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[Published CUSIP Number: ________]
LETTER OF CREDIT AGREEMENT
Dated as of August 18, 2005
Among
SCOTTISH RE (DUBLIN) LIMITED,
as Borrower,
SCOTTISH ANNUITY & LIFE INSURANCE COMPANY (CAYMAN) LTD.,
as Guarantor
BANK OF AMERICA, N.A.,
as Administrative Agent
and
L/C Issuer,
and
The Other Lenders Party Hereto
BANC OF AMERICA SECURITIES LLC,
as
Sole Lead Arranger and Sole Book Manager
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS.............................1
1.01 Defined
Terms...................................................1
1.02 Other
Interpretive Provisions..................................19
1.03 Accounting
Terms...............................................19
1.04
Rounding.......................................................20
1.05 Times of
Day...................................................20
1.06 Letter of
Credit Amounts.......................................20
ARTICLE II. THE
COMMITMENTS AND L/C CREDIT EXTENSIONS...................20
2.01 Letters of
Credit..............................................20
2.02 Termination
or Reduction of Commitments........................28
2.03
Fees...........................................................28
2.04
Computation of
Interest and Fees...............................29
2.05 Evidence of
Debt...............................................29
2.06 Payments
Generally; Administrative Agent's Clawback............29
2.07 Sharing of
Payments by Lenders.................................30
2.08 SALIC as
Agent of the Borrower.................................31
2.09 Increase in
Commitments........................................31
ARTICLE III. TAXES,
YIELD PROTECTION AND ILLEGALITY......................32
3.01
Taxes..........................................................32
3.02
Illegality.....................................................35
3.03 Increased
Costs................................................35
3.04 Mitigation
Obligations; Replacement of Lenders.................36
3.05
Survival.......................................................37
ARTICLE IV.
CONDITIONS PRECEDENT TO L/C CREDIT EXTENSIONS...............37
4.01 Conditions
of Effective Date...................................37
4.02 Conditions
to All L/C Credit Extensions........................38
ARTICLE V.
REPRESENTATIONS AND WARRANTIES..............................39
5.01 Existence,
Qualification and Power; Compliance with Laws.......39
5.02
Authorization; No
Contravention................................39
5.03
Governmental Authorization; Other
Consents.....................39
5.04 Binding
Effect.................................................40
5.05 Financial
Statements; No Material Adverse Effect...............40
5.06
Litigation.....................................................40
5.07 No
Default.....................................................41
5.08 Ownership
of Property; Liens...................................41
5.09
Environmental
Compliance.......................................41
5.10
Insurance......................................................41
5.11
Taxes..........................................................41
5.12 ERISA and
Foreign Benefit Plan Compliance......................41
<PAGE>
TABLE OF CONTENTS
(continued)
Page
5.13
Subsidiaries...................................................42
5.14 Margin
Regulations; Investment Company Act; Public Utility
Holding Company
Act............................................42
5.15
Disclosure.....................................................43
5.16 Compliance
with Laws...........................................43
5.17
Representations as to Loan
Parties.............................43
ARTICLE VI.
AFFIRMATIVE COVENANTS.......................................44
6.01 Financial
Statements...........................................44
6.02
Certificates; Other
Information................................45
6.03
Notices........................................................48
6.04 Payment of
Obligations.........................................48
6.05
Preservation of Existence,
Etc.................................49
6.06 Maintenance
of Properties......................................49
6.07 Maintenance
of Insurance.......................................49
6.08 Compliance
with Laws...........................................49
6.09 Books and
Records..............................................49
6.10 Inspection
Rights..............................................49
6.11 Use of
Proceeds................................................50
6.12 Approvals
and Authorizations...................................50
ARTICLE VII. NEGATIVE
COVENANTS..........................................50
7.01
Liens..........................................................50
7.02
Investments....................................................51
7.03
Indebtedness...................................................52
7.04 Fundamental
Changes............................................53
7.05
Dispositions...................................................54
7.06 Restricted
Payments............................................54
7.07 Change in
Nature of Business...................................55
7.08
Transactions with
Affiliates...................................55
7.09 Burdensome
Agreements..........................................55
7.10 Use of
Proceeds................................................55
7.11 Financial
Covenants............................................55
7.12
Restrictions On Negative Pledge
Agreements.....................56
7.13
Acquisitions...................................................57
ARTICLE VIII. EVENTS OF
DEFAULT AND REMEDIES..............................57
8.01 Events of
Default..............................................57
8.02 Remedies
Upon Event of Default.................................59
8.03
Application of
Funds...........................................59
ARTICLE IX.
AGENT.......................................................60
9.01 Appointment
and Authority......................................60
9.02 Rights as a
Lender.............................................60
9.03 Exculpatory
Provisions.........................................61
ii
<PAGE>
TABLE OF CONTENTS
(continued)
Page
9.04 Reliance by
Administrative Agent...............................61
9.05 Delegation
of Duties...........................................62
9.06 Resignation
of Administrative Agent............................62
9.07
Non-Reliance on Administrative Agent and Other
Lenders.........63
9.08 No Other
Duties, Etc...........................................63
9.09
Administrative Agent May File Proofs of
Claim..................63
ARTICLE X.
SALIC GUARANTEE.............................................64
10.01 Unconditional
Guarantee........................................64
10.02 Guarantee
Absolute.............................................64
10.03
Waivers........................................................65
10.04
Subrogation....................................................65
10.05
Survival.......................................................66
ARTICLE XI.
MISCELLANEOUS...............................................66
11.01 Amendments,
Etc................................................66
11.02 Notices;
Effectiveness; Electronic Communication...............67
11.03 No Waiver;
Cumulative Remedies.................................69
11.04 Expenses;
Indemnity; Damage Waiver.............................69
11.05 Payments Set
Aside.............................................71
11.06 Successors and
Assigns.........................................71
11.07 Treatment of
Certain Information; Confidentiality..............74
11.08 Right of
Setoff................................................75
11.09 Interest Rate
Limitation.......................................75
11.10 Counterparts;
Integration; Effectiveness.......................76
11.11 Survival of
Representations and Warranties.....................76
11.12
Severability...................................................76
11.13 Replacement of
Lenders.........................................76
11.14 Governing Law;
Jurisdiction; Etc...............................77
11.15 Waiver of Jury
Trial...........................................78
11.16 USA PATRIOT Act
Notice.........................................78
11.17 Judgment
Currency..............................................79
11.18 ENTIRE
AGREEMENT...............................................79
11.19 Lender
Status..................................................79
iii
<PAGE>
SCHEDULES
1.02 Applicable
Percentage for Eligible Investments
2.01 Commitments
and Applicable Percentages
5.13
Subsidiaries
7.01 Existing
Liens
7.03 Existing
Indebtedness
11.02 Administrative
Agent's Office; Certain Addresses for Notices
EXHIBITS
Form of
A Compliance
Certificate
B Assignment
and Assumption
C Opinion
Matters
<PAGE>
LETTER OF CREDIT AGREEMENT
This LETTER OF
CREDIT AGREEMENT ("Agreement") is entered into as of August
18, 2005, among SCOTTISH RE (DUBLIN)
LIMITED, a limited company incorporated and
existing under the laws of Ireland (the
"Borrower"), SCOTTISH ANNUITY & LIFE
INSURANCE COMPANY (CAYMAN) LTD., a Cayman
Islands exempted company with limited
liability ("SALIC" and, together with the
Borrower, each a "Loan Party" and
collectively the "Loan Parties"), each
lender from time to time party hereto
(collectively, the "Lenders" and
individually, a "Lender"), and BANK OF AMERICA,
N.A., as Administrative Agent, and L/C
Issuer.
WHEREAS, the
Borrower has requested the Lenders to provide a letter of
credit facility and the Lenders are willing
to do so on the terms and conditions
set forth herein;
NOW, THEREFORE,
in consideration of the mutual covenants and agreements
herein contained, the parties hereto
covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined
Terms. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Administrative
Agent" means Bank of America in its capacity as
administrative agent under any of the Loan
Documents, or any successor
administrative agent.
"Administrative
Agent's Office" means, with respect to any currency, the
Administrative Agent's address and, as
appropriate, account as set forth on
Schedule 11.02 with respect to such
currency, or such other address or account
with respect to such currency as the
Administrative Agent may from time to time
notify to SALIC and the Lenders.
"Administrative
Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative
Agent.
"Affiliate"
means, with respect to any Person, another Person that
directly, or indirectly through one or more
intermediaries, Controls or is
Controlled by or is under common Control
with the Person specified.
"Aggregate
Commitments" means the Commitments of all the Lenders.
"Agreement"
means this Letter of Credit Agreement.
"Alternative
Reserve Agreements" means funding agreements, collateral
borrowing arrangements and other capital
market solutions entered into by the
Parent or its Subsidiaries to meet the
regulatory or operational reserve
requirements of an Insurance
Subsidiary.
"Applicable
Percentage" means with respect to any Lender at any time, the
percentage (carried out to the ninth
decimal place) of the Aggregate Commitments
represented by such
<PAGE>
Lender's Commitment at such time. If the
commitment of each Lender and the
obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated
pursuant to Section 8.02 or if the
Aggregate Commitments have expired, then the
Applicable Percentage of each Lender shall
be determined based on the Applicable
Percentage of such Lender most recently in
effect, giving effect to any
subsequent assignments. The initial
Applicable Percentage of each Lender is set
forth opposite the name of such Lender on
Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender
becomes a party hereto, as applicable.
"Applicable
Rate" means, from time to time, the following percentages per
annum, based upon the Parent Debt Rating as
set forth below:
Applicable Rate
----------------------------------------------------------------------
Pricing
Parent Debt Facility Fee
Utilization
Letter of
Ratings
Level
S&P/Moody's
Fee
Credit
Fee
-----------
------------------ ------------- ------------ ------------
1
> A-/A3
0.080%
0.100%
0.270%
-
2
> BBB+/Baa1
0.100%
0.100%
0.400%
-
3
> BBB/Baa2
0.125%
0.100%
0.525%
-
4
> BBB-/Baa3
0.175%
0.150%
0.675%
-
5
< BBB-/Baa3
0.250%
0.150%
0.850%
or no rating
"Parent Debt Rating" means, as of any date of determination,
the
rating as
determined by either S&P or Moody's (collectively, the
"Parent
Debt Ratings")
of the Parent's non-credit-enhanced, senior unsecured
long-term debt;
provided that if a Parent Debt Rating is issued by each of
the foregoing
rating agencies, then the higher of such Parent Debt Ratings
shall apply
(with the Parent Debt Rating for Pricing Level 1 being the
highest and the
Parent Debt Rating for Pricing Level 5 being the lowest),
unless there is
a split in Parent Debt Ratings of more than one level, in
which case the
Pricing Level that is one Pricing Level below the higher
Parent Debt
Rating shall apply; provided further that if neither of the
foregoing rating
agencies issues a Parent Debt Rating, then Pricing Level V
shall apply.
Initially, the Applicable Rate shall be
determined based upon the Parent Debt
Rating specified in the certificate
delivered pursuant to Section 4.01(a)(vii).
