Exhibit 99.2
EXECUTION COPY
IPCRE LIMITED
AS BORROWER
BARCLAYS BANK PLC
AS ISSUER
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$200,000,000
CREDIT AGREEMENT
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CONTENTS
CLAUSE PAGE
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1. Definitions........................................................ 1
2. The Letter of Credit Facility...................................... 10
3. Change in Circumstances............................................ 14
4. Conditions Precedent............................................... 17
5. Representations and Warranties..................................... 19
6. Covenants.......................................................... 23
7. Defaults........................................................... 27
8. Acceleration, Waivers, Amendments and Remedies..................... 29
9. General Provisions................................................. 31
10. Set-off............................................................ 34
11. Benefit of Agreement............................................... 34
12. Notices............................................................ 35
SCHEDULE 1 AUTHORIZED OFFICERS......................................... 36
EXHIBIT A FORM OF LETTER OF CREDIT..................................... 37
EXHIBIT B FORM OF LC APPLICATION....................................... 39
EXHIBIT C FORM OF COMPLIANCE CERTIFICATE............................... 41
THIS CREDIT AGREEMENT dated as of December 23, 2005
BETWEEN:
(1) IPCRE LIMITED, a company incorporated under the laws of Bermuda, as
Borrower; and
(2) BARCLAYS BANK PLC, a public limited company, as Issuer.
RECITALS:
(A) The Borrower has requested the Issuer to make available to the Borrower a
standby letter of credit issuance facility in the aggregate principal
amount of up to $200,000,000 to support the reinsurance of business of the
Borrower in the United States.
(B) The Issuer is willing to extend such standby letter of credit issuance
facility on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Issuer hereby
agree as follows:
1. DEFINITIONS
As used in this Agreement:
"ACCOUNT CONTROL AGREEMENT" means the Account Control Agreement dated on or
about the date hereof among the Borrower, the Issuer and the Custodian, or
any other account control agreement among the Borrower, the Issuer and the
Custodian approved by the Issuer, as it may be amended, modified or
restated and in effect from time to time.
"ADJUSTED COLLATERAL VALUE" means the amount calculated as follows:
(i) US Government Bonds and OECD Government Bonds: 95% of market value;
(ii) MBS Securities: 90.9% of market value;
(iii) Corporate Bonds: 90.9% of market value;
(iv) Cash: 100% of matching currency deposits; and
(v) Cash: 110% of non-matching currency deposits.
Notwithstanding the above, no more than 50% of the Adjusted Collateral
Value may be comprised of Corporate Bonds and no more than 10% of Adjusted
Collateral Value may be from any one corporate issuer or any Affiliate of
such corporate issuer.
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"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person.
"AGGREGATE FACILITY LC COMMITMENT" means the commitment of the Issuer to
issue Facility LCs from time to time issued or outstanding under Clause 2
(The Letter of Credit Facility), in an aggregate amount not to exceed
$200,000,000 at any time outstanding, as such amount may be decreased from
time to time pursuant to the terms hereof.
"AGREEMENT" means this credit agreement, as it may be amended, modified or
restated and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means the U.S. generally accepted
accounting principles as in effect from time to time, applied in a manner
consistent with those used in preparing the financial statements referred
to in Clause 5.5 (Financial Statements).
"AUTHORIZED OFFICER" means, with respect to the Borrower, any two of the
individuals, acting jointly, listed on Schedule 1 (Authorized Officers) as
such Schedule may be supplemented or modified from time to time by the
Borrower with the approval of the Issuer.
"BORROWER" means IPCRe Limited, a company incorporated under the laws of
Bermuda, and its successors and assigns.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks
are open in London for the conduct of substantially all of their commercial
lending activities, interbank wire transfers can be made on the Fedwire
system and dealings in Dollars are carried on in the London interbank
market.
"CASH" means immediately available funds denominated in Dollars and
credited to an account in the name of the Borrower at the New York branch
of/with the Issuer and to which the Borrower is alone beneficially entitled
and for so long as the Issuer has a perfected security interest thereon
under security documents satisfactory to the Issuer.
"CEDING COMPANY" means an insurance or reinsurance company (including,
without limitation, any reinsurance or insurance company that is a
Wholly-Owned Subsidiary of the Borrower) that has, pursuant to an Insurance
Contract or a Reinsurance Contract with the Borrower (or one of its
Wholly-Owned Subsidiaries), agreed with the Borrower (or one of its
Wholly-Owned Subsidiaries) that the Borrower (or one of its Wholly-Owned
Subsidiaries), as reinsurer, shall assume certain liabilities of such
insurance or reinsurance company under an Insurance Contract.
"CHANGE" is defined in Clause 3.2 (Changes in Capital Adequacy
Regulations).
"CHANGE IN CONTROL" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the
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Securities and Exchange Commission under the Securities Exchange Act of
1934) of 30% or more of the issued and outstanding voting shares of the
Borrower.
"CHANGE IN LAW" is defined in Clause 3.1 (Yield Protection).
"CLAUSE" means a numbered Clause of this Agreement, unless another document
is specifically referenced.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means at any time a first priority, perfected security
interest in favor of the Issuer in Cash, OECD Government Bonds, US
Government Bonds, Corporate Bonds and MBS Securities.
"COLLATERAL DOCUMENTS" means all agreements, instruments and other
documents now or hereafter executed and delivered by the Borrower pursuant
to which liens and security interests in collateral are granted to secure
the Obligations, including, without limitation, the Security Agreement, the
Account Control Agreement, the Custody Agreement, UCC-1 Financing
Statements, security documents securing a pledge over Cash in favor of the
Issuer and any documentation delivered pursuant to Clause 2.9 (Facility LC
Collateral Account) with respect to the Facility LC Collateral Account.
"COLLATERAL SHORTFALL AMOUNT" is defined in Clause 8.1 (Acceleration;
Facility LC Collateral Account).
"COMMITMENT" means the Facility LC Commitment.
"CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or
otherwise assures any creditor of any other Person against loss, including,
without limitation, any comfort letter, operating agreement, take or pay
contract or application for a Facility LC or other Letter of Credit, but
excluding the Reimbursement Obligations, obligations in respect of the
endorsement of instruments for deposit or collection in the ordinary course
of business, obligations in respect of Insurance Contracts and Reinsurance
Contracts issued in the ordinary course of business and obligations in
respect of the extension of guaranties in the ordinary course of business
to insureds of the obligations of insurers under Insurance Contracts and
Reinsurance Contracts.
"CONTROLLED GROUP" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
of its Subsidiaries, are treated as a single employer under Section 414 of
the Code.
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"CORPORATE BONDS" means debt securities issued by any corporate and which
are rated at least AA by S&P and which have a maximum remaining modified
duration of ten years PROVIDED THAT at least 50% of Corporate Bonds
included in the Collateral shall have a remaining modified duration of less
than five years.
"CREDIT DOCUMENTS" means this Agreement, the Facility LC Applications, the
Facility LCs, the Collateral Documents and the other documents and
agreements contemplated hereby and executed by the Borrower pursuant hereto
in favor of the Issuer, as amended, modified or supplemented from time to
time.
"CUSTODIAL ACCOUNT" means the investment securities account of the Borrower
maintained with the Custodian pursuant to the Custody Agreement into which
the Collateral (other than Cash) shall be deposited from time to time and
over which the Issuer has a perfected security interest under the Account
Control Agreement.
"CUSTODIAN" shall mean, initially, AIG Global Investment Trust Services
Limited and any successor thereto approved by the Issuer.
"CUSTODY AGREEMENT" means the Custody Agreement dated as of _____________,
2005 between the Borrower and AIG Global Investment Trust Services Limited
or any other custody agreement between the Borrower and a Custodian
approved by the Issuer, as it may be amended, modified or restated and in
effect from time to time.
"DEFAULT" means an event described in Clause 7 (Defaults).
"DOLLARS," "DOLLARS" and "$" each mean lawful money of the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"EUROCURRENCY BASE RATE" means, with respect to any unpaid Reimbursement
Obligation for the relevant Interest Period, the rate per annum determined
by the Issuer by reference to the applicable British Bankers' Association
LIBOR rate for deposits in the applicable agreed currency (as reported by
Reuters, or if Reuters quotations are not available, as reported by
Bloomberg L.P., or if neither is available, as reported by another
generally recognized financial information service selected by the Issuer
in its reasonable discretion) as of 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, and having a maturity
equal to such Interest Period; PROVIDED THAT, if no such British Bankers'
Association LIBOR rate is available to the Issuer, the applicable
Eurocurrency Base Rate for the relevant Interest Period shall instead be
the arithmetic mean (rounded in accordance with normal market practice) of
the rates at which the Issuer offers to place deposits in Dollars with
first-class banks in the London interbank market at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of the Issuer's unpaid
Reimbursement Obligations and having a maturity equal to such Interest
Period.
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"EXCLUDED TAXES" means in the case of the Issuer, taxes imposed on its
overall net income, and franchise taxes imposed on it, in each case by:
(a) England and Wales;
(b) the jurisdiction in which the Issuer's principal executive office is
located; or
(c) any jurisdiction in which the Issuer is otherwise doing business.
