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EXHIBIT 10.1
C L I F F O R D LIMITED LIABILITY PARTNERSHIP
C H A N C E
EXECUTION COPY
DATED AS OF
JUNE 25, 2004
PXRE REINSURANCE LTD.
AS BORROWER
BARCLAYS BANK PLC
AS ISSUER
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$100,000,000
LETTER OF CREDIT FACILITY AGREEMENT
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CONTENTS
CLAUSE PAGE
1.
Definitions............................................................1
2. The Letter Of Credit
Facility..........................................9
3. Change In
Circumstances...............................................13
4. Conditions
Precedent..................................................16
5. Representations And
Warranties........................................18
6.
Covenants.............................................................22
7.
Defaults..............................................................26
8. Acceleration, Waivers, Amendments And
Remedies........................28
9. General
Provisions....................................................29
10.
Set-Off...............................................................32
11. Benefit Of
Agreement..................................................32
12.
Notices...............................................................33
SCHEDULE 1 AUTHORIZED OFFICERS OF THE
BORROWER...............................34
EXHIBIT A FORM OF LETTER OF
CREDIT...........................................35
EXHIBIT B FORM OF LC
APPLICATION.............................................37
EXHIBIT C FORM OF COMPLIANCE
CERTIFICATE.....................................39
EXHIBIT D FORM OF ADJUSTED COLLATERAL VALUE
CERTIFICATE......................40
SIGNATURES
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THIS CREDIT AGREEMENT dated as of June 25, 2004
BETWEEN:
(1) PXRE REINSURANCE LTD., a corporation organized under the
laws of Bermuda,
as Borrower; and
(2) BARCLAYS BANK PLC, as Issuer.
RECITALS:
(A) The Borrower has requested the Issuer to make available to
the Borrower a
standby letter of credit issuance facility in the aggregate
principal amount
of up to $100,000,000 to support the reinsurance of business of
the Borrower
in the United States.
(B) The Issuer is willing to extend such standby letter of
credit issuance
facility on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein
contained, and for other good and valuable consideration, the
receipt and
sufficiency of which are hereby acknowledged, the Borrower and
the Issuer hereby
agree as follows:
1. DEFINITIONS
As used in this Agreement:
"ACCOUNT CONTROL AGREEMENT" means the Account Control Agreement
dated June ,
2004 among the Borrower, the Issuer and the Custodian, or any
other account
control agreement among the Borrower, the Issuer and a custodian
approved by
the Issuer, as it may be amended, modified or restated and in
effect from
time to time.
"ADJUSTED COLLATERAL VALUE" means the amount calculated as
follows:
(i) OECD Government Bonds: 95% of market value;
(ii) MBS Securities: 90.9% of market value;
(iii) Corporate Bonds: 90.9% of market value; and
(iv) Cash: 100%
Notwithstanding the above, no more than 50% of the Adjusted
Collateral Value
may be comprised of Corporate Bonds and no more than 10% of
Adjusted
Collateral Value may be from any one corporate issuer or any
Affiliate of
such corporate issuer.
"AFFILIATE" of any Person means any other Person directly or
indirectly
controlling, controlled by or under common control with such
Person.
"AGGREGATE FACILITY LC COMMITMENT" means the commitment of the
Issuer to
issue Facility LCs from time to time issued or outstanding under
Clause 2
(The Letter of Credit Facility), in an aggregate amount not to
exceed
$100,000,000 at any time outstanding, as such amount may be
decreased from
time to time pursuant to the terms hereof.
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"AGREEMENT" means this credit agreement, as it may be amended,
modified or
restated and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means (x) with respect to the
Borrower's
parent holding company, the U.S. generally accepted accounting
principles as
in effect from time to time, (y) with respect to the Borrower,
Bermuda
statutory accounting principles and (z) with respect to any
Subsidiary, the
accounting principles which such Subsidiary is required by law
or regulation
to apply to the preparation of its financial statements.
"AUTHORIZED OFFICER" means, with respect to the Borrower, any
two of the
individuals, acting jointly, listed on Schedule 1 (Authorized
Officers) as
such Schedule may be supplemented or modified from time to time
by the
Borrower.
"BORROWER" means PXRE Reinsurance Ltd., a corporation organized
under the
laws of Bermuda, and its successors and assigns.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on
which banks
are open in London for the conduct of substantially all of their
commercial
lending activities, interbank wire transfers can be made on the
Fedwire
system and dealings in Dollars are carried on in the London
interbank
market.
"CASH" means immediately available funds denominated in Dollars
and credited
to an account in the name of the Borrower at the New York branch
of the
Issuer and to which the Borrower is alone beneficially entitled
and for so
long as the Issuer has a perfected security interest thereon
under security
documents satisfactory to the Issuer.
"CEDING COMPANY" means an insurance or reinsurance company
(including,
without limitation, any reinsurance or insurance company that is
a
Wholly-Owned Subsidiary of the Borrower) that has, pursuant to
an Insurance
Contract or a Reinsurance Contract with the Borrower, agreed
with the
Borrower that the Borrower, as reinsurer, shall assume certain
liabilities
of such insurance or reinsurance company under an Insurance
Contract.