Thereafter, each change in the Applicable
Rate resulting from a publicly
announced change in the Parent Debt Rating
shall be effective, in the case of an
upgrade, during the period commencing on
the date of delivery by SALIC to the
Administrative Agent of notice thereof
pursuant to Section 6.03(e) and ending on
the date immediately preceding the
effective date of the next such change and,
in the case of a downgrade, during the
period commencing on the date of the
public announcement thereof and ending on
the date immediately preceding the
effective date of the next such change.
"Applicable Loan
Party Documents" has the meaning specified in Section
5.17(a).
"Arranger" means
Banc of America Securities LLC, in its capacity as sole
lead arranger and sole book manager.
2
<PAGE>
"Asset Backed
Security" means any fixed-income instrument that entitles the
holder of, or beneficial owner under, the
instrument to the whole or any part of
the rights or entitlements of a holder of a
receivable or other asset and any
other rights or entitlements in respect of
a pool of receivables or other assets
or any money payable by obligors under
those receivables or other assets
(whether or not the money is payable to the
holder of, or beneficial owner
under, the instrument on the same terms and
conditions as under the receivables
or other assets) in relation to receivables
or other assets; provided however,
such receivables or assets shall be limited
to automobile loans, credit card
receivables and home equity loans and such
other Asset-Backed Security assets as
may be acceptable to the Administrative
Agent.
"Assignment and
Assumption" means an assignment and assumption entered into
by a Lender and an Eligible Assignee (with
the consent of any party whose
consent is required by Section 11.06(b)),
and accepted by the Administrative
Agent, in substantially the form of Exhibit
B or any other form approved by the
Administrative Agent.
"Attributable
Indebtedness" means, on any date, (a) in respect of any
capital lease of any Person, the
capitalized amount thereof that would appear on
a balance sheet of such Person prepared as
of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of
the remaining lease payments under the
relevant lease that would appear on a
balance sheet of such Person prepared as of
such date in accordance with GAAP if
such lease were accounted for as a capital
lease.
"Audited Annual
Statements" means the Statutory Statements of Scottish US
and its Subsidiaries for the fiscal year
ended December 31, 2004.
"Audited
Financial Statements" means each of (a) with respect to the
Parent, the audited consolidated balance
sheet of the Parent and its
Subsidiaries for the fiscal year ended
December 31, 2004 and the related
consolidated statements of income or
operations, shareholders' equity and cash
flows for such fiscal year of the Parent
and its Subsidiaries, including the
notes thereto, (b) with respect to SALIC,
the audited consolidated balance sheet
of SALIC and its Subsidiaries for the
fiscal year ended December 31, 2004, and
the related consolidated statements of
income or operations, shareholders'
equity and cash flows for such fiscal year
of SALIC and its Subsidiaries,
including the notes thereto, and (c) with
respect to the Borrower, the audited
consolidated balance sheet of the Borrower
and its Subsidiaries for the fiscal
year ended December 31, 2004 and the
related consolidated statements of income
or operations, shareholders' equity and
cash flows for such fiscal year of the
Borrower and its Subsidiaries, including
the notes thereto.
"Availability
Period" means the period from and including the Effective
Date to the earliest of (a) the Commitment
Termination Date, (b) the date of
termination of the Aggregate Commitments
pursuant to Section 2.02, and (c) the
date of termination of the commitment of
each Lender and of the obligation of
the L/C Issuer to make L/C Credit
Extensions pursuant to Section 8.02.
"Bank of
America" means Bank of America, N.A. and its successors.
3
<PAGE>
"Base Rate"
means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus
1/2 of 1% and (b) the rate of interest
in effect for such day as publicly
announced from time to time by Bank of
America as its "prime rate." The "prime
rate" is a rate set by Bank of America
based upon various factors including Bank
of America's costs and desired return,
general economic conditions and other
factors, and is used as a reference point
for pricing some loans, which may be priced
at, above, or below such announced
rate. Any change in such rate announced by
Bank of America shall take effect at
the opening of business on the day
specified in the public announcement of such
change.
"Borrower" has
the meaning specified in the preamble.
"Business Day"
means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to
close under the Laws of, or are in fact
closed in, the state where the
Administrative Agent's Office with respect to
Obligations denominated in Dollars is
located or the State of New York.
"Cash
Collateralize" has the meaning specified in Section 2.01(g).
"Change in Law"
means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or
taking effect of any law, rule,
regulation or treaty, (b) any change in any
law, rule, regulation or treaty or
in the administration, interpretation or
application thereof by any Governmental
Authority or (c) the making or issuance of
any request, guideline or directive
(whether or not having the force of law) by
any Governmental Authority.
"Change of
Control" means an event or series of events by which:
(a) any "person" or "group" (as such terms are used in Sections
13(d)
and 14(d) of the
Securities Exchange Act of 1934, but excluding any
employee benefit
plan of such person or its subsidiaries, and any person or
entity acting in
its capacity as trustee, agent or other fiduciary or
administrator of
any such plan) becomes the "beneficial owner" (as defined
in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, except
that a person or
group shall be deemed to have "beneficial ownership" of
all securities
that such person or group has the right to acquire (such
right, an
"option right"), whether such right is exercisable immediately
or
only after the
passage of time), directly or indirectly, of 51% or more of
the equity
securities of the Parent entitled to vote for members of the
board of
directors or equivalent governing body of the Parent on a
fully-diluted
basis (and taking into account all such securities that such
person or group
has the right to acquire pursuant to any option right);
(b) during any period of 12 consecutive months, a majority of
the
members of the
board of directors or other equivalent governing body of the
Parent cease to
be composed of individuals (i) who were members of that
board or
equivalent governing body on the first day of such period, (ii)
whose election
or nomination to that board or equivalent governing body was
approved by
individuals referred to in clause (i) above constituting at the
time of such
election or nomination at least a majority of that board or
equivalent
governing body or (iii) whose election or nomination to that
board or other
equivalent governing body was approved by individuals
referred to in
clauses (i) and (ii)
4
<PAGE>
above
constituting at the time of such election or nomination at least
a
majority of that
board or equivalent governing body (excluding, in the case
of both clause
(ii) and clause (iii), any individual whose initial
nomination for,
or assumption of office as, a member of that board or
equivalent
governing body occurs as a result of an actual or threatened
solicitation of
proxies or consents for the election or removal of one or
more directors
by any person or group other than a solicitation for the
election of one
or more directors by or on behalf of the board of
directors);
(c) 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, upon consummation thereof, will result in its or their
acquisition of
the power to exercise, directly or indirectly, a controlling
influence over
the management or policies of the Parent, or control over
the equity
securities of the Parent entitled to vote for members of the
board of
directors or equivalent governing body of the Parent on a
fully-diluted
basis (and taking into account all such securities that such
Person or group
has the right to acquire pursuant to any option right)
representing 51%
or more of the combined voting power of such securities;
or
(d) (i) the Parent fails to own, directly or indirectly, free
and
clear of all
Liens, 100% of the Equity Interests of the Borrower, or (ii)
SALIC fails to
own directly or indirectly, free and clear of all Liens,
100% of the
Equity Interests of the Borrower.
"Code" means the
Internal Revenue Code of 1986.
"Commitment"
means, as to each Lender, its obligation to purchase
participations in L/C Obligations, in an
aggregate principal amount at any one
time outstanding not to exceed the amount
set forth opposite such Lender's name
on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such
Lender becomes a party hereto, as
applicable, as such amount may be adjusted
from time to time in accordance with this
Agreement.
"Commitment
Termination Date" means July 14, 2008.
"Compliance
Certificate" means a certificate substantially in the form of
Exhibit A.
"Consolidated
Net Income" means, for any period, (a) for the Parent and its
Subsidiaries on a consolidated basis, the
net income of the Parent and its
Subsidiaries (excluding extraordinary gains
but including extraordinary losses)
for that period, and (b) for SALIC and its
Subsidiaries on a consolidated basis,
the net income of SALIC and its
Subsidiaries (excluding extraordinary gains but
including extraordinary losses) for that
period, in each case calculated in
accordance with GAAP.
"Contractual
Obligation" means, as to any Person, any provision of any
security issued by such Person or of any
agreement, instrument or other
undertaking to which such Person is a party
or by which it or any of its
property is bound.
"Control" means
the possession, directly or indirectly, of the power to
direct or cause the direction of the
management or policies of a Person, whether
through the ability to exercise
5
<PAGE>
voting power, by contract or otherwise.
"Controlling" and "Controlled" have
meanings correlative thereto.
"Corporate
Securities" means commercial paper, Asset Backed Securities and
other obligations of a corporation for
borrowed money evidenced by bonds,
debentures, notes, loan agreements or other
similar instruments.
"Debtor Relief
Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship,
bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement,
receivership, insolvency,
reorganization, or similar debtor relief
Laws of the United States or other
applicable jurisdictions from time to time
in effect and affecting the rights of
creditors generally.
"Default" means
any event or condition that constitutes an Event of Default
or that, with the giving of any notice, the
passage of time, or both, would be
an Event of Default.
"Default Rate"
means (a) when used with respect to Obligations other than
Letter of Credit Fees, an interest rate
equal to (i) the Base Rate plus (ii) 2%
per annum, and (b) when used with respect
to Letter of Credit Fees, a rate equal
to the Applicable Rate plus 2% per
annum.
"Defaulting
Lender" means any Lender that (a) has failed to fund any
participations in L/C Obligations required
to be funded by it hereunder within
one Business Day of the date required to be
funded by it hereunder, (b) has
otherwise failed to pay over to the
Administrative Agent or any other Lender any
other amount required to be paid by it
hereunder within one Business Day of the
date when due, unless the subject of a good
faith dispute, or (c) has been
deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.
"Disposition" or
"Dispose" means the sale, transfer, license, lease or
other disposition (including any sale and
leaseback transaction) of any property
by any Person, including any sale,
assignment, transfer or other disposal, with
or without recourse, of any notes or
accounts receivable or any rights and
claims associated therewith.
"Dollar" and "$"
mean lawful money of the United States.
"Effective Date"
means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in
accordance with Section 11.01.
"Eligible
Assignee" means (a) a Lender and (b) any other Person (other
than
a natural person) (i) which is approved by
(x) the Administrative Agent and the
L/C Issuer, and (y) unless an Event of
Default has occurred and is continuing,
the Borrower (each such approval not to be
unreasonably withheld or delayed) and
(ii) is able to make the representation
required under Section 11.19; provided
that notwithstanding the foregoing,
"Eligible Assignee" shall not include the
Parent or any of the Parent's Affiliates or
Subsidiaries.
"Eligible Investments" mean
Government Debt, Corporate Securities and
Asset-Backed Securities which are (a) rated
by S&P or Moody's, (b) owned by
SALIC and (c) not subject to any Lien.
6
<PAGE>
"Environmental
Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees,
permits, concessions, grants, franchises,
licenses, agreements or governmental
restrictions relating to pollution and the
protection of the environment or the
release of any materials into the
environment, including those related to
hazardous substances or wastes, air
emissions and discharges to waste or public
systems.
