Exhibit 10.63
CONFORMED COPY
EXHIBIT
DATED 19 NOVEMBER 1999
(as (a) amended and restated pursuant to the First Restatement
Agreement dated 17 November 2000, (b) amended pursuant to the Amendment
Agreement dated 23 October 2001, (c) amended and restated pursuant to the
Second Restatement Agreement dated 21 November 2001, and (d) amended and
restated pursuant to the Third Restatement Agreement dated 19 November 2002)
ACE LIMITED
as Account Party
ACE BERMUDA INSURANCE LTD.
as Guarantor
CITIBANK, N.A.
and
BARCLAYS CAPITAL
as Lead Arrangers
ING BANK, N.V., LONDON BRANCH
as Co-Arranger
CITIBANK INTERNATIONAL plc
as Agent and Security Trustee
and
OTHERS
______________________________________________________________
(pounds)380,000,000
LETTER OF CREDIT FACILITY AGREEMENT
______________________________________________________________
CONTENTS
Clause Page
1. Definitions And Interpretation ................................................. 1
2. The Facility ................................................................... 17
3. Utilisation Of The Facility .................................................... 18
4. Extension Of Letters Of Credit ................................................. 20
5. Substitution Of Letters Of Credit .............................................. 23
6. Increase Of The Facility ....................................................... 24
7. Notification ................................................................... 26
8. The Account Party's Liabilities In Relation To Letters Of Credit ............... 26
9. Cancellation And Collateralisation ............................................. 27
10. Taxes .......................................................................... 28
11. Tax Receipts ................................................................... 29
12. Increased Costs ................................................................ 30
13. Illegality ..................................................................... 31
14. Mitigation ..................................................................... 31
15. Representations ................................................................ 32
16. Covenants ...................................................................... 36
17. Events Of Default .............................................................. 43
18. Commission And Fees ............................................................ 47
19. Costs And Expenses ............................................................. 48
20. Default Interest And Break Costs ............................................... 49
21. Indemnities .................................................................... 50
22. Currency Of Account And Payment ................................................ 51
23. Payments ....................................................................... 51
24. Set-Off ........................................................................ 53
25. Sharing ........................................................................ 53
26. The Agent, The Arrangers And The Banks ......................................... 54
27. Assignments And Transfers ...................................................... 62
28. Economic And Monetary Union .................................................... 65
29. Calculations And Evidence Of Debt .............................................. 65
30. Guarantee And Indemnity ........................................................ 67
31. Remedies And Waivers, Partial Invalidity ....................................... 69
32. Notices ........................................................................ 69
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33. Counterparts ..................................................... 71
34. Amendments ....................................................... 71
35. Governing Law .................................................... 72
36. Jurisdiction ..................................................... 72
Schedule 1 The Banks ................................................. 74
Schedule 2 Form Of Transfer Certificate .............................. 75
Schedule 3 Conditions Precedent ...................................... 77
Schedule 4 Utilisation Request ....................................... 78
Schedule 5 Form Of Extension Request ................................. 80
Schedule 6 Form Of Letter Of Credit .................................. 83
Schedule 7 Mandatory Liquid Asset Costs Rate ......................... 90
Schedule 8 Form Of Confidentiality Undertaking ....................... 92
Schedule 9 Pricing Schedule .......................................... 95
Schedule 10 Existing Liens ........................................... 96
Schedule 11 Form Of Charge Agreement ................................. 97
Schedule 12 Form Of Substitution Notice .............................. 119
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THIS AGREEMENT originally dated 19 November 1999, as (a) amended and restated
pursuant to the First Restatement Agreement dated 17 November 2000, (b) amended
by an Amendment Agreement dated 23 October 2001, (c) further amended and
restated pursuant to the Second Restatement Agreement dated 21 November 2001,
and (d) further amended and restated as of the Commencement Date referred to in
the Third Restatement Agreement dated 19 November 2002, is made between:
(1) ACE LIMITED as account party (the "Account Party");
(2) ACE BERMUDA INSURANCE LTD. as guarantor (the "Guarantor");
(3) CITIBANK, N.A. and BARCLAYS CAPITAL (the investment banking division of
Barclays Bank PLC) as lead arrangers of the Facility (the "Lead
Arrangers");
(4) ING BANK, N.V., LONDON BRANCH as co-arranger of the Facility (the
"Co-Arranger");
(5) CITIBANK INTERNATIONAL plc as agent and trustee for the banks (when
acting in such capacities the "Agent" and the "Security Trustee"
respectively); and
(6) THE BANKS as defined below.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"ACE INA" means ACE INA Holdings Inc., a Delaware company and its
successors.
"ACE US" means ACE US Holdings, Inc., a Delaware company and its
successors.
"Adjusted Consolidated Debt" means, at any time, an amount equal to (a)
the then outstanding Consolidated Debt of the Account Party and its
Subsidiaries plus (b) to the extent exceeding an amount equal to 15 per
cent. of Total Capitalisation, the then issued and outstanding amount of
Preferred Securities (other than any Mandatorily Convertible Preferred
Securities).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For the purposes
of this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with") of a
Person means the possession, direct or indirect, of the power to vote 5
per cent. or more of the Voting Interests of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Interests, by contract or
otherwise.
"Amendment Agreement" means the amendment agreement dated 23 October
2001 which amends the First Restatement Agreement.
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"Applicant" means each of ACE Capital Limited, ACE Capital IV Limited,
ACE Capital V Limited, ACE Capital VI Limited and ACE Capital VII
Limited and their successors and substitutes within the Group from time
to time.
"Approved Credit Institution" means a credit institution within the
meaning of the First Council Directive relating to the taking up and
pursuit of the business of credit institutions (No. 2000/12 EC) which
has been approved by the Council of Lloyd's for the purpose of providing
guarantees and issuing or confirming letters of credit comprising a
member's Funds at Lloyd's.
"Approved Investment" means any Investment that was made by the Account
Party or any of its Subsidiaries pursuant to investment guidelines set
forth by the board of directors of the Account Party which guidelines
are consistent with past practices.
"Arrangers" means the Lead Arrangers and the Co-Arranger.
"Authorised Signatory" means, in relation to an Obligor, any person who
is duly authorised (in such manner as may be reasonably acceptable to
the Agent) and in respect of whom the Agent has received a certificate
signed by a director or another Authorised Signatory of such Obligor
setting out the name and signature of such person and confirming such
person's authority to act.
"Available Commitment" means, in relation to a Bank at any time and save
as otherwise provided herein its Commitment less its share of the
Sterling Amount of Outstandings at such time provided that such amount
shall not be less than zero.
"Available Facility" means, at any time, the aggregate of the Available
Commitments adjusted, in the case of a proposed utilisation pursuant to
a Utilisation Request, so as to take into account:-
(a) any reduction in the Commitment of a Bank pursuant to the terms
hereof; and
(b) any Letter of Credit which pursuant to any other Utilisation
Request, is to be issued;
on or before the proposed Utilisation Date relating to such utilisation.
"Availability Period" means the period from the Commencement Date to the
Commitment Termination Date (or such other date which Lloyd's may
specify as the Funds Date for 2002) inclusive.
"Bank" means any financial institution:
(a) named in Schedule 1 (The Banks); or
(b) which has become a party hereto in accordance with Clause 27.4
(Assignments by Banks) or Clause 27.5 (Transfers by Banks),
and which has not ceased to be a party hereto in accordance with the
terms hereof.
"Bermuda Companies Law" means The Companies Act 1981 of Bermuda, as
amended, and the regulations promulgated thereunder.
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"Bermuda Insurance Law" means The Insurance Act 1978 of Bermuda, as
amended, and the regulations promulgated thereunder.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks generally are open for business in London and Bermuda and, in the
case of payments to be made in dollars, New York.
"Capitalised Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalised leases.
"Cash Collateral" means, in relation to any Bank's L/C Proportion of any
Letter of Credit, a deposit in such interest-bearing account or accounts
as such Bank or, as the case may be, the Agent may specify, such deposit
and account to be secured in favour of, and on terms and conditions
acceptable to, such Bank.
"Charge Agreement" means the charge agreement dated on or about the date
of the Second Restatement Agreement, in substantially the form set out
in Schedule 11 (Form of Charge Agreement).
"Charged Portfolio" has the meaning ascribed to it in the Charge
Agreement.
"Commencement Date" has the meaning given to it in the Third Restatement
Agreement.
"Commitment" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set opposite its name under the
heading "Commitment" in Schedule 1 (The Banks).
"Commitment Termination Date" means 16 December 2002.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
"Consolidated Debt" means at any date the Debt of the Account Party and
its Consolidated Subsidiaries, determined on a Consolidated basis as of
such date.
"Consolidated Net Income" means, for any period, the net income of the
Account Party and its Consolidated Subsidiaries, determined on a
Consolidated basis for such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the
Account Party in its consolidated financial statements if such
statements were prepared as of such date.
"Consolidated Net Worth" means at any date the Consolidated
stockholder's equity of the Account Party and its Consolidated
Subsidiaries determined as of such date, provided that such
determination for the purposes of Clause 16.7 (Adjusted Consolidated
Debt to Total Capitalisation Ratio), Clause 16.8 (Consolidated Net
Worth) and Clause 16.9 (Liens) shall be made without giving effect to
adjustments pursuant to Statement No. 115 of the Financial Accounting
Standards Board of the United States of America.
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"Contingent Obligation" means, with respect to any Person, any
obligation or arrangement of such Person to guarantee or indemnify or
intended to guarantee or indemnify any Debt, leases, dividends or other
payment obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation:
(a) the direct or indirect guarantee, endorsement (other than for
collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by
such Person of the obligation of a primary obligor;
(b) the obligation to make take-or-pay or similar payments, if
required, regardless of non-performance by any other party or
parties to an agreement; or
(c) any obligation of such Person, whether or not contingent:
(i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor;
(ii) to advance or supply funds (1) for the purchase or payment
of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the
primary obligor;
(iii) to purchase property, assets, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation; or
(iv) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof,
provided, however, that Contingent Obligations shall not include any
obligations of any such Person arising under insurance contracts entered
into in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the
terms of the instrument evidencing such Contingent Obligation) or, if
not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such person is required to perform
thereunder), as determined by such Person in good faith.
"Custodian" means (at the date of the Charge Agreement) State Street
Bank and Trust Company, or such other entity or entities as may be
agreed from time to time between the Account Party and the Security
Trustee (each acting reasonably), provided that such other Custodian has
entered into Security Documents in a form reasonably acceptable to the
Security Trustee.
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"Custodian's Undertaking" means the undertaking delivered to the
Security Trustee by the Custodian in respect of the Charged Portfolio as
contemplated by the Charge Agreement.
"Debenture" means debt securities issued by the Account Party or ACE INA
to a Special Purpose Trust in exchange for proceeds of Preferred
Securities and common securities of such Special Purpose Trust.
"Debt" of any Person means, without duplication for purposes of
calculating financial ratios:
(a) all indebtedness of such Person for borrowed money:
(b) all obligations of such Person for the deferred purchase price of
property or services (other than trade payables incurred in the
ordinary course of such Person's business);
(c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments;
(d) all obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect
to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property);
(e) all obligations of such Person as lessee under Capitalised Leases
(excluding imputed interest);
(f) all obligations of such Person under acceptance, letter of credit
or similar facilities;
(g) all obligations of such Person (except for Approved Investments)
to purchase, redeem, retire, defease or otherwise make any payment
in respect of any Equity Interests (except for obligations to pay
for Equity Interests within customary settlement periods) in such
Person or any other Person or any warrants, rights or options to
acquire such capital stock (excluding payments under a contract
for the forward sale of ordinary shares of such Person issued in a
public offering), valued, in the case of Redeemable Preferred
Interests, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends;
(h) all Contingent Obligations of such Person in respect of Debt (of
the types described above) of any other Person; and
(i) all indebtedness and other payment obligations referred to in
clauses (a) through (h) above of another Person secured by (or for
which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by
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such Person, even though such Person has not assumed or become liable
for the payment of such indebtedness or other payment obligations;
provided, however, that the amount of Debt of such Person under clause
(i) above shall, if such Person has not assumed or otherwise become
liable for any such Debt, be limited to the lesser of the principal
amount of such Debt or the fair market value of all property of such
Person securing such Debt; provided further that "Debt" shall not
include obligations in respect of insurance or reinsurance contracts
entered into in the ordinary course of business; provided further that,
solely for the purposes of Clause 16.7 (Adjusted Consolidated Debt to
Total Capitalisation Ratio) and Clause 16.8 (Consolidated Net Worth)
and the definitions of "Adjusted Consolidated Debt" and "Total
Capitalisation", "Debt" shall not include (x) any contingent
obligations of any Person under or in connection with acceptance,
letter of credit or similar facilities or (y) obligations of the
Account Party or ACE INA under any Debentures or under any subordinated
guarantee or any Preferred Securities or obligations of a Special
Purpose Trust under any Preferred Securities.
"Default" means an Event of Default or a Potential Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or other similar transaction (including any
option with respect to any of the foregoing transactions) or any
combination of the foregoing transactions.
"Effective Date" means, in respect of each Letter of Credit, 22 November
2002.
"Equity Interests" means, with respect to any Person, shares of capital
stock of (or other ownership or profit interests in) such Person,
warrants, options or other rights for the purchase or other acquisition
from such Person of shares of capital stock of (or other ownership or
profit interests in) such Person, securities convertible into or
exchangeable for shares of capital stock of (or other ownership or
profit interests in) such Person or warrants, rights or options for the
purchase or other acquisition from such Person of such shares (or such
other interests), and other ownership or profit interests in such Person
(including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are authorised or otherwise
existing on any date of determination.
"Event of Default" means any circumstance described as such in Clause 17
(Events of Default).
"Expiry Date" means, in relation to any Letter of Credit, the date on
which that Letter of Credit terminates or will terminate (as the context
requires) and the maximum aggregate liability thereunder is to be
reduced to zero.
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"Facility" means the sterling and dollar letter of credit facility
granted to the Account Party in this Agreement.
"Facility Office" means, in relation to the Agent, the office identified
with its signature below or such other office as it may select by notice
and, in relation to any Bank, the office notified by it to the Agent in
writing prior to the date hereof (or, in the case of a Transferee, at
the end of the Transfer Certificate to which it is a party as
Transferee) or such other office as it may from time to time select by
notice to the Agent.
"Finance Documents" means this Agreement and each Security Document and
any other document or documents as may be agreed by the Agent and the
Account Party.
"Finance Parties" means the Agent, the Security Trustee, the Arrangers
and the Banks.
"First Restatement Agreement" means the amendment and restatement
agreement dated 17 November 2000 made between (amongst others) the
Account Party, the Guarantor, the Agent and the Banks named therein.
"Funds at Lloyd's" has the meaning given to it in paragraph 4 of the
Membership Bylaw (No. 17 of 1993).
"Funds at Lloyd's Requirements" means, in respect of any member, the
amount required to be maintained by that member as Funds at Lloyd's.
"Funds Date" means, in relation to any year, the date notified by
Lloyd's as being the latest date in that year by which Funds at Lloyd's
can be placed with Lloyd's in order to satisfy Funds at Lloyd's
Requirements in respect of the year of account next following that date,
such date notified by Lloyd's in respect of the 2003 year of account
being 22 November 2002.
"GAAP" has the meaning specified in Clause 1.7 (Accounting Terms and
Determinations).
"Group" means the Account Party and its Subsidiaries for the time being.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other hedging agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986 of the
United States of America, as amended, or any successor statute, and
includes regulation promulgated and rulings issued thereunder.
"Investment" in any Person means any loan or advance to such Person, any
purchase or other acquisition of any Equity Interests or Debt or the
assets comprising a division or business unit or a substantial part or
all of the business of such Person, any capital contribution to such
Person or any other direct or indirect investment in such Person,
including, without limitation, any acquisition by way of a merger or
consolidation and any arrangement pursuant to which the investor incurs
Debt of the types referred to in clause (h) or (i) of the definition of
"Debt" in respect of such Person; provided, however, that any purchase
by any US Facility Agreement Loan Party or any Subsidiary
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of any catastrophe-linked instruments which are (x) issued for the
purpose of transferring traditional reinsurance risk to the capital
markets and (y) purchased by such US Facility Agreement Loan Party or
any Subsidiary in accordance with its customary reinsurance underwriting
procedures, or the entry by any US Facility Agreement Loan Party or any
Subsidiary into swap transactions relating to such instruments in
accordance with such procedures, shall be deemed to be the entry by such
Person into a reinsurance contract and shall not be deemed to be an
Investment by such Person.
"L/C Commission Rate" means the rate per annum determined in accordance
with Clause 18.1 (Letter of Credit Commission) or Schedule 9 (Pricing
Schedule), as the case may be.
"L/C Proportion" means, in relation to a Bank in respect of any Letter
of Credit and save as otherwise provided herein, the proportion
(expressed as a percentage) borne by such Bank's Available Commitment to
the Available Facility immediately prior to the issue of such Letter of
Credit.
"L/C Valuation Date" means the first Business Day which falls six months
after the Commencement Date and each day falling at six monthly
intervals thereafter.
"Letter of Credit" means a letter of credit issued or to be issued
pursuant to Clause 3 (Utilisation of the Facility) substantially in the
form set out in Schedule 6 (Form of Letter of Credit) or in such other
form requested by the Account Party which is approved by the Banks (such
approval not to be unreasonably withheld or delayed).
"Letter of Credit Commission" means the letter of credit commission
described in Clause 18.1 (Letter of Credit Commission).
"LIBOR" means, in relation to any Unpaid Sum on which interest for a
given period is to accrue, the percentage rate per annum equal to the
offered quotation which appears on the page of the Telerate Screen which
displays an average British Bankers Association Interest Settlement Rate
for the currency of the relevant amount (being currently "3740" or, as
the case may be, "3750") for such period as of 11.00 a.m. London time on
the Quotation Date for such period or, if such page or such service
shall cease to be available, such other page or such other service for
the purpose of displaying an average British Bankers Association
Interest Settlement Rate for such currency as the Agent, after
consultation with the Banks and the Account Party, shall select, acting
reasonably.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other charge or encumbrance of any kind, or
any other type of preferential arrangement that has the practical effect
of creating a security interest, in respect of such asset. For the
purposes of this Agreement, the Account Party shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Lloyd's" means the Society incorporated by Lloyd's Act 1871 by the name
of Lloyd's.
"Mandatorily Convertible Preferred Securities" means units comprised of
(i) Preferred Securities or preferred shares of the Account Party and
(ii) a contract for the
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sale of ordinary shares of the Account Party (including "Feline
Prides(TM)", "Rhinos(TM)" or any substantially similar securities).
"Mandatory Liquid Asset Costs Rate" in relation to any Unpaid Sum shall
bear the meaning given to it in Schedule 7 (Mandatory Liquid Asset Costs
Rate).
"Majority Banks" means, save as otherwise provided herein:
(a) whilst there are no Outstandings, a Bank or Banks whose
Commitments amount (or, if each Bank's Commitment has been
reduced to zero, did immediately before such reduction to zero,
amount) in aggregate to sixty-six and two thirds per cent. or
more (or for the purposes of Clause 17.18 (Acceleration and
Cancellation) to more than fifty per cent.) of the Total
Commitments; and
(b) whilst there are Outstandings a Bank or Banks to whom in aggregate
more than sixty-six and two thirds per cent. (or for the purposes
of Clause 17.18 (Acceleration and Cancellation) more than fifty
per cent.) of the Outstandings is owed,
provided that, in respect of a Letter of Credit issued by a Declining
Bank pursuant to sub-clause 4.7.2 of Clause 4.7 (Replacement Letters of
Credit), an amount equal to the amount of its Outstandings in respect
thereof multiplied by the Reduction Percentage applicable at that time
shall be excluded in determining the amount of Outstandings owed to such
Bank for the purposes of this definition only.
"Material Debt" means Debt of the Account Party and/or one or more of
its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal or face amount exceeding
US$25,000,000.
"Material Financial Obligations" means a principal amount of Debt and/or
current payment obligations in respect of Derivatives Obligations of the
Account Party and/or one or more of its Subsidiaries, arising in one or
more related or unrelated transactions, exceeding in the aggregate
US$25,000,000.
"Material Subsidiary" means any Subsidiary having:
(a) assets (after inter company eliminations) in excess of 10 per cent.
of the total assets of the Account Party and its Subsidiaries
determined on a Consolidated basis; or
(b) annual net income constituting 10 per cent. or more of the total
annual net income of the Account Party and its Subsidiaries on a
Consolidated basis,
in each case determined as of the end of the most recently ended fiscal
year, and in any event ACE UK Limited and ACE Tempest Reinsurance Ltd.
shall be construed as Material Subsidiaries.
"Notice of Charge" means the notice of charge of the Charged Portfolio
to be delivered by the Obligors to the Custodian pursuant to the terms
of the Charge Agreement.
"Obligors" means the Account Party and the Guarantor.
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"Original Agreement" means this Agreement as:
(a) amended and restated pursuant to the First Restatement Agreement,
(b) amended by the Amendment Agreement; and
(c) amended and restated pursuant to the Second Restatement Agreement,
but prior to its amendment and restatement on the Commencement Date.
"Original Letters of Credit" means the letters of credit issued under
the Original Agreement.
"Original Sterling Amount" means:
(a) in relation to a Letter of Credit denominated in sterling, the
amount specified as the amount of the Letter of Credit in the
Utilisation Request relating thereto; and
(b) in relation to a Letter of Credit denominated in dollars, the
amount of sterling which could be purchased with the dollar amount
of such Letter of Credit at the spot rate of exchange quoted by the
Agent at or about 11.00 a.m. London time on the day falling three
Business Days before the Utilisation Date for the purchase of
sterling with dollars for delivery two Business Days thereafter.
"Outstandings" means, at any time, the aggregate of the Sterling Amounts
of the maximum actual and contingent liabilities of the Banks in respect
of each outstanding Letter of Credit.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced or which are being contested in good faith by
appropriate proceedings:
(a) Liens for taxes, assessments and governmental charges or levies not
yet due and payable;
(b) Liens imposed by law, such as materialsmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations
that are not overdue for a period of more than 90 days;
(c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations; and
(d) easements, rights of way and other encumbrances on title to real
property that do not render title to the property encumbered
thereby unmarketable or materially adversely affect the use of such
property for its present purposes.
"Person" means an individual, a company, a corporation, a partnership,
an association, a trust or any other entity or organisation, including a
government or political subdivision or an agency or instrumentality
thereof.
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"Potential Event of Default" means any event which would reasonably be
expected to become (with the passage of time, the giving of notice, the
making of any determination hereunder or any combination thereof) an
Event of Default.
"Preferred Interests" means, with respect to any Person, Equity
Interests issued by such Person that are entitled to a preference or
priority over any other Equity Interests issued by such Person upon any
distribution of such Person's property and assets, whether by dividend
or upon liquidation.
"Preferred Securities" means:
(a) preferred securities issued by the Special Purpose Trust which
shall provide, among other things, that dividends shall be payable
only out of proceeds of interest payments on the Debentures; or
(b) other instruments that may be treated in whole or in part as
equity for rating agency purposes while being treated as debt for
tax purposes.
"Proportion" means, in relation to a Bank the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments are
then zero, by its Commitment to the Total Commitments immediately prior
to their reduction to zero).
"Qualifying Bank" means an institution which is a bank as defined for
the purposes of Section 349 of the Income and Corporation Taxes Act 1988
and such bank is within the charge to United Kingdom corporation tax as
respects to interest which is (or which, if it were a Bank, would be)
payable to it hereunder.
"Quotation Date" means, in relation to any period for which an interest
rate is to be determined hereunder, the day on which quotations would
ordinarily be given by prime banks in the London interbank market for
deposits in the currency in relation to which such rate is to be
determined for delivery on the first day of that period, provided that,
if, for any such period, quotations would ordinarily be given on more
than one date, the Quotation Date for that period shall be the last of
those dates.
"Redeemable" means, with respect to any Equity Interest, any Debt or any
other right or obligation, any such Equity Interest, Debt, right or
obligation that:
(a) the issuer has undertaken to redeem at a fixed or determinable
date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within
the control of the issuer; or
(b) is redeemable at the option of the holder.
"Reduction Percentage" means 20 per cent. x (5 - a); where "a" equals
the remaining number of years (and for such purposes any incomplete year
shall be treated as one year) for which the relevant Letter of Credit is
currently valid.
"Representations" means each of the representations set out in Clause 15
(Representations).
"Required Value" has the meaning ascribed to it in the Charge Agreement.
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"Second Restatement Agreement" means the agreement dated 21 November
2001 which amends and restates the Original Agreement.
"Securitisation Transaction" means any sale, assignment or other
transfer by the Account Party or any Subsidiary of any accounts
receivable, premium finance loan receivables, lease receivables or other
payment obligations owing to the Account Party or such Subsidiary or any
interest in any of the foregoing, together in each case with any
collections and other proceeds thereof, any collection or deposit
accounts related thereto, and any collateral, guarantees or other
property or claims in favour of the Account Party or such Subsidiary
supporting or securing payment by the obligor thereon of, or otherwise
related to, any such receivables.
"Security" means any security granted over the Charged Portfolio by the
Obligors in favour of the Security Trustee pursuant to the Charge
Agreement.
"Security Documents" means the Charge Agreement, the Custodian's
Undertaking and the Notice of Charge.
"Special Purpose Trust" means a special purpose business trust
established by the Account Party or ACE INA of which the Account Party
or ACE INA will hold all the common securities, which will be the issuer
of Preferred Securities, and which will loan to the Account Party or ACE
INA (such loan being evidenced by the Debentures) the net proceeds of
the issuance and sale of the Preferred Securities and common securities
of such Special Purpose Trust.
"Spot Rate" means the spot rate of exchange quoted by the Agent at or
about 11.00 a.m. London time on the day on which the relevant
calculation is to be made for the purchase of sterling with dollars or
any other relevant currency for delivery two business days thereafter.
"Sterling Amount" means:
(a) in relation to a Letter of Credit at any time:
(i) if such Letter of Credit is denominated in sterling, the
maximum actual and contingent liability of the Banks
thereunder or in respect thereof at such time; and
(ii) if such Letter of Credit is denominated in dollars, the
equivalent in sterling of the maximum actual and contingent
liability of the Banks thereunder at such time, calculated
as at the later of the date which falls (1) two Business
Days before its Utilisation Date or (2) the most recent L/C
Valuation Date; and
(b) in relation to the Outstandings, the aggregate of the Sterling
Amounts of each outstanding Letter of Credit.
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly
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or indirectly owned by such Person and, unless otherwise specified,
"Subsidiary" means a Subsidiary of the Account Party.
"Substitution Date" means the date on which a new Letter of Credit will
be substituted for an existing Letter of Credit under Clause 5
(Substitution of Letters of Credit), as specified in the relevant
Substitution Request.
"Substitution Period" means the period from the Commencement Date to the
date falling 48 months prior to the then-applicable Termination Date.
"Substitution Request" means a request substantially in the form set out
in Schedule 12 (Form of Substitution Request).
"Term" means, save as otherwise provided herein:
(a) in relation to any Letter of Credit, the period from its Effective
Date until its Expiry Date; and
(b) in relation to an Unpaid Sum, any of those periods mentioned in
Clause 20 (Default Interest and Break Costs).
"Termination Date" means (subject to any extension of the Termination
Date of a Letter of Credit under Clause 4 (Extension of Letters of
Credit)) 30 September 2007 (unless the Account Party specifies an
earlier date for the termination of any Letter of Credit in the
Utilisation Request therefor, in which case the Termination Date of that
Letter of Credit shall be that earlier date).
"Termination Notice" has the meaning specified in Clause 3.8
(Termination Notice).
"Third Restatement Agreement" means the agreement dated 19 November 2002
which amends and restates the Original Agreement.