"FACILITY LC" is defined in sub-clause 2.1.1 of Clause 2.1 (Issuance of
Facility LCs).
"FACILITY LC APPLICATION" is defined in Clause 2.2 (Notice).
"FACILITY LC COLLATERAL ACCOUNT" is defined in Clause 2.9 (Facility LC
Collateral Account).
"FACILITY LC COMMITMENT" means for the Issuer, the obligation to issue
Facility LCs in accordance with the terms hereof.
"FACILITY LC OBLIGATIONS" means, at any time, the sum, without duplication,
of:
(a) the aggregate undrawn stated amount under all Facility LCs outstanding
at such time; plus
(b) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
"FHLMC" means the Federal Home Loan Mortgage Corp.
"FINANCIAL STATEMENTS" is defined in Clause 5.5 (Financial Statements).
"FNMA" means the Federal National Mortgage Association.
"GNMA" means the Government National Mortgage Association.
"GOVERNMENTAL AUTHORITY" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including without limitation
any board of insurance, insurance department, insurance commission, taxing
authority or political subdivision) or any instrumentality or officer
thereof (including without limitation any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government and any corporation, partnership or other
entity directly or indirectly owned or controlled by or subject to the
control of any of the foregoing.
"INSURANCE CONTRACT" means an insurance contract or Reinsurance Contract
entered into by a Ceding Company.
"INTEREST PERIOD" means a period of one month, or such other period as the
Issuer may agree, commencing on a Business Day on which a Reimbursement
Obligation commenced but was not immediately paid. Such Interest Period
shall end on the day which corresponds numerically to such date one month
or such other applicable
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period, thereafter; PROVIDED, HOWEVER, THAT if there is no such numerically
corresponding day in such next succeeding month, or such other applicable
period, such Interest Period shall end on the last Business Day of such
next succeeding month, or such other applicable period. If an Interest
Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day; PROVIDED,
HOWEVER, THAT if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business
Day.
"ISSUANCE DATE" means a date on which a Facility LC is issued, renewed or
amended hereunder.
"ISSUANCE REQUEST" is defined in Clause 2.2 (Notice).
"ISSUER" means Barclays Bank PLC.
"LC FACILITY TERMINATION DATE" means the date falling 364 days after the
date of issuance of a Facility LC (as such date may be extended by
amendment hereto) or any earlier date on which the Aggregate Facility LC
Commitment is reduced to zero or otherwise terminated and/or the Facility
LC Obligations shall become due and payable in accordance with the
provisions of this Agreement.
"LC PAYMENT DATE" is defined in Clause 2.5 (Reimbursement by Borrower).
"LETTER OF CREDIT" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon
which such Person is an account party or for which such Person is in any
way liable.
"LICENSE" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental
Authority in connection with the operation, ownership or transaction of
insurance or reinsurance business.
"LIEN" means any lien (statutory or other), charge, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever having a similar effect (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
capitalized lease or other title retention agreement).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on:
(a) the business, Property, condition (financial or otherwise), prospects
or results of operations of the Borrower and its Subsidiaries taken as
a whole,
(b) the ability of the Borrower to perform its obligations under the
Credit Documents, or
(c) the validity or enforceability of any of the Credit Documents or the
rights or remedies of the Issuer thereunder.
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"MATERIAL INDEBTEDNESS" means indebtedness in an outstanding principal
amount of $25,000,000 or more in the aggregate (or the equivalent thereof
in any currency other than Dollars).
"MATERIAL INDEBTEDNESS AGREEMENT" means any agreement or instrument under
which any Material Indebtedness was created, is evidenced or is governed.
"MBS SECURITIES" means mortgage-backed securities and bonds issued by
FHLMC, FNMA and GNMA and which are rated at least AAA by S&P and which have
a remaining modified duration of less than [two] years.
"MODIFY" and "MODIFICATION" are defined in sub-clause 2.1.1 of Clause 2.1
(Issuance of Facility LCs).
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined in Section
(3)(37) of ERISA) contributed to for any employees of the Borrower or any
Affiliate of the Borrower.
"OBLIGATIONS" means all unpaid principal and accrued and unpaid interest on
the Facility LC Obligations and all other liabilities, if any, whether
actual or contingent, of the Borrower with respect to Facility LCs, all
accrued and unpaid fees and all expenses, reimbursements, indemnities and
other obligations of the Borrower to the Issuer or any indemnified party
hereunder, in each case arising under any of the Credit Documents.
"OECD COUNTRY" means a country that (a) either (i) is a full member of the
Organization for Economic Cooperation and Development or (ii) has concluded
special lending arrangements with the International Monetary Fund's General
Arrangements to Borrow and (b) has not rescheduled its external sovereign
debt within the previous five years.
"OECD GOVERNMENT BONDS" means bonds issued by any OECD Country and which
are rated at least AAA by S&P and which have a remaining modified duration
of less than [two] years.
"OTHER TAXES" is defined in sub-clause 3.3.2 of Clause 3.3 (Taxes).
"PARENT" means IPC Holdings Ltd.
"PAYMENT DATE" means the last Business Day of each March, June, September
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERSON" means any natural person, corporation, limited liability company,
firm, joint venture, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
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"PLAN" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"PROPERTY" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"REGULATION U" means Regulation U of the Board of Governors of the U.S.
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to member banks of the
Federal Reserve System.
"REIMBURSEMENT OBLIGATIONS" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Clause 2 (The Letter of
Credit Facility) to reimburse the Issuer for amounts paid by the Issuer in
respect of any one or more drawings under Facility LCs.
"REINSURANCE CONTRACT" means a reinsurance contract between the Borrower
(or one of its Wholly-Owned Subsidiaries), as reinsurer, and a Ceding
Company pursuant to which the Borrower (or one of its Wholly-Owned
Subsidiaries), as reinsurer, assumes certain liabilities of the Ceding
Company with respect to one or more Insurance Contracts.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such Section, with respect to a
Single Employer Plan, excluding, however, such events as to which the PBGC
has by regulation waived the requirement of Section 4043(a) of ERISA that
it be notified within thirty days of the occurrence of such event;
PROVIDED, HOWEVER, THAT a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable
Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"RISK-BASED CAPITAL GUIDELINES" is defined in Clause 3.2 (Changes in
Capital Adequacy Regulations).
"S & P" means Standard & Poor's Rating Services, a division of the
XxXxxx-Xxxx Companies or any successor rating agency thereto acceptable to
the Issuer.
"SCHEDULE" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.
"SECURITY AGREEMENT" means the Security Agreement dated as of ____________,
2005 between the Borrower and the Issuer, as it may be amended, modified or
restated and in effect from time to time.
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"SENIOR FINANCIAL OFFICER" means any of the following officers of the
Borrower: Chief Financial Officer and Controller.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group.
"SUBSIDIARY" of a Person means:
(a) any corporation more than 50% of the outstanding securities having
ordinary voting power of which shall at the time be owned or
controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its
Subsidiaries; or
(b) any partnership, association, joint venture, limited liability company
or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be
so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the
Borrower.
"TAXES" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.
"TRANSFEREE" is defined in Clause 11.2 (Dissemination of Information).
"UNFUNDED LIABILITIES" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Single Employer Plan assets
allocable to such benefits, all determined as of the then most recent
valuation date for such Single Employer Plans using PBGC actuarial
assumptions for single employer plan terminations.
"UNMATURED DEFAULT" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"US GOVERNMENT BONDS" means bonds issued by any agency of the US Government
and which are rated at least AAA by S&P and which have a remaining modified
duration of less than two years.
"WHOLLY-OWNED SUBSIDIARY" of a Person means:
(a) any Subsidiary, all of the outstanding voting securities (other than
directors' qualifying shares) of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or
more Wholly-Owned Subsidiaries of such Person, or
(b) any partnership, association, joint venture, limited liability company
or similar business organization, 100% of the ownership interests
having
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ordinary voting power of which shall at the time be so owned or
controlled by such Person or one or more Wholly-Owned Subsidiaries of
such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person. Unless otherwise expressly provided, all
references herein to a "Wholly-Owned Subsidiary" shall mean a
Wholly-Owned Subsidiary of the Borrower.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
2. THE LETTER OF CREDIT FACILITY
2.1 ISSUANCE OF FACILITY LCS
2.1.1 The Issuer hereby agrees, on the terms and conditions set forth in
this Agreement, to issue standby letters of credit denominated in
Dollars and substantially in the form of Exhibit A (or in such other
form as may be acceptable to the Issuer and the Borrower) (each, a
"FACILITY LC") and to renew, extend, increase, decrease or otherwise
modify each Facility LC ("MODIFY," and each such action a
"MODIFICATION"), from time to time from and including the date of this
Agreement and prior to the LC Facility Termination Date upon the
request of and for the account of the Borrower; PROVIDED THAT:
(a) immediately after each such Facility LC is issued or Modified,
the aggregate amount of the outstanding Facility LC Obligations
shall not exceed the Aggregate Facility LC Commitment;
(b) the initial face amount of any Facility LC shall not be less than
$500,000. No Facility LC shall have an expiry date later than the
earlier of:
(i) the one year anniversary of the date of the Facility LC or,
as applicable, a Modification; and
(ii) the LC Facility Termination Date; and
(c) The Issuer acknowledges that, subject to the terms of this
Agreement, each issued Facility LC shall continue in force unless
the Issuer receives a notice from the Borrower no more than
ninety days and at least seventy days (or such shorter time as
the Issuer may agree in a particular instance) prior to the
anniversary of the issuance of such Facility LC or Modification,
as the case may be, that such Facility LC is to be cancelled,
effective upon the ensuing anniversary of the issuance of such
Facility LC or Modification. Notwithstanding the foregoing, all
outstanding Facility LCs shall automatically expire on the LC
Facility Termination Date.
