Exhibit 10.14.22
070299
$500,000,000
SHORT TERM REVOLVING CREDIT AGREEMENT
BETWEEN
XL CAPITAL LTD, XL INSURANCE LTD and XL MID OCEAN REINSURANCE LTD,
as Borrowers and Guarantors
AND
THE BANKS PARTIES HERETO FROM TIME TO TIME
AND
MELLON BANK, N.A.,
as Administrative Agent
AND
THE CHASE MANHATTAN BANK,
as Syndication Agent
DATED AS OF
June 30, 1999
SHORT TERM REVOLVING CREDIT AGREEMENT, dated and effective as of June 30,
1999, by and between XL CAPITAL LTD ("XL Capital"), a corporation organized
under the laws of the Cayman Islands, British West Indies, XL INSURANCE LTD ("XL
Insurance"), a Bermuda limited liability corporation, and XL MID OCEAN
REINSURANCE LTD, a Bermuda limited liability corporation ("XL Mid Ocean"), as
borrowers and as guarantors, (XL Capital, XL Insurance and XL Mid Ocean are
sometimes referred to hereinafter individually as "Borrower" and collectively as
the "Borrowers" and sometimes referred to hereinafter individually as
"Guarantor" and collectively as the "Guarantors"), the Banks (as defined further
below) parties hereto from time to time, MELLON BANK, N.A., as Administrative
Agent for the Banks hereunder (in such capacity, together with successors in
such capacity, the "Administrative Agent") and THE CHASE MANHATTAN BANK, as
Syndication Agent for the Banks hereunder (in such capacity, together with
successors in such capacity, the "Syndication Agent") (the Administrative Agent
and the Syndication Agent being hereinafter sometimes referred to collectively
as the "Agents" and individually as "Agent").
PRELIMINARY STATEMENT
WHEREAS, the Banks have agreed to make available to the Borrowers a Short
Term Revolving Credit Facility upon all of the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of their mutual agreements hereinafter
set forth and intending to be legally bound hereby, the Borrowers, each Agent
and each Bank agree as follows.
ARTICLE I
DEFINITIONS: CONSTRUCTION
1.01. Certain Definitions. In addition to other words and terms defined
elsewhere in this Agreement, as used herein the following words and terms shall
have the following meanings, respectively, unless the context hereof otherwise
clearly requires:
"Alternate Base Rate" and "Alternate Base Rate Option" shall have the
meaning assigned those terms in Section 2.04(a)(i) hereof.
"Alternate Base Rate Loan" shall mean any Loan bearing interest under the
Alternate Base Rate Option.
"Alternate Base Rate Portion" of any Loan or Loans shall mean at any time
the portion, including the whole, of such Loan or Loans bearing interest at such
time under the Alternate Base Rate Option.
"Affiliate" shall mean an entity which is directly or indirectly
controlled by a Borrower or which controls a Borrower or which is under common
control with any of the Borrowers.
"Agreement" shall mean this Agreement as amended, modified or supplemented
from time to time.
"Applicable Margin" shall have the meaning given that term in Section
2.04(b) hereof.
"Assets" at any time shall mean the assets of any Borrower, as the context
requires, at such time, determined in accordance with GAAP or SAP, as
appropriate.
"Banks" shall mean the parties listed on the signature pages hereof,
subject to the provisions of Section 9.13 hereof pertaining to Persons becoming
or ceasing to be Banks, and Bank shall mean any of them.
"Base Rate" shall have the meaning given that term in Section 2.04(a)(i)
hereof.
"Bermuda Companies Law" shall mean The Companies Act of 1981 of Bermuda,
as amended, and the regulations promulgated thereunder.
"Bermuda Insurance Law " shall mean The Insurance Act of 1978 of Bermuda,
as amended, and the regulations promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania or of Bermuda or
other day on which banking institutions are authorized or obligated to close in
Pittsburgh, Pennsylvania or Bermuda.
"Capitalized Lease Obligation" shall mean any lease obligation which is
required to be capitalized in accordance with GAAP.
"Change in Control" shall mean the occurrence of any of the following
events or conditions: (a) any Person or group of Persons (as used in Sections 13
and 14 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"),
and the rules and regulations thereunder) shall have become the beneficial owner
(as defined in rules promulgated by the Securities & Exchange Commission) of
more than 40% of the voting securities of XL Capital; (b) the sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of XL Capital; or (c)
a majority of the members of XL Capital's Board of Directors are persons who are
then serving on the Board of Directors without having been elected by the Board
of Directors or having been nominated for election by its shareholders.
"Closing Date" shall mean July 2, 1999, or such later date prior to August
1, 1999 as may be specified by XL Capital by one day's written notice to the
Administrative Agent.
"Co-Agents" shall mean The Bank of Nova Scotia, Citibank, N. A., Credit
Lyonnais New York Branch and Deutsche Bank AG.
"Committed Amount" shall have the meaning given that term in Section
2.01(a) hereof.
"Commitment" of any Bank shall mean such Bank's Committed Amount and the
"Commitments" of the Banks shall mean the Committed Amounts of the Banks.
"Consolidated Net Worth" shall mean at any date the consolidated
stockholders' equity of a Borrower and its consolidated Subsidiaries.
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"Consolidated Tangible Net Worth" shall mean at any date the consolidated
stockholders' equity of a Borrower and its consolidated Subsidiaries less their
consolidated Intangible Assets, all determined as of such date. For purposes of
this definition "Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to November 30, 1998, in the book value
of any asset owned by the applicable Borrower or a consolidated Subsidiary and
(ii) all unamortized debt discount and expense, unamortized deferred charges,
deferred acquisition costs, goodwill, patents, trademarks, service marks, trade
names, anticipated future benefit of tax loss carry-forwards, copyrights,
organization or developmental expenses and other intangible assets.
"Corresponding Source of Funds" shall mean in the case of any Euro-Rate
Loan, the proceeds of hypothetical receipts by a Notional Euro-Rate Funding
Office of one or more Dollar deposits in the interbank Eurodollar market at the
beginning of the Euro-Rate Funding Period applicable to such Loan, having
maturities approximately equal to such Maturity Period and in an aggregate
amount approximately equal to such Loan.
"Designated Lender" means, with respect to any Designating Lender, an
Eligible Designee designated by it pursuant to Section 9.13(f) as a Designated
Lender for purposes of this Agreement.
"Designating Lender" means, with respect to each Designated Lender, the
Bank that designated such Designated Lender pursuant to Section 9.13(f).
"Dollar," "Dollars" and the symbol $ shall mean lawful money of the United
States of America.
"Eligible Designee" means a special purpose corporation that (i) is
organized under the laws of the United States or any state thereof, (ii) is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and (iii) issues (or the parent of which issues)
commercial paper rated at least A-1 or the equivalent thereof by Standard &
Poor's Ratings Services or the equivalent thereof by another generally
recognized rating service.
"Environmental Concern Materials" shall mean (a) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in CERCLA or any similar Law),
(b) any toxic chemical or other substance from or related to industrial,
commercial or institutional activities, and (c) asbestos, gasoline, diesel fuel,
motor oil, waste and used oil, heating oil and other petroleum products or
compounds, polychlorinated biphenyls, radon and urea formaldehyde.
"Environmental Law" shall mean any Law, whether now existing or
subsequently enacted or amended, relating to (a) pollution or protection of the
environment, including natural resources, (b) exposure of Persons, including but
not limited to employees, to Environmental Concern Materials, (c) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (d)
regulation of the manufacture, use or introduction into commerce of
Environmental Concern Materials, including their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage or
disposal.
"Euro-Rate" and "Euro-Rate Option" shall have the meanings assigned to
those terms in Section 2.04(a)(ii) hereof.
"Euro-Rate Loan" shall mean any Loan bearing interest under the Euro-Rate
Option.
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"Euro-Rate Portion" of any Loan or Loans shall mean at any time the
portion, including the whole, of such Loan or Loans bearing interest at any time
under the Euro-Rate Option.
"Event of Default" shall mean any of the Events of Default described in
Article VII hereof.
"Expiration Date" shall mean June 28, 2000.
"Facility Fee" shall have the meaning given that term in Section 2.02(a)
hereof.
"Funding Periods" shall have the meaning given that term in Section
2.04(c) hereof.
"Funding Breakage Date" shall have the meaning given that term in Section
2.10(b) hereof.
"Funding Segment" of the Euro-Rate Portion of the Loans at any time shall
mean the entire principal amount of such Portion to which at the time in
question there is applicable a particular Funding Period beginning on a
particular day and ending on a particular day.
"GAAP" shall have the meaning set forth in Section 1.03 hereof.
"Guaranteed Obligations" shall have the meaning given that term in Section
10.01 hereof.
"Guarantors" shall mean XL Capital, XL Insurance and XL Mid Ocean and
"Guarantor" shall mean any one of them.
"Guaranty Equivalents" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor for the purpose of assuring the
holder of such Indebtedness, (ii) to advance or provide funds or other support
for the payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keepwell agreements, maintenance agreements,
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Equivalent hereunder shall (subject to any limitations set -forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Equivalent is made.
"Indebtedness" of a Person shall mean (it being understood, for the
avoidance of doubt, that insurance payment liabilities, as such, and liabilities
arising in the ordinary course of such Person's business as an insurance or
reinsurance company or corporate member of Lloyds or as a provider of financial
services or contracts (in each case other than in connection with the provision
of financing to such Person or any of such Person's Affiliates) shall not be
deemed to constitute Indebtedness):
(i) all indebtedness or liability for or on account of money
borrowed by, or for or on account of deposits with or advances to (but not
including accrued pension costs, deferred income taxes or accounts payable
of) such Person;
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(ii) all obligations (including contingent liabilities) of such
Person evidenced by bonds, debentures, notes, banker's acceptances or
similar instruments;
(iii) all indebtedness or liability for or on account of property or
services purchased or acquired by such Person;
(iv) any amount secured by a Lien on property owned by such Person
(whether or not assumed) and Capitalized Lease Obligations of such Person
(without regard to any limitation of the rights and remedies of the holder
of such Lien or the lessor under such Capitalized Lease to repossession or
sale of such property);
(v) the maximum available amount of all standby letters of credit
issued for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed; and
(vi) all Guaranty Equivalents of such Person.
"Insurance Subsidiary" means any, present or future, direct or indirect
Subsidiary of any Borrower that offers insurance products, including but not
limited to XL Europe.
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
"Lien" shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"Loan" or "Loans" shall mean a loan or loans made by any Bank to any of
the Borrowers under this Agreement.
"Loan Document" or "Loan Documents" shall mean this Agreement, any Note
and any other documents or instruments executed and delivered in connection
herewith or therewith.
"London Business Day" shall mean a Business Day (as herein defined) which
is also a day for dealing in deposits in Dollars by and among banks in the
London interbank market.
"Material Adverse Effect" shall mean the occurrence of an event (including
any adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), which has or could reasonably be expected to have
a materially adverse effect on: (a) the assets, business, financial condition or
operations of a Borrower and its Subsidiaries taken as a whole; or (b) the
ability of a Borrower to perform any of its payment or other material
obligations under this Agreement or the applicable Note; or (c) the legality,
validity, binding effect or enforceability against a Borrower of any Loan
Document that by its terms purports to bind such Borrower.
"Notes" shall mean the promissory notes of the respective Borrowers
executed and delivered under this Agreement, together with all extensions,
renewals, refinancings or refundings in whole or part and "Note" shall mean any
one of the Notes.
"Notional Euro-Rate Funding Office" shall have the meaning given to that
term in Section 2.12(a) hereof.
"Obligations" shall mean the obligations of any Borrower to repay the
aggregate unpaid principal amount of all loans, and pay all interest accrued
thereon, all Facility Fees accruing and all
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other liabilities of such Borrower arising pursuant to the terms of this
Agreement or the other Loan Documents.
"Office," when used in connection with the Administrative Agent, shall
mean its office located at One Mellon Bank Center, Pittsburgh, Pennsylvania
15258, or at such other office or offices of the Administrative Agent or branch,
subsidiary or affiliate thereof as may be designated in writing from time to
time by the Administrative Agent to the Borrowers and the Banks.
"Official Body" shall mean any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Option" shall mean the Alternate Base Rate Option or the Euro-Rate
Option, as the case may be.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated association, joint venture, joint-stock company, government
(including political subdivisions), official body or agency, or any other
entity.
"Portion" shall mean the Alternate Base Rate Portion or the Euro-Rate
Portion, as the case may be.
"Potential Default" shall mean any event or condition referenced in
Article VII hereof which with notice, passage of time or both would constitute
an Event of Default.
"Private Act" shall mean separate legislation enacted in Bermuda with the
intention that such legislation applies specifically to a Borrower in whole or
in part.
"Pro Rata" shall mean from or to each Bank in proportion to its percentage
of the aggregated Committed Amounts of all of the Banks.
"Register" shall have the meaning given that term in Section 9.13(d)
hereof.
"Regular Payment Date" shall mean the last day of each March, June,
September and December after the date hereof, commencing September 30, 1999.
"Required Banks" shall mean at any time Banks which have respective
Committed Amounts equal to or greater than 51% of the aggregate Committed
Amounts of all Banks or, if the obligations of the Banks to make loans shall
have terminated, Banks which have outstanding Loans in a principal amount equal
to or greater than 51% of the aggregate principal amount of all Loans
outstanding at such time.
"SAP" shall mean, as to each Borrower and each Insurance Subsidiary, the
statutory accounting practices prescribed or permitted by the relevant Official
Body for such Borrower's or such Insurance Subsidiary's domicile for the
preparation of Annual Statements and other Default reports by insurance
corporations of the same type as such Borrower or such Insurance Subsidiary in
effect on the date such statements or reports are to be prepared.
"Standard Notice" shall mean an irrevocable notice provided to the
Administrative Agent on a Business Day which is
(i) the same Business Day in the case of any Alternate Base
Rate Loan; and
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(ii) at least three London Business Days in advance in the
case of any Euro-Rate Loan.
Standard Notice must be provided no later than: 10:00 o'clock a.m., Pittsburgh
time, on the last day permitted for such notice. Standard Notice shall be in
writing (including telex, facsimile or cable communication) or by telephone (to
be subsequently confirmed in writing) in any such case, effective upon receipt
by the Administrative Agent.
"Subsidiary" of a Borrower at any time shall mean any corporation (or
similar entity) of which a majority (by number of shares or number of votes) of
any class of outstanding capital stock normally entitled to vote for the
election of one or more directors (regardless of any contingency which does or
may suspend or dilute the voting rights of such class) is at such time owned
directly or indirectly by a Borrower or one or more Subsidiaries.
"Total Exposure" of any Bank at any time shall mean the sum of the
outstanding principal amount of all of such Bank's Loans, whether such Loans are
made to XL Insurance, XL Capital or XL Mid Ocean.
"Total Funded Debt" of a Person at any time shall mean all Indebtedness of
such person which would at such time be classified in whole or in part as a
liability on the balance sheet of such person in accordance with GAAP.
"Transfer Supplement" shall have the meaning given that term in Section
9.13(c)(iv) hereof.
"Treasury Rate" as of any Funding Breakage Date shall mean the rate per
annum determined by the applicable Bank (which determination shall be
conclusive) to be the semiannual equivalent yield to maturity (expressed as a
semiannual equivalent and decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield) for the United States Treasury
securities maturing on the last day of the corresponding Funding Period and
trading in the secondary market in reasonable volume (or if no such securities
mature on such date, the rate determined by standard securities interpolation
methods as applied to the series of securities maturing as close as possible to,
but earlier than, such date, and the series of such securities maturing as close
as possible to, but later than, such date).
"XL Capital" shall mean XL Capital Ltd, a corporation organized under the
laws of the Cayman Islands, British West Indies.
"XL Insurance" shall mean XL Insurance Ltd, a Bermuda limited liability
corporation.
"XL Mid Ocean" shall mean XL Mid Ocean Reinsurance Ltd, a Bermuda limited
liability corporation.
1.02 Construction. Unless the context of this Agreement otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or. "
References in this Agreement to "determination" by either Agent include good
faith estimates by such Agent (in the case of quantitative determinations) and
good faith belief of such Agent (in the case of qualitative determinations). The
words "hereof," "herein," "hereunder" and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The section and other headings contained in this Agreement are for
reference purposes only and shall not control or affect the construction of this
Agreement or the interpretation hereof in any respect. Section, subsection and
exhibit references are to this Agreement unless otherwise specified.
