Exhibit 10.62
▇ ▇ ▇ ▇ ▇ ▇ ▇ ▇ LIMITED LIABILITY PARTNERSHIP
C H A N C E
EXECUTION COPY
DATED 21 NOVEMBER 2001
ACE LIMITED
AS ACCOUNT PARTY
ACE BERMUDA INSURANCE LTD
AS GUARANTOR
CITIBANK, N.A.
AS LEAD ARRANGER
BARCLAYS BANK PLC
AS ARRANGER
ING BARINGS
AS CO-ARRANGER
CITIBANK INTERNATIONAL PLC
AS AGENT AND SECURITY TRUSTEE
AND
OTHERS
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SECOND AMENDMENT AND RESTATEMENT AGREEMENT
RELATING TO A LETTER OF CREDIT FACILITY
AGREEMENT DATED 19 NOVEMBER 1999
(as amended and restated pursuant to an amendment and
restatement agreement dated 17 November 2000 and as amended
pursuant to an amendment agreement dated 23 October 2001)
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CONTENTS
Clause Page
1. Interpretation ......................................................... 1
2. Amendment And Restatement Of The Facility Agreement .................... 2
3. Release Of Security .................................................... 2
4. Agreement Supplemental ................................................. 2
5. Representations ........................................................ 2
6. Costs And Expenses ..................................................... 2
7. Governing Law .......................................................... 2
8. Incorporation Of Terms ................................................. 3
9. Counterparts ........................................................... 3
THIS SECOND AMENDMENT AND RESTATEMENT AGREEMENT is made the 21st day of November
2001
BETWEEN
(1) ACE LIMITED (the "Account Party");
(2) ACE BERMUDA INSURANCE LTD. (the "Guarantor");
(3) CITIBANK, N.A. (the "Lead Arranger");
(4) BARCLAYS BANK PLC (the "Arranger");
(5) ING BARINGS (the "Co-Arranger")((3) ,(4) and (5) together the
"Arrangers");
(6) CITIBANK INTERNATIONAL plc (the "Agent" and "Security Trustee"); and
(7) THE FINANCIAL INSTITUTIONS listed in the signature pages hereof as
Banks (the "Banks").
WHEREAS
(A) By a letter of credit facility agreement dated 19 November 1999 as
amended and restated by an amendment agreement dated 17 November 2001
and as amended by an amendment agreement dated 23 October 2001 (the
"Facility Agreement") made between (1) the Account Party, (2) the
Guarantor, (3) the Arrangers, (4) the Agent and (5) the Banks, such
Banks granted to the Borrower a letter of credit facility in an
aggregate amount of (pounds)390,000,000.
(B) The parties hereto wish to release the security under the existing
Charge Agreement dated on or about 24 November 1998, increase the
amount of the Facility to (pounds)440,000,000 and to amend the Facility
Agreement upon the terms and subject to the conditions set out below.
NOW IT IS AGREED as follows:
1. INTERPRETATION
1.1 Terms defined in the Facility Agreement and not otherwise defined
herein shall have the same meaning in this Agreement. Any reference to
a Clause, an Exhibit or a Schedule shall be construed as references to
a Clause hereof or an Exhibit or a Schedule hereto unless the contrary
is expressed.
1.2 In this agreement:
"Amended Agreement" means the Facility Agreement as amended by this
Agreement;
"Commencement Date" means the date which is the later of 21 November
2001 and the date on which the Agent confirms in writing to the
Obligors and the Banks that it has received in form and substance
satisfactory to it each of the documents and other items specified in
Schedule 3 (Conditions Precedent) of the Exhibit hereto.
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2. AMENDMENT AND RESTATEMENT OF THE FACILITY AGREEMENT
With effect from the Commencement Date the Facility Agreement shall be
amended and restated so that it shall be read and construed for all
purposes as set forth in the Exhibit hereto.
3. RELEASE OF SECURITY
On the Commencement Date, the Security Trustee agrees that all existing
security under the Existing Charge Agreement will be released.
4. AGREEMENT SUPPLEMENTAL
This Agreement is and shall be construed as supplemental to the
Facility Agreement and the Facility Agreement and every clause thereof
shall continue to be in full force and effect and binding on the
parties thereto save as expressly amended and supplemented by this
Agreement.
5. REPRESENTATIONS
On the Commencement Date, the Obligors shall make the Representations
set out in Clause 14 (Representations) of the Amended Agreement as if
each reference in those Representations to "this Agreement" and "the
Finance Documents" includes a reference to (a) this Agreement and (b)
the Amended Agreement.
6. COSTS AND EXPENSES
6.1 Transaction Expenses
The Account Party shall promptly on demand pay the Banks the amount of
all costs and expenses (including legal fees) reasonably incurred by
the Banks in connection with the negotiation, preparation, printing and
execution of this Agreement and any other documents referred to in this
Agreement.
6.2 Enforcement Costs
The Account Party shall, within three Business Days of demand, pay to
each Bank the amount of all costs and expenses (including legal fees)
incurred by that Bank in connection with the enforcement of, or the
preservation of any rights under this Agreement.
6.3 Stamp Taxes
The Account Party shall pay and, within three Business Days of demand,
indemnify each Bank against any costs, loss or liability that each such
Bank incurs in relation to all stamp duty, registration and other
similar taxes payable in respect of this Agreement.
7. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
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8. INCORPORATION OF TERMS
The provisions of Clause 30.2 (Partial Invalidity) and Clause 35
(Jurisdiction) of the Facility Agreement shall apply, mutatis mutandis,
hereto.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts each of which, when
executed and delivered shall constitute an original, but all the
counterparts together shall constitute but one and the same Agreement.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
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The Account Party
ACE LIMITED
By:
Address: ACE Global Headquarters
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Telefax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
The Guarantor
ACE BERMUDA INSURANCE LTD.
By:
Address: ACE Global Headquarters
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Telefax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
The Lead Arranger
CITIBANK, N.A.
By:
The Arranger
BARCLAYS BANK PLC
By:
The Co-Arranger
ING BARINGS
By:
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The Agent and Security Trustee
EXECUTED AS A DEED )
BY CITIBANK INTERNATIONAL PLC )
______________________________ Director
______________________________ Director/Secretary
Address: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Telefax: ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇/3
Attention: Loans Agency
The Banks
ABN AMRO BANK N.V., LONDON BRANCH
By:
BARCLAYS BANK PLC
By:
CITIBANK, N.A.
By:
CREDIT LYONNAIS NEW YORK BRANCH
By:
ING BANK N.V., LONDON BRANCH
By:
LLOYDS TSB BANK PLC
By:
NATIONAL WESTMINSTER BANK PLC
By:
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▇ ▇ ▇ ▇ ▇ ▇ ▇ ▇ LIMITED LIABILITY PARTNERSHIP
C H A N C E
EXHIBIT
DATED 19 NOVEMBER 1999
(as (i) amended and restated pursuant to the First Restatement
Agreement dated 17 November 2000, (ii) amended pursuant to the
Amendment Agreement dated 23 October 2001 and (iii) amended and
restated pursuant to the Second Restatement Agreement
dated 21 November 2001)
ACE LIMITED
as Account Party
ACE BERMUDA INSURANCE LTD.
as Guarantor
CITIBANK, N.A.
as Lead Arranger
BARCLAYS BANK PLC
as Arranger
ING BARINGS
as Co-Arranger
CITIBANK INTERNATIONAL plc
as Agent and Security Trustee
and
OTHERS
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(Pounds)440,000,000
LETTER OF CREDIT FACILITY AGREEMENT
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CONTENTS
Clause Page
1. Definitions And Interpretation .................................... 1
2. The Facility ...................................................... 17
3. Utilisation Of The Facility ....................................... 17
4. Extension Of Letters Of Credit .................................... 19
5. Increase Of The Facility .......................................... 22
6. Notification ...................................................... 24
7. The Account Party's Liabilities In Relation To Letters Of Credit .. 24
8. Cancellation And Collateralisation ................................ 26
9. Taxes ............................................................. 27
10. Tax Receipts ...................................................... 27
11. Increased Costs ................................................... 29
12. Illegality ........................................................ 29
13. Mitigation ........................................................ 30
14. Representations ................................................... 30
15. Covenants ......................................................... 34
16. Events Of Default ................................................. 41
17. Commission And Fees ............................................... 46
18. Costs And Expenses ................................................ 47
19. Default Interest And Break Costs .................................. 48
20. Indemnities ....................................................... 49
21. Currency Of Account And Payment ................................... 50
22. Payments .......................................................... 50
23. Set-Off ........................................................... 52
24. Sharing ........................................................... 52
25. The Agent, The Arrangers And The Banks ............................ 53
26. Assignments And Transfers ......................................... 62
27. Economic And Monetary Union ....................................... 64
28. Calculations And Evidence Of Debt ................................. 65
29. Guarantee And Indemnity ........................................... 66
30. Remedies And Waivers, Partial Invalidity .......................... 69
31. Notices ........................................................... 69
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32. Counterparts ...................................................... 71
33. Amendments ........................................................ 71
34. Governing Law ..................................................... 72
35. Jurisdiction ...................................................... 72
Schedule 1 The Banks .................................................... 74
Schedule 2 Form Of Transfer Certificate ................................. 75
Schedule 3 Conditions Precedent ......................................... 77
Schedule 4 Utilisation Request .......................................... 79
Schedule 5 Form Of Extension Request .................................... 81
Schedule 6 Form Of Letter Of Credit ..................................... 84
Schedule 7 Mandatory Liquid Asset Costs Rate ............................ 91
Schedule 8 Form Of Confidentiality Undertaking .......................... 93
Schedule 9 Pricing Schedule ............................................. 96
Schedule 10 Existing Liens .............................................. 97
Schedule 11 Form Of Charge Agreement .................................... 98
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THIS AGREEMENT originally dated 19 November 1999, as (i) amended and restated
pursuant to the First Restatement Agreement dated 17 November 2000, (ii) amended
by an Amendment Agreement dated 23 October 2001 and (iii) further amended and
restated as of the Commencement Date referred to in the Second Restatement
Agreement dated 21 November 2001.
BETWEEN
(1) ACE LIMITED as account party (the "Account Party");
(2) ACE BERMUDA INSURANCE LTD. as guarantor (the "Guarantor");
(3) CITIBANK, N.A. as lead arranger of the Facility (the "Lead Arranger");
(4) BARCLAYS BANK PLC as arranger of the Facility (the "Arranger");
(5) ING BARINGS as co-arranger of the Facility (the "Co-Arranger");
(6) CITIBANK INTERNATIONAL plc as agent and trustee for the banks (when
acting in such capacities the "Agent" and the "Security Trustee"
respectively); and
(7) THE BANKS as defined below.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"ACE INA" means ACE INA Holdings Inc., a Delaware company and its
successors.
"ACE US" means ACE US Holdings, Inc., a Delaware company and its
successors.
"Adjusted Consolidated Debt" means, at any time, an amount equal to (i)
the then outstanding Consolidated Debt of the Account Party and its
Subsidiaries plus (ii) to the extent exceeding an amount equal to 15% of
Total Capitalisation, the then issued and outstanding amount of Preferred
Securities (other than any Mandatorily Convertible Preferred Securities).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For the purposes
of this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with") of a
Person means the possession, direct or indirect, of the power to vote 5
per cent. or more of the Voting Interests of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Interests, by contract or
otherwise.
"Amendment Agreement" means the 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 on the co-ordination of laws,
regulations and administrative provisions relating to the taking up and
pursuit of the business of credit institutions (No. 77/780/EEC) which has
been approved by the Council of Lloyd's for the purpose of providing
guarantees and issuing or confirming letters of credit comprising a
member's Funds at Lloyd's.
"Approved Investment" means any Investment that was made by the Account
Party or any of its Subsidiaries pursuant to investment guidelines set
forth by the board of directors of the Account Party which guidelines are
consistent with past practices.
"Arrangers" means the Lead Arranger, the Arranger 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 2001) inclusive.
"Bank" means any financial institution:
(a) named in Schedule 1 (The Banks); or
(b) which has become a party hereto in accordance with Clause 26.4
(Assignments by Banks) or Clause 26.5 (Transfers by Banks),
and which has not ceased to be a party hereto in accordance with the
terms hereof.
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"Bermuda Companies Law" means The Companies Act 1981 of Bermuda, as
amended, and the regulations promulgated thereunder.
"Bermuda Insurance Law" means The Insurance ▇▇▇ ▇▇▇▇ 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 Second 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 29 November 2001.
"Consolidated" refers to the consolidation of accounts in accordance with
GAAP.
"Consolidated Debt" means at any date the Debt of the Account Party and
its Consolidated Subsidiaries, determined on a Consolidated basis as of
such date.
"Consolidated Net Income" means, for any period, the net income of the
Account Party and its Consolidated Subsidiaries, determined on a
Consolidated basis for such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the
Account Party in its consolidated financial statements if such statements
were prepared as of such date.
"Consolidated Net Worth" means at any date the Consolidated stockholder's
equity of the Account Party and its Consolidated Subsidiaries determined
as of such date, provided that such determination for the purposes of
Clause 15.7 (Adjusted Consolidated Debt to Total Capitalisation Ratio),
Clause 15.8 (Consolidated Net Worth) and Clause 15.9 (Liens) shall be
made without giving effect to adjustments pursuant to
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Statement No. 115 of the Financial Accounting Standards Board of the
United States of America.
"Contingent Obligation" means, with respect to any Person, any obligation
or arrangement of such Person to guarantee or indemnify or intended to
guarantee or indemnify any Debt, leases, dividends or other payment
obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, (a) the direct or indirect guarantee, endorsement
(other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by
such Person of the obligation of a primary obligor, (b) the obligation to
make take-or-pay or similar payments, if required, regardless of
non-performance by any other party or parties to an agreement or (c) any
obligation of such Person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (A) for the purchase
or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (iii) to purchase
property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof; provided, however, that
Contingent Obligations shall not include any obligations of any such
Person arising under insurance contracts entered into in the ordinary
course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made
(or, if less, the maximum amount of such primary obligation for which
such Person may be liable pursuant to the terms of the instrument
evidencing such Contingent Obligation) or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming
such person is required to perform thereunder), as determined by such
Person in good faith.
"Custodian" means (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.
"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:
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(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 such
Person, even though such Person has not assumed or become liable
for the payment of such indebtedness or other payment obligations;
provided, however, that the amount of Debt of such Person under clause
(i) above shall, if such Person has not assumed or otherwise become
liable for any such Debt, be limited to the lesser of the principal
amount of such Debt or the fair market value of all property of such
Person securing such Debt; provided further that "Debt" shall not include
obligations in respect of insurance or reinsurance contracts entered into
in the ordinary course of business; provided further that, solely for the
purposes of Clause 15.7 (Adjusted Consolidated Debt to Total
Capitalisation Ratio) and Clause 15.8 (Consolidated Net Worth) and the
definitions of "Adjusted Consolidated Debt" and "Total Capitalisation",
"Debt" shall not include (x) any contingent obligations of any Person
under or in connection with acceptance, letter of credit or similar
facilities or (y)
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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, 29 November
2001.
"Equity Interests" means, with respect to any Person, shares of capital
stock of (or other ownership or profit interests in) such Person,
warrants, options or other rights for the purchase or other acquisition
from such Person of shares of capital stock of (or other ownership or
profit interests in) such Person, securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase
or other acquisition from such Person of such shares (or such other
interests), and other ownership or profit interests in such Person
(including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are authorised or otherwise
existing on any date of determination.
"Event of Default" means any circumstance described as such in Clause 16
(Events of Default).
"Expiry Date" means, in relation to any Letter of Credit, the date on
which the maximum aggregate liability thereunder is to be reduced to
zero.
"Facility" means the sterling and dollar letter of credit facility
granted to the Account Party in this Agreement.
"Facility Office" means, in relation to the Agent, the office identified
with its signature below or such other office as it may select by notice
and, in relation to any Bank, the office notified by it to the Agent in
writing prior to the date hereof (or, in the case of a Transferee, at the
end of the Transfer Certificate to which it is a party as Transferee) or
such other office as it may from time to time select by notice to the
Agent.
"Finance Documents" means this Agreement and any Security Document
entered into pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission) and any other document or documents as may be agreed
by the Agent and the Account Party.
"Finance Parties" means the Agent, the Security Trustee, the Arrangers
and the Banks.
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"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 the date notified by Lloyd's each year as being the
latest date in that year by which Funds at Lloyd's can be placed with
Lloyd's in order to satisfy Funds at Lloyd's Requirements in respect of
the immediately succeeding calendar year, such date notified by Lloyd's
in respect of the 2001 calendar year being 29 November 2001, or such
other date as may be advised by Lloyd's.
"GAAP" has the meaning specified in Clause 1.7 (Accounting Terms and
Determinations).
"Group" means the Account Party and its Subsidiaries for the time being.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other hedging agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986 of the
United States of America, as amended, or any successor statute, and
includes regulation promulgated and rulings issued thereunder.
"Investment" in any Person means any loan or advance to such Person, any
purchase or other acquisition of any Equity Interests or Debt or the
assets comprising a division or business unit or a substantial part or
all of the business of such Person, any capital contribution to such
Person or any other direct or indirect investment in such Person,
including, without limitation, any acquisition by way of a merger or
consolidation and any arrangement pursuant to which the investor incurs
Debt of the types referred to in clause (h) or (i) of the definition of
"Debt" in respect of such Person; provided, however, that any purchase by
any US Facility Agreement Loan Party or any Subsidiary of any
catastrophe-linked instruments which are (x) issued for the purpose of
transferring traditional reinsurance risk to the capital markets and (y)
purchased by such US Facility Agreement Loan Party or any Subsidiary in
accordance with its customary reinsurance underwriting procedures, or the
entry by any US Facility Agreement Loan Party or any Subsidiary into swap
transactions relating to such instruments in accordance with such
procedures, shall be deemed to be the entry by such Person into a
reinsurance contract and shall not be deemed to be an Investment by such
Person.
"L/C Commission Rate" means the rate per annum determined in accordance
with Clause 17.1 (Letter of Credit Commission) or Schedule 9 (Pricing
Schedule), as the case may be.
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"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 17.1 (Letter of Credit Commission).
"LIBOR" means, in relation to any Unpaid Sum on which interest for a
given period is to accrue, the percentage rate per annum equal to the
offered quotation which appears on the page of the Telerate Screen which
displays an average British Bankers Association Interest Settlement Rate
for the currency of the relevant amount (being currently "3740" or, as
the case may be, "3750") for such period as of 11.00 a.m. on the
Quotation Date for such period or, if such page or such service shall
cease to be available, such other page or such other service for the
purpose of displaying an average British Bankers Association Interest
Settlement Rate for such currency as the Agent, after consultation with
the Banks and the Account Party, shall select, acting reasonably.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other charge or encumbrance of any kind, or
any other type of preferential arrangement that has the practical effect
of creating a security interest, in respect of such asset. For the
purposes of this Agreement, the Account Party shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Lloyd's" means the society incorporated by Lloyd's ▇▇▇ ▇▇▇▇ by the name
of Lloyd's.