"Total Capitalisation" means, at any time, an amount (without
duplication) equal to:
(a) the then outstanding Consolidated Debt of the Account Party and
its Subsidiaries
plus
(b) Consolidated stockholders' equity of the Account Party and its
Subsidiaries
plus (without duplication)
(c) the then issued and outstanding amount of Preferred Securities
(including Mandatorily Convertible Preferred Securities) and
(without duplication) Debentures.
"Total Commitments" means, at any time, the aggregate of the Banks'
Commitments.
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"Transfer Certificate" means a certificate substantially in the form set
out in Schedule 2 (Form of Transfer Certificate) signed by a Bank and a
Transferee under which:
(a) such Bank seeks to procure the transfer to such Transferee of all
or a part of such Bank's rights, benefits and obligations under
the Finance Documents upon and subject to the terms and conditions
set out in Clause 27.3 (Assignments and Transfers by Banks); and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the Agent as
contemplated in Clause 27.5 (Transfers by Banks).
"Transfer Date" means, in relation to any Transfer Certificate, the date
for the making of the transfer as specified in such Transfer
Certificate.
"Transferee" means a person to which a Bank seeks to transfer by
novation all or part of such Bank's rights, benefits and obligations
under the Finance Documents.
"Unpaid Sum" means the unpaid balance of any of the sums referred to in
Clause 20.1 (Default Interest).
"US Facility Agreements" means each of:
(a) the US$800,000,000 364 day revolving credit facility agreement
originally entered into on 11 June 1999 (as amended and restated
on (i) 8 May 2000 and (ii) 6 April 2001) and made between, inter
alia, ACE Limited and ACE INA as borrowers, the financial
institutions named therein and others; and
(b) the US$250,000,000 revolving credit facility agreement originally
entered into on 11 June 1999 (as amended and restated on 8 May
2000) and made between, inter alia, ACE Limited and ACE INA as
borrowers, the financial institutions named therein and others
(the "Five Year US Facility"),
in each case as the same may be further amended or restated from time to
time.
"US Facility Agreement Loan Parties" means, at any time, any or all of
the Account Party, ACE INA, ACE Financial Services Inc., ACE Guaranty Re
Inc., ACE Bermuda Insurance Ltd. and ACE Tempest Reinsurance Ltd.
"US Fee Letter" means the fee letter dated 5 March 2001 and made
between, inter alia, the Account Party, the arrangers of the US Facility
Agreements, JP Morgan Securities Inc. and others.
"US Letter of Credit Agreements" means any and all letter of credit
agreements entered into by any borrower pursuant to the Five Year US
Facility.
"US Loan Documents" means:
(a) each US Facility Agreement;
(b) the US Notes;
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(c) the US Fee Letter; and
(d) each US Letter of Credit Agreement.
"US Notes" means each promissory note issued or to be issued pursuant to
the terms of the US Facility Agreements.
"Utilisation Date" means the date on which a Letter of Credit is to be
issued.
"Utilisation Request" means a notice substantially in the form set out
in Schedule 4 (Form of Utilisation Request).
"Voting Interests" means shares of capital stock issued by a
corporation, or equivalent Equity Interest in any other Person, the
holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing
similar functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by the Account Party.
1.2 Interpretation
Any reference in this Agreement to:
the "Agent", "Security Trustee" or any "Bank" shall be construed so as
to include its and any subsequent successors and permitted transferees
in accordance with their respective interests;
"continuing", in the context of an Event of Default shall be construed
as a reference to an Event of Default which has not been remedied or
waived in accordance with the terms hereof and in relation to a
Potential Event of Default, one which has not been remedied within the
relevant grace period or waived in accordance with the terms hereof.
the "euro" means the single currency of participating member states of
the European Union;
a "holding company" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a Subsidiary;
a "law" shall be construed as any law (including common or customary
law), statute, constitution, decree, judgment, treaty, regulation,
directive, bye-law, order or any other legislative measure of any
government, supranational, local government, statutory or regulatory
body or court;
a "member" shall be construed (as the context may require) as a
reference to an underwriting member of Lloyd's;
a "month" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that,
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where any such period would otherwise end on a day which is not a
Business Day, it shall end on the next succeeding Business Day, unless
that day falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the immediately
preceding Business Day, provided that, if a period starts on the last
Business Day in a calendar month or if there is no numerically
corresponding day in the month in which that period ends, that period
shall end on the last Business Day in that later month (and references
to "months" shall be construed accordingly);
a "participating member state" is a reference to a member of the
European Communities that adopts or has adopted the euro as its lawful
currency in accordance with legislation of the European Union relating
to European Monetary Union;
a Bank's "participation", in relation to a Letter of Credit, shall be
construed as a reference to the rights and obligations of such Bank in
relation to such Letter of Credit as are expressly set out in this
Agreement;
a "successor" shall be construed so as to include an assignee or
successor in title of such party and any person who under the laws of
its jurisdiction of incorporation or domicile has assumed the rights and
obligations of such party under this Agreement or to which, under such
laws, such rights and obligations have been transferred;
"tax" shall be construed so as to include any tax, levy, impost, duty or
other charge of a similar nature (including any penalty or interest
payable in connection with any failure to pay or any delay in paying any
of the same);
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time; and
the "winding-up", "dissolution" or "administration" of a company or
corporation shall be construed so as to include any equivalent or
analogous proceedings under the law of the jurisdiction in which such
company or corporation is incorporated or any jurisdiction in which such
company or corporation carries on business including the seeking of
liquidation, winding-up, reorganisation, dissolution, administration,
arrangement, adjustment, protection or relief of debtors.
1.3 Currency Symbols
1.3.1 "(Pounds)" and "sterling" denote lawful currency of the United
Kingdom for the time being.
1.3.2 "US$" and "dollars" denote lawful currency of the United States
of America for the time being.
1.4 Agreements and Statutes
Any reference in this Agreement to:
1.4.1 this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented;
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1.4.2 a statute or treaty shall be construed as a reference to such
statute or treaty as the same may have been, or may from time to
time be, amended or, in the case of a statute, re-enacted; and
1.4.3 a bylaw shall be construed as a reference to a bylaw made under
Lloyd's Acts 1871 to 1982 as the same may have been, or may from
time to time be, amended or replaced.
1.5 Headings
Clause and Schedule headings are for ease of reference only.
1.6 Time
Any reference in this Agreement to a time of day shall, unless a contrary
indication appears, be a reference to London time.
1.7 Accounting Terms and Determinations
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting principles as in
effect from time to time ("GAAP"), applied on a basis consistent (except
for changes concurred in by the Account Party's independent public
accountants) with the most recent audited consolidated financial statements
of the Account Party and its Consolidated Subsidiaries delivered to the
Banks; provided that, if the Account Party notifies the Agent that the
Account Party wishes to amend any covenant in Clause 16 (Covenants) to
eliminate the effect of any change in generally accepted accounting
principles on the operation of such covenant (or if the Agent notifies the
Account Party that the Majority Banks wish to amend Clause 16 (Covenants)
for such purpose), then the Account Party's compliance with such covenant
shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted account principals became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the
Account Party and the Majority Banks.
1.8 Third party rights
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
Agreement.
2. THE FACILITY
2.1 Grant of the Facility
The Banks, upon the terms and subject to the conditions hereof, grant to
the Account Party a dual currency letter of credit facility in an aggregate
amount of (pound)380,000,000.
2.2 Purpose and Application
The Facility is intended to support Funds at Lloyd's, and, accordingly, the
Account Party shall apply all Letters of Credit issued hereunder in or
towards satisfaction of such purpose and none of the Finance Parties shall
be obliged to concern themselves with such application.
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2.3 Conditions Precedent
Save as the Banks may otherwise agree, the Account Party may not deliver
any Utilisation Request unless the Agent has confirmed to the Account Party
and the Banks that it has received all of the documents and other evidence
listed in Schedule 3 (Conditions Precedent) and that each is, in form and
substance, satisfactory to the Agent.
2.4 Several Obligations
The obligations of each Bank are several and the failure by a Bank to
perform its obligations hereunder and/or under any Letter of Credit issued
hereunder shall not affect the obligations of either Obligor towards any
other party hereto nor shall any other party be liable for the failure by
such Bank to perform its obligations hereunder and/or under such Letter of
Credit.
2.5 Several Rights
The rights of each Finance Party are several and any debt arising hereunder
at any time from an Obligor to any Finance Party shall be a separate and
independent debt. Each such party shall be entitled to protect and enforce
its individual rights arising out of this Agreement independently of any
other party (so that it shall not be necessary for any party hereto to be
joined as an additional party in any proceedings for this purpose).
2.6 Cancellation of Original Letters of Credit
On and with effect from the Effective Date, all outstanding Original
Letters of Credit shall be cancelled and replaced by the Letters of Credit
issued after the Commencement Date.
3. UTILISATION OF THE FACILITY
3.1 Utilisation Conditions for the Facility
Save as otherwise provided herein, a Letter of Credit will be issued at the
request of the Account Party on behalf of an Applicant if:
3.1.1 no later than 10.00 a.m. two Business Days before the proposed
Utilisation Date, the Agent has received a duly completed
Utilisation Request from the Account Party;
3.1.2 the proposed Utilisation Date is a Business Day falling within the
Availability Period;
3.1.3 the proposed Original Sterling Amount of such Letter of Credit is
less than or equal to the Available Facility;
3.1.4 the proposed Term of the Letter of Credit is a period ending on or
before the Termination Date;
3.1.5 the Letter of Credit is substantially in the form set out in
Schedule 6 (Form of Letter of Credit) or in such other form
requested by the Account Party which is approved by the Banks (such
approval not to be unreasonably withheld or delayed);
3.1.6 the beneficiary of such Letter of Credit is Lloyd's;
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3.1.7 on and as of the proposed Utilisation Date:
(a) no Event of Default or Potential Event of Default has occurred
and is continuing; and
(b) the Representations are true in all material respects; and
3.1.8 the Agent has received evidence acceptable to it that the Charged
Portfolio has been delivered to the Custodian and the amount of the
Charged Portfolio is at least equal to the Required Value.
3.2 Request for Letters of Credit
A single Utilisation Request may be issued in respect of more than one
Letter of Credit.
3.3 Completion of Letters of Credit
The Agent is authorised to arrange for the issue of any Letter of Credit
pursuant to Clause 3.1 (Utilisation Conditions for the Facility) by:
3.3.1 completing the Effective Date of such Letter of Credit;
3.3.2 completing the schedule to such Letter of Credit with the percentage
participation of each Bank as allocated pursuant to the terms
hereof; and
3.3.3 executing such Letter of Credit on behalf of each Bank and following
such execution delivering such Letter of Credit to Lloyd's on the
Utilisation Date,
provided that the Agent shall not deliver any such Letter of Credit to
Lloyd's unless the Agent is satisfied that:
(a) Lloyd's has cancelled (or will upon such delivery cancel) the
Original Letters of Credit; and
(b) all amounts outstanding in respect of the Original Letters of
Credit have been paid in full.
3.4 Dollar Option
The Account Party may, in a Utilisation Request, request that such Letter
of Credit be denominated in dollars in which event such Letter of Credit
shall be denominated in dollars.
3.5 Amounts of Letters of Credit
The amount of a Letter of Credit shall be:
3.5.1 the Original Sterling Amount of such Letter of Credit, if such
Letter of Credit is to be denominated in sterling; and
3.5.2 if such Letter of Credit is to be denominated in dollars, the amount
specified in the Utilisation Request relating thereto.
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3.6 Each Bank's Participation in Letters of Credit
Save as otherwise provided herein, each Bank will participate in each
Letter of Credit issued pursuant to this Clause 3 in the proportion borne
by its Available Commitment to the Available Facility immediately prior to
the issue of such Letter of Credit.
3.7 Cancellation of Commitments
On the expiry of the Availability Period the Available Facility and each
Bank's Available Commitment shall be reduced to zero.
3.8 Termination Notice
Subject to Clause 4.2 (Request for Extension), no later than the date
falling 48 months prior to the then-applicable Termination Date of each
Letter of Credit, the Agent shall give notice to Lloyd's, in the manner
described in that Letter of Credit, terminating that Letter of Credit on
that Termination Date (such notice, a "Termination Notice"). The Agent
shall promptly send a copy of any Termination Notice to the Account Party
and each Bank.
4. EXTENSION OF LETTERS OF CREDIT
4.1 Right to Request Extension
Each Bank acknowledges that the Account Party may request one or more
extensions of a Letter of Credit hereunder, in accordance with this Clause
4.
4.2 Request for Extension
If the Account Party wishes, in any year, to request the extension of a
Letter of Credit, the Account Party shall give the Agent notice, by way of
a Letter of Credit extension request in the form of Schedule 5 (Form of
Extension Request), before the date which falls eight weeks prior to 30
September in that year, specifying that the then-applicable Termination
Date of that Letter of Credit is to be extended to 30 September of the year
immediately succeeding the year in which that Termination Date falls (such
notice being a "Notice of Extension"). A single Notice of Extension may be
delivered in respect of more than one Letter of Credit.
4.3 Non-Delivery of Notice of Extension
If the Account Party does not deliver a Notice of Extension in respect of
one or more Letters of Credit in accordance with the provisions of Clause
4.2 (Request for Extension), the Agent shall give a Termination Notice
under Clause 3.8 (Termination Notice) to terminate those Letters of Credit
on the then-applicable Termination Date.
4.4 Notification to Banks
Upon receipt of a Notice of Extension in any year, the Agent shall promptly
notify each Bank of the contents thereof and of the amount of such Bank's
participation in the relevant Letter of Credit, together with notice of the
applicable Funds Date for such year. Each Bank undertakes to notify the
Agent in writing as soon as reasonably practicable after it has determined
that it will not agree to an extension requested in any year, and in any
event by no later than close of business on the date which falls four weeks
prior to 30 September in that year, and the Agent shall give notice thereof
to the Account Party within two Business Days of notification from such
Bank. Unless notice is given to the
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Agent as aforesaid, each Bank will be deemed automatically to have agreed
to such extension.
4.5 Extension of a Letter of Credit
4.5.1 If all of the Banks agree (or are deemed to have agreed) to the
extension of the Letter of Credit in accordance with Clause 4.4
(Notification to Banks), the Agent shall notify the Account Party
and the Banks thereof and, subject to the provisions of Clause 4.8
(Extension Conditions Precedent), the Letter of Credit shall be
automatically extended in accordance with the terms thereof.
4.5.2 If a Bank gives notice in accordance with the provisions of Clause
4.4 (Notification to Banks) that it does not agree to a requested
extension of any Letter of Credit, the Agent shall notify the
Account Party and Lloyd's accordingly within two Business Days
thereafter, and the succeeding provisions of this Clause 4 shall
apply.
4.6 Substitute Bank
4.6.1 If any Bank (a "Declining Bank") gives notice in accordance with the
provisions of Clause 4.4 (Notification to Banks) that it does not
agree to an extension in any year, then the Account Party may
designate, by the date which falls three weeks prior to 30 September
in that year, an Approved Credit Institution (the "Substitute Bank")
which is willing to assume all of the rights and obligations of the
Declining Bank in respect of its participation in the relevant
Letter of Credit (the "Old Letter of Credit").
4.6.2 If the Account Party has designated a Substitute Bank, it shall
promptly notify the Agent and the Declining Bank thereof and shall
procure the release by Lloyd's of the Old Letter of Credit from the
Funds at Lloyd's of the relevant Applicant.
4.6.3 The Declining Bank shall, with effect from 30 September in that
year, transfer its rights and obligations hereunder to the
Substitute Bank in accordance with the provisions of Clause 27.5
(Transfers by Banks).
4.6.4 The Substitute Bank shall pay to the Declining Bank all amounts then
due and owing (and all fees accrued to but excluding the date of
such transfer) to the Declining Bank in respect of its participation
in the Old Letter of Credit.
4.7 Replacement Letters of Credit
4.7.1 If a Substitute Bank has become party hereto pursuant to Clause 4.6
(Substitute Bank), then, subject to the provisions of Clause 4.8
(Extension Conditions Precedent), the Banks who have agreed to the
extension of the Old Letter of Credit in any year (the "Extending
Banks") shall, together with the Substitute Bank, issue, with effect
from 30 September in that year, and participate in, a new Letter of
Credit (the "New Letter of Credit") which shall:
(a) replace the Old Letter of Credit,
(b) be in an amount equal to the Old Letter of Credit; and
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(c) have a Termination Date which corresponds with the Termination
Date specified in the Notice of Extension.
4.7.2 If a Substitute Bank has not been designated, then:
(a) the Account Party shall procure the release by Lloyd's of the
Old Letter of Credit from the Funds at Lloyd's of the relevant
Applicant,
(b) subject to the provisions of Clause 4.8 (Extension Conditions
Precedent), the Extending Banks shall issue, with effect from
30 September in that year, and participate in, a new Letter of
Credit (the "Reduced Letter of Credit") which shall:
(i) replace their participation in the Old Letter of Credit;
(ii) be in an amount equal to the Old Letter of Credit less
the amount of the Declining Bank's participation therein;
and
(iii) have a Termination Date which corresponds with the
Termination Date specified in the Notice of Extension;
and
(c) the Declining Bank shall issue, with effect from 30 September
in that year, and participate in, a separate Letter of Credit
(a "Bilateral Letter of Credit") which shall:
(i) replace its participation in the Old Letter of Credit;
(ii) be in an amount equal to the Declining Bank's
participation in the Old Letter of Credit; and
(iii) have a Termination Date which is the same as the
Termination Date of the Old Letter of Credit (as the same
may have been extended from time to time with the
agreement of the Declining Bank).
4.8 Extension Conditions Precedent
4.8.1 On or prior to close of business on 30 September in the year
immediately following the delivery of any Notice of Extension, the
Account Party shall promptly notify the Agent if:
(a) an Event of Default or Potential Event of Default occurs which
is continuing;
(b) any of the representations and warranties of either or both of
the Obligors contained in this Agreement or in the Charge
Agreement cease to be correct in all material respects, or
become misleading in any material respect; or
(c) the Letter of Credit which is the subject of such Notice of
Extension ceases solely to be used to support the relevant
Applicant's underwriting business at Lloyd's which has been
provided in accordance with the requirements of Lloyd's
applicable to it.
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4.8.2 Subject to due notification to Lloyd's in accordance with the
provisions of the relevant Letter of Credit, the Banks shall not
be obliged to agree to any extension requested if the Account
Party fails to comply with its obligations under Clause 4
(Extension of Letters of Credit) or if any of the events
specified in sub-clause 4.8.1 above occurs.
4.9 Cancellation of Bilateral Letters of Credit
At any time after the issue of a Bilateral Letter of Credit by a
Declining Bank the Account Party may give the Agent and the Declining
Bank not less than fourteen days' prior written notice of its intention
to procure that the liability of the Declining Bank under such Letter of
Credit is reduced to zero (whereupon it shall do so).
4.10 Mandatory Collateralisation
If a Letter of Credit is extended in accordance with this Clause 4 and,
on or prior to the time of such extension, the Account Party had failed
to comply with its obligations under Clause 4 (Extension of Letters of
Credit) or any of the events specified in sub-clause 4.8.1 of Clause 4.8
(Extension Conditions Precedent) had occurred, the Agent may (and, if so
instructed by the Majority Banks participating in such Letter of Credit,
shall) require the Account Party to procure that the liabilities of each
of the Banks under such Letter of Credit are reduced to zero and/or
provide Cash Collateral for each Bank's L/C Proportion under such Letter
of Credit.
4.11 Revised Letters of Credit
In the event that the Funds at Lloyd's Requirements of an Applicant
change at or around the time of any given Funds Date in terms of amount
and/or the identity of the Applicant, then, subject to the approval of
Lloyd's and subject to each Bank's Outstandings under the Letters of
Credit issued hereunder not being increased other than in accordance
with Clause 6 (Increase of the Facility), the Banks shall co-operate
with the Account Party to ensure to the extent reasonably possible that
the Letters of Credit provide for the revised Funds at Lloyd's
Requirements of the Applicants.
5. SUBSTITUTION OF LETTERS OF CREDIT
5.1 Request For Substitution
At any time prior to the end of the Substitution Period, the Account
Party may request the cancellation of any existing Letter(s) of Credit
and the substitution therefor of one or more new Letters of Credit in
accordance with this Clause 5.
5.2 Substitution Request
If the Account Party wishes to substitute one or more new Letters of
Credit under Clause 5.1 (Request For Substitution), the Account Party
shall give the Agent notice, by way of a duly signed and completed
Substitution Request, no later than the date falling 30 Business Days
prior to the proposed Substitution Date.
5.3 Substitution of a Letter of Credit
5.3.1 Upon receipt of a Substitution Request, the Agent shall promptly
notify each Bank of the contents thereof and of the amount of
such Bank's participation in the proposed substitute Letter(s) of
Credit and, subject to the provisions of Clause 5.4 (Substitution
Conditions Precedent) and to the acceptance of the
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proposed substitution by Lloyd's, there shall be substituted for
the existing Letter(s) of Credit the subject of the relevant
Substitution Request new Letter(s) of Credit in accordance with
the terms of this Clause 5.
5.3.2 If a new Letter of Credit (the "Substitute Letter of Credit") is to
be substituted for one or more existing Letters of Credit (the
"Existing Letters of Credit") pursuant to sub-clause 5.3.1 above,
the Banks shall issue, with effect from the Substitution Date, and
participate in, a Substitute Letter of Credit which shall:
(a) replace the Existing Letter(s) of Credit;
(b) be in an amount equal to or less than the aggregate of all the
Existing Letters of Credit; and
(c) have the same Termination Date as the Existing Letters of
Credit.
5.4 Substitution Conditions Precedent
5.4.1 On or prior to close of business on the Substitution Date
immediately following the delivery of any Substitution Request, the
Account Party shall promptly notify the Agent if:
(a) an Event of Default or Potential Event of Default occurs which
is continuing;
(b) any of the representations and warranties of either or both of
the Obligors contained in this Agreement or in the Charge
Agreement cease to be correct in all material respects, or
become misleading in any material respect; or
(c) the Letter of Credit which is the subject of such Substitution
Request ceases solely to be used to support the relevant
Applicant's underwriting business at Lloyd's which has been
provided in accordance with the requirements of Lloyd's
applicable to it.
5.4.2 The Banks shall not be obliged to agree to any substitution
requested if the Account Party fails to comply with its obligations
under this Clause 5 (Substitution of Letters of Credit) or if any
of the events specified in sub-clause 5.4.1 above occurs.
6. INCREASE OF THE FACILITY
6.1 Request for Increase
In the event that the Funds at Lloyd's Requirements of an Applicant
increases at or around the time of any given Funds Date and, as a result of
such increase, the aggregate amount of the Funds at Lloyd's Requirements of
the Applicants on such Funds Date would exceed the aggregate amount of the
Banks' Outstandings under the Letters of Credit, the Account Party shall be
entitled to request an increase of the amount of the Letter of Credit of
such Applicant by giving notice to the Agent no later than eight weeks
prior to the Funds Date for such year (the "Increase Request"). The
Increase Request shall be made in writing and shall be unconditional and
irrevocable and shall specify:
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6.1.1 which Letters of Credit and Applicants the Increase Request relates
to;
6.1.2 the additional amount of commitments required by the Account Party
from the Banks; and
6.1.3 any other information relevant to the Increase Request.
6.2 Notification of Increase Request
The Agent shall forward a copy of the Increase Request to the Banks as soon
as practicable, and in any event no later than two Business Days after
receipt thereof, together with notification of the amount of such Banks'
pro rata participation in any such increased Letter of Credit.
6.3 Response to Increase Request
If a Bank, in its sole discretion, agrees to the increase requested by the
Account Party pursuant to the Increase Request, it shall give notice to the
Agent (a "Notice of Increase") accordingly not less than three weeks prior
to the Increase Date. If a Bank does not give such Notice of Increase by
such date, then such Bank shall be deemed to have refused such increase.
Nothing shall oblige a Bank to agree to the Increase Request.
6.4 Notification of Response to Increase Request
The Agent shall notify the Account Party in writing of each Bank's decision
in relation to the Increase Request (specifying which Banks have given a
Notice of Increase, which Banks have actually refused the Increase Request
and which Banks are deemed to have refused the Increase Request) no less
than two weeks prior to the Increase Date.
6.5 Increase
6.5.1 If one or more of the Banks does not give a Notice of Increase
(hereinafter referred to as "Refusing Banks"), then the Refusing
Banks shall not participate in any increase pursuant to the
Increase Request but shall continue to participate in the Letters
of Credit to the extent of their existing participation.
6.5.2 If one or more Banks agree to the Increase Request, such Banks'
participation in the relevant Letter(s) of Credit shall, subject to
satisfaction of any conditions precedent which may be specified in
connection therewith, be increased in accordance with the terms of
the Increase Request.
6.5.3 The Account Party shall co-operate with the Agent, the Banks and
Lloyd's with respect to the replacement of any Letters of Credit
required as a result of an Increase Request, and all parties hereto
shall agree on any necessary replacement Letters of Credit in the
context of any replacement Letters of Credit required in accordance
with Clause 4.7 (Replacement Letters of Credit).
6.5.4 The Facility, save as amended pursuant to the Increase Request,
shall continue to operate in accordance with its terms.
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7. NOTIFICATION
7.1 Letters of Credit
On or before each Utilisation Date, the Agent shall notify each Bank of the
Letter of Credit that is to be issued by the Agent on behalf of the Banks,
the name of the Applicant in respect of whom the Letter of Credit is being
issued, the proposed length of the relevant Term and the aggregate
principal amount of the relevant Letter of Credit allocated to such Bank
pursuant to this Agreement.
7.2 Demands under Letters of Credit
If a demand is made by Lloyd's under a Letter of Credit, the Agent shall
promptly make demand upon the Account Party in accordance with this
Agreement and notify the Banks accordingly.
8. THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF CREDIT
8.1 The Account Party's Indemnity to Banks
The Account Party shall irrevocably and unconditionally, as a primary
obligation, indemnify (on demand by the Agent) each Bank against:
8.1.1 any sum paid or due and payable by such Bank in accordance with the
terms of any Letter of Credit requested by the Account Party; and
8.1.2 all liabilities, costs (including, without limitation, any costs
incurred in funding any amount which falls due from such Bank in
connection with such Letter of Credit), claims, losses and expenses
which such Bank may at any time properly incur or sustain in
connection with any Letter of Credit.
8.2 Preservation of Rights
Neither the obligations of the Account Party set out in this Clause 8 nor
the rights, powers and remedies conferred on any Bank by this Agreement or
by law shall be discharged, impaired or otherwise affected by:
8.2.1 the winding-up, dissolution, administration or re-organisation of
any Bank or any other person or any change in its status, function,
control or ownership;
8.2.2 any of the obligations of any Bank or any other person hereunder or
under any Letter of Credit or under any other security taken in
respect of the Account Party's obligations hereunder or otherwise
in connection with any Letter of Credit being or becoming illegal,
invalid, unenforceable or ineffective in any respect;
8.2.3 time or other indulgence being granted or agreed to be granted to
any Bank or any other person in respect of its obligations
hereunder or under or in connection with any Letter of Credit or
under any such other security;
8.2.4 any amendment to, or any variation, waiver or release of, any
obligation of any Bank or any other person under any Letter of
Credit or this Agreement; or
8.2.5 any other act, event or omission which, but for this Clause 8,
might operate to discharge, impair or otherwise affect any of the
obligations of the Account Party
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set out in this Clause 8 or any of the rights, powers or remedies
conferred upon any Bank by this Agreement or by law.
The obligations of the Account Party set out in this Clause 8 shall be in
addition to and independent of every other security which any Bank may at
any time hold in respect of the Account Party's obligations hereunder.
8.3 Settlement Conditional
Any settlement or discharge between the Account Party and a Bank shall be
conditional upon no security or payment to such Bank by the Account Party
or any other person on behalf of the Account Party, being avoided or
reduced by virtue of any laws relating to bankruptcy, insolvency,
liquidation or similar laws of general application and, if any such
security or payment is so avoided or reduced, such Bank shall be entitled
to recover the value or amount of such security or payment from the Account
Party subsequently as if such settlement or discharge had not occurred.