2.1.2 The Issuer shall not be under any obligation to issue or extend any
Facility LC if any order, judgment or decree of any Governmental
Authority or other
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regulatory body with jurisdiction over the Issuer shall purport by its
terms to enjoin or restrain the Issuer from issuing or extending such
Facility LC, or any law or governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) from
any Governmental Authority or other regulatory body with jurisdiction
over the Issuer shall prohibit, or request that the Issuer refrain
from, the issuance or extension of Facility LCs in particular or shall
impose upon the Issuer with respect to any Facility LC any restriction
or reserve or capital requirement (for which the Issuer is not
otherwise compensated) or any unreimbursed loss, cost or expense which
was not applicable and in effect with respect to the Issuer as of the
date of this Agreement and which the Issuer in good xxxxx xxxxx
material to it.
2.1.3 Notwithstanding anything herein, the Borrower and the Issuer may
agree in writing between themselves as to administrative procedures
for the issuance of Facility LCs by the Issuer which are different
than those set forth herein, and such procedures shall govern as
between the Issuer and the Borrower.
2.2 NOTICE
Subject to Clause 2.1 (Issuance of Facility LCs), the Borrower shall,
through an Authorized Officer or authorized attorney in fact, give the
Issuer notice (an "ISSUANCE REQUEST") prior to 11:00 a.m. (London time) at
least two Business Days prior to the proposed date of issuance or
Modification of each Facility LC, specifying the account party, the
beneficiary, the proposed date of issuance (or Modification) and the expiry
date of such Facility LC. If the Issuance Request requests the issuance of
a Facility LC, it shall be accompanied by a completed standby letter of
credit application substantially in the form of Exhibit B (or such other
form as from time to time is customarily utilized by the Issuer) executed
by the Borrower and related documentation reasonably required by the Issuer
(collectively, a "FACILITY LC APPLICATION"). The issuance or Modification
by the Issuer of any Facility LC shall be subject to the conditions
precedent set forth in Clause 4 (Conditions Precedent). In the event of any
conflict between the terms of this Agreement and the terms of any Facility
LC Application, the terms of this Agreement shall control.
2.3 FACILITY LC FEES
The Borrower shall pay to the Issuer a letter of credit fee with respect to
each Facility LC for each day from and including the date of issuance
thereof until the date such Facility LC is fully drawn, cancelled or
expired (the "EXPIRY DATE") equal to ____% per annum multiplied by the
aggregate outstanding face amount thereof at the close of business on such
day, payable (in arrears) until the applicable Expiry Date of such Facility
LC on each Payment Date and, if any such fees are accrued and unpaid on the
LC Facility Termination Date, on such date. Notwithstanding anything
contained in this Clause 2.3 to the contrary, during the continuance of a
Default, the letter of credit fee rate shall be increased to ____% per
annum. The Borrower shall also pay to the Issuer (i) a facility fee on the
average daily amount equal to the difference between the Aggregate Facility
LC Commitment and the aggregate undrawn stated amount under all Facility
LCs outstanding from time to time, in an amount equal to ____% per
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annum, such fee to be payable (in arrears) on each Payment Date and, if any
such fees are accrued and unpaid on the LC Facility Termination Date, on
such date; (ii) an upfront fee equal to ____% per annum of the Aggregate
Facility LC Commitment, such fee to be payable within 10 days of the date
of execution of this Agreement; and (iii) documentary and processing
charges in connection with the issuance or Modification of and draws under
Facility LCs, in an amount separately agreed upon between the Issuer and
the Borrower, payable at the time of issuance of each Facility LC. Interest
and fees under this Agreement shall be calculated for actual days elapsed
on the basis of a 360-day year. If any payment shall become due on a day
which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a payment of a Reimbursement
Obligation, such extension of time shall be included in computing interest
in connection with such payment.
2.4 ADMINISTRATION; REIMBURSEMENT BY LC PARTICIPANTS.
Upon receipt from the beneficiary of any Facility LC of any demand for
payment under such Facility LC, the Issuer shall promptly notify the
Borrower as to the amount to be paid by the Issuer as a result of such
demand and the proposed payment date thereof. The responsibility of the
Issuer to the Borrower shall be only to determine that the documents
(including each demand for payment) delivered under each Facility LC in
connection with such presentment shall be in conformity in all material
respects with such Facility LC.
2.5 REIMBURSEMENT BY BORROWER
(a) The Borrower shall be irrevocably and unconditionally obligated to
reimburse the Issuer for any amounts paid by the Issuer upon any
drawing under any Facility LC, without presentment, demand, protest or
other formalities of any kind, not later than 3:00 p.m. (London time)
on the first Business Day after the date notice of such payment is
transmitted to the Applicant in accordance with Clause 12.1 (Giving
Notice) and confirmation of receipt is received or such notice is
otherwise received by the Applicant (such first Business Day being the
"LC PAYMENT DATE") PROVIDED THAT any such notice that is transmitted
to the Applicant after 12:00 noon (London time) on any Business Day
shall be deemed to have been transmitted on the immediately following
Business Day.
(b) All such amounts paid by the Issuer and remaining unpaid by the
Borrower shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of the Eurocurrency Base
Rate for such day plus ____% per annum.
Such interest shall accrue from and including the date of the applicable
drawing (unless the drawing is reimbursed in full prior to 3:00 p.m.
(London time) on such date) to and including the date of payment (unless
such payment in full is made prior to 3:00 p.m. (London time) on such
payment date).
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2.6 OBLIGATIONS ABSOLUTE
The Borrower's obligations under this Clause 2 shall be absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defence to payment which the Borrower may have or
have had against the Issuer or any beneficiary of a Facility LC. The
Borrower further agrees with the Issuer that the Issuer shall not be
responsible for, and the Borrower's Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of any Facility LC or any financing institution or other party
to whom any Facility LC may be transferred or any claims or defences
whatsoever of the Borrower against the beneficiary of any Facility LC or
any such transferee. The Issuer shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted in connection with any Facility
LC; PROVIDED FURTHER, that the Borrower agrees that any action taken or
omitted by the Issuer under or in connection with each Facility LC and the
related drafts and documents, if done without bad faith, gross negligence
or wilful misconduct, shall be binding upon the Borrower and shall not put
the Issuer under any liability to the Borrower.
2.7 ACTIONS OF ISSUER
The Issuer shall be entitled to rely, and shall be fully protected in
relying, upon any Facility LC, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by the Issuer
in good faith to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons set forth on Schedule 1 (Authorized
Officers) attached hereto, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Issuer.
2.8 INDEMNIFICATION
The Borrower hereby agrees to indemnify and hold harmless the Issuer and
its directors, officers, agents and employees from and against any and all
claims and damages, losses, liabilities, costs or expenses which the Issuer
may incur (or which may be claimed against the Issuer by any Person
whatsoever) by reason of or in connection with the issuance, execution and
delivery or transfer of or payment or failure to pay under any Facility LC
or any actual or proposed use of any Facility LC, including, without
limitation, any claims, damages, losses, liabilities, costs or expenses
which the Issuer may incur by reason of or on account of the Issuer issuing
any Facility LC which specifies that the term "BENEFICIARY" included
therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by any
such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the Issuer, evidencing the appointment of such successor
Beneficiary; PROVIDED THAT the Borrower shall not be required to indemnify
any such indemnitee for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (a) the bad
faith, wilful misconduct or gross negligence of such indemnitee or (b) the
Issuer's failure to pay
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under any Facility LC after the presentation to it of a request strictly
complying with the terms and conditions of such Facility LC.
2.9 FACILITY LC COLLATERAL ACCOUNT
The Borrower agrees that it will (to the extent required by Clause 8.1
(Acceleration; Facility LC Collateral Account), upon the request of the
Issuer and until the final expiration date of any Facility LC and
thereafter as long as any amount is payable to the Issuer in respect of any
Facility LC, maintain a special collateral account pursuant to
documentation (including, without limitation, legal opinions) satisfactory
to the Issuer (the "FACULTY LC COLLATERAL ACCOUNT") at the Issuer's office
at the address specified pursuant to Clause 12, in the name of the Borrower
but under the sole dominion and control of the Issuer and in which the
Borrower shall have no interest other than as set forth in Clause 8.1
(Acceleration; Facility LC Collateral Account). The Borrower hereby
pledges, assigns and grants to the Issuer a security interest in all of the
Borrower's right, title and interest in and to all funds which may from
time to time be on deposit in the Facility LC Collateral Account to secure
the prompt and complete payment and performance of the Obligations.
