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$200,000,000 Multicurrency Letter of Credit Facility Agreement

 

 

Dated

31 August 2011

FLAGSTONE RÉASSURANCE SUISSE SA (as Borrower) (1)

FLAGSTONE CAPITAL MANAGEMENT LUXEMBOURG SICAF-FIS (as Collateral Provider) (2)

BARCLAYS BANK PLC (as Issuing Bank) (3)

 

 
 

 

 

 

 

 

1390/B23985.23/CORP2:3020236.8/AGAA

 

 


 

 

 

 

TABLE OF CONTENTS

 

 

2

The Facility  

 

 

 

3

Purpose  

 

 

 

5

Utilisation  

 

 

6

Letters of Credit  

 

 

 

7

Repayment  

 

 

 

9

Restrictions  

 

 

10

Termination  

 

 

12

Default Interest  

 

 

14

Fees  

 

 

16

Increased Costs  

 

 

 

 

20

Representations  

 

 

 

 

29

Set-Off  

 

 

30

Notices  

 

 

 

34

Amendments  

 

 

 

35

Counterparts  

 

 

36

Publicity  

 

 

 

37

Governing Law  

 

 

38

Enforcement  

 

 

 

 

 

 


 

 

THIS AGREEMENT is dated 31 August 2011 and made between:

(1)

FLAGSTONE RÉASSURANCE SUISSE SA (company number CH-621.3.007.041-9), a company incorporated in Switzerland whose registered office is at 1, rue du Collège, CH-1920 Martigny, Switzerland as borrower (the “ Borrower ”); and

(2)

FLAGSTONE CAPITAL MANAGEMENT LUXEMBOURG SICAF-FIS a public limited liability company ( société anonyme ) incorporated under the laws of Luxembourg qualifying as a specialised investment fund ( fonds d’investissement spécialisé ), having its registered office at 37, Val St André, L-1128 Luxembourg, registered with the Luxembourg trade and companies register under number B141.810, ( (the “ Collateral Provider ”); and

(3)

BARCLAYS BANK PLC as issuing bank (the “ Issuing Bank ”).

 

IT IS AGREED as follows:

 

SECTION 1

 

INTERPRETATION

 

1  

Definitions and Interpretation

 

1.1  

Definitions

 

In this Agreement:

 

A.M. Best Company Inc ” means A.M. Best Company Inc, a credit rating agency incorporated in New Jersey and any successor thereto.

 

Accounting Principles ” means in respect of any person, generally accepted accounting principles in accordance with the relevant GAAP in its jurisdiction of incorporation.

 

Accounting Reference Date ” means 31 December.

 

Additional Cost Rate ” has the meaning given to it in Schedule 3 ( Mandatory Cost Formula ).

 

Affiliate ” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

 

Approved Issuing Bank ” means:

 

(a)  

in New York state, a “qualified bank” as defined by The New York Insurance Regulations and determined by the Securities and Valuation Office of the NAIC and whose name is contained in the Securities and Valuation Office list; or

 

(b)  

in any other jurisdiction including any state in the United States of America other than New York state, a bank which meets the criteria, including such standards of financial condition and standing, as are considered necessary and appropriate by that jurisdiction’s regulator to regulate the quality of banks and trust companies issuing letters of credit for which the beneficiary can benefit from credit for reinsurance.

 

Authorisation ” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

 

Availability Period ” means the period from and including the date of this Agreement to and including the date falling one year prior to the Final Maturity Date (but subject to the further provisions of Clause 7.4 .)

 

Available Commitment ” means the Commitment under the Facility minus:

 

(a)  

the Base Currency Amount of any outstanding Letters of Credit (other than any Letters of Credit that are due to expire or be cancelled and do expire or are cancelled prior to the proposed Utilisation Date); and

 

(b)  

in relation to any proposed Utilisation, the Base Currency Amount of any Letters of Credit that are due to be issued under the Facility on or before the proposed Utilisation Date.

 

Available Facility ” means the aggregate for the time being of the Available Commitment in respect of the Facility.

 

Base Currency ” means US Dollars.

