Document/Exhibit Description Pages Size
1: 10-K Annual Report 44 271K
2: EX-10.59 First Amendment to Ace Stock Purchase Plan 2 11K
3: EX-10.60 Amendment to Ace Retirement Plan 1 8K
4: EX-10.61 Amendment and Restatement Agreement 123 371K
5: EX-13.1 Excerpts of the Annual Report of Shareholders 63 380K
6: EX-21.1 Subsidiaries of the Company 4 34K
7: EX-23.1 Consent of Pricewaterhousecoopers LLP 1 8K
C L I F F O R D LIMITED LIABILITY PARTNERSHIP
C H A N C E
EXECUTION COPY
EXHIBIT 10.61
ACE LIMITED
as Account Party
ACE BERMUDA INSURANCE LTD.
as Guarantor
CITIBANK, N.A.
as Arranger
BARCLAYS BANK PLC
and
ING BARINGS
as Co-Arrangers
CITIBANK INTERNATIONAL PLC
as Agent and Security Trustee
and
OTHERS
_____________________________________________
AMENDMENT AND RESTATEMENT AGREEMENT
RELATING TO
A LETTER OF CREDIT FACILITY AGREEMENT
_____________________________________________
CONTENTS
[Download Table]
Clause Page
1. Interpretation...................................................... 1
2. Acceding Bank And Changes In Commitments............................ 2
3. Amendment And Restatement Of The Facility Agreement................. 2
4. Agreement Supplemental.............................................. 2
5. Representations..................................................... 2
6. Costs And Expenses.................................................. 2
7. Governing Law....................................................... 3
8. Incorporation Of Terms.............................................. 3
9. Counterparts........................................................ 3
THIS AMENDMENT AGREEMENT is made the seventeenth day of November 2000
BETWEEN
(1) ACE LIMITED (the "Account Party");
(2) ACE BERMUDA INSURANCE LTD. (the "Guarantor");
(3) CITIBANK, N.A. (the "Arranger");
(4) BARCLAYS BANK PLC and ING BARINGS (the "Co-Arrangers");
(5) CITIBANK INTERNATIONAL plc (the "Agent" and "Security Trustee"); and
(6) THE FINANCIAL INSTITUTIONS named in the Schedule (the "Banks").
WHEREAS
(A) By a letter of credit facility agreement dated 19 November 1999 (the
"Facility Agreement") made between (1) Account Party, (2) the Guarantor,
(3) the Arranger, (4) the Co-Arrangers, (5) the Agent and (6) the Banks
named in Part One of the Schedule, such Banks granted to the Borrower a
letter of credit facility in an aggregate amount of (Pounds)290,000,000.
(B) The parties hereto wish to increase the amount of the Facility to
(Pounds)390,000,000 and to amend the Facility Agreement upon the terms and
subject to the conditions set out below.
NOW IT IS AGREED as follows:
1. INTERPRETATION
1.1 Terms defined in the Facility Agreement and not otherwise defined herein
shall have the same meaning in this Agreement. Any reference to a Clause,
an Exhibit or a Schedule shall be construed as references to a Clause
hereof or an Exhibit or a Schedule hereto unless the contrary is expressed.
1.2 In this agreement:
"Acceding Bank" means the bank set out in Part Two of the Schedule hereto;
"Amended Agreement" means the Facility Agreement as amended by this
Agreement;
"Commencement Date" means the date which is the later of 17 November 2000
and the date on which the Agent confirms in writing to the Obligors and the
Banks that it has received in form and substance satisfactory to it each of
the documents and other items specified in the Third Schedule of the
Exhibit hereto.
-1-
2. ACCEDING BANK AND CHANGES IN COMMITMENTS
2.1 With effect from the Commencement Date the Acceding Bank shall become a
Bank with a Commitment as set out alongside its name in the First Schedule
of the Exhibit hereto (a "New Commitment").
2.2 The Acceding Bank undertakes with each of the other parties to the Facility
Agreement that, as of the Commencement Date, it will acquire the same
rights and assume the same obligations under the Facility Agreement (as
amended, varied, novated or supplemented from time to time) as it would
have acquired and assumed had such Acceding Bank been an original party
thereto as a Bank with its New Commitment.
3. AMENDMENT AND RESTATEMENT OF THE FACILITY AGREEMENT
With effect from the Commencement Date the Facility Agreement shall be
amended so that it shall be read and construed for all purposes as set
forth in the Exhibit hereto.
4. AGREEMENT SUPPLEMENTAL
This Agreement is and shall be construed as supplemental to the Facility
Agreement and the Facility Agreement and every clause thereof shall
continue to be in full force and effect and binding on the parties thereto
save as expressly amended and supplemented by this Agreement.
5. REPRESENTATIONS
The Obligors make the Representations set out in Clause 14
(Representations) of the Amended Agreement as if each reference in those
Representations to "this Agreement" includes a reference to (a) this
Agreement and (b) the Amended Agreement.
6. COSTS AND EXPENSES
6.1 Transaction Expenses
The Account Party shall promptly on demand pay the Banks the amount of all
costs and expenses (including legal fees) reasonably incurred by the Banks
in connection with the negotiation, preparation, printing and execution of
this Agreement and any other documents referred to in this Agreement.
6.2 Enforcement Costs
The Account Party shall, within three Business Days of demand, pay to each
Bank the amount of all costs and expenses (including legal fees) incurred
by that Bank in connection with the enforcement of, or the preservation of
any rights under this Agreement.
6.3 Stamp Taxes
The Account Party shall pay and, within three Business Days of demand,
indemnify each Bank against any costs, loss or liability that each such
Bank incurs in relation to
-2-
all stamp duty, registration and other similar taxes payable in respect of
this Agreement.
7. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
8. INCORPORATION OF TERMS
The provisions of Clause 30.2 (Partial Invalidity) and Clause 35
(Jurisdiction) of the Facility Agreement shall apply, mutatis mutandis,
hereto.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts each of which, when
executed and delivered shall constitute an original, but all the
counterparts together shall constitute but one and the same Agreement.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
-3-
THE SCHEDULE
The Banks
Part One
Citibank, N.A.
Barclays Bank PLC
ING Bank N.V., London Branch
ABN AMRO Bank N.V., London Branch
National Westminster Bank PLC
Credit Lyonnais New York Branch
Acceding Banks
Part Two
Lloyds TSB Bank plc
-4-
The Account Party
ACE LIMITED
By:
Address: The Ace Building
30 Woodbourne Avenue
Hamilton HM08
Bermuda
Telefax: +1 441 296 0087
The Guarantor
ACE BERMUDA INSURANCE LTD.
By:
Address: The Ace Building
30 Woodbourne Avenue
Hamilton HM08
Bermuda
Telefax: +1 441 296 0087
The Arranger
CITIBANK, N.A.
By:
The Co-Arrangers
BARCLAYS BANK PLC
By:
ING BARINGS
By:
-5-
The Agent and Security Trustee
CITIBANK INTERNATIONAL PLC
By:
Address: Riverdale House
3/rd/ Floor
68 Molesworth Street
London SE13 7EU
Telefax: +44 20 7500 4482/3
Attention: Loans Agency
The Banks
ABN AMRO BANK N.V., LONDON BRANCH
By:
BARCLAYS BANK PLC
By:
CITIBANK, N.A.
By:
CREDIT LYONNAIS NEW YORK BRANCH
By:
ING BANK N.V., LONDON BRANCH
By:
LLOYDS TSB BANK PLC
By:
-6-
NATIONAL WESTMINSTER BANK PLC
By:
-7-
C L I F F O R D LIMITED LIABILITY PARTNERSHIP
C H A N C E
EXHIBIT
DATED 19 NOVEMBER 1999
(as amended and restated pursuant to an Amendment Agreement
dated 17 November 2000)
ACE LIMITED
as Account Party
ACE BERMUDA INSURANCE LTD.
as Guarantor
CITIBANK, N.A.
as Arranger
BARCLAYS BANK PLC
and
ING BARINGS
as Co-Arrangers
CITIBANK INTERNATIONAL plc
as Agent and Security Trustee
and
OTHERS
----------------------------------------------
(pounds)390,000,000
LETTER OF CREDIT FACILITY AGREEMENT
----------------------------------------------
CONTENTS
[Enlarge/Download Table]
Clause Page
1. Definitions And Interpretation................................................................. 1
2. The Facility................................................................................... 16
3. Utilisation Of The Facility.................................................................... 17
4. Extension Of Letters Of Credit................................................................. 19
5. Increase Of The Facility....................................................................... 22
6. Notification................................................................................... 23
7. The Account Party's Liabilities In Relation To Letters Of Credit............................... 24
8. Cancellation And Collateralisation............................................................. 25
9. Taxes.......................................................................................... 26
10. Tax Receipts................................................................................... 27
11. Increased Costs................................................................................ 29
12. Illegality..................................................................................... 29
13. Mitigation..................................................................................... 30
14. Representations................................................................................ 30
15. Covenants...................................................................................... 34
16. Events Of Default.............................................................................. 41
17. Commission And Fees............................................................................ 45
18. Costs And Expenses............................................................................. 46
19. Default Interest And Break Costs............................................................... 47
20. Indemnities.................................................................................... 48
21. Currency Of Account And Payment................................................................ 49
22. Payments....................................................................................... 50
23. Set-Off........................................................................................ 51
24. Sharing........................................................................................ 52
25. The Agent, The Arranger And The Banks.......................................................... 53
26. Assignments And Transfers...................................................................... 62
27. Economic And Monetary Union.................................................................... 64
28. Calculations And Evidence Of Debt.............................................................. 65
29. Guarantee And Indemnity........................................................................ 66
30. Remedies And Waivers, Partial Invalidity....................................................... 69
31. Notices........................................................................................ 69
[Enlarge/Download Table]
32. Counterparts.................................................................................... 71
33. Amendments...................................................................................... 71
34. Governing Law................................................................................... 72
35. Jurisdiction.................................................................................... 72
Schedule 1 The Banks................................................................................... 74
Schedule 2 Form Of Transfer Certificate................................................................ 75
Schedule 3 Conditions Precedent........................................................................ 77
Schedule 4 Utilisation Request......................................................................... 78
Schedule 5 Form Of Extension Request................................................................... 80
Schedule 6 Form Of Letter Of Credit.................................................................... 83
Schedule 7 Mandatory Liquid Asset Costs Rate........................................................... 89
Schedule 8 Form Of Confidentiality Undertaking......................................................... 91
Schedule 9 Pricing Schedule............................................................................ 94
Schedule 10 Existing Liens............................................................................. 95
Schedule 11 Form Of Charge Agreement................................................................... 96
THIS AGREEMENT originally dated 19 November 1999 and amended and restated as of
the Commencement Date referred to in the Amendment Agreement dated 17 November
2000
BETWEEN
(1) ACE LIMITED as the account party (the "Account Party");
(2) ACE BERMUDA INSURANCE LTD. as guarantor (the "Guarantor");
(3) CITIBANK, N.A. as arranger of the Facility (the "Arranger");
(4) BARCLAYS BANK PLC and ING BARINGS as co-arrangers of the Facility (the "Co-
Arrangers");
(5) CITIBANK INTERNATIONAL plc as agent and trustee for the banks (when acting
in such capacities the "Agent" and the "Security Trustee" respectively);
and
(6) THE BANKS as defined below.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"ACE INA" means ACE INA Holdings Inc., a Delaware company and its
successors.
"ACE US" means ACE US Holdings, Inc., a Delaware company and its
successors.
"Adjusted Consolidated Debt" means, at any time, an amount equal to (i) the
then outstanding Consolidated Debt of the Account Party and its
Subsidiaries plus (ii) to the extent exceeding an amount equal to 15% of
Total Capitalisation, the then issued and outstanding amount of Preferred
Securities (other than any Mandatorily Convertible Preferred Securities).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For the purposes of this
definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5 per cent. or more of
the Voting Interests of such Person or to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of Voting Interests, by contract or otherwise.
"Amendment Agreement" means the agreement dated 17 November 2000 which
amends and restates the Original Agreement.
"Applicant" means each of ACE Capital Limited, ACE Capital II Limited, ACE
Capital III Limited, ACE Capital IV Limited, ACE Capital V Limited, ACE
Capital VI
-1-
Limited and ACE Capital VII Limited and their successors and substitutes
within the Group from time to time.
"Approved Credit Institution" means a credit institution within the meaning
of the First Council Directive on the co-ordination of laws, regulations
and administrative provisions relating to the taking up and pursuit of the
business of credit institutions (No. 77/780/EEC) which has been approved by
the Council of Lloyd's for the purpose of providing guarantees and issuing
or confirming letters of credit comprising a member's Funds at Lloyd's.
"Approved Investment" means any Investment that was made by the Account
Party or any of its Subsidiaries pursuant to investment guidelines set
forth by the board of directors of the Account Party which guidelines are
consistent with past practices.
"Authorised Signatory" means, in relation to an Obligor, any person who is
duly authorised (in such manner as may be reasonably acceptable to the
Agent) and in respect of whom the Agent has received a certificate signed
by a director or another Authorised Signatory of such Obligor setting out
the name and signature of such person and confirming such person's
authority to act.
"Available Commitment" means, in relation to a Bank at any time and save as
otherwise provided herein its Commitment less its share of the Sterling
Amount of Outstandings at such time provided that such amount shall not be
less than zero.
"Available Facility" means, at any time, the aggregate of the Available
Commitments adjusted, in the case of a proposed utilisation pursuant to a
Utilisation Request, so as to take into account:-
(a) any reduction in the Commitment of a Bank pursuant to the terms
hereof; and
(b) any Letter of Credit which pursuant to any other Utilisation Request,
is to be issued;
on or before the proposed Utilisation Date relating to such utilisation.
"Availability Period" means the period from the Commencement Date to 24
November 2000 (or such other date which Lloyd's may specify as the Funds
Date for 2000) inclusive.
"Bank" means any financial institution:
(a) named in Schedule 1 (The Banks); or
(b) which has become a party hereto in accordance with Clause 26.4
(Assignments by Banks) or Clause 26.5 (Transfers by Banks),
and which has not ceased to be a party hereto in accordance with the terms
hereof.
"Bermuda Companies Law" means The Companies Act 1981 of Bermuda, as
amended, and the regulations promulgated thereunder.
-2-
"Bermuda Insurance Law" means The Insurance Act 1978 of Bermuda, as
amended, and the regulations promulgated thereunder.
"Business Day" means a day (other than a Saturday or Sunday) on which banks
generally are open for business in London and Bermuda and, in the case of
payments to be made in dollars, New York.
"Capitalised Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalised leases.
"Cash Collateral" means, in relation to any Bank's L/C Proportion of any
Letter of Credit, a deposit in such interest-bearing account or accounts as
such Bank or, as the case may be, the Agent may specify, such deposit and
account to be secured in favour of, and on terms and conditions acceptable
to, such Bank.
"Charge Agreement" means the charge agreement, in substantially the form
set out in Schedule 11 (Form of Charge Agreement), that may be required to
be entered into by the Account Party as chargor pursuant to sub-clause
17.1.2 of Clause 17.1 (Letter of Credit Commission) and pursuant to which
the Account Party charges the Charged Portfolio in favour of the Security
Trustee.
"Charged Portfolio" has the meaning ascribed to it in the Charge Agreement.
"Commencement Date" has the meaning given to it in the Amendment Agreement.
"Commitment" means, in relation to a Bank at any time and save as otherwise
provided herein, the amount set opposite its name under the heading
"Commitment" in Schedule 1 (The Banks).
"Consolidated" refers to the consolidation of accounts in accordance with
GAAP.
"Consolidated Debt" means at any date the Debt of the Account Party and its
Consolidated Subsidiaries, determined on a Consolidated basis as of such
date.
"Consolidated Net Income" means, for any period, the net income of the
Account Party and its Consolidated Subsidiaries, determined on a
Consolidated basis for such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other entity
the accounts of which would be consolidated with those of the Account Party
in its consolidated financial statements if such statements were prepared
as of such date.
"Consolidated Net Worth" means at any date the Consolidated stockholder's
equity of the Account Party and its Consolidated Subsidiaries determined as
of such date, provided that such determination for the purposes of Clause
15.7 (Adjusted Consolidated Debt to Total Capitalisation Ratio), Clause
15.8 (Consolidated Net Worth) and Clause 15.9 (Liens) shall be made without
giving effect to adjustments pursuant to Statement No. 115 of the Financial
Accounting Standards Board of the United States of America.
-3-
"Contingent Obligation" means, with respect to any Person, any obligation
or arrangement of such Person to guarantee or indemnify or intended to
guarantee or indemnify any Debt, leases, dividends or other payment
obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, (a) the direct or indirect guarantee, endorsement (other than
for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the
obligation of a primary obligor, (b) the obligation to make take-or-pay or
similar payments, if required, regardless of non-performance by any other
party or parties to an agreement or (c) any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (A) for the purchase or payment of any such primary
obligation or (B) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, assets, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided,
however, that Contingent Obligations shall not include any obligations of
any such Person arising under insurance contracts entered into in the
ordinary course of business. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made
(or, if less, the maximum amount of such primary obligation for which such
Person may be liable pursuant to the terms of the instrument evidencing
such Contingent Obligation) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such person
is required to perform thereunder), as determined by such Person in good
faith.
"Custodian" means such entity or entities as may be agreed from time to
time between the Account Party and the Security Trustee (each acting
reasonably).
"Custodian's Undertaking" means the undertaking delivered to the Security
Trustee by the Custodian in respect of the Charged Portfolio as
contemplated by the Charge Agreement.
"Debenture" means debt securities issued by the Account Party or ACE INA to
a Special Purpose Trust in exchange for proceeds of Preferred Securities
and common securities of such Special Purpose Trust.
"Debt" of any Person means, without duplication for purposes of calculating
financial ratios:
(a) all indebtedness of such Person for borrowed money:
(b) all obligations of such Person for the deferred purchase price of
property or services (other than trade payables incurred in the
ordinary course of such Person's business);
-4-
(c) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments;
(d) all obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property);
(e) all obligations of such Person as lessee under Capitalised Leases
(excluding imputed interest);
(f) all obligations of such Person under acceptance, letter of credit or
similar facilities;
(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interests (except
for obligations to pay for Equity Interests within customary
settlement periods) in such Person or any other Person or any
warrants, rights or options to acquire such capital stock (excluding
payments under a contract for the forward sale of ordinary shares of
such Person issued in a public offering), valued, in the case of
Redeemable Preferred Interests, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends;
(h) all Contingent Obligations of such Person in respect of Debt (of the
types described above) of any other Person; and
(i) all indebtedness and other payment obligations referred to in clauses
(a) through (h) above of another Person secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
indebtedness or other payment obligations;
provided, however, that the amount of Debt of such Person under clause (i)
above shall, if such Person has not assumed or otherwise become liable for
any such Debt, be limited to the lesser of the principal amount of such
Debt or the fair market value of all property of such person securing such
Debt; provided further that "Debt" shall not include obligations in respect
of insurance or reinsurance contracts entered into in the ordinary course
of business; provided further that, solely for the purposes of Clause 15.7
(Adjusted Consolidated Debt to Total Capitalisation Ratio) and Clause 15.8
(Consolidated Net Worth) and the definitions of "Adjusted Consolidated
Debt" and "Total Capitalisation", "Debt" shall not include (x) any
contingent obligations of any Person under or in connection with
acceptance, letter of credit or similar facilities or (y) obligations of
the Account Party or ACE INA under any Debentures or under any subordinated
guarantee or any Preferred Securities or obligations of a Special Purpose
Trust under any Preferred Securities.
-5-
"Default" means an Event of Default or a Potential Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or other similar transaction (including any
option with respect to any of the foregoing transactions) or any
combination of the foregoing transactions.
"Effective Date" means, in respect of each Letter of Credit, 24 November
2000.
"Equity Interests" means, with respect to any Person, shares of capital
stock of (or other ownership or profit interests in) such Person, warrants,
options or other rights for the purchase or other acquisition from such
Person of shares of capital stock of (or other ownership or profit
interests in) such Person, securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or other acquisition
from such Person of such shares (or such other interests), and other
ownership or profit interests in such Person (including, without
limitation, partnership, member or trust interests therein), whether voting
or nonvoting, and whether or not such shares, warrants, options, rights or
other interests are authorised or otherwise existing on any date of
determination.
"Event of Default" means any circumstance described as such in Clause 16
(Events of Default).
"Expiry Date" means, in relation to any Letter of Credit, the date on which
the maximum aggregate liability thereunder is to be reduced to zero.
"Facility" means the sterling and dollar letter of credit facility granted
to the Account Party in this Agreement.
"Facility Office" means, in relation to the Agent, the office identified
with its signature below or such other office as it may select by notice
and, in relation to any Bank, the office notified by it to the Agent in
writing prior to the date hereof (or, in the case of a Transferee, at the
end of the Transfer Certificate to which it is a party as Transferee) or
such other office as it may from time to time select by notice to the
Agent.
"Finance Documents" means this Agreement, any Security Document entered
into pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of Credit
Commission) and any other document or documents as may be agreed by the
Agent and the Account Party.
"Finance Parties" means the Agent, the Security Trustee, the Arranger, the
Co-Arrangers and the Banks.
-6-
"Funds at Lloyd's" has the meaning given to it in paragraph 4 of the
Membership Bylaw (No. 17 of 1993).
"Funds at Lloyd's Requirements" means, in respect of any member, the amount
required to be maintained by that member as Funds at Lloyd's.
"Funds Date" means the date notified by Lloyd's each year as being the
latest date in that year by which Funds at Lloyd's can be placed with
Lloyd's in order to satisfy Funds at Lloyd's Requirements in respect of the
immediately succeeding calendar year, such date notified by Lloyd's in
respect of the 2000 calendar year being 24 November 2000, or such other
date as may be advised by Lloyd's.
"GAAP" has the meaning specified in Clause 1.7 (Accounting Terms and
Determinations).
"Group" means the Account Party and its Subsidiaries for the time being.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other hedging agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986 of the
United States of America, as amended, or any successor statute, and
includes regulation promulgated and rulings issued thereunder.
"Investment" in any Person means any loan or advance to such Person, any
purchase or other acquisition of any Equity Interests or Debt or the assets
comprising a division or business unit or a substantial part or all of the
business of such Person, any capital contribution to such Person or any
other direct or indirect investment in such Person, including, without
limitation, any acquisition by way of a merger or consolidation and any
arrangement pursuant to which the investor incurs Debt of the types
referred to in clause (h) or (i) of the definition of "Debt" in respect of
such Person; provided, however, that any purchase by any US Facility
Agreement Loan Party or any Subsidiary of any catastrophe-linked
instruments which are (x) issued for the purpose of transferring
traditional reinsurance risk to the capital markets and (y) purchased by
such US Facility Agreement Loan Party or any Subsidiary in accordance with
its customary reinsurance underwriting procedures, or the entry by any US
Facility Agreement Loan Party or any Subsidiary into swap transactions
relating to such instruments in accordance with such procedures, shall be
deemed to be the entry by such Person into a reinsurance contract and shall
not be deemed to be an Investment by such Person.
"L/C Commission Rate" means the rate per annum determined in accordance
with Clause 17.1 (Letter of Credit Commission) or Schedule 9 (Pricing
Schedule), as the case may be.
"L/C Proportion" means, in relation to a Bank in respect of any Letter of
Credit and save as otherwise provided herein, the proportion (expressed as
a percentage) borne by
-7-
such Bank's Available Commitment to the Available Facility immediately
prior to the issue of such Letter of Credit.
"L/C Valuation Date" means the first Business Day which falls six months
after the Commencement Date and each day falling at six monthly intervals
thereafter.
"Letter of Credit" means a letter of credit issued or to be issued pursuant
to Clause 3 (Utilisation of the Facility) substantially in the form set out
in Schedule 6 (Form of Letter of Credit) or in such other form requested by
the Account Party which is approved by the Banks (such approval not to be
unreasonably withheld or delayed).
"Letter of Credit Commission" means the letter of credit commission
described in Clause 17.1 (Letter of Credit Commission).
"LIBOR" means, in relation to any Unpaid Sum on which interest for a given
period is to accrue, the percentage rate per annum equal to the offered
quotation which appears on the page of the Telerate Screen which displays
an average British Bankers Association Interest Settlement Rate for the
currency of the relevant amount (being currently "3740" or, as the case may
be, "3750") for such period as of 11.00 a.m. on the Quotation Date for such
period or, if such page or such service shall cease to be available, such
other page or such other service for the purpose of displaying an average
British Bankers Association Interest Settlement Rate for such currency as
the Agent, after consultation with the Banks and the Account Party, shall
select, acting reasonably.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other charge or encumbrance of any kind, or
any other type of preferential arrangement that has the practical effect of
creating a security interest, in respect of such asset. For the purposes of
this Agreement, the Account Party shall be deemed to own subject to a Lien
any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such asset.
"Lloyd's" means the society incorporated by Lloyd's Act 1871 by the name of
Lloyd's.
"Mandatorily Convertible Preferred Securities" means units comprised of (i)
Preferred Securities or preferred shares of the Account Party and (ii) a
contract for the sale of ordinary shares of the Account Party (including
"Feline PridesTM", "RhinosTM" or any substantially similar securities).
"Mandatory Liquid Asset Costs Rate" in relation to any Unpaid Sum shall
bear the meaning given to it in Schedule 7 (Mandatory Liquid Asset Costs
Rate).
