special Expiration Date, but shall not
include any such Letter of Credit as to which the L/C Termination
Date has been extended to a date after the L/C Termination Date
which was in effect on such second Special Expiration Date and shall
not include any Tranche 1 Letter of Credit (it being understood that
a Letter of Credit may change from a Tranche 1 Letter of Credit to a
Tranche 2 Letter of Credit as a result of the extension, after the
first Special Expiration Date, of its L/C Termination Date).
"Tranche 3 Letter of Credit" and "Tranche 4 Letter of Credit"
have the meanings set forth in the definition of the term "Tranche
X".
"Tranche X" shall mean Tranche 3 if there are existing Tranche
2 Letters of Credit but not Tranche 3 Letters of Credit, Tranche 4
if there are existing Tranche 3 Letters of Credit but not Tranche 4
Letters of Credit, and so on in consecutive integral succession. The
terms "Tranche X Bank", "Tranche X Letter of Credit Participating
Interest Commitment", "Tranche X Letter of Credit Participating
Interest Committed Amount" and "Tranche X Letter of Credit
Participating Interest Percentage" shall have comparable meanings.
The term "Tranche X Letter of Credit" shall have a comparable
meaning, but such meaning shall be consistent with the following:
(i) the term "Tranche 3 Letter of Credit" means each Letter of
Credit which is issued prior to the third Special Expiration Date,
but shall not include any such Letter of Credit as to which the L/C
Termination Date has been extended to a date after the L/C
Termination Date which was in effect on such third Special
Expiration Date and shall not include any Tranche 1 Letter or Credit
or any Tranche 2 Letter of Credit; (ii) the term "Tranche 4 Letter
of Credit" means each Letter of Credit which is issued prior to the
fourth Special Expiration Date, but shall not include any such
Letter of Credit as to which the L/C Termination Date has been
extended to a date after the L/C Termination Date which was in
effect on such fourth Special Expiration Date and shall not include
any Tranche 1 Letter of Credit, any Tranche 2 Letter of Credit or
any Tranche 3 Letter of Credit; (iii) the terms "Tranche 5 Letter of
Credit", "Tranche 6 Letter of Credit", and so on shall have
comparable meanings (it being understood that a Letter of Credit can
change from one Tranche to another as a result of an extension of
its L/C Termination Date).
(b) Conversion to Tranche System. If XL Capital elects the Conversion to
Tranche System with respect to an Extension Request, the following shall occur:
(i) the Letter of Credit Participating Interest Commitments of Banks which, with
respect to such Extension Request, are Nonextending Banks shall terminate as of
the Special Expiration Date related to such Extension Request, but such
Nonextending Banks (other than Nonextending Banks which have been replaced as
contemplated by Section 2.14 hereof) shall remain parties to this Agreement and
shall retain all of their respective obligations with respect to Tranche 1
Letters of Credit and shall retain their respective Letter of Credit
Participating Interests in and with respect to Tranche 1 Letters of Credit; (ii)
from and after the Special Expiration Date related to such Extension Request,
the Letter of Credit Participating Interest Commitment of each Bank which has
consented in writing to such Extension Request shall be a "Tranche 2 Letter of
Credit Participating Interest Commitment" and
23
the Letter of Credit Participating Interested Committed Amount of such Lender
shall be its "Tranche 2 Letter of Credit Participating Interest Committed
Amount"; (iii) the "Tranche 2 Letter of Credit Participating Interest Commitment
Percentage" for each Tranche 2 Bank shall mean a fraction, expressed as
percentage, the numerator of which is such Tranche 2 Bank's Tranche 2 Letter of
Credit Participating Interest Committed Amount and the denominator of which is
the aggregate Tranche 2 Letter of Credit Participating Interest Committed
Amounts of all of the Tranche 2 Banks.
(c) Supplement to Tranche System. If XL Capital elects a Supplement to
Tranche System with respect to an Extension Request, the following shall occur:
(i) the Letter of Credit Participating Interest Commitments of Banks which, with
respect to such Extension Request, are Nonextending Banks shall terminate, but
such Nonextending Banks shall remain parties to this Agreement and shall retain
all of their respective obligations with respect to Letters of Credit under
existing Tranches and shall retain their respective Letter of Credit
Participating Interests in and with respect to existing Letters of Credit; (ii)
from and after the Special Expiration Date related to such Extension Request,
the Letter of Credit Participating Interest Commitment of each Bank which has
consented in writing to such Extension Request shall be a "Tranche X Letter of
Credit Participating Interest Commitment" and the Letter of Credit Participating
Interested Committed Amount of such Lender shall be its "Tranche X Letter of
Credit Participating Interest Committed Amount"; (iii) the "Tranche X Letter of
Credit Participating Interest Commitment Percentage" for each Tranche X Bank
shall mean a fraction, expressed as percentage, the numerator of which is such
Tranche X Bank's Tranche X Letter of Credit Participating Interest Committed,
Amount and the denominator of which is the aggregate Tranche X Letter of Credit
Participating Interest Committed Amounts of all of the Tranche X Banks, all as
contemplated by the definition of the term "Tranche X" contained in paragraph
(a) of this Section 2.15.
ARTICLE III
REPRESENTATIONS AND WARRANTIES.
Each Credit Party represents and warrants that:
3.01. Organization and Qualification. Such Credit Party and each of its
Credit Subsidiaries is a corporation duly organized, validly existing and
(unless the concept of good standing is not known to the law of the relevant
jurisdiction) in good standing under the laws of their respective jurisdictions
of incorporation and has the power and authority to own its properties and
assets, and to carry on its business as presently conducted and is qualified to
do business in those jurisdictions in which its ownership of property or the
nature of its business activities is such that failure to receive or retain such
qualification would have a Material Adverse Effect. A list of such Credit
Party's Credit Subsidiaries setting forth their respective jurisdictions of
incorporation is set forth in Schedule 3.01 hereto. Such Credit Party is not
subject to any Private Act, except, with respect to XL Insurance, the X.L.
Insurance Company, Ltd. Xxx, 0000, a copy of which has been provided to the
Agent.
3.02. Corporate Power and Authorization. Such Credit Party and any
Subsidiary of such Credit Party which is also a Credit Party has corporate power
and authority to make and carry out this Agreement and any other Transaction
Document to which it is a party, to execute and deliver this Agreement and each
such Transaction Document, to perform its obligations hereunder and under any
such Transaction Documents and, in the case of each Credit Party which is an
Account Party, to request the issuance of Letters of Credit as provided for
herein. All such action has been duly authorized by all necessary corporate
proceedings on the part of such Credit Party.
24
3.03. Financial Information. Such Credit Party (other than Xxxxxxxxx
Group) has furnished to Agent, with sufficient copies for each Bank, copies of
the audited consolidated financial statements of such Credit Party and its
consolidated Subsidiaries including a consolidated and consolidating balance
sheet and related statements of income and retained earnings for the fiscal year
ending November 30, 1998. Such financial statements fairly present the financial
position of such Credit Party and its consolidated Subsidiaries as of the date
of such reports and the consolidated and consolidating results of their
operations and cash flows for the fiscal period then ended in conformity with
GAAP or SAP, applied on a consistent basis, and such consolidated financial
statements have been examined and reported upon by independent, certified public
accountants.
3.04. Litigation. Except as disclosed to the Banks in writing prior to the
Closing Date (including by disclosure in the financial statements delivered to
the Banks referred to in Section 3.03 hereof), there is no litigation or
governmental proceeding by or against such Credit Party or any of its
Subsidiaries pending or, to its knowledge, threatened, which could reasonably be
expected (in light of reserves, and total shareholders' equity of such Credit
Party and after taking into account the nature of such Credit Party's business
and activities) to have a Material Adverse Effect if adversely determined.
3.05. No Adverse Changes. Since November 30, 1998, there has been no
occurrence or event which has had a Material Adverse Effect.
3.06. No Conflicting Laws or Agreements; Consents and Approvals. (a)
Neither the execution and delivery of this Agreement or any other Transaction
Document, the consummation of the transactions herein or therein contemplated
nor compliance with the terms and provisions hereof or thereof will conflict
with or result in a breach of any of the terms, conditions or provisions of the
articles of incorporation or by-laws of such Credit Party or of any applicable
Law or of any material agreement or instrument to which such Credit Party is a
party or by which it is bound or to which it is subject, or constitute a default
thereunder or result in the creation or imposition of any Lien, except Permitted
Liens, of any nature whatsoever upon any of the property of such Credit Party
pursuant to the terms of any such agreement or instrument.
(b) Except for the filing of the Pledge Agreement with the Registrar of
Companies in Bermuda, no authorization, consent, approval, license, exemption or
other action by, and no registration, qualification, designation, declaration or
filing with, any Official Body is or will be necessary or advisable in
connection with (i) execution and delivery of this Agreement or any other
Transaction Document, (ii) the consummation of the transactions herein or
therein contemplated, or (iii) the performance of or compliance with the terms
and conditions hereof or thereof.
3.07. Execution and Binding Effect. This Agreement (and, in the case of XL
Investments and XL Mid Ocean, the Pledge Agreement) has been duly and validly
executed and delivered by such Credit Party. This Agreement and each Transaction
Document to which it is a party constitutes legal, valid and binding obligations
of such Credit Party enforceable in accordance with the terms thereof except, as
to the enforcement of remedies, for limitations imposed by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally (excluding Laws with respect to
fraudulent conveyance), (ii) Laws limiting the right of specific performance or
(iii) general principles of equity.
3.08. Taxes. All tax returns required to be filed by each Credit Party
have been properly prepared, executed and filed. All taxes, assessments, fees
and other governmental charges upon such Credit Party or upon its properties,
income or sales which are due and payable have been paid. The reserves and
provisions for taxes, if any, on the books of such Credit Party are adequate for
all open years and for its current fiscal period as determined in accordance
with GAAP.
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3.09. Use of Proceeds. Such Credit Party will use any Letter of Credit
issued hereunder for its account for general corporate purposes. Such Credit
Party will make no request for a Letter of Credit hereunder for the purpose of
directly or indirectly buying or carrying any "margin stock" as such term is
used in Regulation U of the Board of Governors of the Federal Reserve System in
violation of such regulation. Such Credit Party is not engaged in the business
of extending credit to others for the purposes of buying or carrying any "margin
stock."
3.10. Permits, Licenses and Rights. Such Credit Party and each Credit
Subsidiary of such Credit Party own or possess all the patents, trademarks,
service marks, trade names, copyrights, licenses, franchises, permits and rights
with respect to the foregoing necessary to own and operate their respective
properties and to carry on their respective businesses as presently conducted
and presently planned to be conducted without, to the best knowledge of such
Credit Party, conflict with the rights of others.