"Mandatorily Convertible Preferred Securities" means units comprised of
(i) Preferred Securities or preferred shares of the Account Party and
(ii) a contract for the sale of ordinary shares of the Account Party
(including "Feline PridesTM", "RhinosTM" or any substantially similar
securities).
"Mandatory Liquid Asset Costs Rate" in relation to any Unpaid Sum shall
bear the meaning given to it in Schedule 7 (Mandatory Liquid Asset Costs
Rate).
"Majority Banks" means, save as otherwise provided herein:
(a) whilst there are no Outstandings, a Bank or Banks whose
Commitments amount (or, if each Bank's Commitment has been reduced
to zero, did immediately before such reduction to zero, amount) in
aggregate to sixty-six and two thirds
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per cent. or more (or for the purposes of Clause 16.18
(Acceleration and Cancellation) to more than fifty per cent.) of
the Total Commitments; and
(b) whilst there are Outstandings a Bank or Banks to whom in aggregate
more than sixty-six and two thirds per cent. (or for the purposes
of Clause 16.18 (Acceleration and Cancellation) more than fifty
per cent.) of the Outstandings is owed,
provided that, in respect of a Letter of Credit issued by a Declining
Bank pursuant to sub-clause 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 (i) assets (after inter
company eliminations) in excess of 10 per cent. of the total assets of
the Account Party and its Subsidiaries determined on a Consolidated
basis, or (ii) annual net income constituting 10 per cent. or more of the
total annual net income of the Account Party and its Subsidiaries on a
Consolidated basis, in each case determined as of the end of the most
recently ended fiscal year and in any event ACE UK Limited and 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.
"Original Agreement" means this Agreement as (i) amended and restated
pursuant to the First Restatement Agreement and (ii) amended by the
Amendment Agreement, prior to its amendment and restatement on the
Commencement Date.
"Original Letters of Credit" means the letters of credit issued under the
Original Agreement.
"Original Sterling Amount" means:
(a) in relation to a Letter of Credit denominated in sterling, the
amount specified as the amount of the Letter of Credit in the
Utilisation Request relating thereto; and
(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
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spot rate of exchange quoted by the Agent at or about 11.00 am
London time on the day falling three Business Days before the
Utilisation Date for the purchase of sterling with dollars for
delivery two business days thereafter.
"Outstandings" means, at any time the aggregate of the Sterling Amounts
of the maximum actual and contingent liabilities of the Banks in respect
of each outstanding Letter of Credit.
"Permitted Liens" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been
commenced or which are being contested in good faith by appropriate
proceedings: (a) Liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Liens imposed by law, such as
materialsmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than 90
days; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations; and (d) easements, rights of way and other encumbrances on
title to real property that do not render title to the property
encumbered thereby unmarketable or materially adversely affect the use of
such property for its present purposes.
"Person" means an individual, a company, a corporation, a partnership, an
association, a trust or any other entity or organisation, including a
government or political subdivision or an agency or instrumentality
thereof.
"Potential Event of Default" means any event which would reasonably be
expected to become (with the passage of time, the giving of notice, the
making of any determination hereunder or any combination thereof) an
Event of Default.
"Preferred Interests" means, with respect to any Person, Equity Interests
issued by such Person that are entitled to a preference or priority over
any other Equity Interests issued by such Person upon any distribution of
such Person's property and assets, whether by dividend or upon
liquidation.
"Preferred Securities" means (i) preferred securities issued by the
Special Purpose Trust which shall provide, among other things, that
dividends shall be payable only out of proceeds of interest payments on
the Debentures, or (ii) other instruments that may be treated in whole or
in part as equity for rating agency purposes while being treated as debt
for tax purposes.
"Proportion" means, in relation to a Bank the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments are
then zero, by its Commitment to the Total Commitments immediately prior
to their reduction to zero).
"Qualifying Bank" means an institution which is a bank as defined for the
purposes of Section 349 of the Income and Corporation Taxes Act 1988 and
such bank is within the 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.
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"Quotation Date" means, in relation to any period for which an interest
rate is to be determined hereunder, the day on which quotations would
ordinarily be given by prime banks in the London Interbank Market for
deposits in the currency in relation to which such rate is to be determined
for delivery on the first day of that period, provided that, if, for any
such period, quotations would ordinarily be given on more than one date,
the Quotation Date for that period shall be the last of those dates.
"Redeemable" means, with respect to any Equity Interest, any Debt or any
other right or obligation, any such Equity Interest, Debt, right or
obligation that (a) the issuer has undertaken to redeem at a fixed or
determinable date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of the issuer or (b) is redeemable at the option of the holder.
"Reduction Percentage" means 20 per cent. x (5 - a); where "a" equals the
remaining number of years (and for such purposes any incomplete year shall
be treated as one year) for which the relevant Letter of Credit is
currently valid.
"Representations" means each of the representations set out in Clause 14
(Representations).
"Required Value" has the meaning ascribed to it in the Charge Agreement.
"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, guaranties or other property or claims in favour of the Account
Party or such Subsidiary supporting or securing payment by the obligor
thereon of, or otherwise related to, any such receivables.
"Security" means any security granted over the Charged Portfolio by the
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 am London time on the day on which the relevant calculation is to be
made for the purchase
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of sterling with dollars or any other relevant currency for delivery two
business days thereafter.
"Sterling Amount" means:
(a) in relation to a Letter of Credit at any time:
(i) if such Letter of Credit is denominated in sterling, the maximum
actual and contingent liability of the Banks thereunder or in
respect thereof at such time; and
(ii) if such Letter of Credit is denominated in dollars, the
equivalent in sterling of the maximum actual and contingent
liability of the Banks thereunder at such time, calculated as at
the later of the date which falls (1) two Business Days before
its Utilisation Date or (2) the most recent L/C Valuation Date;
and
(b) in relation to the Outstandings, the aggregate of the Sterling Amounts
of each outstanding Letter of Credit.
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such
Person; unless otherwise specified, "Subsidiary" means a Subsidiary of the
Account Party.
"Term" means, save as otherwise provided herein:
(a) in relation to any Letter of Credit, the period from its Effective
Date until its Expiry Date; and
(b) in relation to an Unpaid Sum, any of those periods mentioned in Clause
19 (Default Interest and Break Costs).
"Termination Date" means 31 December 2006.
"Total Capitalisation" means, at any time, an amount (without duplication)
equal to (i) the then outstanding Consolidated Debt of the Account Party
and its Subsidiaries plus (ii) Consolidated stockholders' equity of the
Account Party and its Subsidiaries plus (without duplication) (iii) the
then issued and outstanding amount of Preferred Securities (including
Mandatorily Convertible Preferred Securities) and (without duplication)
Debentures.
"Total Commitments" means, at any time, the aggregate of the Banks'
Commitments.
"Transfer Certificate" means a certificate substantially in the form set
out in Schedule 2 (Form of Transfer Certificate) signed by a Bank and a
Transferee under which:
(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
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and subject to the terms and conditions set out in Clause 26.3
(Assignments and Transfers by Banks); and
(b) such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Agent as
contemplated in Clause 26.5 (Transfers by Banks).
"Transfer Date" means, in relation to any Transfer Certificate, the date
for the making of the transfer as specified in such Transfer Certificate.
"Transferee" means a person to which a Bank seeks to transfer by novation
all or part of such Bank's rights, benefits and obligations under the
Finance Documents.
"Unpaid Sum" means the unpaid balance of any of the sums referred to in
Clause 19.1 (Default Interest).
"US Facility Agreements" means each of:
(a) the US$800,000,000 364 day revolving credit facility agreement
originally entered into on 11 June 1999 (as amended and restated on
(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,
▇▇ ▇▇▇▇▇▇ Securities Inc. and others.
"US Letter of Credit Agreements" means any and all letter of credit
agreements entered into by any borrower pursuant to the Five Year US
Facility.
"US Loan Documents" means (i) each US Facility Agreement, (ii) the US
Notes, (iii) the US Fee Letter and (iv) each US Letter of Credit Agreement.
"US Notes" means each promissory note issued or to be issued pursuant to
the terms of the US Facility Agreements.
"Utilisation Date" means the date on which a Letter of Credit is to be
issued.
"Utilisation Request" means a notice substantially in the form set out in
Schedule 4 (Form of Utilisation Request).
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"Voting Interests" means shares of capital stock issued by a corporation,
or equivalent Equity Interest in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by the Account Party.
1.2 Interpretation
Any reference in this Agreement to:
the "Agent", "Security Trustee" or any "Bank" shall be construed so as to
include its and any subsequent successors and permitted transferees in
accordance with their respective interests;
"continuing", in the context of an Event of Default shall be construed as a
reference to an Event of Default which has not been remedied or waived in
accordance with the terms hereof and in relation to a Potential Event of
Default, one which has not been remedied within the relevant grace period
or waived in accordance with the terms hereof.
the "euro" means the single currency of participating member states of the
European Union;
a "holding company" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a Subsidiary;
a "law" shall be construed as any law (including common or customary law),
statute, constitution, decree, judgment, treaty, regulation, directive,
bye-law, order or any other legislative measure of any government,
supranational, local government, statutory or regulatory body or court;
a "member" shall be construed (as the context may require) as a reference
to an underwriting member of Lloyd's;
a "month" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that, where any such period would otherwise
end on a day which is not a Business Day, it shall end on the next
succeeding Business Day, unless that day falls in the calendar month
succeeding that in which it would otherwise have ended, in which case it
shall end on the immediately preceding Business Day, provided that, if a
period starts on the last Business Day in a calendar month or if there is
no numerically corresponding day in the month in which that period ends,
that period shall end on the last Business Day in that later month (and
references to "months" shall be construed accordingly);
a Bank's "participation", in relation to a Letter of Credit, shall be
construed as a reference to the rights and obligations of such Bank in
relation to such Letter of Credit as are expressly set out in this
Agreement;
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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 "(pound)" and "sterling" denote lawful currency of the United
Kingdom for the time being.
1.3.2 "US$" and "dollars" denote lawful currency of the United States
of America for the time being.
1.4 Agreements and Statutes
Any reference in this Agreement to:
1.4.1 this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented;
1.4.2 a statute or treaty shall be construed as a reference to such
statute or treaty as the same may have been, or may from time to
time be, amended or, in the case of a statute, re-enacted; and
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.
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1.7 Accounting Terms and Determinations
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting principles as in
effect from time to time ("GAAP"), applied on a basis consistent (except
for changes concurred in by the Account Party's independent public
accountants) with the most recent audited consolidated financial statements
of the Account Party and its Consolidated Subsidiaries delivered to the
Banks; provided that, if the Account Party notifies the Agent that the
Account Party wishes to amend any covenant in Clause 15 (Covenants) to
eliminate the effect of any change in generally accepted accounting
principles on the operation of such covenant (or if the Agent notifies the
Account Party that the Majority Banks wish to amend Clause 15 (Covenants)
for such purpose), then the Account Party's compliance with such covenant
shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted account principals became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the
Account Party and the Majority Banks.
1.8 Third party rights
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ to enforce any term of this
Agreement.
2. THE FACILITY
2.1 Grant of the Facility
The Banks, upon the terms and subject to the conditions hereof, grant to
the Account Party a dual currency letter of credit facility in an aggregate
amount of (pounds)440,000,000.
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.
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.
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2.5 Several Rights
The rights of each Finance Party are several and any debt arising hereunder
at any time from an Obligor to any Finance Party shall be a separate and
independent debt. Each such party shall be entitled to protect and enforce
its individual rights arising out of this Agreement independently of any
other party (so that it shall not be necessary for any party hereto to be
joined as an additional party in any proceedings for this purpose).
2.6 Cancellation of Original Letters of Credit
On and with effect from the Effective Date, all outstanding Original
Letters of Credit shall be replaced by the Letters of Credit issued after
the Commencement Date.
3. UTILISATION OF THE FACILITY
3.1 Utilisation Conditions for the Facility
Save as otherwise provided herein, a Letter of Credit will be issued at the
request of the Account Party on behalf of an Applicant if:
3.1.1 no later than 10.00 a.m. two Business Days before the proposed
Utilisation Date, the Agent has received a duly completed
Utilisation Request from the Account Party;
3.1.2 the proposed Utilisation Date is a Business Day falling within
the Availability Period;
3.1.3 the proposed Original Sterling Amount of such Letter of Credit is
less than or equal to the Available Facility;
3.1.4 the proposed Term of the Letter of Credit is a period ending on
or before the Termination Date;
3.1.5 the Letter of Credit is substantially in the form set out in
Schedule 6 (Form of Letter of Credit) or in such other form
requested by the Account Party which is approved by the Banks
(such approval not to be unreasonably withheld or delayed);
3.1.6 the beneficiary of such Letter of Credit is Lloyd's;
3.1.7 on and as of the proposed Utilisation Date (a) no Event of
Default or Potential Event of Default has occurred and is
continuing and (b) the Representations are true in all material
respects; and
3.1.8 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:
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3.3.1 completing the Effective Date and the proposed Expiry Date of
such Letter of Credit;
3.3.2 completing the schedule to such Letter of Credit with the
percentage participation of each Bank as allocated pursuant to
the terms hereof; and
3.3.3 executing such Letter of Credit on behalf of each Bank and
following such execution delivering such Letter of Credit to
Lloyd's on the Utilisation Date,
provided that the Agent shall not deliver any such Letter of Credit to
Lloyd's unless the Agent is satisfied that (a) Lloyd's has cancelled (or
will upon such delivery cancel) the Original Letters of Credit and (b) all
amounts outstanding in respect of the Original Letters of Credit have been
paid in full.
3.4 Dollar Option
The Account Party may, in a Utilisation Request, request that such Letter
of Credit be denominated in dollars in which event such Letter of Credit
shall be denominated in dollars.
3.5 Amounts of Letters of Credit
The amount of a Letter of Credit shall be:
3.5.1 the Original Sterling Amount of such Letter of Credit, if such
Letter of Credit is to be denominated in sterling; and
3.5.2 if such Letter of Credit is to be denominated in dollars, the
amount specified in the Utilisation Request relating thereto.
3.6 Each Bank's Participation in Letters of Credit
Save as otherwise provided herein, each Bank will participate in each
Letter of Credit issued pursuant to this Clause 3 in the proportion borne
by its Available Commitment to the Available Facility immediately prior to
the issue of such Letter of Credit.
3.7 Cancellation of Commitments
On the expiry of the Availability Period the Available Facility and each
Bank's Available Commitment shall be reduced to zero.
4. EXTENSION OF LETTERS OF CREDIT
4.1 Bank Notification
Each Bank acknowledges that the Account Party may request one or more
extensions of a Letter of Credit hereunder, and that pursuant to the terms
thereof each Letter of Credit shall be extended automatically for a further
year each year unless Lloyd's receives notice to the contrary. Accordingly,
each Bank undertakes to notify the Agent in writing as soon as reasonably
practicable after it has determined that it will not agree to a requested
extension, and in any event by no later than close of business on the date
which falls ten weeks prior to the first date which Lloyd's notifies as
being the Funds Date of such year and the Agent shall give notice thereof
to the Account Party within two Business Days of notification from such
Bank. Unless notice is given to the Agent as aforesaid each Bank will be
deemed automatically to have agreed to such extension.
-18-
4.2 Request for Extension
If the Account Party wishes to request the extension of a Letter of Credit,
the Account Party shall give the Agent notice, by way of a Letter of Credit
extension request in the form of Schedule 5 (Form of Extension Request) by
the date which falls thirteen weeks prior to the Funds Date of such year,
specifying that the Expiry Date of the applicable Letter of Credit is to be
extended to 31 December of the year immediately succeeding the year in
which the then current Expiry Date falls (such notice being a "Notice of
Extension"). A single Notice of Extension may be delivered in respect of
more than one Letter of Credit.
4.3 Non-Delivery of Notice of Extension
If the Account Party does not deliver a Notice of Extension in accordance
with the provisions of Clause 4.2 (Request for Extension), the Agent shall:
4.3.1 as soon as reasonably practicable after the date which falls ten
weeks prior to the Funds Date of such year, notify the Account
Party and then notify the Banks thereof; and
4.3.2 as soon as reasonably practicable after the date which falls ten
weeks prior to the Funds Date of such year and in any event by no
later than close of business on the Business Day immediately
preceding the Funds Date of such year, notify Lloyd's that the
Term of the relevant Letter of Credit will not be extended beyond
its then current Expiry Date.
4.4 Notification to Banks
Upon receipt of a Notice of Extension, the Agent shall promptly notify each
Bank of the contents thereof and of the amount of such Bank's participation
in the applicable Letter of Credit, together with notice of the applicable
Funds Date for such year.
4.5 Extension of a Letter of Credit
4.5.1 If all of the Banks agree (or are deemed to have agreed) to the
extension of the Letter of Credit in accordance with Clause 4.1
(Bank Notification) the Agent shall notify the Account Party and
the Banks thereof and subject to the provisions of Clause 4.8
(Extension Conditions Precedent), the Letter of Credit shall be
automatically extended in accordance with the terms thereof.
4.5.2 If a Bank gives notice in accordance with the provisions of
Clause 4.1 (Bank Notification) that it does not agree to a
requested extension of any Letter of Credit the Agent shall
notify the Account Party and Lloyd's accordingly within two
Business Days thereafter, and the succeeding provisions of this
Clause 4 shall apply.
4.6 Substitute Bank
4.6.1 If any Bank (a "Declining Bank") gives notice in accordance with
the provisions of Clause 4.1 (Bank Notification) that it does not
agree to a requested extension, then the Account Party may
designate by the date which falls four weeks prior to the Funds
Date of such year an Approved Credit Institution (the "Substitute
Bank") which is willing to assume all of the rights and
obligations
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of the Declining Bank in respect of its participation in the
relevant Letter of Credit (the "Old Letter of Credit").
4.6.2 If the Account Party has found a Substitute Bank it shall
promptly notify the Agent and the Declining Bank thereof and
shall procure the release by Lloyd's of the Old Letter of Credit
from the Funds at Lloyd's of the relevant Applicant.
4.6.3 The Declining Bank shall as soon as reasonably practicable and in
any event no later than the date which falls two weeks prior to
the Funds Date of such year transfer its rights and obligations
hereunder to the Substitute Bank in accordance with the
provisions of Clause 26.5 (Transfers by Banks).
4.6.4 The Substitute Bank shall pay to the Declining Bank all amounts
then due and owing (and all fees accrued to but excluding the
date of such transfer) to the Declining Bank in respect of its
participation in the Old Letter of Credit.
4.7 Replacement Letters of Credit
4.7.1 If a Substitute Bank has become party hereto pursuant to Clause
4.6 (Substitute Bank), then subject to the provisions of Clause
4.8 (Extension Conditions Precedent) the Banks who have confirmed
their agreement to the extension of the Old Letter of Credit (the
"Extending Banks") shall, together with the Substitute Bank,
participate in, and issue by the Funds Date of such year, a new
Letter of Credit (the "New Letter of Credit") which shall (i)
replace the Old Letter of Credit, (ii) be in an amount equal to
the Old Letter of Credit and (iii) have an Expiry Date which
corresponds with the Expiry Date requested in the Notice of
Extension.