 

Base Currency Amount ” means, in relation to a Letter of Credit, the amount specified in the Utilisation Request delivered by the Borrower for that Letter of Credit (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Spot Rate of Exchange on the Utilisation Date adjusted under Clause 5.7 ( Revaluation of Letters of Credit ) and as adjusted to reflect any repayment or prepayment of a Letter of Credit.

 

Break Costs ” means the amount (if any) by which:

 

(a)  

the interest which the Issuing Bank should have received for the period from the date of receipt of all or any part of an Unpaid Sum to the last day of the current Interest Period in respect of that Unpaid Sum, had the Unpaid Sum received been paid on the last day of that Interest Period;

 

exceeds:

 

(b)  

the amount which the Issuing Bank would be able to obtain by placing an amount equal to the Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

 

Business Day ” means a day (other than a Saturday or Sunday) on which banks are open for general business in London, Luxembourg, New York and Switzerland.

 

Cash ” means, at any time, cash denominated in sterling, euro, US Dollars (or Australian Dollars) credited in a Cash Account and to which the Collateral Provider is alone beneficially entitled and which, for the avoidance of doubt, excludes cash held exclusively for the benefit of the Collateral Provider’s customers which is not available to the Collateral Provider for its own use and for so long as:

 

(a)  

that cash is repayable on demand;

 

(b)  

repayment of that cash is not contingent on the prior discharge of any other indebtedness of the Collateral Provider or of any other person whatsoever or on the satisfaction of any other condition;

 

(c)  

there is no Security over the cash except for the Cash Charge; and

 

(d)  

the cash is freely and immediately available to be applied in repayment or prepayment of the Facility.

 

Cash Accounts ” means the accounts of the Collateral Provider with the Issuing Bank with the following details: Sterling, sort code 200000 and account number 03493083; US Dollars, sort code 200000 and account number 79768933; Australian Dollars, sort code 200000 and account number 48314433; and euro, sort code 200000 and account number 48314444.

 

Cash Charge ” means the charge over cash deposit in the agreed form to be entered into by the Collateral Provider on or about the date of this Agreement pursuant to which the Collateral Provider creates a fixed charge over the Cash Accounts in favour of the Issuing Bank.

 

Cash Collateral ” means any Cash provided by the Collateral Provider as collateral in accordance with Clause 22.4 ( Minimum Security Cover ) and subject to the Transaction Security.

 

Cash Proportion ” means, at any time, the proportion, expressed as a percentage, of the value at that time of any Cash Collateral to the Total Collateral Value.

 

Certified Copy ” means a copy of an original document which is

 

(i)       in the case of the Borrower, certified by a director of the Borrower; and

 

 

(ii)

in the case of the Collateral Provider, certified by two directors of the Collateral Provider,

 

 as being a copy of that document..

 

 

 

Change of Control ” means any person or group of persons acting in concert gain direct or indirect control of the Borrower or the Collateral Provider.  For the purposes of this definition:

 

(a)  

control ” means:

 

(i)  

the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

 

(A)  

cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of the Borrower or the Collateral Provider; or

 

(B)  

appoint or remove all, or the majority, of the directors or other equivalent officers of the Borrower or the Collateral Provider; or

 

(C)  

give directions with respect to the operating and financial policies of the Borrower or the Collateral Provider with which the directors or other equivalent officers of the Borrower or the Collateral Provider are obliged to comply; and/or

 

(ii)  

the holding beneficially of more than 50% of the issued share capital of the Borrower or the Collateral Provider (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); and

 

(b)  

acting in concert ” means, a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition of shares in a company by any of them, either directly or indirectly, to obtain or consolidate control of the Borrower or the Collateral Provider.

 

Charged Property ” means all of the assets of the Collateral Provider which from time to time are, or are expressed to be, the subject of the Transaction Security.

 

Commitment ” means $200,000,000 to the extent not cancelled, reduced or transferred under this Agreement.