"Majority Banks" means, save as otherwise provided herein:
(a) whilst there are no Outstandings, a Bank or Banks whose Commitments
amount (or, if each Bank's Commitment has been reduced to zero, did
-8-
immediately before such reduction to zero, amount) in
aggregate to sixty-six and two thirds per cent. or more (or
for the purposes of Clause 16.18 (Acceleration and
Cancellation) to more than fifty per cent.) of the Total
Commitments; and
(b) whilst there are Outstandings a Bank or Banks to whom in
aggregate more than sixty-six and two thirds per cent. (or for
the purposes of Clause 16.18 (Acceleration and Cancellation)
more than fifty per cent.) of the Outstandings is owed,
provided that, in respect of a Letter of Credit issued by a Declining
Bank pursuant to sub-clause 5.7.2 of Clause 5.7 (Replacement Letters of
Credit), an amount equal to the amount of its Outstandings in respect
thereof multiplied by the Reduction Percentage applicable at that time
shall be excluded in determining the amount of Outstandings owed to such
Bank for the purposes of this definition only.
"Material Debt" means Debt of the Account Party and/or one or more of
its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal or face amount exceeding
US$25,000,000.
"Material Financial Obligations" means a principal amount of Debt and/or
current payment obligations in respect of Derivatives Obligations of the
Account Party and/or one or more of its Subsidiaries, arising in one or
more related or unrelated transactions, exceeding in the aggregate
US$25,000,000.
"Material Subsidiary" means any Subsidiary having (i) assets (after
inter company eliminations) in excess of 10 per cent. of the total
assets of the Account Party and its Subsidiaries determined on a
Consolidated basis, or (ii) annual net income constituting 10 per cent.
or more of the total annual net income of the Account Party and its
Subsidiaries on a Consolidated basis, in each case determined as of the
end of the most recently ended fiscal year and in any event ACE UK
Limited and Tempest Reinsurance Company Limited shall be construed as
Material Subsidiaries.
"Notice of Charge" means the notice of charge of Charged Portfolio to be
delivered by the Account Party to the Custodian pursuant to the terms of
the Charge Agreement.
"Obligors" means the Account Party and the Guarantor.
"Original Agreement" means this Agreement prior to its amendment and
restatement on the Commencement Date.
"Original Letters of Credit" means the letters of credit issued under
the Original Agreement.
"Original Sterling Amount" means:
(a) in relation to a Letter of Credit denominated in sterling, the
amount specified as the amount of the Letter of Credit in the
Utilisation Request relating thereto; and
-9-
(b) in relation to a Letter of Credit denominated in dollars, the
amount of sterling which could be purchased with the dollar
amount of such Letter of Credit at the spot rate of exchange
quoted by the Agent at or about 11.00 am London time on the
day falling three Business Days before the Utilisation Date
for the purchase of sterling with dollars for delivery two
business days thereafter.
"Outstandings" means, at any time the aggregate of the Sterling Amounts
of the maximum actual and contingent liabilities of the Banks in respect
of each outstanding Letter of Credit.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced or which are being contested in good faith by
appropriate proceedings: (a) Liens for taxes, assessments and
governmental charges or levies not yet due and payable; (b) Liens
imposed by law, such as materialsmen's, mechanics', carriers', workmen's
and repairmen's Liens and other similar Liens arising in the ordinary
course of business securing obligations that are not overdue for a
period of more than 90 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or
to secure public or statutory obligations; and (d) easements, rights of
way and other encumbrances on title to real property that do not render
title to the property encumbered thereby unmarketable or materially
adversely affect the use of such property for its present purposes.
"Person" means an individual, a company, a corporation, a partnership,
an association, a trust or any other entity or organisation, including a
government or political subdivision or an agency or instrumentality
thereof.
"Potential Event of Default" means any event which would reasonably be
expected to become (with the passage of time, the giving of notice, the
making of any determination hereunder or any combination thereof) an
Event of Default.
"Preferred Interests" means, with respect to any Person, Equity
Interests issued by such Person that are entitled to a preference or
priority over any other Equity Interests issued by such Person upon any
distribution of such Person's property and assets, whether by dividend
or upon liquidation.
"Preferred Securities" means (i) preferred securities issued by the
Special Purpose Trust which shall provide, among other things, that
dividends shall be payable only out of proceeds of interest payments on
the Debentures, or (ii) other instruments that may be treated in whole
or in part as equity for rating agency purposes while being treated as
debt for tax purposes.
"Proportion" means, in relation to a Bank the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments are
then zero, by its Commitment to the Total Commitments immediately prior
to their reduction to zero).
"Qualifying Bank" means an institution which is a bank as defined for
the purposes of Section 349 of the Income and Corporation Taxes Act 1988
and such bank is within the
-10-
charge to United Kingdom corporation tax as respects to interest which
is (or which, if it were a Bank, would be) payable to it hereunder.
"Quotation Date" means, in relation to any period for which an interest
rate is to be determined hereunder, the day on which quotations would
ordinarily be given by prime banks in the London Interbank Market for
deposits in the currency in relation to which such rate is to be
determined for delivery on the first day of that period, provided that,
if, for any such period, quotations would ordinarily be given on more
than one date, the Quotation Date for that period shall be the last of
those dates.
"Redeemable" means, with respect to any Equity Interest, any Debt or any
other right or obligation, any such Equity Interest, Debt, right or
obligation that (a) the issuer has undertaken to redeem at a fixed or
determinable date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of the issuer or (b) is redeemable at the option of the holder.
"Reduction Percentage" means 20 per cent. x (5 - a); where "a" equals
the remaining number of years (and for such purposes any incomplete year
shall be treated as one year) for which the relevant Letter of Credit is
currently valid.
"Representations" means each of the representations set out in Clause 14
(Representations).
"Required Value" has the meaning ascribed to it in the Charge Agreement.
"Securitisation Transaction" means any sale, assignment or other
transfer by the Account Party or any Subsidiary of any accounts
receivable, premium finance loan receivables, lease receivables or other
payment obligations owing to the Account Party or such Subsidiary or any
interest in any of the foregoing, together in each case with any
collections and other proceeds thereof, any collection or deposit
accounts related thereto, and any collateral, guaranties or other
property or claims in favour of the Account Party or such Subsidiary
supporting or securing payment by the obligor thereon of, or otherwise
related to, any such receivables.
"Security" means any security granted over the Charged Portfolio by the
Account Party in favour of the Security Trustee pursuant to the Charge
Agreement.
"Security Documents" means the Charge Agreement, the Custodian's
Undertaking and the Notice of Charge.
"Special Purpose Trust" means a special purpose business trust
established by the Account Party or ACE INA of which the Account Party
or ACE INA will hold all the common securities, which will be the issuer
of Preferred Securities, and which will loan to the Account Party or ACE
INA (such loan being evidenced by the Debentures) the net proceeds of
the issuance and sale of the Preferred Securities and common securities
of such Special Purpose Trust.
-11-
"Spot Rate" means the spot rate of exchange quoted by the Agent at or
about 11.00 am London time on the day on which the relevant calculation
is to be made for the purchase of sterling with dollars or any other
relevant currency for delivery two business days thereafter.
"Sterling Amount" means:
(a) in relation to a Letter of Credit at any time:
(i) if such Letter of Credit is denominated in sterling,
the maximum actual and contingent liability of the
Banks thereunder or in respect thereof at such time;
and
(ii) if such Letter of Credit is denominated in dollars,
the equivalent in sterling of the maximum actual and
contingent liability of the Banks thereunder at such
time, calculated as at the later of the date which
falls (1) two Business Days before its Utilisation
Date or (2) the most recent L/C Valuation Date; and
(b) in relation to the Outstandings, the aggregate of the Sterling
Amounts of each outstanding Letter of Credit.
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly
owned by such Person; unless otherwise specified, "Subsidiary" means a
Subsidiary of the Account Party.
"Term" means, save as otherwise provided herein:
(a) in relation to any Letter of Credit, the period from its
Effective Date until its Expiry Date; and
(b) in relation to an Unpaid Sum, any of those periods mentioned
in Clause 19 (Default Interest and Break Costs).
"Termination Date" means 31 December 2005.
"Total Capitalisation" means, at any time, an amount (without
duplication) equal to (i) the then outstanding Consolidated Debt of the
Account Party and its Subsidiaries plus (ii) Consolidated stockholders'
equity of the Account Party and its Subsidiaries plus (without
duplication) (iii) the then issued and outstanding amount of Preferred
Securities (including Mandatorily Convertible Preferred Securities) and
(without duplication) Debentures.
"Total Commitments" means, at any time, the aggregate of the Banks'
Commitments.
"Transfer Certificate" means a certificate substantially in the form set
out in Schedule 2 (Form of Transfer Certificate) signed by a Bank and a
Transferee under which:
-12-
(a) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights, benefits and obligations
under the Finance Documents upon and subject to the terms and
conditions set out in Clause 26.3 (Assignments and Transfers
by Banks); and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the
Agent as contemplated in Clause 26.5 (Transfers by Banks).
"Transfer Date" means, in relation to any Transfer Certificate, the date
for the making of the transfer as specified in such Transfer
Certificate.
"Transferee" means a person to which a Bank seeks to transfer by
novation all or part of such Bank's rights, benefits and obligations
under the Finance Documents.
"Unpaid Sum" means the unpaid balance of any of the sums referred to in
Clause 19.1 (Default Interest).
"US Facility Agreements" means each of:
(a) the US$800,000,000 364 day revolving credit facility agreement
originally entered into on 11 June 1999 (as amended and
restated on 8 May 2000) and made between, inter alia, ACE
Limited and ACE INA as borrowers, the financial institutions
named therein and others; and
(b) the US$250,000,000 revolving credit facility agreement
originally entered into on 11 June 1999 (as amended and
restated on 8 May 2000) and made between, inter alia, ACE
Limited and ACE INA as borrowers, the financial institutions
named therein and others (the "Five Year US Facility"),
in each case as the same may be further amended or restated from time to
time.
"US Facility Agreement Loan Parties" means, at any time, any or all of
the Account Party, ACE INA, ACE Financial Services Inc., ACE Guaranty Re
Inc., ACE Bermuda Insurance Ltd. and Tempest Reinsurance Company
Limited.
"US Fee Letter" means the fee letter dated 12 April 2000 and made
between, inter alia, the Account Party, the arrangers of the US Facility
Agreements, JP Morgan Securities Inc. and others.
"US Letter of Credit Agreements" means any and all letter of credit
agreements entered into by any borrower pursuant to the Five Year US
Facility.
"US Loan Documents" means (i) each US Facility Agreement, (ii) the US
Notes, (iii) the US Fee Letter and (iv) each US Letter of Credit
Agreement.
"US Notes" means each promissory note issued or to be issued pursuant to
the terms of the US Facility Agreements.
"Utilisation Date" means the date on which a Letter of Credit is to be
issued.
-13-
"Utilisation Request" means a notice substantially in the form set out
in Schedule 4 (Form of Utilisation Request).
"Voting Interests" means shares of capital stock issued by a
corporation, or equivalent Equity Interest in any other Person, the
holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing
similar functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by the Account Party.
1.2 Interpretation
Any reference in this Agreement to:
the "Agent", "Security Trustee" or any "Bank" shall be construed so as
to include its and any subsequent successors and permitted transferees
in accordance with their respective interests;
"continuing", in the context of an Event of Default shall be construed
as a reference to an Event of Default which has not been remedied or
waived in accordance with the terms hereof and in relation to a
Potential Event of Default, one which has not been remedied within the
relevant grace period or waived in accordance with the terms hereof.
the "euro" means the single currency of participating member states of
the European Union;
a "holding company" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a Subsidiary;
a "law" shall be construed as any law (including common or customary
law), statute, constitution, decree, judgment, treaty, regulation,
directive, bye-law, order or any other legislative measure of any
government, supranational, local government, statutory or regulatory
body or court;
a "member" shall be construed (as the context may require) as a
reference to an underwriting member of Lloyd's;
a "month" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that, where any such period would
otherwise end on a day which is not a Business Day, it shall end on the
next succeeding Business Day, unless that day falls in the calendar
month succeeding that in which it would otherwise have ended, in which
case it shall end on the immediately preceding Business Day, provided
that, if a period starts on the last Business Day in a calendar month or
if there is no numerically
-14-
corresponding day in the month in which that period ends, that period
shall end on the last Business Day in that later month (and references
to "months" shall be construed accordingly);
a Bank's "participation", in relation to a Letter of Credit, shall be
construed as a reference to the rights and obligations of such Bank in
relation to such Letter of Credit as are expressly set out in this
Agreement;
a "successor" shall be construed so as to include an assignee or
successor in title of such party and any person who under the laws of
its jurisdiction of incorporation or domicile has assumed the rights and
obligations of such party under this Agreement or to which, under such
laws, such rights and obligations have been transferred;
"tax" shall be construed so as to include any tax, levy, impost, duty or
other charge of a similar nature (including any penalty or interest
payable in connection with any failure to pay or any delay in paying any
of the same);
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time; and
the "winding-up", "dissolution" or "administration" of a company or
corporation shall be construed so as to include any equivalent or
analogous proceedings under the law of the jurisdiction in which such
company or corporation is incorporated or any jurisdiction in which such
company or corporation carries on business including the seeking of
liquidation, winding-up, reorganisation, dissolution, administration,
arrangement, adjustment, protection or relief of debtors.
1.3 Currency Symbols
1.3.1 "(pounds)" and "sterling" denote lawful currency of the United
Kingdom for the time being.
1.3.2 "US$" and "dollars" denote lawful currency of the United States
of America for the time being.
1.4 Agreements and Statutes
Any reference in this Agreement to:
1.4.1 this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented;
1.4.2 a statute or treaty shall be construed as a reference to such
statute or treaty as the same may have been, or may from time
to time be, amended or, in the case of a statute, re-enacted;
and
-15-
1.4.3 a bylaw shall be construed as a reference to a bylaw made under
Lloyd's Acts 1871 to 1982 as the same may have been, or may
from time to time be, amended or replaced.
1.5 Headings
Clause and Schedule headings are for ease of reference only.
1.6 Time
Any reference in this Agreement to a time of day shall, unless a
contrary indication appears, be a reference to London time.
1.7 Accounting Terms and Determinations
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time ("GAAP"), applied on a basis
consistent (except for changes concurred in by the Account Party's
independent public accountants) with the most recent audited
consolidated financial statements of the Account Party and its
Consolidated Subsidiaries delivered to the Banks; provided that, if the
Account Party notifies the Agent that the Account Party wishes to amend
any covenant in Clause 15 (Covenants) to eliminate the effect of any
change in generally accepted accounting principles on the operation of
such covenant (or if the Agent notifies the Account Party that the
Majority Banks wish to amend Clause 15 (Covenants) for such purpose),
then the Account Party's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally accepted
account principals became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the
Account Party and the Majority Banks.
1.8 Third party rights
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
Agreement.
2. THE FACILITY
2.1 Grant of the Facility
The Banks, upon the terms and subject to the conditions hereof, grant to
the Account Party a dual currency letter of credit facility in an
aggregate amount of (pounds)390,000,000.
2.2 Purpose and Application
The Facility is intended to support Funds at Lloyd's, and, accordingly,
the Account Party shall apply all Letters of Credit issued hereunder in
or towards satisfaction of such purpose and none of the Finance Parties
shall be obliged to concern themselves with such application.
-16-
2.3 Conditions Precedent
Save as the Banks may otherwise agree, the Account Party may not deliver
any Utilisation Request unless the Agent has confirmed to the Account
Party and the Banks that it has received all of the documents and other
evidence listed in Schedule 3 (Conditions Precedent) and that each is,
in form and substance, satisfactory to the Agent.
2.4 Several Obligations
The obligations of each Bank are several and the failure by a Bank to
perform its obligations hereunder and/or under any Letter of Credit
issued hereunder shall not affect the obligations of either Obligor
towards any other party hereto nor shall any other party be liable for
the failure by such Bank to perform its obligations hereunder and/or
under such Letter of Credit.
2.5 Several Rights
The rights of each Finance Party are several and any debt arising
hereunder at any time from an Obligor to any Finance Party shall be a
separate and independent debt. Each such party shall be entitled to
protect and enforce its individual rights arising out of this Agreement
independently of any other party (so that it shall not be necessary for
any party hereto to be joined as an additional party in any proceedings
for this purpose).
2.6 Cancellation of Original Letters of Credit
On and with effect from the Effective Date, all outstanding Original
Letters of Credit shall be replaced by the Letters of Credit issued
after the Commencement Date.
3. UTILISATION OF THE FACILITY
3.1 Utilisation Conditions for the Facility
Save as otherwise provided herein, a Letter of Credit will be issued at
the request of the Account Party on behalf of an Applicant if:
3.1.1 no later than 10.00 a.m. two Business Days before the proposed
Utilisation Date, the Agent has received a duly completed
Utilisation Request from the Account Party;
3.1.2 the proposed Utilisation Date is a Business Day falling within
the Availability Period;
3.1.3 the proposed Original Sterling Amount of such Letter of Credit
is less than or equal to the Available Facility;
3.1.4 the proposed Term of the Letter of Credit is a period ending
on or before the Termination Date;
3.1.5 the Letter of Credit is substantially in the form set out in
Schedule 6 (Form of Letter of Credit) or in such other form
requested by the Account Party which is approved by the Banks
(such approval not to be unreasonably withheld or delayed);
-17-
3.1.6 the beneficiary of such Letter of Credit is Lloyd's;
3.1.7 on and as of the proposed Utilisation Date (a) no Event of
Default or Potential Event of Default has occurred and is
continuing and (b) the Representations are true in all
material respects; and
3.1.8 (if the Charge Agreement is required to be executed and
delivered by the Account Party pursuant to sub-clause 17.1.2
of Clause 17.1 (Letter of Credit Commission)), the Agent has
received evidence acceptable to it that the Charged Portfolio
has been delivered to the Custodian and the amount of the
Charged Portfolio is at least equal to the Required Value.
3.2 Request for Letters of Credit
The Account Party may request the issue by the Banks hereunder of one
Letter of Credit only in respect of each Applicant (with the exception
of ACE Capital IV Limited, ACE Capital V Limited and ACE Capital VII
Limited in respect of each of whom two Letters of Credit may be issued).
A single Utilisation Request may be issued in respect of more than one
Letter of Credit.
3.3 Completion of Letters of Credit
The Agent is authorised to arrange for the issue of any Letter of Credit
pursuant to Clause 3.1 (Utilisation Conditions for the Facility) by:
3.3.1 completing the Effective Date and the proposed Expiry Date of
such Letter of Credit;
3.3.2 completing the schedule to such Letter of Credit with the
percentage participation of each Bank as allocated pursuant to
the terms hereof; and
3.3.3 executing such Letter of Credit on behalf of each Bank and
following such execution delivering such Letter of Credit to
Lloyd's on the Utilisation Date,
provided that the Agent shall not deliver any such Letter of Credit to
Lloyd's unless the Agent is satisfied that (a) Lloyd's has cancelled (or
will upon such delivery cancel) the Original Letters of Credit and (b)
all amounts outstanding in respect of the Original Letters of Credit
have been paid in full.
3.4 Dollar Option
The Account Party may, in a Utilisation Request, request that such
Letter of Credit be denominated in dollars in which event such Letter of
Credit shall be denominated in dollars.
3.5 Amounts of Letters of Credit
The amount of a Letter of Credit shall be:
3.5.1 the Original Sterling Amount of such Letter of Credit, if such
Letter of Credit is to be denominated in sterling; and
-18-
3.5.2 if such Letter of Credit is to be denominated in dollars, the
amount specified in the Utilisation Request relating thereto.
3.6 Each Bank's Participation in Letters of Credit
Save as otherwise provided herein, each Bank will participate in each
Letter of Credit issued pursuant to this Clause 3 in the proportion
borne by its Available Commitment to the Available Facility immediately
prior to the issue of such Letter of Credit.
3.7 Cancellation of Commitments
On the expiry of the Availability Period the Available Facility and each
Bank's Available Commitment shall be reduced to zero.
4. EXTENSION OF LETTERS OF CREDIT
4.1 Bank Notification
Each Bank acknowledges that the Account Party may request one or more
extensions of a Letter of Credit hereunder, and that pursuant to the
terms thereof each Letter of Credit shall be extended automatically for
a further year each year unless Lloyd's receives notice to the contrary.
Accordingly, each Bank undertakes to notify the Agent in writing as soon
as reasonably practicable after it has determined that it will not agree
to a requested extension, and in any event by no later than close of
business on the date which falls ten weeks prior to the first date which
Lloyd's notifies as being the Funds Date of such year and the Agent
shall give notice thereof to the Account Party within two Business Days
of notification from such Bank. Unless notice is given to the Agent as
aforesaid each Bank will be deemed automatically to have agreed to such
extension.
4.2 Request for Extension
If the Account Party wishes to request the extension of a Letter of
Credit, the Account Party shall give the Agent notice, by way of a
Letter of Credit extension request in the form of Schedule 5 (Form of
Extension Request) by the date which falls thirteen weeks prior to the
Funds Date of such year, specifying that the Expiry Date of the
applicable Letter of Credit is to be extended to 31 December of the year
immediately succeeding the year in which the then current Expiry Date
falls (such notice being a "Notice of Extension"). A single Notice of
Extension may be delivered in respect of more than one Letter of Credit.
4.3 Non-Delivery of Notice of Extension
If the Account Party does not deliver a Notice of Extension in
accordance with the provisions of Clause 4.2 (Request for Extension),
the Agent shall:
4.3.1 as soon as reasonably practicable after the date which falls
ten weeks prior to the Funds Date of such year, notify the
Account Party and then notify the Banks thereof; and
4.3.2 as soon as reasonably practicable after the date which falls
ten weeks prior to the Funds Date of such year and in any
event by no later than close of business on the Business Day
immediately preceding the Funds Date of such
-19-
year, notify Lloyd's that the Term of the relevant Letter of
Credit will not be extended beyond its then current Expiry
Date.
4.4 Notification to Banks
Upon receipt of a Notice of Extension, the Agent shall promptly notify
each Bank of the contents thereof and of the amount of such Bank's
participation in the applicable Letter of Credit, together with notice
of the applicable Funds Date for such year.
4.5 Extension of a Letter of Credit
4.5.1 If all of the Banks agree (or are deemed to have agreed) to
the extension of the Letter of Credit in accordance with
Clause 4.1 (Bank Notification) the Agent shall notify the
Account Party and the Banks thereof and subject to the
provisions of Clause 4.8 (Extension Conditions Precedent), the
Letter of Credit shall be automatically extended in accordance
with the terms thereof.
4.5.2 If a Bank gives notice in accordance with the provisions of
Clause 4.1 (Bank Notification) that it does not agree to a
requested extension of any Letter of Credit the Agent shall
notify the Account Party and Lloyd's accordingly within two
Business Days thereafter, and the succeeding provisions of
this Clause 4 shall apply.
4.6 Substitute Bank
4.6.1 If any Bank (a "Declining Bank") gives notice in accordance
with the provisions of Clause 4.1 (Bank Notification) that it
does not agree to a requested extension, then the Account
Party may designate by the date which falls four weeks prior
to the Funds Date of such year an Approved Credit Institution
(the "Substitute Bank") which is willing to assume all of the
rights and obligations of the Declining Bank in respect of its
participation in the relevant Letter of Credit (the "Old
Letter of Credit").
4.6.2 If the Account Party has found a Substitute Bank it shall
promptly notify the Agent and the Declining Bank thereof and
shall procure the release by Lloyd's of the Old Letter of
Credit from the Funds at Lloyd's of the relevant Applicant.
4.6.3 The Declining Bank shall as soon as reasonably practicable and
in any event no later than the date which falls two weeks
prior to the Funds Date of such year transfer its rights and
obligations hereunder to the Substitute Bank in accordance
with the provisions of Clause 26.5 (Transfers by Banks).
4.6.4 The Substitute Bank shall pay to the Declining Bank all
amounts then due and owing (and all fees accrued to but
excluding the date of such transfer) to the Declining Bank in
respect of its participation in the Old Letter of Credit.
4.7 Replacement Letters of Credit
4.7.1 If a Substitute Bank has become party hereto pursuant to
Clause 4.6 (Substitute Bank), then subject to the provisions
of Clause 4.8 (Extension Conditions Precedent) the Banks who
have confirmed their agreement to the
-20-
extension of the Old Letter of Credit (the "Extending Banks")
shall, together with the Substitute Bank, participate in, and
issue by the Funds Date of such year, a new Letter of Credit
(the "New Letter of Credit") which shall (i) replace the Old
Letter of Credit, (ii) be in an amount equal to the Old Letter
of Credit and (iii) have an Expiry Date which corresponds with
the Expiry Date requested in the Notice of Extension.
4.7.2 If a Substitute Bank has not been found then: (a) the Account
Party shall procure the release by Lloyd's of the Old Letter
of Credit from the Funds at Lloyd's of the relevant Applicant,
(b) subject to the provisions of Clause 4.8 (Extension
Conditions Precedent), the Extending Banks shall participate
in, and issue by the Funds Date of such year, a new Letter of
Credit (the "Reduced Letter of Credit") which shall (1)
replace their participation in the Old Letter of Credit, (2)
be in an amount equal to the Old Letter of Credit less the
amount of the Declining Bank's participation and (3) have an
Expiry Date which corresponds with the Expiry Date requested
in the Notice of Extension; and (c) the Declining Bank shall
participate in a separate Letter of Credit (a "Bilateral
Letter of Credit") which shall (1) replace its participation
in the Old Letter of Credit, (2) be in an amount equal to the
Declining Bank's participation in the Old Letter of Credit and
(3) have an Expiry Date which is the same as the Expiry Date
specified in the Old Letter of Credit (as the same may have
been extended from time to time with the consent of the
Declining Bank).
4.8 Extension Conditions Precedent
4.8.1 On or prior to close of business on the Funds Date immediately
following the delivery of any Notice of Extension, the Account
Party shall promptly notify the Agent if:
(a) an Event of Default or Potential Event of Default occurs
which is continuing;
(b) any of the representations and warranties of the Account
Party contained in this Agreement or in the Charge
Agreement cease to be correct in all material respects,
or become misleading in any material respect; or
(c) the Letter of Credit which is the subject of such Notice
of Extension ceases solely to be used to support the
relevant Applicant's underwriting business at Lloyd's
which has been provided in accordance with the
requirements of Lloyd's applicable to it.