4.7.2 If a Substitute Bank has not been found then: (a) the Account
Party shall procure the release by Lloyd's of the Old Letter of
Credit from the Funds at Lloyd's of the relevant Applicant, (b)
subject to the provisions of Clause 4.8 (Extension Conditions
Precedent), the Extending Banks shall participate in, and issue
by the Funds Date of such year, a new Letter of Credit (the
"Reduced Letter of Credit") which shall (1) replace their
participation in the Old Letter of Credit, (2) be in an amount
equal to the Old Letter of Credit less the amount of the
----
Declining Bank's participation and (3) have an Expiry Date
which corresponds with the Expiry Date requested in the Notice of
Extension; and (c) the Declining Bank shall participate in a
separate Letter of Credit (a "Bilateral Letter of Credit") which
shall (1) replace its participation in the Old Letter of Credit,
(2) be in an amount equal to the Declining Bank's participation
in the Old Letter of Credit and (3) have an Expiry Date which is
the same as the Expiry Date specified in the Old Letter of Credit
(as the same may have been extended from time to time with the
consent of the Declining Bank).
4.8 Extension Conditions Precedent
4.8.1 On or prior to close of business on the Funds Date immediately
following the delivery of any Notice of Extension, the Account
Party shall promptly notify the Agent if:
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(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.
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 automatically extended in accordance with the
terms thereof and, on or prior to the time of such extension the
Company had failed to comply with its obligations under Clause 4
(Extension of Letters of Credit) or any of the events specified in
sub-clause 4.8.1 thereof had occurred, the Agent may (and if so
instructed by the Majority Banks participating in such Letter of
Credit shall) require the Account Party to procure that the
liabilities of each of the Banks under such Letter of Credit are
reduced to zero and/or provide Cash Collateral for each Bank's L/C
Proportion under such Letter of Credit.
4.11 Revised Letters of Credit
In the event that the Funds at Lloyd's Requirements of an Applicant
change at or around the time of any given Funds Date in terms of
amount and/or the identity of the Applicant, subject to the approval
of Lloyd's and subject to each Bank's Outstandings under the Letters
of Credit issued hereunder not being increased other than in
accordance with Clause 5 (Increase of the Facility), the Banks shall
co-operate with the Account Party to ensure to the extent reasonably
possible that the Letters of Credit provide for the revised Funds at
Lloyd's Requirements of the Applicants.
5. Increase of the Facility
5.1 Request for Increase
In the event that the Funds at Lloyd's Requirements of an Applicant
increases at or around the time of any given Funds Date and as a
result of such increase the aggregate amount of the Funds at Lloyd's
Requirements of the Applicants on such Funds Date
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would exceed the aggregate amount of the Banks' Outstandings under the
Letters of Credit, the Account Party shall be entitled to request an
increase of the amount of the Letter of Credit of such Applicant by
giving notice to the Agent no later than thirteen weeks prior to the
Funds Date of such year (the "Increase Request"). The Increase Request
shall be made in writing and shall be unconditional and irrevocable
and shall specify:
5.1.1 which Letters of Credit and Applicants the Increase Request
relates to;
5.1.2 the additional amount of commitments required by the Account
Party from the Banks; and
5.1.3 any other information relevant to the Increase Request.
5.2 Notification of Increase Request
The Agent shall forward a copy of the Increase Request to the Banks as
soon as practicable, and in any event no later than two Business Days
after receipt thereof together with notification of the amount of such
Banks' pro rata participation in any such increased Letter of Credit.
5.3 Response to Increase Request
If a Bank, in its sole discretion, agrees to the increase requested by
the Account Party pursuant to the Increase Request, it shall give
notice to the Agent (a "Notice of Increase") accordingly not less than
ten weeks prior to the Increase Date. If a Bank does not give such
Notice of Increase by such date, then such Bank shall be deemed to
have refused such increase. Nothing shall oblige a Bank to agree to
the Increase Request.
5.4 Notification of Response to Increase Request
The Agent shall notify the Account Party in writing of each Bank's
decision in relation to the Increase Request (specifying which Banks
have given a Notice of Increase, which Banks have actually refused the
Increase Request and which Banks are deemed to have refused the
Increase Request) no less than eight weeks prior to the Increase Date.
5.5 Increase
5.5.1 If one or more of the Banks does not give a Notice of
Increase (hereinafter referred to as "Refusing Banks"), then
the Refusing Banks shall not participate in any increase
pursuant to the Increase Request but shall continue to
participate in the Letters of Credit to the extent of their
existing participation.
5.5.2 If one or more Banks agree to the Increase Request such
Banks' participation in the relevant Letter(s) of Credit
shall, subject to satisfaction of any conditions precedent
which may be specified in connection therewith, be increased
in accordance with the terms of the Increase Request.
5.5.3 The Account Party shall co-operate with the Agent, the Banks
and Lloyd's with respect to the replacement of any Letters
of Credit required as a result of an Increase Request and
all parties shall agree on any necessary replacement Letters
of Credit in the context of any replacement Letters of
Credit required in accordance with Clause 4.7 (Replacement
Letters of Credit).
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5.5.4 The Facility, save as amended pursuant to the Increase
Request, shall continue to operate in accordance with its
terms.
6. NOTIFICATION
6.1 Letters of Credit
On or before each Utilisation Date the Agent shall notify each Bank of
the Letter of Credit that is to be issued by the Agent on behalf of
the Banks, the name of the Applicant in respect of whom the Letter of
Credit is being issued, the proposed length of the relevant Term and
the aggregate principal amount of the relevant Letter of Credit
allocated to such Bank pursuant to this Agreement.
6.2 Demands under Letters of Credit
If a demand is made by Lloyd's under a Letter of Credit the Agent
shall promptly make demand upon the Account Party in accordance with
this Agreement and notify the Banks.
7. THE ACCOUNT PARTY'S LIABILITIES IN RELATION TO LETTERS OF CREDIT
7.1 The Account Party's Indemnity to Banks
The Account Party shall irrevocably and unconditionally as a primary
obligation indemnify (on demand by the Agent) each Bank against:
7.1.1 any sum paid or due and payable by such Bank in accordance
with the terms of any Letter of Credit requested by the
Account Party; and
7.1.2 all liabilities, costs (including, without limitation, any
costs incurred in funding any amount which falls due from
such Bank in connection with such Letter of Credit), claims,
losses and expenses which such Bank may at any time properly
incur or sustain in connection with any Letter of Credit.
7.2 Preservation of Rights
Neither the obligations of the Account Party set out in this Clause 7
nor the rights, powers and remedies conferred on any Bank by this
Agreement or by law shall be discharged, impaired or otherwise
affected by:
7.2.1 the winding-up, dissolution, administration or
re-organisation of any Bank or any other person or any
change in its status, function, control or ownership;
7.2.2 any of the obligations of any Bank or any other person
hereunder or under any Letter of Credit or under any other
security taken in respect of the Account Party's obligations
hereunder or otherwise in connection with any Letter of
Credit being or becoming illegal, invalid, unenforceable or
ineffective in any respect;
7.2.3 time or other indulgence being granted or agreed to be
granted to any Bank or any other person in respect of its
obligations hereunder or under or in connection with any
Letter of Credit or under any such other security;
7.2.4 any amendment to, or any variation, waiver or release of,
any obligation of any Bank or any other person under any
Letter of Credit or this Agreement; or
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7.2.5 any other act, event or omission which, but for this Clause
7, might operate to discharge, impair or otherwise affect
any of the obligations of the Account Party set out in this
Clause 7 or any of the rights, powers or remedies conferred
upon any Bank by this Agreement or by law.
The obligations of the Account Party set out in this Clause 7 shall be
in addition to and independent of every other security which any Bank
may at any time hold in respect of the Account Party's obligations
hereunder.
7.3 Settlement Conditional
Any settlement or discharge between the Account Party and a Bank shall
be conditional upon no security or payment to such Bank by the Account
Party or any other person on behalf of the Account Party, being
avoided or reduced by virtue of any laws relating to bankruptcy,
insolvency, liquidation or similar laws of general application and, if
any such security or payment is so avoided or reduced, such Bank shall
be entitled to recover the value or amount of such security or payment
from the Account Party subsequently as if such settlement or discharge
had not occurred.
7.4 Right to make Payments under Letters of Credit
Each Bank shall be entitled to make any payment in accordance with the
terms of the relevant Letter of Credit without any reference to or
further authority from the Account Party or any other investigation or
enquiry. The Account Party irrevocably authorises each Bank to comply
with any demand under a Letter of Credit which is valid on its face.
7.5 Revaluation of Outstandings
On each L/C Valuation Date, the Agent shall calculate the amount of
the Outstandings (having regard to changes in the Sterling Amounts of
the Letters of Credit which may arise as a result of currency
fluctuations), and the Agent shall notify the Account Party of the
amount, if any (the "Excess Amount"), by which the Outstandings exceed
105 per cent. of the aggregate Commitments of the Banks on such date,
and the Account Party shall secure such Excess Amount by providing
Cash Collateral in an amount not less than the Excess Amount provided
that if the Account Party provides Cash Collateral as aforesaid and,
on any succeeding L/C Valuation Date the Excess Amount as determined
on such date (the "New Excess Amount") is:
7.5.1 less than the amount of the Cash Collateral provided at such
time, the Agent shall deliver to the Account Party an amount
equal to the difference between the amount of such Cash
Collateral and the New Excess Amount; or
7.5.2 greater than the amount of Cash Collateral provided at such
time, the Account Party shall deliver to the Agent an amount
equal to the amount by which the New Excess Amount exceeds
the amount of such Cash Collateral.
8. CANCELLATION and COLLATERALISATION
8.1 Cancellation/Cash Collateralisation of Letters of Credit
The Account Party may give the Agent not less than fourteen days'
prior notice of its intention to procure that the liability of each
Bank under a Letter of Credit requested by it is reduced to zero
(whereupon it shall do so) or provide Cash Collateral for each Bank's
L/C Proportion under such Letter of Credit (whereupon it shall do so).
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8.2 Notice of Cancellation or Collateralisation
Any notice of cancellation or collateralisation given by the Account
Party pursuant to this Clause 8 shall be irrevocable, shall specify
the date upon which such cancellation or collateralisation is to be
made and the amount of such cancellation or collateralisation and
shall oblige the Account Party to procure such cancellation or
collateralisation on such date.
8.3 Notice of Removal of a Bank
If:
8.3.1 any sum payable to any Bank by the Account Party is required
to be increased pursuant to Clause 9.1 (Tax Gross-up); or
8.3.2 any Bank claims indemnification from the Account Party under
Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs),
the Account Party may, whilst such circumstance continues, give the
Agent at least ten Business Days' notice (which notice shall be
irrevocable) of its intention to cancel, and/or provide Cash
Collateral in respect of the Commitment of such Bank.
8.4 Removal of a Bank
On the day the notice referred to in Clause 8.3 (Notice of Removal of
a Bank) expires the Account Party shall procure either that such
Bank's L/C Proportion of each relevant Letter of Credit be reduced to
zero (by reduction of the amount of such Letter of Credit in an amount
equal to such Bank's L/C Proportion) or that Cash Collateral be
provided in an amount equal to such Bank's L/C Proportion of such
Letter of Credit.
8.5 No Further Availability
A Bank for whose account a repayment is to be made under Clause 8.3
(Notice of Removal of a Bank) shall not be obliged to participate in
the making of any Letter of Credit on or after the date upon which the
Agent receives the Account Party's notice of its intention to procure
the repayment of such Bank's share of the Outstandings, and such
Bank's Available Commitment shall be reduced to zero.
8.6 No Other Repayments or Cancellation
The Account Party shall not repay or cancel all or any part of the
Outstandings except at the times and in the manner expressly provided
for in this Agreement.
9. TAXES
9.1 Tax Gross-up
All payments to be made by an Obligor to any Finance Party hereunder
shall be made free and clear of and without deduction for or on
account of tax unless such Obligor is required to make such a payment
subject to the deduction or withholding of tax, in which case the sum
payable by such Obligor (in respect of which such deduction or
withholding is required to be made) shall be increased to the extent
necessary to ensure that such Finance Party receives a sum net of any
deduction or withholding equal to the sum which it would have received
had no such deduction or withholding been made or required to be made.
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9.2 Tax Indemnity
Without prejudice to Clause 9.1 (Tax Gross-up), if any Finance Party
is required to make any payment of or on account of tax on or in
relation to any sum received or receivable hereunder (including any
sum deemed for purposes of tax to be received or receivable by such
Finance Party whether or not actually received or receivable) or if
any liability in respect of any such payment is asserted, imposed,
levied or assessed against any Finance Party, the Account Party shall,
upon demand of the Agent, promptly indemnify the Finance Party which
suffers a loss or liability as a result against such payment or
liability, together with any interest, penalties, costs and expenses
payable or incurred in connection therewith, provided that this Clause
9.2 shall not apply to:
9.2.1 any tax imposed on and calculated by reference to the net
income actually received or receivable by such Finance Party
by the jurisdiction in which such Finance Party is
incorporated; or
9.2.2 any tax imposed on and calculated by reference to the net
income of the Facility Office of such Finance Party actually
received or receivable by such Finance Party by the
jurisdiction in which its Facility Office is located.
9.3 Claims by Banks
A Bank intending to make a claim pursuant to Clause 9.2 (Tax
Indemnity) shall notify the Agent of the event giving rise to the
claim, whereupon the Agent shall notify the Account Party thereof.
10. TAX RECEIPTS
10.1 Notification of Requirement to Deduct Tax
If, at any time, an Obligor is required by law to make any deduction
or withholding from any sum payable by it hereunder (or if thereafter
there is any change in the rates at which or the manner in which such
deductions or withholdings are calculated), such Obligor shall
promptly, upon becoming aware of the same, notify the Agent.
10.2 Evidence of Payment of Tax
If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the Agent for each Bank, within
thirty days after it has made such payment to the applicable
authority, an original receipt (or a certified copy thereof) issued by
such authority evidencing the payment to such authority of all amounts
so required to be deducted or withheld in respect of that Bank's share
of such payment.
10.3 Tax Credit Payment
If an additional payment is made under Clause 9 (Taxes) by an Obligor
for the benefit of any Finance Party and such Finance Party, in its
sole discretion, determines that it has obtained (and has derived full
use and benefit from) a credit against, a relief or remission for, or
repayment of, any tax, then, if and to the extent that such Finance
Party, in its sole opinion, determines that:
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10.3.1 such credit, relief, remission or repayment is in respect of
or calculated with reference to the additional payment made
pursuant to Clause 9 (Taxes); and
10.3.2 its tax affairs for its tax year in respect of which such
credit, relief, remission or repayment was obtained have
been finally settled,
such Finance Party shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to such Obligor such amount as such
Finance Party shall, in its sole opinion, determine to be the amount
which will leave such Finance Party (after such payment) in no worse
after-tax position than it would have been in had the additional
payment in question not been required to be made by such Obligor.
10.4 Tax Credit Clawback
If any Finance Party makes any payment to an Obligor pursuant to
Clause 10.3 (Tax Credit Payment) and such Finance Party subsequently
determines, in its sole opinion, that the credit, relief, remission or
repayment in respect of which such payment was made was not available
or has been withdrawn or that it was unable to use such credit,
relief, remission or repayment in full, the Obligor shall reimburse
such Finance Party such amount as such Finance Party determines, in
its sole opinion, is necessary to place it in the same after-tax
position as it would have been in if such credit, relief, remission or
repayment had been obtained and fully used and retained by such
Finance Party.
10.5 Tax and Other Affairs
No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever
manner it thinks fit, oblige any Finance Party to claim any credit,
relief, remission or repayment in respect of any payment under Clause
8.1 (Tax Gross-up) in priority to any other credit, relief, remission
or repayment available to it nor oblige any Finance Party to disclose
any information relating to its tax or other affairs or any
computations in respect thereof.
11. INCREASED COSTS
11.1 Increased Costs
If, by reason of (a) any change in law or in its interpretation or
administration and/or (b) compliance with any request or requirement
relating to the maintenance of capital or any other request from or
requirement of any central bank or other fiscal, monetary or other
authority (being a request or requirement with which banks are
accustomed to comply) and/or (c) the introduction of, changeover to or
operation of the euro in any participating member state:
11.1.1 a Bank or any holding company of such Bank is unable to
obtain the rate of return on its capital which it would have
been able to obtain but for such Bank's entering into or
assuming or maintaining a commitment, issuing or performing
its obligations under this Agreement or any Letter of
Credit;
11.1.2 a Bank or any holding company of such Bank incurs a cost as
a result of such Bank's entering into or assuming or
maintaining a commitment, issuing or performing its
obligations under this Agreement or any Letter of Credit; or
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11.1.3 there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining such Bank's
share of any Unpaid Sum or any Letter of Credit,
then the Account Party shall, from time to time on demand of the
Agent, promptly pay to the Agent for the account of that Bank amounts
sufficient to indemnify that Bank or to enable that Bank to indemnify
its holding company from and against, as the case may be, (i) such
reduction in the rate of return of capital, (ii) such cost or (iii)
such increased cost.
11.2 Increased Costs Claims
A Bank intending to make a claim pursuant to Clause 11.1 (Increased
Costs) shall notify the Agent of the event giving rise to such claim
and the amount of such claim and the basis for calculation of such
amount in reasonable detail whereupon the Agent shall notify the
Account Party thereof.
11.3 Exclusions
Notwithstanding the foregoing provisions of this Clause 11, no Bank
shall be entitled to make any claim under this Clause 11 in respect
of:
11.3.1 any cost, increased cost or liability as referred to in
Clause 11.1 (Increased Costs) to the extent the same is
compensated by the Mandatory Liquid Asset Costs Rate; or
11.3.2 any cost, increased cost or liability compensated by Clause
9 (Taxes).
12. ILLEGALITY
If, at any time, it is or will become unlawful or prohibited pursuant
to any request from or requirement of any central bank or other
fiscal, monetary or other authority (being a request or requirement
with which banks are accustomed to comply) for a Bank to fund, issue,
participate in or allow to remain outstanding all or part of its share
of the Letters of Credit, then that Bank shall, promptly after
becoming aware of the same, deliver to the Account Party through the
Agent a notice to that effect and:
12.1.1 such Bank shall not thereafter be obliged to participate in
any Letter of Credit or issue any Letter of Credit
(whichever shall be so affected) and the amount of its
Available Commitment shall be immediately reduced to zero;
and
12.1.2 if the Agent on behalf of such Bank so requires, the Account
Party shall on such date as the Agent shall have specified
ensure that the liabilities of such Bank under or in respect
of each affected Letter of Credit are reduced to zero or
otherwise secured by providing Cash Collateral in an amount
equal to such Bank's L/C Proportion of such Letters of
Credit or such Bank's maximum actual or contingent
liabilities under such Letter of Credit.