 

Commission Period ” means, in relation to a Letter of Credit, each successive period commencing on the day after a Quarter Date and ending on the next Quarter Date except that the first Commission Period for a Letter of Credit shall commence on the date such Letter of Credit is issued and that no Commission Period in respect of a Letter of Credit may end after the Expiry Date for such Letter of Credit (so any Commission Period which would otherwise end after the Expiry Date for such Letter of Credit shall end on the relevant Expiry Date).

 

Compliance Certificate ” means a certificate substantially in the form set out in Schedule 5 ( Form of Compliance Certificate ).

 

Constitutional Documents ” means (i) the up-to-date and certified articles of association of the Borrower and the Collateral Provider each in the agreed form, (ii) an extract from the registry of commerce in respect of the Borrower, (iii) a certified extract from the Luxembourg trade and companies register in respect of the Collateral Provider, and (iv) a certified negative certificate issued by the Luxembourg trade and companies register stating that on the day immediately prior to the issuance of the certified negative certificate there were no records at the Luxembourg trade and companies register of any judicial decisions regarding, inter alia the bankruptcy ( faillite ), composition arrangements with creditors ( concordat préventif de faillite ), reprieve from payment ( sursis de paiement ) or controlled management ( gestion contrôlée ) of the Collateral Provider, each such extract or certificate, dated no earlier than 10 days before the date of this Agreement.

 

Control Agreement ” means the securities account control account agreement in the agreed form to be entered into on or about the date of this Agreement between the Issuing Bank, the Collateral Provider and the Custodian.

 

CSSF ” means the Commission de Surveillance du Secteur Financier of Luxembourg .

 

Custodian Account ” means the accounts established pursuant to the Custodian Agreement to hold the Securities Collateral, with numbers: G14965; 81360; G21040; 81359; G21039; 81358.

 

Custodian ” means J.P Morgan Bank Luxembourg S.A. or any replacement custodian from time to time in respect of the Securities Collateral approved by the Issuing Bank.

 

Default ” means an Event of Default or any event or circumstance specified in Clause 25 ( Events of Default ) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

 

Disruption Event ” means either or both of:

 

(a)  

a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

 

(b)  

the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

 

(i)  

from performing its payment obligations under the Finance Documents; or

 

(ii)  

from communicating with other Parties in accordance with the terms of the Finance Documents,

 

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

 

Eligible Securities ” means:

 

(a)  

Government Securities and Government Guaranteed Securities; and

 

(b)  

Inflation Linked Securities;

 

(c)  

Supranational Securities; and

 

(d)  

Quasi Government Securities.

 

Expiry Date ” means, for a Letter of Credit, the last day of its Term.

 

Event of Default ” means any event or circumstance specified as such in Clause 25 ( Events of Default ).

 

Facility ” means the revolving letter of credit facility made available or to be made available under this Agreement for the purposes more specifically set out in Clause 3 .

 

Facility Office ” means the office in the jurisdiction in which the Issuing Bank is resident for tax purposes.

 

Fannie Mae ” means The Federal National Mortgage Association, a corporation created under the laws of the United States of America.

 

Final Maturity Date ” means 31 December 2014 (as the same may be extended in accordance with Clause 7.4 ( Extension option ).

 

Finance Document ” means this Agreement, any Transaction Security Document, any Utilisation Request and any other document designated as a “Finance Document” by the Issuing Bank and the Borrower.

 

Financial Indebtedness ” means any indebtedness for or in respect of:

 

(a)  

moneys borrowed and debit balances at banks or other financial institutions;

 

(b)  

any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

 

(c)  

any note purchase facility or the issue of bonds (but not Trade Instruments), notes, debentures, loan stock or any similar instrument;

 

(d)  

the amount of any liability in respect of finance leases;

 

(e)  

receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis and meet any requirement for de-recognition under the Accounting Principles);

 

(f)  

any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);

 

(g)  

any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability (but not, in any case, Trade Instruments) of an entity which is not a Group Company which liability would fall within one of the other paragraphs of this definition or (ii) any liabilities of any Group Company relating to any post-retirement benefit scheme;

 

(h)  

any amount raised by the issue of redeemable or preferred shares which are capable of redemption (other than at the option of the issuer) before the Final Maturity Date or are otherwise classified as borrowings under the Accounting Principles;

 

(i)  

any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply;

 

(j)  

any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing; and

 

(k)  

the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (j) above .