1.03. Accounting Principles. (a) As used herein, "GAAP" shall mean
generally accepted accounting principles as such principles shall be in effect
in the United States of America at the
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Relevant Date, subject to the provisions of this Section 1.03. As used herein,
"Relevant Date" shall mean the date a relevant computation or determination is
to be made or the date of relevant financial statements, as the case may be.
(b) Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters shall be made, and all
financial statements to be delivered pursuant to this Agreement shall be
prepared, in accordance with GAAP or SAP, as the context requires (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP or SAP, as
appropriate.
(c) If any change in GAAP or SAP after the date of this Agreement is or
shall be required to be applied to transactions then or thereafter in existence,
and a violation of one or more financial covenants in this Agreement shall have
occurred (or in the opinion of the Required Banks would be likely to occur)
which would not have occurred or be likely to occur if no change in accounting
principles had taken place, the parties agree in such event to negotiate in good
faith an amendment of this Agreement which shall approximate to the extent
possible the economic effect of the original financial covenants after taking
into account such change in GAAP or SAP, as appropriate.
(d) Without in any manner limiting the provisions of this Section 1.03, if
any change in GAAP or SAP occurs after the date of this Agreement and such
change in GAAP or SAP could or would materially change a Borrower's financial
results or position from that reflected in such Borrower's financial statements
prior to such change, such Borrower shall notify the Bank as soon as
practicable.
ARTICLE II
THE CREDITS
2.01. Revolving Credit Loans.
(a) Revolving Credit Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Bank,
severally and not jointly, agrees to make loans ("Loans") to a Borrower at any
time or from time to time on or after the date hereof and to but not including
the Expiration Date (it being understood that Loans may be outstanding to more
than one of the Borrowers at any time). A Bank shall have no obligation to make
any Loan if, after such Loan is made, such Bank's Total Exposure would exceed
such Bank's Committed Amount. Each Bank's "Committed Amount" at any time shall
be equal to the amount set forth as its "Initial Committed Amount" below its
name on the signature pages hereof, as such amount may have been reduced under
Section 2.02(c) hereof at such time, and subject to transfer to or from another
Bank as provided in Section 9.13 hereof.
(b) Nature of Credit. Within the limits of time and amount set forth in
this Section 2.01, and subject to the provisions of this Agreement, the
Borrowers may borrow, repay and reborrow Loans hereunder.
(c) Revolving Credit Notes. The obligation of the Borrowers to repay the
unpaid principal amount of the Loans made to it by each Bank and to pay interest
thereon shall be evidenced in part by promissory notes of the Borrowers, one to
each Bank, dated the Closing Date (the "Notes") in substantially the form
attached hereto as Exhibit A-1 (in the case of XL Insurance), Exhibit A-2 (in
the case of XL Mid Ocean) or Exhibit A-3 (in the case of XL Capital), with the
blanks appropriately filled, payable to the order of such Bank in a face amount
equal to such Bank's Initial Committed Amount.
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(d) Maturity. To the extent not due and payable earlier, the Loans shall
be due and payable on the Expiration Date.
2.02. Facility Fee; Initial Fee, Reduction of the Committed Amounts.
(a) Facility Fee. XL Capital agrees to pay to the Administrative Agent for
the account of each Bank a facility fee (the "Facility Fee") for each day during
the period from the Closing Date to and including the Expiration Date calculated
(based on a year of 360 days and actual days elapsed), at a per annum rate equal
to seven basis points (0.07%), payable on such Bank's Committed Amount (whether
used or unused) in effect on such day. Such fee shall be payable quarterly on
the last day of each March, June, September and December after the Closing Date,
and on the Expiration Date, for the preceding period for which such fee has not
been paid.
(b) Initial Fee. XL Capital agrees to pay on the Closing Date to the
Administrative Agent for the account of each Bank an initial fee equal to five
basis points (0.05%), payable on such Bank's Committed Amount on the Closing
Date.
(c) Reduction of the Committed Amounts. XL Capital may at any time or from
time to time reduce Pro Rata the Committed Amounts of the Banks to an aggregate
amount (which may be zero) not less than the sum of the unpaid principal amount
of the Loans then outstanding plus the principal amount of all Loans not yet
made as to which notice has been given by the Borrower under Section 2.03
hereof. Any reduction of the Committed Amounts shall be in an aggregate minimum
amount of $20,000,000 and in an amount which is an integral multiple of
$10,000,000. Reduction of the Committed Amounts shall be made by providing not
less than three Business Days' notice (which notice shall be irrevocable) to
such effect to the Administrative Agent, which will promptly advise the Banks of
such notice. After the date specified in such notice the Facility Fee shall be
calculated upon the Committed Amounts as so reduced.
2.03. Making of Loans. Whenever a Borrower desires that the Banks make
Loans, XL Capital shall provide Standard Notice to the Administrative Agent
setting forth the following information (a separate notice being required for
each such type of Loans):
(a) Whether the proposed Loans are to be made to XL Insurance, to XL
Capital or to XL Mid Ocean;
(b) The date, which shall be a Business Day, on which such proposed Loans
are to be made;
(c) The aggregate principal amount of such proposed Loans, which shall be
the sum of the principal amounts selected pursuant to clause (d) of this Section
2.06, and which shall be an integral multiple of $1,000,000.00 not less than
$10,000,000.00;
(d) The interest rate Option or Options selected in accordance with
Section 2.04(a) hereof and the principal amounts selected in accordance with
Section 2.04(d) hereof of the Alternate Base Rate Portion and each Funding
Segment of the Euro-Rate Portion of such proposed Loans; and
(e) With respect to each such Funding Segment of such proposed Loans, the
Funding Period to apply to such Funding Segment, selected in accordance with
Section 2.04(c) hereof.
Standard Notice having been so provided, the Administrative Agent shall promptly
notify each Bank of the information contained therein and of the amount of such
Bank's Loan. Unless any applicable condition specified in Article IV hereof has
not been satisfied, on the date specified in such Standard Notice each Bank
shall make the proceeds of its Loan available to the Administrative Agent at the
Administrative Agent's Office, no later than 12:00 o'clock Noon, Pittsburgh
time, in funds immediately available at such Office. The Administrative Agent
will make the funds so received available to the applicable Borrower in funds
immediately available at the Administrative Agent's Office.
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2.04. Interest Rates.
(a) Optional Bases of Borrowing. The unpaid principal amount of the Loans
shall bear interest for each day until due on one or more bases selected by the
Borrower from among the interest rate Options set forth below. Subject to the
provisions of this Agreement the applicable Borrower may select different
Options to apply simultaneously to different Portions of its Loans and may
select different Funding Segments to apply simultaneously to different parts of
the Euro-Rate Portion of such Loans. The aggregate number of Funding Segments
applicable to the Euro-Rate Portion of the Loans at any time shall not exceed
six.
(i) Alternate Base Rate Option: The Alternate Base Rate Option is a
rate per annum (the "Alternate Base Rate") (computed on the basis of a
year of 365 or 366 days, as the case may be) for each day equal to the
higher of: (A) the Base Rate for such day or (B) the Federal Funds
Effective Rate for such day plus 0.50% per annum. "Base Rate" as used
herein shall mean the interest rate per annum announced from time to time
by the Administrative Agent as its prime rate. "Federal Funds Effective
Rate" for any day shall mean the rate per annum (rounded upward to the
nearest 1/100 of 1 %) determined by the Administrative Agent (which
determination shall be conclusive) to be the rate per annum announced by
the Federal Reserve Bank of New York (or any successor) on such day as
being the weighted average of the rates on overnight Federal funds
transactions arranged by Federal funds brokers on the previous trading
day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal
Funds Effective Rate" as of the date of this Agreement; provided, that if
such Federal Reserve Bank (or its successor) does not announce such rate
on any day, the "Federal Funds Effective Rate" for such day shall be the
Federal Funds Effective Rate for the last day on which such rate was
announced. Changes in the Alternate Base Rate shall take effect on the
date the Administrative Agent announces a change in the Base Rate or the
Federal Reserve Bank announces a change in the Federal Funds Effective
Rate, as the case may be;
(ii) Euro-Rate Option: The Euro-Rate Option is a rate per annum
(based on a year of 360 days and actual days elapsed) for each day equal
to the Euro-Rate for such day plus the Applicable Margin for such day.
"Euro-Rate" for any day, as used herein, shall mean for each Funding
Segment of the Euro-Rate Portion corresponding to a proposed or existing
Euro-Rate Funding Period the rate per annum determined by the
Administrative Agent by dividing (the resulting quotient to be rounded
upward to the nearest 1/100 of 1%) (A) the rate of interest (which shall
be the same for each day in such Euro-Rate Funding Period) determined in
good faith by the Administrative Agent in accordance with its usual
procedures (which determination shall be conclusive) to be the average of
the rates per annum for deposits in Dollars offered to major money center
banks in the London interbank market at approximately 11:00 a.m., London
time, two London Business Days prior to the first day of such Euro-Rate
Funding Period for delivery on the first day of such Euro-Rate Funding
Period in amounts comparable to such Funding Segment and having maturities
comparable to such Funding Period by (B) a number equal to 1.00 minus the
Euro-Rate Reserve Percentage.
The "Euro-Rate" may also be expressed by the following formula:
[average of the rates offered to major money ]
[center banks in the London interbank market ]
Euro-Rate = [determined by the Administrative Agent per subsection (A) ]
-------------------------------------------------------------
[1.00 - Euro-Rate Reserve Percentage ]
"Euro-Rate Reserve Percentage" for any day shall mean the percentage
(expressed as a decimal, rounded upward to the nearest 1/100 of 1%), as
determined in good faith by the Administrative Agent (which determination
shall be conclusive), which is in effect on such day as
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prescribed by the Board of Governors of the Federal Reserve System (or any
successor) representing the maximum reserve requirement (including,
without limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to
as "Eurocurrency liabilities") of a member bank in such System. The
Euro-Rate shall be adjusted automatically as of the effective date of each
change in the Euro-Rate Reserve Percentage. The Euro-Rate Option shall be
calculated in accordance with the foregoing whether or not any Bank is
actually required to hold reserves in connection with its eurocurrency
funding or, if required to hold such reserves, is required to hold
reserves at the "Euro-Rate Reserve Percentage" as herein defined.
The Administrative Agent shall give prompt notice to the applicable
Borrower and to the Banks of the Euro-Rate determined or adjusted in
accordance with the definition of the Euro-Rate, which determination or
adjustment shall be conclusive if made in good faith.
(b) Applicable Margin. "Applicable Margin" shall mean 0.380% plus
the Utilization Rate for such day. "Utilization Rate" shall mean (x)
0.125% for any day on which the aggregate outstanding principal amount of
all Loans under this Agreement exceeds 66% of the sum of the Committed
Amounts of all Banks on such day, (y) 0.05% for any day on which the
aggregate outstanding principal amount of all Loans under this Agreement
exceeds 33%, but is less than or equal to 66%, of the sum of the Committed
Amounts of all Banks on such day and (z) zero for each other day.
(c) Funding Periods. At any time when a Borrower shall select,
convert to or renew the Euro-Rate Option to apply to any part of the Loans, such
Borrower shall specify one or more periods (the "Funding Periods") during which
each such Option shall apply, such Funding Periods being as set forth below:
Interest Rate Option Available Funding Periods
- -------------------- -------------------------
Euro-Rate Option One, two, three, six or twelve months or, if
acceptable to all Banks, one or two weeks
("Euro-Rate Funding Period");
provided, that:
(i) Each Euro-Rate Funding Period shall begin on a London Business
Day, and the term "month", when used in connection with a Euro-Rate
Funding Period, shall be construed in accordance with prevailing practices
in the interbank eurodollar market at the commencement of such Euro-Rate
Funding Period, as determined in good faith by the Administrative Agent
(which determination shall be conclusive); and
(ii) A Borrower may not select a Funding Period that would end after
the Expiration Date.
(d) Transactional Amounts. Every selection of, conversion from, conversion
to or renewal of an interest rate Option and every payment or prepayment of any
Loans shall be in a principal amount such that after giving effect thereto the
aggregate principal amount of the Alternate Base Rate Portion of the Loans, or
the aggregate principal amount of each Funding Segment of the Euro-Rate Portion
of the Loans, shall be as set forth below:
Portion or Funding Segment Allowable Aggregate Principal Amounts
- -------------------------- -------------------------------------
Alternate Base Rate Portion and $10,000,000 plus an integral
Each Funding Segment of the multiple of $1,000,000.
Euro-Rate Portion
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(e) Euro-Rate Unascertainable; Impracticability. If
(i) on any date on which a Euro-Rate would otherwise be set the
Administrative Agent (in the case of clauses (A) or (B) below) or any Bank
(in the case of clause (C) below) shall have determined in good faith
(which determination shall be conclusive) that:
(A) adequate and reasonable means do not exist for
ascertaining such Euro-Rate,
(B) a contingency has occurred which materially and adversely
affects the interbank eurodollar market, or
(C) the effective cost to such Bank of funding a proposed
Funding Segment of the Euro-Rate Portion from a Corresponding Source
of Funds shall exceed the Euro-Rate applicable to such Funding
Segment, or
(ii) at any time any Bank shall have determined in good faith (which
determination shall be conclusive) that the making, maintenance or funding
of any part of the Euro-Rate Portion has been made impracticable or
unlawful by compliance by such Bank or a Notional Euro-Rate Funding Office
in good faith with any applicable Law or guideline or interpretation or
administration thereof by any Official Body charged with the
interpretation or administration thereof or with any applicable request or
directive of any such Official Body (whether or not having the force of
law);
then, and in any such event, the Administrative Agent or such Bank, as the case
may be, may notify the Borrowers of such determination (and any Bank giving such
notice shall notify the Administrative Agent, which shall advise the other Banks
of such notice). Upon such date as shall be specified in such notice (which
shall not be earlier than the date such notice is given), the obligation of each
of the Banks to allow the Borrowers to select, convert to or renew the Euro-Rate
Option shall be suspended until the Administrative Agent or such Bank, as the
case may be, shall have later notified the Borrowers (and any Bank giving such
notice shall notify the Administrative Agent) of the Administrative Agent's or
such Bank's determination in good faith (which determination shall be
conclusive) that the circumstance giving rise to such previous determination no
longer exist.
If any Bank notifies the Borrowers of a determination under subsection
(ii) of this Section 2.04(e), the Euro-Rate Portion of the Loans of such Bank
(the "Affected Bank") shall automatically be converted to the Alternate Base
Rate Option as of the date specified in such notice (and accrued interest
thereon shall be due and payable on such date).
If at the time the Administrative Agent or a Bank makes a determination
under subsection (i) or (ii) of this Section 2.04(e) and XL Capital previously
has notified the Administrative Agent that a Borrower wishes to select, convert
to or renew the Euro-Rate Option with respect to any proposed Loans but such
Loans have not yet been made, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Alternate Base Rate Option instead
of the Euro-Rate Option, with respect to such Loans or, in the case of a
determination by a Bank, such Loans of such Bank.
2.05. Conversion or Renewal of Interest Rate Options.
(a) Conversion or Renewal. Subject to the provisions of Section 2.10(b)
hereof, and if no Event of Default or Potential Default shall have occurred and
be continuing or shall exist, a Borrower may convert any part of its Loans from
any interest rate Option or Options to one or more different interest rate
Options and may renew the Euro-Rate Option as to any Funding Segment of the
Euro-Rate Portion:
(i) At any time with respect to conversion from the Alternate Base
Rate Option; or
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(ii) At the expiration of any Funding Period with respect to
conversions from or renewals of the Euro-Rate Option as to the Funding
Segment corresponding to such expiring Funding Period.
Whenever a Borrower desires to convert or renew any interest rate Option or
Options, XL Capital shall provide to the Administrative Agent Standard Notice
setting forth the following information (and the Agent shall promptly advise the
Banks of such information):
(w) The date, which shall be a Business Day, on which the proposed
conversion or renewal is to be made;
(x) The principal amounts selected in accordance with Section
2.04(d) hereof of the Alternate Base Rate Portion and each Funding Segment
of the Euro-Rate Portion to be converted from or renewed;
(y) The interest rate Option or Options selected in accordance with
Section 2.04(a) hereof and the principal amounts selected in accordance
with Section 2.04(d) hereof of the Alternate Base Rate Portion and each
Funding Segment of the Euro-Rate Portion to be converted to; and
(z) With respect to each Funding Segment to be converted to or
renewed, the Funding Period selected in accordance with Section 2.04(c)
hereof to apply to such Funding Segment.