"CHANGE" is defined in Clause 3.2 (Changes in Capital Adequacy
Regulations).
"CHANGE IN CONTROL" means the acquisition by any Person, or two
or more
Persons acting in concert, of beneficial ownership (within the
meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities
Exchange Act of 1934) of 40% or more of the outstanding shares
of voting
stock of the Borrower.
"CHANGE IN LAW" is defined in Clause 3.1 (Yield Protection).
"CLAUSE" means a numbered Clause of this Agreement, unless
another document
is specifically referenced.
"CODE" means the Internal Revenue Code of 1986, as amended,
reformed or
otherwise modified from time to time.
"COLLATERAL" means at any time Cash, OECD Government Bonds, MBS
Securities
and Corporate Bonds.
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"COLLATERAL DOCUMENTS" means all agreements, instruments and
other documents
now or hereafter executed and delivered by the Borrower pursuant
to which
liens and security interests in collateral are granted to secure
the
Obligations, including, without limitation, the Security
Agreement, the
Account Control Agreement, the Custody Agreement, UCC-1
Financing
Statements, security documents securing a pledge over Cash in
favor of the
Issuer and any documentation delivered pursuant to Clause 2.9
(Facility LC
Collateral Account) with respect to the Facility LC Collateral
Account.
"COLLATERAL SHORTFALL AMOUNT" is defined in Clause 8.1
(Acceleration;
Facility LC Collateral Account).
"COMMITMENT" means the Facility LC Commitment.
"CONTINGENT OBLIGATION" of a Person means any agreement,
undertaking or
arrangement by which such Person assumes, guarantees, endorses,
contingently
agrees to purchase or provide funds for the payment of, or
otherwise becomes
or is contingently liable upon, the obligation or liability of
any other
Person, or agrees to maintain the net worth or working capital
or other
financial condition of any other Person, or otherwise assures
any creditor
of any other Person against loss, including, without limitation,
any comfort
letter, operating agreement, take or pay contract or application
for a
Facility LC or other Letter of Credit, but excluding the
Reimbursement
Obligations, obligations in respect of the endorsement of
instruments for
deposit or collection in the ordinary course of business,
obligations in
respect of Insurance Contracts and Reinsurance Contracts issued
or entered
into in the ordinary course of business and obligations in
respect of the
extension of guaranties in the ordinary course of business to
insureds of
the obligations of insurers under Insurance Contracts and
Reinsurance
Contracts.
"CONTROLLED GROUP" means all members of a controlled group of
corporations
or other business entities and all trades or businesses (whether
or not
incorporated) under common control which, together with the
Borrower or any
of its Subsidiaries, are treated as a single employer under
Section 414 of
the Code.
"CORPORATE BONDS" means debt securities issued by any corporate
and which
are rated at least AA by S&P or Aa by Moody's and have a
remaining term to
maturity of less than ten years.
"CREDIT DOCUMENTS" means this Agreement, the Facility LC
Applications, the
Facility LCs, the Collateral Documents and the other documents
and
agreements contemplated hereby and executed by the Borrower
pursuant hereto
in favor of the Issuer, as amended, modified or supplemented
from time to
time.
"CUSTODIAL ACCOUNT" means the investment securities account of
the Borrower
maintained with the Custodian pursuant to the Custody Agreement
into which
the Collateral (other than Cash) shall be deposited from time to
time and
over which the Issuer has a perfected security interest under
the Account
Control Agreement.
"CUSTODIAN" shall mean, initially, JP Morgan Chase and any
successor thereto
approved by the Issuer.
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"CUSTODY AGREEMENT" means the Custody Agreement dated as of June
, 2004
between the Borrower and JP Morgan Chase or any other custody
agreement
between the Borrower and a Custodian approved by the Issuer, as
it may be
amended, modified or restated and in effect from time to
time.
"DEFAULT" means an event described in Clause 7 (Defaults).
"DOLLARS," "DOLLARS" and "$" each mean lawful money of the
United States.
"ERISA" means the Employee Retirement Income Security Act of
1974, as
amended from time to time, and any rule or regulation issued
thereunder.
"EUROCURRENCY BASE RATE" means, with respect to any unpaid
Reimbursement
Obligation for the relevant Interest Period, the rate per annum
determined
by the Issuer by reference to the applicable British Bankers'
Association
LIBOR rate for deposits in the applicable agreed currency (as
reported by
Reuters, or if Reuters quotations are not available, as reported
by
Bloomberg L.P., or if neither is available, as reported by
another generally
recognized financial information service selected by the
Facility Agent in
its reasonable discretion) as of 11:00 a.m. (London time) two
Business Days
prior to the first day of such Interest Period, and having a
maturity equal
to such Interest Period; PROVIDED THAT, if no such British
Bankers'
Association LIBOR rate is available to the Issuer, the
applicable
Eurocurrency Base Rate for the relevant Interest Period shall
instead be the
arithmetic mean (rounded in accordance with normal market
practice) of the
rates as the rate at which the Issuer offers to place deposits
in Dollars
with first-class banks in the London interbank market at
approximately 11:00
a.m. (London time) two Business Days prior to the first day of
such Interest
Period, in the approximate amount of the Issuer's unpaid
Reimbursement
Obligations and having a maturity equal to such Interest
Period.
