364-DAY CREDIT AGREEMENT dated as of December 19, 2006 between XL CAPITAL LTD, X.L. AMERICA, INC., XL INSURANCE (BERMUDA) LTD and XL RE LTD, as Account Parties and Guarantors, DEUTSCHE BANK AG NEW YORK BRANCH, as Lender
Exhibit
10.2
dated
as
of
December
19, 2006
between
X.L.
AMERICA, INC., XL INSURANCE (BERMUDA) LTD and XL RE LTD,
as
Account
Parties and Guarantors,
DEUTSCHE
BANK AG NEW YORK BRANCH,
as
Lender
_____________
$100,000,000
_____________
TABLE
OF
CONTENTS
Page
ARTICLE
I
DEFINITIONS
|
SECTION
1.01.
|
Defined
Terms
|
1
|
|
SECTION
1.02.
|
Terms
Generally
|
15
|
|
SECTION
1.03.
|
Accounting
Terms; GAAP and SAP
|
15
|
ARTICLE
II
THE
CREDITS
|
SECTION
2.01.
|
Dollar
Letters of Credit
|
15
|
|
SECTION
2.02.
|
Alternative
Currency Letters of Credit
|
16
|
|
SECTION
2.03.
|
Reimbursement
of LC Disbursements, Etc.
|
17
|
|
SECTION
2.04.
|
Loans
and Borrowings
|
19
|
|
SECTION
2.05.
|
Requests
for Borrowings
|
20
|
|
SECTION
2.06.
|
Funding
of Borrowings
|
21
|
|
SECTION
2.07.
|
Interest
Elections
|
21
|
|
SECTION
2.08.
|
Termination
and Reduction of the Commitment
|
22
|
|
SECTION
2.09.
|
Repayment
of Loans; Term-Out Option; Evidence of Debt
|
23
|
|
SECTION
2.10.
|
Prepayment
of Loans
|
24
|
|
SECTION
2.11.
|
Fees
|
25
|
|
SECTION
2.12.
|
Interest
|
26
|
|
SECTION
2.13.
|
Alternate
Rate of Interest
|
26
|
|
SECTION
2.14.
|
Increased
Costs
|
27
|
|
SECTION
2.15.
|
Break
Funding Payments
|
28
|
|
SECTION
2.16.
|
Taxes
|
28
|
|
SECTION
2.17.
|
Payments
Generally; Pro Rata Treatment; Sharing of Set-offs
|
30
|
|
SECTION
2.18.
|
Designation
of a Different Lending Office
|
31
|
ARTICLE
III
GUARANTEE
|
SECTION
3.01.
|
The
Guarantee
|
31
|
|
SECTION
3.02.
|
Obligations
Unconditional
|
32
|
|
SECTION
3.03.
|
Reinstatement
|
32
|
|
SECTION
3.04.
|
Subrogation
|
33
|
|
SECTION
3.05.
|
Remedies
|
00
|
-x-
|
XXXXXXX
3.06.
|
Continuing
Guarantee
|
33
|
|
SECTION
3.07.
|
Rights
of Contribution
|
33
|
|
SECTION
3.08.
|
General
Limitation on Guarantee Obligations
|
34
|
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
|
SECTION
4.01.
|
Organization;
Powers
|
34
|
|
SECTION
4.02.
|
Authorization;
Enforceability
|
34
|
|
SECTION
4.03.
|
Governmental
Approvals; No Conflicts
|
35
|
|
SECTION
4.04.
|
Financial
Condition; No Material Adverse Change
|
35
|
|
SECTION
4.05.
|
Properties
|
35
|
|
SECTION
4.06.
|
Litigation
and Environmental Matters
|
36
|
|
SECTION
4.07.
|
Compliance
with Laws and Agreements
|
36
|
|
SECTION
4.08.
|
Investment
and Holding Company Status
|
36
|
|
SECTION
4.09.
|
Taxes
|
36
|
|
SECTION
4.10.
|
ERISA
|
37
|
|
SECTION
4.11.
|
Disclosure
|
37
|
|
SECTION
4.12.
|
Use
of Credit
|
37
|
|
SECTION
4.13.
|
Subsidiaries
|
38
|
|
SECTION
4.14.
|
Withholding
Taxes
|
38
|
|
SECTION
4.15.
|
Stamp
Taxes
|
38
|
|
SECTION
4.16.
|
Legal
Form
|
38
|
ARTICLE
V
CONDITIONS
|
SECTION
5.01.
|
Effective
Date
|
38
|
|
SECTION
5.02.
|
Each
Credit Event
|
40
|
ARTICLE
VI
AFFIRMATIVE
COVENANTS
|
SECTION
6.01.
|
Financial
Statements and Other Information
|
40
|
|
SECTION
6.02.
|
Notices
of Material Events
|
43
|
|
SECTION
6.03.
|
Preservation
of Existence and Franchises
|
43
|
|
SECTION
6.04.
|
Insurance
|
43
|
|
SECTION
6.05.
|
Maintenance
of Properties
|
43
|
|
SECTION
6.06.
|
Payment
of Taxes and Other Potential Charges and Priority Claims; Payment
of Other
Current Liabilities
|
44
|
|
SECTION
6.07.
|
Financial
Accounting Practices
|
44
|
-ii-
|
SECTION
6.08.
|
Compliance
with Applicable Laws
|
44
|
|
SECTION
6.09.
|
Use
of Letters of Credit and Proceeds
|
45
|
|
SECTION
6.10.
|
Continuation
of and Change in Businesses
|
45
|
|
SECTION
6.11.
|
Visitation
|
45
|
ARTICLE
VII
NEGATIVE
COVENANTS
|
SECTION
7.01.
|
Mergers
|
45
|
|
SECTION
7.02.
|
Dispositions
|
46
|
|
SECTION
7.03.
|
Liens
|
46
|
|
SECTION
7.04.
|
Transactions
with Affiliates
|
48
|
|
SECTION
7.05.
|
Ratio
of Total Funded Debt to Total Capitalization
|
49
|
|
SECTION
7.06.
|
Consolidated
Net Worth
|
49
|
|
SECTION
7.07.
|
Indebtedness
|
49
|
|
SECTION
7.08.
|
Financial
Strength Ratings
|
49
|
|
SECTION
7.09.
|
Private
Act
|
50
|
ARTICLE
VIII
EVENTS
OF DEFAULT
ARTICLE
IX
MISCELLANEOUS
|
SECTION
9.01.
|
Notices
|
53
|
|
SECTION
9.02.
|
Waivers;
Amendments
|
54
|
|
SECTION
9.03.
|
Expenses;
Indemnity; Damage Waiver
|
54
|
|
SECTION
9.04.
|
Successors
and Assigns
|
55
|
|
SECTION
9.05.
|
Survival
|
55
|
|
SECTION
9.06.
|
Counterparts;
Integration; Effectiveness
|
56
|
|
SECTION
9.07.
|
Severability
|
56
|
|
SECTION
9.08.
|
Right
of Setoff
|
56
|
|
SECTION
9.09.
|
Governing
Law; Jurisdiction; Etc.
|
57
|
|
SECTION
9.10.
|
WAIVER
OF JURY TRIAL
|
58
|
|
SECTION
9.11.
|
Headings
|
58
|
|
SECTION
9.12.
|
Treatment
of Certain Information; Confidentiality
|
58
|
|
SECTION
9.13.
|
Judgment
Currency
|
59
|
|
SECTION
9.14.
|
USA
PATRIOT Act
|
60
|
-iii-
SCHEDULES
AND EXHIBITS
|
SCHEDULE
I
|
-
|
Indebtedness
and Liens
|
|
SCHEDULE
II
|
-
|
Litigation
|
|
SCHEDULE
III
|
-
|
Environmental
Matters
|
|
SCHEDULE
IV
|
-
|
Subsidiaries
|
|
EXHIBIT
A -1
|
-
|
Form
of Opinion of Counsel to XL Capital
|
|
EXHIBIT
A -2
|
-
|
Form
of Opinion of Counsel to XL America
|
|
EXHIBIT
A -3
|
-
|
Form
of Opinion of Special U.S. Counsel to the Obligors
|
|
EXHIBIT
A -4
|
-
|
Form
of Opinion of Special Bermuda Counsel to XL Insurance
|
|
and
XL Re
|
||
|
EXHIBIT
A -5
|
-
|
Form
of Opinion of Special Cayman Islands Counsel to XL
Capital
|
-iv-
364-DAY
CREDIT AGREEMENT dated as of December 19, 2006, between XL CAPITAL LTD, a Cayman
Islands exempted limited liability company (“XL
Capital”),
X.L.
AMERICA, INC., a Delaware corporation (“XL
America”),
XL
INSURANCE (BERMUDA) LTD, a Bermuda limited liability company (“XL
Insurance”)
and XL
RE LTD, a Bermuda limited liability company (“XL
Re”
and,
together with XL Capital, XL America and XL Insurance, each an “Account
Party”
and
each
a “Guarantor”
and
collectively, the “Account
Parties”
and
the
“Guarantors”;
the
Account Parties and the Guarantors being collectively referred to as the
“Obligors”),
and
DEUTSCHE BANK AG NEW YORK BRANCH, as the Lender.
The
Account Parties have requested that the Lender issue letters of credit for
their
account and make loans to them in an aggregate face or principal amount not
exceeding $100,000,000 at any one time outstanding, and the Lender is prepared
to issue such letters of credit and make such loans upon the terms and
conditions hereof. Accordingly, the parties hereto agree as
follows:
ARTICLE
I
DEFINITIONS
SECTION
1.01. Defined
Terms.
As used
in this Agreement, the following terms have the meanings specified
below:
“ABR”,
when
used in reference to any Loan or Borrowing, refers to whether such Loan, or
the
Loans constituting such Borrowing, are bearing interest at a rate determined
by
reference to the Alternate Base Rate.
“Account
Parties”
means
each of XL Capital, XL America, XL Insurance and XL Re.
“Account
Party Jurisdiction”
means
(a) Bermuda, (b) the Cayman Islands and (c) any other country (i) where any
Account Party is licensed or qualified to do business or (ii) from or through
which payments hereunder are made by any Account Party.
“Adjusted
LIBO Rate”
means,
for the Interest Period for any Eurodollar Borrowing, an interest rate per
annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the
LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate for such Interest Period.
“Affiliate”
means,
with respect to a specified Person, another Person that directly, or indirectly,
Controls or is Controlled by or is under common Control with the Person
specified.
“Alternate
Base Rate”
means,
for any day, a rate per annum equal to the greater of (a) the Prime Rate in
effect on such day, and (b) the Federal Funds Effective Rate
for
such
day plus½
of
1%.
Any change in the Alternate Base Rate due to a change in the Prime Rate or
the
Federal Funds Effective Rate shall be effective from and including the effective
date of such change in the Prime Rate or the Federal Funds Effective Rate,
as
the case may be.
“Alternative
Currency”
means
any currency other than Dollars (a) that is freely transferable and
convertible into Dollars in the London foreign exchange market and (b) for
which no central bank or other governmental authorization in the country of
issue of such currency is required to permit use of such currency by the Lender
for issuing, renewing, extending or amending letter of credits or funding or
making drawings thereunder and/or to permit any Account Party to pay the
reimbursement obligations and interest thereon, each as contemplated hereunder,
unless such authorization has been obtained and is in full force and
effect.
“Alternative
Currency LC Exposure”
means,
at any time, the sum of (a) the Dollar Equivalent of the aggregate undrawn
amount of all outstanding Alternative Currency Letters of Credit at such time
plus
(b) the Dollar Equivalent of the aggregate amount of all LC Disbursements
under Alternative Currency Letters of Credit that have not been reimbursed
by or
on behalf of the Account Parties at such time.
“Alternative
Currency Letter of Credit”
means
a
letter of credit issued by the Lender in an Alternative Currency pursuant to
Section 2.02.
“Applicable
Facility Fee Rate”
means
0.05%.
“Applicable
Letter of Credit Fee Rate”
means
0.25%.
“Applicable
Margin”
means
a
rate per annum equal to, (a) for the period from and including the date hereof
to but not including the Commitment Termination Date, 0.25% and (b) in the
event
that the Term-Out Option has been exercised and is in effect, for the period
from and including the Commitment Termination Date to but not including the
date
of payment in full of the Loans, 0.50%.
“Applicable
Additional Margin”
means
a
rate per annum equal to 0.10% (a) for any period during which the aggregate
outstanding principal amount of the Loans shall be greater than 50% of the
RC
Sublimit then in effect and (b) from and after the Term-Out Option has been
exercised and is in effect.
“Availability
Period”
means
the period from and including the Effective Date to and including the Commitment
Termination Date.
“Board”
means
the Board of Governors of the Federal Reserve System of the United States of
America.
-2-
“Borrowing”
means,
with respect to any Account Party, (a) all ABR Loans of such Account
Party made, converted or continued on the same date or (b) all Eurodollar
Loans of such Account Party that have the same Interest Period.
“Borrowing
Request”
means
a
request by an Account Party for a Borrowing in accordance with
Section 2.05.
“Business
Day”
means
any day (a) that is not a Saturday, Sunday or other day on which commercial
banks in New York City, London, the Cayman Islands or Bermuda are authorized
or
required by law to remain closed and (b) if such day relates to a borrowing
of,
a payment or prepayment of principal of or interest on, a continuation or
conversion of or into, or the Interest Period for, a Eurodollar Loan, or to
a
notice by an Account Party with respect to any such borrowing, payment,
prepayment, continuation, conversion, or Interest Period, that is also a day
on
which dealings in Dollar deposits are carried out in the London interbank
market.
“Capital
Lease Obligations”
of
any
Person means the obligations of such Person to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
“Change
in Control”
means
the occurrence of any of the following events or conditions: (a) any Person,
including any syndicate or group deemed to be a Person under Section 13(d)(3)
of
the Securities Exchange Act of 1934, as amended, acquires beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of XL Capital entitling such
Person to exercise 40% or more of the total voting power of all shares of XL
Capital that is entitled to vote generally in elections of directors, other
than
an acquisition by XL Capital, any of its Subsidiaries or any employee benefit
plans of XL Capital; or (b) XL Capital merges or consolidates with or into
any
other Person (other than a Subsidiary), another Person (other than a Subsidiary)
merges into XL Capital or XL Capital conveys, sells, transfers or leases all
or
substantially all of its assets to another Person (other than a Subsidiary),
other
than
any transaction: (i) that does not result in a reclassification, conversion,
exchange or cancellation of the outstanding shares of XL Capital (other than
the
cancellation of any outstanding shares of XL Capital held by the Person with
whom it merges or consolidates) or (ii) which is effected solely to change
the
jurisdiction of incorporation of XL Capital and results in a reclassification,
conversion or exchange of outstanding shares of XL Capital solely into shares
of
the surviving entity;
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.
-3-
“Change
in Law”
means
(a) the adoption of any law, rule or regulation after the date of this
Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by the Lender (or, for purposes of
Section 2.14(b), by any lending office of the Lender or by the Lender’s
holding company, if any) with any request, guideline or directive (whether
or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.
“Code”
means
the Internal Revenue Code of 1986, as amended from time to time.
“Commitment”
means,
the Lender’s commitment (a) to issue Letters of Credit and
(b) to
make Loans, in each case expressed as an amount representing the maximum
aggregate amount of the Lender’s Credit Exposure hereunder, as such commitment
may be reduced from time to time pursuant to Section 2.08. The initial
aggregate amount of the Lender’s Commitment is $100,000,000.
“Commitment
Termination Date”
means
December 19, 2007.
“Consolidated
Net Worth”
means,
at any time, the consolidated shareholders’ equity of XL Capital and its
Subsidiaries, provided that the calculation of such consolidated shareholders’
equity shall exclude (a) the effect thereon of any adjustments required under
Statement of Financial Accounting Standard No. 115 (“Accounting for Certain
Investments in Debt and Equity Securities”) (b) any Exempt Indebtedness (and the
assets relating thereto) in the event such Exempt Indebtedness is consolidated
on the balance sheet of XL Capital and its consolidated Subsidiaries in
accordance with GAAP.