3.11. Accurate and Complete Disclosure. All information provided by or on
behalf of any Credit Party to the Agent or any Bank pursuant to or in connection
with this Agreement or the other Transaction Documents and the transactions
contemplated hereby and thereby is true and accurate in all material respects on
the date such information is dated (or, if not dated, on the date such
information was received by the Agent or such Bank, as the case may be) and such
information, taken as a whole, which was provided on or prior to the time this
representation is made or remade, does not, to the best knowledge of the Credit
Parties, omit to state any material fact necessary to make such information not
misleading at such time in light of the circumstances in which it was provided.
3.12. Absence of Violations. Such Credit Party and each Affiliate of such
Credit Party is not in violation of any charter document, corporate minute or
resolution, any instrument or agreement, in each case binding on it or affecting
its property, or any Law, in a manner which could have a Materially Adverse
Effect.
3.13. Environmental Matters. Such Credit Party and each of its Credit
Subsidiaries is and has been in full compliance with all applicable
Environmental Laws. Such Credit Party and each of its Credit Subsidiaries have
all approvals by Official Bodies charged with the enforcement of Environmental
Laws that are necessary or desirable for the ownership and operation of their
respective properties, facilities and businesses as presently owned and operated
and as presently proposed to be owned and operated.
3.14. Not an Investment Company. Such Credit Party is not an Investment
Company required to be registered under the Investment Company Act of 1940.
3.15. Year 2000 Compliance. XL Capital has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by material suppliers, vendors and
customers) that could be adversely affected by the risk that computer
applications used by XL Capital or any of its Subsidiaries (or material
suppliers, vendors and customers other than those affecting customers that may
give rise to claims under insurance policies issued by XL Capital or any
Subsidiary of XL Capital) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999 (the "Year 2000 Problem") and (ii) developed a plan and
timetable for addressing the Year 2000 Problem on a timely basis. Based on the
foregoing, XL Capital believes that all computer applications of XL Capital and
its Subsidiaries that are material to its or any of its Subsidiaries' business
and operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
("Year 2000 Compliant"), except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect.
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ARTICLE IV
CONDITIONS
4.01. Effectiveness. The obligation of the Issuing Bank to issue Letters
of Credit and to permit the commencement of the maintenance of Existing Letters
of Credit as Letters of Credit hereunder shall be subject to the following
conditions:
(a) Proceedings and Incumbency. There shall have been delivered to the
Agent with sufficient copies for each Bank a certificate with respect to each
Credit Party in form and substance satisfactory to the Agent dated the Closing
Date and signed on behalf of each Credit Party by the Secretary or an Assistant
Secretary of such Credit Party certifying as to: (a) true copies of all
corporate action taken by such Credit Party relative to this Agreement and the
other Transaction Documents applicable to it including but not limited to that
described in Section 3.02 hereof and (b) the names, true signatures and
incumbency of the officer or officers of such Credit Party authorized to execute
and deliver this Agreement and the other Transaction Documents applicable to it.
Each Bank may conclusively rely on such certificates unless and until a later
certificate revising the prior certificate has been furnished to such Bank.
(b) Organizational Documents. There shall have been delivered to the Agent
with sufficient copies for each Bank (i) certified copies of the articles of
incorporation or memorandum of association and by-laws or other equivalent
organizational documents for each Credit Party and (ii) a certificate of good
standing for each Credit Party (other than XL Europe) certified by the
appropriate Official Body of its place of organization.
(c) Opinions of Counsel. There shall have been delivered to the Agent with
sufficient copies for each Bank written opinions addressed to the Banks, dated
the Closing Date, of Messrs. Xxxxxx Xxxxxx & Xxxxxxx, Messrs. Xxxxxxx, Xxxx &
Xxxxxxx, Xxxxxx & Xxxxxx and Xxxx X. Xxxxxxxx, Esq., respectively, the Account
Parties' and Guarantors' counsel, which together are substantially to the
effects set forth in Exhibit C, and opinions of counsel qualified to practice in
each jurisdiction, other than Bermuda and the United States, under the laws of
which an Account Party is organized substantially to such effects to the extent
that the laws of such jurisdiction are relevant.
(d) Details, Proceedings and Documents. All legal details and proceedings
in connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory to each Bank, and each Bank shall have received all such
counterpart originals or certified or other copies of this Agreement and the
other the Transaction Documents and such other documents and proceedings in
connection with such transactions, in form and substance satisfactory to it, as
such Bank have reasonably requested.
(e) Fees and Expenses. Each Account Party shall have paid all fees and
other compensation to be paid by it hereunder on or prior to the Closing Date.
(f) Representation and Warranties. The representation and warranties
contained in Article III hereof shall be true on and as of the Closing Date with
the same effect as though made on and as of the Closing Date.
(g) Pledge Agreement. The Pledge Agreement shall have been delivered to
the Agent, with sufficient copies for each Bank, duly executed by XL Investments
and XL Mid Ocean. The Custodian's Acknowledgments, as defined in the Pledge
Agreement, shall have been delivered to
27
the Agent duly executed by the Custodian and by XL Investments and XL Mid Ocean,
respectively.
(h) Letter of Credit Agreement. The Continuing Letter of Credit Agreement
shall have been delivered to the Agent, with sufficient copies for each Bank,
duly executed by each Account Party.
(i) Prior Agreement. The "Letter of Credit Committed Amounts" of the
"Banks" under and as defined in the Prior Agreement shall have been reduced to
zero and, on the Closing Date, there shall be no unreimbursed drawings under
letters of credit issued under the Prior Agreement or other amounts remaining
payable by the Account Parties thereunder and the Issuing Bank and the Agent
shall provide documentation to the other parties to the Prior Agreement to the
effect that no letters of credit are outstanding under the Prior Agreement (as
the Existing Letters of Credit shall have become Letters of Credit hereunder),
that the security interests relating to the Prior Agreement are released and
that all fees payable under the Prior Agreement have ceased to accrue.
4.02. Issuance of Letters of Credit. The obligation of the Issuing Bank to
issue any Letters of Credit hereunder (and to permit the commencement of the
maintenance of Existing Letters of Credit as Letters of Credit hereunder) is
subject to the accuracy as of the date hereof of the representations and
warranties herein contained, to the performance by each Account Party of its
obligations to be performed hereunder on or before the date of such Letters of
Credit (or, in the case of Existing Letters of Credit, the Closing Date) and to
the satisfaction of the following further conditions:
(a) Representations and Warranties; Events of Default and Potential
Defaults. The representations and warranties contained in Article III hereof
shall be true on and as of the date of each Letter of Credit issued hereunder
with the same effect as though made on and as of each such date, and on the date
of each Letter of Credit issued hereunder no Event of Default and no Potential
Default shall have occurred and be continuing or exist or shall occur or exist
after giving effect to the Letter of Credit to be issued on such date. Failure
of the Agent to receive notice from the applicable Account Party to the contrary
before any Letter of Credit is issued hereunder shall constitute a
representation and warranty that: (i) the representations and warranties
contained in Article III hereof are true and correct on and as of the date of
such Letter of Credit with the same effect as though made on and as of such date
and (ii) on the date of such Letter of Credit no Event of Default or Potential
Default has occurred and is continuing or exists or will occur or exist after
giving effect to such Letter of Credit.
(b) Commitment. The fact that, immediately after the issuance of such
Letter of Credit, the Letter of Credit Undrawn Availability (determined as
Dollar Equivalents) and the aggregate of the Letter of Credit Unreimbursed Draws
(determined as Dollar Equivalents) will not exceed the lesser of (x) the
aggregate amount of the Letter of Credit Participating Interest Committed
Amounts and (y) the Pledged Securities Available Amount.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Credit Party, as applicable, hereby covenants to the Agent, the
Issuing Bank and each other Bank as follows:
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5.01. Reporting and Information Requirements. Each Credit Party shall
deliver to the Agent with sufficient copies for each Bank:
(a) Annual Reports. As soon as practicable and in any event within 100
days (or in the case of Xxxxxxxxx Group eight months) after the close of each
fiscal year, audited consolidated statements of income, retained earnings and
cash flows of such Credit Party and its consolidated Subsidiaries, for such
fiscal year and a consolidated audited balance sheet of such Credit Party and
its consolidated Subsidiaries, as of the close of such fiscal year, and notes to
each, all in accordance with GAAP or, in the case of Credit Parties which are
Insurance Subsidiaries, SAP, setting forth in comparative form the corresponding
figures for the preceding fiscal year, with such consolidated statements and
balance sheets to be certified by independent public accountants of recognized
national standing in the United States selected by such Credit Party and not
unacceptable to the Required Banks, and the certificate or report of such
accountants to be free of exceptions or qualifications not reasonably acceptable
to the Required Banks (it being understood that delivery of XL Capital's Report
on Form 10-K filed with the Securities and Exchange Commission shall satisfy the
requirement of this Section 5.01(a) to deliver the annual financial statements
of XL Capital so long as the financial information required to be in such report
is substantially the same as the financial information required by this Section
5.01(a)).
(b) Quarterly Statements. Within sixty days after the end of the first,
second and third quarterly accounting periods in each fiscal year of XL Capital,
copies of the unaudited consolidated balance sheets of XL Capital and its
consolidated Subsidiaries as of the end of such accounting period and of the
consolidated income statements of XL Capital and its consolidated Subsidiaries
for the elapsed portion of the fiscal year ended with the last day of such
accounting period, all in accordance with GAAP subject to year-end audit
adjustments and certified by the principal financial officer of XL Capital to
have been prepared in accordance with generally accepted accounting principles
consistently applied by XL Capital except as explained in such certificate (it
being understood that delivery of XL Capital's Report on Form 10-Q filed with
the Securities and Exchange Commission shall satisfy the requirement of this
Section 5.01(b) to deliver the quarterly financial statements of XL Capital so
long as the financial information required to be in such report is substantially
the same as the financial information required by this Section 5.01(b)).
