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MULTICURRENCY LETTER OF CREDIT FACILITY AGREEMENT

Letter of Credit

MULTICURRENCY LETTER OF CREDIT FACILITY AGREEMENT | Document Parties: ASPEN INSURANCE HOLDINGS LTD | ASPEN INSURANCE LIMITED | ASPEN INSURANCE UK LIMITED | BARCLAYS BANK PLC You are currently viewing:
This Letter of Credit involves

ASPEN INSURANCE HOLDINGS LTD | ASPEN INSURANCE LIMITED | ASPEN INSURANCE UK LIMITED | BARCLAYS BANK PLC

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Title: MULTICURRENCY LETTER OF CREDIT FACILITY AGREEMENT
Date: 10/7/2009
Industry: Insurance (Prop. and Casualty)     Sector: Financial

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Exhibit 10.1

MULTICURRENCY LETTER OF CREDIT FACILITY AGREEMENT

US$200,000,000

FACILITY AGREEMENT

Dated 6 October 2009

for

ASPEN INSURANCE LIMITED

as Borrower A

ASPEN INSURANCE UK LIMITED

as Borrower B

and

BARCLAYS BANK PLC
as Issuing Bank

 


 

CONTENTS

 

 

 

 

 

 

 

Clause

 

 

 

Page

 

1.

 

Definitions And Interpretation

 

 

3

 

2.

 

The Facility

 

 

24

 

3.

 

Purpose

 

 

24

 

4.

 

Conditions Of Utilisation

 

 

25

 

5.

 

Utilisation

 

 

26

 

6.

 

Letters Of Credit

 

 

29

 

7.

 

Default Interest

 

 

31

 

8.

 

Changes To The Calculation Of Interest

 

 

32

 

9.

 

Fees

 

 

33

 

10.

 

Tax Gross Up And Indemnities

 

 

33

 

11.

 

Increased Costs

 

 

35

 

12.

 

Other Indemnities

 

 

36

 

13.

 

Mitigation By The Issuing Bank

 

 

37

 

14.

 

Costs And Expenses

 

 

37

 

15.

 

Representations And Warranties

 

 

38

 

16.

 

Affirmative Covenants

 

 

43

 

17.

 

Negative Covenants

 

 

48

 

18.

 

Events Of Default

 

 

54

 

19.

 

Collateral

 

 

57

 

20.

 

Changes To The Issuing Bank

 

 

59

 

21.

 

Changes To The Borrower

 

 

59

 

22.

 

Conduct Of Business By The Issuing Bank

 

 

60

 

23.

 

Payment Mechanics

 

 

60

 

24.

 

Set-Off

 

 

62

 

25.

 

Notices

 

 

62

 

26.

 

Calculations And Certificates

 

 

63

 

27.

 

Partial Invalidity

 

 

64

 

28.

 

Remedies And Waivers

 

 

64

 

29.

 

Amendments And Waivers

 

 

64

 

30.

 

Confidentiality

 

 

64

 

31.

 

Counterparts

 

 

66

 

32.

 

Governing Law

 

 

66

 

 


 

 

 

 

 

 

 

 

Clause

 

 

 

Page

 

33.

 

Jurisdiction

 

 

66

 

34.

 

Service Of Process

 

 

67

 

 

 

 

 

 

 

SCHEDULE 1

 

Part 1 Conditions Precedent

 

68

 

 

 

 

 

Part 2

 

Conditions Precedent To Acceding Borrower

 

70

 

 

 

 

 

SCHEDULE 2

 

Utilisation Request

 

72

 

 

 

 

 

SCHEDULE 3

 

Mandatory Cost Formulae

 

74

 

 

 

 

 

SCHEDULE 4

 

Form Of Collateral Compliance Certificate

 

 

 

 

 

 

 

SCHEDULE 5

 

Form Of Outstanding LC Certificate

 

 

 

 

 

 

 

SCHEDULE 6

 

Financial Indebtedness

 

 

 

 

 

 

 

SCHEDULE 7

 

Compliance Certificate

 

 

 

 

 

 

 

SCHEDULE 8

 

Existing Security At The Date Of This Agreement

 

 

 

 

 

 

 

SCHEDULE 9

 

Consents, Authorisations, Filings And Notices

 

 

 

 

 

 

 

SCHEDULE 10

 

Subsidiaries

 

 

 


 

THIS AGREEMENT is dated 6 October 2009 and made between:

(1)

 

ASPEN INSURANCE LIMITED a Bermuda exempted company with company registered number 32866 and registered address Maxwell Roberts Building, 1 Church Street, Hamilton, HM11, Bermuda (“ Borrower A ”);

 

(2)

 

ASPEN INSURANCE UK LIMITED a company incorporated in England and Wales with company registered number 01184193 and registered address being 30 Fenchurch Street, London EC3M 3BD (“ Borrower B ”); and

 

(3)

 

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

IT IS AGREED as follows:

SECTION 1
INTERPRETATION

1.

 

DEFINITIONS AND INTERPRETATION

 

1.1

 

Definitions

 

 

 

In this Agreement:

 

 

 

Acceding Borrower ” means:

 

(a)

 

a member of the Group which comes within the definition of Third Party Borrower; and

 

 

(b)

 

which has satisfied the provisions of Schedule 1 Part 2 ( Conditions Precedent to Acceding Borrower ); and

 

 

(c)

 

which has been approved by the Issuing Bank.

Acceding Borrower Collateral Control Agreement ” means any agreement between the Custodian, an Acceding Borrower and the Issuing Bank relating to an Acceding Borrower Custodian Account.

Acceding Borrower Collateral Security Agreement ” means any agreement under which the Security is created (or expressed to be created) by an Acceding Borrower over an Acceding Borrower Custodian Account and an Acceding Borrower Custody Agreement.

Acceding Borrower Custodian Account ” means any account held in the name of an Acceding Borrower with the Custodian under an Acceding Borrower Custody Agreement.

Acceding Borrower Custody Agreement ” means any agreement between an Acceding Borrower and the Custodian under which the Custodian agrees to hold certain assets as custodian on behalf of an Acceding Borrower and to establish an Acceding Borrower Custodian Account.

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

AM Best ” means the A.M. Best credit rating organisation and its successors.

Approved Optional Currency ” means any of the following:

(a) Pounds Sterling, the lawful currency of the United Kingdom; and

(b) Euro, the lawful currency of the Participating Member States.

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

Authorised Signatory ” means, with respect to a Borrower, any individual (a) who has been authorised to sign Finance Documents, and certificates, instruments and documents related thereto, on behalf of that Borrower and (b) who is named on, and whose specimen signature appears on, a bank mandate issued by that Borrower to the Issuing Bank.

Availability Period ” means the period from and including the date of this Agreement to the Final Maturity Date.

Available Commitment ” means the Commitment minus:

 

(a)

 

the Base Currency Amount of any outstanding Letters of Credit (including, for the avoidance of doubt, the Existing LoCs); and

 

 

(b)

 

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

other than any Letters of Credit that are due to expire or be cancelled on or before the proposed Utilisation Date.