"EXCLUDED TAXES" means in the case of the Issuer, taxes imposed
on its
overall net income, and franchise taxes imposed on it, in each
case by:
(a) England and Wales;
(b) the jurisdiction in which the Issuer's principal executive
office is
located; or
(c) any jurisdiction in which the Issuer is otherwise doing
business.
"FACILITY LC" is defined in sub-clause 2.1.1 of Clause 2.1
(Issuance of
Facility LCs).
"FACILITY LC APPLICATION" is defined in Clause 2.2 (Notice).
"FACILITY LC COLLATERAL ACCOUNT" is defined in Clause 2.9
(Facility LC
Collateral Account).
"FACILITY LC COMMITMENT" means for the Issuer, the obligation to
issue
Facility LCs in accordance with the terms hereof.
"FACILITY LC OBLIGATIONS" means, at any time, the sum, without
duplication,
of:
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(a) the aggregate undrawn stated amount under all Facility LCs
outstanding
at such time; plus
(b) the aggregate unpaid amount at such time of all
Reimbursement
Obligations.
"FANNIE MAE" means the Federal National Mortgage Association,
a
quasi-government corporation, or any successor thereof.
"FINANCIAL STATEMENTS" is defined in Clause 5.5 (Financial
Statements).
"FREDDIE MAC" means the Federal Home Loan Mortgage Corporation,
a
quasi-government corporation, or any successor thereof.
"GOVERNMENTAL AUTHORITY" means any government (foreign or
domestic) or any
state or other political subdivision thereof or any governmental
body,
agency, authority, department or commission (including without
limitation,
the Bermuda Monetary Authority, any board of insurance,
insurance
department, insurance commission, taxing authority or political
subdivision)
or any instrumentality or officer thereof (including without
limitation any
court or tribunal) exercising executive, legislative, judicial,
regulatory
or administrative functions of or pertaining to government and
any
corporation, partnership or other entity directly or indirectly
owned or
controlled by or subject to the control of any of the
foregoing.
"GINNIE MAE" means the Government National Mortgage Association,
a
quasi-government corporation, or any successor thereof.
"INSURANCE CONTRACT" means an insurance contract or Reinsurance
Contract
entered into by a Ceding Company.
"INTEREST PERIOD" means a period of one month, or such other
period as the
Issuer and the Borrower may agree, commencing on a Business Day
on which a
Reimbursement Obligation commenced but was not immediately paid.
Such
Interest Period shall end on the day which corresponds
numerically to such
date one month or such other applicable period, thereafter;
PROVIDED,
HOWEVER, THAT if there is no such numerically corresponding day
in such next
succeeding month, or such other applicable period, such Interest
Period
shall end on the last Business Day of such next succeeding
month, or such
other applicable period. If an Interest Period would otherwise
end on a day
which is not a Business Day, such Interest Period shall end on
the next
succeeding Business Day; PROVIDED, HOWEVER, THAT if said next
succeeding
Business Day falls in a new calendar month, such Interest Period
shall end
on the immediately preceding Business Day.
"ISSUANCE DATE" means a date on which a Facility LC is issued,
renewed or
amended hereunder.
"ISSUANCE REQUEST" is defined in Clause 2.2 (Notice).
"ISSUER" means Barclays Bank PLC, acting in each instance
through a branch
or affiliate that qualifies as a financial institution for
purposes of the
National Association of Insurance Commissioners credit for
reinsurance
regulators.
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"LC FACILITY TERMINATION DATE" means the date falling 364 days
after the
date of issuance of a Facility LC (as such date may be extended
by amendment
hereto) or any earlier date on which the Aggregate Facility LC
Commitment is
reduced to zero or otherwise terminated and/or the Facility LC
Obligations
shall become due and payable in accordance with the provisions
of this
Agreement.
"LC PAYMENT DATE" is defined in Clause 2.5 (Reimbursement by
Borrower).
"LETTER OF CREDIT" of a Person means a letter of credit or
similar
instrument which is issued upon the application of such Person
or upon which
such Person is an account party or for which such Person is in
any way
liable.
"LICENSE" means any license, certificate of authority, permit or
other
authorization which is required to be obtained from any
Governmental
Authority in connection with the operation, ownership or
transaction of
insurance or reinsurance business.
"LIEN" means any lien (statutory or other) mortgage, pledge,
hypothecation,
assignment, deposit arrangement, encumbrance or preference,
priority or
other security agreement or preferential arrangement of any kind
or nature
whatsoever having a similar effect (including, without
limitation, the
interest of a vendor or lessor under any conditional sale,
capitalized lease
or other title retention agreement).