13. MITIGATION
If, in respect of any Bank, circumstances arise which would or would
upon the giving of notice result in:
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13.1.1 an increase in any sum payable to it or for its account
pursuant to Clause 9.1 (Tax Gross-up);
13.1.2 a claim for indemnification pursuant to Clause 9.2 (Tax
Indemnity) or Clause 11.1 (Increased Costs); or
13.1.3 the reduction of its Available Commitment to zero or any
repayment to be made pursuant to Clause 12 (Illegality),
then, without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the obligations of the Obligors under any of the
Clauses referred to in sub-clauses 13.1.1, 13.1.2 and 13.1.3 such Bank
shall promptly upon becoming aware of such circumstances notify the
Agent thereof and, in consultation with the Agent and the Account Party
and to the extent that it can do so lawfully and without prejudice to
its own position, take reasonable steps (including a change of location
of its Facility Office or the transfer of its rights, benefits and
obligations hereunder to another financial institution which is an
Approved Credit Institution and which is acceptable to the Account Party
and willing to participate in the Facility) to mitigate the effects of
such circumstances, provided that such Bank shall be under no obligation
to take any such action if, in the opinion of such Bank, to do so might
have any adverse effect upon its business, operations or financial
condition (other than any minor costs and expenses of an administrative
nature).
14. REPRESENTATIONS
The Obligors jointly and severally represent and warrant on the
Commencement Date that:
14.1 Corporate Existence and Power
The Account Party is a company limited by shares, and the Guarantor is
a limited liability company, and in each case, is duly incorporated
and validly existing under the laws of its jurisdiction of
incorporation and the Account Party is in good standing under the laws
of the Cayman Islands. Each of the Obligors has all corporate powers
and all material governmental licenses, authorisations, consents and
approvals required to carry on its respective business as now
conducted. The Guarantor is a Wholly-Owned Consolidated Subsidiary of
the Account Party.
14.2 Corporate and Governmental Authorisation; No Contravention
The execution, delivery and performance by each Obligor of this
Agreement and the other Finance Documents to which it is a party are
within its corporate powers, have been duly authorised by all
necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable
law or regulation or of the memorandum of association, articles of
association or bye-laws (or any comparable document) of any Obligor or
of any agreement, judgment, injunction, order, decree or other
instrument binding upon any Obligor or any of their respective
Subsidiaries or result in the creation or imposition of any Lien
(excluding the provision of Security pursuant to this Agreement) on
any asset of any Obligor or any of their respective Subsidiaries.
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14.3 Binding Effect
Each of this Agreement and the other Finance Documents to which any
Obligor is a party constitutes a valid and binding agreement of each
Obligor enforceable in accordance with its terms, subject to
bankruptcy, insolvency or other laws of general application affecting
the enforcement of creditors rights, the application of equitable
principles and the non-availability of the equitable remedies of
specific performance or injunctive relief.
14.4 Financial Information
14.4.1 The consolidated balance sheet of the Account Party and its
Consolidated Subsidiaries as of 31 December 2000 and the
related consolidated statements of operations and of cash
flows for the fiscal year then ended, reported on by
PricewaterhouseCoopers LLP, copies of which have been
delivered to each of the Banks, fairly present, in all
material respects, in conformity with GAAP, the consolidated
financial position of the Account Party and its Consolidated
Subsidiaries as of such date and their consolidated results
of operations and cash flows for such fiscal year.
14.4.2 The unaudited consolidated balance sheet of the Account
Party and its Consolidated Subsidiaries as of 30 June 2001
and the related unaudited consolidated statements of
operations and of cash flows for the six months then ended,
copies of which have been delivered to each of the Banks,
fairly present, in all material respects, in conformity with
GAAP (except for the absence of footnotes) applied on a
basis consistent with the financial statements referred to
in sub-clause 14.4.1 of Clause 14.4 (Financial Information),
the consolidated financial position of the Account Party and
its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such
six month period (subject to normal year-end adjustments).
14.4.3 Since 30 June 2001 there has been no material adverse change
in the business, financial position or results of operations
of the Account Party and its Consolidated Subsidiaries,
considered as a whole.
14.4.4 The consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of 31 December 2000 and the
related consolidated statements of operations and retained
earnings and of cash flows for the fiscal year then ended,
all reported on by PricewaterhouseCoopers LLP, copies of
which have been delivered to each of the Banks, fairly
present, in all material respects in conformity with GAAP,
the consolidated financial position of the Guarantor and its
Consolidated Subsidiaries as of such date and their
consolidated results of operations and retained earnings and
cash flows for such fiscal year.
14.4.5 Since 31 December 2000 there has been no material adverse
change in the business, financial position or results of
operations of the Guarantor and its Consolidated
Subsidiaries, considered as a whole.
14.5 Litigation
Except as disclosed in the notes to the financial statements referred
to in sub-clause 14.4.1 of Clause 14.4 (Financial Information) and
except for insurance claims made in
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the context of the ordinary course of business of the Group, there is
no action, suit or proceeding pending against, or to the knowledge of
the Account Party threatened against or affecting, the Account Party
or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable
likelihood of an adverse decision which could materially adversely
affect the business, consolidated financial position or consolidated
results of operations of the Account Party and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws into
question the validity or enforceability of this Agreement or any other
Finance Document.
14.6 Taxes
The Account Party and its Subsidiaries have filed all material income
tax returns and all other material tax returns which are required to
be filed by them and have paid all taxes due pursuant to such returns
or pursuant to any assessment received by the Account Party or any
Subsidiary. The charges, accruals and reserves on the books of the
Account Party and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Account Party,
adequate.
14.7 Written Information
All written information supplied by any member of the Group which is
factual, is true, complete and accurate in all material respects as at
the date it was given and is not misleading in any material respect
and all financial projections so supplied have been prepared on the
basis of recent historical information and on the basis of reasonable
assumptions.
14.8 Compliance with Laws
The Account Party and each Subsidiary are in compliance, in all
material respects, with all applicable laws, ordinances, rules,
regulations, guidelines and other requirements of governmental
authorities except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings and any reserves
required under generally accepted accounting principles with respect
thereto have been established and except where any such failure could
not reasonably be expected to materially adversely affect the
business, consolidated financial position or consolidated results of
operations of the Account Party and its Consolidated Subsidiaries,
considered as a whole.
14.9 Lien
14.9.1 Upon delivery of the Security to the Custodian as provided
in the Charge Agreement, each Obligor will have 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).
14.9.2 Upon delivery of the Security to the Custodian as provided
in the Charge Agreement, the Charge Agreement will create in
favour of the Security Trustee for the benefit of the Banks
a valid and enforceable first priority Lien on all of the
Security, subject to the interest of the Custodian under the
Finance Documents.
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14.9.3 Upon delivery of the Security to the Custodian as provided
in the Charge Agreement, neither Obligor will have
outstanding, nor will either Obligor be contractually bound
to create, any Lien on or with respect to any of the
Security, subject to the interest of the Custodian under the
Finance Documents and to "Permitted Liens" as defined in the
Charge Agreement.
14.9.4 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 14.9 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.
14.10 Validity and Admissibility in Evidence
All acts, conditions and things required to be done, fulfilled and
performed in order (a) to enable each Obligor lawfully to enter into,
exercise its rights under and perform and comply with the obligations
expressed to be assumed by it in the Finance Documents to which it is
a party, (b) to ensure that the obligations expressed to be assumed by
it in the Finance Documents to which it is a party are legal, valid,
binding and enforceable and (c) to make the Finance Documents to which
it is a party admissible in evidence in its jurisdiction of
incorporation have been done, fulfilled and performed (subject to any
exception contained in the legal opinions provided as conditions
precedent).
14.11 Claims Pari Passu
Under the laws of its jurisdiction of incorporation in force at the
date of this Agreement, the claims of the Finance Parties against each
Obligor under this Agreement will rank at least pari passu with the
claims of all its other unsecured and unsubordinated creditors save
those claims which are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application or are
mandatorily preferred by law applying to insurance companies
generally.
14.12 No Filing or Stamp Taxes
Under the laws of the jurisdiction of incorporation of each Obligor in
force at the date of this Agreement, it is not necessary that the
Finance Documents to which it is party be filed, recorded or enrolled
with any court or other authority in such jurisdiction or that any
stamp, registration or similar tax be paid on or in relation to the
Finance Documents to which it is party.
14.13 No Winding-up
No Obligor or Material Subsidiary has taken any corporate action nor
have any other steps been taken or legal proceedings been started or
(to the best of its knowledge and belief) threatened against any
Obligor or Material Subsidiary for its winding-up, dissolution,
administration or re-organisation (whether by voluntary arrangement,
scheme of arrangement or otherwise) or for the appointment of a
receiver, administrator, administrative receiver, conservator,
custodian, trustee or similar officer of it or of any or all of its
assets or revenues.
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14.14 No Default
No Default has occurred and is continuing.
15. COVENANTS
The Account Party agrees that, so long as any Original Letter of
Credit or any Letter of Credit is in effect or any Outstandings remain
unpaid:
15.1 Information
The Account Party will deliver to the Agent in sufficient copies for
the Banks:
15.1.1 as soon as available and in any event within 90 days after
the end of each fiscal year of the Account Party, a
consolidated balance sheet of the Account Party and its
Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of operations and of
cash flows for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal
year, all reported on in a manner acceptable to the
Securities and Exchange Commission of the United States of
America or otherwise reasonably acceptable to the Majority
Banks by PricewaterhouseCoopers LLP or other independent
public accountants of internationally recognised standing;
15.1.2 as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal
year of the Account Party, a consolidated balance sheet of
the Account Party and its Consolidated Subsidiaries as of
the end of such quarter and the related consolidated
statements of operations and of cash flows for such quarter
and for the portion of the Account Party's fiscal year ended
at the end of such quarter, setting forth in the case of
such statements of operations and cash flows in comparative
form the figures for the corresponding quarter and the
corresponding portion of the Account Party's previous fiscal
year, all certified (subject to normal year-end adjustments)
as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial
officer or the chief accounting officer of the Account
Party;
15.1.3 simultaneously with the delivery of each set of financial
statements referred to in sub-clauses 15.1.1 and 15.1.2 of
this Clause 15.1, a certificate of the chief financial
officer or the chief accounting officer of the Account Party
(a) setting forth in reasonable detail the calculations
required to establish whether the Account Party was in
compliance with the requirements of Clauses 15.7 (Adjusted
Consolidated Debt to Total Capitalisation Ratio) to 15.9
(Liens), inclusive, on the date of such financial statements
and (b) stating whether any Default exists on the date of
such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Account
Party is taking or proposes to take with respect thereto;
15.1.4 within five days after any executive officer of the Account
Party obtains knowledge of any Default, if such Default is
then continuing, a certificate of the chief financial
officer or the chief accounting officer of the Account Party
setting forth the details thereof and the action which the
Account Party is taking or proposes to take with respect
thereto;
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15.1.5 promptly upon the mailing thereof to the shareholders of the
Account Party generally, copies of all financial statements,
reports and proxy statements so mailed;
15.1.6 promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which the Account Party shall have filed with the Securities
and Exchange Commission of the United States of America;
15.1.7 as soon as available and in any event within 20 days after
submission, each statutory statement of the Guarantor in the
form submitted to The Insurance Division of the Office of
Registrar of Companies of Bermuda;
15.1.8 as soon as available and in any event within 120 days after
the end of each fiscal year of the Guarantor, a consolidated
balance sheet of the Guarantor and its Consolidated
Subsidiaries as of the end of such fiscal year and the
related statements of income and changes in financial
position for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year,
all reported on by the independent public accountants which
reported on the financial statements referred to in
sub-clause 15.1.1 of this Clause 15.1;
15.1.9 promptly after any executive officer of the Account Party
obtains knowledge thereof, (a) a copy of any notice from the
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
15.1.10 from time to time such additional information regarding the
financial position, results of operations or business of the
Account Party or any of its Subsidiaries as the Agent, at
the request of any Bank, may reasonably request from time to
time.
15.2 Payment of Obligations
The Account Party will pay and discharge, and will cause each
Subsidiary to pay and discharge, at or before maturity, all their
respective material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will
cause each Subsidiary to maintain, in accordance with generally
accepted accounting principles, appropriate reserves for the accrual
of any of the same.
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15.3 Maintenance of Property; Insurance.
15.3.1 The Account Party will keep, and will cause each Subsidiary
to keep, all property useful and necessary in its business
in good working order and condition, ordinary wear and tear
excepted.
15.3.2 The Account Party will maintain, and will cause each
Subsidiary to maintain, 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.
15.4 Conduct of Business and Maintenance of Existence
The Account Party will continue, and will cause each Subsidiary to
continue, to engage in business of the same general type as now
conducted by the Account Party and its Subsidiaries, and will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect, their
respective existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business;
provided that nothing in this Clause 15.4 shall prohibit (i) the
merger of a Subsidiary (other than the Guarantor) into the Account
Party or the merger or consolidation of a Subsidiary (other than the
Guarantor) with or into another Person if the corporation surviving
such consolidation or merger is a Subsidiary and if, in each case,
after giving effect thereto, no Default shall have occurred and be
continuing, (ii) any merger of any Obligor permitted by Clause 15.10
(Consolidations, Mergers and Sale of Assets) or (iii) the termination
of (x) the corporate existence or (y) any rights, privileges and
franchises of any Subsidiary (other than the Guarantor) if the Account
Party in good faith determines that such termination is in the best
interest of the Account Party and is not materially disadvantageous to
the Banks.
15.5 Compliance with Laws
The Account Party will comply, and cause each Subsidiary to comply, in
all material respects with all applicable laws, ordinances, rules,
regulations, guidelines and other requirements of governmental
authorities except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings and any reserves
required under generally accepted accounting principles with respect
thereto have been established and except where any such failure to
comply could not reasonably be expected to materially adversely affect
the business, consolidated financial position or consolidated results
of operations of the Account Party and its Consolidated Subsidiaries,
considered as a whole.
15.6 Inspection of Property, Books and Records
The Account Party will keep, and will cause each Subsidiary to keep,
proper books of records and account in accordance with generally
accepted accounting principles in which full, true and correct entries
shall be made of all dealings and transactions in
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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.
15.7 Adjusted Consolidated Debt to Total Capitalisation Ratio
The Account Party shall maintain at all times a ratio of Adjusted
Consolidated Debt to Total Capitalisation of not more than 0.35 to 1.
15.8 Consolidated Net Worth
The Account Party shall maintain at all times Consolidated Net Worth
in an amount at least equal to the sum of (i) US$3,600,000,000 plus
(ii) 25 per cent. of Consolidated Net Income for each fiscal quarter
of the Account Party ending on and after 31 March 2000 for which such
Consolidated Net Income is positive.
15.9 Liens
Neither the Account Party nor any Subsidiary will create, incur,
assume or suffer to exist, or permit any of its Subsidiaries to
create, incur, assume or suffer to exist, any Lien on or with respect
to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or
assign, or permit any of its Subsidiaries to assign, any accounts or
other right to receive income, except:
15.9.1 Liens created under the US Loan Documents;
15.9.2 Permitted Liens;
15.9.3 Liens described in Schedule 10 (Existing Liens);
15.9.4 purchase money Liens upon or in real property or equipment
acquired or held by the Account Party or any of its
Subsidiaries in the ordinary course of business to secure
the purchase price of such property or equipment or to
secure Debt incurred solely for the purpose of financing the
acquisition, construction or improvement of any such
property or equipment to be subject to such Liens, or Liens
existing on any such property or equipment at the time of
acquisition or within 180 days following such acquisition
(other than any such Liens created in contemplation of such
acquisition that do not secure the purchase price), or
extensions, renewals or replacements or any of the foregoing
for the same or a lesser amount; provided, however, that no
such Lien shall extend to or cover any property other than
the property or equipment being acquired, constructed or
improved, and no such extension, renewal or replacement
shall extend to or cover any property not theretofore
subject to the Lien being extended, renewed or replaced;
15.9.5 Liens arising in connection with Capitalised Leases;
provided that no such Lien shall extend to or cover any
assets other than the assets subject to such Capitalised
Leases;
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15.9.6 (A) any Lien existing on any asset of any Person at the time
such Person becomes a Subsidiary and not created in
contemplation of such event, (B) any Lien on any asset of
any Person existing at the time such Person is merged or
consolidated with or into the Account Party or any of its
Subsidiaries in accordance with Clause 15.10
(Consolidations, Mergers and Sales of Assets) and not
created in contemplation of such event and (C) any Lien
existing on any asset prior to the acquisition thereof by
the Account Party or any of its Subsidiaries and not created
in contemplation of such acquisition;
15.9.7 Liens securing obligations under credit default swap
transactions determined by reference to, or Contingent
Obligations in respect of, Debt issued by the Account Party
or one of its Subsidiaries; such Debt not to exceed an
aggregate principal amount of US$550,000,000;
15.9.8 Liens arising in the ordinary course of its business which
(A) do not secure Debt and (B) do not in the aggregate
materially detract from the value of its assets or
materially impair the use thereof in the operation of its
business;
15.9.9 Liens on cash and Approved Investments securing Hedge
Agreements arising in the ordinary course of business;
15.9.10 other Liens securing Debt or other obligations outstanding
in an aggregate principal or face amount not to exceed at
any time 5 per cent. of Consolidated Net Worth;
15.9.11 Liens consisting of deposits made by the Account Party or
any insurance Subsidiary with any insurance regulatory
authority or other statutory Liens or Liens or claims
imposed or required by applicable insurance law or
regulation against the assets of the Account Party or any
insurance Subsidiary, in each case in favour of
policyholders of the Account Party or such insurance
Subsidiary or an insurance regulatory authority and in the
ordinary course of the Account Party's or such insurance
Subsidiary's business;
15.9.12 Liens on Investments and cash balances of the Account Party
or any insurance Subsidiary (other than capital stock of any
Subsidiary) securing obligations of the Account Party or any
insurance Subsidiary in respect of (i) letters of credit
obtained in the ordinary course of business and/or (ii)
trust arrangements formed in the ordinary course of business
for the benefit of cedents to secure reinsurance or
insurance obligations owed to them by the Account Party or
any insurance Subsidiary;
15.9.13 the replacement, extension or renewal of any Lien permitted
by sub-clause 15.9.2 or 15.9.5 of this Clause 15.9 upon or
in the same property theretofore subject thereto or the
replacement, extension or renewal (without increase in the
amount (other than in respect of fees, expenses and
premiums, if any) or change in any direct or contingent
obligor) of the Debt secured thereby;
15.9.14 Liens securing obligations owed by the Account Party to any
Subsidiary or by any Subsidiary to the Account Party or any
other Subsidiary;
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15.9.15 Liens incurred in the ordinary course of business in favour
of financial intermediaries and clearing agents pending
clearance of payments for investment or in the nature of
set-off, banker's lien or similar rights as to deposit
accounts or other funds;
15.9.16 judgement or judicial attachment Liens, provided that the
enforcement of such Liens is effectively stayed;
15.9.17 Liens on any assets of the Obligors created pursuant to the
Finance Documents;
15.9.18 Liens arising in connection with certain equity proceeds
received on or about 12 September 2000 (plus interest
accrued thereon) placed in a segregated account in support
of (or pledged as collateral for) the Account Party's
guarantee of the US$412,372,000 principal amount of Auction
Rate Reset Subordinated Notes Series A issued by ACE INA to
ACE RHINOS Trust on 30 June 1999;
15.9.19 Liens arising in connection with Securitisation
Transactions, provided that the aggregate principal amount
of the investment or claim held at any time by all
purchasers, assignees or other transferees of (or of
interests in) receivables and other rights to payment in all
Securitisation Transactions shall not exceed US$250,000,000;
15.9.20 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 15.9.10) 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
15.9.21 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.