2.10 REDUCTIONS IN AGGREGATE FACILITY LC COMMITMENT
2.10.1 The Borrower may permanently reduce the Aggregate Facility LC
Commitment in whole or in part in a minimum aggregate amount of the
lesser of (i) $25,000,000 (or any integral multiple of $5,000,000 in
excess thereof) and (ii) the total amount of the unused Aggregate
Facility LC Commitment, upon at least three Business Days' written
notice to the Issuer, which notice shall specify the amount of any
such reduction; PROVIDED, HOWEVER, THAT the amount of the Aggregate
Facility LC Commitment may not be reduced below the aggregate amount
of the outstanding Facility LC Obligations (and if, at any time, the
aggregate outstanding amount of the Facility LC Obligations exceeds
the Aggregate Facility LC Commitment, then the Issuer shall
immediately deposit an amount equal to such excess in the Facility LC
Collateral Account in accordance with Clause 8.1 (Acceleration;
Facility LC Collateral Account)).
3. CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION
If, on or after the date of this Agreement, the adoption of or any change
in any law or any governmental or quasi governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or
any change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the Issuer with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency (each of the foregoing being a "CHANGE IN LAW"):
3.1.1 subjects the Issuer to any Taxes, or changes the basis of taxation of
payments (except for Taxes covered by Clause 3.3 (Taxes) and changes
in the rate of
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tax on the overall net income of the Issuer) to the Issuer in respect
of its interest in the Facility LCs or other amounts due it hereunder;
or
3.1.2 imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by
the Issuer; or
3.1.3 imposes any other condition the result of which is to increase the
cost to the Issuer of issuing Facility LCs or reduces any amount
receivable by the Issuer in connection with any Facility LC, or
requires the Issuer to make any payment calculated by reference to the
amount of the Issuer Facility LCs issued or interest received by it,
in each case, by an amount reasonably deemed material by the Issuer,
and the result of any of the foregoing is to increase the cost to the
Issuer of funding or maintaining its interest in the Facility LCs and its
Commitment or to reduce the return received by it in connection with its
interest in the Facility LCs and its Commitment, then, within fifteen days
of demand by the Issuer, the Borrower shall pay the Issuer such additional
amount or amounts as will compensate the Issuer for such increased cost or
reduction in amount received.
3.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS
If the Issuer reasonably determines the amount of capital required or
expected to be maintained by the Issuer or any corporation controlling the
Issuer is increased as a result of a Change, then, within fifteen Business
Days of demand by the Issuer, the Borrower shall pay the Issuer the amount
necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which the Issuer determines is
attributable to this Agreement, its interest in the Facility LCs or its
obligation to issue Facility LCs hereunder (after taking into account the
Issuer's policies as to capital adequacy). "CHANGE" means (a) any change
after the date of this Agreement in the Risk Based Capital Guidelines, or
(b) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by the Issuer or corporation controlling the Issuer. "RISK BASED
CAPITAL GUIDELINES" means (a) the risk based capital guidelines in effect
in the United States on the date of this Agreement, including transition
rules, and (b) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July 1988
report of the Basel Committee on Banking Regulation and Supervisory
Practices entitled "International Convergence of Capital Measurements and
Capital Standards", including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3 TAXES
3.3.1 All payments by or on behalf of the Borrower to or for the account of
the Issuer hereunder shall be made free and clear of and without
deduction for any and all Taxes. If the Borrower shall be required by
law to deduct any
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Taxes from or in respect of any sum payable hereunder to the Issuer,
(a) the sum payable by the Borrower shall be increased as necessary so
that after making all required deductions (including deductions
applicable to additional sums payable under this Clause 3.3) the
Issuer receives an amount equal to the sum it would have received had
no such deductions been made, (b) the Borrower shall make such
deductions, (c) the Borrower shall pay the full amount deducted to the
relevant authority in accordance with applicable law and (d) the
Borrower shall furnish to the Issuer the original copy of a receipt
evidencing payment thereof or other evidence of such payment
reasonably satisfactory to the Issuer within thirty days after such
payment is made. The Borrower shall not be required to increase any
amounts payable to the Issuer hereunder with respect to any United
States withholding Taxes to the extent that such Taxes are imposed on
the Issuer on the date of this Agreement.
3.3.2 In addition, the Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder
or from the execution or delivery of, or otherwise with respect to,
any Credit Document ("OTHER TAXES").
3.3.3 The Borrower hereby agrees to indemnify the Issuer for the full
amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed on amounts payable under this Clause 3.3)
paid by the Issuer as a result of its Commitment, its interest in
Facility LCs, or otherwise in connection with its participation in
this Agreement and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payments due
under this indemnification shall be made within thirty days of the
date the Issuer makes demand therefor pursuant to Clause 3.4 (Issuer
Statements); PROVIDED THAT the Issuer shall contest such Taxes or
Other Taxes and liabilities, at the Borrower's expense, if (a) the
Borrower furnishes to it an opinion of reputable tax counsel
acceptable to the Issuer to the effect that such Taxes or Other Taxes
and liabilities were wrongfully or illegally imposed and (b) the
Issuer determines in its sole good faith discretion that it would not
be disadvantaged or prejudiced in any manner as a result of such
contest.
3.3.4 If the Issuer receives a refund in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to
sub-clause 3.3.1, it shall, within thirty days from the date of such
receipt, pay over the amount of such refund to the Borrower, net of
all reasonable out-of-pocket expenses of the Issuer and without
interest (other than interest paid by the relevant Governmental
Authority with respect to such refund); PROVIDED THAT the Borrower,
upon the request of the Issuer, agrees to repay the amount paid over
to the Borrower (plus penalties, interest or other reasonable charges)
to
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the Issuer in the event the Issuer is required to repay such refund to
such Governmental Authority.
3.4 ISSUER STATEMENTS
To the extent reasonably possible, the Issuer shall designate an alternate
issuing office to reduce any liability of the Borrower to the Issuer under
Clause 3.1 (Yield Protection), Clause 3.2 (Changes in Capital Adequacy
Regulations) and Clause 3.3 (Taxes) so long as such designation is not, in
the judgment of the Issuer, disadvantageous to the Issuer. The Issuer shall
deliver a written statement to the Borrower as to the amount due, if any,
under Clause 3.1 (Yield Protection), Clause 3.2 (Changes in Capital
Adequacy Regulations) and Clause 3.3 (Taxes). Such written statement shall
set forth in reasonable detail the calculations upon which the Issuer
determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Unless otherwise provided
herein, the amount specified in the written statement of the Issuer shall
be payable within thirty days after receipt by the Borrower of such written
statement. The obligations of the Issuer under Clause 3.1 (Yield
Protection), Clause 3.2 (Changes in Capital Adequacy Regulations) and
Clause 3.3 (Taxes) shall survive payment of the Obligations and termination
of this Agreement.
3.5 FUNDING INDEMNIFICATION
If any payment of any default interest occurs on a date which is not the
last day of the applicable Interest Period the Borrower will indemnify the
Issuer for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired.
3.6 SURVIVAL
The agreements and obligations of the Borrower in this Clause 3 shall
survive the payment of the Obligations and termination of this Agreement.
4. CONDITIONS PRECEDENT
4.1 INITIAL EXTENSION OF CREDIT
The Issuer shall not be required to issue any Facility LC hereunder unless
the Borrower has furnished the following to the Issuer and the other
conditions set forth below have been satisfied:
4.1.1 Charter Documents; Good Standing Certificates. A Copy of a
certificate of compliance (to the extent issued in the ordinary course
in the applicable jurisdiction) as of a recent date, certified by the
appropriate governmental officer in its jurisdiction of organization.
4.1.2 By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant Secretary of the Borrower, of its memorandum of association
and bye-laws or other similar document, together with all amendments
thereto, and of resolutions of its Board of Directors or other similar
governing body (and resolutions of other bodies, if any are deemed
necessary by counsel for the
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Issuer) authorizing the execution, delivery and performance of the
Credit Documents.
4.1.3 Incumbency Certificate. An incumbency certificate, executed by the
Secretary or Assistant Secretary of the Borrower, which shall identify
by name and title and bear the signature of the officers or attorneys
in fact of the Borrower authorized to sign the Credit Documents and to
request the issuance of Facility LCs hereunder, upon which certificate
the Issuer shall be entitled to rely until informed of any change in
writing by the Borrower.
4.1.4 Officer's Certificate. A certificate, dated the date of this
Agreement, signed by an Authorized Officer of the Borrower, in form
and substance satisfactory to the Issuer, to the effect that: (a) on
the date of this Agreement (both before and after giving effect to the
issuance of any Facility LCs hereunder) no Default or Unmatured
Default has occurred and is continuing; (b) each of the
representations and warranties set forth in Clause 5 (Representations
and Warranties) of this Agreement is true and correct in all material
respects on and as of the date of the Agreement; (c) on the date of
this Agreement (both before and after giving effect to this Agreement
and the issuance of any Facility LCs hereunder) the Borrower is not in
breach of any borrowing limit applicable to the Borrower; and (d) no
event or change has occurred that has caused or evidences a Material
Adverse Effect with regard to the Borrower or its Parent.