4.8.2 Subject to due notification to Lloyd's in accordance with the
provisions of the relevant Letter of Credit, the Banks shall
not be obliged to agree to any extension requested if the
Account Party fails to comply with its obligations under
Clause 4 (Extension of Letters of Credit) or if any of the
events specified in sub-clause 4.8.1 above occurs.
-21-
4.9 Cancellation of Bilateral Letters of Credit
At any time after the issue of a Bilateral Letter of Credit by a
Declining Bank the Account Party may give the Agent and the Declining
Bank not less than fourteen days' prior written notice of its intention
to procure that the liability of the Declining Bank under such Letter of
Credit is reduced to zero (whereupon it shall do so).
4.10 Mandatory Collateralisation
If a Letter of Credit is automatically extended in accordance with the
terms thereof and, on or prior to the time of such extension the Company
had failed to comply with its obligations under Clause 4 (Extension of
Letters of Credit) or any of the events specified in sub-clause 4.8.1
thereof had occurred, the Agent may (and if so instructed by the
Majority Banks participating in such Letter of Credit shall) require the
Account Party to procure that the liabilities of each of the Banks under
such Letter of Credit are reduced to zero and/or provide Cash Collateral
for each Bank's L/C Proportion under such Letter of Credit.
4.11 Revised Letters of Credit
In the event that the Funds at Lloyd's Requirements of an Applicant
change at or around the time of any given Funds Date in terms of amount
and/or the identity of the Applicant, subject to the approval of Lloyd's
and subject to each Bank's Outstandings under the Letters of Credit
issued hereunder not being increased other than in accordance with
Clause 5 (Increase of the Facility), the Banks shall co-operate with the
Account Party to ensure to the extent reasonably possible that the
Letters of Credit provide for the revised Funds at Lloyd's Requirements
of the Applicants.
5. INCREASE OF THE FACILITY
5.1 Request for Increase
In the event that the Funds at Lloyd's Requirements of an Applicant
increases at or around the time of any given Funds Date and as a result
of such increase the aggregate amount of the Funds at Lloyd's
Requirements of the Applicants on such Funds Date would exceed the
aggregate amount of the Banks' Outstandings under the Letters of Credit,
the Account Party shall be entitled to request an increase of the amount
of the Letter of Credit of such Applicant by giving notice to the Agent
no later than thirteen weeks prior to the Funds Date of such year (the
"Increase Request"). The Increase Request shall be made in writing and
shall be unconditional and irrevocable and shall specify:
5.1.1 which Letters of Credit and Applicants the Increase Request
relates to;
5.1.2 the additional amount of commitments required by the Account
Party from the Banks; and
5.1.3 any other information relevant to the Increase Request.
5.2 Notification of Increase Request
The Agent shall forward a copy of the Increase Request to the Banks as
soon as practicable, and in any event no later than two Business Days
after receipt thereof
-22-
together with notification of the amount of such Banks' pro rata
participation in any such increased Letter of Credit.
5.3 Response to Increase Request
If a Bank, in its sole discretion, agrees to the increase requested by
the Account Party pursuant to the Increase Request, it shall give notice
to the Agent (a "Notice of Increase") accordingly not less than ten
weeks prior to the Increase Date. If a Bank does not give such Notice of
Increase by such date, then such Bank shall be deemed to have refused
such increase. Nothing shall oblige a Bank to agree to the Increase
Request.
5.4 Notification of Response to Increase Request
The Agent shall notify the Account Party in writing of each Bank's
decision in relation to the Increase Request (specifying which Banks
have given a Notice of Increase, which Banks have actually refused the
Increase Request and which Banks are deemed to have refused the Increase
Request) no less than eight weeks prior to the Increase Date.
5.5 Increase
5.5.1 If one or more of the Banks does not give a Notice of Increase
(hereinafter referred to as "Refusing Banks"), then the
Refusing Banks shall not participate in any increase pursuant
to the Increase Request but shall continue to participate in
the Letters of Credit to the extent of their existing
participation.
5.5.2 If one or more Banks agree to the Increase Request such Banks'
participation in the relevant Letter(s) of Credit shall,
subject to satisfaction of any conditions precedent which may
be specified in connection therewith, be increased in
accordance with the terms of the Increase Request.
5.5.3 The Account Party shall co-operate with the Agent, the Banks
and Lloyd's with respect to the replacement of any Letters of
Credit required as a result of an Increase Request and all
parties shall agree on any necessary replacement Letters of
Credit in the context of any replacement Letters of Credit
required in accordance with Clause 4.7 (Replacement Letters of
Credit).
5.5.4 The Facility, save as amended pursuant to the Increase
Request, shall continue to operate in accordance with its
terms.
6. NOTIFICATION
6.1 Letters of Credit
On or before each Utilisation Date the Agent shall notify each Bank of
the Letter of Credit that is to be issued by the Agent on behalf of the
Banks, the name of the Applicant in respect of whom the Letter of Credit
is being issued, the proposed length of the relevant Term and the
aggregate principal amount of the relevant Letter of Credit allocated to
such Bank pursuant to this Agreement.
-23-
6.2 Demands under Letters of Credit
If a demand is made by Lloyd's under a Letter of Credit the Agent shall
promptly make demand upon the Account Party in accordance with this
Agreement and notify the Banks.
7. THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF CREDIT
7.1 The Account Party's Indemnity to Banks
The Account Party shall irrevocably and unconditionally as a primary
obligation indemnify (on demand by the Agent) each Bank against:
7.1.1 any sum paid or due and payable by such Bank in accordance with
the terms of any Letter of Credit requested by the Account
Party; and
7.1.2 all liabilities, costs (including, without limitation, any
costs incurred in funding any amount which falls due from such
Bank in connection with such Letter of Credit), claims, losses
and expenses which such Bank may at any time properly incur or
sustain in connection with any Letter of Credit.
7.2 Preservation of Rights
Neither the obligations of the Account Party set out in this Clause 7
nor the rights, powers and remedies conferred on any Bank by this
Agreement or by law shall be discharged, impaired or otherwise affected
by:
7.2.1 the winding-up, dissolution, administration or re-organisation
of any Bank or any other person or any change in its status,
function, control or ownership;
7.2.2 any of the obligations of any Bank or any other person
hereunder or under any Letter of Credit or under any other
security taken in respect of the Account Party's obligations
hereunder or otherwise in connection with any Letter of Credit
being or becoming illegal, invalid, unenforceable or
ineffective in any respect;
7.2.3 time or other indulgence being granted or agreed to be granted
to any Bank or any other person in respect of its obligations
hereunder or under or in connection with any Letter of Credit
or under any such other security;
7.2.4 any amendment to, or any variation, waiver or release of, any
obligation of any Bank or any other person under any Letter of
Credit or this Agreement; or
7.2.5 any other act, event or omission which, but for this Clause 7,
might operate to discharge, impair or otherwise affect any of
the obligations of the Account Party set out in this Clause 7
or any of the rights, powers or remedies conferred upon any
Bank by this Agreement or by law.
The obligations of the Account Party set out in this Clause 7 shall be
in addition to and independent of every other security which any Bank
may at any time hold in respect of the Account Party's obligations
hereunder.
-24-
7.3 Settlement Conditional
Any settlement or discharge between the Account Party and a Bank shall
be conditional upon no security or payment to such Bank by the Account
Party or any other person on behalf of the Account Party, being avoided
or reduced by virtue of any laws relating to bankruptcy, insolvency,
liquidation or similar laws of general application and, if any such
security or payment is so avoided or reduced, such Bank shall be
entitled to recover the value or amount of such security or payment from
the Account Party subsequently as if such settlement or discharge had
not occurred.
7.4 Right to make Payments under Letters of Credit
Each Bank shall be entitled to make any payment in accordance with the
terms of the relevant Letter of Credit without any reference to or
further authority from the Account Party or any other investigation or
enquiry. The Account Party irrevocably authorises each Bank to comply
with any demand under a Letter of Credit which is valid on its face.
7.5 Revaluation of Outstandings
On each L/C Valuation Date, the Agent shall calculate the amount of the
Outstandings (having regard to changes in the Sterling Amounts of the
Letters of Credit which may arise as a result of currency fluctuations),
and the Agent shall notify the Account Party of the amount, if any (the
"Excess Amount"), by which the Outstandings exceed 105 per cent. of the
aggregate Commitments of the Banks on such date, and the Account Party
shall secure such Excess Amount by providing Cash Collateral in an
amount not less than the Excess Amount provided that if the Account
Party provides Cash Collateral as aforesaid and, on any succeeding L/C
Valuation Date the Excess Amount as determined on such date (the "New
Excess Amount") is:
7.5.1 less than the amount of the Cash Collateral provided at such
time, the Agent shall deliver to the Account Party an amount
equal to the difference between the amount of such Cash
Collateral and the New Excess Amount; or
7.5.2 greater than the amount of Cash Collateral provided at such
time, the Account Party shall deliver to the Agent an amount
equal to the amount by which the New Excess Amount exceeds the
amount of such Cash Collateral.
8. CANCELLATION AND COLLATERALISATION
8.1 Cancellation/Cash Collateralisation of Letters of Credit
The Account Party may give the Agent not less than fourteen days' prior
notice of its intention to procure that the liability of each Bank under
a Letter of Credit requested by it is reduced to zero (whereupon it
shall do so) or provide Cash Collateral for each Bank's L/C Proportion
under such Letter of Credit (whereupon it shall do so).
8.2 Notice of Cancellation or Collateralisation
Any notice of cancellation or collateralisation given by the Account
Party pursuant to this Clause 8 shall be irrevocable, shall specify the
date upon which such cancellation or collateralisation is to be made and
the amount of such cancellation or
-25-
collateralisation and shall oblige the Account Party to procure such
cancellation or collateralisation on such date.
8.3 Notice of Removal of a Bank
If:
8.3.1 any sum payable to any Bank by the Account Party is required to
be increased pursuant to Clause 9.1 (Tax Gross-up); or
8.3.2 any Bank claims indemnification from the Account Party under
Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs),
the Account Party may, whilst such circumstance continues, give the
Agent at least ten Business Days' notice (which notice shall be
irrevocable) of its intention to cancel, and/or provide Cash Collateral
in respect of the Commitment of such Bank.
8.4 Removal of a Bank
On the day the notice referred to in Clause 8.3 (Notice of Removal of a
Bank) expires the Account Party shall procure either that such Bank's
L/C Proportion of each relevant Letter of Credit be reduced to zero (by
reduction of the amount of such Letter of Credit in an amount equal to
such Bank's L/C Proportion) or that Cash Collateral be provided in an
amount equal to such Bank's L/C Proportion of such Letter of Credit.
8.5 No Further Availability
A Bank for whose account a repayment is to be made under Clause 8.3
(Notice of Removal of a Bank) shall not be obliged to participate in the
making of any Letter of Credit on or after the date upon which the Agent
receives the Account Party's notice of its intention to procure the
repayment of such Bank's share of the Outstandings, and such Bank's
Available Commitment shall be reduced to zero.
8.6 No Other Repayments or Cancellation
The Account Party shall not repay or cancel all or any part of the
Outstandings except at the times and in the manner expressly provided
for in this Agreement.
9. TAXES
9.1 Tax Gross-up
All payments to be made by an Obligor to any Finance Party hereunder
shall be made free and clear of and without deduction for or on account
of tax unless such Obligor is required to make such a payment subject to
the deduction or withholding of tax, in which case the sum payable by
such Obligor (in respect of which such deduction or withholding is
required to be made) shall be increased to the extent necessary to
ensure that such Finance Party receives a sum net of any deduction or
withholding equal to the sum which it would have received had no such
deduction or withholding been made or required to be made.
-26-
9.2 Tax Indemnity
Without prejudice to Clause 9.1 (Tax Gross-up), if any Finance Party is
required to make any payment of or on account of tax on or in relation
to any sum received or receivable hereunder (including any sum deemed
for purposes of tax to be received or receivable by such Finance Party
whether or not actually received or receivable) or if any liability in
respect of any such payment is asserted, imposed, levied or assessed
against any Finance Party, the Account Party shall, upon demand of the
Agent, promptly indemnify the Finance Party which suffers a loss or
liability as a result against such payment or liability, together with
any interest, penalties, costs and expenses payable or incurred in
connection therewith, provided that this Clause 9.2 shall not apply to:
9.2.1 any tax imposed on and calculated by reference to the net
income actually received or receivable by such Finance Party
by the jurisdiction in which such Finance Party is
incorporated; or
9.2.2 any tax imposed on and calculated by reference to the net
income of the Facility Office of such Finance Party actually
received or receivable by such Finance Party by the
jurisdiction in which its Facility Office is located.
9.3 Banks' Tax Status Confirmation
Each Bank confirms in favour of the Agent (on the date hereof or, in the
case of a Bank which becomes a party hereto pursuant to a transfer or
assignment, on the date on which the relevant transfer or assignment
becomes effective) that either:
9.3.1 it is a Qualifying Bank; or
9.3.2 it is not resident for tax purposes in the United Kingdom and
is beneficially entitled to its share of the Outstandings and
any interest thereon.
9.4 Claims by Banks
A Bank intending to make a claim pursuant to Clause 9.2 (Tax Indemnity)
shall notify the Agent of the event giving rise to the claim, whereupon
the Agent shall notify the Account Party thereof.
10. TAX RECEIPTS
10.1 Notification of Requirement to Deduct Tax
If, at any time, an Obligor is required by law to make any deduction or
withholding from any sum payable by it hereunder (or if thereafter there
is any change in the rates at which or the manner in which such
deductions or withholdings are calculated), such Obligor shall promptly,
upon becoming aware of the same, notify the Agent.
10.2 Evidence of Payment of Tax
If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the Agent for each Bank, within
-27-
thirty days after it has made such payment to the applicable authority,
an original receipt (or a certified copy thereof) issued by such
authority evidencing the payment to such authority of all amounts so
required to be deducted or withheld in respect of that Bank's share of
such payment.
10.3 Tax Credit Payment
If an additional payment is made under Clause 9 (Taxes) by an Obligor
for the benefit of any Finance Party and such Finance Party, in its sole
discretion, determines that it has obtained (and has derived full use
and benefit from) a credit against, a relief or remission for, or
repayment of, any tax, then, if and to the extent that such Finance
Party, in its sole opinion, determines that:
10.3.1 such credit, relief, remission or repayment is in respect of
or calculated with reference to the additional payment made
pursuant to Clause 9 (Taxes); and
10.3.2 its tax affairs for its tax year in respect of which such
credit, relief, remission or repayment was obtained have been
finally settled,
such Finance Party shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to such Obligor such amount as such Finance
Party shall, in its sole opinion, determine to be the amount which will
leave such Finance Party (after such payment) in no worse after-tax
position than it would have been in had the additional payment in
question not been required to be made by such Obligor.
10.4 Tax Credit Clawback
If any Finance Party makes any payment to an Obligor pursuant to Clause
10.3 (Tax Credit Payment) and such Finance Party subsequently
determines, in its sole opinion, that the credit, relief, remission or
repayment in respect of which such payment was made was not available or
has been withdrawn or that it was unable to use such credit, relief,
remission or repayment in full, the Obligor shall reimburse such Finance
Party such amount as such Finance Party determines, in its sole opinion,
is necessary to place it in the same after-tax position as it would have
been in if such credit, relief, remission or repayment had been obtained
and fully used and retained by such Finance Party.
10.5 Tax and Other Affairs
No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever manner
it thinks fit, oblige any Finance Party to claim any credit, relief,
remission or repayment in respect of any payment under Clause 8.1 (Tax
Gross-up) in priority to any other credit, relief, remission or
repayment available to it nor oblige any Finance Party to disclose any
information relating to its tax or other affairs or any computations in
respect thereof.
11. INCREASED COSTS
11.1 Increased Costs
If, by reason of (a) any change in law or in its interpretation or
administration and/or (b) compliance with any request or requirement
relating to the maintenance of capital
-28-
or any other request from or requirement of any central bank or other
fiscal, monetary or other authority (being a request or requirement with
which banks are accustomed to comply) and/or (c) the introduction of,
changeover to or operation of the euro in any participating member state:
11.1.1 a Bank or any holding company of such Bank is unable to obtain
the rate of return on its capital which it would have been able
to obtain but for such Bank's entering into or assuming or
maintaining a commitment, issuing or performing its obligations
under this Agreement or any Letter of Credit;
11.1.2 a Bank or any holding company of such Bank incurs a cost as a
result of such Bank's entering into or assuming or maintaining a
commitment, issuing or performing its obligations under this
Agreement or any Letter of Credit; or
11.1.3 there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining such Bank's share
of any Unpaid Sum or any Letter of Credit,
then the Account Party shall, from time to time on demand of the Agent,
promptly pay to the Agent for the account of that Bank amounts sufficient
to indemnify that Bank or to enable that Bank to indemnify its holding
company from and against, as the case may be, (i) such reduction in the
rate of return of capital, (ii) such cost or (iii) such increased cost.
11.2 Increased Costs Claims
A Bank intending to make a claim pursuant to Clause 11.1 (Increased Costs)
shall notify the Agent of the event giving rise to such claim and the
amount of such claim and the basis for calculation of such amount in
reasonable detail whereupon the Agent shall notify the Account Party
thereof.
11.3 Exclusions
Notwithstanding the foregoing provisions of this Clause 11, no Bank shall
be entitled to make any claim under this Clause 11 in respect of:
11.3.1 any cost, increased cost or liability as referred to in Clause
11.1 (Increased Costs) to the extent the same is compensated by
the Mandatory Liquid Asset Costs Rate; or
11.3.2 any cost, increased cost or liability compensated by Clause 9
(Taxes).
12. ILLEGALITY
If, at any time, it is or will become unlawful or prohibited pursuant to
any request from or requirement of any central bank or other fiscal,
monetary or other authority (being a request or requirement with which
banks are accustomed to comply) for a Bank to fund, issue, participate in
or allow to remain outstanding all or part of its share of the Letters of
Credit, then that Bank shall, promptly after becoming aware of the same,
deliver to the Account Party through the Agent a notice to that effect and:
-29-
12.1.1 such Bank shall not thereafter be obliged to participate in any
Letter of Credit or issue any Letter of Credit (whichever shall
be so affected) and the amount of its Available Commitment shall
be immediately reduced to zero; and
12.1.2 if the Agent on behalf of such Bank so requires, the Account
Party shall on such date as the Agent shall have specified ensure
that the liabilities of such Bank under or in respect of each
affected Letter of Credit are reduced to zero or otherwise
secured by providing Cash Collateral in an amount equal to such
Bank's L/C Proportion of such Letters of Credit or such Bank's
maximum actual or contingent liabilities under such Letter of
Credit.
13. MITIGATION
If, in respect of any Bank, circumstances arise which would or would upon
the giving of notice result in:
13.1.1 an increase in any sum payable to it or for its account pursuant
to Clause 8.1 (Tax Gross-up);
13.1.2 a claim for indemnification pursuant to Clause 9.2 (Tax
Indemnity) or Clause 11.1 (Increased Costs); or
13.1.3 the reduction of its Available Commitment to zero or any
repayment to be made pursuant to Clause 12 (Illegality),
then, without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the obligations of the Obligors under any of the
Clauses referred to in sub-clauses 13.1.1, 13.1.2 and 13.1.3 such Bank
shall promptly upon becoming aware of such circumstances notify the Agent
thereof and, in consultation with the Agent and the Account Party and to
the extent that it can do so lawfully and without prejudice to its own
position, take reasonable steps (including a change of location of its
Facility Office or the transfer of its rights, benefits and obligations
hereunder to another financial institution which is an Approved Credit
Institution and which is acceptable to the Account Party and willing to
participate in the Facility) to mitigate the effects of such circumstances,
provided that such Bank shall be under no obligation to take any such
action if, in the opinion of such Bank, to do so might have any adverse
effect upon its business, operations or financial condition (other than any
minor costs and expenses of an administrative nature).
14. REPRESENTATIONS
The Obligors jointly and severally represent and warrant on the
Commencement Date that:
14.1 Corporate Existence and Power
The Account Party is a company limited by shares, and the Guarantor is a
limited liability company, and in each case, is duly incorporated and
validly existing under the laws of its jurisdiction of incorporation and
the Account Party is in good standing under the laws of the Cayman Islands.
Each of the Obligors has all corporate powers
-30-
and all material governmental licenses, authorisations, consents and
approvals required to carry on its respective business as now conducted.
The Guarantor is a Wholly-Owned Consolidated Subsidiary of the Account
Party.
14.2 Corporate and Governmental Authorisation; No Contravention
The execution, delivery and performance by each Obligor of this Agreement
and the other Finance Documents to which it is a party are within its
corporate powers, have been duly authorised by all necessary corporate
action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
memorandum of association, articles of association or bye-laws (or any
comparable document) of any Obligor or of any agreement, judgment,
injunction, order, decree or other instrument binding upon any Obligor or
any of their respective Subsidiaries or result in the creation or
imposition of any Lien (excluding the provision of Security pursuant to
this Agreement) on any asset of any Obligor or any of their respective
Subsidiaries.
14.3 Binding Effect
Each of this Agreement and the other Finance Documents to which any Obligor
is a party constitutes a valid and binding agreement of each Obligor
enforceable in accordance with its terms, subject to bankruptcy, insolvency
or other laws of general application affecting the enforcement of creditors
rights, the application of equitable principles and the non-availability of
the equitable remedies of specific performance or injunctive relief.
14.4 Financial Information
14.4.1 The consolidated balance sheet of the Account Party and its
Consolidated Subsidiaries as of 31 December 1999 and the related
consolidated statements of operations and of cash flows for the
fiscal year then ended, reported on by PricewaterhouseCoopers
LLP, copies of which have been delivered to each of the Banks,
fairly present, in all material respects, in conformity with
GAAP, the consolidated financial position of the Account Party
and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal
year.
14.4.2 The unaudited consolidated balance sheet of the Account Party and
its Consolidated Subsidiaries as of 30 June 2000 and the related
unaudited consolidated statements of operations and of cash flows
for the six months then ended, copies of which have been
delivered to each of the Banks, fairly present, in all material
respects, in conformity with GAAP (except for the absence of
footnotes) applied on a basis consistent with the financial
statements referred to in sub-clause 14.4.1 of Clause 14.4
(Financial Information), the consolidated financial position of
the Account Party and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows
for such six month period (subject to normal year-end
adjustments).
-31-
14.4.3 Since 30 June 2000 there has been no material adverse change in
the business, financial position or results of operations of the
Account Party and its Consolidated Subsidiaries, considered as a
whole.
14.4.4 The consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of 31 December 1999 and the related
consolidated statements of operations and retained earnings and
of cash flows for the fiscal year then ended, all reported on by
PricewaterhouseCoopers LLP, copies of which have been delivered
to each of the Banks, fairly present, in all material respects in
conformity with GAAP, the consolidated financial position of the
Guarantor and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and retained earnings
and cash flows for such fiscal year.
14.4.5 Since 31 December 1999 there has been no material adverse change
in the business, financial position or results of operations of
the Guarantor and its Consolidated Subsidiaries, considered as a
whole.
14.5 Litigation
Except as disclosed in the notes to the financial statements referred to in
Clause 14.4.1 (Financial Information) and except for insurance claims made
in the context of the ordinary course of business of the Group, there is no
action, suit or proceeding pending against, or to the knowledge of the
Account Party threatened against or affecting, the Account Party or any of
its Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable likelihood of an adverse
decision which could materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Account
Party and its Consolidated Subsidiaries, considered as a whole, or which in
any manner draws into question the validity or enforceability of this
Agreement or any other Finance Document.
14.6 Taxes
The Account Party and its Subsidiaries have filed all material income tax
returns and all other material tax returns which are required to be filed
by them and have paid all taxes due pursuant to such returns or pursuant to
any assessment received by the Account Party or any Subsidiary. The
charges, accruals and reserves on the books of the Account Party and its
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Account Party, adequate.
14.7 Written Information
All written information supplied by any member of the Group which is
factual, is true, complete and accurate in all material respects as at the
date it was given and is not misleading in any material respect and all
financial projections so supplied have been prepared on the basis of recent
historical information and on the basis of reasonable assumptions.
-32-
14.8 Compliance with Laws
The Account Party and each Subsidiary are in compliance, in all material
respects, with all applicable laws, ordinances, rules, regulations,
guidelines and other requirements of governmental authorities except where
the necessity of compliance therewith is contested in good faith by
appropriate proceedings and any reserves required under generally accepted
accounting principles with respect thereto have been established and
except where any such failure could not reasonably be expected to
materially adversely affect the business, consolidated financial position
or consolidated results of operations of the Account Party and its
Consolidated Subsidiaries, considered as a whole.
14.9 Lien
14.9.1 Upon delivery of the Security to the Custodian as provided in the
Charge Agreement, the Account Party will have good and marketable
title in and to the Security free and clear of all Liens (except
the Lien created under the Finance Documents and subject to the
interest of the Custodian under the Finance Documents).
14.9.2 Upon delivery of the Security to the Custodian as provided in the
Charge Agreement, the Charge Agreement will create in favour of
the Security Trustee for the benefit of the Banks a valid and
enforceable first priority Lien on all of the Security, subject
to the interest of the Custodian under the Finance Documents.
14.9.3 Upon delivery of the Security to the Custodian as provided in the
Charge Agreement, the Account Party will not have outstanding,
nor will it be contractually bound to create, any Lien on or with
respect to any of the Security, subject to the interest of the
Custodian under the Finance Documents.
14.9.4 The Account Party is not subject to any agreement, judgment,
injunction, order, decree or other instrument or any law or
regulation which would prevent or otherwise interfere with the
Account Party's obligations to deliver Security in the amounts,
at the times and as otherwise provided in the Charge Agreement,
subject to the interest of the Custodian under the Finance
Documents.