8.4 Right to make Payments under Letters of Credit
Each Bank shall be entitled to make any payment in accordance with the
terms of the relevant Letter of Credit without any reference to or further
authority from the Account Party or any other investigation or enquiry. The
Account Party irrevocably authorises each Bank to comply with any demand
under a Letter of Credit which is valid on its face.
8.5 Revaluation of Outstandings
On each L/C Valuation Date, the Agent shall calculate the amount of the
Outstandings (having regard to changes in the Sterling Amounts of the
Letters of Credit which may arise as a result of currency fluctuations),
and the Agent shall notify the Account Party of the amount, if any (the
"Excess Amount"), by which the Outstandings exceed 105 per cent. of the
aggregate Commitments of the Banks on such date, and the Account Party
shall secure such Excess Amount by providing Cash Collateral in an amount
not less than the Excess Amount, provided that if the Account Party
provides Cash Collateral as aforesaid and, on any succeeding L/C Valuation
Date, the Excess Amount as determined on such date (the "New Excess
Amount") is:
8.5.1 less than the amount of the Cash Collateral provided at such time,
the Agent shall deliver to the Account Party an amount equal to the
difference between the amount of such Cash Collateral and the New
Excess Amount; or
8.5.2 greater than the amount of Cash Collateral provided at such time,
the Account Party shall deliver to the Agent an amount equal to the
amount by which the New Excess Amount exceeds the amount of such
Cash Collateral.
9. CANCELLATION and COLLATERALISATION
9.1 Cancellation/Cash Collateralisation of Letters of Credit
The Account Party may give the Agent not less than fourteen days' prior
notice of its intention to procure that the liability of each Bank under a
Letter of Credit requested by it is reduced to zero (whereupon it shall do
so) or provide Cash Collateral for each Bank's L/C Proportion under such
Letter of Credit (whereupon it shall do so).
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9.2 Notice of Cancellation or Collateralisation
Any notice of cancellation or collateralisation given by the Account
Party pursuant to this Clause 9 shall be irrevocable, shall specify the
date upon which such cancellation or collateralisation is to be made and
the amount of such cancellation or collateralisation and shall oblige the
Account Party to procure such cancellation or collateralisation on such
date.
9.3 Notice of Removal of a Bank
If:
9.3.1 any sum payable to any Bank by the Account Party is required to
be increased pursuant to Clause 10.1 (Tax Gross-up); or
9.3.2 any Bank claims indemnification from the Account Party under
Clause 10.2 (Tax Indemnity) or Clause 12.1 (Increased Costs),
the Account Party may, whilst such circumstance continues, give the Agent
at least ten Business Days' notice (which notice shall be irrevocable) of
its intention to cancel, and/or provide Cash Collateral in respect of the
Commitment of such Bank.
9.4 Removal of a Bank
On the day the notice referred to in Clause 9.3 (Notice of Removal of a
Bank) expires, the Account Party shall procure either that such Bank's
L/C Proportion of each relevant Letter of Credit be reduced to zero (by
reduction of the amount of such Letter of Credit in an amount equal to
such Bank's L/C Proportion) or that Cash Collateral be provided in an
amount equal to such Bank's L/C Proportion of such Letter of Credit.
9.5 No Further Availability
A Bank for whose account a repayment is to be made under Clause 9.3
(Notice of Removal of a Bank) shall not be obliged to participate in the
making of any Letter of Credit on or after the date upon which the Agent
receives the Account Party's notice of its intention to procure the
repayment of such Bank's share of the Outstandings, and such Bank's
Available Commitment shall be reduced to zero.
9.6 No Other Repayments or Cancellation
The Account Party shall not repay or cancel all or any part of the
Outstandings except at the times and in the manner expressly provided for
in this Agreement.
10. TAXES
10.1 Tax Gross-up
All payments to be made by an Obligor to any Finance Party hereunder
shall be made free and clear of and without deduction for or on account
of tax unless such Obligor is required to make such a payment subject to
the deduction or withholding of tax, in which case the sum payable by
such Obligor (in respect of which such deduction or withholding is
required to be made) shall be increased to the extent necessary to ensure
that such Finance Party receives a sum net of any deduction or
withholding equal to the sum which it would have received had no such
deduction or withholding been made or required to be made.
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10.2 Tax Indemnity
Without prejudice to Clause 10.1 (Tax Gross-up), if any Finance Party is
required to make any payment of or on account of tax on or in relation to
any sum received or receivable hereunder (including any sum deemed for
purposes of tax to be received or receivable by such Finance Party
whether or not actually received or receivable) or if any liability in
respect of any such payment is asserted, imposed, levied or assessed
against any Finance Party, the Account Party shall, upon demand of the
Agent, promptly indemnify the Finance Party which suffers a loss or
liability as a result against such payment or liability, together with
any interest, penalties, costs and expenses payable or incurred in
connection therewith, provided that this Clause 10.2 shall not apply to:
10.2.1 any tax imposed on and calculated by reference to the net income
actually received or receivable by such Finance Party by the
jurisdiction in which such Finance Party is incorporated; or
10.2.2 any tax imposed on and calculated by reference to the net income
of the Facility Office of such Finance Party actually received or
receivable by such Finance Party by the jurisdiction in which its
Facility Office is located.
10.3 Claims by Banks
A Bank intending to make a claim pursuant to Clause 10.2 (Tax Indemnity)
shall notify the Agent of the event giving rise to the claim, whereupon
the Agent shall notify the Account Party thereof.
11. TAX RECEIPTS
11.1 Notification of Requirement to Deduct Tax
If, at any time, an Obligor is required by law to make any deduction or
withholding from any sum payable by it hereunder (or if thereafter there
is any change in the rates at which or the manner in which such
deductions or withholdings are calculated), such Obligor shall promptly,
upon becoming aware of the same, notify the Agent.
11.2 Evidence of Payment of Tax
If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under applicable
law and shall deliver to the Agent for each Bank, within thirty days
after it has made such payment to the applicable authority, an original
receipt (or a certified copy thereof) issued by such authority evidencing
the payment to such authority of all amounts so required to be deducted
or withheld in respect of that Bank's share of such payment.
11.3 Tax Credit Payment
If an additional payment is made under Clause 10 (Taxes) by an Obligor
for the benefit of any Finance Party and such Finance Party, in its sole
discretion, determines that it has obtained (and has derived full use and
benefit from) a credit against, a relief or remission for, or repayment
of, any tax, then, if and to the extent that such Finance Party, in its
sole opinion, determines that:
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11.3.1 such credit, relief, remission or repayment is in respect of or
calculated with reference to the additional payment made pursuant
to Clause 10 (Taxes); and
11.3.2 its tax affairs for its tax year in respect of which such credit,
relief, remission or repayment was obtained have been finally
settled,
such Finance Party shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to such Obligor such amount as such Finance
Party shall, in its sole opinion, determine to be the amount which will
leave such Finance Party (after such payment) in no worse after-tax
position than it would have been in had the additional payment in
question not been required to be made by such Obligor.
11.4 Tax Credit Clawback
If any Finance Party makes any payment to an Obligor pursuant to Clause
11.3 (Tax Credit Payment) and such Finance Party subsequently determines,
in its sole opinion, that the credit, relief, remission or repayment in
respect of which such payment was made was not available or has been
withdrawn or that it was unable to use such credit, relief, remission or
repayment in full, the Obligor shall reimburse such Finance Party such
amount as such Finance Party determines, in its sole opinion, is
necessary to place it in the same after-tax position as it would have
been in if such credit, relief, remission or repayment had been obtained
and fully used and retained by such Finance Party.
11.5 Tax and Other Affairs
No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever manner
it thinks fit, oblige any Finance Party to claim any credit, relief,
remission or repayment in respect of any payment under Clause 10.1 (Tax
Gross-up) in priority to any other credit, relief, remission or repayment
available to it nor oblige any Finance Party to disclose any information
relating to its tax or other affairs or any computations in respect
thereof.
12. INCREASED COSTS
12.1 Increased Costs
If, by reason of (a) any change in law or in its interpretation or
administration and/or (b) compliance with any request or requirement
relating to the maintenance of capital or any other request from or
requirement of any central bank or other fiscal, monetary or other
authority (being a request or requirement with which banks are accustomed
to comply) and/or (c) the introduction of, changeover to or operation of
the euro in any participating member state:
12.1.1 a Bank or any holding company of such Bank is unable to obtain
the rate of return on its capital which it would have been able
to obtain but for such Bank's entering into or assuming or
maintaining a commitment, issuing or performing its obligations
under this Agreement or any Letter of Credit;
12.1.2 a Bank or any holding company of such Bank incurs a cost as a
result of such Bank's entering into or assuming or maintaining a
commitment, issuing or performing its obligations under this
Agreement or any Letter of Credit; or
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12.1.3 there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining such Bank's share
of any Unpaid Sum or any Letter of Credit,
then the Account Party shall, from time to time on demand of the Agent,
promptly pay to the Agent for the account of that Bank amounts sufficient
to indemnify that Bank or to enable that Bank to indemnify its holding
company from and against, as the case may be, (a) such reduction in the
rate of return of capital, (b) such cost or (c) such increased cost.
12.2 Increased Costs Claims
A Bank intending to make a claim pursuant to Clause 12.1 (Increased
Costs) shall notify the Agent of the event giving rise to such claim and
the amount of such claim and the basis for calculation of such amount in
reasonable detail whereupon the Agent shall notify the Account Party
thereof.
12.3 Exclusions
Notwithstanding the foregoing provisions of this Clause 12, no Bank shall
be entitled to make any claim under this Clause 12 in respect of:
12.3.1 any cost, increased cost or liability as referred to in Clause
12.1 (Increased Costs) to the extent the same is compensated by
the Mandatory Liquid Asset Costs Rate; or
12.3.2 any cost, increased cost or liability compensated by Clause 10
(Taxes).
13. ILLEGALITY
If, at any time, it is or will become unlawful or prohibited pursuant to
any request from or requirement of any central bank or other fiscal,
monetary or other authority (being a request or requirement with which
banks are accustomed to comply) for a Bank to fund, issue, participate in
or allow to remain outstanding all or part of its share of the Letters of
Credit, then that Bank shall, promptly after becoming aware of the same,
deliver to the Account Party through the Agent a notice to that effect
and:
13.1.1 such Bank shall not thereafter be obliged to participate in any
Letter of Credit or issue any Letter of Credit (whichever shall
be so affected) and the amount of its Available Commitment shall
be immediately reduced to zero; and
13.1.2 if the Agent on behalf of such Bank so requires, the Account
Party shall on such date as the Agent shall have specified ensure
that the liabilities of such Bank under or in respect of each
affected Letter of Credit are reduced to zero or otherwise
secured by providing Cash Collateral in an amount equal to such
Bank's L/C Proportion of such Letters of Credit or such Bank's
maximum actual or contingent liabilities under such Letter of
Credit.
14. MITIGATION
If, in respect of any Bank, circumstances arise which would or would upon
the giving of notice result in:
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14.1.1 an increase in any sum payable to it or for its account pursuant
to Clause 10.1 (Tax Gross-up);
14.1.2 a claim for indemnification pursuant to Clause 10.2 (Tax
Indemnity) or Clause 12.1 (Increased Costs); or
14.1.3 the reduction of its Available Commitment to zero or any
repayment to be made pursuant to Clause 13 (Illegality),
then, without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the obligations of the Obligors under any of the
Clauses referred to in sub-clauses 14.1.1, 14.1.2 and 14.1.3 such Bank
shall promptly upon becoming aware of such circumstances notify the Agent
thereof and, in consultation with the Agent and the Account Party and to
the extent that it can do so lawfully and without prejudice to its own
position, take reasonable steps (including a change of location of its
Facility Office or the transfer of its rights, benefits and obligations
hereunder to another financial institution which is an Approved Credit
Institution and which is acceptable to the Account Party and willing to
participate in the Facility) to mitigate the effects of such
circumstances, provided that such Bank shall be under no obligation to
take any such action if, in the opinion of such Bank, to do so might have
any adverse effect upon its business, operations or financial condition
(other than any minor costs and expenses of an administrative nature).
15. REPRESENTATIONS
The Obligors jointly and severally represent and warrant on the
Commencement Date that:
15.1 Corporate Existence and Power
The Account Party is a company limited by shares, and the Guarantor is a
limited liability company, and in each case, is duly incorporated and
validly existing under the laws of its jurisdiction of incorporation and
the Account Party is in good standing under the laws of the Cayman
Islands. Each of the Obligors has all corporate powers and all material
governmental licenses, authorisations, consents and approvals required to
carry on its respective business as now conducted. The Guarantor is a
Wholly-Owned Consolidated Subsidiary of the Account Party.
15.2 Corporate and Governmental Authorisation; No Contravention
The execution, delivery and performance by each Obligor of this Agreement
and the other Finance Documents to which it is a party are within its
corporate powers, have been duly authorised by all necessary corporate
action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation
or of the memorandum of association, articles of association or bye-laws
(or any comparable document) of any Obligor or of any agreement,
judgment, injunction, order, decree or other instrument binding upon any
Obligor or any of their respective Subsidiaries or result in the creation
or imposition of any Lien (excluding the provision of Security pursuant
to this Agreement) on any asset of any Obligor or any of their respective
Subsidiaries.
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15.3 Binding Effect
Each of this Agreement and the other Finance Documents to which any
Obligor is a party constitutes a valid and binding agreement of each
Obligor enforceable in accordance with its terms, subject to bankruptcy,
insolvency or other laws of general application affecting the enforcement
of creditors rights, the application of equitable principles and the
non-availability of the equitable remedies of specific performance or
injunctive relief.
15.4 Financial Information
15.4.1 The consolidated balance sheet of the Account Party and its
Consolidated Subsidiaries as of 31 December 2001, and the related
consolidated statements of operations and of cash flows for the
fiscal year then ended, reported on by PricewaterhouseCoopers
LLP, copies of which have been delivered to each of the Banks
prior to the Commencement Date, fairly present, in all material
respects, in conformity with GAAP, the consolidated financial
position of the Account Party and its Consolidated Subsidiaries
as of such date and their consolidated results of operations and
cash flows for such fiscal year.
15.4.2 The unaudited consolidated balance sheet of the Account Party and
its Consolidated Subsidiaries as of 30 June 2002, and the related
unaudited consolidated statements of operations and of cash flows
for the six months then ended, copies of which have been
delivered to each of the Banks prior to the Commencement Date,
fairly present, in all material respects, in conformity with GAAP
(except for the absence of footnotes) applied on a basis
consistent with the financial statements referred to in
sub-clause 15.4.1, the consolidated financial position of the
Account Party and its Consolidated Subsidiaries as of such date
and their consolidated results of operations and cash flows for
such six month period (subject to normal year-end adjustments).
15.4.3 Since 30 June 2002, there has been no material adverse change in
the business, financial position or results of operations of the
Account Party and its Consolidated Subsidiaries, considered as a
whole.
15.4.4 The consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of 31 December 2001, and the related
consolidated statements of operations and retained earnings and
of cash flows for the fiscal year then ended, all reported on by
PricewaterhouseCoopers LLP, copies of which have been delivered
to each of the Banks prior to the Commencement Date, fairly
present, in all material respects in conformity with GAAP, the
consolidated financial position of the Guarantor and its
Consolidated Subsidiaries as of such date and their consolidated
results of operations and retained earnings and cash flows for
such fiscal year.
15.4.5 Since 31 December 2001, there has been no material adverse change
in the business, financial position or results of operations of
the Guarantor and its Consolidated Subsidiaries, considered as a
whole.
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15.5 Litigation
Except as disclosed in the notes to the financial statements referred to
in sub-clause 15.4.1 of Clause 15.4 (Financial Information), and except
for insurance claims made in the context of the ordinary course of
business of the Group, there is no action, suit or proceeding pending
against, or to the knowledge of the Account Party threatened against or
affecting, the Account Party or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which there
is a reasonable likelihood of an adverse decision which could materially
adversely affect the business, consolidated financial position or
consolidated results of operations of the Account Party and its
Consolidated Subsidiaries, considered as a whole, or which in any manner
draws into question the validity or enforceability of this Agreement or
any other Finance Document.
15.6 Taxes
The Account Party and its Subsidiaries have filed all material income tax
returns and all other material tax returns which are required to be filed
by them and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by the Account Party or any Subsidiary. The
charges, accruals and reserves on the books of the Account Party and its
Subsidiaries in respect of taxes or other governmental charges are, in
the opinion of the Account Party, adequate.
15.7 Written Information
All written information supplied by any member of the Group which is
factual, is true, complete and accurate in all material respects as at
the date it was given and is not misleading in any material respect and
all financial projections so supplied have been prepared on the basis of
recent historical information and on the basis of reasonable assumptions.
15.8 Compliance with Laws
The Account Party and each Subsidiary are in compliance, in all material
respects, with all applicable laws, ordinances, rules, regulations,
guidelines and other requirements of governmental authorities except
where the necessity of compliance therewith is contested in good faith by
appropriate proceedings and any reserves required under generally
accepted accounting principles with respect thereto have been established
and except where any such failure could not reasonably be expected to
materially adversely affect the business, consolidated financial position
or consolidated results of operations of the Account Party and its
Consolidated Subsidiaries, considered as a whole.
15.9 Lien
15.9.1 Each Obligor has good and marketable title in and to its portion
of the Security free and clear of all Liens (except the Lien
created under the Finance Documents and subject to the interest
of the Custodian under the Finance Documents and to "Permitted
Liens" as defined in the Charge Agreement).
15.9.2 The Charge Agreement creates in favour of the Security Trustee,
for the benefit of the Banks, a valid and enforceable first
priority Lien on all of the Security, subject to the interest of
the Custodian under the Finance Documents.
15.9.3 Neither Obligor has outstanding, nor is any Obligor contractually
bound to create, any Lien on or with respect to any of the
Security, subject to the interest
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of the Custodian under the Finance Documents and to "Permitted
Liens" as defined in the Charge Agreement.
15.9.4 Neither Obligor is subject to any agreement, judgment,
injunction, order, decree or other instrument or any law or
regulation which would prevent or otherwise interfere with such
Obligor's obligations to deliver Security in the amounts, at the
times and as otherwise provided in the Charge Agreement, subject
to the interest of the Custodian under the Finance Documents.
The representations contained in this Clause 15.9 shall only be made on
the date hereof and shall only be repeated on each day commencing on the
date on which the Pricing Level is Level V.
15.10 Validity and Admissibility in Evidence
All acts, conditions and things required to be done, fulfilled and
performed in order:
15.10.1 to enable each Obligor lawfully to enter into, exercise its
rights under and perform and comply with the obligations
expressed to be assumed by it in the Finance Documents to which
it is a party,
15.10.2 to ensure that the obligations expressed to be assumed by it in
the Finance Documents to which it is a party are legal, valid,
binding and enforceable; and
15.10.3 to make the Finance Documents to which it is a party admissible
in evidence in its jurisdiction of incorporation,
have been done, fulfilled and performed (subject to any exception
contained in the legal opinions provided as conditions precedent).
15.11 Claims Pari Passu
Under the laws of its jurisdiction of incorporation in force at the date
of this Agreement, the claims of the Finance Parties against each Obligor
under this Agreement will rank at least pari passu with the claims of all
its other unsecured and unsubordinated creditors save those claims which
are preferred solely by any bankruptcy, insolvency, liquidation or other
similar laws of general application or are mandatorily preferred by law
applying to insurance companies generally.
15.12 No Filing or Stamp Taxes
Under the laws of the jurisdiction of incorporation of each Obligor in
force at the date of this Agreement, it is not necessary that the Finance
Documents to which it is party be filed, recorded or enrolled with any
court or other authority in such jurisdiction or that any stamp,
registration or similar tax be paid on or in relation to the Finance
Documents to which it is party.
15.13 No Winding-up
No Obligor or Material Subsidiary has taken any corporate action nor have
any other steps been taken or legal proceedings been started or (to the
best of its knowledge and belief) threatened against any Obligor or
Material Subsidiary for its winding-up, dissolution, administration or
re-organisation (whether by voluntary arrangement, scheme of arrangement
or otherwise) or for the appointment of a receiver, administrator,
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administrative receiver, conservator, custodian, trustee or similar
officer of it or of any or all of its assets or revenues.
15.14 No Default
No Default has occurred and is continuing.
16. COVENANTS
The Account Party agrees that, so long as any Original Letter of Credit
or any Letter of Credit is in effect or any Outstandings remain unpaid:
16.1 Information
The Account Party will deliver to the Agent in sufficient copies for the
Banks:
16.1.1 as soon as available and in any event within 90 days after the
end of each fiscal year of the Account Party, a consolidated
balance sheet of the Account Party and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated statements of operations and of cash flows for
such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on
in a manner acceptable to the Securities and Exchange
Commission of the United States of America or otherwise
reasonably acceptable to the Majority Banks by
PricewaterhouseCoopers LLP or other independent public
accountants of internationally recognised standing;
16.1.2 as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of
the Account Party, a consolidated balance sheet of the Account
Party and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated statements of operations
and of cash flows for such quarter and for the portion of the
Account Party's fiscal year ended at the end of such quarter,
setting forth in the case of such statements of operations and
cash flows in comparative form the figures for the
corresponding quarter and the corresponding portion of the
Account Party's previous fiscal year, all certified (subject to
normal year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the
chief financial officer or the chief accounting officer of the
Account Party;
16.1.3 simultaneously with the delivery of each set of financial
statements referred to in sub-clauses 16.1.1 and 16.1.2, a
certificate of the chief financial officer or the chief
accounting officer of the Account Party (a) setting forth in
reasonable detail the calculations required to establish
whether the Account Party was in compliance with the
requirements of Clauses 16.7 (Adjusted Consolidated Debt to
Total Capitalisation Ratio) to 16.9 (Liens), inclusive, on the
date of such financial statements and (b) stating whether any
Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the
action which the Account Party is taking or proposes to take
with respect thereto;
16.1.4 within five days after any executive officer of the Account
Party obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer or the
chief accounting officer of the Account Party
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setting forth the details thereof and the action which the
Account Party is taking or proposes to take with respect
thereto;
16.1.5 promptly upon the mailing thereof to the shareholders of the
Account Party generally, copies of all financial statements,
reports and proxy statements so mailed;
16.1.6 promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which the Account Party shall have filed with the Securities
and Exchange Commission of the United States of America;
16.1.7 as soon as available and in any event within 20 days after
submission, each statutory statement of the Guarantor in the
form submitted to The Insurance Division of the Office of
Registrar of Companies of Bermuda;
16.1.8 as soon as available and in any event within 120 days after the
end of each fiscal year of the Guarantor, a consolidated
balance sheet of the Guarantor and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
statements of income and changes in financial position for such
fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by the
independent public accountants which reported on the financial
statements referred to in sub-clause 16.1.1;
16.1.9 promptly after any executive officer of the Account Party
obtains knowledge thereof:
(a) a copy of any notice from the Supervisor of Insurance or
the Registrar of Companies or any other Person of the
revocation, the suspension or the placing of any
restriction or condition on the registration as an
insurer of the Guarantor under the Bermuda Insurance Law
or of the institution of any proceeding or investigation
which could result in any such revocation, suspension or
placing of such a restriction or condition;
(b) copies of any correspondence by, to or concerning the
Guarantor relating to an investigation conducted by the
Minister of Finance, whether pursuant to Section 132 of
the Bermuda Companies Law or otherwise; and
(c) a copy of any notice of or requesting or otherwise
relating to the winding up or any similar proceeding of
or with respect to the Guarantor; and
16.1.10 from time to time such additional information regarding the
financial position, results of operations or business of the
Account Party or any of its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request from time to time.
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16.2 Payment of Obligations
The Account Party will pay and discharge, and will cause each Subsidiary
to pay and discharge, at or before maturity, all their respective material
obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by
appropriate proceedings, and will maintain, and will cause each Subsidiary
to maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
16.3 Maintenance of Property; Insurance.
16.3.1 The Account Party will keep, and will cause each Subsidiary to
keep, all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
16.3.2 The Account Party will maintain, and will cause each Subsidiary to
maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which
the Account Party or such Subsidiary operates (it being understood
that the foregoing shall not apply to maintenance of reinsurance
or similar matters which shall be solely within the reasonable
business judgement of the Account Party and its Subsidiaries). The
Account Party will deliver to the Banks upon request of any Bank
through the Agent from time to time, full information as to the
insurance carried.
16.4 Conduct of Business and Maintenance of Existence
The Account Party will continue, and will cause each Subsidiary to
continue, to engage in business of the same general type as now conducted
by the Account Party and its Subsidiaries, and will preserve, renew and
keep in full force and effect, and will cause each Subsidiary to preserve,
renew and keep in full force and effect, their respective existence and
their respective rights, privileges and franchises necessary or desirable
in the normal conduct of business; provided that nothing in this Clause
16.4 shall prohibit:
16.4.1 the merger of a Subsidiary (other than the Guarantor) into the
Account Party or the merger or consolidation of a Subsidiary
(other than the Guarantor) with or into another Person if the
corporation surviving such consolidation or merger is a Subsidiary
and if, in each case, after giving effect thereto, no Default
shall have occurred and be continuing;
16.4.2 any merger of any Obligor permitted by Clause 16.10
(Consolidations, Mergers and Sale of Assets); or
16.4.3 the termination of:
(a) the corporate existence; or
(b) any rights, privileges and franchises of any Subsidiary
(other than the Guarantor),
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if, in each case, the Account Party in good faith determines that
such termination is in the best interest of the Account Party and
is not materially disadvantageous to the Banks.
16.5 Compliance with Laws
The Account Party will comply, and cause each Subsidiary to comply, in all
material respects with all applicable laws, ordinances, rules,
regulations, guidelines and other requirements of governmental authorities
except where the necessity of compliance therewith is contested in good
faith by appropriate proceedings and any reserves required under generally
accepted accounting principles with respect thereto have been established
and except where any such failure to comply could not reasonably be
expected to materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Account
Party and its Consolidated Subsidiaries, considered as a whole.
16.6 Inspection of Property, Books and Records
The Account Party will keep, and will cause each Subsidiary to keep,
proper books of records and account in accordance with generally accepted
accounting principles in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense to visit and inspect
any of their respective properties, to examine and make abstracts from any
of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees
and independent public accountants, all at such reasonable times on
reasonable notice and as often as may reasonably be desired.
16.7 Adjusted Consolidated Debt to Total Capitalisation Ratio
The Account Party shall maintain at all times a ratio of Adjusted
Consolidated Debt to Total Capitalisation of not more than 0.35 to 1.
16.8 Consolidated Net Worth
The Account Party shall maintain at all times Consolidated Net Worth in an
amount at least equal to the sum of:
16.8.1 US$3,600,000,000,
plus
16.8.2 25 per cent. of Consolidated Net Income for each fiscal quarter of
the Account Party ending on and after 31 March 2000 for which such
Consolidated Net Income is positive.
