EXHIBIT 10.1
MASTER STANDBY LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
This MASTER
STANDBY LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT is dated
as of September 30, 2005 (the "Agreement")
and is by and among National
Australia Bank Limited, New York Branch
(the "Bank"), XL Capital Ltd, a company
incorporated under the laws of the Cayman
Islands, XL America, Inc., a Delaware
corporation, XL Insurance (Bermuda) Ltd, a
Bermuda limited liability company,
and XL Re Ltd, a Bermuda limited liability
company (collectively, the "Account
Parties" and each an "Account Party").
WHEREAS, the
Account Parties have requested that the Bank issue letters of
credit from and after the date hereof and
the Bank is prepared to issue such
letters of credit upon the terms and
conditions hereof.
NOW, THEREFORE,
for good and valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, the parties hereto agree as
follows:
1. Subject to
the terms and conditions herein, from and after the date
hereof to but not including September 29,
2006 (the "Termination Date"), the
Bank agrees to issue one or more letters of
credit (collectively the "Letters of
Credit" and each a "Letter of Credit") in
aggregate principal amount not
exceeding US $150,000,000 at any one time
outstanding (the "Commitment").
2. (a) The
obligation of the Bank to issue any Letter of Credit hereunder
shall be subject to receipt by the Bank
from an Account Party, in form and
substance reasonably satisfactory to the
Bank, of (i) a request in the form of
Exhibit A hereto (a "L/C Application") to
issue a letter of credit hereunder,
the expiration of which shall in no event
be on a date (the "Expiry Date") which
is later than one year after the date of
its issuance, such request to be
received by the Bank at least four business
days prior to the proposed date of
issuance, (ii) the proposed form of the
letter of credit and (iii) a corporate
secretary's certificate (a) attesting to
resolutions of its Board of Directors
or other action taken to authorize this
Agreement, the L/C Application and any
other documents reasonably requested to be
delivered in connection herewith and
(b) certifying the names, titles and
specimen signatures of the officers or
other persons authorized to execute and
deliver this Agreement, the L/C
Application and other documents reasonably
requested to be delivered in
connection herewith (each an "Authorized
Person").
(b) The Bank
shall be entitled to rely conclusively on the authority of the
Authorized Persons identified in such
certificate, or any amendment thereof or
substitution therefor, until it shall have
received a written notice signed by
an Authorized Person revoking or amending
such certificate or substituting a new
certificate therefor.
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3. The Account
Parties unconditionally agree, jointly and severally and
regardless of the identity of the Account
Party of a Letter of Credit, to pay to
the Bank, on demand in immediately
available funds (in United States Dollars),
on each date on which a disbursement is
made by the Bank pursuant to a Letter of
Credit, an amount equal to such
disbursement. If payment is not made on the date
of disbursement, such amount shall bear
interest (based on a 360-day year and
actual days elapsed) from the date of
disbursement until paid in full, but
excluding the date paid, at a rate per
annum equal to the rate of interest from
time to time announced by the Bank as its
prime rate plus 2%.
4. The Account
Parties agree, jointly and severally, to pay to the Bank,
quarterly in arrears on the last business
day of each March, June, September and
December and commencing December 30, 2005,
(i) a facility fee which shall accrue
at a rate per annum equal to 0.07% on the
Commitment amount (whether used or
unused) during the period from September
30, 2005 to the Termination Date; and
(ii) letter of credit fees which shall
accrue at a rate per annum equal to 0.23%
of the amount available to be drawn under
each Letter of Credit. All fees
payable hereunder shall be computed on the
basis of a 360-day year and paid for
the actual number of days elapsed
(including the first day but excluding the
last).
5. The Account
Parties' joint and several obligations to reimburse Letter
of Credit disbursements as provided in
Section 3 above shall be absolute,
unconditional and irrevocable, and shall be
performed strictly in accordance
with the terms of this Agreement,
irrespective of any of the following
circumstances: (a) any lack of validity or
enforceability of a Letter of Credit
or any document or instrument relating
thereto; (b) the existence of any claim,
setoff, defense or other rights which any
of the Account Parties may have at any
time against the Bank, the beneficiary or
any other person or entity, whether in
connection with this Agreement or any
unrelated transaction; (c) any document
presented under a Letter of Credit proving
to be forged, fraudulent, invalid or
insufficient in any respect or any
statement therein being untrue or inaccurate
in any respect whatsoever; (d) payment by
the Bank under a Letter of Credit
against presentation of a draft or
certificate which does not strictly comply
with the terms of a Letter of Credit,
provided such payment shall have been made
by the Bank in good faith and without gross
negligence and payment is made
against presentation of a draft or other
document that at least substantially
complies with the terms of the relevant
Letter of Credit; (e) any agreement by
the Bank and the beneficiary extending or
shortening the Bank's time after
presentation to examine documents or to
honor or give notice of discrepancies;
(f) at any time or from time to time,
without notice to any Account Party, the
time for any performance of or compliance
with any of such reimbursement
obligations of any other Account Party
being waived, extended or renewed; (g)
any of such reimbursement obligations of
any other Account Party being amended
or otherwise modified in any respect, or
any guarantee of any of such
reimbursement obligations being released,
substituted or exchanged in whole or
in part or otherwise dealt with; (h) the
occurrence of any Event of Default; (i)
the existence of any proceedings of the
type described in clause (g) or (h) of
Article VIII of that certain Credit
Agreement dated as of June 22, 2005 among
the Account Parties hereunder, as account
parties and guarantors thereunder,
various lenders parties thereto and
JPMorgan Chase Bank, N.A., as administrative
agent (the "Syndicated Credit Agreement")
with respect to any other Account
Party or any guarantor of any of such
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reimbursement obligations; (j) any lack of
validity or enforceability of any of
such reimbursement obligations against any
other Account Party or any guarantor
of any of such reimbursement obligations;
or (k) any other event or circumstance
whatsoever, whether or not similar to any
of the foregoing, that might, but for
the provisions of this Section 5,
constitute a legal or equitable discharge of
the obligations of any Account Party
hereunder, other than performance by an
Account Party hereunder. Without limiting
any other provision of this Agreement,
the Bank: (i) may rely upon any oral,
telephonic, facsimile, electronic, written
or other communication believed by it in
good faith to have been authorized by
any Account Party, the beneficiary or
anyone acting for any of them; (ii) shall
not be responsible for errors, omissions,
interruptions or delays in
transmission or delivery of any message,
advice or document in connection with a
Letter of Credit, whether transmitted by
courier, mail, telecommunication or
otherwise, or for errors in interpretation
of technical terms or in translation;
(iii) shall not be responsible for the
identity or authority of any signer or
the form, accuracy, genuineness or legal
effect of any draft, certificate or
other document presented under a Letter of
Credit; and (iv) may accept as a
draft any written or electronic demand or
other request for payment under a
Letter of Credit, even if such demand or
other request is not in the form of a
negotiable draft.