Standard Notice having been so provided, after the date specified in such
Standard Notice, interest shall be calculated upon the principal amount of the
Loans as so converted or renewed. Interest on the principal amount of any part
of the Loans converted or renewed (automatically or otherwise) shall be due and
payable on the conversion or renewal date.
(b) Failure to Convert or Renew. Absent due notice from XL Capital of
conversion or renewal in the circumstances described in Section 2.05(a)(ii)
hereof, any part of the Euro-Rate Portion for which such notice is not received
shall be converted automatically to the Alternate Base Rate Option on the last
day of the expiring Funding Period.
2.06. Prepayments Generally. Whenever a Borrower desires or is required to
prepay any part of its Loans, XL Capital shall provide Standard Notice to the
Administrative Agent setting forth the following information (and the Agent
shall promptly advise the Banks of such information):
(a) Whether such prepayment is to be applied to the Loans outstanding to
XL Insurance, XL Capital or XL Mid Ocean;
(b) The date, which shall be a Business Day, on which the proposed
prepayment is to be made;
(c) The total principal amount of such prepayment, which shall be the sum
of the principal amounts selected pursuant to clause (d) of this Section 2.06;
and
(d) The principal amounts selected in accordance with Section 2.04(d)
hereof of the Alternate Base Rate Portion and each part of each Funding Segment
of the Euro-Rate Portion to be prepaid.
Standard Notice having been so provided, on the date specified in such Standard
Notice, the principal amounts of the Alternate Base Rate Portion and each part
of the Euro-Rate Portion specified in such notice, together with interest on
each such principal amount to such date, shall be due and payable.
2.07. Optional Prepayments. Each Borrower shall have the right at its
option from time to time to prepay its Loans in whole or part without premium or
penalty (subject, however, to Section 2.10(b) hereof):
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(a) At any time with respect to any part of the Alternate Base Rate
Portion, provided, however, that such prepayment shall be in a principal amount
of $10,000,000 or an integral multiple of $1,000,000 in excess thereof; or
(b) At the expiration of any Funding Period with respect to prepayment of
the Euro-Rate Portion with respect to any part of the Funding Segment
corresponding to such expiring Funding Period, provided, however, that such
prepayment shall be in a principal amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof.
Any such prepayment shall be made in accordance with Section 2.06 hereof.
2.08. Interest Payment Dates. Interest on the Alternate Base Rate Portion
shall be due and payable on each Regular Payment Date. Interest on each Funding
Segment of the Euro-Rate Portion shall be due and payable on the last day of the
corresponding Euro-Rate Funding Period and, if such Euro-Rate Funding Period is
longer than three months, also every third month during such Funding Period.
After maturity of any part of the Loans (by acceleration or otherwise), interest
on such part of the Loans shall be due and payable on demand.
2.09. Pro Rata Treatment; Payments Generally; Interest on Overdue Amounts.
(a) Pro Rata Treatment. Each borrowing and conversion and renewal of
interest rate Options hereunder shall be made, and all payments made in respect
of principal, interest, and Facility Fees due from the Borrowers hereunder or
under the Notes shall be applied, Pro Rata from and to each Bank, except for
payments of interest involving an Affected Bank as provided in Section 2.04(e)
hereof and payments to a Bank subject to a withholding deduction under Section
2.11(c) hereof. The failure of any Bank to make a Loan shall not relieve any
other Bank of its obligation to lend hereunder, but neither either Agent nor any
Bank shall be responsible for the failure of any other Bank to make a Loan.
(b) Payments Generally. All payments and prepayments to be made by a
Borrower in respect of principal, interest, fees, indemnity, expenses or other
amounts due from such Borrower hereunder or under any Loan Document shall be
payable in Dollars at 12:00 o'clock Noon, Pittsburgh time, on the day when due
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue,
without setoff, counterclaim, withholding or other deduction of any kind or
nature, except for payments to a Bank subject to a withholding deduction under
Section 2.11(c) hereof. Except for payments under Sections 2.10 and 9.04 hereof,
such payments shall be made to the Administrative Agent at its Office in Dollars
in funds immediately available at such Office, and payments under Sections 2.10
and 9.04 hereof shall be made to the applicable Bank at such domestic account as
it shall specify to the Borrowers from time to time in funds immediately
available at such account. Any payment or prepayment received by the
Administrative Agent or such Bank after 12:00 o'clock Noon, Pittsburgh time, on
any day shall be deemed to have been received on the next succeeding Business
Day. The Administrative Agent shall distribute to the Banks all such payments
received by it from a Borrower as promptly as practicable after receipt by the
Administrative Agent.
(c) Interest on Overdue Amounts. To the extent permitted by law, after
there shall have become due (by acceleration or otherwise) principal, interest,
fees, indemnity, expenses or any other amounts due from the Borrowers hereunder
or under any other Loan Document, such amounts shall bear interest for each day
until paid (before and after judgment), payable on demand, at a rate per annum
(in each case based on a year of 360 days and actual days elapsed) which for
each day shall be equal to the following:
(i) In the case of any part of the Euro-Rate Portion of any Loans,
(A) until the end of the applicable then-current Funding Period at a rate
per annum 2% above the rate otherwise applicable to such part, and (B)
thereafter in accordance with the following clause (ii); and
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(ii) In the case of any other amount due from a Borrower hereunder
or under any Loan Document, 2% above the then-current Alternate Base Rate
Option applicable to Loans.
To the extent permitted by law, interest accrued on any amount which has become
due hereunder or under any Loan Document shall compound on a day-by-day basis,
and hence shall be added daily to the overdue amount to which such interest
relates.
2.10. Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc. If the introduction of or any
change in, or any change in the interpretation or application of, any Law,
regulation or guideline by any Official Body charged with the interpretation or
administration thereof or compliance with any request or directive of any
applicable Official Body (whether or not having the force of law):
(i) subjects any Bank or any Notional Euro-Rate Funding Office to
any tax or changes the basis of taxation with respect to this Agreement,
the Notes, the Loans or payments by the Borrowers of principal, interest,
facility fee or other amounts due from the Borrowers hereunder or under
the Notes (except for taxes on the overall net income or overall gross
receipts of such Bank or such Notional Euro-Rate Funding Office imposed by
the jurisdictions (federal, state and local) in which the Bank's principal
office or Notional Euro-Rate Funding Office is located),
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend
credit extended by, assets (funded or contingent) of, deposits with or for
the account of, other acquisitions of funds by, such Bank or any Notional
Euro-Rate Funding Office (other than requirements expressly included
herein in the determination of the Euro-Rate hereunder),
(iii) imposes, modifies or deems applicable any capital adequacy or
similar requirement (A) against assets (funded or contingent) of, or
credits or commitments to extend credit extended by, any Bank or any
Notional Euro-Rate Funding Office, or (B) otherwise applicable to the
obligations of any Bank or any Notional Euro-Rate Funding Office under
this Agreement, or
(iv) imposes upon any Bank or any Notional Euro-Rate Funding Office
any other condition or expense with respect to this Agreement, the Notes
or its making, maintenance or funding of any Loan,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank, any Notional Euro-Rate Funding Office or, in the case of clause (iii)
hereof, any Person controlling a Bank, with respect to this Agreement, the Notes
or the making, maintenance or funding of any Loan (or, in the case of any
capital adequacy or similar requirement, to have the effect of reducing the rate
of return on such Bank's or controlling Person's capital, taking into
consideration such Bank's or controlling Person's policies with respect to
capital adequacy so long as such policies are reasonable in light of prevailing
market practice at the time) by an amount which such Bank deems to be material
(such Bank being deemed for this purpose to have made, maintained or funded each
Funding Segment of the Euro-Rate Portion from a Corresponding Source of Funds),
such Bank may from time to time notify the Borrowers of the amount determined in
good faith (using any averaging and attribution methods) by such Bank (which
determination shall be conclusive) to be necessary to compensate such Bank or
such Notional Euro-Rate Funding Office for such increase, reduction or
imposition. Such amount shall be due and payable by any applicable Borrower to
such Bank five Business Days after such notice is given, together with an amount
equal to interest on such amount from the date two Business Days after the date
demanded until such due date at the Alternate Base Rate Option applicable to
Loans. A certificate by such Bank as to the amount due and payable under this
Section 2.10(a) from time to time and the method of calculating such amount
shall be conclusive. Each Bank agrees that it will use good faith
-15-
efforts to notify the Borrowers of the occurrence of any event that would give
rise to a payment under this Section 2.10(a); provided, however that, so long as
such notice is given within a reasonable period after the occurrence of such
event, any failure of such Bank to give any such notice shall have no effect on
the Borrowers' obligations hereunder.
(b) Funding Breakage. In addition to all other amounts payable hereunder,
if and to the extent for any reason any part of any Funding Segment of any
Euro-Rate Portion of the Loans becomes due (by acceleration or otherwise), or is
paid, prepaid or converted to another interest rate Option (whether or not such
payment, prepayment or conversion is mandatory or automatic and whether or not
such payment or prepayment is then due), on a day other than the last day of the
corresponding Funding Period (the date such amount so becomes due, or is so
paid, prepaid or converted, being referred to as the "Funding Breakage Date"),
the applicable Borrower shall pay each Bank an amount ("Funding Breakage
Indemnity") determined by such Bank as follows:
(i) first, calculate the following amount: (A) the principal amount
of such Funding Segment of the Loans owing to such Bank which so became
due, or which was so paid, prepaid or converted, times (B) the greater of
(x) zero or (y) the rate of interest applicable to such principal amount
on the Funding Breakage Date minus the Treasury Rate as of the Funding
Breakage Date, times (C) the number of days from and including the Funding
Breakage Date to but not including the last day of such Funding Period,
times (D) 1/360;
(ii) the Funding Breakage Indemnity to be paid by such Borrower to
such Bank shall be the amount equal to the present value as of the Funding
Breakage Date (discounted at the Treasury Rate as of such Funding Breakage
Date, and calculated on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed) of the amount described in the
preceding clause (i) (which amount described in the preceding clause (i)
is assumed for purposes of such present value calculation to be payable on
the last day of the corresponding Funding Period).
Such Funding Breakage Indemnity shall be due and payable on demand, and each
Bank shall, upon making such demand, notify the Administrative Agent of the
amount so demanded. In addition, such Borrower shall, on the due date for
payment of any Funding Breakage Indemnity, pay to such Bank an additional amount
equal to interest on such Funding Breakage Indemnity from the Funding Breakage
Date to but not including such due date at the Alternate Base Rate Option
applicable to Loans (calculated on the basis of a year of 360 days and actual
days elapsed). The amount payable to each Bank under this Section 2.10(b) shall
be determined in good faith by such Bank, and such determination shall be
conclusive.
2.11. Taxes.
(a) Payments Net of Taxes. All payments made by the Borrowers under this
Agreement or any other Loan Document shall be made free and clear of, and
without reduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Official Body, and all liabilities with respect thereto,
excluding
(i) in the case of each Agent and each Bank, income or franchise
taxes imposed on such Agent or such Bank by the jurisdiction under the
laws of which such Agent or such Bank is organized or any political
subdivision or taxing authority thereof or therein or as a result of a
connection between such Bank or Agent and any jurisdiction other than a
connection resulting solely from this Agreement and the transactions
contemplated hereby, and
(ii) in the case of each Bank, income or franchise taxes imposed by
any jurisdiction in which such Bank's lending offices which make or book
Loans are located or any political subdivision or taxing authority thereof
or therein
-16-
(all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"), unless the Borrower is required
to withhold or deduct Taxes. If any Taxes are required to be withheld or
deducted from any amounts payable to either Agent or any Bank under this
Agreement or any other Loan Document, the applicable Borrower shall pay the
relevant amount of such Taxes and the amounts so payable to such Agent or such
Bank shall be increased to the extent necessary to yield to such Agent or such
Bank (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
other Loan Documents. Whenever any Taxes are paid by a Borrower with respect to
payments made in connection with this Agreement or any other Loan Document, as
promptly as possible thereafter, such Borrower shall send to the Administrative
Agent for its own account or for the account of the other Agent or such Bank, as
the case may be, a certified copy of an original official receipt received by
such Borrower showing payment thereof. If a Bank or either Agent determines in
its sole discretion in good faith that it has received a refund in respect of
any Taxes as to which it has been indemnified by a Borrower, or with respect to
which a Borrower has paid additional amounts pursuant to this Section 2.11, such
Bank or Agent shall promptly after the date of such receipt pay over the amount
of such refund to such Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by a Borrower under this Section 2.11 with
respect to Taxes giving rise to such refund and only to the extent that such
Bank or Agent has determined that the amount of any such refund is directly
attributable to payments made under this Agreement), net of all reasonable
expenses of such Bank or Agent (including additional Taxes attributable to such
refund, as determined by such Bank or Agent) and without interest (other than
interest, if any, paid by the relevant Official Body with respect to such
refund). A Borrower receiving any such payment from a Bank or Agent shall, upon
demand, pay to such Bank or Agent any amount paid over to such Borrower by such
Bank or Agent (plus penalties, interest or other charges) in the event such Bank
or Agent is required to repay any portion of such refund to such Official Body.
Nothing in this Section 2.11(a) shall entitle a Borrower to have access to the
records of any Bank or Agent, including, without limitation, tax returns.
(b) Indemnity. Each Borrower hereby indemnifies each Agent and each of the
Banks for the full amount of all Taxes attributable to payments by or on behalf
of such Borrower hereunder or under any of the other Loan Documents, any Taxes
paid by such Agent or such Bank, as the case may be, any present or future
claims, liabilities or losses with respect to or resulting from any omission to
pay or delay in paying any Taxes (including any incremental Taxes, interest or
penalties that may become payable by such Agent or such Bank as a result of any
failure to pay such Taxes, except by reason of unreasonable delay by such Agent
or Bank in notifying the Borrower or in making payment after payment was
received from the Borrower), whether or not such Taxes were correctly or legally
asserted. Such indemnification shall be made within 30 days from the date such
Bank or such Agent, as the case may be, makes written demand therefor.
(c) Withholding and Backup Withholding. Each Bank or Agent that is
incorporated or organized under the laws of any jurisdiction other than the
United States or any State thereof agrees that, on or prior to the date any
payment is due to be made to it hereunder or under any other Loan Document, it
will furnish to the Borrowers and the Administrative Agent
(i) two valid, duly completed copies of United States Internal
Revenue Service Form 4224 or United States Internal Revenue Form 1001 or
successor applicable form, as the case may be, certifying in each case
that such Bank or Agent is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding of
any United States federal income taxes and
(ii) a valid, duly completed Internal Revenue Service Form W-8 or
W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax.
Each Bank which so delivers to the Borrowers and the Administrative Agent a Form
1001 or 4224 and Form W-8 or W-9, or successor applicable forms, agrees to
deliver to the Borrowers and the Administrative
-17-
Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to obtaining an exemption
from withholding tax, or after the occurrence of any event requiring a change in
the most recent form previously delivered by it, and such extensions or renewals
thereof as may reasonably be requested by the Borrowers and the Administrative
Agent, certifying in the case of a Form 1001 or Form 4224 that such Bank or
Agent is entitled to receive payments under this Agreement or any other Loan
Document without deduction or withholding of any United States federal income
taxes, unless in any such cases an event (including any changes in Law) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such letter or form with respect to
it and such Bank or Agent advises the Borrowers and the Administrative Agent
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax, and in the case of a Form W-8
or W-9, establishing an exemption from United States backup withholding tax.
2.12. Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding. Each Bank shall have the right from time to time,
prospectively or retrospectively, without notice to the Borrowers, to deem any
branch, subsidiary or affiliate of such Bank to have made, maintained or funded
any part of the Euro-Rate Portion at any time. Any branch, subsidiary or
affiliate so deemed shall be known as a "Notional Euro-Rate Funding Office."