“Control”
means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling”
and
“Controlled”
have
meanings correlative thereto.
“Credit
Documents”
means,
collectively, this Agreement and the Letter of Credit Documents.
“Credit
Exposure”
means
the sum of the outstanding principal amount of the Lender’s Loans and its LC
Exposure at any time.
“Default”
means
any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event
of
Default.
-4-
“Dollar
Equivalent”
means,
in respect of any Alternative Currency Letter of Credit, the amount of Dollars
obtained by converting the Alternative Currency LC Exposure with respect to
such
Alternative Currency Letter of Credit, into Dollars at the spot rate for the
purchase of Dollars with such currency as quoted by the Lender at approximately
11:00 a.m. (London time) on the second Business Day before the date such Dollar
Equivalent shall be calculated (unless another rate or time is agreed to by
XL
Capital and the Lender).
“Dollar
Letter of Credit”
means
a
letter of credit issued by the Lender in Dollars pursuant to
Section 2.01.
“Dollars”
or
“$”
refers
to lawful money of the United States of America.
“Effective
Date”
means
the date on which the conditions specified in Section 5.01 are satisfied
(or waived in accordance with Section 9.02).
“Environmental
Laws”
means
any Law, whether now existing or subsequently enacted or amended, relating
to
(a) pollution or protection of the environment, including natural
resources, (b) exposure of Persons, including but not limited to employees,
to Hazardous Materials, (c) protection of the public health or welfare from
the effects of products, by-products, wastes, emissions, discharges or releases
of Hazardous Materials or (d) regulation of the manufacture, use or
introduction into commerce of Hazardous Materials, including their manufacture,
formulation, packaging, labeling, distribution, transportation, handling,
storage or disposal.
“Environmental
Liability”
means
any liability, contingent or otherwise (including any liability for damages,
costs of environmental remediation, fines, penalties or indemnities), of an
Account Party or any Subsidiary resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened
release of any Hazardous Materials into the environment or (e) any contract
or agreement pursuant to which liability is assumed or imposed with respect
to
any of the foregoing.
“Equity
Rights”
means,
with respect to any Person, any subscriptions, options, warrants, commitments,
preemptive rights or agreements of any kind (including any shareholders’ or
voting trust agreements) for the issuance, sale, registration or voting of,
or
securities convertible into, any additional shares of any class, or partnership
or other ownership interests of any type in, such Person.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended from time to
time.
“ERISA
Affiliate”
means
any trade or business (whether or not incorporated) that, together with any
Account Party, is treated as a single employer under Section 414(b)
-5-
or (c)
of the Code, or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
“ERISA
Event”
means
(a) any “reportable event”, as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Plan (other than an event for
which the 30-day notice period is waived); (b) the existence with respect
to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by any
Account Party or any of such Account Party’s ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Account Party or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate
any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by any Account Party or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by any Account Party or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from any
Account Party or any ERISA Affiliate of any notice, concerning the imposition
of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title
IV
of ERISA.
“Eurodollar”,
when
used in reference to any Loan or Borrowing, refers to whether such Loan, or
the
Loans constituting such Borrowing, are bearing interest at a rate determined
by
reference to the Adjusted LIBO Rate.
“Event
of Default”
has
the
meaning assigned to such term in Article VIII.
“Excess
Funding Guarantor”
has
the
meaning assigned to such term in Section 3.07.
“Excess
Payment”
has
the
meaning assigned to such term in Section 3.07.
“Excluded
Taxes”
means,
with respect to the Lender or any other recipient of any payment to be made
by
or on account of any obligation of any Account Party hereunder, (a) Taxes
imposed on (or measured by) its net income, net profits or overall gross
receipts (including, without limitation, branch profits or similar taxes) by
the
United States of America, or by any jurisdiction under the laws of which such
recipient is organized or resident, in which such recipient has an office or
with which such recipient has any other connection (other than a connection
that
is deemed to arise solely by reason of both (I) the transactions contemplated
by
this Agreement and (II) an Account Party being organized in, maintaining an
office in, conducting business in, or having a connection with, such
jurisdiction), (b) any Taxes not described in clause (a) above (other than
Other Taxes) that are imposed as a result of a connection the Lender has with
the relevant jurisdiction (other than a connection that is
-6-
deemed
to
arise solely by reason of both (I) the transactions contemplated by this
Agreement and (II) an Account Party being organized or resident in, maintaining
an office in, conducting business in, or having a connection with, such
jurisdiction), (c) any U.S. federal withholding tax that is imposed on
amounts payable to a Lender under a law that was in effect at the time such
Lender becomes a party to this Agreement (or designates a new lending office),
except to the extent that such Lender (or its assignor, if any) was entitled,
immediately prior to the designation of a new lending office (or assignment),
to
receive additional amounts from Borrower with respect to such withholding tax
pursuant to Section 2.16(a) and (d) any Tax that is not imposed solely
as a result of a Change in Law formally announced after the date
hereof.
“Exempt
Indebtedness”
means
any Indebtedness of any Person (other than XL Capital or any of its Affiliates)
that is consolidated on the balance sheet of XL Capital and its consolidated
Subsidiaries in accordance with GAAP (whether or not required to be so
consolidated); provided that (a) at the time of the incurrence of such
Indebtedness by such Person, the cash flows from the assets of such Person
shall
reasonably be expected by such Person to liquidate such Indebtedness and all
other liabilities (contingent or otherwise) of such Person and (b) no portion
of
such Indebtedness of such Person shall be Guaranteed (other than by guarantees
of the type referred to in clause (a) or (b) of the definition of the term
“Indebtedness”) by, or shall be secured by a Lien on any assets owned by, XL
Capital or any of its Subsidiaries and neither such Person nor any of the
holders of such Indebtedness shall have any direct or indirect recourse to
XL
Capital or any of its Subsidiaries (other than in respect of liabilities and
guarantees of the type referred to in clause (a) or (b) of the definition of
the
term “Indebtedness”).
“Federal
Funds Effective Rate”
means,
for any day, the weighted average (rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as published
on
the next succeeding Business Day by the Federal Reserve Bank of New York, or,
if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations
for
such day for such transactions received by the Lender from three Federal funds
brokers of recognized standing selected by it.
“Financial
Officer”
means,
with respect to any Obligor, a principal financial officer of such
Obligor.
“GAAP”
means
generally accepted accounting principles in the United States of
America.
“GIC”
means
a
guaranteed investment contract or funding agreement or other similar agreement
issued by an Account Party or any of its Subsidiaries that guarantees to a
counterparty a rate of return on the invested capital over the life of such
contract or agreement.
-7-
“Governmental
Authority”
means
the government of the United States of America, or of any other nation
(including the European Union), or any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
“Guarantee”
means,
with respect to any Person, without duplication, any obligations of such Person
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to guarantee
any
Indebtedness of any other Person in any manner, whether direct or indirect,
and
including 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 keepwell agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any holder
of
Indebtedness of such other Person, (iii) to lease or purchase property,
securities or services primarily for the purpose of assuring the holder of
such
Indebtedness or (iv) to otherwise assure or hold harmless the holder of such
Indebtedness against loss in respect thereof. The amount of any Guarantee
hereunder shall (subject to any limitations set forth therein) be deemed to
be
an amount equal to the outstanding principal amount of the Indebtedness in
respect of which such Guarantee is made. The terms “Guarantee”
and
“Guaranteed”
used
as
a verb shall have a correlative meaning.
“Guaranteed
Obligations”
has
the
meaning assigned to such term in Section 3.01.
“Guarantors”
means
each of XL Capital, XL America, XL Insurance and XL Re.
“Hazardous
Materials”
means
all explosive or radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances
or
wastes of any nature regulated pursuant to any Environmental Law.
“Hedging
Agreement”
means
any interest rate protection agreement, foreign currency exchange agreement,
commodity price protection agreement or other interest or currency exchange
rate
or commodity price hedging arrangement.
“Indebtedness”
means,
for any Person, without duplication: (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 evi-
-8-
denced
by
bonds, debentures, notes, banker’s acceptances or similar instruments; (iii) all
indebtedness or liability for or on account of property or services purchased
or
acquired by such Person; (iv) any amount secured by a Lien on property owned
by
such Person (whether or not assumed) and Capital Lease Obligations of such
Person (without regard to any limitation of the rights and remedies of the
holder of such Lien or the lessor under such capital lease to repossession
or
sale of such property); (v) the maximum available amount of all standby letters
of credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed); and (vi) all Guarantees
of
such Person; provided that the following shall be excluded from Indebtedness
of
XL Capital and any of its Subsidiaries for purposes of this Agreement: (a)
all
payment liabilities of any such Person under insurance and reinsurance policies
from time to time issued by such Person, including guarantees of any such
payment liabilities; (b) all other liabilities (or guarantees thereof) arising
in the ordinary course of any such Person’s business as an insurance or
reinsurance company (including GICs and Stable Value Instruments and any
Specified Transaction Agreement relating thereto), or as a corporate member
of
The Council of Lloyd’s, or as a provider of financial or investment services or
contracts (including GICs and Stable Value Instruments and any Specified
Transaction Agreement relating thereto); and (c) any Exempt
Indebtedness.
“Indemnified
Taxes”
means
Taxes imposed on the Lender on or with respect to any payment hereunder, other
than Excluded Taxes and Other Taxes.
“Insurance
Subsidiary”
means
any Subsidiary which is subject to the regulation of, and is required to file
statutory financial statements with, any governmental body, agency or official
in any State or territory of the United States or the District of Columbia
which
regulates insurance companies or the doing of an insurance business
therein.
“Interest
Election Request”
means
a
request by an Account Party to convert or continue a Borrowing in accordance
with Section 2.07.
“Interest
Payment Date”
means
(a) with respect to any ABR Loan, each Quarterly Date and
(b) with respect to any Eurodollar Loan, the last day of each Interest
Period therefor and, in the case of any Interest Period of more than three
months’ duration, each day prior to the last day of such Interest Period that
occurs at three-month intervals after the first day of such Interest
Period.
“Interest
Period”
means,
for any Eurodollar Loan or Borrowing, the period commencing on the date of
such
Loan or Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as specified
in
the applicable Borrowing Request or Interest Election Request; provided
that
(i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business
Day,
and (ii) any Interest Period that commences on the last Business Day
-9-
of
a
calendar month (or on a day for which there is no numerically corresponding
day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Loan initially shall be the date on which such Loan is
made and thereafter shall be the effective date of the most recent conversion
or
continuation of such Loan, and the date of a Borrowing comprising Loans that
have been converted or continued shall be the effective date of the most recent
conversion or continuation of such Loans.
“ISDA”
has
the
meaning assigned to such term in Section 7.03(f).
“Law”
means
any law (including common law), constitution, statute, treaty, regulation,
rule,
ordinance, order, injunction, writ, decree or award of any Governmental
Authority.
“LC
Disbursement”
means
with respect to any Letter of Credit a payment made by the Lender pursuant
thereto.
“LC Exposure”
means,
at any time, the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit at such time plus (b) the aggregate amount of all LC
Disbursements under Letters of Credit that have not yet been reimbursed by
or on
behalf of the Account Parties at such time. The LC Exposure of the Lender
at the time shall be the sum of (i) LC Exposure (excluding any Alternative
Currency LC Exposure) plus (ii) the Alternative Currency LC Exposure (if any)
at
such time.
“Lender”
means
Deutsche Bank AG New York Branch, or its successors or assigns.
“Letter
of Credit Documents”
means,
with respect to any Letter of Credit, collectively, any application therefor
and
any other agreements, instruments, guarantees or other documents (whether
general in application or applicable only to such Letter of Credit) governing
or
providing for the rights and obligations of the parties concerned or at risk
with respect to such Letter of Credit.
“Letters
of Credit”
means
each of the Dollar Letters of Credit and the Alternative Currency Letters of
Credit.
“LIBO
Rate”
means,
for the Interest Period for any Eurodollar Borrowing, the rate appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page
of such Service, or any successor to or substitute for such Service, providing
rate quotations comparable to those currently provided on such page of such
Service, as determined by the Lender from time to time for purposes of providing
quotations of interest rates applicable to Dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for the
offering of Dollar deposits with a maturity comparable to such Interest Period.
In the event that
-10-
such
rate
is not available at such time for any reason, then the LIBO Rate for such
Interest Period shall be the rate at which Dollar deposits of $5,000,000 and
for
a maturity comparable to such Interest Period are offered by the principal
London office of the Lender in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
“Lien”
means,
with respect to any asset, any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as,
or
having the effect of, security.
“Loans”
means
the loans made by the Lender to the Account Parties pursuant to Section
2.04.
“Margin
Stock”
means
“margin stock” within the meaning of Regulations T, U and X of the
Board.
“Material
Adverse Effect”
means
a
material adverse effect on: (a) the assets, business, financial condition or
operations of an Account Party and its Subsidiaries taken as a whole; or (b)
the
ability of an Account Party to perform any of its payment or other material
obligations under this Agreement.
“Maturity
Date”
means
the Commitment Termination Date, as such date may be extended pursuant to the
Term-Out Option.
“Multiemployer
Plan”
means
a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Non-U.S.
Benefit Plan”
means
any plan, fund (including any superannuation fund) or other similar program
established or maintained outside the United States by any Account Party or
any
of their Subsidiaries, with respect to which such Account Party or such
Subsidiary has an obligation to contribute, for the benefit of employees of
such
Account Party or such Subsidiary, which plan, fund or other similar program
provides, or results in, the type of benefits described in Section 3(1) or
3(2)
of ERISA, and which plan is not subject to ERISA or the Code.
“Obligors”
means
each of the Account Parties and each of the Guarantors.
“Other
Taxes”
means
any and all present or future stamp or documentary taxes or any other similar
excise or property Taxes, arising from any payment made hereunder or from the
execution, delivery or enforcement of this Agreement, but excluding property
or
similar Taxes other than any such Taxes imposed in such circumstances solely
as
a result of
-11-
the
Account Party being organized or resident in, maintaining an office in,
conducting business in or maintaining property located in the taxing
jurisdiction in question.
“PBGC”
means
the Pension Benefit Guaranty Corporation referred to and defined in ERISA and
any successor entity performing similar functions.
“Person”
means
any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.
“Plan”
means
any employee pension benefit plan (other than a Multiemployer Plan) subject
to
the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which any Account Party or any
ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.
“Prime
Rate”
means
the rate of interest per annum publicly announced from time to time by the
Lender as its prime rate in effect at its principal office in New York City;
each change in the Prime Rate shall be effective from and including the date
such change is publicly announced as being effective.
“Private
Act”
means
separate legislation enacted in Bermuda with the intention that such legislation
apply specifically to an Account Party, in whole or in part.
“Pro
Rata Share”
has
the
meaning assigned to such term in Section 3.07.
“Quarterly
Date”
means
the last Business Day of March, June, September and December in each year,
the
first of which shall be the first such day after the date hereof.
“RC
Sublimit”
means
$100,000,000, as such amount may be reduced from time to time pursuant to
Section 2.08.
“Related
Parties”
means,
with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.
“SAP”
means,
as to each Account Party and each Subsidiary that offers insurance products,
the
statutory accounting practices prescribed or permitted by the relevant
Governmental Authority for such Account Party’s or such Subsidiary’s domicile
for the preparation of its financial statements and other reports by insurance
corporations of the same type as such Account Party or such Subsidiary in effect
on the date such statements or reports are to be prepared, except if otherwise
notified by XL Capital as provided in Section 1.03.
-12-
“SCA”
means
Security Capital Assurance Ltd, a Bermuda limited liability
company.
“SEC”
means
the Securities and Exchange Commission or any successor entity.