"MATERIAL ADVERSE EFFECT" means a material adverse effect
on:
(a) the business, Property, condition (financial or otherwise),
prospects or
results of operations of the Borrower and its Subsidiaries taken
as a
whole,
(b) the ability of the Borrower to perform its obligations under
the Credit
Documents, or
(c) the validity or enforceability of any of the Credit
Documents or the
rights or remedies of the Issuer thereunder.
"MATERIAL INDEBTEDNESS" means indebtedness in an outstanding
principal
amount of $10,000,000 or more in the aggregate (or the
equivalent thereof in
any currency other than Dollars).
"MATERIAL INDEBTEDNESS AGREEMENT" means any agreement or
instrument under
which any Material Indebtedness was created, is evidenced or is
governed.
"MBS SECURITIES" means mortgage-backed securities issued by any
institution
(including Freddie Mac, Fannie Mae and Ginnie Mae) and which are
rated at
least AAA by S&P or Aaa by Moody's and have a remaining term
to maturity of
less than eight years.
"MODIFY" and "MODIFICATION" are defined in sub-clause 2.1.1 of
Clause 2.1
(Issuance of Facility LCs).
"MOODY'S" means Moody's Investors Service, Inc. and any
successor or
successors thereto.
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"MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined in
Section
(3)(37) of ERISA) contributed to for any employees of the
Borrower or any
Affiliate of the Borrower.
"OBLIGATIONS" means all unpaid principal and accrued and unpaid
interest on
the Facility LC Obligations and all other liabilities, if any,
whether
actual or contingent, of the Borrower with respect to Facility
LCs, all
accrued and unpaid fees and all expenses, reimbursements,
indemnities and
other obligations of the Borrower to the Issuer or any
indemnified party
hereunder, in each case arising under any of the Credit
Documents.
"OECD COUNTRY" means a country that (a) either (i) is a full
member of the
Organization for Economic Cooperation and Development or (ii)
has concluded
special lending arrangements with the International Monetary
Fund's General
Arrangements to Borrow, and (b) has not rescheduled its external
sovereign
debt within the previous five (5) years.
"OECD GOVERNMENT BONDS" means bonds issued by any OECD Country,
political
subdivision or agency thereof which are rated at least AAA by
S&P or Aaa by
Moody's and have a remaining term to maturity of less than eight
years.
"OTHER TAXES" is defined in sub-clause 3.3.2 of Clause 3.3
(Taxes).
"PAYMENT DATE" means the last Business Day of each March, June,
September
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor
thereto.
"PERSON" means any natural person, corporation, limited
liability company,
firm, joint venture, partnership, association, enterprise, trust
or other
entity or organization, or any government or political
subdivision or any
agency, department or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered
by Title IV
of ERISA or subject to the minimum funding standards under
Section 412 of
the Code as to which any Credit Party or any member of the
Controlled Group
may have any liability.
"PROPERTY" of a Person means any and all property, whether real,
personal,
tangible, intangible, or mixed, of such Person, or other assets
owned,
leased or operated by such Person.
"REGULATION U" means Regulation U of the Board of Governors of
the U.S.
Federal Reserve System as from time to time in effect and any
successor
thereto or other regulation or official interpretation of said
Board of
Governors relating to the extension of credit by banks for the
purpose of
purchasing or carrying margin stocks applicable to member banks
of the
Federal Reserve System.
"REIMBURSEMENT OBLIGATIONS" means, at any time, the aggregate of
all
obligations of the Borrower then outstanding under Clause 2 (The
Letter of
Credit Facility) to reimburse the Issuer for amounts paid by the
Issuer in
respect of any one or more drawings under Facility LCs.
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"REINSURANCE CONTRACT" means a reinsurance contract between the
Borrower, as
reinsurer, and a Ceding Company pursuant to which the Borrower,
as
reinsurer, assumes certain liabilities of the Ceding Company
with respect to
one or more Insurance Contracts and contracts of reinsurance
arranged for
the benefit of the Borrower (i.e. reinsuring the borrower). For
the
avoidance of doubt, Reinsurance Contracts shall include
contracts described
in this definition which do not qualify as reinsurance contracts
for
purposes of FAS 113. .
"RISK-BASED CAPITAL GUIDELINES" is defined in Clause 3.2
(Changes in Capital
Adequacy Regulations).
"S & P" means Standard & Poor's Rating Services, a
division of the
McGraw-Hill Companies or any successor rating agency thereto
acceptable to
the Issuer.
"SCHEDULE" refers to a specific schedule to this Agreement,
unless another
document is specifically referenced.
"SECURITY AGREEMENT" means the Security Agreement dated as of
June , 2004
between the Borrower and the Issuer, as it may be amended,
modified or
restated and in effect from time to time.