6. If after the
date hereof, the adoption of or any change in any law or
regulation or in the interpretation thereof
by, or compliance by the Bank with
any guideline or request from any central
bank or other authority charged with
the administration thereof (whether or not
having the force of law) shall
impose, modify or deem applicable any (a)
reserve, special deposit or similar
requirement against letters of credit
issued by the Bank or (b) capital adequacy
or similar requirement (including without
limitation a requirement which affects
the manner in which the Bank allocates
capital to letters of credit), and the
result thereof shall be to increase the
cost to the Bank of issuing or
maintaining a Letter of Credit (which
increase in cost shall be calculated in
accordance with the Bank's reasonable
averaging and attribution methods) or to
reduce the rate of return on the Bank's
capital as a consequence of its
obligations under a Letter of Credit to a
level below that which the Bank could
have achieved but for such circumstances,
then the Account Parties shall pay to
the Bank within 10 days of demand such
additional amount or amounts as shall
compensate the Bank for such increase in
cost or reduction in rate of return;
provided that this Section 6 shall not
apply to Taxes, which shall be governed
exclusively by Section 7. A certificate of
the Bank as to such additional amount
or amounts shall be conclusive, absent
manifest error.
7. (a) Any and
all payments made to the Bank by any Account Party hereunder
shall be made free and clear of and without
deduction for any Covered Taxes
unless an Account Party is required to
withhold Covered Taxes. If an Account
Party shall be required by law to deduct
any Covered Taxes from or in respect of
any sum payable hereunder to the Bank, (i)
the sum payable shall be increased as
may be necessary so that after making all
required deductions of Covered Taxes
(including deductions applicable to
additional sums payable under this Section
7) the Bank receives an amount equal to the
sum it would have received had no
such deductions been required and (ii) such
Account Party shall pay the full
amount deducted to the relevant taxing
authority in accordance with applicable
law and shall provide the Bank with the
original or a certified copy of the
receipt evidencing such payment.
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If the Bank determines in good faith that
it has received a refund in respect of
any Covered Taxes with respect to which any
Account Party has paid additional
amounts pursuant to this Section 7, the
Bank shall promptly after the date of
such receipt pay over the amount of such
refund to such Account Party (but only
to the extent of additional amounts paid by
the Account Party under this Section
7 with respect to the Covered Taxes giving
rise to such refund), net of all
reasonable expenses of the Bank (including
additional Taxes attributable to such
refund, as determined in good faith by the
Bank) and without interest (other
than interest, if any, paid by the relevant
taxing authority with respect to
such refund). Any Account Party shall, upon
demand, repay to the Bank any amount
paid over to such Account Party by the Bank
in the event the Bank is required to
repay any portion of such refund to such
taxing authority. If any Account Party
reasonably believes that any Covered Taxes
were not correctly or legally
asserted, the Bank will use reasonable
efforts to cooperate with such Account
Party (at Account Party's expense) to
obtain a refund of such Covered Taxes,
which refund shall be returned to the
Account Party to the extent provided in
this Section 7(a). Nothing in this Section
7 shall entitle any Account Party to
have access to the records of the Bank,
including, without limitation, tax
returns.
(b) To the
extent it is legally entitled to do so, the Bank shall from
time
to time, at the written request of any
Account Party, provide to such Account
Party such form, certification or similar
documentation, if any (each duly
completed, accurate and signed) as is
required by any jurisdiction, in order to
obtain an exemption from, or reduced rate
of, deduction, payment or withholding
of Covered Taxes to which the Bank is
entitled pursuant to an applicable tax
treaty or other applicable law.
(c) An assignee
of the Bank or subsequent assignee shall not be entitled to
any greater gross-up payments under this
Section 7 than such assignee's assignor
was entitled to immediately prior to such
assignment (determined taking into
account the provisions of this Section 7)
except to the extent that the
entitlement to greater payments resulted
solely from a change in law formally
announced after the date on which such
assignee became an assignee hereunder.
(d) For purposes
of this Agreement the following terms shall have the
following meanings, respectively:
"Excluded Taxes"
means, with respect to the Bank or any other recipient of
a payment from any Account Party hereunder,
(a) any Taxes that are imposed as a
result of a connection the recipient of the
payment has with the relevant
jurisdiction (other than a connection that
is deemed to arise solely by reason
of both (i) the transactions contemplated
by this Agreement and (ii) an Account
Party being organized or resident,
maintaining an office or conducting business
in such jurisdiction), including without
limitation any such Taxes imposed on
(or measured by) net income, net profi