“Significant
Subsidiary”
means,
at any time, each Subsidiary of XL Capital that, as of such time, meets the
definition of a “significant subsidiary” under Regulation S-X of the SEC;
provided,
however,
that for
purposes of this Agreement, neither SCA nor any of its Subsidiaries shall be
a
“Significant Subsidiary” of XL Capital.
“Specified
Account Party”
has
the
meaning assigned to such term in Section 2.03(e).
“Specified
Transaction Agreement”
means
any agreement, contract or documentation with respect to the following types
of
transactions: rate swap transaction, swap option, basis swap, asset swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, current swap transaction, cross-currency rate swap transaction,
currency option, credit protection transaction, credit swap, credit default
swap, credit default option, total return swap, credit spread transaction,
repurchase transaction, reverse repurchase transaction, buy/sell-back
transaction, securities lending or borrowing transaction, weather index
transaction or forward purchase or sale of a security, commodity or other
financial instrument or interest, and transactions on any commodity futures
or
other exchanges, markets and their associated clearing houses (including any
option with respect to any of these transactions).
“Stable
Value Instrument”
means
any insurance, derivative or similar financial contract or instrument designed
to mitigate the volatility of returns during a given period on a specified
portfolio of securities held by one party (the “customer”)
through
the commitment of the other party (the “SVI
provider”)
to
provide the customer with a credited rate of return on the portfolio, typically
determined through an interest-crediting mechanism (and in exchange for which
the SVI provider typically receives a fee).
“Statutory
Reserve Rate”
means,
for any day (or for the Interest Period for any Eurodollar Borrowing), a
fraction (expressed as a decimal), the numerator of which is the number one
and
the denominator of which is the number one minus
the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board to which the Lender is subject on such day (or, with respect to an
Interest Period, the denominator of which is the number one minus
the
arithmetic mean of such aggregates for the days in such Interest Period) with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency liabilities” in Regulation D of the Board). Such
reserve percentages shall include those
-13-
imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may
be
available from time to time to the Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
“Subsidiary”
means,
with respect to any Person (the “parent”),
at any
date, any corporation (or similar entity) of which a majority of the shares
of
outstanding capital stock normally entitled to vote for the election of
directors (regardless of any contingency which does or may suspend or dilute
the
voting rights of such capital stock) is at such time owned directly or
indirectly by the parent or one or more subsidiaries of the parent; provided,
however,
that for
purposes of this Agreement neither SCA nor any of its Subsidiaries shall be
a
“Subsidiary” of any Account Party. Unless otherwise specified, “Subsidiary”
means a Subsidiary of an Account Party.
“Taxes”
means
any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.
“Term-Out
Option”
has
the
meaning assigned to such term in Section 2.09(b).
“Total
Funded Debt”
means,
at any time, all Indebtedness of XL Capital and its Subsidiaries and any other
Person which would at such time be classified in whole or in part as a liability
on the consolidated balance sheet of XL Capital and its consolidated
Subsidiaries in accordance with GAAP (it being understood for avoidance of
doubt
that any liability or obligation excluded from the definition of Indebtedness
shall not constitute Indebtedness for purposes of this definition).
“Transactions”
means
the execution, delivery and performance by the Obligors of this Agreement and
the other Credit Documents to which any Account Party is intended to be a party,
the issuance of Letters of Credit, the borrowing of Loans and the use of the
proceeds thereof.
“Type”,
when
used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans constituting such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base
Rate.
“Withdrawal
Liability”
means
liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part
I of
Subtitle E of Title IV of ERISA.
“XL
Capital Group”
means
XL
Capital Group as determined from time to time by A.M. Best & Co. (or its
successor).
-14-
SECTION
1.02. Terms
Generally.
The
definitions of terms herein shall apply equally to the singular and plural
forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”. The word “will” shall be construed to have the same
meaning and effect as the word “shall”. Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement and (e) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
SECTION
1.03. Accounting
Terms; GAAP and SAP.
Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP or SAP, as the context
requires, each as in effect from time to time; provided that, if XL Capital
notifies the Lender that the Account Parties request an amendment to any
provision hereof to eliminate the effect of any change occurring after the
date
hereof in GAAP or SAP, as the case may be, or in the application thereof on
the
operation of such provision, regardless of whether any such notice is given
before or after such change in GAAP or SAP, as the case may be, or in the
application thereof, then such provision shall be interpreted on the basis
of
GAAP or SAP, as the case may be, as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE
II
THE
CREDITS
SECTION
2.01. Dollar
Letters of Credit.
(a) General.
Subject
to the terms and conditions set forth herein, at the request of any Account
Party the Lender agrees at any time and from time to time during the
Availability Period to issue Dollar Letters of Credit for the account of such
Account Party in an aggregate amount that will not result in the Credit Exposure
exceeding the Commitment (it being understood that Dollar Letters of Credit
may
be issued, or be outstanding, for the account of more than one of the Account
Parties at any time). Each Dollar Letter of Credit shall be in such form as
is
consistent with the requirements of the applicable regulatory authorities
-15-
in
Illinois, California, Wisconsin or New York, as reasonably determined by the
Lender or as otherwise agreed to by the Lender and XL Capital.
(b) Notice
of Issuance, Amendment, Renewal or Extension.
To
request the issuance of Dollar Letters of Credit (or the amendment, renewal
or
extension of outstanding Dollar Letters of Credit), an Account Party shall
hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the Lender) to the Lender (reasonably in
advance of the requested date of issuance, amendment, renewal or extension)
a
notice requesting the issuance of Letters of Credit, or identifying the Dollar
Letters of Credit to be amended, renewed or extended, and specifying the date
of
issuance, amendment, renewal or extension, as the case may be (which shall
be a
Business Day), the date on which such Dollar Letters of Credit are to expire
(which shall comply with paragraph (d) of this Section), the aggregate
amount of all Dollar Letters of Credit to be issued in connection with such
request, the name and address of the beneficiary thereof and the terms and
conditions of (and such other information as shall be necessary to prepare,
amend, renew or extend, as the case may be) such Dollar Letters of Credit.
If
requested by the Lender, such Account Party also shall submit a letter of credit
application on Lender’s standard form in connection with any request for a
Letter of Credit. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by any Account Party to,
or
entered into by any Account Party with, the Lender relating to any Dollar Letter
of Credit, the terms and conditions of this Agreement shall
control.
(c) Limitations
on Amounts.
A Dollar
Letter of Credit shall be issued, amended, renewed or extended only if (and
upon
such issuance, amendment, renewal or extension of each Dollar Letter of Credit
the Account Parties shall be deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension, the Credit Exposure
shall not exceed the aggregate amount of the Commitment.
(d) Expiry
Date.
Each
Dollar Letter of Credit shall expire at or prior to the close of business on
the
date one year after the date of the issuance of such Dollar Letter of Credit
(or, in the case of any renewal or extension thereof, one year after such
renewal or extension).
SECTION
2.02. Alternative
Currency Letters of Credit.
From
time to time during the Availability Period, an Account Party may request the
Lender to make offers to issue an Alternative Currency Letter of Credit for
the
account of such Account Party. The Lender may, but shall have no obligation
to,
make such offers on terms and conditions that are satisfactory to the Lender,
and such Account Party may, but shall have no obligation to, accept any such
offers. An Alternative Currency Letter of Credit shall be issued, amended,
renewed or extended only if (and upon such issuance, amendment, renewal or
extension of each Alternative Currency Letter of Credit the Account Parties
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension, the
-16-
Credit
Exposure shall not exceed the amount of the Commitment.
Each
such Alternative Currency Letter of Credit shall be issued, and subsequently,
renewed, extended, amended and confirmed, on such terms as XL Capital, the
applicable Account Party and the Lender shall agree, including expiry, drawing
conditions, reimbursement, interest, fees and provision of cover; provided
that
the expiry of any Alternative Currency Letter of Credit shall not be later
than
the one-year anniversary from the date of issuance thereof (or, in the case
of
any renewal or extension thereof, one-year after such renewal or
extension).
SECTION
2.03. Reimbursement
of LC Disbursements, Etc.
(a) Reimbursement.
If the
Lender shall make any LC Disbursement, regardless of the identity of the Account
Party of such Letter of Credit, the Account Parties jointly and severally agree
that they shall reimburse the Lender in respect of such LC Disbursement under
(x) a Dollar Letter of Credit, by paying to the Lender an amount equal to
such LC Disbursement not later than noon, New York City time, on (i) the
Business Day that the Account Parties receive notice of such LC Disbursement,
if
such notice is received prior to 10:00 a.m., New York City time, or
(ii) the Business Day immediately following the day that the Account
Parties receive such notice, if such notice is not received prior to such time
and (y) an Alternative Currency Letter of Credit, by paying the Lender on
the date, in the currency and amount thereof, together with interest thereon
(if
any), and in the manner (including the place of payment) as the Lender and
such
Account Party shall have separately agreed pursuant to
Section 2.02.
(b) Reimbursement
Obligations Absolute.
The
Account Parties’ joint and several obligations to reimburse LC Disbursements as
provided
in
paragraph (a) of this Section shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective
of
(i) any lack of validity or enforceability of any Letter of Credit or any
term or provision therein, (ii) any draft or other document presented under
a Letter of Credit proving to be forged, fraudulent or invalid in any respect
or
any statement therein being untrue or inaccurate in any respect,
(iii) payment under a Letter of Credit against presentation of a draft or
other document that does not comply strictly with the terms of such Letter
of
Credit (provided that the Account Parties shall not be obligated to reimburse
such LC Disbursements unless payment is made against presentation of a draft
or
other document that at least substantially complies with the terms of such
Letter of Credit), (iv) at any time or from time to time, without notice to
any
Account Party, the time for any performance of or compliance with any of such
reimbursement obligations of any other Account Party shall be waived, extended
or renewed, (v) any of such reimbursement obligations of any other Account
Party
being amended or otherwise modified in any respect, or any guarantee of any
of
such reimbursement obligations being released, substituted or exchanged in
whole
or in part or otherwise dealt with, (vi) the occurrence of any Default, (vii)
the existence of any proceedings of the type described in clause (g) or (h)
of
Article VIII with respect to any other Account Party or any guarantor of any
of
such reimbursement obligations, (viii) any lack of validity or enforceability
of
any of
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such
reimbursement obligations against any other Account Party or any guarantor
of
any of such reimbursement obligations, or (ix) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of the obligations of any Account Party hereunder.
Neither
the Lender nor any of its Related Parties shall have any liability or
responsibility by reason of or in connection with the issuance or transfer
of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to
any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond their control; provided
that the
foregoing shall not be construed to excuse the Lender from liability to any
Account Party to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Account Parties
to
the extent permitted by applicable law) suffered by any Account Party that
are
caused by the gross negligence or willful misconduct of the Lender determined
in
a final, non-appealable judgment by a court of competent jurisdiction. The
parties hereto expressly agree that:
(i) the
Lender
may accept documents that appear on their face to be in substantial compliance
with the terms of a Letter of Credit without responsibility for further
investigation, regardless of any notice or information to the contrary, and
may
make payment upon presentation of documents that appear on their face to be
in
substantial compliance with the terms of such Letter of Credit;
(ii) the
Lender
shall have the right, in its sole discretion, to decline to accept such
documents and to make such payment if such documents are not in strict
compliance with the terms of such Letter of Credit; and
(iii) this
sentence shall establish the standard of care to be exercised by the Lender
when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof (and the parties hereto hereby waive,
to
the extent permitted by applicable law, any standard of care inconsistent with
the foregoing).
(c) Disbursement
Procedures.
The
Lender shall, within a reasonable time following its receipt thereof, examine
all documents purporting to represent a demand for payment under any Letter
of
Credit. The Lender shall promptly after such examination notify each of the
Account Parties by telephone (confirmed by telecopy) of such demand for payment.
The Lender will make any such LC Disbursement available to the beneficiary
of
such Letter of Credit by promptly crediting the amounts so received, in like
funds, to the account identified by such beneficiary in connection with such
demand for payment. Promptly following any LC Disbursement by the Lender in
respect of any Letter of Credit, the Lender will
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notify
the
Account Parties of such LC Disbursement; provided
that any
failure to give or delay in giving such notice shall not relieve the Account
Parties of their obligation to reimburse the Lender with respect to any such
LC
Disbursement,
(d) Interim
Interest.
If any
LC Disbursement with respect to a Letter of Credit is made, then, unless the
Account Parties shall reimburse such LC Disbursement in full on the date such
LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that the Account Parties reimburse such LC Disbursement, at the rate
per annum equal to (i) 1% plus
the
Alternate Base Rate to but excluding the date three Business Days after such
LC
Disbursement is made and (ii) from and including the date three Business Days
after such LC Disbursement is made, 3% plus
the
Alternate Base Rate.
(e) Right
of Contribution.
The
Account Parties hereby agree, as between themselves, that if any Account Party
shall pay any reimbursement obligation in respect of any LC Disbursement with
respect to a Letter of Credit issued to support the obligations of another
Account Party (the “Specified
Account Party”),
the
Specified Account Party shall, on demand (but subject to the next sentence),
pay
to such first Account Party an amount equal to the amount of such reimbursement.
The payment obligation of a Specified Account Party to another Account Party
under this paragraph (e) shall be subordinate and subject in right of payment
to
the prior payment in full of the obligations of the Specified Account Party
under this Agreement and each other Credit Document, and such other Account
Party shall not exercise any right or remedy with respect to such reimbursement
until payment and satisfaction in full of all of such obligations of the
Specified Account Party.
SECTION
2.04. Loans
and Borrowings.
(a) General.
Subject
to the terms and conditions set forth herein, the Lender agrees to make Loans
to
an Account Party from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) the Lender’s outstanding
Loans exceeding the RC Sublimit and (ii) the Credit Exposure exceeding the
aggregate amount of the Commitment. Loans may be made, or be outstanding, to
more than one of the Account Parties at any time. Within the foregoing limits
and subject to the terms and conditions set forth herein, the Account Parties
may borrow, prepay and reborrow Loans.
(b) Type
of
Loans.
Subject
to Section 2.12, each Borrowing shall be constituted entirely of
ABR Loans or of Eurodollar Loans as any Account Party may request in
accordance herewith. The Lender at its option may make any Eurodollar Loan
by
causing any domestic or foreign branch or Affiliate of the Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Account Parties to repay such Loan in accordance with the terms of this
Agreement.
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(c) Minimum
Amounts; Limitation on Number of Borrowings.
Each
Eurodollar Borrowing shall be in an aggregate amount of $10,000,000 or a larger
multiple of $1,000,000. Each ABR Borrowing shall be in an aggregate amount
equal to $10,000,000 or a larger multiple of $1,000,000; provided
that an
ABR Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the Commitment or that is requested to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.03(a).
Borrowings of more than one Type may be outstanding at the same time;
provided
that
there shall not at any time be more than a total of ten Eurodollar Borrowings
outstanding.
(d) Limitations
on Interest Periods.
Notwithstanding any other provision of this Agreement, no Account Party shall
be
entitled to request (or to elect to convert to or continue as a Eurodollar
Borrowing) any Borrowing if the Interest Period requested therefor would end
after the Maturity Date.
SECTION
2.05. Requests
for Borrowings.
(a) Notice
by the Account Parties.
To
request a Borrowing, XL Capital shall notify the Lender of such request by
telephone (i) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three (3) Business Days before the date of
the proposed Borrowing or (ii) in the case of an ABR Borrowing, not
later than 11:00 a.m., New York City time, on the date of the proposed
Borrowing; provided that any such notice of an ABR Borrowing to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.03(a) may
be
given not later than 11:00 a.m., New York City time, on the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and
shall
be confirmed promptly by hand delivery or telecopy to the Lender of a written
Borrowing Request in a form approved by the Lender and signed by XL
Capital.
(b) Content
of Borrowing Requests.
Each
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.04:
(i) the
relevant Account Party;
(ii) the
aggregate amount of the requested Borrowing;
(iii) the
date
of such Borrowing, which shall be a Business Day;
(iv) whether
such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in
the
case of a Eurodollar Borrowing, the Interest Period therefor, which shall be
a
period contemplated by the definition of the term “Interest Period” and
permitted under Section 2.04(d); and
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(vi) the
location and number of such Account Party’s account to which funds are to be
disbursed, which shall comply with the requirements of
Section 2.06.