Such Bank shall deem any part of the Euro-Rate Portion of the Loans or the
funding therefor to have been transferred to a different Notional Euro-Rate
Funding Office if such transfer would avoid or cure an event or condition
described in Section 2.04(e)(ii) hereof or would lessen compensation payable by
a Borrower under Section 2.10(a) hereof, and if such Bank determines in its sole
discretion that such transfer would be practicable and would not have a material
adverse effect on such part of the Loans, such Bank or any Notional Euro-Rate
Funding Office (it being assumed for purposes of such determination that each
part of the Euro-Rate Portion is actually made or maintained by or funded
through the corresponding Notional Euro-Rate Funding Office). Notional Euro-Rate
Funding Offices may be selected by such Bank without regard to such Bank's
actual methods of making, maintaining or funding Loans or any sources of funding
actually used by or available to such Bank.
(b) Actual Funding. Each Bank shall have the right from time to time to
make or maintain any part of the Euro-Rate Portion by arranging for a branch,
subsidiary or affiliate of such Bank to make or maintain such part of the
Euro-Rate Portion. Such Bank shall have the right to (i) hold any applicable
Note payable to its order for the benefit and account of such branch, subsidiary
or affiliate or (ii) request the applicable Borrower to issue one or more
promissory notes in the principal amount of such Euro-Rate Portion, in
substantially the form attached hereto as Exhibit A-1, A-2 or A-3, as the case
may be, with the blanks appropriately filled, payable to such branch, subsidiary
or affiliate and with appropriate changes reflecting that the holder thereof is
not obligated to make any additional Loans to such Borrower. Each Borrower
agrees to comply promptly with any request under subsection (ii) of this Section
2.12(b). If any Bank causes a branch, subsidiary or affiliate to make or
maintain any part of the Euro-Rate Portion hereunder, all terms and conditions
of this Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Euro-Rate Portion and to any note payable to the
order of such branch, subsidiary or affiliate to the same extent as if such part
of the Euro-Rate Portion were made or maintained and such note were a Note
payable to such Bank's order.
2.13. Extensions of Expiration Date. The Borrowers may, at their option,
give the Administrative Agent written notice (an "Extension Request") not more
than 90 days, nor less than 60 days, prior to the then effective Expiration
Date, of the Borrowers' desire to extend the then effective Expiration Date to a
date which is not later than 364 days after the "Reset Date". The "Reset Date"
means the date which is 30 days prior to the then effective Expiration Date. The
Administrative Agent shall promptly inform the Banks of such Extension Request.
Each Bank that agrees with such Extension Request shall deliver to the
Administrative Agent its express written consent thereto no later than the Reset
Date. No extension shall
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become effective unless agreed to by the Required Banks on or prior to the Reset
Date. If all Banks have not in writing expressly consented to any such Extension
Request by the Reset Date, then the Administrative Agent shall so notify the
Borrowers and the Borrowers, at their option, may, as of the then effective
Expiration Date, (i) replace any Bank which has not agreed to such Extension
Request (a "Nonextending Bank") with another commercial lending institution
reasonably satisfactory to the Administrative Agent (a "Replacement Bank") by
giving notice of the name of such Replacement Bank to the Administrative Agent
not later than five Business Days prior to the then effective Expiration Date or
(ii) pay the Loans of such Nonextending Bank. Upon notice from the
Administrative Agent, such Nonextending Bank shall, as of the then effective
Expiration Date, assign all of its interests hereunder to such Replacement Bank
in accordance with the provisions of Section 9.13 hereof. If the Required Banks
shall have consented to such Extension Request, then, on the then effective
Expiration Date, after payment by the Borrower (or, if applicable, by a
Replacement Bank) of all amounts payable hereunder to each Nonextending Bank,
the Expiration Date shall be deemed to have been extended to, and shall be, the
date specified in such Extension Notice. The Administrative Agent shall promptly
after any such extension advise the Banks of any decrease in the aggregate
Committed Amounts of the Banks and of the respective Committed Amounts of all
Banks. Each Bank may agree or not agree to any such Extension Request in its
sole and absolute discretion and any Bank not agreeing (or not responding) to an
Extension Request shall not be deemed to have extended the Expiration Date
regardless of whether a Replacement Bank is obtained.
ARTICLE III
REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants that:
3.01. Organization and Qualification. Such Borrower and each of its
Subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation; each
of such Borrower and each of its Subsidiaries has the power and authority to own
its properties and assets, and to carry on its business as currently conducted
and is qualified to do business in those jurisdictions in which its ownership of
property or the nature of its business activities is such that failure to
receive or retain such qualification would have a Material Adverse Effect. A
list of such Borrower's Subsidiaries setting forth their respective
jurisdictions of incorporation is set forth in Schedule 3.01 hereto. Such
Borrower is not subject to any Private Act other than the X.L. Insurance
Company, Ltd. Act, 1989, a copy of which has been provided to the Administrative
Agent.
3.02. Corporate Power and Authorization. Such Borrower has corporate power
and authority to, make and carry out this Agreement and any other Loan Document
to which it is a party to make the borrowings provided for herein, to execute
and deliver this Agreement and, in the case of such Borrower, the applicable
Notes and to perform its obligations hereunder and under any such Loan Documents
and all such action has been duly authorized by all necessary corporate
proceedings on its part.
3.03. Financial Information. Such Borrower has furnished to the
Administrative Agent with sufficient copies for each Bank copies of the audited
consolidated financial statements of such Borrower and its consolidated
Subsidiaries including a consolidated balance sheet and related statements of
income and retained earnings for the fiscal year ending November 30, 1998. Such
financial statements fairly present the financial position of such Borrower and
its consolidated Subsidiaries as of the date of such reports and the
consolidated results of their operations and cash flows for the fiscal period
then
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ended in conformity with GAAP applied on a consistent basis, and such
consolidated financial statements have been examined and reported upon by
independent, certified public accountants.
3.04. Litigation. Except as disclosed to the Banks in writing prior to the
Closing Date (including by disclosure in the financial statements delivered to
the Banks referred to in Section 3.03 hereof), there is no litigation or
governmental proceeding by or against such Borrower or any of its Subsidiaries
pending or, to its knowledge, threatened, which could reasonably be expected (in
light of reserves, and total shareholders' equity of such Borrower and after
taking into account the nature of such Borrower's business and activities) to
have a Material Adverse Effect if adversely determined.
3.05. No Adverse Changes. Since November 30, 1998, there has been no
occurrence or event which has had a Material Adverse Effect.
3.06. No Conflicting Laws or Agreements; Consents and Approvals. (a)
Neither the execution and delivery of this Agreement or any other Loan Document,
the consummation of the transactions herein or therein contemplated nor
compliance with the terms and provisions hereof or thereof will conflict with or
result in a breach of any of the terms, conditions or provisions of the articles
of incorporation or by-laws of such Borrower or of any applicable Law or of any
material agreement or instrument to which such Borrower is a party or by which
it is bound or to which it is subject, or constitute a default thereunder or
result in the creation or imposition of any Lien of any nature whatsoever upon
any of the property of such Borrower pursuant to the terms of any such agreement
or instrument.
(b) No authorization, consent, approval, license, exemption or other
action by, and no registration, qualification, designation, declaration or
filing with, any Official Body is or will be necessary or advisable in
connection with (i) execution and delivery of this Agreement or any other Loan
Document, (ii) the consummation of the transactions herein or therein
contemplated, or (iii) the performance of or compliance with the terms and
conditions hereof or thereof.
3.07. Execution and Binding Effect. This Agreement has been duly and
validly executed and delivered by such Borrower. This Agreement constitutes, and
the applicable Notes when duly executed and delivered by such Borrower pursuant
to the provisions hereof will constitute, legal, valid and binding obligations
of such Borrower enforceable in accordance with the terms thereof except, as to
the enforcement of remedies, for limitations imposed by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally (excluding Laws with respect to
fraudulent conveyance), (ii) Laws limiting the right of specific performance or
(iii) general principles of equity.
3.08. Taxes. All tax returns required to be filed by such Borrower have
been properly prepared, executed and filed. All taxes, assessments, fees and
other governmental charges upon such Borrower or upon its properties, income or
sales which are due and payable have been paid. The reserves and provisions for
taxes, if any, on the books of such Borrower are adequate for all open years and
for its current fiscal period as determined in accordance with GAAP.
3.09. Use of Proceeds. Such Borrower will use the proceeds from any
borrowing hereunder for general corporate purposes (which may include
acquisitions and may include refinancing of other indebtedness). Such Borrower
will make no borrowing hereunder for the purpose of buying or carrying any
"margin stock" as such term is used in Regulation U of the Board of Governors of
the Federal Reserve System in violation of such regulation. Such Borrower is not
engaged in the business of extending credit to others for the purposes of buying
or carrying any "margin stock."
3.10. Permits, Licenses and Rights. Such Borrower and each Subsidiary of
such Borrower own or possess all the patents, trademarks, service marks, trade
names, copyrights, licenses, franchises, permits and rights with respect to the
foregoing necessary to own and operate their respective properties
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and to carry on their respective businesses as currently conducted and currently
planned to be conducted without, to the best knowledge of such Borrower,
conflict with the rights of others.
3.11. Accurate and Complete Disclosure. All information provided by or on
behalf of any Borrower to either Agent or any Bank pursuant to or in connection
with the Loan Documents and the transactions contemplated thereby is true and
accurate in all material respects on the date such information is dated (or, if
not dated, on the date such information was received by such Agent or such Bank,
as the case may be) and such information, taken as a whole, which was provided
on or prior to the time this representation is made or remade, does not, to the
best knowledge of the Borrowers, omit to state any material fact necessary to
make such information not misleading at such time in light of the circumstances
in which it was provided.
3.12. Absence of Violations. Such Borrower and each Affiliate of such
Borrower is not in violation of a any charter document, corporate minute or
resolution, any instrument or agreement, in each case binding on it or affecting
its property, or any Law, in a manner which could have a Materially Adverse
Effect.
3.13. Environmental Matters. Such Borrower and each of its Subsidiaries is
and has been in full compliance with all applicable Environmental Laws. Such
Borrower and each of its Subsidiaries have all approvals by Official Bodies
charged with the enforcement of Environmental Laws that are necessary or
desirable for the ownership and operation of their respective properties,
facilities and businesses as presently owned and operated and as currently
proposed to be owned and operated.
3.14. Not an Investment Company. Such Borrower is not an Investment
Company required to be registered under the Investment Company Act of 1940.
3.15. Year 2000 Compliance. XL Capital has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by material suppliers, vendors and
customers) that could be adversely affected by the risk that computer
applications used by XL Capital or any of its Subsidiaries (or material
suppliers, vendors and customers other than risks affecting customers that may
give rise to claims under insurance policies issued by XL Capital or any
Subsidiary of XL Capital) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999 (the "Year 2000 Problem") and (ii) developed a plan and
timetable for addressing the Year 2000 Problem on a timely basis. Based on the
foregoing, XL Capital believes that all computer applications of XL Capital and
its Subsidiaries that are material to its or any of its Subsidiaries' business
and operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
("Year 2000 Compliant"), except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
CONDITIONS OF LENDING
4.01. Effectiveness. The effectiveness of this Agreement and the closing
of the transactions contemplated hereby shall be subject to the following
conditions:
(a) Proceedings and Incumbency. There shall have been delivered to the
Administrative Agent with sufficient copies for each Bank a certificate with
respect to each Borrower in form and substance
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satisfactory to the Administrative Agent dated the Closing Date and signed on
behalf of each Borrower by the Secretary or an Assistant Secretary of such
Borrower, certifying as to: (a) true copies of all corporate action taken by
such Borrower relative to this Agreement, and the other Loan Documents
applicable to it, including but not limited to that described in Section 3.02
hereof and (b) the names, true signatures and incumbency of the officer or
officers of such Borrower authorized to execute and deliver this Agreement and
the other Loan Documents applicable to it. Each Bank may conclusively rely on
such certificates unless and until a later certificate revising the prior
certificate has been furnished to such Bank.
(b) Organizational Documents. There shall have been delivered to the
Administrative Agent with sufficient copies for each Bank (i) certified copies
of the articles of incorporation and by-laws for each Borrower and (ii) a
certificate of good standing for each Borrower and any subsidiary of such
Borrower certified by the appropriate Official Body of Bermuda or of the Cayman
Islands, British West Indies, as the case may be.
(c) Opinions of Counsel. There shall have been delivered to the
Administrative Agent with sufficient copies for each Bank written opinions
addressed to the Banks, dated the Closing Date, of Cahill Gordon & Reindel,
Conyers, Dill & Pearman, Hunter & Hunter and Paul S. Giordano, Esq.,
respectively, the Borrowers' and Guarantors' counsel, which together are
substantially to the effects set forth in Exhibit C.
(d) Details, Proceedings and Documents. All legal details and proceedings
in connection with the transactions contemplated by this Agreement shall be
satisfactory to each Bank, and each Bank shall have received all such
counterpart originals or certified or other copies of the Loan Documents and
such other documents and proceedings in connection with such transactions, in
form and substance satisfactory to it, as such Bank have reasonably requested.
(e) Fees and Expenses. The Borrowers shall have paid all fees and other
compensation to be paid by it hereunder on or prior to the Closing Date.
(f) Representation and Warranties. The representation and warranties
contained in Article III hereof shall be true on and as of the Closing Date with
the same effect as though made on and as of the Closing Date.
(g) Termination of Commitments under Prior Agreements. The commitments of
the respective banks under the Short Term Revolving Credit Agreement, dated as
of June 6, 1997, as amended, to which XL Insurance and XL Mid Ocean are parties,
and the Credit Agreement (364-day), dated as of September 2, 1997, as amended to
which Mid Ocean Limited is a party, shall have been terminated and arrangements
satisfactory to the Agents shall have been made to pay all amounts owing to the
respective banks thereunder with the proceeds of Loans hereunder or with other
funds of the Borrowers.
4.02. Borrowings. The obligations of each Bank to make any Loan hereunder
are subject to the accuracy as of the date hereof of the representations and
warranties herein contained, to the performance by each Borrower of its
obligations to be performed hereunder on or before the date of such Loans and to
the satisfaction of the following further conditions:
(a) Representations and Warranties; Events of Default and Potential
Defaults. The representations and warranties contained in Article III hereof
shall be true on and as of the date of each Loan hereunder with the same effect
as though made on and as of each such date, and on the date of each Loan
hereunder no Event of Default and no Potential Default shall have occurred and
be continuing or exist or shall occur or exist after giving effect to the Loans
to be made on such date. Failure of the Administrative Agent to receive notice
from the applicable Borrower to the contrary before any Loan is made or deemed
made hereunder shall constitute a representation and warranty that: (i) the
representations and warranties contained in Article III hereof are true and
correct on and as of the
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date of such Loan with the same effect as though made on and as of such date and
(ii) on the date of such Loan no Event of Default or Potential Default has
occurred and is continuing or exists or will occur or exist after giving effect
to such Loan.
(b) Commitment. The fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Committed Amounts.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrowers hereby covenant to each Agent and each Bank as follows:
5.01. Reporting and Information Requirements. Each Borrower shall deliver
to the Administrative Agent with sufficient copies for each Bank:
(a) Annual Reports. As soon as practicable and in any event within 100
days after the close of each fiscal year of such Borrower, audited consolidated
statements of income, retained earnings and cash flows of such Borrower and its
consolidated Subsidiaries, for such fiscal year and a consolidated audited
balance sheet of such Borrower and its consolidated Subsidiaries, as of the
close of such fiscal year, and notes to each, all in accordance with GAAP or, in
the case of XL Insurance and XL Mid Ocean, SAP, setting forth in comparative
form the corresponding figures for the preceding fiscal year, with such
consolidated statements and balance sheets to be certified by independent public
accountants of recognized national standing in the United States selected by
such Borrower and not unacceptable to the Required Banks, and the certificate or
report of such accountants to be free of exceptions or qualifications not
reasonably acceptable to the Required Banks (it being understood that delivery
of XL Capital's Report on Form 10-K filed with the Securities and Exchange
Commission shall satisfy the requirement of this Section 5.01(a) to deliver the
annual financial statements of XL Capital so long as the financial information
required to be in such report is substantially the same as the financial
information required by this Section 5.01(a)).