The representations contained in this Clause 14.9 shall only be made on
each day commencing on the date on which the Account Party may be required
to grant Security pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission) and for so long as such Security is required to remain
in place.
14.10 Validity and Admissibility in Evidence
All acts, conditions and things required to be done, fulfilled and
performed in order (a) to enable each Obligor lawfully to enter into,
exercise its rights under and perform and comply with the obligations
expressed to be assumed by it in the Finance Documents to which it is a
party, (b) to ensure that the obligations expressed to be assumed by it in
-33-
the Finance Documents to which it is a party are legal, valid, binding and
enforceable and (c) to make the Finance Documents to which it is a party
admissible in evidence in its jurisdiction of incorporation have been
done, fulfilled and performed (subject to any exception contained in the
legal opinions provided as conditions precedent).
14.11 Claims Pari Passu
Under the laws of its jurisdiction of incorporation in force at the date
of this Agreement, the claims of the Finance Parties against each Obligor
under this Agreement will rank at least pari passu with the claims of all
its other unsecured and unsubordinated creditors save those claims which
are preferred solely by any bankruptcy, insolvency, liquidation or other
similar laws of general application or are mandatorily preferred by law
applying to insurance companies generally.
14.12 No Filing or Stamp Taxes
Under the laws of the jurisdiction of incorporation of each Obligor in
force at the date of this Agreement, it is not necessary that the Finance
Documents to which it is party be filed, recorded or enrolled with any
court or other authority in such jurisdiction or that any stamp,
registration or similar tax be paid on or in relation to the Finance
Documents to which it is party.
14.13 No Winding-up
No Obligor or Material Subsidiary has taken any corporate action nor have
any other steps been taken or legal proceedings been started or (to the
best of its knowledge and belief) threatened against any Obligor or
Material Subsidiary for its winding-up, dissolution, administration or re-
organisation (whether by voluntary arrangement, scheme of arrangement or
otherwise) or for the appointment of a receiver, administrator,
administrative receiver, conservator, custodian, trustee or similar
officer of it or of any or all of its assets or revenues.
14.14 No Default
No Default has occurred and is continuing.
15. COVENANTS
The Account Party agrees that, so long as any Original Letter of Credit or
any Letter of Credit is in effect or any Outstandings remain unpaid:
15.1 Information
The Account Party will deliver to the Agent in sufficient copies for the
Banks:
15.1.1 as soon as available and in any event within 90 days after the
end of each fiscal year of the Account Party, a consolidated
balance sheet of the Account Party and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated statements of operations and of cash flows for such
fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on in a manner
acceptable to the Securities and Exchange Commission of the
United States of America or otherwise
-34-
reasonably acceptable to the Majority Banks by
PricewaterhouseCoopers LLP or other independent public
accountants of internationally recognised standing;
15.1.2 as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of
the Account Party, a consolidated balance sheet of the Account
Party and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated statements of operations and
of cash flows for such quarter and for the portion of the Account
Party's fiscal year ended at the end of such quarter, setting
forth in the case of such statements of operations and cash flows
in comparative form the figures for the corresponding quarter and
the corresponding portion of the Account Party's previous fiscal
year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the
chief accounting officer of the Account Party;
15.1.3 simultaneously with the delivery of each set of financial
statements referred to in sub-clauses 15.1.1 and 15.1.2 of this
Clause 15.1, a certificate of the chief financial officer or the
chief accounting officer of the Account Party (a) setting forth
in reasonable detail the calculations required to establish
whether the Account Party was in compliance with the requirements
of Clauses 15.7 (Adjusted Consolidated Debt to Total
Capitalisation Ratio) to 15.9 (Liens), inclusive, on the date of
such financial statements and (b) stating whether any Default
exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and the action which
the Account Party is taking or proposes to take with respect
thereto;
15.1.4 within five days after any executive officer of the Account Party
obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer or the
chief accounting officer of the Account Party setting forth the
details thereof and the action which the Account Party is taking
or proposes to take with respect thereto;
15.1.5 promptly upon the mailing thereof to the shareholders of the
Account Party generally, copies of all financial statements,
reports and proxy statements so mailed;
15.1.6 promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms
10-K, 10-Q and 8-K (or their equivalents) which the Account Party
shall have filed with the Securities and Exchange Commission of
the United States of America;
15.1.7 as soon as available and in any event within 20 days after
submission, each statutory statement of the Guarantor in the form
submitted to The Insurance Division of the Office of Registrar of
Companies of Bermuda;
-35-
15.1.8 as soon as available and in any event within 120 days after the
end of each fiscal year of the Guarantor, a consolidated balance
sheet of the Guarantor and its Consolidated Subsidiaries as of
the end of such fiscal year and the related statements of income
and changes in financial position for such fiscal year, setting
forth in each case in comparative form the figures for the
previous fiscal year, all reported on by the independent public
accountants which reported on the financial statements referred
to in sub-clause 15.1.1 of this Clause 15.1;
15.1.9 promptly after any executive officer of the Account Party obtains
knowledge thereof, (a) a copy of any notice from the Minister of
Finance or the Registrar of Companies or any other Person of the
revocation, the suspension or the placing of any restriction or
condition on the registration as an insurer of the Guarantor
under the Bermuda Insurance Law or of the institution of any
proceeding or investigation which could result in any such
revocation, suspension or placing of such a restriction or
condition, (b) copies of any correspondence by, to or concerning
the Guarantor relating to an investigation conducted by the
Minister of Finance, whether pursuant to Section 132 of the
Bermuda Companies Law or otherwise and (c) a copy of any notice
of or requesting or otherwise relating to the winding up or any
similar proceeding of or with respect to the Guarantor; and
15.1.10 from time to time such additional information regarding the
financial position, results of operations or business of the
Account Party or any of its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request from time to time.
15.2 Payment of Obligations
The Account Party will pay and discharge, and will cause each Subsidiary
to pay and discharge, at or before maturity, all their respective material
obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by
appropriate proceedings, and will maintain, and will cause each Subsidiary
to maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
15.3 Maintenance of Property; Insurance.
15.3.1 The Account Party will keep, and will cause each Subsidiary to
keep, all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
15.3.2 The Account Party will maintain, and will cause each Subsidiary
to maintain, physical damage insurance on all real and personal
property on an all risks basis (including the perils of flood and
quake), covering the repair and replacement cost of all such
property and consequential loss coverage for business
interruption and extra expense (but, for the avoidance of doubt,
the foregoing shall not apply to maintenance of reinsurance or
similar matters
-36-
which shall be solely within the reasonable business judgement of
the Account Party and its Subsidiaries). The Account Party will
deliver to the Banks upon request of any Bank through the Agent
from time to time, full information as to the insurance carried.
15.4 Conduct of Business and Maintenance of Existence
The Account Party will continue, and will cause each Subsidiary to
continue, to engage in business of the same general type as now conducted
by the Account Party and its Subsidiaries, and will preserve, renew and
keep in full force and effect, and will cause each Subsidiary to preserve,
renew and keep in full force and effect, their respective existence and
their respective rights, privileges and franchises necessary or desirable
in the normal conduct of business; provided that nothing in this Clause
15.4 shall prohibit (i) the merger of a Subsidiary (other than the
Guarantor) into the Account Party or the merger or consolidation of a
Subsidiary (other than the Guarantor) with or into another Person if the
corporation surviving such consolidation or merger is a Subsidiary and if,
in each case, after giving effect thereto, no Default shall have occurred
and be continuing, (ii) any merger of any Obligor permitted by Clause
15.10 (Consolidations, Mergers and Sale of Assets) or (iii) the
termination of (x) the corporate existence or (y) any rights, privileges
and franchises of any Subsidiary (other than the Guarantor) if the Account
Party in good faith determines that such termination is in the best
interest of the Account Party and is not materially disadvantageous to the
Banks.
15.5 Compliance with Laws
The Account Party will comply, and cause each Subsidiary to comply, in all
material respects with all applicable laws, ordinances, rules,
regulations, guidelines and other requirements of governmental authorities
except where the necessity of compliance therewith is contested in good
faith by appropriate proceedings and any reserves required under generally
accepted accounting principles with respect thereto have been established
and except where any such failure to comply could not reasonably be
expected to materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Account
Party and its Consolidated Subsidiaries, considered as a whole.
15.6 Inspection of Property, Books and Records
The Account Party will keep, and will cause each Subsidiary to keep,
proper books of records and account in accordance with generally accepted
accounting principles in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense to visit and inspect
any of their respective properties, to examine and make abstracts from any
of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees
and independent public accountants, all at such reasonable times on
reasonable notice and as often as may reasonably be desired.
-37-
15.7 Adjusted Consolidated Debt to Total Capitalisation Ratio
The Account Party shall maintain at all times a ratio of Adjusted
Consolidated Debt to Total Capitalisation of not more than 0.35 to 1.
15.8 Consolidated Net Worth
The Account Party shall maintain at all times Consolidated Net Worth in an
amount at least equal to the sum of (i) US$3,600,000,000 plus (ii) 25 per
cent. of Consolidated Net Income for each fiscal quarter of the Account
Party ending on and after 31 March 2000 for which such Consolidated Net
Income is positive.
15.9 Liens
Neither the Account Party nor any Subsidiary will create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist, any Lien on or with respect to any of its
properties of any character (including, without limitation, accounts)
whether now owned or hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any accounts or other right to receive income,
except:
15.9.1 Liens created under the US Loan Documents;
15.9.2 Permitted Liens;
15.9.3 Liens described in Schedule 10 (Existing Liens);
15.9.4 purchase money Liens upon or in real property or equipment
acquired or held by the Account Party or any of its Subsidiaries
in the ordinary course of business to secure the purchase price
of such property or equipment or to secure Debt incurred solely
for the purpose of financing the acquisition, construction or
improvement of any such property or equipment to be subject to
such Liens, or Liens existing on any such property or equipment
at the time of acquisition or within 180 days following such
acquisition (other than any such Liens created in contemplation
of such acquisition that do not secure the purchase price), or
extensions, renewals or replacements or any of the foregoing for
the same or a lesser amount; provided, however, that no such Lien
shall extend to or cover any property other than the property or
equipment being acquired, constructed or improved, and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended,
renewed or replaced;
15.9.5 Liens arising in connection with Capitalised Leases; provided
that no such Lien shall extend to or cover any assets other than
the assets subject to such Capitalised Leases;
15.9.6 (A) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of
such event, (B) any Lien on any asset of any Person existing at
the time such Person is merged or consolidated with or into the
Account Party or any of its Subsidiaries in accordance with
Clause 15.10 (Consolidations, Mergers and Sales of Assets) and
not created in contemplation of such event and (C) any Lien
existing on
-38-
any asset prior to the acquisition thereof by the Account Party
or any of its Subsidiaries and not created in contemplation of
such acquisition;
15.9.7 Liens securing obligations under credit default swap transactions
determined by reference to, or Contingent Obligations in respect
of, Debt issued by the Account Party or one of its Subsidiaries;
such Debt not to exceed an aggregate principal amount of
US$550,000,000;
15.9.8 Liens arising in the ordinary course of its business which (A) do
not secure Debt and (B) do not in the aggregate materially
detract from the value of its assets or materially impair the use
thereof in the operation of its business;
15.9.9 Liens on cash and Approved Investments securing Hedge Agreements
arising in the ordinary course of business;
15.9.10 other Liens securing Debt or other obligations outstanding in an
aggregate principal or face amount not to exceed at any time 5
per cent. of Consolidated Net Worth;
15.9.11 Liens consisting of deposits made by the Account Party or any
insurance Subsidiary with any insurance regulatory authority or
other statutory Liens or Liens or claims imposed or required by
applicable insurance law or regulation against the assets of the
Account Party or any insurance Subsidiary, in each case in favour
of policyholders of the Account Party or such insurance
Subsidiary or an insurance regulatory authority and in the
ordinary course of the Account Party's or such insurance
Subsidiary's business;
15.9.12 Liens on Investments and cash balances of the Account Party or
any insurance Subsidiary (other than capital stock of any
Subsidiary) securing obligations of the Account Party or any
insurance Subsidiary in respect of (i) letters of credit obtained
in the ordinary course of business and/or (ii) trust arrangements
formed in the ordinary course of business for the benefit of
cedents to secure reinsurance recoverables owed to them by the
Account Party or any insurance Subsidiary;
15.9.13 the replacement, extension or renewal of any Lien permitted by
sub-clause 15.9.2 or 15.9.5 of this Clause 15.9 upon or in the
same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount (other than
in respect of fees, expenses and premiums, if any) or change in
any direct or contingent obligor) of the Debt secured thereby;
15.9.14 Liens securing obligations owed by the Account Party to any
Subsidiary or by any Subsidiary to the Account Party or any other
Subsidiary;
15.9.15 Liens incurred in the ordinary course of business in favour of
financial intermediaries and clearing agents pending clearance of
payments for investment or in the nature of set-off, banker's
lien or similar rights as to deposit accounts or other funds;
-39-
15.9.16 judgement or judicial attachment Liens, provided that the
enforcement of such Liens is effectively stayed;
15.9.17 Liens on any assets of the Account Party created pursuant to the
Finance Documents;
15.9.18 Liens arising in connection with certain equity proceeds received
on or about 12 September 2000 (plus interest accrued thereon)
placed in a segregated account in support of (or pledged as
collateral for) the Account Party's guarantee of the
US$412,372,000 principal amount of Auction Rate Reset
Subordinated Notes Series A issued by ACE INA to ACE RHINOS Trust
on 30 June 1999; and
15.9.19 Liens arising in connection with Securitisation Transactions,
provided that the aggregate principal amount of the investment or
claim held at any time by all purchasers, assignees or other
transferees of (or of interests in) receivables and other rights
to payment in all Securitisation Transactions shall not exceed
US$250,000,000.
15.10 Consolidations, Mergers and Sales of Assets
15.10.1 No Obligor will consolidate with or merge into any other
Person, provided that if both immediately before and after
giving effect thereto no Default shall have occurred and be
continuing, then:
(a) the Guarantor may merge or consolidate with any other
Person so long as the surviving entity is the Guarantor
or a Wholly-Owned Consolidated Subsidiary of the Account
Party and, if the Guarantor is not the surviving entity,
such surviving entity shall have assumed the obligations
of the Guarantor hereunder pursuant to an instrument in
form and substance reasonably satisfactory to the
Majority Banks and shall have delivered such opinions of
counsel with respect thereto as the Agent may reasonably
request; and
(b) the Account Party may merge with another Person so long
as the Account Party is the surviving entity.
15.10.2 No Obligor will sell, lease or otherwise transfer, directly or
indirectly, all or any substantial part of its assets to any
other Person (excluding sales of investment securities in the
ordinary course of business).
15.11 No Amendments
The Account Party shall not amend or waive, or utilise or rely on any
waiver of, any provision of any Security Document that may be entered
into without the written consent of the Agent, the Security Trustee and
the Majority Banks.
15.12 Maintenance of Legal Validity
Each Obligor shall obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all authorisations,
approvals, licences and consents
-40-
required in or by the laws of its jurisdiction of incorporation to
enable it lawfully to enter into and perform its obligations under the
Finance Documents to which it is a party and to ensure the legality,
validity, enforceability or admissibility in evidence in its
jurisdiction of incorporation of the Finance Documents to which it is a
party.
15.13 Claims Pari Passu
Each Obligor shall ensure that at all times the claims of the Finance
Parties against it under this Agreement ranks at least pari passu with
the claims of all its other unsecured and unsubordinated creditors save
those claims which are preferred by any bankruptcy, insolvency,
liquidation or other similar laws of general application or are
mandatorily preferred by law applying to insurance companies generally.
16. EVENTS OF DEFAULT
Each of Clause 16.1 (Failure to Pay) to Clause 16.17 (Custodian's
Undertaking) describes circumstances which constitute an Event of
Default for the purposes of this Agreement.
16.1 Failure to Pay
The Account Party shall fail to reimburse any drawing under any Letter
of Credit when required hereunder or shall fail to pay within five
Business Days of the due date thereof any interest or fees or other
amounts payable hereunder or under any other Finance Document or the
Guarantor shall fail to pay when due any such reimbursement obligations,
interest, fees or other amounts payable hereunder provided that, for the
purposes of this Clause 16.1, no such payment default by the Account
Party shall be continuing if the Guarantor pays the amount thereof at
the time and otherwise in the manner provided in Clause 29 (Guarantee
and Indemnity).
16.2 Specific Covenants
The Account Party shall fail to observe or perform any covenant (a)
contained in Clauses 15.7 (Adjusted Consolidated Debt to Total
Capitalisation Ratio) to Clause 15.10 (Consolidations, Mergers and Sale
of Assets) inclusive or (b) contained in Clause 17.1 (Letter of Credit
Commission).
16.3 Other Obligations
Any Obligor shall fail to observe or perform any covenant or agreement
contained in this Agreement or in any other Finance Document (other than
those covered by Clause 16.1 or Clause 16.2 above) and such failure, if,
in the reasonable opinion of the Majority Banks, it is capable of
remedy, is not remedied within 30 days after notice thereof has been
given to the Account Party by the Agent at the request of any Bank.
16.4 Misrepresentation
Any representation, warranty, certification or statement made by any
Obligor in this Agreement or in any other Finance Document or in any
certificate, financial statement or other document delivered pursuant to
this Agreement or any other Finance Document shall prove to have been
incorrect in any material respect when made (or deemed made).
-41-
16.5 Cross-default
The Account Party or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations when due or within any
applicable grace period.
16.6 Cross-Acceleration
Any event or condition shall occur which results in the acceleration of
the maturity of any Material Debt or enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of such
Material Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof.
16.7 Winding-up of the Account Party or the Guarantor
16.7.1 A resolution or other similar action is passed authorising the
voluntary winding up of the Account Party or any other similar
action with respect to the Account Party or a petition is
filed for the winding up of the Account Party or the taking of
any other similar action with respect to the Account Party in
the Grand Court of the Cayman Islands (except in the case of
any frivolous or vexatious steps or proceedings started by any
Person who is not a member of the Group where such steps or
proceedings are dismissed within 30 days); or
16.7.2 any corporate action is taken authorising the winding up, the
liquidation, any arrangement or the taking of any other
similar action of or with respect to the Guarantor or
authorising any corporate action to be taken to facilitate any
such winding up, liquidation, arrangement or other similar
action or any petition shall be filed seeking the winding up,
the liquidation, any arrangement or the taking of any other
similar action of or with respect to the Guarantor by the
Registrar of Companies in Bermuda, one or more holders of
insurance policies or reinsurance certificates issued by the
Guarantor or by any other Person or Persons or any petition
shall be presented for the winding up of the Guarantor to a
court of Bermuda as provided under the Bermuda Companies Law
and in either such case such petition shall remain undismissed
and unstayed for a period of 60 days or any creditors' or
members' voluntary winding up of the Guarantor as provided
under the Bermuda Companies Law shall be commenced or any
receiver shall be appointed by a creditor of the Guarantor or
by a court of Bermuda on the application of a creditor of the
Guarantor as provided under any instrument giving rights for
the appointment of a receiver.
16.8 Execution or Distress
A proceeding shall be commenced by any Person seeking execution or
distress over or possession of the assets of either Obligor or any
substantial part thereof or any similar remedy and such proceedings
shall remain undismissed and unstayed for a period of 60 days.
16.9 Insolvency and Rescheduling
An Obligor or Material Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganisation or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar
-42-
official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced
against it or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due,
or shall take any corporate action to authorise any of the foregoing; or
an involuntary case or other proceeding shall be commenced against an
Obligor or Material Subsidiary seeking liquidation, reorganisation or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered against an Obligor or Material Subsidiary under the United
States federal bankruptcy laws as now or hereafter in effect.
16.10 Analogous Proceedings
There occurs, in relation to an Obligor or Material Subsidiary in any
country or territory in which any of them carries on business or in any
jurisdiction where any part of their assets is subject, any event which
corresponds in that country or territory with any of those mentioned in
Clause 16.7 (Winding-up of the Account Party or the Guarantor) to Clause
16.9 (Insolvency and Rescheduling) above.
16.11 Failure to comply with Judgment
A final judgment or order for the payment of money in excess of
US$100,000,000 shall be rendered against an Obligor or Material
Subsidiary and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days.
16.12 Ownership of the Account Party and the Guarantor
16.12.1 Any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934 of the United States of
America, as amended), directly or indirectly, of Voting
Interests of the Account Party (or other securities
convertible into such Voting Interests) representing 30 per
cent. or more of the combined voting power of all Voting
Interests of the Account Party; or
16.12.2 during any period of 12 consecutive calendar months,
individuals who were directors of the Account Party on the
first day of such period shall cease to constitute a
majority of the board of directors of the Account Party; or
16.12.3 any Person or two or more Persons acting in concert shall
have acquired, by contract or otherwise, or shall have
entered into a contract or arrangement that results in its
or their acquisition of the power to exercise, directly or
indirectly, a controlling influence over the management or
policies of the Account Party; or
16.12.4 the Guarantor ceases to be a Wholly-Owned Consolidated
Subsidiary of the Account Party.
-43-
16.13 Illegality
At any time it is or becomes unlawful for either Obligor to
perform or comply with any or all of its obligations
hereunder or under any of the Finance Documents or any court
or arbitrator or any governmental body, agency or official
which has jurisdiction in the matter shall decide, rule or
order that any provision of any of the Finance Documents is
invalid or unenforceable in any material respect, or either
Obligor shall so assert in writing.
16.14 Revocation of Registration
The registration of the Guarantor as an insurer shall be
revoked, suspended or otherwise have restrictions or
conditions placed upon it unless, in the case of the placing
of any such restrictions or conditions, such restrictions or
conditions could not have a material adverse effect on the
interests of the Finance Parties under the Finance Documents.
16.15 Security
If the Account Party is required to grant security pursuant
to sub-clause 17.1.2 of Clause 17.1 (Letter of Credit
Commission), the Account Party fails to deliver Security at
the times, in the amounts or as otherwise specified in the
Finance Documents or the Lien created pursuant thereto on the
Security shall at any time or for any reason cease to be a
valid, enforceable and first priority Lien on any of the
Security or the Account Party shall fail to observe or
perform any covenant relating to the delivery of the Security
and the perfection of the first priority charge and security
interest created therein contained in any other Finance
Document, provided that if the market value of the Charged
Portfolio falls below the Required Value or the Charged
Portfolio fails to satisfy the Security Trustee's
Requirements (as defined in the Charge Agreement), such
circumstances shall not constitute an Event of Default if the
market value of the Charged Portfolio is restored to the
Required Value and/or, as the case may be, the Security
Trustee's Requirements are satisfied in each case within five
Business Days of notification by the Security Trustee on
behalf of the Banks of the breach of Clause 4 of the Charge
Agreement or, if earlier, within five Business Days of the
Account Party becoming aware of such breach.
16.16 Finance Documents
Any provision of any Finance Document is repudiated,
terminated, amended or waived by any party thereto without
the written consent of the Agent, the Security Trustee and
the Majority Banks.
16.17 Custodian's Undertaking
In the event that the Account Party is required to grant
Security pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter
of Credit Commission), the Custodian fails to observe or
perform any material provision of the Custodian's Undertaking
and such failure, if in the reasonable opinion of the
Majority Banks it is capable of remedy, is not remedied
within 30 days after notice thereof has been given to the
Custodian by the Account Party or by the Agent at the request
of any Bank.
-44-
16.18 Acceleration and Cancellation
Upon the occurrence of an Event of Default at any time thereafter
while that Event of Default is continuing, the Agent may (and, if
so instructed by the Majority Banks shall) by notice to the
Account Party:
16.18.1 require the Account Party to procure that the
liabilities of each of the Banks under each Letter of
Credit are promptly reduced to zero and/or provide Cash
Collateral for each Letter of Credit in an amount
specified by the Agent (whereupon the Account Party shall
do so); and/or
16.18.2 declare that any unutilised portion of the Facility shall
be cancelled, whereupon the same shall be cancelled and
the Available Commitment of each Bank shall be reduced to
zero; and
16.18.3 (in the event that the Account Party has granted Security
pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission), direct the Security Trustee to
exercise all rights and remedies of a mortgagee or a
secured party at such time including, without limitation,
the right to take possession of any or all of the assets
subject to the Security Documents and the books and
records relating thereto, with or without judicial
process. For the purposes of the preceding sentence, the
Security Trustee may enter upon any or all of the
premises where any of the assets subject to the Security
Documents, such other security or books or records may
be situated and take possession and remove the same
therefrom.
17. COMMISSION AND FEES
17.1 Letter of Credit Commission
17.1.1 The Account Party shall, in respect of each Letter of
Credit requested by it, pay to the Agent for the account
of each Bank (for distribution in proportion to each
Bank's L/C Proportion of such Letter of Credit) a letter
of credit commission in sterling at the L/C Commission
Rate on the maximum actual and contingent liabilities of
the Banks under the relevant Letter of Credit. Such
Letter of Credit Commission shall be paid quarterly in
arrear in respect of each successive period of three
months (or such shorter period as shall end on the
relevant Expiry Date) which begins during the Term of the
relevant Letter of Credit, commencing from the Effective
Date of such Letter of Credit, and payable on the first
day of each such period thereafter.
17.1.2 If the Pricing Level reaches Level V (each as defined in
Schedule 9 (Pricing Schedule)), the Account Party shall
execute and deliver a Charge Agreement and grant Security
in favour of the Security Trustee in accordance with the
terms thereof with a Required Value equal to the
aggregate amount of the Letters of Credit issued
hereunder or such other amount as may be required by the
Security Trustee, and the Account Party shall promptly
(and in any event within five Business Days) perform its
obligations under Clause 4 of the Charge Agreement. Upon
the Security Trustee being satisfied that the Account
-45-
Party has performed its obligations under Clause 4 of the
Charge Agreement, and having received legal opinions in
form and substance satisfactory to the Security Trustee
(acting reasonably) opining that the Charge Agreement has
been executed with the necessary power and authorisation
and creates in favour of the Security Trustee on behalf
of the Banks a valid and enforceable first priority Lien
on all of the Security in respect of the Security
(subject to such qualifications and assumptions as are
customarily made by leading firms of solicitors in giving
legal opinions of that nature), the L/C Commission Rate
shall become 0.15 per cent. and the Security Trustee
shall notify all parties hereto accordingly.