16.9 Liens
Neither the Account Party nor any Subsidiary will create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist, any Lien on or with respect to any of its
properties of any character (including, without limitation, accounts)
whether now owned or hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any accounts or other right to receive income,
except:
16.9.1 Liens created under the US Loan Documents;
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16.9.2 Permitted Liens;
16.9.3 Liens described in Schedule 10 (Existing Liens);
16.9.4 purchase money Liens upon or in real property or equipment
acquired or held by the Account Party or any of its Subsidiaries
in the ordinary course of business to secure the purchase price of
such property or equipment or to secure Debt incurred solely for
the purpose of financing the acquisition, construction or
improvement of any such property or equipment to be subject to
such Liens, or Liens existing on any such property or equipment at
the time of acquisition or within 180 days following such
acquisition (other than any such Liens created in contemplation of
such acquisition that do not secure the purchase price), or
extensions, renewals or replacements or any of the foregoing for
the same or a lesser amount, provided, however, that no such Lien
shall extend to or cover any property other than the property or
equipment being acquired, constructed or improved, and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended,
renewed or replaced;
16.9.5 Liens arising in connection with Capitalised Leases, provided that
no such Lien shall extend to or cover any assets other than the
assets subject to such Capitalised Leases;
16.9.6 (a) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of
such event, (b) any Lien on any asset of any Person existing at
the time such Person is merged or consolidated with or into the
Account Party or any of its Subsidiaries in accordance with Clause
16.10 (Consolidations, Mergers and Sales of Assets) and not
created in contemplation of such event and (c) any Lien existing
on any asset prior to the acquisition thereof by the Account Party
or any of its Subsidiaries and not created in contemplation of
such acquisition;
16.9.7 Liens securing obligations under credit default swap transactions
determined by reference to, or Contingent Obligations in respect
of, Debt issued by the Account Party or one of its Subsidiaries;
such Debt not to exceed an aggregate principal amount of
US$550,000,000;
16.9.8 Liens arising in the ordinary course of its business which:
(a) do not secure Debt; and
(b) do not in the aggregate materially detract from the value of
its assets or materially impair the use thereof in the
operation of its business;
16.9.9 Liens on cash and Approved Investments securing Hedge Agreements
arising in the ordinary course of business;
16.9.10 other Liens securing Debt or other obligations outstanding in an
aggregate principal or face amount not to exceed at any time 5 per
cent. of Consolidated Net Worth;
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16.9.11 Liens consisting of deposits made by the Account Party or any
insurance Subsidiary with any insurance regulatory authority or
other statutory Liens or Liens or claims imposed or required by
applicable insurance law or regulation against the assets of the
Account Party or any insurance Subsidiary, in each case in favour
of policyholders of the Account Party or such insurance Subsidiary
or an insurance regulatory authority and in the ordinary course of
the Account Party's or such insurance Subsidiary's business;
16.9.12 Liens on Investments and cash balances of the Account Party or any
insurance Subsidiary (other than capital stock of any Subsidiary)
securing obligations of the Account Party or any insurance
Subsidiary in respect of:
(a) letters of credit obtained in the ordinary course of
business; and/or
(b) trust arrangements formed in the ordinary course of business
for the benefit of cedents to secure reinsurance or insurance
obligations owed to them by the Account Party or any
insurance Subsidiary;
16.9.13 the replacement, extension or renewal of any Lien permitted by
sub-clause 16.9.2 or 16.9.5 of this Clause 16.9 upon or in the
same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount (other than
in respect of fees, expenses and premiums, if any) or change in
any direct or contingent obligor) of the Debt secured thereby;
16.9.14 Liens securing obligations owed by the Account Party to any
Subsidiary or by any Subsidiary to the Account Party or any other
Subsidiary;
16.9.15 Liens incurred in the ordinary course of business in favour of
financial intermediaries and clearing agents pending clearance of
payments for investment or in the nature of set-off, banker's lien
or similar rights as to deposit accounts or other funds;
16.9.16 judgement or judicial attachment Liens, provided that the
enforcement of such Liens is effectively stayed;
16.9.17 Liens on any assets of the Obligors created pursuant to the
Finance Documents;
16.9.18 Liens arising in connection with certain equity proceeds received
on or about 12 September 2000 (plus interest accrued thereon)
placed in a segregated account in support of (or pledged as
collateral for) the Account Party's guarantee of the
US$412,372,000 principal amount of Auction Rate Reset Subordinated
Notes Series A issued by ACE INA to ACE RHINOS Trust on 30 June
1999;
16.9.19 Liens arising in connection with Securitisation Transactions,
provided that the aggregate principal amount of the investment or
claim held at any time by all purchasers, assignees or other
transferees of (or of interests in) receivables and other rights
to payment in all Securitisation Transactions shall not exceed
US$250,000,000;
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16.9.20 Liens on securities arising out of repurchase agreements with a
term of not more than three months entered into with "Lenders"
(as such term is defined in the Five Year US Facility) or their
Affiliates or with securities dealers of recognised standing;
provided that (but without prejudice to sub-clause 16.9.10) the
aggregate amount of all assets of the Account Party and its
Subsidiaries subject to such agreements shall not at any time
exceed US$800,000,000; and
16.9.21 Liens securing up to an aggregate amount of US$200,000,000 of
obligations of ACE Tempest Reinsurance Ltd, the Account Party or
any wholly owned subsidiary, arising out of catastrophe bond
financing.
16.10 Consolidations, Mergers and Sales of Assets
16.10.1 No Obligor will consolidate with or merge into any other Person,
provided that if both immediately before and after giving effect
thereto no Default shall have occurred and be continuing, then:
(a) the Guarantor may merge or consolidate with any other Person
so long as the surviving entity is the Guarantor or a
Wholly-Owned Consolidated Subsidiary of the Account Party
and, if the Guarantor is not the surviving entity, such
surviving entity shall have assumed the obligations of the
Guarantor hereunder pursuant to an instrument in form and
substance reasonably satisfactory to the Majority Banks and
shall have delivered such opinions of counsel with respect
thereto as the Agent may reasonably request; and
(b) the Account Party may merge with another Person so long as
the Account Party is the surviving entity.
16.10.2 No Obligor will sell, lease or otherwise transfer, directly or
indirectly, all or any substantial part of its assets to any other
Person (excluding sales of investment securities in the ordinary
course of business).
16.11 No Amendments
The Account Party shall not amend or waive, or utilise or rely on any
waiver of, any provision of any Security Document that may be entered into
without the written consent of the Agent, the Security Trustee and the
Majority Banks.
16.12 Maintenance of Legal Validity
Each Obligor shall obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all authorisations,
approvals, licences and consents required in or by the laws of its
jurisdiction of incorporation to enable it lawfully to enter into and
perform its obligations under the Finance Documents to which it is a party
and to ensure the legality, validity, enforceability or admissibility in
evidence in its jurisdiction of incorporation of the Finance Documents to
which it is a party.
16.13 Claims Pari Passu
Each Obligor shall ensure that at all times the claims of the Finance
Parties against it under this Agreement ranks at least pari passu with the
claims of all its other unsecured and unsubordinated creditors save those
claims which are preferred by any bankruptcy,
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insolvency, liquidation or other similar laws of general application or
are mandatorily preferred by law applying to insurance companies
generally.
17. EVENTS OF DEFAULT
Each of Clause 17.1 (Failure to Pay) to Clause 17.17 (Custodian's
Undertaking) describes circumstances which constitute an Event of Default
for the purposes of this Agreement.
17.1 Failure to Pay
The Account Party shall fail to reimburse any drawing under any Letter of
Credit when required hereunder or shall fail to pay within five Business
Days of the due date thereof any interest or fees or other amounts payable
hereunder or under any other Finance Document or the Guarantor shall fail
to pay when due any such reimbursement obligations, interest, fees or
other amounts payable hereunder provided that, for the purposes of this
Clause 17.1, no such payment default by the Account Party shall be
continuing if the Guarantor pays the amount thereof at the time and
otherwise in the manner provided in Clause 30 (Guarantee and Indemnity).
17.2 Specific Covenants
The Account Party shall fail to observe or perform any covenant (a)
contained in Clauses 16.7 (Adjusted Consolidated Debt to Total
Capitalisation Ratio) to Clause 16.10 (Consolidations, Mergers and Sale of
Assets) inclusive or (b) contained in Clause 18.1 (Letter of Credit
Commission).
17.3 Other Obligations
Any Obligor shall fail to observe or perform any covenant or agreement
contained in this Agreement or in any other Finance Document (other than
those covered by Clause 17.1 (Failure to Pay) or Clause 17.2 (Specific
Covenants)) and such failure, if, in the reasonable opinion of the
Majority Banks, it is capable of remedy, is not remedied within 30 days
after notice thereof has been given to the Account Party by the Agent at
the request of any Bank.
17.4 Misrepresentation
Any representation, warranty, certification or statement made by any
Obligor in this Agreement or in any other Finance Document or in any
certificate, financial statement or other document delivered pursuant to
this Agreement or any other Finance Document shall prove to have been
incorrect in any material respect when made (or deemed made).
17.5 Cross-default
The Account Party or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations when due or within any
applicable grace period.
17.6 Cross-Acceleration
Any event or condition shall occur which results in the acceleration of
the maturity of any Material Debt or enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of such Material
Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof.
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17.7 Winding-up of the Account Party or the Guarantor
17.7.1 A resolution or other similar action is passed authorising the
voluntary winding up of the Account Party or any other similar
action with respect to the Account Party or a petition is filed
for the winding up of the Account Party or the taking of any other
similar action with respect to the Account Party in the Grand
Court of the Cayman Islands (except in the case of any frivolous
or vexatious steps or proceedings started by any Person who is not
a member of the Group where such steps or proceedings are
dismissed within 30 days); or
17.7.2 any corporate action is taken authorising the winding up, the
liquidation, any arrangement or the taking of any other similar
action of or with respect to the Guarantor or authorising any
corporate action to be taken to facilitate any such winding up,
liquidation, arrangement or other similar action or any petition
shall be filed seeking the winding up, the liquidation, any
arrangement or the taking of any other similar action of or with
respect to the Guarantor by the Registrar of Companies in Bermuda,
one or more holders of insurance policies or reinsurance
certificates issued by the Guarantor or by any other Person or
Persons or any petition shall be presented for the winding up of
the Guarantor to a court of Bermuda as provided under the Bermuda
Companies Law and in either such case such petition shall remain
undismissed and unstayed for a period of 60 days or any creditors'
or members' voluntary winding up of the Guarantor as provided
under the Bermuda Companies Law shall be commenced or any receiver
shall be appointed by a creditor of the Guarantor or by a court of
Bermuda on the application of a creditor of the Guarantor as
provided under any instrument giving rights for the appointment of
a receiver.
17.8 Execution or Distress
A proceeding shall be commenced by any Person seeking execution or
distress over or possession of the assets of either Obligor or any
substantial part thereof or any similar remedy and such proceedings shall
remain undismissed and unstayed for a period of 60 days.
17.9 Insolvency and Rescheduling
An Obligor or Material Subsidiary shall commence a voluntary case or other
proceeding seeking liquidation, reorganisation or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorise any of the foregoing; or an involuntary case or other
proceeding shall be commenced against an Obligor or Material Subsidiary
seeking liquidation, reorganisation or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be
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entered against an Obligor or Material Subsidiary under the United States
federal bankruptcy laws as now or hereafter in effect.
17.10 Analogous Proceedings
There occurs, in relation to an Obligor or Material Subsidiary in any
country or territory in which any of them carries on business or in any
jurisdiction where any part of their assets is subject, any event which
corresponds in that country or territory with any of those mentioned in
Clause 17.7 (Winding-up of the Account Party or the Guarantor) to Clause
17.9 (Insolvency and Rescheduling) above.
17.11 Failure to comply with Judgment
A final judgment or order for the payment of money in excess of
US$100,000,000 shall be rendered against an Obligor or Material Subsidiary
and such judgment or order shall continue unsatisfied and unstayed for a
period of 30 days.
17.12 Ownership of the Account Party and the Guarantor
17.12.1 Any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities
Exchange Act of 1934 of the United States of America, as amended),
directly or indirectly, of Voting Interests of the Account Party
(or other securities convertible into such Voting Interests)
representing 30 per cent. or more of the combined voting power of
all Voting Interests of the Account Party; or
17.12.2 during any period of 12 consecutive calendar months, individuals
who were directors of the Account Party on the first day of such
period shall cease to constitute a majority of the board of
directors of the Account Party; or
17.12.3 any Person or two or more Persons acting in concert shall have
acquired, by contract or otherwise, or shall have entered into a
contract or arrangement that results in its or their acquisition
of the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Account Party; or
17.12.4 the Guarantor ceases to be a Wholly-Owned Consolidated Subsidiary
of the Account Party.
17.13 Illegality
At any time it is or becomes unlawful for either Obligor to perform or
comply with any or all of its obligations hereunder or under any of the
Finance Documents or any court or arbitrator or any governmental body,
agency or official which has jurisdiction in the matter shall decide, rule
or order that any provision of any of the Finance Documents is invalid or
unenforceable in any material respect, or either Obligor shall so assert
in writing.
17.14 Revocation of Registration
The registration of the Guarantor as an insurer shall be revoked,
suspended or otherwise have restrictions or conditions placed upon it
unless, in the case of the placing of any such restrictions or conditions,
such restrictions or conditions could not have a material adverse effect
on the interests of the Finance Parties under the Finance Documents.
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17.15 Security
If the Obligors are required to grant security pursuant to sub-clause
18.1.2 of Clause 18.1 (Letter of Credit Commission) and they fail to
deliver Security at the times, in the amounts or as otherwise specified in
the Finance Documents or the Lien created pursuant thereto on the Security
shall at any time or for any reason cease to be a valid, enforceable and
first priority Lien on any of the Security or either Obligor shall fail to
observe or perform any covenant relating to the delivery of the Security
and the perfection of the first priority charge and security interest
created therein contained in any other Finance Document, provided that if
the market value of the Charged Portfolio falls below the Required Value
or the Charged Portfolio fails to satisfy the Security Trustee's
Requirements (as defined in the Charge Agreement), such circumstances
shall not constitute an Event of Default if the market value of the
Charged Portfolio is restored to the Required Value and/or, as the case
may be, the Security Trustee's Requirements are satisfied in each case
within five Business Days of notification by the Security Trustee on
behalf of the Banks of the breach of clause 4 of the Charge Agreement or,
if earlier, within five Business Days of either Obligor becoming aware of
such breach.
17.16 Finance Documents
Any provision of any Finance Document is repudiated, terminated, amended
or waived by any party thereto without the written consent of the Agent,
the Security Trustee and the Majority Banks.
17.17 Custodian's Undertaking
In the event that the Obligors are required to grant Security pursuant to
sub-clause 18.1.2 of Clause 18.1 (Letter of Credit Commission), the
Custodian fails to observe or perform any material provision of the
Custodian's Undertaking and such failure, if in the reasonable opinion of
the Majority Banks it is capable of remedy, is not remedied within 30 days
after notice thereof has been given to the Custodian by the Account Party
or by the Agent at the request of any Bank.
17.18 Acceleration and Cancellation
Upon the occurrence of an Event of Default at any time thereafter while
that Event of Default is continuing, the Agent may (and, if so instructed
by the Majority Banks, shall) by notice to the Account Party:
17.18.1 require the Account Party to procure that the liabilities of each
of the Banks under each Letter of Credit are promptly reduced to
zero and/or provide Cash Collateral for each Letter of Credit in
an amount specified by the Agent (whereupon the Account Party
shall do so); and/or
17.18.2 declare that any unutilised portion of the Facility shall be
cancelled, whereupon the same shall be cancelled and the Available
Commitment of each Bank shall be reduced to zero; and
17.18.3 (in the event that the Obligors have granted Security pursuant to
sub-clause 18.1.2 of Clause 18.1 (Letter of Credit Commission),
direct the Security Trustee to exercise all rights and remedies of
a mortgagee or a secured party at such time including, without
limitation, the right to take possession of any or all of the
assets subject to the Security Documents and the books and records
relating
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thereto, with or without judicial process. For the purposes of the
preceding sentence, the Security Trustee may enter upon any or all
of the premises where any of the assets subject to the Security
Documents, such other security or books or records may be situated
and take possession and remove the same therefrom.
18. COMMISSION and FEES
18.1 Letter of Credit Commission
18.1.1 The Account Party shall, in respect of each Letter of Credit
requested by it, pay to the Agent for the account of each Bank
(for distribution in proportion to each Bank's L/C Proportion of
such Letter of Credit) a letter of credit commission in sterling
at the L/C Commission Rate on the maximum actual and contingent
liabilities of the Banks under the relevant Letter of Credit. Such
Letter of Credit Commission shall be paid quarterly in arrear in
respect of each successive period of three months (or such shorter
period as shall end on the Termination Date of the relevant Letter
of Credit) which begins during the Term of the relevant Letter of
Credit, commencing from the Effective Date of such Letter of
Credit, and payable on the first day of each such period
thereafter.
18.1.2 If the Pricing Level reaches Level V (each as defined in Schedule
9 (Pricing Schedule)), the Required Value (for the avoidance of
doubt, the Obligors will not each be required to grant Security to
the Required Value) shall (subject to Section 25.21.3) be
increased to an amount equal to the aggregate amount of the
Letters of Credit issued hereunder, and each Obligor shall
promptly (and in any event within five Business Days) perform its
obligations under clause 4 of the Charge Agreement. Upon the
Security Trustee being satisfied that each Obligor has performed
its obligations under clause 4 of the Charge Agreement, and having
received legal opinions in form and substance satisfactory to the
Security Trustee (acting reasonably) opining that the Charge
Agreement creates in favour of the Security Trustee on behalf of
the Banks a valid and enforceable first priority Lien on all of
the Security (subject to such qualifications and assumptions as
are customarily made by leading firms of solicitors in giving
legal opinions of that nature), the L/C Commission Rate shall
become 0.15 per cent. and the Security Trustee shall notify all
parties hereto accordingly.
18.1.3 Any change to the L/C Commission Rate shall take effect on the day
on which the event giving rise to such change occurs (whether
pursuant to Schedule 9 (Pricing Schedule) or pursuant to
sub-clause 18.1.2).
18.1.4 Any unpaid Letter of Credit Commission payable in respect of each
Original Letter of Credit shall be paid in full by the Account
Party by no later than the Effective Date.
18.2 Arrangement Fees
The Account Party shall pay to the Lead Arranger the fees specified in the
letter dated 14 October 2002 from the Lead Arrangers to the Account Party
at the times, and in the amounts, specified in such letter.
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18.3 Agency Fee
The Account Party shall pay to the Agent for its own account the agency
fees specified in the letter dated 14 October 2002 from the Agent to the
Account Party at the times, and in the amounts, specified in such letter.
18.4 Participation Fees
The Account Party shall pay to the Lead Arrangers the participation fees
specified in the letter dated 14 October 2002 from the Lead Arrangers to
the Account Party at the times, and in the amounts, specified in such
letter. These fees shall be distributed by the Lead Arrangers among
certain of the Banks in accordance with the arrangements agreed by the
Lead Arrangers with such Banks prior to the Commencement Date.
19. COSTS and EXPENSES
19.1 Transaction Expenses
The Account Party shall, from time to time within thirty days of demand
of the Agent, reimburse the Agent and the Arrangers for all reasonable
costs and expenses (including legal fees) together with any VAT thereon
incurred by them in connection with the negotiation, preparation and
execution of the Finance Documents, any other document referred to in the
Finance Documents and the completion of the transactions therein
contemplated.
19.2 Preservation and Enforcement of Rights
19.2.1 The Account Party shall, from time to time on demand of the
Agent, reimburse the Finance Parties for all costs and expenses
(including legal fees) properly incurred on a full indemnity
basis together with any VAT thereon incurred in or in connection
with the preservation and/or enforcement of any of the rights of
the Finance Parties under the Finance Documents and any document
referred to in the Finance Documents (including, without
limitation, any costs and expenses relating to any investigation
as to whether or not an Event of Default might have occurred or
is likely to occur or any steps necessary or desirable in
connection with any proposal for remedying or otherwise
resolving a Default).
19.2.2 In the event that the Obligors have granted Security pursuant to
sub-clause 18.1.2 of Clause 18.1 (Letter of Credit Commission)
and if, by reason of a subsequent breach of clause 4 of the
Charge Agreement by either Obligor, any Bank incurs a capital
cost or is unable to continue to obtain the rate of return
obtained by it hereunder at the date the Security is granted or
at the date it becomes party hereto as a Bank, the Obligors
shall on demand of the Agent, promptly pay to the Agent for the
account of the Bank amounts sufficient to indemnify that Bank
from and against such cost or loss in return.
19.3 Stamp Taxes
The Account Party shall pay all stamp, registration and other taxes to
which the Finance Documents, any other document referred to in the
Finance Documents or any judgment given in connection therewith is or at
any time may be subject and to which it is a party and shall, from time
to time on demand of the Agent, indemnify the Finance Parties against any
liabilities, costs, claims and expenses resulting from any failure to pay
or any delay in paying any such tax.
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19.4 Amendment Costs
If an Obligor requests any amendment, waiver or consent to any Finance
Document then the Account Party shall, within thirty days of demand by
the Agent, reimburse the Finance Parties for all reasonable costs and
expenses (including legal fees) together with any VAT thereon incurred by
such persons in responding to or complying with such request.
19.5 Banks' Liabilities for Costs
If the Account Party fails to perform any of its obligations under this
Clause 19 each Bank shall, in its Proportion, indemnify each of the Agent
and the Arrangers against any loss incurred by any of them as a result of
such failure.
20. DEFAULT INTEREST and BREAK COSTS
20.1 Default Interest
If any sum due and payable by an Obligor hereunder is not paid on the due
date therefor in accordance with Clause 23 (Payments) or if any sum due
and payable by an Obligor under any judgment of any court in connection
herewith is not paid on the date of such judgment, the period beginning
on such due date or, as the case may be, the date of such judgment and
ending on the date upon which the obligation of such Obligor to pay such
sum is discharged shall be divided into successive periods, each of which
(other than the first) shall start on the last day of the preceding such
period and the duration of each of which shall (except as otherwise
provided in this Clause 20) be selected by the Agent.
20.2 Default Interest Rate
An Unpaid Sum shall bear interest during each Term in respect thereof at
the rate per annum which is the sum from time to time of two per cent.
and LIBOR on the Quotation Date therefor.
20.3 Payment of Default Interest
Any interest which shall have accrued under Clause 20.1 (Default
Interest) in respect of an Unpaid Sum shall be due and payable and shall
be paid by the relevant Obligor, together with any Mandatory Liquid Asset
Costs Rate in respect thereof on the last day of each Term in respect
thereof or on such other dates as the Agent may specify by notice to the
relevant Obligor.
20.4 Break Costs
If any Bank or the Agent on its behalf receives or recovers all or any
part of an Unpaid Sum otherwise than on the last day of a Term relating
thereto, the Account Party shall pay to the Agent on demand for the
account of such Bank an amount equal to the amount (if any) by which:
20.4.1 the additional interest which would have been payable on the
amount so received or recovered had it been received or
recovered on the last day of that Term
exceeds
20.4.2 the amount of interest which in the opinion of the Agent (acting
reasonably) would have been payable to the Agent on the last day
of that Term in respect of
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a deposit in the currency of the amount so received or recovered equal
to the amount so received or recovered placed by it with a prime bank
in London for a period starting on the first Business Day following
the date of such receipt or recovery and ending on the last day of
that Term.
21. INDEMNITIES
21.1 Company's Indemnity
The Account Party undertakes to indemnify:
21.1.1 each Finance Party against any reasonable cost, claim, loss,
expense (including legal fees) or liability together with any VAT
thereon, whether or not reasonably foreseeable, which it may
sustain or incur as a consequence of the occurrence of any Event
of Default or any default by an Obligor in the performance of any
of the obligations expressed to be assumed by it in the Finance
Documents;
21.1.2 the Agent against any reasonable cost or loss it may suffer or
incur as a result of its entering into, or performing, any
foreign exchange contract for the purposes of Clause 23
(Payments);
21.1.3 each Bank against any reasonable cost or loss it may suffer under
Clause 19.5 (Banks' Liabilities for Costs) or Clause 26.5
(Indemnification); and
21.1.4 each Bank against any reasonable cost or loss it may suffer or
incur as a result of its issuing or making arrangements to issue
a Letter of Credit requested by the Account Party hereunder but
not issued by reason of the operation of any one or more of the
provisions hereof.
21.2 Currency Indemnity
If any sum (a "Sum") due from an Obligor under the Finance Documents or
any order or judgment given or made in relation thereto has to be
converted from the currency (the "First Currency") in which such Sum is
payable into another currency (the "Second Currency") for the purpose of:
21.2.1 making or filing a claim or proof against such Obligor;
21.2.2 obtaining an order or judgment in any court or other tribunal; or
21.2.3 enforcing any order or judgment given or made in relation
thereto,
the Account Party shall indemnify each person to whom such Sum is due
from and against any loss suffered or incurred as a result of any
discrepancy between (a) the rate of exchange used for such purpose to
convert such Sum from the First Currency into the Second Currency and (b)
the rate or rates of exchange available to such person at its prevailing
spot rate at the time of receipt of such Sum.
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22. CURRENCY OF ACCOUNT AND PAYMENT
22.1 Currency of Account
Sterling is the currency of account and payment for each and every sum at
any time due from an Obligor hereunder, provided that:
22.1.1 each sum falling due by an Obligor hereunder in relation to any
demand made under a Letter of Credit or in relation to any
reimbursement of the Banks pursuant to a demand made under a
Letter of Credit shall be made in the currency of the demand;
22.1.2 each payment of interest shall be made in the currency in which
the sum in respect of which such interest is payable is
denominated;
22.1.3 each payment in respect of costs and expenses shall be made in
the currency in which the same were incurred;
22.1.4 each payment pursuant to Clause 10.2 (Tax Indemnity) or Clause
12.1 (Increased Costs) shall be made in the currency specified by
the party claiming thereunder; and
22.1.5 any amount expressed to be payable in a currency other than
sterling shall be paid in that other currency.
23. PAYMENTS
23.1 Payments to the Agent
On each date on which this Agreement requires an amount to be paid by an
Obligor, such Obligor shall make the same available to the Agent for
value on the due date at such time and in such funds and to such account
with such bank as the Agent shall specify from time to time upon
reasonable advance notice to such Obligor.
23.2 Payments by the Agent
Save as otherwise provided herein, each payment received by the Agent
pursuant to Clause 23.1 (Payments to the Agent) shall be made available
by the Agent to the person entitled to receive such payment in accordance
with this Agreement (in the case of a Bank, for the account of its
Facility Office) for value the same day by transfer to such account of
such person with such bank in the principal financial center of the
country of the currency of such payment as such person shall have
previously notified to the Agent.
23.3 No Set-off
All payments required to be made by an Obligor hereunder shall be
calculated without reference to any set-off or counterclaim and shall be
made free and clear of and without any deduction for or on account of any
set-off or counterclaim.
23.4 Clawback
Where a sum is to be paid hereunder to the Agent for the account of
another person, the Agent shall not be obliged to make the same available
to that other person or to enter into or perform any exchange contract in
connection therewith until it has been able to establish to its
satisfaction that it has actually received such sum, but if it does so
and it proves to be the case that it had not actually received such sum,
then the person to whom
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such sum or the proceeds of such exchange contract was so made available
shall on request refund the same to the Agent together with an amount
sufficient to indemnify the Agent against any cost or loss it may have
suffered or incurred by reason of its having paid out such sum or the
proceeds of such exchange contract prior to its having received such sum.
23.5 Partial Payments
If and whenever a payment is made by an Obligor hereunder and the Agent
receives an amount less than the due amount of such payment the Agent may
apply the amount received towards the obligations of the Obligors under
this Agreement in the following order:
23.5.1 first, in or towards payment of any unpaid costs and expenses of
each of the Agent and the Arrangers;
23.5.2 second, in or towards payment pro rata of any accrued interest,
Letter of Credit Commission or fees payable to any Bank hereunder
due but unpaid;
23.5.3 third, in or towards payment pro rata of any Outstandings due but
unpaid; and
23.5.4 fourth, in or towards payment pro rata of any other sum due but
unpaid.
23.6 Variation of Partial Payments
The order of partial payments set out in Clause 23.5 (Partial Payments)
shall override any appropriation made by the Obligors to which the
partial payment relates but the order set out in sub-clauses 23.5.2,
23.5.3 and 23.5.4 of Clause 23.5 (Partial Payments) may be varied if
agreed by all the Banks.