"Environmental
Liability" means any liability, contingent or otherwise
(including any liability for damages, costs
of environmental remediation, fines,
penalties or indemnities), of SALIC, the
Borrower or any of their respective
Subsidiaries directly or indirectly
resulting from or based upon (a) violation
of any Environmental Law, (b) the
generation, use, handling, transportation,
storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or
threatened release of any Hazardous
Materials into the environment or (e) any
contract, agreement or other
consensual arrangement pursuant to which
liability is assumed or imposed with
respect to any of the foregoing.
"Equity
Interests" means, with respect to any Person, all of the shares
of
capital stock of (or other ownership or
profit interests in) such Person, all of
the warrants, options or other rights for
the purchase or acquisition from such
Person of shares of capital stock of (or
other ownership or profit interests in)
such Person, all of the 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 acquisition from such Person of
such shares (or such other interests), and
all of the other ownership or profit
interests in such Person (including
partnership, member or trust interests
therein), whether voting or nonvoting, and
whether or not such shares, warrants,
options, rights or other interests are
outstanding on any date of determination.
"ERISA" means
the Employee Retirement Income Security Act of 1974.
"ERISA
Affiliate" means any trade or business (whether or not
incorporated)
under common control with SALIC within the
meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions
relating to Section 412 of the Code).
"ERISA Event"
means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by SALIC or any ERISA
Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in
which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations that is
treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or
partial withdrawal by SALIC or any ERISA
Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is
in reorganization; (d) the filing of a
notice of intent to terminate, the
treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of
ERISA, or the commencement of
proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes
grounds under Section 4042 of ERISA for
the termination of, or the appointment of a
trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title
IV of ERISA, other than for PBGC premiums
due but not delinquent under Section
4007 of ERISA, upon SALIC or any ERISA
Affiliate.
7
<PAGE>
"EU GAAP" means
the accounting principles set forth in the European
Community Regulations of 1996.
"Event of
Default" has the meaning specified in Section 8.01.
"Excluded Taxes"
means, with respect to the Administrative Agent, any
Lender, the L/C Issuer or any other
recipient of any payment to be made by or on
account of any obligation of any Loan Party
hereunder, (a) taxes imposed on or
measured by its overall net income (however
denominated), and franchise taxes
imposed on it (in lieu of net income
taxes), by the jurisdiction (or any
political subdivision thereof) under the
laws of which such recipient is
organized or in which its principal office
is located or, in the case of any
Lender, in which its applicable Lending
Office is located, (b) any branch
profits taxes imposed by the United States
or any similar tax imposed by any
other jurisdiction in which such Loan Party
is located and (c) except as
provided in the following sentence, in the
case of a Foreign Lender (other than
an assignee pursuant to a request by SALIC
under Section 11.13), any withholding
tax that is imposed on amounts payable to
such Foreign Lender at the time such
Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is
attributable to such Foreign Lender's
failure or inability (other than as a
result of a Change in Law) to comply with
Section 3.01(e), except to the extent
that such Foreign Lender (or its assignor,
if any) was entitled, at the time of
designation of a new Lending Office (or
assignment), to receive additional
amounts from the Borrower with respect to
such withholding tax pursuant to
Section 3.01(a). Notwithstanding anything
to the contrary contained in this
definition, "Excluded Taxes" shall not
include any withholding tax imposed at
any time on payments made by or on behalf
of a Loan Party to any Lender
hereunder or under any other Loan Document,
provided that such Lender shall have
complied with the last paragraph of Section
3.01(e).
"Fair Market
Value" shall mean (a) with respect to any publicly-traded
security (other than those set forth in
clause (b)), the closing price for such
security on the largest exchange on which
such security is traded (or if not
traded on an exchange, then the average of
the closing bid and ask prices quoted
over-the-counter) on the date of the
determination (as such prices are
recognized in The Wall Street Journal or if
not so reported, in any nationally
recognized financial journal or newspaper),
(b) with respect to Government Debt,
the amount thereof, and (c) with respect to
any other Eligible Investment (other
than those set forth in clauses (a) and
(b)), the price for the such Eligible
Investment on the date of calculation
obtained from a generally recognized
source approved by the Administrative Agent
or the most recent bid quotation
from such approved source (or, if no
generally recognized source exists as to
any particular Eligible Investment, any
other source specified by SALIC to which
the Administrative Agent does not
reasonably object).
"Federal Funds
Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight
Federal funds transactions with
members of the Federal Reserve System
arranged by Federal funds brokers on such
day, as published by the Federal Reserve
Bank of New York on the Business Day
next succeeding such day; provided that (a)
if such day is not a Business Day,
the Federal Funds Rate for such day shall
be such rate on such transactions on
the next preceding Business Day as so
published on the next succeeding Business
Day, and (b) if no such rate is so
published on such next succeeding Business
Day, the Federal Funds Rate for such day
shall be the average rate (rounded
upward, if necessary, to a whole
8
<PAGE>
multiple of 1/100 of 1%) charged to Bank of
America on such day on such
transactions as determined by the
Administrative Agent.
"Fee Letter"
means the letter agreement, dated August 18, 2005, among
SALIC, the Borrower, the Administrative
Agent and the Arranger.
"Foreign Benefit
Plan" means any employee benefit plan, pension plan or
welfare plan not subject to ERISA which is
maintained or contributed to for the
benefit of the employees of a Loan Party or
its Subsidiaries which, under
applicable law, (a) is required to be
funded through a trust or similar funding
vehicle or (b) creates or could result in a
Lien on any property of such Loan
Party or any of its Subsidiaries.
"Foreign Lender"
means, with respect to any Loan Party, any Lender that is
organized under the laws of a jurisdiction
other than that in which such Loan
Party is resident for tax purposes. For
purposes of this definition, the United
States, each State thereof and the District
of Columbia shall be deemed to
constitute a single jurisdiction.
"FRB" means the
Board of Governors of the Federal Reserve System of the
United States.
"Fund" means any
Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or
otherwise investing in commercial
loans and similar extensions of credit in
the ordinary course of its business.
"GAAP" means US
GAAP or EU GAAP, as the context requires.
"Government
Debt" means negotiable Indebtedness issued or guaranteed by the
United States Government or any agency
thereof.
"Governmental
Authority" means the government of the United States or any
other nation, or of any political
subdivision thereof, whether state or local,
and any agency, authority, instrumentality,
regulatory body, court, central bank
or other entity exercising executive,
legislative, judicial, taxing, regulatory
or administrative powers or functions of or
pertaining to government (including
any supra-national bodies such as the
European Union or the European Central
Bank).
"Guarantee"
means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or
having the economic effect of
guaranteeing any Indebtedness or other
obligation payable or performable by
another Person (the "primary obligor") in
any manner, whether directly or
indirectly, and including any obligation of
such Person, direct or indirect, (i)
to purchase or pay (or advance or supply
funds for the purchase or payment of)
such Indebtedness or other obligation, (ii)
to purchase or lease property,
securities or services for the purpose of
assuring the obligee in respect of
such Indebtedness or other obligation of
the payment or performance of such
Indebtedness or other obligation, (iii) to
maintain working capital, equity
capital or any other financial statement
condition or liquidity or level of
income or cash flow of the primary obligor
so as to enable the primary obligor
to pay such Indebtedness or other
obligation, or (iv) entered into for the
purpose of assuring in any other manner the
obligee in respect of such
Indebtedness or other obligation of the
payment or performance thereof or to
9
<PAGE>
protect such obligee against loss in
respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person
securing any Indebtedness or other
obligation of any other Person, whether or
not such Indebtedness or other
obligation is assumed by such Person (or
any right, contingent or otherwise, of
any holder of such Indebtedness to obtain
any such Lien); provided, however,
that obligations of the Parent or any of
its Subsidiaries under Primary
Policies, Reinsurance Agreements,
Retrocession Agreements or Other Insurance
Products which are entered into in the
ordinary course of business (including
security posted to secure obligations
thereunder) shall not be deemed to be
Guarantees of such Person for the purposes
of this Agreement. The amount of any
Guarantee shall be deemed to be an amount
equal to the stated or determinable
amount of the related primary obligation,
or portion thereof, in respect of
which such Guarantee is made or, if not
stated or determinable, the maximum
reasonably anticipated liability in respect
thereof as determined by the
guaranteeing Person in good faith. The term
"Guarantee" as a verb has a
corresponding meaning.
"Hazardous
Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic
substances, wastes or other pollutants,
including petroleum or petroleum
distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon
gas, infectious or medical wastes
and all other substances or wastes of any
nature regulated pursuant to any
Environmental Law.
"Indebtedness"
means, as to any Person at a particular time, without
duplication, all of the following, whether
or not included as indebtedness or
liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all
obligations of
such Person evidenced by bonds, debentures, notes, loan
agreements or
other similar instruments;
(b) all direct or contingent obligations of such Person arising
under
letters of
credit (including standby and commercial), bankers'
acceptances,
bank guaranties,
surety bonds and similar instruments;
(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase
price
of property or
services (other than trade accounts payable in the ordinary
course of
business);
(e) indebtedness (excluding prepaid interest thereon) secured by
a
Lien on property
owned or being purchased by such Person (including
indebtedness
arising under conditional sales or other title retention
agreements),
whether or not such indebtedness shall have been assumed by
such Person or
is limited in recourse;
(f) capital leases and Synthetic Lease Obligations;
(g) all obligations of such Person to purchase, redeem, retire,
defease or
otherwise make any payment in respect of any Equity Interest in
such Person or
any other Person, valued, in the case of a redeemable
preferred
interest, at the greater of its voluntary or involuntary
liquidation
preference plus accrued and unpaid dividends; and
10
<PAGE>
(h) all Guarantees of such Person in respect of any of the
foregoing.
For all purposes
hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint
venture (other than a joint venture
that is itself a corporation or limited
liability company) in which such Person
is a general partner or a joint venturer,
unless such Indebtedness is expressly
made non-recourse to such Person. The
amount of any net obligation under any
Swap Contract on any date shall be deemed
to be the Swap Termination Value
thereof as of such date. The amount of any
capital lease or Synthetic Lease
Obligation as of any date shall be deemed
to be the amount of Attributable
Indebtedness in respect thereof as of such
date. Indebtedness shall not include
the obligations of the Parent or any of its
Insurance Subsidiaries under Primary
Policies, Reinsurance Agreements,
Retrocession Agreements or Other Insurance
Products which are entered into in the
ordinary course of business (including
security posted to secure obligations
thereunder).
"Indemnified
Taxes" means Taxes other than Excluded Taxes.
"Indemnitees"
has the meaning specified in Section 11.04(b).
"ING Asset
Purchase Agreement" means the Asset Purchase Agreement dated as
of October 17, 2004 by and among SLD, SLDI,
the Parent, Scottish US and Scottish
Bermuda, with such amendments thereto as
have been approved by the Required
Lenders.
"ING Reinsurance
Agreements" means the SLD Coinsurance Agreement, the SLD
Coinsurance/Modified Coinsurance Agreement,
SLDI Coinsurance Agreement, the SLDI
Funds Withheld Coinsurance Agreement, the
SLDI Coinsurance/Modified Coinsurance
Agreement, (as such terms are defined in
the ING Asset Purchase Agreement) each
dated as of December 31, 2004.
