Exhibit 10.4
 
EXECUTION COPY

 
AMENDMENT NO. 1 TO CREDIT AGREEMENT
 
AMENDMENT NO. 1, dated as of May 9, 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,
the Lenders party thereto, and BEAR STEARNS CORPORATE LENDING INC., as
“Administrative Agent”.
 
The Borrowers, the Lenders and the Administrative Agent are parties to a
Five-Year Credit Agreement dated as of August 3, 2005 (the “Credit Agreement”),
providing, subject to the terms and conditions thereof, for extensions of credit
to be made by or on behalf of said Lenders to the Borrowers in an aggregate
principal amount not exceeding $100,000,000. The Borrowers, the Lenders and the
Administrative Agent 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 Borrower. Unless otherwise specified, “Subsidiary” means a Subsidiary of
a Borrower.
 
“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 Borrower will use the proceeds of any Loan, to support the
obligations of, or otherwise for primarily the general corporate purposes of,
SCA and its Subsidiaries”.
 
2.04. 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 Lenders hereby agree 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 Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that (i) the
representations and warranties of such Borrower 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 Administrative Agent of one or more counterparts of this Amendment No. 1
duly executed and delivered by each of the Obligors and the Required Lenders.
 
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 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 a Borrower and a Guarantor
 
By:  /s/ Paul Dowden        
         Name:  Paul Dowden
         Title:    Senior Vice President &
                      Chief Risk Officer
 
X.L. AMERICA, INC.,
as a Borrower and a Guarantor
 
By:  /s/ Gabriel Carino        
         Name:  Gabriel Carino
         Title:    Senior Vice President &
                      Treasurer (XLGS)
 
XL INSURANCE (BERMUDA) LTD,
as a Borrower and a Guarantor
 
By:  /s/ Christopher A. Coelho    
         Name:  Christopher A. Coelho
         Title:    Senior Vice-President &
                      Chief Financial Officer
 
XL RE LTD,
as a Borrower and a Guarantor
 
By:  /s/ Andrew J. Turnbull    
        Name:  Andrew J. Turnbull
        Title:    Senior Vice President

 
 

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LENDERS

BEAR STEARNS CORPORATE LENDING, INC.,

   
individually and as Administrative Agent

By: /s/ Victor Bulzachelli        
       Name:  Victor Bulzachelli
       Title:    Vice President