Base Currency ” means US Dollars (US$), the lawful currency of the United States of America.

Base Currency Amount ” means, in relation to a Letter of Credit denominated in US$, the amount specified in the Utilisation Request delivered by a Borrower for that Letter of Credit and, in relation to a Letter of Credit denominated in any Optional Currency, the amount specified in the Utilisation Request delivered by that Borrower for that Letter of Credit converted into US$ at a rate of exchange as set out in the most recent Outstanding LC Certificate delivered (or to be delivered before the relevant Utilisation Date) in accordance with Clause 19 ( Collateral ).

Bermuda Companies Law ” means The Companies Act of 1981 of Bermuda and the regulations promulgated thereunder.

Bermuda Insurance Law ” means The Insurance Act of 1978 of Bermuda and the regulations promulgated thereunder.

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Board ” means the Board of Governors of the Federal Reserve System of the United States (or any successor).

Borrower A Collateral Control Agreement ” means the agreement dated on or about the date of this Agreement between the Custodian, Borrower A and the Issuing Bank relating to the Borrower A Custodian Account.

Borrower A Collateral Security Agreement ” means the agreement dated on or about the date of this Agreement under which the Security is created (or expressed to be created) by Borrower A over the Borrower A Custodian Account and the Borrower A Custody Agreement.

Borrower A Custodian Account ” means the account with account number 471453 held in the name of Borrower A with the Custodian under the Borrower A Custody Agreement.

Borrower A Custody Agreement ” means the agreement between Borrower A and the Custodian dated 6 March 2003 under which the custodian agrees to hold certain assets as Custodian on behalf of Borrower A and to establish the Borrower A Custodian Account.

Borrower B Collateral Control Agreement ” means the agreement dated on or about the date of this Agreement between the Custodian, Borrower B and the Issuing Bank relating to the Borrower B Custodian Account.

Borrower B Collateral Security Agreement ” means the agreement dated on or about the date of this Agreement under which the Security is created (or expressed to be created) by Borrower B over the Borrower B Custodian Account and the Borrower B Custody Agreement.

Borrower B Custodian Account ” means the account with account number 471452 held in the name of Borrower B with the Custodian under the Borrower B Custody Agreement.

Borrower B Custody Agreement ” means the agreement between Borrower B and the Custodian dated 27 February 2003 under which the Custodian agrees to hold certain assets as custodian on behalf of Borrower B and to establish the Borrower B Custodian Account.

Borrowers ” means the Original Borrowers and any Acceding Borrower and “Borrower” shall be construed accordingly.

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

 

(a)

 

the interest which the Issuing Bank would have received for the period from the date of receipt of all or any part of an Unpaid Sum to the last day of the current Interest Period in respect of that Unpaid Sum, had the Unpaid Sum received been paid on the last day of that Interest Period (assuming that interest on the Unpaid Sum was equal to the aggregate of the applicable

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LIBOR (or, if applicable, the rate selected by the Issuing Bank pursuant to Clause 8.2(a)(ii) ( Market Disruption )));

     exceeds:

 

(b)

 

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

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

Capital Lease Obligations ” means in relation to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under US GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalised amount thereof at such time determined in accordance with US GAAP.

Capital Stock ” means any and all shares, interests, participations or other equivalents (however designated) of capital stock (including Hybrid Capital) of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

Cash Equivalents ” means:

 

(a)

 

marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition;

 

 

(b)

 

certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by the Issuing Bank or by any commercial bank organised under the laws of the United States or any state thereof having combined capital and surplus of not less than US$500,000,000;

 

 

(c)

 

commercial paper of an issuer rated at least ‘A-1’ by S&P or ‘P-1’ by Moody’s, or carrying an equivalent rating by a nationally recognised rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition;

 

 

(d)

 

repurchase obligations of the Issuing Bank or of any commercial bank satisfying the requirements of sub-clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government;

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(e)

 

securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least ‘A’ by S&P or ‘A’ by Moody’s;

 

 

(f)

 

securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by the Issuing Bank or any commercial bank satisfying the requirements of sub-clause (b) of this definition;

 

 

(g)

 

money market mutual or similar funds that invest exclusively in assets satisfying the requirements of sub-clauses (a) through (f) of this definition; or

 

 

(h)

 

money market funds that:

 

(i)

 

comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940;

 

 

(ii)

 

are rated ‘AAA’ by S&P and ‘Aaa’ by Moody’s; and

 

 

(iii)

 

have portfolio assets of at least US$5,000,000,000.

     “ Change of Control ” means any of the following:

 

(a)

 

any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “ Exchange Act ”)), other than the Parent or any Subsidiary, shall become, or obtain rights (whether by means of warrants, options or otherwise (other than any such warrants, options or other rights which are not exercisable prior to the Final Maturity Date)) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of shares of Capital Stock representing more than 50% of the total voting power of any Borrower; or

 

 

(b)

 

the occupation of a majority of the seats (other than vacant seats) of the board of directors of the Parent by Persons who are not:

 

(i)

 

the directors of the Parent on the date of this Agreement;

 

 

(ii)

 

nominated by the board of directors of the Parent, or

 

 

(iii)

 

appointed by a majority of the directors described in (i) and (ii) that are members of the board of directors at the time of such appointment.

Charged Assets ” means the Collateral Assets and any other assets subject (or expressed to be subject) to Security under the Security Documents.

Code ” means the Internal Revenue Code of 1986.

Collateral ” means the Collateral Assets which are subject to perfected Security in favour of the Issuing Bank under the Security Documents.

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Collateral Assets ” means any Eligible Collateral held in the Borrower A Custodian Account, the Borrower B Custodian Account or any Acceding Borrower Borrower Custodian Account.

Collateral Compliance Certificate ” means a certificate substantially in the form set out in Schedule 4 ( Form of Collateral Compliance Certificate ).

Collateral Control Agreements ” means each of the Borrower A Collateral Control Agreement, the Borrower B Collateral Control Agreement and any Acceding Borrower Collateral Control Agreement.