(c) Failure
to Elect.
If no
election as to the Type of a Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified
with respect to any requested Eurodollar Borrowing, then the requested Borrowing
shall be made instead as an ABR Borrowing.
SECTION
2.06. Funding
of Borrowings.
The
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 12:00 noon, New
York City time (or 1:00 p.m., New York City time with respect to ABR Loans
requested by XL Capital no later than 11:00 a.m. on the same day), available
to
the relevant Account Party by promptly crediting the amounts so received, in
like funds, to an account of such Account Party maintained with the Lender
in
New York City and designated by such Account Party in the applicable Borrowing
Request.
SECTION
2.07. Interest
Elections.
(a) Elections
by the Account Parties.
The
Loans constituting each Borrowing initially shall be of the Type specified
in
the applicable Borrowing Request and, in the case of a Eurodollar Borrowing,
shall have the Interest Period specified in such Borrowing Request. Thereafter,
the relevant Account Party may elect to convert such Borrowing to a Borrowing
of
a different Type or to continue such Borrowing as a Borrowing of the same Type
and, in the case of a Eurodollar Borrowing, may elect the Interest Period
therefor, all as provided in this Section. The relevant Account Party may elect
different options with respect to different portions of the affected Borrowing,
and the Loans constituting each such portion shall be considered a separate
Borrowing.
(b) Notice
of Elections.
To make
an election pursuant to this Section, XL Capital shall notify the Lender of
such
election by telephone by the time that a Borrowing Request would be required
under Section 2.05 if XL Capital were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall
be
confirmed promptly by hand delivery or telecopy to the Lender of a written
Interest Election Request in a form approved by the Lender and signed by XL
Capital.
(c) Content
of Interest Election Requests.
Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.04:
(i) the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case
the
infor-
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mation
to
be specified pursuant to clauses (iii) and (iv) of this paragraph
shall be specified for each resulting Borrowing);
(ii) the
effective date of the election made pursuant to such Interest Election Request,
which shall be a Business Day;
(iii) whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and
(iv) if
the
resulting Borrowing is a Eurodollar Borrowing, the Interest Period therefor
after giving effect to such election, which shall be a period contemplated
by
the definition of the term “Interest Period” and permitted under
Section 2.04(d).
(d) Failure
to Elect; Events of Default.
If XL
Capital fails to deliver a timely and complete Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
therefor, then, unless such Borrowing is repaid as provided herein, at the
end
of such Interest Period such Borrowing shall be converted to an
ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event
of Default has occurred and is continuing and the Lender so notifies XL Capital,
then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and
(ii) unless repaid, each Eurodollar Borrowing shall be converted to an
ABR Borrowing at the end of the Interest Period therefor.
SECTION
2.08. Termination
and Reduction of the Commitment.
(a) Scheduled
Termination.
Unless
previously terminated, the Commitment shall terminate at the close of business
on the Commitment Termination Date.
(b) Voluntary
Termination or Reduction.
The
Account Parties may at any time terminate, or from time to time reduce, the
Commitment and/or RC Sublimit; provided
that
(i) each reduction of the Commitment or RC Sublimit shall be in an amount
that is $25,000,000 or a larger multiple of $5,000,000 and (ii) the Account
Parties shall not terminate or reduce the Commitment or RC Sublimit if the
Credit Exposure would exceed the Commitment or the outstanding Loans would
exceed the RC Sublimit, as the case may be. XL Capital shall notify the Lender
of any election to terminate or reduce the Commitment or RC Sublimit under
this
paragraph (b) at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof, provided
that no
reduction of the RC Sublimit shall occur in connection with a reduction of
the
Commitment unless specified in such notice, except that upon the earlier of
(x) the termination of the Commitment and (y) the Commitment
Termination Date, the RC Sublimit shall be reduced to zero. Each notice
delivered by XL Capital pursuant to this paragraph (b) shall be
irrevocable; provided
that a
notice of termination of the Commitment delivered by XL Capital may state that
such notice is conditioned upon the effectiveness of other credit facilities,
in
which case
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such
notice may be revoked by XL Capital (by notice to the Lender on or prior to
the
specified effective date) if such condition is not satisfied. Subject to the
proviso in the immediately preceding sentence, any termination or reduction
of
the Commitment or the RC Sublimit shall be permanent.
SECTION
2.09. Repayment
of Loans; Term-Out Option; Evidence of Debt.
(a) Repayment.
Each
Account Party hereby unconditionally promises to pay to the Lender, (i) in
the
event that the Term-Out Option has not been exercised, the outstanding principal
amount of the Loans made to such Account Party on the Commitment Termination
Date and (ii) in the event that the Term-Out Option has been exercised and
is in
effect, the outstanding principal amount of the Loans made to such Account
Party
on the Maturity Date.
(b) Term-Out
Option.
The
Account Parties may, by notice given by XL Capital to the Lender not less than
15 days prior to the Commitment Termination Date, extend the Maturity Date
for
all Loans outstanding at the close of business New York City time on the
Commitment Termination Date to the first anniversary of the Commitment
Termination Date (the “Term-Out
Option”);
provided
that such
extension shall not be effective with respect to the Lender unless:
(i) no
Default
shall have occurred and be continuing on each of the date of the notice
requesting such extension and on the Commitment Termination Date;
and
(ii) the
representations and warranties of the Obligors set forth in this Agreement
(other than in Section 4.04(b)) shall be true and correct on and as of each
of
the date of the notice requesting such extension and the Commitment Termination
Date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date).
Such
notice shall be deemed to constitute a representation and warranty by XL Capital
as to the matters specified in clauses (i) and (ii) of the immediately preceding
sentence as of each such date.
Notwithstanding
the foregoing, the Commitment of the Lender to make Loans shall terminate on
the
Commitment Termination Date.
(c) Manner
of Payment.
Prior to
any repayment or prepayment of any Borrowings hereunder, XL Capital shall select
the Borrowing or Borrowings to be paid and shall notify the Lender by telephone
(confirmed by telecopy) of such selection not later than 11:00 a.m., New
York City time, three Business Days before the scheduled date of such repayment;
provided
that each
repayment of Borrowings shall be applied to repay any out-
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standing
ABR Borrowings before any other Borrowings. If XL Capital fails to make a
timely selection of the Borrowing or Borrowings to be repaid or prepaid, such
payment shall be applied, first, to pay any outstanding ABR Borrowings and,
second, to other Borrowings in the order of the remaining duration of their
respective Interest Periods (the Borrowing with the shortest remaining Interest
Period to be repaid first). Each payment of a Borrowing shall be applied ratably
to the Loans included in such Borrowing.
(d) Maintenance
of Records by Lender.
The
Lender shall maintain in accordance with its usual practice records evidencing
the indebtedness of each Account Party to the Lender resulting from each Loan
made by the Lender to such Account Party, including the amounts of principal
and
interest payable and paid to the Lender from time to time hereunder. The entries
made in the records maintained pursuant to paragraph (d) or (e) of
this Section shall be prima facie
evidence
of the existence and amounts of the obligations recorded therein; provided
that the
failure of the Lender to maintain such records or any error therein shall not
in
any manner affect the obligation of the Account Parties to repay the Loans
in
accordance with the terms of this Agreement.
(e) Promissory
Notes.
The
Lender may request that Loans made by it to any Account Party be evidenced
by a
promissory note of such Account Party. In such event, each Account Party shall
prepare, execute and deliver to the Lender a promissory note payable to the
Lender (or, if requested by the Lender, to the Lender and its registered
assigns) and in a form approved by the Lender. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times be represented
by one or more promissory notes in such form payable to the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).
SECTION
2.10. Prepayment
of Loans.
(a) Right
to Prepay Borrowings.
The
Account Parties shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part, subject to the requirements of this
Section.
(b) Notices,
Etc.
XL
Capital shall notify the Lender by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of prepayment or (ii) in the case of prepayment of an
ABR Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount
of
each Borrowing or portion thereof to be prepaid; provided that, if a notice
of
prepayment is given in connection with a conditional notice of termination
of
the Commitment as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance
with Section 2.08. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of a Borrowing of the same
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Type
as
provided in Section 2.04. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.12 and
shall be made in the manner specified in Section 2.09(c).
SECTION
2.11. Fees.
(a) Facility
Fee.
XL
Capital agrees to pay to the Lender a facility fee which shall accrue at a
rate
per annum equal to the Applicable Facility Fee Rate, (i) prior to the
termination of the Lender’s Commitment, on the daily amount of such Commitment
(whether used or unused) during the period from and including the Effective
Date
to but excluding the earlier of the date on which such Commitment terminates
and
the Commitment Termination Date and (ii) if the Lender continues to have any
Credit Exposure after its Commitment terminates, on the daily amount of the
Lender’s Credit Exposure from and including the date on which the Lender’s
Commitment terminates to but excluding the date on which the Lender ceases
to
have any Credit Exposure. Accrued facility fees shall be payable on each
Quarterly Date and on (i) in the event the Term-Out Option has not been
exercised, the earlier of the date the Commitment terminates and the Commitment
Termination Date or (ii) in the event the Term-Out Option has been exercised
and
is in effect, on the Maturity Date; provided
that any
facility fees accruing after such earlier date or the Maturity Date, as the
case
may be, shall be payable on demand.
(b) Letter
of Credit Fees.
XL
Capital agrees to pay to the Lender a letter of credit fee which shall accrue
at
a rate per annum equal to the Applicable Letter of Credit Fee Rate on the
average daily aggregate undrawn amount of all outstanding Letters of Credit
during the period from and including the Effective Date to but excluding the
later of the date on which the Lender’s Commitment terminates and the date on
which the Lender ceases to have any LC Exposure. Letter of Credit fees accrued
through and including each Quarterly Date shall be payable on the third Business
Day following such Quarterly Date, commencing on the first such date to occur
after the Effective Date; provided that all such fees shall be payable on the
date on which the Commitment terminates and any such fees accruing after the
date on which the Commitment terminates shall be payable on demand.
(c) Payment
and Computation of Fees.
All fees
payable hereunder shall be paid on the dates due, in immediately available
funds, to the Lender entitled thereto. Fees paid shall not be refundable under
any circumstances. All fees payable under paragraphs (a) and (b) of this Section
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).
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SECTION
2.12. Interest.
(a) ABR Loans.
The
Loans constituting each ABR Borrowing shall bear interest at a rate per
annum equal to the Alternate Base Rate plus
the
Applicable Additional Margin, if any.
(b) Eurodollar
Loans.
The
Loans constituting each Eurodollar Borrowing shall bear interest at a rate
per
annum equal to the Adjusted LIBO Rate for the Interest Period for such Borrowing
plus the Applicable Margin plus
the
Applicable Additional Margin, if any.
(c) Default
Interest.
Notwithstanding the foregoing, if any principal of or interest on any Loan
or
any fee or other amount payable (other that in respect of any LC Disbursement
under Section 2.03(d)) by the Account Parties hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2%
plus
the rate
otherwise applicable to such Loan as provided
above or
(ii) in the case of any other amount, 2% plus
the rate
applicable to ABR Loans as provided
in
paragraph (a) of this Section.
(d) Payment
of Interest.
Accrued
interest on each Loan shall be payable by the applicable Account Party in
arrears on each Interest Payment Date for such Loan and upon (i) in the event
the Term-Out Option has not been exercised, the date the Commitment terminates
or (ii) in the event the Term-Out Option has been exercised and is in effect,
the Maturity Date; provided
that
(x) interest accrued pursuant to paragraph (c) of this Section shall
be payable on demand, (y) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Loan prior to the later of the
Commitment Termination Date and the Maturity Date), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (z) in the event of any conversion of any
Eurodollar Borrowing prior to the end of the Interest Period therefor, accrued
interest on such Borrowing shall be payable on the effective date of such
conversion.
(e) Computation.
All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the Alternate Base Rate at times when
the
Alternate Base Rate is based on the Prime Rate shall be computed on the basis
of
a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO
Rate shall be determined by the Lender, and such determination shall be
conclusive absent manifest error.
SECTION
2.13. Alternate
Rate of Interest.
If prior
to the commencement of the Interest Period for any Eurodollar Borrowing, the
Lender determines in good faith that the Adjusted LIBO Rate for such Interest
Period will not adequately and fairly reflect the cost to the Lender of making
or maintaining its respective Loans included in such Borrowing for such Interest
Period, then the Lender shall give notice thereof to XL Capital by telephone
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or
telecopy as promptly as practicable thereafter and, until the Lender notifies
XL
Capital that the circumstances giving rise to such notice no longer exist,
(i) any Interest Election Request that requests the conversion of any
Borrowing to, or the continuation of any Borrowing as, a Eurodollar Borrowing
shall be ineffective and such Borrowing (unless prepaid) shall be continued
as,
or converted to, an ABR Borrowing and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an
ABR Borrowing.
SECTION
2.14. Increased
Costs.
(a) Increased
Costs Generally.
If any
Change in Law shall:
(i) impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for account of, or credit extended by,
the
Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate); or
(ii) impose
on
the Lender or the London interbank market any other condition affecting this
Agreement, any Letter of Credit (or any participation therein) or any Eurodollar
Loan made by the Lender;
and
the
result of any of the foregoing shall be to increase the cost to the Lender
of
making or maintaining, or participating in, any Letter of Credit (or of
maintaining any participation therein) or Eurodollar Loan (or of maintaining
its
obligation to make any such Loan) or to reduce the amount of any sum received
or
receivable by the Lender hereunder (whether of principal, interest or
otherwise), then the Account Parties jointly and severally agree that they
will
pay to the Lender such additional amount or amounts as will compensate the
Lender for such additional costs incurred or reduction suffered.
(b) Capital
Requirements.
If the
Lender determines that any Change in Law regarding capital requirements has
or
would have the effect of reducing the rate of return on the Lender’s capital or
on the capital of the Lender’s holding company, if any, as a consequence of this
Agreement or the Letters of Credit issued or participated in, or the Loans
made,
by the Lender to a level below that which the Lender or the Lender’s holding
company could have achieved but for such Change in Law (taking into
consideration the Lender’s policies and the policies of the Lender’s holding
company with respect to capital adequacy), then from time to time the Account
Parties will pay to the Lender such additional amount or amounts as will
compensate the Lender or the Lender’s holding company for any such reduction
suffered.
(c) Certificates
from Lender.
A
certificate of the Lender setting forth the Lender’s good faith determination of
the amount or amounts necessary to compensate the Lender or its holding company,
as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to XL Capital and shall be conclusive absent manifest
error. The Account Parties shall pay the Lender the amount shown as due on
any
such certificate within 10 days after receipt thereof by XL
Capital.
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(d) Delay
in Requests.
Failure
or delay on the part of the Lender to demand compensation pursuant to this
Section shall not constitute a waiver of the Lender’s right to demand such
compensation; provided
that the
Account Parties shall not be required to compensate the Lender pursuant to
this
Section for any increased costs or reductions incurred more than 90 days prior
to the date that the Lender notifies XL Capital of the Change in Law giving
rise
to such increased costs or reductions and of the Lender’s intention to claim
compensation therefor; provided,
further,
that, if
the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 90 day period referred to above shall be extended to
include the period of retroactive effect thereof.
(e) Application
to Taxes.
Notwithstanding anything in this Section to the contrary, this Section shall
not
apply to Taxes, which shall be governed solely by Section 2.16.
SECTION
2.15. Break
Funding Payments.