4.1.5 Legal Opinions. Written opinions of (a) inside counsel to the
Borrower, (b) Xxxxxxxx Chance LLP, special New York counsel to the
Issuer and, (c) external Bermuda counsel to the Borrower, each
addressed to the Issuer in form and substance acceptable to the Issuer
and its counsel.
4.1.6 Credit Documents. Executed originals of this Agreement and each of
the other Credit Documents, which shall be in full force and effect,
together with all schedules, exhibits, certificates, instruments,
documents and financial statements required to be delivered pursuant
hereto and thereto.
4.1.7 Regulatory Matters. Receipt of any required regulatory approvals from
any Governmental Authority with respect to the transactions
contemplated by the Credit Documents, including all hearing orders, if
any, issued by insurance regulatory authorities.
4.1.8 Accounts. Completion of account opening procedures satisfactory to
the Issuer.
4.1.9 Rating Agency Action. Clarification regarding ongoing actions of the
Rating Agencies in form and substance satisfactory to the Issuer.
4.1.10 Other. Such other documents as the Issuer or its counsel may have
reasonably requested, including any such information as the Issuer may
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request to enable it to carry out and be satisfied with the result of
its "know your customer checks".
4.2 CONTINUATION CONDITIONS PRECEDENT
The following conditions will be deemed to have been confirmed by the
Borrower on 31 December of each year and on each date of issuance or
Modification of a Facility LC (each such date, a "REPETITION DATE"):
4.2.1 there exists no Default or Unmatured Default and none would result
from such issuance or Modification of such Facility LC;
4.2.2 the representations and warranties (deemed to be made by reference to
the facts and circumstances existing on each Repetition Date)
contained in Clause 5 (Representations and Warranties) (other than
Clause 5.6 (Material Adverse Change), paragraph (a) of Clause 5.8
(Litigation and Contingent Obligations) and sub-clause 5.14.1 of
Clause 5.14 (Material Agreements)) are true and correct in all
material respects as of such Issuance Date or Modification except to
the extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or
warranty shall be true and correct on and as of such earlier date.
4.3 ISSUANCE REQUEST
Each properly submitted Issuance Request (with respect to each such
Facility LC) shall constitute a representation and warranty by the Borrower
that the conditions contained in Clause 4.2 (Continuation Conditions
Precedent) have been satisfied.
5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Issuer that on the date hereof:
5.1 CORPORATE EXISTENCE AND STANDING
The Borrower is a company duly incorporated, validly existing and in good
standing under the laws of Bermuda and has all requisite authority to
conduct its business in each jurisdiction in which its business is
conducted.
5.2 AUTHORIZATION AND VALIDITY
The Borrower has all requisite power and authority and legal right to
execute and deliver each of the Credit Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the
Credit Documents and the performance of its respective obligations
thereunder have been duly authorized by proper corporate proceedings and
the Credit Documents constitute legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
general principles of equity.
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5.3 NO CONFLICT
Neither the execution and delivery by the Borrower of the Credit Documents,
nor the consummation of the transactions therein contemplated, nor
compliance with the provisions of the Credit Documents, including the
application of the proceeds of the Facility LCs, will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Borrower or any of its Subsidiaries or the Borrower's or any
of its Subsidiaries' articles or certificate of incorporation or by-laws or
other organizational documents or the provisions of any indenture,
instrument or agreement to which the Borrower or any of its Subsidiaries is
a party or is subject, or by which it or its Property is bound, or conflict
with or constitute a default thereunder, or result in the creation or
imposition of any Lien in, of or on the Property of the Borrower or any of
its Subsidiaries pursuant to the terms of any such indenture, instrument or
agreement. Neither the Borrower nor any Subsidiary is subject to any
charter or other corporate restriction that would conflict with the terms
or the intent on this Agreement.
5.4 GOVERNMENTAL CONSENTS
No order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any Governmental
Authority is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Credit Documents, the application
of the proceeds of the Facility LCs or the consummation of any other
transaction contemplated by the Credit Documents except for those which
have been obtained and are in full force and effect. No change in any
regulation or policy of any Governmental Authority affecting the Issuer or
the Borrower with respect to the transactions contemplated by the Credit
Documents has occurred which would have a Material Adverse Effect.
5.5 FINANCIAL STATEMENTS
The December 31, 2004 audited consolidated financial statements of the
Borrower's Parent and its consolidated Subsidiaries and the September 30,
2005 unaudited consolidated financial statements of the Borrower's Parent
and its consolidated Subsidiaries heretofore delivered to the Issuer (the
"FINANCIAL STATEMENTS") were prepared in accordance with the Agreement
Accounting Principles in effect on the date such statements were prepared,
consistently applied, and fairly present the consolidated financial
condition and operations of the Borrower's Parent and its consolidated
Subsidiaries at such dates and the consolidated results of their operations
for the periods then ended.
5.6 MATERIAL ADVERSE CHANGE
Since December 31, 2004, there has been no Material Adverse Effect except
as disclosed to the Issuer in a letter dated as of the date hereof.
5.7 TAXES
The Borrower and its Subsidiaries have filed all material tax returns
(domestic or foreign) which are required to be filed and have paid all
taxes due pursuant to said returns or pursuant to any assessment received
by the Borrower or any of its
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Subsidiaries, except (a) such taxes, if any, as are being contested in good
faith and as to which, in the good faith judgment of the Borrower, adequate
reserves have been provided and (b) taxes the failure of which to pay could
not reasonably be expected to have a Material Adverse Effect. Except for
liens and claims of which the executive officers of the Borrower are
unaware or which are immaterial, no tax liens have been filed and no claims
against the Borrower or its Subsidiaries are being asserted with respect to
any such taxes except claims being contested in good faith and as to which,
in the good faith judgment of the Borrower, adequate reserves have been
provided. The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of any taxes or other governmental charges
are adequate in the good faith judgment of the Borrower.
5.8 LITIGATION AND CONTINGENT OBLIGATIONS
There is no litigation, arbitration, governmental investigation, proceeding
or inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Borrower or any of its Subsidiaries
which could reasonably be expected to (a) have a Material Adverse Effect or
(b) prevent, enjoin or unduly delay the issuance of Facility LCs under this
Agreement. As of the date hereof, the Borrower has no material Contingent
Obligations not provided for or disclosed in the Financial Statements.
5.9 SUBSIDIARIES
Schedule 5.9 hereto contains an accurate list of certain Subsidiaries of
the Borrower in existence on the date of this Agreement, setting forth
their respective jurisdictions of incorporation and the percentage of their
respective capital stock owned by the Borrower or other Subsidiaries. All
of the issued and outstanding shares of capital stock of such Subsidiaries
have been duly authorized and issued.
5.10 ERISA
5.10.1 The Unfunded Liabilities of all Single Employer Plans do not in the
aggregate exceed $100,000,000. Each Single Employer Plan complies in
all material respects with all applicable requirements of law and
regulations except where such non-compliance could not reasonably be
expected to have a Material Adverse Effect.
5.10.2 No Reportable Event has occurred with respect to any Single Employer
Plan.
5.10.3 Neither the Borrower nor any Affiliate of the Borrower contributes
to a Multiemployer Plan.
5.11 DEFAULTS
No Default or Unmatured Default has occurred and is continuing.
5.12 ACCURACY OF INFORMATION
No information, exhibit or report furnished by the Borrower or any of its
Subsidiaries to the Issuer in connection with the negotiation of, or
compliance with, the Credit Documents (as modified or supplemented by other
information so furnished) contained any material misstatement of fact,
omitted to state a material fact or omitted to state
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any fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading in any
material respect; provided, that with respect to projected financial
information, the Borrower represents only that such information was
prepared in good faith upon assumptions believed to be reasonable at the
time prepared.
5.13 REGULATION U
Margin stock (as defined in Regulation U) constitutes less than 25 % of
those assets of the Borrower and its Subsidiaries which are subject to any
limitation on sale, pledge or other restriction hereunder. Neither the
Borrower nor any Subsidiary is engaged, directly or indirectly,
principally, or as one of its important activities, in the business of
extending, or arranging for the extension of, credit for the purpose of
purchasing or carrying margin stock. No part of any Facility LC will be
used in a manner which would violate, or result in a violation of,
Regulation U. Neither the issuance of any Facility LC hereunder nor the use
of the proceeds thereof will violate or be inconsistent with the provisions
of Regulation U.
5.14 MATERIAL AGREEMENTS
5.14.1 Neither the Borrower nor any Subsidiary is a party to any agreement
or instrument which could reasonably be expected to have a Material
Adverse Effect;
5.14.2 Neither the Borrower nor any Subsidiary is subject to any charter or
other corporate restriction which could reasonably be expected to have
a Material Adverse Effect; and
5.14.3 Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfilment of any of the obligations,
covenants or conditions contained in any agreement to which it is a
party, which default could reasonably be expected to have a Material
Adverse Effect.