"Insurance
Subsidiaries" means SALIC and any Subsidiary of SALIC which is
licensed by any Governmental Authority to
engage in the insurance or reinsurance
business.
"Investment"
means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means
of (a) the purchase or other
acquisition of capital stock or other
securities of another Person, (b) a loan,
advance or capital contribution to,
Guarantee or assumption of debt of, or
purchase or other acquisition of any other
debt or equity participation or
interest in, another Person, including any
partnership or joint venture interest
in such other Person and any arrangement
pursuant to which the investor
Guarantees Indebtedness of such other
Person, or (c) the purchase or other
acquisition (in one transaction or a series
of transactions) of assets of
another Person that constitute a business
unit. For purposes of covenant
compliance, the amount of any Investment
shall be the amount actually invested,
without adjustment for subsequent increases
or decreases in the value of such
Investment.
"Investment
Policies" means the Investment Policies of SALIC as in effect
on the Effective Date with such revisions
thereto as are approved by the Board
of Directors of the Parent from time to
time.
"IRS" means the
United States Internal Revenue Service.
11
<PAGE>
"ISP" means,
with respect to any Letter of Credit, the "International
Standby Practices 1998" published by the
Institute of International Banking Law
& Practice (or such later version
thereof as may be in effect at the time of
issuance).
"Issuer
Documents" means with respect to any Letter of Credit, the
Letter
Credit Application, and any other document,
agreement and instrument entered
into by the L/C Issuer and the Borrower or
in favor of an L/C Issuer and
relating to any such Letter of Credit.
"Keep Well
Agreements" means (a) the Net Worth Maintenance Agreement
between the Parent, SALIC and the Borrower
dated as of January 1, 2002, (b) the
Net Worth Maintenance Agreement restated as
of February 1, 2002 among SALIC and
Scottish US, (c) the Guarantee dated as of
January 1, 2002 among the Parent,
SALIC and Scottish Re Limited, (d) the
Scottish Life Keep Well Agreement, (e)
the Scottish Bermuda Keep Well Agreement
and (f) similar net worth maintenance
agreements entered into by the Parent or
any of its subsidiaries in favor of a
wholly-owned Insurance Subsidiary which are
required by the Governmental
Authority regulating such Insurance
Subsidiary provided such agreements are no
more onerous than the Keep Well Agreement
described in clause (b) above.
"Laws" means,
collectively, all international, foreign, Federal, state and
local statutes, treaties, rules,
guidelines, regulations, ordinances, codes and
administrative or judicial precedents or
authorities, including the
interpretation or administration thereof by
any Governmental Authority charged
with the enforcement, interpretation or
administration thereof, and all
applicable administrative orders, directed
duties, requests, licenses,
authorizations and permits of, and
agreements with, any Governmental Authority,
in each case whether or not having the
force of law.
"L/C Advance"
means, with respect to each Lender, such Lender's funding of
its participation in any L/C Borrowing in
accordance with its Applicable
Percentage.
"L/C Borrowing"
means an extension of credit resulting from a drawing under
any Letter of Credit which has not been
reimbursed on the date when made or
refinanced as a Borrowing.
"L/C Credit
Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry
date thereof, or the increase of the
amount thereof.
"L/C Issuer"
means Bank of America in its capacity as issuer of Letters of
Credit hereunder or any successor issuer of
Letters of Credit hereunder.
"L/C
Obligations" means, as at any date of determination, the
aggregate
amount available to be drawn under all
outstanding Letters of Credit plus the
aggregate of all Unreimbursed Amounts,
including all L/C Borrowings. For
purposes of computing the amount available
to be drawn under any Letter of
Credit, the amount of such Letter of Credit
shall be determined in accordance
with Section 1.06. For all purposes of this
Agreement, if on any date of
determination a Letter of Credit has
expired by its terms but any amount may
still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be
"outstanding" in the amount so
remaining available to be drawn.
"Lender" has the
meaning specified in the introductory paragraph hereto.
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<PAGE>
"Lending Office"
means, as to any Lender, the office or offices of such
Lender described as such in such Lender's
Administrative Questionnaire, or such
other office or offices as a Lender may
from time to time notify SALIC and the
Administrative Agent.
"Letter of
Credit" means any standby letter of credit issued hereunder.
"Letter of
Credit Application" means an application and agreement for the
issuance or amendment of a Letter of Credit
in the form from time to time in use
by the L/C Issuer.
"Letter of
Credit Fee" has the meaning specified in Section 2.01(i).
"Lien" means any
mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory
or other), charge, or preference,
priority or other security interest or
preferential arrangement in the nature of
a security interest of any kind or nature
whatsoever (including any conditional
sale or other title retention agreement,
any easement, right of way or other
encumbrance on title to real property, and
any financing lease having
substantially the same economic effect as
any of the foregoing).
"Loan Documents"
means this Agreement, each Issuer Document and the Fee
Letter.
"Loan Party" and
"Loan Parties" are defined in the preamble.
"Material
Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the business,
assets, liabilities (actual or
contingent), operations, condition
(financial or otherwise) or prospects of (i)
the Borrower or (ii) SALIC and its
Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Loan Party
to perform its obligations under any
Loan Document to which it is a party; or
(c) a material adverse effect upon the
legality, validity, binding effect or
enforceability against any Loan Party of
any Loan Document to which it is a
party.
"Material
Subsidiaries" means the Borrower, Scottish US, Scottish Life,
Scottish Bermuda, each other Subsidiary of
SALIC whose consolidated assets or
revenues exceed 5% of the consolidated
assets of SALIC and its Subsidiaries for
the most recent fiscal quarter for which
financial statements have been
delivered pursuant to Section 6.01(a) or
(b).
"Moody's" means
Moody's Investors Service, Inc. and any successor thereto.
"Multiemployer
Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which
SALIC or any ERISA Affiliate makes or
is obligated to make contributions, or
during the preceding five plan years, has
made or been obligated to make
contributions.
"Obligations"
means all advances to, and debts, liabilities, obligations,
covenants and duties of, the Borrower
arising under any Loan Document or
otherwise with respect to any Letter of
Credit, whether direct or indirect
(including those acquired by assumption),
absolute or contingent, due or to
become due, now existing or hereafter
arising and including interest and fees
that accrue after the commencement by or
against the Borrower or any Affiliate
thereof of
13
<PAGE>
any proceeding under any Debtor Relief Laws
naming such Person as the debtor in
such proceeding, regardless of whether such
interest and fees are allowed claims
in such proceeding.
"Organization
Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation
and the bylaws (or equivalent or
comparable constitutive documents with
respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability
company, the certificate or articles
of formation or organization and operating
agreement; and (c) with respect to
any partnership, joint venture, trust or
other form of business entity, the
partnership, joint venture or other
applicable agreement of formation or
organization and any agreement, instrument,
filing or notice with respect
thereto filed in connection with its
formation or organization with the
applicable Governmental Authority in the
jurisdiction of its formation or
organization and, if applicable, any
certificate or articles of formation or
organization of such entity.
"Other Insurance
Products" means guaranteed investment contracts and
secured and unsecured funding agreements
which are not Alternative Reserve
Agreements.
"Other Taxes"
means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or
similar levies arising from any
payment made hereunder or under any other
Loan Document or from the execution,
delivery or enforcement of, or otherwise
with respect to, this Agreement or any
other Loan Document.
"Outstanding
Amount" means with respect to any L/C Obligations on any date,
the amount of such L/C Obligations on such
date after giving effect to any L/C
Credit Extension occurring on such date and
any other changes in the aggregate
amount of the L/C Obligations as of such
date, including as a result of any
reimbursements by the Borrower of
Unreimbursed Amounts.
"Parent" means
Scottish Re Group Limited, a Cayman Islands exempted company
(f/k/a Scottish Annuity & Life
Holdings, Ltd.).
"Parent
Consolidated Indebtedness" means, as of any date of
determination,
for the Parent and its Subsidiaries on a
consolidated basis, the sum of (a) the
outstanding principal amount of all
obligations, whether current or long-term,
for borrowed money (including Obligations
hereunder) and all obligations
evidenced by bonds, debentures, notes, loan
agreements or other similar
instruments, (b) all purchase money
Indebtedness, (c) all direct obligations
arising under letters of credit (including
standby and commercial) which have
been drawn but not reimbursed by the Person
for whose account such Letter of
Credit was issued, bankers' acceptances,
bank guaranties, surety bonds and
similar instruments, (d) all obligations in
respect of the deferred purchase
price of property or services (other than
trade accounts payable in the ordinary
course of business), (e) Attributable
Indebtedness in respect of capital leases
and Synthetic Lease Obligations and Swap
Termination Value, (f) without
duplication, all Guarantees with respect to
outstanding Indebtedness of the
types specified in clauses (a) through (e)
above of Persons other than its
Subsidiaries, and (g) all Indebtedness of
the types referred to in clauses (a)
through (f) above of any partnership or
joint venture (other than a joint
venture that is itself a corporation or
limited liability company) in which the
Parent or one of its Subsidiaries is a
general partner or joint venturer, unless
such Indebtedness is expressly made
non-recourse to
14
<PAGE>
the Parent or such Subsidiary; provided,
however, the obligations of the Parent
or any of its Subsidiaries under the Keep
Well Agreements shall be excluded for
purposes of calculating Parent Consolidated
Indebtedness.
"Parent Debt
Rating" has the meaning specified in the definition of
"Applicable Rate."
"Parent Debt to
Capitalization Ratio" means the ratio of (a) Parent
Consolidated Indebtedness to (b) the sum of
Parent Consolidated Indebtedness
plus Parent Net Worth.
"Parent Net
Worth" means the Shareholders Equity of the Parent calculated
in accordance with all GAAP as adjusted
pursuant to Section 7.11(b)(iii).
"Participant"
has the meaning specified in Section 11.06(d).
"PBGC" means the
Pension Benefit Guaranty Corporation.
"Pension Plan"
means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other
than a Multiemployer Plan, that is
subject to Title IV of ERISA and is
sponsored or maintained by SALIC or any
ERISA Affiliate or to which SALIC or any
ERISA Affiliate contributes or has an
obligation to contribute, or in the case of
a multiple employer or other plan
described in Section 4064(a) of ERISA, has
made contributions at any time during
the immediately preceding five plan
years.
"Perpetual
Preferred Stock" means preferred stock issued from time to time
by the Parent which preferred stock is not
redeemable at the option of the
holder thereof.
"Person" means
any natural person, corporation, limited liability company,
trust, joint venture, association, company,
partnership, Governmental Authority
or other entity.
"Plan" means any
"employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by SALIC
or, with respect to any such plan
that is subject to Section 412 of the Code
or Title IV of ERISA, any ERISA
Affiliate.
"Platform" has
the meaning specified in Section 6.02.
"Primary
Policies" means any insurance policies issued by an Insurance
Subsidiary.
"Register" has
the meaning specified in Section 11.06(c).
Reinsurance
Agreements means any agreement, contract, treaty, certificate
or other arrangement whereby the Parent or
any of its Insurance Subsidiaries
agrees to assume from or reinsure an
insurer or reinsurer for all or part of the
liability of such insurer or reinsurer
under a policy or policies of insurance
issued by such insurer or reinsurer.