Collateral Margin ” means (subject to Clause 19 ( Collateral )):

 

(a)

 

in the case of Eligible Collateral A only:

 

(i)

 

where such Eligible Collateral A has a maturity of 2 years or less, 95 per cent. (except where such Eligible Collateral falls within paragraph (e) of the definition of “Eligible Collateral A”);

 

 

(ii)

 

where such Eligible Collateral A (x) has a maturity of greater than 2 years but less than or equal to 10 years or (y) falls within paragraph (e) of the definition of “Eligible Collateral A”, 90 per cent.; and

 

 

(iii)

 

where such Eligible Collateral A has a maturity of greater than 10 years, 85 per cent.;

 

 

(b)

 

subject to paragraph (c) below, in the case of Eligible Collateral B only:

 

(i)

 

where such Eligible Collateral B has a maturity of 2 years or less, 90 per cent.;

 

 

(ii)

 

where such Eligible Collateral B has a maturity of greater than 2 years but less than or equal to 10 years, 85 per cent.; and

 

 

(iii)

 

where such Eligible Collateral B has a maturity of greater than 10 years, 80 per cent.; and

 

 

(c)

 

in the case of Eligible Collateral B only, with effect from the date on which the US Federal National Mortgage Association and/or the US Federal Home Loan Mortgage Corporation, as the case may be, is no longer subject to Conservatorship:

 

(i)

 

where such Eligible Collateral B has a maturity of 2 years or less, 82.5 per cent.;

 

 

(ii)

 

where such Eligible Collateral B has a maturity of greater than 2 years but less than or equal to 10 years, 77.5 per cent.; and

 

 

(iii)

 

where such Eligible Collateral B has a maturity of greater than 10 years, 72.5 per cent.

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Collateralisation Ratio ” means, in relation to each Borrower, at any time, the ratio (expressed as a percentage) of: (i) the Collateral Value attributable to that Borrower; to (ii) the aggregate amount of all Letters of Credit outstanding to that Borrower (denominated in US$ and determined by reference to the most recent calculations delivered in accordance with Clause 19 ( Collateral )).

Collateral Security Agreements ” mean each of the Borrower A Collateral Security Agreement, Borrower B Collateral Security Agreement and any Acceding Borrower Collateral Security Agreement.

Collateral Value ” means, in relation to each Borrower, at any time, the aggregate of:

 

(a)

 

the Market Value of each type of Eligible Collateral deposited by that Borrower (denominated in US$ and determined by reference to the most recent calculations delivered in accordance with Clause 19 ( Collateral )); multiplied by

 

 

(b)

 

the Collateral Margin applicable to that Eligible Collateral.

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

Commonly Controlled Entity ” means an entity, whether or not incorporated, that is under common control with the Parent or any Subsidiary within the meaning of Section 4001 of ERISA or is part of a group that includes the Parent or any Subsidiary and that is treated as a single employer under Section 414 of the Code.

Compliance Certificate ” means a certificate substantially in the form set out in Schedule 7 ( Form of Compliance Certificate ).

Confidential Information ” means all information relating to the Borrowers or their Subsidiaries, the Finance Documents or the Facility of which the Issuing Bank becomes aware in its capacity as Issuing Bank from any Borrower, any of its Subsidiaries or any of their respective advisers in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

 

(a)

 

is or becomes public information other than as a direct or indirect result of any breach by the Issuing Bank of Clause 30 ( Confidentiality ); or

 

 

(b)

 

is identified in writing at the time of delivery as non-confidential by a Borrower or any Subsidiary thereof or any of their respective advisers; or

 

 

(c)

 

is known by the Issuing Bank before the date the information is disclosed to it or is lawfully obtained by the Issuing Bank from a source which is, as far as the Issuing Bank is aware, unconnected with the Group and which, in either case, as far as the Issuing Bank is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

Confidentiality Undertaking ” means a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With

- 9 -


 

Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between Borrower A and the Issuing Bank.

Conservatorship ” means the appointment of a conservator pursuant to the Federal Housing Finance Regulatory Reform Act of 2008 and the Federal Housing Enterprises Finance Safety and Soundness Act of 1992.

Contractual Obligation ” means in relation 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.

Custodian ” means The Bank of New York Mellon.

Custodian Accounts ” means each of the Borrower A Custodian Account, the Borrower B Custodian Account and any Acceding Borrower Custodian Account.

Custody Agreements ” means each of the Borrower A Custodian Agreement, the Borrower B Custodian Agreement and any Acceding Borrower Custodian Agreement.

Default ” means any of the events specified in Clause 18 ( Events of Default ), whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

Disposition ” means with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and “Disposed of” shall have correlative meanings.

Disruption Event ” means either or both of:

 

(a)

 

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

 

 

(b)

 

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

 

(i)

 

from performing its payment obligations under the Finance Documents; or

 

 

(ii)

 

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

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

Eligible Collateral ” means Eligible Collateral A and Eligible Collateral B.

Eligible Collateral A ” means:

 

(a)

 

debt securities issued by, or the payment of which is unconditionally backed by the full faith and credit of, the United States of America;

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(b)

 

debt securities issued by, or the payment of which is unconditionally backed by the full faith and credit of, the governments of any of the following countries: the United Kingdom, France, Germany and Japan, provided that such country is a full member of the Organisation for Economic Co-operation and Development;

 

 

(c)

 

debt securities issued by the US Government National Mortgage Association;

 

 

(d)

 

debt securities unconditionally guaranteed by the US Federal Deposit Insurance Corporation; and

 

 

(e)

 

investments in the Permitted Fund not at any one time exceeding US$35,000,000,

and which in each case are deposited with or held by the Custodian and subject to perfected first priority Security in favour of the Issuing Bank under the Security Documents.

Eligible Collateral B ” means:

 

(a)

 

debt securities issued by the US Federal National Mortgage Association;

 

 

(b)

 

debt securities issued by the US Federal Home Loan Mortgage Corporation;

 

 

(c)

 

debt securities issued by any US Federal Home Loan Bank; and

 

 

(d)

 

debt securities issued by any US Federal Farm Credit Bank,

and which in each case are deposited with the Custodian and subject to perfected first priority Security in favour of the Issuing Bank under the Security Documents.

Enforcement Event ” has the meaning given to it in the Collateral Security Agreements.

Environment ” means humans, animals, plants and all other living organisms including ecological systems of which they form a part and the following media:

 

(a)

 

air (including air within natural or man-made structures, whether above or below ground);

 

 

(b)

 

water (including territorial, coastal and inland waters, water under or within land and water in drains and sewers); and

 

 

(c)

 

land (including land under water).

Environmental Law ” means any applicable law or regulation which relates to:

 

(a)

 

the pollution or protection of the Environment;

 

 

(b)

 

the conditions of the workplace; or

 

 

(c)

 

the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment including any waste.

Environmental Permits ” means any permit and other Authorisation and the filing of any notification, report or assessment required under any Environmental Law for the

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operation of the business of a Borrower conducted on or from the properties owned or used by that Borrower.

ERISA ” means the Employee Retirement Income Security Act of 1974.

Event of Default ” means any of the events specified in Clause 18 ( Events of Default ), provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

Existing Facility Agreement ” means the 5-year Credit Agreement dated 2 August, 2005 between inter alia, the Parent as the Company, The Bank of New York as the Collateral Agent, Bank of America N.A. and Calyon, New York Branch as Co-Syndication Agents, Credit Suisse, Cayman Islands Branch and Deutsche Bank AG, New York Branch as Co-Documentation Agents and Barclays Bank PLC as Administrative Agent.

Existing LoC ” has the meaning given to it in Clause 3.2 ( Existing LoCs ).

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

Facility ” means the letter of credit facility made available under this Agreement as described in Clause 2 ( The Facility ).