5.15 INSURANCE
The Borrower and each of its Subsidiaries maintains, with financially sound
and reputable insurance companies, insurance on their Property in such
amounts and covering such risks as is consistent with sound business
practice.
5.16 INSURANCE LICENSES
No material license, permit or authorization of the Borrower or any
material Subsidiary to engage in the business of insurance, reinsurance or
insurance-related activities is the subject of a proceeding for suspension
or revocation, except where such suspension or revocation would not
individually or in the aggregate have a Material Adverse Effect.
5.17 COMPLIANCE WITH LAWS
The Borrower and each of its Subsidiaries have complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or
foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of their respective businesses or the
ownership of their respective Property, except where the
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failure to so comply could not reasonably be expected to have a Material
Adverse Effect. No material changes in governmental regulation or policy
have occurred that would adversely affect the Issuer or the Borrower in
this transaction.
5.18 OWNERSHIP OF PROPERTIES
On the date of this Agreement the Borrower has good title to the
Collateral, free of all Liens other than Liens in favor of the Issuer
pursuant to the Credit Documents.
5.19 INVESTMENT COMPANY ACT
Neither the Borrower (nor, to the extent such status would have a Material
Adverse Effect, any of its Subsidiaries) is an "investment company" which
is registered or required to be registered under the Investment Company Act
of 1940, as amended, or is "controlled" by an "investment company" which is
registered or required to be registered under such Act (all quoted terms in
this Clause 5.19 having the meaning ascribed to them by such Act).
5.20 PUBLIC UTILITY HOLDING COMPANY ACT
Neither the Borrower nor any of its Subsidiaries is a "holding company" or
a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
6. COVENANTS
While the Aggregate Facility LC Commitment remains outstanding and until
the payment in full of any outstanding Obligations (other than contingent
Obligations in respect of claims for indemnification) unless the Issuer
shall otherwise consent in writing:
6.1 FINANCIAL REPORTING
The Borrower will maintain, for itself and each of its Subsidiaries, a
system of accounting established and administered in accordance with
Agreement Accounting Principles, and the Borrower will furnish to the
Issuer:
6.1.1 As soon as available, but, in any event, no later than within 90 days
after the close of each of its fiscal years, an unqualified audit
report certified by independent certified public accountants,
reasonably acceptable to the Issuer, prepared in accordance with
Agreement Accounting Principles on a consolidated basis for the
Borrower's Parent and its consolidated Subsidiaries, including balance
sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows.
6.1.2 As soon as available, but, in any event, no later than within 45 days
after the end of each quarterly reporting period of each of its fiscal
years, for the Borrower and its consolidated Subsidiaries,
consolidated unaudited balance sheets as at the close of each such
period and consolidated profit and loss statements and a statement of
cash flows for the period from the beginning of
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such fiscal year to the end of such period, all certified by the
senior financial officer or senior accounting officer of the Borrower.
6.1.3 Together with the financial statements required under sub-clause
6.1.1 and 6.1.2, a compliance certificate in substantially the form of
Exhibit C hereto signed by a Senior Financial Officer showing the
calculations necessary to determine compliance with this Agreement and
stating that no Default or Unmatured Default exists, or if any Default
or Unmatured Default exists, stating the nature and status thereof.
6.1.4 Promptly and in any event within ten (10) days after the Borrower
knows that any Reportable Event has occurred with respect to any
Single Employer Plan, a statement, signed by a Senior Financial
Officer, describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto
6.1.5 Promptly upon the filing thereof, copies of all Forms 10-Q, 10-K and
8-K which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or similar foreign body.
6.1.6 Within ten (10) Business Days after the end of each month (or at any
time while any Default (or breach of Clause 6.13 (Adjusted Collateral
Value)) is continuing), a certificate of a Senior Financial Officer as
to (a) the aggregate fair market value of all amounts deposited in the
Facility LC Collateral Account and the Custodial Account and (b) the
Collateral Shortfall Amount, if any, each as of the end of such month.
In addition, the Issuer shall receive all the information (or rights
to access such information) as set out in the Account Control
Agreement.
6.1.7 Such other information (including, without limitation, non financial
information) as the Issuer may from time to time reasonably request;
PROVIDED, HOWEVER, THAT the Borrower shall not be obligated to provide
information pursuant to this sub-clause 6.1.7 to the extent that
disclosure thereof is prohibited by any existing customary
confidentiality agreement restricting the dissemination of such
information.
6.2 USE OF FACILITY LCS
The Borrower will use the Facility LCs only to secure its
reinsurance-related obligations to Ceding Companies. The Borrower will not
request the issuance of any Facility LC, the proceeds of which are to be
used to purchase or carry any "margin stock" (as defined in Regulation U).
6.3 CERTAIN NOTICES
The Borrower will give prompt notice in writing to the Issuer of the
occurrence of any Default or Unmatured Default. Any such notice shall state
that it is given pursuant to this Clause 6.3 and describe in reasonable
detail the occurrence that is being notified.
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6.4 CONDUCT OF BUSINESS
The Borrower will (a) carry on and conduct its business in the fields of
enterprise of insurance, reinsurance and financial services and similar and
ancillary activities, (b) do all things necessary to remain duly
incorporated, validly existing and in good standing in its jurisdiction of
formation, and (c) do all things necessary to renew, extend and continue in
effect all Licenses which may at any time and from time to time be
necessary to operate its insurance business in compliance with all
applicable laws and regulations (except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect). The
Borrower will not change its jurisdiction of domicile without the prior
written consent of the Issuer, which consent shall not be unreasonably
withheld.
6.5 TAXES
The Borrower will, and will cause each of its Subsidiaries to, pay when due
all taxes, assessments and governmental charges and levies upon it or its
income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves have been set aside and those the failure of which to pay could
not reasonably be expected to have a Material Adverse Effect.
6.6 INSURANCE
The Borrower will, and will cause each of its Subsidiaries to, maintain
with financially sound and reputable insurance companies insurance on all
or substantially all of its Property, or shall maintain self-insurance, in
such amounts and covering such risks as is consistent with sound business
practice for Persons in substantially the same industry as the Borrower or
such Subsidiary, and the Borrower will furnish to the Issuer upon request
full information as to the insurance carried.
6.7 COMPLIANCE WITH LAWS
The Borrower will, and will cause each of its Subsidiaries to, comply with
all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject (including, without
limitation, environmental laws), except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
6.8 INSPECTION
The Borrower will, and will cause each of its Subsidiaries to, permit the
Issuer, by its representatives and agents, subject to the confidentiality
provisions of Clause 9.13 (Confidentiality), to inspect (no more frequently
than twice per annum unless a Default has occurred and is continuing) any
of the property, corporate books and financial records of the Borrower and
each of its Subsidiaries, to examine and make copies of the books of
accounts and other financial records of the Borrower and each of its
Subsidiaries, and to discuss the affairs, finances and accounts of the
Borrower and each of its Subsidiaries with, and to be advised as to the
same by, their respective officers upon reasonable notice and at such
reasonable times during normal business hours and intervals as Issuer may
designate. Following a Default, the Borrower shall
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reimburse the Issuer for any reasonable and documented costs and
out-of-pocket expenses paid or incurred in exercising rights pursuant to
this Clause 6.8.
6.9 MERGER
The Borrower will not, nor will it permit any Subsidiary to, amalgamate,
merge or consolidate with or into any other Person, except that (a) a
Subsidiary may amalgamate or merge with the Borrower or a Wholly-Owned
Subsidiary, (b) the Borrower and any Subsidiary may amalgamate, merge or
consolidate with or into any other Person PROVIDED THAT the Borrower or
such Subsidiary shall be the continuing or surviving corporation and, after
giving effect to such amalgamation, merger or consolidation, no Default or
Unmatured Default shall exist and (c) a material Subsidiary may amalgamate,
merge or consolidate with or into another Person as a means of effecting a
disposition otherwise permitted by this Agreement.
6.10 SALE OF ASSETS
The Borrower will not, nor will it permit any of its Subsidiaries to,
lease, sell, transfer or otherwise dispose of, by one or more transactions
or series of transactions (whether related or not), all or a portion of its
Property to any other Person(s) except for:
6.10.1 sales, transfers and other dispositions of securities and other
financial instruments sold, transferred or disposed of in the ordinary
course of business (excluding sales, transfers or other dispositions
of interests in operating companies of the Borrower or holding
companies for such operating companies);
6.10.2 sales or other dispositions of obsolete Property in the ordinary
course of business;
6.10.3 transfers of assets and liabilities under Reinsurance Contracts in
the ordinary course of business;
6.10.4 sales, transfers or other dispositions made to the Borrower or
between the Wholly-Owned Subsidiaries of the Borrower;
6.10.5 sales of assets (excluding any sales of all or substantially all the
assets of such Person) upon fair and reasonable terms in an
arms-length transaction; and
6.10.6 leases, sales or other dispositions of its Property that,
individually do not exceed $10,000,000, and together with all other
Property of the Borrower and its Subsidiaries previously leased, sold
or disposed of pursuant to this sub-clause 6.10.6 during the twelve
(12) month period ending with the month in which any such lease, sale
or other disposition occurs, do not exceed $50,000,000;
provided, in the case of sub-clauses 6.10.1 through 6.10.6, any lease,
sale, transfer or other disposition of cash deposited in the Facility LC
Collateral Account may only be made in accordance with the terms of this
Agreement and any related Collateral Document.
