Exhibit 10.1

 
AMENDMENT NO. 1 TO CREDIT AGREEMENT
 
AMENDMENT NO. 1, dated as of May 15, 2006, to the Credit Agreement (as defined
below), between XL CAPITAL LTD, a Cayman Islands exempted limited company, X.L.
AMERICA, INC., a Delaware corporation, XL INSURANCE (BERMUDA) LTD, a Bermuda
limited liability company, and XL RE LTD, a Bermuda limited liability company,
and DEUTSCHE BANK AG NEW YORK BRANCH, as the Lender.
 
The Obligors and the Lender are parties to a 364-day Credit Agreement dated as
of December 23, 2005 (the “Credit Agreement”), providing, subject to the terms
and conditions thereof, for extensions of credit to be made by or on behalf of
the Lender to the Account Parties in an aggregate principal or face amount not
exceeding $100,000,000. The Obligors and the Lender wish to amend the Credit
Agreement in certain respects and, accordingly, the parties hereto hereby agree
as follows:
 
Section 1. Definitions. Except as otherwise defined in this Amendment No. 1,
terms defined in the Credit Agreement are used herein as defined therein.
 
Section 2. Amendments. Effective as of the date hereof as provided in Section 5
of this Amendment No. 1, the Credit Agreement is hereby amended as follows:
 
2.01. References in the Credit Agreement to “this Agreement” (and indirect
references such as “hereunder”, “hereby”, “herein” and “hereof”) shall be deemed
to be references to the Credit Agreement as amended hereby.
 
2.02. Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definitions (or, in the case of any of the following defined terms
that are already defined in the Credit Agreement, by amending and restating in
its entirety each such term to read as set forth below) in their proper
respective alphabetical locations:
 
“SCA” means Security Capital Assurance Ltd, a Bermuda limited liability company.
 
“SCA IPO” means the issuance or sale of common shares of SCA to the public
pursuant to an effective registration statement filed under the Securities Act
of 1933, as amended, in connection with an underwritten offering.
 
“Significant Subsidiary” means, at any time, each Subsidiary of XL Capital that,
as of such time, meets the definition of a “significant subsidiary” under
Regulation S-X of the SEC; provided, however, that for purposes of this
Agreement, from and after the consummation of the SCA IPO, neither SCA nor any
of its Subsidiaries shall be a “Significant Subsidiary” of XL Capital.
 
“Subsidiary” means, with respect to any Person (the “parent”), at any date, any
corporation (or similar entity) of which a majority of the shares of outstanding
capital stock normally entitled to vote for the election of directors
(regardless of any contingency which does or may suspend or dilute the voting
rights of such capital stock) is at such time owned directly or indirectly by
the parent or one or more subsidiaries of the parent; provided, however, that
for purposes of this Agreement, from and after the consummation
 

 
 

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of the SCA IPO, neither SCA nor any of its Subsidiaries shall be a “Subsidiary”
of any Account Party. Unless otherwise specified, “Subsidiary” means a
Subsidiary of an Account Party.
 
“XL Capital Group” means XL Capital Group as determined from time to time by
A.M. Best & Co. (or its successor).
 
2.03. Section 6.09 of the Credit Agreement is hereby amended by inserting a new
sentence at the end thereof to read as follows:
 
“Notwithstanding anything in this Section to the contrary, from and after the
SCA IPO, no Account Party will issue any Letter of Credit, or renew or permit to
renew any Letter of Credit existing as of the SCA IPO, or use the proceeds of
any Loan, to support the obligations of, or otherwise primarily for the general
corporate purposes of, SCA and its Subsidiaries”.
 
2.04. Section 7.07 and 7.08 of the Credit Agreement entitled “Financial Strength
Ratings” and “Private Act”, respectively, are hereby amended by re-numbering
such sections as Sections 7.08 and 7.09, respectively.
 
2.05 Section 7.08 of the Credit Agreement is hereby amended by inserting the
word “Group” immediately after the reference in the first line thereof to “XL
Capital”.
 
Section 3. Waiver. Effective as of the date hereof as provided in Section 5 of
this Amendment No. 1, the Lender hereby agrees that, notwithstanding anything in
Section 7.02 of the Credit Agreement to the contrary, the issuance or sale of
shares of SCA pursuant to the SCA IPO shall be permitted and shall not reduce
the basket under Section 7.02(b) of the Credit Agreement available to the
Account Parties and their respective Subsidiaries for the calendar year ending
December 31, 2006.
 
Section 4. Representations and Warranties. Each Account Party hereby represents
and warrants to the Lender that (i) the representations and warranties of such
Account Party set forth in Article IV of the Credit Agreement are, on the date
hereof, true and complete as if made on the date hereof (and after giving effect
to this Amendment No. 1) and as if each reference in said Article IV to “this
Agreement” includes reference to this Amendment No. 1 and (ii) both immediately
before and after giving effect to the amendments under Section 2 hereof, no
Default has occurred and is continuing.
 
Section 5. Conditions Precedent. The amendments to the Credit Agreement set
forth in Section 2 of this Amendment No. 1 and the waiver under Section 3 of
this Amendment No. 1 shall become effective, as of the date hereof, upon receipt
by the Lender of one or more counterparts of this Amendment No. 1 duly executed
and delivered by each of the Obligors and the Lender.
 
Section 6. Miscellaneous. Except as herein provided, the Credit Agreement shall
remain unchanged and in full force and effect. This Amendment No. 1 may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same agreement and any of the parties hereto may execute
this Amendment No. 1 by signing any such
 

 
 

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counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the laws of the State of New York.
 

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be
duly executed and delivered as of the day and year first above written.
 
XL CAPITAL LTD,
 
as an Account Party and a Guarantor
 
By:  /s/ Brian O’Hara            
        Name:  Brian O’Hara
        Title:    President and Chief Executive
                     Officer
 
X.L. AMERICA, INC.,
as an Account Party and a Guarantor
 
By:  /s/ Gabriel Carino            
        Name:  Gabriel Carino
        Title:    Senior Vice President &
                     Treasurer (XLGS)
 
XL INSURANCE (BERMUDA) LTD,
as an Account Party and a Guarantor
 
By:  /s/ Brian O’Hara            
        Name:  Brian O’Hara
        Title:    Director 
 
XL RE LTD,
as an Account Party and a Guarantor
 
By:  /s/ Brian O’Hara            
        Name:  Brian O’Hara
        Title:    Director

 
 

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DEUTSCHE BANK AG NEW YORK BRANCH
 

By:  /s/ Richard Herder            
        Name:  Richard Herder
        Title:    Managing Director

By:  /s/ Ruth Leung              
        Name:  Ruth Leung
        Title:    Director