EXHIBIT 10.20
GENERAL SERVICES AGREEMENT
This General Services Agreement is made this ________ day of ___________ (the
"EFFECTIVE DATE") between
XL FINANCIAL ASSURANCE LTD., a Bermuda company ("XLFA" or the "SERVICE
PROVIDER"); and
XL INSURANCE (BERMUDA) LTD, a Bermuda exempted company ("XLIB" or the "COMPANY")
(each a "Party" and collectively the "Parties").
WHEREAS:
Service Provider and Company are currently wholly owned subsidiaries of the XL
Capital Ltd group of companies; and
It is contemplated that an initial public offering will be made of a portion of
the capital stock of Security Capital Assurance Ltd ("SCA"), a parent of the
Service Provider, resulting in partial public ownership of SCA; and
Service Provider and Company both desire for Service Provider to provide certain
services to the Company following the initial public offering of SCA; and
Service Provider and the Company desire to enter into this Agreement to set
forth the roles and responsibilities with regard to services to be provided by
Service Provider to the Company.
Now, in consideration for the mutual benefits contained in this General Services
Agreement, it is agreed as follows:
1 DEFINITIONS
The following words and phrases shall have the meaning given to them
below:
"Agreement" means this General Services Agreement and the Schedules
attached to it and any subsequent amendments or alterations agreed in
writing by the Parties.
"Non-SCA Third Party Contractors" means any individual, company or other
legal entity with whom Service Provider enters into a contract for the
benefit of the Company, including (but not limited to) to enhance its
ability to provide any part of the Services, where such individual,
company or other legal entity is not within the SCA group of companies.
"Representatives" shall have the meaning specified in clause 10.1.
"SCA Third Party Contractors" means any individual, company or other
legal entity with whom Service Provider enters into a contract for the
benefit of the Company, including (but not limited to) to enhance its
ability to provide any part of the Services, where such individual,
company or other legal entity is within the SCA group of companies.
"Services" shall have the meaning specified in clause 3.1.
"Staff" means individuals employed by Service Provider or by another
company within the SCA group of companies.
"Steering Committee" shall have the meaning specified in clause 10.3.
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"Third Party Contractors" means both SCA Third Party Contractors and
Non-SCA Third Party Contractors.
2 PERIOD OF THIS AGREEMENT
2.1 This Agreement shall commence on the Effective Date and continue until
terminated in accordance with clause 19 of this Agreement.
3 PROVISION OF SERVICES
3.1 Each Schedule attached to and made a part of this Agreement describes
the services to be provided by Service Provider to the Company, as
amended from time to time by written agreement of the Parties (the
"Services"). The Parties have made a good faith effort as of the date
hereof to identify each Service and to complete the content of the
Schedules accurately. It is anticipated that the Parties will modify the
Services from time to time. In that case or to the extent that any
Schedule is incomplete, the Parties will use good faith efforts to
modify the Schedules. There are certain terms that are specifically
addressed in the Schedules attached hereto that may differ from the
terms provided hereunder. In those cases, the specific terms described
in the Schedules shall govern.
3.2 The Parties may also identify additional Services that they wish to
incorporate into this Agreement. The Parties will create additional
Schedules setting forth the description of such Services, the fees for
such Services and any other applicable terms.
3.3 Subject to the terms of this Agreement, Service Provider undertakes to
and shall provide the Services to the Company to the best of its ability
at all times and to a standard that would reasonably be expected of it
by a professional, independent person or body.
3.4 Without prejudice to clause 3.3, to the extent that Service Provider is
unable to perform any part of the Services in accordance with this
Agreement, it shall advise the Company as soon as reasonably
practicable. In addition, Service Provider shall, to the extent
possible, advise the Company of a timetable for it to be able to resume
full performance of the Services in accordance with this Agreement and
the steps it is taking in that regard. Service Provider shall notify the
Company to the extent there is likely to be any deviation from the
timetable proposed.