In the
event of (a) the payment of any principal of any Eurodollar Loan other than
on the last day of an Interest Period therefor (including as a result of an
Event of Default), (b) the conversion of any Eurodollar Loan other than on
the last day of an Interest Period therefor or (c) the failure to borrow,
convert, continue or prepay any Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice is permitted to
be
revocable under Section 2.10(b) and is revoked in accordance herewith),
then, in any such event, the Account Parties shall compensate the Lender for
the
loss attributable to such event. The loss to the Lender attributable to any
such
event shall be deemed to be an amount determined by the Lender to be equal
to
the excess, if any, of (i) the amount of interest that the Lender would pay
for a deposit equal to the principal amount of such Loan for the period from
the
date of such payment, conversion, failure or assignment to the last day of
the
then current Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the duration of the Interest Period that would
have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the Adjusted LIBO Rate for such Interest
Period, over
(ii) the amount of interest that the Lender would earn on such principal
amount for such period if the Lender were to invest such principal amount for
such period at the interest rate that would be bid by the Lender (or an
affiliate of the Lender) for Dollar deposits from other banks in the eurodollar
market at the commencement of such period. A certificate of the Lender setting
forth the Lender’s good faith determination of any amount or amounts that the
Lender is entitled to receive pursuant to this Section shall be delivered to
XL
Capital and shall be conclusive absent manifest error. The Account Parties
shall
pay the Lender the amount shown as due on any such certificate within 10 days
after receipt thereof by XL Capital.
SECTION
2.16. Taxes.
(a) Payments
Free of Taxes.
Any and
all payments by or on account of any obligation of the Account Parties hereunder
shall be made free and clear of and without deduction for any Indemnified Taxes;
provided
that if
any Account Party shall be required to
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deduct
any
Indemnified Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Account Party shall make such
deductions and (iii) such Account Party shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable
law.
(b) Payment
of Other Taxes by the Account Parties.
In
addition, each Account Party shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Indemnification
by the Account Parties.
The
Account Parties shall indemnify the Lender, within 10 days after written demand
to XL Capital therefor, for the full amount of any Indemnified Taxes and Other
Taxes (including Indemnified Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Lender and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes, as the case may be, were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate setting forth the Lender’s good faith determination of the amount
of such payment or liability delivered to XL Capital by the Lender, shall be
conclusive as between the Lender and the Account Parties absent manifest
error.
(d) Evidence
of Payments.
As soon
as practicable after any payment of Indemnified Taxes or Other Taxes by any
Account Party to a Governmental Authority, XL Capital on behalf of such Account
Party shall deliver to the Lender the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to the Lender.
(e) Exemptions.
The
Lender shall, at the written request of XL Capital, provide to any Account
Party
such form, certification or similar documentation, if any (each duly completed,
accurate and signed) as is currently required by any Account Party Jurisdiction
or any other jurisdiction, or comply with such other requirements, if any,
as is
currently applicable in such Account Party Jurisdiction or any other
jurisdiction, in order to obtain an exemption from, or reduced rate of,
deduction, payment or withholding of Indemnified Taxes or Other Taxes to which
the Lender is entitled pursuant to an applicable tax treaty or the law of such
Account Party Jurisdiction or any other jurisdiction; provided
that XL
Capital shall have furnished to the Lender in a reasonably timely manner copies
of such documentation and notice of such requirements together with applicable
instructions. Upon the reasonable request of XL Capital in writing, the Lender
will provide to XL Capital such form, certification or similar documentation
(each duly completed, accurate and signed) as may in the future be required
by
any Account Party Jurisdiction or any other jurisdiction, or comply with such
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other
requirements, if any, as may be applicable in such Account Party Jurisdiction
or
any other jurisdiction in order to obtain an exemption from, or reduced rate
of,
deduction, payment or withholding of Indemnified Taxes or Other Taxes to which
the Lender is entitled pursuant to an applicable tax treaty or the law of the
relevant jurisdiction. The Account Parties shall not be required to pay
additional amount to, or to indemnify, the Lender under paragraph (a) or (c)
of
this Section for any Indemnified Taxes or Other Taxes to the extent such
Indemnified Taxes or Other Taxes would not have been imposed but for the failure
by the Lender to comply with the foregoing provisions of this paragraph
(e).
(f) If
the
Lender determines, in its reasonable discretion, that it has received a refund
of any Taxes or Other 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, it shall pay over such refund to such Account Party
(but only to the extent of indemnity payments made, or additional amounts paid,
by such Account Party under this Section with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided
that such
Account Party, upon the request of the Lender, agrees to repay the amount paid
over to such Account Party (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Lender in the event
the
Lender is required to repay such refund to such Governmental Authority. This
Section shall not be construed to require the Lender to make available its
tax
returns (or any other information relating to its taxes which it deems
confidential) to any Account Party or any other Person.
SECTION
2.17. Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Payments
by the Account Parties.
The
Account Parties shall make each payment required to be made by them hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements,
interest or fees, or under Section 2.14, 2.15 or 2.16, or otherwise) or
under any other Credit Document (except to the extent otherwise provided
therein) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim; provided
that any
payments in respect of Alternative Currency Letters of Credit shall be made
in
the manner (including the time and place of payment) as shall have been
separately agreed between the relevant Account Party and Lender pursuant to
Section 2.02. Any amounts received after such time on any date may, in the
discretion of the Lender, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Lender at its offices at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx
00000, except payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03,
which shall be made directly to the Persons entitled thereto. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day and, in the case of any
payment accru-
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ing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in Dollars.
(b) Application
of Insufficient Payments.
If at
any time insufficient funds are received by and available to the Lender to
pay
fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees
then due hereunder, such funds shall be applied (i) first, to pay interest
and fees then due hereunder, and (ii) second, to pay principal and
unreimbursed LC Disbursements then due hereunder.
SECTION
2.18. Designation
of a Different Lending Office
.
If the
Lender requests compensation under Section 2.14, or if any Account Party is
required to pay any additional amount or indemnification payment to the Lender
or any Governmental Authority for account of the Lender pursuant to
Section 2.16, then the Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans and/or Letters of
Credit hereunder or to assign its rights and obligations hereunder to another
of
its offices, branches or Affiliates, if, in the reasonable judgment of the
Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.14 or 2.16, as the case may be,
in the future and (ii) would not subject the Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to the Lender. Each
Account Party hereby agrees to pay all reasonable costs and expenses incurred
by
the Lender in connection with any such designation or assignment.
ARTICLE
III
GUARANTEE
SECTION
3.01. The
Guarantee.
Each
Guarantor hereby jointly and severally guarantees to the Lender and its
respective successors and assigns the prompt payment in full when due (whether
at stated maturity, by acceleration or otherwise) of the principal of and
interest on the Loans and LC Disbursements (and interest thereon) made by the
Lender to each of the Account Parties (other than such Guarantor in its capacity
as an Account Party hereunder) and all other amounts from time to time owing
to
the Lender by such Account Parties under this Agreement, in each case strictly
in accordance with the terms thereof (such obligations being herein collectively
called the “Guaranteed
Obligations”).
Each
Guarantor hereby further jointly and severally agrees that if any Account Party
(other than such Guarantor in its capacity as an Account Party hereunder) shall
fail to pay in full when due (whether at stated maturity, by acceleration or
otherwise) any of the Guaranteed Obligations, such Guarantor will promptly
pay
the same, without any demand or notice whatsoever, 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.
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SECTION
3.02. Obligations
Unconditional.
The
obligations of the Guarantors under Section 3.01 are absolute and
unconditional, joint and several, irrespective of the value, genuineness,
validity, regularity or enforceability of the obligations of the Account Parties
under this Agreement or any other agreement or instrument referred to herein
or
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
that 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
the Guarantors hereunder shall be absolute and unconditional, joint and several,
under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Guarantors hereunder, which
shall
remain 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 this Agreement or any other agreement
or instrument referred to herein shall be done or omitted; or
(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 this Agreement or any other agreement or instrument
referred to herein 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.
The
Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Lender exhaust
any right, power or remedy or proceed against any Account Party under this
Agreement or any other agreement or instrument referred to herein, or against
any other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations.
SECTION
3.03. 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 Account Party 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 or reorganization or
otherwise, and the Guarantors jointly and severally agree that they will
indemnify the Lender on demand for all reasonable costs and expenses (including
reasonable fees of counsel) incurred by the Lender in connection with such
rescission or restoration, including any such costs and expenses
in-
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curred
in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
SECTION
3.04. Subrogation.
The
Guarantors hereby jointly and severally agree that until the payment and
satisfaction in full of all Guaranteed Obligations and the expiration and
termination of the Commitment they shall not exercise any right or remedy
arising by reason of any performance by them of their guarantee in
Section 3.01, whether by subrogation or otherwise, against any Account
Party or any other guarantor of any of the Guaranteed Obligations or any
security for any of the Guaranteed Obligations.
SECTION
3.05. Remedies.
The
Guarantors jointly and severally agree that, as between the Guarantors and
the
Lender, the obligations of the Account Parties under this Agreement may be
declared to be forthwith due and payable as provided in Article VIII (and shall
be deemed to have become automatically due and payable in the circumstances
provided in Article VIII) for purposes of Section 3.01 notwithstanding any
stay, injunction or other prohibition preventing such declaration (or such
obligations from becoming automatically due and payable) as against any Account
Party and that, in the event of such declaration (or such obligations being
deemed to have become automatically due and payable), such obligations (whether
or not due and payable by any Account Party) shall forthwith become due and
payable by the Guarantors for purposes of Section 3.01.
SECTION
3.06. Continuing
Guarantee.
The
guarantee in this Article is a continuing guarantee, and shall apply to all
Guaranteed Obligations whenever arising.
SECTION
3.07. Rights
of Contribution.
The
Guarantors (other than XL Capital) hereby agree, as between themselves, that
if
any such Guarantor shall become an Excess Funding Guarantor (as defined below)
by reason of the payment by such Guarantor of any Guaranteed Obligations, each
other Guarantor (other than XL Capital) shall, on demand of such Excess Funding
Guarantor (but subject to the next sentence), pay to such Excess Funding
Guarantor an amount equal to such Guarantor’s Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, debts
and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of
a
Guarantor to any Excess Funding Guarantor under this Section shall be
subordinate and subject in right of payment to the prior payment in full of
the
obligations of such Guarantor under the other provisions of this Article III
and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full of all of such
obligations.
For
purposes of this Section, (i) “Excess
Funding Guarantor”
means,
in respect of any Guaranteed Obligations, a Guarantor that has paid an amount
in
excess of its Pro Rata Share of such Guaranteed Obligations,
(ii) “Excess
Payment”
means,
in respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations and
(iii) “Pro
Rata Share”
means,
for any Guarantor,
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the
ratio
(expressed as a percentage) of (x) the amount by which the aggregate
present fair saleable value of all properties of such Guarantor (excluding
any
shares of stock of any other Guarantor) exceeds the amount of all the debts
and
liabilities of such Guarantor (including contingent, subordinated, unmatured
and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder and any obligations of any other Guarantor that have been Guaranteed
by such Guarantor) to (y) the amount by which the aggregate fair saleable
value of all properties of all of the Guarantors (other than XL Capital) exceeds
the amount of all the debts and liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of the
Guarantors under this Article III) of all of the Guarantors (other than XL
Capital), determined (A) with respect to any Guarantor that is a party
hereto on the date hereof, as of the date hereof, and (B) with respect to any
other Guarantor, as of the date such Guarantor becomes a Guarantor
hereunder.
SECTION
3.08. General
Limitation on Guarantee Obligations.
In any
action or proceeding involving any corporate law, or any bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if
the
obligations of any Guarantor under Section 3.01 would otherwise, taking
into account the provisions of Section 3.07, be held or determined to be
void, invalid or unenforceable, or subordinated to the claims of any other
creditors, on account of the amount of its liability under Section 3.01,
then, notwithstanding any other provision hereof to the contrary, the amount
of
such liability shall, without any further action by such Guarantor, the Lender
or any other Person, be automatically limited and reduced to the highest amount
that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
Each
Account Party represents and warrants to the Lender that:
SECTION
4.01. Organization;
Powers.
Such
Account Party and each of its Significant Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its
organization, has all requisite power and authority to carry on its business
as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
SECTION
4.02. Authorization;
Enforceability.
The
Transactions are within such Account Parties’ corporate powers and have been
duly authorized by all necessary corporate and, if required, by all necessary
shareholder action. This Agreement has been duly executed and delivered by
such
Account Party and constitutes a legal, valid and binding obligation of such
Account Party, enforceable against such Account Party in accordance with
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its
terms,
except as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, examination or similar laws of general applicability
affecting the enforcement of creditors’ rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION
4.03. Governmental
Approvals; No Conflicts.
The
Transactions (a) do not require any consent or approval of (including any
exchange control approval), registration or filing with, or any other action
by,
any Governmental Authority, except such as have been obtained or made and are
in
full force and effect, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of such
Account Party or any of its Significant Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under
any material indenture, agreement or other instrument binding upon such Account
Party or any of its Significant Subsidiaries or assets, or give rise to a right
thereunder to require any payment to be made by any such Person, and
(d) will not result in the creation or imposition of any Lien on any asset
of such Account Party or any of its Significant Subsidiaries.
SECTION
4.04. Financial
Condition; No Material Adverse Change.
(a) Financial
Condition.
Such
Account Party has heretofore furnished to the Lender the consolidated balance
sheet and statements of income, stockholders’ equity and cash flows of such
Account Party and its consolidated Subsidiaries (A) as of and for the
fiscal year ended December 31, 2005, reported on by PricewaterhouseCoopers
LLP,
independent public accountants (as provided in XL Capital’s Report on Form 10-K
filed with the SEC for the fiscal year ended December 31, 2005), and (B) as
of and for the fiscal quarter ended September 30, 2006, as provided in XL
Capital’s Report on Form 10-Q filed with the SEC for the fiscal quarter ended
September 30, 2006. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of
such Account Party and its respective consolidated Subsidiaries as of such
dates
and for such periods in accordance with GAAP or (in the case of XL Insurance
or
XL Re) SAP, subject to year-end audit adjustments and the absence of footnotes
in the case of the statements referred to in clause (B) of the first
sentence of this paragraph.
(b) No
Material Adverse Change.
Since
December 31, 2005, there has been no material adverse change in the assets,
business, financial condition or operations of such Account Party and its
Subsidiaries, taken as a whole, except as disclosed in XL Capital’s filings with
the SEC.
SECTION
4.05. Properties.
(a) Property
Generally.
Such
Account Party and each of its Significant Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material to
its
business, subject only to Liens permitted by Section 7.03 and except for
minor
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defects
in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended
purposes.
(b) Intellectual
Property.
Such
Account Party and each of its Significant Subsidiaries owns, or is licensed
to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by such Account Party
and
its Subsidiaries does not infringe upon the rights of any other Person, except
for any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION
4.06. Litigation
and Environmental Matters.
(a) Actions,
Suits and Proceedings.
Except
as disclosed in Schedule II or contemplated by our SEC reports, or as routinely
encountered in claims activity, there are no actions, suits or proceedings
by or
before any arbitrator or Governmental Authority now pending against or, to
the
knowledge of such Account Party, threatened against or affecting such Account
Party or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or
(ii) that involve this Agreement or the Transactions.
(b) Environmental
Matters.
Except
as disclosed in Schedule III and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result
in
a Material Adverse Effect, neither such Account Party nor any of its
Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
for its business under any Environmental Law, (ii) has incurred any
Environmental Liability, (iii) has received notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
SECTION
4.07. Compliance
with Laws and Agreements.
Such
Account Party and each of its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon
it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
SECTION
4.08. Investment
and Holding Company Status.
Such
Account Party is not (a) an “investment company” as defined in, or subject
to regulation under, the Investment Company Act of 1940 or (b) a “holding
company” as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION
4.09. Taxes.
Such
Account Party and each of its Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed
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and
has
paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings
and for which such Person has set aside on its books adequate reserves or
(b) to the extent that the failure to file any such Tax return or pay any
such Taxes could not reasonably be expected to result in a Material Adverse
Effect.
SECTION
4.10. ERISA.
No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected
to
occur, could reasonably be expected to result in a Material Adverse Effect.