"SENIOR FINANCIAL OFFICER" means any of the following officers
of the
Borrower: Chief Financial Officer, Treasurer and Assistant Vice
President
Finance.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower
or any member
of the Controlled Group for employees of the Borrower or any
member of the
Controlled Group.
"SUBSIDIARY" of a Person means:
(a) any corporation more than 50% of the outstanding securities
having
ordinary voting power of which shall at the time be owned or
controlled,
directly or indirectly, by such Person or by one or more of
its
Subsidiaries or by such Person and one or more of its
Subsidiaries; or
(b) any partnership, association, joint venture, limited
liability company
or similar business organization more than 50% of the
ownership
interests having ordinary voting power of which shall at the
time be so
owned or controlled. Unless otherwise expressly provided, all
references
herein to a "Subsidiary" shall mean a Subsidiary of the
Borrower.
"TAXES" means any and all present or future taxes, duties,
levies, imposts,
deductions, charges or withholdings, and any and all liabilities
with
respect to the foregoing, but excluding Excluded Taxes and Other
Taxes.
"TRANSFEREE" is defined in Clause 11.2 (Dissemination of
Information).
"UNENCUMBERED PROPERTY" means any combination of assets
comprising Cash,
Corporate Bonds, MBS Securities, OECD Government Bonds and
commercial paper
with a rating of at least A-1 or P-1, the aggregate value of
which at any
given time amounts to no less than $25,000,000.
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"UNFUNDED LIABILITIES" means the amount (if any) by which the
present value
of all vested and unvested accrued benefits under all Single
Employer Plans
exceeds the fair market value of all such Plan assets allocable
to such
benefits, all determined as of the then most recent valuation
date for such
Plans using PBGC actuarial assumptions for single employer
plan
terminations.
"UNMATURED DEFAULT" means an event which but for the lapse of
time or the
giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both
the singular
and plural forms of the defined terms. Any reference herein to a
"Section"
or "Article" shall mean a Section or Article of this Agreement
unless
explicitly provided to the contrary.
2. THE LETTER OF CREDIT FACILITY
2.1 ISSUANCE OF FACILITY LCS
2.1.1 The Issuer hereby agrees, on the terms and conditions set
forth in
this Agreement, promptly to issue standby letters of credit
denominated in Dollars and substantially in the form of Exhibit
A
(or in such other form as may be acceptable to the Issuer and
the
Borrower) (each, a "FACILITY LC") and to renew, extend,
increase,
decrease or otherwise modify each Facility LC ("MODIFY," and
each
such action a "MODIFICATION"), from time to time from and
including
the date of this Agreement and prior to the LC Facility
Termination
Date upon the request of and for the account of the
Borrower;
PROVIDED THAT:
(a) immediately after each such Facility LC is issued or
Modified,
the aggregate amount of the outstanding Facility LC
Obligations
shall not exceed the Aggregate Facility LC Commitment; and
(b) the initial face amount of any Facility LC shall not be
less
than $1,000,000. No Facility LC shall have an expiry date
later
than the earlier of (i) the one (1) year anniversary of the
date
of issuance Facility LC or, as applicable, a Modification,
(ii)
the Facility LC Termination Date and (iii) the date notified
to
the Issuer pursuant to Section 9.14 of this Agreement.
(c) The Issuer acknowledges that, subject to the terms of
this
Agreement, each issued Facility LC shall continue in force
unless the Issuer receives a notice from the Borrower no
more
than ninety (90) days and at least seventy (70) days (or
such
shorter time as the Issuer may agree in a particular
instance)
prior to the anniversary of the issuance of such Facility LC
or
Modification, as the case may be, that such Facility LC is to
be
cancelled, effective upon the ensuing anniversary of the
issuance of such Facility LC or Modification.
Notwithstanding
the foregoing, all outstanding Facility LCs shall
automatically
expire on the LC Facility Termination Date.
2.1.2 The Issuer shall not be under any obligation to issue or
extend any
Facility LC if any order, judgment or decree of any
Governmental
Authority or other regulatory body with jurisdiction over the
Issuer
shall purport by its terms to enjoin or restrain the Issuer
from
issuing or extending such Facility LC, or any law or
governmental
rule, regulation, policy, guideline or directive (whether or
not
having the force of law) from any Governmental Authority or
other
regulatory body with jurisdiction over the Issuer shall
prohibit, or
request that the Issuer refrain from, the issuance or extension
of
Facility LCs in particular or shall impose upon the Issuer
with
respect to any Facility LC any restriction or reserve or
capital
requirement (for which the Issuer is not otherwise compensated)
or
any unreimbursed loss, cost or expense which was not applicable
and
in effect with respect to the Issuer as of the date of this
Agreement and which the Issuer in good faith deems material to
it.
The Issuer shall give the Borrower prompt written notice of
its
determination at any time (and from time to time) to exercise
its
rights to payment or indemnification under this Section 2.1.2
and a
description in reasonable detail of the event(s) described in
this
Section 2.1.2 pursuant to which such rights are being
exercised.