3.5 The Parties acknowledge and agree that Service Provider and the Staff
shall be entitled to provide similar services as the Services to any
other legal entity, provided that in doing so the operation of the
Company is not unreasonably prejudiced and the provision of the Services
to the Company is not materially adversely affected. The Parties further
acknowledge and agree that the Company may retain any individual or
legal entity, other than Service Provider and the Staff, to perform
services similar or identical to the Services; provided that in doing so
the ability of Service Provider to perform any part of the Services in
accordance with this Agreement is not materially adversely affected.
4 PROVISION OF STAFF TO PERFORM THE SERVICES
4.1 Service Provider acknowledges it has been given sufficient information
to understand and appreciate the requirements and operations of the
Company relating to the provision of the Services currently described in
each Schedule. Service Provider shall and undertakes to provide at all
times, Staff or Non-SCA Third Party Contractors of the requisite
calibre, and with appropriate training and experience and in sufficient
numbers as required by the Company and as agreed between the Parties and
in accordance with the attached Schedules.
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4.2 The Company acknowledges and agrees that at the commencement of this
Agreement the Staff or Non-SCA Third Party Contractors provided to
perform the Services are of the requisite calibre, have appropriate
experience and training and are of a sufficient number.
4.3 If Service Provider cannot provide Staff to perform the Services, it
shall, with the agreement of the Company, contract or subcontract with
Non-SCA Third Party Contractors to provide all or part of the Services.
The direction and management of the Non-SCA Third Party Contractors
provided to perform the Services on behalf of the Company will be the
responsibility of Service Provider, unless otherwise agreed by the
Parties in writing but only to the extent that Service Provider has
contracted directly with such Non-SCA Third Party Contractors.
5 THIRD PARTY CONTRACTORS
5.1 The Company acknowledges and agrees that the provision of the Services
may in part be delegated or contracted or subcontracted to Third Party
Contractors by Service Provider.
5.2 Service Provider may enter into contracts with Third Party Contractors,
including, but not limited to, for the provision of the Services, either
on its own behalf or on its own behalf and on behalf of the Company,
whichever Service Provider reasonably deems appropriate and in the best
interests of the Company.
5.3 When entering into contracts with Third Party Contractors, Service
Provider will have regard to the stated interests of the Company,
including, but not limited to, the identity of the Third Party
Contractor, the terms, costs and period of the contract.
5.4 To the extent Service Provider delegates to, or contracts or
subcontracts with, Third Party Contractors to perform any part of the
Services or to perform specific functions, Service Provider shall
(remain responsible and) be liable to the Company for the (non)
performance of the Services and the (non) performance of such specific
functions in their entirety (and for the oversight and management of the
Third Party Contractors) and in accordance with clause 6.1. below,
unless otherwise agreed in writing by the Company.
6 LIABILITY
6.1 Except to the extent set out in clauses 6.2, to 6.3 below or as a result
of a breach by the Company of its obligations under Clause 15.1, Service
Provider shall be liable to indemnify the Company for any loss the
Company incurs (including defence costs) caused by (i) the acts and/or
omissions of Service Provider, its employees, directors and officers in
providing the Services, (ii) the breaches of obligations, acts and/or
omissions of Third Party Contractors, and (iii) the failure of Service
Provider to abide by the terms and conditions of this Agreement. Both
Parties shall take all reasonable steps to mitigate any loss including
pursuing recovery from any third party. Where appropriate, the Parties
further agree they will consult each other in respect of such steps in
accordance with clause 10 below.
6.2 Service Provider shall not be liable to the Company in respect of any
loss caused by acts of God, or any event beyond the reasonable control
of the Parties, including but not limited to nationalization,
expropriation, devaluation, seizure, or similar action by any government
authority, de facto or de jure; or acts of war, terrorism, insurrection
or revolution.