(c) Compliance Certificates. Within 100 days after the end of each fiscal
year of the Credit Parties and within sixty days after the end of each of the
first three quarters of each fiscal year, a certificate in the form of Exhibit D
hereto dated as of the end of such fiscal year or quarter, signed on behalf of
each Credit Party by a principal financial officer thereof, (i) stating that as
of the date thereof no Event of Default or Potential Default has occurred and is
continuing or exists, or if an Event of Default or Potential Default has
occurred and is continuing or exists, specifying in detail the nature and period
of existence thereof and any action with respect thereto taken or contemplated
to be taken by such Credit Party, (ii) stating in reasonable detail the
information and calculations necessary to establish compliance with the
provisions of Article VI hereof, and (iii) stating that the signer has reviewed
this Agreement and that such certificate is based on an examination made by or
under the supervision of the signer sufficient to assure that such certificate
is accurate.
(d) Further Information. All such other information and in such form as
any Bank may reasonably request in writing.
(e) Notice of Event of Default. Immediately upon becoming aware of any
Event of Default or Potential Default, written notice thereof, together with a
written statement of the president or a principal financial officer of the
applicable Credit Party setting forth the details thereof and any action with
respect thereto taken or contemplated to be taken by the Credit Parties.
(f) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, written notice of any event or occurrence constituting or which could
reasonably be expected to have a Material Adverse Effect.
29
(g) Notice of Material Proceedings. Promptly upon becoming aware thereof,
written notice of the commencement, existence or threat of any proceeding or a
material change in any existing material proceeding by or before any Official
Body against or affecting such Credit Party which, if adversely decided, could
have a Material Adverse Effect.
(h) Notice of Certain Material Changes. Promptly upon adoption thereof,
notice of each material change in any Credit Party's investment policy,
underwriting policy or other business policy.
(i) Year 2000 Compliance. Promptly after any Credit Party's discovery or
determination thereof, notice (in reasonable detail) that any computer
application that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant (as defined in Section 3.15), except
to the extent that such failure could not reasonably be expected to have a
Material Adverse Effect.
The Credit Parties hereby authorize and direct the Agent to, and the Agent
agrees to, furnish to the Banks no less frequently than quarterly a statement of
value with respect to the Designated Accounts (and the Pledged Securities)
provided by the Custodian under the Custody Agreement referred to in the Pledge
Agreement, which statement shall include, or be accompanied by, information as
to the risk weighting of the Required Pledged Securities.
5.02. Preservation of Existence and Franchises. Each Credit Party shall,
and shall cause each of its Credit Subsidiaries to, maintain its corporate
existence, rights and franchises in full force and effect in its jurisdiction of
incorporation, which jurisdiction shall continue to be, in the case of each
Credit Party, the jurisdiction under the laws of which such Credit Party is
organized as of the date hereof. Each Credit Party shall, and shall cause each
of its Credit Subsidiaries to, qualify and remain qualified as a foreign
corporation in each jurisdiction in which failure to receive or retain such
qualification would have a Material Adverse Effect.
5.03. Insurance. Each Credit Party shall, and shall cause each of its
Credit Subsidiaries to, maintain with financially sound and reputable insurers,
insurance with respect to its properties in such amounts as is customary in the
case of corporations engaged in the same or a similar business having similar
properties similarly situated.
5.04. Maintenance of Properties. Each Credit Party shall, and shall cause
each of its Credit Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition the properties now or hereafter owned,
leased or otherwise possessed by and used or useful in its business and shall
make or cause to be made all needful and proper repairs, renewals, replacements
and improvements thereto so that the business carried on in connection therewith
may be properly conducted at all times, provided, however, that the foregoing
shall not impose on such Credit Party or any Subsidiary of such Credit Party any
obligation in respect of any property leased by such Credit Party or such
Subsidiary in addition to such Credit Party's obligations under the applicable
document creating such Credit Party's or such Subsidiary's lease or tenancy.
5.05. Payment of Taxes and Other Potential Charges and Priority Claims
Payment of Other Current Liabilities. Each Credit Party shall, and shall cause
each of its Credit Subsidiaries to, pay or discharge:
(a) on or prior to the date on which penalties attach thereto, all taxes,
assessments and other governmental charges or levies imposed upon it or any of
its properties or income;
(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, if
unpaid, might result in the creation of a Lien upon any such property; and
30
(c) on or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any such property (other
than Liens not forbidden by Section 6.03 hereof) or which, if unpaid, might give
rise to a claim entitled to priority over general creditors of such Account
Party in any proceeding under the Bermuda Companies Law or Bermuda Insurance Law
or any similar Law applicable to any Credit Party, or any insolvency proceeding,
liquidation, receivership, rehabilitation, dissolution or winding-up involving
such Credit Party or such Credit Subsidiary; provided that, unless and until
foreclosure, distraint, levy, sale or similar proceedings shall have been
commenced, such Credit Party need not pay or discharge any such tax, assessment,
charge, levy or claim so long as the validity thereof is contested in good faith
and by appropriate proceedings diligently conducted and so long as such reserves
or other appropriate provisions as may be required by GAAP and SAP shall have
been made therefor and so long as such failure to pay or discharge does not have
a Material Adverse Effect.
5.06. Financial Accounting Practices. Such Credit Party shall, and shall
cause each of its Credit Subsidiaries to, make and keep books, records and
accounts which, in reasonable detail, accurately and fairly reflect its
transactions and dispositions of its assets and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
transactions are recorded as necessary to permit preparation of financial
statements required under Section 5.01 hereof in conformity with GAAP and SAP,
as applicable, and to maintain accountability for assets.
5.07. Compliance with Applicable Laws. Each Credit Party shall, and shall
cause each of its Credit Subsidiaries to, comply with all applicable Laws
(including but not limited to the Bermuda Companies Law and Bermuda Insurance
Laws) in all respects; provided that such Credit Party or any Credit Subsidiary
of such Credit Party shall not be deemed to be in violation of this Section 5.07
as a result of any failure to comply with any such Law which would not (i)
result in fines, penalties, injunctive relief or other civil or criminal
liabilities which, in the aggregate, would have a Materially Adversely Effect or
(ii) otherwise impair the ability of such Credit Party to perform its
obligations under this Agreement.
5.08. Use of Proceeds. Each Account Party shall use the Letters of Credit
issued hereunder for its general corporate purposes.
5.09. Continuation Of and Change In Business. Each Credit Party and its
Subsidiaries shall continue to engage in substantially the same business and
activities it currently engages in on the date of this Agreement.
5.10. Visitation. Each Credit Party shall permit such Persons as any Bank
may reasonably designate to visit and inspect any of the properties of such
Credit Party, to discuss its affairs with its financial management, and provide
such other information relating to the business and financial condition of such
Credit Party at such times as such Bank may reasonably request. Each Credit
Party hereby authorizes its financial management to discuss with any Bank the
affairs of such Credit Party.
ARTICLE VI
NEGATIVE COVENANTS
Each Credit Party covenants to the Agent and to each Bank as follows:
6.01. Mergers and Acquisitions. (a) Such Credit Party shall not merge with
or into or consolidate with any other Person, or agree to do any of the
foregoing, except that if no Event of Default
31
or Potential Event of Default shall occur and be continuing or shall exist at
the time of such merger or consolidation or immediately thereafter and after
giving effect thereto:
(i) any Credit Party may merge with any other corporation, including
a Subsidiary, if such Credit Party shall be the surviving corporation; and
(ii) if the written consent of the Required Banks is obtained, any
Credit Party may merge into or consolidate with any other corporation if
the corporation into which such Credit Party is merged or which is formed
by such consolidation shall expressly assume all obligations of such
Credit Party under this Agreement.
(b) Such Credit Party shall not acquire the stock or other equity
interests, or all or any substantial portion of the properties or assets of any
other Person, or agree to do any of the foregoing, unless such Person is engaged
primarily in the insurance business or the financial services business.
6.02. Dispositions of Assets. Such Credit Party shall not, and shall not
permit any Credit Subsidiary to, sell, convey, assign, lease, abandon or
otherwise transfer or dispose of, voluntarily or involuntarily (any of the
foregoing being referred to in this Section 6.02 as a "transaction" and any
series of related transactions constituting but a single transaction), any of
its properties or Assets, tangible or intangible (including but not limited to
sale, assignment, discount or other disposition of accounts, contract rights,
chattel paper or general intangibles with or without recourse), except:
(a) Transactions in the ordinary course of business involving current
assets or other assets classified on such Credit Party's balance sheet as
available for sale;
(b) Sales, conveyances, assignments or other transfers or dispositions in
immediate exchange for cash or tangible assets, provided that any such sales,
conveyances or transfers shall not individually, or in the aggregate, exceed
$50,000,000 in any calendar year for all Credit Parties in the aggregate; or
(c) Dispositions of equipment or other property which is obsolete or no
longer used or useful in the conduct of the business of such Credit Party or its
Credit Subsidiaries.
6.03. Liens. Such Credit Party shall not, and shall not permit any Credit
Subsidiary to, at any time create, incur, assume or suffer to exist any Lien on
any of its property or assets, tangible or intangible, now owned or hereafter
acquired or agree or become liable to do so, except:
(a) Liens existing on the date hereof (and extension, renewal and
replacement Liens upon the same property, provided the amount secured by each
Lien constituting such an extension, renewal or replacement Lien shall not
exceed the amount secured by the Lien theretofore existing) and listed on
Schedule 6.03(a) hereto; provided, however, that no such Lien may at any time
exist upon the Pledged Securities;
(b) Liens arising from taxes, assessments, charges, levies or claims
described in Section 5.05 hereof that are not yet due or that remain payable
without penalty or to the extent permitted to remain unpaid under the provision
of such Section 5.05;
(c) Liens on property securing all or part of the purchase price thereof
to such Credit Party and Liens (whether or not assumed) existing on property at
the time of purchase thereof by such Credit Party (and extension, renewal and
replacement Liens upon the same property), provided --
(i) each such Lien is confined solely to the property so purchased,
improvements thereto and proceeds thereof, and
32
(ii) the aggregate amount of the obligations secured by all such
Liens on any particular property at any time purchased by such Credit
Party, as applicable, shall not exceed 100% (if such obligations are not
subject when created to United States income taxes) or 90% (in all other
cases) of the lesser of the fair market value of such property at such
time or the actual purchase price of such property;
provided, however, that no such Lien may at any time exist upon the Pledged
Securities;
(d) Zoning restrictions, easements, minor restrictions on the use of real
property, minor irregularities in title thereto and other minor Liens that do
not in the aggregate materially detract from the value of a property or asset
to, or materially impair its use in the business of, such Credit Party;
(e) Liens securing Indebtedness permitted by Section 6.08 hereof covering
assets whose market value is not materially greater than an amount equal to the
amount of the Indebtedness secured thereby, plus a commercially reasonable
margin provided, however, that no such Lien may at any time exist upon the
Required Pledged Securities;
(f) Liens on cash and securities of such Credit Party or its Credit
Subsidiaries incurred as part of the management of its investment portfolio in
accordance with customary portfolio management practice and not in violation of
such Credit Parties' investment policy as in effect on the date of this
Agreement; provided, however, that no such Lien may at any time exist upon the
Pledged Securities; or
(g) Liens in favor of the Bank Parties created pursuant to the Pledge
Agreement.