17.1.3 Any change to the L/C Commission Rate shall take effect
on the day on which the event giving rise to such change
occurs (whether pursuant to Schedule 9 (Pricing Schedule)
or pursuant to Clause 17.1.2).
17.1.4 Any unpaid Letter of Credit Commission payable in respect
of each Original Letter of Credit shall be paid in full
by the Account Party by no later than the Effective Date.
17.2 Arrangement Fees
The Account Party shall pay to the Arranger the fees specified in
the letter dated 12 September 2000 from the Arranger to the
Account Party at the times, and in the amounts, specified in such
letter.
17.3 Agency Fee
The Account Party shall pay to the Agent for its own account the
agency fees specified in the letter dated 12 September 2000 from
the Arranger to the Account Party at the times, and in the
amounts, specified in such letter.
17.4 Participation Fees
The Account Party shall pay to the Arranger the participation fees
specified in the letter dated 12 September 2000 from the Arranger
to the Account Party at the times, and in the amounts, specified
in such letter. These fees shall be distributed by the Arranger
among certain of the Banks in accordance with the arrangements
agreed by the Arranger with such Banks prior to the date of this
Agreement.
18. COSTS AND EXPENSES
18.1 Transaction Expenses
The Account Party shall, from time to time within thirty days of
demand of the Agent, reimburse the Agent and the Arranger for all
reasonable costs and expenses (including legal fees) together with
any VAT thereon incurred by them in connection with the
negotiation, preparation and execution of the Finance Documents,
any other document referred to in the Finance Documents and the
completion of the transactions therein contemplated.
-46-
18.2 Preservation and Enforcement of Rights
18.2.1 The Account Party shall, from time to time on demand of
the Agent, reimburse the Finance Parties for all costs and
expenses (including legal fees) properly incurred on a
full indemnity basis together with any VAT thereon
incurred in or in connection with the preservation and/or
enforcement of any of the rights of the Finance Parties
under the Finance Documents and any document referred to
in the Finance Documents (including, without limitation,
any costs and expenses relating to any investigation as to
whether or not an Event of Default might have occurred or
is likely to occur or any steps necessary or desirable in
connection with any proposal for remedying or otherwise
resolving a Default).
18.2.2 In the event that the Account Party has granted Security
pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission) and if, by reason of a subsequent
breach of Clause 4 of the Charge Agreement by the Account
Party, any Bank incurs a capital cost or is unable to
continue to obtain the rate of return obtained by it
hereunder at the date the Security is granted or at the
date it becomes party hereto as a Bank, the Account Party
shall on demand of the Agent, promptly pay to the Agent
for the account of the Bank amounts sufficient to
indemnify that Bank from and against such cost or loss in
return.
18.3 Stamp Taxes
The Account Party shall pay all stamp, registration and other
taxes to which the Finance Documents, any other document referred
to in the Finance Documents or any judgment given in connection
therewith is or at any time may be subject and to which it is a
party and shall, from time to time on demand of the Agent,
indemnify the Finance Parties against any liabilities, costs,
claims and expenses resulting from any failure to pay or any delay
in paying any such tax.
18.4 Amendment Costs
If an Obligor requests any amendment, waiver or consent to any
Finance Document then the Account Party shall, within thirty days
of demand by the Agent, reimburse the Finance Parties for all
reasonable costs and expenses (including legal fees) together with
any VAT thereon incurred by such persons in responding to or
complying with such request.
18.5 Banks' Liabilities for Costs
If the Account Party fails to perform any of its obligations under
this Clause 18, each Bank shall, in its Proportion, indemnify each
of the Agent and the Arranger against any loss incurred by any of
them as a result of such failure.
19. DEFAULT INTEREST AND BREAK COSTS
19.1 Default Interest
If any sum due and payable by an Obligor hereunder is not paid on
the due date therefor in accordance with Clause 22 (Payments) or
if any sum due and payable by an Obligor under any judgment of any
court in connection herewith is not paid on the date
-47-
of such judgment, the period beginning on such due date or, as the
case may be, the date of such judgment and ending on the date upon
which the obligation of such Obligor to pay such sum is discharged
shall be divided into successive periods, each of which (other
than the first) shall start on the last day of the preceding such
period and the duration of each of which shall (except as
otherwise provided in this Clause 19) be selected by the Agent.
19.2 Default Interest Rate
An Unpaid Sum shall bear interest during each Term in respect
thereof at the rate per annum which is the sum from time to time
of two per cent. and LIBOR on the Quotation Date therefor.
19.3 Payment of Default Interest
Any interest which shall have accrued under Clause 19.2 (Default
Interest) in respect of an Unpaid Sum shall be due and payable and
shall be paid by the relevant Obligor, together with any Mandatory
Liquid Asset Costs Rate in respect thereof on the last day of each
Term in respect thereof or on such other dates as the Agent may
specify by notice to the relevant Obligor.
19.4 Break Costs
If any Bank or the Agent on its behalf receives or recovers all or
any part of an Unpaid Sum otherwise than on the last day of a Term
relating thereto, the Account Party shall pay to the Agent on
demand for the account of such Bank an amount equal to the amount
(if any) by which (a) the additional interest which would have
been payable on the amount so received or recovered had it been
received or recovered on the last day of that Term exceeds (b) the
amount of interest which in the opinion of the Agent (acting
reasonably) would have been payable to the Agent on the last day
of that Term in respect of a deposit in the currency of the amount
so received or recovered equal to the amount so received or
recovered placed by it with a prime bank in London for a period
starting on the first Business Day following the date of such
receipt or recovery and ending on the last day of that Term.
20. INDEMNITIES
20.1 Company's Indemnity
The Account Party undertakes to indemnify:
20.1.1 each Finance Party against any reasonable cost, claim, loss,
expense (including legal fees) or liability together with any VAT
thereon, whether or not reasonably foreseeable, which it may
sustain or incur as a consequence of the occurrence of any Event
of Default or any default by an Obligor in the performance of any
of the obligations expressed to be assumed by it in the Finance
Documents;
20.1.2 the Agent against any reasonable cost or loss it may suffer or
incur as a result of its entering into, or performing, any foreign
exchange contract for the purposes of Clause 22 (Payments);
-48-
20.1.3 each Bank against any reasonable cost or loss it may suffer under
Clause 18.5 (Banks' Liabilities for Costs) or Clause 25.5
(Indemnification); and
20.1.4 each Bank against any reasonable cost or loss it may suffer or
incur as a result of its issuing or making arrangements to issue
a Letter of Credit requested by the Account Party hereunder but
not issued by reason of the operation of any one or more of the
provisions hereof.
20.2 Currency Indemnity
If any sum (a "Sum") due from an Obligor under the Finance Documents or any
order or judgment given or made in relation thereto has to be converted
from the currency (the "First Currency") in which such Sum is payable into
another currency (the "Second Currency") for the purpose of:
20.2.1 making or filing a claim or proof against such Obligor;
20.2.2 obtaining an order or judgment in any court or other tribunal; or
20.2.3 enforcing any order or judgment given or made in relation
thereto,
the Account Party shall indemnify each person to whom such Sum is due from
and against any loss suffered or incurred as a result of any discrepancy
between (a) the rate of exchange used for such purpose to convert such Sum
from the First Currency into the Second Currency and (b) the rate or rates
of exchange available to such person at its prevailing spot rate at the
time of receipt of such Sum.
21. CURRENCY OF ACCOUNT AND PAYMENT
21.1 Currency of Account
Sterling is the currency of account and payment for each and every sum at
any time due from an Obligor hereunder, provided that:
21.1.1 each sum falling due by an Obligor hereunder in relation to any
demand made under a Letter of Credit or in relation to any
reimbursement of the Banks pursuant to a demand made under a
Letter of Credit shall be made in the currency of the demand;
21.1.2 each payment of interest shall be made in the currency in which
the sum in respect of which such interest is payable is
denominated;
21.1.3 each payment in respect of costs and expenses shall be made in
the currency in which the same were incurred;
21.1.4 each payment pursuant to Clause 9.2 (Tax Indemnity) or Clause
11.1 (Increased Costs) shall be made in the currency specified by
the party claiming thereunder; and
21.1.5 any amount expressed to be payable in a currency other than
sterling shall be paid in that other currency.
-49-
22. PAYMENTS
22.1 Payments to the Agent
On each date on which this Agreement requires an amount to be paid by an
Obligor, such Obligor shall make the same available to the Agent for
value on the due date at such time and in such funds and to such account
with such bank as the Agent shall specify from time to time upon
reasonable advance notice to such Obligor.
22.2 Payments by the Agent
Save as otherwise provided herein, each payment received by the Agent
pursuant to Clause 22.1 (Payments to the Agent) shall be made available
by the Agent to the person entitled to receive such payment in accordance
with this Agreement (in the case of a Bank, for the account of its
Facility Office) for value the same day by transfer to such account of
such person with such bank in the principal financial centre of the
country of the currency of such payment as such person shall have
previously notified to the Agent.
22.3 No Set-off
All payments required to be made by an Obligor hereunder shall be
calculated without reference to any set-off or counterclaim and shall be
made free and clear of and without any deduction for or on account of any
set-off or counterclaim.
22.4 Clawback
Where a sum is to be paid hereunder to the Agent for account of another
person, the Agent shall not be obliged to make the same available to that
other person or to enter into or perform any exchange contract in
connection therewith until it has been able to establish to its
satisfaction that it has actually received such sum, but if it does so
and it proves to be the case that it had not actually received such sum,
then the person to whom such sum or the proceeds of such exchange
contract was so made available shall on request refund the same to the
Agent together with an amount sufficient to indemnify the Agent against
any cost or loss it may have suffered or incurred by reason of its having
paid out such sum or the proceeds of such exchange contract prior to its
having received such sum.
22.5 Partial Payments
If and whenever a payment is made by an Obligor hereunder and the Agent
receives an amount less than the due amount of such payment the Agent may
apply the amount received towards the obligations of the Obligors under
this Agreement in the following order:
22.5.1 first, in or towards payment of any unpaid costs and expenses
of each of the Agent and the Arranger;
22.5.2 second, in or towards payment pro rata of any accrued interest,
Letter of Credit Commission or fees payable to any Bank
hereunder due but unpaid;
22.5.3 third, in or towards payment pro rata of any Outstandings due
but unpaid; and
-50-
22.5.4 fourth, in or towards payment pro rata of any other sum due
but unpaid.
22.6 Variation of Partial Payments
The order of partial payments set out in Clause 22.5 (Partial
Payments) shall override any appropriation made by the Obligors to
which the partial payment relates but the order set out in sub-clauses
22.5.2, 22.5.3 and 22.5.4 of Clause 22.5 (Partial Payments) may be
varied if agreed by all the Banks.
22.7 Appropriations of proceeds of enforcement of Security
If the Agent recovers any moneys from the enforcement of any Finance
Document in its capacity as Agent or Security Trustee thereunder, it
shall apply the money recovered in the following order:
22.7.1 first, in payment of all costs, charges, expenses and
liabilities (and all interest thereon as provided in the
Finance Documents) incurred by or on behalf of the Agent and
the Security Trustee and any receiver, attorney or agent in
connection with the due performance of its duties and
exercise of its powers and discretions under the Finance
Documents and the remuneration of the Agent, the Security
Trustee and every receiver under the Finance Documents;
22.7.2 secondly, in or towards payment pro rata of any due but
unpaid costs and expenses of the Agent, the Arranger and the
Banks under the Finance Documents;
22.7.3 thirdly, in or towards payment pro rata of any accrued
interest, Letter of Credit Commission or fees due but unpaid
under this Agreement;
22.7.4 fourthly, in or towards payment pro rata of any Outstandings
due but unpaid under this Agreement;
22.7.5 fifthly, in or towards payment pro rata of any other sum due
but unpaid under the Finance Documents; and
22.7.6 sixthly, in payment of the surplus (if any) to the Account
Party or any other person entitled thereto.
The order of application of money recovered in this Clause may only be
varied with the consent of all the Banks.
23. SET-OFF
23.1 Contractual Set-off
Each Obligor authorises each Bank at any time after an Event of
Default has occurred which is continuing to apply any credit balance
to which such Obligor is entitled on any account of such Obligor with
such Bank in satisfaction of any sum due and payable from such Obligor
to such Bank hereunder (whether by way of collateralisation or
otherwise) but unpaid. For this purpose, each Bank is authorised to
purchase with the moneys standing to the credit of any such account
such other currencies as may be necessary to effect such application.
-51-
23.2 Set-off not Mandatory
No Bank shall be obliged to exercise any right given to it by Clause
23.1 (Contractual Set-off).
24. SHARING
24.1 Payments to Banks
If a Bank (a "Recovering Bank") applies any receipt or recovery from
an Obligor to a payment due under this Agreement and such amount is
received or recovered other than in accordance with Clause 22
(Payments), then such Recovering Bank shall:
24.1.1 notify the Agent of such receipt or recovery;
24.1.2 at the request of the Agent, promptly pay to the Agent an
amount (the "Sharing Payment") equal to such receipt or
recovery less any amount which the Agent determines may be
retained by such Recovering Bank as its share of any payment
to be made in accordance with Clause 22.5 (Partial
Payments).
24.2 Redistribution of Payments
The Agent shall treat the Sharing Payment as if it had been paid by
the relevant Obligor and distribute it between the Finance Parties
(other than the Recovering Bank) in accordance with Clause 22.5
(Partial Payments).
24.3 Recovering Bank's Rights
The Recovering Bank will be subrogated to the rights of the parties
which have shared in a redistribution pursuant to Clause 24.2
(Redistribution of Payments) in respect of the Sharing Payment (and
the relevant Obligor shall be liable to the Recovering Bank in an
amount equal to the Sharing Payment) in place of any corresponding
liability to the parties which have shared in the redistribution.
24.4 Repayable Recoveries
If any part of the Sharing Payment received or recovered by a
Recovering Bank becomes repayable and is repaid by such Recovering
Bank, then:
24.4.1 each party which has received a share of such Sharing
Payment pursuant to Clause 24.2 (Redistribution of Payments)
shall, upon request of the Agent, pay to the Agent for
account of such Recovering Bank an amount equal to its share
of such Sharing Payment; and
24.4.2 such Recovering Bank's rights of subrogation in respect of
any reimbursement shall be cancelled and the relevant
Obligor will be liable to the reimbursing party for the
amount so reimbursed.
24.5 Exception
This Clause 24 shall not apply if the Recovering Bank would not, after
making any payment pursuant hereto, have a valid and enforceable claim
against the relevant Obligor.
-52-
24.6 Recoveries Through Legal Proceedings
If any Bank intends to commence any action in any court it shall give
prior notice to the Agent and the other Banks. If any Bank shall
commence any action in any court to enforce its rights hereunder and, as
a result thereof or in connection therewith, receives any amount, then
such Bank shall not be required to share any portion of such amount with
any Bank which has the legal right to, but does not, join in such action
or commence and diligently prosecute a separate action to enforce its
rights in another court.
25. THE AGENT, THE ARRANGER AND THE BANKS
25.1 Appointment of the Agent
The Arranger and each of the Banks hereby appoints the Agent to act as
its agent in connection herewith and authorises the Agent to exercise
such rights, powers, authorities and discretions as are specifically
delegated to the Agent by the terms hereof together with all such
rights, powers, authorities and discretions as are reasonably incidental
thereto.
25.2 Agent's Discretions
The Agent may:
25.2.1 assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto,
that (a) any representation made or deemed to be made by an
Obligor in connection with the Finance Documents is true, (b)
no Event of Default or Potential Event of Default has
occurred, (c) no Obligor is in breach of or default under its
obligations under the Finance Documents and (d) any right,
power, authority or discretion vested therein upon the
Majority Banks, the Banks or any other person or group of
persons has not been exercised;
25.2.2 assume that the Facility Office of each Bank is that notified
to it by such Bank in writing prior to the date hereof (or, in
the case of a Transferee, at the end of the Transfer
Certificate to which it is a party as Transferee) until it has
received from such Bank a notice designating some other office
of such Bank to replace its Facility Office and act upon any
such notice until the same is superseded by a further such
notice;
25.2.3 engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or
services may to it seem necessary, expedient or desirable and
rely upon any advice so obtained;
25.2.4 rely as to any matters of fact which might reasonably be
expected to be within the knowledge of an Obligor upon a
certificate signed by or on behalf of such Obligor;
25.2.5 rely upon any communication or document believed by it to be
genuine;
-53-
25.2.6 refrain from exercising any right, power or discretion
vested in it as agent hereunder unless and until instructed
by the Majority Banks as to whether or not such right, power
or discretion is to be exercised and, if it is to be
exercised, as to the manner in which it should be exercised;
25.2.7 refrain from acting in accordance with any instructions of
the Majority Banks to begin any legal action or proceeding
arising out of or in connection with the Finance Documents
until it shall have received such security as it may require
(whether by way of payment in advance or otherwise) for all
costs, claims, losses, expenses (including legal fees) and
liabilities together with any VAT thereon which it will or
may expend or incur in complying with such instructions; and
25.2.8 assume (unless it has specific notice to the contrary) that
any notice or request made by the Account Party is made on
behalf of both Obligors.
25.3 Agent's Obligations
The Agent shall:
25.3.1 promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from an
Obligor under the Finance Documents and shall promptly
deliver to each Bank a copy of each Letter of Credit
delivered to Lloyd's pursuant to Clause 3.3 (Completion of
Letters of Credit);
25.3.2 promptly notify each Bank of the occurrence of any Event of
Default or any default by an Obligor in the due performance
of or compliance with its obligations under the Finance
Documents of which the Agent has notice from any other party
hereto;
25.3.3 save as otherwise provided herein, act as agent under the
Finance Documents in accordance with any instructions given
to it by an Majority Banks, which instructions shall be
binding on the Arranger and the Banks; and
25.3.4 if so instructed by the Majority Banks, refrain from
exercising any right, power or discretion vested in it as
agent under the Finance Documents.
The Agent's duties under the Finance Documents are solely mechanical
and administrative in nature.
25.4 Excluded Obligations
Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arranger shall:
25.4.1 be bound to enquire as to (a) whether or not any
representation made or deemed to be made by an Obligor in
connection with the Finance Documents is true, (b) the
occurrence or otherwise of any Default, (c) the performance
by an Obligor of its obligations under the Finance Documents
or (d) any breach
-54-
of or default by an Obligor of or under its obligations
under the Finance Documents;
25.4.2 be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
25.4.3 be bound to disclose to any other person any information
relating to any member of the Group if (a) such person, on
providing such information, expressly stated to the Agent
or, as the case may be, the Arranger, that such information
was confidential or (b) such disclosure would or might in
its opinion constitute a breach of any law or be otherwise
actionable at the suit of any person;
25.4.4 be under any obligations other than those for which express
provision is made herein; or
25.4.5 be or be deemed to be a fiduciary for any other party
hereto.
25.5 Indemnification
Each Bank shall, in its Proportion, from time to time on demand by the
Agent, indemnify the Agent against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT
thereon which the Agent may incur, otherwise than by reason of its own
gross negligence or wilful misconduct, in acting in its capacity as
agent hereunder (other than any which have been reimbursed by the
Account Party pursuant to Clause 20.1 (Company's Indemnity).
25.6 Exclusion of Liabilities
Except in the case of gross negligence or wilful default, neither the
Agent nor the Arranger accepts any responsibility:
25.6.1 for the adequacy, accuracy and/or completeness of any
information supplied by the Agent or the Arranger, by an
Obligor or by any other person in connection with the
Finance Documents or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
pursuant to or in connection with the Finance Documents;
25.6.2 for the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any other
agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection
with the Finance Documents; or
25.6.3 for the exercise of, or the failure to exercise, any
judgement, discretion or power given to any of them by or in
connection with the Finance Documents or any other
agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection
with the Finance Documents.
-55-
Accordingly, neither the Agent nor the Arranger shall be under any
liability (whether in negligence or otherwise) in respect of such
matters, save in the case of gross negligence or wilful misconduct.
25.7 No Actions
Each of the Banks agree that it will not assert or seek to assert
against any director, officer or employee of the Agent or the Arranger
any claim it might have against any of them in respect of the matters
referred to in Clause 25.6 (Exclusion of Liabilities).
25.8 Business with the Group
The Agent and the Arranger may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any
member of the Group.
25.9 Resignation
The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior
notice to that effect to each of the other parties hereto, provided that
no such resignation shall be effective until a successor for the Agent
is appointed in accordance with the succeeding provisions of this Clause
25.
25.10 Removal of Agent
The Majority Banks may remove the Agent from its role as agent hereunder
after consultation with the Account Party by giving notice to that
effect to each of the other parties hereto. Such removal shall take
effect only when a successor to the Agent is appointed in accordance
with the terms hereof.
25.11 Successor Agent
If the Agent gives notice of its resignation pursuant to Clause 25.9
(Resignation) or it is removed pursuant to Clause 25.10 (Removal of
Agent) then any reputable and experienced bank or other financial
institution may be appointed as a successor to the Agent by the Majority
Banks (after consultation with the Account Party if the successor is a
Bank or otherwise with the Account Party's prior written consent) during
the period of such notice (with the co-operation of the Agent), subject
to such entity executing and delivering a confidentiality undertaking
substantially in the form set out in Schedule 8 (Form of Confidentiality
Undertaking) but, if no such successor is so appointed, the Agent may
appoint such a successor itself.
25.12 Rights and Obligations
If a successor to the Agent is appointed under the provisions of Clause
25.11 (Successor Agent), then (a) the retiring Agent shall be discharged
from any further obligation hereunder but shall remain entitled to the
benefit of the provisions of this Clause 25 and (b) its successor and
each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor
had been a party hereto.
-56-
25.13 Own Responsibility
It is understood and agreed by each Bank that at all times it has itself
been, and will continue to be, solely responsible for making its own
independent appraisal of and investigation into all risks arising under
or in connection with this Agreement including, but not limited to:
25.13.1 the financial condition, creditworthiness, condition, affairs,
status and nature of each member of the Group;
25.13.2 the legality, validity, effectiveness, adequacy and
enforceability of the Finance Documents and any other
agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection with
the Finance Documents;
25.13.3 whether such Bank has recourse, and the nature and extent of
that recourse, against an Obligor or any other person or any
of its assets under or in connection with the Finance
Documents, the transactions therein contemplated or any other
agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection with
the Finance Documents; and
25.13.4 the adequacy, accuracy and/or completeness of any information
provided by the Agent or the Arranger, an Obligor or by any
other person in connection with the Finance Documents, the
transactions contemplated therein or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with the Finance
Documents.
Accordingly, each Bank acknowledges to the Agent and the Arranger that
it has not relied on and will not hereafter rely on the Agent and the
Arranger or either of them in respect of any of these matters.
25.14 Agency Division Separate
In acting as agent hereunder for the Banks, the Agent shall be regarded
as acting through its agency division which shall be treated as a
separate entity from any other of its divisions or departments and,
notwithstanding the foregoing provisions of this Clause 25, any
information received by some other division or department of the Agent
may be treated as confidential and shall not be regarded as having been
given to the Agent's agency division.
25.15 Declaration of Agent as Security Trustee
The Agent hereby declares that it shall hold:
25.15.1 all rights, titles and interests that may hereafter be
mortgaged, charged, assigned or otherwise secured in favour of
the Agent by or pursuant to the Finance Documents;
25.15.2 the benefit of all representations, covenants, guarantees,
indemnities and other contractual provisions given in favour
of the Agent (other than any such
-57-
benefits given to the Agent solely for its own benefit) by or
pursuant to the Finance Documents (other than this Agreement);
and
25.15.3 all proceeds of the security referred to in sub-clause 25.15.1
above and of the enforcement of the benefits referred to in
25.15.2 above,
on trust for itself and the other Finance Parties from time to time.
Such declaration shall remain valid notwithstanding that the Agent may
on the date hereof or at any other time be the sole Finance Party; for
the avoidance of doubt, however, such declaration shall, in such case,
be deemed repeated on each date on which the Agent ceases to be the sole
Finance Party.
Each of the parties hereto agrees that the obligations, rights and
benefits vested or to be vested in the Agent as trustee as aforesaid by
the Finance Documents or any document entered into pursuant thereto
shall (as well before as after enforcement) be performed and (as the
case may be) exercised by the Agent in accordance with the provisions of
this Clause 25.
25.16 Powers and Discretions
The Agent shall have all the powers and discretions conferred upon
trustees by the Trustee Act 1925 (to the extent not inconsistent
herewith) and by way of supplement it is expressly declared as follows:
25.16.1 the Agent shall be at liberty to place any of the Finance
Documents and any other instruments, documents or deeds
delivered to it pursuant thereto or in connection therewith
for the time being in its possession in any safe deposit, safe
or receptacle selected by the Agent or with any bank, any
company whose business includes undertaking the safe custody
of documents or any firm of lawyers of good repute;
25.16.2 the Agent may, whenever it thinks fit, delegate by power of
attorney or otherwise to any person or persons or fluctuating
body of persons all or any of the rights, trusts, powers,
authorities and discretions vested in it by any of the Finance
Documents and such delegation may be made upon such terms and
subject to such conditions (including the power to
sub-delegate) and subject to such regulations as the Agent may
think fit and the Agent shall not be bound to supervise, or be
in any way responsible for any loss incurred by reason of any
misconduct or default on the part of, any such delegate (or
sub-delegate);
25.16.3 notwithstanding anything else herein contained, the Agent may
refrain from doing anything which would or might in its
opinion be contrary to any law of any jurisdiction or any
directive or regulation of any agency of any state or which
would or might otherwise render it liable to any person and
may do anything which is, in its opinion, necessary to comply
with any such law, directive or regulation;
-58-
25.16.4 save in the case of gross negligence or wilful misconduct, the
Agent and every attorney, agent, delegate, sub-delegate and any
other person appointed by any of them under any of the Finance
Documents may indemnify itself or himself out of the security
held by the Agent against all liabilities, costs, fees, charges,
losses and expenses incurred by any of them in relation to or
arising out of the taking or holding of any of the security
constituted by, or any of the benefits provided by, any of the
Finance Documents, in the exercise or purported exercise of the
rights, trusts, powers and discretions vested in any of them or
in respect of any other matter or thing done or omitted to be
done in any way relating to any of the Finance Documents or
pursuant to any law or regulation; and
25.16.5 without prejudice to the provisions of any of the Finance
Documents, the Agent shall not be under any obligation to insure
any property or to require any other person to maintain any such
insurance and shall not be responsible for any loss which may be
suffered by any person as a result of the lack of or inadequacy
or insufficiency of any such insurance.