Facility Office ” means the office or offices of the Issuing Bank through which it will perform its obligations under this Agreement.

Final Maturity Date ” means 31 December 2011.

Finance Document ” means this Agreement, the Security Documents, the Process Agent Letter and any other document designated as such by the Issuing Bank and Borrower A.

Financial Indebtedness ” of any Person at any date, without duplication, means:

 

(a)

 

all indebtedness of such Person for borrowed money;

 

 

(b)

 

all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business);

 

 

(c)

 

all obligations of such Person evidenced by notes, bonds, debentures, loan agreements or other similar debt instruments;

 

 

(d)

 

all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property);

 

 

(e)

 

all Capital Lease Obligations of such Person;

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(f)

 

all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements;

 

 

(g)

 

the liquidation value of all mandatorily redeemable preferred Capital Stock of such Person;

 

(h)

 

net obligations of such Person under any Swap Contract;

 

 

(i)

 

any other instruments or obligations of such Person to the extent that such instruments or obligations are then classified as indebtedness by S&P;

 

 

(j)

 

all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (i) above;

 

 

(k)

 

all obligations of the kind referred to in clauses (a) through (j) above secured by any Security on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation; and

 

 

(l)

 

all indebtedness of the kind referred to in clauses (a) through (k) above of any partnership in which such Person is a general partner to the extent that applicable law requires that such Person is liable for such indebtedness unless the terms of such indebtedness expressly provide that such Person is not so liable.

The amount of any net obligation under any Swap contract on any date shall be deemed to be the Swap Termination Value as of such date. For the avoidance of doubt, Indebtedness shall not include the obligations of any Insurance Subsidiary under any Primary Policy, Reinsurance Agreement, Retrocession Agreement or Other Insurance Product which is entered into in the ordinary course of business.

Financial Quarter ” means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.

Governmental Authority ” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organisation (including the National Association of Insurance Commissioners, the U.K. Financial Services Authority and the Bermuda Monetary Authority).

Group ” means the Parent, the Borrowers and their Subsidiaries for the time being.

Guarantee Obligations ” means in relation to any Person (the “ guarantor ”), means any obligation, including a reimbursement, counterindemnity or similar obligation, of the guarantor that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any Letter of Credit) that guarantees or in effect guarantees, any Financial Indebtedness of any other

- 13 -


 

third Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of the guarantor, whether or not contingent,

 

(a)

 

to purchase any such Financial Indebtedness or any property constituting direct or indirect security therefore;

 

 

(b)

 

to advance or supply funds:

 

(i)

 

for the purchase or payment of any such Financial Indebtedness; or

 

 

(ii)

 

to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor so as to enable the primary obligor to pay Financial Indebtedness or other obligation;

 

 

(c)

 

to purchase property, securities or services primarily for the purpose of assuring the owner of any such Financial Indebtedness of the ability of the primary obligor to make payment of such Indebtedness; or

 

 

(d)

 

otherwise to assure or hold harmless the owner of any such Financial Indebtedness against loss in respect thereof; provided , however , that the term Guarantee Obligation shall not include:

 

(i)

 

endorsements of instruments for deposit or collection in the ordinary course of business; or

 

 

(ii)

 

obligations of any Insurance Subsidiary under any Primary Policy, Reinsurance Agreement, Retrocession Agreement or Other Insurance Product which is entered into in the ordinary course of business.

The amount of any Guarantee Obligation of any guarantor shall be deemed to be the lower of:

 

(a)

 

an amount equal to the stated or determinable amount of the Financial Indebtedness in respect of which such Guarantee Obligation is made as such amount may be reduced from time to time; and

 

 

(b)

 

the maximum amount for which such guarantor may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, as such amount may be reduced from time to time unless such Financial Indebtedness and the maximum amount for which such guarantor may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guarantor’s maximum reasonably anticipated liability in respect thereof as determined by Borrower A in good faith.

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.

- 14 -


 

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

Hybrid Capital ” means at any time, all subordinated securities, instruments or other obligations issued by any Borrower to the extent that such securities, instruments or other obligations (i) are then accorded equity treatment by S&P and (ii) mature no earlier than the date which is six months after the Final Maturity Date.

Insolvency ” means with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

Insolvent ” pertaining to a condition of Insolvency.

Insurance Subsidiary ” means a Subsidiary of the Parent engaged in the insurance and/or reinsurance underwriting business.

Interest Period ” means each period determined in accordance with Clause 7.1 (Default interest) and paragraph (a) of Clause 6.2 ( Claims under a Letter of Credit ) .

ITA ” means the Income Tax Act 2007.

KPMG ” means any member firm of KPMG International, a Swiss cooperative.

Letter of Credit ” means a letter of credit, substantially in the form customarily used by the Issuing Bank for the type of letter of credit requested or in any other form requested by a Borrower and agreed by the Issuing Bank (acting in good faith).

LIBOR ” means:

 

(a)

 

the applicable Screen Rate; or

 

 

(b)

 

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

as of 11.00 am (London Time) on the Quotation Day for the offering of deposits in the relevant currency and for a period comparable to the relevant Interest Period.

LMA ” means the Loan Market Association.

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

Market Value ” means the market value of the relevant Eligible Collateral determined by the Custodian in accordance with the following principles:

 

(a)

 

securities listed or traded on any generally recognised securities exchange shall be valued at the closing sale price. If no sale has been reported for a given day or if the exchange was not open on a given day, the last published sale price or the last recorded bid price, whichever is the most recent, shall be used, unless in the opinion of the Custodian such price does not fairly indicate

- 15 -


 

 

 

 

the actual market value, in which case the Custodian may rely on the valuation obtained from a reputable broker or investment banker as of the valuation date. Securities traded only in the over-the-counter market shall be valued at the closing representative bid price for such securities as reported by the NASDAQ reporting system for securities covered by that system and for other over-the-counter securities at the last current bid price for such securities in accordance with quotations obtained from a reputable broker or investment banker as of the valuation date. Notwithstanding the foregoing, the Custodian may use any other method of valuation which is or becomes generally accepted practice for valuation of assets in the corporate custody industry;

 

(b)

 

for the purposes of paragraph (a) above, the Custodian may rely on reports printed in any newspaper of general circulation published in New York or in any other newspaper the Custodian deems appropriate, or in any financial periodical or industry-recognised quotation service, or in the records of any securities exchange, as sufficient evidence of sale, bid and asked prices, and over-the-counter quotations;

 

 

(c)

 

other securities or assets which cannot be valued under paragraphs (a) to (b) above shall be valued on the basis of data available from the best available sources, including employees of the Custodian, brokers or dealers who deal in or are familiar with the type of investment involved or other qualified appraisers, or by reference to the market value of similar investments for which a market value is readily ascertainable;

 

 

(d)

 

notwithstanding anything to the contrary in this Agreement, the Custodian shall have no duty to confirm or validate any information or valuation supplied to the Custodian from any third party sources described in paragraphs (b) and (c) above, nor shall the Custodian be responsible for any act or omission of any such source selected by the Custodian acting in good faith and without gross negligence; and

 

 

(e)

 

notwithstanding paragraphs (a) to (d) above, where the Issuing Bank believes (acting reasonably) that the Custodian’s valuation is not an accurate reflection of the market of the relevant Eligible Collateral, the Issuing Bank shall be entitled to obtain (at the cost of the relevant Borrower) a further independent valuation of the Eligible Collateral.