 

Financial Year ” means in relation to the Borrower, the Parent and/or the Collateral Provider, each calendar year ending on the 31 December.

 

Fitch " means Fitch Ratings Ltd, a credit rating agency incorporated in England and Wales and any successor thereto.

 

Freddie Mac ” means The Federal Home Loan Mortgage Corporation, a corporation created under the laws of the United States of America.

 

Ginnie Mae ” means the Government National Mortgage Association, an agency of the government of the United States of America.

 

Government Securities ” means US Treasuries (i.e. US Government Bonds), Federal Deposit Insurance Corporation (FDIC), Government National Mortgage Association (GNMA), & OECD Government Bonds and Agency Bonds of the United States, United Kingdom, France, Germany, Australia, Canada or Japan which are AAA rated by Standard & Poors or in the case of the United States, rated no lower than the credit rating for the United States’ sovereign debt (at the date of this Agreement such debt being rated by Standard & Poors as AA+) or in the case of Japan, rated no lower than the credit rating for Japan’s sovereign debt (at the date of this Agreement such debt being rated by Standard & Poors as AA/AA2).

 

Government Guaranteed Securities ” means Agency Bonds explicitly guaranteed by the national governments of any of the United Kingdom, France, Germany, Australia, Canada or Japan and rated AAA by Standard & Poors or in the case of bonds guaranteed by the United States, rated no lower than the credit rating for the United States’ sovereign debt (at the date of this Agreement such debt being rated by Standard & Poors as AA+) or in the case of bonds guaranteed by Japan, rated no lower than the credit rating for Japan’s sovereign debt (at the date of this Agreement such debt being rated by Standard & Poors as AA/AA2).

 

Group ” means the Borrower, the Collateral Provider and each of their Subsidiaries for the time being and “ Group Company ” means any of them.

 

Group Structure Chart ” means the group structure chart in the agreed form.

 

Holding Company ” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

 

Inflation Linked Securities ” means US Tips, Canadian Government Real Return Bonds, French Global Inflation linked bonds, Japan Global Inflation linked bonds, and UK, German and Australian index linked bonds which are AAA rated by Standard & Poors or in the case of Japan Global Inflation Linked bonds, rated no lower than the credit rating for Japan’s sovereign debt (at the date of this Agreement and debt being rated by Standard & Poors as AA/AA2).

 

Interest Period ” means in relation to an Unpaid Sum, each period determined in accordance with Clause 12.1 ( Default interest ).

 

Issuing Bank ” means:

 

(a)  

the Issuing Bank; and

 

(b)  

any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 26 ( Changes to the Issuing Bank ),

 

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

 

Legal Opinion ” means any legal opinion delivered to the Issuing Bank under Clause 4.1 ( Initial conditions precedent ).

 

Legal Reservations ” means:

 

(a)  

the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

 

(b)  

the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

 

(c)  

similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

 

(d)  

any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.

 

Letter of Credit ” means a letter of credit denominated in US Dollars or Australian Dollars, substantially in the form set out in Schedule 4A ( Form of US Dollar Letter of Credit ) or Schedule 4B ( Form of Australian Dollar Letter of Credit )  in the case of a Letter of Credit issued in Australian Dollars or in any other form requested by the Borrower for the purposes of meeting the requirements of the regulatory body with whose rules the beneficiary of the relevant Letter of Credit is seeking to comply in order to benefit from credit for reinsurance provided such form is approved by the Issuing Bank (such approval not to be unreasonably withheld).

 

LIBOR ” means, in relation to an Unpaid Sum:

 

(a)  

the applicable Screen Rate; or

 

(b)  

(if no Screen Rate is available for the currency or Interest Period of that Unpaid Sum) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Issuing Bank at its request quoted by the Reference Banks to leading banks in the London interbank market,

 

as of 11.00am on the Quotation Day for the offering of deposits in the currency of that Unpaid Sum and for a period comparable to the Interest Period for that Unpaid Sum.