(b) Quarterly Statements. Within sixty days after the end of the first,
second and third quarterly accounting periods in each fiscal year of such
Borrowers, copies of the unaudited consolidated balance sheets of such Borrower
and its consolidated Subsidiaries as of the end of such accounting period and of
the consolidated income statements of such Borrower and its consolidated
Subsidiaries for the elapsed portion of the fiscal year ended with the last day
of such accounting period, all in accordance with GAAP or, in the case of XL
Insurance and XL Mid Ocean, SAP, subject to year-end audit adjustments and
certified by the principal financial officer of such Borrower to have been
prepared in accordance with generally accepted accounting principles
consistently applied by such Borrower except as explained in such certificate
(it being understood that delivery of XL Capital's Report on Form 10-Q filed
with the Securities and Exchange Commission shall satisfy the requirement of
this Section 5.01(b) to deliver the quarterly financial statements of XL Capital
so long as the financial information required to be in such report is
substantially the same as the financial information required by this Section
5.01(b)).
(c) Compliance Certificates. Within 100 days after the end of each fiscal
year of the Borrowers and within sixty days after the end of each of the first
three quarters of each fiscal year, a certificate dated as of the end of such
fiscal year or quarter, signed on behalf of each Borrower by a principal
financial officer thereof, (i) stating that as of the date thereof no Event of
Default or Potential Default has occurred and is continuing or exists, or if an
Event of Default or Potential Default has occurred and is continuing or exists,
specifying in detail the nature and period of existence thereof and any action
with respect thereto taken or contemplated to be taken by such Borrower, (ii)
stating in reasonable detail the information and calculations necessary to
establish compliance with the provisions of Article VI hereof, and (iii) stating
that the signer has
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reviewed this Agreement and that such certificate is based on an examination
made by or under the supervision of the signer sufficient to assure that such
certificate is accurate.
(d) Further Information. All such other information and in such form as
any Bank may reasonably request in writing.
(e) Notice of Event of Default. Immediately upon becoming aware of any
Event of Default or Potential Default, written notice thereof, together with a
written statement of the president or a principal financial officer of the
applicable Borrower setting forth the details thereof and any action with
respect thereto taken or contemplated to be taken by the Borrowers.
(f) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, written notice of any event or occurrence constituting or which could
reasonably be expected to have a Material Adverse Effect.
(g) Notice of Material Proceedings. Promptly upon becoming aware thereof,
written notice of the commencement, existence or threat of any proceeding or a
material change in any existing material proceeding by or before any Official
Body against or affecting such Borrower which, if adversely decided, could have
a Material Adverse Effect.
(h) Notice of Certain Material Changes. Promptly upon adoption thereof,
notice of each material change in any Borrower's investment policy, underwriting
policy or other business policy.
(i) Year 2000 Compliance. Promptly after any Borrower's discovery or
determination thereof, notice (in reasonable detail) that any computer
application that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant (as defined in Section 3.15), except
to the extent that such failure could not reasonably be expected to have a
Material Adverse Effect.
5.02. Preservation of Existence and Franchises. Each Borrower shall, and
shall cause each of its Subsidiaries to, maintain its corporate existence,
rights and franchises in full force and effect in its jurisdiction of
incorporation. Each Borrower shall, and shall cause each of its Subsidiaries to,
qualify and remain qualified as a foreign corporation in each jurisdiction in
which failure to receive or retain such qualification would have a Material
Adverse Effect.
5.03. Insurance. Each Borrower shall, and shall cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers,
insurance with respect to its properties in such amounts as is customary in the
case of corporations engaged in the same or a similar business having similar
properties similarly situated.
5.04. Maintenance of Properties. Each Borrower shall, and shall cause each
of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition the properties now or hereafter owned, leased or
otherwise possessed by and used or useful in its business and shall make or
cause to be made all needful and proper repairs, renewals, replacements and
improvements thereto so that the business carried on in connection therewith may
be properly conducted at all times, provided, however, that the foregoing shall
not impose on such Borrower or any Subsidiary of such Borrower any obligation in
respect of any property leased by such Borrower or such Subsidiary in addition
to such Borrower's obligations under the applicable document creating such
Borrower's or such Subsidiary's lease or tenancy.
5.05. Payment of Taxes and Other Potential Charges and Priority Claims
Payment of Other Current Liabilities. Each Borrower shall, and shall cause each
of its Subsidiaries to, pay or discharge:
(a) on or prior to the date on which penalties attach thereto, all taxes,
assessments and other governmental charges or levies imposed upon it or any of
its properties or income;
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(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, if
unpaid, might result in the creation of a Lien upon any such property; and
(c) on or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any such property (other
than Liens not forbidden by Section 6.03 hereof) or which, if unpaid, might give
rise to a claim entitled to priority over general creditors of such Borrower in
any proceeding under the Bermuda Companies Law or Bermuda Insurance Law, or any
insolvency proceeding, liquidation, receivership, rehabilitation, dissolution or
winding-up involving such Borrower or such Subsidiary;
provided that, unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, such Borrower need not pay or discharge
any such tax, assessment, charge, levy or claim so long as the validity thereof
is contested in good faith and by appropriate proceedings diligently conducted
and so long as such reserves or other appropriate provisions as may be required
by GAAP and SAP shall have been made therefor and so long as such failure to pay
or discharge does not have a Material Adverse Effect.
5.06. Financial Accounting Practices. Such Borrower shall, and shall cause
each of its Subsidiaries to, make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its transactions and
dispositions of its assets and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that transactions are recorded as
necessary to permit preparation of financial statements required under Section
5.01 hereof in conformity with GAAP and SAP, as applicable, and to maintain
accountability for assets.
5.07. Compliance with Applicable Laws. Each Borrower shall, and shall
cause each of its Subsidiaries to, comply with all applicable Laws (including
but not limited to the Bermuda Companies Law and Bermuda Insurance Laws) in all
respects; provided that such Borrower or any Subsidiary of such Borrower shall
not be deemed to be in violation of this Section 5.07 as a result of any failure
to comply with any such Law which would not (i) result in fines, penalties,
injunctive relief or other civil or criminal liabilities which, in the
aggregate, would have a Materially Adversely Effect or (ii) otherwise impair the
ability of such Borrower to perform its obligations under this Agreement or the
Notes issued by it.
5.08. Use of Proceeds. Each Borrower shall use the proceeds of all Loans
hereunder for its general corporate purposes (which may include funding
acquisitions and paying dividends).
5.09. Continuation Of and Change In Business. Each Borrower and its
Subsidiaries shall continue to engage in substantially the same business and
activities it currently engages in on the date of this Agreement.
5.10. Visitation. Each Borrower shall permit such Persons as any Bank may
reasonably designate to visit and inspect any of the properties of such
Borrower, to discuss its affairs with its financial management, and provide such
other information relating to the business and financial condition of such
Borrower at such times as such Bank may reasonably request. Each Borrower hereby
authorizes its financial management to discuss with any Bank the affairs of such
Borrower.
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ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants to each Agent and to each Bank as follows:
6.01. Mergers and Acquisitions. (a) No Borrower shall merge with or into
or consolidate with any other Person, or agree to do any of the foregoing,
except that if no Event of Default or Potential Event of Default shall occur and
be continuing or shall exist at the time of such merger or consolidation or
immediately thereafter and after giving effect thereto:
(i) any Borrower may merge with any other corporation, including a
Subsidiary, if such Borrower shall be the surviving corporation; and
(ii) if the written consent of the Required Banks is obtained, any
Borrower may merge into or consolidate with any other corporation if the
corporation into which such Borrower is merged or which is formed by such
consolidation shall expressly assume all obligations of such Borrower
under this Agreement.
(b) No Borrower shall acquire the stock or other equity interests, or all
or any substantial portion of the properties or assets of any other Person, or
agree to do any of the foregoing, unless such Person is engaged primarily in the
insurance business or the financial services business.
6.02. Dispositions of Assets. No Borrower shall, and nor shall it permit
any Subsidiary to, sell, convey, assign, lease, abandon or otherwise transfer or
dispose of, voluntarily or involuntarily (any of the foregoing being referred to
in this Section 6.02 as a "transaction" and any series of related transactions
constituting but a single transaction), any of its properties or Assets,
tangible or intangible (including but not limited to sale, assignment, discount
or other disposition of accounts, contract rights, chattel paper or general
intangibles with or without recourse), except:
(a) Transactions in the ordinary course of business involving current
assets or other assets classified on the Borrower's balance sheet as available
for sale.
(b) Sales, conveyances, assignments or other transfers or dispositions in
immediate exchange for cash or tangible assets, provided that any such sales,
conveyances or transfers shall not individually, or in the aggregate, exceed
$50,000,000 in any calendar year; or
(c) Dispositions of equipment or other property which is obsolete or no
longer used or useful in the conduct of the business of such Borrower or its
Subsidiaries.
6.03. Liens. No Borrower shall, nor shall it permit any Subsidiary to, at
any time create, incur, assume or suffer to exist any Lien on any of its
property or assets, tangible or intangible, now owned or hereafter acquired or
agree or become liable to do so, except:
(a) Liens existing on the date hereof (and extension, renewal and
replacement Liens upon the same property, provided the amount secured by each
Lien constituting such an extension, renewal or replacement Lien shall not
exceed the amount secured by the Lien theretofore existing) and listed on
Schedule 6.03(a) hereto;
(b) Liens arising from taxes, assessments, charges, levies or claims
described in Section 5.05 hereof that are not yet due or that remain payable
without penalty or to the extent permitted to remain unpaid under the provision
of such Section 5.05;
-26-
(c) Liens on property securing all or part of the purchase price thereof
to such Borrower and Liens (whether or not assumed) existing on property at the
time of purchase thereof by such Borrower (and extension, renewal and
replacement Liens upon the same property), provided --
(i) each such Lien is confined solely to the property so purchased,
improvements thereto and proceeds thereof, and
(ii) the aggregate amount of the obligations secured by all such
Liens on any particular property at any time purchased by such Borrower,
as applicable, shall not exceed 100% (if such obligations are not subject
when created to United States income taxes) or 90% (in all other cases) of
the lesser of the fair market value of such property at such time or the
actual purchase price of such property;
(d) Zoning restrictions, easements, minor restrictions on the use of real
property, minor irregularities in title thereto and other minor Liens that do
not in the aggregate materially detract from the value of a property or asset
to, or materially impair its use in the business of, such Borrower;
(e) Liens securing Indebtedness permitted by Section 6.08(b), Section 6.08
(c) and Section 6.08(g) hereof covering assets whose market value is not
materially greater than the amount of the Indebtedness secured thereby, plus a
commercially reasonable margin; or
(f) Liens on cash and securities of a Borrower or its Subsidiaries
incurred as part of the management of its investment portfolio in accordance
with customary portfolio management practice and not in violation of the
Borrowers' investment policy as in effect on the date of this Agreement.
6.04. Transactions With Affiliates. No Borrower shall, nor shall it permit
any Subsidiary to, enter into or carry out any transaction with (including,
without limitation, purchase or lease property or services to, loan or advance
to or enter into, suffer to remain in existence or amend any contract, agreement
or arrangement with) any Affiliate of such Borrower, or directly or indirectly
agree to do any of the foregoing, except transactions among the Borrowers and
their wholly-owned Subsidiaries and transactions with Affiliates in good faith
in the ordinary course of such Borrower's business consistent with past practice
and on terms no less favorable to such Borrower or any Subsidiary than those
that could have been obtained in a comparable transaction on an arm's length
basis from an unrelated Person.
6.05. Business. No Borrower will, nor will it permit any Subsidiary to,
engage (directly or indirectly) in any businesses other than the businesses
substantially the same as those in which such Borrower and its Subsidiaries are
engaged on the Closing Date and any businesses reasonably related thereto or in
the financial services industry. No Borrower will permit, at any time, its net
premiums earned from insurance or reinsurance operations to comprise less than
50% of gross revenues of such Borrower (on a consolidated basis exclusive of net
gains and losses from investments and investment income).
6.06. Ratio of Total Funded Debt to Consolidated Tangible Net Worth. XL
Capital will not permit its ratio of (i) the sum of (x) Total Funded Debt plus
(y) the aggregate undrawn face amount of all letters of credit (as to which
reimbursement obligations are unsecured) issued for the account of, or
guaranteed by, XL Capital or any of its consolidated Subsidiaries to (ii)
Consolidated Tangible Net Worth to be greater than 0.35 at any time.
6.07. Consolidated Tangible Net Worth. XL Capital will not permit its
Consolidated Tangible Net Worth to be less than $2,566,000,000.00 at any time.
6.08. Indebtedness. No Borrower shall, nor shall any Borrower permit any
Subsidiary to, at any time create, incur, assume or suffer to exist any
Indebtedness, or agree, become or remain liable (contingent or otherwise) to do
any of the foregoing, except:
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(a) Indebtedness to the Banks pursuant to this Agreement and the other
Loan Documents;
(b) Secured Indebtedness (including secured reimbursement obligations with
respect to letters of credit) of any Borrower or any Subsidiary in an aggregate
principal amount (for all Borrowers and Subsidiaries) not exceeding $400,000,000
at any time outstanding;
(c) Other secured reimbursement obligations of any Borrower or any
Subsidiary with respect to letters of credit not exceeding $800,000,000 in the
aggregate at any time outstanding for all Borrowers and Subsidiaries;
(d) Unsecured Indebtedness, so long as upon the incurrence thereof no
Event of Default or Potential Default would occur or exist;
(e) Accounts or claims payable and accrued and deferred compensation
(including options) incurred in the ordinary course of business by any Borrower
or any Subsidiary; and
(f) Indebtedness incurred in transactions described in Section 6.03(f);
and
(g) Indebtedness described on Schedule 6.08(g) hereto.
6.09. Claims Paying Ratings. Each of XL Insurance and XL Mid Ocean shall
maintain at all times a claims-paying rating of at least "A" from Standard &
Poor's Ratings Services and from A.M. Best Company.
6.10. Private Act. No Borrower shall become subject to a Private Act other
than the X.L. Insurance Company, Ltd. Act, 1989.
ARTICLE VII
EVENTS OF DEFAULT
7.01. Events of Default. An Event of Default shall mean the occurrence or
existence of one or more of the following events or conditions (for any reason,
whether voluntary, involuntary or effected or required by Law):
(a) Any Borrower shall default in the payment when due of the principal of
any Loan;
(b) Any Borrower shall default in the payment when due of any interest,
Facility Fee, or any other fee or amount payable hereunder which default shall
continue for a period of three days from the due date thereof;
(c) Any Borrower shall default in the observance, performance or
fulfillment of any covenant contained in Article VI hereof;
(d) Any Borrower shall default in the observance, performance or
fulfillment of any other covenant, condition or provision hereof and such
default shall not be remedied for a period of twenty days after written notice
thereof to such Borrower from the Administrative Agent or the holder of any Note
issued hereunder;
(e) Any Borrower or any Subsidiary of any Borrower shall default (i) in
any payment of principal of or interest on any other obligation for borrowed
money in principal amount of $10,000,000
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or more or any obligation for borrowed money under the Revolving Credit
Agreement, dated as of June 6, 1997, as amended, to which each of the Borrowers
is a party, in each case beyond any period of grace provided with respect
thereto, or (ii) in the performance of any other agreement, term or condition
contained in any such agreement under which any such obligation in principal
amount of $10,000,000.00 or more is created or contained in such Revolving
Credit Agreement, if the effect of such default is to cause or permit the holder
or holders of such obligation (or trustee on behalf of such holder or holders)
to cause such obligation to become due prior to its stated maturity or to
terminate its commitment under such agreement or to cause or permit the holder
or holders of any obligation under such Revolving Credit Agreement to cause such
obligation to become due prior to its stated maturity or to terminate its
commitment under such Revolving Credit Agreement;
(f) One or more judgments for the payment of money shall have been entered
against any Borrower which judgments exceed $50,000,000 in the aggregate and
such judgments shall remain undischarged or uncontested or appealed in good
faith for a period of thirty consecutive days;
(g) Any representation or warranty herein made by any Borrower, or any
certificate or financial statement furnished pursuant to the provisions hereof,
shall prove to have been false or misleading in any material respect as of the
time made or furnished;
(h) XL Capital shall cease to own, beneficially and of record, directly or
indirectly all of the outstanding voting shares of capital stock of XL Insurance
and of XL Mid Ocean, except for a nominal number of shares owned by nominee
shareholders required by the Bermuda Companies Law;
(i) A Change in Control shall occur;
(j) The guarantee contained in Article X hereof shall terminate or cease,
in whole or material part, to be a legally valid and binding obligation of each
Guarantor or any Guarantor or any Person acting for or on behalf of any of such
parties contests such validity or binding nature of such guarantee itself or the
transactions contemplated by this Agreement and the Notes, or any other Person
shall assert any of the foregoing;
(k) A decree or order by a court having jurisdiction in the premises shall
have been entered adjudging any Borrower a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization of such Borrower under the
Bermuda Companies Law or the companies laws of the Cayman Islands, British West
Indies, or any other similar applicable Law, and such decree or order shall have
continued undischarged or unstayed for a period of sixty days; or a decree or
order of a court having jurisdiction in the premises for the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of
such Borrower or a substantial part of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree or order
shall have remained in force undischarged and unstayed for a period of sixty
days; or
(l) Any Borrower shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy proceeding against it,
or shall file a petition or answer or consent seeking reorganization under the
Bermuda Companies Law or the companies laws of the Cayman Islands, British West
Indies or any other similar applicable Law, or shall consent to the filing of
any such petition, or shall consent to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of it or of a
substantial part of its property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, or corporate action shall be taken by such Borrower in
furtherance of any of the aforesaid purposes;
then, (i) as to any Event of Default specified under subsections (a) through (j)
of this Article VII, the Banks shall be under no further obligation to make
Loans hereunder and the Administrative Agent by written request of the Required
Banks may, by written notice to the Borrowers, declare the unpaid balance of all
Loans then outstanding and interest accrued thereon and all other liabilities of
the
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Borrowers hereunder and thereunder to be forthwith due and payable, and the same
shall thereupon become and be immediately due and payable, without presentment,
demand, protest or notice or any kind, all of which are hereby expressly waived;
and (ii) as to any Event of Default specified under subsections (k) or (l) of
this Article VII, the Banks shall be under no further obligation to make Loans
hereunder and the unpaid balance of all Loans outstanding hereunder and interest
accrued thereon and all other liabilities of the Borrowers hereunder and
thereunder shall be immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived.