6.04. Transactions With Affiliates. Such Credit Party shall not, and shall
not permit any Credit Subsidiary to, enter into or carry out any transaction
with (including, without limitation, purchase or lease property or services to,
loan or advance to or enter into, suffer to remain in existence or amend any
contract, agreement or arrangement with) any Affiliate of such Credit Party, or
directly or indirectly agree to do any of the foregoing, except transactions
among such Credit Party and its wholly-owned Credit Subsidiaries and
transactions with Affiliates in good faith in the ordinary course of such Credit
Party's business consistent with past practice and on terms no less favorable to
such Credit Party or any Credit Subsidiary than those that could have been
obtained in a comparable transaction on an arm's length basis from an unrelated
Person.
6.05. Business. Such Credit Party will not, and will not permit any
Subsidiary to, engage (directly or indirectly) in any businesses other than the
businesses substantially the same as those in which such Credit Party and its
Subsidiaries are engaged on the Closing Date and any businesses reasonably
related thereto or in the financial services industry. Each Account Party which
is an insurance company will not permit, at any time, its net premiums earned
from insurance or reinsurance operations to comprise less than 50% of gross
revenues of such Account Party (on a consolidated basis exclusive of net gains
and losses from investments and investment income). XL Investments shall not
conduct or be engaged in any business other than the business of holding
investments provided to it by XL Insurance, XL Mid Ocean and the affiliates of
XL Capital and the proceeds thereof.
6.06. Ratio of Total Funded Debt to Consolidated Tangible Net Worth. XL
Capital will not permit its ratio of (i) the sum of (x) Total Funded Debt plus
(y) the aggregate undrawn face amount of all letters of credit (as to which
reimbursement obligations are unsecured) issued for the account of, or as to
which reimbursement obligations are guaranteed by, XL Capital or any of its
Consolidated Subsidiaries to (ii) Consolidated Tangible Net Worth to be greater
than 0.35 at any time.
33
6.07. Consolidated Tangible Net Worth. XL Capital will not permit its
Consolidated Tangible Net Worth to be less than $2,566,000,000.00 at any time.
6.08. Indebtedness. Such Credit Party shall not, and shall not permit any
Subsidiary to, at any time create, incur, assume or suffer to exist any
Indebtedness, or agree, become or remain liable (contingent or otherwise) to do
any of the foregoing, except:
(a) Indebtedness to the Banks pursuant to this Agreement and the other
Transaction Document;
(b) Other Indebtedness, so long as upon the incurrence thereof no Event of
Default or Potential Default would occur or exist;
(c) Accounts or claims payable and accrued and deferred compensation
(including options) incurred in the ordinary course of business by any Credit
Party or any Subsidiary of any Credit Party; and
(d) Indebtedness incurred in transactions described in Section 6.03(f).
6.09. Claims-Paying Ratings. Each of XL Insurance and XL Mid Ocean shall
maintain at all times a claims-paying rating of at least "A" from Standard &
Poor's Ratings Services and from A.M. Best Company.
6.10. Private Act. Such Credit Party shall not become subject to a Private
Act except, in the case of XL Insurance, the X.L. Insurance Company, Ltd. Act,
1989.
ARTICLE VII
EVENTS OF DEFAULT
7.01. Events of Default. An Event of Default shall mean the occurrence or
existence of one or more of the following events or conditions (for any reason,
whether voluntary, involuntary or effected or required by Law):
(a) Any Account Party shall default in the payment when due of any
reimbursement obligation with respect to any Letter of Credit;
(b) Any Account Party shall default in the payment when due of any Letter
of Credit Fee, Commitment Fee, or any other fee or amount payable hereunder
which default shall continue for a period of three days from the due date
thereof;
(c) Any Credit Party shall default in the observance, performance or
fulfillment of any covenant contained in Article VI hereof;
(d) Any Credit Party shall default in the observance, performance or
fulfillment of any other covenant, condition or provision hereof and such
default shall not be remedied for a period of twenty days after written notice
thereof to such Credit Party from the Agent;
(e) Any Credit Party or any Subsidiary of any Credit Party shall default
(i) in any payment of principal of or interest on any other obligation for
borrowed money in principal amount of $10,000,000 or more beyond any period of
grace provided with respect thereto, or (ii) in the
34
performance of any other agreement, term or condition contained in any such
agreement under which any such obligation in principal amount of $10,000,000 or
more is created, if the effect of such default is to cause or permit the holder
or holders of such obligation (or trustee on behalf of such holder or holders)
to cause such obligation to become due prior to its stated maturity or to
terminate its commitment under such agreement;
(f) One or more judgments for the payment of money shall have been entered
against any Credit Party which judgments exceed $50,000,000 in the aggregate and
such judgments shall remain undischarged or uncontested or appealed in good
faith for a period of thirty consecutive days;
(g) Any representation or warranty herein made by any Credit Party, or any
certificate or financial statement furnished pursuant to the provisions hereof,
shall prove to have been false or misleading in any material respect as of the
time made (or deemed made) or furnished;
(h) XL Insurance shall cease to own, beneficially and of record, directly
or indirectly, 100% of the outstanding voting shares of common stock of XL
Investments;
(i) XL Capital shall cease to own, beneficially and of record, directly or
indirectly all of the outstanding voting shares of common stock of each other
Credit Party, except for a nominal number of shares owned by nominee
shareholders required by the applicable laws of the jurisdiction where such
Credit Party is incorporated;
(j) A Change in Control shall occur;
(k) The guarantee contained in Article X hereof shall terminate or cease,
in whole or material part, to be a legally valid and binding obligation of XL
Insurance , XL Investments, XL Capital or XL Mid Ocean or any Credit Party or
any Person acting for or on behalf of any of such parties contests such validity
or binding nature of such guarantee itself or the transactions contemplated by
this Agreement, or any other Person shall assert any of the foregoing, or the
Pledge Agreement shall terminate or cease, in whole or in part, to be a legally
valid and binding obligation of XL Investments or XL Mid Ocean, or any Credit
Party or any Person acting for or on behalf of any of such parties contests such
validity or binding nature of the Pledge Agreement itself or the transactions
contemplated thereby (including the security interest granted thereunder);
(l) A decree or order by a court having jurisdiction in the premises shall
have been entered adjudging any Credit Party a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of such Credit
Party under the Bermuda Companies Law, or any other similar applicable Law, and
such decree or order shall have continued undischarged or unstayed for a period
of sixty days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver or liquidator or trustee or assignee
in bankruptcy or insolvency of such Credit Party or a substantial part of its
property, or for the winding up or liquidation of its affairs, shall have been
entered, and such decree or order shall have remained in force undischarged and
unstayed for a period of sixty days;
(m) Any Credit Party shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking reorganization
under the Bermuda Companies Law, or the companies laws of the Cayman Islands,
British West Indies or any other similar applicable Law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a receiver
or liquidator or examiner (in the case of XL Europe) or trustee or assignee in
bankruptcy or insolvency of it or of a substantial part of its property, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or corporate action
shall be taken by such Credit Party in furtherance of any of the aforesaid
purposes; or
35
(n) The Pledged Securities Available Amount shall at any time be less than
the Letter of Credit Exposure;
then, the Issuing Bank shall be under no further obligation to issue Letters of
Credit hereunder and the Agent may, and upon written request of the Required
Banks shall, exercise any or all remedies available to it under the Pledge
Agreement or otherwise.
ARTICLE VIII
THE AGENT
8.01. Appointment. (a) Each Bank hereby appoints Mellon Bank, N.A. to act
as Agent for such Bank under this Agreement and the other Transaction Documents.
Each Bank hereby irrevocably authorizes the Agent to take such action on behalf
of such Bank under the provisions of this Agreement and the other Transaction
Documents, and to exercise such powers and to perform such duties, as are
expressly delegated to or required of the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto. Mellon Bank,
N.A. hereby agrees to act as Agent on behalf of the Banks on the terms and
conditions set forth in this Agreement and the other Transaction Documents,
subject to its right to resign as provided in Section 8.10 hereof. Each Bank
hereby irrevocably authorizes the Agent to execute and deliver each of the
Transaction Documents and to accept delivery of such of the other Transaction
Documents as may not require execution by the Agent. Each Bank agrees that the
rights and remedies granted to the Agent under the Transaction Documents shall
be exercised exclusively by the Agent, and that no Bank shall have any right
individually to exercise any such right or remedy, except to the extent
expressly provided herein or therein.
(b) Each Bank agrees that Mellon Bank, N. A. may act as collateral agent
in connection with a Future Collateral Allocation Transaction. As used herein,
the term "Future Collateral Allocation Transaction" means a transaction which
includes, among other things, the following elements: (i) a Credit Party shall
have arranged one or more separate financing transactions with credit providers
(which may, but need not, include any of the Banks) for which securities
entitlements in the Designated Accounts serve as collateral at a time when
securities entitlements in the Designated Accounts serve as collateral for the
Obligations under this Agreement; (ii) Mellon Bank, N. A. shall have agreed to
serve as collateral agent both for the Issuing Bank, the Agent and the Banks
under this Agreement and the Pledge Agreement and for the parties providing the
separate financing described in clause (i) of this paragraph; (iii) arrangements
shall have been made pursuant to which specific securities entitlements within
the Designated Accounts are allocated as collateral for the Obligations under
this Agreement and other specific securities entitlements within the Designated
Accounts are allocated as collateral for such other financings; and (iv) the
Required Banks and the Issuing Bank shall have approved all of such arrangements
and the documents implementing the same, including amendments to this Agreement
and the Pledge Agreement. The granting by a Credit Party to a person other than
Mellon Bank, N. A. of a security interest in securities entitlements which are
maintained in a Designated Account but which do not constitute Collateral (as
defined in the Pledge Agreement) shall not be a "Future Collateral Allocation
Transaction" and, accordingly, shall not require approval of the Required Banks
but shall be subject to the applicable provisions of the Custodian's
Acknowledgments, as defined in the Pledge Agreement.
(c). The Arrangers shall have no duties or obligations in such capacity
under this Agreement.