23.7 Appropriations of proceeds of enforcement of Security
If the Agent recovers any moneys from the enforcement of any Finance
Document in its capacity as Agent or Security Trustee thereunder, it
shall apply the money recovered in the following order:
23.7.1 first, in payment of all costs, charges, expenses and liabilities
(and all interest thereon as provided in the Finance Documents)
incurred by or on behalf of the Agent and the Security Trustee
and any receiver, attorney or agent in connection with the due
performance of its duties and exercise of its powers and
discretions under the Finance Documents and the remuneration of
the Agent, the Security Trustee and every receiver under the
Finance Documents;
23.7.2 secondly, in or towards payment pro rata of any due but unpaid
costs and expenses of the Agent, the Arrangers and the Banks
under the Finance Documents;
23.7.3 thirdly, in or towards payment pro rata of any accrued interest,
Letter of Credit Commission or fees due but unpaid under this
Agreement;
23.7.4 fourthly, in or towards payment pro rata of any Outstandings due
but unpaid under this Agreement;
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23.7.5 fifthly, in or towards payment pro rata of any other sum due but
unpaid under the Finance Documents; and
23.7.6 sixthly, in payment of the surplus (if any) to the Account Party
or any other person entitled thereto.
The order of application of money recovered in this Clause may only be
varied with the consent of all the Banks.
24. SET-OFF
24.1 Contractual Set-off
Each Obligor authorises each Bank at any time after an Event of Default
has occurred which is continuing to apply any credit balance to which
such Obligor is entitled on any account of such Obligor with such Bank in
satisfaction of any sum due and payable from such Obligor to such Bank
hereunder (whether by way of collateralisation or otherwise) but unpaid.
For this purpose, each Bank is authorised to purchase with the moneys
standing to the credit of any such account such other currencies as may
be necessary to effect such application.
24.2 Set-off not Mandatory
No Bank shall be obliged to exercise any right given to it by Clause 24.1
(Contractual Set-off).
25. SHARING
25.1 Payments to Banks
If a Bank (a "Recovering Bank") applies any receipt or recovery from an
Obligor to a payment due under this Agreement and such amount is received
or recovered other than in accordance with Clause 23 (Payments), then
such Recovering Bank shall:
25.1.1 notify the Agent of such receipt or recovery;
25.1.2 at the request of the Agent, promptly pay to the Agent an amount
(the "Sharing Payment") equal to such receipt or recovery less
any amount which the Agent determines may be retained by such
Recovering Bank as its share of any payment to be made in
accordance with Clause 23.5 (Partial Payments).
25.2 Redistribution of Payments
The Agent shall treat the Sharing Payment as if it had been paid by the
relevant Obligor and distribute it between the Finance Parties (other
than the Recovering Bank) in accordance with Clause 23.5 (Partial
Payments).
25.3 Recovering Bank's Rights
The Recovering Bank will be subrogated to the rights of the parties which
have shared in a redistribution pursuant to Clause 25.2 (Redistribution
of Payments) in respect of the Sharing Payment (and the relevant Obligor
shall be liable to the Recovering Bank in an amount equal to the Sharing
Payment) in place of any corresponding liability to the parties which
have shared in the redistribution.
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25.4 Repayable Recoveries
If any part of the Sharing Payment received or recovered by a Recovering
Bank becomes repayable and is repaid by such Recovering Bank, then:
25.4.1 each party which has received a share of such Sharing Payment
pursuant to Clause 25.2 (Redistribution of Payments) shall, upon
request of the Agent, pay to the Agent for account of such
Recovering Bank an amount equal to its share of such Sharing
Payment; and
25.4.2 such Recovering Bank's rights of subrogation in respect of any
reimbursement shall be cancelled and the relevant Obligor will be
liable to the reimbursing party for the amount so reimbursed.
25.5 Exception
This Clause 25 shall not apply if the Recovering Bank would not, after
making any payment pursuant hereto, have a valid and enforceable claim
against the relevant Obligor.
25.6 Recoveries Through Legal Proceedings
If any Bank intends to commence any action in any court it shall give
prior notice to the Agent and the other Banks. If any Bank shall commence
any action in any court to enforce its rights hereunder and, as a result
thereof or in connection therewith, receives any amount, then such Bank
shall not be required to share any portion of such amount with any Bank
which has the legal right to, but does not, join in such action or
commence and diligently prosecute a separate action to enforce its rights
in another court.
26. THE AGENT, THE ARRANGERS AND THE BANKS
26.1 Appointment of the Agent
The Arrangers and each of the Banks hereby appoints the Agent to act as
its agent in connection herewith and authorises the Agent to exercise
such rights, powers, authorities and discretions as are specifically
delegated to the Agent by the terms hereof together with all such rights,
powers, authorities and discretions as are reasonably incidental thereto.
26.2 Agent's Discretions
The Agent may:
26.2.1 assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto, that
(a) any representation made or deemed to be made by an Obligor in
connection with the Finance Documents is true, (b) no Event of
Default or Potential Event of Default has occurred, (c) no
Obligor is in breach of or default under its obligations under
the Finance Documents and (d) any right, power, authority or
discretion vested therein upon the Majority Banks, the Banks or
any other person or group of persons has not been exercised;
26.2.2 assume that the Facility Office of each Bank is that notified to
it by such Bank in writing prior to the date hereof (or, in the
case of a Transferee, at the end of
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the Transfer Certificate to which it is a party as Transferee)
until it has received from such Bank a notice designating some
other office of such Bank to replace its Facility Office and act
upon any such notice until the same is superseded by a further
such notice;
26.2.3 engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem necessary, expedient or desirable and rely upon
any advice so obtained;
26.2.4 rely as to any matters of fact which might reasonably be expected
to be within the knowledge of an Obligor upon a certificate
signed by or on behalf of such Obligor;
26.2.5 rely upon any communication or document believed by it to be
genuine;
26.2.6 refrain from exercising any right, power or discretion vested in
it as agent hereunder unless and until instructed by the Majority
Banks as to whether or not such right, power or discretion is to
be exercised and, if it is to be exercised, as to the manner in
which it should be exercised;
26.2.7 refrain from acting in accordance with any instructions of the
Majority Banks to begin any legal action or proceeding arising
out of or in connection with the Finance Documents until it shall
have received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, losses,
expenses (including legal fees) and liabilities together with any
VAT thereon which it will or may expend or incur in complying
with such instructions; and
26.2.8 assume (unless it has specific notice to the contrary) that any
notice or request made by the Account Party is made on behalf of
both Obligors.
26.3 Agent's Obligations
The Agent shall:
26.3.1 promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from an Obligor
under the Finance Documents and shall promptly deliver to each
Bank a copy of each Letter of Credit delivered to Lloyd's
pursuant to Clause 3.3 (Completion of Letters of Credit);
26.3.2 promptly notify each Bank of the occurrence of any Event of
Default or any default by an Obligor in the due performance of or
compliance with its obligations under the Finance Documents of
which the Agent has notice from any other party hereto;
26.3.3 save as otherwise provided herein, act as agent under the Finance
Documents in accordance with any instructions given to it by an
Majority Banks, which instructions shall be binding on the
Arrangers and the Banks; and
26.3.4 if so instructed by the Majority Banks, refrain from exercising
any right, power or discretion vested in it as agent under the
Finance Documents.
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The Agent's duties under the Finance Documents are solely mechanical and
administrative in nature.
26.4 Excluded Obligations
Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arrangers shall:
26.4.1 be bound to enquire as to (a) whether or not any representation
made or deemed to be made by an Obligor in connection with the
Finance Documents is true, (b) the occurrence or otherwise of any
Default, (c) the performance by an Obligor of its obligations
under the Finance Documents or (d) any breach of or default by an
Obligor of or under its obligations under the Finance Documents;
26.4.2 be bound to account to any Bank for any sum or the profit element
of any sum received by it for its own account;
26.4.3 be bound to disclose to any other person any information relating
to any member of the Group if (a) such person, on providing such
information, expressly stated to the Agent or, as the case may
be, the Arrangers, that such information was confidential or (b)
such disclosure would or might in its opinion constitute a breach
of any law or be otherwise actionable at the suit of any person;
26.4.4 be under any obligations other than those for which express
provision is made herein; or
26.4.5 be or be deemed to be a fiduciary for any other party hereto.
26.5 Indemnification
Each Bank shall, in its Proportion, from time to time on demand by the
Agent, indemnify the Agent against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT
thereon which the Agent may incur, otherwise than by reason of its own
gross negligence or wilful misconduct, in acting in its capacity as agent
hereunder (other than any which have been reimbursed by the Account Party
pursuant to Clause 21.1 Company's Indemnity).
26.6 Exclusion of Liabilities
Except in the case of gross negligence or wilful default, neither the
Agent nor the Arrangers accepts any responsibility:
26.6.1 for the adequacy, accuracy and/or completeness of any information
supplied by the Agent or the Arrangers, by an Obligor or by any
other person in connection with the Finance Documents or any
other agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection with
the Finance Documents;
26.6.2 for the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with the Finance
Documents; or
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26.6.3 for the exercise of, or the failure to exercise, any judgement,
discretion or power given to any of them by or in connection with
the Finance Documents or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
pursuant to or in connection with the Finance Documents.
Accordingly, neither the Agent nor the Arrangers shall be under any
liability (whether in negligence or otherwise) in respect of such
matters, save in the case of gross negligence or wilful misconduct.
26.7 No Actions
Each of the Banks agree that it will not assert or seek to assert against
any director, officer or employee of the Agent or the Arrangers any claim
it might have against any of them in respect of the matters referred to
in Clause 26.6 (Exclusion of Liabilities).
26.8 Business with the Group
The Agent and the Arrangers may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any member
of the Group.
26.9 Resignation
The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior
notice to that effect to each of the other parties hereto, provided that
no such resignation shall be effective until a successor for the Agent is
appointed in accordance with the succeeding provisions of this Clause 26.
26.10 Removal of Agent
The Majority Banks may remove the Agent from its role as agent hereunder
after consultation with the Account Party by giving notice to that effect
to each of the other parties hereto. Such removal shall take effect only
when a successor to the Agent is appointed in accordance with the terms
hereof.
26.11 Successor Agent
If the Agent gives notice of its resignation pursuant to Clause 26.9
(Resignation) or it is removed pursuant to Clause 26.10 (Removal of
Agent) then any reputable and experienced bank or other financial
institution may be appointed as a successor to the Agent by the Majority
Banks (after consultation with the Account Party if the successor is a
Bank or otherwise with the Account Party's prior written consent) during
the period of such notice (with the co-operation of the Agent), subject
to such entity executing and delivering a confidentiality undertaking
substantially in the form set out in Schedule 8 (Form of Confidentiality
Undertaking) but, if no such successor is so appointed, the Agent may
appoint such a successor itself.
26.12 Rights and Obligations
If a successor to the Agent is appointed under the provisions of Clause
26.11 (Successor Agent), then (a) the retiring Agent shall be discharged
from any further obligation hereunder but shall remain entitled to the
benefit of the provisions of this Clause 26 and (b) its successor and
each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor
had been a party hereto.
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26.13 Own Responsibility
It is understood and agreed by each Bank that at all times it has itself
been, and will continue to be, solely responsible for making its own
independent appraisal of and investigation into all risks arising under
or in connection with this Agreement including, but not limited to:
26.13.1 the financial condition, creditworthiness, condition, affairs,
status and nature of each member of the Group;
26.13.2 the legality, validity, effectiveness, adequacy and
enforceability of the Finance Documents and any other
agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection with
the Finance Documents;
26.13.3 whether such Bank has recourse, and the nature and extent of
that recourse, against an Obligor or any other person or any of
its assets under or in connection with the Finance Documents,
the transactions therein contemplated or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with the Finance
Documents; and
26.13.4 the adequacy, accuracy and/or completeness of any information
provided by the Agent or the Arrangers, an Obligor or by any
other person in connection with the Finance Documents, the
transactions contemplated therein or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with the Finance
Documents.
Accordingly, each Bank acknowledges to the Agent and the Arrangers that
it has not relied on and will not hereafter rely on the Agent and the
Arrangers or either of them in respect of any of these matters.
26.14 Agency Division Separate
In acting as agent hereunder for the Banks, the Agent shall be regarded
as acting through its agency division which shall be treated as a
separate entity from any other of its divisions or departments and,
notwithstanding the foregoing provisions of this Clause 26, any
information received by some other division or department of the Agent
may be treated as confidential and shall not be regarded as having been
given to the Agent's agency division.
26.15 Declaration of Agent as Security Trustee
The Agent hereby declares that it shall hold:
26.15.1 all rights, titles and interests that may hereafter be
mortgaged, charged, assigned or otherwise secured in favour of
the Agent by or pursuant to the Finance Documents;
26.15.2 the benefit of all representations, covenants, guarantees,
indemnities and other contractual provisions given in favour of
the Agent (other than any such benefits given to the Agent
solely for its own benefit) by or pursuant to the Finance
Documents (other than this Agreement); and
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26.15.3 all proceeds of the security referred to in sub-clause 26.15.1
above and of the enforcement of the benefits referred to in
26.15.2 above,
on trust for itself and the other Finance Parties from time to time.
Such declaration shall remain valid notwithstanding that the Agent may
on the date hereof or at any other time be the sole Finance Party; for
the avoidance of doubt, however, such declaration shall, in such case,
be deemed repeated on each date on which the Agent ceases to be the sole
Finance Party.
Each of the parties hereto agrees that the obligations, rights and
benefits vested or to be vested in the Agent as trustee as aforesaid
by the Finance Documents or any document entered into pursuant thereto
shall (as well before as after enforcement) be performed and (as the
case may be) exercised by the Agent in accordance with the provisions
of this Clause 26.
26.16 Powers and Discretions
The Agent shall have all the powers and discretions conferred upon
trustees by the Trustee Act 1925 (to the extent not inconsistent
herewith) and by way of supplement it is expressly declared as follows:
26.16.1 the Agent shall be at liberty to place any of the Finance
Documents and any other instruments, documents or deeds
delivered to it pursuant thereto or in connection therewith for
the time being in its possession in any safe deposit, safe or
receptacle selected by the Agent or with any bank, any company
whose business includes undertaking the safe custody of
documents or any firm of lawyers of good repute;
26.16.2 the Agent may, whenever it thinks fit, delegate by power of
attorney or otherwise to any person or persons or fluctuating
body of persons all or any of the rights, trusts, powers,
authorities and discretions vested in it by any of the Finance
Documents and such delegation may be made upon such terms and
subject to such conditions (including the power to
sub-delegate) and subject to such regulations as the Agent may
think fit and the Agent shall not be bound to supervise, or be
in any way responsible for any loss incurred by reason of any
misconduct or default on the part of, any such delegate (or
sub-delegate);
26.16.3 notwithstanding anything else herein contained, the Agent may
refrain from doing anything which would or might in its opinion
be contrary to any law of any jurisdiction or any directive or
regulation of any agency of any state or which would or might
otherwise render it liable to any person and may do anything
which is, in its opinion, necessary to comply with any such
law, directive or regulation;
26.16.4 save in the case of gross negligence or wilful misconduct, the
Agent and every attorney, agent, delegate, sub-delegate and any
other person appointed by any of them under any of the Finance
Documents may indemnify itself or himself out of the security
held by the Agent against all liabilities, costs, fees,
charges, losses and expenses incurred by any of them in
relation to or arising out of the
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taking or holding of any of the security constituted by, or
any of the benefits provided by, any of the Finance Documents,
in the exercise or purported exercise of the rights, trusts,
powers and discretions vested in any of them or in respect of
any other matter or thing done or omitted to be done in any
way relating to any of the Finance Documents or pursuant to
any law or regulation; and
26.16.5 without prejudice to the provisions of any of the Finance
Documents, the Agent shall not be under any obligation to
insure any property or to require any other person to maintain
any such insurance and shall not be responsible for any loss
which may be suffered by any person as a result of the lack of
or inadequacy or insufficiency of any such insurance.
26.17 Liability
The Agent shall not be liable for any failure:
26.17.1 to require the deposit with it of any deed or document
certifying, representing or constituting the title of the
Account Party to any of the property mortgaged, charged,
assigned or otherwise encumbered by or pursuant to any of the
Finance Documents;
26.17.2 to obtain any licence, consent or other authority for the
execution, delivery, validity, legality, adequacy, performance,
enforceability or admissibility in evidence of any of the
Finance Documents;
26.17.3 to register or notify any deed or document mentioned at
sub-clause 26.17.1 in accordance with the provisions of any of
the documents of title of the Account Party;
26.17.4 to effect or procure registration of or otherwise protect any
of the security created by any of the Finance Documents by
registering the same under any applicable registration laws in
any territory or otherwise by registering any notice, caution
or other entry prescribed by or pursuant to the provisions of
the said Act or laws;
26.17.5 to take or to require the Account Party to take any steps to
render the security without limitation, any floating charge)
created or purported to be created by or pursuant to any of the
Finance Documents effective or to secure the creation of any
ancillary charge under the laws of any jurisdiction; or
26.17.6 to require any further assurances in relation to any of the
Finance Documents.
26.18 Title to Security etc.
The Agent may accept without enquiry, requisition or objection such
right and title as the Account Party may have to the property belonging
(or purportedly belonging) to it (or any part thereof) which is the
subject matter of any of the Finance Documents and shall not be bound or
concerned to investigate or make any enquiry into the right or title of
the Account Party to such property (or any part thereof) or, without
prejudice to the foregoing, to require the Account Party to remedy any
defect in the Account Party's right or title as aforesaid.
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26.19 New Security Trustee
The Agent may at any time appoint any person (whether or not a trust
corporation) to act either as a separate trustee or as a co-trustee
jointly with the Agent:
26.19.1 if the Agent considers such appointment to be in the interests
of the Banks; or
26.19.2 for the purposes of conforming to any legal requirements,
restrictions or conditions which the Agent deems relevant for
the purposes of the Finance Documents and the Agent shall give
prior notice to the Account Party and the Banks of any such
appointment.
Any person so appointed shall (subject to the provisions of the Finance
Documents) have such powers, authorities and discretions and such duties
and obligations as shall be conferred or imposed or such person by the
instrument of appointment and shall have the same benefits under this
Clause 26 as the Agent.
The Agent shall have power in like manner to remove any person so
appointed.
Such reasonable remuneration as the Agent may pay to any person so
appointed, and any costs, charges and expenses incurred by such person
in performing its functions pursuant to such appointment, shall for the
purposes hereof be treated as costs, charges and expenses incurred by
the Agent under the Finance Documents.
26.20 Perpetuity Period
The perpetuity period under the rule against perpetuities if applicable
to the trusts constituted in this Clause 26 and the other Finance
Documents shall be the period of eighty years from the date of this
Agreement and, subject thereto, if the Agent determines that all of the
obligations of the Account Party under any of the Finance Documents have
been fully and unconditionally discharged, such trusts shall be wound
up.
26.21 Security
26.21.1 In the event that the Required Value is greater than US$100
pursuant to sub-clause 18.1.2 of Clause 18.1 (Letter of Credit
Commission), as soon as reasonably practicable after each
delivery to the Security Trustee of the statement(s) of the
Charged Portfolio by the Custodian pursuant to paragraph 3 of
the Custodian's Undertaking and in any event within seven
Business Days of such delivery, the Security Trustee and the
Obligors shall adjust the Required Value to the extent
necessary to ensure that the Required Value of the Charged
Portfolio is an amount equal to the aggregate of:
A + (A x Y per cent.) + B + (B x Y per cent.) +C + (C x Y per
cent.)
where:
A represents the amount of the Charged Portfolio denominated
in sterling
B represents the amount of the Charged Portfolio denominated
in dollars (converted into sterling at the Spot Rate)
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C represents the amount of the Charged Portfolio
denominated in any currency other than sterling or
dollars (converted into sterling at the Spot Rate)
Y per cent. means:
(a) 10 per cent. in respect of any portion of the Charged
Portfolio denominated in sterling;
(b) 10 per cent. in respect of any portion of the Charged
Portfolio denominated in dollars; and
(c) 15 per cent. in respect of any portion of the Charged
Portfolio denominated in any currency other than dollars
or sterling
and shall notify the Custodian of any such adjustments.
26.21.2 The Security Trustee shall not amend the Security Trustee's
Requirements without the consent of the Banks.
26.21.3 In the event that the Pricing Level reverts from Level V to
level IV or above (each as defined in Schedule 9 (Pricing
Schedule), the Required Value will revert to US$100. For the
avoidance of doubt, if, following any such reduction in the
Required Value, the Pricing Level again reaches Level V, the
Required Value shall be increased to the extent required
pursuant to sub-clause 18.1.2 of Clause 18.1 (Letter of Credit
Commission).
26.22 Bank Representations
Each Bank represents to the Agent on the date of issue of each Letter of
Credit that:
26.22.1 the execution and delivery of each Letter of Credit by the
Agent on the Bank's behalf has been duly authorised by all
necessary action on the part of the Bank; and
26.22.2 the obligations of the Bank under each Letter of Credit
constitute its legal, valid and binding obligations.
26.23 Letters of Credit
Each Bank shall in its Proportion, indemnify the Agent against any and
all liabilities, costs and expenses which the Agent may incur (in its
capacity as Agent) as a result of the execution and delivery of any
Letter of Credit and any documents executed and delivered by the Agent
in connection therewith.
27. ASSIGNMENTS and TRANSFERS
27.1 Binding Agreement
The Finance Documents shall be binding upon and enure to the benefit of
each party hereto and its or any subsequent successors and Transferees.
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27.2 No Assignments and Transfers by the Obligors
No Obligor shall be entitled to assign or transfer all or any of its
rights, benefits and obligations under the Finance Documents without the
prior written consent of all the Banks.
27.3 Assignments and Transfers by Banks
Subject to obtaining the prior written consent of the Account Party
(such consent not to be unreasonably withheld or delayed), any Bank may,
at any time, assign all or any of its rights and benefits under the
Finance Documents or transfer in accordance with Clause 27.5 (Transfers
by Banks) all or any of its rights, benefits and obligations under the
Finance Documents to a bank or financial institution, provided that:
27.3.1 no such assignment or transfer of the whole or any part of the
Commitment may be made unless it is to an Approved Credit
Institution; and
27.3.2 the Account Party's consent is not required if such assignment
or transfer is:
(a) to any subsidiary or holding company, or to any subsidiary
of any holding company, of such Bank; or
(b) to any other Bank.
27.4 Assignments by Banks
If any Bank assigns all or any of its rights and benefits under the
Finance Documents in accordance with Clause 27.3 (Assignments and
Transfers by Banks), then, unless and until the assignee has delivered a
notice to the Agent confirming in favour of the Agent, the Arrangers and
the Banks that it shall be under the same obligations towards each of
them as it would have been under if it had been an original party hereto
as a Bank (whereupon such assignee shall become a party hereto as a
"Bank"), the Agent, the Arrangers, and the Banks shall not be obliged to
recognise such assignee as having the rights against each of them which
it would have had if it had been such a party hereto.
27.5 Transfers by Banks
If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations under the Finance Documents as contemplated in Clause 27.3
(Assignments and Transfers by Banks), then such transfer may be effected
by the delivery to the Agent of a duly completed Transfer Certificate
executed by such Bank and the relevant Transferee in which event, on the
later of the Transfer Date specified in such Transfer Certificate and
the fifth Business Day after (or such earlier Business Day endorsed by
the Agent on such Transfer Certificate falling on or after) the date of
delivery of such Transfer Certificate to the Agent:
27.5.1 to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer by novation its rights, benefits and
obligations under the Finance Documents, each of the Obligors
and such Bank shall be released from further obligations
towards one another under the Finance Documents and their
respective rights against one another shall be cancelled (such
rights and obligations being referred to in this Clause 27.5 as
"discharged rights and obligations");
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27.5.2 each of the Obligors and the Transferee party thereto shall
assume obligations towards one another and/or acquire rights
against one another which differ from such discharged rights
and obligations only insofar as such Obligor and such
Transferee have assumed and/or acquired the same in place of
such Obligor and such Bank;
27.5.3 the Agent, the Arrangers, the Security Trustee, such Transferee
and the other Banks shall acquire the same rights and benefits
and assume the same obligations between themselves as they
would have acquired and assumed had such Transferee been an
original party hereto as a Bank with the rights, benefits
and/or obligations acquired or assumed by it as a result of
such transfer and to that extent the Agent, the Arrangers and
the relevant Bank shall each be released from further
obligations to each other under the Finance Documents; and
27.5.4 such Transferee shall become a party hereto as a "Bank".
27.6 Replacement of Letter of Credit
On any transfer pursuant to Clause 27.5 (Transfers by Banks) other than
such a transfer upon the designation of a Substitute Bank in accordance
with the provisions of sub-clause 4.6.1 of Clause 4.6 (Substitute Bank)
the Bank transferring all or any of its rights, benefits and/or
obligations under the Finance Documents shall ensure that the Account
Party will procure the release by Lloyd's of each Letter of Credit (an
"Old Letter of Credit") with respect to which the transfer is to have
effect and its replacement by a new Letter of Credit to be issued by the
Transferee and all the other Banks in an amount equal to that of the Old
Letter of Credit and having a Termination Date which corresponds with
the Termination Date thereof.
27.7 Transfer Fees
On the date upon which a transfer takes effect pursuant to Clause 27.5
(Transfers by Banks) the relevant Transferee shall pay to the Agent for
its own account a fee of (Pounds)1,000.
27.8 Disclosure of Information
Any Bank may disclose to any person:
27.8.1 to (or through) whom such Bank assigns or transfers (or may
potentially assign or transfer) all or any of its rights,
benefits and obligations under the Finance Documents;
27.8.2 with (or through) whom such Bank enters into (or may
potentially enter into) any sub-participation in relation to,
or any other transaction under which payments are to be made by
reference to, this Agreement or any Obligor; or
27.8.3 to whom information may be required to be disclosed by any
applicable law,
such information about any Obligor or the Group and the Finance
Documents as such Bank shall consider appropriate and in the case of
sub-clause 27.8.1 and 27.8.2, subject to requiring and receiving a
confidentiality undertaking substantially in the form set out in
Schedule 8 (Form of Confidentiality Agreement).
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27.9 Partial Transfers/Assignments
Any assignment or transfer by a Bank of part of its Commitment or
Outstandings shall be in a minimum amount of (Pounds)10,000,000.
28. ECONOMIC AND MONETARY UNION
28.1 Alternative Currencies during Transition Period
On and from the date on which the United Kingdom becomes a Participating
Member State, if and to the extent that any EMU Legislation provides
that an amount denominated either in the euro or in sterling and payable
within that Participating Member State by crediting an account of the
creditor can be paid by the debtor either in the euro unit or in
sterling, the Borrower shall be entitled to pay or repay any such amount
payable hereunder either in the euro unit or in sterling.
28.2 Business Days
With effect on and from the date on which the United Kingdom becomes a
Participating Member State, the definition of Business Day in Clause 1.1
(Definitions) shall be amended by the addition thereto (at the end) of
the following:
"and if such reference relates to a date for the payment or
purchase of a sum denominated in the euro or in sterling, a
day (other than a Saturday or Sunday) on which (a) such
clearing or settlement system as is determined by the Agent to
be suitable for clearing or settlement of the euro is open for
business and (b) banks are generally open for business in
London.".
28.3 Rounding and Other Consequential Changes
With effect on and from the date on which the United Kingdom becomes a
Participating Member State:
28.3.1 without prejudice and in addition to any method of conversion
or rounding prescribed by any EMU Legislation, each reference
in this Agreement to a fixed amount or fixed amounts in a
national currency unit to be paid to or by the Agent shall be
replaced by a reference to such comparable and convenient fixed
amount or fixed amounts in the euro unit as the Agent may from
time to time specify; and
28.3.2 save as expressly provided in this Clause 28, the Finance
Documents shall be subject to such changes of construction or
interpretation as the Agent and the Security Trustee may from
time to time specify to be necessary to reflect the changeover
to the euro in the United Kingdom and to put the parties in the
same position, so far as possible, that they would have been in
if no change in currency had occurred.