ARTICLE VIII
THE AGENTS
8.01. Appointment. Each Bank hereby appoints Mellon Bank, N.A. to act as
Administrative Agent for such Bank under this Agreement and the other Loan
Documents and appoints The Chase Manhattan Bank to act as Syndication Agent for
such Bank under this Agreement and the other Loan Documents. Each Bank hereby
irrevocably authorizes each Agent to take such action on behalf of such Bank
under the provisions of this Agreement and the other Loan Documents, and to
exercise such powers and to perform such duties, as are expressly delegated to
or required of such Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto. Mellon Bank, N.A. hereby agrees to
act as Administrative Agent and The Chase Manhattan Bank agrees to act as
Syndication Agent, in each case on behalf of the Banks on the terms and
conditions set forth in this Agreement and the other Loan Documents, subject to
its right to resign as provided in Section 8.10 hereof. Each Bank hereby
irrevocably authorizes each Agent to execute and deliver each of the Loan
Documents and to accept delivery of such of the other Loan Documents as may not
require execution by such Agent. Each Bank agrees that the rights and remedies
granted to an Agent under the Loan Documents shall be exercised exclusively by
such Agent, and that no Bank shall have any right individually to exercise any
such right or remedy, except to the extent expressly provided herein or therein.
8.02. General Nature of Each Agent's Duties. Notwithstanding anything to
the contrary elsewhere in this Agreement or in any other Loan Document:
(a) Neither Agent shall have any duties or responsibilities except
those expressly set forth in this Agreement and the other Loan Documents,
and no implied duties or responsibilities on the part of either Agent
shall be read into this Agreement or any Loan Document or shall otherwise
exist.
(b) The duties and responsibilities of each Agent under this
Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and neither Agent shall have a fiduciary
relationship in respect of any Bank.
(c) Each Agent is and shall be solely the agent of the Banks.
Neither Agent assumes, and shall not at any time be deemed to have, any
relationship of agency or trust with or for, or any other duty or
responsibility to, any other Person (except only for its relationship as
agent for, and its express duties and responsibilities to, the Banks as
provided in this Agreement and the other Loan Documents).
(d) Neither Agent shall be under any obligation to take any action
hereunder or under any other Loan Document if such Agent believes in good
faith that taking such action may conflict with any Law or any provision
of this Agreement or any other Loan Document, or may require such Agent to
qualify to do business in any jurisdiction where it is not then so
qualified.
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8.03. Exercise of Powers. Each Agent shall take any action of the type
specified in this Agreement or any other Loan Document as being within such
Agent's rights, powers or discretion in accordance with directions from the
Required Banks (or, to the extent this Agreement or such Loan Document expressly
requires the direction or consent of some other Person or set of Persons, then
instead in accordance with the directions of such other Person or set of
Persons). In the absence of such directions, each Agent shall have the authority
(but under no circumstances shall be obligated), in its sole discretion, to take
any such action, except to the extent this Agreement or such Loan Document
expressly requires the direction or consent of the Required Banks (or some other
Person or set of Persons), in which case such Agent shall not take such action
absent such direction or consent. Any action or inaction pursuant to such
direction, discretion or consent shall be binding on all the Banks. Neither
Agent shall have any liability to any Person as a result of (x) either Agent
acting or refraining from acting in accordance with the directions of the
Required Banks (or other applicable Person or set of Persons), (y) either Agent
refraining from acting in the absence of instructions to act from the Required
Banks (or other applicable Person or set of Persons), whether or not such Agent
has discretionary power to take such action, or (z) either Agent taking
discretionary action it is authorized to take under this Section (subject, in
the case of this clause (z), to the provisions of Section 8.04(a) hereof).
8.04. General Exculpatory Provisions. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) Neither Agent shall be liable for any action taken or omitted to be
taken by it under or in connection with this Agreement or any other Loan
Document, unless caused by its own gross negligence or willful misconduct.
(b) Neither Agent shall be responsible for (i) the execution, delivery,
effectiveness, enforceability, genuineness, validity or adequacy of this
Agreement or any other Loan Document, (ii) any recital, representation,
warranty, document, certificate, report or statement in, provided for in, or
received under or in connection with, this Agreement or any other Loan Document,
(iii) any failure of any Loan Party or Bank to perform any of their respective
obligations under this Agreement or any other Loan Document, or (iv) the
existence, validity, enforceability, perfection, recordation, priority, adequacy
or value, now or hereafter, of any Lien or other direct or indirect security
afforded or purported to be afforded by any of the Loan Documents or otherwise
from time to time.
(c) Neither Agent shall be under any obligation to ascertain, inquire or
give any notice relating to (i) the performance or observance of any of the
terms or conditions of this Agreement or any other Loan Document on the part of
any Borrower, (ii) the business, operations, condition (financial or otherwise)
or prospects of any Borrower or any other Person, or (iii) except to the extent
set forth in Section 8.05(f) hereof, the existence of any Event of Default or
Potential Default.
(d) Neither Agent shall not be under any obligation, either initially or
on a continuing basis, to provide any Bank with any notices, reports or
information of any nature, whether in its possession presently or hereafter,
except for such notices, reports and other information expressly required by
this Agreement or any other Loan Document to be furnished by such Agent to such
Bank.
8.05. Administration by the Agents.
(a) Each Agent may rely upon any notice or other communication of any
nature (written or oral, including but not limited to telephone conversations,
whether or not such notice or other communication is made in a manner permitted
or required by this Agreement or any Loan Document) purportedly made by or on
behalf of the proper party or parties, and neither Agent shall have any duty to
verify the identity or authority of any Person giving such notice or other
communication.
(b) Each Agent may consult with legal counsel (including, without
limitation, in-house counsel for such Agent or in-house or other counsel for any
Borrower), independent public accountants and any other
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experts selected by it from time to time, and neither Agent shall be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts.
(c) Each Agent may conclusively rely upon the truth of the statements and
the correctness of the opinions expressed in any certificates or opinions
furnished to either Agent in accordance with the requirements of this Agreement
or any other Loan Document. Whenever either Agent shall deem it necessary or
desirable that a matter be proved or established with respect to any Borrower or
Bank, such matter may be established by a certificate of such Borrower or Bank,
as the case may be, and each Agent may conclusively rely upon such certificate
(unless other evidence with respect to such matter is specifically prescribed in
this Agreement or another Loan Document).
(d) Each Agent may fail or refuse to take any action unless it shall be
indemnified to its satisfaction from time to time against any and all amounts,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature which may be imposed on,
incurred by or asserted against such Agent by reason of taking or continuing to
take any such action.
(e) Each Agent may perform any of its duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact. Neither Agent
shall be responsible for the negligence or misconduct of any agents or
attorneys-in fact selected by it with reasonable care.
(f) Neither Agent shall be deemed to have any knowledge or notice of the
occurrence of any Event of Default or Potential Default unless such Agent has
received notice from a Bank or any Borrower referring to this Agreement,
describing such Event of Default or Potential Default, and stating that such
notice is a "notice of default". If an Agent receives such a notice, such Agent
shall give prompt notice thereof to the other Agent and each Bank.
8.06. Bank Not Relying on Agent or Other Banks. Each Bank acknowledges as
follows: (a) Neither either Agent nor any other Bank has made any
representations or warranties to it, and no act taken hereafter by either Agent
or any other Bank shall be deemed to constitute any representation or warranty
by such Agent or such other Bank to it. (b) It has, independently and without
reliance upon either Agent or any other Bank, and based upon such documents and
information as it has deemed appropriate, made its own credit and legal analysis
and decision to enter into this Agreement and the other Loan Documents. (c) It
will, independently and without reliance upon either Agent or any other Bank,
and based upon such documents and information as it shall deem appropriate at
the time, make its own decisions to take or not take action under or in
connection with this Agreement and the other Loan Documents.
8.07. Indemnification. Each Bank agrees to reimburse and indemnify each
Agent and its directors, officers, employees and agents (to the extent not
reimbursed by a Borrower and without limitation of the obligations of the
Borrowers to do so), pro rata, from and against any and all amounts, losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature (including,
without limitation, the fees and disbursements of counsel for such Agent or such
other Person in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Agent or such other
Person shall be designated a party thereto) that may at any time be imposed on,
incurred by or asserted against such Agent or such other Person as a result of,
or arising out of, or in any way related to or by reason of, this Agreement, any
other Loan Document, any transaction from time to time contemplated hereby or
thereby, or any transaction financed in whole or in part or directly or
indirectly with the proceeds of any Loan, provided that no Bank shall be liable
for any portion of such amounts, losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements to the
extent resulting from the gross negligence or willful misconduct of such Agent
or such other Person, as finally determined by a court of competent
jurisdiction. Payments under this Section shall be due and payable on demand,
and to the extent that any Bank fails to pay any such amount on demand, such
amount shall bear interest for each day from the date of demand until paid
(before and after judgment) at a rate per annum (calculated on the basis of a
year of 360 days and actual days elapsed) which for each day shall be equal to
2% over the Federal Funds Effective Rate.
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8.08. Each Agent in its Individual Capacity. With respect to its
Commitments and the Obligations owing to it, each Agent shall have the same
rights and powers under this Agreement and each other Loan Document as any other
Bank and may exercise the same as though it were not an Agent, and the terms
"Banks," "holders of Notes" and like terms shall include each Agent in its
individual capacity as such. Each Agent and its affiliates may, without
liability to account, make loans to, accept deposits from, acquire debt or
equity interests in, act as trustee under indentures of, and engage in any other
business with, any Borrower and any stockholder, subsidiary or affiliate of any
Borrower, as though such Agent were not an Agent hereunder.
8.09. Holders of Notes. The Administrative Agent may deem and treat the
Bank which is payee of a Note as the owner and holder of such Note for all
purposes hereof unless and until a Transfer Supplement with respect to the
assignment or transfer thereof shall have been filed with the Administrative
Agent in accordance with Section 9.13 hereof. Any authority, direction or
consent of any Person who at the time of giving such authority, direction or
consent is shown in the Register as being a Bank shall be conclusive and binding
on each present and subsequent holder, transferee or assignee of any Note or
Notes payable to such Bank or of any Note or Notes issued in exchange therefor.
8.10. Successor Agent. Either Agent may resign at any time by giving 10
days' prior written notice thereof to the Banks and the Borrowers. Either Agent
may be removed by the Required Banks at any time by giving 10 days' prior
written notice thereof to the Agents, the other Banks and the Borrowers. Upon
any such resignation or removal of the Administrative Agent, the Required Banks
shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed and consented to,
and shall have accepted such appointment, within 30 days after such notice of
resignation or removal, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent. Each successor
Administrative Agent shall be a commercial bank or trust company organized under
the laws of the United States of America or any State thereof and having a
combined capital and surplus of at least $1,000,000,000. Upon the acceptance by
a successor Administrative Agent of its appointment as Administrative Agent
hereunder, such successor Administrative Agent shall thereupon succeed to and
become vested with all the properties, rights, powers, privileges and duties of
the former Administrative Agent, without further act, deed or conveyance. Upon
the effective date of resignation or removal of a retiring Agent, such Agent
shall be discharged from its duties under this Agreement and the other Loan
Documents, but the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted by it while it was an Agent under this Agreement.
If and so long as no successor Administrative Agent shall have been appointed,
then any notice or other communication required or permitted to be given by the
Administrative Agent shall be sufficiently given if given by the Required Banks,
all notices or other communications required or permitted to be given to the
Administrative Agent shall be given to each Bank, and all payments to be made to
the Administrative Agent shall be made directly to the Borrower or Bank for
whose account such payment is made.
8.11. Additional Administrative Agents. If the Administrative Agent shall
from time to time deem it necessary or advisable, for its own protection in the
performance of its duties hereunder or in the interest of the Banks, the
Administrative Agent and the Borrowers shall execute and deliver a supplemental
agreement and all other instruments and agreements necessary or advisable, in
the opinion of the Administrative Agent, to constitute another commercial bank
or trust company, or one or more other Persons approved by the Administrative
Agent, to act as co-Administrative Agent or agent with such powers of the
Administrative Agent as may be provided in such supplemental agreement and to
vest in such bank, trust company or Person as such co-Administrative Agent or
separate agent, as the case may be, any properties, rights, powers, privileges
and duties of the Administrative Agent under this Agreement or any other Loan
Document.
8.12. Calculations. Neither Agent shall be liable for any calculation,
apportionment or distribution of payments made by either Agent in good faith. If
such calculation, apportionment or distribution is subsequently determined to
have been made in error, the sole recourse of any Bank to whom payment was due
but not made shall be to recover from the other Banks any payment in excess of
the amount to which
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they are determined to be entitled or, if the amount due was not paid by the
appropriate Borrower, to recover such amount from the appropriate Borrower.
8.13. Agent's Fee. The Borrower agrees to pay to each Agent, for its
individual account, a nonrefundable Agent's fee in an amount and at such time or
times as such Agent and the Borrower have heretofore agreed.
8.14. Funding by Administrative Agent. Unless the Administrative Agent
shall have been notified in writing by any Bank not later than the close of
business on the day before the day on which Loans are requested by the Borrower
to be made that such Bank will not make its ratable share of such Loans, the
Administrative Agent may assume that such Bank will make its ratable share of
the Loans, and in reliance upon such assumption the Administrative Agent may
(but in no circumstances shall be required to) make available to the applicable
Borrower a corresponding amount. If and to the extent that any Bank fails to
make such payment to the Administrative Agent on such date, such Bank shall pay
such amount on demand (or, if such Bank fails to pay such amount on demand, such
Borrower shall pay such amount on demand), together with interest, for the
Administrative Agent's own account, for each day from and including the date of
the Administrative Agent's payment to and including the date of repayment to the
Administrative Agent (before and after judgment) at the rate or rates per annum
applicable to such Loans. All payments to the Administrative Agent under this
Section shall be made to the Administrative Agent at its Office in Dollars in
funds immediately available at such Office, without set-off, withholding,
counterclaim or other deduction of any nature.