6.3 Service Provider agrees to take all reasonable steps to recover any loss
suffered by the Company (for which Service Provider is liable to
indemnify the Company under this Agreement) from any insurer or any
third party liable to Service Provider in respect of such loss. Provided
that Service Provider complies with such obligation in a timely manner,
the Company agrees to delay commencing proceedings against Service
Provider to enforce payment in respect of
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any claim, which it may have under this Agreement until such time as and
to the extent that Service Provider has obtained recovery against any
third party (including but not limited to Third Party Contractors and
insurers) in respect of such losses.
7 INSURANCE
7.1 Service Provider undertakes it or one of its affiliates has and will
maintain throughout the duration and period of this Agreement
appropriate errors and omissions and directors' and officers' insurance
in full force and effect to cover its liabilities to third parties.
8 LIMITATION OF AUTHORITY
8.1 Except as expressly provided for in this Agreement, or by the Company,
neither Service Provider nor the Staff shall enter into any contract
(including verbal) on behalf of the Company or commit or bind the
Company to any agreement or obligation, or hold it or themselves out as
having authority to do so.
9 COMPLIANCE
9.1 In providing the Services, Service Provider shall, to the extent within
its control, comply with, and will not do anything or fail to do
anything, which would result in the Company failing to comply with, all
applicable laws, legislation and regulations. In addition, Service
Provider shall comply with relevant principles and guidelines, manuals,
codes and policies issued by the Company to the extent it is made aware
of such principles and guidelines, manuals, codes and policies. It is
agreed and understood that this clause does not affect or reduce the
Company's duty and responsibility with regard to its own regulatory and
legal compliance.
9.2 Service Provider shall direct all enquiries from any regulatory
authority relating to this Agreement or the Services to the Company,
unless (i) the enquiry is specifically addressed to Service Provider (in
which case Service Provider shall procure that the details or a copy of
such enquiry are promptly relayed in writing to the Company), (ii) the
enquiry relates exclusively to a third party and not to the Company, or
(iii) otherwise agreed in writing by the Parties.
10 PERSONS RESPONSIBLE FOR THE OPERATION OF THIS AGREEMENT
10.1 The Service Provider and the Company shall each appoint two individuals
to be their respective representatives (the "Representatives") for the
purpose of the operation of this Agreement. The Representatives
(identified below) shall be responsible for, among other things,
managing the relationship, and acting as the principal points of
contact, between the Parties in relation to matters and disputes under
this Agreement.
10.2 Any matters or disputes under this Agreement including matters or
disputes affecting the relationship between the Parties or the
performance of their respective obligations hereunder, shall in the
first instance, be raised to and sought to be resolved by the
Representatives.
10.3 If and to the extent that any matters or disputes cannot be resolved by
the Representatives then the Representatives shall, raise such matters
or disputes with a committee comprised of [ ] and established by the
Parties for the purpose of overseeing the relationship between the
Parties with respect to matters set forth in this
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Agreement (the "Steering Committee"). The Steering Committee shall be
responsible for the resolution of those matters and disputes brought
before it.
10.4 The Parties may each appoint Representatives, in lieu of their
Representatives listed below, provided that prior written notice is
given to the other Party in accordance with Section 22 below.
COMPANY REPRESENTATIVES: [ ]
Telephone:
E-Mail:
SERVICE PROVIDER REPRESENTATIVES: [ ]
Telephone:
E-Mail:
11. REPORTING
11.1 Unless otherwise agreed between the Parties, Service Provider shall
provide reports on the Services in accordance with the Schedules as
amended from time to time.
11.2 Service Provider shall provide such other reports, including in relation
to Staff and Third Party Contractors, as may reasonably be required by
the Company from time to time in a timely manner.
11.3 To the extent the Schedules do not already address the issue and to the
extent appropriate, practicable and necessary, the Parties shall
establish benchmarks against which to monitor the performance of Service
Provider and Third Party Contractors. If and when such benchmarks are
established, Service Provider shall and undertakes to provide reports,
at least quarterly, in respect of such benchmarks, or otherwise in
accordance with the Schedules.