8.02. General Nature of Agent's Duties. Notwithstanding anything to the
contrary elsewhere in this Agreement or in any other Transaction Document:
36
(a) The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Transaction Documents,
and no implied duties or responsibilities on the part of the Agent shall
be read into this Agreement or any Transaction Document or shall otherwise
exist.
(b) The duties and responsibilities of the Agent under this
Agreement and the other Transaction Documents shall be mechanical and
administrative in nature, and the Agent shall not have a fiduciary
relationship in respect of any Bank.
(c) The Agent is and shall be solely the agent of the Banks. The
Agent does not assume, and shall not at any time be deemed to have, any
relationship of agency or trust with or for, or any other duty or
responsibility to, any other Person (except only for its relationship as
agent for, and its express duties and responsibilities to, the Banks as
provided in this Agreement and the other Transaction Documents).
(d) The Agent shall be under no obligation to take any action
hereunder or under any other Transaction Document if the Agent believes in
good faith that taking such action may conflict with any Law or any
provision of this Agreement or any other Transaction Document, or may
require the Agent to qualify to do business in any jurisdiction where it
is not then so qualified.
8.03. Exercise of Powers. The Agent shall take any action of the type
specified in this Agreement or any other Transaction Document as being within
the Agent's rights, powers or discretion in accordance with directions from the
Required Banks (or, to the extent this Agreement or such Transaction Document
expressly requires the direction or consent of some other Person or set of
Persons, then instead in accordance with the directions of such other Person or
set of Persons). In the absence of such directions, the Agent shall have the
authority (but under no circumstances shall be obligated), in its sole
discretion, to take any such action, except to the extent this Agreement or such
Transaction Document expressly requires the direction or consent of the Required
Banks (or some other Person or set of Persons), in which case the Agent shall
not take such action absent such direction or consent. Any action or inaction
pursuant to such direction, discretion or consent shall be binding on all the
Banks. The Agent shall not have any liability to any Person as a result of (x)
the Agent acting or refraining from acting in accordance with the directions of
the Required Banks (or other applicable Person or set of Persons), (y) the Agent
refraining from acting in the absence of instructions to act from the Required
Banks (or other applicable Person or set of Persons), whether or not the Agent
has discretionary power to take such action, or (z) the Agent taking
discretionary action it is authorized to take under this Section (subject, in
the case of this clause (z), to the provisions of Section 8.04(a) hereof).
8.04. General Exculpatory Provisions. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Transaction Document:
(a) The Agent shall not be liable for any action taken or omitted to be
taken by it under or in connection with this Agreement or any other Transaction
Document, unless caused by its own gross negligence or willful misconduct.
(b) The Agent shall not be responsible for (i) the execution, delivery,
effectiveness, enforceability, genuineness, validity or adequacy of this
Agreement or any other Transaction Document, (ii) any recital, representation,
warranty, document, certificate, report or statement in, provided for in, or
received under or in connection with, this Agreement or any other Transaction
Document, (iii) any failure of any Credit Party or Bank to perform any of their
respective obligations under this Agreement or any other Transaction Document,
or (iv) the existence, validity, enforceability, perfection, recordation,
priority, adequacy or value, now or hereafter, of any Lien or
37
other direct or indirect security afforded or purported to be afforded by any of
the Transaction Documents or otherwise from time to time.
(c) The Agent shall not be under any obligation to ascertain, inquire or
give any notice relating to (i) the performance or observance of any of the
terms or conditions of this Agreement or any other Transaction Document on the
part of any Credit Party, (ii) the business, operations, condition (financial or
otherwise) or prospects of any Credit Party or any other Person, or (iii) except
to the extent set forth in Section 8.05(f) hereof, the existence of any Event of
Default or Potential Default.
(d) The Agent shall not be under any obligation, either initially or on a
continuing basis, to provide any Bank with any notices, reports or information
of any nature, whether in its possession presently or hereafter, except for such
notices, reports and other information expressly required by this Agreement or
any other Transaction Document to be furnished by the Agent to such Bank.
8.05. Administration by the Agent.
(a) The Agent may rely upon any notice or other communication of any
nature (written or oral, including but not limited to telephone conversations,
whether or not such notice or other communication is made in a manner permitted
or required by this Agreement or any Transaction Document) purportedly made by
or on behalf of the proper party or parties, and the Agent shall not have any
duty to verify the identity or authority of any Person giving such notice or
other communication.
(b) The Agent may consult with legal counsel (including, without
limitation, in-house counsel for the Agent or in-house or other counsel for any
Credit Party), independent public accountants and any other experts selected by
it from time to time, and the Agent shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts.
(c) The Agent may conclusively rely upon the truth of the statements and
the correctness of the opinions expressed in any certificates or opinions
furnished to the Agent in accordance with the requirements of this Agreement or
any other Transaction Document. Whenever the Agent shall deem it necessary or
desirable that a matter be proved or established with respect to any Credit
Party or Bank, such matter may be established by a certificate of such Credit
Party or Bank, as the case may be, and the Agent may conclusively rely upon such
certificate (unless other evidence with respect to such matter is specifically
prescribed in this Agreement or another Transaction Document).
(d) The Agent may fail or refuse to take any action unless it shall be
indemnified to its satisfaction from time to time against any and all amounts,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature which may be imposed on,
incurred by or asserted against the Agent by reason of taking or continuing to
take any such action.
(e) The Agent may perform any of its duties under this Agreement or any
other Transaction Document by or through agents or attorneys-in-fact. The Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in fact selected by it with reasonable care.
(f) The Agent shall not be deemed to have any knowledge or notice of the
occurrence of any Event of Default or Potential Default unless the Agent has
received notice from a Bank or any Credit Party referring to this Agreement,
describing such Event of Default or Potential Default, and stating that such
notice is a "notice of default". If the Agent receives such a notice, the Agent
shall give prompt notice thereof to each Bank.
38
8.06. Bank Not Relying on Agent or Other Banks. Each Bank acknowledges as
follows: (a) neither the Agent nor any other Bank has made any representations
or warranties to it, and no act taken hereafter by the Agent or any other Bank
shall be deemed to constitute any representation or warranty by the Agent or
such other Bank to it; (b) it has, independently and without reliance upon the
Agent or any other Bank, and based upon such documents and information as it has
deemed appropriate, made its own credit and legal analysis and decision to enter
into this Agreement and the other Transaction Documents; and (c) it will,
independently and without reliance upon the Agent or any other Bank, and based
upon such documents and information as it shall deem appropriate at the time,
make its own decisions to take or not take action under or in connection with
this Agreement and the other Transaction Documents.
8.07. Indemnification. Each Bank agrees to reimburse and indemnify the
Agent and its directors, officers, employees and agents (to the extent not
reimbursed by a Credit Party and without limitation of the obligations of the
Credit Parties to do so), ratably in accordance with their respective Letter of
Credit Participating Interests, from and against any and all amounts, losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature (including,
without limitation, the reasonable fees and disbursements of counsel for the
Agent or such other Person in connection with any investigative, administrative
or judicial proceeding commenced or threatened, whether or not the Agent or such
other Person shall be designated a party thereto) that may at any time be
imposed on, incurred by or asserted against the Agent or such other Person as a
result of, or arising out of, or in any way related to or by reason of, this
Agreement, any other Transaction Document, any transaction from time to time
contemplated hereby or thereby, or any transaction to which a Letter of Credit
directly or indirectly relates, provided that no Bank shall be liable for any
portion of such amounts, losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements to the
extent resulting from the gross negligence or willful misconduct of the Agent or
such other Person, as finally determined by a court of competent jurisdiction.
Payments under this Section shall be due and payable on demand, and to the
extent that any Bank fails to pay any such amount after a proper demand, such
amount shall bear interest for each day from the date of demand until paid
(before and after judgment) at a rate per annum (calculated on the basis of a
year of 360 days and actual days elapsed) which for each day shall be equal to
2% over the interest rate per annum announced by the Federal Reserve Bank of New
York or otherwise determined by the Agent to be applicable for such day to
overnight federal funds transactions arranged by federal funds brokers on the
previous trading day.
8.08. Agent in its Individual Capacity. With respect to its commitments
hereunder and the Obligations owing to it, the Agent shall have the same rights
and powers under this Agreement and each other Transaction Document as any other
Bank and may exercise the same as though it were not the Agent, and the terms
"Banks" and like terms shall include the Agent in its individual capacity as
such. The Agent and its affiliates may, without liability to account, make loans
to, accept deposits from, acquire debt or equity interests in, act as trustee
under indentures of, act as agent under other credit facilities for, and engage
in any other business with, any Credit Party and any stockholder, subsidiary or
affiliate of any Credit Party, as though the Agent were not the Agent hereunder.
8.09. Successor Agent. The Agent may resign at any time by giving 10 days'
prior written notice thereof to the Banks and the Account Parties. The Agent may
be removed by the Required Banks at any time by giving 10 days' prior written
notice thereof to the Agent, the other Banks and the Account Parties. Upon any
such resignation or removal, the Required Banks shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed and
consented to, and shall have accepted such appointment, within 30 days after
such notice of resignation or removal, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent. Each successor Agent shall be a commercial
bank or trust company organized under the laws of the United States of America
or any State thereof and having a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance by a successor Agent of its appointment as
Agent hereunder, such successor Agent shall thereupon succeed to and become
vested with all the properties, rights, powers, privileges and duties
39
of the former Agent, without further act, deed or conveyance. Upon the effective
date of resignation or removal of a retiring Agent, such Agent shall be
discharged from its duties under this Agreement and the other Transaction
Documents, but the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted by it while it was Agent under this Agreement. If
and so long as no successor Agent shall have been appointed, then any notice or
other communication required or permitted to be given by the Agent shall be
sufficiently given if given by the Required Banks, all notices or other
communications required or permitted to be given to the Agent shall be given to
each Bank, and all payments to be made to the Agent shall be made directly to
the Account Parties or Bank for whose account such payment is made.
8.10. Additional Agents. If the Agent shall from time to time deem it
necessary or advisable, for its own protection in the performance of its duties
hereunder or in the interest of the Banks, the Agent and the Account Parties
shall execute and deliver a supplemental agreement and all other instruments and
agreements necessary or advisable, in the opinion of the Agent, to constitute
another commercial bank or trust company, or one or more other Persons approved
by the Agent, to act as co-Agent or agent with such powers of the Agent as may
be provided in such supplemental agreement and to vest in such bank, trust
company or Person as such co-Agent or separate agent, as the case may be, any
properties, rights, powers, privileges and duties of the Agent under this
Agreement or any other Transaction Document.