 

Limitation Acts ” means the Limitation Act 1980 and any other legislation in force for the time being in England and Wales relating to the time barring of claims.

 

LMA ” means the Loan Market Association.

 

Mandatory Cost ” means the percentage rate per annum calculated by the Issuing Bank in accordance with Schedule 3 ( Mandatory Cost Formula ).

 

Margin ” means in relation to any Unpaid Sum, 3 per cent per annum.

 

Material Adverse Effect ” means a material adverse effect on:

 

(a)  

the assets, financial condition or business of the Borrower, the Collateral Provider or of the Group taken as a whole;

 

(b)  

the ability of the Borrower or the Collateral Provider to meet its payment obligations or the ability of the Borrower to comply with the financial covenants set out in Clause 22 ( Financial Covenants ) under any Finance Document;

 

(c)  

the validity, legality or enforceability of, or the ranking of any Security granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of the Issuing Bank under any of the Finance Documents.

 

Month ” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

 

(a)  

if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;

 

(b)  

if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.

 

NAIC ” means the National Association of Insurance Commissioners.

 

New York Insurance Regulations ” means the New York Insurance Law and the rules and regulations promulgated thereunder which are in effect from time to time.

 

Optional Currency ” means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3 ( Conditions relating to Optional Currencies ).

 

Original Financial Statements ” means in relation to the Borrower its audited financial statements for the period of 12 months ended 31 December 2010 and in relation to the Collateral Provider means its audited financial statements for the period of 12 months ended 31 December 2010 and in relation to the Parent means its audited consolidated financial statements for the period of 12 months ended 31 December 2010.

 

Parent ” means Flagstone Reinsurance Holdings S.A. (R.C.S. Luxembourg company no. B 153 214) whose registered office is at 37, Val St André, L-1128 Luxembourg, Grand Duchy of Luxembourg, a company incorporated in the Grand Duchy of Luxembourg.

 

Participating Member State ” means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

 

Party ” means a party to this Agreement.

 

Perfection Requirements ” means any and all registrations, filings, notices and other actions and steps required to be made in any jurisdiction in order to perfect security created by the Transaction Security Documents or in order to achieve the relevant priority for such Security.

 

Permitted Disposal ” means any sale, lease, licence, transfer or other disposal which is on arm’s length terms:

 

(a)  

of cash or deposits by the Borrower or the Collateral Provider in the ordinary course of trading (and for the avoidance of doubt this shall not include any cash or deposits subject to the Transaction Security);

 

(b)  

of investments in the ordinary course of business;

 

(c)  

provided no Event of Default has occurred which is continuing, of assets in exchange for other assets comparable or superior as to type, value and quality;

 

(d)  

of obsolete or redundant vehicles, plant and equipment for cash;

 

(e)  

arising as a result of any Permitted Security;

 

(f)  

which is a lease or licence of property in the ordinary course of business; and

 

(g)  

of assets not allowed under the preceding paragraphs (other than shares) for cash where the net consideration receivable (when aggregated with the net consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under the preceding paragraphs) does not exceed $20,000,000 (or its equivalent in other currencies) in any one Financial Year.

 

Permitted Financial Indebtedness ” means Financial Indebtedness:

 

(a)  

arising under any of the Finance Documents;

 

(b)  

arising under the Borrower’s existing letter of credit and trust facilities with Citibank and Wells Fargo;

 

(c)  

arising in respect of any Trade Instrument to the extent such Trade Instrument is fully collateralised; and

 

(d)  

not permitted by the preceding paragraphs and the outstanding principal amount of which does not exceed an amount equal to 25% of Total Shareholder Equity (or such other amount as may be agreed by the parties in writing) (or its equivalent in other currencies) in aggregate at any time.