25.17 Liability
The Agent shall not be liable for any failure:
25.17.1 to require the deposit with it of any deed or document
certifying, representing or constituting the title of the Account
Party to any of the property mortgaged, charged, assigned or
otherwise encumbered by or pursuant to any of the Finance
Documents;
25.17.2 to obtain any licence, consent or other authority for the
execution, delivery, validity, legality, adequacy, performance,
enforceability or admissibility in evidence of any of the Finance
Documents;
25.17.3 to register or notify any deed or document mentioned at sub-
clause 25.17.1 in accordance with the provisions of any of the
documents of title of the Account Party;
25.17.4 to effect or procure registration of or otherwise protect any of
the security created by any of the Finance Documents by
registering the same under any applicable registration laws in
any territory or otherwise by registering any notice, caution or
other entry prescribed by or pursuant to the provisions of the
said Act or laws;
25.17.5 to take or to require the Account Party to take any steps to
render the security without limitation, any floating charge)
created or purported to be created by or pursuant to any of the
Finance Documents effective or to secure the creation of any
ancillary charge under the laws of any jurisdiction; or
25.17.6 to require any further assurances in relation to any of the
Finance Documents.
-59-
25.18 Title to Security etc.
The Agent may accept without enquiry, requisition or objection such
right and title as the Account Party may have to the property belonging
(or purportedly belonging) to it (or any part thereof) which is the
subject matter of any of the Finance Documents and shall not be bound or
concerned to investigate or make any enquiry into the right or title of
the Account Party to such property (or any part thereof) or, without
prejudice to the foregoing, to require the Account Party to remedy any
defect in the Account Party's right or title as aforesaid.
25.19 New Security Trustee
The Agent may at any time appoint any person (whether or not a trust
corporation) to act either as a separate trustee or as a co-trustee
jointly with the Agent:
25.19.1 if the Agent considers such appointment to be in the interests
of the Banks; or
25.19.2 for the purposes of conforming to any legal requirements,
restrictions or conditions which the Agent deems relevant for
the purposes of the Finance Documents and the Agent shall give
prior notice to the Account Party and the Banks of any such
appointment.
Any person so appointed shall (subject to the provisions of the Finance
Documents) have such powers, authorities and discretions and such duties
and obligations as shall be conferred or imposed or such person by the
instrument of appointment and shall have the same benefits under this
Clause 25 as the Agent.
The Agent shall have power in like manner to remove any person so
appointed.
Such reasonable remuneration as the Agent may pay to any person so
appointed, and any costs, charges and expenses incurred by such person
in performing its functions pursuant to such appointment, shall for the
purposes hereof be treated as costs, charges and expenses incurred by
the Agent under the Finance Documents.
25.20 Perpetuity Period
The perpetuity period under the rule against perpetuities if applicable
to the trusts constituted in this Clause 25 and the other Finance
Documents shall be the period of eighty years from the date of this
Agreement and, subject thereto, if the Agent determines that all of the
obligations of the Account Party under any of the Finance Documents have
been fully and unconditionally discharged, such trusts shall be wound
up.
25.21 Security
25.21.1 In the event that the Account Party grants Security pursuant to
sub-clause 17.1.2. of Clause 17.1 (Letter of Credit Commission),
as soon as reasonably practicable after each delivery to the
Security Trustee of the statement(s) of the Charged Portfolio by
the Custodian pursuant to paragraph 3 of the Custodian's
Undertaking and in any event within seven Business Days of such
delivery, the Security Trustee and the Account Party shall
adjust the Required
-60-
Value to the extent necessary to ensure that the Required Value
of the Charged Portfolio is of an amount equal to the aggregate
of:
A + (A x Y per cent.) + B + (B x Y per cent.) +C + (C x Y per
cent.)
where:
A represents the amount of the Charged Portfolio denominated
in sterling
B represents the amount of the Charged Portfolio denominated in
dollars (converted into sterling at the Spot Rate)
C represents the amount of the Charged Portfolio denominated in
any currency other than sterling or dollars (converted into
sterling at the Spot Rate)
Y per cent. means:
(a) 10 per cent. in respect of any portion of the Charged
Portfolio denominated in sterling;
(b) 10 per cent. in respect of any portion of the Charged
Portfolio denominated in dollars; and
(c) 15 per cent. in respect of any portion of the Charged
Portfolio denominated in any currency other than dollars or
sterling
and shall notify the Custodian of any such adjustments.
25.21.2 The Security Trustee shall not amend the Security Trustee's
Requirements without the consent of the Banks.
25.21.3 In the event that the Pricing Level reverts from Level V to level
IV or above (each as defined in Schedule 9 (Pricing Schedule),
the Security Trustee will release the Security granted to it
pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of Credit
Commission) except for a portion of such Security which has a
Required Value of US$100. For the avoidance of doubt, if,
following any such release, further Security is again required to
be granted pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter
of Credit Commission), the Required Value of the Security charged
pursuant to the Charge Agreement shall be increased to the extent
required pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission).
25.22 Bank Representations
Each Bank represents to the Agent on the date of issue of each Letter of
Credit that:
25.22.1 the execution and delivery of each Letter of Credit by the Agent
on the Bank's behalf has been duly authorised by all necessary
action on the part of the Bank; and
-61-
25.22.2 the obligations of the Bank under each Letter of Credit
constitute its legal, valid and binding obligations.
25.23 Letters of Credit
Each Bank shall in its Proportion, indemnify the Agent against any and
all liabilities, costs and expenses which the Agent may incur (in its
capacity as Agent) as a result of the execution and delivery of any
Letter of Credit and any documents executed and delivered by the Agent
in connection therewith.
26. ASSIGNMENTS AND TRANSFERS
26.1 Binding Agreement
The Finance Documents shall be binding upon and enure to the benefit of
each party hereto and its or any subsequent successors and Transferees.
26.2 No Assignments and Transfers by the Obligors
No Obligor shall be entitled to assign or transfer all or any of its
rights, benefits and obligations under the Finance Documents without the
prior written consent of all the Banks.
26.3 Assignments and Transfers by Banks
Subject to obtaining the prior written consent of the Account Party
(such consent not to be unreasonably withheld or delayed), any Bank may,
at any time, assign all or any of its rights and benefits under the
Finance Documents or transfer in accordance with Clause 26.5 (Transfers
by Banks) all or any of its rights, benefits and obligations under the
Finance Documents to a bank or financial institution, provided that:
26.3.1 no such assignment or transfer of the whole or any part of the
Commitment may be made unless it is to an Approved Credit
Institution; and
26.3.2 the Account Party's consent is not required if such assignment
or transfer is:
(a) to any subsidiary or holding company, or to any subsidiary
of any holding company, of such Bank; or
(b) to any other Bank.
26.4 Assignments by Banks
If any Bank assigns all or any of its rights and benefits under the
Finance Documents in accordance with Clause 26.3 (Assignments and
Transfers by Banks), then, unless and until the assignee has delivered a
notice to the Agent confirming in favour of the Agent, the Arranger and
the Banks that it shall be under the same obligations towards each of
them as it would have been under if it had been an original party hereto
as a Bank (whereupon such assignee shall become a party hereto as a
"Bank"), the Agent, the Arranger, and the Banks shall not be obliged to
recognise such assignee as having the rights against each of them which
it would have had if it had been such a party hereto.
-62-
26.5 Transfers by Banks
If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations under the Finance Documents as contemplated in Clause 26.3
(Assignments and Transfers by Banks), then such transfer may be effected
by the delivery to the Agent of a duly completed Transfer Certificate
executed by such Bank and the relevant Transferee in which event, on the
later of the Transfer Date specified in such Transfer Certificate and
the fifth Business Day after (or such earlier Business Day endorsed by
the Agent on such Transfer Certificate falling on or after) the date of
delivery of such Transfer Certificate to the Agent:
26.5.1 to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer by novation its rights, benefits and
obligations under the Finance Documents, each of the Obligors
and such Bank shall be released from further obligations towards
one another under the Finance Documents and their respective
rights against one another shall be cancelled (such rights and
obligations being referred to in this Clause 26.5 as "discharged
rights and obligations");
26.5.2 each of the Obligors and the Transferee party thereto shall
assume obligations towards one another and/or acquire rights
against one another which differ from such discharged rights and
obligations only insofar as such Obligor and such Transferee
have assumed and/or acquired the same in place of such Obligor
and such Bank;
26.5.3 the Agent, the Arranger, the Security Trustee, the Co-Arrangers,
such Transferee and the other Banks shall acquire the same
rights and benefits and assume the same obligations between
themselves as they would have acquired and assumed had such
Transferee been an original party hereto as a Bank with the
rights, benefits and/or obligations acquired or assumed by it as
a result of such transfer and to that extent the Agent, the
Arranger and the relevant Bank shall each be released from
further obligations to each other under the Finance Documents;
and
26.5.4 such Transferee shall become a party hereto as a "Bank".
26.6 Replacement of Letter of Credit
On any transfer pursuant to Clause 26.5 (Transfers by Banks) other than
such a transfer upon the designation of a Substitute Bank in accordance
with the provisions of Clause 4.6.1 (Substitute Bank) the Bank
transferring all or any of its rights, benefits and/or obligations under
the Finance Documents shall ensure that the Account Party will procure
the release by Lloyd's of each Letter of Credit (an "Old Letter of
Credit") with respect to which the transfer is to have effect and its
replacement by a new Letter of Credit to be issued by the Transferee and
all the other Banks in an amount equal to that of the Old Letter of
Credit and having an Expiry Date which corresponds with the Expiry Date
thereof.
-63-
26.7 Transfer Fees
On the date upon which a transfer takes effect pursuant to Clause 26.5
(Transfers by Banks) the relevant Transferee shall pay to the Agent for
its own account a fee of (pounds)1,000.
26.8 Disclosure of Information
Any Bank may disclose to any person:
26.8.1 to (or through) whom such Bank assigns or transfers (or may
potentially assign or transfer) all or any of its rights,
benefits and obligations under the Finance Documents;
26.8.2 with (or through) whom such Bank enters into (or may potentially
enter into) any sub-participation in relation to, or any other
transaction under which payments are to be made by reference to,
this Agreement or any Obligor; or
26.8.3 to whom information may be required to be disclosed by any
applicable law,
such information about any Obligor or the Group and the Finance
Documents as such Bank shall consider appropriate and in the case of (i)
and (ii) above, subject to requiring and receiving a confidentiality
undertaking substantially in the form set out in Schedule 8 (Form of
Confidentiality Agreement).
26.9 Partial Transfers/Assignments
Any assignment or transfer by a Bank of part of its Commitment or
Outstandings shall be in a minimum amount of (pound)10,000,000.
27. ECONOMIC AND MONETARY UNION
27.1 Alternative Currencies during Transition Period
On and from the date on which the United Kingdom becomes a Participating
Member State, if and to the extent that any EMU Legislation provides
that an amount denominated either in the euro or in sterling and payable
within that Participating Member State by crediting an account of the
creditor can be paid by the debtor either in the euro unit or in
sterling, the Borrower shall be entitled to pay or repay any such amount
payable hereunder either in the euro unit or in sterling.
27.2 Business Days
With effect on and from the date on which the United Kingdom becomes a
Participating Member State, the definition of Business Day in Clause 1.1
(Definitions) shall be amended by the addition thereto (at the end) of
the following:
"and if such reference relates to a date for the payment or purchase
of a sum denominated in the euro or in sterling, a day (other than a
Saturday or Sunday) on which (a) such clearing or settlement system
as is determined by the Agent to be suitable for clearing or
settlement of the euro is open for business and (b) banks are
generally open for business in London.".
-64-
27.3 Rounding and Other Consequential Changes
With effect on and from the date on which the United Kingdom becomes a
Participating Member State:
27.3.1 without prejudice and in addition to any method of conversion or
rounding prescribed by any EMU Legislation, each reference in
this Agreement to a fixed amount or fixed amounts in a national
currency unit to be paid to or by the Agent shall be replaced by
a reference to such comparable and convenient fixed amount or
fixed amounts in the euro unit as the Agent may from time to time
specify; and
27.3.2 save as expressly provided in this Clause 27, the Finance
Documents shall be subject to such changes of construction or
interpretation as the Agent and the Security Trustee may from
time to time specify to be necessary to reflect the changeover to
the euro in the United Kingdom and to put the parties in the same
position, so far as possible, that they would have been in if no
change in currency had occurred.
28. CALCULATIONS AND EVIDENCE OF DEBT
28.1 Basis of Accrual
Interest and Letter of Credit Commission shall accrue from day to day
and shall be calculated on the basis of a year of 365 days (or in the
case of any such amounts denominated in dollars, 360 days) and the
actual number of days elapsed.
28.2 Proportionate Reductions
Any collateralisation of Outstandings denominated in dollars shall
reduce the amount of such Outstandings by the amount of dollars
collateralised and shall reduce the Sterling Amount of such Outstandings
proportionately.
28.3 Evidence of Debt
Each Bank shall maintain in accordance with its usual practice accounts
evidencing the face amount of its participations in Letters of Credit
and the amounts from time to time owing to it hereunder.
28.4 Control Accounts
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (a) the amount of any Unpaid Sum and the face
amount of any Letter of Credit issued and each Bank's share therein, (b)
the amount of all fees, interest and other sums due or to become due
from an Obligor and each Bank's share therein and (c) the amount of any
sum received or recovered by the Agent hereunder and each Bank's share
therein.
28.5 Prima Facie Evidence
In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to
Clause 28.3 (Evidence of Debt) and Clause 28.4 (Control Accounts) shall
be prima facie evidence of the existence and amounts of the specified
obligations of the Obligors.
-65-
28.6 Certificates of Banks
A certificate of a Bank as to (a) the amount by which a sum payable to
it hereunder is to be increased under Clause 9.1 (Tax Gross-up), (b) the
amount for the time being required to indemnify it against any such
cost, payment or liability as is mentioned in Clause 9.2 (Tax Indemnity)
or Clause 11.1 (Increased Costs) or (c) the amount of any credit,
relief, remission or repayment as is mentioned in Clause 10.3 (Tax
Credit Payment) or Clause 10.4 (Tax Credit Clawback) shall, in the
absence of manifest error, be prima facie evidence of the existence and
amounts of the specified obligations of the Obligors.
28.7 Agent's Certificates
A certificate of the Agent as to the amount at any time due from the
Account Party hereunder or the amount which, but for any of the
obligations of the Account Party hereunder being or becoming void,
voidable, unenforceable or ineffective, at any time would have been due
from the Account Party hereunder shall, in the absence of manifest
error, be conclusive for the purposes of Clause 29 (Guarantee and
Indemnity).
28.8 Letters of Credit
A certificate of a Bank as to the amount paid out by such Bank in
respect of any Letter of Credit shall, save for manifest error, be prima
facie evidence of the payment of such amounts in any legal action or
proceedings arising in connection therewith.
29. GUARANTEE AND INDEMNITY
29.1 Guarantee and Indemnity
The Guarantor irrevocably and unconditionally:
29.1.1 guarantees to each Finance Party the due and punctual observance
and performance of all the terms, conditions and covenants on
the part of the Account Party contained in the Finance Documents
and agrees to pay from time to time on demand any and every sum
or sums of money which the Account Party is at any time liable
to pay to any Finance Party under or pursuant to the Finance
Documents and which has become due and payable but has not been
paid at the time such demand is made; and
29.1.2 agrees as a primary obligation to indemnify each Finance Party
from time to time on demand from and against any loss incurred
by any Finance Party as a result of any of the obligations of
the Account Party under or pursuant to the Finance Documents
being or becoming void, voidable, unenforceable or ineffective
as against the Account Party for any reason whatsoever, whether
or not known to any Finance Party or any other person, the
amount of such loss being the amount which the person or persons
suffering it would otherwise have been entitled to recover from
the Account Party.
-66-
29.2 Additional Security
The obligations of the Guarantor herein contained shall be in addition
to and independent of every other security which any Finance Party may
at any time hold in respect of any of the Account Party's obligations
under the Finance Documents.
29.3 Continuing Obligations
The obligations of the Guarantor herein contained shall constitute and
be continuing obligations notwithstanding any settlement of account or
other matter or thing whatsoever and shall not be considered satisfied
by any intermediate payment or satisfaction of all or any of the
obligations of the Account Party under the Finance Documents and shall
continue in full force and effect until final payment in full of all
amounts owing by the Account Party under the Finance Documents and total
satisfaction of all the Account Party's actual and contingent
obligations under the Finance Documents.
29.4 Obligations not Discharged
Neither the obligations of the Guarantor herein contained nor the
rights, powers and remedies conferred in respect of the Guarantor upon
any Finance Party by the Finance Documents or by law shall be
discharged, impaired or otherwise affected by:
29.4.1 the winding-up, dissolution, administration or re-organisation
of the Account Party or any other person or any change in its
status, function, control or ownership;
29.4.2 any of the obligations of the Account Party or any other person
under the Finance Documents or under any other security taken in
respect of any of its obligations under the Finance Documents
being or becoming illegal, invalid, unenforceable or ineffective
in any respect;
29.4.3 time or other indulgence being granted or agreed to be granted
to the Account Party in respect of its obligations under the
Finance Documents or under any such other security;
29.4.4 any amendment to, or any variation, waiver or release of, any
obligation of the Account Party under the Finance Documents or
under any such other security;
29.4.5 any failure to take, or fully to take, any security contemplated
hereby or otherwise agreed to be taken in respect of the Account
Party's obligations under the Finance Documents;
29.4.6 any failure to realise or fully to realise the value of, or any
release, discharge, exchange or substitution of, any security
taken in respect of the Account Party's obligations under the
Finance Documents; or
29.4.7 any other act, event or omission which, but for this Clause
29.4, might operate to discharge, impair or otherwise affect any
of the obligations of the
-67-
Guarantor herein contained or any of the rights, powers or
remedies conferred upon any of the Finance Parties by the
Finance Documents or by law.
29.5 Settlement Conditional
Any settlement or discharge between the Account Party and any of the
Finance Parties shall be conditional upon no security or payment to any
Finance Party by the Account Party or any other person on behalf of the
Account Party being avoided or reduced by virtue of any laws relating to
bankruptcy, insolvency, liquidation or similar laws of general
application and, if any such security or payment is so avoided or
reduced, each Finance Party shall be entitled to recover the value or
amount of such security or payment from the Account Party subsequently
as if such settlement or discharge had not occurred.
29.6 Exercise of Rights
No Finance Party shall be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of the Guarantor by
the Finance Documents or by law to:
29.6.1 make any demand of the Account Party;
29.6.2 take any action or obtain judgment in any court against the
Account Party;
29.6.3 make or file any claim or proof in a winding-up or dissolution
of the Account Party; or
29.6.4 enforce or seek to enforce any other security taken in respect
of any of the obligations of the Account Party under the Finance
Documents.
29.7 Deferral of Guarantor's Rights
The Guarantor agrees that, so long as any amounts are or may be owed by
the Account Party under the Finance Documents or the Account Party is
under any actual or contingent obligations under the Finance Documents,
it shall not exercise any rights which it may at any time have by reason
of performance by it of its obligations under the Finance Documents:
29.7.1 to be indemnified by the Account Party; and/or
29.7.2 to claim any contribution from any other guarantor of the
Account Party's obligations under the Finance Documents; and/or
29.7.3 to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Finance Parties
under the Finance Documents or of any other security taken
pursuant to, or in connection with, the Finance Documents by all
or any of the Finance Parties.
29.8 Suspense Accounts
All moneys received, recovered or realised by a Bank by virtue of Clause
29.1 (Guarantee and Indemnity) may, in that Bank's discretion, be
credited to an interest bearing suspense or impersonal account and may
be held in such account for so long as
-68-
such Bank thinks fit pending the application from time to time (as
such Bank may think fit) of such moneys in or towards the payment and
discharge of any amounts owing by the Account Party to such Bank under
the Finance Documents.
30. REMEDIES AND WAIVERS, PARTIAL INVALIDITY
30.1 Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of
any Finance Party, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right
or remedy prevent any further or other exercise thereof or the
exercise of any other right or remedy. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies
provided by law.
30.2 Partial Invalidity
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions thereof nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
31. NOTICES
31.1 Communications in writing
31.1.1 Any communication to be made under or in connection with the
Finance Documents shall be made in writing and, unless
otherwise stated, may be made by fax, letter or telex or (to
the extent that the relevant party hereto has specified such
address pursuant to Clause 31.2 (Addresses)) by e-mail.
31.1.2 The Agent may additionally (if the parties hereto agree and
the Account Party has specifically approved in writing), in
the case of any document to be forwarded by the Agent
pursuant to this Agreement where such document has been
supplied to such Agent pursuant to Clause 15.1
(Information), refer the relevant party or parties hereto
(by fax, letter, telex or (if so specified) e-mail) to a web
site considered by the Account Party as secure and
confidential and to the location of the relevant information
on such web site in discharge of such notification or
delivery obligation.
31.2 Addresses
The address, fax number, e-mail address, telex number and, where
appropriate, web site (and the department or officer, if any, for
whose attention the communication is to be made) of each party hereto
for any communication or document to be made or delivered under or in
connection with the Finance Documents is:
31.2.1 in the case of an Obligor, that identified with its name
below;
31.2.2 in the case of each Bank, that notified in writing to the
Agent on or prior to the date on which it becomes a party
hereto; and
31.2.3 in the case of the Agent, that identified with its name
below,
-69-
or any substitute address, fax number, e-mail address, telex number,
web site, department or officer as the party hereto may notify to the
Agent (or the Agent may notify to the other parties hereto, if a
change is made by the Agent or a web site carrying relevant
information has been set up by the Agent) by not less than five
Business Days' notice.
31.3 Delivery
31.3.1 Any communication or document made or delivered by one
person to another under or in connection with the Finance
Documents will only be effective:
(a) if by way of fax, when received in legible form; or
(b) if by way of letter, when it has been left at the
relevant address or five Business Days after being
deposited in the post postage prepaid in an envelope
addressed to it at that address; or
(c) if by way of telex, when dispatched, but only if, at
the time of transmission, the correct answerback
appears at the start and at the end of the sender's
copy of the notice; or
(d) if by way of e-mail, when sent in legible form, but
only if, following transmission, the sender does not
receive a non-delivery message; or
(e) where reference in such communication is to a web site,
when the delivery of the letter, fax, telex or, as the
case may be, e-mail referring the addressee to such web
site is effective,
and, if a particular department or officer is specified as
part of its address details provided under Clause 31.2
(Addresses), if addressed to that department or officer.
31.3.2 Any communication or document to be made or delivered to the
Agent will be effective only when actually received by the
Agent and then only if it is expressly marked for the
attention of the department or officer identified with the
Agent's signature below (or any substitute department or
officer as the agent shall specify for this purpose).
31.3.3 All notices from or to any Obligor shall be sent through the
Agent.
31.4 Notification of address, fax number and telex number
Promptly upon receipt of notification of an address, fax number, telex
number or e-mail address or change of such pursuant to Clause 31.2
(Addresses) or changing its own address, fax number, telex number or
e-mail address, the Agent shall notify the other parties hereto.
31.5 English language
31.5.1 Any notice given under or in connection with any Finance
Document must be in English.
-70-
31.5.2 All other documents provided under or in connection with any
Finance Document must be:
(a) in English; or
(b) if not in English, accompanied by an English
translation thereof certified (by an officer of the
person making or delivering the same) as being a true
and accurate translation thereof.
31.6 Deemed receipt by the Obligors
Any communication or document made or delivered to the Account Party
in accordance with Clause 31.3 (Delivery) shall be deemed to have been
made or delivered to both Obligors.
32. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
33. AMENDMENTS
33.1 Amendments
The Agent, if it has the prior consent of the Majority Banks, and the
Obligors may from time to time agree in writing to amend this
Agreement or to waive, prospectively or retrospectively, any of the
requirements of this Agreement and any amendments or waivers so agreed
shall be binding on all the Finance Parties, provided that no such
waiver or amendment shall subject any Finance Party hereto to any new
or additional obligations without the consent of such Finance Party.
33.2 Amendments Requiring the Consent of all the Banks
An amendment or waiver which relates to:
33.2.1 Clause 24 (Sharing) or this Clause 33;
33.2.2 a change in the currency or amount of any Letter of Credit;
33.2.3 a change in the Letter of Credit Commission, or the amount
or currency of any payment of interest, fees or any other
amount payable hereunder to any Finance Party or deferral of
the date for payment thereof;
33.2.4 a release of the Guarantor from any of its obligations set
out in Clause 29 (Guarantee and Indemnity);
33.2.5 Clause 15.7 (Adjusted Consolidated Debt to Total
Capitalisation Ratio), Clause 15.8 (Consolidated Net Worth)
and Clause 15.9 (Liens);
33.2.6 the definition of Majority Banks;
33.2.7 any provision which contemplates the need for the consent or
approval of all the Banks; or
-71-
33.2.8 the Security Documents (if any),
shall not be made without the prior consent of all the Banks.