The
present value of all accumulated benefit obligations under each Plan (based
on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of such
Plan
by an amount that could reasonably be expected to result in a Material Adverse
Effect.
Except
as
could not reasonably be expected to result in a Material Adverse Effect, (i)
all
contributions required to be made by any Account Party or any of their
Subsidiaries with respect to a Non-U.S. Benefit Plan have been timely made,
(ii)
each Non-U.S. Benefit Plan has been maintained in compliance with its terms
and
with the requirements of any and all applicable laws and has been maintained,
where required, in good standing with the applicable Governmental Authority
and
(iii) neither any Account Party nor any of their Subsidiaries has incurred
any
obligation in connection with the termination or withdrawal from any Non-U.S.
Benefit Plan.
SECTION
4.11. Disclosure.
The
reports, financial statements, certificates or other information furnished
by
such Account Party to the Lender in connection with the negotiation of this
Agreement or delivered hereunder (taken as a whole) do not contain any material
misstatement of fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided
that,
with respect to projected financial information, such Account Party represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.
SECTION
4.12. Use
of
Credit.
Neither
such Account Party nor any of its Subsidiaries is engaged principally, or as
one
of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying Margin
Stock, and no Letter of Credit will be used in connection with buying or
carrying any Margin Stock. No part of the proceeds of any Loan hereunder will
be
used to buy or carry any Margin Stock (except for repurchases of the capital
stock of XL Capital and purchases of Margin Stock in accordance with XL
Capital’s Statement of Investment Policy Objectives and Guidelines as in effect
on the date hereof or as it may be changed from time to time by a resolution
duly adopted by the board of directors of XL Capital (or any committee
thereof)). The purchase of any Margin Stock with the proceeds of any Loan will
not be in
-37-
violation
of Regulation U or X of the Board and, after applying the proceeds of such
Loan,
not more than 25% of the value of the assets of XL Capital and its Subsidiaries
taken as a whole consists or will consist of Margin Stock.
SECTION
4.13. Subsidiaries.
Set
forth in Schedule IV is a complete and correct list of all of the
Subsidiaries of XL Capital as of September 30, 2006, together with, for each
such Subsidiary, (i) the jurisdiction of organization of such Subsidiary,
(ii) each Person holding ownership interests in such Subsidiary and
(iii) the percentage of ownership of such Subsidiary represented by such
ownership interests. Except as disclosed in Schedule IV, (x) each of
XL Capital and its Subsidiaries owns, free and clear of Liens, and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Schedule IV, (y) all of the issued and
outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) except as disclosed in
filings of XL Capital with the SEC prior to the date hereof, there are no
outstanding Equity Rights with respect to any Account Party.
SECTION
4.14. Withholding
Taxes.
Based
upon information with respect to the Lender provided as of the date hereof,
the
payment of the LC Disbursements and interest thereon, principal of and interest
on the Loans, the fees under Section 2.11 and all other amounts payable
hereunder will not be subject, by withholding or deduction, to any Indemnified
Taxes imposed by Bermuda or the Cayman Islands.
SECTION
4.15. Stamp
Taxes.
To
ensure the legality, validity, enforceability or admissibility in evidence
of
this Agreement or any promissory notes evidencing Loans made (or to be made),
it
is not necessary, as of the date hereof, that this Agreement or such promissory
notes or any other document be filed or recorded with any Governmental Authority
in Bermuda or the Cayman Islands, or that any stamp or similar tax be paid
on or
in respect of this Agreement in any such jurisdiction, or such promissory notes
or any other document other than such filings and recordations that have already
been made and such stamp or similar taxes that have been paid.
SECTION
4.16. Legal
Form.
Each of
this Agreement and any promissory notes evidencing Loans made (or to be made)
is
in proper legal form under the laws of any Account Party Jurisdiction for the
admissibility thereof in the courts of such Account Party
Jurisdiction.
ARTICLE
V
CONDITIONS
SECTION
5.01. Effective
Date.
The
obligations of the Lender to issue or continue Letters of Credit and to make
Loans hereunder are subject to the receipt by the Lender of each of the
following documents, each of which shall be satisfactory to the Lender
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in
form
and substance (or such condition shall have been waived in accordance with
Section 9.02):
(a) Executed
Counterparts.
From
each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the Lender
(which may include telecopy transmission of a signed signature page to this
Agreement) that such party has signed a counterpart of this
Agreement.
(b) Opinions
of Counsel to the Obligors.
Opinions, each dated the Effective Date, of (i) Xxxxxxx Xxxxxx Xxxxx, Esq.,
counsel to XL Capital, substantially in the form of Exhibit A-1,
(ii) Xxxxxxx X. XxXxxxx, Esq., counsel to XL America, substantially in the
form of Exhibit A-2, (iii) Xxxxxx Xxxxxx & Xxxxxxx LLP,
special
U.S. counsel for the Obligors, substantially in the form of Exhibit A-3,
(iv) Xxxxxxx, Xxxx & Xxxxxxx, special Bermuda counsel to XL Insurance and XL
Re, substantially in the form of Exhibit A-4, and (v) Xxxxxxx Xxxxxxxx
Xxxxxx, special Cayman Islands counsel to XL Capital, substantially in the
form
of Exhibit A-5.
(c) Corporate
Documents.
Such
documents and certificates as the Lender or its counsel may reasonably request
relating to the organization, existence and good standing, if applicable, of
the
Obligors, the authorization of the Transactions and any other legal matters
relating to the Obligors, this Agreement or the Transactions, all in form and
substance reasonably satisfactory to the Lender and its counsel.
(d) Officer’s
Certificate.
A
certificate, dated the Effective Date and signed by the President, a Vice
President or a Financial Officer of XL Capital, confirming compliance with
the
conditions set forth in the lettered clauses of the first sentence of
Section 5.02.
(e) Other
Documents.
Such
other documents as the Lender may reasonably request.
The
obligation of the Lender to make its initial extension of credit hereunder
is
also subject to the payment by XL Capital of such fees as XL Capital shall
have
agreed to pay to the Lender in connection herewith, (to the extent that
reasonably detailed statements for such fees and expenses have been delivered
to
XL Capital).
The
Lender
shall notify the Account Parties of the Effective Date, and such notice shall
be
conclusive and binding. Notwithstanding the foregoing, the obligations of the
Lender to issue or continue Letters of Credit or to make Loans hereunder shall
not become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to Section 9.02) at or prior to 5:00 p.m., New York
City time, on December 19, 2006 (and, in the event such conditions are not
so
satisfied or waived, the Commitment shall terminate at such time).
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SECTION
5.02. Each
Credit Event.
The
obligation of the Lender to issue, continue, amend, renew or extend any Letter
of Credit or to make any Loan is additionally subject to the satisfaction of
the
following conditions:
(a) the
representations and warranties of the Obligors set forth in this Agreement
(other than, at any time after the Effective Date, in Section 4.04(b)) shall
be
true and correct on and as of the date of issuance, continuation, amendment,
renewal or extension of such Letter of Credit or the date of such Loan, as
applicable (or, if any such representation or warranty is expressly stated
to
have been made as of a specific date, as of such specific date);
(b) at
the
time of and immediately after giving effect to the issuance, amendment, renewal
or extension of such Letter of Credit or such Loan, as applicable, no Default
shall have occurred and be continuing; and
(c) in
the
case of any Alternative Currency Letter of Credit, receipt by the Lender of
a
request for offers as required by Section 2.02.
Each
issuance, continuation, amendment, renewal or extension of a Letter of Credit
and each Borrowing shall be deemed to constitute a representation and warranty
by the Obligors on the date thereof as to the matters specified in clauses
(a)
and (b) of the immediately preceding sentence.
ARTICLE
VI
AFFIRMATIVE
COVENANTS
Until
the
Commitment has expired or been terminated, the principal of and interest on
each
Loan and all fees payable hereunder shall have been paid in full, all Letters
of
Credit shall have expired or terminated and all LC Disbursements shall have
been
reimbursed, the Account Parties covenant and agree with the Lender
that:
SECTION
6.01. Financial
Statements and Other Information.
Each
Account Party will furnish to the Lender:
(a) within
135
days after the end of each fiscal year of each Account Party except for XL
America (but in the case of XL Capital, within 100 days after the end of each
fiscal year of XL Capital), the audited consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows of such Account
Party and its consolidated Subsidiaries as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year (if such figures were already produced for such corresponding period
or periods) (it being understood that delivery to the Lender of XL Capital’s
Report on Form 10-K filed with the SEC shall satisfy the financial statement
delivery requirements of this paragraph (a) to deliver the annual financial
statements of XL Capital so
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long
as
the financial information required to be contained in such Report is
substantially the same as the financial information required under this
paragraph (a)), all reported on by independent public accountants of recognized
national standing (without a “going concern” or like qualification or exception
and without any qualification or exception as to the scope of such audit) to
the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of such
Account Party and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP or (in the case of XL Insurance and XL Re) SAP, as the
case
may be, consistently applied;
(b) by
June 15
of each year, (i) an unaudited consolidated balance sheet and related statements
of operations, stockholders’ equity and cash flows of XL America and its
consolidated Subsidiaries as of the end of and for the immediately preceding
fiscal year, setting forth in each case in comparative form the figures for
the
previous fiscal year (if such figures were already produced for such
corresponding period or periods), all certified by a Financial Officer of XL
America as presenting fairly in all material respects the financial condition
and results of operations of XL America and its consolidated Subsidiaries on
a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes, and (ii) audited
statutory financial statements for each Insurance Subsidiary of XL America
reported on by independent public accountants of recognized national standing
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such audited consolidated financial statements present fairly in all material
respects the financial condition and results of operations of such Insurance
Subsidiaries in accordance with SAP, consistently applied;
(c) within
60
days after the end of each of the first three fiscal quarters of each fiscal
year of such Account Party, the consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows of such Account
Party and its consolidated Subsidiaries as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, setting forth in each
case in comparative form the figures for (or, in the case of the balance sheet,
as of the end of) the corresponding period or periods of the previous fiscal
year (if such figures were already produced for such corresponding period or
periods), all certified by a Financial Officer of such Account Party as
presenting fairly in all material respects the financial condition and results
of operations of such Account Party and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP or (in the case of XL Insurance
and
XL Re) SAP, as the case may be, consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes (it being understood that
delivery to the Lender of XL Capital’s Report on Form 10-Q filed with the SEC
shall satisfy the financial statement delivery requirements of this paragraph
to
deliver the quarterly financial statements of XL Capital so long as the
financial information required to be contained in such Report is substantially
the same as the financial information required under this paragraph
(c));
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(d) concurrently
with any delivery of financial statements under clause (a), (b) or (c) of this
Section, a certificate signed on behalf of each Account Party by a Financial
Officer (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed
to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 7.03, 7.05, 7.06 and 7.07
and (iii) stating whether any change in GAAP or (in the case of XL Insurance,
XL
Re and any Insurance Subsidiary of XL America) SAP or in the application thereof
has occurred since the date of the audited financial statements referred to
in
Section 4.04 and, if any such change has occurred, specifying any material
effect of such change on the financial statements accompanying such
certificate;
(e) concurrently
with any delivery of financial statements under clauses (a) and (b)(ii) of
this
Section, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate
may
be limited to the extent required by accounting rules or
guidelines);
(f) promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by such Account Party or
any
of its respective Subsidiaries with the SEC, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with any U.S.
or other securities exchange, or distributed by such Account Party to its
shareholders generally, as the case may be;
(g) concurrently
with any delivery of financial statements under clause (a), (b) or (c) of this
Section, a certificate of a Financial Officer of XL Capital, setting forth
on a
consolidated basis for XL Capital and its consolidated Subsidiaries as of the
end of the fiscal year or quarter to which such certificate relates (i) the
aggregate book value of assets which are subject to Liens permitted under
Section 7.03(h) and the aggregate book value of liabilities which are subject
to
Liens permitted under Section 7.03(h) (it being understood that the reports
required by paragraphs (a), (b) and (c) of this Section shall satisfy the
requirement of this clause (i) of this paragraph (g) if such reports set forth
separately, in accordance with GAAP, line items corresponding to such aggregate
book values) and (ii) a calculation showing the portion of each of such
aggregate amounts which portion is attributable to transactions among
wholly-owned Subsidiaries of XL Capital;
(h) within
90
days after the end of each of the first three fiscal quarters of each fiscal
year and within 135 days after the end of each fiscal year of XL Capital
(commencing with the fiscal year ending December 31, 2005), a statement of
a
Financial Officer of XL Capital listing, as of the end of the immediately
preceding fiscal quarter of XL Capital, the amount of cash and the securities
of
the Account Parties and their Subsidiaries that have been posted as collateral
under Section 7.03(f); and
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(i) promptly
following any request therefor, such other information regarding the operations,
business affairs and financial condition of XL Capital or any of its
Subsidiaries, or compliance with the terms of this Agreement, as the Lender
may
reasonably request.
SECTION
6.02. Notices
of Material Events.
Each
Account Party will furnish to the Lender prompt written notice of the
following:
(a) the
occurrence of any Default; and
(b) any
event
or condition constituting, or which could reasonably be expected to have a
Material Adverse Effect.
Each
notice delivered under this Section shall be accompanied by a statement of
a
Financial Officer or other executive officer of the relevant Account Party
setting forth the details of the event or development requiring such notice
and
any action taken or proposed to be taken by such Account Party with respect
thereto.
SECTION
6.03. Preservation
of Existence and Franchises.
Each
Account Party will, and will cause each of its Significant Subsidiaries to,
maintain its corporate existence and its material rights and franchises in
full
force and effect in its jurisdiction of incorporation; provided
that the
foregoing shall not prohibit any merger or consolidation permitted under Section
7.01. Each Account Party will, and will cause each of its 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.
SECTION
6.04. Insurance.
Each
Account Party will, and will cause each of its Significant Subsidiaries to,
maintain with financially sound and reputable insurers, insurance with respect
to its properties in such amounts as is customary in the case of corporations
engaged in the same or similar businesses having similar properties similarly
situated.
SECTION
6.05. Maintenance
of Properties.
Each
Account Party will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition the
properties now or hereafter owned, leased or otherwise possessed by and used
or
useful in its business and will make or cause to be made all needful and proper
repairs, renewals, replacements and improvements thereto so that the business
carried on in connection therewith may be properly conducted at all times except
if the failure to do so would not have a Material Adverse Effect, provided,
however,
that the
foregoing shall not impose on such Account Party or any Subsidiary of such
Account Party any obligation in respect of any property leased by such Account
Party or such Subsidiary in addition to such Account Party’s obligations under
the applicable document creating such Account Party’s or such Subsidiary’s lease
or tenancy.
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SECTION
6.06. Payment
of Taxes and Other Potential Charges and Priority Claims; Payment of Other
Current Liabilities.
Each
Account Party will, and will cause each of its Subsidiaries to, pay or
discharge:
(a) on
or
prior to the date on which penalties attach thereto, all taxes, assessments
and
other governmental charges or levies imposed upon it or any of its properties
or
income;
(b) on
or
prior to the date when due, all lawful claims of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons which, if unpaid,
might
result in the creation of a Lien upon any such property; and
(c) on
or
prior to the date when due, all other lawful claims which, if unpaid, might
result in the creation of a Lien upon any such property (other than Liens not
forbidden by Section 7.03) or which, if unpaid, might give rise to a claim
entitled to priority over general creditors of such Account Party or such
Subsidiary in any proceeding under the Bermuda Companies Law or Bermuda
Insurance Law, or any insolvency proceeding, liquidation, receivership,
rehabilitation, dissolution or winding-up involving such Account Party or such
Subsidiary;
provided
that
unless and until foreclosure, distraint, levy, sale or similar proceedings
shall
have been commenced, such Account Party or such Subsidiary need not pay or
discharge any such tax, assessment, charge, levy or claim (i) 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 or SAP, as the case may be, shall have
been made therefor or (ii) so long as such failure to pay or discharge would
not
have a Material Adverse Effect.