ARTICLE IX
MISCELLANEOUS
9.01. No Implied Waiver etc. No delay or failure of either Agent or any
Bank, or the holder of any Note in exercising any right, power or privilege
hereunder shall affect such right, power or privilege; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further exercise thereof
or of any other right, power or privilege. The rights and remedies hereunder of
the Agents, the Banks and any holder of the Notes are cumulative and not
exclusive of any rights or remedies which, it or they would otherwise have. Any
amendment, waiver, permit, consent or approval of any kind or character on the
part of an Agent or a Bank of any breach or default under this Agreement or any
such waiver of any provision or condition of this Agreement must be in writing
and shall be effective only to the extent in such writing specifically set
forth.
9.02. Set-Off. In case any one or more of the Events of Default described
in Article VII hereof shall occur, the holder of any Note shall have the right,
in addition to all other rights and remedies available to it, to set-off against
the unpaid balance of the Note held by it any debt owing by such holder to the
applicable Borrower, including without limitation any funds in any deposit
account maintained by such Borrower with such holder, and such holder shall have
and there is hereby created in favor of such holder a security interest in all
deposit accounts maintained by such Borrower with such holder. Any sums obtained
by the holder of any Note issued hereunder by way of counterclaim, set-off,
banker's lien or other lien for application upon any Note held by it shall be
shared pro rata with the holders of the other Notes. Nothing in this Agreement
shall be deemed any waiver or prohibition of any right of banker's lien or
set-off under applicable Law.
9.03. Survival of Provisions. Each of the representations, warranties,
covenants and agreements of the Borrowers and the Guarantors contained herein or
made in writing in connection
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herewith shall survive the execution and delivery of this Agreement, the making
of Loans hereunder and the issuance of the Notes.
9.04. Expenses and Fees; Indemnity.
(a) Each Borrower agrees to pay or cause to be paid and to save the Agents
and (in the case of clause (iii) below) each of the Banks harmless against
liability for the payment of all reasonable out-of-pocket costs and expenses
(including but not limited to reasonable fees and expenses of counsel, including
local counsel, auditors, and all other professional, accounting, evaluation and
consulting costs, incurred by the Agents or such Bank from time to time arising
from or relating to (i) the negotiation, preparation, execution, delivery,
administration and performance of this Agreement and the other Loan Documents,
(ii) any requested amendments, modifications, supplements, waivers or consents
(whether or not ultimately entered into or granted) to this Agreement or any
Loan Document, and (iii) the enforcement or preservation of rights under this
Agreement or any Loan Document (including but not limited to any such costs or
expenses arising from or relating to (A) collection or enforcement of an
outstanding Loan or any other amount owing hereunder or thereunder by either
Agent or any Bank and (B) any litigation, proceeding, dispute, work-out,
restructuring or rescheduling related in any way to this Agreement or the Loan
Documents). Notwithstanding the foregoing, the Borrowers shall not be required
to pay costs and expenses of a Bank (in its capacity as such) which were
incurred by such Bank in connection with any litigation, proceeding or other
dispute relating solely to a claim made against such Bank by one or more of the
other Banks. Each Borrower hereby agrees to pay all stamp, document, transfer,
recording, filing, registration, search, sales and excise fees and taxes and all
similar impositions now or hereafter determined by either Agent or any Bank to
be payable in connection with this Agreement or any other Loan Documents or any
other documents, instruments or transactions pursuant to or in connection
herewith or therewith, and the Borrower agrees to save each Agent and each Bank
harmless from and against any and all present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such fees.
(b) Each Borrower hereby agrees to reimburse and indemnify each Agent and
each Bank (the "Indemnified Parties") from and against any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for the
Indemnified Parties in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnified
Party shall be designated a party thereto) that may at any time be imposed on,
asserted against or incurred by such Indemnified Party as a result of, or
arising out of, or in any way related to or by reason of, this Agreement or any
other Loan Document, any transaction from time to time contemplated hereby or
thereby, or any transaction financed in whole or in part or directly or
indirectly with the proceeds of any Loan (and without in any way limiting the
generality of the foregoing, including any violation or breach of any Law by any
Borrower or any exercise by either Agent or any Bank of any of its rights or
remedies under this Agreement or any other Loan Document; any breach of any
representation or warranty, covenant or agreement of any Borrower); but
excluding any such losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements to the extent
resulting from the gross negligence or willful misconduct of such Indemnified
Party, as finally determined by a court of competent jurisdiction. If and to the
extent that the foregoing obligations of the Borrowers under this Section 9.04,
or any other indemnification obligation of the Borrowers hereunder or under any
other Loan Document, are unenforceable for any reason, the Borrowers hereby
agree to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable Law. Notwithstanding the
foregoing, the Borrowers shall not be required to pay costs and expenses of a
Bank (in its capacity as such) which were incurred by such Bank in connection
with any litigation, proceeding or other dispute relating solely to a claim made
against such Bank by one or more of the other Banks.
9.05. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the
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validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
9.06. Holidays. Unless otherwise specified herein, whenever any payment or
action to be made or taken hereunder or under the Notes shall be stated to be
due on a Saturday, Sunday or public holiday under the laws of the Commonwealth
of Pennsylvania or Bermuda, such payment or action shall be made or taken on the
next succeeding Business Day and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment or
action.
9.07. Notices, etc. Any notice or other communication in connection with
this Agreement shall be deemed to have been given or made when received by the
party to whom directed. All such notices and other communications shall be in
writing unless otherwise provided herein and shall be directed, if to a Bank, at
such Bank's address on the signature pages hereof, if to the Administrative
Agent at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, Attention:
Susan Whitewood, Facsimile No. 412-234-8087, with a copy to Mellon Bank Loan
Administration, Three Mellon Bank Center, Pittsburgh, Pennsylvania 15259,
Facsimile No. 412-209-6134; if to the Syndication Agent at 270 Park Avenue, 20th
Floor, New York, New York 10017, Attention: Donald Rands and if to X.L. Capital,
at Cumberland House, One Victoria Street, Hamilton HM11 Bermuda, Attention:
William Robbie, fax no. (441) 292-8618, with a copy to Paul Giordano, Esq. at
the same address and fax number, or in accordance with the latest unrevoked
written direction from any party to the other parties hereto. For the purposes
of both receiving information from either Agent or any Bank or providing
information to either Agent or any Bank, XL Capital shall act as the agent for
XL Insurance and XL Mid Ocean.
9.08. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR ANY OTHER
MATTER RELATED THERETO MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF
COMMONWEALTH OF PENNSYLVANIA OR IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF PENNSYLVANIA. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA
AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION,
SUBJECT TO ANY GENERAL RIGHT OF APPEAL. EACH BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS PROVIDED IN THIS AGREEMENT.
9.09. WAIVER OF JURY TRIAL. TO THE EXTENT LITIGATION HEREUNDER IS BROUGHT
BEFORE A COURT IN THE UNITED STATES, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY. EACH PARTY
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISIONS OF EACH OTHER DOCUMENT RELATED
HERETO TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR EACH AGENT AND EACH BANK ENTERING INTO THIS AGREEMENT AND RELATED
AGREEMENTS.
9.10. Governing Law. This Agreement and any other documents delivered in
connection herewith and the rights and obligations of the parties hereto and
thereto shall for all purposes be governed by and construed and enforced in
accordance with the substantive law of the Commonwealth of Pennsylvania without
giving effect to conflict of laws principles.
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9.11 Validity and Enforceability. If any stamp tax, levy, duty or fee is
imposed or payable in respect to this Agreement or the transaction contemplated
hereby or is necessary or advisable to ensure the legality, validity or
enforceability of the documents in this transaction, the Borrowers shall
promptly pay such stamp tax, levy, duty or fee. No government approval or
consent is necessary for the execution, delivery and performance of the
transactions contemplated under this Agreement and the Notes.
9.12. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one (1) and the same instrument.
9.13. Successors and Assigns; Participations; Assignments.
(a) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Borrowers, the Banks, the Agents,
all future holders of the Notes and their respective successors and assigns,
except that no Borrower may assign or otherwise transfer any of its rights or
duties under this Agreement without the prior written consent of the Agents and
all of the Banks, and any purported assignment without such consent shall be
void.
(b) Participations. Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time sell
participations to one or more commercial banks or other Persons (each a
"Participant") in a portion of its rights and obligations under this Agreement
and the other Loan Documents (including, without limitation, all or a portion of
its Commitments and the Loans owing to it and any Notes held by it); provided,
that
(i) any such participation sold to a Participant which is not a
Bank, an affiliate of a Bank or a Federal Reserve Bank shall be made only
with the consent (which in each case shall not be unreasonably withheld)
of each Borrower and the Administrative Agent, unless an Event of Default
has occurred and is continuing, in which case the consent of the Borrowers
shall not be required,
(ii) any such Bank's obligations under this Agreement and the other
Loan Documents shall remain unchanged,
(iii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations,
(iv) the parties hereto shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement and each of the other Loan Documents,
(v) such Participant shall be bound by the provisions of Section
9.18 hereof, and the Bank selling such participation shall obtain from
such Participant a written confirmation of its agreement to be so bound,
(vi) no Participant (unless such Participant is an affiliate of such
Bank, or is itself a Bank) shall be entitled to require such Bank to take
or refrain from taking action under this Agreement or under any other Loan
Document, except that such Bank may agree with such Participant that such
Bank will not, without such Participant's consent, take action of the type
described in subsections (a), (b), (c), (d) or (e) of Section 9.14 hereof,
and
(vii) a Participant shall have the right to vote regarding
amendments to this Agreement only in connection with amendments which
effect changes in the amount of principal, interest rates, fees and
maturity.
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The Borrowers agree that any such Participant shall be entitled to the benefits
of Sections 2.09 and 9.04 with respect to its participation in the Commitments
and the Loans outstanding from time to time; provided, that no such Participant
shall be entitled to receive any greater amount pursuant to such Sections than
the transferor Bank would have been entitled to receive in respect of the amount
of the participation transferred to such Participant had no such transfer
occurred.
(c) Assignments. Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time assign all
or a portion of its rights and obligations under this Agreement and the other
Loan Documents (including, without limitation, all or any portion of its
Commitments and Loans owing to it and any Note held by it) to any Bank, any
affiliate of a Bank or to one or more additional commercial banks or other
Persons (each a "Purchasing Bank"); provided, that
(i) any such assignment to a Purchasing Bank which is not a Bank, an
affiliate of a Bank or a Federal Reserve Bank shall be made only with the
consent (which in each case shall not be unreasonably withheld) of XL
Capital and the Administrative Agent, unless an Event of Default has
occurred and is continuing or exists, in which case the consent of XL
Capital shall not be required,
(ii) if a Bank makes such an assignment of less than all of its then
remaining rights and obligations under this Agreement and the other Loan
Documents, such assignment shall be in a minimum aggregate principal
amount of $10,000,000 of the Commitments and Loans then outstanding,
(iii) each such assignment shall be of a constant, and not a
varying, percentage of each Commitment of the transferor Bank and of all
of the transferor Bank's rights and obligations under this Agreement and
the other Loan Documents, and
(iv) each such assignment shall be made pursuant to a Transfer
Supplement in substantially the form of Exhibit B to this Agreement, duly
completed (a "Transfer Supplement").
In order to effect any such assignment, the transferor Bank and the
Purchasing Bank shall execute and deliver to the Administrative Agent a
duly completed Transfer Supplement (including the consents required by
clause (i) of the preceding sentence) with respect to such assignment,
together with any Notes subject to such assignment (the "Transferor Bank
Notes") and a processing and recording fee of $2,500; and, upon receipt
thereof, the Administrative Agent shall accept such Transfer Supplement;
provided, however, that no such processing and recording fee shall be due
if such assignment is to an affiliate of a Bank or a Federal Reserve Bank
. Upon receipt of the Purchase Price Receipt Notice pursuant to such
Transfer Supplement, the Administrative Agent shall record such acceptance
in the Register. Upon such execution, delivery, acceptance and recording,
from and after the close of business at the Administrative Agent's Office
on the Transfer Effective Date specified in such Transfer Supplement.
(x) the Purchasing Bank shall be a party hereto and, to the extent
provided in such Transfer Supplement, shall have the rights and
obligations of a Bank hereunder, and
(y) the transferor Bank thereunder shall be released from its
obligations under this Agreement to the extent so transferred (and, in the
case of an Transfer Supplement covering all or the remaining portion of a
transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party to this Agreement) from and
after the Transfer Effective Date.
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On or prior to the Transfer Effective Date specified in an Transfer Supplement,
the Borrowers, at their expense, shall execute and deliver to the Administrative
Agent (for delivery to the Purchasing Bank) new Notes evidencing such Purchasing
Bank's assigned Commitments or Loans and (for delivery to the transferor Bank)
replacement Notes in the principal amount of the Loans or Commitments retained
by the transferor Bank (such Notes to be in exchange for, but not in payment of,
those Notes then held by such transferor Bank). Each such Note shall be dated
the date and be substantially in the form of the predecessor Note. The
Administrative Agent shall mark the predecessor Notes "exchanged" and deliver
them to the Borrower. Accrued interest and accrued fees shall be paid to the
Purchasing Bank at the same time or times provided in the predecessor Notes and
this Agreement.
(d) Register. The Administrative Agent shall maintain at its office a copy
of each Transfer Supplement delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment of,
and principal amount of the Loans owing to, each Bank from time to time. The
entries in the Register shall be conclusive absent manifest error and the
Borrowers, the Administrative Agent and the Banks may treat each person whose
name is recorded in the Register as a Bank hereunder for all purposes of the
Agreement. The Register shall be available for inspection by any Borrower or any
Bank at any reasonable time and from time to time upon reasonable prior notice.
(e) Financial and Other Information. Each Borrower authorizes each Agent
and each Bank to disclose to any Participant or Purchasing Bank (each, a
"transferee") and any prospective transferee any and all financial and other
information in such Person's possession concerning the Borrowers and their
affiliates which has been or may be delivered to such Person by or on behalf of
the Borrowers in connection with this Agreement or any other Loan Document or
such Person's credit evaluation of the Borrowers and their affiliates. At the
request of any Bank, each Borrower, at such Borrower's expense, shall provide to
each prospective transferee the conformed copies of documents referred to in
Section 4 of the form of Transfer Supplement.
(f) Designated Lenders. Notwithstanding anything to the contrary contained
herein, any Bank (a "Designating Lender") may grant to an Eligible Designee
identified as such (and as a Designated Lender) in writing from time to time by
such Designating Lender to the Administrative Agent and the Borrowers, the
option to provide to the Borrowers all or any part of any Loan that such
Designating Lender would otherwise be obligated to make to any Borrower pursuant
to this Agreement; provided that nothing herein shall constitute a commitment by
such Designated Lender to make any Loan and (ii) if a Designated Lender elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Designating Lender shall be obligated to make such Loan pursuant
to the terms hereof. The making of a Loan by a Designated Lender hereunder shall
utilize the Committed Amount of the Designating Lender to the same extent, and
as if, such Loan were made by such Designating Lender. Each party hereto hereby
agrees that no Designated Lender shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Designating Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any
Designated Lender, it will not institute against, or join any other person in
instituting against, such Designated Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof. As to any Loans or portion thereof made by it, each
Designated Lender shall have all the rights that a Bank making such Loans or
portion thereof would have had under this Agreement and otherwise; provided that
(i) its voting rights under this Agreement shall be exercised solely by its
Designating Lender, (ii) its Designating Lender shall be deemed to hold its
relevant Note as agent for its Designated Lender to the extent of the Loans or
portion thereof funded by such Designated Lender and (iii) the designation of a
Designated Lender and the funding of Loans by a Designated Lender shall in no
event (x) subject any of the Borrowers to any delay in the making of a Loan, (y)
cause or give rise to any obligation of any of the Borrowers to indemnify or
hold harmless such Designated Lender or any other person (including without
limitation pursuant to Sections 2.11 and 9.04 of this Agreement) except to the
extent such obligation would have arisen in favor of the
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Designating Lender or another person if the Designating Lender (rather than such
Designated Lender) had made all of such Designated Lender's Loans and such
Designated Lender had not been designated as such hereunder, or (z) render the
performance of any provision of the Agreement illegal, void or unenforceable
under any provision of law. Each Designating Lender shall act as administrative
agent for its Designated Lender and give and receive notices and other
communications on behalf of its Designated Lender. Any payments for the account
of any Designated Lender shall be paid to its Designating Lender as
administrative agent for such Designated Lender and neither the Borrowers nor
either Agent shall be responsible for any Designating Lender's application of
such payments. In addition, any Designated Lender may (i) with notice to, but
without the prior written consent of, XL Capital and the Administrative Agent
and without paying any processing fee therefor, assign all or a portion of its
interests in any Loans to the Designating Lender or to any financial
institutions (consented to by XL Capital and the Administrative Agent) providing
liquidity and/or credit support to or for the account of such Designated Lender
to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans or portions
thereof to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such Designated Lender. This
section may not be amended without the written consent of each Designating
Lender which has designated a Designated Lender.