33.3 Exceptions
Notwithstanding any other provisions hereof, the Agent shall not be
obliged to agree to any such amendment or waiver if the same would:
33.3.1 amend or waive this Clause 33, Clause 18 (Costs and
Expenses) or Clause 25 (The Agent, the Arranger and the
Banks); or
33.3.2 otherwise amend or waive any of the Agent's rights hereunder
or subject the Agent or the Arranger to any additional
obligations hereunder.
34. GOVERNING LAW
This Agreement is governed by English law.
35. JURISDICTION
35.1 English Courts
Each of the parties hereto irrevocably agrees for the benefit of each
of the Agent, the Arranger and the Banks that the courts of England
shall have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and the other Finance Documents and,
for such purposes, irrevocably submits to the jurisdiction of such
courts.
35.2 Convenient Forum
The Obligors irrevocably waive any objection which either of them
might now or hereafter have to the courts referred to in Clause 35.1
being nominated as the forum to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and agree not to claim that any such
court is not a convenient or appropriate forum.
35.3 Service of Process
Each Obligor agrees that the process by which any suit, action or
proceeding is begun may be served on it by being delivered in
connection with any suit, action or proceeding in England, to ACE UK
Limited at Crosby Court, 38 Bishopsgate, London EC2N 4AJ or its other
principal place of business for the time being.
35.4 Non-Exclusive Jurisdiction
The submission to the jurisdiction of the courts referred to in Clause
35.1 shall not (and shall not be construed so as to) limit the right
of the Agent, the Arranger, the Co-Arrangers and the Banks or any of
them to take proceedings against the Account Party in any other court
of competent jurisdiction nor shall the taking of proceedings in any
one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
-72-
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
-73-
SCHEDULE 1
The Banks
Bank Commitment
(pound)
Citibank, N.A. 81,666,666.68
Barclays Bank PLC 81,666,666.66
ING Bank N.V., London Branch 81,666,666.66
National Westminster Bank PLC 50,000,000.00
Lloyds TSB Bank plc 35,000,000.00
ABN Amro Bank N.V., London Branch 30,000,000.00
Credit Lyonnais New York Branch 30,000,000.00
-------------
Total 390,000,000
-------------
-74-
SCHEDULE 2
Form of Transfer Certificate
To: Citibank International plc
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Credit Agreement") originally dated 19 November 1999 whereby
following an amendment agreement dated 17 November 2000 a (pound)390,000,000
letter of credit facility was made available to ACE Limited by a group of banks
on whose behalf Citibank International plc acted as agent in connection
therewith.
1. Terms defined in the Credit Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee and
Portion Transferred are defined in the schedule hereto.
2. The Bank (a) confirms that the details in the schedule hereto under the
heading "Letters of Credit" accurately summarises its participation in the
Credit Agreement and the Term of any existing Letters of Credit and (b)
requests the Transferee to accept and procure the transfer by novation to
the Transferee of the Portion Transferred (specified in the schedule
hereto) of its Commitment and/or its participation in such Letters of
Credit by counter-signing and delivering this Transfer Certificate to the
Agent at its address for the service of notices specified in the Credit
Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the
purposes of Clause 26.5 (Transfers by Banks) of the Credit Agreement so as
to take effect in accordance with the terms thereof on the Transfer Date or
on such later date as may be determined in accordance with the terms
thereof.
4. The Transferee confirms that it has received a copy of the Credit Agreement
together with such other information as it has required in connection with
this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information
and further agrees that it has not relied and will not rely on the Bank to
assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the Obligors.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Credit Agreement that it will perform in accordance with
their terms all those obligations which by the terms of the Finance
Documents will be assumed by it after delivery of this Transfer Certificate
to the Agent and satisfaction of the conditions (if any) subject to which
this Transfer Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Finance
-75-
Documents or any document relating thereto and assumes no responsibility
for the financial condition of the Obligors or for the performance and
observance by the Obligors of any of their respective obligations under the
Finance Documents or any document relating thereto and any and all such
conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Finance
Documents (or any document relating thereto) shall oblige the Bank to (a)
accept a re-transfer from the Transferee of the whole or any part of its
rights, benefits and/or obligations under the Finance Documents transferred
pursuant hereto or (b) support any losses directly or indirectly sustained
or incurred by the Transferee for any reason whatsoever including the non-
performance by an Obligor or any other party to the Finance Documents (or
any document relating thereto) of its obligations under any such document.
The Transferee hereby acknowledges the absence of any such obligation as is
referred to in (a) or (b) above.
8. This Transfer Certificate and the rights, benefits and obligations of the
parties hereunder shall be governed by and construed in accordance with
English law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Bank's Commitment Portion Transferred
5. Letter(s) of Credit Term and Portion Transferred
Bank's L/C Participation Expiry Date
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
-----------------------------------------------------------------------------
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address
Contact Name:
Account for Payments
in sterling:
Fax:
Telephone:
-76-
SCHEDULE 3
Conditions Precedent
1. In relation to each Obligor:
(i) confirmation by an Authorised Signatory of such Obligor that
there have been no changes to the constitutional documents of
such Obligor since 19 November 1999;
(ii) a copy, certified as at the date of the Amendment Agreement a
true and up-to-date copy by an Authorised Signatory of such
Obligor, of a board resolution of such Obligor approving the
execution, delivery and performance of the Amendment Agreement
and the terms and conditions thereof and authorising a named
person or persons to sign the Amendment Agreement and any
documents to be delivered by such Obligor pursuant thereto;
(iii) a certificate of an Authorised Signatory of such Obligor setting
out the names and signatures of the persons authorised to sign,
on behalf of such Obligor, the Amendment Agreement and any
documents to be delivered by such Obligor pursuant thereto.
2. Opinion of Clifford Chance, solicitors to the Agent.
3. An opinion of Maples and Calder, Cayman Islands counsel to the Account
Party addressed to the Finance Parties.
4. An opinion of Conyers, Dill and Pearman, Bermudian counsel to the Account
Party addressed to the Finance Parties.
5. A copy, certified a true copy by an Authorised Signatory of the Account
Party, of the financial statements of the Account Party referred to in
Clauses 14.4.1 and 14.4.2 (Financial Information).
6. Evidence satisfactory to the Agent that Lloyd's agrees to accept deeds of
substitution in respect of transfers by Banks.
7. Evidence satisfactory to the Agent that all Original Letters of Credit will
be cancelled by Lloyd's upon the issue of the Letters of Credit issued
hereunder after the Commencement Date.
8. Evidence that ACE UK Limited of Crosby Court, 38 Bishopsgate, London EC2N
4AJ has agreed to act as the agent of each Obligor for the service of
process in England in respect of the Amendment Agreement.
-77-
SCHEDULE 4
Utilisation Request
From: ACE Limited
To: Citibank International plc
Dated:
Dear Sirs,
1. We refer to the (pound)390,000,000 letter of credit agreement (the "Credit
Agreement") originally dated 19 November 1999 (as amended and restated
pursuant to an Amendment Agreement dated 17 November 2000) and made between
inter alia, ACE Limited as account party, Citibank International plc as
agent and the financial institutions named therein as Banks. Terms defined
in the Credit Agreement shall have the same meaning in this notice. This
notice is irrevocable.
2. We hereby give you notice that, pursuant to the Credit Agreement we wish
the Banks to issue the following Letters of Credit:
[Enlarge/Download Table]
===============================================================================================================
Amount Effective Date Expiry Date Beneficiary Applicant
---------------------------------------------------------------------------------------------------------------
(pound)/US$/1/ 24 November 2000 31 December 2005 Society of Lloyd's
---------------------------------------------------------------------------------------------------------------
(pound)/US$/1/ 24 November 2000 31 December 2005 Society of Lloyd's
---------------------------------------------------------------------------------------------------------------
(pound)/US$/1/ 24 November 2000 31 December 2005 Society of Lloyd's
---------------------------------------------------------------------------------------------------------------
(pound)/US$/1/ 24 November 2000 31 December 2005 Society of Lloyd's
---------------------------------------------------------------------------------------------------------------
(pound)/US$/1/ 24 November 2000 31 December 2005 Society of Lloyd's
---------------------------------------------------------------------------------------------------------------
(pound)/US$/1/ 24 November 2000 31 December 2005 Society of Lloyd's
---------------------------------------------------------------------------------------------------------------
(pound)/US$/1/ 24 November 2000 31 December 2005 Society of Lloyd's
===============================================================================================================
3. Utilisation Date: [ ].
/1/ Delete where appropriate.
-78-
4. We confirm that, at the date hereof, the Representations are true in all
material respects and no Default is continuing.
The Letters of Credit should be issued in the form attached and delivered to the
recipient at [address of recipient]. The purpose of their issue is to support
Funds at Lloyd's in respect of the Applicants.
Yours faithfully
.............................
Authorised Signatory
for and on behalf of
ACE LIMITED
-79-
SCHEDULE 5
FORM OF EXTENSION REQUEST
From: ACE Limited
To: Citibank International plc
Dated:
Re: [Applicant 1]
[Applicant 2]
Dear Sirs
We refer to the (pound)390,000,000 letter of credit agreement originally dated
19 November 1999, (as amended and restated pursuant to an Amendment Agreement
dated 17 November 2000, the "Agreement") between, inter alia, ACE Limited (the
"Company"), the financial institutions named therein as Banks and Citibank
International plc as Agent.
Terms defined in the Agreement shall have the same meanings herein.
1. Pursuant to Clause 4 (Extension of Letters of Credit) of the Agreement, the
Account Party, on behalf of [ ] (the "Applicant[s]") hereby requests that
the Banks extend the Letter[s] of Credit in accordance with the information
annexed hereto as Annex A.
2. The Account Party hereby certifies that on the date hereof and on the date
of extension set forth in Annex A, in each case both before and after
giving effect to the extension requested hereby:
(i) no Event of Default or Potential Event of Default has occurred
and is continuing;
(ii) each of the representations and warranties of the Account Party
contained in the Agreement and each other Finance Document is
correct in all material respects on the date hereof, except
representations and warranties which expressly refer to an
earlier date in which case the same shall be true on and as of
such earlier date;
(iii) after giving effect to the extension requested hereby, the
aggregate Sterling Amount of the Outstandings will not exceed the
Total Commitments; and
(iv) the Letter[s] of Credit requested hereby [is/are] being extended
solely as security to support the underwriting business of the
Applicant[s] at Lloyd's which has been provided in accordance
with the requirements of Lloyd's applicable to [it/them].
-80-
IN WITNESS WHEREOF, the Account Party has caused this Certificate to be executed
by its duly authorised officer as of the date and year first written above.
ACE LIMITED
By:............................
Name:..........................
Title:.........................
-81-
Annex A
Letter of Credit Information/2/
1. Name of Beneficiary:
......................................................
2. Letter of Credit Number:
......................................................
3. Maximum amount available under Letter of Credit: (pound)/US$.......
4. Effective Expiry Date: 31 December...../3/
/2/ A Separate "Letter of Credit Information" should be completed for each
Letter of Credit covered by the Extension Request.
/3/ Insert immediately succeeding year in which the then current Expiry Date
falls.
-82-
SCHEDULE 6
Form of Letter of Credit
Letter of Credit to be issued by the Agent on behalf of the Banks
To: The Council of Lloyd's
One Lime Street
London EC3M 7HA
Dear Sirs
Irrevocable Standby Letter of Credit No. [ ]
Re: [name of corporate member of Lloyd's] (the "Applicant")
This Clean Irrevocable Standby Letter of Credit (the "Credit") is issued by the
banks whose names are set out in Schedule 1 hereto (the "Issuing Banks", and
each an "Issuing Bank") in favour of the Society of Lloyd's ("Lloyd's") on the
following terms:
1. Subject to the terms hereof, the Issuing Banks shall make payments within
two business days of demand on Citibank International plc (the "Agent") in
accordance with paragraph 4 below.
2. Upon a demand being made by Lloyd's pursuant to paragraph 4 below each
Issuing Bank shall pay that proportion of the amount demanded which is
equal to the proportion which its Commitment set out in Schedule 1 hereto
bears to the aggregate Commitments of all the Issuing Banks set out in
Schedule 1 hereto, provided that the obligations of the Issuing Banks under
this Credit shall be several and no Issuing Bank shall be required to pay
an amount exceeding its Commitment set out in Schedule 1 hereto and the
Issuing Banks shall not be obliged to make payments hereunder in aggregate
exceeding a maximum amount of [amount in approved currency]. Any payment by
an Issuing Bank hereunder shall be made in [approved currency] to Lloyd's
account specified in the demand made by Lloyd's pursuant to paragraph 4
below.
3. The initial expiry date of this Credit shall be 31 December 2005. This
Credit will be extended automatically for a further year, without written
amendment, on the first day of January of every future year after 1 January
2001, so that it is always valid for a minimum period of four years unless
at least thirty days prior to 31 December of the first year of the then
current validity period, notice is given in writing, sent by registered
mail for the attention of the Manager, Members' Funds Department, at the
above address, that this Credit will not be extended beyond the then
current expiry date.
4. Subject to paragraph 3 above, the Issuing Banks shall pay to Lloyd's under
this Credit upon presentation of a demand by Lloyd's on Citibank
International plc at P.O. Box 449, Riverdale House, 68 Molesworth Street,
Lewisham, London SE13 7EU marked for the attention of Cliff Posner, Loans
Agency (and, in copy, at P.O. Box 200, Cottons Centre, Hays Lane, London
SE1 2QT marked for the attention of Jon Pasquill,
-83-
Global Cash and Trade) in the form set out in Schedule 2 hereto the amount
specified therein (which amount shall not, when aggregated with all other
amounts paid by the Issuing Banks to Lloyd's under this Credit, exceed the
maximum amount referred to in paragraph 2 above).
5. The Agent has signed this Credit as agent for disclosed principals and
accordingly shall be under no obligation to Lloyd's hereunder other than in
its capacity as an Issuing Bank.
6. All charges are for the Applicant's account.
7. Subject to any contrary indication herein, this Credit is subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500.
8. This Credit shall be governed by and interpreted in accordance with English
law and the Issuing Banks hereby irrevocably submit to the jurisdiction of
the High Court of Justice in England.
9. Each of the Issuing Banks engages with Lloyd's that demands made under and
in compliance with the terms and conditions of this Credit shall be duly
honoured on presentation.
Yours faithfully
CITIBANK INTERNATIONAL plc
for and on behalf of
[Names of all Issuing Banks]
-84-
APPENDIX 1
Issuing Banks' Commitments
Name and Address of Issuing Bank Commitment
-85-
APPENDIX 2
Form of Demand (Sterling)
[on Lloyd's letterhead]
Dear Sir/Madam
THE SOCIETY OF LLOYD'S
TRUSTEE OF
LETTER OF CREDIT NO.
With reference to the above, we enclose for your attention a Bill of Exchange,
together with the respective Credit. Payment should be made by way of CHAPS. The
account details are as follows:-
National Westminster Bank Plc Sort Code 60-00-01
City of London Office Account 140-00-04026268
P.O. Box 12258
1 Princes Street
London EC2R 8AP
Please quote Member Code:
Yours faithfully
for Manager
Members' Funds Department
Members' Services Unit
-86-
Your ref:
Our ref: MEM/ / / /C911f
Extn:
BILL OF EXCHANGE
The Society of Lloyd's
Trustee of
Letter of Credit No.
Please pay in accordance with the terms of the Credit to our order the amount
of (pound) .
For and on behalf of
Authorised Signatory
Membership Department
To: Citibank International plc
as Agent
-87-
APPENDIX 2 (CONT.)
Form of Demand (Approved Currency)
[Lloyd's to supply]
-88-
SCHEDULE 7
Mandatory Liquid Asset Costs Rate
1. For the purposes of this Agreement, the cost of compliance with existing
requirements of the Bank of England and/or the Financial Services
Authority will be calculated by the Agent in relation to each Unpaid Sum
on the basis of rates supplied by the Agent (or such Bank(s) as it may
from time to time determine) by reference to the circumstances existing
on the first day of each Term in respect of such Unpaid Sum and, if any
such Term of such Unpaid Sum exceeds three months, at three calendar
monthly intervals from the first day of such Term during its duration in
accordance with the following formula:
(a) in relation to Unpaid Sums denominated in Sterling:
AB + C(B - D) + E x 0.01 per cent. per annum
------------------------
100 - (A + ^ C)
(b) in relation to Unpaid Sums denominated in dollars:
E x 0.01 per cent. per annum
-------- ---
300
Where:
A is the percentage of eligible liabilities (assuming
these to be in excess of any stated minimum) which the
Agent (or such Bank as it may determine) is from time
to time required to maintain as an interest free cash
ratio deposit with the Bank of England to comply with
cash ratio requirements.
B is the percentage rate per annum at which sterling
deposits are offered by the Agent (or such Bank as it
may determine) in accordance with its normal practice,
for a period equal to (a) the relevant Term (or, as
the case may be, remainder of such Term) in respect of
the relevant Unpaid Sum or (b) three months, whichever
is the shorter, to a leading bank in the London
Interbank Market as of 11.00 a.m. in a sum
approximately equal to the amount of such Unpaid Sum.
C is the percentage of eligible liabilities which the
Agent (or such Bank as it may determine) is required
from time to time to maintain as interest bearing
special deposits with the Bank of England.
D is the percentage rate per annum payable by the Bank
of England to the Agent (or such Bank as it may
determine) on interest bearing special deposits.
E is the rate payable by the Agent (or such Bank as it
may determine) to the Financial Services Authority
pursuant to the Fees Regulations (but, for this
purpose, ignoring any minimum fee required pursuant to
the
-89-
Fees Regulations) and expressed in pounds per
(pound)1,000,000 of the Fee Base of the Agent (or such
Bank as it may determine).
2. For the purposes of this Schedule:
(i) "eligible liabilities" and "special deposits" shall bear the
meanings ascribed to them from time to time under or pursuant
to the Bank of England Act 1998 or (as may be appropriate) by
the Bank of England;
(ii) "Fee Regulations" means the Banking Supervision (Fees)
Regulations 2000 or such other regulation as may be in force
from time to time in respect of the payment of fees for
banking supervision; and
(iii) "Fee Base" shall bear the meaning ascribed to it, and shall be
calculated in accordance with, the Fees Regulations.
3. The percentages used in A and C above shall be those required to be
maintained on the first day of the relevant period as determined in
accordance with B above.
4. In application of the above formula, A, B, C and D will be included in
the formula as figures and not as percentages e.g. if A is 0.5 per cent.
and B is 12 per cent., AB will be calculated as 0.5 x 12 and not as 0.5
per cent. x 12 per cent.
5. Calculations will be made on the basis of a 365 day year (or, if market
practice differs, in accordance with market practice).
6. A negative result obtained by subtracting D from B shall be taken as
zero.
7. The resulting figures shall be rounded to four decimal places.
8. Additional amounts calculated in accordance with this Schedule are
payable on the last day of the Term to which they relate.
9. The determination of the Mandatory Liquid Asset Costs Rate by the Agent
in relation to any period shall, in the absence of manifest error, be
conclusive and binding on all of the parties hereto.
10. The Agent may from time to time, after consultation with the Account
Party and the Banks, determine and notify to all parties any amendments
or variations which are required to be made to the formula set out above
in order to comply with any requirements from time to time imposed by
the Bank of England or the Financial Services Authority in relation to
any Unpaid Sum and any such determination shall, in the absence of
manifest error, be conclusive and binding on all the parties hereto.
-90-
SCHEDULE 8
Form of Confidentiality Undertaking
[Letterhead of Transferor]
[Date]
To: [Transferee]
Dear Sirs,
ACE Limited - (pound)390,000,000 Letter of Credit Facility Agreement originally
dated 19 November 1999 (as amended and restated pursuant to an Amendment
Agreement dated 17 November 2000)
Confidentiality Agreement
In connection with your possible interest in becoming a bank in the
above-captioned facility (the "Transaction") for ACE Limited (the "Company"), we
will be providing you with information that is not in the public domain but that
is confidential or proprietary in nature. Such information and any other
information concerning the Company or the Transaction furnished to you by
[Transferor], or by or on behalf of the Company (whether before, on or after the
date of this Agreement), together with analyses, compilations or other materials
prepared by you or your directors, officers, employees or advisors
(collectively, "Representatives") which contain or otherwise reflect such
information, are hereinafter collectively referred to as the "Information". In
consideration of your receipt of the Information, you agree that:
1. Except as otherwise expressly provided herein, you will not (i) use the
Information except in connection with the Transaction or (ii) disclose
to any person any terms or conditions of the Transaction or any portion
of the Information.
2. Notwithstanding the foregoing, you may disclose the Information: (i) to
your Representatives who need to know the Information for purposes of
evaluating the Transaction and who are informed by you of the
confidential nature of the Information and who agree to be bound by the
terms of this Agreement; (ii) as may be required by applicable law or at
the request of any regulatory or supervisory authority having
jurisdiction over you or at the request of any rating agency for
purposes of establishing or maintaining your debt ratings, provided that
you request confidential treatment thereof to the extent permitted by
law; or (iii) with the prior written consent of the Company and
[Transferor].
3. The reference to the term "Information" contained in paragraphs 1 and 2
shall not include such portions thereof which (i) are or become
available to the public through no fault or action by you or your
Representatives or (ii) are or hereafter become available to you on a
non-confidential basis from a source other than the Company,
[Transferor] or their respective Representatives, which source, to the
best of your
-91-
knowledge, is not prohibited from disclosing such Information to you by
a contractual, legal or fiduciary obligation to the Company or
[Transferor].
4. In the event that you or any of your Representatives becomes legally
compelled to disclose any of the Information or the existence of the
Transaction, you will, to the extent permitted by law provide the
Company and [Transferor] with prompt notice so that they may seek a
protective order or other appropriate remedy. In the event that such
protective order or remedy is not obtained, you shall furnish only that
portion of the Information that is legally required and shall disclose
such Information in a manner reasonably designed to preserve its
confidential nature.
5. In the event that discussions with you concerning the Transaction are
discontinued or your participation in the Transaction is otherwise
terminated, you shall redeliver to [Transferor] any Information that was
furnished to you by or on behalf of the Company or the Transferor or
shall certify to the Company and [Transferor] that you have destroyed
all such Information.
6. You agree to be responsible for any breach of this Agreement by you or
your Representatives.
7. You acknowledge that money damages and other remedies at law may be
inadequate to protect against breach of this Agreement and you hereby
agree to the granting of injunctive or other equitable relief without
proof of actual damages.
8. It is further understood and agreed that no failure or delay by the
Company or [Transferor] in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof.
9. This Agreement shall be governed by and construed in accordance with the
laws of England and Wales.
If you are prepared to accept the Information on the foregoing terms, please
countersign this Agreement in the space provided below and deliver it via
telecopier (with the executed original to follow by next-day courier) to:
[Transferor]
[address]
Attention:
Telecopier:
Your acceptance of this Agreement shall be effective upon our receipt of such
fax from you.
Yours faithfully,
-92-
[TRANSFEROR]
By: [ ] [ACCEPTED AND AGREED]
Title: [ ] As at the date hereof
[Name of Transferee]
By: [ ]
Title: [ ]
-93-
SCHEDULE 9
Pricing Schedule
"L/C Commission Rate" means, for any date, the rates set forth below in the row
opposite such term and in the column corresponding to the Pricing Level that
applies at such date:
[Enlarge/Download Table]
===============================================================================================================
Level I Level II Level III Level IV Level V
---------------------------------------------------------------------------------------------------------------
L/C Commission Rate 0.50 per cent. 0.55 per cent. 0.60 per cent. 0.625 per cent. 0.65 per cent.
===============================================================================================================
For purposes of this Schedule 9, the following Pricing Levels have the following
meanings:
"Level I" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated AA- or higher by S&P.
"Level II" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated A+ by S&P.
"Level III" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated A by S&P.
"Level IV" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated A- by S&P.
"Level V" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated BBB+ or less by S&P.
"Financial Strength Rating" means the financial strength rating of a company
determined by the method used by S&P.
"Pricing Level" refers to the determination of which of Level I, Level II, Level
III, Level IV or Level V applies at any date.
"S&P" means Standard & Poor's Rating Services (a division of The McGraw-Hill
Companies, Inc.).
The credit ratings to be utilised for the purposes of this Schedule 9 are those
ratings assigned to the Financial Strength Rating of the Guarantor. The rating
in effect at any date is that in effect at the close of business on such date.
-94-
SCHEDULE 10
Existing Liens
1. Liens securing letters of credit issued by Citibank, N.A. for the
account of Cigna Europe in an aggregate stated amount not exceeding
US$16,000,000 (subject to currency fluctuations).
2. Liens securing letters of credit issued by Citibank, N.A. for the
account of INA (UK) in an aggregate stated amount not exceeding
US$8,000,000.
3. US$70,000,000 of Cigna Overseas Insurance Company investments are
pledged to Domestic Pool companies under a Regulation 114 trust.
4. Lien arising under a Subordination Agreement dated as of 27 October 1998
among ACE US Holdings, Inc., ACE Limited and The Chase Manhattan Bank
encumbering ACE US Holdings, Inc.'s rights under the Subordinated Loan
Agreement dated as of 27 October 1998 among ACE US Holdings, Inc., ACE
Bermuda Insurance Ltd. and United States Trust Company of New York, as
trustee under the Indenture dated 17 October 1998 of ACE US Holdings,
Inc.
-95-
SCHEDULE 11
Form of Charge Agreement
--------------------------------------------------------------------------------
Name of Chargor and address of its registered or principal office:
ACE Limited
The ACE Building
30 Woodbourne Avenue
Hamilton HM08
Bermuda
Facsimile no: +441 296 0087 (the "Chargor")
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name of Custodian and address of its registered or principal office:
[ ]
Facsimile no: [ ] (the "Custodian")
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date: [Date]
--------------------------------------------------------------------------------
To: CITIBANK INTERNATIONAL plc (the "Security Trustee")
336 Strand
London WC2R 1HB
The terms used in this Charge Agreement are defined in Clause 21.