15.10 Consolidations, Mergers and Sales of Assets
15.10.1 No Obligor will consolidate with or merge into any other
Person, provided that if both immediately before and after
giving effect thereto no Default shall have occurred and be
continuing, then:
(a) the Guarantor may merge or consolidate with any other
Person so long as the surviving entity is the Guarantor
or a Wholly-Owned Consolidated Subsidiary of the
Account Party and, if the Guarantor is not the
surviving entity, such surviving entity shall have
assumed the obligations of the Guarantor hereunder
pursuant to an instrument in form and substance
reasonably satisfactory to the Majority Banks and shall
have delivered such opinions of counsel with respect
thereto as the Agent may reasonably request; and
(b) the Account Party may merge with another Person so long
as the Account Party is the surviving entity.
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15.10.2 No Obligor will sell, lease or otherwise transfer, directly
or indirectly, all or any substantial part of its assets to
any other Person (excluding sales of investment securities
in the ordinary course of business).
15.11 No Amendments
The Account Party shall not amend or waive, or utilise or rely on any
waiver of, any provision of any Security Document that may be entered
into without the written consent of the Agent, the Security Trustee
and the Majority Banks.
15.12 Maintenance of Legal Validity
Each Obligor shall obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all authorisations,
approvals, licences and consents required in or by the laws of its
jurisdiction of incorporation to enable it lawfully to enter into and
perform its obligations under the Finance Documents to which it is a
party and to ensure the legality, validity, enforceability or
admissibility in evidence in its jurisdiction of incorporation of the
Finance Documents to which it is a party.
15.13 Claims Pari Passu
Each Obligor shall ensure that at all times the claims of the Finance
Parties against it under this Agreement ranks at least pari passu with
the claims of all its other unsecured and unsubordinated creditors
save those claims which are preferred by any bankruptcy, insolvency,
liquidation or other similar laws of general application or are
mandatorily preferred by law applying to insurance companies
generally.
16. EVENTS OF DEFAULT
Each of Clause 16.1 (Failure to Pay) to Clause 16.17 (Custodian's
Undertaking) describes circumstances which constitute an Event of
Default for the purposes of this Agreement.
16.1 Failure to Pay
The Account Party shall fail to reimburse any drawing under any Letter
of Credit when required hereunder or shall fail to pay within five
Business Days of the due date thereof any interest or fees or other
amounts payable hereunder or under any other Finance Document or the
Guarantor shall fail to pay when due any such reimbursement
obligations, interest, fees or other amounts payable hereunder
provided that, for the purposes of this Clause 16.1, no such payment
default by the Account Party shall be continuing if the Guarantor pays
the amount thereof at the time and otherwise in the manner provided in
Clause 29 (Guarantee and Indemnity).
16.2 Specific Covenants
The Account Party shall fail to observe or perform any covenant (a)
contained in Clauses 15.7 (Adjusted Consolidated Debt to Total
Capitalisation Ratio) to Clause 15.10 (Consolidations, Mergers and
Sale of Assets) inclusive or (b) contained in Clause 17.1 (Letter of
Credit Commission).
16.3 Other Obligations
Any Obligor shall fail to observe or perform any covenant or agreement
contained in this Agreement or in any other Finance Document (other
than those covered by Clause 16.1 (Failure to Pay) or Clause 16.2
(Specific Covenants)) and such failure, if, in the
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reasonable opinion of the Majority Banks, it is capable of remedy, is
not remedied within 30 days after notice thereof has been given to the
Account Party by the Agent at the request of any Bank.
16.4 Misrepresentation
Any representation, warranty, certification or statement made by any
Obligor in this Agreement or in any other Finance Document or in any
certificate, financial statement or other document delivered pursuant
to this Agreement or any other Finance Document shall prove to have
been incorrect in any material respect when made (or deemed made).
16.5 Cross-default
The Account Party or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations when due or within any
applicable grace period.
16.6 Cross-Acceleration
Any event or condition shall occur which results in the acceleration
of the maturity of any Material Debt or enables (or, with the giving
of notice or lapse of time or both, would enable) the holder of such
Material Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof.
16.7 Winding-up of the Account Party or the Guarantor
16.7.1 A resolution or other similar action is passed authorising
the voluntary winding up of the Account Party or any other
similar action with respect to the Account Party or a
petition is filed for the winding up of the Account Party or
the taking of any other similar action with respect to the
Account Party in the Grand Court of the Cayman Islands
(except in the case of any frivolous or vexatious steps or
proceedings started by any Person who is not a member of the
Group where such steps or proceedings are dismissed within
30 days); or
16.7.2 any corporate action is taken authorising the winding up,
the liquidation, any arrangement or the taking of any other
similar action of or with respect to the Guarantor or
authorising any corporate action to be taken to facilitate
any such winding up, liquidation, arrangement or other
similar action or any petition shall be filed seeking the
winding up, the liquidation, any arrangement or the taking
of any other similar action of or with respect to the
Guarantor by the Registrar of Companies in Bermuda, one or
more holders of insurance policies or reinsurance
certificates issued by the Guarantor or by any other Person
or Persons or any petition shall be presented for the
winding up of the Guarantor to a court of Bermuda as
provided under the Bermuda Companies Law and in either such
case such petition shall remain undismissed and unstayed for
a period of 60 days or any creditors' or members' voluntary
winding up of the Guarantor as provided under the Bermuda
Companies Law shall be commenced or any receiver shall be
appointed by a creditor of the Guarantor or by a court of
Bermuda on the application of a creditor of the Guarantor as
provided under any instrument giving rights for the
appointment of a receiver.
16.8 Execution or Distress
A proceeding shall be commenced by any Person seeking execution or
distress over or possession of the assets of either Obligor or any
substantial part thereof or any similar
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remedy and such proceedings shall remain undismissed and unstayed for
a period of 60 days.
16.9 Insolvency and Rescheduling
An Obligor or Material Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganisation or other relief
with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorise any
of the foregoing; or an involuntary case or other proceeding shall be
commenced against an Obligor or Material Subsidiary seeking
liquidation, reorganisation or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against an Obligor or
Material Subsidiary under the United States federal bankruptcy laws as
now or hereafter in effect.
16.10 Analogous Proceedings
There occurs, in relation to an Obligor or Material Subsidiary in any
country or territory in which any of them carries on business or in
any jurisdiction where any part of their assets is subject, any event
which corresponds in that country or territory with any of those
mentioned in Clause 16.7 (Winding-up of the Account Party or the
Guarantor) to Clause 16.9 (Insolvency and Rescheduling) above.
16.11 Failure to comply with Judgment
A final judgment or order for the payment of money in excess of
US$100,000,000 shall be rendered against an Obligor or Material
Subsidiary and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days.
16.12 Ownership of the Account Party and the Guarantor
16.12.1 Any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934 of the United States of
America, as amended), directly or indirectly, of Voting
Interests of the Account Party (or other securities
convertible into such Voting Interests) representing 30 per
cent. or more of the combined voting power of all Voting
Interests of the Account Party; or
16.12.2 during any period of 12 consecutive calendar months,
individuals who were directors of the Account Party on the
first day of such period shall cease to constitute a
majority of the board of directors of the Account Party; or
16.12.3 any Person or two or more Persons acting in concert shall
have acquired, by contract or otherwise, or shall have
entered into a contract or arrangement that
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results in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence
over the management or policies of the Account Party; or
16.12.4 the Guarantor ceases to be a Wholly-Owned Consolidated
Subsidiary of the Account Party.
16.13 Illegality
At any time it is or becomes unlawful for either Obligor to perform or
comply with any or all of its obligations hereunder or under any of
the Finance Documents or any court or arbitrator or any governmental
body, agency or official which has jurisdiction in the matter shall
decide, rule or order that any provision of any of the Finance
Documents is invalid or unenforceable in any material respect, or
either Obligor shall so assert in writing.
16.14 Revocation of Registration
The registration of the Guarantor as an insurer shall be revoked,
suspended or otherwise have restrictions or conditions placed upon it
unless, in the case of the placing of any such restrictions or
conditions, such restrictions or conditions could not have a material
adverse effect on the interests of the Finance Parties under the
Finance Documents.
16.15 Security
If the Obligors are required to grant security pursuant to sub-clause
17.1.2 of Clause 17.1 (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.
16.16 Finance Documents
Any provision of any Finance Document is repudiated, terminated,
amended or waived by any party thereto without the written consent of
the Agent, the Security Trustee and the Majority Banks.
16.17 Custodian's Undertaking
In the event that the Obligors are required to grant Security pursuant
to sub-clause 17.1.2 of Clause 17.1 (Letter of Credit Commission), the
Custodian fails to observe or perform any material provision of the
Custodian's Undertaking and such failure, if in the reasonable opinion
of the Majority Banks it is capable of remedy, is not remedied within
30 days after notice thereof has been given to the Custodian by the
Account Party or by the Agent at the request of any Bank.
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16.18 Acceleration and Cancellation
Upon the occurrence of an Event of Default at any time thereafter
while that Event of Default is continuing, the Agent may (and, if so
instructed by the Majority Banks shall) by notice to the Account
Party:
16.18.1 require the Account Party to procure that the liabilities of
each of the Banks under each Letter of Credit are promptly
reduced to zero and/or provide Cash Collateral for each
Letter of Credit in an amount specified by the Agent
(whereupon the Account Party shall do so); and/or
16.18.2 declare that any unutilised portion of the Facility shall be
cancelled, whereupon the same shall be cancelled and the
Available Commitment of each Bank shall be reduced to zero;
and
16.18.3 (in the event that the Obligors have granted Security
pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission), direct the Security Trustee to exercise
all rights and remedies of a mortgagee or a secured party at
such time including, without limitation, the right to take
possession of any or all of the assets subject to the
Security Documents and the books and records relating
thereto, with or without judicial process. For the purposes
of the preceding sentence, the Security Trustee may enter
upon any or all of the premises where any of the assets
subject to the Security Documents, such other security or
books or records may be situated and take possession and
remove the same therefrom.
17. COMMISSION AND FEES
17.1 Letter of Credit Commission
17.1.1 The Account Party shall, in respect of each Letter of Credit
requested by it, pay to the Agent for the account of each
Bank (for distribution in proportion to each Bank's L/C
Proportion of such Letter of Credit) a letter of credit
commission in sterling at the L/C Commission Rate on the
maximum actual and contingent liabilities of the Banks under
the relevant Letter of Credit. Such Letter of Credit
Commission shall be paid quarterly in arrear in respect of
each successive period of three months (or such shorter
period as shall end on the relevant Expiry Date) which
begins during the Term of the relevant Letter of Credit,
commencing from the Effective Date of such Letter of Credit,
and payable on the first day of each such period thereafter.
17.1.2 If the Pricing Level reaches Level V (each as defined in
Schedule 9 (Pricing Schedule)), the 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
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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.
17.1.3 Any change to the L/C Commission Rate shall take effect on
the day on which the event giving rise to such change occurs
(whether pursuant to Schedule 9 (Pricing Schedule) or
pursuant to Clause 17.1.2).
17.1.4 Any unpaid Letter of Credit Commission payable in respect of
each Original Letter of Credit shall be paid in full by the
Account Party by no later than the Effective Date.
17.2 Arrangement Fees
The Account Party shall pay to the Lead Arranger the fees specified in
the letter dated 11 September 2001 from the Lead Arranger to the
Account Party at the times, and in the amounts, specified in such
letter.
17.3 Agency Fee
The Account Party shall pay to the Agent for its own account the
agency fees specified in the letter dated 11 September 2001 from the
Lead Arranger to the Account Party at the times, and in the amounts,
specified in such letter.
17.4 Participation Fees
The Account Party shall pay to the Lead Arranger the participation
fees specified in the letter dated 11 September 2001 from the Lead
Arranger to the Account Party at the times, and in the amounts,
specified in such letter. These fees shall be distributed by the Lead
Arranger among certain of the Banks in accordance with the
arrangements agreed by the Lead Arranger with such Banks prior to the
date of this Agreement.
18. COSTS AND EXPENSES
18.1 Transaction Expenses
The Account Party shall, from time to time within thirty days of
demand of the Agent, reimburse the Agent and the 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.
18.2 Preservation and Enforcement of Rights
18.2.1 The Account Party shall, from time to time on demand of the
Agent, reimburse the Finance Parties for all costs and
expenses (including legal fees) properly incurred on a full
indemnity basis together with any VAT thereon incurred in or
in connection with the preservation and/or enforcement of
any of the rights of the Finance Parties under the Finance
Documents and any document referred to in the Finance
Documents (including, without limitation, any costs and
expenses relating to any investigation as to whether or not
an Event of Default
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might have occurred or is likely to occur or any steps
necessary or desirable in connection with any proposal for
remedying or otherwise resolving a Default).
18.2.2 In the event that the Obligors have granted Security
pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission) and if, by reason of a subsequent breach
of clause 4 of the Charge Agreement by 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.
18.3 Stamp Taxes
The Account Party shall pay all stamp, registration and other taxes to
which the Finance Documents, any other document referred to in the
Finance Documents or any judgment given in connection therewith is or
at any time may be subject and to which it is a party and shall, from
time to time on demand of the Agent, indemnify the Finance Parties
against any liabilities, costs, claims and expenses resulting from any
failure to pay or any delay in paying any such tax.
18.4 Amendment Costs
If an Obligor requests any amendment, waiver or consent to any Finance
Document then the Account Party shall, within thirty days of demand by
the Agent, reimburse the Finance Parties for all reasonable costs and
expenses (including legal fees) together with any VAT thereon incurred
by such persons in responding to or complying with such request.
18.5 Banks' Liabilities for Costs
If the Account Party fails to perform any of its obligations under
this Clause 18 each Bank shall, in its Proportion, indemnify each of
the Agent and the Arrangers against any loss incurred by any of them
as a result of such failure.
19. DEFAULT INTEREST AND BREAK COSTS
19.1 Default Interest
If any sum due and payable by an Obligor hereunder is not paid on the
due date therefor in accordance with Clause 22 (Payments) or if any
sum due and payable by an Obligor under any judgment of any court in
connection herewith is not paid on the date of such judgment, the
period beginning on such due date or, as the case may be, the date of
such judgment and ending on the date upon which the obligation of such
Obligor to pay such sum is discharged shall be divided into successive
periods, each of which (other than the first) shall start on the last
day of the preceding such period and the duration of each of which
shall (except as otherwise provided in this Clause 19) be selected by
the Agent.
19.2 Default Interest Rate
An Unpaid Sum shall bear interest during each Term in respect thereof
at the rate per annum which is the sum from time to time of two per
cent. and LIBOR on the Quotation Date therefor.
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19.3 Payment of Default Interest
Any interest which shall have accrued under Clause 19.1 (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.
19.4 Break Costs
If any Bank or the Agent on its behalf receives or recovers all or any
part of an Unpaid Sum otherwise than on the last day of a Term
relating thereto, the Account Party shall pay to the Agent on demand
for the account of such Bank an amount equal to the amount (if any) by
which (a) the additional interest which would have been payable on the
amount so received or recovered had it been received or recovered on
the last day of that Term exceeds (b) the amount of interest which in
the opinion of the Agent (acting reasonably) would have been payable
to the Agent on the last day of that Term in respect of a deposit in
the currency of the amount so received or recovered equal to the
amount so received or recovered placed by it with a prime bank in
London for a period starting on the first Business Day following the
date of such receipt or recovery and ending on the last day of that
Term.
20. INDEMNITIES
20.1 Company's Indemnity
The Account Party undertakes to indemnify:
20.1.1 each Finance Party against any reasonable cost, claim, loss,
expense (including legal fees) or liability together with
any VAT thereon, whether or not reasonably foreseeable,
which it may sustain or incur as a consequence of the
occurrence of any Event of Default or any default by an
Obligor in the performance of any of the obligations
expressed to be assumed by it in the Finance Documents;
20.1.2 the Agent against any reasonable cost or loss it may suffer
or incur as a result of its entering into, or performing,
any foreign exchange contract for the purposes of Clause 22
(Payments);
20.1.3 each Bank against any reasonable cost or loss it may suffer
under Clause 18.5 (Banks' Liabilities for Costs) or Clause
25.5 (Indemnification); and
20.1.4 each Bank against any reasonable cost or loss it may suffer
or incur as a result of its issuing or making arrangements
to issue a Letter of Credit requested by the Account Party
hereunder but not issued by reason of the operation of any
one or more of the provisions hereof.
20.2 Currency Indemnity
If any sum (a "Sum") due from an Obligor under the Finance Documents
or any order or judgment given or made in relation thereto has to be
converted from the currency (the "First Currency") in which such Sum
is payable into another currency (the "Second Currency") for the
purpose of:
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20.2.1 making or filing a claim or proof against such Obligor;
20.2.2 obtaining an order or judgment in any court or other
tribunal; or
20.2.3 enforcing any order or judgment given or made in relation
thereto,
the Account Party shall indemnify each person to whom such Sum is due
from and against any loss suffered or incurred as a result of any
discrepancy between (a) the rate of exchange used for such purpose to
convert such Sum from the First Currency into the Second Currency and
(b) the rate or rates of exchange available to such person at its
prevailing spot rate at the time of receipt of such Sum.
21. CURRENCY OF ACCOUNT AND PAYMENT
21.1 Currency of Account
Sterling is the currency of account and payment for each and every sum
at any time due from an Obligor hereunder, provided that:
21.1.1 each sum falling due by an Obligor hereunder in relation to
any demand made under a Letter of Credit or in relation to
any reimbursement of the Banks pursuant to a demand made
under a Letter of Credit shall be made in the currency of
the demand;
21.1.2 each payment of interest shall be made in the currency in
which the sum in respect of which such interest is payable
is denominated;
21.1.3 each payment in respect of costs and expenses shall be made
in the currency in which the same were incurred;
21.1.4 each payment pursuant to Clause 9.2 (Tax Indemnity) or
Clause 11.1 (Increased Costs) shall be made in the currency
specified by the party claiming thereunder; and
21.1.5 any amount expressed to be payable in a currency other than
sterling shall be paid in that other currency.
22. PAYMENTS
22.1 Payments to the Agent
On each date on which this Agreement requires an amount to be paid by
an Obligor, such Obligor shall make the same available to the Agent
for value on the due date at such time and in such funds and to such
account with such bank as the Agent shall specify from time to time
upon reasonable advance notice to such Obligor.
22.2 Payments by the Agent
Save as otherwise provided herein, each payment received by the Agent
pursuant to Clause 22.1 (Payments to the Agent) shall be made
available by the Agent to the person entitled to receive such payment
in accordance with this Agreement (in the case of a Bank, for the
account of its Facility Office) for value the same day by transfer to
such account of such person with such bank in the principal financial
centre of the country of the currency of such payment as such person
shall have previously notified to the Agent.