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2.1.3 Notwithstanding anything herein, the Borrower and the
Issuer may
agree in writing between themselves as to administrative
procedures
for the issuance of Facility LCs by the Issuer which are
different
than those set forth herein, and such procedures shall govern
as
between the Issuer and the Borrower.
2.1.4 Each Facility LC shall be issued by, and shall be an
obligation of,
the Issuer.
2.2 NOTICE
Subject to Clause 2.1 (Issuance of Facility LCs), the Borrower
shall,
through an Authorized Officer or authorized attorney in fact,
give the
Issuer notice (an "ISSUANCE REQUEST") prior to 11:00 a.m.
(London time)
at least two (2) Business Days prior to the proposed date of
issuance or
Modification of each Facility LC, specifying the account party,
the
beneficiary, the proposed date of issuance (or Modification) and
the
expiry date of such Facility LC. If the Issuance Request
requests the
issuance of a Facility LC, it shall be accompanied by a
completed
standby letter of credit application substantially in the form
of
Exhibit B (or such other form as from time to time is
customarily
utilized by the Issuer) executed by the Borrower and related
documentation reasonably required by the Issuer (collectively,
a
"FACILITY LC APPLICATION"). The issuance or Modification by the
Issuer
of any Facility LC shall be subject to the conditions precedent
set
forth in Clause 4 (Conditions Precedent) (the satisfaction of
which the
Issuer shall have no duty to ascertain except with respect
to
sub-clauses 4.2.3 of Clause 4.2 (Continuantion Conditions
Precedent). In
the event of any conflict between the terms of this Agreement
and the
terms of any Facility LC Application, the terms of this
Agreement shall
control.
2.3 FACILITY LC FEES
The Borrower shall pay to the Issuer a letter of credit fee with
respect
to each Facility LC for each day from and including the date of
issuance
thereof until (and excluding) the date such Facility LC is fully
drawn,
cancelled or expired (the "EXPIRY DATE") equal to 0.30% per
annum
multiplied by the aggregate outstanding face amount thereof at
the close
of business on such day, payable (in arrears) until the
applicable
Expiry Date of such Facility LC on each Payment Date and, if any
such
fees are accrued and unpaid on the LC Facility Termination Date,
on such
date. Notwithstanding anything contained in this Clause 2.3 to
the
contrary, during the continuance of a Default, the letter of
credit fee
rate shall be increased to 2.00% per annum. The Borrower shall
also pay
to the Issuer (i) until the earlier of such date as this
Agreement
terminates or the obligation of the issuer to issue or Modify
any
Facility LC terminates or is suspended (whether pursuant to
Section
2.1.2 or Section 8.1 or otherwise), a facility fee on the
average daily
amount equal to the difference between the Aggregate Facility
LC
Commitment and the aggregate undrawn stated amount under all
Facility
LCs outstanding from time to time, in an amount equal to 0.15%
per
annum, such fee to be payable (in arrears) on each Payment Date
and, if
any such fees are accrued and unpaid on the LC Facility
Termination
Date, on such date; (ii) a one-time upfront fee equal to 0.075%
per
annum of the Aggregate Facility LC Commitment, such fee to be
payable
(in advance) on or before the date of execution of this
Agreement; and
(iii) documentary and processing charges in connection with the
issuance
or Modification of and draws under Facility LCs, in an amount
separately
agreed upon between the Issuer and the Borrower in writing,
payable at
the time of issuance of each Facility LC. Interest and fees
under this
Agreement shall be calculated for actual days elapsed on the
basis of a
360-day year. If any payment shall become due on a day which is
not a
Business Day, such payment shall be made on the next succeeding
Business
Day and, in the case of a payment of a Reimbursement Obligation,
such
extension of time shall be included in computing interest in
connection
with such payment.
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<PAGE>
2.4 ADMINISTRATION; REIMBURSEMENT BY LC PARTICIPANTS.
Upon receipt from the beneficiary of any Facility LC of any
demand for
payment under such Facility LC, the Issuer shall promptly notify
the
Borrower as to the amount to be paid by the Issuer as a result
of such
demand and the proposed payment date thereof. The responsibility
of the
Issuer to the Borrower shall be only to determine that the
documents
(including each demand for payment) delivered under each
Facility LC in
connection with such presentment shall be in conformity in all
material
respects with such Facility LC.
2.5 REIMBURSEMENT BY BORROWER
(a) The Borrower shall be irrevocably and unconditionally
obligated to
reimburse the Issuer for any amounts paid by the Issuer upon
any
drawing under any Facility LC, without presentment, demand,
protest
or other formalities of any kind, not later than 3:00 p.m.
(London
time) on the second Business Day after the date notice of
such
payment is transmitted to the Borrower in accordance with
Clause
12.1 (Giving Notice) and confirmation of receipt is received or
such
notice is otherwise received by the Borrower (such second
Business
Day being the "LC PAYMENT DATE"); PROVIDED THAT any such notice
that
is transmitted to the Borrower after 12:00 noon (London time) on
any
Business Day shall be deemed to have been transmitted on the
immediately following Business Day.