"Related
Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors,
officers, employees, agents and advisors
of such Person and of such Person's
Affiliates.
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<PAGE>
"Retrocession
Agreements" means any agreement, treaty, certificate or other
arrangement whereby any Insurance
Subsidiary cedes to another insurer all or
part of such Insurance Subsidiary's
liability under a policy or policies of
insurance reinsured by such Insurance
Subsidiary.
"Reportable
Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30
day notice period has been waived.
"Request for L/C
Credit Extension" means a Letter of Credit Application.
"Required
Lenders" means, as of any date of determination, Lenders having
more than 50% of the Aggregate Commitments
or, if the commitment of each Lender
and the obligation of the L/C Issuer to
make L/C Credit Extensions have been
terminated pursuant to Section 8.02,
Lenders holding in the aggregate more than
50% of the Total Outstandings (with the
aggregate amount of each Lender's risk
participation and funded participation in
L/C Obligations being deemed "held" by
such Lender for purposes of this
definition); provided that the Commitment of,
and the portion of the Total Outstandings
held or deemed held by, any Defaulting
Lender shall be excluded for purposes of
making a determination of Required
Lenders.
"Responsible
Officer" means (a) with respect to SALIC, the chief executive
officer, president, chief financial
officer, executive vice president or
treasurer of SALIC and (b) with respect to
the Borrower, any director, manager
or authorized officer (as appointed by the
board of directors of the Borrower).
Any document delivered hereunder that is
signed by a Responsible Officer of the
Borrower shall be conclusively presumed to
have been authorized by all necessary
corporate, partnership and/or other action
on the part of the Borrower and such
Responsible Officer shall be conclusively
presumed to have acted on behalf of
the Borrower.
"Restricted
Payment" means any dividend or other distribution (whether in
cash, securities or other property) with
respect to any capital stock or other
Equity Interest of a Person, or any payment
(whether in cash, securities or
other property), including any sinking fund
or similar deposit, on account of
the purchase, redemption, retirement,
acquisition, cancellation or termination
of any such capital stock or other Equity
Interest, or on account of any return
of capital to such Person's stockholders,
partners or members (or the equivalent
Person thereof).
"SALIC" is
defined in the preamble.
"SALIC Net
Worth" means the Shareholders Equity of SALIC calculated in
accordance with GAAP.
"SAP" means the
statutory accounting practices prescribed or permitted by
the Department of Insurance or other
similar Governmental Authority in such
Insurance Subsidiary's domicile for the
preparation of annual statements and
other financial reports by insurance
companies of the same type as such
Insurance Subsidiary.
"S&P" means
Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any
successor thereto.
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<PAGE>
"Scottish
Bermuda" means Scottish Re (Bermuda) Limited, a company formed
under the laws of Bermuda.
"Scottish
Bermuda Keep Well Agreement" means the Net Worth Maintenance
Agreement between SALIC and Scottish
Bermuda dated as of December 31, 2004.
"Scottish Life"
means Scottish Re Life Corporation, a Missouri corporation.
"Scottish Life
Keep Well Agreement" means the Net Worth Maintenance
Agreement between SALIC and Scottish Life
dated as of December 31, 2004.
"Scottish Re
Credit Agreement" means the Amended and Restated Credit
Agreement dated as of July 14, 2005 among
the Borrower, SALIC, certain other
borrowers, various financial institutions
and Bank of America, as administrative
agent.
"Scottish US"
means Scottish Re (U.S.), Inc., a Delaware corporation.
"SEC" means the
Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its
principal functions.
"Shareholders'
Equity" means, as to any Person as of any date of
determination, the consolidated
shareholders' equity of such Person and its
Subsidiaries as of that date determined in
accordance with GAAP.
"SLD" means
Security Life of Denver Insurance Company, a Colorado insurance
company.
"SLDI" means
Security Life of Denver International Limited, a Bermuda
insurance company.
"Statutory
Statements" means, as to any Insurance Subsidiary, the annual
or
quarterly financial statements of such
Person as required to be filed with the
Department of Insurance (or similar
Governmental Authority) of such Person's
domicile, together with all exhibits or
schedules filed therewith prepared in
conformity with SAP.
"Subsidiary" of
a Person means a corporation, partnership, joint venture,
limited liability company or other business
entity of which a majority of the
shares of securities or other interests
having ordinary voting power for the
election of directors or other governing
body (other than securities or
interests having such power only by reason
of the happening of a contingency)
are at the time beneficially owned, or the
management of which is otherwise
controlled, directly, or indirectly through
one or more intermediaries, or both,
by such Person.
"Swap Contract"
means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward
rate transactions, commodity swaps,
commodity options, forward commodity
contracts, equity or equity index swaps or
options, bond or bond price or bond index
swaps or options or forward bond or
forward bond price or forward bond index
transactions, interest rate options,
forward foreign exchange transactions, cap
transactions, floor transactions,
collar transactions, currency swap
transactions, cross-currency rate swap
17
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transactions, currency options, spot
contracts, or any other similar
transactions or any combination of any of
the foregoing (including any options
to enter into any of the foregoing),
whether or not any such transaction is
governed by or subject to any master
agreement, and (b) any and all transactions
of any kind, and the related confirmations,
which are subject to the terms and
conditions of, or governed by, any form of
master agreement published by the
International Swaps and Derivatives
Association, Inc., any International Foreign
Exchange Master Agreement, or any other
master agreement (any such master
agreement, together with any related
schedules, a "Master Agreement"), including
any such obligations or liabilities under
any Master Agreement.
"Swap
Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the
effect of any legally enforceable
netting agreement relating to such Swap
Contracts, (a) for any date on or after
the date such Swap Contracts have been
closed out and termination value(s)
determined in accordance therewith, such
termination value(s), and (b) for any
date prior to the date referenced in clause
(a), the amount(s) determined as the
mark-to-market value(s) for such Swap
Contracts, as determined based upon one or
more mid-market or other readily available
quotations provided by any recognized
dealer in such Swap Contracts (which may
include a Lender or any Affiliate of a
Lender).
"Synthetic Lease
Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession
of property creating obligations that
do not appear on the balance sheet of such
Person but which, upon the insolvency
or bankruptcy of such Person, would be
characterized as the indebtedness of such
Person (without regard to accounting
treatment).
"Taxes" means
all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees
or other charges imposed by any
Governmental Authority, including any
interest, additions to tax or penalties
applicable thereto.
"Threshold
Amount" means $20,000,000.
"Total
Outstandings" means the aggregate Outstanding Amount of all L/C
Obligations.
"Unencumbered
Asset Value" means, with respect to any type of Eligible
Investments, the product of (i) the
percentage on Schedule 1.02 set forth
opposite such type of Eligible Investment
and (ii) the Fair Market Value of such
Eligible Investment at such time of
determination; provided, that to the extent
any Eligible Investments from the same
issuer or any other issuer and its
Affiliates (other than the Government Debt)
would constitute more than ten
percent (10% ) of the aggregate
Unencumbered Asset Value of the Eligible
Investments, that amount in excess of ten
percent (10%) shall be valued at zero.
"Unfunded
Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of
ERISA, over the current value of that
Pension Plan's assets, determined in
accordance with the assumptions used for
funding the Pension Plan pursuant to
Section 412 of the Code for the applicable
plan year.
"United States"
and "U.S." mean the United States of America.
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"Unreimbursed
Amount" has the meaning specified in Section 2.01(c)(i).
"US GAAP" means generally
accepted accounting principles in the United
States set forth in the opinions and
pronouncements of the Accounting Principles
Board and the American Institute of
Certified Public Accountants and statements
and pronouncements of the Financial
Accounting Standards Board or such other
principles as may be approved by a
significant segment of the accounting
profession in the United States, that are
applicable to the circumstances as of
the date of determination, consistently
applied without giving effect to FAS 115
or DIG-B36 to include unrealized gains and
losses.
1.02 Other
Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise
specified herein or in such other
Loan Document:
(a) The
definitions of terms herein shall apply equally to the singular
and
plural forms of the terms defined. Whenever
the context may require, any pronoun
shall include the corresponding masculine,
feminine and neuter forms. The words
"include," "includes" and "including" shall
be deemed to be followed by the
phrase "without limitation." The word
"will" shall be construed to have the same
meaning and effect as the word "shall."
Unless the context requires otherwise,
(i) any definition of or reference to any
agreement, instrument or other
document (including any Organization
Document) shall be construed as referring
to such agreement, instrument or other
document as from time to time amended,
supplemented or otherwise modified (subject
to any restrictions on such
amendments, supplements or modifications
set forth herein or in any other Loan
Document), (ii) any reference herein to any
Person shall be construed to include
such Person's successors and assigns, (iii)
the words "herein," "hereof" and
"hereunder," and words of similar import
when used in any Loan Document, shall
be construed to refer to such Loan Document
in its entirety and not to any
particular provision thereof, (iv) all
references in a Loan Document to
Articles, Sections, Exhibits and Schedules
shall be construed to refer to
Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in
which such references appear, (v) any
reference to any law shall include all
statutory and regulatory provisions
consolidating, amending replacing or
interpreting such law and any reference to
any law or regulation shall, unless
otherwise specified, refer to such law or
regulation as amended, modified or
supplemented from time to time, and (vi)
the words "asset" and "property" shall
be construed to have the same meaning and
effect and to refer to any and all
tangible and intangible assets and
properties, including cash, securities,
accounts and contract rights.
(b) In the
computation of periods of time from a specified date to a later
specified date, the word "from" means "from
and including;" the words "to" and
"until" each mean "to but excluding;" and
the word "through" means "to and
including."
(c) Section
headings herein and in the other Loan Documents are included
for convenience of reference only and shall
not affect the interpretation of
this Agreement or any other Loan
Document.
1.03 Accounting
Terms.
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(a) Generally.
All accounting terms not specifically or completely defined
herein shall be construed in conformity
with, and all financial data (including
financial ratios and other financial
calculations) required to be submitted
pursuant to this Agreement shall be
prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time
to time, applied in a manner
consistent with that used in preparing the
Audited Financial Statements, except
as otherwise specifically prescribed
herein. The Audited Financial Statements
and the financial statements delivered by
the Parent and SALIC pursuant to
Sections 6.01(a) and (b) shall be prepared
in accordance with US GAAP. The
Audited Financial Statements and the annual
financial statements delivered by
the Borrower pursuant to Section 6.01(a)
shall be prepared in accordance with EU
GAAP. The quarterly financial statements
delivered by the Borrower pursuant to
Section 6.01(b) shall be prepared in
accordance with US GAAP.
(b) Changes in
GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or
requirement set forth in any Loan
Document, and either SALIC or the Required
Lenders shall so request, the
Administrative Agent, the Lenders and SALIC
shall negotiate in good faith to
amend such ratio or requirement to preserve
the original intent thereof in light
of such change in GAAP (subject to the
approval of the Required Lenders);
provided that, until so amended, (i) such
ratio or requirement shall continue to
be computed in accordance with GAAP prior
to such change therein and (ii) SALIC
shall provide to the Administrative Agent
and the Lenders financial statements
and other documents required under this
Agreement or as reasonably requested
hereunder setting forth a reconciliation
between calculations of such ratio or
requirement made before and after giving
effect to such change in GAAP.