8.11. Calculations. The Agent shall not be liable for any calculation,
apportionment or distribution of payments made by it in good faith. If such
calculation, apportionment or distribution is subsequently determined to have
been made in error, the sole recourse of any Bank to whom payment was due but
not made shall be to recover from the other Banks any payment in excess of the
amount to which they are determined to be entitled or, if the amount due was not
paid by the appropriate Account Party, to recover such amount from the
appropriate Account Party.
8.12. Agent's Fee. XL Insurance agrees to pay to the Agent, for its
individual account, a nonrefundable Agent's fee in an amount and at such time or
times as the Agent and XL Insurance have heretofore agreed.
ARTICLE IX
MISCELLANEOUS
9.01. No Implied Waiver etc. No delay or failure of the Agent or any Bank
in exercising any right, power or privilege hereunder shall affect such right,
power or privilege; nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power or
privilege preclude any further exercise thereof or of any other right, power or
privilege. The rights and remedies hereunder of the Agent and the Banks are
cumulative and not exclusive of any rights or remedies which, it or they would
otherwise have. Any amendment, waiver, permit, consent or approval of any kind
or character on the part of the Agent or a Bank of any breach or default under
this Agreement or any such waiver of any provision or condition of this
Agreement must be in writing and shall be effective only to the extent in such
writing specifically set forth.
9.02. Set-Off. In case any one or more of the Events of Default described
in Article VII hereof shall occur, each Bank shall have the right, in addition
to all other rights and remedies available to it, to set-off against the unpaid
balance of its interests in any Letter of Credit Reimbursement Obligations any
debt owing by such Bank to the applicable Credit Party, including without
limitation any funds in any deposit account maintained by such Credit Party with
such
40
Bank, and such Bank shall have and there is hereby created in favor of such Bank
a security interest in all deposit accounts maintained by such Credit Party with
such Bank, subject to Liens permitted under 6.03(f). Any sums obtained by any
Bank by way of counterclaim, set-off, banker's lien or other lien for
application upon any Letter of Credit Reimbursement Obligation shall be shared
pro rata with the other Banks. Nothing in this Agreement shall be deemed any
waiver or prohibition of any right of banker's lien or set-off under applicable
Law.
9.03. Survival of Provisions. Each of the representations, warranties,
covenants and agreements of the Credit Parties contained herein or made in
writing in connection herewith shall survive the execution and delivery of this
Agreement, and the issuance of any Letter of Credit hereunder.
9.04. Expenses and Fees; Indemnity.
(a) Each Account Party agrees to pay or cause to be paid and to save the
Agent and (in the case of clause (iii) below) each of the Banks harmless against
liability for the payment of all reasonable out-of-pocket costs and expenses
(including but not limited to reasonable fees and expenses of counsel, including
local counsel, auditors, and all other professional, accounting, evaluation and
consulting costs) incurred by the Agent or such Bank from time to time arising
from or relating to (i) the negotiation, preparation, execution, delivery,
administration and performance of this Agreement and the other Transaction
Documents, (ii) any requested amendments, modifications, supplements, waivers or
consents (whether or not ultimately entered into or granted) to this Agreement
or any Transaction Document, and (iii) the enforcement or preservation of rights
under this Agreement or any Transaction Document (including but not limited to
any such costs or expenses arising from or relating to (A) collection or
enforcement of any other amount owing hereunder or thereunder by the Agent or
any Bank and (B) any litigation, proceeding, dispute, work-out, restructuring or
rescheduling related in any way to this Agreement or the Transaction Documents.
Notwithstanding the foregoing, an Account Party shall not be required to pay
costs and expenses of a Bank (in its capacity as such) which were incurred by
such Bank in connection with any litigation, proceeding or other dispute
relating solely to a claim made against such Bank by one or more of the other
Banks. Each Account Party hereby agrees to pay all stamp, document, transfer,
recording, filing, registration, search, sales and excise fees and taxes and all
similar impositions now or hereafter determined by the Agent or any Bank to be
payable in connection with this Agreement or any other Transaction Documents or
any other documents, instruments or transactions pursuant to or in connection
herewith or therewith, and an Account Party agrees to save the Agent and each
Bank harmless from and against any and all present or future claims, liabilities
or losses with respect to or resulting from any omission to pay or delay in
paying any such fees.
(b) Each Account Party hereby agrees to reimburse and indemnify the Agent
and each Bank (the "Indemnified Parties") from and against any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for the
Indemnified Parties in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnified
Party shall be designated a party thereto) that may at any time be imposed on,
asserted against or incurred by such Indemnified Party as a result of, or
arising out of, or in any way related to or by reason of, this Agreement or any
other Transaction Document, any transaction from time to time contemplated
hereby or thereby, or any transaction to which any Letter of Credit directly or
indirectly relates (and without in any way limiting the generality of the
foregoing, including any violation or breach of any Law by any Credit Party or
any exercise by the Agent or any Bank of any of its rights or remedies under
this Agreement or any other Transaction Document; any breach of any
representation or warranty, covenant or agreement of any Credit Party); but
excluding any such losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements to the
41
extent resulting from the gross negligence or willful misconduct of such
Indemnified Party, as finally determined by a court of competent jurisdiction.
If and to the extent that the foregoing obligations of the Account Parties under
this Section 9.04, or any other indemnification obligation of the Account
Parties hereunder or under any other Transaction Document, are unenforceable for
any reason, the Account Parties hereby agree to make the maximum contribution to
the payment and satisfaction of such obligations which is permissible under
applicable Law. Notwithstanding the foregoing, an Account Party shall not be
required to pay costs and expenses of a Bank (in its capacity as such) which
were incurred by such Bank in connection with any litigation, proceeding or
other dispute relating solely to a claim made against such Bank by one or more
of the other Banks.
9.05. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Transaction Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
9.06. Holidays. Unless otherwise specified herein, whenever any payment or
action to be made or taken hereunder shall be stated to be due on a Saturday,
Sunday or public holiday under the laws of the Commonwealth of Pennsylvania or
Bermuda, such payment or action shall be made or taken on the next succeeding
Business Day and such extension of time shall in such case be included in
computing interest, if any, in connection with such payment or action.
9.07. Notices, etc. Any notice or other communication in connection with
this Agreement shall be deemed to have been given or made when received by the
party to whom directed. All such notices and other communications shall be in
writing unless otherwise provided herein and shall be directed, if to a Bank, at
such Bank's address on the signature pages hereof, if to the Agent at One Mellon
Bank Center, Room 4401, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxx
Xxxxxxxxx, fax no. (000) 000-0000, with a copy to Loan Administration, Three
Mellon Bank Center, Xxxxxxxxxx, XX 00000 fax no. (000) 000-0000; if to the
Issuing Bank at Three Mellon Bank Center, Xxxxxxxxxx, Xxxxxxxxxxxx 00000,
Attention: Letter of Credit Department with a copy to Institutional Banking,
Room 4401, Xxx Xxxxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention:
Xxxxx Xxxxxxxxx; and if to any Credit Party, to XL Capital Ltd, Cumberland
House, One Victoria Street, Xxxxxxxx HM11 Bermuda, Attn:Xxxxxxx Xxxxxx, fax no.
(000) 000-0000, with a copy to XL Investments Ltd, XL Investments, Ltd, Xxxxxxxx
Xxxxx, 00 Xxx-xx-Xxxxx Xxxx, Xxxxxxxx XX00 Xxxxxxx, Attn: Chief Investment
Officer, fax no. (000) 000-0000, and, in the case of notices to The Xxxxxxxxx
Group Plc, with a copy to Xxxxx Xxxxxx, fax no (000) 000-0000, or in accordance
with the latest unrevoked written direction from any party to the other parties
hereto. For the purposes of both receiving information from the Agent or any
Bank or providing information to the Agent or any Bank, XL Insurance shall act
as the agent for each other Credit Party.
9.08. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR ANY
OTHER MATTER RELATED THERETO MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF
COMMONWEALTH OF PENNSYLVANIA OR IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF PENNSYLVANIA. EACH CREDIT PARTY HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
PENNSYLVANIA AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
PENNSYLVANIA FOR THE PURPOSE OF ANY SUCH
42
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION, SUBJECT TO ANY GENERAL
RIGHT OF APPEAL. EACH CREDIT PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS PROVIDED IN THIS
AGREEMENT.
9.09. WAIVER OF JURY TRIAL. TO THE EXTENT LITIGATION HEREUNDER IS BROUGHT
BEFORE A COURT IN THE UNITED STATES, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY. EACH PARTY
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISIONS OF EACH OTHER DOCUMENT RELATED
HERETO TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE AGENT AND EACH BANK ENTERING INTO THIS AGREEMENT AND RELATED AGREEMENTS.
9.10. Governing Law. This Agreement and any other documents delivered in
connection herewith and the rights and obligations of the parties hereto and
thereto shall for all purposes be governed by and construed and enforced in
accordance with the substantive law of the Commonwealth of Pennsylvania without
giving effect to conflict of laws principles.
9.11 Validity and Enforceability. If any stamp tax, levy, duty or fee is
imposed or payable in respect to this Agreement or the transaction contemplated
hereby or is necessary or advisable to ensure the legality, validity or
enforceability of the documents in this transaction, the Account Parties shall
promptly pay such stamp tax, levy, duty or fee. No government approval or
consent is necessary for the execution, delivery and performance of the
transactions contemplated under this Agreement.
9.12. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one (1) and the same instrument.
9.13. Successors and Assigns; Participations; Assignments.
(a) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Account Parties, the Banks, the
Agent, and their respective successors and assigns, except that no Credit Party
may assign or otherwise transfer any of its rights or duties under this
Agreement without the prior written consent of the Agent and all of the Banks,
and any purported assignment without such consent shall be void.
(b) Participations. Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time sell
participations to one or more commercial banks or other Persons (each a
"Participant") in a portion of its rights and obligations under this Agreement
and the other Transaction Documents (including, without limitation, all or a
portion of its Letter of Credit Participating Interest Commitment and Letter of
Credit Participating Interests); provided, that
(i) any such participation sold to a Participant which is not a
Bank, an affiliate of a Bank or a Federal Reserve Bank shall be made only
with the consent (which in each case shall not be unreasonably withheld)
of XL Insurance and the Agent, unless an Event of Default has occurred and
is continuing, in which case the consent of the Account Parties shall not
be required,
43
(ii) any such Bank's obligations under this Agreement and the other
Transaction Documents shall remain unchanged,
(iii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations,
(iv) the parties hereto shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement and each of the other Transaction Documents,
(v) such Participant shall be bound by the provisions of Section
9.18 hereof, and the Bank selling such participation shall obtain from
such Participant a written confirmation of its agreement to be so bound,
(vi) no Participant (unless such Participant is an affiliate of such
Bank, or is itself a Bank) shall be entitled to require such Bank to take
or refrain from taking action under this Agreement or under any other
Transaction Document, except that such Bank may agree with such
Participant that such Bank will not, without such Participant's consent,
take action of the type described in subsections (a), (b), (c), (d) or (e)
of Section 9.14 hereof, and
(vii) a Participant shall have the right to vote regarding
amendments to this Agreement only in connection with amendments which
effect changes in the amount of Letter of Credit Participating Interest
Commitments, Letter of Credit Participating Interests, fees payable
hereunder and the Expiration Date.