29. CALCULATIONS AND EVIDENCE OF DEBT
29.1 Basis of Accrual
Interest and Letter of Credit Commission shall accrue from day to day
and shall be calculated on the basis of a year of 365 days (or in the
case of any such amounts denominated in dollars, 360 days) and the
actual number of days elapsed.
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29.2 Proportionate Reductions
Any collateralisation of Outstandings denominated in dollars shall
reduce the amount of such Outstandings by the amount of dollars
collateralised and shall reduce the Sterling Amount of such Outstandings
proportionately.
29.3 Evidence of Debt
Each Bank shall maintain in accordance with its usual practice accounts
evidencing the face amount of its participations in Letters of Credit
and the amounts from time to time owing to it hereunder.
29.4 Control Accounts
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (a) the amount of any Unpaid Sum and the face
amount of any Letter of Credit issued and each Bank's share therein, (b)
the amount of all fees, interest and other sums due or to become due
from an Obligor and each Bank's share therein and (c) the amount of any
sum received or recovered by the Agent hereunder and each Bank's share
therein.
29.5 Prima Facie Evidence
In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to
Clause 29.3 (Evidence of Debt) and Clause 29.4 (Control Accounts) shall
be prima facie evidence of the existence and amounts of the specified
obligations of the Obligors.
29.6 Certificates of Banks
A certificate of a Bank as to:
29.6.1 the amount by which a sum payable to it hereunder is to be
increased under Clause 10.1 (Tax Gross-up);
29.6.2 the amount for the time being required to indemnify it against
any such cost, payment or liability as is mentioned in Clause
10.2 (Tax Indemnity) or Clause 12.1 (Increased Costs); or
29.6.3 the amount of any credit, relief, remission or repayment as is
mentioned in Clause 11.3 (Tax Credit Payment) or Clause 11.4
(Tax Credit Clawback),
shall, in the absence of manifest error, be prima facie evidence of the
existence and amounts of the specified obligations of the Obligors.
29.7 Agent's Certificates
A certificate of the Agent as to the amount at any time due from the
Account Party hereunder or the amount which, but for any of the
obligations of the Account Party hereunder being or becoming void,
voidable, unenforceable or ineffective, at any time would have been due
from the Account Party hereunder shall, in the absence of manifest
error, be conclusive for the purposes of Clause 30 (Guarantee and
Indemnity).
29.8 Letters of Credit
A certificate of a Bank as to the amount paid out by such Bank in
respect of any Letter of Credit shall, save for manifest error, be prima
facie evidence of the payment of such amounts in any legal action or
proceedings arising in connection therewith.
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30. GUARANTEE and INDEMNITY
30.1 Guarantee and Indemnity
The Guarantor irrevocably and unconditionally:
30.1.1 guarantees to each Finance Party the due and punctual observance
and performance of all the terms, conditions and covenants on the
part of the Account Party contained in the Finance Documents and
agrees to pay from time to time on demand any and every sum or
sums of money which the Account Party is at any time liable to
pay to any Finance Party under or pursuant to the Finance
Documents and which has become due and payable but has not been
paid at the time such demand is made; and
30.1.2 agrees as a primary obligation to indemnify each Finance Party
from time to time on demand from and against any loss incurred by
any Finance Party as a result of any of the obligations of the
Account Party under or pursuant to the Finance Documents being or
becoming void, voidable, unenforceable or ineffective as against
the Account Party for any reason whatsoever, whether or not known
to any Finance Party or any other person, the amount of such loss
being the amount which the person or persons suffering it would
otherwise have been entitled to recover from the Account Party.
30.2 Additional Security
The obligations of the Guarantor herein contained shall be in addition to
and independent of every other security which any Finance Party may at any
time hold in respect of any of the Account Party's obligations under the
Finance Documents.
30.3 Continuing Obligations
The obligations of the Guarantor herein contained shall constitute and be
continuing obligations notwithstanding any settlement of account or other
matter or thing whatsoever and shall not be considered satisfied by any
intermediate payment or satisfaction of all or any of the obligations of
the Account Party under the Finance Documents and shall continue in full
force and effect until final payment in full of all amounts owing by the
Account Party under the Finance Documents and total satisfaction of all
the Account Party's actual and contingent obligations under the Finance
Documents.
30.4 Obligations not Discharged
Neither the obligations of the Guarantor herein contained nor the rights,
powers and remedies conferred in respect of the Guarantor upon any Finance
Party by the Finance Documents or by law shall be discharged, impaired or
otherwise affected by:
30.4.1 the winding-up, dissolution, administration or re-organisation of
the Account Party or any other person or any change in its
status, function, control or ownership;
30.4.2 any of the obligations of the Account Party or any other person
under the Finance Documents or under any other security taken in
respect of any of its obligations under the Finance Documents
being or becoming illegal, invalid, unenforceable or ineffective
in any respect;
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30.4.3 time or other indulgence being granted or agreed to be granted to
the Account Party in respect of its obligations under the Finance
Documents or under any such other security;
30.4.4 any amendment to, or any variation, waiver or release of, any
obligation of the Account Party under the Finance Documents or
under any such other security;
30.4.5 any failure to take, or fully to take, any security contemplated
hereby or otherwise agreed to be taken in respect of the Account
Party's obligations under the Finance Documents;
30.4.6 any failure to realise or fully to realise the value of, or any
release, discharge, exchange or substitution of, any security
taken in respect of the Account Party's obligations under the
Finance Documents; or
30.4.7 any other act, event or omission which, but for this Clause 30.4,
might operate to discharge, impair or otherwise affect any of the
obligations of the Guarantor herein contained or any of the
rights, powers or remedies conferred upon any of the Finance
Parties by the Finance Documents or by law.
30.5 Settlement Conditional
Any settlement or discharge between the Account Party and any of the
Finance Parties shall be conditional upon no security or payment to any
Finance Party by the Account Party or any other person on behalf of the
Account Party being avoided or reduced by virtue of any laws relating to
bankruptcy, insolvency, liquidation or similar laws of general application
and, if any such security or payment is so avoided or reduced, each
Finance Party shall be entitled to recover the value or amount of such
security or payment from the Account Party subsequently as if such
settlement or discharge had not occurred.
30.6 Exercise of Rights
No Finance Party shall be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of the Guarantor by the
Finance Documents or by law to:
30.6.1 make any demand of the Account Party;
30.6.2 take any action or obtain judgment in any court against the
Account Party;
30.6.3 make or file any claim or proof in a winding-up or dissolution of
the Account Party; or
30.6.4 enforce or seek to enforce any other security taken in respect of
any of the obligations of the Account Party under the Finance
Documents.
30.7 Deferral of Guarantor's Rights
The Guarantor agrees that, so long as any amounts are or may be owed by
the Account Party under the Finance Documents or the Account Party is
under any actual or contingent obligations under the Finance Documents, it
shall not exercise any rights which it may at any time have by reason of
performance by it of its obligations under the Finance Documents:
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30.7.1 to be indemnified by the Account Party; and/or
30.7.2 to claim any contribution from any other guarantor of the Account
Party's obligations under the Finance Documents; and/or
30.7.3 to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Finance Parties
under the Finance Documents or of any other security taken
pursuant to, or in connection with, the Finance Documents by all
or any of the Finance Parties.
30.8 Suspense Accounts
All moneys received, recovered or realised by a Bank by virtue of Clause
30.1 (Guarantee and Indemnity) may, in that Bank's discretion, be credited
to an interest bearing suspense or impersonal account and may be held in
such account for so long as such Bank thinks fit pending the application
from time to time (as such Bank may think fit) of such moneys in or
towards the payment and discharge of any amounts owing by the Account
Party to such Bank under the Finance Documents.
31. REMEDIES and WAIVERS, PARTIAL INVALIDITY
31.1 Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of any
Finance Party, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
prevent any further or other exercise thereof or the exercise of any other
right or remedy. The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by law.
31.2 Partial Invalidity
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions thereof nor the legality, validity or enforceability
of such provision under the law of any other jurisdiction shall in any way
be affected or impaired thereby.
32. NOTICES
32.1 Communications in writing
32.1.1 Any communication to be made under or in connection with the
Finance Documents shall be made in writing and, unless otherwise
stated, may be made by fax, letter or telex or (to the extent
that the relevant party hereto has specified such address
pursuant to Clause 32.2 (Addresses)) by e-mail.
32.1.2 The Agent may additionally (if the parties hereto agree and the
Account Party has specifically approved in writing), in the case
of any document to be forwarded by the Agent pursuant to this
Agreement where such document has been supplied to such Agent
pursuant to Clause 16.1 (Information), refer the relevant party
or parties hereto (by fax, letter, telex or (if so specified)
e-mail) to a web site considered by the Account Party as secure
and confidential and to the location of the relevant information
on such web site in discharge of such notification or delivery
obligation.
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32.2 Addresses
The address, fax number, e-mail address, telex number and, where
appropriate, web site (and the department or officer, if any, for whose
attention the communication is to be made) of each party hereto for any
communication or document to be made or delivered under or in connection
with the Finance Documents is:
32.2.1 in the case of an Obligor, that identified with its name below;
32.2.2 in the case of each Bank, that notified in writing to the Agent
on or prior to the date on which it becomes a party hereto; and
32.2.3 in the case of the Agent, that identified with its name below,
or any substitute address, fax number, e-mail address, telex number, web
site, department or officer as the party hereto may notify to the Agent
(or the Agent may notify to the other parties hereto, if a change is made
by the Agent or a web site carrying relevant information has been set up
by the Agent) by not less than five Business Days' notice.
32.3 Delivery
32.3.1 Any communication or document made or delivered by one person to
another under or in connection with the Finance Documents will
only be effective:
(a) if by way of fax, when received in legible form; or
(b) if by way of letter, when it has been left at the relevant
address or five Business Days after being deposited in the
post postage prepaid in an envelope addressed to it at that
address; or
(c) if by way of telex, when dispatched, but only if, at the
time of transmission, the correct answerback appears at the
start and at the end of the sender's copy of the notice; or
(d) if by way of e-mail, when sent in legible form, but only if,
following transmission, the sender does not receive a
non-delivery message; or
(e) where reference in such communication is to a web site, when
the delivery of the letter, fax, telex or, as the case may
be, e-mail referring the addressee to such web site is
effective,
and, if a particular department or officer is specified as part
of its address details provided under Clause 32.2 (Addresses), if
addressed to that department or officer.
32.3.2 Any communication or document to be made or delivered to the
Agent will be effective only when actually received by the Agent
and then only if it is expressly marked for the attention of the
department or officer identified with the Agent's signature below
(or any substitute department or officer as the agent shall
specify for this purpose).
32.3.3 All notices from or to any Obligor shall be sent through the
Agent.
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32.4 Notification of address, fax number and telex number Promptly upon receipt
of notification of an address, fax number, telex number or e-mail address
or change of such pursuant to Clause 32.2 (Addresses) or changing its own
address, fax number, telex number or e-mail address, the Agent shall
notify the other parties hereto.
32.5 English language
32.5.1 Any notice given under or in connection with any Finance Document
must be in English.
32.5.2 All other documents provided under or in connection with any
Finance Document must be:
(a) in English; or
(b) if not in English, accompanied by an English translation
thereof certified (by an officer of the person making or
delivering the same) as being a true and accurate
translation thereof.
32.6 Deemed receipt by the Obligors
Any communication or document made or delivered to the Account Party in
accordance with Clause 32.3 (Delivery) shall be deemed to have been made
or delivered to both Obligors.
33. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument.
34. AMENDMENTS
34.1 Amendments
The Agent, if it has the prior consent of the Majority Banks, and the
Obligors may from time to time agree in writing to amend this Agreement or
to waive, prospectively or retrospectively, any of the requirements of
this Agreement and any amendments or waivers so agreed shall be binding on
all the Finance Parties, provided that no such waiver or amendment shall
subject any Finance Party hereto to any new or additional obligations
without the consent of such Finance Party.
34.2 Amendments Requiring the Consent of all the Banks
An amendment or waiver which relates to:
34.2.1 Clause 4 (Extension of Letters of Credit), Clause 5 (Substitution
of Letters of Credit), Clause 6 (Increase of the Facility),
Clause 25 (Sharing) or this Clause 34;
34.2.2 a change in the currency or amount of any Letter of Credit;
34.2.3 a reduction in the Letter of Credit Commission, or the amount or
currency of any payment of interest, fees or any other amount
payable hereunder to any Finance Party or deferral of the date
for payment thereof;
-71-
34.2.4 a release of the Guarantor from any of its obligations set out in
Clause 30 (Guarantee and Indemnity);
34.2.5 Clause 16.7 (Adjusted Consolidated Debt to Total Capitalisation
Ratio) and Clause 16.8 (Consolidated Net Worth);
34.2.6 the definition of Majority Banks;
34.2.7 any provision which contemplates the need for the consent or
approval of all the Banks; or
34.2.8 the Security Documents (if any),
shall not be made without the prior consent of all the Banks.
34.3 Exceptions
Notwithstanding any other provisions hereof, the Agent shall not be
obliged to agree to any such amendment or waiver if the same would:
34.3.1 amend or waive this Clause 34, Clause 19 (Costs and Expenses) or
Clause 26 (The Agent, the Arrangers and the Banks); or
34.3.2 otherwise amend or waive any of the Agent's rights hereunder or
subject the Agent or the Arrangers to any additional obligations
hereunder.
35. GOVERNING LAW
This Agreement is governed by English law.
36. JURISDICTION
36.1 English Courts
Each of the parties hereto irrevocably agrees for the benefit of each of
the Agent, the Arrangers and the Banks that the courts of England shall
have jurisdiction to hear and determine any suit, action or proceeding,
and to settle any disputes, which may arise out of or in connection with
this Agreement and the other Finance Documents and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
36.2 Convenient Forum
The Obligors irrevocably waive any objection which either of them might
now or hereafter have to the courts referred to in Clause 36.1 being
nominated as the forum to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and agree not to claim that any such court
is not a convenient or appropriate forum.
36.3 Service of Process
Each Obligor agrees that the process by which any suit, action or
proceeding is begun may be served on it by being delivered in connection
with any suit, action or proceeding in England, to ACE UK Limited at
Crosby Court, 38 Bishopsgate, London EC2N 4AJ or its other principal place
of business for the time being.
-72-
36.4 Non-Exclusive Jurisdiction
The submission to the jurisdiction of the courts referred to in Clause
36.1 shall not (and shall not be construed so as to) limit the right of
the Agent, the Arrangers and the Banks or any of them to take proceedings
against the Account Party in any other court of competent jurisdiction nor
shall the taking of proceedings in any one or more jurisdictions preclude
the taking of proceedings in any other jurisdiction, whether concurrently
or not.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
-73-
SCHEDULE 1
The Banks
Bank Commitment(Pounds)
Citibank, N.A. 81,330,000.00
Barclays Bank PLC 81,330,000.00
ING Bank N.V., London Branch 74,850,000.00
Credit Lyonnais New York Branch 43,180,000.00
National Westminster Bank PLC 43,180,000.00
Lloyds TSB Bank plc 30,230,000.00
ABN AMRO Bank N.V., London Branch 25,900,000.00
------------------
Total 380,000,000.00
------------------
-74-
SCHEDULE 2
Form of Transfer Certificate
To: Citibank International plc
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Credit Agreement") originally dated 19 November 1999 whereby
following the First Restatement Agreement, the Amendment Agreement, the Second
Restatement Agreement and the Third Restatement Agreement a (Pounds)380,000,000
letter of credit facility was made available to ACE Limited by a group of banks
on whose behalf Citibank International plc acted as agent in connection
therewith.
1. Terms defined in the Credit Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee and
Portion Transferred are defined in the schedule hereto.
2. The Bank (a) confirms that the details in the schedule hereto under the
heading "Letters of Credit" accurately summarises its participation in the
Credit Agreement and the Term of any existing Letters of Credit and (b)
requests the Transferee to accept and procure the transfer by novation to
the Transferee of the Portion Transferred (specified in the schedule
hereto) of its Commitment and/or its participation in such Letters of
Credit by counter-signing and delivering this Transfer Certificate to the
Agent at its address for the service of notices specified in the Credit
Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the
purposes of Clause 27.5 (Transfers by Banks) of the Credit Agreement so as
to take effect in accordance with the terms thereof on the Transfer Date or
on such later date as may be determined in accordance with the terms
thereof.
4. The Transferee confirms that it has received a copy of the Credit Agreement
together with such other information as it has required in connection with
this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information
and further agrees that it has not relied and will not rely on the Bank to
assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the Obligors.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Credit Agreement that it will perform in accordance with
their terms all those obligations which by the terms of the Finance
Documents will be assumed by it after delivery of this Transfer Certificate
to the Agent and satisfaction of the conditions (if any) subject to which
this Transfer Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any document relating thereto
and assumes no responsibility for the
-75-
financial condition of the Obligors or for the performance and observance
by the Obligors of any of their respective obligations under the Finance
Documents or any document relating thereto and any and all such conditions
and warranties, whether express or implied by law or otherwise, are hereby
excluded.
7. The Bank hereby gives notice that nothing herein or in the Finance
Documents (or any document relating thereto) shall oblige the Bank to (a)
accept a re-transfer from the Transferee of the whole or any part of its
rights, benefits and/or obligations under the Finance Documents transferred
pursuant hereto or (b) support any losses directly or indirectly sustained
or incurred by the Transferee for any reason whatsoever including the
non-performance by an Obligor or any other party to the Finance Documents
(or any document relating thereto) of its obligations under any such
document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (a) or (b) above.
8. This Transfer Certificate and the rights, benefits and obligations of the
parties hereunder shall be governed by and construed in accordance with
English law.
THE SCHEDULE
9. Bank:
10. Transferee:
11. Transfer Date:
12. Bank's Commitment Portion Transferred
13. Letter(s) of Credit Term and Portion Transferred
Bank's L/C Participation Termination Date
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
________________________________________________________________________________
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address
Contact Name:
Account for Payments
in sterling:
Fax:
Telephone:
-76-
SCHEDULE 3
Conditions Precedent
1. In relation to each Obligor:
(i) confirmation by an Authorised Signatory of such Obligor that there
have been no changes to the constitutional documents of such Obligor
since 19 November 1999;
(ii) a copy, certified as at the date of the Second Restatement Agreement
a true and up-to-date copy by an Authorised Signatory of such
Obligor, of a board resolution of such Obligor approving the
execution, delivery and performance of the Second Restatement
Agreement, the Charge Agreement and the Notice of Charge and the
terms and conditions thereof and authorising a named person or
persons to sign the Second Restatement Agreement, the Charge
Agreement and Notice of Charge and any documents to be delivered by
such Obligor pursuant thereto;
(iii) a certificate of an Authorised Signatory of such Obligor setting out
the names and signatures of the persons authorised to sign, on
behalf of such Obligor, Second Restatement Agreement, the Charge
Agreement and the Notice of Charge and any documents to be delivered
by such Obligor pursuant thereto.
2. Opinion of Clifford Chance, solicitors to the Agent.
3. An opinion of Maples and Calder, Cayman Islands counsel to the Account
Party addressed to the Finance Parties.
4. An opinion of Conyers, Dill and Pearman, Bermudian counsel to the Account
Party addressed to the Finance Parties.
5. A copy, certified a true copy by an Authorised Signatory of the Account
Party, of the financial statements of the Account Party referred to in
sub-clauses 15.4.1 and 15.4.2 of Clause 15.4 (Financial Information).
6. Evidence satisfactory to the Agent that Lloyd's agrees to accept deeds of
substitution in respect of transfers by Banks.
7. Evidence satisfactory to the Agent that all Original Letters of Credit will
be cancelled by Lloyd's upon the issue of the Letters of Credit issued
hereunder on and after the Commencement Date.
8. Evidence that ACE UK Limited of Crosby Court, 38 Bishopsgate, London EC2N
4AJ has agreed to act as the agent of each Obligor for the service of
process in England in respect of the Amended Agreement.
-77-
SCHEDULE 4
Utilisation Request
From: ACE Limited
To: Citibank International plc
Dated:
Dear Sirs,
1. We refer to the (pound)380,000,000 letter of credit agreement originally
dated 19 November 1999 (as (a) amended and restated pursuant to the First
Restatement Agreement, (b) amended pursuant to the Amendment Agreement, (c)
amended and restated pursuant to the Second Restatement Agreement and (d)
amended and restated pursuant to the Third Restatement Agreement (the
"Credit Agreement")) and made between inter alia, ACE Limited as account
party, Citibank International plc as agent and the financial institutions
named therein as Banks. Terms defined in the Credit Agreement shall have
the same meaning in this notice. This notice is irrevocable.
2. We hereby give you notice that, pursuant to the Credit Agreement we wish
the Banks to issue the following Letters of Credit:
=========================================================================================================
Amount Effective Date Termination Date Beneficiary Applicant
- ---------------------------------------------------------------------------------------------------------
(Pounds)/US$/1/ 22 November 2001 30 September 2007 Society of Lloyd's
- ---------------------------------------------------------------------------------------------------------
(Pounds)/US$/1/ 22 November 2001 30 September 2007 Society of Lloyd's
- ---------------------------------------------------------------------------------------------------------
(Pounds)/US$/1/ 22 November 2001 30 September 2007 Society of Lloyd's
- ---------------------------------------------------------------------------------------------------------
(Pounds)/US$/1/ 22 November 2001 30 September 2007 Society of Lloyd's
- ---------------------------------------------------------------------------------------------------------
(Pounds)/US$/1/ 22 November 2001 30 September 2007 Society of Lloyd's
- ---------------------------------------------------------------------------------------------------------
(Pounds)/US$/1/ 22 November 2001 30 September 2007 Society of Lloyd's
- ---------------------------------------------------------------------------------------------------------
(Pounds)/US$/1/ 22 November 2001 30 September 2007 Society of Lloyd's
=========================================================================================================
3. Utilisation Date: [ ].
4. We confirm that, at the date hereof, the Representations are true in all
material respects and no Default is continuing, or would result from the
issue of such Letters of Credit.
The Letters of Credit should be issued in the form attached and delivered to the
recipient at [address of recipient]. The purpose of their issue is to support
Funds at Lloyd's in respect of the Applicants.
/1/ Delete where appropriate.
-78-
Yours faithfully
- -----------------
Authorised Signatory
for and on behalf of
ACE LIMITED
-79-
SCHEDULE 5
Form of Extension Request
From: ACE Limited
To: Citibank International plc
Dated:
Re: [Applicant 1]
[Applicant 2]
Dear Sirs
We refer to the (pound)380,000,000 letter of credit agreement originally dated
19 November 1999, (as (a) amended and restated pursuant to the First Restatement
Agreement, (b) amended pursuant to the Amendment Agreement, (c) amended and
restated pursuant to the Second Restated Agreement and (d) amended and restated
pursuant to the Third Restatement Agreement (the "Agreement")) between, inter
alia, ACE Limited (the "Account Party"), the financial institutions named
therein as Banks and Citibank International plc as Agent.
Terms defined in the Agreement shall have the same meanings in this Extension
Request.
1. Pursuant to Clause 4 (Extension of Letters of Credit) of the Agreement, the
Account Party, on behalf of [ ] (the "Applicant[s]"), hereby requests
that the Banks extend the Letter[s] of Credit in accordance with the
information annexed hereto as Annex A.
2. The Account Party hereby certifies that on the date hereof and on the date
of extension set forth in Annex A, in each case both before and after
giving effect to the extension requested hereby:
(i) no Event of Default or Potential Event of Default has occurred and
is continuing;
(ii) each of the representations and warranties of the Account Party
contained in the Agreement and each other Finance Document is
correct in all material respects on the date hereof, except
representations and warranties which expressly refer to an earlier
date in which case the same shall be true on and as of such earlier
date;
(iii) after giving effect to the extension requested hereby, the aggregate
Sterling Amount of the Outstandings will not exceed the Total
Commitments; and
(iv) the Letter[s] of Credit requested hereby [is/are] being extended
solely as security to support the underwriting business of the
Applicant[s] at Lloyd's which has been provided in accordance with
the requirements of Lloyd's applicable to [it/them].
-80-
IN WITNESS WHEREOF, the Account Party has caused this Certificate to be executed
by its duly authorised officer as of the date and year first written above.
ACE LIMITED
By:____________________
Name:__________________
Title:_________________
-81-
Annex A
Letter of Credit Information/2/
1. Name of Beneficiary:
________________________________
2. Letter of Credit Number:
________________________________
3. Maximum amount available under Letter of Credit: (Pounds)/US$____
4. New Termination Date: 30 September ____/3/
- --------------------------------------------------------------------------------
/2/ A Separate "Letter of Credit Information" should be completed for each
Letter of Credit covered by the Extension Request.
/3/ Insert immediately succeeding year in which the then-applicable current
Termination Date falls.
-82-
SCHEDULE 6
Form of Letter of Credit
Letter of Credit to be issued by the Agent on behalf of the Banks
To: The Society and Council of Lloyd's
c/o General Manager, Members' Financial Services
Gun Wharf
Dock Road
Chatham
Kent ME4 4TU
Dear Sirs
Irrevocable Standby Letter of Credit No. [ ]
Re: [name of Corporate Member of Lloyd's] (the "Applicant")
This Clean Irrevocable Standby Letter of Credit (the "Credit") is issued by the
banks whose names are set out in Appendix 1 hereto (the "Issuing Banks", and
each an "Issuing Bank") in favour of the Society of Lloyd's ("Lloyd's") on the
following terms:
1. Subject to the terms hereof, the Issuing Banks shall make payments within
two business days of demand on Citibank International plc (the "Agent") in
accordance with paragraph 4 below.
2. Upon a demand being made by Lloyd's pursuant to paragraph 4 below each
Issuing Bank shall pay that proportion of the amount demanded which is
equal to the proportion which its Commitment set out in Appendix 1 hereto
bears to the aggregate Commitments of all the Issuing Banks set out in
Appendix 1 hereto, provided that the obligations of the Issuing Banks under
this Credit shall be several and no Issuing Bank shall be required to pay
an amount exceeding its Commitment set out in Appendix 1 hereto and the
Issuing Banks shall not be obliged to make payments hereunder in aggregate
exceeding a maximum amount of [amount in approved currency]. Any payment by
an Issuing Bank hereunder shall be made in [approved currency] to Lloyd's
account specified in the demand made by Lloyd's pursuant to paragraph 4
below.
3. This Credit is effective from 22 November 2002 (the "Commencement Date")
and will expire on the Final Expiration Date. This Credit shall remain in
force until we give you not less than four years' notice in writing
terminating the same on the fourth anniversary of the Commencement Date or
on any date subsequent thereto as specified in such notice (the "Final
Expiration Date"), our notice to be sent by registered mail for the
attention of the General Manager, Members' Financial Services, at the above
address.
4. Subject to paragraph 3 above, the Issuing Banks shall pay to Lloyd's under
this Credit upon presentation of a demand by Lloyd's on Citibank
International plc at Citigroup Centre, Canada Square, Canary Wharf, London
E14 5LB marked for the attention of [Cliff Posner, Loans Agency] (and, in
copy, at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB
marked for the attention of Jon Pasquill, Global Cash and
-83-
Trade) in the form set out in Appendix 2 or Appendix 3 (as appropriate)
hereto the amount specified therein (which amount shall not, when
aggregated with all other amounts paid by the Issuing Banks to Lloyd's
under this Credit, exceed the maximum amount referred to in paragraph 2
above).
5. The Agent has signed this Credit as agent for disclosed principals and
accordingly shall be under no obligation to Lloyd's hereunder.
6. All charges are for the Applicant's account.
7. Subject to any contrary indication herein, this Credit is subject to the
International Standby Practices - ISP98 (1998 publication) - International
Chamber of Commerce Publication No. 590.
8. This Credit shall be governed by and interpreted in accordance with English
law and the Issuing Banks hereby irrevocably submit to the jurisdiction of
the High Court of Justice in England.