1.04 Rounding.
Any financial ratios required to be maintained pursuant to
this Agreement shall be calculated by
dividing the appropriate component by the
other component, carrying the result to one
place more than the number of places
by which such ratio is expressed herein and
rounding the result up or down to
the nearest number (with a rounding-up if
there is no nearest number).
1.05 Times of
Day. Unless otherwise specified, all references herein to
times of day shall be references to Eastern
time (daylight or standard, as
applicable).
1.06 Letter of
Credit Amounts. Unless otherwise specified herein, the
amount of a Letter of Credit at any time
shall be deemed to be the stated amount
of such Letter of Credit in effect at such
time; provided, however, that with
respect to any Letter of Credit that, by
its terms or the terms of any Issuer
Document related thereto, provides for one
or more automatic increases in the
stated amount thereof, the amount of such
Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of
Credit after giving effect to all
such increases, whether or not such maximum
stated amount is in effect at such
time.
ARTICLE II.
THE COMMITMENTS AND L/C CREDIT EXTENSIONS
2.01 Letters of
Credit.
(a) The Letter
of Credit Commitment.
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<PAGE>
(i) Subject to the terms and conditions set forth herein, (A) the
L/C
Issuer agrees,
in reliance upon the agreements of the Lenders set forth in
this Section
2.01, (1) from time to time on any Business Day during the
Availability
Period, to issue Letters of Credit in Dollars for the account
of the Borrower,
and to amend Letters of Credit previously issued by it, in
accordance with
subsection (b) below, and (2) to honor drawings under the
Letters of
Credit; and (B) the Lenders severally agree to participate in
Letters of
Credit issued for the account of the Borrower and any drawings
thereunder;
provided that after giving effect to any L/C Credit Extension
with respect to
any Letter of Credit, (x) the Total Outstandings shall not
exceed the
Aggregate Commitments and (y) a Lender's Applicable Percentage
of the
Outstanding Amount of all L/C Obligations shall not exceed such
Lender's
Commitment. Each request by the Borrower for the issuance or
amendment of a
Letter of Credit shall be deemed to be a representation by
the Borrower
that the L/C Credit Extension so requested complies with the
conditions set
forth in the proviso to the preceding sentence. Within the
foregoing
limits, and subject to the terms and conditions hereof, the
Borrower's
ability to obtain Letters of Credit shall be fully revolving,
and accordingly
the Borrower may, during the foregoing period, obtain
Letters of
Credit to replace Letters of Credit that have expired or that
have been drawn
upon and reimbursed.
(ii) The L/C Issuer shall not issue any Letter of Credit, if:
(A) the expiry date of such requested Letter of Credit would
occur more than twelve months after the date of issuance, unless
the
Lenders have approved such expiry date; or
(iii) The L/C Issuer shall not be under any obligation to issue
any
Letter of Credit
if:
(A) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain the
L/C
Issuer from issuing such Letter of Credit, or any Law applicable
to
the L/C Issuer or any request or directive (whether or not having
the
force of law) from any Governmental Authority with jurisdiction
over
the L/C Issuer shall prohibit, or request that the L/C Issuer
refrain
from, the issuance of letters of credit generally or such Letter
of
Credit in particular or shall impose upon the L/C Issuer with
respect
to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise
compensated
hereunder) not in effect on the Effective Date, or shall impose
upon
the
L/C Issuer any unreimbursed loss, cost or expense which was not
applicable on the Effective Date and which the L/C Issuer in
good
faith deems material to it;
(B) the issuance of such Letter of Credit would violate one or
more policies of the L/C Issuer;
(C) except as otherwise agreed by the Administrative Agent and
the L/C Issuer, such Letter of Credit is in an initial stated
amount
less than $50,000;
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<PAGE>
(D) such Letter of Credit is to be denominated in a currency
other than Dollars;
(E) such Letter of Credit contains any provisions for automatic
reinstatement of the stated amount after any drawing thereunder;
or
(F) a default of any Lender's obligations to fund under Section
2.01(c) exists or any Lender is at such time a Defaulting
Lender
hereunder, unless the L/C Issuer has entered into satisfactory
arrangements with SALIC or such Lender to eliminate the L/C
Issuer's
risk with respect to such Lender.
(iv) The L/C Issuer shall not amend any Letter of Credit if the
L/C
Issuer would not
be permitted at such time to issue such Letter of Credit
in its amended
form under the terms hereof.
(v) The L/C Issuer shall be under no obligation to amend any Letter
of
Credit if (A)
the L/C Issuer would have no obligation at such time to issue
such Letter of Credit
in its amended form under the terms hereof, or (B)
the beneficiary
of such Letter of Credit does not accept the proposed
amendment to
such Letter of Credit.
(vi) The L/C Issuer shall act on behalf of the Lenders with respect
to
any Letters of
Credit issued by it and the documents associated therewith,
and the L/C
Issuer shall have all of the benefits and immunities (A)
provided to the
Administrative Agent in Article IX with respect to any acts
taken or omissions suffered
by the L/C Issuer in connection with Letters of
Credit issued by
it or proposed to be issued by it and Issuer Documents
pertaining to
such Letters of Credit as fully as if the term
"Administrative
Agent" as used in Article IX included the L/C Issuer with
respect to such
acts or omissions, and (B) as additionally provided herein
with respect to
the L/C Issuer.
(b) Procedures
for Issuance and Amendment of Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case
may
be, upon the
request of the Borrower delivered to the L/C Issuer (with a
copy to the
Administrative Agent) in the form of a Letter of Credit
Application,
appropriately completed and signed by a Responsible Officer of
the Borrower.
Such Letter of Credit Application must be received by the L/C
Issuer and the
Administrative Agent not later than 11:00 a.m. at least two
Business Days
prior to the proposed issuance date or date of amendment, as
the case may be;
or in each case such later date and time as the
Administrative
Agent and the L/C Issuer may agree in a particular instance
in their sole
discretion. In the case of a request for an initial issuance
of a Letter of
Credit, such Letter of Credit Application shall specify in
form and detail
satisfactory to the L/C Issuer: (A) the proposed issuance
date of the
requested Letter of Credit (which shall be a Business Day); (B)
the amount
thereof; (C) the expiry date thereof; (D) the name and address
of the
beneficiary thereof; (E) the documents to be presented by such
beneficiary in
case of any drawing thereunder; (F) the full text of any
certificate to
be presented by such beneficiary in case of any drawing
thereunder; and
(G) such other matters as the L/C Issuer may require. In
the case of a
request for an amendment of any outstanding Letter of Credit,
such Letter of
Credit
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<PAGE>
Application
shall specify in form and detail satisfactory to the L/C Issuer
(A) the Letter
of Credit to be amended; (B) the proposed date of amendment
thereof (which
shall be a Business Day); (C) the nature of the proposed
amendment; and
(D) such other matters as the L/C Issuer may require.
Additionally,
the Borrower shall furnish to the L/C Issuer and the
Administrative
Agent such other documents and information pertaining to
such requested
Letter of Credit issuance or amendment, including any Issuer
Documents, as
the L/C Issuer or the Administrative Agent may require.
(ii) Promptly after receipt of any Letter of Credit Application,
the
L/C Issuer will
confirm with the Administrative Agent (by telephone or in
writing) that
the Administrative Agent has received a copy of such Letter
of Credit
Application from the Borrower and, if not, the L/C Issuer will
provide the
Administrative Agent with a copy thereof. Unless the L/C Issuer
has received written
notice from any Lender, the Administrative Agent or
the Borrower, at
least one Business Day prior to the requested date of
issuance or
amendment of the applicable Letter of Credit, that one or more
applicable
conditions contained in Article IV shall not then be satisfied,
then, subject to
the terms and conditions hereof, the L/C Issuer shall, on
the requested
date, issue a Letter of Credit for the account of the
Borrower or
enter into the applicable amendment, as the case may be, in
each case in
accordance with the L/C Issuer's usual and customary business
practices.
Immediately upon the issuance of each Letter of Credit, each
Lender shall be
deemed to, and hereby irrevocably and unconditionally
agrees to,
purchase from the L/C Issuer a risk participation in such
Letter
of Credit in an
amount equal to the product of such Lender's Applicable
Percentage times
the amount of such Letter of Credit.
(iii) Promptly after its delivery of any Letter of Credit (or
any
amendment
thereto) to an advising bank with respect to such Letter of
Credit or to the
beneficiary of such Letter of Credit, the L/C Issuer will
also deliver to
the Borrower and the Administrative Agent a true and
complete copy of
such Letter of Credit or amendment. The Administrative
Agent shall
provide notice to the Lenders within a reasonable time after
any change to
the L/C Obligations.
(c) Drawings and
Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of
any
notice of a
drawing under such Letter of Credit, the L/C Issuer shall
notify the
Borrower and the Administrative Agent thereof. Not later than
11:00 a.m. on
the date of any payment by the L/C Issuer under a Letter of
Credit (each
such date, an "Honor Date"), the Borrower shall reimburse the
L/C Issuer
through the Administrative Agent in an amount equal to the
amount of such
drawing. If the Borrower fails to so reimburse the L/C
Issuer by such
time, the Administrative Agent shall promptly notify each
Lender of the
Honor Date, the amount of the unreimbursed drawing (the
"Unreimbursed
Amount"), and the amount of such Lender's Applicable
Percentage
thereof. Any notice given by the L/C Issuer or the
Administrative
Agent pursuant to this Section 2.01(c)(i) may be given by
telephone if
immediately confirmed in writing; provided that the lack of
such an
immediate confirmation shall not affect the conclusiveness or
binding effect
of such notice.
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<PAGE>
(ii) Each Lender shall upon any notice pursuant to Section
2.01(c)(i)
make funds
available to the Administrative Agent for the account of the
L/C
Issuer at the
Administrative Agent's Office in an amount equal to its
Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m.
on the Business
Day specified in such notice by the Administrative Agent,
whereupon, the
Borrower shall be deemed to have incurred from the L/C
Issuer an L/C
Borrowing in the amount of the Unreimbursed Amount that is
not so
refinanced, which L/C Borrowing shall be due and payable on
demand
(together with
interest) and shall bear interest at the Default Rate. In
such event, each
Lender's payment to the Administrative Agent for the
account of the
L/C Issuer pursuant to this Section 2.01(c)(ii) shall be
deemed payment
in respect of its participation in such L/C Borrowing and
shall constitute
an L/C Advance from such Lender in satisfaction of its
participation
obligation under this Section 2.01. The Administrative Agent
shall remit the
funds so received to the L/C Issuer.
(iii) Until each Lender funds its L/C Advance pursuant to this
Section
2.01(c) to
reimburse the L/C Issuer for any amount drawn under any Letter
of Credit,
interest in respect of such Lender's Applicable Percentage of
such amount
shall be solely for the account of the L/C Issuer.