The Market Value of the Eligible Collateral shall be certified by the Custodian in each Collateral Compliance Certificate which is required to be delivered in accordance with Clause 19 ( Collateral). The Custodian shall certify the Market Value of each type of Eligible Collateral in the currency in which it is denominated and shall also certify the Market Value of each type of Eligible Collateral in US$ converted (where such Eligible Collateral is not denominated in US$) at the Custodian’s spot rate of exchange for the purchase of the relevant currency with US$ in the London foreign exchange market at or about 11:00am (London time) (as set out in the relevant Collateral Compliance Certificate) on the date which is 2 Business Days before the relevant Test Date.

Material Adverse Effect ” means a material adverse effect on:-

- 16 -


 

 

(a)

 

the business, operations, property or condition (financial or otherwise) of the Group; or

 

 

(b)

 

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

Material Subsidiary ” means at any time:

 

(a)

 

any Subsidiary: (x) the total consolidated assets or total consolidated revenues of which exceed 10% of the total consolidated assets or total consolidated revenues, respectively, of the Parent and its Subsidiaries on a consolidated basis at the end of or for, respectively, the then most recently completed fiscal quarter of the Parent for which financial statements shall have been delivered to the Issuing Bank as described in Clause 15.2 ( Financial Conditions ) or pursuant to Clause 16.1 ( Financial Statements ); and/or (y) the net assets of which exceed US$100,000,000 at the end of the then most recently completed fiscal quarter of the Parent for which financial statements shall have been delivered to the Issuing Bank as described in Clause 15.2 ( Financial Conditions ) or pursuant to Clause 16.1 ( Financial Statements ) (accounting terms used in this definition have the meanings given to them under US GAAP);

 

 

(b)

 

Aspen Specialty Insurance Company; and

 

 

(c)

 

Aspen U.S. Holdings, Inc.

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

 

(a)

 

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

 

 

(b)

 

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

 

 

(c)

 

if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.

The above rules will only apply to the last Month of any period.

Monthly Portfolio Valuations ” means the portfolio valuation to be delivered to the Issuing Bank in accordance with Clause 16.2(d) by the Custodian in a form approved by the Issuing Bank.

Moody’s ” means Moody’s Investors Service, Inc. and its successors.

- 17 -


 

Multiemployer Plan ” means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

Obligations ” means the unpaid principal of and interest on (including interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganisation or like proceeding, relating to any of the Borrowers, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the reimbursement obligations hereunder and all other obligations and liabilities of any of the Borrowers to the Issuing Bank, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Finance Document, the Letters of Credit or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, fees, reimbursement obligations, indemnities, costs, expenses or otherwise (including all reasonable fees, charges and disbursements of counsel to the Issuing Bank that are required to be paid by the Borrowers pursuant hereto).

Optional Currency ” means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.2 ( Conditions relating to Optional Currencies ).

Original Borrowers ” means Borrower A and Borrower B.

Original Financial Statements ” means the audited consolidated financial statements of the Parent for the financial year ended 31 December 2008.

Other Insurance Product ” means any specialty insurance or reinsurance product such as contingency reinsurance and structured risks.

Outstanding LC Certificate ” means a certificate substantially in the form set out in Schedule 5 ( Form of Outstanding LC Certificate ) which sets out:

 

(a)

 

the aggregate amount of all Letters of Credit then outstanding to each Borrower in the currency in which those Letters of Credit are denominated; and

 

 

(b)

 

the aggregate amount of the Letters of Credit then outstanding to each Borrower converted into US$ (where such Letters of Credit are not denominated in US$) at the Issuing Bank’s spot rate of exchange for the purchase of the relevant currency with US$ on the London foreign exchange market at or about 11:00am (London time) (as set out in the relevant Outstanding LC Certificate) on the date of the relevant Outstanding LC Certificate.

Parent ” means Aspen Insurance Holdings Limited (a Bermuda exempted limited liability company with registered number 32164 and registered address Maxwell Roberts Building, 1 Church Street, Hamilton, HM 11 Bermuda).

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

Party ” means a party to this Agreement.

- 18 -


 

PBGC ” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

Permitted Fund ” means:

 

(a)

 

the Dreyfus Treasury Prime Cash Management Fund as more fully described in the prospectus dated June 1 2009 delivered to the Issuing Bank on or before the date of this Agreement, so long as such fund (i) invests solely in securities issued or guaranteed as to principal and interest by the U.S government and (ii) continues to be rated AAA by S&P and Aaa by Moody’s; and

 

 

(b)

 

any other money market fund that (i) qualifies as an investment company under the Investment Company Act of 1940, (ii) meets the requirements of sub-clauses (i) and (ii) of paragraph (a) above and (iii) has been approved by the Issuing Bank (acting in good faith),

provided that at any given time there shall only be one Permitted Fund.

Person ” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

Plan ” means at a particular time, any employee benefit plan that is covered by ERISA and in respect of which a Borrower, a Subsidiary or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA responsible for contributing to or under or having any liability in respect of an employee benefit plan or Multiemployer Plan.

Primary Policy ” means any insurance policy issued by an Insurance Subsidiary.

Private Act ” means separate legislation enacted in Bermuda with the intention that such legislation applies specifically to a Borrower or a Subsidiary in whole or in part.

Process Agent Letter ” means:

 

(a)

 

the letter dated on or around the date of this Agreement between Borrower A and Borrower B, appointing Borrower B as its agent for service of process pursuant to this Agreement and pursuant to the Security Documents; and

 

 

(b)

 

any letter between any Acceding Borrower (other than an Acceding Borrower incorporated in England and Wales) and Borrower B, appointing Borrower B as its agent for service of process pursuant to this Agreement and pursuant to the Security Documents.

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

Quotation Day ” means, in relation to any period for which an interest rate is to be determined, the day determined by the Issuing Bank in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading

- 19 -


 

banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

Reference Banks ” means the principal London offices of Barclays Bank PLC, HSBC Bank plc and Lloyds TSB Bank plc or such other banks as may be appointed by the Issuing Bank in consultation with Borrower A.

Regulation U ” means Regulation U of the Board as in effect from time to time.

Reinsurance Agreement ” means any agreement, contract, treaty, certificate or other arrangement whereby any Insurance Subsidiary 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.

Relevant Interbank Market ” means, in relation to euro, the European interbank market and, in relation to any other currency, the London interbank market.

Reorganisation ” means with respect to any Multiemployer Plan, the condition that such plan is in reorganisation within the meaning of Section 4241 of ERISA.