Each Account Party agrees that any such Participant shall be entitled to the
benefits of Sections 2.09 and 9.04 with respect to its participation in the
Commitments and the Letters of Credit outstanding from time to time; provided,
that no such Participant shall be entitled to receive any greater amount
pursuant to such Sections than the transferor Bank would have been entitled to
receive in respect of the amount of the participation transferred to such
Participant had no such transfer occurred.
(c) Assignments. Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time assign all
or a portion of its rights and obligations under this Agreement and the other
Transaction Documents (including, without limitation, all or any portion of its
Letter of Credit Participating Interest Commitments and Letter of Credit
Participating Interests to any Bank, any affiliate of a Bank or to one or more
additional commercial banks or other Persons (each a "Purchasing Bank");
provided, that
(i) any such assignment to a Purchasing Bank which is not a Bank, an
affiliate of a Bank or a Federal Reserve Bank shall be made only with the
consent (which in each case shall not be unreasonably withheld) of XL
Capital and the Issuing Bank, unless an Event of Default has occurred and
is continuing or exists, in which case the consent of XL Capital shall not
be required,
(ii) if a Bank makes such an assignment of less than all of its then
remaining rights and obligations under this Agreement and the other
Transaction Documents, such assignment shall be in a minimum aggregate
principal amount of $10,000,000 of the Letter of Credit Participating
Interest Commitments and Letter of Credit Participating Interests then
outstanding,
44
(iii) each such assignment shall be of a constant, and not a
varying, percentage of each Commitment of the transferor Bank and of all
of the transferor Bank's rights and obligations under this Agreement and
the other Transaction Documents, and
(iv) each such assignment shall be made pursuant to a Transfer
Supplement in substantially the form of Exhibit B to this Agreement, duly
completed (a "Transfer Supplement").
In order to effect any such assignment, the transferor Bank and the
Purchasing Bank shall execute and deliver to the Agent a duly completed
Transfer Supplement (including the consents required by clause (i) of the
preceding sentence) with respect to such assignment, and a processing and
recording fee of $2,500; and, upon receipt thereof, the Agent shall accept
such Transfer Supplement; provided, however, that no such processing and
recording fee shall be due if such assignment is to an affiliate of a Bank
or a Federal Reserve Bank . Upon receipt of the Purchase Price Receipt
Notice pursuant to such Transfer Supplement, the Agent shall record such
acceptance in the Register. Upon such execution, delivery, acceptance and
recording, from and after the close of business at the Agent's Office on
the Transfer Effective Date specified in such Transfer Supplement.
(x) the Purchasing Bank shall be a party hereto and, to the extent
provided in such Transfer Supplement, shall have the rights and
obligations of a Bank hereunder, and
(y) the transferor Bank thereunder shall be released from its
obligations under this Agreement to the extent so transferred (and, in the
case of an Transfer Supplement covering all or the remaining portion of a
transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party to this Agreement) from and
after the Transfer Effective Date.
(d) Register. The Agent shall maintain at its office a copy of each
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Banks and the Letter of Credit
Participating Interest Commitment of, and the amount of the Letter of Credit
Participating Interests of, each Bank from time to time. The entries in the
Register shall be conclusive absent manifest error and the Account Parties, the
Agent and the Banks may treat each person whose name is recorded in the Register
as a Bank hereunder for all purposes of the Agreement. The Register shall be
available for inspection by any Account Party or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(e) Financial and Other Information. Each Credit Party authorizes the
Agent and each Bank to disclose to any Participant or Purchasing Bank (each, a
"transferee") and any prospective transferee any and all financial and other
information in such Person's possession concerning the Credit Parties and their
affiliates which has been or may be delivered to such Person by or on behalf of
the Credit Parties in connection with this Agreement or any other Transaction
Document or such Person's credit evaluation of the Credit Parties and their
affiliates. At the request of any Bank, a Credit Party, at such Credit Party's
expense, shall provide to each prospective transferee the conformed copies of
documents referred to in Section 4 of the form of Transfer Supplement.
9.14. Amendments and Waivers. Neither this Agreement nor any Transaction
Document may be amended, modified or supplemented except in accordance with the
provisions of this Section. The Agent and the Credit Parties may from time to
time amend, modify or supplement the provisions of this Agreement or any other
Transaction Document for the purpose of amending, adding to, or waiving any
provisions or changing in any manner the rights and duties of any Credit Party,
the Agent or any Bank. Any such amendment, modification or supplement made by
the Credit Parties and the Agent in accordance with the provisions of this
Section shall be binding upon the Credit Parties, each Bank and the Agent. The
Agent shall enter into such amendments, modifications or supplements from time
to
45
time as directed by the Required Banks, and only as so directed, provided, that
no such amendment, modification or supplement may be made which will:
(a) Increase the Letter of Credit Participating Interest Committed Amount
of any Bank over the amount thereof then in effect, or extend the Expiration
Date, without the written consent of each Commitment Bank affected thereby;
(b) Reduce the amount of or postpone the date for payment of any
Commitment Fee or Letter of Credit Fee or reduce or postpone the date for
payment of any other fees, expenses, indemnities or amounts payable under any
Transaction Document, without the written consent of each Bank affected thereby;
(c) Change the definition of "Required Banks" or amend this Section 9.14,
without the written consent of all the Banks;
(d) Amend or waive any of the provisions of Article VII hereof, or impose
additional duties upon the Agent or otherwise adversely affect the rights,
interests or obligations of the Agent, without the written consent of the Agent;
(e) Amend or waive any of the provisions of Article X or release any
Guarantor from its obligations hereunder without the written consent of all the
Banks; or
(f) Amend the definition of Qualifying Pledged Securities or of Required
Pledged Securities (as each such term is defined herein and in the Pledge
Agreement) or release all or (except in accordance with the terms of the Pledge
Agreement) any material part of the Collateral under the Pledge Agreement or
release XL Investments or XL Mid Ocean from all of their respective obligations
as the Grantors thereunder, without the written consent of all of the Banks;
and provided further, that Transfer Supplements may be entered into in the
manner provided in Section 9.13 hereof. Any such amendment, modification or
supplement must be in writing and shall be effective only to the extent set
forth in such writing. Any Event of Default or Potential Default waived or
consented to in any such amendment, modification or supplement shall be deemed
to be cured and not continuing to the extent and for the period set forth in
such waiver or consent, but no such waiver or consent shall extend to any other
or subsequent Event of Default or Potential Default or impair any right
consequent thereto. Implementation of a Future Collateral Allocation Transaction
(as defined in Section 8.01(b) hereof) shall require the consent of the Required
Banks, the Issuing Bank and the Agent, but shall not require the consent of all
of the Banks.
9.15. Judgment Currency. In the event of a judgment or order being
rendered by any court or tribunal for the payment of any amounts owing to the
Banks, the Agent or any of them under this Agreement or any other Transaction
Document or for the payment of damages in respect of any breach of this
Agreement or any other Transaction Document or under or in respect of a judgment
or order of another court or tribunal for the payment of such amounts or
damages, such judgment or order being expressed in a currency (the "Judgment
Currency") other than Dollars the party against whom the judgment or order is
made shall indemnify and hold the Banks and the Agent harmless against any
deficiency in terms of Dollars in the amounts received by the Banks or the
Agent, as the case may be, arising or resulting from any variations as between
(i) the exchange rate at which Dollars are converted into the Judgment Currency
for the purposes of such judgment or order and (ii) the exchange rate at which
each Bank or the Agent, as the case may be, is able to purchase Dollars with the
amount of the Judgment Currency actually received by such Bank or the Agent, as
the case may be, on the date of such receipt. The indemnity in this section
shall constitute a separate and independent obligation from the other
obligations of the Account Parties hereunder and shall apply irrespective of any
indulgence granted by the Banks.
46
9.16. Records. The amount of outstanding Letters of Credit, each Bank's
Letter of Credit Participating Interest Committed Amount and the accrued and
unpaid Commitment Fees shall at all times be ascertained from the records of the
Agent, which shall be conclusive absent manifest error.
9.17 Confidentiality. Each of the Agent and the Banks agree to keep
confidential any information relating to the Credit Parties received by it
pursuant to or in connection with this Agreement which is (a) information which
the Agent and the Banks reasonably expect that the applicable Credit Party would
want to keep confidential or (b) information which is clearly marked
"CONFIDENTIAL"; provided, however, that this Section 9.17 shall not be construed
to prevent the Agent or any Bank from disclosing such information (i) to any
affiliate that shall agree in writing for the benefit of the Credit Parties to
be bound by this obligation of confidentiality, (ii) upon the order of any court
or administrative agency of competent jurisdiction, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over the Agent
or such Bank which request or demand has the force of Law or is made by a bank
regulatory agency, (iv) that has been publicly disclosed, other than from a
breach of this provision by the Agent or any Bank, (v) that has been obtained
from any person that is neither a party to this Agreement nor an affiliate of
any such party, but only to the extent that such Bank does not know or have
reason to know that such disclosure violates a confidentiality agreement between
such person and the applicable Credit Party (vi) in connection with the exercise
of any right or remedy hereunder or under any other Transaction Document, (vii)
as expressly contemplated by this Agreement or any other Transaction Document or
(viii) to any prospective purchaser of all or any part of the interest of any
Bank which shall agree in writing for the benefit of the Credit Parties to be
bound by the obligation of confidentiality in this Agreement or the other
Transaction Documents if such prospective purchaser is a financial institution
or has been consented to by the Account Parties, which consent will not be
withheld if such purchaser is not a competitor of any Account Party or an
affiliate of a competitor of any Account Party.