(b) All such amounts paid by the Issuer and remaining unpaid by
the
Borrower shall bear interest, payable on demand, for each day
until
paid at a rate per annum equal to the sum of the Eurocurrency
Base
Rate for such day plus 2.00% per annum.
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<PAGE>
Such interest shall accrue from and including the date of the
applicable
drawing (unless the drawing is reimbursed in full prior to 3:00
p.m.
(London time) on such date) to and including the date of payment
(unless
such payment in full is made prior to 3:00 p.m. (London time) on
such
payment date).
2.6 OBLIGATIONS ABSOLUTE
The Borrower's obligations under this Clause 2 shall be absolute
and
unconditional under any and all circumstances and irrespective
of any
setoff, counterclaim or defence to payment which the Borrower
may have
or have had against the Issuer or any beneficiary of a Facility
LC. The
Borrower further agrees with the Issuer that the Borrower shall
not be
responsible for, and the Borrower's Reimbursement Obligation in
respect
of any Facility LC shall not be affected by, among other things,
the
validity or genuineness of documents or of any endorsements
thereon,
even if such documents should in fact prove to be in any or all
respects
invalid, fraudulent or forged, or any dispute between or among
the
Borrower, the beneficiary of any Facility LC or any
financing
institution or other party to whom any Facility LC may be
transferred or
any claims or defences whatsoever of the Borrower against
the
beneficiary of any Facility LC or any such transferee,
provided,
however, that this Section 2.6 shall not limit any rights of
the
Borrower under applicable law (including, without limitation,
Section
5-109 of the Uniform Commercial Code in effect in the State of
New
York). The Issuer shall not be liable for any error,
omission,
interruption or delay in transmission, dispatch or delivery of
any
message or advice, however transmitted (except for the Issuer's
bad
faith, gross negligence or wilful misconduct) that, in
connection with
any Facility LC; PROVIDED FURTHER, that the Borrower agrees that
any
action taken or omitted by the Issuer under or in connection
with each
Facility LC and the related drafts and documents, if done
without bad
faith, gross negligence or wilful misconduct, shall be binding
upon the
Borrower and shall not put the Issuer under any liability to
the
Borrower.
2.7 ACTIONS OF ISSUER
The Issuer shall be entitled to rely, and shall be fully
protected in
relying, upon any Facility LC, draft, writing, resolution,
notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or
teletype message, statement, order or other document believed by
the Issuer
in good faith to be genuine and correct and to have been signed,
sent or
made by the proper Person or Persons set forth on Schedule 1
(Authorized
Officers) attached hereto, and upon advice and statements of
legal counsel,
independent accountants and other experts selected by the
Issuer.
2.8 INDEMNIFICATION
The Borrower hereby agrees to indemnify and hold harmless the
Issuer and
its directors, officers, agents and employees from and against
any and all
claims and damages, losses, liabilities, reasonable costs or
expenses which
the Issuer may incur (or which may be claimed against the Issuer
by any
Person whatsoever) by reason of or in connection with the
issuance,
execution and delivery or transfer of or payment or failure to
pay under
any Facility LC or any actual or proposed use of any Facility
LC,
including, without limitation, any claims, damages, losses,
liabilities,
costs or expenses which the Issuer may incur by reason of or on
account of
the Issuer issuing any Facility LC which specifies that the
term
"BENEFICIARY" included therein includes any successor by
operation of law
of the named Beneficiary, but which Facility LC does not require
that any
drawing by any such successor Beneficiary be accompanied by a
copy of a
legal document, satisfactory to the Issuer, evidencing the
appointment of
such successor Beneficiary; PROVIDED THAT the Borrower shall not
be
required to indemnify any such indemnitee for any claims,
damages, losses,
liabilities, costs or expenses to the extent, but only to the
extent,
caused by (a) the bad faith, wilful misconduct or gross
negligence of such
indemnitee (including officers and employees of such
indemnities) or (b)
the Issuer's failure to pay under any Facility LC after the
presentation to
it of a request strictly complying with the terms and conditions
of such
Facility LC.
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<PAGE>
2.9 FACILITY LC COLLATERAL ACCOUNT
The Borrower agrees that it will (to the extent required by
Clause 8.1
(Acceleration; Facility LC Collateral Account), upon the request
of the
Issuer and until the final expiration date of any Facility LC
and
thereafter as long as any amount is payable to the Issuer in
respect of any
Facility LC, maintain a special collateral account pursuant
to
documentation (including, without limitation, legal opinions)
reasonably
satisfactory to the Issuer (the "FACILITY LC COLLATERAL
ACCOUNT") at the
Issuer's office at the address specified pursuant to Clause 12,
in the name
of the Borrower but under the sole dominion and control of the
Issuer and
in which the Borrower shall have no interest other than as set
forth in
Clause 8.1 (Acceleration; Facility LC Collateral Account). The
Borrower
hereby pledges, assigns and grants to the Issuer a security
interest in all
of the Borrower's right, title and interest in and to all funds
which may
from time to time be on deposit in the Facility LC Collateral
Account to
secure the prompt and complete payment and performance of the
Obligations.