12 DOCUMENTS AND RECORDS
12.1 Service Provider shall establish and/or maintain records relating to
this Agreement and, to the extent reasonable and appropriate, the
Services, in accordance with the document retention policy established
by SCA or in accordance with applicable laws and regulations if they
provide for longer periods of retention.
12.2 The Company, its bona fide agents, auditors and/or a relevant regulatory
authority shall have the right on the giving of reasonable prior notice,
to inspect and audit any records of or held by Service Provider relating
to this Agreement and the Services, and shall have the right to make
copies or extracts of any such records.
12.3 In the event that an audit reveals that Service Provider is not
complying with the terms of this Agreement, or any applicable
regulation, principles, guidelines, laws or legislation in any material
respect, the Company may, without prejudice to its other rights under
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this Agreement, require Service Provider to take all necessary remedial
action within four (4) weeks following disclosure to Service Provider of
such audit results.
12.4 All files, materials, policies and documents prepared or obtained by
Service Provider in the course of carrying out its obligations under
this Agreement shall be and remain the property of the Company, and
Service Provider shall treat them accordingly - including keeping them
safe and secure whilst in Service Provider's possession.
13 CONFIDENTIALITY
13.1 Confidential Information means all information disclosed by either the
Company or Service Provider (whether in writing, orally or by another
means) concerning the other Party which comes into their possession as a
consequence of the operation of this Agreement including, without
limitation, information relating to the Parties products, operations,
processes, plans or intentions, product information, know-how, design
rights, trade secrets, market opportunities and business affairs.
13.2 The Parties undertake to hold the Confidential Information in confidence
and not to disclose the Confidential Information (except as provided in
this Agreement) without the prior written consent of the other Party.
13.3 Notwithstanding clause 13.2, the Parties are entitled to disclose that
portion of the Confidential Information required in order to comply with
any legal requirement or any regulation or rule or the requirements of
any rating agency, or to the extent the Confidential Information is
already in the public domain.
14 DATA PROTECTION
14.1 The Parties undertake to comply with all applicable data protection laws
and regulations in any relevant jurisdiction in which personal data (or
any other data, the use or transfer of which is regulated by law and
regulations in that jurisdiction) is transferred or used in connection
with the provision of the Services.
15 BUSINESS CONTINUITY PLAN
15.1 The Parties shall be jointly responsible for devising a plan(s) to
ensure the continuity of the Services in the event of an unforeseen
interruption and any other prudent procedures and measures that are
reasonably necessary to prevent the disruption of the Services
(collectively, the "Business Continuity Plan"). The Company shall be
responsible for maintaining the Business Continuity Plan and the Service
Provider shall, in the event of an unforeseen interruption, cooperate to
the best of its ability with the Company to ensure the uninterrupted
provision of Services.
16 REMUNERATION AND FEES
16.1 The Company will pay Service Provider in accordance with the provisions
of the Schedules. Within thirty (30) days of receipt of an invoice from
Service Provider, Company shall pay Service Provider semi-annually in
arrears. Such invoices shall be provided at the end of the second and
fourth quarters of each calendar year, if applicable.
16.2 Unless otherwise provided in the relevant Schedule, at the end of each
annual period commencing as of January 1, 2006, Service Provider will
perform a review of the fees being charged to the Company and if Service
Provider determines, based on a transfer pricing or similar study, that
the fees should be different, then the parties will negotiate in good
faith to change the fees to a rate consistent with such study.
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17 TAXES
17.1 All sums payable pursuant to this Agreement shall be exclusive of any
duties and taxes. Any other duties or taxes payable on such sums shall
be payable in addition to such sums.
18 COMPLAINTS
18.1 In accordance with clause 22, the Parties shall notify one another
immediately upon becoming aware of any relevant matter arising out of
the operation of, or in connection with, this Agreement, which has
resulted or could result in a complaint to, including but not limited
to, any regulatory authority or which could give rise to litigation or
proceedings against either Party.
19 TERM AND TERMINATION
19.1 This Agreement may be terminated, either in whole or with respect to one
or more of the Services, by the Company at any time by giving the
Service Provider ninety (90) days prior written notice.