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22.3 No Set-off
All payments required to be made by an Obligor hereunder shall be
calculated without reference to any set-off or counterclaim and shall
be made free and clear of and without any deduction for or on account
of any set-off or counterclaim.
22.4 Clawback
Where a sum is to be paid hereunder to the Agent for 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 such sum or the
proceeds of such exchange contract was so made available shall on
request refund the same to the Agent together with an amount
sufficient to indemnify the Agent against any cost or loss it may have
suffered or incurred by reason of its having paid out such sum or the
proceeds of such exchange contract prior to its having received such
sum.
22.5 Partial Payments
If and whenever a payment is made by an Obligor hereunder and the
Agent receives an amount less than the due amount of such payment the
Agent may apply the amount received towards the obligations of the
Obligors under this Agreement in the following order:
22.5.1 first, in or towards payment of any unpaid costs and
expenses of each of the Agent and the Arrangers;
22.5.2 second, in or towards payment pro rata of any accrued
interest, Letter of Credit Commission or fees payable to any
Bank hereunder due but unpaid;
22.5.3 third, in or towards payment pro rata of any Outstandings
due but unpaid; and
22.5.4 fourth, in or towards payment pro rata of any other sum due
but unpaid.
22.6 Variation of Partial Payments
The order of partial payments set out in Clause 22.5 (Partial
Payments) shall override any appropriation made by the Obligors to
which the partial payment relates but the order set out in sub-clauses
22.5.2, 22.5.3 and 22.5.4 of Clause 22.5 (Partial Payments) may be
varied if agreed by all the Banks.
22.7 Appropriations of proceeds of enforcement of Security
If the Agent recovers any moneys from the enforcement of any Finance
Document in its capacity as Agent or Security Trustee thereunder, it
shall apply the money recovered in the following order:
22.7.1 first, in payment of all costs, charges, expenses and
liabilities (and all interest thereon as provided in the
Finance Documents) incurred by or on behalf of the Agent and
the Security Trustee and any receiver, attorney or agent in
connection with the due performance of its duties and
exercise of its powers and discretions under the Finance
Documents and the remuneration of the Agent, the Security
Trustee and every receiver under the Finance Documents;
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22.7.2 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;
22.7.3 thirdly, in or towards payment pro rata of any accrued
interest, Letter of Credit Commission or fees due but unpaid
under this Agreement;
22.7.4 fourthly, in or towards payment pro rata of any Outstandings
due but unpaid under this Agreement;
22.7.5 fifthly, in or towards payment pro rata of any other sum due
but unpaid under the Finance Documents; and
22.7.6 sixthly, in payment of the surplus (if any) to the Account
Party or any other person entitled thereto.
The order of application of money recovered in this Clause may only be
varied with the consent of all the Banks.
23. SET-OFF
23.1 Contractual Set-off
Each Obligor authorises each Bank at any time after an Event of
Default has occurred which is continuing to apply any credit balance
to which such Obligor is entitled on any account of such Obligor with
such Bank in satisfaction of any sum due and payable from such Obligor
to such Bank hereunder (whether by way of collateralisation or
otherwise) but unpaid. For this purpose, each Bank is authorised to
purchase with the moneys standing to the credit of any such account
such other currencies as may be necessary to effect such application.
23.2 Set-off not Mandatory
No Bank shall be obliged to exercise any right given to it by Clause
23.1 (Contractual Set-off).
24. SHARING
24.1 Payments to Banks
If a Bank (a "Recovering Bank") applies any receipt or recovery from
an Obligor to a payment due under this Agreement and such amount is
received or recovered other than in accordance with Clause 22
(Payments), then such Recovering Bank shall:
24.1.1 notify the Agent of such receipt or recovery;
24.1.2 at the request of the Agent, promptly pay to the Agent an
amount (the "Sharing Payment") equal to such receipt or
recovery less any amount which the Agent determines may be
retained by such Recovering Bank as its share of any payment
to be made in accordance with Clause 22.5 (Partial
Payments).
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24.2 Redistribution of Payments
The Agent shall treat the Sharing Payment as if it had been paid by
the relevant Obligor and distribute it between the Finance Parties
(other than the Recovering Bank) in accordance with Clause 22.5
(Partial Payments).
24.3 Recovering Bank's Rights
The Recovering Bank will be subrogated to the rights of the parties
which have shared in a redistribution pursuant to Clause 24.2
(Redistribution of Payments) in respect of the Sharing Payment (and
the relevant Obligor shall be liable to the Recovering Bank in an
amount equal to the Sharing Payment) in place of any corresponding
liability to the parties which have shared in the redistribution.
24.4 Repayable Recoveries
If any part of the Sharing Payment received or recovered by a
Recovering Bank becomes repayable and is repaid by such Recovering
Bank, then:
24.4.1 each party which has received a share of such Sharing
Payment pursuant to Clause 24.2 (Redistribution of Payments)
shall, upon request of the Agent, pay to the Agent for
account of such Recovering Bank an amount equal to its share
of such Sharing Payment; and
24.4.2 such Recovering Bank's rights of subrogation in respect of
any reimbursement shall be cancelled and the relevant
Obligor will be liable to the reimbursing party for the
amount so reimbursed.
24.5 Exception
This Clause 24 shall not apply if the Recovering Bank would not, after
making any payment pursuant hereto, have a valid and enforceable claim
against the relevant Obligor.
24.6 Recoveries Through Legal Proceedings
If any Bank intends to commence any action in any court it shall give
prior notice to the Agent and the other Banks. If any Bank shall
commence any action in any court to enforce its rights hereunder and,
as a result thereof or in connection therewith, receives any amount,
then such Bank shall not be required to share any portion of such
amount with any Bank which has the legal right to, but does not, join
in such action or commence and diligently prosecute a separate action
to enforce its rights in another court.
25. THE AGENT, THE ARRANGERS AND THE BANKS
25.1 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.
25.2 Agent's Discretions
The Agent may:
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25.2.1 assume, unless it has, in its capacity as agent for the
Banks, received notice to the contrary from any other party
hereto, that (a) any representation made or deemed to be
made by an Obligor in connection with the Finance Documents
is true, (b) no Event of Default or Potential Event of
Default has occurred, (c) no Obligor is in breach of or
default under its obligations under the Finance Documents
and (d) any right, power, authority or discretion vested
therein upon the Majority Banks, the Banks or any other
person or group of persons has not been exercised;
25.2.2 assume that the Facility Office of each Bank is that
notified to it by such Bank in writing prior to the date
hereof (or, in the case of a Transferee, at the end of the
Transfer Certificate to which it is a party as Transferee)
until it has received from such Bank a notice designating
some other office of such Bank to replace its Facility
Office and act upon any such notice until the same is
superseded by a further such notice;
25.2.3 engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or
services may to it seem necessary, expedient or desirable
and rely upon any advice so obtained;
25.2.4 rely as to any matters of fact which might reasonably be
expected to be within the knowledge of an Obligor upon a
certificate signed by or on behalf of such Obligor;
25.2.5 rely upon any communication or document believed by it to be
genuine;
25.2.6 refrain from exercising any right, power or discretion
vested in it as agent hereunder unless and until instructed
by the Majority Banks as to whether or not such right, power
or discretion is to be exercised and, if it is to be
exercised, as to the manner in which it should be exercised;
25.2.7 refrain from acting in accordance with any instructions of
the Majority Banks to begin any legal action or proceeding
arising out of or in connection with the Finance Documents
until it shall have received such security as it may require
(whether by way of payment in advance or otherwise) for all
costs, claims, losses, expenses (including legal fees) and
liabilities together with any VAT thereon which it will or
may expend or incur in complying with such instructions; and
25.2.8 assume (unless it has specific notice to the contrary) that
any notice or request made by the Account Party is made on
behalf of both Obligors.
25.3 Agent's Obligations
The Agent shall:
25.3.1 promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from an
Obligor under the Finance Documents and shall promptly
deliver to each Bank a copy of each Letter of Credit
delivered to Lloyd's pursuant to Clause 3.3 (Completion of
Letters of Credit);
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25.3.2 promptly notify each Bank of the occurrence of any Event of
Default or any default by an Obligor in the due performance of
or compliance with its obligations under the Finance Documents
of which the Agent has notice from any other party hereto;
25.3.3 save as otherwise provided herein, act as agent under the
Finance Documents in accordance with any instructions given to
it by an Majority Banks, which instructions shall be binding on
the Arrangers and the Banks; and
25.3.4 if so instructed by the Majority Banks, refrain from exercising
any right, power or discretion vested in it as agent under the
Finance Documents.
The Agent's duties under the Finance Documents are solely mechanical
and administrative in nature.
25.4 Excluded Obligations
Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arrangers shall:
25.4.1 be bound to enquire as to (a) whether or not any representation
made or deemed to be made by an Obligor in connection with the
Finance Documents is true, (b) the occurrence or otherwise of
any Default, (c) the performance by an Obligor of its
obligations under the Finance Documents or (d) any breach of or
default by an Obligor of or under its obligations under the
Finance Documents;
25.4.2 be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
25.4.3 be bound to disclose to any other person any information
relating to any member of the Group if (a) such person, on
providing such information, expressly stated to the Agent or,
as the case may be, the 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;
25.4.4 be under any obligations other than those for which express
provision is made herein; or
25.4.5 be or be deemed to be a fiduciary for any other party hereto.
25.5 Indemnification
Each Bank shall, in its Proportion, from time to time on demand by the
Agent, indemnify the Agent against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT
thereon which the Agent may incur, otherwise than by reason of its own
gross negligence or wilful misconduct, in acting in its capacity as
agent hereunder (other than any which have been reimbursed by the
Account Party pursuant to Clause 20.1 Company's Indemnity).
25.6 Exclusion of Liabilities
Except in the case of gross negligence or wilful default, neither the
Agent nor the Arrangers accepts any responsibility:
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25.6.1 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;
25.6.2 for the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with the Finance
Documents; or
25.6.3 for the exercise of, or the failure to exercise, any judgement,
discretion or power given to any of them by or in connection
with the Finance Documents or any other agreement, arrangement
or document entered into, made or executed in anticipation of,
pursuant to or in connection with the Finance Documents.
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.
25.7 No Actions
Each of the Banks agree that it will not assert or seek to assert
against any director, officer or employee of the Agent or the Arrangers
any claim it might have against any of them in respect of the matters
referred to in Clause 25.6 (Exclusion of Liabilities).
25.8 Business with the Group
The Agent and the 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.
25.9 Resignation
The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days'
prior notice to that effect to each of the other parties hereto,
provided that no such resignation shall be effective until a successor
for the Agent is appointed in accordance with the succeeding
provisions of this Clause 25.
25.10 Removal of Agent
The Majority Banks may remove the Agent from its role as agent
hereunder after consultation with the Account Party by giving notice to
that effect to each of the other parties hereto. Such removal shall
take effect only when a successor to the Agent is appointed in
accordance with the terms hereof.
25.11 Successor Agent
If the Agent gives notice of its resignation pursuant to Clause 25.9
(Resignation) or it is removed pursuant to Clause 25.10 (Removal of
Agent) then any reputable and experienced bank or other financial
institution may be appointed as a successor to the Agent by the
Majority Banks (after consultation with the Account Party if the
successor is a Bank or otherwise with the Account Party's prior
written consent) during the period of such notice (with the
co-operation of the Agent), subject to such entity executing and
delivering a confidentiality undertaking substantially in the form set
out in Schedule 8
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(Form of Confidentiality Undertaking) but, if no such successor is so
appointed, the Agent may appoint such a successor itself.
25.12 Rights and Obligations
If a successor to the Agent is appointed under the provisions of
Clause 25.11 (Successor Agent), then (a) the retiring Agent shall be
discharged from any further obligation hereunder but shall remain
entitled to the benefit of the provisions of this Clause 25 and (b)
its successor and each of the other parties hereto shall have the same
rights and obligations amongst themselves as they would have had if
such successor had been a party hereto.
25.13 Own Responsibility
It is understood and agreed by each Bank that at all times it has
itself been, and will continue to be, solely responsible for making
its own independent appraisal of and investigation into all risks
arising under or in connection with this Agreement including, but not
limited to:
25.13.1 the financial condition, creditworthiness, condition, affairs,
status and nature of each member of the Group;
25.13.2 the legality, validity, effectiveness, adequacy and
enforceability of the Finance Documents and any other
agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection with
the Finance Documents;
25.13.3 whether such Bank has recourse, and the nature and extent of
that recourse, against an Obligor or any other person or any of
its assets under or in connection with the Finance Documents,
the transactions therein contemplated or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with the Finance
Documents; and
25.13.4 the adequacy, accuracy and/or completeness of any information
provided by the Agent or the 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.
25.14 Agency Division Separate
In acting as agent hereunder for the Banks, the Agent shall be
regarded as acting through its agency division which shall be treated
as a separate entity from any other of its divisions or departments
and, notwithstanding the foregoing provisions of this Clause 25, any
information received by some other division or department of the Agent
may be treated as confidential and shall not be regarded as having
been given to the Agent's agency division.
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25.15 Declaration of Agent as Security Trustee
The Agent hereby declares that it shall hold:
25.15.1 all rights, titles and interests that may hereafter be
mortgaged, charged, assigned or otherwise secured in favour of
the Agent by or pursuant to the Finance Documents;
25.15.2 the benefit of all representations, covenants, guarantees,
indemnities and other contractual provisions given in favour
of the Agent (other than any such benefits given to the Agent
solely for its own benefit) by or pursuant to the Finance
Documents (other than this Agreement); and
25.15.3 all proceeds of the security referred to in sub-clause 25.15.1
above and of the enforcement of the benefits referred to in
25.15.2 above,
on trust for itself and the other Finance Parties from time to time.
Such declaration shall remain valid notwithstanding that the Agent may
on the date hereof or at any other time be the sole Finance Party; for
the avoidance of doubt, however, such declaration shall, in such case,
be deemed repeated on each date on which the Agent ceases to be the sole
Finance Party.
Each of the parties hereto agrees that the obligations, rights and
benefits vested or to be vested in the Agent as trustee as aforesaid by
the Finance Documents or any document entered into pursuant thereto
shall (as well before as after enforcement) be performed and (as the
case may be) exercised by the Agent in accordance with the provisions of
this Clause 25.
25.16 Powers and Discretions
The Agent shall have all the powers and discretions conferred upon
trustees by the Trustee ▇▇▇ ▇▇▇▇ (to the extent not inconsistent
herewith) and by way of supplement it is expressly declared as follows:
25.16.1 the Agent shall be at liberty to place any of the Finance
Documents and any other instruments, documents or deeds
delivered to it pursuant thereto or in connection therewith
for the time being in its possession in any safe deposit, safe
or receptacle selected by the Agent or with any bank, any
company whose business includes undertaking the safe custody
of documents or any firm of lawyers of good repute;
25.16.2 the Agent may, whenever it thinks fit, delegate by power of
attorney or otherwise to any person or persons or fluctuating
body of persons all or any of the rights, trusts, powers,
authorities and discretions vested in it by any of the Finance
Documents and such delegation may be made upon such terms and
subject to such conditions (including the power to
sub-delegate) and subject to such regulations as the Agent may
think fit and the Agent shall not be bound to supervise, or be
in any way responsible for any loss incurred by reason of any
misconduct or default on the part of, any such delegate (or
sub-delegate);
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25.16.3 notwithstanding anything else herein contained, the Agent may
refrain from doing anything which would or might in its
opinion be contrary to any law of any jurisdiction or any
directive or regulation of any agency of any state or which
would or might otherwise render it liable to any person and
may do anything which is, in its opinion, necessary to comply
with any such law, directive or regulation;
25.16.4 save in the case of gross negligence or wilful misconduct, the
Agent and every attorney, agent, delegate, sub-delegate and
any other person appointed by any of them under any of the
Finance Documents may indemnify itself or himself out of the
security held by the Agent against all liabilities, costs,
fees, charges, losses and expenses incurred by any of them in
relation to or arising out of the taking or holding of any of
the security constituted by, or any of the benefits provided
by, any of the Finance Documents, in the exercise or purported
exercise of the rights, trusts, powers and discretions vested
in any of them or in respect of any other matter or thing done
or omitted to be done in any way relating to any of the
Finance Documents or pursuant to any law or regulation; and
25.16.5 without prejudice to the provisions of any of the Finance
Documents, the Agent shall not be under any obligation to
insure any property or to require any other person to maintain
any such insurance and shall not be responsible for any loss
which may be suffered by any person as a result of the lack of
or inadequacy or insufficiency of any such insurance.
25.17 Liability
The Agent shall not be liable for any failure:
25.17.1 to require the deposit with it of any deed or document
certifying, representing or constituting the title of the
Account Party to any of the property mortgaged, charged,
assigned or otherwise encumbered by or pursuant to any of the
Finance Documents;
25.17.2 to obtain any licence, consent or other authority for the
execution, delivery, validity, legality, adequacy,
performance, enforceability or admissibility in evidence of
any of the Finance Documents;
25.17.3 to register or notify any deed or document mentioned at
sub-clause 25.17.1 in accordance with the provisions of any of
the documents of title of the Account Party;
25.17.4 to effect or procure registration of or otherwise protect any
of the security created by any of the Finance Documents by
registering the same under any applicable registration laws in
any territory or otherwise by registering any notice, caution
or other entry prescribed by or pursuant to the provisions of
the said Act or laws;
25.17.5 to take or to require the Account Party to take any steps to
render the security without limitation, any floating charge)
created or purported to be created by or
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pursuant to any of the Finance Documents effective or to
secure the creation of any ancillary charge under the laws
of any jurisdiction; or
25.17.6 to require any further assurances in relation to any of the
Finance Documents.
25.18 Title to Security etc.
The Agent may accept without enquiry, requisition or objection such
right and title as the Account Party may have to the property
belonging (or purportedly belonging) to it (or any part thereof) which
is the subject matter of any of the Finance Documents and shall not be
bound or concerned to investigate or make any enquiry into the right
or title of the Account Party to such property (or any part thereof)
or, without prejudice to the foregoing, to require the Account Party
to remedy any defect in the Account Party's right or title as
aforesaid.
25.19 New Security Trustee
The Agent may at any time appoint any person (whether or not a trust
corporation) to act either as a separate trustee or as a co-trustee
jointly with the Agent:
25.19.1 if the Agent considers such appointment to be in the
interests of the Banks; or
25.19.2 for the purposes of conforming to any legal requirements,
restrictions or conditions which the Agent deems relevant
for the purposes of the Finance Documents and the Agent
shall give prior notice to the Account Party and the Banks
of any such appointment.
Any person so appointed shall (subject to the provisions of the
Finance Documents) have such powers, authorities and discretions and
such duties and obligations as shall be conferred or imposed or such
person by the instrument of appointment and shall have the same
benefits under this Clause 25 as the Agent.
The Agent shall have power in like manner to remove any person so
appointed.
Such reasonable remuneration as the Agent may pay to any person so
appointed, and any costs, charges and expenses incurred by such person
in performing its functions pursuant to such appointment, shall for
the purposes hereof be treated as costs, charges and expenses incurred
by the Agent under the Finance Documents.