2.10 REDUCTIONS IN AGGREGATE FACILITY LC COMMITMENT
2.10.1 The Borrower may permanently reduce the Aggregate
Facility LC
Commitment in whole or in part in a minimum aggregate amount
of
the lesser of (i) $25,000,000 (or any integral multiple of
$5,000,000 in excess thereof) and (ii) the total amount of
the
unused Aggregate Facility LC Commitment, upon at least three
(3)
Business Days' written notice to the Issuer, which notice
shall
specify the amount of any such reduction; PROVIDED, HOWEVER,
THAT
the amount of the Aggregate Facility LC Commitment may not
be
reduced below the aggregate amount of the outstanding Facility
LC
Obligations (and if, at any time, the aggregate outstanding
amount of the Facility LC Obligations exceeds the Aggregate
Facility LC Commitment, then the Issuer shall immediately
deposit
an amount equal to such excess in the Facility LC Collateral
Account in accordance with Clause 8.1 (Acceleration; Facility
LC
Collateral Account)).
3. CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION
If, after the date of this Agreement, the adoption of or any
change in any
law or any governmental or quasi governmental rule, regulation,
policy,
guideline or directive (whether or not having the force of law),
or any
change in the interpretation or administration thereof by any
governmental
or quasi-governmental authority, central bank or comparable
agency charged
with the interpretation or administration thereof, or compliance
by the
Issuer with any request or directive (whether or not having the
force of
law) of any such authority, central bank or comparable agency
(each of the
foregoing being a "CHANGE IN LAW"):
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<PAGE>
3.1.1 subjects the Issuer to any Taxes, or changes the basis of
taxation
of payments (except for Taxes covered by Clause 3.3 (Taxes)
and
changes in the rate of tax on the overall net income of the
Issuer) to the Issuer in respect of its interest in the
Facility
LCs or other amounts due it hereunder; or
3.1.2 imposes or increases or deems applicable any reserve,
assessment,
insurance charge, special deposit or similar requirement
against
assets of, deposits with or for the account of, or credit
extended by the Issuer; or
3.1.3 imposes any other condition the result of which is to
increase the
cost to the Issuer of issuing in Facility LCs or reduces any
amount receivable by the Issuer in connection with any
Facility
LC, or requires the Issuer to make any payment calculated by
reference to the amount of the Issuer Facility LCs issued or
interest received by it, in each case, by an amount
reasonably
deemed material by the Issuer,
and the result of any of the foregoing is to increase the cost
to the
Issuer of funding or maintaining its interest in the Facility
LCs and its
Commitment or to reduce the return received by it in connection
with its
interest in the Facility LCs and its Commitment, then, within
five (5) days
of demand by the Issuer, the Borrower shall pay the Issuer such
additional
amount or amounts as will compensate the Issuer for such
increased cost or
reduction in amount received.
3.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS
If the Issuer reasonably determines the amount of capital
required or
expected to be maintained by the Issuer or any corporation
controlling the
Issuer is increased as a result of a Change, then, within five
(5) Business
Days of demand by the Issuer, the Borrower shall pay the Issuer
the amount
necessary to compensate for any shortfall in the rate of return
on the
portion of such increased capital which the Issuer reasonably
determines is
attributable to this Agreement, its interest in the Facility LCs
or its
obligation to issue Facility LCs hereunder (after taking into
account the
Issuer's policies as to capital adequacy). "CHANGE" means (a)
any change
after the date of this Agreement in the Risk Based Capital
Guidelines, or
(b) any adoption of or change in any other law, governmental
or
quasi-governmental rule, regulation, policy, guideline,
interpretation, or
directive (whether or not having the force of law but in each
instance
binding on the Issuer) after the date of this Agreement which
affects the
amount of capital required to be maintained by the Issuer or
corporation
controlling the Issuer. "RISK BASED CAPITAL GUIDELINES" means
rules and
regulations applicable to the Issuer and promulgated by
relevant
authorities implementing the July 1988 report of the Basle
Committee on
Banking Regulations and Supervisory Practices entitled
"International
Convergence of Capital Measurement and Capital Standards"
(including,
without limitation, the Final Risk-Based Capital Guidelines of
the Board of
Governors of the Federal Reserve System (12 CFR Part 208,
Appendix A; 12
CFR Part 225, Appendix A) and the Final Risk-Based Capital
Guidelines of
the Office of the Comptroller of the Currency (12 CFR Part 3,
Appendix A)),
including transition rules and any amendments thereto adopted
prior to the
date of this Agreement.
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<PAGE>
3.3 TAXES
3.3.1 All payments by or on behalf of the Borrower to or for the
account
of the Issuer hereunder shall be made free and clear of and
without deduction for any and all Taxes. If the Borrower shall
be
required by law to deduct any Taxes from or
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