19.2 Unless the other Party specifically agrees to the contrary in writing,
this Agreement will be automatically terminated with immediate effect in
the event that one Party shall:-
(a) enter or become the subject of voluntary or involuntary
rehabilitation or liquidation proceedings;
(b) become the subject of an action in bankruptcy;
(c) make or propose any composition with its creditors or make any
assignment for the benefit of its creditors or otherwise
acknowledge its insolvency;
(d) have an administrator or administrative receiver or equivalent
office holder appointed by a court of competent jurisdiction;
(e) have a receiver or equivalent office holder appointed for the
whole or any part of its business;
(f) any past or present director, officer, partner or employee of
Service Provider is convicted of or charged with any criminal
offence involving fraud or dishonesty or any similar criminal
offence which may materially affect the operation of this
Agreement.
19.3 Each Party shall inform the other immediately upon becoming aware of the
occurrence of any of the events set out in Clause 19.2 above.
19.4 In the event of persistent and material breaches of any discreet part of
the Services, the Company shall inform the Representatives of Service
Provider in writing of the nature of such breaches. The Representatives
shall meet as soon as reasonably practicable to discuss these breaches
(such meeting being expected to occur within seven (7) business days of
receipt of the written notice) and try to agree an action plan designed
to remedy the breaches within a reasonable timeframe acceptable to the
Company. Should an action plan not be agreed within a reasonable
timeframe, or the implementation of an action plan not result in the
Services being performed to the specified standards, then the
Representatives shall raise the matter with the Steering Committee, in
accordance with clause 10 above. If the material breaches continue and
the Steering Committee does not provide a resolution to the matter
within a reasonable timeframe, then the Company has the right to
terminate the relevant part of the Services with one (1) month's notice.
Such termination will not affect the continuance of the Services not
subject to the persistent and material breaches.
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19.5 On termination of any Service provided for in any Schedule or the entire
Agreement, each Party shall bear its own associated costs; Service
Provider will cooperate in good faith with the Company to provide the
Company (or its designee) with reasonable assistance to make an orderly
transition from Service Provider to another supplier of the Services.
Service Provider undertakes to work with the Company to ensure a smooth
transition and hand-over and to minimise the costs associated with
termination for each Party. Such transition assistance shall include the
following:
(a) developing a transition plan with assistance from the Company or
its designee; and
(b) organizing and delivering to the Company records and documents
necessary to allow continuation of the Services, including
delivering such materials in electronic forms and versions as
requested by the Company.
19.6 Termination of this Agreement does not affect a Party's accrued rights
and obligations at the date of termination.
20 LAW AND JURISDICTION
20.1 This Agreement shall be construed in accordance with the laws of Bermuda
without regard to the principles of conflict of laws.
21 ASSIGNMENT
21.1 This Agreement shall not be assignable by either Party without the
express written consent of the other, and such consent shall not be
unreasonably withheld, provided however that upon delivery of notice to
the Company, Service Provider may assign all or a portion of its rights
under this Agreement to an affiliate. For purposes of this Agreement
"affiliate" shall mean any person, corporation, company partnership,
individual or group (collectively a "Person"), which directly or
indirectly, through one or more intermediaries, controls or is
controlled by, or owns or is owned by another Person, with an equity or
other financial interest of 35% or more of any management interest.
22 NOTICES
22.1 All notices hereunder shall be sent to the Party at the address set
forth below or at such other address as shall be specified by a Party as
to it in a notice duly given. Notices shall be effective upon receipt,
and shall be addressed as follows:
If to Service Provider: XL Financial Assurance Ltd.
▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇:
Telephone:
Facsimile:
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If to Company: XL Insurance (Bermuda) Ltd
▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇:
Telephone:
Fax:
or to such other address as a Party shall have designated by notice in
writing to the other Party in the manner provided by this clause 22.1.