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6.11 LIENS
The Borrower will not create, incur, or suffer to exist any Lien in, of or
on the Collateral other than Liens in favor of the Issuer pursuant to the
Credit Documents.
6.12 ADJUSTED COLLATERAL VALUE
The Borrower shall at all times maintain the Collateral in the Custodial
Account (or, in the case of Cash, in an account with the Issuer) in an
amount such that the Adjusted Collateral Value of such Collateral is not
less than the Obligations outstanding from time to time.
6.13 INCONSISTENT AGREEMENTS
Neither the Borrower nor any of its Subsidiaries shall enter into any
indenture, agreement, instrument (or amendment thereto) or other
arrangement which, (a) directly or indirectly prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence or repayment of the Obligations, the
amendment of the Credit Documents, or the ability of any Subsidiary to pay
dividends or make other distributions on its capital stock (other than
restrictions on the payment of dividends or other distributions imposed
under subordinated debt obligations entered into for purposes of having
such indebtedness treated as capital for rating agency or regulatory
purposes) or (b) contains any provision which would be violated or breached
by the issuance of Facility LCs or by the performance by the Borrower of
any of its obligations under any Credit Document.
6.14 CUSTODY AGREEMENT
The Borrower shall not agree to any waiver or amendment of the Custody
Agreement without first obtaining the written consent of the Issuer.
7. DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1 Any representation or warranty made or deemed made by or on behalf of the
Borrower to the Issuer under or in connection with this Agreement, any
other Credit Document, any Facility LC or any certificate or information
delivered in connection with this Agreement or any other Credit Document
shall be materially false or misleading on the date as of which made or
deemed made.
7.2 Non-payment of any principal of any Reimbursement Obligation or non-payment
of any interest or any fee or other obligation owing by the Borrower under
any of the Credit Documents when due.
7.3 The breach by the Borrower of any of the terms or provisions of Clause 6.2
(Use of Facility LCs), Clause 6.3 (Certain Notices), Clause 6.8 (Merger),
Clause 6.10 (Sale of Assets), Clause 6.11 (Liens) or Clause 6.13
(Inconsistent Agreements) or a breach by the Borrower of any of the terms
or provisions of Clause 6.12 (Adjusted Collateral Value).
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7.4 The breach by the Borrower (other than a breach which constitutes a Default
under Clause 7.1, 7.2 or 7.3 of this Clause 7) of any of the terms or
provisions of this Agreement which is not remedied within fifteen days
after written notice from the Issuer.
7.5 Failure of the Borrower, its Parent or any of its Subsidiaries to pay when
due (beyond the applicable grace period with respect thereto, if any) any
indebtedness constituting in the aggregate Material Indebtedness; or the
default by the Borrower, its Parent or any of its Subsidiaries in the
performance (beyond the applicable grace period with respect thereto, if
any) of any term, provision or condition contained in any Material
Indebtedness Agreement, or any other event shall occur or condition exist,
the effect of which default, event or condition is to cause, or to permit
the lender(s) under any Material Indebtedness Agreement to cause, Material
Indebtedness thereunder to become due prior to its stated maturity; or any
Material Indebtedness of the Borrower, its Parent or any of its
Subsidiaries shall be declared to be due and payable or required to be
prepaid or repurchased (other than by a regularly scheduled payment or
prepayment not associated with a contractual breach) prior to the stated
maturity thereof.
7.6 The Borrower or any of its Subsidiaries shall:
7.6.1 have an order for relief entered with respect to it under any state,
federal or foreign bankruptcy or similar laws as now or hereafter in
effect;
7.6.2 make an assignment for the benefit of creditors;
7.6.3 apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official
for it or any of its assets;
7.6.4 institute any proceeding seeking an order for relief under any state,
federal or foreign bankruptcy or similar laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail
to file an answer or other pleading denying the material allegations
of any such proceeding filed against it;
7.6.5 take any corporate action to authorize or effect any of the foregoing
actions set forth in this Clause 7.6;
7.6.6 fail to contest in good faith within thirty days any appointment or
proceeding described in Clause 7.7; or
7.6.7 not pay, or admit in writing its inability to pay, its debts
generally as they become due.
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7.7 Without the application, approval or consent of the Borrower or any of its
Subsidiaries, a receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Borrower or any of its Subsidiaries, or a
proceeding described in sub-clause 7.6.4 of Clause 7.6 shall be instituted
against the Borrower or any of its Subsidiaries and such appointment
continues undischarged or such proceeding continues undismissed or unstayed
for a period of thirty consecutive days.
7.8 The Borrower or any of its Subsidiaries shall fail within fifteen days to
pay, bond or otherwise discharge any judgment or order for the payment of
money, either singly or in the aggregate, in excess of $100,000,000, which
is not stayed on appeal or otherwise being appropriately contested in good
faith.
7.9 Any Change in Control shall occur or the Borrower's Parent shall cease to
own, directly or indirectly, 100% of the issued shares of the Borrower.
7.10 The occurrence of any default or breach of its material obligations under,
or any "event of default" as defined in, any Credit Document (other than
this Agreement) on the part of or relating to the Borrower, which default,
breach or "event of default" continues beyond any period of grace therein
provided.
7.11 (a) The Unfunded Liabilities of all Single Employer Plans shall exceed in
the aggregate $100,000,000 or (b) any Reportable Event shall occur in
connection with any Plan which, individually or in the aggregate with other
Reportable Events, may reasonably be expected to have a Material Adverse
Effect."
7.12 Any Collateral Document delivered by the Borrower pursuant to this
Agreement shall for any reason fail to create a valid and perfected first
priority security interest in any collateral purported to be covered
thereby, except as permitted by the terms of any such Collateral Document,
or any Collateral Document shall fail to remain in full force or effect or
any action shall be taken by the Borrower, any Governmental Authority or
any other Person to discontinue or to assert the invalidity or
unenforceability of any Collateral Document.
8. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 ACCELERATION; FACILITY LC COLLATERAL ACCOUNT
8.1.1 If any Default described in Clause 7.6 or Clause 7.7 of Clause 7
(Defaults) occurs with respect to the Borrower, the obligation of the
Issuer to issue Facility LCs shall automatically terminate and the
Obligations shall immediately become due and payable without any
election or action on the part of the Issuer and the Borrower will be
and become thereby unconditionally obligated, without any further
notice, act or demand, to pay or transfer to the Issuer an amount in
immediately available funds, which funds shall be held in the Facility
LC Collateral Account, equal to the difference of (i) the amount of
Facility LC Obligations at such time, less (ii) the amount on deposit
in the Facility LC Collateral Account or under any Collateral Document
at such time which is free and clear of all rights and
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claims of third parties and has not been applied against the
Obligations (such difference, the "COLLATERAL SHORTFALL AMOUNT"). If
any other Default occurs and is continuing, the Issuer may (i)
terminate or suspend the obligation of the Issuer to issue Facility
LCs, or declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives, and (ii) upon notice to
the Borrower and in addition to the continuing right to demand payment
of all amounts payable under this Agreement, make demand on the
Borrower, and the Borrower will, forthwith upon such demand and
without any further notice or act, pay or transfer to the Issuer an
amount in immediately available funds, the Collateral Shortfall
Amount, which funds shall be deposited in the Facility LC Collateral
Account.
8.1.2 If at any time while any Default is continuing, the Issuer determines
that the Collateral Shortfall Amount at such time is greater than
zero, the Issuer may, make demand on the Borrower to, and the Borrower
will, forthwith upon such demand and without any further notice or
act, pay or transfer to the Issuer an amount in immediately available
funds equal to the Collateral Shortfall Amount, which funds shall be
deposited in the Facility LC Collateral Account.
8.1.3 The Issuer may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to
the payment of the Facility LC Obligations and any other amounts as
shall from time to time have become due and payable by the Borrower to
the Issuer under the Credit Documents.
8.1.4 At any time while any Default (or breach of Clause 6.12 (Adjusted
Collateral Value)) is continuing neither the Borrower nor any Person
claiming on behalf of or through the Borrower shall have any right to
withdraw any of the funds held in the Facility LC Collateral Account.
After all of the Obligations have been indefeasibly paid in full
(other than contingent Obligations in respect of claims for
indemnification hereunder) and the Aggregate Facility LC Commitment
has been terminated, any funds remaining in the Facility LC Collateral
Account shall be returned by the Issuer to the Borrower or paid to
whomever may be legally entitled thereto at such time.
8.2 AMENDMENTS
Subject to the provisions of this Clause 8.2, the Issuer and the Borrower
may enter into written agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Credit Documents or changing in
any manner the rights of the Issuer or the Borrower hereunder or waiving
any Default or Unmatured Default hereunder.