Repeating Representations ” means each of the representations set out in Clause 15 ( Representations and warranties ) save for Clause 15.2 ( Financial Conditions ) and Clause 15.18 ( No breach of laws ).

Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

Representative ” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

Requirements of Law ” means as to any Person, the Memorandum of Association or the Certificate of Incorporation and Bye-laws or other organisational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

Responsible Officer ” means, with respect to a Borrower, the chief executive officer, president, chief financial officer, finance director or treasurer of such Borrower or of the Group (so long as, in the case of an individual signing any document in such individual’s capacity with the Group, such individual is an Authorised Signatory of such Borrower), but in any event, with respect to financial matters, the chief financial officer, finance director or Treasurer of such Borrower or (subject to the parenthetical clause above) of the Group.

Retrocession Agreement ” 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.

- 20 -


 

S&P ” means Standard & Poor’s Ratings Services and its successors.

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

SEC ” means the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

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

Security Documents ” means the Collateral Security Agreements, the Collateral Control Agreements, the Custody Agreements and any other document that may at any time be given as security for any liabilities in connection with any Finance Document.

Single Employer Plan ” means any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan.

Subsidiary ” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, directly or indirectly, by such Person.

Swap Contracts ” 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 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.

- 21 -


 

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 the Issuing Bank or any Affiliate of the Issuing Bank).

Tax ” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

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

Test Date ” means each of:

 

(a)

 

the last Business Day in each calendar month falling after the date of this Agreement;

 

 

(b)

 

the date which is 2 Business Days after the date of each Utilisation Request; and

 

 

(c)

 

any other date specified by the Issuing Bank to Borrower A on not less than 5 Business Days’ notice.

Third Party Borrower ” means a borrower that is 100% owned by the Parent and:

 

(a)

 

is a Material Subsidiary; or

 

 

(b)

 

has an AM Best Financial Strength rating at all times of no less than B + +.

Third Party Borrowing ” means a Utilisation made in accordance with the provisions of Clause 3.1 ( Purpose ) and Clause 4.1(b)(ii).

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

US GAAP ” means generally accepted accounting principles in the United States of America.

Utilisation ” means a utilisation of the Facility by way of a Letter of Credit.

Utilisation Date ” means the date of a Utilisation, being the date on which a Letter of Credit is to be issued.

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Utilisation Request ” means a notice substantially in the form set out in Schedule 2 ( Utilisation Request ).

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

1.2

 

Construction

 

(a)

 

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

 

 

(i)

 

the “ Issuing Bank ”, the “ Parent ”, a “ Borrower ”, an “ Acceding Borrower ” or any “ Party ” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

 

 

(ii)

 

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

 

 

(iii)

 

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

 

 

(iv)

 

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

 

 

(v)

 

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

 

 

(vi)

 

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

 

 

(vii)

 

a provision of law is a reference to that provision as amended or re-enacted; and

 

 

(viii)

 

a time of day is a reference to London time.

 

(b)

 

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

 

 

(c)

 

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

 

 

(d)

 

A Default or an Event of Default is “ continuing ” if it has not been remedied or waived.

 

1.3

 

Third Party Rights

 

 

 

A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

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2.

 

THE FACILITY

 

2.1

 

The Facility

 

 

 

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

3.

 

PURPOSE

 

3.1

 

Purpose

 

 

 

All Letters of Credit issued for the account of a Borrower under the Facility shall be used for that Borrower’s reinsurance purposes including those Letters of Credit issued by the Issuing Bank at the date of this Agreement pursuant to the provisions of the Existing Facility Agreement.

3.2

 

Existing LoCs

 

 

(a)

 

Borrower A may, on or before the date falling 10 Business Days after the date of this Agreement, request in writing to the Issuing Bank that certain letters of credit issued under the Existing Facility Agreement (the “ Existing LoCs ”) be transferred from the Existing Facility Agreement and deemed to be issued under this Agreement. Such request shall set out the principal amount, currency of denomination and beneficiary of each Existing LoC which is proposed to be so transferred and deemed issued under this Agreement.

 

 

(b)

 

If Borrower A makes any such request:

 

(i)

 

the Issuing Bank shall deliver to the Borrowers and the Custodian an Outstanding LC Certificate in respect of the Existing LoCs on or before 1.00pm (London time) 1 Business Day after the date of such request; and

 

 

(ii)

 

the Borrowers shall procure the delivery to the Issuing Bank of a Collateral Compliance Certificate in respect of the Existing LoCs on or before 1.00pm (London time) 2 Business Days after the date of such request.

 

 

(c)

 

Provided that:

 

(i)

 

Borrower A has confirmed in writing to Barclays Bank PLC as Administrative Agent under the Existing Facility Agreement those Existing LoCs which are to be transferred and deemed issued under this Agreement;

 

 

(ii)

 

the Collateral Compliance Certificate delivered pursuant to paragraph b(ii) above confirms that the Borrowers are in compliance with their obligations under Clause 19.1 and 19.2 in respect of the Existing LoCs; and

 

 

(iii)

 

all other conditions to the issuance of Letters of Credit set forth in Clause 4 ( Conditions of Utilisation ), excluding Clause 4.3 (Maximum number of Letters of Credit ), have been satisfied or waived by the Issuing

- 24 -


 

 

 

 

Bank (assuming, solely for such purpose, that the Existing LoCs were being issued hereunder on the applicable date),

with effect from 9.00am (London time) on the date which the last of the conditions set out in paragraphs (i) to (iii) is satisfied:

 

(x)

 

the Available Commitment shall be reduced by an amount equal to the aggregate stated amount of the Existing LoCs (as in effect from time to time); and

 

 

(y)

 

for all purposes the Existing LoCs shall be deemed to be issued under and in accordance with the terms of this Agreement.

3.3

 

Letters of Credit on behalf of Third Party Borrowers

 

 

 

Each Borrower may also request the issuance of Letters of Credit on behalf of a Third Party Borrower for that Third Party Borrower’s reinsurance purposes.

 

3.4

 

Monitoring

 

 

 

The Issuing Bank is not bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

4.

 

CONDITIONS OF UTILISATION

 

4.1

 

Conditions precedent

 

(a)

 

A Borrower may not deliver the first Utilisation Request unless the Issuing Bank has received all of the documents and other evidence listed in Schedule 1 Part 1 ( Conditions precedent ) in form and substance satisfactory to it. The Issuing Bank shall notify Borrower A promptly upon being so satisfied.