 

Permitted Security ” means:

 

(a)  

any Security granted pursuant to the Transaction Security Documents;

 

(b)  

any lien arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by the Borrower or the Collateral Provider;

 

(c)  

any netting or set-off arrangement entered into by the Borrower or the Collateral Provider in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;

 

(d)  

any Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a the Borrower or the Collateral Provider in the ordinary course of trading and on the supplier’s standard or usual terms and not arising as a result of any default or omission by the Borrower of the Collateral Provider;

 

(e)  

any Security under netting or set-off arrangements under Treasury Transactions permitted by the Finance Documents;

 

(f)  

any Transaction Security, including cash collateral to secure obligations under the Finance Documents;

 

(g)  

any Security entered into in respect of Permitted Financial Indebtedness as described in paragraph (b) or paragraph (c) of that definition so long as such Security does not secure any Charged Property or otherwise adversely affect the validity or enforceability of the Transaction Security;

 

(h)  

any Security securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of Security given by the Borrower or the Collateral Provider other than any permitted under paragraphs (a) to (g) above ) does not exceed $300,000,000 (or such other amount as may be agreed between the parties from time to time) (or its equivalent in other currencies) at any time; or

 

(i)  

any Security created with the prior written consent of the Issuing Bank.

 

Quarter Date ” means 31 March, 30 June, 30 September and 31 December in each year.

 

Quasi Government Securities ” means Freddie Mac debentures and/or mortgage backed securities, Federal Home Loan Banks debentures and/or mortgage backed securities, Federal Farm Credit Banks debentures and/or mortgage backed securities and Fannie Mae debentures and/or mortgages backed securities each of which are at least AAA rated by Standard & Poors.

 

Quasi-Security ” has the meaning given to that term in Clause 23.3 ( Negative pledge ).

 

Quotation Day ” means, in relation to any period for which an interest rate is to be determined the first day of that period.

 

Receiver ” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

 

Reference Banks ” means, in relation to LIBOR and Mandatory Cost, the principal London offices of the Issuing Bank, HSBC Bank plc, Lloyds Banking Group and The Royal Bank of Scotland plc or such other banks as may be appointed by the Issuing Bank in consultation with the Borrower.

 

Relevant Interbank Market ” means the London interbank market.

 

Relevant Jurisdiction ” means, in relation to each of the Borrower and the Collateral Provider:

 

(a)  

its jurisdiction of incorporation;

 

(b)  

any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated;

 

(c)  

any jurisdiction where it conducts its business; and

 

(d)  

the jurisdiction whose laws govern the perfection of any of the Transaction Security Documents entered into by it.

 

Repeating Representations ” means each of the representations set out in Clause 20.2 ( Status ) to Clause 20.6 ( Validity and admissibility in evidence ) (inclusive), Clause 20.8 ( No filing or stamp taxes ), Clause 20.10 ( No default ), Clause 20.11 ( No misleading information ), paragraphs (d) and (e) of Clause  20.12 ( Original Financial Statements ), Clause 20.13 ( Pari passu ranking ) and Clause 20.14 ( No proceedings pending or threatened ), Clause 20.15 (Custodian arrangements), Clause 20.16 (No Insolvency), Clause 20.18 ( Security and Financial Indebtedness ), Clause 20.19 ( Legal and beneficial ownership ) and Clause 20.20 ( Centre of main interests and establishments ).

 

Screen Rate ” means in relation to LIBOR, the British Bankers’ Association Interest Settlement Rate for the Base Currency and period displayed on the appropriate page of the Reuters screen.  If the agreed page is replaced or service ceases to be available, the Issuing Bank may specify another page or service displaying the appropriate rate after consultation with the Borrower.

 

Securities Collateral ” means at any time, any Eligible Securities provided by the Collateral Provider as collateral in accordance with Clause 22.4 ( Minimum Security Cover ) and subject to the Transaction Security.

 

Securities Collateral Charge ” means the Luxembourg law governed account pledge agreement in the agreed form to be entered into on or about the date of this Agreement by the Collateral Provider in favour of the Issuing Bank granting a first ranking perfected security interest in the Securities Collateral held in the Custodian Account.

 

Securities Collateral Proportion ” means, at any time, the proportion, expressed as a percentage, of the value at that time of any Securities Collateral to the Total Collateral Value.