1. PAYMENT AND DISCHARGE
We shall pay and discharge in full all of the Obligations at the times
and in the manner provided for in the Agreements.
2. CHARGE
2.1 We, acting in the Due Capacity, hereby charge, by way of first charge,
in your favour all of the Charged Portfolio for the payment to you and
the discharge of all of the Obligations.
-96-
2.2 Notwithstanding any provision of the Agreement to the contrary, the
Security Trustee's entitlement and recourse against the Charged
Portfolio under this Charge Agreement shall not in any circumstances
exceed an amount equal to the Required Value.
2.3 We shall deliver, transfer and assign all of the Charged Portfolio to
the Custodian by means acceptable to you.
3. CUSTODIAN'S UNDERTAKING
We undertake to deliver (or procure the delivery of) the Custodian's
Undertaking to you forthwith upon the execution of this Charge
Agreement.
4. REQUIRED VALUE
We undertake to ensure that with effect from the date of this Charge
Agreement and at all times thereafter until the Obligations are
discharged in full:
4.1 the market value of the Charged Portfolio shall not be less than the
Required Value and without limitation from time to time to pay or
transfer to the Custodian (by way of increment to the Charged Portfolio)
money and/or securities so that such value shall not be less than the
Required Value; and
4.2 each component part of the Charged Portfolio shall satisfy the Security
Trustee's Requirements applicable thereto.
5. FURTHER ASSURANCE
5.1 We undertake forthwith upon notice to that effect by you to execute and
sign in your favour or your nominees' and to deliver to you all such
transfers (or, if you shall so require, partially completed instruments
of transfer with the name of the transferee, date and consideration left
blank), assignments and notices (including without limitation the notice
in the form set out in the First Schedule), and to make all such
payments, as you may specify in such notice for the purpose of
perfecting your title to all or any part of the Charged Portfolio or for
enabling you (as you shall be entitled at any time to do) to vest the
same in your name or in the name(s) of your nominees or agents or any
purchaser.
5.2 We further undertake forthwith upon notice to that effect by you to
execute in your favour or your nominees' or agents' and to deliver to
you such legal or other mortgages of the Charged Portfolio or any part
thereof for the purpose of securing or further securing the Obligations
and being in such form as you shall require (provided that the
Obligations are not thereby increased).
6. REPRESENTATIONS AND WARRANTIES
We hereby represent and warrant to you and undertake that:
6.1 we are and will, at all times during the subsistence of the security
hereby constituted, be the sole beneficial owner of all of the Charged
Portfolio free from mortgages or charges in accordance with our
undertaking contained in Clause 7 hereof;
-97-
6.2 subject to paragraph 5 of the Custodian's Undertaking, we have not sold
or agreed to sell or otherwise disposed of or agreed to dispose of the
benefit of the Charged Portfolio or any part thereof;
6.3 we have and will at all times have the necessary power to enable us to
enter into and perform the obligations expressed to be assumed by us
under this Charge Agreement;
6.4 this Charge Agreement constitutes our legal, valid, binding and
enforceable obligation (subject to bankruptcy, insolvency or other laws
of general application affecting the enforcement of creditors' rights,
the application of equitable principles and the non-availability of the
equitable remedies of specific performance or injunctive relief) and is
a security over the Charged Portfolio and every part thereof effective
in accordance with its terms; and
6.5 all necessary authorisations to enable or entitle us to enter into this
Charge Agreement have been obtained and are in full force and effect and
will remain in such force and effect at all times during the subsistence
of the security hereby constituted.
7. NEGATIVE PLEDGE
We hereby undertake with you that at no time during the subsistence of
the security hereby constituted will we, otherwise than:
7.1 in your favour, or
7.2 with your prior written consent and in accordance with and subject to
any conditions which you may attach to such consent,
create, grant, extend or permit to subsist any mortgage or other fixed
security or any floating charge on or over the Charged Portfolio or any
part thereof. The foregoing prohibition shall apply not only to
mortgages, other fixed securities and floating charges which rank or
purport to rank in point of security in priority to the security hereby
constituted but also to any mortgages, securities or floating charges
which rank or purport to rank pari passu therewith or thereafter.
8. POWER OF SALE
8.1 Upon the occurrence of an Event of Default which is continuing and which
has not been remedied or waived under the Agreement, you shall have and
be entitled without prior notice to us to exercise the power to sell or
otherwise dispose of, for any consideration (whether payable immediately
or by instalments) as you shall think fit, the whole or any part of the
Charged Portfolio and may (without prejudice to any right which you may
have under any other provision hereof) treat such part of the Charged
Portfolio as consists of money as if it were the proceeds of such sale
or other disposal. You shall be entitled to apply the proceeds of such
sale or other disposal in paying the costs of such sale or other
disposal and (subject to the rights or claims of any person entitled in
priority to you) in or towards the discharge of the Obligations, the
balance (if any) to be paid to us or other persons entitled thereto.
Such power of sale or other
-98-
disposal shall operate as a variation and extension of the statutory
power of sale under Section 101 of the Law of Property Act 1925.
8.2 The restriction contained in Section 103 of the Law of Property Act 1925
on the exercise of the statutory power of sale shall not apply to any
exercise by you of your power of sale or other disposal which shall
arise, as shall the statutory power under the said Section 101 of
appointing a receiver of the Charged Portfolio or the income thereof,
immediately upon the occurrence of an Event of Default which is
continuing and which has not been remedied or waived as is referred to
in Clause 8.1. In favour of a purchaser of all or any part of the
Charged Portfolio, a certificate in writing by your officer or agent
that either or both of such powers has arisen and is exercisable shall
be conclusive evidence of that fact.
8.3 Without limitation to the generality of your rights and remedies as set
forth in Clause 8.1, you may at any time without prior notice to us:-
8.3.1 after an Event of Default has occurred which is continuing and
which has not been remedied or waived, exercise any or all of
your rights under or pursuant to the Custodian's Undertaking;
and
8.3.2 if any or all of the component parts of the Charged Portfolio
(the "Ineligible Property") delivered, transferred or assigned
to you under or pursuant to the Custodian's Undertaking do not
satisfy the Security Trustee's Requirements,
then you may (but shall not be obliged to):
(a) convert for our account and at our sole risk all or any part
of the Ineligible Property into property which does satisfy
all or any of the Security Trustee's Requirements in such
manner as you in your sole discretion (acting reasonably) may
determine to be appropriate; and/or
(b) sell for our account and at our sole risk all or any part of
the Ineligible Property in return for payment of such currency
or currencies as you in your sole discretion (acting
reasonably) determine to be appropriate and pay the same to an
account or accounts opened or maintained by you for that
purpose pursuant to Clause 13.2.
9. POWER OF ATTORNEY
We hereby by way of security for the performance of our obligations
hereunder irrevocably (within the meaning of Section 4 of the Powers of
Attorney Act 1971) appoint you to be our attorney and in our name and on
our behalf and as our act and deed after an Event of Default has
occurred which is continuing and which has not been remedied or waived,
to sign, seal, execute, deliver, perfect and do all deeds, instruments,
mortgages and things as may be, or as you may consider to be, requisite
for carrying out any obligations imposed on us under Clause 5, or for
enabling you to exercise your power(s) of sale or other disposal or
conversion referred to in Clause 8 or for carrying into effect any such
sale or other disposal or conversion made under
-99-
such power(s) by executing instruments of transfer (or completing
partially completed instruments executed by us), assignments or notices,
or exercising any of the rights and powers from time to time attaching
to any part of the Charged Portfolio. We hereby undertake to ratify and
confirm all things done and documents executed by you in the exercise of
the power of attorney conferred by this Clause.
10. CONSOLIDATION OF SECURITIES
Subsection (1) of Section 93 of the Law of Property Act 1925 shall not
apply to this Charge Agreement.
11. EFFECTIVENESS OF SECURITY
11.1 This Charge Agreement shall be in addition to and shall be independent
of every other security which you may at any time hold for any of the
Obligations. No prior security held by you over the whole or any part of
the Charged Portfolio shall merge in the security hereby constituted.
11.2 This Charge Agreement shall remain in full force and effect as a
continuing security unless and until you discharge it.
11.3 Nothing contained in this Charge Agreement is intended to, or shall
operate so as to, prejudice or affect any bill, note, guarantee,
mortgage, pledge, charge or other security of any kind whatsoever which
you may have for the Obligations or any of them or any right, remedy or
privilege of yours thereunder.
12. REMEDIES, TIME OR INDULGENCE
12.1 The rights, powers and remedies provided by this Charge Agreement are
cumulative and are not, nor are they to be construed as, exclusive of
any right of set-off or other rights, powers and remedies provided by
law.
12.2 No failure on your part to exercise, or delay on your part in
exercising, any of the rights, powers and remedies provided by this
Charge Agreement or by law (each a "Security Trustee Right") shall
operate as a waiver thereof, nor shall any single or partial waiver of a
Security Trustee Right preclude any further or other exercise of that
Security Trustee Right or the exercise of any other Security Trustee
Right.
12.3 You may in your discretion grant time or other indulgence or make any
other arrangement, variation or release with any person(s) not party
hereto (irrespective of whether such person(s) is/are jointly liable
with us) in respect of the Obligations or in any way affecting or
concerning them or any of them or in respect of any security for the
Obligations or any of them, without in any such case prejudicing,
affecting or impairing the security hereby constituted, or any Security
Trustee Right or the exercise of the same, or any indebtedness or other
liability owed by us to you.
13. ACCOUNTS
-100-
13.1 If you shall at any time receive notice of any subsequent mortgage,
assignment, charge or other interest affecting all or any part of the
Charged Portfolio you may open a new account or accounts for us in your
books. If you do not do so, then (unless you give to us express written
notice to the contrary) as from the time of receipt of such notice by
you, all payments made by us to you shall in the absence of any express
appropriation by you to the contrary be treated as having been credited
to a new account of ours and not as having been applied in reduction of
the Obligations at the time when you received the notice.
13.2 All monies received, recovered or realised by you under this Charge
Agreement (including the proceeds of any conversion of currency) may in
your discretion be credited to any suspense or impersonal account and
may be held in such account for so long as you shall think fit (with
interest accruing thereon at such rate, if any, as you may deem fit)
pending their application from time to time (as you shall be entitled to
do in your discretion) in or towards the discharge of any of the
Obligations.
13.3 In case you shall have more than one account for us in your books you
may at any time after making any demand for payment or other discharge
of any of the Obligations, and for so long as all the Obligations remain
unpaid, or after you shall have received notice of any subsequent charge
or other interest affecting all or any part of the Charged Portfolio,
and without prior notice in that behalf, forthwith transfer all or any
part of any balance standing to the credit of any such account to any
other such account which may be in debit.
14. CURRENCY
14.1 For the purpose of or pending the discharge of any of the Obligations
you may convert any monies received, recovered or realised or subject to
application by you under this Charge Agreement (including the proceeds
of any previous conversion under this Clause) from their existing
currency of denomination into the currency of denomination of such
Obligations as you may think fit, and any such conversion shall be
effected at your then prevailing spot rate of exchange for obtaining
such other currency with the existing currency.
14.2 References herein to any currency extend to any funds of that currency
and for the avoidance of doubt funds of one currency may be converted
into different funds of the same currency.
15. COSTS, CHARGES AND EXPENSES
All your reasonable costs, charges and expenses incurred in the exercise
of any Security Trustee Right, or in connection with the execution of or
otherwise in relation to this Charge Agreement and all your costs,
charges and expenses incurred in connection with the perfection or
enforcement of the security hereby constituted or any other security
held by you for the Obligations or any guarantee to you in respect
thereof, shall be reimbursed to you by us on demand on a full indemnity
basis together with interest from the date of the same having been
incurred (or from the date of
-101-
demand if such demand is made after unreasonable delay) to the date of
payment at such rate or rates as you may determine in relation to the
currency involved.
16. LAW AND JURISDICTION
This Charge Agreement shall be governed by English law and for your
benefit we hereby irrevocably submit to the jurisdiction of the English
courts.
17. PROVISIONS SEVERABLE
Each of the provisions contained in this Charge Agreement shall be
severable and distinct from one another and if at any time any one or
more of such provisions is or becomes invalid, illegal or unenforceable,
the validity, legality and enforceability of each of the remaining
provisions of this Charge Agreement shall not in any way be affected,
prejudiced or impaired thereby.
18. NOTICES
18.1 Any notice or demand required to be served on us by you hereunder may be
served:-
18.1.1 on any of our officers personally,
18.1.2 by letter addressed to us or to any of our officers and left at
our registered office or at any one of our principal places of
business,
18.1.3 by posting the same by letter addressed in any such manner as
aforesaid to such registered office or any such principal place
of business or
18.1.4 by telex or facsimile addressed in any such manner as aforesaid
to any then published telex or facsimile number of ours.
18.2 Any notice or demand:
18.2.1 sent by post in accordance with Clause 18.1 to an address in the
United Kingdom shall be deemed to have been served on us at
10.00 a.m. (London time) on the second business day next
following the date of posting or, in the case of an address
outside the United Kingdom, shall be deemed to have been served
on us at 10.00 a.m. (London time) on the fifth business day next
following and exclusive of the date of posting; or
18.2.2 sent by telex or facsimile in accordance with Clause 18.1 shall
be deemed to have been served on us when despatched, provided
that an activity report indicates that the document has been so
transmitted.
18.3 In proving such service by post it shall be sufficient to show that the
letter containing the notice or demand was properly addressed and posted
and such proof of service shall be effective notwithstanding that the
letter was in fact not delivered or was returned undelivered.
19. THE SECURITY TRUSTEE'S DISCRETIONS
-102-
Any liberty or power which may be exercised or any determination which
may be made hereunder by you may be exercised or made in your absolute
and unfettered discretion and you shall not be under any obligation to
give reasons therefor, provided that the Security Trustee will so act in
good faith and in accordance with Clause 25 of the Agreement).
20. ASSIGNMENT
You shall have a full and unfettered right to assign the whole or any
part of the benefit of this Charge Agreement to any Person who is
appointed as your successor pursuant to Clause 25 of the Agreement and
the words "you" and "your" and the expression "the Security Trustee"
wherever used herein shall be deemed to include your assignees and other
successors, whether immediate or derivative, who shall be entitled to
enforce and proceed upon this Charge Agreement in the same manner as if
named herein. You shall be entitled to impart any information concerning
us to any such assignee or other successor or any participant or
proposed assignee, successor or participant subject to such person
executing and delivering a confidentiality undertaking substantially in
the form set out in Schedule 8 of the Agreement.
21. INTERPRETATION
21.1 Terms not otherwise defined herein shall bear the meaning ascribed to
them in the Agreement.
In this Charge Agreement:
"Agreement" means the (pound)390,000,000 letter of credit facility
agreement originally dated 19 November 1999 (as amended and restated
pursuant to an Amendment Agreement dated 17 November 2000) and made
between ACE Limited as account party, ACE Bermuda Insurance Ltd. as
guarantor, Citibank, N.A. as arranger, Barclays Bank PLC and ING Barings
as co-arrangers, Citibank International plc as agent and security
trustee and the financial institutions defined therein as banks;
"Charged Portfolio" means at any time all of the Chargor's right, title
and interest in and to:
(a) all securities which are held by, to the order, for the account
or under the control or direction of, the Custodian;
(b) all securities which are held by any clearance system on behalf
of, for the account of or to the order of the Custodian;
(c) all rights, benefits and proceeds attaching to or arising from or
in respect of any of the securities referred to in (a) and (b)
above;
(d) all sums of money standing to the credit of any account opened or
maintained by the Custodian for the Chargor;
-103-
(e) all sums of money standing to the credit of any account opened or
maintained by any clearance system for the Chargor and under the
direction or control of the Custodian;
(f) all sums of money standing to the credit of any account opened or
maintained by any clearance system for the Custodian; and
(g) any of the foregoing at any time delivered, transferred or
assigned by the Custodian to the Security Trustee;
but in each case only to the extent that the same are entered or
evidenced in one or more accounts identified in the Custodian's records
by express reference to ACE Limited and the Security Trustee (which
accounts are, at the date hereof, account number [ ]), and to
the extent that the same meets the Security Trustee's Requirements;
"Custodian" means the above-mentioned Custodian or such other person as
the Chargor and the Security Trustee may agree to in writing from time
to time;
"Custodian's Undertaking" means an undertaking in the form set out in
the Second Schedule duly executed by the Custodian as the same may be
amended or substituted with the prior written consent of the Security
Trustee from time to time;
"Due Capacity" means capacity as beneficial owner;
"Obligations" means any and all of the present or future, actual or
contingent, obligations of the Chargor to the Finance Parties hereunder
or under the Agreement;
"Required Value" means the amount stated in Part A of the Schedule to
the Custodian's Undertaking or such other amount determined in
accordance with the Agreement as may be notified from time to time by
the Security Trustee to the Custodian; and
"Security Trustee's Requirements" means the Security Trustee's
requirements in respect of the component parts of the Charged Portfolio
all as set forth in Part B of the Schedule to the Custodian's
Undertaking or as may be agreed from time to time by the Security
Trustee and the Chargor and notified to the Custodian (provided that the
Security Trustee's Requirements may be adjusted by the Security Trustee
without the agreement of the Chargor (but after consultation in good
faith with the Chargor) where an adjustment is necessary to ensure that
the Banks continue to receive the same regulatory treatment in respect
of their Outstandings as they receive at the date hereof and Provided
further that, in the event that the "financial strength rating" of the
Chargor as determined by Standard and Poor's Rating Services reaches
BBB+ or less, the Security Trustee's Requirements shall be amended
without the prior agreement of the Chargor by the additional requirement
that any fixed income securities comprising the Charged Portfolio issued
by or fully and explicitly guaranteed by the central government of an
OECD (Organisation for Economic Co-operation and Development)
-104-
country shall only satisfy the Security Trustee's Requirements if such
country is rated AA by Standard and Poor's Rating Services or AA
equivalent or better).
21.2 Any reference in this Charge Agreement to:-
a "business day" shall be construed as a reference to a day (other than
a Saturday or Sunday) on which banks are generally open for business in
London, Bermuda and the jurisdiction in which the Custodian's principal
or head office is located;
a "clearance system" means Clearstream, the Euro-Clear System, the First
Chicago Clearing Centre, The Depository Trust Company and such other
clearance system as may from time to time be used in connection with
transactions relating to any securities, and any depository for any of
the foregoing;
a "Clause" is, unless otherwise stated, a reference to a Clause hereof;
a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing;
a "Schedule" is, unless otherwise stated, a reference to a schedule
hereto; and
"securities" shall be construed as a reference to bonds, debentures,
notes, stocks, shares or other securities and all moneys, rights or
property which may at any time accrue or be offered (whether by way of
bonus, redemption, preference, option or otherwise) in respect of any of
the foregoing (and without limitation, shall include any of the
foregoing not constituted, evidenced or represented by a certificate or
other document but by an entry in the books or other permanent records
of the issuer, a trustee or other fiduciary thereof, or a clearance
system).
21.3 Any reference in this Charge Agreement to another agreement, arrangement
or undertaking shall be construed as a reference to such other
agreement, arrangement or undertaking as the same may have been, or may
from time to time be, amended, varied, novated or supplemented.
21.4 Clause and Schedule headings are for ease of reference only.
-105-
THE FIRST SCHEDULE
NOTICE OF CHARGE OF CHARGED PORTFOLIO
To: [ ]
* ___________________
(*Contact name at the Custodian)
We refer to the Charge Agreement (the "Charge Agreement") dated [ ]
entered into by us in favour of Citibank International plc of 336 Strand, London
WC2R 1HB (the "Security Trustee"), a copy of which is annexed hereto. Terms
defined in the Charge Agreement shall have the same meanings herein.
Notice is hereby given by us to you that, by and pursuant to the Charge
Agreement, we have charged in favour of the Security Trustee all of the Charged
Portfolio.
Yours faithfully,
For and on behalf of
ACE Limited
__________________________
(Signature(s))
Dated ____________________
-106-
THE SECOND SCHEDULE
Custodian's Undertaking
--------------------------------------------------------------------------------
Name of Custodian and address of its registered or principal office:
[ ]
Attn: [ ]
facsimile no: [ ] (the "Custodian")
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name of Chargor and address of its registered or principal office:
ACE Limited
The ACE Building
30 Woodbourne Avenue
Hamilton HM08
Bermuda
facsimile no: +441 296 0087 (the "Chargor")
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date of Charge Agreement: [Date]
--------------------------------------------------------------------------------
To: Citibank International plc (the "Security Trustee")
336 Strand
London WC2R 1HB
We, the Custodian, refer to the above-mentioned Charge Agreement (the "Charge
Agreement") between the Chargor and the Security Trustee. Save where the context
otherwise requires, terms defined in the Charge Agreement shall have the same
meanings herein.
In consideration of the Security Trustee and the other Finance Parties entering
into the Agreement and issuing Letters of Credit thereunder and pursuant to
instructions received by the Custodian from the Chargor, the Custodian hereby
represents and irrevocably undertakes and agrees to and with the Security
Trustee as follows:
1. The Custodian will hold the Charged Portfolio to the Security Trustee's
order.
-107-
2. The Custodian will deliver to the Security Trustee within three business
days of the Security Trustee's request therefor an up-to-date statement or
statements of the Charged Portfolio, each component thereof and the
aggregate value thereof.
3. The Custodian will in any event deliver to the Security Trustee not later
than the tenth business day of each calendar month a statement or
statements, made up as at the close of business on the last business day of
the preceding calendar month, of the Charged Portfolio, each component
thereof and the aggregate value thereof.
4. If trades of, or any transactions relating to, a component part of the
Charged Portfolio are processed by the Custodian on any Business Day, the
Custodian shall notify the Security Trustee as soon as possible (and in any
event within one Business Day of such day) of the trades and transactions
processed.
5. The Custodian shall be entitled to process trades as it may be directed to
do so under the terms of its custodial agreement with the Chargor only to
the extent such trades comprise a disposal to a third party in the market
of a component part of the Charged Portfolio and the substitution therefor
of other securities save that transfers can be made (i) to the Security
Trustee in accordance with the terms of this undertaking or (ii) to any
person with the Security Trustee's prior written consent or (iii) in
respect of any part of the Charged Portfolio representing an excess over
the Required Value, to the Chargor or as it may direct, which excess will
be determined by the Security Trustee on the date of the request from the
Chargor.
6. The Custodian shall deliver, transfer or assign to the Security Trustee on
the Security Trustee's first written demand securities and monies in the
Charged Portfolio up to the Required Value as directed by the Security
Trustee and all certificates and other instruments evidencing title thereto
or necessary or desirable in order for the Security Trustee to acquire good
and marketable title thereto. The Security Trustee shall indicate the
identity of the securities and monies it wishes to receive and the
Custodian shall have no discretion in this matter and shall be fully
protected in relying upon any direction received from the Security Trustee.
7. All rights and interests of the Custodian in or towards the Charged
Portfolio or any part thereof are and shall be subordinated and postponed
to the Security Trustee's rights and interests therein under and pursuant
to the Charge Agreement, save that the Custodian shall be entitled to debit
any account of the Chargor with the Custodian with any reasonable fees or
commissions due and owing by the Chargor to the Custodian in respect of the
Charged Portfolio or part thereof or to settle any reasonable bank charges
due and owing by the Chargor to the Custodian and incurred in the ordinary
course of business for the purchase of securities and/or foreign exchange
or contracts for foreign exchange.
-108-
8. Any notice, demand or other communication required to be served on us by
you hereunder may be served by letter properly addressed and deposited with
a recognised air express courier or transmitted by facsimile if (a) a
telephone call is placed to the officer noted for address purposes on page
1 of this Custodian's Undertaking notifying such officer of the facsimile
transmission and (b) the original is properly addressed and mailed. Any
notice, demand or other communication shall be deemed to have been served
on us on the third business day following if sent by recognised air express
courier and when dispatched if sent in accordance with the facsimile
procedures.
9. This undertaking shall be governed by, and construed in accordance with,
English law. The Custodian and the Security Trustee agree that a proper
forum for any dispute would be either the English courts or the federal
courts within the United States of America.
10. Save as expressly provided herein, the Custodian shall have no further
obligations or liabilities to the Security Trustee in relation to the
Charged Portfolio and specifically shall have no liability or
responsibility for monitoring or determining the compliance by any party
with any other agreement including, without limitation, the Charge
Agreement.
-109-
THE SCHEDULE
PART A
The initial Required Value is:-
(pound)[ ] (amount in words)
(or such other amount as may be agreed between the Security Trustee and the
Chargor and notified to the Custodian by the Security Trustee from time to
time).
PART B
The initial Security Trustee's Requirements are:-
To the extent of an aggregate amount not less than the Required Value, the
Charged Portfolio shall at all times be comprised of fixed income securities
issued by or fully and explicitly guaranteed by the central government of an
OECD (Organisation for Economic Co-Operation and Development) country, and fixed
income securities issued by US government agencies (whose debt obligations are
fully and explicitly guaranteed as to the timely payment of principal and
interest by the full faith and credit of the US Government) as used in Appendix
A, Section III (C), Category I to Regulation H as promulgated by the Board of
Governors of the Federal Reserve System and the same are either (i)
uncertificated and governed by the provisions of 31 C.F.R. Part 357 or such
similar provisions of the Code of Federal Regulations, applicable to United
States agency securities as are acceptable to the Security Trustee; or (ii)
certificated.
_______________________
(Authorised Signatory)
for and on behalf of the Custodian
[Date]
-110-
The COMMON or CORPORATE SEAL of
the CHARGOR was hereto affixed
to this DEED in the presence of:
Director
Secretary/Director
-111-
↑Top
Filing Submission 0000950131-01-001644 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Sat., Apr. 27, 12:46:40.2am ET 