 

 

(b)

 

Without limiting paragraph (a) above (and subject to Clause 5.5 ( Increase and decrease ), the Issuing Bank will only be obliged to comply with Clause 5.4 ( Issue of Letters of Credit ) if:

 

 

(i)

 

the Borrowers are all, and will after making the relevant Utilisation(s) remain, in compliance with their obligations under Clause 19 ( Collateral ) and the Issuing Bank shall have received a Collateral Compliance Certificate on the date which is 2 Business Days after the date of each Utilisation Request confirming such compliance;

 

 

(ii)

 

if the relevant Borrower is issuing that Utilisation Request for a Third Party Borrowing, the Issuing Bank shall have received, prior to or concurrently with that Utilisation Request, board resolutions (and, if reasonably deemed necessary by the Issuing Bank, shareholder resolutions) of the proposed Third Party Borrower approving such borrowing and the Third Party Borrower shall have confirmed compliance with all relevant corporate benefit issues as applicable from time to time to the satisfaction of the Issuing Bank (acting reasonably);

 

 

(iii)

 

no Default is continuing or would result from the proposed Utilisation; and

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(iv)

 

the Repeating Representations to be made by each Borrower are true in all material respects.

4.2

 

Conditions relating to Optional Currencies

 

 

(a)

 

A currency will constitute an Optional Currency in relation to a Letter of Credit if:

 

(i)

 

it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Utilisation Date for that Letter of Credit; and

 

 

(ii)

 

it is an Approved Optional Currency or it has been approved by the Issuing Bank on or prior to receipt by the Issuing Bank of the relevant Utilisation Request for that Letter of Credit.

 

 

(b)

 

If the Issuing Bank has received a written request from Borrower A for a currency to be approved under paragraph (a)(ii) above, the Issuing Bank will promptly confirm to Borrower A:

 

(i)

 

whether or not approval has been granted; and

 

 

(ii)

 

if approval has been granted, the minimum amount for any subsequent Utilisation in that currency.

 

4.3

 

Maximum number of Letters of Credit

 

 

 

The Borrowers may not deliver more than 30 Utilisation Requests in aggregate on any Business Day.

5.

 

UTILISATION

 

5.1

 

Delivery of a Utilisation Request

 

 

 

A Borrower may request a Letter of Credit by delivery to the Issuing Bank of a duly completed Utilisation Request not later than 10.00 am (London time) 3 Business Days prior to the proposed Utilisation Date.

5.2

 

Completion of a Utilisation Request

 

 

(a)

 

Each Utilisation Request will not be regarded as having been duly completed unless:

 

(i)

 

the proposed Utilisation Date is a Business Day within the Availability Period;

 

 

(ii)

 

the currency and amount of the Utilisation comply with Clause 5.3 ( Currency and amount );

 

 

(iii)

 

it specifies the relevant Borrower;

 

 

(iv)

 

the Letter of Credit has an initial Term (subject to Clause 5.6 ( Renewal of a Letter of Credit )) of no greater than twelve months from the Utilisation Date; and

 

 

(v)

 

the delivery instructions for the Letter of Credit are specified.

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(b)

 

Only one Letter of Credit may be requested in each Utilisation Request.

5.3 Currency and amount

 

(a)

 

The currency specified in a Utilisation Request must be the Base Currency or an Optional Currency.

 

 

(b)

 

The amount of the proposed Letter of Credit must be an amount such that its Base Currency Amount is less than or equal to the Available Commitment.

5.4

 

Issue of Letters of Credit

 

 

(a)

 

If the conditions set out in this Agreement have been met, the Issuing Bank shall issue the Letter of Credit on or before the Utilisation Date.

 

 

(b)

 

The Issuing Bank will only comply with paragraph (a) above if on the date of the Utilisation Request and on the proposed Utilisation Date the Repeating Representations made by each Borrower are true in all material respects and there is otherwise no breach by a Borrower of the terms of any Finance Document.

5.5

 

Increases and decreases

 

 

(a)

 

A Borrower may request either an increase or a decrease in the principal amount of any Letter of Credit issued for the account of such Borrower by delivering to the Issuing Bank a Utilisation Request in accordance with and subject to the terms of Agreement.

 

 

(b)

 

With respect to a Utilisation Request delivered in accordance with this Clause 5.5 for a reduction in the principal amount of a Letter of Credit, the provisions of Clause 4.1(b)(i) above requiring that the Issuing Bank shall have received a Collateral Compliance Certificate shall not be applicable.

 

 

(c)

 

Any Utilisation Request delivered to the Issuing Bank in accordance with this Clause 5.5 shall be delivered no later than 10.00 am (London time) 3 Business Days prior to the proposed amendment date to the Letter of Credit to which the Utilisation Request relates.

 

 

(d)

 

Any such increase or decrease shall only take effect following receipt by the Issuing Bank of written confirmation from the beneficiary under the relevant Letter of Credit of such amendment.

5.6

 

Renewal of a Letter of Credit

 

 

(a)

 

Subject to clause (b) below, each Letter of Credit issued shall automatically be renewed on each Expiry Date for a period of 364 days from the relevant Expiry Date subject always to no Letter of Credit extending beyond the Final Maturity Date.

 

 

(b)

 

A Letter of Credit shall not be automatically renewed if:

 

(i)

 

a Default exists and the Issuing Bank has notified the relevant Borrower in writing at least 60 days prior to the Expiry Date that the Letter of Credit will not be renewed; or

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(ii)

 

the relevant Borrower has notified the Issuing Bank in writing at least 40 days prior to the Expiry Date that it does not wish the Letter of Credit to be renewed,

and, in each case, the Issuing Bank has sent a notice to the beneficiaries of such Letter of Credit at least 30 days prior to the Expiry Date of such Letter of Credit confirming that the same shall not be automatically renewed upon the Expiry Date. In the event that the Issuing Bank has agreed to issue a Letter of Credit with a notice period to the beneficiaries of 60 days, the time period set out in b(ii) above shall be increased to 70 days prior to the Expiry Date of the relevant Letter of Credit.

 

(c)

 

The terms of each renewed Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its renewal, except that its Term shall start on the date which was the Expiry Date of such Letter of Credit immediately prior to its renewal, and shall end on the new Expiry Date, being the earlier of:

 

(i)

 

12 months thereafter (subject to any further renewal in accordance with Clause 5.6(a)above); and

 

 

(ii)

 

the Final Maturity Date.

 

5.7

 

Cancellation of Commitment

 

(a)

 

The Commitment shall be immediately cancelled at the end of the Availability Period.

 

 

(b)

 

Borrower A (on behalf of all the Borrowers) may if it gives the Issuing Bank not less than 5 Business Days’ prior written notice, cancel the whole or part (in minimum amounts of US$500,000) of the Available Commitment. Any such notice of cancellation shall be irrevocable and unless a contrary indication appears in this Agreement any such notice shall specify the date or dates upon which the relevant cancellation is to be made and the amount of that cancellation.

 

 

(c)

 

No amount of the Commitment cancelled under this Agreement may be subsequently reinstated.

 

 

(d)

 

No Party may cancel all or any part of the Commitment except at the times and in the manner expressly provided for in this Agreement.

 

5.8

 

Illegality

 

(a)

 

If it becomes unlawful in any applicable jurisdiction for the Issuing Bank to issue or maintain any Letter of Credit:

 

 

(i)

 

the Issuing Bank shall promptly notify Borrower A (on behalf of all the Borrowers) upon becoming aware of that event; and

 

 

(ii)

 

upon the Issuing Bank notifying Borrower A (on behalf of all the Borrowers), the Issuing Bank shall have no obligation to issue or maintain any Letter of Credit in such jurisdiction.