9. Each of the Issuing Banks engages with Lloyd's that demands made under and
in compliance with the terms and conditions of this Credit shall be duly
honoured on presentation.
Yours faithfully
CITIBANK INTERNATIONAL plc
for and on behalf of
[Names of all Issuing Banks]
-84-
APPENDIX 1
Issuing Banks' Commitments
- --------------------------------------------------------------------------------
Name and Address of Issuing Bank Commitment
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total value:
- --------------------------------------------------------------------------------
-85-
APPENDIX 2
Form of Demand (Sterling)
[on Lloyd's letterhead]
Dear Sir/Madam
THE SOCIETY OF LLOYD'S
TRUSTEE OF
LETTER OF CREDIT NO.
With reference to the above, we enclose for your attention a Bill of Exchange,
together with the respective Credit. Payment should be made by way of CHAPS. The
account details are as follows:-
National Westminster Bank Plc Sort Code 60-00-01
City of London Office Account 13637444
P.O. Box 12258
1 Princes Street
London EC2R 8AP
Please quote Member Code:
Yours faithfully
for Manager
Members' Funds Department
Members' Services Unit
-86-
Your ref:
Our ref: MEM/ / / /C911f
Extn:
BILL OF EXCHANGE
The Society of Lloyd's
Trustee of
Letter of Credit No.
Please pay in accordance with the terms of the Credit to our order the amount of
(Pounds) .
For and on behalf of
Authorised Signatory
Membership Department
TO: Citibank International plc
as Agent
-87-
APPENDIX 3
Form of Demand (Approved Currency)
[on Lloyd's letterhead]
Dear Sir/Madam
THE SOCIETY OF LLOYD'S
TRUSTEE OF
LETTER OF CREDIT NO.
With reference to the above, we enclose for your attention a Bill of Exchange,
together with the respective Credit. Payment should be made by way of SWIFT. The
account details are as follows:-
National Westminster Bank Plc Sort Code 60-00-01
City of London Office Account 13637444
P.O. Box 12258
1 Princes Street SWIFT Code NWBK GB21
London EC2R 8AP SWIFT Code Intermediary CHA SUS33
Please quote Member Code:
Yours faithfully
for Manager
Members' Funds Department
Members' Services Unit
-88-
Your ref:
Our ref: MEM/ / / /C911f
Extn:
BILL OF EXCHANGE
The Society of Lloyd's
Trustee of
Letter of Credit No.
Please pay in accordance with the terms of the Credit to our order the amount of
$ .
For and on behalf of
Authorised Signatory
Membership Department
TO: Citibank International plc
as Agent
-89-
SCHEDULE 7
Mandatory Liquid Asset Costs Rate
1. For the purposes of this Agreement, the cost of compliance with existing
requirements of the Bank of England and/or the Financial Services Authority
will be calculated by the Agent in relation to each Unpaid Sum on the basis
of rates supplied by the Agent (or such Bank(s) as it may from time to time
determine) by reference to the circumstances existing on the first day of
each Term in respect of such Unpaid Sum and, if any such Term of such
Unpaid Sum exceeds three months, at three calendar monthly intervals from
the first day of such Term during its duration in accordance with the
following formula:
(a) in relation to Unpaid Sums denominated in Sterling:
AB + C(B - D) + E x 0.01 per cent. per annum
------------------------
100 - (A + C)
(b) in relation to Unpaid Sums denominated in dollars:
E x 0.01 per cent. per annum
--------
300
Where:
A is the percentage of eligible liabilities (assuming these to be
in excess of any stated minimum) which the Agent (or such Bank as
it may determine) is from time to time required to maintain as an
interest free cash ratio deposit with the Bank of England to
comply with cash ratio requirements.
B is the percentage rate per annum at which sterling deposits are
offered by the Agent (or such Bank as it may determine) in
accordance with its normal practice, for a period equal to (a)
the relevant Term (or, as the case may be, remainder of such
Term) in respect of the relevant Unpaid Sum or (b) three months,
whichever is the shorter, to a leading bank in the London
Interbank Market as of 11.00 a.m. in a sum approximately equal to
the amount of such Unpaid Sum.
C is the percentage of eligible liabilities which the Agent (or
such Bank as it may determine) is required from time to time to
maintain as interest bearing special deposits with the Bank of
England.
D is the percentage rate per annum payable by the Bank of England
to the Agent (or such Bank as it may determine) on interest
bearing special deposits.
E is the rate payable by the Agent (or such Bank as it may
determine) to the Financial Services Authority pursuant to the
Fees Regulations (but, for this purpose, ignoring any minimum fee
required pursuant to the
-90-
Fees Regulations) and expressed in Pounds per (Pounds)1,000,000
of the Fee Base of the Agent (or such Bank as it may determine).
2. For the purposes of this Schedule:
(i) "eligible liabilities" and "special deposits" shall bear the meanings
ascribed to them from time to time under or pursuant to the Bank of
England Act 1998 or (as may be appropriate) by the Bank of England;
(ii) "Fee Regulations" means the Banking Supervision (Fees) Regulations
2001 or such other regulation as may be in force from time to time in
respect of the payment of fees for banking supervision; and
(iii) "Fee Base" shall bear the meaning ascribed to it, and shall be
calculated in accordance with, the Fees Regulations.
3. The percentages used in A and C above shall be those required to be
maintained on the first day of the relevant period as determined in
accordance with B above.
4. In application of the above formula, A, B, C and D will be included in the
formula as figures and not as percentages e.g. if A is 0.5 per cent. and B
is 12 per cent., AB will be calculated as 0.5 x 12 and not as 0.5 per cent.
x 12 per cent.
5. Calculations will be made on the basis of a 365 day year (or, if market
practice differs, in accordance with market practice).
6. A negative result obtained by subtracting D from B shall be taken as zero.
7. The resulting figures shall be rounded to four decimal places.
8. Additional amounts calculated in accordance with this Schedule are payable
on the last day of the Term to which they relate.
9. The determination of the Mandatory Liquid Asset Costs Rate by the Agent in
relation to any period shall, in the absence of manifest error, be
conclusive and binding on all of the parties hereto.
10. The Agent may from time to time, after consultation with the Account Party
and the Banks, determine and notify to all parties any amendments or
variations which are required to be made to the formula set out above in
order to comply with any requirements from time to time imposed by the Bank
of England or the Financial Services Authority in relation to any Unpaid
Sum and any such determination shall, in the absence of manifest error, be
conclusive and binding on all the parties hereto.
-91-
SCHEDULE 8
Form of Confidentiality Undertaking
[Letterhead of Transferor]
[Date]
To: [Transferee]
Dear Sirs,
ACE Limited - (Pounds)380,000,000 Letter of Credit Facility Agreement originally
dated 19 November 1999 (as (a) amended and restated pursuant to a First
Amendment Agreement dated 17 November 2000, (b) an Amendment Agreement dated 23
October 2001, (c) a Second Restatement Agreement dated 21 November 2001 and (d)
a Third Restatement Agreement dated 19 November 2002)
Confidentiality Agreement
In connection with your possible interest in becoming a bank in the
above-captioned facility (the "Transaction") for ACE Limited (the "Company"), we
will be providing you with information that is not in the public domain but that
is confidential or proprietary in nature. Such information and any other
information concerning the Company or the Transaction furnished to you by
[Transferor], or by or on behalf of the Company (whether before, on or after the
date of this Agreement), together with analyses, compilations or other materials
prepared by you or your directors, officers, employees or advisors
(collectively, "Representatives") which contain or otherwise reflect such
information, are hereinafter collectively referred to as the "Information". In
consideration of your receipt of the Information, you agree that:
1. Except as otherwise expressly provided herein, you will not (a) use the
Information except in connection with the Transaction or (b) disclose to
any person any terms or conditions of the Transaction or any portion of the
Information.
2. Notwithstanding the foregoing, you may disclose the Information: (a) to
your Representatives who need to know the Information for purposes of
evaluating the Transaction and who are informed by you of the confidential
nature of the Information and who agree to be bound by the terms of this
Agreement; (b) as may be required by applicable law or at the request of
any regulatory or supervisory authority having jurisdiction over you or at
the request of any rating agency for purposes of establishing or
maintaining your debt ratings, provided that you request confidential
treatment thereof to the extent permitted by law; or (c) with the prior
written consent of the Company and [Transferor].
3. The reference to the term "Information" contained in paragraphs 1 and 2
shall not include such portions thereof which (a) are or become available
to the public through no fault or action by you or your Representatives or
(b) are or hereafter become available to you on a non-confidential basis
from a source other than the Company, [Transferor] or their respective
Representatives, which source, to the best of your knowledge, is not
prohibited from disclosing such Information to you by a contractual, legal
or fiduciary obligation to the Company or [Transferor].
-92-
4. In the event that you or any of your Representatives becomes legally
compelled to disclose any of the Information or the existence of the
Transaction, you will, to the extent permitted by law provide the Company
and [Transferor] with prompt notice so that they may seek a protective
order or other appropriate remedy. In the event that such protective order
or remedy is not obtained, you shall furnish only that portion of the
Information that is legally required and shall disclose such Information in
a manner reasonably designed to preserve its confidential nature.
5. In the event that discussions with you concerning the Transaction are
discontinued or your participation in the Transaction is otherwise
terminated, you shall redeliver to [Transferor] any Information that was
furnished to you by or on behalf of the Company or the Transferor or shall
certify to the Company and [Transferor] that you have destroyed all such
Information.
6. You agree to be responsible for any breach of this Agreement by you or your
Representatives.
7. You acknowledge that money damages and other remedies at law may be
inadequate to protect against breach of this Agreement and you hereby agree
to the granting of injunctive or other equitable relief without proof of
actual damages.
8. It is further understood and agreed that no failure or delay by the Company
or [Transferor] in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof.
9. This Agreement shall be governed by and construed in accordance with the
laws of England and Wales.
If you are prepared to accept the Information on the foregoing terms, please
countersign this Agreement in the space provided below and deliver it via
telecopier (with the executed original to follow by next-day courier) to:
[Transferor]
[address]
Attention:
Telecopier:
Your acceptance of this Agreement shall be effective upon our receipt of such
fax from you.
Yours faithfully,
[TRANSFEROR]
-93-
By: [ ] [ACCEPTED AND AGREED]
Title: [ ] As at the date hereof
[Name of Transferee]
By: [ ]
Title: [ ]
-94-
SCHEDULE 9
Pricing Schedule
"L/C Commission Rate" means, for any date, the rates set forth below in the row
opposite such term and in the column corresponding to the Pricing Level that
applies at such date:
======================================================================================================
Level I Level II Level III Level IV Level V
- ------------------------------------------------------------------------------------------------------
L/C Commission Rate 0.55 per 0.60 per 0.65 per 0.675 per 0.70 per
cent. cent. cent. cent. cent.
======================================================================================================
For purposes of this Schedule 9, the following Pricing Levels have the following
meanings:
"Level I" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated AA- or higher by S&P.
"Level II" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated A+ by S&P.
"Level III" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated A by S&P.
"Level IV" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated A- by S&P.
"Level V" applies at any date if, at such date, the Guarantor's Financial
Strength Rating is rated BBB+ or less by S&P.
"Financial Strength Rating" means the financial strength rating of a company
determined by the method used by S&P.
"Pricing Level" refers to the determination of which of Level I, Level II, Level
III, Level IV or Level V applies at any date.
"S&P" means Standard & Poor's Rating Services (a division of The McGraw-Hill
Companies, Inc.).
The credit ratings to be utilised for the purposes of this Schedule 9 are those
ratings assigned to the Financial Strength Rating of the Guarantor. The rating
in effect at any date is that in effect at the close of business on such date.
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SCHEDULE 10
Existing Liens
1. Liens securing letters of credit issued by Citibank, N.A. for the account
of Cigna Europe in an aggregate stated amount not exceeding US$16,000,000
(subject to currency fluctuations).
2. Liens securing letters of credit issued by Citibank, N.A. for the account
of INA (UK) in an aggregate stated amount not exceeding US$8,000,000.
3. US$70,000,000 of Cigna Overseas Insurance Company investments are pledged
to Domestic Pool companies under a Regulation 114 trust.
4. Lien arising under a Subordination Agreement dated as of 27 October 1998
among ACE US Holdings, Inc., ACE Limited and The Chase Manhattan Bank
encumbering ACE US Holdings, Inc.'s rights under the Subordinated Loan
Agreement dated as of 27 October 1998 among ACE US Holdings, Inc., ACE
Bermuda Insurance Ltd. and United States Trust Company of New York, as
trustee under the Indenture dated 17 October 1998 of ACE US Holdings, Inc.
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SCHEDULE 11
Form of Charge Agreement
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Name of each Chargor and the address of its registered or principal office:
(1) ACE Limited
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton HM08
Bermuda
Facsimile no: +441 296 0087
(2) ACE Bermuda Insurance Ltd.
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton HM08
Bermuda
Facsimile no: +441 296 0087
((1) and (2) together the "Chargors" and each a "Chargor")
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Name of Custodian and address of its registered or principal office:
[ ]
Facsimile no: [ ] (the "Custodian")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date: [Date]
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To: CITIBANK INTERNATIONAL plc (the "Security Trustee")
336 Strand
London WC2R 1HB
The terms used in this Charge Agreement are defined in Clause 23
(Payments).
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It is a condition precedent to the obligations of the Banks under the
Agreement that the Chargors shall have granted the security interests and
undertaken the obligations contemplated by this Charge Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to issue Letters of Credit under the Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Chargor hereby agrees with the Security Trustee as
follows:
1. PAYMENT AND DISCHARGE
We shall pay and discharge in full all of the Obligations at the times and
in the manner provided for in the Agreements.
2. CHARGE
2.1 Each Chargor hereby pledges and assigns to the Security Trustee, and hereby
grants to the Security Trustee a security interest in, its portion of the
Charged Portfolio as collateral security for the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the United States Bankruptcy Code,
11 U.S.C. 362(a)), of all Obligations.
2.2 Notwithstanding any provision of the Agreement to the contrary, the
Security Trustee's entitlement and recourse against the Charged Portfolio
under this Charge Agreement shall not in any circumstances exceed an amount
equal to the Required Value.
2.3 Each Chargor shall deposit all of its portion of the Charged Portfolio in
the accounts comprising the Charged Portfolio and held with the Custodian.
3. CUSTODIAN'S UNDERTAKING
We undertake to deliver (or procure the delivery of) the Custodian's
Undertaking to you forthwith upon the execution of this Charge Agreement.
4. REQUIRED VALUE
We undertake to ensure that with effect from the date of this Charge
Agreement and at all times thereafter until the Obligations are discharged
in full:
4.1 the market value of the Charged Portfolio (including the accounts and
securities of both Chargors) shall not be less than the Required Value and
without limitation from time to time to pay or transfer to the Custodian
(by way of increment to the Charged Portfolio) money and/or securities so
that the market value of each Chargor's portion of the Charged Portfolio
(including the accounts and securities of both Chargors) shall not be less
than the Required Value; and
4.2 each component part of the Charged Portfolio shall satisfy the Security
Trustee's Requirements applicable thereto.
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5. FURTHER ASSURANCE
Each Chargor agrees that from time to time, at the expense of such Chargor,
such Chargor shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable,
or that the Security Trustee may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby
or to enable the Security Trustee or the Custodian to exercise and enforce
its rights and remedies hereunder or under the Custodian's Undertaking with
respect to any part of such Chargor's portion of the Charged Portfolio.
Without limiting the generality of the foregoing, each Chargor shall: (a)
execute and file such assignments, financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may
reasonably be necessary or desirable, or as the Security Trustee may
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, and (b) at the Security Trustee's request,
appear in and defend any action or proceeding that may affect such
Chargor's title to or the Security Trustee's security interest in all or
any part of such Chargor's portion of the Charged Portfolio.
6. REPRESENTATIONS AND WARRANTIES
Each Chargor hereby represents and warrants to you and undertakes that:
6.1 it is (or at the time of transfer thereof to the Custodian will be) the
beneficial owner of its portion of the Charged Portfolio from time to time
transferred by it to the Custodian, as agent for the Security Trustee, free
and clear of any lien other than Permitted Liens in accordance with the
undertaking contained in Clause 7 (Negative Pledge) hereof, except for the
security interest created by this Charge Agreement. The pledge and
assignment of the Charged Portfolio pursuant to this Charge Agreement and
the Custodian's Undertaking creates a valid security interest in its
portion of the Charged Portfolio securing the payment of the Obligations.
Assuming execution and due performance of the Custodian's Undertaking by
the Custodian, the security interest in the Charged Portfolio is or will be
perfected and senior in priority to any other lien therein;
6.2 subject to paragraph 11 of the Custodian's Undertaking, it has not sold or
agreed to sell or otherwise disposed of or agreed to dispose of the benefit
of its portion of the Charged Portfolio or any part thereof;
6.3 it has and will at all times have the necessary power to enable it to enter
into and perform the obligations expressed to be assumed by it under this
Charge Agreement;
6.4 this Charge Agreement constitutes its legal, valid, binding and enforceable
obligation (subject to bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditors' rights, the application
of equitable principles and the non-availability of the equitable remedies
of specific performance or injunctive relief) and is a security over its
portion of the Charged Portfolio and every part thereof effective in
accordance with its terms; and
6.5 all necessary authorisations to enable or entitle it to enter into this
Charge Agreement have been obtained and are in full force and effect and
will remain in full force and effect
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at all times during the subsistence of the security hereby constituted and
no authorisation, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for either
(a) the grant by it of the security interest granted hereby, (b) the
execution, delivery or performance of this Charge Agreement or the
Custodian's Undertaking by it, or (c) the perfection of or the exercise by
Security Trustee or the Custodian of its rights and remedies hereunder or
under the Custodian's Undertaking.
6.6 All information heretofore, herein or hereafter supplied to the Security
Trustee or the Custodian by or on behalf of it with respect to its portion
of the Charged Portfolio is accurate and complete in all material respects.
7. NEGATIVE PLEDGE
Each Chargor undertakes with you that at no time during the subsistence of
the security interest granted hereby will it, otherwise than:
7.1 in your favour, or
7.2 with your prior written consent and in accordance with and subject to any
conditions which you may attach to such consent,
create, grant, extend or permit to subsist any lien, security interest or
other encumbrance on or over its portion of the Charged Portfolio or any
part thereof, other than Permitted Liens. The foregoing prohibition shall
apply not only to any lien, security interest or other encumbrance which
rank or purport to rank in point of security in priority to the security
hereby constituted but also to any lien, security interest or other
encumbrance which rank or purport to rank pari passu therewith or
thereafter.
8. POWER OF SALE
8.1 Upon the occurrence of an Event of Default which is continuing and has not
been remedied or waived under the Agreement, the Security Trustee may
instruct the Custodian to (a) sell or redeem any of the Charged Portfolio,
(b) transfer any or all of the Charged Portfolio constituting cash to any
account designated by the Security Trustee, including an account or
accounts established in the Security Trustee's name (whether with the
Security Trustee or the Custodian or otherwise), (c) register title to all
or any portion of the Charged Portfolio in any name specified by the
Security Trustee, including the name of the Security Trustee or any of its
nominees or agents, without reference to any interest of the Chargors, or
(d) otherwise deal with the Charged Portfolio as directed by the Security
Trustee.
8.2 Upon the occurrence of an Event of Default which is continuing and has not
been remedied or waived under the Agreement, the Security Trustee may
exercise in respect of the Charged Portfolio, in addition to all other
rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "UCC")
(whether or not the UCC applies to the affected Charged Portfolio), and the
Security Trustee may also in its sole discretion sell the Charged Portfolio
or any part thereof in one or more parcels at public or private sale, at
any exchange or broker's board
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or at any of the Security Trustee's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as the Security Trustee may deem
commercially reasonable, irrespective of the impact of any such sales on
the market price of the Charged Portfolio. Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the
part of the Chargors, and each Chargor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay or appraisal
which it now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted. The Security Trustee
shall not be obligated to make any sale of Charged Portfolio regardless of
notice of sale having been given. The Security Trustee may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
8.3 Each Chargor hereby agrees that the property included in the Charged
Portfolio is of a type customarily sold on recognized markets and,
accordingly, that no notice to any person is required before any sale of
any of the Charged Portfolio pursuant to the terms of this Charge
Agreement; provided that, without prejudice to the foregoing, each Chargor
agrees that, to the extent notice of any such sale shall be required by
law, at least ten days' notice to it of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification.
8.4 If the proceeds of any sale or other disposition of the Charged Portfolio
are insufficient to pay all the Obligations, the Chargors shall be liable
for the deficiency and the fees of any attorneys employed by the Security
Trustee to collect such deficiency.
8.5 Anything contained herein to the contrary notwithstanding, any of the
Charged Portfolio consisting of a deposit or an other obligation of the
Security Trustee, whether credited to the Charged Portfolio or otherwise,
shall be subject to the Security Trustee's rights of set-off.
9. POWER OF ATTORNEY
9.1 Each Chargor hereby irrevocably appoints the Security Trustee as its
attorney-in-fact, with full authority in the place and stead of such
Chargor and in the name of such Chargor, the Security Trustee or otherwise,
from time to time in the Security Trustee's discretion upon the occurrence
of an Event of Default which is continuing and has not been remedied or
waived under the Agreement, to take any action and execute and deliver, any
instrument that the Security Trustee may reasonably deem necessary or
advisable to accomplish the purposes of this Charge Agreement or the
Custodian's Undertaking, including, without limitation, executing
instruments of transfer (or completing partially completed instruments
executed by us), assignments or notices, or exercising any of the rights
and powers from time to time attaching to any part of such Chargor's
portion of the Charged Portfolio. Each Chargor hereby undertakes to ratify
and confirm all things done and documents executed by the Security Trustee
in the exercise of the power of attorney conferred by this Clause.
9.2 If the Chargor fails to perform any agreement contained herein, the
Security Trustee may itself perform, or cause performance of, such
agreement, and the expenses of the Security
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Trustee incurred in connection therewith shall be payable by the Chargor
under Clause 14 (Exculpation, Costs, Charges and Expenses).
10. EFFECTIVENESS OF SECURITY
10.1 This Charge Agreement shall be in addition to and shall be independent of
every other security which you may at any time hold for any of the
Obligations. No prior security held by you over the whole or any part of
the Charged Portfolio shall merge in the security hereby constituted.
10.2 Nothing contained in this Charge Agreement is intended to, or shall
operate so as to, prejudice or affect any bill, note, guarantee, mortgage,
pledge, charge or other security of any kind whatsoever which you may have
for the Obligations or any of them or any right, remedy or privilege of
yours thereunder.
11. REMEDIES, TIME OR INDULGENCE
11.1 The rights, powers and remedies provided by this Charge Agreement are
cumulative and are not, nor are they to be construed as, exclusive of any
right of set-off or other rights, powers and remedies provided by law.
11.2 No failure on your part to exercise, or delay on your part in exercising,
any of the rights, powers and remedies provided by this Charge Agreement
or by law (each a "Security Trustee Right") shall operate as a waiver
thereof, nor shall any single or partial waiver of a Security Trustee
Right preclude any further or other exercise of that Security Trustee
Right or the exercise of any other Security Trustee Right.
11.3 You may in your discretion grant time or other indulgence or make any
other arrangement, variation or release with any person(s) not party
hereto (irrespective of whether such person(s) is/are jointly liable with
us) in respect of the Obligations or in any way affecting or concerning
them or any of them or in respect of any security for the Obligations or
any of them, without in any such case prejudicing, affecting or impairing
the security hereby constituted, or any Security Trustee Right or the
exercise of the same, or any indebtedness or other liability owed by
either of us to you.
12. ACCOUNTS
All monies received, recovered or realised by you under this Charge
Agreement (including the proceeds of any conversion of currency) may in
your discretion be credited to any suspense or impersonal account and may
be held in such account for so long as you shall think fit (with interest
accruing thereon at such rate, if any, as you may deem fit) pending their
application from time to time (as you shall be entitled to do in your
discretion) in or towards the discharge of any of the Obligations.
13. CURRENCY
13.1 For the purpose of or pending the discharge of any of the Obligations you
may convert any monies received, recovered or realised or subject to
application by you under this Charge Agreement (including the proceeds of
any previous conversion under this Clause) from their existing currency of
denomination into the currency of denomination
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of such Obligations as you may think fit, and any such conversion shall be
effected at your then prevailing spot rate of exchange for obtaining such
other currency with the existing currency.
13.2 References herein to any currency extend to any funds of that currency and
for the avoidance of doubt funds of one currency may be converted into
different funds of the same currency.
14. EXCULPATION, COSTS, CHARGES AND EXPENSES
14.1 The powers conferred on the Security Trustee hereunder are solely to
protect its interest in the Charged Portfolio and shall not impose any
duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any portion of the Charged Portfolio in
its possession and the accounting for moneys actually received by it
hereunder, the Security Trustee shall have no duty as to any Charged
Portfolio, it being understood that the Security Trustee shall have no
responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters
relating to any Charged Portfolio, whether or not the Security Trustee has
or is deemed to have knowledge of such matters, (b) taking any necessary
steps (other than steps taken in accordance with the standard of care set
forth above to maintain possession of the Charged Portfolio) to preserve
rights against any parties with respect to any Charged Portfolio, (c)
taking any necessary steps to collect or realise upon the Obligations or
any guarantee therefor, or any part thereof, or any of the Charged
Portfolio, (d) initiating any action to protect the Charged Portfolio
against the possibility of a decline in market value, (e) any loss
resulting from investments made, held or sold, or (f) determining (i) the
correctness of any statement or calculation made by a Chargor in any
written instructions or (ii) whether any transfer to or from the Charged
Portfolio is proper. The Security Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of Charged
Portfolio in its possession if such Charged Portfolio is accorded
treatment substantially equal to that which the Security Trustee accords
its own property of like kind. In addition to the foregoing and without
limiting the generality thereof, the Security Trustee shall not be
responsible for any actions or omissions of Custodian.
14.2 Each Chargor agrees to indemnify the Security Trustee from and against any
and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Charge Agreement and the transactions
contemplated hereby (including enforcement of this Charge Agreement),
except to the extent such claims, losses or liabilities result from the
Security Trustee's gross negligence or wilful misconduct as finally
determined by a court of competent jurisdiction.
14.3 Each Chargor shall pay to the Security Trustee upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, that the Securities Trustee
may incur in connection with (a) the administration of this Charge
Agreement, (b) the custody, preservation, use or operation of, or the sale
of, collection from, or other realisation upon, any of the Charged
Portfolio, (c) the exercise or enforcement of any of the rights of the
Security Trustee hereunder, or (d) the failure by a Chargor to perform or
observe any of the provisions hereof on a full
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indemnity basis together with interest from the date of the same having
been incurred (or from the date of demand if such demand is made after
unreasonable delay) to the date of payment at such rate or rates as you
may determine in relation to the currency involved.
15. CONTINUING SECURITY INTEREST
This Charge Agreement shall create a continuing security interest in the
Charged Portfolio and shall (a) remain in full force and effect until the
indefeasible payment in full of the Obligations and the cancellation or
expiration of all outstanding Letters of Credit, (b) be binding upon each
Chargor, its successors and assigns, and (c) inure, together with the
rights and remedies of the Security Trustee hereunder, to the benefit of
Security Trustee and the Banks and their respective successors,
transferees and assigns. Upon the indefeasible payment in full of all
Obligations and the cancellation or expiration of all outstanding Letters
of Credit, the security interest granted hereby shall terminate and all
rights to the Charged Portfolio shall revert to the respective Chargor so
long as the Custodian's fees, expenses, and advancements have first been
paid or reimbursed in full. Upon any such termination the Security Trustee
shall, at the Chargors' expense, execute and deliver to the Chargors such
documents as the Chargors shall reasonably request to evidence such
termination and each Chargor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to the
Security Trustee, of such of its Charged Portfolio as shall not have been
sold or otherwise applied pursuant to the terms hereof.