SECTION
6.07. Financial
Accounting Practices.
Such
Account Party will, and will cause each of its consolidated Subsidiaries to,
make and keep books, records and accounts which, in reasonable detail,
accurately and fairly reflect its transactions and dispositions of its assets
and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are recorded as necessary to permit
preparation of financial statements required under Section 6.01 in conformity
with GAAP and SAP, as applicable, and to maintain accountability for
assets.
SECTION
6.08. Compliance
with Applicable Laws.
Each
Account Party will, and will cause each of its Subsidiaries to, comply with
all
applicable Laws (including but not limited to the Bermuda Companies Law and
Bermuda Insurance Laws) in all respects; provided
that such
Account Party or any Subsidiary of such Account Party will not be deemed to
be
in violation of this Section 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
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which,
in
the aggregate, would have a Material Adverse Effect or (ii) otherwise impair
the
ability of such Account Party to perform its obligations under this
Agreement.
SECTION
6.09. Use
of
Letters of Credit and Proceeds.
No part
of the proceeds of any Loan and no Letter of Credit will be used, whether
directly or indirectly, for any purpose that entails a violation of any of
the
Regulations of the Board, including Regulations U and X. Each Account Party
will
use the Letters of Credit issued for its account hereunder in the ordinary
course of business of, and will use the proceeds of all Loans made to it for
the
general corporate purposes of, such Account Party and its Affiliates. For the
avoidance of doubt, the parties agree that any Account Party may apply for
a
Letter of Credit hereunder to support the obligations of any Affiliate of XL
Capital, it being understood that such Account Party shall nonetheless remain
the account party and as such be liable with respect to such Letter of
Credit.
Notwithstanding anything in this Section to the contrary, no Account Party
will
issue any Letter of Credit, or renew or permit to renew any Letter of Credit,
existing as of August 4, 2006, or use the proceeds of any Loan, to support
the
obligations of, or otherwise primarily for the general corporate purposes of,
SCA and its Subsidiaries.
SECTION
6.10. Continuation
of and Change in Businesses.
Each
Account Party and its Significant Subsidiaries will continue to engage in
substantially the same business or businesses it engaged in (or proposes to
engage in) on the date of this Agreement and businesses related or incidental
thereto.
SECTION
6.11. Visitation.
Each
Account Party will permit such Persons as the Lender may reasonably designate
to
visit and inspect any of the properties of such Account Party, to discuss its
affairs with its financial management, and provide such other information
relating to the business and financial condition of such Account Party at such
times as the Lender may reasonably request. Each Account Party hereby authorizes
its financial management to discuss with the Lender the affairs of such Account
Party.
ARTICLE
VII
NEGATIVE
COVENANTS
Until
the
Commitment has expired or terminated, the principal of and interest on each
Loan
and all fees payable hereunder have been paid in full, all Letters of Credit
have expired or terminated and all LC Disbursements have been reimbursed, each
of the Account Parties covenants and agrees with the Lender that:
SECTION
7.01. Mergers.
No
Account Party will merge with or into or consolidate with any other Person,
except that if no Default shall occur and be continuing or shall exist at the
time of such merger or consolidation or immediately thereafter and after giving
effect thereto (a) any Account Party may merge or consolidate with any other
corporation, including a Subsidiary, if such Account Party shall be the
surviving corporation, (b) XL Capi-
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tal
may
merge with or into or consolidate with any other Person in a transaction that
does not result in a reclassification, conversion, exchange or cancellation
of
the outstanding shares of capital stock of XL Capital (other than the
cancellation of any outstanding shares of capital stock of XL Capital held
by
the Person with whom it merges or consolidates) and (c) any Account Party may
enter into a merger or consolidation which is effected solely to change the
jurisdiction of incorporation of such Account Party and results in a
reclassification, conversion or exchange of outstanding shares of capital stock
of such Account Party solely into shares of capital stock of the surviving
entity.
SECTION
7.02. Dispositions.
No
Account Party will, nor will it permit any of its Significant Subsidiaries
to,
sell, convey, assign, lease, abandon or otherwise transfer or dispose of,
voluntarily or involuntarily (any of the foregoing being referred to in this
Section as a “Disposition”
and
any
series of related Dispositions constituting but a single Disposition), any
of
its properties or assets, tangible or intangible (including but not limited
to
sale, assignment, discount or other disposition of accounts, contract rights,
chattel paper or general intangibles with or without recourse),
except:
(a) Dispositions
in the ordinary course of business involving current assets or other invested
assets classified on such Account Party’s or its respective Subsidiaries’
balance sheet as available for sale or as a trading account;
(b) sales,
conveyances, assignments or other transfers or dispositions in immediate
exchange for cash or tangible assets, provided
that any
such sales, conveyances or transfers shall not individually, or in the aggregate
for the Account Parties and their respective Subsidiaries, exceed $500,000,000
in any calendar year; Dispositions of equipment or other property which is
obsolete or no longer used or useful in the conduct of the business of such
Account Party or its Subsidiaries;
(c) Dispositions
of equipment or other property which is obsolete or no longer used or useful
in
the conduct of the business of such Account Party or its Subsidiaries;
and
(d) Dispositions
from an Account Party or a wholly-owned Subsidiary to any other Account Party
or
wholly-owned Subsidiary.
SECTION
7.03. Liens.
No
Account Party will, nor will it permit any of its Subsidiaries to, create,
incur, assume or permit to exist any Lien on any property or assets, tangible
or
intangible, now owned or hereafter acquired by it, except:
(a) Liens
existing on the date hereof (and extension, renewal and replacement Liens upon
the same property, provided
that the
amount secured by each Lien constituting such an extension, renewal or
replacement Lien shall not exceed the amount secured by the Lien theretofore
existing) and listed on Part B of Schedule I;
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(b) Liens
arising from taxes, assessments, charges, levies or claims described in Section
6.06 that are not yet due or that remain payable without penalty or to the
extent permitted to remain unpaid under the provision of Section
6.06;
(c) Liens
on
property securing all or part of the purchase price thereof to such Account
Party and Liens (whether or not assumed) existing on property at the time of
purchase thereof by such Account 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 (ii) the aggregate amount of the obligations secured
by all such Liens on any particular property at any time purchased by such
Account Party, as applicable, shall not exceed 100% of the lesser of the fair
market value of such property at such time or the actual purchase price of
such
property;
(d) zoning
restrictions, easements, minor restrictions on the use of real property, minor
irregularities in title thereto and other minor Liens that do not in the
aggregate materially detract from the value of a property or asset to, or
materially impair its use in the business of, such Account Party or any such
Subsidiary;
(e) Liens
securing Indebtedness permitted by Section 7.07(b) covering assets whose market
value is not materially greater than the amount of the Indebtedness secured
thereby plus a commercially reasonable margin;
(f) Liens
on
cash and securities of an Account Party or any of its Subsidiaries incurred
as
part of the management of its investment portfolio including, but not limited
to, pursuant to any International Swaps and Derivatives Association, Inc.
(“ISDA”)
documentation or any Specified Transaction Agreement in accordance with XL
Capital’s Statement of Investment Policy Objectives and Guidelines as in effect
on the date hereof or as it may be changed from time to time by a resolution
duly adopted by the board of directors of XL Capital (or any committee
thereof);
(g) Liens
on
cash and securities not to exceed $500,000,000 in the aggregate securing
obligations of an Account Party or any of its Subsidiaries arising under any
ISDA documentation or any other Specified Transaction Agreement (it being
understood that in no event shall this clause (g) preclude any Person (other
than any Subsidiary of XL Capital) in which XL Capital or any of its
Subsidiaries shall invest (each an “investee”)
from
granting Liens on such Person’s assets to secure hedging obligations of such
Person, so long as such obligations are non-recourse to XL Capital or any of
its
Subsidiaries (other than any investees)), provided
that, for
purposes of determining the aggregate amount of cash and/or securities subject
to such Liens under this clause (g), the aggregate amount of cash and/or
securities on which any Account Party or any Subsidiary shall have granted
a
Lien in favor of a counterparty at any time shall be netted against the
aggregate amount of cash and/or securities on which such counterparty shall
have
granted a Lien in favor of such Account Party or such Subsidiary, as the case
may be, at such time, so long as the relevant agreement between such
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Account
Party or such Subsidiary, as the case may be, provides for the netting of their
respective obligations thereunder;
(h) Liens
on
(i) assets received, and on actual or imputed investment income on such assets
received incurred as part of its business including activities utilizing ISDA
documentation or any Specified Transaction Agreement relating and identified
to
specific insurance payment liabilities or to liabilities arising in the ordinary
course of any Account Parties’ or any of their Subsidiary’s business as an
insurance or reinsurance company (including GICs and Stable Value Instruments)
or corporate member of Lloyd’s or as a provider of financial or investment
services or contracts, or the proceeds thereof (including GICs and Stable Value
Instruments), in each case held in a segregated trust, trust or other account
and securing such liabilities, (ii) assets securing Exempt Indebtedness of
any
Person (other than XL Capital or any of its Affiliates) in the event such Exempt
Indebtedness is consolidated on the consolidated balance sheet of XL Capital
and
its consolidated Subsidiaries in accordance with GAAP or (iii) any other assets
subject to any trust or other account arising out of or as a result of
contractual, regulatory or any other requirements; provided
that in
no case shall any such Lien secure Indebtedness and any Lien which secures
Indebtedness shall not be permitted under this clause (h);
(i) statutory
and common law Liens of materialmen, mechanics, carriers, warehousemen and
landlords and other similar Liens arising in the ordinary course of business;
and
(j) Liens
existing on property of a Person immediately prior to its being consolidated
with or merged into any Account Party or any of their Subsidiaries or its
becoming a Subsidiary, and Liens existing on any property acquired by any
Account Party or any of their Subsidiaries at the time such property is so
acquired (whether or not the Indebtedness secured thereby shall have been
assumed) (and extension, renewal and replacement Liens upon the same property,
provided
that the
amount secured by each Lien constituting such an extension, renewal or
replacement Lien shall not exceed the amount secured by the Lien theretofore
existing), provided
that (i)
no such Lien shall have been created or assumed in contemplation of such
consolidation or merger or such Person’s becoming a Subsidiary or such
acquisition of property and (ii) each such Lien shall extend solely to the
item
or items of property so acquired and, if required by terms of the instrument
originally creating such Lien, other property which is an improvement to or
is
acquired for specific use in connection with such acquired
property.
SECTION
7.04. Transactions
with Affiliates.
No
Account Party will, nor will it permit any of its Significant Subsidiaries
to,
enter into or carry out any transaction with (including 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 Account Party, or directly or indirectly agree to do any of the foregoing,
except (i) transactions involving guarantees or co-obligors with respect to
any
Indebtedness described in
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Part A
of Schedule I, (ii) transactions among the Account Parties and their
wholly-owned Subsidiaries and (iii) transactions with Affiliates in good
faith in the ordinary course of such Account Party’s business consistent with
past practice and on terms no less favorable to such Account Party or any
Subsidiary than those that could have been obtained in a comparable transaction
on an arm’s length basis from an unrelated Person.
SECTION
7.05. Ratio
of Total Funded Debt to Total Capitalization.
XL
Capital will not permit its ratio of (a) Total Funded Debt to (b) the sum of
Total Funded Debt plus Consolidated Net Worth to be greater than 0.35:1.00
at
any time.
SECTION
7.06. Consolidated
Net Worth.
XL
Capital will not permit its Consolidated Net Worth to be less than the sum
of
(a) $5,000,000,000 plus (b) 25% of consolidated net income (if positive) of
XL
Capital and its Subsidiaries for each fiscal quarter ending on or after December
31, 2006.
SECTION
7.07. Indebtedness.
No
Account Party will, nor will it permit any of its Subsidiaries to, at any time
create, incur, assume or permit to exist any Indebtedness, or agree, become
or
remain liable (contingent or otherwise) to do any of the foregoing,
except:
(a) Indebtedness
created hereunder;
(b) secured
Indebtedness (including secured reimbursement obligations with respect to
letters of credit) of any Account Party or any Subsidiary in an aggregate
principal amount (for all Account Parties and their respective Subsidiaries)
not
exceeding at any time outstanding 15% of Consolidated Net Worth;
(c) other
unsecured Indebtedness, so long as upon the incurrence thereof no Default would
occur or exist;
(d) Indebtedness
consisting of accounts or claims payable and accrued and deferred compensation
(including options) incurred in the ordinary course of business by any Account
Party or any Subsidiary;
(e) Indebtedness
incurred in transactions described in Section 7.03(f) and (g); and
(f) Indebtedness
existing on the date hereof and described in Part A of Schedule I and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof.
SECTION
7.08. Financial
Strength Ratings.
None of
XL Capital Group, XL Insurance and XL Re will permit at any time its financial
strength ratings to be less than “A-” from A.M. Best & Co. (or its
successor).
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SECTION
7.09. Private
Act.
No
Account Party will become subject to a Private Act other than the X.L. Insurance
Company, Ltd. Act, 1989.
ARTICLE
VIII
EVENTS
OF DEFAULT
If
any of
the following events (“Events
of Default”)
shall
occur:
(a) any
Account Party shall fail to pay any principal of any Loan or any reimbursement
obligation in respect of any LC Disbursement when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
(b) any
Account Party shall fail to pay any interest on any Loan or LC Disbursement
or
any fee payable under this Agreement or any other amount (other than an amount
referred to in clause (a) of this Article) payable under this Agreement,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of 5 or more days;
(c) any
representation or warranty made or deemed made by any Account Party in or in
connection with this Agreement or any amendment or modification hereof, or
in
any certificate or financial statement furnished pursuant to the provisions
hereof, shall prove to have been false or misleading in any material respect
as
of the time made (or deemed made) or furnished;
(d) any
Account Party shall fail to observe or perform any covenant, condition or
agreement contained in Article VII;
(e) any
Obligor shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those specified in clause (a), (b)
or (d) of this Article or the reporting requirement pursuant to Section
6.01(h)) and such failure shall continue unremedied for a period of 20 or more
days after notice thereof from the Lender to such Obligor;
(f) any
Account Party or any of its Subsidiaries shall default (i) in any payment
of principal of or interest on any other obligation for borrowed money in
principal amount of $50,000,000 or more, or any payment of any principal amount
of $50,000,000 or more under Hedging Agreements, in each case beyond any period
of grace provided with respect thereto, or (ii) in the performance of any
other agreement, term or condition contained in any such agreement (other than
Hedging Agreements) under which any such obligation in principal amount of
$50,000,000 or more is created, if the effect of such default is to cause or
permit the holder or holders of such obligation (or trustee on behalf of such
holder or holders) to cause such obligation to become due prior to its stated
maturity or to terminate its commit-
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ment
under
such agreement, provided
that this
clause (f) shall not apply to secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness;
(g) a
decree
or order by a court having jurisdiction in the premises shall have been entered
adjudging any Account Party a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of such Account Party under the Bermuda
Companies Law or the Cayman Islands Companies Law (2004 Revision) or any other
similar applicable Law, and such decree or order shall have continued
undischarged or unstayed for a period of 60 days; or a decree or order of a
court having jurisdiction in the premises for the appointment of an examiner,
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of
such Account 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 continued undischarged and unstayed for a period of 60
days;
(h) any
Account 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 Cayman Islands Companies Law (2004 Revision) or
any
other similar applicable Law, or shall consent to the filing of any such
petition, or shall consent to the appointment of an examiner, receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of it or a
substantial part of its property, or shall make an assignment for the benefit
of
creditors, or shall admit in writing its inability to pay its debts generally
as
they become due, or corporate or other action shall be taken by such Account
Party in furtherance of any of the aforesaid purposes;
(i) one
or
more judgments for the payment of money in an aggregate amount in excess of
$100,000,000 shall be rendered against any Account Party or any of its
Subsidiaries or any combination thereof and the same shall not have been
vacated, discharged, stayed (whether by appeal or otherwise) or bonded pending
appeal within 45 days from the entry thereof;
(j) an
ERISA
Event (or similar event with respect to any Non-U.S. Benefit Plan) shall have
occurred that, in the opinion of the Lender, when taken together with all other
ERISA Events and such similar events that have occurred, could reasonably be
expected to result in liability of the Account Parties and their Subsidiaries
in
an aggregate amount exceeding $100,000,000;
(k) a
Change
in Control shall occur;
(l) XL
Capital
shall cease to own, beneficially and of record, directly or indirectly all
of
the outstanding voting shares of capital stock of XL Insurance, XL Re or XL
America; or
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(m) the
guarantee contained in Article III shall terminate or cease, in whole or
material part, to be a legally valid and binding obligation of each Guarantor
or
any Guarantor or any Person acting for or on behalf of any of such parties
shall
contest such validity or binding nature of such guarantee itself or the
Transactions, or any other Person shall assert any of the
foregoing;
then,
and
in every such event (other than an event with respect to any Account Party
described in clause (g) or (h) of this Article), and at any time
thereafter during the continuance of such event, the Lender shall, by notice
to
the Account Parties, take either or both of the following actions, at the same
or different times: (i) terminate the Commitment, and thereupon the
Commitment shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared
to be
due and payable), and thereupon the principal of the Loans so declared to be
due
and payable, together with accrued interest thereon and all fees and other
obligations of the Account Parties accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of
any
kind, all of which are hereby waived by the Account Parties; and in case of
any
event with respect to any Account Party described in clause (g) or (h)
of this Article, the Commitment shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Account Parties accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest
or
other notice of any kind, all of which are hereby waived by the Account
Parties.