- 28 -


 

6.

 

LETTERS OF CREDIT

6.1

 

Fees payable in respect of Letters of Credit

 

 

(a)

 

The relevant Borrower (or Borrower A on its behalf) shall pay to the Issuing Bank a letter of credit fee in the Base Currency on each Letter of Credit computed at the greater of:

 

(i)

 

US$30.00; and

 

 

(ii)

 

0.45 per cent. per annum on the outstanding amount of each Letter of Credit requested by it for the period from the issue of that Letter of Credit until its Expiry Date.

 

 

(b)

 

The letter of credit fees on the Letters of Credit shall be computed on the last day of each Financial Quarter (and if applicable on such other dates as the Issuing Bank may elect after the Commitment has been cancelled), in each case for the period then ending. The Issuing Bank shall give Borrower A (on behalf of all the Borrowers) notice of letter of credit fees due pursuant to this Clause 6.1 ( Fees payable in respect of Letters of Credit ) (in a consolidated invoice) as soon as reasonably practicable after each date of computation, and the Borrowers shall pay such fees within five Business Days after receipt of such notice. Amounts payable in accordance with this Clause 6 ( Letters of Credit ) shall remain payable notwithstanding any failure by the Issuing Bank to issue a notice under this Clause 6.1(b).

 

 

(c)

 

The relevant Borrower (or Borrower A on its behalf) shall pay an additional fee in respect of any Letter of Credit issued with a beneficiary which is established in the United States of America (a “ US Letter of Credit ”), calculated as follows:

 

(i)

 

US$120 on the date of issue of a US Letter of Credit;

 

 

(ii)

 

US$95 on the date of any amendment, waiver or variation (howsoever described) to a US Letter of Credit;

 

 

(iii)

 

US$60 on the date of any extension of a US Letter of Credit under Clause 5.5 ( Renewal of a Letter of Credit ); and

 

 

(iv)

 

US$100 within two Business Days following any claim which is made under a US Letter of Credit under Clause 6.2 ( Claims under a Letter of Credit ).

 

 

(d)

 

Fees payable in accordance with this Clause 6.1 ( Fees payable in respect of Letters of Credit ) in respect of any Letter of Credit issued shall be payable in the Base Currency.

6.2

 

Claims under a Letter of Credit

 

 

(a)

 

Each Borrower irrevocably and unconditionally authorises the Issuing Bank to pay any claim made or purported to be made under a Letter of Credit requested by it and which appears on its face to be in order (a “ Claim ”).

- 29 -


 

 

(b)

 

The relevant Borrower shall within two Business Days of demand pay to the Issuing Bank an amount equal to the amount of any Claim in the currency of the Claim.

 

 

(c)

 

Each Borrower acknowledges that the Issuing Bank:

 

(i)

 

is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and

 

 

(ii)

 

deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

 

 

(d)

 

The obligations of each Borrower under this Clause will not be affected by:

 

(i)

 

the sufficiency, accuracy or genuineness of any claim or any other document; or

 

 

(ii)

 

any incapacity of, or limitation on the powers of, any person signing a claim or other document.

 

 

(e)

 

Interest shall accrue on the amount of any Claim from the date of the Issuing Bank’s payment of the Claim until the date the Issuing Bank receives repayment from the relevant Borrower in respect of that Claim, at a rate which is the aggregate of:

 

(i)

 

2.75 per cent.;

 

 

(ii)

 

the applicable LIBOR; and

 

 

(iii)

 

the applicable Mandatory Cost, if any,

for such interest period selected by the Issuing Bank.

 

(f)

 

Any interest accruing under this Clause 6 shall be payable by the relevant Borrower within two Business Days of demand in writing by the Issuing Bank.

 

 

(g)

 

Any interest accruing under this Clause 6 (if unpaid) will be compounded at the end of its interest period (but no more frequently then monthly) but will remain due and payable within two Business Days of demand.

6.3

 

Indemnities

 

 

 

Each Borrower shall within ten Business Days of demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank’s gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit requested by (or on behalf of) that Borrower. The Issuing Bank shall provide a certificate or invoice(s) to the relevant Borrower setting forth in reasonable detail the basis for and the amount of any such cost, loss or liability.

 

6.4

 

Role of the Issuing Bank

 

(a)

 

Nothing in this Agreement constitutes the Issuing Bank as a trustee or fiduciary of any other person.

- 30 -


 

 

(b)

 

The Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

 

 

(c)

 

The Issuing Bank may rely on:

 

(i)

 

any representation, notice or document provided to it in relation to the Facility believed by it to be genuine, correct and appropriately authorised; and

 

 

(ii)

 

any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

 

 

(d)

 

The Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

 

 

(e)

 

The Issuing Bank may act in relation to the Finance Documents through its personnel and agents.

 

 

(f)

 

The Issuing Bank is not responsible for:

 

(i)

 

the adequacy, accuracy and/or completeness of any information (whether oral or written) provided by any Party (excluding itself), or any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; or

 

 

(ii)

 

the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

 

6.5

 

Exclusion of liability

 

(a)

 

Without limiting paragraph (b) below, the Issuing Bank will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

 

 

(b)

 

No Party (other than the Issuing Bank) may take any proceedings against any officer, employee or agent of the Issuing Bank in respect of any claim it might have against the Issuing Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document.

 

7.

 

DEFAULT INTEREST

7.1

 

Default interest

 

 

(a)

 

If a Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on such Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which is the aggregate of:-

- 31 -


 

 

(i)

 

4 per cent.;

 

 

(ii)

 

the applicable LIBOR; and

 

 

(iii)

 

the applicable Mandatory Cost, if any.

for such interest period selected by the Issuing Bank (acting reasonably).

 

(b)

 

Any interest accruing under this Clause 7 ( Default interest ) shall be payable by the relevant Borrower within two Business Days of demand in writing by the Issuing Bank.

 

 

(c)

 

Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum to the extent such Unpaid Sum remains unpaid at the end of its interest period but will remain due and payable within two Business Days of demand in writing by the Issuing Bank.

8.

 

CHANGES TO THE CALCULATION OF INTEREST

 

8.1

 

Absence of quotations

 

 

 

Subject to Clause 8.2 ( Market disruption ), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11 am (London time) on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

8.2

 

Market disruption

 

 

(a)

 

If a Market Disruption Event occurs then the rate of interest for the Interest Period shall be the percentage rate per annum which is the sum of:

 

(i)

 

2 per cent (or, if the circumstances described in Clause 7.1 ( Default interest ) have occurred, 4 per cent);

 

 

(ii)

 

the rate the Issuing Bank may reasonably select; and

 

 

(iii)

 

the Mandatory Cost, if any.

 

 

(b)

 

In this Agreement “ Market Disruption Event ” means at or about n


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