9.14. Amendments and Waivers. Neither this Agreement nor any Loan Document
may be amended, modified or supplemented except in accordance with the
provisions of this Section. The Administrative Agent and the Borrowers may from
time to time amend, modify or supplement the provisions of this Agreement or any
other Loan Document for the purpose of amending, adding to, or waiving any
provisions or changing in any manner the rights and duties of any Borrower,
either Agent or any Bank. Any such amendment, modification or supplement made by
the Borrowers and the Administrative Agent in accordance with the provisions of
this Section shall be binding upon the Borrowers, each Bank and each Agent. The
Administrative Agent shall enter into such amendments, modifications or
supplements from time to time as directed by the Required Banks, and only as so
directed, provided, that no such amendment, modification or supplement may be
made which will:
(a) Increase the Committed Amount of any Bank over the amount thereof then
in effect, or extend the Expiration Date, without the written consent of each
Bank affected thereby;
(b) Reduce the principal amount of or extend the payment of principal of
any Loan, or reduce the rate of interest or extend the time for payment of
interest borne by any Loan or extend the time for payment of or reduce the
amount of any Facility Fee or reduce or postpone the date for payment of any
other fees, expenses, indemnities or amounts payable under any Loan Document,
without the written consent of each Bank affected thereby;
(c) Change the definition of "Required Banks" or amend this Section 9.14,
without the written consent of all the Banks;
(d) Amend or waive any of the provisions of Article VIII hereof with
respect to either Agent, or impose additional duties upon either Agent or
otherwise adversely affect the rights, interests or obligations of either Agent,
without the written consent of such Agent; or
(e) Amend or waive any of the provisions of Article X or release any
Guarantor from its obligations hereunder;
and provided further, that Transfer Supplements may be entered into in the
manner provided in Section 9.13 hereof. Any such amendment, modification or
supplement must be in writing and shall be effective only to the extent set
forth in such writing. Any Event of Default or Potential Default waived or
consented to in any such amendment, modification or supplement shall be deemed
to be cured and not continuing to the extent and for the period set forth in
such waiver or consent, but no such waiver or consent shall extend to any other
or subsequent Event of Default or Potential Default or impair any right
consequent thereto.
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9.15. Judgment Currency. In the event of a judgment or order being
rendered by any court or tribunal for the payment of any amounts owing to the
Banks or any of them under this Agreement or any other Loan Document or for the
payment of damages in respect of any breach of this Agreement or any other Loan
Document or under or in respect of a judgment or order of another court or
tribunal for the payment of such amounts or damages, such judgment or order
being expressed in a currency (the "Judgment Currency") other than Dollars the
party against whom the judgment or order is made shall indemnify and hold the
Banks harmless against any deficiency in terms of Dollars in the amounts
received by the Banks arising or resulting from any variations as between (i)
the exchange rate at which Dollars are converted into the Judgment Currency for
the purposes of such judgment or order and (ii) the exchange rate at which each
Bank is able to purchase Dollars with the amount of the Judgment Currency
actually received by the Banks on the date of such receipt. The indemnity in
this section shall constitute a separate and independent obligation from the
other obligations of the Borrowers hereunder and shall apply irrespective of any
indulgence granted by the Banks.
9.16. Records. The unpaid principal amount of the Loans owing to each
Bank, the unpaid interest accrued thereon, the interest rate or rates applicable
to such unpaid principal amount, the duration of such applicability, each Bank's
Committed Amount and the accrued and unpaid Facility Fees shall at all times be
ascertained from the records of the Administrative Agent, which shall be
conclusive absent manifest error.
9.17 Confidentiality. Each of the Agents and the Banks agree to keep
confidential any information relating to the Borrowers received by it pursuant
to or in connection with this Agreement which is (a) information which the
Agents and the Banks reasonably expect that the applicable Borrower would want
to keep confidential or (b) information which is clearly marked "CONFIDENTIAL";
provided, however, that this Section 9.17 shall not be construed to prevent
either Agent or any Bank from disclosing such information (i) to any affiliate
that shall agree in writing for the benefit of the Borrowers to be bound by this
obligation of confidentiality, (ii) upon the order of any court or
administrative agency of competent jurisdiction, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over such Agent
or such Bank which request or demand has the force of Law or is made by a bank
regulatory agency, (iv) that has been publicly disclosed, other than from a
breach of this provision by either Agent or any Bank, (v) that has been obtained
from any person that is neither a party to this Agreement nor an affiliate of
any such party, but only to the extent that such Bank does not know or have
reason to know that such disclosure violates a confidentiality agreement between
such person and the applicable Borrower (vi) in connection with the exercise of
any right or remedy hereunder or under any other Loan Document, (vii) as
expressly contemplated by this Agreement or any other Loan Document or (viii) to
any prospective purchaser of all or any part of the interest of any Bank which
shall agree in writing for the benefit of the Borrowers to be bound by the
obligation of confidentiality in this Agreement or the other Loan Documents if
such prospective purchaser is a financial institution or has been consented to
by the Borrower, which consent will not be withheld if such purchaser is not a
competitor of the Borrower or an affiliate of a competitor of the Borrower.
9.18. Sharing of Collections. The Banks hereby agree among themselves that
if any Bank shall receive (by voluntary payment, realization upon security,
set-off or from any other source) any amount on account of the Loans, interest
thereon, or any other Obligation contemplated by this Agreement or the other
Loan Documents to be made by the Borrowers pro rata to all Banks in greater
proportion than any such amount received by any other Bank, then the Bank
receiving such proportionately greater payment shall notify each other Bank and
the Administrative Agent of such receipt, and equitable adjustment will be made
in the manner stated in this Section 9.18 so that, in effect, all such excess
amounts will be shared ratably among all of the Banks. The Bank receiving such
excess amount shall purchase (which it shall be deemed to have done
simultaneously upon the receipt of such excess amount) for cash from the other
Banks a participation in the applicable Obligations owed to such other Banks in
such amount as shall result in a ratable sharing by all Banks of such excess
amount (and to such extent the receiving Bank shall be a Participant). If all or
any portion of such excess amount is thereafter recovered from the Bank making
such purchase, such purchase shall be rescinded and the
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purchase price restored to the extent of such recovery, together with interest
or other amounts, if any, required by Law to be paid by the Bank making such
purchase. Each Borrower hereby consents to and confirms the foregoing
arrangements. Each Participant shall be bound by this Section 9.18 as fully as
if it were a Bank hereunder.
ARTICLE X
GUARANTEE
10.01. The Guarantee. Each of XL Insurance, XL Capital and XL Mid Ocean
(the "Guarantors") guarantees to the Agents and the Banks as hereinafter
provided the prompt payment of the Obligations of each of the Borrowers (other
than itself) (the "Guaranteed Obligations") in full when due (whether at stated
maturity, by acceleration, or otherwise) strictly in accordance with the terms
thereof. Each Guarantor hereby further agrees that if any of the Guaranteed
Obligations are not paid in full when due (whether at stated maturity, by
acceleration, or otherwise), such Guarantor will promptly pay the same, without
any demand or notice whatsoever (except as expressly provided herein), and that
in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any other
of the Loan Documents, to the extent the obligations of any Guarantor shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable law, including the insolvency laws,
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder automatically shall be limited to the maximum amount that is
permissible under applicable law.
10.02. Obligations Unconditional. The obligations of each Guarantor under
this Article are absolute and unconditional (to the fullest extent permitted by
applicable law), irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Loan Documents, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Article that the obligations of each Guarantor hereunder shall be absolute and
unconditional under any and all circumstances. Each Guarantor agrees that such
Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against any Borrower for amounts paid under this Guarantee until
such time as the Banks have been paid in full, the Committed Amounts under the
Credit Agreement have been reduced to zero and no Person or Official Body shall
have any right to request any return or reimbursement of funds from any Bank in
connection with monies received under the Loan Documents. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent permitted
by applicable law, the occurrence of any one or more of the following shall not
alter or impair the liability of any Guarantor hereunder which shall remain
absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of
the Loan Documents, or any other agreement or instrument referred to in
the Loan Documents shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the Loan
Documents, or any other agreement or instrument referred to in the
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Loan Documents shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, either Agent or any Bank
as security for any of the Guaranteed Obligations shall be void or
voidable, or shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined to be void
or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever (except notices expressly required hereunder), and any requirement
that the Agents, the Banks or any of them exhaust any right, power or remedy or
proceed against any Person under any of the Loan Documents, or any other
agreement or instrument referred to in the Loan Documents, or against any other
Person under any other guarantee of, or security for, any of the Guaranteed
Obligations.
10.03. Reinstatement. The obligations of the Guarantors under this Article
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy,
receivership, or reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Agents and the Banks on demand for all reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable fees
and expenses of counsel) incurred by either Agent or any Bank in connection with
such rescission or restoration, including any such reasonable costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency, receivership, reorganization or similar law.
10.04. Remedies. Each Guarantor agrees that, to the fullest extent
permitted by applicable law, as between such Guarantor, on the one hand, and the
Agents and the Banks, on the other hand, the Guaranteed Obligations may be
declared to be forthwith due and payable as provided in Section 7.01 hereof (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 7.01) for purposes of Section 10.01
hereof notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Guaranteed Obligations from becoming
automatically due and payable) as to any other Person and that, in the event of
such declaration (or Guaranteed Obligations being deemed to have become
automatically due and payable), the Guaranteed Obligations (whether or not due
and payable by any other Person) shall forthwith become due and payable by such
Guarantor for purposes of said Section 10.01.
10.05. Continuing Guarantee. The guarantee in this Article is a continuing
guarantee, and shall apply to all of the Guaranteed Obligations whenever
arising.
10.06. No Restrictions. Except for restrictions under the Loan Documents,
no Guarantor shall be or become subject to any restriction of any nature
(whether arising by operation of Law, by agreement, by its articles of
incorporation, by-laws or other constituent documents of such Guarantor, or
otherwise) on the right of such Guarantor from time to time to (x) pay any
indebtedness, obligations or liabilities from time to time owed to any Borrower,
or (y) make loans or advances to any Borrower or (z) transfer any of its
properties or assets to any Borrower.
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IN WITNESS WHEREOF, the parties hereto, by their respective officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
XL INSURANCE LTD
By: /s/ Brian M. O'Hara
--------------------------------------
(Signature)
Name: Brian M. O'Hara
------------------------------------
Title: Chairman
------------------------------------
XL MID OCEAN REINSURANCE LTD
By: /s/ Brian M. O'Hara
--------------------------------------
(Signature)
Name: Brian M. O'Hara
------------------------------------
Title: Chairman
------------------------------------
XL CAPITAL LTD
By: /s/ Brian M. O'Hara
--------------------------------------
(Signature)
Name: Brian M. O'Hara
------------------------------------
Title: President & Chief Executive Officer
------------------------------------
-44-
MELLON BANK, N.A., as a Bank and as Administrative Agent
By: /s/ Karla K. Maloof
--------------------------------------
(Signature)
Name: Karla K. Maloof
------------------------------------
Title: Vice President
------------------------------------
Notice Address:
Institutional Banking Department
One Mellon Bank Center, Room 4401
Pittsburgh, PA 15258
Attn: Susan Whitewood
Facsimile No. 412-234-8087
with a copy to:
Mellon Bank Loan Administration
Three Mellon Bank Center
Pittsburgh, PA 15259
Facsimile No. 412-209-6134
Initial Committed Amount: $65,000,000
-45-
THE CHASE MANHATTAN BANK, as a Bank and as Syndication Agent
By: /s/ Donald L. Rands
--------------------------------------
(Signature)
Name: Donald L. Rands
------------------------------------
Title: Vice President
------------------------------------
Notice Address:
270 Park Avenue, 20th Floor
New York, New York 10017
Attn: Donald Rands
Initial Committed Amount: $65,000,000
-46-
THE BANK OF NOVA SCOTIA
By: /s/ J.R. Trimble
--------------------------------------
(Signature)
Name: J.R. Trimble
------------------------------------
Title: Senior Relationship Manager
------------------------------------
Notice Address:
New York Branch
One Liberty Plaza
New York, New York 10006
Attn: Jim Trimble
Initial Committed Amount: $55,000,000
-47-
CITIBANK, N.A.
By: /s/ Michael Taylor
--------------------------------------
(Signature)
Name: Michael Taylor
------------------------------------
Title: Vice President
------------------------------------
Notice Address:
Cottons Centre, Hays Lane
London SE1 2QT
Attn: Michael A. L. Taylor
Initial Committed Amount: $55,000,000
-48-
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Sebastian Rocco
--------------------------------------
(Signature)
Name: Sebastian Rocco
------------------------------------
Title: Senior Vice President
------------------------------------
Notice Address:
1301 Avenue of the Americas
New York, New York 10019
Attn: Jimmy Tse
Initial Committed Amount: $55,000,000
-49-
DEUTSCHE BANK AG, NEW YORK OR CAYMAN ISLANDS BRANCHES
By: /s/ John S. McGill /s/ Clinton M. Johnson
--------------------------------------------
(Signature)
Name: John S. McGill Clinton M. Johnson
------------------------------------------
Title: Director Director
------------------------------------------
Notice Address:
31 West 52nd Street
New York, New York 10019
Attn: Clinton M. Johnson
Initial Committed Amount: $55,000,000
-50-
BANK OF AMERICA NT&SA
By: /s/ Nita Savage
--------------------------------------
(Signature)
Name: Nita Savage
------------------------------------
Title: Vice President
------------------------------------
Notice Address:
231 S.LaSalle Street-10th Floor
Chicago, IL 60697
Attn: Nita Savage
Initial Committed Amount: $25,000,000
-51-
THE BANK OF BERMUDA LIMITED
By: /s/ Michael W. Collins
--------------------------------------
(Signature)
Name: Michael W. Collins
------------------------------------
Title: Senior Vice President
------------------------------------
Notice Address:
6 Front Street
Hamilton HM 11, Bermuda
Attn: Hanne Frost
Initial Committed Amount: $25,000,000
-52-
BANQUE NATIONALE DE PARIS
By: /s/ Phil Truesdale /s/ Veronique Marcus
-------------------------------------------------
(Signature)
Name: Phil Truesdale Veronique Marcus
-----------------------------------------------
Title: Chairman
-----------------------------------------------
Notice Address:
499 Park Avenue
New York, NY 10022
Attn: Phil Truesdale
Initial Committed Amount: $25,000,000
-53-
FLEET NATIONAL BANK
By: /s/ Anson Harris
---------------------------------------
(Signature)
Name: Anson Harris
-------------------------------------
Title: Vice President
-------------------------------------
Notice Address:
Mail Stop CTMO 0250
777 Main Street
Hartford, CT 06115-2001
Attn: Anson T. Harris
Initial Committed Amount: $25,000,000
-54-
STATE STREET BANK AND TRUST COMPANY
By: /s/ Edward M. Anderson
-----------------------------------
(Signature)
Name: Edward M. Anderson
---------------------------------
Title:
---------------------------------
Notice Address:
2 Avenue De Lafayette
2nd Floor-LCC2N
Boston, MA 02111
Attn: Edward M. Anderson
Initial Committed Amount: $25,000,000
-55-
ROYAL BANK OF CANADA
By: /s/ V. Abdelmessih
-----------------------------------
(Signature)
Name: V. Abdelmessih
---------------------------------
Title: Senior Account Manager
--------------------------------
Notice Address:
New York Branch
One Liberty Plaza, 4th Floor
New York, New York 10006-1404
Attn: Manager, Loans Administration
Facsimile No.: (212)428-2372
with a copy to
One Liberty Plaza, 4th Floor
New York, NY 10006-1404
Attn: Vivian Abdelmessih
Facsimile No: (212) 428-6201
Initial Committed Amount: $25,000,000
-56-