 

Security ” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

 

Security Period ” means the period starting on the date of this Agreement and ending on the date on which the Issuing Bank is satisfied that all of the liabilities of the Borrower and the Collateral Provider under each Finance Document are irrevocably discharged in full and the Issuing Bank has no commitment or liability, whether present or future, actual or contingent, in relation to the Facility.

 

Spot Rate of Exchange ” means the Issuing Bank’s spot rate of exchange for the purchase of the relevant amount of the relevant currency with the Base Currency in the London foreign exchange market at about 11am on a particular day.

 

Subsidiary ” means in relation to any company or corporation, a company or corporation:

 

(a)  

which is controlled, directly or indirectly, by the first mentioned company or corporation;

 

(b)  

more than half the issued share capital of which is beneficially owned, directly or indirectly by the first mentioned company or corporation; or

 

(c)  

which is a Subsidiary of another Subsidiary of the first mentioned company or corporation,

 

and for this purpose, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body.

 

Supranational Securities ” means European Bank for Reconstruction and Development, European Investment Bank & European Union securities which are in each case at least AAA rated by Standard & Poors.

 

Standard & Poor’s ” means Standard & Poors Rating Services a division of the McGraw & Hill Companies, Inc., a New York corporation, and any successor thereto.

 

Supportable Capital Transactions ” means a dividend paid out of retained earnings, a return of share capital or any analogous transaction.

 

Tax ” means any tax, levy, impost, duty or other charge or withholding 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).

 

Term ” means each period determined under this Agreement for which the Issuing Bank is under a liability under a Letter of Credit.

 

Total Collateral Value ” means, at any time, the aggregate of the value of the Cash Collateral and the value of the Securities Collateral, in each case as determined by the Issuing Bank, acting reasonably and for the avoidance of doubt in determining the value of the Securities Collateral the Issuing Bank’s determination shall be made on the basis of the most recent valuation of the Securities Collateral provided by the Custodian pursuant to paragraph (a) of Clause 21.4 ( Information: miscellaneous ) except that where there is no readily available market value for the Securities Collateral and the Custodian has based its valuation of such Securities Collateral on a financial model which is not satisfactory to the Issuing Bank (acting reasonably), the Issuing Bank shall be entitled to obtain and have regard to a further independent valuation of the Securities Collateral.

 

Total Shareholder Equity ” means, at any time, the amount appearing next to the heading “Total Shareholder Equity” in the most recent audited financial statements of the Borrower provided to the Issuing Bank pursuant to paragraph 21.1(a) of Clause 21.1 ( Financial statements ).

 

Trade Instruments ” means any performance bonds, advance payment bonds or documentary letters of credit, credit for reinsurance trusts or collateral trust funds issued in respect of the obligations of any Group Company arising in the ordinary course of trading.

 

Transaction Security ” means the Security created or expressed to be created in favour of the Issuing Bank pursuant to the Transaction Security Documents.

 

Transaction Security Documents ” means each of the documents listed as being a Transaction Security Document in paragraphs 2(b) to 2(d) of Part 1A of Schedule 1 ( Conditions Precedent ) together with any other document entered into by the Borrower or Collateral Provider creating or expressed to create or deal with any Security over all or any part of its assets in respect of its obligations under any of the Finance Documents.

 

Treasury Transactions ” means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.

 

Unpaid Sum ” means any sum due and payable but unpaid by the Borrower or the Collateral Provider under the Finance Documents.

 

Utilisation ” means a utilisation of the Facility.

 

Utilisation Date ” means the date on which a Utilisation is made being 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 2 ( Utilisation Request ).

 

VAT ” means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature.