23. THIRD PARTIES' RIGHTS
23.1 For the avoidance of doubt, no term of this Agreement is intended for
the benefit of any third party, and the Parties do not intend that any
term of this Agreement should be enforceable by a third party.
24 ENTIRE AGREEMENT
24.1 This Agreement, including the attached Schedules, is the complete and
exclusive statement of the agreement between the Parties and supersedes
all prior proposals, understandings and all other agreements, oral and
written, between the Parties relating to the subject matter of this
Agreement. This Agreement may not be modified or altered except by
written instrument duly executed by both Parties.
25. FORCE MAJEURE
25.1 Any delay or failure by either Party in the performance of this
Agreement will be excused to the extent that the delay or failure is due
solely to causes or contingencies beyond the reasonable control of such
Party.
26. SEVERABILITY
26.1 If any provision, clause or part of this Agreement, or the application
thereof under certain circumstances is held invalid or unenforceable for
any reason, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances shall not be
affected thereby.
IN WITNESS WHEREOF, the Parties have signed this Agreement on the Effective
Date.
XL FINANCIAL ASSURANCE LTD. XL INSURANCE (BERMUDA) LTD
By By:
-------------------------------- --------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
-------------------------------- --------------------------------
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SCHEDULE #__________
______________________________ SERVICES
I DESCRIPTION OF SERVICES
A. SCOPE
XL Financial Assurance Ltd. (" Service Provider") will provide
______________________________ services to XL Insurance (Bermuda) Ltd (the
"Company"), either through Service Provider's own resources, the resources of
its subsidiary or affiliates, as provided in the General Services Agreement (the
"Services Agreement"), dated as of _______________, by and between Service
Provider and Company, or by contracting with other independent contractors, all
in accordance with Section 4.1 of the Services Agreement.
B. SPECIFIC SERVICES
The specific services that Service Provider will provide are as follows:
1. ________________________________________________________________
2. ________________________________________________________________
3. ________________________________________________________________
4. ________________________________________________________________
5. ________________________________________________________________
Additional services may be included upon agreement of both parties.
II SERVICE FEES
[The Company will pay Service Provider [insert payment frequency and related
terms] on a "cost plus" basis for each Service as set forth herein. The Company
will pay the Service Provider within thirty (30) days of the receipt of an
invoice from Servicer Provider.
The fee will include:
(i) with respect to the Services being performed and Support
Services being provided by Service Provider, any salaries,
bonuses, benefits, fringe benefits, incentive compensation
benefits (if applicable) payroll taxes or other applicable
taxes, and depreciation/amortization of office equipment and
software attributed to the employee in the group (collectively,
the "Employee Costs"), based upon the ratio of Service
Provider's estimate of the time spent by the employee on behalf
of the Company or in connection with providing Services divided
by the total time spent by the employees multiplied by the
Employee Costs;
(ii) a ▇▇▇▇ up of ____% of the aggregate amount calculated pursuant
to (i);
(iii) third-party expenses, including travel and entertainment,
consulting fees and printing costs, incurred on behalf of the
Company by Service Provider on behalf of the Company or in
connection with providing Services (such costs are not subject
to a ▇▇▇▇ up); and
(iv) Any costs incurred by the Service Provider in providing the
Services not in the ordinary course of business (such costs are
not subject to a ▇▇▇▇ up).]
OR
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[The Company will pay Service Provider semi-annually on an hourly rate per
professional hour (or pro rata portion thereof for portions of an hour) as set
forth below based on the title of the XLFA professional providing the Services
; plus actual out of pocket expenses incurred in providing such services,
provided that the incurrence of such expenditures has been approved by the
Company. The foregoing hourly rates include a ▇▇▇▇ up of [ ]. Out of pocket
expenses are not subject to markup.
Account current statements shall be rendered [ ] by Servicer Provider to the
Company (which statements shall provide, upon request from time to time of the
Company, reasonable detail as to the services rendered) and enumeration of any
out-of-pocket expenditure to be reimbursed.]
III ADDITIONAL TERMS
Insert any other relevant terms.