16. AMENDMENTS
No amendment or waiver of any provision of this Charge Agreement, or
consent to any departure by a Chargor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Security
Trustee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
17. LAW AND JURISDICTION
17.1 THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC
PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
17.2 ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE CHARGORS ARISING OUT OF OR
RELATING TO THIS CHARGE AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS CHARGE AGREEMENT EACH CHARGOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE
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OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS CHARGE AGREEMENT. Each Chargor
hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to such Chargor at its address as provided pursuant to Clause
19 (Notices), such service being hereby acknowledged by each Chargor to be
sufficient for personal jurisdiction in any action against such Chargor in
any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of the Security
Trustee to bring proceedings against a Chargor in the courts of any other
jurisdiction.
17.3 EACH CHARGOR AND THE SECURITY TRUSTEE HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS CHARGE AGREEMENT OR THE CUSTODIAN'S
UNDERTAKING. The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to
the subject matter of this transaction, including contract claims, tort
claims, breach of duty claims, and all other common law and statutory
claims. Each Chargor and the Security Trustee acknowledge that this waiver
is a material inducement for such Chargor and the Security Trustee to
enter into a business relationship, that each Chargor and the Security
Trustee have already relied on this waiver in entering into this Charge
Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Chargor and the Security Trustee further
warrant and represents that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS CHARGE AGREEMENT OR THE
CUSTODIAN'S UNDERTAKING. In the event of litigation, this Charge Agreement
may be filed as a written consent to a trial by the court.
18. PROVISIONS SEVERABLE
Each of the provisions contained in this Charge Agreement shall be
severable and distinct from one another and if at any time any one or more
of such provisions is or becomes invalid, illegal or unenforceable, the
validity, legality and enforceability of each of the remaining provisions
of this Charge Agreement shall not in any way be affected, prejudiced or
impaired thereby.
19. NOTICES
All notices, requests and demands to or upon the Security Trustee or
either Chargor hereunder shall be effected in the manner provided for in
Clause 31 (Remedies and Waivers, Partial Invalidity) of the Agreement.
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20. THE SECURITY TRUSTEE'S DISCRETIONS
Any liberty or power which may be exercised or any determination which may
be made hereunder by you may be exercised or made in your absolute and
unfettered discretion and you shall not be under any obligation to give
reasons therefor, provided that the Security Trustee will so act in good
faith and in accordance with Clause 26 (The Agent, The Arrangers and The
Banks) of the Agreement).
21. ASSIGNMENT
You shall have a full and unfettered right to assign the whole or any part
of the benefit of this Charge Agreement to any Person who is appointed as
your successor pursuant to Clause 25 (The Agent, The Arrangers and The
Banks) of the Agreement and the words "you" and "your" and the expression
"the Security Trustee" wherever used herein shall be deemed to include
your assignees and other successors, whether immediate or derivative, who
shall be entitled to enforce and proceed upon this Charge Agreement in the
same manner as if named herein. You shall be entitled to impart any
information concerning us to any such assignee or other successor or any
participant or proposed assignee, successor or participant subject to such
person executing and delivering a confidentiality undertaking
substantially in the form set out in Schedule 8 (Form of Confidentiality
Undertaking) of the Agreement.
22. COUNTERPARTS
This Charge Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are
physically attached to the same document.
23. INTERPRETATION
23.1 Terms not otherwise defined herein shall bear the meaning ascribed to them
in the Agreement.
In this Charge Agreement:
"Agreement" means the (Pounds)380,000,000 letter of credit facility
agreement originally dated 19 November 1999 (as (a) amended and restated
pursuant to the First Restatement Agreement, (b) amended pursuant to the
Amendment Agreement and (c) amended and restated pursuant to the Second
Restatement Agreement) and made between ACE Limited as account party, ACE
Bermuda Insurance Ltd. as guarantor, Citibank, N.A. as lead arranger,
Barclays Bank PLC as arranger, ING Bank, N.V., London Branch as
co-arranger, Citibank International plc as agent and security trustee and
the financial institutions defined therein as banks;
"Charged Portfolio" means at any time all of each Chargor's right, title
and interest in any and all assets (to include without limitation any and
all securities) now or hereafter carried in or credited to or held for the
benefit of:
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(a) the account (designated, at the date hereof, with account number [ ])
maintained by the Custodian in the name of ACE Limited; and
(b) the account (designated, at the date hereof, with account number [ ])
maintained by the Custodian in the name of ACE Bermuda Insurance Ltd.
"Custodian" means the above-mentioned Custodian or such other person as the
Chargors and the Security Trustee may agree to in writing from time to
time;
"Custodian's Undertaking" means an undertaking in the form set out in the
Second Schedule duly executed by the Custodian as the same may be amended
or substituted with the prior written consent of the Security Trustee from
time to time;
"Obligations" means any and all of the present or future, actual or
contingent, obligations of the Chargors to the Finance Parties hereunder or
under the Agreement;
"Permitted Lien" means any Lien described in clause (a) of the definition
of "Permitted Lien" in the Agreement or in sub-clause 15.9.16 of clause
15.9 (Lien) of the Agreement;
"Required Value" means US$100 or, if Pricing Level V applies, such other
amount as is determined in accordance with the Agreement and notified from
time to time by the Security Trustee to the Custodian; and
"Security Trustee's Requirements" means the Security Trustee's requirements
in respect of the component parts of the Charged Portfolio all as set forth
in Part B of the Schedule to the Custodian's Undertaking or as may be
agreed from time to time by the Security Trustee and ACE Limited on behalf
of the Chargors and notified to the Custodian (provided that the Security
Trustee's Requirements may be adjusted by the Security Trustee without the
agreement of the Chargors (but after consultation in good faith with ACE
Limited on behalf of the Chargors) where an adjustment is necessary to
ensure that the Banks continue to receive the same regulatory treatment in
respect of their Outstandings as they receive at the date hereof and
Provided further that, in the event that the "financial strength rating" of
either or both of the Chargors as determined by Standard and Poor's Rating
Services reaches BBB+ or less, the Security Trustee's Requirements shall be
amended without the prior agreement of the Chargors by the additional
requirement that any fixed income securities comprising the Charged
Portfolio issued by or fully and explicitly guaranteed by the central
government of an OECD (Organisation for Economic Co-operation and
Development) country shall only satisfy the Security Trustee's Requirements
if such country is rated AA or better by Standard and Poor's Rating
Services or AA equivalent or better by any other recognised rating
service).
23.2 Any reference in this Charge Agreement to:-
a "business day" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks are generally open for business in
London, Bermuda, and the jurisdiction in which the Custodian's principal or
head office is located;
a "clearance system" means Clearstream, the Euro-Clear System, the First
Chicago Clearing Centre, The Depository Trust Company and such other
clearance system as may
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from time to time be used in connection with transactions relating to any
securities, and any depository for any of the foregoing;
a "Clause" is, unless otherwise stated, a reference to a Clause hereof;
a "person" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or
more of the foregoing;
a "Schedule" is, unless otherwise stated, a reference to a schedule hereto;
and
"securities" shall be construed as a reference to bonds, debentures, notes,
stocks, shares or other securities and all moneys, rights or property which
may at any time accrue or be offered (whether by way of bonus, redemption,
preference, option or otherwise) in respect of any of the foregoing (and
without limitation, shall include any of the foregoing not constituted,
evidenced or represented by a certificate or other document but by an entry
in the books or other permanent records of the issuer, a trustee or other
fiduciary thereof, or a clearance system).
23.3 The obligations of the Chargors hereunder shall be joint and several.
23.4 Any reference in this Charge Agreement to another agreement, arrangement or
undertaking shall be construed as a reference to such other agreement,
arrangement or undertaking as the same may have been, or may from time to
time be, amended, varied, novated or supplemented.
23.5 Clause and Schedule headings are for ease of reference only.
The COMMON or CORPORATE SEAL of
ACE LIMITED was hereto affixed
to this DEED in the presence of:
Director
Secretary/Director
THE COMMON or CORPORATE SEAL of
ACE BERMUDA INSURANCE LTD was hereto affixed
to this DEED in the presence of:
Director
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Secretary/Director
ACKNOWLEDGED AND AGREED:
CITIBANK INTERNATIONAL PLC
As Security Trustee
By:
Title:
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THE FIRST SCHEDULE
NOTICE OF CHARGE OF CHARGED PORTFOLIO
To: [ ]
* _____________________________
(*Contact name at the Custodian)
We refer to (i) the Charge Agreement (the "Charge Agreement") dated [ ]
entered into by us in favour of Citibank International plc of 336 Strand, London
WC2R 1HB (the "Security Trustee"), a copy of which is annexed hereto and (ii)
the Custodian's Undertaking in the form of the Second Schedule to the Charge
Agreement. Terms defined in the Charge Agreement shall have the same meanings
herein.
Notice is hereby given by us to you that, by and pursuant to the Charge
Agreement, we have charged in favour of the Security Trustee all of the Charged
Portfolio.
We hereby:
(a) confirm that references to the "Charged Portfolio" are to all the
securities and proceeds received from time to time in respect of such
securities, which are credited to (i) the account (designated with account
number [_]) in the name of ACE Limited and (ii) the account (designated
with account number [_]) in the name of ACE Bermuda Insurance Ltd.,
maintained by you in accordance with the terms of our custodian arrangement
with you;
(b) request that you execute the attached Custodian's Undertaking in favour of
the Security Trustee and comply with any entitlement orders and
instructions, received by you from the Security Trustee, to deliver,
transfer or assign the securities and monies (together with all
certificates and other instruments evidencing title thereto) in the Charged
Portfolio [and any entitlement orders or other instructions that you
receive from the Security Trustee with respect to the Charged Portfolio
shall constitute "Proper Instructions" for the purposes of the Custodian
Agreement between us]*;
(c) confirm that you shall not be liable to us for any action taken or
omitted to be taken by you in connection with the Custodian's
Undertaking save in the case of wilful misconduct or gross negligence
(and, to the maximum extent permitted by law, shall under no
circumstances be liable for indirect, special, punitive or
consequential damages);
(d) indemnify you against any liabilities, costs, claims and expenses
(including reasonable legal fees (whether incurred with external or
internal legal advisors)) arising from or in connection with the
Custodian's Undertaking or the Charged Portfolio, provided that
nothing contained herein shall require that you be indemnified for
your wilful misconduct or gross negligence;
[(e)/(f)] [notwithstanding the terms of Section IX of the Custodian Agreement
dated June 7, 2001, you shall be entitled to debit any of our accounts
maintained by you, other than the account (designated with account
number []) in the name of ACE Limited and the account (designated with
account number [ ]) in the name of ACE Bermuda Insurance Ltd.
(hereinafter the "Charged Accounts") if we require you, your
affiliates, subsidiaries or agents to advance cash or investments to,
for or on behalf of the Charged Portfolio, for any purpose (including
but not limited to securities settlements, foreign exchange contracts
and assumed settlement) or in the event that you, your subcustodians
or their respective nominees shall incur or be assessed any taxes
(except your income taxes or those of any of your subcustodians),
charges, expenses, assessment, claims or liabilities in connection
with the performance of the Custodian's Undertaking except as may
arise from your or your subcustodians' or their respective nominees'
own gross negligent action, gross negligent failure to act or wilful
misconduct. Any of our property at any time held by you (other than
the Charged Portfolio) shall be security therefore and should we fail
to repay you promptly, upon ten (10) days' written notice to us, you
(save as otherwise provided above) shall be entitled to utilise
available cash in any of our accounts (other than the Charged
Accounts) maintained by you and to dispose of assets of any of our
accounts (other than the Charged Accounts) maintained by you to the
extent necessary to obtain reimbursement.]*
[(f)/(g)] confirm that (except as may raise from your own gross negligence, bad
faith, or wilful misconduct or the gross negligence, bad faith, or
wilful misconduct of a subcustodian or agent) you shall be without
liability to us for any loss, liability, claim or expense resulting
from or caused by events or circumstances beyond your reasonable
control, including, without limitation, the interruption, suspension
or restriction of trading on or the closure of any securities markets,
power or other mechanical or technological failures or interruptions
not within your reasonable control, or computer viruses or
communications disruptions, work stoppages, natural disasters, or
other similar events or acts.
This notice shall be governed by and construed in accordance with the laws of
the State of New York.
Yours faithfully,
________________________________________________________________________________
* To be inserted if State Bank and Trust Company are appointed Custodian.
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For and on behalf of
ACE Limited
_____________________________ Dated _______________________
For and on behalf of
ACE Bermuda Insurance Ltd. Dated _______________________
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THE SECOND SCHEDULE
Custodian's Undertaking
- --------------------------------------------------------------------------------
Name of Custodian and address of its registered or principal office:
[ ]
Attn: [ ]
Facsimile no: [ ] (the "Custodian")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name of each Chargor and the address of its registered or principal office:
ACE Limited
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton HM08
Bermuda
Facsimile no: +441 296 0087
ACE Bermuda Insurance Ltd.
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton HM08
Bermuda
Facsimile no: +441 296 0087
((1) and (2) together the "Chargors" and each a "Chargor" )
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name of Security Trustee and address of its registered or principal office:
Citibank International plc
336 Strand
London WC2R 1HB
Attn: Loans Agency
Facsimile no: +44 20 7500 4482 (the "Security Trustee")
- --------------------------------------------------------------------------------
Date of Charge Agreement: [Date]
- --------------------------------------------------------------------------------
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To: the Security Trustee
We, the Custodian, refer to the afore-mentioned Charge Agreement (the "Charge
Agreement") between the Chargors and the Security Trustee. Save where the
context otherwise requires, terms defined in the Charge Agreement shall have the
same meanings herein.
In consideration of the Security Trustee and the other Finance Parties entering
into the Agreement and issuing Letters of Credit thereunder and pursuant to
instructions received by the Custodian from the Chargors, the Custodian hereby
represents and irrevocably undertakes and agrees to and with the Security
Trustee as follows:
1. The Custodian acknowledges the security interest granted by each Chargor in
favor of Security Trustee in the Charged Portfolio.
2. Anything contained herein to the contrary notwithstanding, the Custodian
will, without further consent by any Chargor (a) comply with Entitlement
Orders originated by the Security Trustee with respect to the Charged
Portfolio and any Security Entitlements carried therein, (b) transfer, sell
or redeem any of the Charged Portfolio as directed by the Security Trustee,
(c) transfer any or all of the Charged Portfolio to any account or accounts
designated by the Security Trustee, including an account established in the
Security Trustee's name (whether at the Security Trustee or the Custodian
or otherwise), (d) register title to any of the Charged Portfolio in any
name specified by the Security Trustee, including the name of the Security
Trustee or any of its nominees or agents, without reference to any interest
of either Chargor, or (e) otherwise deal with the Charged Portfolio as
directed by the Security Trustee.
3. The Custodian hereby further acknowledges that it holds the Charged
Portfolio, all Security Entitlements carried therein, and all other
collateral held by the Custodian under this Custodian's Undertaking or the
Charge Agreement, as custodian for the benefit of, and subject to the
control of, the Security Trustee. The Custodian shall, by book entry or
otherwise, indicate that the Charged Portfolio, and all Security
Entitlements carried therein, are subject to the control of the Security
Trustee as provided in Section 2.
4. The Custodian hereby represents and warrants (a) that the records of
Custodian show that each Chargor is the sole owner of such Chargor's
portion of the Charged Portfolio, (b) that the Custodian has not been
served with any notice of levy or received any notice of any security
interest in or other claim to the Charged Portfolio, or any portion of the
Charged Portfolio, other than Security Trustee's claim pursuant to the
Charge Agreement, (c) that the Custodian is not presently obliged to accept
any entitlement order from any person with respect to the Charged
Portfolio, except for entitlement orders that the Custodian is obligated to
accept from the Security Trustee under this undertaking and entitlement
orders that the Custodian, subject to the provisions of Section 10 below,
is obligated to accept from the Chargors, (d) that the Custodian has all
necessary corporate power and authority to enter into and perform this
undertaking, (e) that the execution, delivery and performance of this
undertaking by the Custodian have been duly authorized by all necessary
corporate action on the part of the Custodian, (f) that the Custodian is a
"securities intermediary" (as that term is defined in Section 8-102(a)(14)
of the Uniform Commercial Code as in effect in the state of New York (the
"Code")) and is acting in such capacity with respect to the Charged
Portfolio and (g) that the Custodian
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is not a "clearing corporation" (as that term is defined in Section
8-102(a)(5) of the Code).
5. Without the prior written consent of the Security Trustee, the Custodian
will not enter into any agreement by which the Custodian agrees to comply
with any entitlement order of any person other than the Security Trustee
or, subject to the provisions of Section 10 below, the Chargors, with
respect to any portion or all of the Charged Portfolio. The Custodian (a)
shall promptly notify the Security Trustee if any person requests the
Custodian to enter into any such agreement or otherwise assert or seeks to
assert a lien, encumbrance or adverse claim against any portion or all of
the Charged Portfolio and (b) will not acknowledge any limitation on the
right of Security Trustee to originate "entitlement orders" (as such term
is defined in Section 8-102(8) of the Code, "Entitlement Orders") with
respect to or direct the transfer of the Charged Portfolio or any portion
thereof.
6. The Custodian hereby agrees that: (a) each account comprising the Charged
Portfolio established by the Custodian (each, a "Charged Account") is and
will be maintained as a "securities account" (within the meaning of Section
8-501 of the Code); (b) any credit balances or other property, other than
cash, credited to, or held for the credit of, any such Charged Account
shall be treated as "financial assets" (within the meaning of Section
8-102(a)(9) of the Code, "Financial Assets") and (c) each Chargor is an
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the
Code) in respect of the Financial Assets credited to such Charged Account
and with respect to such Charged Account and Custodian shall so note in its
records pertaining to such Financial Assets and each Charged Account; and
(d) all Financial Assets in registered form or payable to or to the order
of and credited to any such Charged Account shall be registered in the name
of, payable to or to the order of, or specially endorsed to, the Custodian
or in blank, or credited to another securities account maintained in the
name of the Custodian, and in no case will any Financial Asset credited to
any such Charged Account be registered in the name of, payable to or to the
order of, or endorsed to, either Chargor except to the extent the foregoing
have been subsequently endorsed by such Chargor to the Custodian or in
blank.
7. The Custodian will deliver to the Security Trustee within three business
days of the Security Trustee's request therefor an up-to-date statement or
statements of the Charged Portfolio, each component thereof and the
aggregate value thereof.
8. The Custodian will in any event deliver to the Security Trustee not later
than the tenth business day of each calendar month a statement or
statements, made up as at the close of business on the last business day of
the preceding calendar month, of the Charged Portfolio, each component
thereof and the aggregate value thereof.
9. If trades of, or any transactions relating to, a component part of the
Charged Portfolio are processed by the Custodian on any Business Day, the
Custodian shall notify the Security Trustee as soon as possible (and in any
event within three Business Days of such day) of the trades and
transactions processed.
10. The Custodian acknowledges that the Security Trustee has the right, by
delivery of written notice (a "Prohibition Notice") to the Custodian, to
prohibit each Chargor from
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effecting any withdrawals, sales, trades, transfers or exchanges of any of
the Charged Portfolio and the Custodian agrees that upon delivery of a
Prohibition Notice, the Custodian will cease to honor instructions from
either of the Chargors with respect to the Charged Portfolio and will
comply with any and all written instructions delivered by the Security
Trustee to the Custodian and has no obligation to and will not, investigate
the reason for any action taken by the Security Trustee, the amount of any
obligations of any Chargor to the Security Trustee, the validity of any of
the Security Trustee's claims against or agreements with either Chargor,
the existence of any defaults under such agreements, or any other matter.
11. The Custodian acknowledges that, unless it receives written instructions
from the Security Trustee to the contrary, it shall be entitled to process
trades as it may be directed to do so under the terms of its custodial
agreement with the [Chargors/each Chargor respectively] only to the extent
such trades comprise a disposal to a third party in the market of a
component part of the Charged Portfolio and the substitution therefor with
the proceeds of such disposition or other securities, save that transfers
can be made (a) to the Security Trustee in accordance with the terms of
this undertaking or (b) to any person with the Security Trustee's prior
written consent or (c) in respect of any part of the Charged Portfolio
representing an excess over the Required Value, to the relevant Chargor or
as it may direct, which excess will be determined by the Security Trustee
and specified in written notice from the Security Trustee to the Custodian
on the date of the request from the Chargors.
12. After delivery of a Prohibition Notice, the Custodian shall deliver,
transfer or assign to the Security Trustee on the Security Trustee's first
written demand securities and monies in the Charged Portfolio as directed
by the Security Trustee and all certificates and other instruments
evidencing title thereto or necessary or desirable in order for the
Security Trustee to acquire good and marketable title thereto. The Security
Trustee shall indicate the identity of the securities and monies it wishes
to receive and the Custodian shall have no discretion in this matter and
shall be fully protected in relying upon any direction received from the
Security Trustee.
13. The Custodian agrees that it will not attempt to assert control, and does
not claim and will not accept any security or other interest in any part of
the Charged Portfolio, and will not exercise, enforce or attempt to enforce
any claim, right of set-off, banker's lien, clearing lien, counterclaim or
similar right against the Charged Portfolio or any portion thereof, or
otherwise charge or deduct from the Charged Portfolio any amount
whatsoever, except as provided below. All rights and interests of the
Custodian in or towards the Charged Portfolio or any part thereof are and
shall be subordinated and postponed to the Security Trustee's rights and
interests therein under and pursuant to the Charge Agreement, save that the
Custodian shall be entitled to debit any account of the relevant Chargor
maintained with the Custodian with any reasonable fees or commissions due
and owing by such Chargor to the Custodian in respect of the Charged
Portfolio or part thereof or to settle any reasonable bank charges due and
owing by such Chargor to the Custodian and incurred in the ordinary course
of business for the purchase of securities and/or foreign exchange or
contracts for foreign exchange.
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14. Any notice, demand or other communication required to be:
(a) served on us by you hereunder, may be served by letter properly
addressed and deposited with a recognised air express courier or
transmitted by facsimile if (a) a telephone call is placed to the
officer noted for address purposes on page 1 of this Custodian's
Undertaking notifying such officer of the facsimile transmission and
(b) the original is properly addressed and mailed. Any notice, demand
or other communication shall be deemed to have been served on us on
the third business day following if sent by recognised air express
courier and when dispatched if sent in accordance with the facsimile
procedures;
(b) made by us to you hereunder, may be transmitted by facsimile to the
facsimile number and for the attention of the officer noted on page 1
of this Custodian's Undertaking, or to any substitute facsimile number
or officer as you may notify to us.
15. The Custodian shall not amend, supplement or otherwise modify its
agreements with the Chargors or the Security Trustee governing the
establishment and maintenance of the Charged Accounts (including, without
limitation the choice of law provision and provisions providing for
treatment of property held in any Charged Account as a financial asset) in
any respect without the Security Trustee's prior written consent.
16. This agreement shall remain in full force and effect until the Custodian
receives written notice of its termination given by the Security Trustee
and the Custodian shall not terminate the Charged Accounts, and shall not
permit either Chargor to terminate the Charged Accounts, without the
Security Trustee's prior written consent.
17. The Custodian hereby acknowledges that in the event any dispute arises
between one or both Chargors, on the one hand, and the Security Trustee, on
the other hand, with respect to the payment, ownership or right to
possession of the Charged Portfolio or any portion thereof, the Custodian
shall take such actions and shall refrain from taking such actions with
respect thereto as may be directed by the Security Trustee.
18. THE CUSTODIAN AGREES that THIS UNDERTAKING shall be governed under and in
accordance with the laws of the State of NEW YORK, without regard to
conflict of laws principles AND FURTHER AGREES THAT ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST THE CUSTODIAN ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN THE ENGLISH COURTS OR ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.
for purposes of this undertaking, the State of New York shall be deemed to
be the Custodian's jurisdiction.
19. Save as expressly provided herein, the Custodian shall have no further
obligations or liabilities to the Security Trustee in relation to the
Charged Portfolio and specifically shall have no liability or
responsibility for monitoring or determining the compliance by any party
with any other agreement including, without limitation, the Charge
Agreement.
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____________________________________________
(Authorised Signatory)
for and on behalf of the Custodian
[Date]
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THE SCHEDULE
PART A
The Required Value is at the date hereof:-
US$100 (One hundred United States dollars)
or such other amount as may be agreed between the Security Trustee and the
Chargors and notified to the Custodian by the Security Trustee from time to
time.
PART B
The initial Security Trustee's Requirements are:-
To the extent of an aggregate amount not less than the Required Value, the
Charged Portfolio shall at all times be comprised of the following: (a) cash,
(b) fixed income securities issued by or fully and explicitly guaranteed by the
central government of an OECD (Organisation for Economic Co-Operation and
Development) country, and (c) fixed income securities issued by US government
agencies (whose debt obligations are fully and explicitly guaranteed as to the
timely payment of principal and interest by the full faith and credit of the US
Government) as used in Appendix A, Section III (C), Category I to Regulation H
as promulgated by the Board of Governors of the Federal Reserve System and the
same are either (a) uncertificated and governed by the provisions of 31 C.F.R.
Part 357 or such similar provisions of the Code of Federal Regulations,
applicable to United States agency securities as are acceptable to the Security
Trustee; or (b) certificated.
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SCHEDULE 12
Form of Substitution Notice
From: ACE Limited
To: Citibank International plc
Dated:
Re: [Applicant 1]
[Applicant 2]
Dear Sirs
We refer to the (Pounds)380,000,000 letter of credit agreement originally dated
19 November 1999, (as (a) amended and restated pursuant to the First Restatement
Agreement, (b) amended pursuant to the Amendment Agreement, (c) amended and
restated pursuant to the Second Restatement Agreement and (d) amended and
restated pursuant to the Third Restatement Agreement (the "Agreement")) between,
inter alia, ACE Limited (the "Account Party"), the financial institutions named
therein as Banks and Citibank International plc as Agent.
Terms defined in the Agreement shall have the same meanings in this Substitution
Request.
1. Pursuant to Clause 5 (Substitution of Letters of Credit) of the Agreement,
the Account Party, on behalf of [ ] (the "Applicant[s]"), hereby requests
that the Banks substitute for the existing Letter[s] of Credit new Letters
of Credit, in each case in accordance with the information annexed hereto
as Annex A.
2. The Account Party hereby certifies that on the date hereof and on the
Substitution Date set forth in Annex A, both before and after giving effect
to the substitution requested hereby:
(i) no Event of Default or Potential Event of Default has occurred and is
continuing;
(ii) each of the representations and warranties of the Account Party
contained in the Agreement and each other Finance Document is correct
in all material respects on the date hereof, except representations
and warranties which expressly refer to an earlier date in which case
the same shall be true on and as of such earlier date;
(iii) after giving effect to the substitution requested hereby, the
aggregate Sterling Amount of the Outstandings will not exceed the
Total Commitments; and
(iv) the Letter[s] of Credit requested hereby [is/are] being extended
solely as security to support the underwriting business of the
Applicant[s] at Lloyd's which has been provided in accordance with
the requirements of Lloyd's applicable to [it/them].
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IN WITNESS WHEREOF, the Account Party has caused this Certificate to be executed
by its duly authorised officer as of the date and year first written above.
ACE LIMITED
By:___________________________
Name:_________________________
Title:________________________
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Annex A
Letter of Credit Information/4/
1. Name of Beneficiary:_____________________________________
2. Existing Letter of Credit Number:________________________
3. Substitution Date [ ]/5/
4. Amount of new Letter of Credit: (poundS)/US$ /6/
________________________________________________________________________________
/4/ A separate "Letter of Credit Information" should be completed for each
Letter of Credit covered by the Substitution Request.
/5/ The Substitution Date must be a Business Day within the Substitution
Period, and be not less than [30] Business Days after the date of the
Substitution Request.
/6/ This amount must not exceed the maximum amount available under the existing
Letter of Credit to be substituted.
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