 

1.2  

Construction

 

(a)  

Unless a contrary indication appears, a reference in this Agreement to:

 

(i)  

the “ Issuing Bank ”, the “ Borrower ”, the “ Collateral Provider ”, the “ Custodian ” or any “ Party ” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

 

(ii)  

a document in “ agreed form ” is a document which is previously agreed in writing by or on behalf of the Borrower and the Issuing Bank or, if not so agreed, is in the form specified by the Issuing Bank;

 

(iii)  

assets ” includes present and future properties, revenues and rights of every description;

 

(iv)  

a “ Finance Document ” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended or restated;

 

(v)  

guarantee ” means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;

 

(vi)  

indebtedness ” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

 

(vii)  

a “ person ” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);

 

(viii)  

a “ regulation ” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

 

(ix)  

a provision of law is a reference to that provision as amended or re-enacted; and is a reference to a provision, of any treaty, legislation, regulation, decree, order or by-law and any secondary legislation enacted under a power given by that provision, as amended, applied or re-enacted or replaced whether before or after the date of this Agreement;

 

(x)  

a time of day is a reference to London time; and

 

(xi)  

reinsurance includes insurance and retrocession.

 

(b)  

Section, Clause and Schedule headings are for ease of reference only.

 

(c)  

Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

 

(d)  

A Default (other than an Event of Default) is “ continuing ” if it has not been remedied or waived and an Event of Default is “ continuing ” if it has not been waived.

 

(e)  

Any reference in this Agreement to:

 

(i)  

the Borrower “ repaying ” or “ prepaying ” a Letter of Credit means:

 

(A)  

the Borrower or the Collateral Provider providing cash cover or eligible collateral for any Letter of Credit;

 

(B)  

the maximum amount payable under any Letter of Credit being reduced in accordance with its terms; or

 

(C)  

the Issuing Bank being satisfied that it has no further liability under any Letter of Credit;

 

and the amount by which a Letter of Credit is repaid or prepaid under paragraphs (A) and (B) above is the amount of the relevant cash cover, eligible collateral or reduction.

 

1.3  

Currency Symbols and Definitions

 

(a)  

£ ” and “ Sterling ” denotes the lawful currency of the United Kingdom;

 

(b)  

” and “ euro ” denotes the single currency of the Participating Member States;

 

(c)  

$ ” and “ US Dollars ” denotes the lawful currency of the United States of America; and

 

(d)  

Aus $ ” and “ Australian Dollars ” denotes the lawful currency of Australia.

 

1.4  

Third party rights

 

(a)  

Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “ Third Parties Act ”) to enforce or enjoy the benefit of any term of this Agreement.

 

(b)  

Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

 

--

1390/B23985.23/CORP2:3020236.8/AGAA

 

 


 

 

 

SECTION 2

 

THE FACILITY

 

2  

The Facility

 

2.1  

The Facility

 

Subject to the terms of this Agreement, the Issuing Bank makes available a multicurrency revolving letter of credit facility in an aggregate amount equal to the Commitment.

 

2.2  

Nature of this Agreement

 

(a)  

This Agreement sets out the basis on which the Issuing Bank may from time to time make facilities available to the Borrower.

 

(b)  

The Facility may be amended and/or restated from time to time by agreement in writing between the Parties.  The nature of the Facility and of this Agreement may therefore change from time to time, even to the extent of becoming a new agreement fundamentally different from that which exists at the date of this Agreement and is evidenced by this document.  Following any such amendment, it is intended that references to this Agreement shall be to this Agreement as so amended.

 

3  

Purpose

 

3.1  

Purpose

 

All amounts utilised by the Borrower under the Facility shall be applied in the issuance by the Issuing Bank of Letters of Credit required as collateral in respect of reinsurance policies provided by the Borrower.

 

3.2  

Monitoring

 

The Issuing Bank is not bound to monitor or verify the application of any amount borrowed or utilised pursuant to this Agreement and shall not be responsible for, or for the consequences of, such application.

 

4  

Conditions of Utilisation

 

4.1  

Initial conditions precedent

 

The Issuing Bank will only be obliged to comply with Clause 5.5 ( Issue of Letters of Credit ) in relation to any Utilisation if:

 

(a)  

on or before the date of this Agreement, the Issuing Bank has received all of the documents and other evidence listed in Part 1A of Schedule 1 ( Conditions Precedent );

 

(b)  

on or before the Utilisation Date for that Utilisation, the Issuing Bank has received all of the documents and other evidence listed in Part 1B of Schedule 1 ( Conditions Precedent ) and in Clause 4.5 ( Condition Subsequent ),

 

in each case in form and substance sat


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