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8.3 PRESERVATION OF RIGHTS
No delay or omission of the Issuer to exercise any right under the Credit
Documents shall impair such right or be construed to be a waiver of any
Default or an acquiescence therein, and the issuance or Modification of a
Facility LC notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such issuance or
Modification shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the
Credit Documents whatsoever shall be valid unless in writing signed by the
Issuer and then only to the extent in such writing specifically set forth.
All remedies contained in the Credit Documents or by law afforded shall be
cumulative and all shall be available to the Issuer until the Obligations
have been paid in full.
9. GENERAL PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS
All representations and warranties of the Borrower contained in this
Agreement or in any other Credit Document shall survive the issuance of the
Facility LCs herein contemplated.
9.2 INTEREST LIMITATION
Anything in this Agreement or any other Credit Document to the contrary
notwithstanding, the Borrower shall not be required to pay interest at a
rate in excess of the highest lawful rate, and if the effective rate of
interest that would otherwise be payable under this Agreement or any other
Credit Document would exceed the highest lawful rate, or if the Issuer
shall receive monies that are deemed to constitute interest which would
increase the effective rate of interest payable under this Agreement or any
other Credit Document to a rate in excess of the highest lawful rate, then
(a) the amount of interest that would otherwise be payable under this
Agreement and the other Credit Documents shall be reduced to the amount
allowed under applicable law, and (b) any interest paid in excess of the
highest lawful rate shall, at the option of the Issuer, be either refunded
to the payor or credited to the payment of the Obligations.
9.3 HEADINGS
Clause headings in the Credit Documents are for convenience of reference
only and shall not govern the interpretation of any of the provisions of
the Credit Documents.
9.4 ENTIRE AGREEMENT
The Credit Documents embody the entire agreement and understanding between
the Issuer and the Borrower and supersede all prior agreements and
understandings between the Issuer and the Borrower relating to the subject
matter thereof.
9.5 EXPENSES; INDEMNIFICATION
The Borrower shall reimburse the Issuer for any reasonable and documented
costs and out-of-pocket expenses (including reasonable attorneys' fees)
paid or incurred by the Issuer in connection with the preparation,
negotiation, execution, delivery, review,
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amendment, modification, and administration of the Credit Documents. The
Borrower also agrees to reimburse the Issuer, for any costs and
out-of-pocket expenses (including attorneys' fees paid or incurred by the
Issuer in connection with the collection of the Obligations or the
enforcement of the Credit Documents. The Borrower further agrees to
indemnify the Issuer its affiliates, and each of its directors, officers
and employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Issuer, or any
affiliate is a party thereto) which any of them may pay or incur arising
out of or relating to this Agreement or the other Credit Documents, the
transactions contemplated hereby or thereby or the use or intended use of
any Facility LC, except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have
resulted from the bad faith, gross negligence or wilful misconduct of the
party seeking indemnification. The obligations of the Borrower under this
Clause 9.5 shall survive the termination of this Agreement.
9.6 ACCOUNTING
Except as provided to the contrary or otherwise defined herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement
Accounting Principles.
9.7 SEVERABILITY OF PROVISIONS
Any provision in any Credit Document that is held to be inoperative,
unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting
the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction,
and to this end the provisions of all Credit Documents are declared to be
severable.
9.8 NON-LIABILITY OF ISSUER
The relationship between the Borrower on the one hand and the Issuer on the
other shall be solely that of debtor/account party and creditor. The Issuer
shall not have any fiduciary responsibilities to the Borrower. The Borrower
agrees that the Issuer shall have no liability to the Borrower (whether
sounding in tort, contract or otherwise) for losses suffered by the
Borrower in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Credit
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence
or wilful misconduct of the party from which recovery is sought. The Issuer
shall not have any liability with respect to, and the Borrower hereby
waives, releases and agrees not to xxx for, any special, indirect,
consequential or punitive damages suffered by the Borrower in connection
with, arising out of, or in any way related to the Credit Documents or the
transactions contemplated thereby.
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9.9 CHOICE OF LAW
THE CREDIT DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE
OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW
YORK.
9.10 CONSENT TO JURISDICTION
THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK
CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT
DOCUMENT AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. ANY JUDICIAL
PROCEEDING BY THE ISSUER AGAINST THE BORROWER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY CREDIT DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW
YORK OR WITH RESPECT TO JUDGMENT ENFORCEMENT PROCEEDINGS ONLY, IN ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE ISSUER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY CREDIT DOCUMENT SHALL BE BROUGHT ONLY IN
A COURT IN NEW YORK, NEW YORK.
9.11 WAIVER OF JURY TRIAL
THE BORROWER AND THE ISSUER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
9.12 COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower and
the Issuer.
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9.13 CONFIDENTIALITY
The Issuer and each Transferee agrees to hold any confidential information
which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (a) to its Affiliates in connection with
the transactions contemplated by the Credit Documents, (b) to legal
counsel, accountants, and other professional advisors to the Issuer or to a
Transferee, (c) to regulatory officials, (d) as requested by a Governmental
Authority or as required by law, regulation, or legal process, (e) to any
Person in connection with any legal proceeding arising in connection with
this Agreement to which the Issuer is a party, (f) permitted by Clause 11.2
(Dissemination of Information) and (g) which is otherwise made publicly
available through no fault of the Issuer. Notwithstanding anything herein
to the contrary, the Issuer, the Borrower and any Transferee (and each
employee, representative, or other agent of any of the foregoing) may
disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated hereby, and
all materials of any kind (including opinions or other tax analyses) that
are provided to such Person related to such tax treatment and tax
structure.
10. SET-OFF
10.1 SETOFF
In addition to, and without limitation of, any rights of the Issuer under
applicable law, if any Default occurs and is continuing, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available), in any currency, and any other
indebtedness at any time held or owing by the Issuer to or for the credit
or account of the Borrower may be offset and applied toward the payment of
the Obligations owing to the Issuer, whether or not the Obligations, or any
part hereof, shall then be due. Such right of setoff shall be without
notice or demand to the Borrower and be without liability to the Issuer.
Any party exercising setoff rights hereunder shall promptly provide the
Borrower with written notice thereof after such setoff; PROVIDED THAT the
failure to provide such notice shall not give rise to liability hereunder.
11. BENEFIT OF AGREEMENT
11.1 SUCCESSORS AND ASSIGNS
The terms and provisions of the Credit Documents shall be binding upon and
inure to the benefit of the Borrower, the Issuer and their respective
successors and assigns, except that the Borrower shall not have the right
to assign its rights or obligations under the Credit Documents. Any
attempted assignment or transfer by any party not made in compliance with
this Clause 11.1 shall be null and void.
11.2 DISSEMINATION OF INFORMATION
The Borrower authorizes the Issuer to disclose to any subparticipant or
purchaser or any other Person acquiring an interest in the Credit Documents
by operation of law or any counterparty to any swap, securitisation or
derivative transaction referencing or involving any rights or obligations
of the Issuer hereunder (each a "TRANSFEREE") and any prospective
Transferee any and all information in the Issuer's possession
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concerning the creditworthiness of the Borrower; PROVIDED THAT each
Transferee and prospective Transferee agrees to be bound by Clause 9.13
(Confidentiality) of this Agreement.
12. NOTICES
12.1 GIVING NOTICE
All notices, requests and other communications to any party hereunder shall
be in writing (including electronic transmission, facsimile transmission or
similar writing) and shall be given to such party: (a) in the case of the
Borrower and the Issuer at its respective address or facsimile number set
forth on the signature pages hereof or (b) in the case of any party, at
such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the Issuer and the Borrower in accordance with
the provisions of this Clause 12.1. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Clause and
confirmation of receipt is received, (ii) if given by recognized courier
service, 72 hours after such communication is deposited with such courier
service with delivery prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered (or, in the case of electronic
transmission, received) at the address specified in this Clause; PROVIDED
THAT notices to the Issuer under Clause 2 (The Letter of Credit Facility)
shall not be effective until received.
12.2 CHANGE OF ADDRESS
The Borrower and the Issuer may each change the address for service of
notice upon it by a notice in writing to the other parties hereto.
IN WITNESS WHEREOF, the Borrower and the Issuer have executed this Agreement as
of the date first above written.
-35-
SIGNATURES
IPCRE LIMITED, AS BORROWER
By: /s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxx
------------------------------------ -------------------------------------
Name: XXXX XXXXX XXXXX XXXXXX
Title: SENIOR V. P. & CFO. V. P. & CONTROLLER.
Address: American International Building
00 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Xxxxxxxxx:
-----------------------------
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
BARCLAYS BANK PLC, AS ISSUER
By: Xxxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Corporate Credit Analyst
Address: Financial Markets Team
Xxxxx 00
0 Xxxxxxxxx Xxxxx
Xxxxxx
X00 0XX
Attention: Xxxxxxx Xxxxx
Telecopy: 0000 000 0000
Telephone: 0000 000 0000