(iv) Each Lender's obligation to make L/C Advances to reimburse
the
L/C Issuer for
amounts drawn under Letters of Credit, as contemplated by
this Section
2.01(c), shall be absolute and unconditional and shall not be
affected by any
circumstance, including (A) any setoff, counterclaim,
recoupment,
defense or other right which such Lender may have against the
L/C Issuer,
SALIC, the Borrower or, any Subsidiary thereof or any other
Person for any
reason whatsoever; (B) the occurrence or continuance of a
Default, or (C)
any other occurrence, event or condition, whether or not
similar to any
of the foregoing. No such making of an L/C Advance shall
relieve or
otherwise impair the obligation of the Borrower to reimburse
the
L/C Issuer for
the amount of any payment made by the L/C Issuer under any
Letter of
Credit, together with interest as provided herein.
(v) If any Lender fails to make available to the Administrative
Agent
for the account
of the L/C Issuer any amount required to be paid by such
Lender pursuant
to the foregoing provisions of this Section 2.01(c) by the
time specified
in Section 2.01(c)(ii), the L/C Issuer shall be entitled to
recover from
such Lender (acting through the Administrative Agent), on
demand, such
amount with interest thereon for the period from the date such
payment is
required to the date on which such payment is immediately
available to the
L/C Issuer at a rate per annum equal to the Federal Funds
Rate from time
to time in effect. A certificate of the L/C Issuer submitted
to any Lender
(through the Administrative Agent) with respect to any
amounts owing
under this clause (v) shall be conclusive absent manifest
error.
(d) Repayment of
Participations.
(i) At any time after the L/C Issuer has made a payment under
any
Letter of Credit
and has received from any Lender such Lender's L/C Advance
in respect of
such payment in accordance with Section 2.01(c), if the
Administrative
Agent receives for the
24
<PAGE>
account of the
L/C Issuer any payment in respect of the related
Unreimbursed
Amount or interest thereon (whether directly from the Borrower
or otherwise,
including proceeds of Cash Collateral applied thereto by the
Administrative
Agent), the Administrative Agent will distribute to such
Lender its
Applicable Percentage thereof (appropriately adjusted, in the
case of interest
payments, to reflect the period of time during which such
Lender's L/C
Advance was outstanding) and in the same funds as those
received by the
Administrative Agent.
(ii) If any payment received by the Administrative Agent for
the
account of the
L/C Issuer pursuant to Section 2.01(c)(i) is required to be
returned under
any of the circumstances described in Section 11.05
(including
pursuant to any settlement entered into by the L/C Issuer in
its
discretion),
each Lender shall pay to the Administrative Agent for the
account of the
L/C Issuer its Applicable Percentage thereof on demand of
the
Administrative Agent, plus interest thereon from the date of
such
demand to the
date such amount is returned by such Lender, at a rate per
annum equal to
the Federal Funds Rate from time to time in effect. The
obligations of
the Lenders under this clause shall survive the payment in
full of the
Obligations and the termination of this Agreement.
(e) Obligations
Absolute. The obligation of the Borrower to reimburse the
L/C Issuer for each drawing under each
Letter of Credit issued for the
Borrower's account and to repay each
related L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be
paid strictly in accordance with the
terms of this Agreement under all
circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of
Credit,
this Agreement,
or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense
or
other right that
the Borrower or SALIC or any of its Subsidiaries may have
at any time
against any beneficiary or any transferee of such Letter of
Credit (or any
Person for whom any such beneficiary or any such transferee
may be acting),
the L/C Issuer or any other Person, whether in connection
with this
Agreement, the transactions contemplated hereby or by such
Letter
of Credit or any
agreement or instrument relating thereto, or any unrelated
transaction;
(iii) any draft, demand, certificate or other document presented
under
such Letter of
Credit proving to be forged, fraudulent, invalid or
insufficient in
any respect or any statement therein being untrue or
inaccurate in
any respect; or any loss or delay in the transmission or
otherwise of any
document required in order to make a drawing under such
Letter of
Credit;
(iv) any payment by the L/C Issuer under such Letter of Credit
against
presentation of
a draft or certificate that does not strictly comply with
the terms of
such Letter of Credit; or any payment made by the L/C Issuer
under such
Letter of Credit to any Person purporting to be a trustee in
bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator,
receiver or other representative of or successor to any
beneficiary or
any transferee of such Letter of Credit, including any
arising in
connection with any proceeding under any Debtor Relief Law; or
25
<PAGE>
(v) any other circumstance or happening whatsoever, whether or
not
similar to any
of the foregoing, including any other circumstance that
might otherwise
constitute a defense available to, or a discharge of, the
Borrower or
SALIC or any of its Subsidiaries.
The Borrower shall promptly examine a copy
of each Letter of Credit and each
amendment thereto that is delivered to it
and, in the event of any claim of
noncompliance with the Borrower's
instructions or other irregularity, the
Borrower will immediately notify the L/C
Issuer. The Borrower shall be
conclusively deemed to have waived any such
claim against the L/C Issuer and its
correspondents unless such notice is given
as aforesaid.
(f) Role of L/C
Issuer. Each Lender and the Borrower agrees that, in paying
any drawing under a Letter of Credit, the
L/C Issuer shall not have any
responsibility to obtain any document
(other than any sight draft, certificates
and documents expressly required by the
Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of
any such document or the authority of
the Person executing or delivering any such
document. None of the L/C Issuer,
the Administrative Agent, any of their
respective Related Parties nor any
correspondent, participant or assignee of
the L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted
in connection herewith at the request
or with the approval of the Lenders or the
Required Lenders, as applicable; (ii)
any action taken or omitted in the absence
of gross negligence or willful
misconduct; or (iii) the due execution,
effectiveness, validity or
enforceability of any document or
instrument related to any Letter of Credit or
Issuer Document. The Borrower hereby
assumes all risks of the acts or omissions
of any beneficiary or transferee with
respect to its use of any Letter of Credit
issued for its account; provided, however,
that this assumption is not intended
to, and shall not, preclude the Borrower's
pursuing such rights and remedies as
it may have against the beneficiary or
transferee at law or under any other
agreement. None of the L/C Issuer, the
Administrative Agent, any of their
respective Related Parties nor any
correspondent, participant or assignee of the
L/C Issuer shall be liable or responsible
for any of the matters described in
clauses (i) through (v) of Section 2.01(e);
provided, however, that anything in
such clauses to the contrary
notwithstanding, the Borrower may have a claim
against the L/C Issuer, and the L/C Issuer
may be liable to the Borrower, to the
extent, but only to the extent, of any
direct, as opposed to consequential or
exemplary, damages suffered by the Borrower
which the Borrower proves were
caused by the L/C Issuer's willful
misconduct or gross negligence or the L/C
Issuer's willful failure to pay under any
Letter of Credit after the
presentation to it by the beneficiary of a
sight draft and certificate(s)
strictly complying with the terms and
conditions of a Letter of Credit. In
furtherance and not in limitation of the
foregoing, the L/C Issuer may accept
documents that appear on their face to be
in order, without responsibility for
further investigation, regardless of any
notice or information to the contrary,
and the L/C Issuer shall not be responsible
for the validity or sufficiency of
any instrument transferring or assigning or
purporting to transfer or assign a
Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in
whole or in part, which may prove to be
invalid or ineffective for any reason.
(g) Cash
Collateral. (i) If for any reason the Total Outstandings at any
time exceed the Aggregate Commitments then
in effect, the Borrower shall
immediately Cash Collateralize the L/C
Obligations in an aggregate amount equal
to such excess; and (ii) upon the request
of the Administrative Agent, if the
L/C Issuer has honored any full or partial
drawing request under any Letter of
Credit and such drawing has resulted in an
L/C Borrowing, the Borrower shall,
immediately Cash Collateralize the then
Outstanding Amount of all the Borrower's
L/C
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Obligations. Sections 8.02(c) sets forth
certain additional requirements to
deliver Cash Collateral hereunder. For
purposes of this Section 2.01 and Section
8.02(c), "Cash Collateralize" means to
pledge and deposit with or deliver to the
Administrative Agent, for the benefit of
the L/C Issuer and the Lenders, as
collateral for the L/C Obligations of the
Borrower, cash or deposit account
balances pursuant to documentation in form
and substance satisfactory to the
Administrative Agent and the L/C Issuer
(which documents are hereby consented to
by the Lenders). Derivatives of such term
have corresponding meanings. The
Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C
Issuer and the Lenders, a security interest
in all such cash, deposit accounts
and all balances therein of the Borrower
and all proceeds of the foregoing. Cash
Collateral shall be maintained in blocked,
non-interest bearing deposit accounts
at Bank of America.
(h)
Applicability of ISP. Unless otherwise expressly agreed by the
L/C
Issuer and the Borrower when a Letter of
Credit is issued, the rules of the ISP
shall apply to each Letter of Credit.
(i) Letter of
Credit Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender in
accordance with its Applicable
Percentage, a Letter of Credit fee (the
"Letter of Credit Fee") for each Letter
of Credit issued for the account of the
Borrower equal to the Applicable Rate
times of the daily amount available to be
drawn under such Letter of Credit. For
purposes of computing the daily amount
available to be drawn under any Letter of
Credit, the amount of such Letter of Credit
shall be determined in accordance
with Section 1.06. Letter of Credit Fees
shall be (i) computed on a quarterly
basis in arrears and (ii) due and payable
on the first Business Day after the
end of each March, June, September and
December, commencing on the first
Business Day after the end of September,
2005 and thereafter commencing with the
first such date to occur after the issuance
of such Letter of Credit and on the
date the last Letter of Credit expires. If
there is any change in the Applicable
Rate during any quarter, the daily amount
available to be drawn under each
Letter of Credit shall be computed and
multiplied by the Applicable Rate
separately for each period during such
quarter that such Applicable Rate was in
effect. Notwithstanding anything to the
contrary contained herein, upon the
request of the Required Lenders, while any
Event of Default exists, all Letter
of Credit Fees shall accrue at the Default
Rate.
(j) Fronting Fee
and Documentary and Processing Charges Payable to L/C
Issuer. The Borrower shall pay directly to
the L/C Issuer for its own account, a
fronting fee with respect to each Letter of
Credit issued for the account of the
Borrower, at the rate per annum agreed to
between the Borrower and the L/C
Issuer, computed on the daily amount
available to be drawn under such Letter of
Credit on a quarterly basis in arrears, and
due and payable on the first
Business Day after the end of each March,
June, September and December,
commencing with the first such date to
occur after the issuance of such Letter
of Credit and on the date the last Letter
of Credit expires. For purposes of
computing the daily amount available to be
drawn under any Letter of Credit, the
amount of such Letter of Credit shall be
determined in accordance with Section
1.06. In addition, the Borrower shall pay
directly to the L/C Issuer for its own
account, the customary issuance,
presentation, amendment and other processing
fees, and other standard costs and charges,
of the L/C Issuer relating to
letters of credit issued for the account of
the Borrower as from time to time in
effect. Such customary fees and standard
costs and charges are due and payable
on demand and are nonrefundable.
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(k) Conflict
with Issuer Documents. In the event of any conflict between
the terms hereof and the terms of any
Issuer Document, the terms hereof shall
control.