25.20 Perpetuity Period
The perpetuity period under the rule against perpetuities if
applicable to the trusts constituted in this Clause 25 and the other
Finance Documents shall be the period of eighty years from the date of
this Agreement and, subject thereto, if the Agent determines that all
of the obligations of the Account Party under any of the Finance
Documents have been fully and unconditionally discharged, such trusts
shall be wound up.
25.21 Security
25.21.1 In the event that the Required Value is greater than US$100
pursuant to sub-clause 17.1.2 of Clause 17.1 (Letter of
Credit Commission), as soon as reasonably practicable after
each delivery to the Security Trustee of the statement(s) of
the Charged Portfolio by the Custodian pursuant to paragraph
3
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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)
C represents the amount of the Charged Portfolio
denominated in any currency other than sterling or
dollars (converted into sterling at the Spot Rate)
Y per cent. means:
(a) 10 per cent. in respect of any portion of the Charged
Portfolio denominated in sterling;
(b) 10 per cent. in respect of any portion of the Charged
Portfolio denominated in dollars; and
(c) 15 per cent. in respect of any portion of the Charged
Portfolio denominated in any currency other than
dollars or sterling
and shall notify the Custodian of any such adjustments.
25.21.2 The Security Trustee shall not amend the Security Trustee's
Requirements without the consent of the Banks.
25.21.3 In the event that the Pricing Level reverts from Level V to
level IV or above (each as defined in Schedule 9 (Pricing
Schedule), the 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 17.1.2 of Clause 17.1 (Letter of
Credit Commission).
25.22 Bank Representations
Each Bank represents to the Agent on the date of issue of each Letter
of Credit that:
25.22.1 the execution and delivery of each Letter of Credit by the
Agent on the Bank's behalf has been duly authorised by all
necessary action on the part of the Bank; and
25.22.2 the obligations of the Bank under each Letter of Credit
constitute its legal, valid and binding obligations.
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25.23 Letters of Credit
Each Bank shall in its Proportion, indemnify the Agent against any and
all liabilities, costs and expenses which the Agent may incur (in its
capacity as Agent) as a result of the execution and delivery of any
Letter of Credit and any documents executed and delivered by the Agent
in connection therewith.
26. ASSIGNMENTS AND TRANSFERS
26.1 Binding Agreement
The Finance Documents shall be binding upon and enure to the benefit
of each party hereto and its or any subsequent successors and
Transferees.
26.2 No Assignments and Transfers by the Obligors
No Obligor shall be entitled to assign or transfer all or any of its
rights, benefits and obligations under the Finance Documents without
the prior written consent of all the Banks.
26.3 Assignments and Transfers by Banks
Subject to obtaining the prior written consent of the Account Party
(such consent not to be unreasonably withheld or delayed), any Bank
may, at any time, assign all or any of its rights and benefits under
the Finance Documents or transfer in accordance with Clause 26.5
(Transfers by Banks) all or any of its rights, benefits and
obligations under the Finance Documents to a bank or financial
institution, provided that:
26.3.1 no such assignment or transfer of the whole or any part of
the Commitment may be made unless it is to an Approved
Credit Institution; and
26.3.2 the Account Party's consent is not required if such
assignment or transfer is:
(a) to any subsidiary or holding company, or to any
subsidiary of any holding company, of such Bank; or
(b) to any other Bank.
26.4 Assignments by Banks
If any Bank assigns all or any of its rights and benefits under the
Finance Documents in accordance with Clause 26.3 (Assignments and
Transfers by Banks), then, unless and until the assignee has delivered
a notice to the Agent confirming in favour of the Agent, the 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.
26.5 Transfers by Banks
If any Bank wishes to transfer all or any of its rights, benefits
and/or obligations under the Finance Documents as contemplated in
Clause 26.3 (Assignments and Transfers by Banks), then such transfer
may be effected by the delivery to the Agent of a duly completed
Transfer Certificate executed by such Bank and the relevant Transferee
in which event, on the later of the Transfer Date specified in such
Transfer Certificate and
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the fifth Business Day after (or such earlier Business Day endorsed by
the Agent on such Transfer Certificate falling on or after) the date
of delivery of such Transfer Certificate to the Agent:
26.5.1 to the extent that in such Transfer Certificate the Bank
party thereto seeks to transfer by novation its rights,
benefits and obligations under the Finance Documents, each
of the Obligors and such Bank shall be released from further
obligations towards one another under the Finance Documents
and their respective rights against one another shall be
cancelled (such rights and obligations being referred to in
this Clause 26.5 as "discharged rights and obligations");
26.5.2 each of the Obligors and the Transferee party thereto shall
assume obligations towards one another and/or acquire rights
against one another which differ from such discharged rights
and obligations only insofar as such Obligor and such
Transferee have assumed and/or acquired the same in place of
such Obligor and such Bank;
26.5.3 the Agent, the 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
26.5.4 such Transferee shall become a party hereto as a "Bank".
26.6 Replacement of Letter of Credit
On any transfer pursuant to Clause 26.5 (Transfers by Banks) other
than such a transfer upon the designation of a Substitute Bank in
accordance with the provisions of 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 an Expiry
Date which corresponds with the Expiry Date thereof.
26.7 Transfer Fees
On the date upon which a transfer takes effect pursuant to Clause 26.5
(Transfers by Banks) the relevant Transferee shall pay to the Agent
for its own account a fee of (Pounds)1,000.
26.8 Disclosure of Information
Any Bank may disclose to any person:
26.8.1 to (or through) whom such Bank assigns or transfers (or may
potentially assign or transfer) all or any of its rights,
benefits and obligations under the Finance Documents;
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26.8.2 with (or through) whom such Bank enters into (or may
potentially enter into) any sub-participation in relation
to, or any other transaction under which payments are to be
made by reference to, this Agreement or any Obligor; or
26.8.3 to whom information may be required to be disclosed by any
applicable law,
such information about any Obligor or the Group and the Finance Documents as
such Bank shall consider appropriate and in the case of sub-clause 26.8.1 and
26.8.2, subject to requiring and receiving a confidentiality undertaking
substantially in the form set out in Schedule 8 (Form of Confidentiality
Agreement).
26.9 Partial Transfers/Assignments
Any assignment or transfer by a Bank of part of its Commitment or
Outstandings shall be in a minimum amount of (Pounds)10,000,000.
27. ECONOMIC AND MONETARY UNION
27.1 Alternative Currencies during Transition Period
On and from the date on which the United Kingdom becomes a
Participating Member State, if and to the extent that any EMU
Legislation provides that an amount denominated either in the euro or
in sterling and payable within that Participating Member State by
crediting an account of the creditor can be paid by the debtor either
in the euro unit or in sterling, the Borrower shall be entitled to pay
or repay any such amount payable hereunder either in the euro unit or
in sterling.
27.2 Business Days
With effect on and from the date on which the United Kingdom becomes a
Participating Member State, the definition of Business Day in Clause
1.1 (Definitions) shall be amended by the addition thereto (at the
end) of the following:
"and if such reference relates to a date for the payment or
purchase of a sum denominated in the euro or in sterling, a
day (other than a Saturday or Sunday) on which (a) such
clearing or settlement system as is determined by the Agent
to be suitable for clearing or settlement of the euro is
open for business and (b) banks are generally open for
business in London.".
27.3 Rounding and Other Consequential Changes
With effect on and from the date on which the United Kingdom becomes a
Participating Member State:
27.3.1 without prejudice and in addition to any method of
conversion or rounding prescribed by any EMU Legislation,
each reference in this Agreement to a fixed amount or fixed
amounts in a national currency unit to be paid to or by the
Agent shall be replaced by a reference to such comparable
and convenient fixed amount or fixed amounts in the euro
unit as the Agent may from time to time specify; and
27.3.2 save as expressly provided in this Clause 27, the Finance
Documents shall be subject to such changes of construction
or interpretation as the Agent and the Security Trustee may
from time to time specify to be necessary to reflect the
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changeover to the euro in the United Kingdom and to put the
parties in the same position, so far as possible, that they
would have been in if no change in currency had occurred.
28. CALCULATIONS AND EVIDENCE of DEBT
28.1 Basis of Accrual
Interest and Letter of Credit Commission shall accrue from day to day
and shall be calculated on the basis of a year of 365 days (or in the
case of any such amounts denominated in dollars, 360 days) and the
actual number of days elapsed.
28.2 Proportionate Reductions
Any collateralisation of Outstandings denominated in dollars shall
reduce the amount of such Outstandings by the amount of dollars
collateralised and shall reduce the Sterling Amount of such
Outstandings proportionately.
28.3 Evidence of Debt
Each Bank shall maintain in accordance with its usual practice
accounts evidencing the face amount of its participations in Letters
of Credit and the amounts from time to time owing to it hereunder.
28.4 Control Accounts
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (a) the amount of any Unpaid Sum and the face
amount of any Letter of Credit issued and each Bank's share therein,
(b) the amount of all fees, interest and other sums due or to become
due from an Obligor and each Bank's share therein and (c) the amount
of any sum received or recovered by the Agent hereunder and each
Bank's share therein.
28.5 Prima Facie Evidence
In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant
to Clause 28.3 (Evidence of Debt) and Clause 28.4 (Control Accounts)
shall be prima facie evidence of the existence and amounts of the
specified obligations of the Obligors.
28.6 Certificates of Banks
A certificate of a Bank as to (a) the amount by which a sum payable to
it hereunder is to be increased under Clause 9.1 (Tax Gross-up), (b)
the amount for the time being required to indemnify it against any
such cost, payment or liability as is mentioned in Clause 9.2 (Tax
Indemnity) or Clause 11.1 (Increased Costs) or (c) the amount of any
credit, relief, remission or repayment as is mentioned in Clause 10.3
(Tax Credit Payment) or Clause 10.4 (Tax Credit Clawback) shall, in
the absence of manifest error, be prima facie evidence of the
existence and amounts of the specified obligations of the Obligors.
28.7 Agent's Certificates
A certificate of the Agent as to the amount at any time due from the
Account Party hereunder or the amount which, but for any of the
obligations of the Account Party hereunder being or becoming void,
voidable, unenforceable or ineffective, at any time would have been
due from the Account Party hereunder shall, in the absence of manifest
error, be conclusive for the purposes of Clause 29 (Guarantee and
Indemnity).
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28.8 Letters of Credit
A certificate of a Bank as to the amount paid out by such Bank in
respect of any Letter of Credit shall, save for manifest error, be
prima facie evidence of the payment of such amounts in any legal
action or proceedings arising in connection therewith.
29. GUARANTEE AND INDEMNITY
29.1 Guarantee and Indemnity
The Guarantor irrevocably and unconditionally:
29.1.1 guarantees to each Finance Party the due and punctual
observance and performance of all the terms, conditions and
covenants on the part of the Account Party contained in the
Finance Documents and agrees to pay from time to time on
demand any and every sum or sums of money which the Account
Party is at any time liable to pay to any Finance Party
under or pursuant to the Finance Documents and which has
become due and payable but has not been paid at the time
such demand is made; and
29.1.2 agrees as a primary obligation to indemnify each Finance
Party from time to time on demand from and against any loss
incurred by any Finance Party as a result of any of the
obligations of the Account Party under or pursuant to the
Finance Documents being or becoming void, voidable,
unenforceable or ineffective as against the Account Party
for any reason whatsoever, whether or not known to any
Finance Party or any other person, the amount of such loss
being the amount which the person or persons suffering it
would otherwise have been entitled to recover from the
Account Party.
29.2 Additional Security
The obligations of the Guarantor herein contained shall be in addition
to and independent of every other security which any Finance Party may
at any time hold in respect of any of the Account Party's obligations
under the Finance Documents.
29.3 Continuing Obligations
The obligations of the Guarantor herein contained shall constitute and
be continuing obligations notwithstanding any settlement of account or
other matter or thing whatsoever and shall not be considered satisfied
by any intermediate payment or satisfaction of all or any of the
obligations of the Account Party under the Finance Documents and shall
continue in full force and effect until final payment in full of all
amounts owing by the Account Party under the Finance Documents and
total satisfaction of all the Account Party's actual and contingent
obligations under the Finance Documents.
29.4 Obligations not Discharged
Neither the obligations of the Guarantor herein contained nor the
rights, powers and remedies conferred in respect of the Guarantor upon
any Finance Party by the Finance Documents or by law shall be
discharged, impaired or otherwise affected by:
29.4.1 the winding-up, dissolution, administration or
re-organisation of the Account Party or any other person or
any change in its status, function, control or ownership;
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29.4.2 any of the obligations of the Account Party or any other
person under the Finance Documents or under any other
security taken in respect of any of its obligations under
the Finance Documents being or becoming illegal, invalid,
unenforceable or ineffective in any respect;
29.4.3 time or other indulgence being granted or agreed to be
granted to the Account Party in respect of its obligations
under the Finance Documents or under any such other
security;
29.4.4 any amendment to, or any variation, waiver or release of,
any obligation of the Account Party under the Finance
Documents or under any such other security;
29.4.5 any failure to take, or fully to take, any security
contemplated hereby or otherwise agreed to be taken in
respect of the Account Party's obligations under the Finance
Documents;
29.4.6 any failure to realise or fully to realise the value of, or
any release, discharge, exchange or substitution of, any
security taken in respect of the Account Party's obligations
under the Finance Documents; or
29.4.7 any other act, event or omission which, but for this Clause
29.4, might operate to discharge, impair or otherwise affect
any of the obligations of the Guarantor herein contained or
any of the rights, powers or remedies conferred upon any of
the Finance Parties by the Finance Documents or by law.
29.5 Settlement Conditional
Any settlement or discharge between the Account Party and any of the
Finance Parties shall be conditional upon no security or payment to
any Finance Party by the Account Party or any other person on behalf
of the Account Party being avoided or reduced by virtue of any laws
relating to bankruptcy, insolvency, liquidation or similar laws of
general application and, if any such security or payment is so avoided
or reduced, each Finance Party shall be entitled to recover the value
or amount of such security or payment from the Account Party
subsequently as if such settlement or discharge had not occurred.
29.6 Exercise of Rights
No Finance Party shall be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of the Guarantor by
the Finance Documents or by law to:
29.6.1 make any demand of the Account Party;
29.6.2 take any action or obtain judgment in any court against the
Account Party;
29.6.3 make or file any claim or proof in a winding-up or
dissolution of the Account Party; or
29.6.4 enforce or seek to enforce any other security taken in
respect of any of the obligations of the Account Party under
the Finance Documents.
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29.7 Deferral of Guarantor's Rights
The Guarantor agrees that, so long as any amounts are or may be owed
by the Account Party under the Finance Documents or the Account Party
is under any actual or contingent obligations under the Finance
Documents, it shall not exercise any rights which it may at any time
have by reason of performance by it of its obligations under the
Finance Documents:
29.7.1 to be indemnified by the Account Party; and/or
29.7.2 to claim any contribution from any other guarantor of the
Account Party's obligations under the Finance Documents;
and/or
29.7.3 to take the benefit (in whole or in part and whether by way
of subrogation or otherwise) of any rights of the Finance
Parties under the Finance Documents or of any other security
taken pursuant to, or in connection with, the Finance
Documents by all or any of the Finance Parties.
29.8 Suspense Accounts
All moneys received, recovered or realised by a Bank by virtue of
Clause 29.1 (Guarantee and Indemnity) may, in that Bank's discretion,
be credited to an interest bearing suspense or impersonal account and
may be held in such account for so long as such Bank thinks fit
pending the application from time to time (as such Bank may think fit)
of such moneys in or towards the payment and discharge of any amounts
owing by the Account Party to such Bank under the Finance Documents.
30. REMEDIES AND WAIVERS, PARTIAL INVALIDITY
30.1 Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of
any Finance Party, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right
or remedy prevent any further or other exercise thereof or the
exercise of any other right or remedy. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies
provided by law.
30.2 Partial Invalidity
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions thereof nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
31. NOTICES
31.1 Communications in writing
31.1.1 Any communication to be made under or in connection with the
Finance Documents shall be made in writing and, unless
otherwise stated, may be made by fax, letter or telex or (to
the extent that the relevant party hereto has specified such
address pursuant to Clause 31.2 (Addresses)) by e-mail.
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31.1.2 The Agent may additionally (if the parties hereto agree and
the Account Party has specifically approved in writing), in
the case of any document to be forwarded by the Agent
pursuant to this Agreement where such document has been
supplied to such Agent pursuant to Clause 15.1
(Information), refer the relevant party or parties hereto
(by fax, letter, telex or (if so specified) e-mail) to a web
site considered by the Account Party as secure and
confidential and to the location of the relevant information
on such web site in discharge of such notification or
delivery obligation.
31.2 Addresses
The address, fax number, e-mail address, telex number and, where
appropriate, web site (and the department or officer, if any, for
whose attention the communication is to be made) of each party hereto
for any communication or document to be made or delivered under or in
connection with the Finance Documents is:
31.2.1 in the case of an Obligor, that identified with its name
below;
31.2.2 in the case of each Bank, that notified in writing to the
Agent on or prior to the date on which it becomes a party
hereto; and
31.2.3 in the case of the Agent, that identified with its name
below,
or any substitute address, fax number, e-mail address, telex number,
web site, department or officer as the party hereto may notify to the
Agent (or the Agent may notify to the other parties hereto, if a
change is made by the Agent or a web site carrying relevant
information has been set up by the Agent) by not less than five
Business Days' notice.
31.3 Delivery
31.3.1 Any communication or document made or delivered by one
person to another under or in connection with the Finance
Documents will only be effective:
(a) if by way of fax, when received in legible form; or
(b) if by way of letter, when it has been left at the
relevant address or five Business Days after being
deposited in the post postage prepaid in an envelope
addressed to it at that address; or
(c) if by way of telex, when dispatched, but only if, at
the time of transmission, the correct answerback
appears at the start and at the end of the sender's
copy of the notice; or
(d) if by way of e-mail, when sent in legible form, but
only if, following transmission, the sender does not
receive a non-delivery message; or
(e) where reference in such communication is to a web site,
when the delivery of the letter, fax, telex or, as the
case may be, e-mail referring the addressee to such web
site is effective,
and, if a particular department or officer is specified as
part of its address details provided under Clause 31.2
(Addresses), if addressed to that department or officer.
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31.3.2 Any communication or document to be made or delivered to the
Agent will be effective only when actually received by the
Agent and then only if it is expressly marked for the
attention of the department or officer identified with the
Agent's signature below (or any substitute department or
officer as the agent shall specify for this purpose).
31.3.3 All notices from or to any Obligor shall be sent through the
Agent.
31.4 Notification of address, fax number and telex number
Promptly upon receipt of notification of an address, fax number, telex
number or e-mail address or change of such pursuant to Clause 31.2
(Addresses) or changing its own address, fax number, telex number or
e-mail address, the Agent shall notify the other parties hereto.
31.5 English language
31.5.1 Any notice given under or in connection with any Finance
Document must be in English.
31.5.2 All other documents provided under or in connection with any
Finance Document must be:
(a) in English; or
(b) if not in English, accompanied by an English
translation thereof certified (by an officer of the
person making or delivering the same) as being a true
and accurate translation thereof.