If
an
Event of Default shall occur and be continuing and XL Capital receives notice
from the Lender demanding the deposit of cash collateral for the aggregate
LC
Exposure of the Lender pursuant to this paragraph, the Account Parties shall
immediately deposit into an account established and maintained on the books
and
records of the Lender, which account may be a “securities account” (within the
meaning of Section 8-501 of the Uniform Commercial Code as in effect in the
State of New York (the “Uniform
Commercial Code”)),
in
the name of the Lender, an amount in cash equal to the total LC Exposure as
of
such date plus any accrued and unpaid interest thereon; provided
that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to any Account Party described in clause (g) or (h) of this
Article. Such deposit shall be held by the Lender as collateral for the LC
Exposure under this Agreement.
In
addition to the provisions of this Article, each Account Party agrees that
upon
the occurrence and during the continuance of any Event of Default the Lender
which has issued any Alternative Currency Letter of Credit may, by notice to
XL
Capital: (a) declare that all fees and other obligations of the Account
Parties accrued in respect of Alternative Currency Letters of Credit issued
by
the Lender shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby
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waived
by
each Account Party and (b) demand the deposit of cash collateral from the
Account Parties in immediately available funds in the currency of such
Alternative Currency Letter of Credit or, at the option of the Lender, in
Dollars in an amount equal to the then aggregate undrawn face amount of all
such
Alternative Currency Letters of Credit and in such manner as previously agreed
to by the Account Parties and the Lender; provided
that, in
the case of any of the Events of Default specified in clause (g) or (h) of
this Article, without any notice to any Account Party or any other act by the
Lender, all fees and other obligations of the Account Parties accrued in respect
of all Alternative Currency Letters of Credit shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Account Party.
ARTICLE
IX
MISCELLANEOUS
SECTION
9.01. Notices.
Except
in the case of notices and other communications expressly permitted to be given
by telephone, all notices and other communications provided for herein shall
be
in writing and shall be delivered by hand or overnight courier service, mailed
by certified or registered mail or sent by telecopy, as follows:
(a) if
to any
Account Party, to XL Capital at XX Xxxxx, Xxx Xxxxxxxxxx Xxxx, Xxxxxxxx XX
00
Xxxxxxx, Xxxxxxxxx of Xxxxxxxx Xxxx (telecopy no. (000) 000-0000); with a copy
to Xxxxxxx Xxxxxx Xxxxx, Esq. at the same address and telecopy number (000)
000-0000);
(b) if
to the
Lender, to [Deutsche Bank AG New York Branch, 00 Xxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention of Global Technology & Operations—Loan
Division (Telecopy No. (000) 000-0000; Telephone No. (000) 000-0000), with
a
copy to Deutsche Bank Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention of Xxxx Xxxxx (Telecopy No. (000) 000-0000; Telephone No. (000)
000-0000).]
Any
party
hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices
and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of
receipt.
Notices
and other communications to the Lender hereunder may be delivered or furnished
by electronic communications; provided
that the
foregoing shall not apply to notices pursuant to Article II unless otherwise
agreed by the Lender. Any Account Party may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided
that
approval of such procedures may be limited to particular notices or
communications. Without limiting the foregoing, the Account Parties may furnish
to the Lender the financial statements required to
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be
furnished by it pursuant to Section 6.01(a), 6.01(b) or 6.01(c) by electronic
communications.
SECTION
9.02. Waivers;
Amendments.
(a) No
Deemed Waivers; Remedies Cumulative.
No
failure or delay by the Lender in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Lender
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Account Parties therefrom shall in any event
be
effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality
of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not
be construed as a waiver of any Default, regardless of whether the Lender may
have had notice or knowledge of such Default at the time.
(b) Amendments.
Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Obligors and the Lender.
SECTION
9.03. Expenses;
Indemnity; Damage Waiver.
(a) Costs
and Expenses.
The
Account Parties jointly and severally agree to pay all out-of-pocket expenses
incurred by the Lender, including the fees, charges and disbursements of one
legal counsel for the Lender, in connection with the enforcement or protection
of its rights in connection with this Agreement, including its rights under
this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including in connection with any workout, restructuring or
negotiations in respect thereof.
Indemnification
by the Account Parties.
The
Account Parties shall jointly and severally indemnify the Lender and its Related
Party (each such Person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee (but not including Excluded
Taxes), incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance
by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any
Loan or the use of the proceeds thereof or any Letter of Credit or the use
thereof (including any refusal by the Lender to honor a demand for payment
under
a Letter of Credit if the documents presented in connection with
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such
demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on
or from any property owned or operated by any Account Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Account
Party or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided
that such
indemnity shall not, as to any Indemnitee, be available to the extent that
such
losses, claims, damages, liabilities or related expenses result from or arise
out of the gross negligence or willful misconduct of such Indemnitee as
determined in a final non-appealable judgment by a court of competent
jurisdiction.
(b) Waiver
of Consequential Damages, Etc.
To the
extent permitted by applicable law, no Account Party shall assert, and each
Account Party hereby waives, any claim against any Indemnitee, on any theory
of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(c) Payments.
All
amounts due under this Section shall be payable promptly after written demand
therefor.
SECTION
9.04. Successors
and Assigns.
(a) Assignments
Generally.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns permitted hereby,
except that no party hereto may assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of the other parties
hereto (and any attempted assignment or transfer by an Account Party without
such consent shall be null and void). Nothing in this Agreement, expressed
or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, and, to the
extent expressly contemplated hereby, the Related Parties of the Lender) any
legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Certain
Pledges.
The
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of the Lender,
including any such pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release the Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party
hereto.
SECTION
9.05. Survival.
All
covenants, agreements, representations and warranties made by the Account
Parties herein and in the certificates or other instruments
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delivered
in connection with or pursuant to this Agreement shall be considered to have
been relied upon by the other parties hereto and shall survive the execution
and
delivery of this Agreement and the making of any Loans and the issuance of
any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of, or any accrued interest on, any Loan or any fee or
any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitment has not expired
or
terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless
of the consummation of the transactions contemplated hereby, the repayment
of
the Loans, the expiration or termination of the Letters of Credit and the
expiration or termination of the Commitment or the termination of this Agreement
or any provision hereof.
SECTION
9.06. Counterparts;
Integration; Effectiveness.
This
Agreement may be executed in counterparts (and by different parties hereto
on
different counterparts), each of which shall constitute an original, but all
of
which when taken together shall constitute a single contract. This Agreement
and
any separate letter agreements with respect to fees payable to the Lender
constitute the entire contract between and among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 5.01, this Agreement shall become effective when it
shall have been executed by the Lender and when the Lender shall have received
counterparts hereof which, when taken together, bear the signatures of each
of
the other parties hereto, and thereafter shall be binding upon and inure to
the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart
of
this Agreement.
SECTION
9.07. Severability.
Any
provision of this Agreement held to be invalid, illegal or unenforceable in
any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
SECTION
9.08. Right
of Setoff.
If an
Event of Default shall have occurred and be continuing, the Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted
by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Lender to or for the credit or the account of any Account
Party against any of and all the obligations of such Account Party now or
hereafter existing under this Agreement held by the Lender, irrespective of
whether or not the Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of the
-56-
Lender
under this Section are in addition to other rights and remedies (including
other
rights of setoff) which the Lender may have.
SECTION
9.09. Governing
Law; Jurisdiction; Etc.
(a) Governing
Law.
This
Agreement shall be construed in accordance with and governed by the law of
the
State of New York.
(b) Submission
to Jurisdiction.
Each
Obligor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State
of
New York sitting in New York County and of the United States District Court
of
the Southern District of New York, and any appellate court from any thereof,
in
any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any
such action or proceeding may be heard and determined in such New York State
or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall
be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or
in any other manner provided by law. Nothing in this Agreement shall affect
any
right that the Lender may otherwise have to bring any action or proceeding
relating to this Agreement against any Obligor or its properties in the courts
of any jurisdiction.
(c) Waiver
of Venue.
Each
Obligor hereby irrevocably and unconditionally waives, to the fullest extent
it
may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of
or
relating to this Agreement in any court referred to in paragraph (b) of
this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Service
of Process.
By the
execution and delivery of this Agreement, XL Capital, XL Insurance and XL Re
acknowledge that they have by a separate written instrument, designated and
appointed CT Corporation System, 000 Xxxxxx Xxxxxx, 00xx xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (or any successor entity thereto), as its authorized agent upon
which
process may be served in any suit or proceeding arising out of or relating
to
this Agreement that may be instituted in any federal or state court in the
State
of New York. Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
(e) Waiver
of Immunities.
To the
extent that any Account Party has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service
of
notice, attachment prior to judgment, attachment in aid of execu-
-57-
tion
or
execution, on the ground of sovereignty or otherwise) with respect to itself
or
its property, it hereby irrevocably waives, to the fullest extent permitted
by
applicable law, such immunity in respect of its obligations under this
Agreement.
SECTION
9.10. WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION
9.11. Headings.
Article
and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.
SECTION
9.12. Treatment
of Certain Information; Confidentiality.
(a) Treatment
of Certain Information.
Each of
the Account Parties acknowledge that from time to time financial advisory,
investment banking and other services may be offered or provided to any Account
Party or one or more of their Subsidiaries (in connection with this Agreement
or
otherwise) by the Lender or by one or more of its subsidiaries or affiliates
and
each of the Account Parties hereby authorizes the Lender to share any
information delivered to it by such Account Party and its Subsidiaries pursuant
to this Agreement, or in connection with the decision of the Lender to enter
into this Agreement, to any such subsidiary or affiliate, it being understood
that (i) any such information shall be used only for the purpose of advising
the
Account Parties or preparing presentation materials for the benefit of the
Account Parties and (ii) any such subsidiary or affiliate receiving such
information shall be bound by the provisions of paragraph (b) of this
Section as if it were a Lender hereunder. Such authorization shall survive
the
repayment of the Loans, the expiration or termination of the Letters of Credit,
the expiration or termination of the Commitment or the termination of this
Agreement or any provision hereof.
(b) Confidentiality.
The
Lender agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (i) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and
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other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (ii) to the extent requested by any
regulatory authority (including self-regulating organizations) having
jurisdiction over the Lender, (iii) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (iv) to
any other party to this Agreement, (v) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (vi) subject to an
agreement in writing containing provisions substantially the same as those
of
this paragraph and for the benefit of the Account Parties, to (a) any assignee
of, or any prospective assignee of, any of its rights or obligations under
this
Agreement or (b) any actual or prospective counterparty (or its advisors) to
any
swap or derivative transaction relating to any Account Party and its
obligations, (vii) with the consent of the Account Parties or
(viii) to the extent such Information (A) becomes publicly available
other than as a result of a breach of this paragraph or (B) becomes
available to the Lender on a nonconfidential basis from a source other than
an
Account Party. For the purposes of this paragraph, “Information”
means
all information received from an Account Party relating to an Account Party
or
its business, other than any such information that is available to the Lender
on
a nonconfidential basis prior to disclosure by such Account Party; provided
that, in the case of information received from an Account Party after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord
to
its own confidential information. Notwithstanding the foregoing, the Lender
agrees that it will not trade the securities of any of the Account Parties
based
upon non-public Information that is received by it.
SECTION
9.13. Judgment
Currency.
This is
an international loan transaction in which the obligations of each Account
Party
under this Agreement to make payment hereunder shall be satisfied only in
Dollars and only if such payment shall be made in New York City, and the
obligations of each Account Party under this Agreement to make payment to (or
for account of) the Lender in Dollars shall not be discharged or satisfied
by
any tender or recovery pursuant to any judgment expressed in or converted into
any other currency or in another place except to the extent that such tender
or
recovery results in the effective receipt by the Lender in New York City of
the
full amount of Dollars payable to the Lender under this Agreement. If for the
purpose of obtaining judgment in any court it is necessary to convert a sum
due
hereunder in Dollars into another currency (in this Section called the
“judgment
currency”),
the
rate of exchange that shall be applied shall be that at which in accordance
with
normal banking procedures the Lender could purchase such Dollars at the
principal office of the Lender in New York City with the judgment currency
on
the Business Day next preceding the day on which such judgment is rendered.
The
obligation of each Account Party in respect of any such sum due from it to
the
Lender hereunder (in this Section called an “Entitled
Person”)
shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by
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such
Entitled Person of any sum adjudged to be due hereunder in the judgment currency
such Entitled Person may in accordance with normal banking procedures purchase
and transfer Dollars to New York City with the amount of the judgment currency
so adjudged to be due; and each Account Party hereby, as a separate obligation
and notwithstanding any such judgment, agrees to indemnify such Entitled Person
against, and to pay such Entitled Person on demand, in Dollars, the amount
(if
any) by which the sum originally due to such Entitled Person in Dollars
hereunder exceeds the amount of the Dollars so purchased and
transferred.
SECTION
9.14. USA
PATRIOT Act.
The
Lender hereby notifies the Account Parties that pursuant to the requirements
of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)), it is required to obtain, verify and record
information that identifies the Account Parties, which information includes
the
name and address of the Account Parties and other information that will allow
the Lender to identify each Account Party in accordance with said
Act.
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IN
WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed
by
their respective authorized officers as of the day and year first above
written.
as
an
Account Party and a Guarantor
By: /s/
Xxxxx Xxxx
Name:
Xxxxx Xxxx
Title:
Senior Vice President and Controller
U.S.
Federal Tax Identification No.:
00-0000000
X.L.
AMERICA, INC.,
as
an
Account Party and a Guarantor
By: /s/
Xxxxxxx X. XxXxxxx
Name:
Xxxxxxx X. XxXxxxx
Title:
SVP, Gen. Counsel, Secretary
U.S.
Federal Tax Identification No.:
00-0000000
XL
INSURANCE (BERMUDA) LTD,
as
an
Account Party and a Guarantor
By: /s/
C.
Xxxxxxx Xxx
Title:
SVP, Chief Financial Officer
U.S.
Federal Tax Identification No.:
00-0000000
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XL
RE
LTD,
as
an
Account Party and a Guarantor
By: /s/
Xxxxxx Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Senior Vice President
U.S.
Federal Tax Identification No.:
00-0000000
DEUTSCHE
BANK AG NEW YORK BRANCH,
as
Lender
By: /s/
Xxxx Xxxxx
Name:
Xxxx
Xxxxx
Title:
Director
By: /s/
Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
Managing Director
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