2.02 Termination
or Reduction of Commitments. SALIC may, upon notice to the
Administrative Agent, terminate the
Aggregate Commitments, or from time to time
permanently reduce the Aggregate
Commitments; provided that (i) any such notice
shall be received by the Administrative
Agent not later than 11:00 a.m. five
Business Days prior to the date of
termination or reduction, (ii) any such
partial reduction shall be in an aggregate
amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof
and (iii) SALIC shall not terminate or
reduce the Aggregate Commitments if, after
giving effect thereto and to any
concurrent prepayments hereunder, the Total
Outstandings would exceed the
Aggregate Commitments. The Administrative
Agent will promptly notify the Lenders
of any such notice of termination or
reduction of the Aggregate Commitments. Any
reduction of the Aggregate Commitments
shall be applied to the Commitment of
each Lender pro rata according to its
Applicable Percentage. All fees accrued
until the effective date of any termination
of the Aggregate Commitments shall
be paid on the effective date of such
termination.
2.03 Fees. In
addition to certain fees described in subsections (i) and (j)
of Section 2.01:
(a) Facility
Fee. The Borrower shall pay to the Administrative Agent for
the account of each Lender in accordance
with its Applicable Percentage, a
facility fee equal to the Applicable Rate
times the actual daily amount of the
Aggregate Commitments (or, if the Aggregate
Commitments have terminated, on the
Outstanding Amount of all L/C Obligations),
regardless of usage. The facility
fee shall accrue at all times during the
Availability Period (and thereafter so
long as any L/C Obligations remain
outstanding), including at any time during
which one or more of the conditions in
Article IV is not met, and shall be due
and payable quarterly in arrears on the
last Business Day of each March, June,
September and December, commencing on the
last Business Day of September, 2005,
and on the Commitment Termination Date
(and, if applicable, thereafter on
demand). The facility fee shall be
calculated quarterly in arrears, and if there
is any change in the Applicable Rate during
any quarter, the actual daily amount
shall be computed and multiplied by the
Applicable Rate separately for each
period during such quarter that such
Applicable Rate was in effect.
(b) Utilization
Fee. The Borrower shall pay to the Administrative Agent for
the account of each Lender in accordance
with its Applicable Percentage, a
utilization fee equal to the Applicable
Rate times the Total Outstandings on
each day that the Total Outstandings exceed
50% of the actual daily amount of
the Aggregate Commitments then in effect
(or, if terminated, in effect
immediately prior to such termination). The
utilization fee shall be due and
payable quarterly in arrears on the last
Business Day of each March, June,
September and December, commencing on the
last Business Day of September, 2005,
and on the Commitment Termination Date
(and, if applicable, thereafter on
demand). The utilization fee shall be
calculated quarterly in arrears and if
there is any change in the Applicable Rate
during any quarter, the daily amount
shall be computed and multiplied by the
Applicable Rate for each period during
which such Applicable Rate was in effect.
The utilization fee shall accrue at
all times, including at any time during
which one or more of the conditions in
Article IV is not met.
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(c) Other
Fees.
(i) The Borrower shall pay to the Arranger and the
Administrative
Agent for their
own respective accounts fees in the amounts and at the
times specified
in the Fee Letter. Such fees shall be fully earned when
paid and shall
not be refundable for any reason whatsoever.
(ii) The Borrower shall pay to the Lenders such upfront fees as
shall
have been
separately agreed upon in writing in the amounts and at the
times
so specified.
Such upfront fees shall be fully earned when paid and shall
not be
refundable for any reason whatsoever.
2.04 Computation
of Interest and Fees. All computations of interest for L/C
Borrowings when the Base Rate is determined
by Bank of America's "prime rate"
shall be made on the basis of a year of 365
or 366 days, as the case may be, and
actual days elapsed. All other computations
of fees and interest shall be made
on the basis of a 360-day year and actual
days elapsed (which results in more
fees or interest, as applicable, being paid
than if computed on the basis of a
365-day year). Interest shall accrue on
each L/C Borrowing for the day on which
the L/C Borrowing is made, and shall not
accrue on a L/C Borrowing, or any
portion thereof, for the day on which the
L/C Borrowing or such portion is paid,
provided that any L/C Borrowing that is
repaid on the same day on which it is
made shall, subject to Section 2.06(a),
bear interest for one day. Each
determination by the Administrative Agent
of an interest rate or fee hereunder
shall be conclusive and binding for all
purposes, absent manifest error.
2.05 Evidence of
Debt.
(a) The L/C
Credit Extensions made by each Lender shall be evidenced by one
or more accounts or records maintained by
such Lender and by the Administrative
Agent in the ordinary course of business.
The accounts or records maintained by
the Administrative Agent and each Lender
shall be conclusive absent manifest
error of the amount of the L/C Credit
Extensions made by the Lenders to the
Borrower and the interest and payments
thereon. Any failure to so record or any
error in doing so shall not, however, limit
or otherwise affect the obligation
of the Borrower hereunder to pay any amount
owing with respect to the
Obligations. In the event of any conflict
between the accounts and records
maintained by any Lender and the accounts
and records of the Administrative
Agent in respect of such matters, the
accounts and records of the Administrative
Agent shall control in the absence of
manifest error.
(b) In addition
to the accounts and records referred to in subsection (a),
each Lender and the Administrative Agent
shall maintain in accordance with its
usual practice accounts or records
evidencing the purchases and sales by such
Lender of participations in Letters of
Credit. In the event of any conflict
between the accounts and records maintained
by the Administrative Agent and the
accounts and records of any Lender in
respect of such matters, the accounts and
records of the Administrative Agent shall
control in the absence of manifest
error.
2.06 Payments
Generally; Administrative Agent's Clawback.
(a) General. All
payments to be made by the Borrower shall be made without
condition or deduction for any
counterclaim, defense, recoupment or setoff.
Except as otherwise
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expressly provided herein, all payments by
the Borrower hereunder shall be made
to the Administrative Agent, for the
account of the respective Lenders to which
such payment is owed, at the applicable
Administrative Agent's Office in Dollars
in immediately available funds not later
than 2:00 p.m. on the date specified
herein. The Administrative Agent will
promptly distribute to each Lender its
Applicable Percentage (or other applicable
share as provided herein) of such
payment in like funds as received by wire
transfer to such Lender's Lending
Office. Except as otherwise expressly
provided herein, all payments received by
the Administrative Agent after 2:00 p.m.
shall in each case be deemed received
on the next succeeding Business Day and any
applicable interest or fee shall
continue to accrue. If any payment to be
made by the Borrower shall come due on
a day other than a Business Day, payment
shall be made on the next following
Business Day, and such extension of time
shall be reflected in computing
interest or fees, as the case may be.
(b) Payments by
the Borrower; Presumptions by Administrative Agent. Unless
the Administrative Agent shall have
received notice from the Borrower prior to
the date on which any payment is due to the
Administrative Agent for the account
of the Lenders or the L/C Issuer hereunder
that the Borrower will not make such
payment, the Administrative Agent may
assume that the Borrower has made such
payment on such date in accordance herewith
and may, in reliance upon such
assumption, distribute to the Lenders or
the L/C Issuer, as the case may be, the
amount due. In such event, if the Borrower
has not in fact made such payment,
then each of the Lenders or the L/C Issuer,
as the case may be, severally agrees
to repay to the Administrative Agent
forthwith on demand the amount so
distributed to such Lender or the L/C
Issuer, in immediately available funds
with interest thereon, for each day from
and including the date such amount is
distributed to it to but excluding the date
of payment to the Administrative
Agent, at the Federal Funds Rate.
(c) Obligations
of Lenders Several. The obligations of the Lenders
hereunder to fund participations in Letters
of Credit and to make payments
pursuant to Section 11.04(c) are several
and not joint. The failure of any
Lender to fund any such participation or to
make any payment under Section
11.04(c) on any date required hereunder
shall not relieve any other Lender of
its corresponding obligation to do so on
such date, and no Lender shall be
responsible for the failure of any other
Lender to purchase its participation or
to make its payment under Section
11.04(c).
(d) Funding
Source. Nothing herein shall be deemed to obligate any Lender
to obtain the funds for any L/C Advance in
any particular place or manner or to
constitute a representation by any Lender
that it has obtained or will obtain
the funds for any L/C Advance in any
particular place or manner.
2.07 Sharing of
Payments by Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or
otherwise, obtain payment in respect of the
participations in L/C Obligations held by
it resulting in such Lender's
receiving payment of a proportion of the
aggregate amount of such participations
and accrued interest thereon greater than
its pro rata share thereof as provided
herein, then the Lender receiving such
greater proportion shall (a) notify the
Administrative Agent of such fact, and (b)
purchase (for cash at face value)
subparticipations in L/C Obligations of the
other Lenders, or make such other
adjustments as shall be equitable, so that
the benefit of all such payments
shall be shared by the Lenders ratably
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in accordance with the aggregate amount of
L/C Obligations and other amounts
owing them, provided that:
(i) if any such or
subparticipations are purchased and all or any portion of
the payment giving rise thereto is recovered, such
subparticipations
shall be rescinded and the purchase price restored to the extent of
such
recovery, without interest; and
(ii) the provisions of this
Section shall not be construed to apply to (x)
any payment made by the Borrower pursuant to and in accordance with
the
express terms of this Agreement or (y) any payment obtained by a
Lender
as consideration for the assignment of or sale of subparticipations
in
L/C Obligations to any assignee or participant, other than to SALIC
or
any Subsidiary thereof (as to which the provisions of this Section
shall
apply).
The Borrower consents to the foregoing and agrees, to the extent it
may
effectively do so under applicable law,
that any Lender acquiring a
participation pursuant to the foregoing
arrangements may exercise against the
Borrower rights of setoff and counterclaim
with respect to such participation as
fully as if such Lender were a direct
creditor of the Borrower in the amount of
such participation.
2.08 SALIC as
Agent of the Borrower. The Borrower hereby irrevocably
appoints SALIC as its agent for all
purposes relevant to this Agreement and each
of the other Loan Documents, including (i)
the giving and receipt of notices,
and (ii) the execution and delivery of all
documents, instruments and
certificates contemplated herein and all
modifications hereto. Any
acknowledgment, consent, direction,
certification or other action which might
otherwise be valid or effective only if
given or taken by the Borrower, shall be
valid and effective if given or taken only
by SALIC, whether or not the Borrower
joins therein. Any notice, demand, consent,
acknowledgement, direction,
certification or other communication
delivered to SALIC in accordance with the
terms of this Agreement shall be deemed to
have been delivered to the Borrower.
2.09 Increase in
Commitments.
(a) Request for
Increase. Provided there exists no Default, upon notice to
the Administrative Agent (which shall
promptly notify the Lenders), SALIC may at
any time request an increase in the
Aggregate Commitments provided that any such
request for an increase shall be in a
minimum amount of $10,000,000 or an even
multiple thereof; provided, further, that
after giving effect to any such
increase, the Aggregate Commitments shall
not exceed $50,000,000. At the time of
sending such notice, SALIC (in consultation
with the Administrative Agent) shall
specify the time period within which each
Lender is requested to respond (which
shall in no event be less than ten Business
Days from the date of delivery of
such notice to the Lenders).
(b) Lender
Elections to Increase. Each Lender shall notify the
Administrative Agent within such ti