31.6 Deemed receipt by the Obligors
Any communication or document made or delivered to the Account Party
in accordance with Clause 31.3 (Delivery) shall be deemed to have been
made or delivered to both Obligors.
32. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
33. AMENDMENTS
33.1 Amendments
The Agent, if it has the prior consent of the Majority Banks, and the
Obligors may from time to time agree in writing to amend this
Agreement or to waive, prospectively or retrospectively, any of the
requirements of this Agreement and any amendments or waivers so agreed
shall be binding on all the Finance Parties, provided that no such
waiver or amendment shall subject any Finance Party hereto to any new
or additional obligations without the consent of such Finance Party.
33.2 Amendments Requiring the Consent of all the Banks
An amendment or waiver which relates to:
33.2.1 Clause 24 (Sharing) or this Clause 33;
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33.2.2 a change in the currency or amount of any Letter of Credit;
33.2.3 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;
33.2.4 a release of the Guarantor from any of its obligations set
out in Clause 29 (Guarantee and Indemnity);
33.2.5 Clause 15.7 (Adjusted Consolidated Debt to Total
Capitalisation Ratio) and Clause 15.8 (Consolidated Net
Worth);
33.2.6 the definition of Majority Banks;
33.2.7 any provision which contemplates the need for the consent or
approval of all the Banks; or
33.2.8 the Security Documents (if any),
shall not be made without the prior consent of all the Banks.
33.3 Exceptions
Notwithstanding any other provisions hereof, the Agent shall not be
obliged to agree to any such amendment or waiver if the same would:
33.3.1 amend or waive this Clause 33, Clause 18 (Costs and
Expenses) or Clause 25 (The Agent, the Arrangers and the
Banks); or
33.3.2 otherwise amend or waive any of the Agent's rights hereunder
or subject the Agent or the Arrangers to any additional
obligations hereunder.
34. GOVERNING LAW
This Agreement is governed by English law.
35. JURISDICTION
35.1 English Courts
Each of the parties hereto irrevocably agrees for the benefit of each
of the Agent, the 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.
35.2 Convenient Forum
The Obligors irrevocably waive any objection which either of them
might now or hereafter have to the courts referred to in Clause 35.1
being nominated as the forum to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and agree not to claim that any such
court is not a convenient or appropriate forum.
-68-
35.3 Service of Process
Each Obligor agrees that the process by which any suit, action or
proceeding is begun may be served on it by being delivered in
connection with any suit, action or proceeding in England, to ACE UK
Limited at ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ or its other
principal place of business for the time being.
35.4 Non-Exclusive Jurisdiction
The submission to the jurisdiction of the courts referred to in Clause
35.1 shall not (and shall not be construed so as to) limit the right
of the Agent, the 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.
-69-
SCHEDULE 1
The Banks
Bank Commitment ((Pounds))
Citibank, N.A. 96,660,000.00
Barclays Bank PLC 91,670,000.00
ING Bank N.V., London Branch 86,670,000.00
Credit Lyonnais New York Branch 50,000,000.00
National Westminster Bank PLC 50,000,000.00
Lloyds TSB Bank plc 35,000,000.00
ABN AMRO Bank N.V., London Branch 30,000,000.00
---------------------
Total 440,000,000.00
---------------------
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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 and the
Second Restatement Agreement a (Pounds)440,000,000 letter of credit facility was
made available to ACE Limited by a group of banks on whose behalf Citibank
International plc acted as agent in connection therewith.
1. Terms defined in the Credit Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee and
Portion Transferred are defined in the schedule hereto.
2. The Bank (a) confirms that the details in the schedule hereto under the
heading "Letters of Credit" accurately summarises its participation in the
Credit Agreement and the Term of any existing Letters of Credit and (b)
requests the Transferee to accept and procure the transfer by novation to
the Transferee of the Portion Transferred (specified in the schedule
hereto) of its Commitment and/or its participation in such Letters of
Credit by counter-signing and delivering this Transfer Certificate to the
Agent at its address for the service of notices specified in the Credit
Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the
purposes of Clause 26.5 (Transfers by Banks) of the Credit Agreement so as
to take effect in accordance with the terms thereof on the Transfer Date or
on such later date as may be determined in accordance with the terms
thereof.
4. The Transferee confirms that it has received a copy of the Credit Agreement
together with such other information as it has required in connection with
this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information
and further agrees that it has not relied and will not rely on the Bank to
assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the Obligors.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Credit Agreement that it will perform in accordance with
their terms all those obligations which by the terms of the Finance
Documents will be assumed by it after delivery of this Transfer Certificate
to the Agent and satisfaction of the conditions (if any) subject to which
this Transfer Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any document relating thereto
and assumes no responsibility for the financial condition of the Obligors
or for the performance and observance by the
-71-
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 Expiry Date
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
-----------------------------------------------------------------------------
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address
Contact Name:
Account for Payments
in sterling:
Fax:
Telephone:
-72-
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, 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 ▇▇▇▇▇▇▇▇ Chance, solicitors to the Agent.
3. An opinion of ▇▇▇▇▇▇ and ▇▇▇▇▇▇, Cayman Islands counsel to the Account
Party addressed to the Finance Parties.
4. An opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇, 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 14.4.1 and 14.4.2 of Clause 14.4 (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. A duly signed original copy of the Charge Agreement, executed by the
Obligors in favour of the Security Trustee, in substantially the form set
out in Schedule 11 (Form of Charge Agreement) to this Agreement.
9. A copy, certified a true copy by an Authorised Signatory of each Obligor,
of the Notice of Charge (in the form set out in the First Schedule to the
Charge Agreement) dated on or about the date hereof, executed by the
Obligors and delivered to State Street Bank and Trust Company as the
Custodian.
-73-
10. A duly signed original copy of the Custodian's Undertaking (in the form set
out in the Second Schedule to the Charge Agreement), executed by State
Street Bank and Trust Company as the Custodian.
11. Evidence of the payment by the Obligors to ▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇ of the
sum of US$446 for the purposes of effecting the registration of the Charge
Agreement with the Registrar of Companies in Bermuda.
12. Evidence that the Charge Agreement has been recorded in the Account Party's
internal register of mortgages and charges.
13. Evidence satisfactory to the Agent of payment by the Obligors of the sum of
CI$500 to ▇▇▇▇▇▇ and Calder in respect of the Ad Valorem stamp duty payable
in the Cayman Islands in relation to the Charge Agreement.
14. Evidence that ACE UK Limited of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ has agreed to act as the agent of each Obligor for the service of
process in England in respect of the Amended Agreement.
-74-
SCHEDULE 4
Utilisation Request
From: ACE Limited
To: Citibank International plc
Dated:
Dear Sirs,
1. We refer to the (pounds)440,000,000 letter of credit agreement originally
dated 19 November 1999 (as (i) amended and restated pursuant to the First
Restatement Agreement, (ii) amended pursuant to the Amendment Agreement and
(iii) amended and restated pursuant to the Second Restatement Agreement
(the "Credit Agreement")) and made between inter alia, ACE Limited as
account party, Citibank International plc as agent and the financial
institutions named therein as Banks. Terms defined in the Credit Agreement
shall have the same meaning in this notice. This notice is irrevocable.
2. We hereby give you notice that, pursuant to the Credit Agreement we wish
the Banks to issue the following Letters of Credit:
================== ======================== ========================= ========================== =======================
Amount Effective Date Expiry Date Beneficiary Applicant
------------------ ------------------------ ------------------------- -------------------------- -----------------------
(pound)/US$/1/ 29 November 2001 31 December 2006 Society of Lloyd's
------------------ ------------------------ ------------------------- -------------------------- -----------------------
(pound)/US$/1/ 29 November 2001 31 December 2006 Society of Lloyd's
------------------ ------------------------ ------------------------- -------------------------- -----------------------
(pound)/US$/1/ 29 November 2001 31 December 2006 Society of Lloyd's
------------------ ------------------------ ------------------------- -------------------------- -----------------------
(pound)/US$/1/ 29 November 2001 31 December 2006 Society of Lloyd's
------------------ ------------------------ ------------------------- -------------------------- -----------------------
(pound)/US$/1/ 29 November 2001 31 December 2006 Society of Lloyd's
------------------ ------------------------ ------------------------- -------------------------- -----------------------
(pound)/US$/1/ 29 November 2001 31 December 2006 Society of Lloyd's
------------------ ------------------------ ------------------------- -------------------------- -----------------------
(pound)/US$/1/ 29 November 2001 31 December 2006 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.
Yours faithfully
--------------------------------------------------------------------------------
1 Delete where appropriate.
-75-
______________________
Authorised Signatory
for and on behalf of
ACE LIMITED
-76-
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 (pounds)440,000,000 letter of credit agreement originally dated
19 November 1999, (as (i) amended and restated pursuant to the First Restatement
Agreement, (ii) amended pursuant to the Amendment Agreement and (iii) amended
and restated pursuant to the Second Restated Agreement (the "Agreement")
between, inter alia, ACE Limited (the "Company"), the financial institutions
named therein as Banks and Citibank International plc as Agent.
Terms defined in the Agreement shall have the same meanings herein.
1. Pursuant to Clause 4 (Extension of Letters of Credit) of the Agreement, the
Account Party, on behalf of [ ] (the "Applicant[s]") hereby requests that
the Banks extend the Letter[s] of Credit in accordance with the information
annexed hereto as Annex A.
2. The Account Party hereby certifies that on the date hereof and on the date
of extension set forth in Annex A, in each case both before and after
giving effect to the extension requested hereby:
(i) no Event of Default or Potential Event of Default has occurred and is
continuing;
(ii) each of the representations and warranties of the Account Party
contained in the Agreement and each other Finance Document is correct
in all material respects on the date hereof, except representations
and warranties which expressly refer to an earlier date in which case
the same shall be true on and as of such earlier date;
(iii) after giving effect to the extension requested hereby, the aggregate
Sterling Amount of the Outstandings will not exceed the Total
Commitments; and
(iv) the Letter[s] of Credit requested hereby [is/are] being extended
solely as security to support the underwriting business of the
Applicant[s] at Lloyd's which has been provided in accordance with
the requirements of Lloyd's applicable to [it/them].
-77-
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: ________________________
-78-
Annex A
Letter of Credit Information/2/
1. Name of Beneficiary:
________________________________________________
2. Letter of Credit Number:
________________________________________________
3. Maximum amount available under Letter of Credit: (pound)/US$________
4. Effective Expiry Date: 31 December ____/3/
--------------------------------------------------------------------------------
/2/ A separate "Letter of Credit Information" should be completed for each
Letter of Credit covered by the Extension Request.
/3/ Insert immediately succeeding year in which the then current Expiry Date
falls.
-79-
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
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇
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. The initial expiry date of this Credit shall be 31 December 2006. This
Credit will be extended automatically for a further year, without written
amendment, on the first day of January of every future year after 1 January
2002, so that it is always valid for a minimum period of four years unless
at least thirty days prior to 31 December of the first year of the then
current validity period, notice is given in writing, sent by registered
mail for the attention of the Manager, Members' Funds Department, at the
above address, that this Credit will not be extended beyond the then
current expiry date.
4. Subject to paragraph 3 above, the Issuing Banks shall pay to Lloyd's under
this Credit upon presentation of a demand by Lloyd's on Citibank
International plc at ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ House, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ marked for the attention of ▇▇▇▇▇ ▇▇▇▇▇▇, Loans
Agency (and, in copy, at ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇ marked for the attention of ▇▇▇ ▇▇▇▇▇▇▇▇, Global Cash and
-80-
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 other than in
its capacity as an Issuing Bank.
6. All charges are for the Applicant's account.
7. Subject to any contrary indication herein, [this Credit is subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500]*.
8. This Credit shall be governed by and interpreted in accordance with English
law and the Issuing Banks hereby irrevocably submit to the jurisdiction of
the High Court of Justice in England.
9. Each of the Issuing Banks engages with Lloyd's that demands made under and
in compliance with the terms and conditions of this Credit shall be duly
honoured on presentation.
Yours faithfully
CITIBANK INTERNATIONAL plc
for and on behalf of
[Names of all Issuing Banks]
--------------------------------------------------------------------------------
* This language may be substituted by the following if so requested by
Lloyd's: "this Credit is subject to The International Standby Practices -
ISP98 (1998 Revision) International Chamber of Commerce Publication ▇▇.
▇▇▇"
-▇▇-
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ Banks' Commitments
Name and Address of Issuing Bank Commitment
-82-
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 ▇▇▇▇ 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 ▇▇▇-▇▇-▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Please quote Member Code:
Yours faithfully
for Manager
Members' Funds Department
Members' Services Unit
-83-
Your ref:
Our ref: MEM/ / / /C911f
Extn:
▇▇▇▇ 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
-84-
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 ▇▇▇▇ 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 ▇▇▇-▇▇-▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SWIFT Code NWBK GB21
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ SWIFT Code Intermediary CHA SUS33
Please quote Member Code:
Yours faithfully
for Manager
Members' Funds Department
Members' Services Unit
-85-
Your ref:
Our ref: MEM/ / / /C911f
Extn:
▇▇▇▇ 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
-86-
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
-87-
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 2000 or such other regulation as may be in force
from time to time in respect of the payment of fees for
banking supervision; and
(iii) "Fee Base" shall bear the meaning ascribed to it, and shall be
calculated in accordance with, the Fees Regulations.
3. The percentages used in A and C above shall be those required to be
maintained on the first day of the relevant period as determined in
accordance with B above.
4. In application of the above formula, A, B, C and D will be included
in the formula as figures and not as percentages e.g. if A is 0.5 per
cent. and B is 12 per cent., AB will be calculated as 0.5 x 12 and not
as 0.5 per cent. x 12 per cent.
5. Calculations will be made on the basis of a 365 day year (or, if
market practice differs, in accordance with market practice).
6. A negative result obtained by subtracting D from B shall be taken as
zero.
7. The resulting figures shall be rounded to four decimal places.
8. Additional amounts calculated in accordance with this Schedule are
payable on the last day of the Term to which they relate.
9. The determination of the Mandatory Liquid Asset Costs Rate by the
Agent in relation to any period shall, in the absence of manifest
error, be conclusive and binding on all of the parties hereto.
10. The Agent may from time to time, after consultation with the Account
Party and the Banks, determine and notify to all parties any
amendments or variations which are required to be made to the formula
set out above in order to comply with any requirements from time to
time imposed by the Bank of England or the Financial Services
Authority in relation to any Unpaid Sum and any such determination
shall, in the absence of manifest error, be conclusive and binding on
all the parties hereto.
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SCHEDULE 8
Form of Confidentality Undertaking
[Letterhead of Transferor]
[Date]
To: [Transferee]
Dear Sirs,
ACE Limited - (pounds)440,000,000 Letter of Credit Facility Agreement originally
dated 19 November 1999 (as (i) amended and restated pursuant to a First
Amendment Agreement dated 17 November 2000, (ii) an Amendment Agreement dated 23
October 2001 and (iii) a Second Restatement Agreement dated 21 November 2001)
Confidentiality Agreement
In connection with your possible interest in becoming a bank in the
above-captioned facility (the "Transaction") for ACE Limited (the "Company"), we
will be providing you with information that is not in the public domain but that
is confidential or proprietary in nature. Such information and any other
information concerning the Company or the Transaction furnished to you by
[Transferor], or by or on behalf of the Company (whether before, on or after the
date of this Agreement), together with analyses, compilations or other materials
prepared by you or your directors, officers, employees or advisors
(collectively, "Representatives") which contain or otherwise reflect such
information, are hereinafter collectively referred to as the "Information". In
consideration of your receipt of the Information, you agree that:
1. Except as otherwise expressly provided herein, you will not (i) use the
Information except in connection with the Transaction or (ii) disclose to
any person any terms or conditions of the Transaction or any portion of the
Information.
2. Notwithstanding the foregoing, you may disclose the Information: (i) to
your Representatives who need to know the Information for purposes of
evaluating the Transaction and who are informed by you of the confidential
nature of the Information and who agree to be bound by the terms of this
Agreement; (ii) as may be required by applicable law or at the request of
any regulatory or supervisory authority having jurisdiction over you or at
the request of any rating agency for purposes of establishing or
maintaining your debt ratings, provided that you request confidential
treatment thereof to the extent permitted by law; or (iii) with the prior
written consent of the Company and [Transferor].
3. The reference to the term "Information" contained in paragraphs 1 and 2
shall not include such portions thereof which (i) are or become available
to the public through no fault or action by you or your Representatives or
(ii) are or hereafter become available to you on a non-confidential basis
from a source other than the Company, [Transferor] or their respective
Representatives, which source, to the best of your knowledge, is not
prohibited from disclosing such Information to you by a contractual, legal
or fiduciary obligation to the Company or [Transferor].
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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]
By: [ ] [ACCEPTED AND AGREED]
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Title: [ ] As at the date hereof
[Name of Transferee]
By: [ ]
Title: [ ]
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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 cent. 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 ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇ ▇▇ or Level V applies at any date.
"S&P" means Standard & Poor's Rating Services (a division of The ▇▇▇▇▇▇-▇▇▇▇
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
--------------------------------------------------------------------------
Name of each Chargor and the address of its registered or principal
office:
(1) ACE Limited
ACE Global Headquarters
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Facsimile no: ▇▇▇▇ ▇▇▇ ▇▇▇▇
(2) ACE Bermuda Insurance Ltd.
ACE Global Headquarters
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Facsimile no: ▇▇▇▇ ▇▇▇ ▇▇▇▇
((1) and (2) together the "Chargors" and each a "Chargor")
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Name of Custodian and address of its registered or principal office:
[ ]
Facsimile no: [ ] (the "Custodian")
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Date: [Date]
--------------------------------------------------------------------------
To: CITIBANK INTERNATIONAL plc (the "Security Trustee")
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
The terms used in this Charge Agreement are defined in Clause 23.
-94-
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
-96-
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
-97-
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 15 (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 ▇▇▇▇, 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
-99-
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
realize 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 willful
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 realization
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
-100-
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
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 25 (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)440,000,000 letter of credit facility
agreement originally dated 19 November 1999 (as (i) amended and restated
pursuant to the First Restatement Agreement, (ii) amended pursuant to the
Amendment Agreement and (iii) 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 Barings 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 subsection 15.9.16 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:
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 ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ (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]*;
.................................................................................
* To be inserted if State Bank and Trust Company are appointed Custodian.
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(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
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ no: ▇▇▇▇ ▇▇▇ ▇▇▇▇
ACE Bermuda Insurance Ltd.
ACE Global Headquarters
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Facsimile no: ▇▇▇▇ ▇▇▇ ▇▇▇▇
((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
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attn: Loans Agency
Facsimile no: +4420 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: (i) 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); (ii) 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 (iii) 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
(iv) 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 (i) to the Security Trustee in accordance with the terms of
this undertaking or (ii) to any person with the Security Trustee's prior
written consent or (iii) in respect of any part of the Charged Portfolio
representing an excess over the Required Value, to the 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 (i) uncertificated and governed by the provisions of 31 C.F.R.
Part 357 or such similar provisions of the Code of Federal Regulations,
applicable to United States agency securities as are acceptable to the Security
Trustee; or (ii) certificated.
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