9.18. Sharing of Collections. The Banks hereby agree among themselves that
if any Bank shall receive (by voluntary payment, realization upon security,
set-off or from any other source) any amount on account of any Obligation
contemplated by this Agreement or the other Transaction Documents to be made by
an Account Party pro rata to all Banks in greater proportion than any such
amount received by any other Bank, then the Bank receiving such proportionately
greater payment shall notify each other Bank and the Agent of such receipt, and
equitable adjustment will be made in the manner stated in this Section 9.18 so
that, in effect, all such excess amounts will be shared ratably among all of the
Banks. The Bank receiving such excess amount shall purchase (which it shall be
deemed to have done simultaneously upon the receipt of such excess amount) for
cash from the other Banks a participation in the applicable Obligations owed to
such other Banks in such amount as shall result in a ratable sharing by all
Banks of such excess amount (and to such extent the receiving Bank shall be a
Participant). If all or any portion of such excess amount is thereafter
recovered from the Bank making such purchase, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by Law to be paid by the Bank making
such purchase. The Account Parties hereby consent to and confirm the foregoing
arrangements. Each Participant shall be bound by this Section 9.18 as fully as
if it were a Bank hereunder."
ARTICLE X
GUARANTEE
10.01. The Guarantee. Each of the Guarantors hereby irrevocably,
unconditionally and absolutely guarantees to the Agent and the Banks, and
becomes surety for, the prompt payment of the Obligations of the Account Parties
(the "Guaranteed Obligations") in full when due (whether at stated maturity, by
acceleration, or otherwise) strictly in accordance with the terms thereof. Each
47
Guarantor hereby further agrees, as a primary obligor, that if any of the
Guaranteed Obligations are not paid in full when due (whether at stated
maturity, by acceleration, or otherwise and whether or not such payments would
not be permitted under any applicable bankruptcy or similar law), the Guarantor
will promptly pay the same, without any demand or notice whatsoever (except as
expressly provided herein), and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any other
of the Transaction Documents, to the extent the obligations of any Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable law, including the insolvency
laws, relating to fraudulent conveyances or transfers) then the obligations of
such Guarantor hereunder automatically shall be limited to the maximum amount
that is permissible under applicable law.
10.02. Obligations Unconditional. The obligations of each Guarantor under
this Article are irrevocable, absolute and unconditional (to the fullest extent
permitted by applicable law), irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Transaction Documents, or any other
agreement or instrument referred to therein, or any substitution, release or
exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Article that the obligations of each Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor agrees that such Guarantor shall have no right of subrogation,
indemnity, reimbursement or contribution against any Account Party, for amounts
paid under this Article X until such time as the Banks have been paid in full,
no Letter of Credit is outstanding, the Letter of Credit Participating Interest
Commitments under this Agreement have been terminated and no Person or Official
Body shall have any right to request any return or reimbursement of funds from
any Bank in connection with monies received under the Transaction Documents.
Without limiting the generality of the foregoing, it is agreed that, to the
fullest extent permitted by applicable law, the occurrence of any one or more of
the following shall not alter or impair the liability of any Guarantor hereunder
which shall remain irrevocable, absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of
the Transaction Documents, or any other agreement or instrument referred
to in the Transaction Documents shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Transaction Documents, or any other agreement or instrument referred to in
the Transaction Documents shall be waived or any other guarantee of any of
the Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any Bank as
security for any of the Guaranteed Obligations shall be void or voidable,
or shall fail to attach or be perfected or the Agent or any Bank shall
fail to realize on any collateral security; or
48
(v) any of the Guaranteed Obligations shall be determined to be void
or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever (except notices expressly required hereunder), and any requirement
that the Agents, the Banks or any of them exhaust any right, power or remedy or
proceed against any Person under any of the Transaction Documents, or any other
agreement or instrument referred to in the Transaction Documents, or against any
other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations. This is a guarantee of payment and not merely of
collection.
10.03. Reinstatement. The obligations of the Guarantors under this Article
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy,
receivership, or reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Agent and the Banks on demand for all reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable fees
and expenses of counsel) incurred by the Agent or any Bank in connection with
such rescission or restoration, including any such reasonable costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency, receivership, reorganization or similar law.
10.04. Remedies. Each Guarantor agrees that, to the fullest extent
permitted by applicable law, as between such Guarantor, on the one hand, and the
Agent and the Banks, on the other hand, the Guaranteed Obligations may be
declared to be forthwith due and payable as provided in Section 7.01 hereof (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 7.01) for purposes of Section 10.01
hereof notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Guaranteed Obligations from becoming
automatically due and payable) as to any other Person and that, in the event of
such declaration (or Guaranteed Obligations being deemed to have become
automatically due and payable), the Guaranteed Obligations (whether or not due
and payable by any other Person) shall forthwith become due and payable by such
Guarantor for purposes of said Section 10.01.
10.05. Continuing Guarantee. The guarantee in this Article is a continuing
guarantee, and shall apply to all of the Guaranteed Obligations whenever
arising.
10.06. No Restrictions. Except for restrictions under the Transaction
Documents, no Guarantor shall be or become subject to any restriction of any
nature (whether arising by operation of Law, by agreement, by its articles of
incorporation, by-laws or other constituent documents of such Guarantor, or
otherwise) on the right of such Guarantor from time to time to (x) pay any
indebtedness, obligations or liabilities from time to time owed to any Account
Party, (y) make loans or advances to any Account Party, or (z) transfer any of
its properties or assets to any Account Party.
49
IN WITNESS WHEREOF, the parties hereto, by their respective officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
XL INSURANCE LTD, as an Account Party and a Guarantor
By: /s/ Xxxxx X. X'Xxxx
------------------------------
(Signature)
Name: Xxxxx X. X'Xxxx
----------------------------
Title: Chairman
----------------------------
XL MID OCEAN REINSURANCE LTD, as an Account Party and a Guarantor
By: /s/ Xxxxx X. X'Xxxx
------------------------------
(Signature)
Name: Xxxxx X. X'Xxxx
----------------------------
Title: Chairman
----------------------------
XL EUROPE, as an Account Party
By /s/ Xxxxx X. X'Xxxx
-------------------------------
(Signature)
Name:
----------------------------
Title:
----------------------------
THE XXXXXXXXX GROUP Plc, as an Account Party
By: /s/ K. I. Xxxxx
------------------------------
(Signature)
Name: K. I. Xxxxx
----------------------------
Title: Finance Director
----------------------------
XL INVESTMENTS LTD, as a Guarantor
By: /s/ Xxxxx X. X'Xxxx
------------------------------
(Signature)
Name: Xxxxx X. X'Xxxx
----------------------------
Title: Chairman
----------------------------
XL CAPITAL LTD, as an Account Party and a Guarantor
By: /s/ Xxxxx X. X'Xxxx
------------------------------
(Signature)
Name: Xxxxx X. X'Xxxx
----------------------------
Title: President & Chief Executive Officer
------------------------------------
50
MELLON BANK, N.A., as a Bank, as Issuing Bank, as Arranger and as Agent
By: /s/ Xxxxx X. Xxxxxx
------------------------------
(Signature)
Name: Xxxxx X. Xxxxxx
----------------------------
Title: Vice President
----------------------------
Notice Address:
Institutional Banking Department
One Mellon Bank Center, Room 4401
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Manager, Letter of Credit Operations
Three Mellon Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Initial Letter of Credit Participating Interest Committed Amount: $47,500,000
51
DEUTSCHE BANK SECURITIES INC., as Arranger
By: /s/ Xxxx X. XxXxxx /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------
(Signature)
Name: Xxxx X. XxXxxx Xxxxxxx X. Xxxxxxx
-----------------------------------------------
Title: Director Director
----------------------------------------------
Notice Address:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ Xxxx X. XxXxxx /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------
(Signature)
Name: Xxxx X. XxXxxx Xxxxxxx X. Xxxxxxx
----------------------------------------------
Title: Director Director
----------------------------------------------
Notice Address:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Initial Letter of Credit Participating Interest Committed Amount: $47,500,000
00
XXX XXXX XX XXXX XXXXXX
By: /s/ J.R. Trimble
------------------------------
(Signature)
Name: J.R. Trimble
----------------------------
Title: Senior Relationship Manager
----------------------------
Notice Address:
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Initial Letter of Credit Participating Interest Committed Amount: $40,000,000
53
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Xxxxxxxxx Xxxxx
------------------------------
(Signature)
Name: Xxxxxxxxx Xxxxx
----------------------------
Title: Senior Vice President
----------------------------
Notice Address:
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxx
Initial Letter of Credit Participating Interest Committed Amount: $40,000,000
54
BANK OF AMERICA NT&SA
By: /s/ Xxxx Xxxxxx
------------------------------
(Signature)
Name: Xxxx Xxxxxx
----------------------------
Title: Vice President
----------------------------
Notice Address:
Insurance Division, 10th Floor
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Initial Letter of Credit Participating Interest Committed Amount: $25,000,000
55
THE BANK OF BERMUDA LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
(Signature)
Name: Xxxxxxx X. Xxxxxxx
----------------------------
Title: Senior Vice President
----------------------------
Notice Address:
0 Xxxxx Xxxxxx
Xxxxxxxx XX 00, Xxxxxxx
Attn: Xxxxx Xxxxx
Initial Letter of Credit Participating Interest Committed Amount: $25,000,000
56
BANQUE NATIONALE DE PARIS
By: /s/ Xxxx Xxxxxxxxx /s/ Xxxxxxxxx Xxxxxx
------------------------------------------------------
(Signature)
Name: Xxxx Xxxxxxxxx Xxxxxxxxx Xxxxxx
----------------------------------------------------
Title: Vice President Vice President
---------------------------------------------------
Notice Address:
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
Initial Letter of Credit Participating Interest Committed Amount: $25,000,000
57
FLEET NATIONAL BANK
By: /s/ Xxxxx Xxxxxx
--------------------------------------
(Signature)
Name: Xxxxx Xxxxxx
------------------------------------
Title: Vice President
-----------------------------------
Notice Address:
Mail Stop CTMO 0250
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx
Initial Letter of Credit Participating Interest Committed Amount: $25,000,000
00
XXXXX XXXX XX XXXXXX
By: /s/ /X. Xxxxxxxxxxx
--------------------------------------
(Signature)
Name: X. Xxxxxxxxxxx
------------------------------------
Title: Senior Account Manager
-----------------------------------
Notice Address:
New York Branch
Xxx Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Manager, Letters of Credit Department
Facsimile No.: (000) 000-0000
with a copy to:
Xxx Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx Xxxxxxxxxxx
Facsimile No.: (000) 000-0000
Initial Letter of Credit Participating Interest Committed Amount: $25,000,000
59
